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EXHIBIT 3.1
BERKSHIRE INCOME REALTY, INC.
FORM OF ARTICLES OF AMENDMENT AND RESTATEMENT
FIRST: Berkshire Income Realty, Inc., a Maryland corporation (the
"CORPORATION"), desires to amend and restate its Charter as currently in effect
and as hereinafter amended. Capitalized terms not defined when first used in
these Articles of Amendment and Restatement are defined in Article 11.
SECOND: The following provisions are all the provisions of the
Charter as currently in effect and as hereinafter amended:
ARTICLE 1
INCORPORATOR
The undersigned, James J. Hanks, Jr., whose address is c/o Ballard Spahr
Andrews & Ingersoll, LLP, 300 East Lombard Street, Baltimore, Maryland 21202,
being at least 18 years of age, does hereby form a corporation under the general
laws of the State of Maryland.
ARTICLE 2
NAME
The name of the Corporation is Berkshire Income Realty, Inc.
ARTICLE 3
PURPOSE
The purposes for which the Corporation is formed are to engage in any
lawful act or activity for which corporations may be organized under the general
laws of the State of Maryland as now or hereafter in force. Subject to and not
in limitation of the authority of the preceding sentence, the Corporation
intends to engage in business as a REIT.
ARTICLE 4
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State
of Maryland is c/o CSC-Lawyers Incorporating Service Company, 11 East Chase
Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in the State of Maryland is CSC-Lawyers Incorporating Service
Company, whose post office address is 11 East Chase Street, Baltimore,
Maryland 21202.
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The resident agent is a citizen of and resides in the State of Maryland.
ARTICLE 5
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS
Section 5.1 NUMBER OF DIRECTORS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. The
number of directors of the Corporation initially shall be five, which number may
be increased or decreased pursuant to the Bylaws, but shall never be less than
the minimum number required by the MGCL. The names of the directors who shall
serve until the first annual meeting of stockholders and until their successors
are duly elected and qualify are:
George D. Krupp
Randolph B. Hawthorne
Robert M. Kaufman
Richard B. Peiser
David C. Quade
These directors may increase the number of directors and may fill any
vacancy, whether resulting from an increase in the number of directors or
otherwise, on the Board of Directors. The Corporation elects, at such time as
it becomes eligible to make the election provided for under Section 3-802(b)
of the MGCL, that, except as may be provided by the Board of Directors in
setting the terms of any class or series of stock, any and all vacancies on
the Board of Directors may be filled only by the affirmative vote of a
majority of the remaining directors in office, even if the remaining
directors do not constitute a quorum, and any director elected to fill a
vacancy shall serve for the remainder of the full term of the directorship in
which such vacancy occurred.
Section 5.2 EXTRAORDINARY ACTIONS. Notwithstanding any provision of
law permitting or requiring any action to be taken or approved by the
affirmative vote of the holders of shares entitled to cast a greater number of
votes, any such action shall be effective and valid if taken or approved by the
affirmative vote of holders of shares entitled to cast a majority of all the
votes entitled to be cast on the matter.
Section 5.3 AUTHORIZATION BY THE BOARD OF DIRECTORS OF STOCK ISSUANCE.
The Board of Directors may authorize the issuance from time to time of shares of
stock of the Corporation of any class or series, whether now or hereafter
authorized, or securities or rights convertible into shares of its stock of any
class or series, whether now or hereafter authorized, for such consideration as
the Board of Directors may deem advisable (or without consideration in the case
of a stock split or stock dividend), subject to such restrictions or
limitations, if any, as may be set forth in the Charter or the Bylaws.
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Section 5.4 PREEMPTIVE RIGHTS. Except as may be provided by the Board
of Directors in setting the terms of classified or reclassified shares of stock
pursuant to Section 6.4 or as may otherwise be provided by contract, no holder
of shares of stock of the Corporation shall, as such holder, have any preemptive
right to purchase or subscribe for any additional shares of stock of the
Corporation or any other security of the Corporation which it may issue or sell.
Section 5.5 INDEMNIFICATION. The Corporation shall have the power, to
the maximum extent permitted by Maryland law in effect from time to time, to
obligate itself to indemnify, and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to, (a) any individual who is a
current or former director or officer of the Corporation or (b) any individual
who, while a director of the Corporation and at the request of the Corporation,
serves or has served as a director, officer, partner or trustee of any other
corporation, real estate investment trust, partnership, limited liability
company, joint venture, trust, employee benefit plan or any other enterprise
from and against any claim or liability to which such person may become subject
or which such person may incur by reason of his or her status as a current or
former director or officer of the Corporation. The Corporation shall have the
power, with the approval of the Board of Directors, to provide such
indemnification and advancement of expenses to a person who served a predecessor
of the Corporation in any of the capacities described in (a) or (b) above and to
any employee or agent of the Corporation or a predecessor of the Corporation.
Section 5.6 DETERMINATIONS BY THE BOARD OF DIRECTORS. The
determination as to any of the following matters, made in good faith by or
pursuant to the direction of the Board of Directors consistent with the Charter
and, as applicable, consistent with generally accepted accounting principles and
the Code (including, without limitation, the requirements of the Code applicable
to REITs and to the qualification of the Corporation as a REIT), and in the
absence of actual receipt of an improper benefit in money, property or services
or active and deliberate dishonesty established by a court, shall be final and
conclusive and shall be binding upon the Corporation and every holder of shares
of its stock: (a) the amount of the net income of the Corporation for any period
and the amount of assets at any time legally available for the payment of
dividends, redemption of its stock or the payment of other distributions on its
stock; (b) the amount of paid-in surplus, net assets, other surplus, annual or
other net profit, net assets in excess of capital, undivided profits or excess
of profits over losses on sales of assets; (c) the amount, purpose, time of
creation, increase or decrease, alteration or cancellation of any reserves or
charges and the propriety thereof (whether or not any obligation or liability
for which such reserves or charges shall have been created shall have been paid
or discharged); (d) the fair value, or any sale, bid or asked price to be
applied in determining the fair value, of any asset owned or held by the
Corporation; (e) any matter relating to the acquisition, holding and disposition
of any assets by the Corporation; or (f) any other matter relating to the
business and affairs of the Corporation.
Section 5.7 REIT QUALIFICATION. The Corporation shall make a timely
election to be a REIT and the Board of Directors shall use its commercially
reasonable efforts to take such actions as are necessary or appropriate in its
sole discretion to cause the Corporation to
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qualify as a REIT and to preserve the status of the Corporation as a REIT with
respect to each taxable year of the Corporation commencing with the taxable year
of the Corporation during which the Issue Date occurs; however, if the Board of
Directors determines that it is no longer in the best interests of the
Corporation to continue to be qualified as a REIT, the Board of Directors may
revoke the Corporation's REIT election pursuant to section 856(g) of the Code.
Subject to such approval that may be required by the MGCL with respect to
charter amendments, the Board of Directors also may determine that compliance
with any restriction or limitation on stock ownership and transfers set forth in
Article 7 is no longer required for REIT qualification.
Section 5.8 REMOVAL OF DIRECTORS. Subject to the rights of holders of
one or more classes or series of Preferred Stock to elect or remove one or more
directors, any director, or the entire Board of Directors, may be removed from
office at any time, with or without cause, by the affirmative vote of at least a
majority of the votes entitled to be cast generally in the election of
directors.
Section 5.9 ADVISOR AGREEMENTS. Subject to such approval of
stockholders and other conditions, if any, as may be required by any applicable
statute, rule or regulation, the Board of Directors may authorize the execution
and performance by the Corporation of one or more agreements with any person,
corporation, association, company, trust, limited liability company, partnership
(limited or general) or other organization whereby, subject to the supervision
and control of the Board of Directors, any such person or entity shall render or
make available to the Corporation managerial, investment, advisory and/or
related services, office space and other services and facilities (including, if
deemed advisable by the Board of Directors, the management or supervision of the
investments of the Corporation) upon such terms and conditions as may be
provided in such agreement or agreements (including, if deemed fair and
equitable by the Board of Directors, the compensation payable thereunder by the
Corporation). Notwithstanding the foregoing, so long as the Corporation intends
to engage in business as a REIT, any such person or entity hired or retained to
perform property management or related services for the Corporation, the
Operating Partnership or any of their subsidiary entities shall not also serve
as the "advisor" that is engaged by the Corporation to provide such advisory
services to the Corporation, the Operating Partnership or any of their
respective subsidiary entities.
Section 5.10 SPECIFIC AUTHORIZATION. Without limiting the provisions of
any other section of the Charter, the Board of Directors is expressly authorized
to take such action as it deems reasonable in order that the Corporation will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act of 1940, as amended.
