EXHIBIT 3.1
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ARTICLES OF RESTATEMENT
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation,
having its principal office in Baltimore City, Maryland (hereinafter referred to
as the "CORPORATION" or "AIMCO"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The Corporation desires to and does hereby restate its Charter
as currently in effect. The Charter as currently in effect is found in the
following charter documents filed with the State Department of Assessments and
Taxation of Maryland (the "SDAT"):
(1) Articles of Amendment and Restatement as filed with the
SDAT on July 15, 1994 (as corrected by Certificates of Correction as
filed with the SDAT on November 6, 1997 at 1:35 p.m., on November 30,
1998 at 1:22 p.m., on May 24, 1999 at 1:38 p.m. and on May 24, 1999 at
1:47 p.m., respectively);
(2) Articles of Amendment as filed with the SDAT on July 28,
1994 at 11:33 a.m. (as corrected by Certificate of Correction as filed
with the SDAT on November 6, 1997 at 1:37 p.m. and on May 24, 1999 at
1:43 p.m.);
(3) Articles Supplementary as filed with the SDAT on August 4,
1997 (Class B Preferred Stock);
(4) Articles Supplementary as filed with the SDAT on December
22, 1997 (as corrected by Certificates of Correction as filed with the
SDAT on February 18, 1998 and on November 30, 1998 at 1:24 p.m.,
respectively) (Class C Preferred Stock);
(5) Articles Supplementary as filed with the SDAT on February
18, 1998 (as corrected by Certificate of Correction as filed with the
SDAT on November 30, 1998 at 1:26 p.m.) (Class D Preferred Stock);
(6) Articles of Amendment as filed with the SDAT on June 19,
1998;
(7) Articles Supplementary as filed with the SDAT on July 13,
1998 (Class G Preferred Stock);
(8) Articles Supplementary as filed with the SDAT on August
13, 1998 (Class H Preferred Stock);
(9) Articles of Merger as filed with the SDAT on October 1,
1998 (as corrected by Certificate of Correction as filed with the SDAT
on May 24, 1999 at 1:33 p.m.);
(10) Articles Supplementary as filed with the SDAT on November
6, 1998 (Class J Preferred Stock);
(11) Articles Supplementary as filed with the SDAT on February
17, 1999 (Class K Preferred Stock);
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(12) Articles Supplementary as filed with the SDAT on May 25,
1999 at 1:24 p.m. (Class I Preferred Stock); and
(13) Articles Supplementary as filed with the SDAT on May 25,
1999 at l:29 p.m.
SECOND: The Charter of the Corporation as restated in its entirety
(except to the extent that the provisions of Articles Supplementary referred to
in Article FIRST, paragraphs (3), (4), (5), (7), (8), (10), (11), and (12) above
relating to the various classes of Preferred Stock of the Corporation are
incorporated by reference) is as follows:
ARTICLE I
ARTICLE II
PURPOSE
The purpose for which the Corporation is formed is to engage in any
lawful act or activity for which corporations may be organized under the general
laws of the State of Maryland authorizing the formation of corporations as now
or hereafter in force.
ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The post office 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 and address of the
resident agent of the Corporation in the State of Maryland is CSC -- Lawyers
Incorporating Service Company, 11 East Chase Street, Baltimore, Maryland 21202.
The resident agent is a Maryland corporation located in the State of Maryland.
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ARTICLE IV
STOCK
SECTION 1. AUTHORIZED SHARES
1.1 CLASS AND NUMBER OF SHARES. The total number of shares of
stock that the Corporation from time to time shall have authority to issue is
510,587,500 shares of capital stock having a par value of $.01 per share,
amounting to an aggregate par value of $5,105,875, consisting of 480,937,500
shares currently classified as Class A Common Stock, par value $.01 per share
(the "CLASS A COMMON STOCK") (the Class A Common Stock and all other classes or
series of common stock hereafter classified being referred to collectively
herein as the "COMMON STOCK"), 750,000 shares currently classified as Class B
Cumulative Convertible Preferred Stock, par value $.01 per share (the "CLASS B
PREFERRED STOCK"), 2,400,000 shares currently classified as Class C Cumulative
Preferred Stock, par value $.01 per share (the "CLASS C PREFERRED STOCK"),
4,200,000 shares currently classified as Class D Cumulative Preferred Stock, par
value $.01 per share (the "CLASS D PREFERRED STOCK"), 4,050,000 shares currently
classified as Class G Cumulative Preferred Stock, par value $.01 per share (the
"CLASS G PREFERRED STOCK"), 2,000,000 shares currently classified as Class H
Cumulative Preferred Stock, par value $.01 per share (the "CLASS H PREFERRED
STOCK"), 10,000,000 shares currently classified as Class I Cumulative Preferred
Stock, par value $.01 per share (the "CLASS I PREFERRED STOCK"), 1,250,000
shares currently classified as Class J Cumulative Convertible Preferred Stock,
par value $.01 per share (the "CLASS J PREFERRED STOCK"), and 5,000,000 shares
currently classified as Class K Convertible Cumulative Preferred Stock, par
value $.01 per share (the "CLASS K PREFERRED STOCK") (the Class B Preferred
Stock, the Class C Preferred Stock, the Class D Preferred Stock, the Class G
Preferred Stock, the Class H Preferred Stock, the Class J Preferred Stock, Class
K Preferred Stock, and all other classes or series of preferred stock hereafter
classified being referred to collectively herein as the "PREFERRED STOCK").(1)
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(1) This section has been revised to reflect action taken in articles
supplementary filed since the section was last amended on June 19, 1998: (i) to
delete language relating to Class B Common Stock, the shares of which were
either cancelled or reclassified into Class A Common Stock; (ii) to add language
relating to Class G Preferred Stock, Class H Preferred Stock, Class I Preferred
Stock, Class J Preferred Stock, and Class K Preferred Stock which were
reclassified from Class A Common Stock; (iii) to adjust the number of shares and
aggregate par value of the authorized
(continued...)
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1.2 CHANGES IN CLASSIFICATION AND PREFERENCES. The Board of
Directors by resolution or resolutions from time to time may classify and
reclassify any unissued shares of capital stock by setting or changing in any
one or more respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption of such shares of capital stock, including, but not limited to,
ownership restrictions consistent with the Ownership Restrictions with respect
to each such class or subclass of capital stock, and the number of shares
constituting each such class or subclass, and to increase or decrease the number
of shares of any such class or subclass.
SECTION 2. NO PREEMPTIVE RIGHTS. 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 the stock of the Corporation or any other
security of the Corporation that it may issue or sell.
SECTION 3. COMMON STOCK.
3.1 DIVIDEND RIGHTS. The holders of shares of Common Stock
shall be entitled to receive such dividends as may be declared by the Board of
Directors of the Corporation out of funds legally available therefor.
3.2 RIGHTS UPON LIQUIDATION. Subject to the preferential
rights of Preferred Stock, if any, as may be determined by the Board of
Directors pursuant to Section l of this Article IV, in the event of any
voluntary or involuntary liquidation, dissolution or winding up of, or any
distribution of the assets of the Corporation, each holder of shares of Common
Stock shall be entitled to receive, ratably with each other holder of Common
Stock, that portion of the assets of the Corporation available for distribution
to its shareholders as the number of shares of the Common Stock held by such
holder bears to the total number of shares of Common Stock then outstanding.
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(1) (...continued)
capital stock of the Corporation for those shares of Class B Common Stock that
were cancelled, and (iv) to adjust the number of shares of authorized Class A
Common Stock, Class C Preferred Stock, Class D Preferred Stock, Class H
Preferred Stock, Class I Preferred Stock, and Class K Preferred Stock for shares
reclassified into or from Class A Common Stock. Class E Preferred Stock was
authorized, issued, converted and reclassified into Class A Common Stock. Class
F Preferred Stock has not heretofore been used as class a designations.
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3.3 VOTING RIGHTS. The holders of shares of Common Stock shall
be entitled to vote on all matters (on which a holder of shares of Common Stock
shall be entitled to vote) at the meetings of the shareholders of the
Corporation, and shall be entitled to one vote for each share of Common Stock
entitled to vote at such meeting.
3.4 RESTRICTION ON OWNERSHIP AND TRANSFERS. The Beneficial
Ownership and Transfer of Common Stock shall be subject to the restrictions set
forth in this Section 3.4 of this Article IV.
3.4.1 RESTRICTIONS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP.
Except as provided in Section 3.4.8 of this Article IV, from and after the date
of the Initial Public Offering, no Person (other than the Initial Holder or a
Look-Through Entity) shall Beneficially Own shares of Common Stock in excess of
the Ownership Limit, the Initial Holder shall not Beneficially Own shares of
Common Stock in excess of the Initial Holder Limit and no Look-Through Entity
shall Beneficially Own shares of Common Stock in excess of the Look-Through
Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT.
Except as provided in Section 3.4.8 of this Article IV, from and after the date
of the Initial Public Offering (and subject to Section 3.4.12 of this Article
IV), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Common Stock in excess of the Ownership Limit shall be void ab
initio as to the Transfer of such shares of Common Stock that would be otherwise
Beneficially Owned by such Person in excess of the Ownership Limit, and the
intended transferee shall acquire no rights in such shares of Common Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER
LIMIT. Except as provided in Section 3.4.8 of this Article IV, from and after
the date of the Initial Public Offering (and subject to Section 3.4.12 of this
Article IV), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in the Initial Holder Beneficially Owning shares of Common Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Common Stock that would be otherwise
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Beneficially Owned by the Initial Holder in excess of the Initial Holder Limit,
and the Initial Holder shall acquire no rights in such shares of Common Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH
OWNERSHIP LIMIT. Except as provided in Section 3.4.8 of this Article IV, from
and after the date of the Initial Public Offering (and subject to Section 3.4.12
of this Article IV), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Common
Stock in excess of the Look-Through Ownership Limit shall be void ab initio as
to the Transfer of such shares of Common Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look- Through
Ownership Limit, and such Look-Through Entity shall acquire no rights in such
shares of Common Stock.
(E) TRANSFERS RESULTING IN OWNERSHIP BY
FEWER THAN 100 PERSONS. Except as provided in Section 3.4.8 of this Article IV,
from and after the date of the Initial Public Offering (and subject to Section
3.4.12 of this Article IV), any Transfer (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in the Common Stock being Beneficially Owned by less
than 100 Persons (determined without reference to any rules of attribution)
shall be void ab initio as to the Transfer of such shares of Common Stock that
would be otherwise Beneficially Owned by the transferee, and the intended
transferee shall acquire no rights in such shares of Common Stock.
(F) TRANSFERS RESULTING IN "CLOSELY HELD"
STATUS. From and after the date of the Initial Public Offering, any Transfer
that, if effective, would result in the Corporation being "closely held" within
the meaning of Section 856(h) of the Code, or would otherwise result in the
Corporation failing to qualify as a REIT (including, without limitation, a
Transfer or other event that would result in the Corporation owning (directly or
constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Corporation from such
tenant would cause the Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code) shall be void ab initio as to the
Transfer of shares of Common Stock that would cause the Corporation (i) to be
"closely held" within the meaning of Section 856(h) of the Code or (ii)
otherwise fail to qualify as a REIT, as the case may be, and the intended
transferee shall acquire no rights in such shares of Common Stock.
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(G) SEVERABILITY ON VOID TRANSACTIONS. A
Transfer of a share of Common Stock that is null and void under Sections
3.4.1(B), (C), (D), (E) or (F) of this Article IV because it would, if
effective, result in (i) the ownership of Common Stock in excess of the Initial
Holder Limit, the Ownership Limit, or the Look-Through Ownership Limit, (ii)
the Common Stock being Beneficially Owned by less than 100 Persons (determined
without reference to any rules of attribution), (iii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iv) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Common Stock in the same or
any other related transaction.
3.4.2 REMEDIES FOR BREACH. If the Board of Directors
or a committee thereof shall at any time determine in good faith that a Transfer
or other event has taken place in violation of Section 3.4.1 of this Article IV
or that a Person intends to acquire or has attempted to acquire Beneficial
Ownership of any shares of Common Stock in violation of Section 3.4.1 of this
Article IV (whether or not such violation is intended), 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, causing the Corporation to
redeem such shares at the then current Market Price and upon such terms and
conditions as may be specified by the Board of Directors in its sole discretion
(including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of any
distributions received in respect of shares of Common Stock acquired in
violation of Section 3.4.1 of this Article IV or instituting proceedings to
enjoin such Transfer or to rescind such Transfer or attempted Transfer;
provided, however, that any Transfers or attempted Transfers (or in the case of
events other than a Transfer, Beneficial Ownership) in violation of Section
3.4.1 of this Article IV, regardless of any action (or non-action) by the Board
of Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 3.4.3 of this Article
IV; provided, further, that the provisions of this Section 3.4.2 shall be
subject to the provisions of Section 3.4.12 of this Article IV; provided,
further, that neither the Board of Directors nor any committee thereof may
exercise such authority in a manner that interferes with any ownership or
transfer of Common Stock that is expressly authorized pursuant to Section
3.4.8(D) of this Article IV.
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3.4.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If,
notwithstanding the other provisions contained in this Article IV, at any time
after the date of the Initial Public Offering there is a purported Transfer (an
"EXCESS TRANSFER") (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) or other change in the capital
structure of the Corporation (including, but not limited to, any redemption of
Preferred Stock) or other event such that (a) any Person (other than the Initial
Holder or a Look-Through Entity) would Beneficially Own shares of Common Stock
in excess of the Ownership Limit, or (b) the Initial Holder would Beneficially
Own shares of Common Stock in excess of the Initial Holder Limit, or (c) any
Person that is a Look-Through Entity would Beneficially Own shares of Common
Stock in excess of the Look-Through Ownership Limit (in any such event, the
Person, Initial Holder or Look-Through Entity that would Beneficially Own shares
of Common Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Entity Limit is referred to as a "PROHIBITED TRANSFEREE"),
then, except as otherwise provided in Section 3.4.8 of this Article IV, such
shares of Common Stock in excess of the Ownership Limit, the Initial Holder
Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to
the nearest whole share) shall be automatically transferred to a Trustee in his
capacity as trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be
effective as of the close of business on the business day prior to the date of
the Excess Transfer, change in capital structure or another event giving rise to
a potential violation of the Ownership Limit, the Initial Holder Limit or the
Look Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee
shall be appointed by the Corporation and shall be a Person unaffiliated with
either the Corporation or any Prohibited Transferee. The Trustee may be an
individual or a bank or trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE.
Shares of Common Stock held by the Trustee shall be issued and outstanding
shares of capital stock of the Corporation. Except to the event provided in
Section 3.4.3(E), the Prohibited Transferee shall have no rights in the Common
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
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(D) DIVIDEND AND VOTING RIGHTS. The Trustee
shall have all voting rights and rights to dividends with respect to shares of
Common Stock held in the Trust, which rights shall be exercised for the benefit
of the Charitable Beneficiary. Any dividend or distribution paid prior to the
discovery by the Corporation that the shares of Common Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void ab
initio with respect to such shares of Common Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Common
Stock have been transferred to the Trustee will be rescinded as void ab initio
and shall be recast in accordance with the desires of the Trustee acting for the
benefit of the Charitable Beneficiary. The owner of the shares at the time of
the Excess Transfer, change in capital structure or other event giving rise to a
potential violation of the Ownership Limit, Initial Holder Limit or Look-Through
Entity Ownership Limit shall be deemed to have given an irrevocable proxy to the
Trustee to vote the shares of Common Stock for the benefit of the Charitable
Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of
the Trust may transfer the shares held in the Trust to a person, designated by
the Trustee, whose ownership of the shares will not violate the Ownership
Restrictions. If such a transfer is made, the interest of the Charitable
Beneficiary shall terminate and proceeds of the sale shall be payable to the
Prohibited Transferee and to the Charitable Beneficiary as provided in this
Section 3.4.3(E). The Prohibited Transferee shall receive the lesser of (l) the
price paid by the Prohibited Transferee for the shares or, if the Prohibited
Transferee did not give value for the shares (through a gift, devise or other
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
proceeds in excess of the amount payable to the Prohibited Transferee shall be
payable to the Charitable Beneficiary. if any of the transfer restrictions set
forth in this Section 3.4.3(E) or any application thereof is determined in a
final judgment to be void, invalid or unenforceable by any court having
jurisdiction over the issue, the Prohibited Transferee may be deemed, at the
option of the Corporation, to have acted as the agent of the Corporation in
acquiring the Common Stock as to which such restrictions would, by their terms,
apply, and to hold such Common Stock on behalf of the Corporation.
