EXHIBIT 3.1
Amendment and Restatement
of Articles of Incorporation of the Company,
as amended on April 29, 1996 and April 30, 1996,
and Articles Supplementary thereto
October 24, 1996 and August 11, 1997
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
CARR REALTY CORPORATION
Carr Realty Corporation, a Maryland Corporation having its
principal office in Maryland in Baltimore, Maryland, and having The Corporation
Trust, Incorporated as its resident agent located at 23 South Street,
Baltimore, Maryland, hereby certifies to the State Department of Assessment and
Taxation of Maryland, that:
FIRST: The Articles of Incorporation of the Corporation,
filed with the Secretary of State on July 9, 1992, and amended and restated on
October 16, 1992, are hereby amended and restated in full as follows:
ARTICLE I.
NAME
The name of the corporation (the "Corporation") is: Carr
Realty Corporation.
ARTICLE II.
PRINCIPAL OFFICE, REGISTERED OFFICE,
AND AGENT
The address of the Corporation's principal office is 1700
Pennsylvania Avenue, Washington, D.C. 20006. The address of the Corporation's
principal office and registered office in the State of Maryland is 32 South
Street, Baltimore, Maryland 21202. The name of its registered agent at that
office is The Corporation Trust, Incorporated.
ARTICLE III.
PURPOSES
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Maryland as now or hereafter in force.
ARTICLE IV.
CAPITAL STOCK
Section 4.1. Shares and par value. The total number of shares
of all classes of stock that the Corporation shall have authority to issue is
35,000,000, consisting of 30,000,000 shares of Common Stock having a par value
of one cent ($.0l) per share, amounting in the aggregate to par value of
$300,000, and 5,000,000 shares of Preferred Stock having a par value of one cent
($.01) per share, amounting in the aggregate to par value of $50,000.
Section 4.2. Voting Rights. Except as otherwise provided in
these Articles of Incorporation or required by applicable law, each holder of
shares of Common Stock shall be entitled to notice of, and the right to vote at,
any meeting of the stockholders. Each holder of shares of Common Stock shall be
entitled to one vote for each share of Common Stock held by such holder.
Section 4.3. Dividends.
(a) Each holder of shares of Common Stock shall be
entitled to receive, out of the assets of the Corporation which are legally
available therefor, such dividends as from time to time may be declared by the
Board of Directors of the Corporation. All such holders shall share ratably, in
accordance with the number of shares of Common Stock held by each such holder,
in all dividends paid on the Common Stock.
(b) The Board of Directors of the Corporation may
declare dividends only to the extent permitted under the General Corporation Law
of Maryland.
(c) All dividends by the Corporation will be at the
sole discretion of the Board of Directors and will depend on the cash flow of
the Corporation, its financial condition, capital requirements, the annual
distribution requirements under the REIT provisions of the Code as defined in
Section 5.1 of these Articles of Incorporation and such other factors as the
Board of Directors deems relevant.
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Section 4.4. Preferred Stock. The Preferred Stock may be
issued from time to time in one or more series and the Board of Directors may,
by resolution providing for the issuance of such Preferred Stock, designate with
respect to such shares: (a) their voting powers; (b) their rights of redemption;
(c) their right to receive dividends (which may be cumulative or noncumulative)
including the dividend rate or rates, conditions to payment, and the relative
preferences in relation to the dividends payable on any other class or classes
or series of stock; (d) their rights upon the dissolution of, or upon any
distribution of the assets of, the Corporation; (e) their rights to convert
into, or exchange for, shares of any other class or classes of stock of the
Corporation, including the price or prices or the rates of exchange; (f)
restrictions on transfer to preserve REIT status; and (g) other relative,
participating, optional or special rights, qualifications, limitations or
restrictions; provided, however, that no such issuance or designation shall
result in any holder of shares of Common Stock being in violation of the
Ownership Limit or Existing Holder Limit, as applicable.
Section 4.5. Dissolution, Liquidation or Winding Up. In the
event of any dissolution, liquidation or winding up of the affairs of the
Corporation, after payment or provision for payment of the debts and other
liabilities of the Corporation, the holders of shares of Common Stock shall
share ratably, in accordance with the number of shares of Common Stock held by
each such holder, in the remaining net assets of the Corporation.
Section 4.6. Preemptive Rights. No holder of shares of capital
stock of the Corporation shall, as such holder, have any preemptive or other
right to purchase or subscribe for any shares of Common Stock or any class of
capital stock of the Corporation which the Corporation may issue or sell.
Section 4.7. Control Shares. Pursuant to Section 3-702(b) of
the General Corporation Law of Maryland, the terms of Subtitle 7 of Title 3 of
such law (the "Control Share Statute") shall be inapplicable to any acquisition
of a Control Share that is not prohibited by the terms of Article V of these
Articles of Incorporation.
Section 4.8. Business Combinations. Pursuant to Section
3-603(e) (1) (iii) of the General Corporation Law of Maryland, the terms of
Section 3-602 of such law shall be inapplicable to the Corporation.
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ARTICLE V.
REIT PROVISIONS
Section 5.1. Definitions. The following terms shall have the
following meanings:
(a) "Acquire" shall mean the acquisition of Beneficial
Ownership of shares of Common Stock by any means including, without limitation,
acquisition pursuant to the exercise of Acquisition Rights or any other option,
warrant, pledge or other security interest or similar right to acquire shares,
but shall not include the acquisition of any such rights unless, as a result,
the acquiror would be considered a Beneficial Owner, as defined below.
(b) "Acquisition Rights" shall mean rights to Acquire
shares of Common Stock pursuant to: (i) redemption of Units Acquired upon
exercise of any option issued by Carr Realty, L.P., a Delaware limited
partnership, or Carr Real Estate Services, Inc., a Delaware corporation and
outstanding at the opening of business on the first business day following the
closing of the Initial Public Offering (whether exercisable on that date or
not); (ii) any right to redeem or exchange Units held on the first business day
following the closing of the Initial Public Offering or any right to redeem or
exchange Units that may be Acquired pursuant to a pledge described in the
following clause; or (iii) any pledge of shares of Common Stock or Units made
pursuant to a pledge agreement executed on or before the opening of business on
the first business day following the closing of the Initial Public Offering (or
the redemption or exchange of Units subject to such a pledge).
(c) "Beneficial Ownership" shall mean ownership of
Common Stock by a Person who would be treated as an owner of such shares of
Common Stock either directly or indirectly under Section 542(a) (2) of the Code,
taking into account, for this purpose, constructive ownership determined under
Section 544 of the Code, as modified by Section 856(h) (1) (B) of the Code
(except where expressly provided otherwise). The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
(d) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) "Existing Holder" shall mean any of Clark
Enterprises, Inc., The Equitable Life Assurance Society of the United States,
Equitable Variable Life Insurance Company, FW REIT, L.P., the Oliver Carr
Company, Oliver T. Carr, Jr., or A. James Clark (or any Person who is a
Beneficial Owner of shares as a result of the Beneficial Ownership of shares by
the Persons identified above) who, at the opening of business on the first
business day following the closing of the
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Initial Public Offering, was the Beneficial Owner of, or had an Acquisition
Right such that such Person would, if such right had been exercised and such
Person received shares (whether or not such right is immediately exercisable
for shares), be the Beneficial Owner of, Common Stock in excess of the
Ownership Limit, so long as, but only so long as, such Person Beneficially Owns
Common Stock (or Acquisition Rights such that it has rights to Acquire shares)
in excess of the Ownership Limit.
(f) "Existing Holder Limit" for an Existing Holder
shall mean, initially, (i) the percentage of the outstanding Common Stock
Beneficially Owned by such Existing Holder at the opening of business on the
first business day following the closing of the Initial Public Offering plus
(ii) the percentage of Common Stock such Existing Holder would Beneficially Own
upon exercise of all Acquisition Rights (assuming only shares are received upon
redemption of Units) plus (iii) the percentage of Common Stock such Existing
Holder would Beneficially Own upon redemption of Units Acquired upon exercise of
any options, or upon exercise of any options for shares of Common Stock, in
either case issued pursuant to an option plan adopted or approved by the Board
of Directors of the Corporation (excluding any such options that fall within the
definition of Acquisition Rights), and after any adjustment pursuant to Section
5.8, shall mean such percentage of the outstanding Common Stock as so adjusted;
provided however, that the Existing Holder Limit shall never exceed 29%. For
purposes of determining the Existing Holder Limit, the amount of shares of
Common Stock outstanding at the time of the determination shall be deemed to
include the maximum number of shares that the Existing Holder may Beneficially
Own with respect to Acquisition Rights and options issued pursuant to an option
plan, but shall not include shares that may be Beneficially Owned solely by
other Persons upon exercise of Acquisition Rights or options. From the date of
the Initial Public Offering and prior to the Restriction Termination Date, the
secretary of the Corporation shall maintain and, upon request, make available to
each Existing Holder, a schedule which sets forth the then current Existing
Holder Limits for each Existing Holder.
(g) "Initial Public Offering" means the sale of shares
of Common Stock pursuant to the Corporation's first effective registration
statement for such Common Stock filed under the Securities Act of 1933, as
amended.
(h) "Ownership Limit" shall initially mean 5 percent
of the outstanding Common Stock of the Corporation, and after any adjustment as
set forth in Section 5.9, shall mean such greater percentage (but not greater
than 9.8%) of the outstanding Common Stock as so adjusted.
(i) "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,
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private foundation within the meaning of Section 509(a) of the Code, joint
stock company or other entity and also includes a group as that term is used
for purposes of Section 13(d) (3) of the Securities Exchange Act of 1934, as
amended; but does not include an underwriter which participates in a public
offering of the Common Stock for a period of 90 days following the purchase by
such underwriter of the Common Stock.
(j) "REIT" shall mean a Real Estate Investment
Trust under Section 856 of the Code.
(k) "Redemption Price" shall mean the lower of (i) the
price paid by the transferee from whom shares are being redeemed and (ii) the
average of the last reported sales prices on the New York Stock Exchange of
Common Stock on the ten trading days immediately preceding the date fixed for
redemption by the Board of Directors, or if the Common Stock is not then traded
on the New York Stock Exchange, the average of the last reported sales prices of
the Common Stock on the ten trading days immediately preceding the relevant date
as reported on any exchange or quotation system over which the Common Stock may
be traded, or if the Common Stock is not then traded over any exchange or
quotation system, then the price determined in good faith by the Board of
Directors of the Corporation as the fair market value of shares of Common Stock
on the relevant date. The Redemption Price may, at the option of the
Corporation, be paid in the form of a number of Units equal to the number of
shares redeemed divided by the Conversion Factor, as that term is defined in the
Partnership Agreement of Carr Realty, L.P., a Delaware limited partnership, as
effective on the date of the Initial Public Offering.
(l) "Restriction Termination Date" shall mean the
first day after the date of the Initial Public Offering on which the Corporation
determines pursuant to Section 5.13 of these Articles of Incorporation that it
is no longer in the best interests of the Corporation to attempt to, or continue
to, qualify as a REIT.
(m) "Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Common Stock or the right to vote or
receive dividends on Common Stock (including (i) the granting of any option or
entering into any agreement for the sale, transfer or other disposition of
Common Stock or the right to vote or receive dividends on Common Stock or (ii)
the sale, transfer, assignment or other disposition or grant of any Acquisition
Rights or other securities or rights convertible into or exchangeable for Common
Stock, or the right to vote or receive dividends on Common Stock), whether
voluntary or involuntary, whether of record or beneficially and whether by
operation of law or otherwise.
(n) "Units" shall mean Partnership Units as that term
is defined in the Agreement of Limited Partnership of Carr Realty, L.P., a
Delaware limited partnership, as effective on the date of the Initial Public
Offering.
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Section 5.2. Restrictions.
(a) Except as provided in Section 5.11, during the
period commencing on the date of the Initial Public Offering and prior to the
Restriction Termination Date: (i) no Person (other than an Existing Holder)
shall Acquire any shares of Common Stock if, as the result of such acquisition,
such Person shall Beneficially Own shares of Common Stock in excess of the
Ownership Limit; (ii) no Existing Holder shall Acquire any shares of Common
Stock if, as the result of such acquisition, such Person shall Beneficially Own
shares of Common Stock in excess of the Existing Holder Limit for such Existing
Holder; (iii) no Person shall Acquire any shares of Common Stock if, as a result
of such acquisition, the Common Stock would be directly or indirectly owned by
less than 100 Persons (determined without reference to the rules of attribution
under Section 544 of the Code); and (iv) no Person shall Acquire any shares if,
as a result of such acquisition, the Corporation would be "closely held" within
the meaning of Section 856(h) of the Code.
(b) Any Transfer that (i) would result in a violation
of the restrictions in Section 5.2(a) (iii) or (iv), or (ii) a transferring
stockholder has actual knowledge will result in a violation of any of the
restrictions in Section 5.2(a)(i) or (ii) shall be void ab initio as to the
Transfer of such shares of Common Stock that would cause the violation of the
applicable restriction in Section 5.2(a), and the intended transferee shall
acquire no rights in such shares of Common Stock.
Section 5.3. Remedies for Breach.
(a) If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer has taken place that
falls within the scope of Section 5.2(b) or that a Person intends to Acquire
Beneficial Ownership of any shares of the Corporation that will result in
violation of Section 5.2(a) or Section 5.2(b) (whether or not such violation is
intended), the Board of Directors or a committee thereof shall take such action
as it or they deem advisable to refuse to give effect to or to prevent such
Transfer, including, but not limited to, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin
such Transfer.
(b) Without limitation to Section 5.2(b) and 5.3(a),
any purported transferee of shares acquired in violation of Section 5.2 shall,
if it shall be deemed to have received any shares, be deemed to have acted as
agent on behalf of the Corporation in acquiring such of the shares as result in
a violation of Section 5.2 and shall be deemed to hold such shares in trust on
behalf and for the benefit of the Corporation. The transferee shall have no
right to receive dividends or other distributions with respect to such shares,
and shall have no right to vote such shares. Such transferee shall have no
claim, cause of action, or any other recourse whatsoever against a transferor of
shares acquired in violation of Section 5.2. The transferee's sole right with
respect to such shares shall be to receive at the
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Corporation's sole and absolute discretion, either (i) consideration for such
shares upon the resale of the shares as directed by the Corporation pursuant to
Section 5.3(c) or (ii) the Redemption Price pursuant to Section 5.3(c).
(c) The Board of Directors shall, within 6 months
after receiving notice of a Transfer that violates Section 5.2(a), either (in
its sole and absolute discretion) (i) direct the transferee of such shares to
sell all shares held in trust for the Corporation pursuant to Section 5.3(b) for
cash in such manner as the Board of Directors directs or (ii) redeem such shares
for the Redemption Price on such date within such 6 month period as the Board of
Directors may determine. If the Board of Directors directs the transferee to
sell the shares, the transferee shall receive such proceeds as trustee for the
Corporation and pay the Corporation out of the proceeds of such sale all
expenses incurred by the Corporation in connection with such sale plus any
remaining amount of such proceeds that exceeds the amount paid by the transferee
for the shares, and the transferee shall be entitled to retain only any proceeds
in excess of such amounts required to be paid to the Corporation.
Section 5.4. Notice of Restricted Transfer. Any Person who
acquires or attempts or intends to acquire shares in violation of Section 5.2
shall immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted or
intended Transfer on the Corporation's status as a REIT.