ARTICLE 6
STOCK
Section 6.1 AUTHORIZED SHARES. The Corporation has authority to issue
30,000,000 shares of stock, consisting of (a) 10,000,000 shares of Common Stock,
$.01 par value per share ("COMMON STOCK"), of which 5,000,000 shares shall be
designated as Class A Common
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Stock (the "CLASS A COMMON STOCK") and 5,000,000 shall be designated as Class B
Common Stock (the "CLASS B COMMON STOCK"), (b) 5,000,000 shares of Preferred
Stock, $.01 par value per share ("PREFERRED STOCK"), of which 5,000,000 shares
shall be designated as __% Series A Cumulative Redeemable Preferred Stock
pursuant Section 6.7 hereof, and (c) 15,000,000 shares of excess stock, $.01 par
value per share (the "EXCESS STOCK"), of which 5,000,000 shares shall be
designated as Excess Class A Common Stock, 5,000,000 shares shall be designated
as Excess Class B Common Stock and 5,000,000 shares shall be designated as
Excess Series A Preferred Stock. The aggregate par value of all authorized
shares of stock having par value is $300,000. If shares of one class of stock
are classified or reclassified into shares of another class of stock pursuant to
this Article 6, the number of authorized shares of the former class shall be
automatically decreased and the number of shares of the latter class shall be
automatically increased, in each case by the number of shares so classified or
reclassified, so that the aggregate number of shares of stock of all classes
that the Corporation has authority to issue shall not be more than the total
number of shares of stock set forth in the first sentence of this paragraph. To
the extent permitted by Maryland law, the Board of Directors, without any action
by the stockholders of the Corporation, may amend the Charter from time to time
to increase or decrease the aggregate number of shares of stock or the number of
shares of stock of any class or series that the Corporation has authority to
issue.
Section 6.2 COMMON STOCK.
Section 6.2.1 CLASSIFICATION. The Board of Directors may
classify any unissued shares of Common Stock and reclassify any previously
classified but unissued shares of Common Stock of any class from time to time in
one or more classes or series of stock.
Section 6.2.2 VOTING RIGHTS. The Corporation shall not issue any
shares of Class A Common Stock without the consent of the holders of a majority
of the outstanding shares of Class B Common Stock. Subject to the provisions of
Article 7, each share of Class A Common Stock shall entitle the holder thereof
to one vote and each share of Class B Common Stock shall entitle the holder
thereof to ten votes. Except as otherwise required by law or otherwise provided
with respect to shares of Preferred Stock outstanding at any time, the holders
of Common Stock shall have the exclusive right and power to vote. No alteration
of or change to the powers, preferences or special rights of the shares of Class
B Common Stock, whether effected by merger, amendment or otherwise, shall be
made without the consent of the holders of shares representing a majority of the
outstanding shares of Class B Common Stock, voting as a single class, if such
alteration or change would have an adverse effect on such holders.
Section 6.2.3 DIVIDENDS AND DISTRIBUTIONS. Subject to the
preferences applicable to shares of Preferred Stock outstanding at any time, the
holders of outstanding shares of Class A Common Stock and the holders of
outstanding shares of Class B Common Stock shall be entitled to receive such
dividends and other distributions in cash, property or shares of stock of the
Corporation as may be authorized thereon by the Board of Directors and declared
by the Corporation from time to time out of assets or funds of the Corporation
legally available therefor. Shares of Class A Common Stock and Class B Common
Stock shall be equal in respect of rights to dividends and other distributions
in cash, property or shares of stock of the Corporation.
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Except as otherwise provided in the immediately following sentence, no dividend
in cash, property or shares of stock of the Corporation may be declared and paid
on any shares of Common Stock unless a dividend of the same character (i.e.,
cash, property or shares of stock of the Corporation) is simultaneously declared
and paid on all shares of Common Stock. In the case of dividends or other
distributions payable in Class A Common Stock or Class B Common Stock, including
distributions pursuant to stock splits or divisions of Class A Common Stock or
Class B Common Stock which occur after the first date upon which the Corporation
has issued shares of both Class A Common Stock and Class B Common Stock, only
shares of Class A Common Stock shall be distributed with respect to Class A
Common Stock and only shares of Class B Common Stock shall be distributed with
respect to Class B Common Stock.
Section 6.2.4 LIQUIDATION RIGHTS. In the event of any
dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntary or involuntary, after payment or provision for payment of the
debts and other liabilities of the Corporation and after making provision for
the holders of each series of Preferred Stock, if any, the remaining assets and
funds of the Corporation, if any, shall be divided among and paid ratably to the
holders of each class or series of Common Stock, treated as a single class.
Section 6.2.5 OPTIONAL CONVERSION OF CLASS B COMMON STOCK. The
holders of shares of Class B Common Stock shall have the right, at their option,
to convert any or all of such shares into shares of Class A Common Stock on the
terms and conditions contained in this Section 6.2.5.
(a) Each share of Class B Common Stock shall be
convertible, at any time, at the office of any transfer agent for Class A Common
Stock, and at such other place or places, if any, as the Board of Directors may
determine, into one fully paid and nonassessable share of Class A Common Stock,
upon surrender at such office or other place of the shares of Class B Common
Stock to be so converted.
(b) Shares of Class B Common Stock shall be deemed to
have been converted and the person converting the same shall become a holder of
Class A Common Stock for the purpose of receiving dividends and for all other
purposes whatsoever as of the date when the shares of Class B Common Stock to be
converted are surrendered to the Corporation as provided in paragraph (e) of
this Section 6.2.5.
(c) A number of shares of Class A Common Stock
sufficient to provide for the conversion of all shares of Class B Common Stock
outstanding shall at all times be reserved by the Corporation for the exercise
of the conversion rights of the holders of the shares of Class B Common Stock.
(d) If the Corporation shall issue shares of Class A
Common Stock to the holders of Class A Common Stock as a stock dividend or stock
split, or if the Corporation reduces the number of outstanding shares of Class A
Common Stock in a reverse stock split or stock combination, the number of shares
of Class A Common Stock issuable upon conversion of a share of Class B Common
Stock shall be adjusted such that the holder of the shares of Class B Common
Stock converting such shares of Class B Common Stock into shares
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of Class A Common Stock shall receive the proportionate number of shares of
Class A Common Stock that such holder would have received if such conversion had
occurred immediately prior to the record date for such stock split, stock
dividend, reverse stock split or stock combination of the Class A Common Stock,
as the case may be. If the Corporation shall issue shares of Class B Common
Stock to the holders of Class B Common Stock in a reverse stock split or stock
combination, then the number of shares of Class A Common Stock shall be adjusted
such that the holder of the shares of Class B Common Stock converting such
shares of Class B Common Stock into shares of Class A Common Stock shall receive
the proportionate number of shares of Class A Common Stock that such holder
would have received if such conversion had occurred immediately prior to the
record date for such stock split, stock dividend, reverse stock split or stock
combination of the Class B Common Stock, as the case may be. In the event of a
reclassification or other similar transaction as a result of which the shares of
Class A Common Stock are converted into another security, then the amount of
such security issuable upon conversion of a share of Class B Common Stock shall
be determined such that the holder of the shares of Class B Common Stock
converting such shares of Class B Common Stock into such other security shall
receive the amount of such security that such holder would have received if such
conversion had occurred immediately prior to the record date of such
reclassification or other similar transaction. No adjustments in respect of
dividends (other than stock dividends) shall be made upon the conversion of any
share of Class B Common Stock; PROVIDED, that if a share of Class B Common Stock
shall be converted after the record date for the payment of a dividend (other
than stock dividends) or other distribution on shares of Class B Common Stock
but prior to such payment, then the holder of such share at the close of
business on such record date shall be entitled to receive the dividend (other
than stock dividends) or other distribution payable on such share on such date
notwithstanding the conversion thereof.
(e) Before any holder of shares of Class B Common
Stock shall be entitled to convert such shares into shares of Class A Common
Stock, such holder must surrender a certificate or certificates for such shares
of Class B Common Stock (if such Class B Common Stock shall be certificated) to
the Corporation at the office of a transfer agent for the Class A Common Stock,
or at such other place or places, if any, as the Board of Directors may
determine, duly endorsed or accompanied by duly executed instruments of
transfer, and shall give written notice to the Corporation at such office or
place that the holder elects so to convert the shares of Class B Common Stock so
surrendered. Unless the shares of Class A Common Stock are to be issued in the
name of the registered owner of the shares so surrendered, the holder shall
state in writing the name or names in which the holder wishes the shares of
Class A Common Stock to be issued, and shall furnish all requisite stock
transfer and stock issuance stamps, or funds therefor. As soon as practicable
after such surrender of shares of Class B Common Stock, accompanied by the
written notice above prescribed, the Corporation shall issue and deliver, at the
office or place at which such certificates were surrendered and such notice was
delivered, to the person for whose account shares of Class B Common Stock were
so surrendered, or to such holder's assignee or assignees, the number of whole
shares of Class A Common Stock to which the holder shall be entitled.
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(f) The shares of Class B Common Stock converted into
shares of Class A Common Stock as provided in this Section 6.2.5 shall have the
status of authorized but unissued shares of Common Stock.
Section 6.3 PREFERRED STOCK. The Board of Directors may classify any
unissued shares of Preferred Stock and reclassify any previously classified but
unissued shares of Preferred Stock of any series from time to time, in one or
more classes or series of stock.
Section 6.4 CLASSIFIED OR RECLASSIFIED SHARES. Prior to issuance of
classified or reclassified shares of any class or series, the Board of Directors
by resolution shall: (a) designate that class or series to distinguish it from
all other classes and series of stock of the Corporation; (b) specify the number
of shares to be included in the class or series; (c) set or change, subject to
the provisions of Article 7 and subject to the express terms of any class or
series of stock of the Corporation outstanding at the time, the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications and terms and conditions of
redemption for each class or series; and (d) cause the Corporation to file
articles supplementary with the State Department of Assessments and Taxation of
Maryland ("SDAT"). Any of the terms of any class or series of stock set or
changed pursuant to clause (c) of this Section 6.4 may be made dependent upon
facts or events ascertainable outside the Charter (including determinations by
the Board of Directors or other facts or events within the control of the
Corporation) and may vary among holders of different classes or series, provided
that the manner in which such facts, events or variations shall operate upon the
terms of such class or series of stock is clearly and expressly set forth in the
articles supplementary filed with the SDAT.