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(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO
THE TRUSTEE. Shares of Common Stock transferred to the Trustee shall be deemed
to have been offered for sale to the Corporation, or its designee, at a price
per share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on
the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer for a period of 90 days after the
later of (i) the date of the Excess Transfer or other event resulting in a
transfer to the Trust and (ii) the date that the Board of Directors determines
in good faith that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES.
By written notice to the Trustee, the Corporation shall designate one or more
nonprofit organizations to be the Charitable Beneficiary of the interest in the
Trust relating to such Prohibited Transferee if (i) the shares of Common Stock
held in the Trust would not violate the Ownership Restrictions in the hands of
such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
3.4.4 NOTICE OF RESTRICTED TRANSFER. Any Person that
acquires or attempts to acquire shares of Common Stock in violation of Section
3.4.1 of this Article IV, or any Person that is a Prohibited Transferee such
that stock is transferred to the Trustee under Section 3.4.3 of this Article IV,
shall immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted 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.
3.4.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From
and after the date of the Initial Public Offering certain record and Beneficial
Owners and transferees of shares of Common Stock will be required to provide
certain information as set out below.
(A) ANNUAL DISCLOSURE. Every record and
Beneficial Owner of more than 5% (or such other percentage between 0.5% and 5%,
as provided in the applicable regulations adopted under the Code) of the number
of Outstanding shares of Common Stock shall, within 30 days after January l 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 Common Stock
Beneficially Owned, and a full
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description of how such shares are held. Each such record or Beneficial Owner of
Common Stock shall, upon demand by the Corporation, disclose to the Corporation
in writing such additional information with respect to the Beneficial Ownership
of the Common 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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each shareholder of record,
including without limitation any Person that holds shares of Common Stock on
behalf of a Beneficial Owner, shall take all reasonable steps to obtain the
written notice described in this Section 3.4.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE
CORPORATION. Any Person that is a Beneficial Owner of shares of Common Stock and
any Person (including the shareholder of record) that is holding shares of
Common Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Common Stock already Beneficially Owned by such shareholder or proposed
transferee and any related persons specified, which statement or affidavit shall
be in the form prescribed by the Corporation for that purpose.
3.4.6 REMEDIES NOT LIMITED. Nothing contained in this
Article IV 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 3.4.12 of this Article IV) (i) to protect the Corporation and the
interests of its shareholders in the preservation of the Corporation's status as
a REIT and (ii) to insure compliance with the Ownership Limit, the Initial
Holder Limit and the Look-Through Ownership Limit.
3.4.7 AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of Section 3.4 of this Article IV, or in
the case of an ambiguity in any definition contained in Section 4 of this
Article IV, the Board of Directors shall have the power to determine the
application of the provisions of this Article IV with respect to any situation
based on its reasonable belief, understanding or knowledge of the circumstances.
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3.4.8 EXCEPTIONS. The following exceptions shall
apply or may be established with respect to the limitations of Section 3.4.1 of
this Article IV.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of
Directors, upon receipt of a ruling from the Internal Revenue Service or an
opinion of tax counsel or other evidence or undertaking acceptable to it, may
waive the application, in whole or in part, of the Ownership Limit to a Person
subject to the Ownership Limit, if such person is not an individual for purpose
of Section 542(a) of the Code and is a corporation, partnership, estate or
trust; provided, however, that in no event may any such exception cause such
Person's ownership, direct or indirect (without taking into account such
Person's ownership of interests in any partnership of which the Corporation is a
partner), to exceed 9.8% of the number of Outstanding shares of Common Stock. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person and may impose such other
conditions as the Board deems necessary, in its sole discretion, to determine
the effect, if any, of the proposed Transfer on the Corporation's status as a
REIT.
(B) PLEDGE BY INITIAL HOLDER.
Notwithstanding any other provision of this Article IV, the pledge by the
Initial Holder of all or any portion of the Common Stock directly owned at any
time or from time to time shall not constitute a violation of Section 3.4.1 of
this Article IV and the pledgee shall not be subject to the Ownership Limit with
respect to the Common Stock so pledged to it either as a result of the pledge or
upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days
following the purchase of Common Stock by an underwriter that (i) is a
corporation or a partnership and (ii) participates in an offering of the Common
Stock, such underwriter shall not be subject to the Ownership Limit with respect
to the Common Stock purchased by it as a part of or in connection with such
offering and with respect to any Common Stock purchased in connection with
market making activities.
(D) OWNERSHIP AND TRANSFERS BY THE CMO
TRUSTEE. The Ownership Limit shall not apply to the initial holding of Common
Stock by the "CMO TRUSTEE" (as that term is defined in the "Glossary" to the
Prospectus) for the benefit of "HF FUNDING TRUST" (as that term is defined in
the "Glossary" to the Prospectus), to any subsequent acquisition of Common Stock
by the CMO Trustee in connection with any conversion of Preferred Stock or to
any transfer or assignment of all or any part of the legal or beneficial
interest in the Common Stock to the CMO Trustee, "FSA" (as that term is defined
in the "Glossary" to the Prospectus), any entity
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controlled by FSA, or any direct or indirect creditor of HF Funding Trust
(including without limitation any reinsurer of any obligation of HF Funding
Trust) or any acquisition of Common Stock by any such person in connection with
any conversion of Preferred Stock.
3.4.9 LEGEND. Each certificate for Common Stock shall
bear the following legend:
"The shares of Class A Common Stock represented by this
certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class A Common Stock in excess of the
Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter. Any Person that
attempts to Beneficially Own shares of Class A Common Stock in excess
of the applicable limitation must immediately notify the Corporation.
All capitalized terms in this legend have the meanings ascribed to such
terms in the 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 that so requests. If the
restrictions on transfer are violated, (i) the transfer of shares of
Class A Common Stock represented hereby will be void in accordance with
the Charter or (ii) the shares of Class A Common Stock represented
hereby automatically be will transferred to a Trustee of a Trust for
the benefit of one or more Charitable Beneficiaries."
3.4.10 SEVERABILITY. If any provision of this Article
IV 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.
3.4.11 BOARD OF DIRECTORS DISCRETION. Anything in
this Article IV to the contrary notwithstanding, 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 the
Ownership Limit, the Initial Holder Limit and the Look- Through Ownership Limit
in the event of a change in law.
3.4.12 SETTLEMENT. Nothing in this Section 3.4 of
this Article IV shall be interpreted to preclude the settlement of any
transaction entered into through the
14
facilities of the NYSE or other securities exchange or an automated inter-dealer
quotation system.
SECTION 4. DEFINITIONS. The terms set forth below shall have the
meanings specified below when used in this Article IV or in Article V of the
Charter.(2)
4.1 BENEFICIAL OWNERSHIP. The term "BENEFICIAL OWNERSHIP"
shall mean, with respect to any Person, ownership of shares of Common Stock
equal to the sum of (i) the shares of Common Stock directly owned by such
Person, (ii) the number of shares of Common Stock indirectly owned by such
Person (if such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number of
shares of Common Stock that such Person is deemed to beneficially own pursuant
to Rule 13d-3 under the Exchange Act or that is attributed to such Person
pursuant to Section 318 of the Code, as modified by Section 856(d)(5) of the
Code, provided that when applying this definition of Beneficial Ownership to the
Initial Holder, clause (iii) of this definition, and clause (b) of the
definition of "Person" shall be disregarded. The terms "BENEFICIAL OWNER,"
"BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the correlative
meanings.
4.2 CHARITABLE BENEFICIARY. The term "CHARITABLE BENEFICIARY"
shall mean one or more beneficiaries of the Trust as determined pursuant to
Section 3.4.3 of this Article IV, each of which shall be an organization
described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
4.3 CODE. The term "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 thereto, as
interpreted by any applicable regulations or other administrative pronouncements
as in effect from time to time.
4.4 COMMON STOCK. The term "COMMON STOCK" shall mean all
shares now or hereafter authorized of any class of Common Stock of the
Corporation and any other capital stock of the Corporation, however designated,
authorized after the Issue Date, that has the right (subject always to prior
rights of any class of Preferred Stock)
- ------------------------
(2) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
15
to participate in the distribution of the assets and earnings of the Corporation
without limit as to per share amount.
4.5 EXCESS TRANSFER. The term "EXCESS TRANSFER" has the
meaning set forth in Section 3.4.3(A) of this Article IV.
4.6 EXCHANGE ACT. The term "EXCHANGE ACT" shall mean the
Securities Exchange Act of 1934, as amended.
4.7 INITIAL HOLDER. The term "INITIAL HOLDER" shall mean Terry
Considine.
4.8 INITIAL HOLDER LIMIT. The term "INITIAL HOLDER LIMIT"
shall mean 15% of the number of Outstanding shares of Common Stock applied, in
the aggregate, to the Initial Holder. From the date of the Initial Public
Offering, the secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available to the
representative(s) of the Initial Holder and the Board of Directors, a schedule
that sets forth the then-current Initial Holder Limit applicable to the Initial
Holder.
4.9 INITIAL PUBLIC OFFERING. The term "INITIAL PUBLIC
OFFERING" shall mean the first underwritten public offering of Class A Common
Stock registered under the Securities Act of 1933, as amended, on a registration
statement on Form S-11 filed with the Securities and Exchange Commission.
4.10 LOOK-THROUGH ENTITY. The term "LOOK-THROUGH ENTITY" shall
mean a Person that is either (i) described in Section 401(a) of the Code as
provided under Section 856(h)(3) of the Code or (ii) registered under the
Investment Company Act of 1940.
4.11 LOOK-THROUGH OWNERSHIP LIMIT. The term "LOOK-THROUGH
OWNERSHIP LIMIT" shall mean 15% of the number of Outstanding shares of Common
Stock.
4.12 MARKET PRICE. The term "MARKET PRICE" on any date shall
mean the Closing Price on the Trading Day immediately preceding such date. The
term "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
16
system with respect to securities listed or admitted to trading on the NYSE or,
if the Common Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common 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 Common 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 Common Stock selected by the Board of
Directors of the Company. The term "TRADING DAY" shall mean a day on which the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business or, if the Common
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.
4.13 NYSE. The term "NYSE" shall mean the New York Stock
Exchange, Inc.
4.14 OUTSTANDING. The term "OUTSTANDING" shall mean issued and
outstanding shares of Common Stock of the Corporation, provided that for
purposes of the application of the Ownership Limit, the Look-Through Ownership
Limit or the Initial Holder Limit to any Person, the term "OUTSTANDING" shall be
deemed to include the number of shares of Common Stock that such Person alone,
at that time, could acquire pursuant to any options or convertible securities.
4.15 OWNERSHIP LIMIT. The term "OWNERSHIP LIMIT" shall mean,
for any Person other than the Initial Holder or a Look-Through Entity, 8.7% of
the number of the Outstanding shares of Common Stock of the Corporation.
4.16 OWNERSHIP RESTRICTIONS. The term "OWNERSHIP RESTRICTIONS"
shall mean collectively the Ownership Limit as applied to Persons other than the
Initial Holder or Look-Through Entities, the Initial Holder Limit as applied to
the Initial Holder and the Look-Through Ownership Limit as applied to
Look-Through Entities.
17
4.17 PERSON. The term "PERSON" shall mean (A) an individual,
corporation, partnership, estate, trust (including a trust qualifying under
Section 401(a) or 501(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.
4.18 PROHIBITED TRANSFEREE. The term "PROHIBITED TRANSFEREE"
has the meaning set forth in Section 3.4.3(A) of this Article IV.
4.19 REIT. The term "REIT" shall mean a "real estate
investment trust" as defined in Section 856 of the Code.
4.20 TRANSFER. The term "TRANSFER" shall mean any sale,
transfer, gift, assignment, devise or other disposition of a share of Common
Stock (including (i) the granting of an option or any series of such options or
entering into any agreement for the sale, transfer or other disposition of
Common Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Common Stock), whether
voluntary or involuntary, whether of record or Beneficial Ownership, and whether
by operation of law or otherwise (including, but not limited to, any transfer of
an interest in other entities that results in a change in the Beneficial
Ownership of shares of Common Stock). The term "TRANSFERS" and "TRANSFERRED"
shall have correlative meanings.
4.21 TRUST. The term "TRUST" shall mean the trust created
pursuant to Section 3.4.3 of this Article IV.
4.22 TRUSTEE. The term "TRUSTEE" shall mean the Person
unaffiliated with either the Corporation or the Prohibited Transferee that is
appointed by the Corporation to serve as trustee of the Trust.
4.23 PROSPECTUS. The term "PROSPECTUS" shall mean the
prospectus that forms a part of the registration statement filed with the
Securities and Exchange Commission in connection with the initial Public
Offering, in the form included in the registration statement at the time the
registration statement becomes effective; provided, however, that, if such
prospectus is subsequently supplemented or amended for use in connection with
the Initial Public Offering, "PROSPECTUS" shall refer to such prospectus as so
supplemented or amended.
18
ARTICLE V
GENERAL REIT PROVISIONS
SECTION 1. TERMINATION OF REIT STATUS. The Board of Directors shall
take no action to terminate the Corporation's status as a REIT until such time
as (i) the Board of Directors adopts a resolution recommending that the
Corporation terminate its status as a REIT, (ii) the Board of Directors presents
the resolution at an annual or special meeting of the shareholders and (iii)
such resolution is approved by the vote of a majority of the shares entitled to
be cast on the resolution.
SECTION 2. EXCHANGE OR MARKET TRANSACTIONS. Nothing in Article IV or
this Article V shall preclude the settlement of any transaction entered into
through the facilities of the NYSE or other national securities exchange or an
automated inter-dealer quotation system. The fact that the settlement of any
transaction is permitted shall not negate the effect of any other provision of
this Article V or any provision of Article IV, and the transferee, including but
not limited to any Prohibited Transferee, in such a transaction shall remain
subject to all the provisions and limitations of Article IV and this Article V.
SECTION 3. SEVERABILITY. If any provision of Article IV or this Article
V or any application of any such provision is determined to be invalid by any
federal or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
SECTION 4. WAIVER. The Corporation shall have authority at any time to
waive the requirement that the Corporation redeem shares of Preferred Stock if,
in the sole discretion of the Board of Directors, any such redemption would
jeopardize the status of the Corporation as a REIT for federal income tax
purposes.
ARTICLE VI
BOARD OF DIRECTORS
SECTION 1. MANAGEMENT. The business and the affairs of the Corporation
shall managed under the direction of its Board of Directors.
SECTION 2. NUMBER. The number of directors that will constitute the
entire Board of Directors shall be fixed by, or in the manner provided in, the
Bylaws but shall
19
in no event be less than three. Any increases or decreases in the size of the
board shall be apportioned equally among the classes of directors to prevent
stacking in any one class of directors. There are currently six directors in
office whose names are as follows: Terry Considine, Peter K. Kompaniez, Richard
S. Ellwood, J. Landis Martin, Thomas L. Rhodes and John D. Smith.(3)
SECTION 3. Intentionally deleted.