Section 5.5. Owners Required To Provide Information. From the
date of the Initial Public Offering and prior to the Restriction Termination
Date:
(a) every stockholder of record of more than 5% (or
such lower percentage as required by the Code or regulations promulgated
thereunder) of the outstanding Common Stock of the Corporation shall, within 30
days after December 31 of each year, give written notice to the Corporation
stating the name and address of such record stockholder, the number of shares
Beneficially Owned by it, and a description of how such shares are held;
provided that a shareholder of record who holds outstanding Common Stock of the
Corporation as nominee for another person, which other person is required to
include in gross income the dividends received on such Common Stock (an "Actual
Owner"), shall give written notice to the Corporation stating the name and
address of such Actual Owner and the number of shares of such Actual Owner with
respect to which the stockholder of record is nominee.
(b) every Actual Owner of more than 5% (or such lower
percentage as required by the Code or regulations promulgated thereunder) of the
outstanding Common Stock of the Corporation who is not a stockholder of record
of the Corporation, shall within 30 days after December 31 of each year, give
written
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notice to the Corporation stating the name and address of such Actual Owner,
the number of shares Beneficially Owned, and a description of how such shares
are held.
(c) each person who is a Beneficial Owner of Common
Stock and each Person (including the stockholder of record) who is holding
Common Stock for a Beneficial Owner shall provide to the Corporation such
information as the Corporation may request, in good faith, in order to determine
the Corporation's status as a REIT.
Section 5.6. Remedies Not Limited. Nothing contained in this
Article shall limit the authority of-the Board of Directors to take such other
action as it deems necessary or advisable to protect the Corporation and the
interests of its stockholders in preserving the Corporation's status as a REIT.
Section 5.7. Ambiguity. In the case of an ambiguity in the
application of any of the provisions of this Article V, including any definition
contained in Section 5.1, the Board of Directors shall have the power to
determine the application of the provisions of this Article V with respect to
any situation based on the facts known to it.
Section 5.8. Modification of Existing Holder Limits. Subject
to Section 5.10(c), the Existing Holder Limit shall be reduced at any time that
either (i) an Existing Holder transfers shares of Common Stock or Acquisition
Rights or (ii) the Corporation issues shares of Common Stock, in either case by
reducing the percentages calculated pursuant to the definition of Existing
Holder Limit to the percentages in effect immediately after such Transfer or
issuance. The Existing Holder Limit shall be increased at any time that the
Corporation redeems or otherwise purchases shares of Common Stock by increasing
the percentages calculated pursuant to the definition of Existing Holder Limit
to the percentages in effect immediately after such redemption or other
purchase. Each Existing Holder shall give the Board of Directors written notice
of any Transfer of shares within 10 business days thereafter.
Section 5.9. Modification of Ownership Limit. Subject to the
limitations provided in Section 5.10, the Board of Directors may from time to
time increase the Ownership Limit.
Section 5.10. Limitations on Modification.
(a) The Ownership Limit may not be increased if, after
giving effect to such increase, five Persons who are considered individuals
pursuant to Section 542(a) (2) of the Code (taking into account all of the then
Existing Holders
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and all Acquisition Rights) could Beneficially Own, in the aggregate, more than
49.5% of the Outstanding Common Stock.
(b) Prior to the modification of the Ownership Limit
pursuant to Section 5.9, the Board of Directors of the Corporation may require
such opinions of counsel, affidavits, undertakings or agreements as it may deem
necessary or advisable in order to determine or ensure the Corporation's status
as a REIT.
(c) No Existing Holder Limit shall be reduced to a
percentage which is less than the Ownership Limit.
(d) The Ownership Limit may not be increased to a
percentage which is greater than 9.8 percent.
Section 5.11. Exception. The Board of Directors may, upon
receipt of either a certified copy of a ruling from the Internal Revenue Service
or an opinion of counsel satisfactory to the Board of Directors, but shall in no
case be required to, exempt a Person (the "Exempted Holder") from the Ownership
Limit or the Existing Holder Limit, as the case may be, if the ruling or opinion
includes that no Person who is an individual as defined in Section 542(a) (2) of
the Code will, as the result of the ownership of shares by the Exempted Holder,
be considered to have Beneficial Ownership of an amount of Common Stock that
will violate the Ownership Limit or the applicable Existing Holder Limit, as the
case may be.
Section 5.12. Legend. Each certificate for Common Stock shall
bear the following legend:
"The shares of Common Stock represented by this
certificate are subject to restrictions on transfer
for the purpose of the Corporation's maintenance of
its status as a Real Estate Investment Trust under
the Internal Revenue Code of 1986, as amended. No
Person may Beneficially Own shares of Common Stock in
excess of 5 percent (or such greater percentage as
may be determined by the Board of Directors of the
Corporation) of the outstanding Common Stock of the
Corporation (unless such Person is an Existing
Holder). Separate restrictions set forth in Article
V of the Articles of Incorporation apply to Existing
Holders. Any Person who attempts to Beneficially Own
shares of Common Stock in excess of the above
limitations must immediately notify the Corporation,
any shares of Common Stock so held may be subject to
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mandatory redemption or sale in certain events, and
certain purported acquisitions of shares of Common
Stock in excess of such limitations shall be void ab
initio. A Person who attempts to Beneficially Own
shares of Common Stock in violation of the ownership
limitations set forth in Section 5.2 of the Articles
of Incorporation shall have no claim, cause of
action, or any other recourse whatsoever against a
transferor of such shares. All capitalized terms in
this legend have the meanings defined in the
Corporation's Articles of Incorporation, a copy of
which, including the restrictions on transfer, will
be sent without charge to each stockholder who so
requests.
Section 5.13. Termination of REIT Status. The Board of
Directors shall take no action to terminate the Corporation's status as a REIT
or to amend the provisions of this Article V until such time as (i) the Board of
Directors adopts a resolution recommending that the Corporation terminate its
status as a REIT or amend this Article V, as the case may be, (ii) the Board of
Directors presents the resolution at an annual or special meeting of the
stockholders and (iii) such resolution is approved by holders of a majority of
the issued and outstanding shares of Common Stock.
Section 5.14. Severability. If any provision of this Article
or any application of any such provision is determined to be invalid by any
Federal or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
ARTICLE VI.
BOARD OF DIRECTORS
Section 6.1. Management. The management of the business and
the conduct of the affairs of the Corporation shall be vested in its Board of
Directors.
Section 6.2. Number. The number of directors which will
constitute the entire Board of Directors shall be fixed by, or in the manner
provided in, the By-Laws but shall in no event be less than three.
Section 6.3. Classification. The directors shall be
classified, with respect to the time for which they severally hold office, into
three classes, as nearly
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equal in number as possible, as shall be provided in the By-Laws of the
Corporation, one class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1994, another class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 1995, and another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 1996, with each class to
hold office until its successors are elected and qualified. At each annual
meeting of the stockholders of the Corporation, the date of which shall be
fixed by or pursuant to the By-Laws of the Corporation, the successors of the
class of directors whose terms expire at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of their election. No election of directors need
be by written ballot. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
Section 6.4. Vacancies. Newly created directorships resulting
from any increase in the number of directors may be filled by the Board of
Directors, or as otherwise provided in the By-Laws, and any vacancies on the
Board of Directors resulting from death, resignation, removal or other cause
shall only be filled by the affirmative vote of a majority of the remaining
directors then in office, even though less than a quorum of the Board of
Directors, or by a sole remaining director, or as otherwise provided in the
By-Laws. Any director elected in accordance with the preceding sentence shall
hold office until the next annual meeting of the Corporation, at which time a
successor shall be elected to fill the remaining term of the position filled by
such director.
Section 6.5. Removal. Any director may be removed from office
only for cause and only by the affirmative vote of the holders of a majority of
the combined voting power of the then outstanding shares entitled to vote in the
election of directors. For purposes of this Section 6.5, "cause" shall mean the
willful and continuous failure of a director to substantially perform such
director's duties to the Corporation (other than any such failure resulting from
temporary incapacity due to physical or mental illness) or the willful engaging
by a director in gross misconduct materially and demonstrably injurious to the
Corporation.
Section 6.6. Reasonableness of Fees. The Board of Directors
will determine, from time to time but at least annually, that the total fees and
expenses of the Corporation are reasonable in light of the investment experience
of the Corporation, its net assets, its net income, and the fees and expenses of
other comparable persons responsible for directing or performing the day to day
business affairs of similar or comparable entities.
Section 6.7. By-Laws. The power to adopt, alter and/or repeal
the By-Laws of the Corporation is vested exclusively in the Board of Directors.
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Section 6.8. Powers. The enumeration and definition of
particular powers of the Board of Directors included in the foregoing shall in
no way be limited or restricted by reference to or inference from the terms of
any other clause of this or any other Article of these Articles of
Incorporation, or construed as or deemed by inference or otherwise in any manner
to exclude or limit the powers conferred upon the Board of Directors under the
General Corporation Law of Maryland as now or hereafter in force.
ARTICLE VII.
LIABILITY
The liability of the directors and officers of the Corporation
to the Corporation and its stockholders for money damages is hereby limited to
the fullest extent permitted by Section 5-349 of the Courts and Judicial
Proceedings Code of Maryland (or its successor) as such provisions may be
amended from time to time.
ARTICLE VIII.
INDEMNIFICATION
The Corporation hereby, to the fullest extent permitted by
Section 2-418 of the General Corporation Law of Maryland, as the same may be
amended and supplemented, indemnifies any and all directors and officers of the
Corporation from and against any and all of the expenses, liabilities or other
matters referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE IX.
WRITTEN CONSENT OF STOCKHOLDERS
Any corporate action upon which a vote of stockholders is
required or permitted may be taken without a meeting or vote of stockholders
with the unanimous written consent of stockholders.
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ARTICLE X.
AMENDMENT
The Corporation reserves the right to amend, alter or repeal
any provision contained in these Articles of Incorporation upon (i) adoption by
the Board of Directors of a resolution recommending such amendment, alteration,
or repeal, (ii) presentation by the Board of Directors of a resolution at an
annual or special meeting of the stockholders and (iii) approval of such
resolution by the vote of a majority of the shares cast on the resolution at a
duly constituted meeting of shareholders; provided that any amendment to
Article V (or to this proviso) must be adopted pursuant to the provisions of
Section 5.13 of Article V. All rights conferred upon stockholders herein are
subject to this reservation.
ARTICLE XI.
EXISTENCE
The Corporation is to have perpetual existence.
SECOND: The number of directors of the Corporation is five.
The names of the directors are:
Oliver T. Carr, Jr.
Robert O. Carr
Thomas A. Carr
Thomas R. Delatour, Jr.
David Bonderman
The board of directors of the Corporation by a unanimous
consent in writing in lieu of a meeting under Section 2-408 of the Maryland
General Corporation law, dated January 29, 1993, adopted a resolution which set
forth the foregoing amendment to the Articles of Incorporation, declaring that
the said amendment and restatement of the Articles of Incorporation was
advisable and directing that it be submitted for action thereon by the
stockholders by a unanimous consent in writing in lieu of a meeting under
Section 2-505 of the Maryland General Corporation law.
THIRD: Notice of a meeting of stockholders to take action on
the amendment and restatement of the Articles of Incorporation was waived by
all stockholders of the Corporation.
FOURTH: The amendment and restatement of the Articles of
Incorporation of the Corporation as hereinabove set forth was approved by the
unanimous consent in writing of the stockholders on January 29, 1993.
14
IN WITNESS WHEREOF, Carr Realty Corporation has caused these
presents to be signed in its name and on its behalf by its President and
attested by its Secretary on January 29, 1993.
CARR REALTY CORPORATION
By: /s/ Thomas A. Carr
--------------------------
Thomas A. Carr
President
Attest: /s/ Joseph D. Wallace
--------------------------
Joseph D. Wallace
Secretary
15
I, Thomas A. Carr, President of CARR REALTY CORPORATION,
hereby acknowledge the foregoing Articles of Amendment and Restatement of
Articles of Incorporation of Carr Realty Corporation to be the act of Carr
Realty Corporation, and to the best of my knowledge, information and belief,
these matters and facts are true in all material respects, and my statement is
made under penalties for perjury.
/s/ Thomas A. Carr
---------------------------------------
Thomas A. Carr
President of Carr Realty Corporation
16
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
CARR REALTY CORPORATION
Carr Realty Corporation, a Maryland corporation, having its principal
office in Maryland in Baltimore, Maryland (the "Corporation"), and having The
Corporation Trust, Incorporated as its resident agent located at 23 South
Street, Baltimore, Maryland, hereby certifies to the State Department of
Assessment and Taxation of Maryland (the "Department") that:
FIRST: The charter of the Corporation is hereby amended by striking in
its entirety Section 4.1 and by inserting in lieu thereof the following:
"Section 4.1 Shares and Par Value. The total number of shares of all
classes of stock that the Corporation shall have authority to issue is
105,000,000, consisting of 90,000,000 shares of Common Stock having a par
value of one cent ($.01) per share, amounting in the aggregate to par value
of $900,000, and 15,000,000 shares of Preferred Stock having a par value of
one cent ($.01) per share, amounting in the aggregate to par value of
$150,000."
SECOND: The total number of shares of all classes of stock that the
Corporation was heretofore authorized to issue is 35,000,000, consisting of
30,000,000 shares of Common Stock having a par value of one cent ($.01) per
share, amounting in the aggregate to par value of $300,000, and 5,000,000
shares of Preferred Stock having a par value of one cent ($.01) per share,
amounting in the aggregate to par value of $50,000. The shares are not divided
into classes.
THIRD: The charter of the Corporation is hereby amended by striking in
its entirety Article V and by inserting in lieu thereof the following:
"ARTICLE V.
REIT Provisions
Section 5.1. Definitions. The following terms shall have the
following meanings:
(a) "Acquire" shall mean the acquisition of Beneficial Ownership of
shares of Stock by any means including, without limitation, acquisition
pursuant to the exercise of Acquisition Rights or any other option, warrant,
pledge or other security interest or similar right to acquire shares, but
shall not include the acquisition of any such rights unless, as a result,
the acquiror would
be considered a Beneficial Owner (if the acquisition would have been
effective), as defined below. The term "Acquisition" shall have a
correlative meaning.
(b) "Acquisition Rights" shall mean rights to Acquire shares of
Common Stock pursuant to: (i) redemption of Units Acquired upon exercise of
any option issued by Carr Realty, L.P., a Delaware limited partnership, or
Carr Real Estate Services, Inc., a Delaware corporation and outstanding at
the opening of business on the first business day following the closing of
the Initial Public Offering (whether exercisable on that date or not); (ii)
any right to redeem or exchange Units held on the first business day
following the closing of the Initial Public Offering or any right to redeem
or exchange Units that may be Acquired pursuant to a pledge described in the
following clause; or (iii) any pledge of shares of Common Stock or Units
made pursuant to a pledge agreement executed on or before the opening of
business on the first business day following the closing of the Initial
Public Offering (or the redemption or exchange of Units subject to such a
pledge).
(c) "Beneficial Ownership" shall mean ownership of Stock by a Person
who is or would be treated as an owner of such shares of Stock either
directly or indirectly pursuant to Section 542(a)(2) of the Code, taking
into account, for this purpose, constructive ownership determined under
Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code.
The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned"
shall have the correlative meanings.