Section 6.5 CHARTER AND BYLAWS. All persons who shall acquire stock in
the Corporation shall acquire the same subject to the provisions of the Charter
and the Bylaws.
Section 6.6 RIGHTS OF OBJECTING STOCKHOLDERS. Holders of shares of
stock of the Corporation shall not be entitled to exercise any rights of an
objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL unless
the Board of Directors, upon the affirmative vote of a majority of the entire
Board, shall determine that such rights shall apply to a particular transaction
or all transactions occurring after the date of such determination in connection
with which holders of shares of stock of the Corporation would otherwise be
entitled to exercise such rights.
Section 6.7 SERIES A PREFERRED STOCK.
Section 6.7.1 NUMBER OF SHARES AND DESIGNATION. 5,000,000 shares
of Preferred Stock shall be designated as __% Series A Cumulative Redeemable
Preferred Stock (the "SERIES A PREFERRED STOCK"), subject, however, to increase
or decrease upon further action of the Board of Directors in the future as
permitted by the Charter and applicable law.
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Section 6.7.2 DIVIDENDS.
(a) The holders of Series A Preferred Stock shall be
entitled to receive, when, as and if authorized by the Board of Directors out of
assets legally available for that purpose, Cumulative Dividends in cash at the
annual rate of ___% of the liquidation preference as set forth in Section 6.7.3
hereof. Such dividends shall be payable quarterly in arrears, on or before
February 15th, May 15th, August 15th and November 15th (each a "DIVIDEND PAYMENT
DATE") to holders of record as they appear on the stock records of the
Corporation at the close of business on such date, which, as long as the Series
A Preferred Stock remains in book-entry form, will be one Business Day prior to
the relevant Dividend Payment Date (the "DIVIDEND RECORD DATE"). In the event
that the Series A Preferred Stock does not continue to remain in book-entry
form, the Board of Directors has the right to fix a Dividend Record Date, which
will not be more than one Business Day prior to the Dividend Payment Date. The
amount of dividends payable on any Dividend Payment Date will be computed on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full quarterly period for which dividends are computed, the amount of the
dividend payable will be computed on the basis of the actual number of days
elapsed in such 30-day month. Such dividends shall be cumulative from the Issue
Date, whether or not such dividends shall be authorized or there shall be assets
of the Corporation legally available for the payment of such dividends. If the
Dividend Payment Date is not on a Business Day, the payment of such dividends
shall be made on the next succeeding day that is a Business Day. The amount of
Cumulative Dividends on any share of Series A Preferred Stock, or fraction
thereof, at any date shall be the amount of any dividends thereon calculated at
the applicable rate to and including such date, whether or not earned or
authorized, which has not been paid.
(b) Holders of Series A Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or 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 of the shares of Series A Preferred
Stock are outstanding, no dividends (other than dividends or distributions paid
in shares of or options, warrants or rights to subscribe for or purchase shares
of Junior Stock) shall be authorized or paid or set apart for payment by the
Corporation or other distribution of cash or other property authorized or made
directly or indirectly by the Corporation with respect to any shares of Junior
Stock or Parity Stock, nor shall any shares of Junior Stock or Parity Stock be
redeemed, purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of Common Stock made for purposes of an 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
shares of any such stock) directly or indirectly by the Corporation (except by
conversion into or exchange for Junior Stock), nor shall any other cash or other
property otherwise be paid or distributed to or for the benefit of any holder of
shares of Junior Stock or Parity Stock in respect thereof, directly or
indirectly, by the Corporation unless in each case the full Cumulative Dividends
on all outstanding shares of Series A Preferred Stock and any
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other Parity Stock of the Corporation shall have been paid or such dividends
have been authorized and set apart for payment with respect to the Series A
Preferred Stock and any such Parity Stock.
Section 6.7.3 LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution,
winding up or termination of the affairs of the Corporation, whether voluntary
or involuntary, before any assets of the Corporation shall be distributed, paid
or set aside for the holders of Junior Stock, the Corporation shall pay to the
holders of shares of Series A Preferred Stock an amount equal to $25 per share
of Series A Preferred Stock (which is the "liquidation preference" referred to
in Section 6.7.2(a)) plus an amount equal to all Cumulative Dividends (whether
or not earned or authorized) to the date of final distribution to such holders;
and such holders shall not be entitled to any further payment. Until the holders
of the Series A Preferred Stock and holders of Parity Stock have been paid this
liquidation preference in full, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution, winding up or termination of the
Corporation. If, upon any liquidation, dissolution, winding up or termination of
the Corporation, the assets of the Corporation, or proceeds thereof,
distributable among the holders of Series A Preferred Stock shall be
insufficient to pay in full this liquidation preference 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 Series A
Preferred Stock and any such other Parity Stock ratably in the same proportion
as 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 6.7.3, (i) a consolidation or merger of
the Corporation with or into one or more entities or (ii) a sale, lease or
conveyance of all or substantially all of the Corporation's assets shall not be
deemed to be a liquidation, dissolution, winding up or termination, voluntary or
involuntary, of the Corporation.
(b) Subject to the rights of the holders of any shares
of Parity Stock, upon any liquidation, dissolution, winding up or termination of
the Corporation, after payment shall have been made in full to the holders of
Series A Preferred Stock and any Parity Stock, as provided in this Section
6.7.3, any other series or class or classes of Junior Stock shall, subject to
the respective terms thereof, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Series A Preferred
Stock and any Parity Stock shall not be entitled to share therein.
(c) In determining whether a distribution (other than
upon voluntary or involuntary liquidation) by dividend, redemption or other
acquisition of shares of stock of the Corporation or otherwise is permitted
under the MGCL, no effect shall be given to amounts that would be needed, if the
Corporation were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of holders of shares of stock of the
Corporation whose preferential rights upon dissolution are superior to those
receiving the distribution.
Section 6.7.4 REDEMPTION AT THE OPTION OF THE CORPORATION.
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(a) Except as provided in Section 6.7.4(b), shares of
Series A Preferred Stock shall not be redeemable by the Corporation prior to
February 15, 2010. On or after such date, the Corporation, at its option, may
redeem shares of Series A Preferred Stock, in whole or in part, at any time out
of assets legally available therefor at a redemption price payable in cash equal
to $25 per share of Series A Preferred Stock (plus an amount equal to all
Cumulative Dividends, if any, to the Call Date, whether or not earned or
authorized) (the "REDEMPTION PRICE").
(b) If, at any time, a Tax Event or Investment Company
Act Event shall occur and be continuing, the Corporation, at its option, may
redeem shares of Series A Preferred Stock, in whole but not in part, out of
assets legally available therefor at the Redemption Price. However, if at such
time there is available to the Corporation the opportunity to eliminate, within
a 90-day period, the Tax Event or the Investment Company Act Event, as the case
may be, by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure, which in the sole
judgment of the Corporation has or will cause no adverse effect on the
Corporation or the holders of the Series A Preferred Stock and will involve no
material cost to the Corporation, the Corporation shall pursue such measure
instead of redeeming the Series A Preferred Stock, and the Corporation will have
no right to redeem the Series A Preferred Stock while it is pursuing such
ministerial action. The Corporation may redeem the Series A Preferred Stock as
provided under this paragraph (b) within 90 days following the occurrence of the
Tax Event or Investment Company Act Event, which 90 day period shall be subject
to extension for the number of days that such ministerial actions are being
pursued.
(c) Shares of Series A Preferred Stock being redeemed
under paragraphs (a) or (b) of this Section 6.7.4 shall be redeemed by the
Corporation on the date specified in the notice to holders required under
paragraph (e) of this Section 6.7.4 (the "CALL DATE"). The Call Date shall be
selected by the Corporation, shall be specified in the notice of redemption and
shall be not less than 30 days nor more than 60 days after the date notice of
redemption is sent by the Corporation. If the Call Date does not fall on a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price is
improperly withheld or refused and not paid, distributions on such Series A
Preferred Stock will continue to accrue, from the Call Date to the date of
payment, in which case the actual payment date will be used for purposes of
calculating the portion of the Redemption Price consisting of Cumulative
Dividends. Except as provided above, the Corporation shall make no payment or
allowance for accumulated or accrued dividends on shares of Series A Preferred
Stock called for redemption.
(d) If full Cumulative Dividends on all outstanding
shares of Series A Preferred Stock have not been paid or authorized and set
apart for payment, no shares of Series A Preferred Stock may be redeemed unless
all outstanding shares of Series A Preferred Stock are simultaneously redeemed.
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(e) If the Corporation shall redeem shares of Series A
Preferred Stock pursuant to paragraphs (a) or (b) of this Section 6.7.4, notice
of such redemption shall be given to each holder of record of the shares to be
redeemed. Such notice shall be provided by first class mail, postage prepaid, at
such holder's address as the same appears on the stock records of the
Corporation not less than 30 days nor more than 60 days prior to the Call Date.