SECTION 4. VACANCIES. Except as otherwise provided in the Charter,(4)
newly created directorships resulting from any increase in the number of
directors may be filled by the majority vote of the Board of Directors, and any
vacancies on the Board of Directors resulting from death, resignation, removal
or other cause shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even if less than a quorum of the Board of
Directors, or, if applicable, by a sole remaining director. Any director elected
in accordance with the preceding sentence shall hold office until the next
annual meeting of the Corporation at which time a successor shall be elected to
fill the remaining term of the position filled by such director.
SECTION 5. REMOVAL. Except as otherwise provided in the Charter,(5) any
director may be removed from office only for cause and only by the affirmative
vote of two-thirds of the aggregate number of votes then entitled to be cast
generally in the election of directors. For purposes of this Section 5, "CAUSE"
shall mean the willful and continuous failure of a director to substantially
perform the duties to the Corporation of such director (other than any such
failure resulting from temporary incapacity due to physical or mental illness)
or the willful engaging by a director in gross misconduct materially and
demonstrably injurious to the Corporation.
SECTION 6. BYLAWS. The Board of Directors shall have power to adopt,
amend, alter, change and repeal any Bylaws of the Corporation by vote of the
majority of the Board of Directors then in office. Any adoption, amendment,
alteration, change or repeal of any Bylaws by the shareholders of the
Corporation shall require the affirmative vote
- ------------------------
(3) See Article FORTH.
(4) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
(5) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
20
of a majority of the aggregate number of votes then entitled to be cast
generally in the election of directors. Notwithstanding anything in this Section
6 to the contrary, no amendment, alteration, change or repeal of any provision
of the Bylaws relating to the removal of directors or repeal of the Bylaws shall
be effected without the vote of two-thirds of the aggregate number of votes
entitled be cast generally in the election of Directors.
SECTION 7. POWERS. The enumeration and definition of particular powers
of the Board of Directors included elsewhere in the Charter(6) shall in no way
be limited or restricted by reference to or inference from the terms of any
other clause of this or any other Article of the Charter,(7) or construed as
excluding or limiting, or deemed by inference or otherwise in any manner to
exclude or limit, the powers conferred upon the Board of Directors under the
Maryland General Corporation Law ("MGCL") as now or hereafter in force.
ARTICLE VII
LIMITATION OF LIABILITY
No director or officer of the Corporation shall be liable to the
Corporation or its shareholders for money damages to the maximum extent that
Maryland law in effect from time to time permits limitation of the liability of
directors and officers. Neither the amendment nor repeal of this Article VII,
nor the adoption or amendment of any other provision of the charter or Bylaws of
the Corporation inconsistent with this Article VII, shall apply to or affect in
any respect the applicability of the preceding sentence with respect to any act
or failure to act that occurred prior to such amendment, repeal or adoption.
- ------------------------
(6) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
(7) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
21
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by
Maryland law, as applicable from time to time, all persons who at any time were
or are directors or officers of the Corporation for any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) relating to any action alleged to have been taken or omitted in
such capacity as a director or an officer. The Corporation shall pay or
reimburse all reasonable expenses incurred by a present or former director or
officer of the Corporation in connection with any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) in which the present or former director or officer is a party, in
advance of the final disposition of the proceeding, to the fullest extent
permitted by, and in accordance with the applicable requirements of, Maryland
law, as applicable from time to time. The Corporation may indemnify any other
persons permitted but not required to be indemnified by Maryland law, as
applicable from time to time, if and to extent indemnification is authorized and
determined to be appropriate, in each case in accordance with applicable law, by
the Board of Directors, the majority of the shareholders of the Corporation
entitled to vote thereon or special legal counsel appointed by the Board of
Directors. No amendment of the Charter(8) of the Corporation or repeal of any of
its provisions shall limit or eliminate any of the benefits provided to
directors and officers under this Article VIII in respect of any act or omission
that occurred prior to such amendment or repeal.
ARTICLE IX
WRITTEN CONSENT OF SHAREHOLDERS
Any corporate action upon which a vote of shareholders is required or
permitted may be taken without a meeting or vote of shareholders with the
unanimous written consent of shareholders entitled to vote thereon.
- ------------------------
(8) This section has been revised to replace the term "these Articles of
Amendment and Restatement" with "the Charter."
22
ARTICLE X
AMENDMENT
The Corporation reserves the right to amend, alter or repeal any
provision contained in this charter upon (i) adoption by the Board of Directors
of a resolution recommending such amendment, alteration, or repeal, (ii)
presentation by the Board of Directors to the shareholders of a resolution at an
annual or special meeting of the shareholders and (iii) approval of such
resolution by the affirmative vote of the holders of a majority (or, as
applicable, a two-thirds vote) of the aggregate number of votes entitled to be
case generally in the election of directors. All rights conferred upon
shareholders herein are subject to this reservation.
ARTICLE XI
EXISTENCE
The Corporation is to have a perpetual existence.
ARTICLE XII
[Reserved.]
ARTICLE XIII
CLASS B PREFERRED STOCK
The terms of the Class B Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class B Preferred Stock, as filed with the SDAT on
August 4, 1997.
23
ARTICLE XIV
CLASS C PREFERRED STOCK
The terms of the Class C Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class C Preferred Stock, as filed with the SDAT on
December 22, 1997 (as corrected by Certificates of Correction as filed with the
SDAT on February 18, 1998 and on November 30, 1998 at 1:24 p.m., respectively).
ARTICLE XV
CLASS D PREFERRED STOCK
The terms of the Class D Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class D Preferred Stock, as filed with the SDAT on
February 18, 1998 (as corrected by Certificate of Correction as filed with the
SDAT on November 30, 1998 at 1:26 p.m.).
ARTICLE XVI
CLASS G PREFERRED STOCK
The terms of the Class G Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other
distributions, qualifications, or terms or conditions of redemption) as set by
the Board of Directors are as set forth in the Articles Supplementary relating
to the Class G Preferred Stock, as filed with the SDAT on July 13, 1998.
ARTICLE XVII
CLASS H PREFERRED STOCK
The terms of the Class H Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class G Preferred Stock, as filed with the SDAT on
July 13, 1998.
24
ARTICLE XVIII
[Reserved.]
ARTICLE XIX
In accordance with Section 15.4 of the Indenture, dated as of November
1, 1996. by and between Insignia Financial Group, Inc. ("INSIGNIA"), a Delaware
corporation (as Issuer) and First Union National Bank of South Carolina (as
Trustee)(the "INDENTURE"), upon effectiveness of the Merger (as defined in the
Amended and Restated Agreement and Plan of Merger, dated as of May 26, 1998, by
and among the Corporation, Insignia, Insignia/ESG Holdings, Inc., a Delaware
corporation, and AIMCO Properties, L.P., a Delaware limited partnership (the
"MERGER AGREEMENT")), the 6 1/2% Convertible Subordinated Debentures due 2016
issued by Insignia (the "CONVERTIBLE DEBENTURES") will become convertible into
the same consideration received by holders of Class A Common Stock, par value
$.01 per share, of Insignia, pursuant to the Merger (i.e., shares of Class E
Cumulative Preferred Stock, par value $.01 per share, of AIMCO (the "AIMCO CLASS
E PREFERRED STOCK"), (or shares of Class A Common Stock, par value $.01 per
share, of the Corporation (the "AIMCO COMMON STOCK"), if such Convertible
Debentures are converted after the AIMCO Class E Preferred Stock has been
converted into AIMCO Common Stock), the Cash Amount (as defined in the Merger
Agreement), if any, and cash in lieu of fractional shares). Furthermore, the
consideration to be received by holders of Convertible Debentures who convert
such Convertible Debentures subsequent to the effectiveness of the Merger shall
be adjusted as required by Article XV of the Indenture.(9)
- ------------------------
(9) All of the outstanding shares of AIMCO Class E Preferred Stock were
converted into shares of AIMCO Common Stock on January 15, 1999 and all of the
authorized shares of AIMCO Class E Preferred Stock have been reclassified into
Class A Common Stock.
25
ARTICLE XX
CLASS J PREFERRED STOCK
The terms of the Class J Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class J Preferred Stock, as filed with the SDAT on
November 6, 1998.
ARTICLE XXI
CLASS K PREFERRED STOCK
The terms of the Class K Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class K Preferred Stock, as filed with the SDAT on
February 17, 1999.
ARTICLE XXII
CLASS I PREFERRED STOCK
The terms of the Class I Preferred Stock (including the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and other distributions, forth in the Articles Supplementary relating
to the Class K Preferred Stock, as filed with the SDAT on February 17, 1999.
ARTICLE XXII
CLASS I PREFERRED STOCK
The terms of the Class I Preferred Stock (including the preferences,
conversion or other rights, voting powers restrictions, limitations as to
dividends and other distributions, qualifications, or terms or conditions of
redemption) as set by the Board of Directors are as set forth in the Articles
Supplementary relating to the Class I Preferred Stock, as filed with the SDAT on
May 25, 1999 at 1:24 p.m.
26
* * * * * * *
THIRD: The Board of Directors of the Corporation at a meeting or by a
unanimous consent in writing in lieu of a meeting under Section 2-408 of the
Maryland General Corporation Law adopted a resolution that set forth and
approved the foregoing restatement of the Charter.
FOURTH: The Charter of the Corporation is not amended by these Articles
of Amendment and Restatement; provided, however, consistent with Section
2-608(b)(7) of the Maryland General Corporation Law, the current number and
names of directors are provided in the last sentence of Section 2 of Article VI
of the restated Charter of the Corporation.
27
IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has
caused these presents to be signed in its name and on its behalf by its Vice
Chairman and President and witnessed by its Secretary on April 21, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- -------------------------------- ----------------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, who executed on behalf of the Corporation the foregoing
Articles of Restatement of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles of Restatement to be the corporate act of said Corporation and hereby
certifies that to the best of his knowledge, information, and belief the matters
and facts set forth therein with respect to the authorization and approval
thereof are true in all material respects under the penalties of perjury.
/s/ PETER K. KOMPANIEZ
----------------------------------
Peter K. Kompaniez,
Vice Chairman and President
28
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS B CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, the Board of Directors has duly divided and classified 750,000
authorized but unissued shares of the capital stock of the Corporation into a
class designated as Class B Cumulative Convertible Preferred Stock and has
provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class B Cumulative Convertible Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 750,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Preferred Stock, par value $.01 per share, from
10,000,000 shares immediately prior to the reclassification to 9,250,000 shares
immediately after the reclassification. The number of shares classified as Class
B Cumulative Convertible Preferred Stock may be decreased pursuant to Section 6
of Article Third of these Articles Supplementary upon reacquisition thereof in
any manner, or by retirement thereof, by the Corporation.
THIRD: The terms of the Class B Cumulative Convertible Preferred Stock
(including the preferences, conversions or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class B Cumulative
Convertible Preferred Stock (the "Class B Preferred Stock") and Seven Hundred
Fifty Thousand (750,000) shall be the authorized number of shares of such Class
B Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class B Preferred Stock, the following terms shall
have the meanings indicated:
-1-
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Base Common Stock Dividend" shall have the meaning set forth in
paragraph (a) of Section 9 of this Article.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial Holder,
clause (iii) of this definition, and clause (ii) of the definition of
"Person" shall be disregarded. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class B
Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (b) of
Section 5 of this Article.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class B Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or
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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 thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in
effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation or such shares of the Corporation's capital
stock into which outstanding shares of Common Stock shall be
reclassified.
"Conversion Price" shall mean the conversion price per share of Common
Stock for which each share of Class B Preferred Stock is convertible,
as such Conversion Price may be adjusted pursuant to paragraph (d) of
Section 7 of this Article. The initial Conversion Price shall be $30.45
(equivalent to an initial conversion rate of 3.28407 shares of Common
Stock for each share of Class B Preferred Stock).
"Current Market Price" of publicly traded shares of Common Stock or any
other class or series of capital stock or other security of the
Corporation or of any similar security of any other issuer for any day
shall mean the closing price, regular way on such day, or, if no sale
takes place on such day, the average of the reported closing bid and
asked prices regular way on such day, in either case as reported on the
principal national securities exchange on which such securities are
listed or admitted for trading, or, if such security is not quoted on
any national securities exchange, on the National Market of the
National Association of Securities Dealers, Inc. Automated Quotations
System ("NASDAQ") or, if such security is not quoted on the NASDAQ
National Market, the average of the closing bid and asked prices on
such day in the over-the-counter market as reported by NASDAQ or, if
bid and asked prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked prices on
such day as furnished by any New York Stock Exchange or National
Association of Securities Dealers, Inc. member firm regularly making a
market in such security selected for such purpose by the Chief
Executive Officer or the Board of Directors or if any class or series
of securities are not publicly traded, the fair value of the shares of
such class as determined reasonably and in good faith by the Board of
Directors of the Corporation.
"distribution" shall have the meaning set forth in paragraph (d)(iii)
of Section 7 of this Article.
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, (a) the date that cash dividends are paid on the Common Stock
with respect to such Dividend Period; or (b) if such dividends have not
been paid on the Common Stock by 9:00 a.m., New York City time, on the
sixtieth day from and including the last day of such Dividend Period,
then on such day; provided, further, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date.
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"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
B Preferred Stock shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the Call Date with respect to the Class B
Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 11.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Common Stock during five (5) consecutive Trading
Days selected by the Corporation commencing not more than twenty (20)
Trading Days before, and ending not later than, the earlier of the day
in question and the day before the "ex" date with respect to the
issuance or distribution requiring such computation. The term "'ex'
date," when used with respect to any issuance or distribution, means
the first day on which the share of Common Stock trades regular way,
without the right to receive such issuance or distribution, on the
exchange or in the market, as the case may be, used to determine that
day's Current Market Price.
"Issue Date" shall mean August 4, 1997.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including September 30,
1997.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class B Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class B Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
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"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class B Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) by the Aggregate Value of all shares of Equity Stock
other than Class B Preferred Stock that are Beneficially Owned by the
Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date. The term
"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 NYSE
or, if the Equity Stock is not listed or admitted to trading on the
NYSE, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Equity Stock is listed or admitted to
trading or, if the Equity 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 Equity 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 Equity
Stock selected by the Board of Directors of the Company.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone, at
that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class B Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value
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of all shares of Equity Stock other than Class B Preferred Stock that
are Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit as applied to the Initial Holder and
the Look-Through Ownership Limit as applied to Look-Through Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article, (i)
an individual, corporation, partnership, estate, trust (including a
trust qualifying under Section 401(a) or 501(c) of the Code),
association, private foundation within the meaning of Section 509(a) of
the Code, joint stock company or other entity, and (ii) also includes a
group as that term is used for purposes of Section 13(d)(3) of the
Exchange Act and (b) for purposes of the remaining Sections of this
Article, any individual, firm, partnership, corporation or other entity
and shall include any successor (by merger or otherwise) of such
entity.
"Prohibited Transferee" has the meaning set forth in Section 11.3(A) of
this Article.
"REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class B
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on
which such securities are listed or admitted or, if such securities are
not listed or admitted for trading on any national securities exchange,
the NASDAQ National Market or, if such securities are not listed or
admitted for trading on the NASDAQ National Market, 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.
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"Transaction" shall have the meaning set forth in paragraph (e) of
Section 7 of this Article.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of a share of Class B Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
B Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class B Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class B Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class B Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class B Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 9
of this Article.