(d) "Charitable Beneficiary" shall mean one or more beneficiaries of
the Trust as determined pursuant to Section 5.13, each of which shall be an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of
the Code.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Common Stock" shall mean (i) any shares of Stock issued by the
Corporation that are Common Stock under Section 4.1 of these Articles of
Incorporation, and (ii) any shares of Stock that are or were originally
issued to a Special Shareholder by the Corporation pursuant to Article 2 of
the Stock Purchase Agreement.
(g) "Effective Date" shall mean the date on which the Articles of
Amendment to the Corporation's Articles of Incorporation adopting this
amended and restated version of Article V are filed with the Department of
Assessments and Taxation of the State of Maryland.
(h) "Existing Holder" shall mean any of Clark Enterprises, Inc., The
Equitable Life Assurance Society of the United States, Equitable Variable
Life
- 2 -
Insurance Company, FW REIT, L.P., the Oliver Carr Company, Oliver T. Carr,
Jr., or A. James Clark (or any Person who is a Beneficial Owner of shares
of Stock as a result of the actual ownership of shares of Stock by the
Persons identified above) who, at the opening of business on the first
business day following the closing of the Initial Public Offering, was the
Beneficial Owner of, or had an Acquisition Right such that such Person
would be the Beneficial Owner of, Stock in excess of the Ownership Limit if
such Acquisition Right had been exercised and such Person received shares
(whether or not such right is immediately exercisable for shares), so long
as, but only so long as, such Person Beneficially Owns Stock (or
Acquisition Rights such that it has rights to Acquire shares) in excess of
the Ownership Limit.
(i) "Existing Holder Limit" for an Existing Holder who Beneficially
Owns only Common Stock of the Corporation shall mean, initially, (i) the
percentage of the shares of outstanding Common Stock Beneficially Owned by
such Existing Holder at the opening of business on the first business day
following the closing of the Initial Public Offering plus (ii) the
percentage of the shares of Common Stock such Existing Holder would
Beneficially Own upon exercise of all Acquisition Rights (assuming only
shares are received upon redemption of Units) plus (iii) the percentage of
the shares of Common Stock such Existing Holder would Beneficially Own upon
redemption of Units Acquired upon exercise of any options, or upon exercise
of any options for shares of Common Stock, in either case issued pursuant to
an option plan adopted or approved by the Board of Directors of the
Corporation (excluding any such options that fall within the definition of
Acquisition Rights), and after any adjustment pursuant to Section 5.7, shall
mean such percentage of the outstanding shares of Common Stock as so
adjusted; provided, however, that the Existing Holder Limit shall never
exceed 15%. For an Existing Holder who owns shares of any class or series of
Preferred Stock, the Existing Holder Limit with respect to such class or
series of Preferred Stock for such Existing Holder shall be the same
percentage as the Existing Holder Limit for Common Stock for such Existing
Holder. For purposes of determining the Existing Holder Limit, the amount of
shares of Common Stock outstanding at the time of the determination shall be
deemed to include the maximum number of shares that the Existing Holder may
Beneficially Own with respect to Acquisition Rights and options issued
pursuant to an option plan, but shall not include shares that may be
Beneficially Owned solely by other Persons upon exercise of Acquisition
Rights or options. From the date of the Initial Public Offering and prior to
the Restriction Termination Date, the secretary of the Corporation shall
maintain and, upon request, make available to each Existing Holder, a
schedule which sets forth the then current Existing Holder Limits for each
Existing Holder.
(j) "Initial Public Offering" means the sale of shares of Common
Stock pursuant to the Corporation's first effective registration statement
for such Common Stock filed under the Securities Act of 1933, as amended.
- 3 -
(k) "IRS" shall mean the United States Internal Revenue Service.
(l) "Market Price" shall mean, with respect to any class of Stock,
the last reported sales price, regular way, on the NYSE of shares of such
class of Stock on the trading day immediately preceding the relevant date,
or if such class of Stock is not then traded on the NYSE, the last reported
sales price, regular way, of shares of such class of Stock on the trading
day immediately preceding the relevant date as reported on the principal
exchange or quotation system on which such class of Stock may be traded,
provided, however, that if the Board of Directors determines in good faith
that a lower price is appropriate, then the Market Price shall be such lower
price as determined in good faith by the Board of Directors, or if such
class of Stock is not then traded over any exchange or quotation system, the
Market Price shall be the price determined in good faith by the Board of
Directors of the Corporation as the fair market value of shares of such
class of Stock on the relevant date.
(m) "Non-U.S. Person" shall mean a Person other than a U.S. Person.
(n) "NYSE" shall mean the New York Stock Exchange.
(o) "Ownership Limit" shall initially mean (i) with respect to the
Common Stock, 5% of the outstanding shares of Common Stock of the
Corporation; and (ii) with respect to any class or series of Preferred
Stock, 5% of the outstanding shares of such class or series of Preferred
Stock of the Corporation. The Ownership Limit may be increased pursuant to
Section 5.8 to such greater percentage (but not greater than 9.8%) as may be
determined by the Board of Directors.
(p) "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; but does not include an underwriter which
participates in a public offering of the Stock for a period of 90 days
following the purchase by such underwriter of the Stock, provided that the
ownership of Stock by such underwriter would not result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code and
would not otherwise result in the Corporation failing to qualify as a REIT.
(q) "Preferred Stock" shall mean any shares of Stock issued by the
Corporation that are Preferred Stock under Section 4.1 of these Articles of
Incorporation other than shares originally issued to a Special Shareholder
by the Corporation pursuant to Article 2 of the Stock Purchase Agreement.
- 4 -
(r) "Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer which would result in a violation of the limitations
in Section 5.2, the purported owner for whom the Purported Record Transferee
would have acquired or owned shares of Stock if such Transfer had been valid
under Section 5.2.
(s) "Purported Record Transferee" shall mean with respect to any
purported Transfer which would result in a violation of the limitations in
Section 5.2, the record holder of the Stock if such Transfer had been valid
under Section 5.2.
(t) "REIT" shall mean a Real Estate Investment Trust under Section
856 of the Code.
(u) "Restriction Termination Date" shall mean the first day after
the date of the Initial Public Offering on which the Corporation determines
pursuant to Section 5.15 of these Articles of Incorporation that it is no
longer in the best interests of the Corporation to attempt to, or continue
to, qualify as a REIT.
(v) "Special Shareholder" shall mean Security Capital U.S. Realty
S.A., Security Capital Holdings S.A. and any affiliate of either such Person
who shall acquire any shares of Stock either directly pursuant to the Stock
Purchase Agreement or from either such Person (or another affiliate thereof)
in accordance with the provisions of such Stock Purchase Agreement or the
Stockholders Agreement (and any Person who is considered a Beneficial Owner
of shares of Stock as a result of the actual ownership of shares of Stock by
any of the Persons identified above).
(w) "Special Shareholder Limit" shall mean (i) the Special
Shareholders' Percentage of the outstanding shares of Common Stock of the
Corporation and (ii) the Special Shareholders' Percentage of the outstanding
shares of each class or series of Preferred Stock of the Corporation;
provided, however, that if, as the result of any Special Shareholder's
Beneficial Ownership of Common Stock or any class or series of Preferred
Stock of the Corporation, any Person who is an individual within the meaning
of Section 542(a)(2) of the Code (taking into account the ownership
attribution rules under Section 544 of the Code, as modified by Section
856(h) of the Code) and who is the Beneficial Owner of any interest in a
Special Shareholder would be considered to Beneficially Own more than 8.5%
of the outstanding shares of Common Stock or the outstanding shares of any
class or series of Preferred Stock of the Corporation, the Special
Shareholder Limit shall be reduced to such percentage as would result in
such Person not being considered to Beneficially Own more than 8.5% of the
outstanding shares of Common Stock or the outstanding shares of any class or
series of Preferred Stock of the Corporation. Notwithstanding anything
contained herein to the contrary, in no
- 5 -
event shall the Special Shareholder Limit be reduced below the Ownership
Limit.
(x) "Special Shareholders' Percentage" shall mean, through and
including the Stock Purchase Agreement Performance Date, 48%. At the close
of business on the Stock Purchase Agreement Performance Date, on the 25%
Termination Date, and on the last day of each calendar year ending after the
25% Termination Date, the Special Shareholders' Percentage shall be
decreased to equal the lesser of (i) the Special Shareholders' Percentage as
in effect prior to such adjustment (but taking into account all prior
reductions pursuant to hereto), and (ii) a fraction determined as set forth
in the next two sentences below plus three percentage points (except in the
case of the adjustment made on the Stock Purchase Agreement Performance
Date). The numerator of such fraction shall be equal to the lesser of (x)
the number of shares of Common Stock Beneficially Owned by the Special
Shareholders at the close of business on the date on which such adjustment
is to be made, or (y) in the case of adjustments to be made on the last day
of a calendar year, the average number of shares of Common Stock
Beneficially Owned by all of the Special Shareholders at the close of
business on the twenty (20) business days prior to and including such last
day. The denominator of such fraction shall be equal to the actual number of
shares of Common Stock outstanding on the date of such determination. In
addition to, and without limitation on, the foregoing, if the Special
Shareholders' Percentage exceeds 45% (including, without limitation, by
reason of an adjustment provided for in the second to last sentence of
Section 5.7 before or after such Date) on or at any time after giving effect
to the adjustment thereto to be made on the Stock Purchase Agreement
Performance Date, then the Special Shareholders' Percentage shall be reduced
(but not below 45%) as described in the next sentence at any time that
either (i) any Special Shareholder Transfers Beneficial Ownership of shares
of Common Stock (other than to another Special Shareholder) or (ii) the
Corporation issues shares of Common Stock. The percentage to which the
Special Shareholders' Percentage shall be reduced under the immediately
preceding sentence shall be the greater of 45% or a fraction, the numerator
of which is (p) in the case of a Transfer by a Special Shareholder, the
number of shares of Common Stock Beneficially Owned by the Special
Shareholders immediately after such Transfer or (q) in the case of an
issuance of shares of Common Stock by the Corporation, the number of shares
of Common Stock Beneficially Owned by the Special Shareholders immediately
prior to such issuance, and the denominator of which is the actual number of
shares of Common Stock outstanding immediately after such Transfer or
Issuance.
(y) "Stock" shall mean shares of stock of the Corporation that are
either Common Stock or Preferred Stock.
- 6 -
(z) "Stock Purchase Agreement" shall mean that Stock Purchase
Agreement dated as of November 5, 1995, by and among the Corporation,
Security Capital Holdings S.A., and Security Capital U.S. Realty.
(aa) "Stock Purchase Agreement Performance Date" shall mean the
first date on which the "remaining equity commitment" (as defined in the
Stock Purchase Agreement) shall have been reduced to zero and the Company
shall have no continuing right (subject to the limitations set forth in this
Article V and the Stockholders Agreement) to require the Special
Shareholders to purchase shares of Common Stock pursuant to Section 2.5(b)
of the Stock Purchase Agreement.
(bb) "Stockholders Agreement" shall mean that Stockholders Agreement
dated as of April 30, 1996, by and among the Corporation, Carr Realty, L.P.,
Security Capital Holdings S.A., and Security Capital U.S. Realty S.A.
(cc) "Transfer" shall mean any sale, transfer, gift, assignment,
pledge, hypothecation, devise or other disposition of Stock or the right to
vote or receive dividends on Stock (including (i) the granting of any option
or entering into any agreement for the sale, transfer or other disposition
of Stock, or the right to vote or receive dividends on Stock or (ii) the
sale, transfer, assignment or other disposition or grant of any Acquisition
Rights or other securities or rights convertible into or exchangeable for
Stock, or the right to vote or receive dividends on Stock), whether
voluntary or involuntary, whether of record, constructively, or
beneficially, and whether by operation of law or otherwise.
(dd) "Trust" shall mean the trust created pursuant to Section 5.12.
(ee) "Trustee" shall mean the Person unaffiliated with the
Corporation, or the Purported Beneficial Transferee, or the Purported Record
Transferee, that is appointed by the Corporation to serve as trustee of the
Trust.
(ff) "25% Termination Date" shall mean such date as is defined in
the Stockholders Agreement.
(gg) "Units" shall mean Partnership Units as that term is defined in
the Agreement of Limited Partnership of Carr Realty, L.P., a Delaware
limited partnership, as effective on the date of the Initial Public
Offering.
(hh) "U.S. Person" shall mean (a) a citizen or resident of the
United States, (b) a partnership created or organized in the United States
or under the laws of the United States or any state therein (including the
District of Columbia), (c) a corporation created or organized in the United
States or under the laws of the United States or any state therein
(including the District of
- 7 -
Columbia), and (d) any estate or trust (other than a foreign estate or
foreign trust, within the meaning of Section 7701(a)(31) of the Code.
Section 5.2 Restrictions. Except as provided in Section 5.10, during
the period commencing on the date of the Initial Public Offering and prior
to the Restriction Termination Date:
(i) no Person (other than an Existing Holder or a Special
Shareholder) shall Acquire any shares of Stock if, as the result of such
Acquisition, such Person shall Beneficially Own shares of Stock in excess of
the Ownership Limit;
(ii) no Existing Holder shall Acquire any shares of Stock if, as a
result of such Acquisition, such Person shall Beneficially Own shares of
Stock in excess of the Existing Holder Limit for such Existing Holder;
(iii) no Special Shareholder shall Acquire any shares of Stock if,
as a result of such Acquisition, such Person, together with all other
Special Shareholders (but without duplication), shall Beneficially Own
shares of Stock in excess of the Special Shareholder Limit;
(iv) no Person shall Acquire any shares of Stock if, as a result of
such Acquisition, the Stock would be directly or indirectly owned by less
than 100 Persons (determined without reference to the rules of attribution
under Section 544 of the Code);
(v) no Person shall Acquire any shares of Stock if, as a result of
such Acquisition, the Corporation would be "closely held" within the meaning
of Section 856(h) of the Code;
(vi) no Person (other than a Special Shareholder) shall acquire any
shares of Stock after the Effective Date if, as a result of such
Acquisition, the fair market value of the shares of Stock owned directly and
indirectly by Non-U.S. Persons would comprise 50% or more of the fair market
value of the issued and outstanding shares of Stock (determined assuming
that the Special Shareholders are Non-U.S. Persons and own a percentage of
the outstanding Stock of the Company (by value) equal to the Special
Shareholders' Percentage); and
(vii) no Special Shareholder shall Acquire any shares of Stock (i)
prior to the Stock Purchase Agreement Performance Date unless such
Acquisition is pursuant to Sections 2.3, 2.4 or 2.5(b) of the Stock Purchase
Agreement or specifically permitted pursuant to Section 2.5(a) of the Stock
Purchase Agreement and (ii) after the Stock Purchase Agreement Performance
Date if the Special Shareholders' Percentage exceeds 45%.
- 8 -
Section 5.3 Remedies for Breach.