If the Corporation elects to provide such notice by publication, it shall also
promptly mail notice of such redemption to the holders of the shares of Series A
Preferred Stock to be redeemed. Neither the failure to mail any notice required
by this paragraph (e), 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 or published 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 such shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (3) the
Redemption Price; (4) the place or places at which certificates for such shares
(if certificated) are to be surrendered for payment; (5) that dividends on the
shares of Series A Preferred Stock to be redeemed shall cease to accrue on such
Call Date except as otherwise provided herein; and (6) that the payment of the
Redemption Price will be made upon presentation and surrender of such shares of
Series A Preferred Stock (if certificated). Notice having been published or
mailed as aforesaid, from and after the Call Date (unless the Corporation shall
fail to issue and make available the amount of cash necessary to effect such
redemption, including all Cumulative Dividends to the Call Date, whether or not
earned or authorized), (i) except as otherwise provided herein, dividends on the
shares of Series A Preferred Stock so called for redemption shall cease to
accumulate or accrue on the shares of Series A Preferred Stock called for
redemption (except that, in the case of a Call Date after a Dividend Record Date
and prior to the related Dividend Payment Date, holders of Series A Preferred
Stock on the Dividend Record Date will be entitled on such Dividend Payment Date
to receive the dividend payable on such shares), (ii) said shares 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 rights to receive the cash payable upon such redemption, without interest
thereon, upon surrender thereof 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 by 12:00 noon
New York City time, the Corporation shall deposit with its paying agent (which
may be the Corporation), such amount of cash as is necessary for such redemption
with irrevocable instructions that such cash be applied to the redemption of the
shares of Series A Preferred Stock so called for redemption. No interest shall
accrue for the benefit of the holders of shares 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 shares of Series A Preferred Stock 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 (if certificated) so
redeemed (properly endorsed or assigned
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for transfer, if the Corporation shall so require and if the notice shall so
state), such certificates shall be exchanged for cash (without interest thereon)
for which such shares have been redeemed in accordance with such notice. If
fewer than all the outstanding shares of Series A Preferred Stock are to be
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 by any other method as may be determined by the Board of
Directors in its discretion to be equitable. If fewer than all the shares of
Series A Preferred Stock are redeemed and such shares are represented by a
certificate, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
Section 6.7.5 STATUS OF SHARES. All shares of Series A Preferred
Stock which shall have been issued and redeemed, converted or reacquired in any
manner by the Corporation shall be restored to the status of authorized, but
unissued shares of Preferred Stock, without designation as to series.
Section 6.7.6 RANKING. Any other class or series of stock of the
Corporation shall be deemed to rank:
(a) senior to the Series A Preferred Stock, as to the
payment of dividends or as to the distribution of assets upon liquidation,
dissolution, winding up or termination, if the holders thereof shall be
entitled, by the terms of such stock, to receipt of dividends or of amounts
distributable upon liquidation, dissolution, winding up or termination, as the
case may be, in preference or priority to the holders of Series A Preferred
Stock ("SENIOR 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, winding up or termination, 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 stock, by the terms of such stock, and the Series A Preferred
Stock shall be entitled to the receipt of dividends and of amounts distributable
upon liquidation, dissolution, winding up or termination 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");
or
(c) junior to the Series A Preferred Stock, as to the
payment of dividends or as to the distribution of assets upon liquidation,
dissolution, winding up or termination, if such class or series shall be Common
Stock or if, by the terms of such class or series of stock, the holders of
Series A Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution, winding up or termination, as the
case may be, in preference or priority to the holders of shares of such class or
series ("JUNIOR STOCK").
Section 6.7.7 VOTING RIGHTS.
(a) The holders of Series A Preferred Stock shall not
have any voting rights except as set forth below.
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(b) Whenever dividends on any shares of Series A
Preferred Stock shall be in arrears for six or more consecutive quarterly
periods (a "DIVIDEND DEFAULT"), the holders of such shares of Series A Preferred
Stock (voting separately as a class with all other classes of preferred stock
upon which like voting rights have been conferred and are exercisable) will be
entitled, by the vote of holders of Series A Preferred Stock and such other
classes of preferred stock with like voting rights representing a majority in
aggregate liquidation amount of such outstanding preferred stock, to elect a
total of two additional directors of the Corporation (who need not be officers
or employees or Affiliates of the Corporation and who shall have the same
rights, powers and privileges as regular members of the Board of Directors,
except as described below) (the "PREFERRED DIRECTORS"). Not later than 30 days
after such right to elect Preferred Directors arises, the Board of Directors
shall convene a meeting for the purpose of electing the Preferred Directors. If
the Board of Directors fails to do so within such 30-day period, a special
meeting called by the holders of record of at least 10% in aggregate liquidation
amount of such outstanding Series A Preferred Stock and such other classes of
preferred stock with like voting rights will be entitled to convene the meeting.
The provisions of this Charter and the Bylaws relating to convening and conduct
of the meetings will apply with respect to any such meeting. If, at any such
meeting, holders of less than a majority in aggregate liquidation amount of
preferred stock of all series entitled to vote for the election of Preferred
Directors vote for such election, no Preferred Directors shall be elected.
During the term of the Preferred Directors, the Board of Directors shall not be
permitted to increase the number of directors, except to add the Preferred
Directors. One of the Preferred Directors, at such Preferred Director's request,
shall be appointed as an additional member of the audit committee of the Board
of Directors, if the director otherwise qualifies as an independent director (as
determined in accordance with Section 3.2 of the Bylaws). Any Preferred Director
may be removed with or without cause at any time by the vote of the holders of a
majority in liquidation amount of each series of preferred stock upon which like
voting rights have been conferred and are then exercisable as a single class.
The holders of 10% in liquidation amount shall be entitled to convene a meeting
for the purpose of removing a Preferred Director. If and when all dividends
accumulated on such shares of Series A Preferred Stock for the past dividend
periods and the then current dividend period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment, the
holders of such shares of Series A Preferred Stock shall be divested of the
voting rights set forth in paragraph (b) of this Section 6.7.7 (subject to
revesting in the event of each and every Dividend Default) and, if all dividends
accumulated on all other classes of preferred stock upon which like voting
rights have been conferred and are exercisable for the past dividend periods and
the then current dividend period shall have been fully paid or declared and a
sum sufficient for the payment thereof set aside for payment, the term of office
of each Preferred Director so elected shall terminate and the Board of Directors
shall take such action as may be necessary to reduce the number of directors by
two.
(c) So long as any shares of Series A Preferred Stock
are outstanding, in addition to any other vote or consent of stockholders
required by the Charter or required by the MGCL, the affirmative vote of holders
of the Series A Preferred Stock representing at least two-thirds in liquidation
amount of the outstanding Series A Preferred Stock shall be necessary for (i)
the authorization or creation of, or any increase in the authorized amount of,
any class or series of Senior Stock or (ii) effecting or validating any
amendment,
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modification or repeal, whether by merger, consolidation or otherwise, of any of
the provisions of the Charter (including the preferences, rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series A Preferred
Stock) that materially and adversely affects the preferences, rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series A Preferred
Stock. Notwithstanding the foregoing, any amendment of the provisions of the
Charter so as to (A) authorize, create or increase the number of authorized
shares of any class or series of Parity Stock or Junior Stock or (B) decrease
the number of authorized shares of Series A Preferred Stock, but not below the
number of shares of Series A Preferred Stock of the series then outstanding,
shall not be deemed to materially and adversely affect the preferences, rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of the
Series A Preferred Stock. Notwithstanding the foregoing, no vote or consent of
the holders of the Series A Preferred Stock will be required for the Corporation
to redeem and cancel preferred stock of any series.
No vote or consent of the holders of the Series A Preferred Stock
will be required for the authorization or creation, or any increase in the
authorized amount, of any class or series of Parity Stock or Junior Stock.
For purposes of the foregoing provisions of this paragraph (c), each
share of Series A Preferred Stock shall have one vote per share, except that
when 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 vote per $25 of stated liquidation preference, and fractional votes shall be
ignored.
Any required approval or direction of holders of Series A Preferred
Stock may be given at separate meetings of holders of Series A Preferred Stock
convened for such purpose, at a meeting of all of the holders of the Series A
Preferred Stock or pursuant to written consent. The Corporation will cause a
notice of any meeting at which holders of Series A Preferred Stock are entitled
to vote, or of any matter upon which action by written consent of such holders
is to be taken, to be mailed to each holder of record of Series A Preferred
Stock. Each such notice will include a statement setting forth (i) the date of
such meeting or the date by which such action is to be taken, (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
(d) Nothing contained in paragraph (c) of this Section
6.7.7 shall require a vote of the holders of the Series A Preferred Stock in
connection with any merger or consolidation or transfer or lease of
substantially all of the Corporation's assets as an entirety to any entity if
such event does not materially and adversely affect the preferences, rights,
voting powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption of the Series A Preferred Stock (including
any Successor Securities).
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Section 6.7.8 SEVERABILITY OF PROVISIONS. If any preference,
right, voting power, restriction, limitation as to dividends or other
distributions, qualification or term or condition of redemption of the Series A
Preferred Stock set forth herein is invalid, unlawful or incapable of being
enforced by reason of any rule of law or public policy, all other preferences,
rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications or terms or conditions of redemption of the Series
A Preferred Stock set forth herein which can be given effect without the
invalid, unlawful or unenforceable provision thereof shall, nevertheless, remain
in full force and effect, and no preferences, rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of the Series A Preferred Stock herein set
forth shall be deemed dependent upon any other provision thereof unless so
expressed therein.