3. DIVIDENDS.
(a) The holders of Class B Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class B Preferred Stock equal to the greater of (i) the base
dividend of $1.78125 per quarter (the "Base Rate") or (ii) the cash dividends
declared on the number of shares of Common Stock, or portion thereof, into which
a share of Class B Preferred Stock is convertible. The dividends payable with
respect to the Initial Dividend Period shall be determined solely by reference
to the Base Rate. The amount referred to in clause (ii) of this paragraph (a)
with respect to each succeeding Dividend Period shall be determined as of the
applicable Dividend Payment Date by multiplying the number of shares of Common
Stock, or portion thereof calculated to the fourth decimal point, into which a
share of Class B Preferred Stock would be convertible at the opening of business
on such Dividend Payment Date (based on the Conversion Price then in effect) by
the aggregate cash dividends payable or paid for such Dividend Period in respect
of a share of Common Stock outstanding as of the record date for the payment of
dividends on the Common Stock with respect to such Dividend Period. If (A) the
Corporation pays a cash dividend on the Common Stock after the
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Dividend Payment Date for the corresponding Dividend Period and (B) the dividend
on the Class B Preferred Stock for such Dividend Period calculated pursuant to
clause (ii) of this paragraph (a), taking into account the Common Stock dividend
referenced in clause (A), exceeds the dividend previously declared on the Class
B Preferred Stock for such Dividend Period, the Corporation shall pay an
additional dividend to the holders of the Class B Preferred Stock on the date
that the Common Stock dividend referenced in clause (A) is paid, in an amount
equal to the difference between the dividend calculated pursuant to clause (B)
and the dividends previously declared on the Class B Preferred Stock with
respect to such Dividend Period. Such dividends shall be cumulative from the
Issue Date, whether or not in any Dividend Period or Periods such dividends
shall be declared or there shall be funds of the Corporation legally available
for the payment of such dividends, and shall be payable quarterly in arrears on
the Dividend Payment Dates, commencing on the first Dividend Payment Date after
the Issue Date. Each such dividend shall be payable in arrears to the holders of
record of the Class B Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on a record date fixed by the Board of
Directors which shall be not more than 60 days prior to the applicable Dividend
Payment Date and, within such 60 day period, shall be the same date as the
record date for the regular quarterly dividend payable with respect to the
Common Stock for the Dividend Period to which such Dividend Payment Date relates
(or, if there is no such record date for Common Stock, then such date as the
Board of Directors may fix). Accumulated, accrued and unpaid dividends for any
past Dividend Periods may be declared and paid at any time, without reference to
any regular Dividend Payment Date, to holders of record on such date, which date
shall not precede by more than 45 days the payment date thereof, as may be fixed
by the Board of Directors.
Upon a final administrative determination by the Internal
Revenue Service that the Corporation does not qualify as a real estate
investment trust in accordance with Section 856 of the Code, the Base Rate set
forth in (a)(i) will be increased to $3.03125 until such time as the Corporation
regains its status as a real estate investment trust; provided, however, that if
the Corporation contests its loss of real estate investment trust status in
Federal Court, following its receipt of an opinion of nationally recognized tax
counsel to the effect that there is a reasonable basis to contest such loss of
status, the Base Rate shall not be increased during the pendency of such
judicial proceeding; provided further, however, that upon a final judicial
determination in Federal Tax Court, Federal District Court or the Federal Claims
Court that the Corporation does not qualify as a real estate investment trust,
the Base Rate will be increased as stated above from the date of such judicial
determination.
(b) The amount of dividends payable per share of Class B
Preferred Stock for the Initial Dividend Period, or any other period shorter
than a full Dividend Period, shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class B 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 Class B Preferred
Stock. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Class B Preferred Stock that
may be in arrears.
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(c) So long as any of the shares of Class B Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment on the Class B Preferred
Stock for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Stock. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class B Preferred Stock and all
dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class B Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class B 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made directly or indirectly by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior 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 in respect thereof, directly or indirectly, by the
Corporation unless in each case (i) the full cumulative dividends (including all
accumulated, accrued and unpaid dividends) on all outstanding shares of Class B
Preferred Stock and any other Parity Stock of the Corporation shall have been
paid or such dividends have been declared and set apart for payment for all past
Dividend Periods with respect to the Class B Preferred Stock and all past
dividend periods with respect to such Parity Stock and (ii) sufficient funds
shall have been paid or set apart for the payment of the full dividend for the
current Dividend Period with respect to the Class B Preferred Stock and the
current dividend period with respect to such Parity Stock.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution of the Corporation (whether capital or surplus) shall be made to or
set apart for the holders of Junior Stock, the holders of shares of Class B
Preferred Stock shall be entitled to receive One Hundred Dollars ($100) per
share of Class B Preferred Stock (the "Liquidation Preference"), plus an amount
equal to all dividends (whether or not earned or declared) accumulated, accrued
and unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class B Preferred Stock have been paid the Liquidation Preference in full, plus
an
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amount equal to all dividends (whether or not earned or declared) accumulated,
accrued and unpaid thereon to the date of final distribution to such holders, no
payment will be made to any holder of Junior Stock upon the liquidation,
dissolution or winding up of the Corporation. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of Class B Preferred Stock
shall be insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any other shares of any class or series of Parity Stock,
then such assets, or the proceeds thereof, shall be distributed among the
holders of Class B Preferred Stock and any such other Parity Stock ratably in
the same proportion as the respective amounts that would be payable on such
Class B Preferred Stock and any such other Parity Stock if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
B Preferred Stock and any Parity Stock, as provided in this Section 4, 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 Class B Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class B Preferred Stock shall not be redeemable
by the Corporation prior to August 4, 2002. On and after August 4, 2002, the
Corporation, at its option, may redeem shares of Class B Preferred Stock, in
whole or from time to time in part, at a redemption price payable in cash equal
to 100% of the Liquidation Preference thereof, plus all accrued and unpaid
dividends to the Call Date.
(b) Shares of Class B Preferred Stock shall be redeemed by the
Corporation on the date specified in the notice to holders required under
paragraph (d) of this Section 5 (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.
(c) If full cumulative dividends on all outstanding shares of
Class B Preferred Stock and any other class or series of Parity Stock of the
Corporation have not been paid or declared and set apart for payment, no shares
of Class B Preferred Stock may be redeemed unless
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all outstanding shares of Class B Preferred Stock are simultaneously redeemed
and neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Class B Preferred Stock, otherwise than pursuant to a purchase
or exchange offer made on the same terms to all holders of shares of Class B
Preferred Stock.
(d) If the Corporation shall redeem shares of Class B
Preferred Stock pursuant to paragraph (a) of this Section 5, 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.
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state, as appropriate: (1) the Call Date; (2) the number of shares of
Class B 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 place or places at which certificates for such shares are
to be surrendered for cash; and (4) the then-current Conversion Price. Notice
having been mailed as aforesaid, from and after the Call Date (unless the
Corporation shall fail to make available the amount of cash necessary to effect
such redemption), (i) except as otherwise provided herein, dividends on the
shares of Class B Preferred Stock so called for redemption shall cease to
accumulate or accrue on the shares of Class B 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 Class B 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 Class B Preferred Stock of the Corporation shall cease (except the
rights to receive the cash payable upon such redemption, without interest
thereon, upon surrender and endorsement of their certificates if so required and
to receive any dividends payable thereon). The Corporation's obligation to make
available the redemption price in accordance with the preceding sentence shall
be deemed fulfilled if, on or before the Call Date, the Corporation shall
deposit with a bank or trust company (which may be an affiliate of the
Corporation) that has, or is an affiliate of a bank or trust company that has, a
capital and surplus of at least $50,000,000, such amount of cash as is necessary
for such redemption, in trust, with irrevocable instructions that such cash be
applied to the redemption of the shares of Class B Preferred Stock so called for
redemption. No interest shall accrue for the benefit of the holders of shares of
Class B Preferred Stock to be redeemed on any cash so set aside by the
Corporation. Subject to applicable escheat laws, any such cash unclaimed at the
end of two years from the Call Date shall revert to the general funds of the
Corporation, after which reversion the holders of shares of Class B 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 such
notice of the
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certificates for any such shares of Class B Preferred Stock to be so redeemed
(properly endorsed or assigned for transfer, if the Corporation shall so require
and 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 Class B
Preferred Stock are to be redeemed, shares to be redeemed shall be selected by
the Corporation from outstanding shares of Class B Preferred Stock not
previously called for redemption by lot or, with respect to the number of shares
of Class B Preferred Stock held of record by each holder of such shares, pro
rata (as nearly as may be) 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 Class B Preferred Stock represented by any certificate are redeemed,
then a new certificate representing the unredeemed shares shall be issued
without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class B Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation (including shares of Class B
Preferred Stock which have been surrendered for conversion into Common Stock)
shall be returned to the status of authorized, but unissued shares of Class B
Preferred Stock.
7. CONVERSION.
At any time on or after August 4, 1998. Holders of shares of Class B
Preferred Stock shall have the right to convert all or a portion of such shares
into shares of Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, a holder of shares of Class B Preferred Stock shall have the right,
at such holder's option, at any time on or after August 4, 1998 to convert such
shares, in whole or in part, into the number of fully paid and non-assessable
shares of authorized but previously unissued shares of Common Stock per each
share of Class B Preferred Stock obtained by dividing the Liquidation Preference
(excluding any accumulated, accrued and unpaid dividends) per share of Class B
Preferred Stock by the Conversion Price (as in effect at the time and on the
date provided for in the last subparagraph of paragraph (b) of this Section 7)
and by surrendering such shares to be converted, such surrender to be made in
the manner provided in paragraph (b) of this Section 7; provided, however, that
the right to convert shares of Class B Preferred Stock called for redemption
pursuant to Section 5 shall terminate at the close of business on the Call Date
fixed for such redemption, unless the Corporation shall default in making
payment of cash payable upon such redemption under Section 5 of this Article.
(b) In order to exercise the conversion right, the holder of
each share of Class B Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof elects to convert such
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share of Class B Preferred Stock. Unless the shares issuable on conversion are
to be issued in the same name as the name in which such share of Class B
Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
Holders of shares of Class B Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment record
date and prior to such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for unpaid dividends, whether or
not in arrears, on converted shares or for dividends on the shares of Common
Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for
shares of Class B Preferred Stock as aforesaid, the Corporation shall issue and
shall deliver at such office to such holder, or send on such holder's written
order, a certificate or certificates for the number of full shares of Common
Stock issuable upon the conversion of such shares of Class B Preferred Stock in
accordance with provisions of this Section 7, and any fractional interest in
respect of a share of Common Stock arising upon such conversion shall be settled
as provided in paragraph (c) of this Section 7.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for shares of
Class B Preferred Stock shall have been surrendered and such notice received by
the Corporation as aforesaid, and the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on such date
unless the stock transfer books of the Corporation shall be closed on that date,
in which event such Person or Persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation. If the dividend payment
record date for the Class B Preferred Stock and Common Stock do not coincide,
and the preceding sentence does not operate to ensure that a holder of shares of
Class B Preferred Stock whose shares are converted into Common Stock does not
receive dividends on both the shares of Class B Preferred Stock and the Common
Stock into which such shares are converted for the same Dividend Period, then
notwithstanding anything herein to the contrary, it is the intent, and the
Transfer Agent is authorized to ensure that no conversion after the earlier of
such record dates will be accepted until after the latter of such record dates.
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(c) No fractional share of Common Stock or scrip representing
fractions of a share of Common Stock shall be issued upon conversion of the
shares of Class B Preferred Stock. Instead of any fractional interest in a share
of Common Stock that would otherwise be deliverable upon the conversion of
shares of Class B Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash based upon the Current Market Price of the Common
Stock on the Trading Day immediately preceding the date of conversion. If more
than one share shall be surrendered for conversion at one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Class B Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time
as follows:
(i) If the Corporation shall after the Issue Date (A)
pay a dividend or make a distribution on its capital stock in shares of Common
Stock, (B) subdivide its outstanding Common Stock into a greater number of
shares, (C) combine its outstanding Common Stock into a smaller number of shares
or (D) issue any shares of capital stock by reclassification of its outstanding
Common Stock, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of stockholders entitled to
receive such dividend or distribution or at the opening of business on the day
following the day on which such subdivision, combination or reclassification
becomes effective, as the case may be, shall be adjusted so that the holder of
any share of Class B Preferred Stock thereafter surrendered for conversion shall
be entitled to receive the number of shares of Common Stock (or fraction of a
share of Common Stock) that such holder would have owned or have been entitled
to receive after the happening of any of the events described above had such
share of Class B Preferred Stock been converted immediately prior to the record
date in the case of a dividend or distribution or the effective date in the case
of a subdivision, combination or reclassification. An adjustment made pursuant
to this paragraph (d)(i) of this Section 7 shall become effective immediately
after the opening of business on the day next following the record date (except
as provided in paragraph (h) below) in the case of a dividend or distribution
and shall become effective immediately after the opening of business on the day
next following the effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Corporation shall issue after the Issue
Date rights, options or warrants to all holders of Common Stock entitling them
(for a period expiring within 45 days after the record date described below in
this paragraph (d)(ii) of this Section 7) to subscribe for or purchase Common
Stock at a price per share less than the Fair Market Value per share of the
Common Stock on the record date for the determination of stockholders entitled
to receive such rights, options or warrants, then the Conversion Price in effect
at the opening of business on the day next following such record date shall be
adjusted to equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the opening of business on the day following the
date fixed for such determination by (B) a fraction, the numerator of which
shall be the sum of (X) the number of shares of Common Stock outstanding on the
close of business on the date fixed for such determination and (Y) the number of
shares that could be
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purchased at such Fair Market Value from the aggregate proceeds to the
Corporation from the exercise of such rights, options or warrants for Common
Stock, and the denominator of which shall be the sum of (XX) the number of
shares of Common Stock outstanding on the close of business on the date fixed
for such determination and (YY) the number of additional shares of Common Stock
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall become effective immediately after the opening
of business on the day next following such record date (except as provided in
paragraph (h) below). In determining whether any rights, options or warrants
entitle the holders of Common Stock to subscribe for or purchase Common Stock at
less than such Fair Market Value, there shall be taken into account any
consideration received by the Corporation upon issuance and upon exercise of
such rights, options or warrants, the value of such consideration, if other than
cash, to be determined in good faith by the Board of Directors.
(iii) If the Corporation shall after the Issue Date
make a distribution on its Common Stock other than in cash or shares of Common
Stock (including any distribution in securities (other than rights, options or
warrants referred to in paragraph (d)(ii) of this Section 7)) (each of the
foregoing being referred to herein as a "distribution"), then the Conversion
Price in effect at the opening of business on the next day following the record
date for determination of stockholders entitled to receive such distribution
shall be adjusted to equal the price determined by multiplying (A) the
Conversion Price in effect immediately prior to the opening of business on the
day following the record date by (B) a fraction, the numerator of which shall be
the difference between (X) the number of shares of Common Stock outstanding on
the close of business on the record date and (Y) the number of shares determined
by dividing (aa) the aggregate value of the property being distributed by (bb)
the Fair Market Value per share of Common Stock on the record date, and the
denominator of which shall be the number of shares of Common Stock outstanding
on the close of business on the record date. Such adjustment shall become
effective immediately after the opening of business on the day next following
such record date (except as provided below). The value of the property being
distributed shall be as determined in good faith by the Board of Directors;
provided, however, if the property being distributed is a publicly traded
security, its value shall be calculated in accordance with the procedure for
calculating the Fair Market Value of a share of Common Stock (calculated for a
period of five consecutive Trading Days commencing on the twentieth Trading Day
after the distribution). Neither the issuance by the Corporation of rights,
options or warrants to subscribe for or purchase securities of the Corporation
nor the exercise thereof shall be deemed a distribution under this paragraph.