(a) If, notwithstanding the other provisions contained in this
Article V, at any time there is a purported Transfer, Acquisition, change in
the capital structure of the Corporation or other event (including, without
limitation, a change in the relationship between two or more Persons that
causes the application of Section 544 of the Code, as modified by Section
856(h)), that, if effective, would result in the violation of one or more of
the restrictions on ownership and transfer described in Section 5.2, then
(1) in the case of a Transfer or Acquisition, that number of shares of Stock
purported to be Transferred or Acquired that otherwise would cause such
Person to violate Section 5.2 (rounded up to the next whole share) shall be
automatically transferred to a Trust for the benefit of a Charitable
Beneficiary, as described in Section 5.12, effective as of the close of
business on the day immediately prior to the date of such purported Transfer
or Acquisition, and such Person shall acquire no rights in such shares of
Stock; (2) in the case of any event other than a Transfer or Acquisition (a
"Beneficial Ownership Event"), that number of shares of Stock that would be
owned by Persons (the "Affected Persons") as a result of such Beneficial
Ownership Event that otherwise would violate Section 5.2 (rounded up to the
next whole share) shall be automatically transferred to a Trust for the
benefit of a Charitable Beneficiary, as described in Section 5.12, effective
as of the close of business on the day immediately prior to such Beneficial
Ownership Event, and such Affected Persons or Persons shall acquire no
rights (or have no continuing rights) in such shares of Stock; or (3) if the
transfer to the Trust described in either clause (1) or clause (2) hereof
would not be effective for any reason to prevent any Person from
Beneficially Owning Stock in violation of Section 5.2, then the Transfer,
Acquisition, or other Beneficial Ownership Event that would otherwise cause
such Person to violate Section 5.2 shall be void ab initio.
(b) Notwithstanding the other provisions hereof, any Transfer or
Acquisition of shares of Stock that, if effective, would result in the Stock
be ing beneficially owned by less than 100 persons (determined without
reference to any rules of attribution) shall be void ab initio, and the
intended transferee shall acquire no rights in such shares of Stock.
(c) In addition to, and without limitation by, subparagraphs (a) and
(b) above, if the Board of Directors or its designees shall at any time
determine in good faith that a Transfer, Acquisition or other event has
taken place in violation of Section 5.2 or that a Person intends to Acquire,
has attempted to Acquire, or may Acquire direct ownership, beneficial
ownership (determined without reference to any rules of attribution) or
Beneficial Ownership of any Stock in violation of Section 5.2, the Board of
Directors or its designees shall take such action as it deems advisable to
refuse to give effect to or to prevent such Transfer or other event,
including, but not limited to, causing the
- 9 -
Corporation to refuse to give effect to such Transfer or other event on the
books of the Corporation or instituting proceedings to enjoin such Transfer
or other event; provided, however, that any Transfer or Acquisition (or, in
the case of events other than a Transfer or Acquisition, ownership or
Beneficial Ownership) in violation of Section 5.2 shall automatically
result in the transfer to the Trust described in Section 5.12, irrespective
of any action (or non-action) by the Board of Directors.
(d) Nothing contained in this Section 5.3 shall limit the authority
of the Board of Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its stockholders
by preservation of the Corporation's status as a REIT.
Section 5.4. Notice of Restricted Transfer. Any Person who acquires
or attempts or intends to acquire shares of Stock in violation of Section
5.2 shall immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of such
Transfer or attempted or intended Transfer on the Corporation's status as a
REIT.
Section 5.5. Owners Required To Provide Information. From the date
of the Initial Public Offering and prior to the Restriction Termination
Date:
(a) every stockholder of record of more than 5% (or such lower
percentage as required by the Code or regulations promulgated thereunder) of
the outstanding Stock of the Corporation shall, within 30 days after
December 31 of each year, give written notice to the Corporation stating the
name and address of such record stockholder, the number of shares
Beneficially Owned by it, and a description of how such shares are held;
provided that a shareholder of record who holds outstanding Stock of the
Corporation as nominee for another person, which other person is required to
include in gross income the dividends received on such Stock (an "Actual
Owner"), shall give written notice to the Corporation stating the name and
address of such Actual Owner and the number of shares of such Actual Owner
with respect to which the stockholder of record is nominee.
(b) every Actual Owner of more than 5% (or such lower percentage as
required by the Code or regulations promulgated thereunder) of the
outstanding Stock of the Corporation who is not a stockholder of record of
the Corporation, shall within 30 days after December 31 of each year, give
written notice to the Corporation stating the name and address of such
Actual Owner, the number of shares Beneficially Owned, and a description of
how such shares are held.
(c) each person who is a Beneficial Owner of Stock and each Person
(including the stockholder of record) who is holding Stock for a Beneficial
- 10 -
Owner shall provide to the Corporation such information as the Corporation
may request, in good faith, in order to determine the Corporation's status
as a REIT.
Section 5.6. Ambiguity. In the case of an ambiguity in the
application of any of the provisions of this Article V, including any
definition contained in Section 5.1, the Board of Directors shall have the
power to determine the application of the provisions of this Article V with
respect to any situation based on the facts known to it.
Section 5.7. Modification of Existing Holder and Special Shareholder
Limits. Subject to Section 5.9(c), the Existing Holder Limit with respect to
an Existing Holder shall be reduced at any time that either (i) such
Existing Holder transfers shares of Common Stock or Acquisition Rights or
(ii) the Corporation issues shares of Stock, in either case by reducing the
percentages calculated pursuant to the definition of Existing Holder Limit
to the percentages in effect immediately after such Transfer or issuance.
The Existing Holder Limit and the Special Shareholder Limit each shall be
increased at any time that the Corporation redeems or otherwise purchases
shares of Stock by increasing the percentages calculated pursuant to the
definition of Existing Holder Limit and Special Shareholder Limit to the
percentages in effect immediately after such redemption or other purchase
(but the Special Shareholders' Percentage shall thereafter be subject to
reduction as and when provided for in the last two sentences of the
definition of "Special Shareholders' Percentage" set forth in Section 5.1
above). Each Existing Holder shall give the Board of Directors written
notice of any Transfer of shares within 10 business days thereafter.
Section 5.8. Modification of Ownership Limit. Subject to the
limitations provided in Section 5.9, the Board of Directors may from time to
time increase the Ownership Limit.
Section 5.9. Limitations on Modifications.
(a) The Ownership Limit may not be increased if, after giving effect
to such increase, five Persons who are considered individuals pursuant to
Section 542(a)(2) of the Code (taking into account all of the then Existing
Holders, Special Shareholders, and all Acquisition Rights) could
Beneficially Own, in the aggregate, more than 49.5% of the value of the
outstanding Stock.
(b) Prior to the modification of the Ownership Limit pursuant to
Section 5.8, the Board of Directors of the Corporation may require such
opinions of counsel, affidavits, undertakings or agreements as it may deem
necessary or advisable in order to determine or ensure the Corporation's
status as a REIT.
- 11 -
(c) No Existing Holder Limit shall be reduced to a percentage which
is less than the Ownership Limit with respect to shares of Common Stock.
(d) The Ownership Limit, with respect to shares of Common Stock and
with respect to shares of any class or series of Preferred Stock, may not be
increased to a percentage which is greater than 9.8 percent.
Section 5.10. Exception. The Board of Directors, in its sole
discretion, may exempt a Person (the "Exempted Holder") from the Ownership
Limit, the Existing Holder Limit, or the Special Shareholder Limit, as the
case may be, with respect to Stock to be Acquired or Beneficially Owned by
such Person (A) if the Person is not an individual for purposes of Section
542(a)(2) of the Code and the Board of Directors obtains such
representations and undertakings from such Person as it determines are
reasonably necessary to ascertain that no individual's Beneficial Ownership
of such shares of Stock will violate the Ownership Limit, the Existing
Holder Limit, or the Special Shareholder Limit as the case may be, and (B)
if such Person agrees that any violation of such representations or
undertaking (or other action that is contrary to the restrictions set forth
in Section 5.2) or attempted violation will result in such Stock being
automatically transferred to the Trust as described in Section 5.12. Prior
to granting any exception pursuant to this Section 5.10, the Board of
Directors may require a ruling from the IRS, or an opinion of counsel, in
either case in form and substance satisfactory to the Board of Directors in
its sole discretion, as it may deem necessary or advisable in order to
determine or ensure the Corporation's status as a REIT. Notwithstanding
the receipt of any ruling or opinion, the Board of Directors may impose
such conditions or restrictions as it deems appropriate in connection with
granting such exception.
Section 5.11. Legend. Each certificate for Stock shall bear the
following legend:
"No Person (1) may Beneficially Own shares of Common Stock
in excess of 5 percent (or such greater percentage as may be
determined by the Board of Directors of the Corporation) of the
outstanding Common Stock of the Corporation (unless such Person is
an Existing Holder or a Special Shareholder), (2) may Beneficially
Own shares of any class or series of Preferred Stock in excess of 5
percent (or such greater percentage as may be determined by the
Board of Directors of the Corporation) of the outstanding shares of
such class or series of Preferred Stock of the Corporation (unless
such Person is an Existing Holder or Special Shareholder), (3)
Beneficially Own Stock that would result in the Corporation's being
"closely held" (within the meaning of Section 856(h) of the Code)
or Acquire Stock that would result in the Corporation having less
than 100 shareholders (as determined for purposes of Section
856(a)(5) of the Code), or (4) unless such
- 12 -
Person is a Special Shareholder, Acquire shares of Stock if, as a
result of such Acquisition, the Corporation would fail to qualify
as a "domestically controlled REIT" (within the meaning of Section
897(h)(4) of the Code) (determined assuming that the Special
Shareholders are Non-U.S. Persons and own a percentage (by value)
of the Company's stock corresponding to the Special Shareholders'
Percentage). Separate restrictions set forth in Article V of the
Articles of Incorporation apply to Existing Holders and Special
Shareholders. Any Person who attempts to Beneficially Own shares
of Stock in excess of the above limitations must immediately notify
the Corporation. If any of the restrictions on transfer or
ownership set forth in Article V of the Articles of Incorporation
are violated, the Stock represented hereby will be automatically
transferred to the Trustee of a Trust for the benefit of a
Charitable Beneficiary pursuant to the terms of Article V of the
Articles of Incorporation. In addition, attempted transfers of
Stock in violation of the limitations described above (as modified
or expanded upon in Article V of the Corporation's Articles of
Incorporation), may be void ab initio. A Person who attempts to
Beneficially Own shares of Stock in violation of the ownership
limitations set forth in Section 5.2 of the Articles of
Incorporation shall have no claim, cause of action, or any other
recourse whatsoever against a transferor of such shares. All
capitalized terms in this legend have the meanings defined in the
Corporation's Articles of Incorporation, a copy of which, including
the restrictions on transfer, will be sent without charge to each
stockholder who so requests.
Section 5.12. Transfer of Stock in Trust.
(a) Ownership in Trust; Status of Shares Held in Trust. Upon any
purported Transfer (whether or not such Transfer is the result of a
transaction engaged in through the facilities of the NYSE), Acquisition or
other event that results in the transfer of Stock to a Trust pursuant to
Section 5.3, such shares of Stock shall be deemed to have been transferred
to the Trustee in its capacity as Trustee for the exclusive benefit of one
or more Charitable Beneficiaries. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with the Corporation, any
Purported Beneficial Transferee or Purported Record Transferee. Each
Charitable Beneficiary shall be designated by the Corporation as provided in
Section 5.13. Shares of Stock so held in Trust shall be issued and
outstanding stock of the Corporation. The Purported Beneficial Transferee or
Purported Record Transferee shall not benefit economically from ownership of
any shares of Stock held in Trust by the Trustee, shall have no rights to
dividends paid with respect to such shares, and shall not possess any rights
to vote or other rights attributable to the shares
- 13 -
held in Trust. The Purported Record Transferee and the Purported
Beneficial Transferee of shares of Stock in violation of Section 5.2 shall
have no claim, cause of action, or any other recourse whatsoever against
the purported transferor of such shares.
(b) Dividend Rights. The Trustee shall have all rights to dividends
with respect to shares of Stock held in the Trust, which rights shall be
exercised for the exclusive benefit of the Charitable Beneficiary. Any
dividend or distribution paid prior to the discovery by the Corporation that
the shares of Stock have been transferred to the Trustee with respect to
such shares shall be paid over to the Trustee by the recipient thereof upon
demand, and any dividend declared but unpaid shall be paid when due to the
Trustee. Any dividends or distributions so paid over to the Trustee shall be
held in trust for the Charitable Beneficiary.
(c) Rights upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of or any distribution of
the assets of the Corporation, the Trustee shall be entitled to receive,
ratably with each other holder of Stock of the class of Stock that is held
in the Trust, that portion of the assets of the Corporation available for
distribution to the holders of such class (determined based upon the ratio
that the number of shares of such class of Stock held by the Trustee bears
to the total number of shares of such class of Stock then outstanding ). The
Trustee shall distribute any such assets received in respect of the Stock
held in the Trust in any liquidation, dissolution or winding up of, or
distribution of the assets of the Corporation in accordance with Section
5.12(d) below.
(d) Sale of Shares by Trustee. Within twenty days of receiving
notice from the Corporation that shares of Stock have been transferred to
the Trust, the Trustee of the Trust shall sell the shares held in Trust to a
Person, designated by the Trustee, whose ownership of the shares of Stock
held in the Trust would not violate the ownership limitations set forth in
Section 5.2. Upon such sale, the interest of the Charitable Beneficiary in
the shares sold shall terminate and the Trustee shall distribute the net
proceeds of the sale to the Purported Record Transferee and to the
Charitable Beneficiary as provided in this Section 5.12. The Purported
Record Transferee shall receive the lesser of (1) (x) the price per share
such Purported Record Transferee paid for the Stock in the purported
Transfer that resulted in the transfer of shares of Stock to the Trust, or
(y) if the Transfer or other event that resulted in the transfer of shares
of Stock to the Trust was not a transaction in which the Purported Record
Transferee gave full value for such shares of Stock, a price per share equal
to the Market Price on the date of the purported Transfer or other event
that resulted in the transfer of such shares of Stock to the Trust and (2)
the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any net sales proceeds in
excess of the amount payable to the Purported Record Transferee shall be
immediately paid to the Charitable
- 14 -
Beneficiary. If, prior to the discovery by the Corporation that shares of
Stock have been transferred to the Trustee, such shares are sold by the
Purported Record Transferee, then (i) such shares shall be deemed to have
been sold on behalf of the Trust and (ii) to the extent that the Purported
Record Transferee received an amount for such shares that exceeds the
amount such Purported Record Transferee was entitled to receive pursuant to
this subparagraph (d), such excess shall be paid to the Trustee upon
demand. The Trustee shall have the right and power (but not the
obligation) to offer any share of Stock held in the Trust for sale to the
Corporation on such terms and conditions as the Trustee shall determine
appropriate.
(e) Voting and Notice Rights. The Trustee shall have all voting
rights and rights to receive any notice of any meetings, which rights shall
be exercised for the exclusive benefit of the Charitable Beneficiary. The
Purported Record Transferee shall have no voting rights with respect to
shares held in Trust.
Section 5.13. Designation of Charitable Beneficiary. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
such that (i) the shares of Stock held in the Trust would not violate the
restrictions set forth in Section 5.2 in the hands of such Charitable
Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
Section 5.14. Settlement. Nothing in this Article V shall preclude
the settlement of any transaction entered into through the facilities of the
NYSE (but the fact that settlement of a transaction is permitted shall not
negate the effect of any other provision of this Article V and all of the
provisions of this Article V shall apply to the purported transferee of the
shares of Stock in such transaction).
Section 5.15. Termination of REIT Status. The Board of Directors
shall take no action to terminate the Corporation's status as a REIT or to
amend the provisions of this Article V until such time as (i) the Board of
Directors adopts a resolution recommending that the Corporation terminate
its status as a REIT or amend this Article V, as the case may be, (ii) the
Board of Directors presents the resolution at an annual or special meeting
of the stockholders and (iii) such resolution is approved by holders of a
majority of the voting power of the issued and outstanding shares of Stock.