ARTICLE 7
RESTRICTIONS ON OWNERSHIP AND TRANSFER
OF SHARES OF CAPITAL STOCK
Section 7.1 CAPITAL STOCK.
Section 7.1.1 RESTRICTION ON OWNERSHIP AND TRANSFERS.
(a) Except as provided in Section 7.1.8, (i) from the
Issue Date and prior to the Restriction Termination Date, no Person (or Persons
in the aggregate, in the case of the Initial Class B Parties) shall Beneficially
Own shares of Capital Stock in excess of the applicable Ownership Limit.
(b) Except as provided in Section 7.1.8 (and subject
to Section 7.3), from the Issue Date and prior to the Restriction Termination
Date, any Transfer (whether or not such Transfer is the result of one or more
transactions entered into through the facilities of the AMEX) that, if
effective, would result in any Person (or Persons, in the case of the Initial
Class B Parties) Beneficially Owning shares of Capital Stock in excess of the
applicable Ownership Limit shall be void AB INITIO as to the Transfer of that
number of shares of Capital Stock which would be otherwise Beneficially Owned by
such Person or Persons, as applicable, in excess of the applicable Ownership
Limit, and the intended transferee or transferees shall acquire no rights in
such shares of Capital Stock.
(c) Subject to Section 7.3, from the Issue Date and
prior to the Restriction Termination Date, any Transfer (whether or not such
Transfer is the result of one or more transactions entered into through the
facilities of the AMEX) that, if effective, would result in the Capital Stock
being actually owned by less than 100 Persons (determined without reference to
any rules of attribution) shall be void AB INITIO as to the Transfer of that
number of shares of Capital Stock which would be otherwise owned (determined
without reference to any rules of attribution) by the transferee and the
intended transferee shall acquire no rights in such shares of Capital Stock.
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(d) Subject to Section 7.3, from the Issue Date and
prior to the Restriction Termination Date, any Transfer (whether or not such
Transfer is the result of one or more transactions entered into through the
facilities of the AMEX) that, if effective, would cause the Corporation to fail
to qualify as a REIT by reason of being "closely held" within the meaning of
section 856(h) of the Code shall be void AB INITIO as to the Transfer of that
number of shares of Capital Stock which would cause the Corporation to be
"closely held" within the meaning of section 856(h) of the Code, and the
intended transferee or transferees shall acquire no rights in such shares of
Capital Stock.
(e) Subject to Section 7.3, from the Issue Date and
prior to the Restriction Termination Date, any Transfer (whether or not such
Transfer is the result of one or more transactions entered into through the
facilities of the AMEX) that, if effective, would (i) cause the Corporation to
Constructively Own 9.9% or more of the ownership interests in a tenant of the
real property of the Corporation, the Operating Partnership or any direct or
indirect subsidiary (including, without limitation, partnerships, joint ventures
and limited liability companies) of the Corporation or the Operating Partnership
(each, a "SUBSIDIARY"), within the meaning of section 856(d)(2)(B) of the Code
or (ii) otherwise, directly or indirectly, cause the Corporation to fail to
qualify as a REIT, shall be void AB INITIO as to the Transfer of that number of
shares of Capital Stock which would cause the Corporation to Constructively Own
9.9% or more of the ownership interests in a tenant of the Corporation's, the
Operating Partnership's or any Subsidiary's real property, within the meaning of
section 856(d)(2)(B) of the Code or otherwise, directly or indirectly, would
cause the Corporation to fail to qualify as a REIT, and the intended transferee
or transferees shall acquire no rights in such shares of Capital Stock.
Section 7.1.2 REMEDIES FOR BREACH. If the Board of Directors or
a committee thereof shall at any time determine in good faith that a purported
Transfer or other event has taken place in violation of Section 7.1.1 (whether
or not such violation is intended), or that a Person intends to acquire or has
attempted to acquire Beneficial or Constructive Ownership of any shares of
Capital Stock in violation of Article 7, the Board of Directors or a committee
thereof shall be empowered to take any action as it deems advisable to refuse to
give effect to or to prevent such Transfer or other event, including, but not
limited to, refusing to give effect to such Transfer or other event on the books
of the Corporation, demanding the repayment of any distributions received in
respect of shares of Capital Stock purportedly acquired in violation of Section
7.1.1 or instituting proceedings to enjoin or rescind such purported Transfer or
attempted Transfer; provided, however, that any Transfers or attempted Transfers
(or in the case of events other than a Transfer, Beneficial or Constructive
Ownership) in violation of Section 7.1.1, regardless of any action (or
non-action) by the Board of Directors or such committee, (i) shall be void AB
INITIO and (ii) shall automatically result in the exchange described in Section
7.1.3.
Section 7.1.3 CONVERSION INTO EXCESS STOCK.
(a) If, notwithstanding the other provisions contained
in this Article 7, there is a purported Transfer (whether or not such Transfer
is the result of one or more transactions entered into through the facilities of
the AMEX) or other change in the capital structure of the Corporation or other
event such that any Person (or Persons, in the case of the
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Initial Class B Parties) would Beneficially Own shares of Capital Stock in
excess of the applicable Ownership Limit, then, except as otherwise provided in
Section 7.1.8, such shares of Capital Stock (rounded up to the next whole number
of shares) in excess of the applicable Ownership Limit, shall be automatically
converted into an equal number of shares of Excess Class A Common Stock, Excess
Class B Common Stock or Excess Series A Preferred Stock, as the case may be,
having identical terms except as set forth in this Article 7. Such conversion
shall be effective as of the close of business on the Business Day prior to the
date of the purported Transfer or change in capital structure or other event.
(b) If, notwithstanding the other provisions contained
in this Article 7, there is a purported Transfer (whether or not such Transfer
is the result of a transaction entered into through the facilities of the AMEX)
or other change in the capital structure of the Corporation or other event that,
if effective, would result in a violation of any of the restrictions contained
in Section 7.1.1(c), (d) or (e) or otherwise, directly or indirectly, would
cause the Corporation to fail to qualify as a REIT, then the shares of Capital
Stock (rounded up to the next whole number of shares) purportedly being
Transferred or which are otherwise affected by the change in the capital
structure of the Corporation or other event and which would result in such
violation or otherwise would cause the Corporation to fail to qualify as a REIT
shall be automatically converted into an equal number of shares of Excess Class
A Common Stock, Excess Class B Common Stock or Excess Series A Preferred Stock,
as the case may be, having identical terms except as set forth in this Article
7. Such conversion shall be effective as of the close of business on the
Business Day prior to the date of the purported Transfer or change in capital
structure or other event.
Section 7.1.4 NOTICE OF RESTRICTED TRANSFER. Any Person who
acquires or attempts to acquire shares of Capital Stock in violation of Section
7.1.1, or any Person who is a transferee such that Excess Stock results under
Section 7.1.3, shall immediately give written notice to the Corporation or, in
the case of a proposed or attempted Transfer or acquisition, shall give at least
15 days prior written notice to the Corporation, of such event and shall
promptly provide to the Corporation such other information as the Corporation in
its sole discretion may request in order to determine the effect, if any, of
such Transfer or proposed or attempted Transfer or other event on the
Corporation's status as a REIT. Failure to give such notice shall not limit the
rights and remedies of the Board of Directors provided herein in any way.
Section 7.1.5 OWNERS REQUIRED TO PROVIDE INFORMATION.
Prior to the Restriction Termination Date:
(a) Every record and Beneficial Owner of more than 5%
(or such other percentage determined pursuant to regulations under the Code or
as may be requested by the Board of Directors in its sole discretion) of the
outstanding shares of any class or series of Capital Stock shall, within 30 days
after January 1 of each year, give written notice to the Corporation stating the
name and address of such record or Beneficial Owner, the number of shares of
each class or series of Capital Stock Beneficially Owned, and a full description
of how such shares are held. Each such record or Beneficial Owner of Capital
Stock shall, promptly
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after demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial or Constructive Ownership
of the Capital Stock as the Board of Directors, in its sole discretion, deems
appropriate or necessary to (i) comply with the provisions of the Code regarding
the qualification of the Corporation as a REIT, and (ii) ensure compliance with
the Ownership Limit. Each stockholder of record, including without limitation
any Person who holds shares of Capital Stock on behalf of a Beneficial or
Constructive Owner, shall take all reasonable steps to obtain the written notice
described in this paragraph.
(b) Each Person who is a Beneficial or Constructive
Owner of shares of any class or series of Capital Stock and each Person
(including the stockholder of record) who is holding shares of Capital Stock for
a Beneficial or Constructive Owner, and any proposed transferee of shares of
Capital Stock, shall provide such information as the Corporation, in its sole
discretion, may request in order to determine the Corporation's status as a
REIT, to comply with the requirements of any taxing authority or other
governmental agency, or to determine any such compliance or to ensure compliance
with the Ownership Limit and other restrictions set forth in this Article 7, and
shall provide a statement or affidavit to the Corporation setting forth the
number of shares of any class or series of Capital Stock Beneficially or
Constructively Owned by such stockholder or proposed transferee and any related
Persons specified, which statement or affidavit shall be in the form prescribed
by the Corporation for that purpose.
Section 7.1.6 REMEDIES NOT LIMITED. Nothing contained in Article
6 or this Article 7 shall limit the authority of the Board of Directors to take
such other action as it deems necessary or advisable (subject to the provisions
of Section 7.3) (i) to protect the Corporation and the interests of its
stockholders in the preservation of the Corporation's status as a REIT, and (ii)
to ensure compliance with the Ownership Limit and other restrictions set forth
in this Article 7.