(iv) If after the Issue Date the Corporation shall
acquire, pursuant to an issuer or self tender offer, all or any portion of the
outstanding Common Stock and such tender offer involves the payment of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors), at the last time (the
"Expiration Time") tenders may be made pursuant to such offer, that exceeds the
Current Market Price per share of Common Stock on the Trading Day next
succeeding the Expiration Time, then the Conversion Price in effect on the
opening of business on the day next succeeding the Expiration
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Time shall be adjusted to equal the price determined by multiplying (A) the
Conversion Price in effect immediately prior to the Expiration Time by (B) a
fraction, the numerator of which shall be (X) the number of shares of Common
Stock outstanding (including the shares acquired in the tender offer (the
"Acquired Shares")) immediately prior to the Expiration Time, multiplied by (Y)
the Current Market Price per share of Common Stock on the Trading Day next
succeeding the Expiration Time, and the denominator of which shall be the sum of
(XX) the fair market value (determined as aforesaid) of the aggregate
consideration paid to acquire the Acquired Shares and (YY) the product of (I)
the number of shares of Common Stock outstanding (less any Acquired Shares) at
the Expiration Time, multiplied by (II) the Current Market Price per share of
Common Stock on the Trading Day next succeeding the Expiration Time.
(v) No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any adjustments that by
reason of this paragraph (d)(v) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in accordance
with the provisions of this Section 7 (other than this paragraph (d)(v)) not
later than such time as may be required in order to preserve the tax-free nature
of a distribution to the holders of shares of Common Stock. Notwithstanding any
other provisions of this Section 7, the Corporation shall not be required to
make any adjustment of the Conversion Price for the issuance of (A) any shares
of Common Stock pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Corporation and the investment of
optional amounts in shares of Common Stock under such plan or (B) any options,
rights or shares of Common Stock pursuant to any stock option, stock purchase or
other stock-based plan maintained by the Corporation. All calculations under
this Section 7 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-tenth of a share (with .05 of a share being
rounded upward), as the case may be. Anything in this paragraph (d) of this
Section 7 to the contrary notwithstanding, the Corporation shall be entitled, to
the extent permitted by law, to make such reductions in the Conversion Price, in
addition to those required by this paragraph (d), as it in its discretion shall
determine to be advisable in order that any stock dividends, subdivision of
shares, reclassification or combination of shares, distribution of rights or
warrants to purchase stock or securities, or a distribution of other assets
(other than cash dividends) hereafter made by the Corporation to its
stockholders shall not be taxable, or if that is not possible, to diminish any
income taxes that are otherwise payable because of such event.
(e) If the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation, statutory share exchange,
issuer or self tender offer for at least 30% of the shares of Common Stock
outstanding, sale of all or substantially all of the Corporation's assets or
recapitalization of the Common Stock, but excluding any transaction as to which
paragraph (d)(i) of this Section 7 applies) (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result of which shares
of Common Stock shall be converted into the right to receive stock, securities
or other property (including cash or any combination thereof), each share of
Class B Preferred Stock which is not converted into the right to receive
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stock, securities or other property in connection with such Transaction shall
thereupon be convertible into the kind and amount of shares of stock, securities
and other property (including cash or any combination thereof) receivable upon
such consummation by a holder of that number of shares of Common Stock into
which one share of Class B Preferred Stock was convertible immediately prior to
such Transaction (without giving effect to any Conversion Price adjustment
pursuant to Section 7(d)(iv) of this Article). The Corporation shall not be a
party to any Transaction unless the terms of such Transaction are consistent
with the provisions of this paragraph (e), and it shall not consent or agree to
the occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Class B Preferred Stock that will contain
provisions enabling the holders of the Class B Preferred Stock that remain
outstanding after such Transaction to convert into the consideration received by
holders of Common Stock at the Conversion Price in effect immediately prior to
such Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
(f) If:
(i) the Corporation shall declare a dividend (or any
other distribution) on the Common Stock (other than cash dividends and cash
distributions); or
(ii) the Corporation shall authorize the granting to
all holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of any class or series of capital stock or any other rights
or warrants; or
(iii) there shall be any reclassification of the
outstanding Common Stock or any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the Corporation is
required, or a statutory share exchange, an issuer or self tender offer shall
have been commenced for at least 30% of the outstanding shares of Common Stock
(or an amendment thereto changing the maximum number of shares sought or the
amount or type of consideration being offered therefor shall have been adopted),
or the sale or transfer of all or substantially all of the assets of the
Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Class B Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, a notice stating (A) the record date for the payment of such
dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected
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that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, statutory share exchange,
sale, transfer, liquidation, dissolution or winding up or (C) the date on which
such tender offer commenced, the date on which such tender offer is scheduled to
expire unless extended, the consideration offered and the other material terms
thereof (or the material terms of any amendment thereto). Failure to give or
receive such notice or any defect therein shall not affect the legality or
validity of the proceedings described in this Section 7.
(g) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment which
certificate shall be conclusive evidence of the correctness of such adjustment
absent manifest error. Promptly after delivery of such certificate, the
Corporation shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder of shares of Class B Preferred Stock at such
holder's last address as shown on the stock records of the Corporation.
(h) In any case in which paragraph (d) of this Section 7
provides that an adjustment shall become effective on the day next following the
record date for an event, the Corporation may defer until the occurrence of such
event (A) issuing to the holder of any share of Class B Preferred Stock
converted after such record date and before the occurrence of such event the
additional Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (B) paying to such
holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of
this Section 7.
(i) There shall be no adjustment of the Conversion Price in
case of the issuance of any capital stock of the Corporation in a
reorganization, acquisition or other similar transaction except as specifically
set forth in this Section 7.
(j) If the Corporation shall take any action affecting the
Common Stock, other than action described in this Section 7, that in the opinion
of the Board of Directors would materially adversely affect the conversion
rights of the holders of Class B Preferred Stock, the Conversion Price for the
Class B Preferred Stock may be adjusted, to the extent permitted by law, in such
manner, if any, and at such time as the Board of Directors, in its sole
discretion, may determine to be equitable under the circumstances.
(k) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Stock solely for the purpose of effecting conversion of the
Class B Preferred Stock, the full number of shares of Common Stock deliverable
upon the conversion of all outstanding shares of Class B Preferred
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Stock not theretofore converted into Common Stock. For purposes of this
paragraph (k), the number of shares of Common Stock that shall be deliverable
upon the conversion of all outstanding shares of Class B Preferred Stock shall
be computed as if at the time of computation all such outstanding shares were
held by a single holder (and without regard to the Ownership Limit set forth in
the Charter of the Corporation).
The Corporation covenants that any shares of Common Stock issued upon
conversion of the shares of Class B Preferred Stock shall be validly issued,
fully paid and nonassessable.
The Corporation shall use its best efforts to list the shares of Common
Stock required to be delivered upon conversion of the shares of Class B
Preferred Stock, prior to such delivery, upon each national securities exchange,
if any, upon which the outstanding shares of Common Stock are listed at the time
of such delivery.
(l) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Common Stock or other securities or property on conversion or
redemption of shares of Class B Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issue or delivery of shares
of Common Stock or other securities or property in a name other than that of the
holder of the shares of Class B Preferred Stock to be converted or redeemed, and
no such issue or delivery shall be made unless and until the Person requesting
such issue or delivery has paid to the Corporation the amount of any such tax or
established, to the reasonable satisfaction of the Corporation, that such tax
has been paid.
(m) In addition to any other adjustment required hereby, to
the extent permitted by law, the Corporation from time to time may decrease the
Conversion Price by any amount, permanently or for a period of at least twenty
Business Days, if the decrease is irrevocable during the period.
(n) Notwithstanding anything to the contrary contained in this
Section 7, conversion of Class B Preferred Stock pursuant to this Section 7
shall be permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in the Charter), after
taking into account any waiver of such limitation granted to any holder of the
shares of Class B Preferred Stock.
8. RANKING.
Any class or series of capital stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Class B Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class B Preferred Stock ("Senior Stock");
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(b) on a parity with the Class B Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class B Preferred Stock, if the holders of such class of stock or
series and the Class B Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority one over the
other ("Parity Stock"); and
(c) junior to the Class B Preferred Stock, as to the payment
of dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such stock or series shall be Common Stock or if the holders
of Class B Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such class or
series ("Junior Stock").
9. VOTING.
(a) If and whenever (i) six quarterly dividends (whether or
not consecutive) payable on the Class B Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, or (ii) for two consecutive quarterly
dividend periods the Corporation fails to pay dividends on the Common Stock in
an amount per share at least equal to $0.4625 (subject to adjustment consistent
with any adjustment of the Conversion Price pursuant to Section 7(d) of this
Article) (the "Base Common Stock Dividend") the number of directors then
constituting the Board of Directors shall be increased by two (in the case of an
arrearage in dividends described in clause (i)) or one additional director (in
the case of an arrearage in dividends described in clause (ii)) (in each case if
not already increased by reason of similar types of provisions with respect to
Voting Preferred Stock (as defined below)) and the holders of shares of Class B
Preferred Stock, together with the holders of shares of every other series or
class of Parity Stock (any other such series, the "Voting Preferred Stock"),
voting as a single class regardless of series, shall be entitled to elect the
two additional directors (in the case of an arrearage in dividends described in
clause (i)) or one (in the case of an arrearage in dividends described in clause
(ii)) to serve on the Board of Directors at any annual meeting of stockholders
or special meeting held in place thereof, or at a special meeting of the holders
of the Class B Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever (1) in the case of an arrearage in dividends
described in clause (i), all arrears in dividends on the Class B Preferred Stock
and the Voting Preferred Stock then outstanding shall have been paid and
dividends thereon for the current quarterly dividend period shall have been paid
or declared and set apart for payment, or (2) in the case of an arrearage in
dividends described in clause (ii), the Corporation makes a quarterly dividend
payment on the Common Stock in an amount per share equal to or exceeding the
Base Common Stock Dividend, then the
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right of the holders of the Class B Preferred Stock and the Voting Preferred
Stock to elect such additional two directors (in the case of an arrearage in
dividends described in clause (i)) or one additional director (in the case of an
arrearage in dividends described in clause (ii)) shall cease (but subject always
to the same provision for the vesting of such voting rights in the case of any
similar future arrearages), and the terms of office of all Persons elected as
directors by the holders of the Class B Preferred Stock and the Voting Preferred
Stock shall forthwith terminate and the number of directors constituting the
Board of Directors shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of Class B Preferred Stock and
the Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class B Preferred Stock (addressed
to the Secretary at the principal office of the Corporation) shall, call a
special meeting of the holders of the Class B Preferred Stock and of the Voting
Preferred Stock for the election of the two directors (in the case of an
arrearage in dividends described in clause (i)) or one director (in the case of
an arrearage in dividends described in clause (ii)) to be elected by them as
herein provided, such call to be made by notice similar to that provided in the
Bylaws of the Corporation for a special meeting of the stockholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days after receipt of
any such request, then any holder of Class B Preferred Stock may call such
meeting, upon the notice above provided, and for that purpose shall have access
to the stock books of the Corporation. The directors or director elected at any
such special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the directors elected by the holders of the Class B Preferred Stock and the
Voting Preferred Stock, a successor shall be elected by the Board of Directors,
upon the nomination of the then-remaining director elected by the holders of the
Class B Preferred Stock and the Voting Preferred Stock or the successor of such
remaining director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.
(b) So long as any shares of Class B Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class B Preferred
Stock, given in Person or by proxy, either in writing without a meeting or by
vote at any meeting called for the purpose, shall be necessary for effecting or
validating:
(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary, the Charter or the By-Laws of the
Corporation that materially adversely affects the voting powers, rights or
preferences of the holders of the Class B Preferred Stock; provided, however,
that the amendment of the provisions of the Charter so as to authorize or
create, or to increase the authorized amount of, any Junior Stock or any shares
of any class of Parity Stock shall not be deemed to materially adversely affect
the voting powers, rights or preferences of the holders of Class B Preferred
Stock; or
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(ii) The authorization, creation of, the increase in
the authorized amount of, or issuance of , any shares of any class of Senior
Stock or any security convertible into shares of any class of Senior Stock
(whether or not such class of Senior Stock is currently authorized); provided,
however, that no such vote of the holders of Class B Preferred Stock shall be
required if, at or prior to the time when such amendment, alteration or repeal
is to take effect, or when the issuance of any such prior shares or convertible
security is to be made, as the case may be, provision is made for the redemption
of all shares of Class B Preferred Stock at the time outstanding to the extent
such redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class B Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock shall have the right to vote with the Class B Preferred Stock as
a single class on any matter, then the Class B Preferred Stock and such other
class or series shall have with respect to such matters one (1) vote per $100 of
stated liquidation preference. Except as otherwise required by applicable law or
as set forth herein, the Class B Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers other than as
set forth herein, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class B Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class B
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class B Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class B
Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided
in Section 11.8, from and after the Issue Date (and subject to Section 11.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class B Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class B Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class B Preferred Stock.
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(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class B Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class B Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder limit, and the
Initial Holder shall acquire no rights in such shares of Class B Preferred
Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 11.8 from and after the Issue Date (and subject to
Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Class B
Preferred Stock in excess of the Look-Through Ownership limit shall be void ab
initio as to the Transfer of such shares of Class B Preferred Stock that would
be otherwise Beneficially Owned by such Look-Through Entity in excess of the
Look-Through Ownership Limit and such Look-Through Entity shall acquire no
rights in such shares of Class B Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant that
is described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class B Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class B
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class B Preferred Stock that is null and void under Sections 11.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class B Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class B Preferred Stock in
the same or any other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section
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11.1 of this Article or that a Person intends to acquire or has attempted to
acquire Beneficial Ownership of any shares of Class B Preferred Stock in
violation of Section 11.1 of this Article (whether or not such violation is
intended), 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, causing
the Corporation to redeem such shares at the then current Market Price and upon
such terms and conditions as may be specified by the Board of Directors in its
sole discretion (including, but not limited to, by means of the issuance of
long-term indebtedness for the purpose of such redemption), demanding the
repayment of any distributions received in respect of shares of Class B
Preferred Stock acquired in violation of Section 11.1 of this Article or
instituting proceedings to enjoin such Transfer or to rescind such Transfer or
attempted Transfer; provided, however, that any Transfers or attempted Transfers
(or in the case of events other than a Transfer, Beneficial Ownership) in
violation of Section 11.1 of this Article, regardless of any action (or
non-action) by the Board of Directors or such committee, (a) shall be void ab
initio or (b) shall automatically result in the transfer described in Section
11.3 of this Article; provided, further, that the provisions of this Section
11.2 shall be subject to the provisions of Section 11.12 of this Article;
provided, further, that neither the Board of Directors nor any committee thereof
may exercise such authority in a manner that interferes with any ownership or
transfer of Class B Preferred Stock that is expressly authorized pursuant to
Section 11.8(d) of this Article.