Section 5.16. Severability. If any provision of this Article or any
application of any such provision is determined to be invalid by any Federal
or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be
- 15 -
affected only to the extent necessary to comply with the determination
of such court."
FOURTH: The board of directors of the Corporation on November 3, 1995 duly
approved the foregoing amendments to the charter of the Corporation, subject
to, among other things, the approval thereof by the stockholders of the
Corporation.
FIFTH: Notice of a special meeting of stockholders of the Corporation
to take action on certain proposals, including the foregoing amendments given
to each stockholder entitled to vote on the foregoing amendments.
SEVENTH: The stockholders of the Corporation on February 26, 1996 duly
approved the foregoing amendments to the charter of the Corporation at a
special meeting of the stockholders of the Corporation.
IN WITNESS WHEREOF, Carr Realty Corporation has caused these presents
to be signed in its name and on its behalf by its Chief Financial Officer and
attested by its Assistant Secretary on April 29, 1996. The undersigned hereby
certifies, under penalties of perjury, that to the best of his knowledge,
information and belief the matters and facts set forth herein are true and
correct in all material respects.
CARR REALTY CORPORATION
By: /s/ BRIAN K. FIELDS
-----------------------------
Brian K. Fields
Chief Financial Officer
Attest: /s/ DEBRA A. VOLPICELLI
---------------------------
Debra A. Volpicelli
Assistant Secretary
- 16 -
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
CARR REALTY CORPORATION
Carr Realty Corporation, a Maryland corporation, having its principal
office in Maryland in Baltimore, Maryland (the "Corporation"), and having The
Corporation Trust, Incorporated as its resident agent located at 23 South
Street, Baltimore, Maryland, hereby certifies to the State Department of
Assessment and Taxation of Maryland (the "Department") that:
FIRST: The charter of the Corporation is hereby amended by striking in
its entirety Article I and by inserting in lieu thereof the following:
"ARTICLE I.
Name
The name of the Corporation (the "Corporation") is:
CarrAmerica Realty Corporation."
SECOND: The board of directors of the Corporation on November 3, 1995
duly approved the foregoing amendment to the charter of the Corporation,
subject to, among other things, the approval thereof by the stockholders of the
Corporation.
THIRD: The stockholders of the Corporation on February 26, 1996 duly
approved the foregoing amendment to the charter of the Corporation at a special
meeting of the stockholders of the Corporation.
IN WITNESS WHEREOF, Carr Realty Corporation has caused these presents to
be signed in its name and on its behalf by its Chief Financial Officer and
attested by its Assistant Secretary on April 30, 1996. The undersigned hereby
certifies, under penalties of perjury, that to the best of his knowledge,
information and belief the matters and facts set forth herein are true and
correct in all material respects.
CARR REALTY CORPORATION
By: /s/ BRIAN K. FIELDS
--------------------------
Brian K. Fields
Chief Financial Officer
Attest: /s/ DEBRA A. VOLPICELLI
------------------------------
Debra A. Volpicelli
Assistant Secretary
ARTICLES SUPPLEMENTARY OF
SERIES A CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
CARRAMERICA REALTY CORPORATION
Pursuant to Section 2-208(b) of the
General Corporation Law of Maryland
CarrAmerica Realty Corporation, a Maryland corporation (the "Corporation"),
hereby certifies that, pursuant to the authority conferred upon the Board of
Directors of the Corporation by Section 4.4 of the Charter and in accordance
with Section 2-208(b) of the General Corporation Law of Maryland, the Board of
Directors on October 10, 1996 duly classified unissued shares of Preferred Stock
of the Corporation, and the description of the Preferred Stock, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption thereof, as set by the Board of Directors, are as follows:
Section 1. Number of Shares and Designation. This class of Preferred Stock
shall be designated as Series A Cumulative Convertible Redeemable Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock"). The number of
shares of preferred stock constituting the Series A Preferred Stock is
1,740,000.
Section 2. Definitions. The following terms shall have the following
meanings herein:
a. "Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by the Board of Directors to perform any
of its responsibilities with respect to the Series A Preferred Stock.
b. "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 City, New
York are not required to be open.
c. "Call Date" shall have the meaning set forth in Section 6(b).
d. "Charter" means the Articles of Amendment and Restatement of Articles of
Incorporation of the Corporation, as amended to the date hereof and as the same
may be amended hereafter from time to time.
e. "Code" shall have the meaning set forth in Section 12.
f. "Common Stock" shall mean the common stock of the Corporation, par value
$.01 per share.
g. "Constituent Person" shall have the meaning set forth in Section 5(e).
h. "Conversion Price" shall mean the conversion price per share of Common
Stock for which the shares of Series A Preferred Stock are convertible, as such
Conversion Price may be adjusted pursuant to Section 5. The initial conversion
price shall be $25.00 (equivalent to a conversion rate of one share of Common
Stock for each share of Series A Preferred Stock).
i. "Current Market Price" of publicly traded shares of Common Stock or any
other class of capital stock 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 New York Stock Exchange ("NYSE") or, if such security is not
listed or admitted for trading on the NYSE, 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
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or, if such security is not quoted on
such National Market System, 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
NYSE member firm regularly making a market in such security selected for such
purpose by the Board of Directors.
j. "Dividend Payment Date" shall mean the last calendar day (or, if such
day is not a Business Day, the next Business Day thereafter) of each February,
May, August, and November, commencing on November 30, 1996.
k. "Dividend Periods" shall mean quarterly dividend periods commencing on
March 1, June 1, September 1 and December 1 of each year and ending on and
including the day of the next succeeding Dividend Payment Date (other than the
initial Dividend Payment Date, which shall commence on the Issue Date, and other
than the Dividend Period during which any shares of Series A Preferred Stock
shall be redeemed pursuant to Section 6, which shall end on and include the Call
Date with respect to the shares of Series A Preferred Stock being redeemed).
l. "Exempted Person" shall have the meaning set forth in Section 12.
m. "Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Common Stock during the five (5) consecutive Trading Days
selected by the Corporation commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and the
-2-
day before the "ex date" with respect to the issuance or distribution requiring
such computation. The term "ex date," with respect to any issuance or
distribution, means the first day on which shares of the Common Stock trade,
regular way, without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that day's
Current Market Price.
n. "Fully Junior Stock" shall mean the Common Stock and any other class or
series of shares of capital stock of the Corporation now or hereafter issued and
outstanding over which the Series A Preferred Stock has preference or priority
in both (i) the payment of dividends and (ii) the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
o. "Issue Date" shall mean the first date on which shares of the Series A
Preferred Stock are issued and sold.
p. "Junior Stock" shall mean the Common Stock and any other class or series
of shares of capital stock of the Corporation now or hereafter issued and
outstanding over which the Series A Preferred Stock has preference or priority
in the payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
q. "Non-Electing Share" shall have the meaning set forth in Section 5(e).
r. "Parity Stock" shall have the meaning set forth in Section 8(b).
s. "Person" shall mean any individual, firm, partnership, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
t. "Preferred Stock" shall mean the preferred stock of the Corporation, par
value $.01 per share.
u. "Securities" and "Security" shall have the meanings set forth in Section
5(d)(iii).
v. "Series A Preferred Stock" shall have the meaning set forth in Section
1.
w. "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 dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of shares of capital
stock of the Corporation; provided, however, that if any funds for any class or
series of Junior Stock or Fully Junior Stock or any class or series of shares of
capital stock
-3-
ranking on a parity with the Series A Preferred Stock as to the payment of
dividends are placed in a 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 A Preferred Stock shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
x."Trading Day" shall mean any day on which the securities in question are
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, 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 National Market System of NASDAQ, or if
such securities are not quoted on such National Market System, in the applicable
securities market in which the securities are traded.
y. "Transaction" shall have the meaning set forth in Section 5(e).
z. "Transfer Agent" means Boston EquiServe, Boston, Massachusetts, or such
other agent or agents of the Corporation as may be designated by the Board of
Directors or their designee as the transfer agent, registrar and dividend
disbursing agent for the Series A Preferred Stock.
Section 3.Dividends.
(a) The holders of Series A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for that purpose, dividends payable in cash in an amount per share
equal to the greater of (i) $1.75 per annum or (ii) the cash dividends
(determined on each Dividend Payment Date) paid on the shares of Common Stock,
or portion thereof, into which a share of Series A Preferred Stock is
convertible. The dividends referred to in clause (ii) of the immediately
preceding sentence shall equal the number of shares of Common Stock, or portion
thereof, into which a share of Series A Preferred Stock is convertible,
multiplied by the most current quarterly dividend paid on a share of Common
Stock on or before the applicable Dividend Payment Date. Such dividends shall
begin to accrue and shall be fully cumulative from the Issue Date, whether or
not in any Dividend Period or Periods there shall be funds of the Corporation
legally available for the payment of such dividends, and shall be payable
quarterly, when, as and if declared by the Board of Directors, in arrears on
Dividend Payment Dates, commencing on the first Dividend Payment Date after the
Issue Date. Such dividends shall be payable in arrears to the holders of record
of Series A Preferred Stock, as they appear on the stock records of the
Corporation at the close of business on the record date, not more than 50 days
-4-
preceding the relevant Dividend Payment Date, as shall be fixed by the Board of
Directors. Accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time and for such interim periods, without reference to
any regular Dividend Payment Date, to holders of record on such date, not
exceeding 50 days preceding the payment date thereof, as may be fixed by the
Board of Directors. Any dividend payment made on the Series A Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to the Series A Preferred Stock which remains payable.
(b) The amount of dividends referred to in clause (i) of Section 3(a)
payable for each full Dividend Period for the Series A Preferred Stock shall be
computed by dividing the annual dividend rate by four. The initial Dividend
Period will include a partial dividend for the period from the Issue Date until
November 30, 1996. The amount of dividends payable for the initial Dividend
Period, or any other period shorter or longer than a full Dividend Period, on
the Series A Preferred Stock shall be computed on the basis of the actual number
of days in such Dividend Period. Holders of Series A Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or shares of
stock, in excess of cumulative dividends, as herein provided, on the Series A
Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series A Preferred
Stock that may be in arrears.
(c) So long as any shares of Series A Preferred Stock are outstanding, no
dividends, except as described in the immediately following sentence, shall be
declared or paid or set apart for payment on any class or series of Parity Stock
for any period unless full cumulative dividends have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Series A Preferred Stock for all Dividend
Periods terminating on or prior to the dividend payment date for such class or
series of Parity Stock. When dividends are not paid in full or a sum sufficient
for such payment is not set apart, as aforesaid, all dividends declared upon
Series A Preferred Stock and all dividends declared upon any other class or
series of Parity Stock shall be declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the Series A Preferred Stock and
accumulated and unpaid on such Parity Stock.
(d) So long as any shares of Series A Preferred Stock are outstanding, no
dividends (other than dividends or distributions paid solely in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Fully Junior
Stock) shall be declared or paid or set apart for payment or other distribution
declared or made upon Junior Stock or Fully Junior Stock, nor shall any Junior
Stock or Fully Junior Stock be redeemed, purchased or otherwise acquired (other
than a redemption, purchase or other acquisition of shares of Common Stock made
for purposes of any employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any such shares) by the Corporation,
directly or indirectly (except by conversion into or exchange for shares of
Fully Junior Stock), unless in each case (i) the full cumulative dividends on
all outstanding shares of Series A Preferred Stock and any other Parity Stock of
the
-5-
Corporation shall have been or contemporaneously are declared and paid or
declared and set apart for payment for all past Dividend Periods with respect to
the Series A Preferred Stock and all past dividend periods with respect to such
Parity Stock and (ii) sufficient funds shall have been or contemporaneously are
declared and paid or declared and set apart for the payment of the dividend for
the current Dividend Period with respect to the Series A Preferred Stock and the
current dividend period with respect to such Parity Stock.
(e) No distributions on Series A Preferred Stock shall be declared by the
Board of Directors or paid or set apart for payment by the Corporation at such
time as the terms and provisions of any agreement of the Corporation, including
any agreement relating to its indebtedness, prohibits such declaration, payment
or setting apart for payment or provides that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted or prohibited
by law.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Junior Stock, the holders of the
Series A Preferred Stock shall be entitled to receive $25.00 per share of Series
A Preferred Stock plus an amount equal to all dividends (whether or not earned
or declared) accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
Series A Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of the Series A Preferred Stock and any such other
Parity Stock ratably in accordance with the respective amounts that would be
payable on such Series A Preferred Stock and any such other Parity Stock if all
amounts payable thereon were paid in full. For the purposes of this Section 4,
(i) a consolidation or merger of the Corporation with one or more corporations,
real estate investment trusts, or other entities, (ii) a sale, lease or transfer
of all or substantially all of the Corporation's assets, or (iii) a statutory
share exchange shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of shares of any series or class
or classes of capital stock ranking on a parity with or prior to the Series A
Preferred Stock upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Corporation, after payment shall
have been made in full to the holders of the Series A Preferred Stock, as
provided in this Section 4,
-6-
any other series or class or classes of Junior Stock or Fully Junior Stock
shall, subject to the respective terms and provisions (if any) applying thereto,
be entitled to receive any and all assets remaining to be paid or distributed,
and the holders of the Series A Preferred Stock shall not be entitled to share
therein.
Section 5. Conversion. Holders of Series A Preferred Stock shall have the
right to convert all or a portion of such shares into shares of Common Stock, as
follows:
(a) The Series A Preferred Stock shall not be convertible by the holders
thereof prior to the date that is six (6) months following the Issue Date. On
and after the date that is six (6) months following the Issue Date and subject
to and upon compliance with the provisions of this Section 5, a holder of Series
A Preferred Stock shall have the right, at his or her option, at any time to
convert such shares into the number of fully paid and non- assessable 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 Section 5(b)) by surrendering such shares
to be converted, such surrender to be made in the manner provided in Section
5(b); provided, however, that the right to convert shares called for redemption
pursuant to Section 6 shall terminate at the close of business on the fifth
Business Day prior to the Call Date fixed for such redemption, unless the
Corporation shall default in making payment of the cash payable upon such
redemption under Section 6.
(b) In order to exercise the conversion right, the holder of each share of
Series A Preferred Stock to be converted shall surrender the certificate
representing such share, 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 convert such shares of Series A
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 A Preferred Stock is
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 attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation demonstrating t hat such taxes have been paid).
Holders of Series A Preferred Stock at the close of business on a dividend
payment record date shall be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date notwithstanding the conversion
thereof following such dividend payment record date and prior to such Dividend
Payment Date. However, Series A Preferred Stock surrendered for conversion
during the period between the close of business on any dividend payment record
date and the opening of business on the corresponding Dividend Payment Date
(except shares converted after the issuance of notice of redemption
-7-
with respect to a Call Date during such period, such shares of Series A
Preferred Stock being entitled to such dividend on the Dividend Payment Date)
must be accompanied by payment of an amount equal to the dividend payable on
such shares on such Dividend Payment Date. A holder of shares of Series A
Preferred Stock on a dividend payment record date who (or whose transferee)
tenders any such shares for conversion into shares of Common Stock on the
corresponding Dividend Payment Date will receive the dividend payable by the
Corporation on such shares of Series A Preferred Stock on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of such shares of Series A Preferred Stock for conversion. Except as
provided above, the Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the shares of Common Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for shares
of Series A Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her 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 5, and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in Section 5(c).