Section 7.1.7 AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of Article 7, including any definition
contained in this Article or in Article 11, the Board of Directors shall have
the power to determine the application of the provisions of Article 7 with
respect to any situation based on its reasonable belief, understanding or
knowledge of the circumstances.
Section 7.1.8 EXCEPTION.
(a) The Board of Directors, upon receipt of a ruling
from the Internal Revenue Service or an opinion of tax counsel or other evidence
or undertakings acceptable to it, may waive the application, in whole or in
part, of the applicable Ownership Limit to a Person or Persons (other than any
individual, as such term is defined pursuant to section 542(a)(2) of the Code)
subject to such Ownership Limit, if a Transfer of shares of Capital Stock or
other applicable event to which the Ownership Limit applies does not or will not
cause any of the Corporation, Krupp Government Income Trust, a Massachusetts
business trust, or Krupp Government Income Trust II, a Massachusetts business
trust, to violate the "closely held" provisions of section 856(h) of the Code or
otherwise cause the Corporation to fail to qualify as a
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REIT. In connection with any such exemption, the Board of Directors may require
such representations and undertakings from such Person or Persons and may impose
such other conditions as the Board of Directors deems necessary, in its sole
discretion, to determine the effect, if any, of the proposed Transfer or other
event on the Corporation's status as a REIT. Notwithstanding the foregoing, the
Board of Directors will not waive the application of clause (ii) of the
definition of Ownership Limit during such time as either of the Corporation or
the Operating Partnership Beneficially Owns more than 9.8% of the outstanding
shares of beneficial interest in Krupp Government Income Trust or Krupp
Government Income Trust II.
(b) For a period of 90 days following the purchase of
Capital Stock by an underwriter that (i) is a corporation, limited liability
company, partnership or other entity and (ii) participates in an offering of the
Capital Stock, such underwriter shall not be subject to the application of
clause (i) of the definition of Ownership Limit with respect to the Capital
Stock purchased by it as part of or in connection with such offering and with
respect to any Capital Stock purchased in connection with market making
activities, provided that the restrictions contained in Section 7.1.1 will not
be violated following the distribution by such underwriter of such shares.
Section 7.1.9 NOTICE TO STOCKHOLDERS. Upon issuance or
transfer on the stock transfer records of the Corporation of shares of
Capital Stock, the Corporation shall provide the recipient or transferee with
a notice containing information about the shares so issued or transferred, in
lieu of issuance of a share certificate, in a form substantially similar to
the following:
"NOTICE OF ISSUANCE OR TRANSFER OF
UNCERTIFICATED SHARES OF BERKSHIRE INCOME
REALTY, INC.
As permitted by Section 2-210(c) of the
Maryland General Corporation Law, shares of
stock of Berkshire Income Realty, Inc., a
Maryland corporation (the "Corporation"), shall
be issued or transferred without certificates.
Shares of stock of the Corporation issued or
transferred are subject to restrictions on
transfer and ownership for the purpose of
maintenance of the Corporation's status as a
real estate investment trust (a "REIT") under
sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code").
Except as otherwise provided pursuant to the
charter of the Corporation, (i) no Person other
than KRF Company, L.L.C. and certain related
Persons may Beneficially Own shares of Capital
Stock of the Corporation in excess of 4.9% (or
such greater percentage as may be determined by
the Board of Directors of the Corporation) of
any class or series of the outstanding shares;
(ii) KRF Company, L.L.C. and certain related
Persons may Beneficially Own all of the shares
of Class B Common Stock of the Corporation but
may not Beneficially Own any other shares of
Capital Stock of the Corporation in excess of
the percentages set forth in the charter of the
Corporation; (iii) no Person may own shares if
such ownership would result in the Capital
Stock of the Corporation being owned by less
than 100 Persons; (iv) no Person may
Beneficially Own
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shares of any class or series of Capital
Stock of the Corporation which would result
in the Corporation being "closely held" under
Section 856(h) of the Code; and (v) no Person
may Beneficially or Constructively Own shares
of any class or series of Capital Stock of
the Corporation that would cause the
Corporation to Constructively Own 9.9% or
more of the ownership interests in a tenant
of the Corporation's, the Operating
Partnership's or a Subsidiary's real
property, within the meaning of section
856(d)(2)(B) of the Code or which otherwise
would cause the Corporation to fail to
qualify as a REIT. Any Person who has
Beneficial or Constructive Ownership, or who
acquires or attempts to acquire Beneficial or
Constructive Ownership of shares in excess of
the above limitations and any Person who
Beneficially or Constructively Owns Excess
Stock as a transferee of shares resulting in
the conversion of shares into Excess Stock
(as described below) immediately must notify
the Corporation. Any Transfer or acquisition
of shares or other event which results in a
violation of the ownership or transfer
limitations set forth in the Corporation's
charter shall be void AB INITIO and the
intended transferee shall acquire no rights
in such shares. If the transfer and ownership
limitations referred to herein are violated,
the shares issued or transferred
automatically will be converted into Excess
Stock to the extent of violation of such
limitations, and such Excess Stock will be
held in trust by a trustee appointed by the
Corporation, all as provided by the charter
of the Corporation. All defined terms used in
this legend have the meanings identified in
the Corporation's charter, as the same may be
amended from time to time, a copy of which,
including the restrictions on transfer, will
be sent without charge to each stockholder
who so requests."
Section 7.1.10 SEVERABILITY. If any provision of this Article 7
or any application of any such provision is determined in a final and
unappealable judgment to be void, invalid or unenforceable by any federal or
state court having jurisdiction over the issues, the validity and enforceability
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.
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Section 7.1.11 BOARD OF DIRECTORS' DISCRETION. Anything in this
Charter to the contrary notwithstanding, and subject to such approval that may
be required by the MGCL with respect to charter amendments, the Board of
Directors shall be entitled to take or omit to take such actions as it in its
discretion shall determine to be advisable in order that the Corporation
maintain its status as and continue to qualify as a REIT, including, but not
limited to, reducing any applicable Ownership Limit in the event of a change in
law.
Section 7.2 EXCESS STOCK. The following is a description of the
preferences, rights, voting powers, restrictions, limitations as to dividends
and other distributions, qualifications and terms and conditions of redemption
of the Excess Stock of the Corporation:
Section 7.2.1 OWNERSHIP IN TRUST. Upon any purported Transfer,
change in the capital structure of the Corporation, purported change in
Beneficial or Constructive Ownership or other event that results in Excess Stock
pursuant to Section 7.1.3, such Excess Stock shall be deemed to have been
transferred to a Person who is unaffiliated with each of the Corporation, each
Purported Beneficial Transferee, and each Purported Record Transferee as trustee
of a Trust for the exclusive benefit of one or more organizations described in
section 170(c)(2) and 501(c)(3) of the Code (the "CHARITABLE BENEFICIARY" or
"CHARITABLE BENEFICIARIES"), as shall be designated by resolution of the Board
of Directors. At all times at least one Charitable Beneficiary shall be
designated by the Board of Directors. Where a Transfer or other event results in
an automatic conversion of shares of more than one class into Excess Stock, then
separate Trusts shall be deemed to have been established for the Excess Stock
attributable to the shares of each such class. Shares of Excess Stock held in a
Trust for the exclusive benefit of the Charitable Beneficiary shall be issued
and outstanding shares of Capital Stock. The Purported Record Transferee and the
Purported Beneficial Transferee shall have no rights in the shares of Excess
Stock except the right to receive an amount for its interest in the shares of
Capital Stock which were converted into Excess Stock upon the terms specified in
Section 7.2.3 or 7.2.5, as applicable.
Section 7.2.2 DISTRIBUTION RIGHTS. Shares of Excess Stock shall
be entitled to dividends and distributions as if such shares of Excess Stock
were shares of the applicable class or series of Common Stock or Preferred Stock
provided that the dividends and distributions shall be paid to the Trustee to be
held in trust for the exclusive benefit of the Charitable Beneficiary. Any
dividend or distribution paid prior to the discovery by the Corporation that the
shares of Capital Stock have been converted into Excess Stock shall be repaid to
the Corporation upon demand or, at the Corporation's sole election, shall be
offset against any future dividends or distributions payable on the shares. Any
dividends so disgorged shall be paid over to the Trust for the exclusive benefit
of the Charitable Beneficiary.
Section 7.2.3 RIGHTS UPON LIQUIDATION.
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up, or any other distribution of the assets,
of the Corporation, each holder of shares of Excess Stock resulting from the
conversion of shares of Capital Stock of any class or series into shares of
Excess Stock shall be entitled to receive, ratably with each other holder of
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shares of Excess Stock resulting from the conversion of shares of Capital Stock
of such class or series into shares of Excess Stock and each holder of shares of
Capital Stock of such class or series, that portion of the remaining assets of
the Corporation as are due to the holders of shares of Preferred Stock of such
series or available for distribution to the holders of shares of Common Stock of
such class, as applicable.