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) or other
change in the capital structure of the Corporation (including, but not limited
to, any redemption of Preferred Stock) or other event (including, but not
limited to, any acquisition of any share of Equity Stock) such that (a) any
Person (other than the Initial Holder or a Look-Through Entity) would
Beneficially Own shares of Class B Preferred Stock in excess of the Ownership
Limit, or (b) the Initial Holder would Beneficially Own shares of Class B
Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is
a Look-Through Entity would Beneficially Own shares of Class B Preferred Stock
in excess of the Look-Through Ownership Limit (in any such event, the Person,
Initial Holder or Look-Through Entity that would Beneficially Own shares of
Class B Preferred Stock in excess of the Ownership Limit, the Initial Holder
Limit or the Look-Through Entity Limit, respectively, is referred to as a
"Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of
this Article, such shares of Class B Preferred Stock in excess of the Ownership
Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case
may be, (rounded up to the nearest whole share) shall be automatically
transferred to a Trustee in his capacity as trustee of a Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the business day
prior to the Excess
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Transfer, change in capital structure or another event giving rise to a
potential violation of the Ownership Limit, the Initial Holder Limit or the Look
Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class B
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
11.3(E), the Prohibited Transferee shall have no rights in the Class B Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class B
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class B Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class B Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class B Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure or
other event giving rise to a potential violation of the Ownership Limit, Initial
Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have
given an irrevocable proxy to the Trustee to vote the shares of Class B
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the Trust
and (2) the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any proceeds in excess of the
amount payable to the Prohibited
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Transferee shall be payable to the Charitable Beneficiary. If any of the
transfer restrictions set forth in this Section 11.3(E) or any application
thereof is determined in a final judgment to be void, invalid or unenforceable
by any court having jurisdiction over the issue, the Prohibited Transferee may
be deemed, at the option of the Corporation, to have acted as the agent of the
Corporation in acquiring the Class B Preferred Stock as to which such
restrictions would, by their terms, apply, and to hold such Class B Preferred
Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares
of Class B Preferred Stock transferred to the Trustee shall be deemed to have
been offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class B Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class B Preferred Stock in violation of Section
11.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 11.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted 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.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class B
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class B Preferred 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 Class B Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record
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or Beneficial Owner of Class B Preferred Stock shall, upon demand by the
Corporation, disclose to the Corporation in writing such additional information
with respect to the Beneficial Ownership of the Class B Preferred 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 under the Code and (ii) ensure compliance with the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as applicable. Each stockholder of record, including without limitation any
Person that holds shares of Class B Preferred Stock on behalf of a Beneficial
Owner, shall take all reasonable steps to obtain the written notice described in
this Section 11.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class B Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class B
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class B Preferred Stock already Beneficially 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.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 11 of this Article, or in the case of an ambiguity
in any definition contained in Section 11 of this Article, the Board of
Directors shall have the power to determine the application of the provisions of
this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code and is a corporation, partnership, estate or trust. In
connection
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with any such exemption, the Board of Directors may require such representations
and undertakings from such Person and may impose such other conditions as the
Board deems necessary, in its sole discretion, to determine the effect, if any,
of the proposed Transfer on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class B Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and the
pledgee shall not be subject to the Ownership Limit with respect to the Class B
Preferred Stock so pledged to it either as a result of the pledge or upon
foreclosure.
(C) UNDERWRITERS. For a period of 270 days following the
purchase of Class B Preferred Stock by an underwriter that (i) is a corporation
or a partnership and (ii) participates in an offering of the Class B Preferred
Stock, such underwriter shall not be subject to the Ownership Limit with respect
to the Class B Preferred Stock purchased by it as a part of or in connection
with such offering and with respect to any Class B Preferred Stock purchased in
connection with market making activities.
11.9 LEGEND. Each certificate for Class B Preferred Stock shall bear
the following legend:
"The shares of Class B Preferred Stock represented by
this certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class B Preferred Stock in excess of the
Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Corporation's Charter
(including the Articles Supplementary setting forth the terms of the
Class B Preferred Stock). Any Person that attempts to Beneficially Own
shares of Class B Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All capitalized
terms in this legend have the meanings ascribed to such terms in the
Corporation's Charter (including the Articles Supplementary setting
forth the terms of the Class B Preferred Stock), 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 that so
requests. If the restrictions on transfer are violated, the shares of
Class B Preferred Stock represented hereby will be either (i) void in
accordance with the Certificate or (ii) automatically transferred to a
Trustee of a Trust for the benefit of one or more Charitable
Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article 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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11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class B Cumulative Convertible Preferred Stock
set forth in Article Third hereof shall become Article XIII of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Vice President and witnessed by its
Secretary on August 1, 1997.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Leeann Morein /s/ Patricia K. Heath
Leeann Morein, Patricia K. Heath,
Secretary Vice President
THE UNDERSIGNED, Vice President of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, who executed on behalf of the Corporation the Articles Supplementary of
which this Certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
/s/ Patricia K. Heath
Patricia K. Heath,
Vice President
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ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS C CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
the Board of Directors has duly divided and classified 2,760,000 authorized but
unissued shares of the capital stock of the Corporation into a class designated
as Class C Cumulative Preferred Stock and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified as
Class C Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 2,760,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Preferred Stock, par value $.01 per share, from 9,250,000 shares
immediately prior to the reclassification to 6,490,000 shares immediately after
the reclassification. The number of shares classified as Class C Cumulative
Preferred Stock may be decreased pursuant to Section 6 of Article Third of these
Articles Supplementary upon reacquisition thereof in any manner, or by
retirement thereof, by the Corporation.
THIRD: The terms of the Class C Cumulative Preferred Stock (including the
preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class C Cumulative
Preferred Stock (the "Class C Preferred Stock") and Two Million Seven Hundred
Sixty Thousand (2,760,000) shall be the authorized number of shares of such
Class C Preferred Stock constituting such class.
5
2. DEFINITIONS.
For purposes of the Class C Preferred Stock, the following terms shall have
the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
"AFFILIATE" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock, the
sum of the products of (i) the number of shares of each class of Equity Stock
within such block multiplied by (ii) the corresponding Market Price of one share
of Equity Stock of such class.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of Equity
Stock directly owned by such Person, (ii) the number of shares of Equity Stock
indirectly owned by such Person (if such Person is an "individual" as defined in
Section 542(a)(2) of the Code) taking into account the constructive ownership
rules of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the
Code, and (iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d3 under the Exchange Act or that is
attributed to such Person pursuant to Section 318 of the Code, as modified by
Section 856(d)(5) of the Code, PROVIDED that when applying this definition of
Beneficial Ownership to the Initial Holder, clause (iii) of this definition, and
clause (ii) of the definition of "Person" shall be disregarded. The terms
"BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the
correlative meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation or
any committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Class C Preferred Stock.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
are not required to be open.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 10.3 of this Article, each of which shall be
an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of
the Code.
"CLASS C PREFERRED STOCK" shall have the meaning set forth in Section 1 of
this Article.
"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 thereto, as interpreted by any applicable
6
regulations or other administrative pronouncements as in effect from time to
time.
"COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation or such shares of the Corporation's capital stock into
which outstanding shares of Common Stock shall be reclassified.
"DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15 and October
15 of each year; provided, further, that if any Dividend Payment Date falls on
any day other than a Business Day, the dividend payment payable on such Dividend
Payment Date shall be paid on the Business Day immediately following such
Dividend Payment Date and no interest shall accrue on such dividend from such
date to such Dividend Payment Date.
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January 15,
April 15, July 15 and October 15 of each year and ending on and including the
day preceding the first day of the next succeeding Dividend Period, other than
the Dividend Period during which any Class B Preferred Stock shall be redeemed
pursuant to Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class C Preferred Stock being redeemed.
"EQUITY STOCK" shall mean one or more shares of any class of capital stock
of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this
Article.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ISSUE DATE" shall mean December 23, 1997(1).
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including
the Issue Date and ending on and including April 14, 1998.
"INITIAL HOLDER" shall mean Terry Considine.
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class C Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class B Preferred Stock that are Beneficially Owned by the Initial Holder.
From the Issue Date, the secretary of the Corporation, or such other person as
shall be designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of Directors, a
schedule that sets forth the then current Initial Holder Limit applicable to the
Initial Holder.
7
"JUNIOR STOCK" shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the shares of Class C Preferred
Stock have preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or
(ii) registered under the Investment Company Act of 1940.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class C Preferred Stock of the Corporation
having an Aggregate Value not in excess of the excess of (x) 15% of the
Aggregate Value of all Outstanding shares of Equity Stock over (y) by the
Aggregate Value of all shares of Equity Stock other than Class B Preferred Stock
that are Beneficially Owned by the Look-Through Entity.
"MARKET PRICE" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of share of that class of Equity Stock on the Trading
Day immediately preceding such date. The term "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 NYSE or,
if the Equity Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Equity Stock is listed or admitted to trading or, if the Equity 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 overthecounter 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 Equity 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 Equity Stock selected by the Board of
Directors of the Company. The term "TRADING DAY" shall mean a day on which the
principal national securities exchange on which the Equity Stock is listed or
admitted to trading is open for the transaction of business or, if the Equity
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.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of
the Corporation, PROVIDED that for purposes of the application of the Ownership
Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any
Person, the term "OUTSTANDING" shall be deemed to include the number of shares
of Equity Stock that such Person alone, at that time, could acquire pursuant to
any options or convertible securities.
8
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder
or a Look-Through Entity, a number of the Outstanding shares of Class C
Preferred Stock of the Corporation having an Aggregate Value not in excess of
the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class C Preferred Stock that are Beneficially Owned by the Person.
"OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or Look-Through Entities, the
Initial Holder Limit as applied to the Initial Holder and the Look-Through
Ownership Limit as applied to Look-Through Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section
7 of this Article. The Class B Preferred Stock shall be a Parity Stock.
"PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and (ii) also includes a group as that term is used for
purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the
remaining Sections of this Article, any individual, firm, partnership,
corporation or other entity and shall include any successor (by merger or
otherwise) of such entity.
"PROHIBITED TRANSFEREE" has the meaning set forth in Section 10.3(A) of
this Article.
"REDEMPTION DATE" shall have the meaning set forth in paragraph (b) of
Section 5 of this Article.
"REIT" shall mean a "real estate investment trust" as defined in Section 856
of the Code.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section
7 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action other
than the following, the recording by the Corporation in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
Junior Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class C Preferred Stock
shall mean placing such funds in a separate account or delivering such funds to
a disbursing, paying or other similar agent.
"TRADING DAY", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on which
such securities are listed or admitted or, if such securities are not listed or
admitted for trading on any national securities exchange, the NASDAQ
9
National Market or, if such securities are not listed or admitted for trading on
the NASDAQ National Market, in the securities market in which such securities
are traded.
"TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class C Preferred Stock (including (i) the granting of
an option or any series of such options or entering into any agreement for the
sale, transfer or other disposition of Class C Preferred Stock or (ii) the sale,
transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Class C Preferred Stock), whether voluntary
or involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any transfer of an
interest in other entities that results in a change in the Beneficial Ownership
of shares of Class C Preferred Stock). The term "TRANSFERS" and "TRANSFERRED"
shall have correlative meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the Board
of Directors or their designee as the transfer agent for the Class C Preferred
Stock; provided, that if the Corporation has not designated a transfer agent
then the Corporation shall act as the transfer agent for the Class C Preferred
Stock.
"TRUST" shall mean the trust created pursuant to Section 10.3 of this
Article.
"TRUSTEE" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8 of
this Article.
3. DIVIDENDS.
(a) The holders of Class C Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class C Preferred Stock equal to $2.25 per annum. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly in arrears on each Dividend Payment Date, commencing on April
15, 1998. Each such dividend shall be payable in arrears to the holders of
record of the Class C Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on the January 1, April 1, July 1 or
October 1, as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) The amount of dividends payable per share of Class C Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30day months
and a 360 day
10
year. Holders of Class C 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 Class C 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 Class C Preferred Stock that may be in arrears.
(c) So long as any of the shares of Class C Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment on the Class C Preferred
Stock for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Stock. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class C Preferred Stock and all
dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class C Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class C 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or rights to
subscribe for or purchase shares of, 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 in respect thereof, directly or indirectly, by
the Corporation unless in each case the full cumulative dividends (including all
accumulated, accrued and unpaid dividends) on all outstanding shares of Class C
Preferred Stock shall have been paid or such dividends have been declared and
set apart for payment for all past Dividend Periods with respect to the Class C
Preferred Stock.
Notwithstanding the provisions of this Section 3(d), the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii) or
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
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4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital or surplus) shall be made to
or set apart for the holders of Junior Stock, the holders of shares of Class C
Preferred Stock shall be entitled to receive TwentyFive Dollars ($25) per share
of Class C Preferred Stock (the "Liquidation Preference"), plus an amount equal
to all dividends (whether or not earned or declared) accumulated, accrued and
unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class C Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Class C
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Class C Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Class C Preferred Stock and any such other Parity Stock if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of Class C Preferred
Stock and any Parity Stock, as provided in this Section 4, 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 Class C Preferred Stock and any Parity Stock shall not be
entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class C Preferred Stock shall not be redeemable by the
Corporation prior to December 23, 2002(2) except as set forth in Section 10.2 of
this Article. On and after December 23, 2002(3), the Corporation, at its option,
may redeem shares of Class C Preferred Stock, in whole or from time to time in
part, at a redemption price payable in cash equal to 100% of the Liquidation
Preference thereof, plus all accrued and unpaid dividends to the date fixed for
redemption (the "Redemption Date"). In connection with any redemption pursuant
to this Section 5(a), the redemption price of the Class C Preferred Stock (other
than any portion thereof consisting of accrued and unpaid dividends) shall be
payable solely with the proceeds from the sale by the Corporation or AIMCO
Properties, L.P., a Delaware limited partnership (the "Operating Partnership")
of other capital shares of the Corporation or the Operating Partnership (whether
or not such sale occurs concurrently with such redemption). For purposes of the
preceding sentence, 'capital shares' means any common stock, preferred stock,
depositary shares, partnership or other interests, participations or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable at the option of the holder for
equity securities (unless and to the extent such debt securities are
subsequently converted into capital shares)) or options to purchase any of the
foregoing of or in the Corporation or the Operating Partnership.
12
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of Class C
Preferred Stock have not been paid or declared and set apart for payment, no
shares of Class C Preferred Stock may be redeemed unless all outstanding shares
of Class C Preferred Stock are simultaneously redeemed and neither the
Corporation nor any affiliate of the Corporation may purchase or acquire shares
of Class C Preferred Stock, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of shares of Class C Preferred
Stock.
(d) If the Corporation shall redeem shares of Class C Preferred Stock
pursuant to paragraph (a) of this Section 5, 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.
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state, as appropriate: (1) the Redemption Date; (2) the number of shares
of Class C 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; and (3) the place or places at which certificates for such
shares are to be surrendered for cash. Notice having been mailed as aforesaid,
from and after the Redemption Date (unless the Corporation shall fail to make
available the amount of cash necessary to effect such redemption), (i) except as
otherwise provided herein, dividends on the shares of Class C Preferred Stock so
called for redemption shall cease to accumulate or accrue on the shares of Class
C Preferred Stock called for redemption (except that, in the case of a
Redemption Date after a dividend record date and prior to the related Dividend
Payment Date, holders of Class C 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 Class C Preferred
Stock of the Corporation shall cease (except the rights to receive the cash
payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Corporation's obligation to make available the redemption
price in accordance with the preceding sentence shall be deemed fulfilled if, on
or before the Call Date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) that has, or is an
affiliate of a bank or trust company that has, a capital and surplus of at least
$50,000,000, such amount of cash as is necessary for such redemption, in trust,
with irrevocable instructions that such cash be applied to the redemption of the
shares of Class C Preferred Stock so called for redemption. No interest shall
accrue for the benefit of the holders of shares of Class C 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
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class C Preferred Stock so called for
redemption shall look only to the general funds of the Corporation for the
payment of such cash.
13
As promptly as practicable after the surrender in accordance with such
notice of the certificates for any such shares of Class C Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and 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 Class C Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class C
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class C Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class C Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class C Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class C Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class C Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class C Preferred Stock ("Senior Stock");
(b) on a parity with the Class C Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class C Preferred Stock, if the holders of such class of stock or series and
the Class C Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
(c) junior to the Class C Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Class C Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series
("Junior Stock").