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of Series
A Preferred Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend 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 shares of 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 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 deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such share transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation
(c) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of the Series A 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 A 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 shall be
surrendered for conversion
-8-
at one time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Series A Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall after the Issue Date (A) pay a dividend
or make a distribution on its shares of stock, in either case, in shares of
Common Stock, (B) subdivide its outstanding shares of Common Stock into a
greater number of shares, (C) combine its outstanding shares of Common
Stock into a smaller number of shares or (D) issue any stock by
reclassification of its shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the date fixed for
the determination of shareholders entitled to receive such dividend or
distribution or at the opening of business on the Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any shares of Series A Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of
shares of Common Stock that such holder would have owned or have been
entitled to receive after the happening of any of the events described
above as if such shares of Series A Preferred Stock had been converted
immediately prior to the record date in the case of a dividend or
distribution or the effective date in the case of a subdivision,
combination or reclassification. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after the opening of
business on the Business Day next following the record date (except as
provided in Section 5(h)) in the case of a dividend or distribution and
shall become effective immediately after the opening of business on the
Business Day next following the effective date in the case of a
subdivision, combination or reclass ification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less than 94%
(100% if a stand-by underwriter is used and charges the Corporation a
commission) of the Fair Market Value per share of Common Stock on the
record date for the determination of shareholders entitled to receive such
rights, options or warrants, then the Conversion Price in effect at the
opening of business on the Business Day next following such record date
shall be adjusted to equal the price determined by multiplying (I) the
Conversion Price in effect immediately prior to the opening of business on
the Business Day next following the date fixed for such determination by
(II) a fraction, the numerator of which shall be the sum of (A) the number
of shares of Common
-9-
Stock outstanding on the close of business on the date fixed for such
determination and (B) the number of shares that the aggregate proceeds to
the Corporation from the exercise of such rights, options or warrants for
shares of Common Stock would purchase at 94% of such Fair Market Value (or
100% in the case of a stand-by underwriting), and the denominator of which
shall be the sum of (A) the number of shares of Common Stock outstanding on
the close of business on the date fixed for such determination and (B) the
number of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights, options or warrants. Such adjustment
shall become effective immediately after the opening of business on the day
next following such record date (except as provided in Section 5(h)). In
determining whether any rights, options or warrants entitle the holders of
Common Stock to subscribe for or purchase Common Stock at less than 94% of
such Fair Market Value (or 100% in the case of a stand-by underwriting),
there shall be taken into account any consideration received by the
Corporation upon issuance and upon exercise of such rights, options or
warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors.
(iii) If the Corporation shall distribute to all holders of its Common
Stock any stock of the Corporation (other than Common Stock) or evidence of
its indebtedness or assets (excluding cumulative cash dividends or
distributions paid with respect to the Common Stock after December 31, 1995
which are not in excess of the following: the sum of (A) the Corporation's
cumulative undistributed funds from operations at December 31, 1995, plus
(B) the cumulative amount of funds from operations, as determined by the
Board of Directors, after December 31, 1995, minus (C) the cumulative
amount of dividends accrued or paid in respect of the Series A Preferred
Stock or any other class or series of Preferred Stock of the Corporation
after the Issue Date) or rights, options or warrants to subscribe for or
purchase any of its securities (excluding those rights, options and
warrants issued to all holders of Common Stock entitling them for a period
expiring within 45 days after the record date referred to in subparagraph
(ii) above to subscribe for or purchase shares of Common Stock, which
rights, options and warrants are referred to in and treated under
subparagraph (ii) above) (any of the foregoing being hereinafter in this
subparagraph (iii) collectively called the "Securities" and individually a
"Security"), then in each such case the Conversion Price shall be adjusted
so that it shall equal the price determined by multiplying (I) the
Conversion Price in effect immediately prior to the close of business on
the date fixed for the determination of shareholders entitled to receive
such distribution by (II) a fraction, the numerator of which shall be the
Fair Market Value per share of Common Stock on the record date mentioned
below less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive), of the portion of the
stock or assets or evidences of indebtedness so distributed or of such
rights,
-10-
options or warrants applicable to one share of Common Stock, and the
denominator of which shall be the Fair Market Value per share of Common
Stock on the record date mentioned below. Such adjustment shall become
effective immediately at the opening of business on the Business Day next
following (except as provided in paragraph (h) below) the record date for
the determination of shareholders entitled to receive such distribution.
For the purposes of this clause (iii), the distribution of a Security,
which is distributed not only to the holders of the Common Stock on the
date fixed for the determination of shareholders entitled to such
distribution of such Security, but also is distributed with each share of
Common Stock delivered to a Person converting a share of Series A Preferred
Stock after such determination date, shall not require an adjustment of the
Conversion Price pursuant to this clause (iii); provided, that on the date,
if any, on which a Person converting a share of Series A Preferred Stock
would no longer be entitled to receive such Security with a share of Common
Stock (other than as a result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have occurred and the
Conversion Price shall be adjusted as provided in this clause (iii) (and
such day shall be deemed to be "the date fixed for the determination of the
shareholders entitled to receive such distribution" and "the record date"
within the meaning of th e two preceding sentences).
(iv) 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 subparagraph (iv) 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 5 (other than this
subparagraph (iv)) 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 Section 5, the
Corporation shall not be required to make any adjustment of the Conversion
Price for the issuance of any shares of Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional
amounts in Common Stock under such plan. All calculations under this
Section 5 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. Anything in this Section 5(d) to the
contrary notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in
addition to those required by this Section 5(d), as it in its discretion
shall determine to be advisable in order that any share dividends,
subdivision of shares, reclassification or combination of shares,
distribution of rights or warrants to purchase stock or
-11-
securities, or a distribution of other assets (other than cash dividends)
hereafter made by the Corporation to its shareholders shall not be taxable.
(e) 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 shares of Common Stock, sale of all or
substantially all of the Corporation's assets or recapitalization of the Common
Stock and excluding any transaction as to which Section 5(d)(i) applies) (each
of the foregoing being referred to herein as a "Transaction"), in each case as a
result of which all or substantially all shares of Common Stock are converted
into the right to receive stock, securities or other property (including cash or
any combination thereof), each share of Series A Preferred Stock which is not
redeemed or converted into the right to receive stock, securities or other
property prior to such Transaction shall thereafter be convertible into the kind
and amount of shares of 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 shares of Common Stock into which one share of Series
A Preferred Stock was convertible immediately prior to such Transaction,
assuming such holder of shares of Common Stock (i) 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 ("Constituent Person"), or an affiliate of a Constituent Person and
(ii) failed to exercise his rights of election, if any, as to the kind or amount
of stock, securities and other property (including cash) receivable upon such
Transaction (provided that if the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction is not the same for
each share of Common Stock held immediately prior to such Transaction by other
than a Constituent Person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised ("Non-Electing Share"), then
for the purpose of this Section 5(e) the kind and amount of stock, securities
and other property (including cash) receivable upon such Transaction by 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 Section 5(e), 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 shares of Series A Preferred Stock that will
contain provisions enabling the holders of the shares of Series A Preferred
Stock that remain outstanding after such Transaction to convert into the
consideration received by holders of Common Stock at the Conversion Price in
effect immediately prior to such Transaction. The provisions of this Section
5(e) shall similarly apply to successive Transactions.
-12-
(f) If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than cash dividends or
distributions paid with respect to the Common Stock after December 31, 1995
not in excess of the sum of the Corporation's cumulative undistributed
funds from operations at December 31, 1995, plus the cumulative amount of
funds from operations, as determined by the Board of Directors, after
December 31, 1995, minus the cumulative amount of dividends accrued or paid
in respect of the shares of Series A Preferred Stock or any other class or
series of Prefer red Stock of the Corporation after the Issue Date); or
(ii) the Corporation shall authorize the granting to the holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase any shares of stock of any class or any other rights, options or
warrants, which granting requires an adjustment of the Conversion Price
pursuan t to Section 5(d)(ii) above; or
(iii) there shall be any reclassification of the Common Stock (other
than an event to which Section 5(d)(i) applies) or any consolidation or
merger to which the Corporation is a party and for which approval of any
shareholders of the Corporation is required, or a statutory share exchange,
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 entirety; or
(iv) 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 shares of Series A Preferred Stock at their
addresses as shown on the stock records of the Corporation, as promptly as
possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of shares of Common Stock of record to be entitled to such dividend,
distribution or rights, options or warrants are to be determined or (B) 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 shares of
Common Stock of record shall be entitled to exchange their shares of 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
-13-
defect therein shall not affect the legality or validity of the proceedings
described in this Section 5.
(g) 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 of such adjustment and shall
mail such notice of such adjustment of the Conversion Price to the holder of
each share of Series A Preferred Stock at such holder's last address as shown on
the share records of the Corporation.
(h) In any case in which Section 5(d) provides that an adjustment shall
become effective on the day next following the record date for an event, the
Corporation may defer until the occurrence of such event (A) issuing to the
holder of any share of Series A Preferred Stock converted after such record date
and before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such conversion before
giving effect to such adjustment and (B) paying t o such holder any amount of
cash in lieu of any fraction pursuant to Section 5(c).
(i) There shall be no adjustment of the Conversion Price in case of the
issuance of any stock or other security of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section 5. If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one paragraph of this Section 5, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(j) If the Corporation shall take any action affecting the Common Stock,
other than action described in this Section 5, that in the opinion of the Board
of Directors would materially and adversely affect the conversion rights of the
holders of the shares of Series A Preferred Stock, the Conversion Price for the
Series A Preferred Stock may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Directors, in its sole
discretion, may determine to be equitable in the circumstances.
(k) 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 shares of Common Stock, for the purpose of effecting conversion of
the shares of Series A Preferred Stock, the full number of shares of Common
Stock
-14-
deliverable upon the conversion of all outstanding shares of Series A Preferred
Stock not theretofore converted. For purposes of this Section 5(k), the number
of shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Series A Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the shares of Series A Preferred Stock shall be validly issued,
fully paid and non-assessable. Before taking any action that would cause an
adjustment reducing the Conversion Price below the then- par value of the shares
of Common Stock deliverable upon conversion of the shares of Series A Preferred
Stock, the Corporation will take any corporate action that, in the opinion of
its counsel, may be necessary in order that the Corporation may validly and
legally issue fully paid and non- assessable shares of Common Stock at such
adjusted Conversion Price.
The Corporation shall endeavor to list the shares of Common Stock required
to be delivered upon conversion of the Series A Preferred Stock, prior to such
delivery, upon each national securities exchange, if any, upon which the
outstanding shares of Common Stock are listed at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the shares of Series A Preferred Stock,
the Corporation shall endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority.
(l) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of the shares of
Series A 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 shares of
Series A 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 established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
Section 6. Redemption at the Option of the Corporation.
(a) The Series A Preferred Stock shall not be redeemable by the Corporation
prior to the third (3rd) anniversary of the Issue Date. On and after the third
(3rd) anniversary of the Issue Date, the Corporation, at its option, may redeem
the Series A Preferred Stock, in whole or in part at any time or from time to
-15-
time at a redemption price of Twenty Five Dollars ($25.00) per share of Series A
Preferred Stock, plus the amounts indicated in Section 6(b).
(b) Upon any redemption of the Series A Preferred Stock pursuant to this
Section 6, the Corporation shall pay all accrued and unpaid dividends, if any,
thereon ending on or prior to the date of such redemption (the "Call Date"),
without interest. If the Call Date falls after a dividend payment record date
and prior to the corresponding Dividend Payment Date, then each holder of Series
A Preferred Stock at the close of business on such dividend payment record date
shall be entitled to the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares before such
Dividend Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on shares
of Series A Preferred Stock called for redemption.
(c) If full cumulative dividends on the Series A Preferred Stock and any
other class or series of Parity Stock of the Corporation have not been declared
and paid or declared and set apart for payment, the Series A Preferred Stock may
not be redeemed under this Section 6 in part and the Corporation may not
purchase or acquire the Series A Preferred Stock, otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of Series A
Preferred Stock.
(d) Notice of the redemption of any Series A Preferred Stock under this
Section 6 shall be mailed by first-class mail to each holder of record of Series
A Preferred Stock to be redeemed at the address of each such holder as shown on
the Corporation's records, not less than 30 nor more than 90 days prior to the
Call Date. Neither the failure to mail any notice required by this Section 6(d),
nor any defect therein or in the mailing thereof, to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which was mailed in
the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such mailed notice shall state, as appropriate: (1) the Call Date; (2) the
number of shares of Series A Preferred Stock to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (3) the place or places at which certificates
for such shares are to be surrendered; (4) the then-current Conversion Price;
and (5) that dividends on the shares to be redeemed shall cease to accrue on
such Call Date except as otherwise provided herein. Notice having been mailed as
aforesaid, from and after the Call Date (unless the Corporation shall fail to
make available an amount of cash necessary to effect such redemption), (i)
except as otherwise provided herein, dividends on the Series A Preferred Stock
so called for redemption shall cease to accrue, (ii) shares of Series A
Preferred Stock shall no longer be deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of Series A Preferred Stock of the
Corporation shall cease (except the right to receive cash payable upon such
redemption, without
-16-
interest thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon). The Corporation's
obligation to provide cash in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the Call Date, the Corporation shall deposit
with a bank or trust company (which may be an affiliate of the Corporation) that
has an office in Washington, D.C., and that has, or is an affiliate of a bank or
trust company that has, capital and surplus of at least $50,000,000, the amount
of cash necessary for such redemption, in trust, with irrevocable instructions
that such cash be applied to the redemption of the Series A Preferred Stock so
called for redemption. No interest shall accrue for the benefit of the holders
of Series A Preferred Stock to be redeemed on any cash so set aside by the
Corporation. Subject to applicable escheat laws, any such cash unclaimed at the
end of two years from the Call Date shall revert to the general funds of the
Corporation, after which reversion the holders of such shares so called for
redemption shall look only to the general funds of the Corporation for the
payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such shares shall be exchanged for any cash (without interest
thereon) for which such shares have been redeemed. If fewer than all the
outstanding shares of Series A Preferred Stock are to redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding shares of Series
A Preferred Stock not previously called for redemption by lot or pro rata (as
nearly as may be) or by any other method determined by the Corporation in its
sole discretion to be equitable. If fewer than all the shares of Series A
Preferred Stock represented by any certificate are redeemed, then new
certificates representing the unredeemed shares shall be issued without cost to
the holder thereof.
Section 7. Shares of Stock To Be Retired. All shares of Series A Preferred
Stock which shall have been issued and reacquired in any manner by the
Corporation shall be restored to the status of authorized but unissued shares of
capital stock of the Corporation, without designation as to class or series.
Section 8. Ranking. Any class or series of shares of capital stock of the
Corporation shall be deemed to rank:
(a) prior to the Series A Preferred Stock, as to the payment of dividends
and as to distribution of assets upon liquidation, dissolution or winding up, if
the holders of such class or series shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of Series A
Preferred Stock;
(b) on a parity with the Series A Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding
-17-
up, whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share thereof be different from those of the Series A
Preferred Stock, if the holders of such class or series of shares of stock and
the Series A Preferred Stock shall be entitled to the receipt of dividends and
of amounts distributable upon liquidation, dissolution or winding up in
proportion to their respective amounts of accrued and unpaid dividends per share
or liquidation preferences, without preference or priority one over the other
("Parity Stock");
(c) junior to the Series A Preferred Stock, as to the payment of dividends
or as to the distribution of assets upon liquidation, dissolution or winding up,
if such shares of stock shall be Junior Stock; and
(d) junior to the Series A Preferred Stock, as to the payment of dividends
and as to the distribution of assets upon liquidation dissolution or winding up,
if such shares of stock shall be Fully Junior Stock.