(b) The Trustee shall distribute to the Purported
Record Transferee or purported record holder of the shares the amounts received
upon such liquidation, dissolution, winding up or distribution, provided that
the Purported Record Transferee or purported record holder of the shares shall
not be entitled to receive amounts pursuant to this Section 7.2.3 in excess of
the price per share in the transaction that created such shares of Excess Stock
(or, in the case of a gift or devise, the Market Price per share on the date of
such purported transfer) less the amount of any distributions received by the
Purported Record Transferee or purported record holder of the shares and not
repaid or offset against future distributions pursuant to Section 7.2.2. Any
remaining amounts shall be distributed to the Charitable Beneficiary.
Section 7.2.4 VOTING RIGHTS. Subject to Maryland law, effective
as of the date that Capital Stock is converted into Excess Stock pursuant to
Section 7.1.3, the holders of Capital Stock that has been converted into Excess
Stock shall not be entitled to vote such Capital Stock on any matter, and, if
such Capital Stock has voting rights, all votes cast with respect to shares of
Excess Stock into which such Capital Stock has been converted shall be voted in
accordance with the direction of the Trustee of the Trust acting for the
exclusive benefit of the Charitable Beneficiary. Any vote taken with respect to
shares of Capital Stock prior to the discovery by the Corporation that the
shares have been converted into Excess Stock shall, subject to applicable law,
be rescinded and be void AB INITIO and be recast by the Trustee, in its sole and
absolute discretion, provided that if the Corporation has already taken
irreversible corporate action based on such vote, then the Trustee shall not
have the authority to rescind and recast such vote. The Purported Record
Transferee or purported record holder of the shares shall be deemed to have
given, as of the date of the conversion of such shares into shares of Excess
Stock pursuant to Section 7.1.3, an irrevocable proxy to the Trustee to vote the
shares of Excess Stock in the manner in which the Trustee, in its sole and
absolute discretion, desires.
Section 7.2.5 SALES OF EXCESS STOCK.
(a) Excess Stock shall not be transferable. However,
for purposes of sales by the Trustee as set forth herein, the Trustee shall
designate a permitted transferee of the shares of Capital Stock represented by
such Excess Stock provided that the transferee (i) purchases such shares for
valuable consideration and (ii) acquires such shares without such acquisition
resulting in a violation of Section 7.1.1 or another automatic conversion of
shares of Capital Stock into Excess Stock. If the Corporation does not purchase
the Excess Stock, the Trustee shall (i) sell that number of shares represented
by such Excess Stock to the permitted transferee, (ii) cause to be recorded on
the books of the Corporation that the permitted transferee is the holder of
record of such number of shares and (iii) cause the Excess Stock to be
cancelled.
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(b) In the event of a sale by the Trustee of the
shares represented by such Excess Stock, the Purported Record Transferee or
purported record holder of such shares shall receive from the Trustee a per
share price equal to the lesser of (i) the price per share in the transaction
that created such Excess Stock (or, in the case of a gift or devise, the Market
Price per share on the date of such purported transfer) and (ii) the price per
share received by the Trustee, provided that such price per share shall be net
of any commissions and other expenses of the sale. The proceeds shall be sent to
such Person within five Business Days after the closing of such sale
transaction.
(c) All Excess Stock will be deemed to have been
offered for sale to the Corporation, or its designee, and the Corporation will
have the right to accept such offer for a period of 20 days after the later of
(i) the date of the purported Transfer or acquisition or change in the capital
structure of the Corporation or other event which resulted in such Excess Stock
and (ii) the date the Corporation determines in good faith that a purported
Transfer or acquisition or change in the capital structure of the Corporation or
other event resulting in such Excess Stock occurred, if the Corporation does not
receive a notice pursuant to Section 7.1.4. If the Corporation accepts the offer
to purchase such Excess Stock, the purchase price per share shall be equal to
the lesser of (i) the price per share in the transaction that created such
Excess Stock (or, in the case of a gift or devise, the Market Price per share on
the date of such purported transfer) and (ii) the Market Price on the date the
Corporation or its designee, accepts such offer.
(d) Any amounts received by the Trustee in excess of
the amounts paid to the Purported Record Transferee or purported record holder
of the shares shall be distributed to the Charitable Beneficiary.
Section 7.2.6 AUTHORIZATION. At such time as the Board of
Directors authorizes a class or series of Common or Preferred Stock pursuant to
Section 6.2.1 or 6.4, there shall be automatically authorized a series of
Excess Stock consisting of the number of shares included in the class or series
of Common or Preferred Stock and having preferences, rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption identical thereto, except
to the extent that this Article 7 requires different terms. In such event, any
appropriate correlative modification in all defined terms shall be deemed to
have been made.
Section 7.3 SETTLEMENT. Nothing in this Article 7 shall be interpreted
to preclude the settlement of any transaction entered into through the
facilities of the AMEX. The fact that the settlement of any transaction occurs
shall not negate the effect of any provisions of this Article 7, and any
transferee in such a transaction shall be subject to all of the provisions and
limitations of this Article.
ARTICLE 8
AMENDMENTS
The Corporation reserves the right from time to time to make any
amendment to the Charter, now or hereafter authorized by law, including any
amendment altering the terms or
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contract rights, as expressly set forth in the Charter, of any shares of
outstanding stock. All rights and powers conferred by the Charter on
stockholders, directors and officers are granted subject to this reservation.
ARTICLE 9
LIMITATION OF LIABILITY
To the maximum extent that Maryland law in effect from time to time
permits limitation of the liability of directors and officers of a corporation,
no director or officer of the Corporation shall be liable to the Corporation or
its stockholders for money damages. Neither the amendment nor repeal of this
Article 9, nor the adoption or amendment of any other provision of the Charter
or Bylaws inconsistent with this Article 9, shall apply to or affect in any
respect the applicability of the preceding sentence with respect to any act or
failure to act which occurred prior to such amendment, repeal or adoption.
ARTICLE 10
GOVERNING LAW
This Charter shall be governed in accordance with the laws of the State
of Maryland.
ARTICLE 11
DEFINITIONS
As used in this Charter, the following terms shall have the meanings
indicated:
"AFFILIATE" of a person shall mean a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified.
"AMEX" shall mean The American Stock Exchange, Inc.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership
of shares of a class of Common Stock or a series of Preferred Stock equal to the
sum of (i) the number of shares of such class of Common Stock or such series of
Preferred Stock directly owned by such Person and (ii) the number of shares of
such class of Common Stock or such series of Preferred Stock indirectly owned by
such Person, taking into account the constructive ownership rules of section 544
of the Code, as modified by section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns," "Beneficially Own" and "Beneficially
Owned" shall have the correlative meanings.
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"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to perform
any of its responsibilities as permitted by law.
"BUSINESS DAY" shall mean any day, other than a Saturday or Sunday, that
is neither a legal holiday nor a day on which banking institutions in New York,
New York or Boston, Massachusetts are authorized or required by law, regulation
or executive order to close.
"BYLAWS" shall mean the bylaws of the Corporation.
"CALL DATE" has the meaning given it in Section 6.7.4.
"CAPITAL STOCK" shall mean all classes or series of stock of the
Corporation, including, without limitation, Common Stock and Preferred Stock.
"CHARITABLE BENEFICIARY" shall mean the beneficiary of the Trust as
determined pursuant to Section 7.2.1.
"CHARTER" shall mean the charter of the Corporation, as that term is
defined in the MGCL.
"CLASS A COMMON STOCK" has the meaning given it in Section 6.1.
"CLASS B COMMON STOCK" has the meaning given it in Section 6.1.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time or any successor statute thereto. Reference to any provision of the
Code shall mean such provision as in effect from time to time, as the same may
be amended, and any successor provision thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in effect from
time to time.
"COMMON STOCK" has the meaning given it in Section 6.1.
"CONSTRUCTIVE OWNERSHIP" shall mean, with respect to any Person,
ownership of shares of Capital Stock equal to the sum of (i) the number of
shares of Capital Stock directly owned by such Person and (ii) the number of
shares of Capital Stock indirectly owned by such Person, taking into account the
constructive ownership rules of section 318 of the Code, as modified by section
856(d)(5) of the Code. The terms "Constructive Owner," "Constructively Owns,"
"Constructively Own" and "Constructively Owned" shall have the correlative
meanings.
"CORPORATION" shall mean Berkshire Income Realty, Inc., a Maryland
corporation, and any successor entity.
"CUMULATIVE DIVIDENDS" shall mean all accumulated, accrued and unpaid
dividends.
"DIVIDEND PAYMENT DATE" has the meaning given it in Section 6.7.2.
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"DIVIDEND RECORD DATE" has the meaning given it in Section 6.7.2.
"EQUITY SECURITY" shall have the meaning ascribed to it in the Exchange
Act and the rules and regulations thereunder (and any successor laws, rules and
regulations of similar import.)
"EXCESS CLASS A COMMON STOCK" shall mean Excess Stock into which, under
Section 7.1.3, Class A Common Stock would automatically convert upon a Transfer
of Class A Common Stock in violation of Section 7.1.1.
"EXCESS CLASS B COMMON STOCK" shall mean Excess Stock into which, under
Section 7.1.3, Class B Common Stock would automatically convert upon a Transfer
of Class B Common Stock in violation of Section 7.1.1.
"EXCESS SERIES A PREFERRED STOCK" shall mean Excess Stock into which,
under Section 7.1.3, Series A Preferred Stock would automatically convert upon a
Transfer of Series A Preferred Stock in violation of Section 7.1.1.