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8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class C Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (if not already increased by reason
of similar types of provisions with respect to shares of Parity Stock of any
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class C Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class C
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class C Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, then the right of the holders of the Class C Preferred Stock
and the Voting Preferred Stock to elect such additional two directors shall
cease (but subject always to the same provision for the vesting of such voting
rights in the case of any similar future arrearages), and the terms of office of
all Persons elected as directors by the holders of the Class C Preferred Stock
and the Voting Preferred Stock shall forthwith terminate and the number of
directors constituting the Board of Directors shall be reduced accordingly. At
any time after such voting power shall have been so vested in the holders of
Class C Preferred Stock and the Voting Preferred Stock, if applicable, the
Secretary of the Corporation may, and upon the written request of any holder of
Class C Preferred Stock (addressed to the Secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of the Class C
Preferred Stock and of the Voting Preferred Stock for the election of the two
directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the stockholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of any such request, then any holder of Class C
Preferred Stock may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock books of the Corporation. The
directors elected at any such special meeting shall hold office until the next
annual meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Class C
Preferred Stock and the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the then remaining director
elected by the holders of the Class C Preferred Stock and the Voting Preferred
Stock or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(b) So long as any shares of Class C Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 662/3% of the
votes entitled to be cast by the holders of the Class C Preferred Stock voting
as a single class
15
with the holders of all other classes or series of Preferred Stock entitled to
vote on such matters, given in Person or by proxy, either in writing without a
meeting or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions
of these Articles Supplementary, the Charter or the ByLaws of the Corporation
that materially adversely affects the voting powers, rights or preferences of
the holders of the Class C Preferred Stock; provided, however, that the
amendment of the provisions of the Charter so as to authorize or create, or to
increase the authorized amount of, or issue any Junior Stock or any shares of
any class of Parity Stock shall not be deemed to materially adversely affect the
voting powers, rights or preferences of the holders of Class C Preferred Stock;
or
(ii) The authorization, creation of, the increase in the
authorized amount of, or issuance of any shares of any class of Senior Stock or
any security convertible into shares of any class of Senior Stock (whether or
not such class of Senior Stock is currently authorized); provided, however, that
no such vote of the holders of Class C Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security is
to be made, as the case may be, provision is made for the redemption of all
shares of Class C Preferred Stock at the time outstanding to the extent such
redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class C Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock shall have the right to vote with the Class C Preferred Stock as a single
class on any matter, then the Class C Preferred Stock and such other class or
series shall have with respect to such matters one quarter of one (.25) vote per
$25 of stated liquidation preference. Except as otherwise required by applicable
law or as set forth herein, the Class C Preferred Stock shall not have any
relative, participating, optional or other special voting rights and powers
other than as set forth herein, and the consent of the holders thereof shall not
be required for the taking of any corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class C Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
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10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section 10.8,
from and after the Issue Date, no Person (other than the Initial Holder or a
Look-Through Entity) shall Beneficially Own shares of Class C Preferred Stock in
excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class C Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class C Preferred Stock in
excess of the Look-Through Ownership Limit.
17
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class C Preferred Stock in excess of the Ownership Limit shall
be void AB INITIO as to the Transfer of such shares of Class C Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class C Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class C Preferred Stock in excess
of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such
shares of Class C Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class C Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated interdealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class C Preferred Stock in
excess of the Look-Through Ownership limit shall be void AB INITIO as to the
Transfer of such shares of Class C Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class C Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class C Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class C
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class
C Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class C Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the
18
meaning of Section 856(h) of the Code or (iii) the Corporation otherwise failing
to qualify as a REIT, shall not adversely affect the validity of the Transfer of
any other share of Class C Preferred Stock in the same or any other related
transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class C Preferred Stock in violation of Section 10.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of longterm indebtedness for the purpose of
such redemption), demanding the repayment of any distributions received in
respect of shares of Class C Preferred Stock acquired in violation of Section
10.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article,
regardless of any action (or nonaction) by the Board of Directors or such
committee, (a) shall be void AB INITIO or (b) shall automatically result in the
transfer described in Section 10.3 of this Article; PROVIDED, FURTHER, that the
provisions of this Section 10.2 shall be subject to the provisions of Section
10.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class C Preferred Stock that is
expressly authorized pursuant to Section 10.8(d) of this Article.
10.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated interdealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Preferred Stock) or other event (including, but not limited to,
any acquisition of any share of Equity Stock) such that (a) any Person (other
than the Initial Holder or a Look-Through Entity) would Beneficially Own shares
of Class C Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class C Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class C Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class C Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class C
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the
19
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the Excess Transfer, change in capital structure or
another event giving rise to a potential violation of the Ownership Limit, the
Initial Holder Limit or the Look-Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class C Preferred
Stock held by the Trustee shall be issued and outstanding shares of capital
stock of the Corporation. Except to the extent provided in Section 10.3(E), the
Prohibited Transferee shall have no rights in the Class C Preferred Stock held
by the Trustee, and the Prohibited Transferee shall not benefit economically
from ownership of any shares held in trust by the Trustee, shall have no rights
to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class C Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class C Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void AB
INITIO with respect to such shares of Class C Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class C
Preferred Stock have been transferred to the Trustee will be rescinded as void
AB INITIO and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class C Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price paid by the Prohibited Transferee for the
shares or, if the Prohibited Transferee did not give value for the shares
(through a gift, devise or other transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2) the
price per share received by the Trustee from the sale or other disposition of
the shares held in the Trust. Any proceeds in excess of the amount payable to
the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any
of the transfer restrictions set forth in this Section 10.3(E) or any
application thereof is determined in a final judgment to be void, invalid or
unenforceable by any court
20
having jurisdiction over the issue, the Prohibited Transferee may be deemed, at
the option of the Corporation, to have acted as the agent of the Corporation in
acquiring the Class C Preferred Stock as to which such restrictions would, by
their terms, apply, and to hold such Class C Preferred Stock on behalf of the
Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class C Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class C Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to
acquire shares of Class C Preferred Stock in violation of Section 10.1 of this
Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 10.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted 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.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date
certain record and Beneficial Owners and transferees of shares of Class C
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more than
5% (or such other percentage between 0.5% and 5%, as provided in the applicable
regulations adopted under the Code) of the number of Outstanding shares of Class
C Preferred 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 Class C Preferred Stock Beneficially
Owned, and a full description of how such shares are held. Each such record or
Beneficial Owner of Class C Preferred Stock shall, upon demand by the
Corporation, disclose to the Corporation in writing such additional information
with respect to the Beneficial Ownership of the Class C Preferred 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 under the Code and (ii) ensure compliance with the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as applicable. Each stockholder of record, including
21
without limitation any Person that holds shares of Class C Preferred Stock on
behalf of a Beneficial Owner, shall take all reasonable steps to obtain the
written notice described in this Section 10.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a
Beneficial Owner of shares of Class C Preferred Stock and any Person (including
the stockholder of record) that is holding shares of Class C Preferred Stock for
a Beneficial Owner, and any proposed transferee of shares, 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, to determine any such
compliance or to ensure compliance with the Ownership Limit, the Initial Holder
Limit and the Look-Through Ownership Limit, and shall provide a statement or
affidavit to the Corporation setting forth the number of shares of Class C
Preferred Stock already Beneficially 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.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit the
authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 10.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of any of the
provisions of Section 10 of this Article, or in the case of an ambiguity in any
definition contained in Section 10 of this Article, the Board of Directors shall
have the power to determine the application of the provisions of this Article
with respect to any situation based on its reasonable belief, understanding or
knowledge of the circumstances.
10.8 EXCEPTIONS. The following exceptions shall apply or may be established
with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of a
ruling from the Internal Revenue Service or an opinion of tax counsel or other
evidence or undertaking acceptable to it, may waive the application, in whole or
in part, of the Ownership Limit to a Person subject to the Ownership Limit, if
such person is not an individual for purposes of Section 542(a) of the Code and
is a corporation, partnership, estate or trust. In connection with any such
exemption, the Board of Directors may require such representations and
undertakings from such Person and may impose such other conditions as the Board
deems necessary, in its sole discretion, to determine the effect, if any, of the
proposed Transfer on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of this
Article, the pledge by the Initial Holder of all or any portion of the Class C
Preferred Stock directly owned at any time or from time to time shall not
constitute a violation of Section 10.1 of this Article and the pledgee shall not
be subject to the Ownership Limit with respect to the Class C Preferred Stock so
pledged to it either as a result of the pledge or upon foreclosure.
22
(C) UNDERWRITERS. For a period of 270 days following the purchase of
Class C Preferred Stock by an underwriter that (i) is a corporation or a
partnership and (ii) participates in an offering of the Class C Preferred Stock,
such underwriter shall not be subject to the Ownership Limit with respect to the
Class C Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class C Preferred Stock purchased in connection
with market making activities.
10.9 LEGEND. Each certificate for Class C Preferred Stock shall bear the
following legend:
"The shares of Class C Cumulative Preferred Stock represented by
this certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class C Cumulative Preferred Stock in excess of
the Ownership Restrictions, as applicable, with certain further restrictions
and exceptions set forth in the Corporation's Charter (including the
Articles Supplementary setting forth the terms of the Class C Cumulative
Preferred Stock). Any Person that attempts to Beneficially Own shares of
Class C Cumulative Preferred Stock in excess of the applicable limitation
must immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Corporation's Charter
(including the Articles Supplementary setting forth the terms of the Class C
Cumulative Preferred Stock), 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 that so requests. If the restrictions on transfer
are violated, the shares of Class C Cumulative Preferred Stock represented
hereby will be either (i) void in accordance with the Certificate or (ii)
automatically transferred to a Trustee of a Trust for the benefit of one or
more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article 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.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system.
FOURTH: The terms of the Class C Cumulative Preferred Stock set forth in
Article Third hereof shall become Article XIV of the Charter.
23
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Chairman and witnessed by its Secretary on
December 19, 1997.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Leeann Morein /s/ Terry Considine
- ----------------------- --------------------------
Leeann Morein, Terry Considine
Secretary Chairman
THE UNDERSIGNED, Chairman of APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
who executed on behalf of the Corporation the Articles Supplementary of which
this Certificate is made a part, hereby acknowledges in the name and on behalf
of said Corporation the foregoing Articles Supplementary to be the corporate act
of said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Terry Considine
Terry Considine
-----------------------
Chairman
24
CERTIFICATE OF CORRECTION
TO
ARTICLES SUPPLEMENTARY
CLASS C CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A MARYLAND CORPORATION)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the
"Corporation"), having its principal office in Baltimore City, Maryland, hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Articles Supplementary, dated December, 1997, of the Corporation
relating to its Class C Cumulative Preferred Stock (par value $.01 per share)
were filed with the State Department of Assessments and Taxation of Maryland on
December 22, 1997, and said Articles Supplementary require correction as
permitted by Section 1-207 of the Corporations and Associations Article of the
Annotated Code of Maryland.
SECOND: ARTICLE FIRST of the Articles Supplementary as previously filed
and to be corrected hereby read as follows:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of
the Corporation, the Board of Directors has duly divided and classified
2,300,000 authorized but unissued shares of the capital stock of the
Corporation into a class designated as Class C Cumulative Preferred Stock
and has provided for the issuance of such class.
THIRD: ARTICLE FIRST of the Articles Supplementary as corrected hereby is
as follows:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of
the Corporation, the Board of Directors has duly divided and classified
2,760,000 authorized but unissued shares of the capital stock of the
Corporation into a class designated as Class C Cumulative Preferred Stock
and has provided for the issuance of such class.
FOURTH: The inaccuracy or defect in ARTICLE FIRST of the Articles
Supplementary as previously filed is that ARTICLE FIRST contained the wrong
number of shares classified as Class C Cumulative Preferred Stock.
FIFTH: ARTICLE SECOND of the Articles Supplementary as previously filed
and to be corrected hereby reads as follows:
SECOND: The reclassification increases the number of shares
classified as Class C Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 2,300,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Preferred Stock, par value $.01 per share, from
9,250,000 shares immediately prior to the reclassification to 6,950,000
shares immediately after the reclassification. The number of shares classified
as Class C Cumulative Preferred Stock may be decreased pursuant to Section 6 of
Article Third of these Articles Supplementary upon reacquisition thereof in any
manner, or by retirement thereof, by the Corporation.
SIXTH: ARTICLE SECOND of the Articles Supplementary as corrected
hereby is as follows:
SECOND: The reclassification increases the number of shares
classified as Class C Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 2,760,00 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Preferred Stock, par value $.01 per share, from
9,250,000 shares immediately prior to the reclassification to 6,490,000 shares
immediately after the reclassification. The number of shares classified as
Class C Cumulative Preferred Stock may be decreases pursuant to Section 6 of
Article Third of these Articles Supplementary upon reacquisition thereof in any
manner, or by retirement thereof, by the Corporation.
SEVENTH: The inaccuracies or defects in ARTICLE SECOND of the Articles
Supplementary as previously filed are that ARTICLE SECOND contained the wrong
number of shares classified as Class C Cumulative Preferred Stock immediately
after the reclassification and the wrong number of shares classified as
Preferred Stock, par value $.01 per share, immediately after the
reclassification.
EIGHTH: Section 1 of ARTICLE THIRD of the Articles Supplementary as
previously filed and to be corrected hereby reads as follows:
1. Number of Shares and Designation.
This class of Preferred Stock shall be designated as Class C
Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million
Three Hundred Thousand (2,300,000) shall be the authorized number of shares of
such Class C Preferred Stock constituting such class.
-2-
NINTH: The first paragraph of Section 1 of ARTICLE THIRD of the Articles
Supplementary as corrected hereby is as follows:
1. Number of Shares and Designation.
This class of Preferred Stock shall be designated as Class C
Cumulative Preferred Stock (the "Class C Preferred Stock") and Two Million
Seven Hundred Sixty Thousand (2,760,000) shall be the authorized number of
shares of such Class C Preferred Stock constituting such class.
TENTH: The inaccuracy or defect in Section 1 of ARTICLE THIRD of the
Articles Supplementary as previously filed is that Section 1 of ARTICLE FIRST
contained the wrong number of shares classified as Class C Cumulative Preferred
Stock.
ELEVENTH: The definition of "Dividend Periods" contained in Section 2 of
ARTICLE THIRD of the Articles Supplementary as previously filed and to be
corrected hereby reads as follows:
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January
15, April 15, July 15 and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, other than the Dividend Period during which any Class B Preferred
Stock shall be redeemed pursuant to Section 5 hereof, which shall end on
and include the Redemption Date with respect to the Class C Preferred Stock
being redeemed.
TWELFTH: The definition of "Dividend Periods" contained in Section 2 of
ARTICLE THIRD of the Articles Supplementary as corrected hereby is as follows:
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January
15, April 15, July 15 and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, other than the Dividend Period during which any Class C Preferred
Stock shall be redeemed pursuant to Section 5 hereof, which shall end on
and include the Redemption Date with respect to the Class C Preferred Stock
being redeemed.
THIRTEENTH: The inaccuracy or defect in the definition of "Dividend
Periods" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary
as previously filed is that the reference to "Class B Preferred Stock" in the
fifth line thereof should be to "Class C Preferred Stock."
FOURTEENTH: The definition of "Initial Holder Limit" contained in Section
2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be
corrected hereby reads as follows:
-3-
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class C Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding
shares of Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class B Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors' a schedule that sets forth the then-current
Initial Holder Limit applicable to the Initial Holder.
FIFTEENTH: The definition of "Initial Holder Limit" contained in Section 2
of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as
follows:
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class C Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding
shares of Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class C Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors, a schedule that sets forth the then-current
Initial Holder Limit applicable to the Initial Holder.
SIXTEENTH: The inaccuracy or defect in the definition of "Initial Holder
Limit" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as
previously filed is that the reference to "Class B Preferred Stock" in the
fourth and fifth lines thereof should be to "Class C Preferred Stock."
SEVENTEENTH: The definition of "Look-Through Ownership Limit" contained in
Section 2 of ARTICLE THIRD of the Articles Supplementary as previously filed
and to be corrected hereby reads as follows:
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class C Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of (x)
15% of the Aggregate Value of all Outstanding shares of Equity Stock over
(y) by the Aggregate Value of all shares of Equity Stock other than Class B
Preferred Stock that are Beneficially Owned by the Look-Through Entity.
EIGHTEENTH: The definition of "Look-Through Ownership Limit" contained in
Section 2 of ARTICLE THIRD of the Articles Supplementary as corrected hereby is
as follows:
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class C Preferred Stock of the
Corporation
-4-
having an Aggregate Value not in excess of the (x) 15% of the Aggregate
Value of all Outstanding shares of Equity Stock over (y) by the Aggregate
Value of all shares of Equity Stock other than Class C Preferred Stock that
are Beneficially Owned by the Look-Through Entity.