Section 9. Voting. If and whenever six consecutive quarterly dividends
payable on the Series A Preferred Stock or any series or class of Parity Stock
shall be in arrears (which shall, with respect to any such quarterly dividend,
mean that any such dividend has not been paid in full), whether or not declared,
the number of directors then constituting the Board of Directors shall be
increased by two, and the holders of Series A Preferred Stock, together with the
holders of shares of every other series of Parity Stock, voting as a single
class regardless of series, shall be entitled to elect the two additional
directors to serve on the Board of Directors at any annual meeting of
shareholders or special meeting held in place thereof, or at a special meeting
of the holders of the Series A Preferred Stock and the Parity Stock called as
hereinafter provided. Whenever all arrears in dividends on the Series A
Preferred Stock and the Parity Stock then outstanding shall have been paid and
dividends thereon for the current quarterly dividend period shall have been paid
or declared and set apart for payment, then the right of the holders of the
Series A Preferred Stock and the Parity Stock to elect such additional two
directors shall immediately cease (but subject always to the same provision for
the vesting of such voting rights in the case of any similar future arrearages
in six consecutive quarterly dividends), and the terms of office of all persons
elected as directors by the holders of the Series A Preferred Stock and the
Parity Stock shall immediately terminate and the number of the Board of
Directors shall be reduced accordingly. At any time after such voting rights
shall have been so vested in the holders of Series A Preferred Stock and the
Parity Stock, the secretary of the Corporation may, and upon the written request
of any holder of Series A Preferred Stock (addressed to the secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Series A Preferred Stock and of the Parity Stock for the election
of the two directors to be elected by them as herein provided, such call to be
made by notice similar to that provided in the Bylaws of the Corporation for a
special meeting of the shareholders or as required by law. If any such special
meeting required to be called as above provided shall not be called
-18-
by the secretary within 20 days after receipt of any such request, then any
holder of Series A Preferred Stock may call such meeting, upon the notice above
provided, and for that purpose shall have access to the stock records of the
Corporation. The directors elected at any such special meeting shall hold office
until the next annual meeting of the shareholders or special meeting held in
lieu thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the directors elected by the holders
of the Series A Preferred Stock and the Parity Stock, a successor shall be
elected by the Board of Directors, upon the nomination of the then-remaining
director elected by the holders of the Series A Preferred Stock and the Parity
Stock or the successor of such remaining director, to serve until the next
annual meeting of the shareholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
So long as any shares of Series A Preferred Stock are outstanding, in
addition to any other vote or consent of shareholders required by law or by the
Charter of the Corporation, the affirmative vote of at least 66-2/3% of the
votes entitled to be cast by the holders of the Series A Preferred Stock and the
Parity Stock, at the time outstanding, acting as a single class regardless of
series, given in person or by proxy, either in writing without a meeting or by
vote at any meeting called for the purpose, shall be necessary for effecting or
validating:
(a) Any amendment, alteration or repeal of any of the provisions of the
Charter of the Corporation (including these Articles Supplementary) that
materially and adversely affects the voting powers, rights or preferences of the
holders of the Series A Preferred Stock or the Parity Stock; provided, however,
that the amendment of the provisions of the Charter of the Corporation so as to
authorize or create or to increase the authorized amount of any Fully Junior
Stock or Junior Stock that are not senior in any respect to the Series A
Preferred Stock, or any shares of any class ranking on a parity with the Series
A Preferred Stock or the Parity Stock, shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the holders of
Series A Preferred Stock; and provided further, that if any such amendment,
alteration or repeal would materially and adversely affect any voting powers,
rights or preferences of the Series A Preferred Stock or another series of
Parity Stock that are not enjoyed by some or all of the other series otherwise
entitled to vote in accordance herewith, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of all series similarly
affected, similarly given, shall be required in lieu of the affirmative vote of
at least 66-2/3% of the votes entitled to be cast by the holders of the Series A
Preferred Stock and the Parity Stock otherwise entitled to vote in accordance
herewith; or
(b) A share exchange that affects the Series A Preferred Stock, a
consolidation with or merger of the Corporation into another entity, or a
consolidation with or merger of another entity into the Corporation, unless in
each such case each share of Series A Preferred Stock (i) shall remain
outstanding
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without a material and adverse change to its terms and rights or (ii) shall be
converted into or exchanged for convertible preferred stock of the surviving
entity having preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption thereof identical to that of a share of Series A
Preferred Stock (except for changes that do not materially and adversely affect
the holders of the Series A Preferred Stock); or
(c) The authorization or creation of, or the increase in the authorized
amount of, any shares of any class or any security convertible into shares of
any class ranking prior to the Series A Preferred Stock in the distribution of
assets on any liquidation, dissolution or winding up of the Corporati on or in
the payment of dividends; provided, however, that no such vote of the holders of
Series A Preferred Stock shall be required if, at or prior to the time when such
amendment, alteration or repeal is to take effect, or when the issuance of any
such shares or convertible securities is to be made, as the case may be,
provision is made for the redemption of all shares of Series A Preferred Stock
at the time outstanding.
For purposes of the foregoing provisions of this Section 9, each share of
Series A Preferred Stock shall have one (1) vote per share, except that when
shares of any other series of Preferred Stock shall have the right to vote with
the Series A Preferred Stock as a single class on any matter, then the Series A
Preferred Stock and such other series shall have with respect to such matters
one (1) vote per $25.00 of stated liquidation preference. Except as otherwise
required by applicable law or as set forth herein, the Series A Preferred Stock
shall not have any relative, participating, optional or other special voting
rights and powers, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
Section 10. Record Holders. The Corporation and the Transfer Agent may deem
and treat the record holder of any Series A Preferred Stock as the true and
lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
Section 11. Sinking Fund. The Series A Preferred Stock shall not be
entitled to the benefits of any retirement or sinking fund.
Section 12. Ownership Limitation. Pursuant to the authority granted to the
Board of Directors under Section 5.10 of the Charter, any Person (as defined in
the Charter) who is not an individual within the meaning of Section 542(a)(2) of
the Internal Revenue Code of 1986, as amended (the "Code"), as modified by
Section 856(h)(3) of the Code (referred to as an "Exempted Person"), that
Acquires (as defined in the Charter) Beneficial Ownership (as defined in the
Charter) of shares of Series A Preferred Stock is exempted from clause (ii) of
the Ownership Limit (as defined in the Charter) with respect to the Series A
Preferred Stock, subject to the
-20-
condition that no Person (as defined in the Charter) who is an individual within
the meaning of Section 542(a)(2) of the Code, as modified by Section 856(h)(3)
of the Code and who Beneficially Owns (as defined in the Charter) any of the
shares of Series A Preferred Stock owned directly by the Exempted Person at any
time Beneficially Owns an amount of Series A Preferred Stock in excess of the
Ownership Limit. Each Exempted Person who acquires shares of Series A Preferred
Stock in reliance upon the conditional exemption set forth in the preceding
sentence represents and warrants to the Corporation as a condition of such
reliance that the condition set forth therein is satisfied at the time such
Exempted Person Acquired the shares of Series A Preferred Stock and will be
satisfied throughout the period during which such Exempted Person Beneficially
Owns the shares of Series A Preferred Stock. Each Exempted Person who acquires
shares of Series A Preferred Stock in reliance upon the conditional exemption
set forth in the second preceding sentence further agrees that in the event the
condition set forth in the second preceding sentence is at any time not
satisfied, the exemption granted under this Section 12 no longer shall apply to
such Exempted Person and all of the shares of Series A Preferred Stock
Beneficially Owned by such Exempted Person shall be subject to all of the
restrictions and remedies set forth in Article V of the Charter (including,
without limitation, the remedies set forth in Section 5.3 of the Charter).
-21-
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 by its
Secretary on October 24, 1996.
CARRAMERICA REALTY CORPORATION
By: /s/ Thomas A. Carr
--------------------------
Thomas A. Carr
President
(SEAL)
Attest: /s/ Andrea F. Bradley
---------------------
Andrea F. Bradley
Secretary
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ARTICLES SUPPLEMENTARY OF
SERIES B CUMULATIVE REDEEMABLE PREFERRED STOCK
OF
CARRAMERICA REALTY CORPORATION
Pursuant to Section 2-208(b) of the
General Corporation Law of Maryland
CarrAmerica Realty Corporation, a Maryland corporation (the
"Corporation"), hereby certifies that, pursuant to the authority conferred upon
the Board of Directors of the Corporation by Section 4.4 of the Charter and in
accordance with Section 2-208(b) of the General Corporation Law of Maryland, the
Board of Directors on August 7, 1997 duly classified unissued shares of
Preferred Stock of the Corporation, and the description of the Preferred Stock,
including the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption thereof, as set by the Board of Directors, are as
follows:
Section 1. Number of Shares and Designation. This class of
Preferred Stock shall be designated as Series B Cumulative Redeemable Preferred
Stock, par value $.01 per share (the "Series B Preferred Stock"). The number of
shares of preferred stock constituting the Series B Preferred Stock is
8,050,000.
Section 2. Definitions. The following terms shall have the
following meanings herein:
(a) "Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by the Board of Directors to perform any
of its responsibilities with respect to the Series B Preferred Stock.
(b) "Business Day" shall mean any day other than a Saturday,
Sunday or day on which state or federally chartered banking institutions in New
York City, New York are not required to be open.
(c) "Call Date" shall have the meaning set forth in Section 6(b).
(d) "Capital Gains Amount" shall have the meaning set forth in
Section 3(d).
(e) "Charter" means the Articles of Amendment and Restatement of
Articles of Incorporation of the Corporation, as amended to the date hereof and
as the same may be amended hereafter from time to time.
(f) "Code" shall have the meaning set forth in Section 12.
(g) "Common Stock" shall mean the common stock of the Corporation,
par value $.01 per share.
(h) "Dividend Payment Date" shall mean the last calendar day (or,
if such day is not a Business Day, the next Business Day thereafter) of each
February, May, August, and November, commencing on August 31, 1997.
(i) "Dividend Periods" shall mean quarterly dividend periods
commencing on March 1, June 1, September 1 and December 1 of each year and
ending on and including the day of the next succeeding Dividend Payment Date
(other than the initial Dividend Period, which shall commence on the Issue Date,
and other than the Dividend Period during which any shares of Series B Preferred
Stock shall be redeemed pursuant to Section 6, which shall end on and include
the Call Date with respect to the shares of Series B Preferred Stock being
redeemed).
(j) "Exempted Person" shall have the meaning set forth in Section
12.
(k) "Fully Junior Stock" shall mean the Common Stock and any other
class or series of shares of capital stock of the Corporation now or hereafter
issued and outstanding over which the Series B Preferred Stock has preference or
priority in both (i) the payment of dividends and (ii) the distribution of
assets on any liquidation, dissolution or winding up of the Corporation.
(l) "Issue Date" shall mean the first date on which the pertinent
shares of the Series B Preferred Stock are issued and sold.
(m) "Junior Stock" shall mean the Common Stock and any other class
or series of shares of capital stock of the Corporation now or hereafter issued
and outstanding over which the Series B Preferred Stock has preference or
priority in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
(n) "Parity Stock" shall have the meaning set forth in Section
8(b).
(o) "Preferred Stock" shall mean the preferred stock of the
Corporation, par value $.01 per share.
(p) "Series B Preferred Stock" shall have the meaning set forth in
Section 1.
(q) "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 dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
shares of capital stock of
-2-
the Corporation; provided, however, that if any funds for any class or series of
Junior Stock or Fully Junior Stock or any class or series of shares of capital
stock ranking on a parity with the Series B Preferred Stock as to the payment of
dividends are placed in a 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 B Preferred Stock shall mean placing such funds in such
separate account or delivering such funds to a disbursing, paying or other
similar agent.
(r) "Total Dividends" shall have the meaning set forth in Section
3(d).
(s) "Transfer Agent" means BankBoston, N.A., Boston,
Massachusetts, or such other agent or agents of the Corporation as may be
designated by the Board of Directors or their designee as the transfer agent,
registrar and dividend disbursing agent for the Series B Preferred Stock.
Section 3. Dividends.
(a) The holders of Series B Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for that purpose, cumulative, preferential dividends payable in cash
at the rate of $2.1425 per annum per share. Such dividends shall begin to accrue
and shall be fully cumulative from the Issue Date, whether or not in any
Dividend Period or Periods there shall be funds of the Corporation legally
available for the payment of such dividends, and shall be payable quarterly,
when, as and if declared by the Board of Directors, in arrears on Dividend
Payment Dates, commencing on the first Dividend Payment Date after the Issue
Date. Such dividends shall be payable in arrears to the holders of record of
Series B Preferred Stock, as they appear on the stock records of the Corporation
at the close of business on the record date, not more than 50 nor less than 10
days preceding the relevant Dividend Payment Date, as shall be fixed by the
Board of Directors. Accrued and unpaid dividends for any past Dividend Periods
may be declared and paid on any date and for such interim periods, without
reference to any regular Dividend Payment Date, to holders of record on such
date, not exceeding 50 days preceding the payment date thereof, as may be fixed
by the Board of Directors. Any dividend payment made on the Series B Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to the Series B Preferred Stock which remains payable.
(b) The amount of dividends referred to in Section 3(a) payable
for each full Dividend Period for the Series B Preferred Stock shall be computed
by dividing the annual dividend rate by four, except that the amount of
dividends payable for the initial Dividend Period, and for any Dividend Period
shorter than a full Dividend Period, for the Series B Preferred Stock shall be
computed on the basis of the actual number of days in such Dividend Period.
Holders of Series B
-3-
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or shares of stock, in excess of cumulative dividends, as herein
provided, on the Series B Preferred Stock. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or payments on
the Series B Preferred Stock that may be in arrears.
(c) Dividends on Series B Preferred Stock will accrue 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 declared.
(d) If, for any taxable year, the Corporation elects to designate
as "capital gain dividends" (as defined in Section 857 of the Code), any portion
(the "Capital Gains Amount") of the total dividends (within the meaning of the
Code) paid or made available for the year to holders of all classes of capital
stock (the "Total Dividends"), then the portion of the Capital Gains Amount that
shall be allocable to holders of Series B Preferred Stock shall be in the same
portion that the Total Dividends paid or made available to the holders of Series
B Preferred Stock for the year bears to the Total Dividends.
(e) So long as any shares of Series B Preferred Stock are
outstanding, no dividends, except as described in the immediately following
sentence, shall be declared or paid or set apart for payment on any class or
series of Parity Stock for any period unless full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Series B Preferred Stock
for all Dividend Periods terminating on or prior to the dividend payment date
for such class or series of Parity Stock. When dividends are not paid in full or
a sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon Series B Preferred Stock and all dividends declared upon any other
class or series of Parity Stock shall be declared ratably in proportion to the
respective amounts of dividends accumulated and unpaid on the Series B Preferred
Stock and accumulated and unpaid on such Parity Stock.