"EXCESS STOCK" has the meaning given it in Section 6.1.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE PERCENTAGE" shall mean, with respect to the outstanding shares
of Series A Preferred Stock, that percentage equal to (i) the number of shares
of Series A Preferred Stock received by Berkshire Mortgage Advisors Limited
Partnership on the Issue Date in exchange for the tender of the 10,000 shares of
beneficial interest of each of Krupp Government Income Trust and Krupp
Government Income Trust II owned by it immediately prior to the Issue Date,
divided by (ii) the total number of shares of Series A Preferred Stock
outstanding on the Issue Date.
"INITIAL CLASS B HOLDER" shall mean KRF Company, L.L.C., a Delaware
limited liability company.
"INITIAL CLASS B PARTIES" shall mean the Initial Class B Holder, the KRF
Individuals and the KRF Related Parties.
"INVESTMENT COMPANY ACT EVENT" shall mean that the Corporation has
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act of 1940, as amended (the "INVESTMENT
COMPANY ACT"), that because of the occurrence of a change in law or regulation
or a change in interpretation or application of law or regulation by a
legislative body, court, governmental agency or regulatory authority, there is
more than an insubstantial risk that the Corporation is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change in law became effective after the Issue Date.
"IRS" shall mean the Internal Revenue Service.
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"ISSUE DATE" shall mean the date on which the exchange offers described
in the Corporation's Prospectus relating to the issuance of the Series A
Preferred Stock is consummated.
"JUNIOR STOCK" has the meaning given it in Section 6.7.6.
"KRF INDIVIDUAL" shall mean each individual (as such term is defined
pursuant to section 542(a)(2) of the Code) who Beneficially Owns any shares of
Capital Stock owned by the Initial Class B Holder.
"KRF RELATED PARTY" shall mean each Person, other than the Initial Class
B Holder and each KRF Individual, whose Beneficial Ownership of shares of
Capital Stock causes the number of shares of Capital Stock Beneficially Owned by
any KRF Individual to increase.
"MARKET PRICE" on any date shall mean the Closing Price on the Trading
Day immediately preceding such date. The "Closing Price" on any date shall mean
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the AMEX or, if the
applicable class or series of Capital Stock is not listed or admitted to trading
on the AMEX, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the applicable class or series of Capital Stock is listed or
admitted to trading or, if the applicable class or series of Capital Stock is
not listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use, or if the applicable class or series of Capital Stock is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the applicable class
or series of Capital Stock selected by the Board of Directors, or if no such
market maker exists, as determined in good faith by the Board of Directors.
"MGCL" shall mean the Maryland General Corporation Law, as amended from
time to time.
"OPERATING PARTNERSHIP" shall mean Berkshire Income Realty-OP, L.P., a
Delaware limited partnership.
"OPERATING PARTNERSHIP AGREEMENT" shall mean the agreement of limited
partnership of the Operating Partnership, dated as of July 22, 2002, as such
agreement has been or in the future may be amended, modified or restated from
time to time. A copy of the Operating Partnership Agreement shall be available
for inspection at the office of the Secretary at the corporate headquarters of
the Corporation.
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"OWNERSHIP LIMIT" shall mean, (i) for any Person other than the Initial
Class B Parties, 4.9% of the number of the outstanding shares of any class or
series of Capital Stock and (ii) for the Initial Class B Parties, (A) 100% of
the number of the outstanding shares of Class B Common Stock and (B) that
percentage of the number of the outstanding shares of Series A Preferred Stock
equal to the Exchange Percentage.
"PARITY STOCK" has the meaning given it in Section 6.7.6.
"PERSON" shall mean (a) 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 (b) also includes a group as that term is used for purposes
of Section 13(d)(3) of the Exchange Act.
"PREFERRED STOCK" has the meaning given it in Section 6.1.
"PURPORTED BENEFICIAL TRANSFEREE" shall mean, with respect to any
purported Transfer of shares of Capital Stock or other event which results in
Excess Stock, the purported beneficial transferee for whom the Purported Record
Transferee would have acquired shares of Capital Stock, if such Transfer or
other event had not resulted in a conversion of any such shares of Capital Stock
into such Excess Stock pursuant to Section 7.1.3 (or in the event the provisions
of paragraphs (b)-(e) of Section 7.1.1 are in effect, had been valid under
Section 7.1.1.) The Purported Beneficial Transferee and the Purported Record
Transferee may be the same Person.
"PURPORTED RECORD TRANSFEREE" shall mean, with respect to any purported
Transfer of shares of Capital Stock or other event which results in Excess
Stock, the Person that would have been the record holder of the shares of
Capital Stock if such Transfer or other event had not resulted in a conversion
of any such shares of Capital Stock into such Excess Stock pursuant to Section
7.1.3 (or in the event the provisions of paragraphs (b)-(e) of Section 7.1.1 are
in effect, had been valid under Section 7.1.1.)
"REIT" shall mean a real estate investment trust within the meaning of
the Code.
"REDEMPTION PRICE" has the meaning given it in Section 6.7.4.
"RESTRICTION TERMINATION DATE" shall mean the first day after the Issue
Date on which the Board of Directors determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify as a REIT.
"SENIOR STOCK" has the meaning given it in Section 6.7.6.
"SERIES A PREFERRED STOCK" has the meaning given it in Section 6.7.1.
"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
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bookkeeping entry which indicates, pursuant to an authorization of dividends or
other distribution by the Board of Directors, the allocation of funds to be so
paid on any series or class of stock of the Corporation.
"SUBSIDIARY" has the meaning given it in Section 7.1.1(e).
"SUCCESSOR SECURITIES" shall mean any securities that the Series A
Preferred Stock has been substituted for pursuant to an event described in
Section 6.7.7(d).
"TAX EVENT" means that the Corporation has received an opinion of
nationally recognized independent tax counsel experienced in such matters that
there is more than an insubstantial risk that the Corporation does not qualify,
or within 90 days of the date of such opinion would no longer qualify, as a REIT
under the Code for any reason whatsoever, PROVIDED, HOWEVER, that a Tax Event
will not include the voluntary election by the Board of Directors to terminate
the Corporation's status as a REIT for federal income tax purposes.
"TRADING DAY" shall mean a day on which the principal national
securities exchange on which the applicable class or series of Capital Stock is
listed or admitted to trading is open for the transaction of business or, if the
applicable class or series of Capital Stock is not listed or admitted to trading
on any national securities exchange, shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"TRANSFER" shall mean any issuance, sale, transfer, gift, assignment,
devise or other disposition of a direct or indirect interest in a share of
Capital Stock (including without limitation (i) the granting of any option
(including, but not limited to, an option to acquire an option or any series of
such options) or entering into any agreement for the sale, transfer or other
disposition of Capital Stock or the right to vote or receive dividends on
Capital Stock or (ii) the issuance, sale, transfer, assignment or other
disposition of any securities or rights convertible into or exchangeable for
Capital Stock), whether voluntary or involuntary, whether of record,
constructively or beneficially, and whether by operation of law or otherwise
(including, but not limited to, any transfer of an interest in other entities
which results in a change in the Beneficial Ownership or Constructive Ownership
of shares of Capital Stock). The terms "Transfers" and "Transferred" shall have
correlative meaning.
"TRUST" shall mean the applicable trust created pursuant to Section
7.2.1.
"TRUSTEE" shall mean the trustee for the Trust, and any successor
trustee in each case appointed by the Corporation, meeting the requirements of
Section 7.2.1.
THIRD: The amendment to and restatement of the Charter as herein
above set forth have been duly advised by the Board of Directors and approved by
the stockholders of the Corporation as required by law.
FOURTH: The current address of the principal office of the
Corporation is as set forth in Article 4 of the foregoing amendment and
restatement of the Charter.
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FIFTH: The name and address of the Corporation's current resident
agent is as set forth in Article 4 of the foregoing amendment and restatement of
the Charter.
SIXTH: The number of directors of the Corporation and the names
of those currently in office are as set forth in Article 5 of the foregoing
amendment and restatement of the Charter.
SEVENTH: The total number of shares of stock which the Corporation
had authority to issue immediately prior to this amendment and restatement was
100,000 shares of Common Stock, $.01 par value, all of one class. The aggregate
par value of all shares of stock having par value was $1,000.
EIGHTH: The total number of shares of stock which the Corporation
has authority to issue pursuant to the foregoing amendment and restatement of
the charter is 30,000,000, consisting of 10,000,000 shares of Common Stock, $.01
par value per share, of which 5,000,000 shares are designated as Class A Common
Stock and 5,000,000 shares are designated as Class B Common Stock; 5,000,000
shares of Preferred Stock, $.01 par value per share, of which 5,000,000 shares
are designated as __% Series A Cumulative Redeemable Preferred Stock; and
15,000,000 shares of Excess Stock, of which 5,000,000 shares are designated as
Excess Class A Common Stock, 5,000,000 shares are designated as Excess Class B
Common Stock and 5,000,000 shares are designated as Excess Series A Preferred
Stock. The aggregate par value of all authorized shares of stock having par
value is $300,000.
NINTH: The undersigned President acknowledges these Articles of
Amendment and Restatement to be the corporate act of the Corporation and as to
all matters or facts required to be verified under oath, the undersigned
President acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
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IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment and Restatement to be signed in its name and on its behalf by its
President and attested to by its Secretary on this _____ day of ____________,
2002.
ATTEST: BERKSHIRE INCOME REALTY, INC.
By:
- ----------------------------------- -------------------------------------
Secretary
President
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