(f) So long as any shares of Series B Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid solely in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Fully Junior Stock) shall be declared or paid or set apart for payment or
other distribution declared or made upon Junior Stock or Fully Junior Stock, nor
shall any Junior Stock or Fully Junior Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of shares of
Common Stock made for purposes of any employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such shares) by
the Corporation, directly or indirectly (except by conversion into or exchange
for shares of Fully Junior Stock), unless in each case (i) the full cumulative
dividends on all
-4-
outstanding shares of Series B Preferred Stock and any other Parity Stock of the
Corporation shall have been or contemporaneously are declared and paid or
declared and set apart for payment for all past Dividend Periods with respect to
the Series B Preferred Stock and all past dividend periods with respect to such
Parity Stock and (ii) sufficient funds shall have been or contemporaneously are
declared and paid or declared and set apart for the payment of the dividend for
the current Dividend Period with respect to the Series B Preferred Stock and the
current dividend period with respect to such Parity Stock.
(g) No dividends on Series B Preferred Stock shall be declared by
the Board of Directors or paid or set apart for payment by the Corporation at
such time as the terms and provisions of any agreement of the Corporation,
including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
Section 4. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of Junior Stock, the holders of the
Series B Preferred Stock shall be entitled to receive Twenty Five Dollars
($25.00) per share of Series B Preferred Stock plus an amount equal to all
dividends (whether or not earned or declared) accrued and unpaid thereon to the
date of final distribution to such holders; but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the Series B Preferred Stock shall
be insufficient to pay in full the preferential amount aforesaid and liquidating
payments on any other shares of any class or series of Parity Stock, then such
assets, or the proceeds thereof, shall be distributed among the holders of the
Series B Preferred Stock and any such other Parity Stock ratably in accordance
with the respective amounts that would be payable on such Series B Preferred
Stock and any such other Parity Stock if all amounts payable thereon were paid
in full. For the purposes of this Section 4, (i) a consolidation or merger of
the Corporation with one or more corporations, real estate investment trusts, or
other entities, (ii) a sale, lease or transfer of all or substantially all of
the Corporation's assets, or (iii) a statutory share exchange shall not be
deemed to be a liquidation, dissolution or winding up, voluntary or involuntary,
of the Corporation.
(b) Subject to the rights of the holders of shares of any series
or class or classes of capital stock ranking on a parity with or prior to the
Series B Preferred Stock upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Corporation, after payment shall
have been made
-5-
in full to the holders of the Series B Preferred Stock, as provided in this
Section 4, any other series or class or classes of Junior Stock or Fully Junior
Stock shall, subject to the respective terms and provisions (if any) applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Series B Preferred Stock shall not be
entitled to share therein.
Section 5. Conversion. The shares of Series B Preferred Stock are
not convertible or exchangeable for any other property or securities of the
Corporation.
Section 6. Redemption at the Option of the Corporation.
(a) The Series B Preferred Stock shall not be redeemable by the
Corporation prior to August 12, 2002. On and after August 12, 2002, the
Corporation, at its option, may redeem the Series B Preferred Stock, in whole or
in part at any time or from time to time, at a redemption price of Twenty Five
Dollars ($25.00) per share of Series B Preferred Stock, plus the amounts
indicated in Section 6(b).
(b) Upon any redemption of the Series B Preferred Stock pursuant
to this Section 6, the Corporation shall pay all accrued and unpaid dividends,
if any, thereon ending on or prior to the date of such redemption (the "Call
Date"), without interest. If the Call Date falls after a dividend payment record
date and prior to the corresponding Dividend Payment Date, then each holder of
Series B Preferred Stock at the close of business on such dividend payment
record date shall be entitled to the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the redemption of such
shares before such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for unpaid dividends, whether or
not in arrears, on shares of Series B Preferred Stock called for redemption.
(c) If full cumulative dividends on the Series B Preferred Stock
and any other class or series of Parity Stock of the Corporation have not been
declared and paid or declared and set apart for payment, the Series B Preferred
Stock or Parity Stock may not be redeemed under this Section 6 in part and the
Corporation may not purchase or acquire the Series B Preferred Stock or any
Parity Stock, otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of Series B Preferred Stock or Parity Stock, as
the case may be.
(d) Notice of the redemption of any Series B Preferred Stock under
this Section 6 shall be mailed by first-class mail to each holder of record of
Series B Preferred Stock to be redeemed at the address of each such holder as
shown on the Corporation's records, not less than 30 nor more than 90 days prior
to the Call Date. Neither the failure to mail any notice required by this
Section 6(d), nor any defect therein or in the mailing thereof, to any
particular holder, shall affect the sufficiency of the notice or the validity of
the proceedings for redemption with
-6-
respect to the other holders. Any notice which was mailed in the manner herein
provided shall be conclusively presumed to have been duly given on the date
mailed whether or not the holder receives the notice. Each such mailed notice
shall state, as appropriate: (1) the Call Date; (2) the number of shares of
Series B Preferred Stock to be redeemed and, if fewer than all the shares held
by such holder are to be redeemed, the number of such shares to be redeemed from
such holder; (3) the redemption price per share; (4) the place or places at
which certificates for such shares are to be surrendered; and (5) that dividends
on the shares to be redeemed shall cease to accrue on such Call Date except as
otherwise provided herein. Notice having been mailed as aforesaid, from and
after the Call Date (unless the Corporation shall fail to make available an
amount of cash necessary to effect such redemption), (i) except as otherwise
provided herein, dividends on the Series B Preferred Stock so called for
redemption shall cease to accrue, (ii) shares of such Series B Preferred Stock
shall no longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Series B Preferred Stock of the Corporation shall cease
(except the right to receive cash payable upon such redemption, without interest
thereon, upon surrender and endorsement of their certificates if so required and
to receive any dividends payable thereon). The Corporation's obligation to
provide cash in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the Call Date, the Corporation shall deposit with a bank or
trust company (which may be an affiliate of the Corporation) that has an office
in Washington, D.C., and that has, or is an affiliate of a bank or trust company
that has, capital and surplus of at least $50,000,000, the amount of cash
necessary for such redemption, in trust, with irrevocable instructions that such
cash be applied to the redemption of the Series B Preferred Stock so called for
redemption. No interest shall accrue for the benefit of the holders of Series B
Preferred Stock to be redeemed on any cash so set aside by the Corporation.
Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Call Date shall revert to the general funds of the Corporation,
after which reversion the holders of such shares so called for redemption shall
look only to the general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with
said notice of the certificates for any such shares so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so require and if
the notice shall so state), such shares shall be exchanged for any cash (without
interest thereon) for which such shares have been redeemed. If fewer than all
the outstanding shares of Series B Preferred Stock are to redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding shares of Series
B Preferred Stock not previously called for redemption by lot or pro rata (as
nearly as may be) or by any other method determined by the Corporation in its
sole discretion to be equitable. If fewer than all the shares of Series B
Preferred Stock represented by any certificate are redeemed, then new
certificates representing the unredeemed shares shall be issued without cost to
the holder thereof.
-7-
Section 7. Shares of Stock to be Retired. All shares of Series B
Preferred Stock which shall have been issued and reacquired in any manner by the
Corporation shall be restored to the status of authorized but unissued shares of
Preferred Stock of the Corporation, without designation as to class or series.
Section 8. Ranking. Any class or series of shares of capital stock
of the Corporation shall be deemed to rank:
(a) prior to the Series B Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Series B Preferred Stock;
(b) on a parity with the Series B Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Series B Preferred Stock, if the holders of such class or series of
shares of stock and the Series B Preferred Stock shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or priority
one over the other ("Parity Stock");
(c) junior to the Series B Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such shares of stock shall be Junior Stock; and
(d) junior to the Series B Preferred Stock, as to the payment of
dividends and as to the distribution of assets upon liquidation dissolution or
winding up, if such shares of stock shall be Fully Junior Stock.
Section 9. Voting. If and whenever six consecutive quarterly
dividends payable on the Series B Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not declared, the number of directors then constituting the Board of
Directors shall be increased by two, and the holders of Series B Preferred
Stock, together with the holders of shares of every other series of Parity
Stock, voting as a single class regardless of series, shall be entitled to elect
the two additional directors to serve on the Board of Directors at any annual
meeting of shareholders or special meeting held in place thereof, or at a
special meeting of the holders of the Series B Preferred Stock and the Parity
Stock called as hereinafter provided. Whenever all arrears in dividends on the
Series B Preferred Stock and the Parity Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been paid or declared and set apart for payment, then the right of the holders
-8-
of the Series B Preferred Stock and the Parity Stock to elect such additional
two directors shall immediately cease (but subject always to the same provision
for the vesting of such voting rights in the case of any similar future
arrearages in six consecutive quarterly dividends), and the terms of office of
all persons elected as directors by the holders of the Series B Preferred Stock
and the Parity Stock shall immediately terminate and the number of the Board of
Directors shall be reduced accordingly. At any time after such voting rights
shall have been so vested in the holders of Series B Preferred Stock and the
Parity Stock, the secretary of the Corporation may, and upon the written request
of any holder of Series B Preferred Stock (addressed to the secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Series B Preferred Stock and of the Parity Stock for the election
of the two directors to be elected by them as herein provided, such call to be
made by notice similar to that provided in the Bylaws of the Corporation for a
special meeting of the shareholders or as required by law. If any such special
meeting required to be called as above provided shall not be called by the
secretary within 20 days after receipt of any such request, then any holder of
Series B Preferred Stock may call such meeting, upon the notice above provided,
and for that purpose shall have access to the stock records of the Corporation.
The directors elected at any such special meeting shall hold office until the
next annual meeting of the shareholders or special meeting held in lieu thereof
if such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Series B
Preferred Stock and the Parity Stock, a successor shall be elected by the Board
of Directors, upon the nomination of the then-remaining director elected by the
holders of the Series B Preferred Stock and the Parity Stock or the successor of
such remaining director, to serve until the next annual meeting of the
shareholders or special meeting held in place thereof if such office shall not
have previously terminated as provided above.
So long as any shares of Series B Preferred Stock are outstanding,
in addition to any other vote or consent of shareholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the
votes entitled to be cast by the holders of the Series B Preferred Stock and the
Parity Stock, at the time outstanding, acting as a single class regardless of
series, given in person or by proxy, either in writing without a meeting or by
vote at any meeting called for the purpose, shall be necessary for effecting or
validating:
(a) Any amendment, alteration or repeal of any of the provisions
of the Charter of the Corporation (including these Articles Supplementary) that
materially and adversely affects the voting powers, rights or preferences of the
holders of the Series B Preferred Stock or the Parity Stock; provided, however,
that the amendment of the provisions of the Charter of the Corporation so as to
authorize or create or to increase the authorized amount of shares of any class
of any Fully Junior Stock or Junior Stock that are not senior in any respect to
the Series B Preferred Stock, or any shares of any class ranking on a parity
with the Series B Preferred Stock or the Parity Stock, shall not be deemed to
materially
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adversely affect the voting powers, rights or preferences of the holders of
Series B Preferred Stock; and provided further, that if any such amendment,
alteration or repeal would materially and adversely affect any voting powers,
rights or preferences of the Series B Preferred Stock or another series of
Parity Stock that are not enjoyed by some or all of the other series otherwise
entitled to vote in accordance herewith, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of all series similarly
affected, similarly given, shall be required in lieu of the affirmative vote of
at least 66-2/3% of the votes entitled to be cast by the holders of the Series B
Preferred Stock and the Parity Stock otherwise entitled to vote in accordance
herewith; or
(b) A share exchange that affects the Series B Preferred Stock, a
consolidation with or merger of the Corporation into another entity, or a
consolidation with or merger of another entity into the Corporation, unless in
each such case each share of Series B Preferred Stock (i) shall remain
outstanding without a material and adverse change to its terms and rights or
(ii) shall be converted into or exchanged for preferred stock of the surviving
entity having preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption thereof identical to that of a share of Series B
Preferred Stock (except for changes that do not materially and adversely affect
the holders of the Series B Preferred Stock); or
(c) The authorization or creation of, or the increase in the
authorized amount of, any shares of any class, or any security convertible into
shares of any class, ranking prior to the Series B Preferred Stock in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation or in the payment of dividends; provided, however, that no such vote
of the holders of Series B Preferred Stock shall be required if, at or prior to
the time when such amendment, alteration or repeal is to take effect, or when
the issuance of any such shares or convertible securities is to be made, as the
case may be, provision is made for the redemption of all shares of Series B
Preferred Stock at the time outstanding.
For purposes of the foregoing provisions of this Section 9, each
share of Series B Preferred Stock shall have one (1) vote per share, except that
when shares of any other series of Preferred Stock shall have the right to vote
with the Series B Preferred Stock as a single class on any matter, then the
Series B Preferred Stock and such other series shall have with respect to such
matters one (1) vote per $25.00 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein, the Series B
Preferred Stock shall not have any relative, participating, optional or other
special voting rights and powers, and the consent of the holders thereof shall
not be required for the taking of any corporate action.
Section 10. Record Holders. The Corporation and the Transfer Agent
may deem and treat the record holder of any Series B Preferred Stock as the true
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and lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
Section 11. Sinking Fund. The Series B Preferred Stock shall not
be entitled to the benefits of any retirement or sinking fund.
Section 12. Ownership Limitation. Pursuant to the authority
granted to the Board of Directors under Section 5.10 of the Charter, any Person
(as defined in the Charter) who is not an individual within the meaning of
Section 542(a)(2) of the Internal Revenue Code of 1986, as amended (the "Code"),
as modified by Section 856(h)(3) of the Code (referred to as an "Exempted
Person"), that Acquires (as defined in the Charter) Beneficial Ownership (as
defined in the Charter) of shares of Series B Preferred Stock is exempted from
clause (ii) of the Ownership Limit (as defined in the Charter) with respect to
the Series B Preferred Stock, subject to the condition that no Person (as
defined in the Charter) who is an individual within the meaning of Section
542(a)(2) of the Code, as modified by Section 856(h)(3) of the Code and who
Beneficially Owns (as defined in the Charter) any of the shares of Series B
Preferred Stock owned directly by the Exempted Person at any time Beneficially
Owns an amount of Series B Preferred Stock in excess of the Ownership Limit.
Each Exempted Person who acquires shares of Series B Preferred Stock in reliance
upon the conditional exemption set forth in the preceding sentence represents
and warrants to the Corporation as a condition of such reliance that the
condition set forth therein is satisfied at the time such Exempted Person
Acquired the shares of Series B Preferred Stock and will be satisfied throughout
the period during which such Exempted Person Beneficially Owns the shares of
Series B Preferred Stock. Each Exempted Person who acquires shares of Series B
Preferred Stock in reliance upon the conditional exemption set forth in the
second preceding sentence further agrees that in the event the condition set
forth in the second preceding sentence is at any time not satisfied, the
exemption granted under this Section 12 no longer shall apply to such Exempted
Person and all of the shares of Series B Preferred Stock Beneficially Owned by
such Exempted Person shall be subject to all of the restrictions and remedies
set forth in Article V of the Charter (including, without limitation, the
remedies set forth in Section 5.3 of the Charter).
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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 Vice President
and attested by its Assistant Secretary on August 8, 1997.
CARRAMERICA REALTY CORPORATION
By: /s/ Joseph D. Wallace
----------------------------
Joseph D. Wallace
Vice President
The abovesigned, Vice President of CarrAmerica Realty Corporation who executed
on behalf of said Corporation these Articles Supplementary to be the corporate
act of said Corporation and Further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
Attest: /s/ Debra A. Volpicelli
-------------------------
Debra A. Volpicelli
Assistant Secretary