NINETEENTH: The inaccuracy or defect in the definition of "Look-Through
Ownership Limit" contained in Section 2 of ARTICLE THIRD of the Articles
Supplementary as previously filed is that the reference to "Class B Preferred
Stock" in the fifth line thereof should be to "Class C Preferred Stock."
TWENTIETH: The provision in the Articles Supplementary as previously filed
and to be corrected hereby reads as follows:
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Chairman and witnessed by its
Secretary on December ____, 1997.
TWENTY-FIRST: The provision in the Articles Supplementary as corrected
hereby is as follows:
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Chairman and witnessed by its
Secretary on December 22, 1997.
TWENTY-SECOND: The inaccuracy or defect in the provision of the Articles
Supplementary as previously filed is that such statement failed to state
correctly the date such Articles were signed.
-5-
IN WITNESS WHEREOF, Apartment Investment and Management Company has caused
this Certificate of Correction to be signed in its name and on its behalf by its
Chairman and witnessed by its Secretary on February 17, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LEEANN MOREIN By: TERRY CONSIDINE
- ----------------------------- -----------------------------
Leeann Morein, Secretary Terry Considine, Chairman
The undersigned, Chairman of APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
with respect to the foregoing Certificate of Correction of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Certificate of Correction to be the act of said
Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the authorization and approval thereof are true in all material respects, under
the penalties of perjury.
/s/ TERRY CONSIDINE
-----------------------------
Terry Considine, Chairman
-6-
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS D CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
the Board of Directors has duly divided and classified 4,600,000 authorized but
unissued shares of the capital stock of the Corporation into a class designated
as Class D Cumulative Preferred Stock and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified as
Class D Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 4,600,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Preferred Stock, par value $.01 per share, from 6,490,000 shares
immediately prior to the reclassification to 1,890,000 shares immediately after
the reclassification. The number of shares classified as Class D Cumulative
Preferred Stock may be decreased pursuant to Section 6 of Article Third of these
Articles Supplementary upon reacquisition thereof in any manner, or by
retirement thereof, by the Corporation.
THIRD: The terms of the Class D Cumulative Preferred Stock (including the
preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class D Cumulative
Preferred Stock (the "Class D Preferred Stock") and Four Million Six Hundred
Thousand (4,600,000) shall be the authorized number of shares of such Class D
Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class D Preferred Stock, the following terms shall have
the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
"AFFILIATE" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock,
the sum of the products of (i) the number of shares of each class of Equity
Stock within such block multiplied by (ii) the corresponding Market Price
of one share of Equity Stock of such class.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of
Equity Stock directly owned by such Person, (ii) the number of shares of
Equity Stock indirectly owned by such Person (if such Person is an
"individual" as defined in Section 542(a)(2) of the Code) taking into
account the constructive ownership rules of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code, and (iii) the number of
shares of Equity Stock that such Person is deemed to beneficially own
pursuant to Rule 13d3 under the Exchange Act or that is attributed to such
Person pursuant to Section 318 of the Code, as modified by Section
856(d)(5) of the Code, PROVIDED that when applying this definition of
Beneficial Ownership to the Initial Holder, clause (iii) of this
definition, and clause (ii) of the definition of "Person" shall be
disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and
"BENEFICIALLY OWNED" shall have the correlative meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of
its responsibilities with respect to the Class D Preferred Stock.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New
York are not required to be open.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 10.3 of this Article, each of which shall
be an organization described in Section 170(b)(1)(A), 170(c)(2) and
501(c)(3) of the Code.
2
"CLASS D PREFERRED STOCK" shall have the meaning set forth in Section 1 of
this Article.
"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 thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in effect
from time to time.
"COMMON STOCK" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation or such shares of the Corporation's capital stock
into which outstanding shares of Common Stock shall be reclassified.
"DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, further, that if any Dividend Payment
Date falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January
15, April 15, July 15 and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, other than the Dividend Period during which any Class D Preferred
Stock shall be redeemed pursuant to Section 5 hereof, which shall end on
and include the Redemption Date with respect to the Class D Preferred Stock
being redeemed.
"EQUITY STOCK" shall mean one or more shares of any class of capital stock
of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this
Article.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ISSUE DATE" shall mean February 19, 1998.
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including
the Issue Date and ending on and including April 14, 1998.
"INITIAL HOLDER" shall mean Terry Considine.
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class D Preferred Stock of the Corporation having an Aggregate Value not in
excess
3
of the excess of (x) 15% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock
other than Class D Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors, a schedule that sets forth the then current
Initial Holder Limit applicable to the Initial Holder.
"JUNIOR STOCK" shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the shares of Class D Preferred
Stock have preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code
or (ii) registered under the Investment Company Act of 1940.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class D Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of (x)
15% of the Aggregate Value of all Outstanding shares of Equity Stock over
(y) by the Aggregate Value of all shares of Equity Stock other than Class D
Preferred Stock that are Beneficially Owned by the Look-Through Entity.
"MARKET PRICE" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of share of that class of Equity Stock on the
Trading Day immediately preceding such date. The term "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 NYSE or, if the Equity Stock is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Equity Stock is listed
or admitted to trading or, if the Equity 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
overthecounter 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 Equity 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 Equity Stock selected
by the Board of
4
Directors of the Company. The term "TRADING DAY" shall mean a day on which
the principal national securities exchange on which the Equity Stock is
listed or admitted to trading is open for the transaction of business or,
if the Equity 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.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of
the Corporation, PROVIDED that for purposes of the application of the
Ownership Limit, the Look-Through Ownership Limit or the Initial Holder
Limit to any Person, the term "OUTSTANDING" shall be deemed to include the
number of shares of Equity Stock that such Person alone, at that time,
could acquire pursuant to any options or convertible securities.
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder
or a Look-Through Entity, a number of the Outstanding shares of Class D
Preferred Stock of the Corporation having an Aggregate Value not in excess
of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock
other than Class D Preferred Stock that are Beneficially Owned by the
Person.
"OWNERSHIP RESTRICTIONS" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or Look-Through Entities,
the Initial Holder Limit as applied to the Initial Holder and the
Look-Through Ownership Limit as applied to Look-Through Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section
7 of this Article. The Class B Preferred Stock and the Class C Preferred
Stock shall each be a Parity Stock.
"PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association,
private foundation within the meaning of Section 509(a) of the Code, joint
stock company or other entity, and (ii) also includes a group as that term
is used for purposes of Section 13(d)(3) of the Exchange Act and (b) for
purposes of the remaining Sections of this Article, any individual, firm,
partnership, corporation or other entity and shall include any successor
(by merger or otherwise) of such entity.
"PROHIBITED TRANSFEREE" has the meaning set forth in Section 10.3(A) of
this Article.
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"REDEMPTION DATE" shall have the meaning set forth in paragraph (b) of
Section 5 of this Article.
"REIT" shall mean a "real estate investment trust" as defined in Section
856 of the Code.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section
7 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board
of Directors, the allocation of funds to be so paid on any series or class
of capital stock of the Corporation; provided, however, that if any funds
for any class or series of Junior Stock or any class or series of Parity
Stock are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment"
with respect to the Class D Preferred Stock shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying or
other similar agent.
"TRADING DAY", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on
which such securities are listed or admitted or, if such securities are not
listed or admitted for trading on any national securities exchange, the
NASDAQ National Market or, if such securities are not listed or admitted
for trading on the NASDAQ National Market, in the securities market in
which such securities are traded.
"TRANSFER" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class D Preferred Stock (including (i) the
granting of an option or any series of such options or entering into any
agreement for the sale, transfer or other disposition of Class D Preferred
Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Class D Preferred
Stock), whether voluntary or involuntary, whether of record or Beneficial
Ownership, and whether by operation of law or otherwise (including, but not
limited to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of Class D Preferred Stock).
The term "TRANSFERS" and "TRANSFERRED" shall have correlative meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the Class D
Preferred Stock; provided, that if the Corporation has not designated a
transfer agent then the Corporation shall act as the transfer agent for the
Class D Preferred Stock.
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"TRUST" shall mean the trust created pursuant to Section 10.3 of this
Article.
"TRUSTEE" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8 of
this Article.
3. DIVIDENDS.
(a) The holders of Class D Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class D Preferred Stock equal to $2.1875 per annum. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly in arrears on each Dividend Payment Date, commencing on April
15, 1998. Each such dividend shall be payable in arrears to the holders of
record of the Class D Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on the January 1, April 1, July 1 or
October 1, as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) The amount of dividends payable per share of Class D Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30day months
and a 360day year. Holders of Class D 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 Class D 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 Class D Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class D Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for
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such payment on the Class D Preferred Stock for all Dividend Periods terminating
on or prior to the Dividend Payment Date with respect to such class or series of
Parity Stock. When dividends are not paid in full or a sum sufficient for such
payment is not set apart, as aforesaid, all dividends declared upon the Class D
Preferred Stock and all dividends declared upon any other class or series of
Parity Stock shall be declared ratably in proportion to the respective amounts
of dividends accumulated, accrued and unpaid on the Class D Preferred Stock and
accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class D 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or rights to
subscribe for or purchase shares of, 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 in respect thereof, directly or indirectly, by
the Corporation unless in each case the full cumulative dividends (including all
accumulated, accrued and unpaid dividends) on all outstanding shares of Class D
Preferred Stock shall have been paid or such dividends have been declared and
set apart for payment for all past Dividend Periods with respect to the Class D
Preferred Stock.
Notwithstanding the provisions of this Section 3(d), the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii) or
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital or surplus) shall be made to
or set apart for the holders of Junior Stock, the holders of shares of Class D
Preferred Stock shall be entitled to receive TwentyFive Dollars ($25) per share
of Class D Preferred Stock (the "Liquidation Preference"), plus an amount equal
to all dividends (whether or not earned or declared) accumulated, accrued and
unpaid thereon to the date of final
8
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Class D Preferred Stock have been paid
the Liquidation Preference in full, plus an amount equal to all dividends
(whether or not earned or declared) accumulated, accrued and unpaid thereon to
the date of final distribution to such holders, no payment will be made to any
holder of Junior Stock upon the liquidation, dissolution or winding up of the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Class D Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the proceeds
thereof, shall be distributed among the holders of Class D Preferred Stock and
any such other Parity Stock ratably in the same proportion as the respective
amounts that would be payable on such Class D Preferred Stock and any such other
Parity Stock if all amounts payable thereon were paid in full. For the purposes
of this Section 4, (i) a consolidation or merger of the Corporation with one or
more corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
D Preferred Stock and any Parity Stock, as provided in this Section 4, 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 Class D Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class D Preferred Stock shall not be redeemable by the
Corporation prior to February 19, 2003, except as set forth in Section 10.2 of
this Article. On and after February 19, 2003, the Corporation, at its option,
may redeem shares of Class D Preferred Stock, in whole or from time to time in
part, at a redemption price payable in cash equal to 100% of the Liquidation
Preference thereof, plus all accrued and unpaid dividends to the date fixed for
redemption (the "Redemption Date"). In connection with any redemption pursuant
to this Section 5(a), the redemption price of the Class D Preferred Stock (other
than any portion thereof consisting of accrued and unpaid dividends) shall be
payable solely with the proceeds from the sale by the Corporation or AIMCO
Properties, L.P., a Delaware limited Partnership (the "Operating Partnership"),
of other capital shares of the Corporation or the Operating Partnership (whether
or not such sale occurs concurrently with such redemption). For purposes of the
preceding sentence, 'capital shares' means any common stock, preferred stock,
depositary shares, partnership or other interests, participations or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable at the option of the holder for
equity securities (unless
9
and to the extent such debt securities are subsequently converted into capital
shares)) or options to purchase any of the foregoing of or in the Corporation or
the Operating Partnership.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of Class D
Preferred Stock have not been paid or declared and set apart for payment, no
shares of Class D Preferred Stock may be redeemed unless all outstanding shares
of Class D Preferred Stock are simultaneously redeemed and neither the
Corporation nor any affiliate of the Corporation may purchase or acquire shares
of Class D Preferred Stock, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of shares of Class D Preferred
Stock.
(d) If the Corporation shall redeem shares of Class D Preferred Stock
pursuant to paragraph (a) of this Section 5, 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. Neither the failure to
mail any notice required by this paragraph (d), nor any defect therein or in the
mailing thereof to any particular holder, shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given on the date mailed whether or
not the holder receives the notice. Each such notice shall state, as
appropriate: (1) the Redemption Date; (2) the number of shares of Class D
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; and (3) the place or places at which certificates for such shares are to
be surrendered for cash. Notice having been mailed as aforesaid, from and after
the Redemption Date (unless the Corporation shall fail to make available the
amount of cash necessary to effect such redemption), (i) except as otherwise
provided herein, dividends on the shares of Class D Preferred Stock so called
for redemption shall cease to accumulate or accrue on the shares of Class D
Preferred Stock called for redemption (except that, in the case of a Redemption
Date after a dividend record date and prior to the related Dividend Payment
Date, holders of Class D 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 Class D Preferred Stock of the
Corporation shall cease (except the rights to receive the cash payable upon such
redemption, without interest thereon, upon surrender and endorsement of their
certificates if so required and to receive any dividends payable thereon). The
Corporation's obligation to make available the redemption price in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the Call
Date, the
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Corporation shall deposit with a bank or trust company (which may be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption, in trust, with irrevocable
instructions that such cash be applied to the redemption of the shares of Class
D Preferred Stock so called for redemption. No interest shall accrue for the
benefit of the holders of shares of Class D 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 Redemption Date shall
revert to the general funds of the Corporation, after which reversion the
holders of shares of Class D 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 such
notice of the certificates for any such shares of Class D Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and 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 Class D Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class D
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class D Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class D Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class D Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class D Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class D Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class D Preferred Stock ("Senior Stock");
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(b) on a parity with the Class D Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class D Preferred Stock, if the holders of such class of stock or series and
the Class D Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
(c) junior to the Class D Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Class D Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series
("Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class D Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (if not already increased by reason
of similar types of provisions with respect to shares of Parity Stock of any
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class D Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class D
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class D Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, then the right of the holders of the Class D Preferred Stock
and the Voting Preferred Stock to elect such additional two directors shall
cease (but subject always to the same provision for the vesting of such voting
rights in the case of any similar future arrearages), and the terms of office of
all Persons elected as directors by the holders of the Class D Preferred Stock
and the Voting Preferred Stock shall forthwith terminate and the number of
directors constituting the Board of Directors shall be reduced accordingly. At
any time after such voting power shall have been so vested in the holders of
Class D Preferred Stock and the Voting Preferred Stock, if applicable, the
Secretary of the Corporation may, and upon the written request of any holder of
Class D Preferred
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Stock (addressed to the Secretary at the principal office of the Corporation)
shall, call a special meeting of the holders of the Class D Preferred Stock and
of the Voting Preferred Stock for the election of the two directors to be
elected by them as herein provided, such call to be made by notice similar to
that provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class D Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors elected
at any such special meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu thereof if such office shall
not have previously terminated as above provided. If any vacancy shall occur
among the directors elected by the holders of the Class D Preferred Stock and
the Voting Preferred Stock, a successor shall be elected by the Board of
Directors, upon the nomination of the then remaining director elected by the
holders of the Class D Preferred Stock and the Voting Preferred Stock or the
successor of such remaining director, to serve until the next annual meeting of
the stockholders or special meeting held in place thereof if such office shall
not have previously terminated as provided above.
(b) So long as any shares of Class D Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 662/3% of the
votes entitled to be cast by the holders of the Class D Preferred Stock voting
as a single class with the holders of all other classes or series of Preferred
Stock entitled to vote on such matters, given in Person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions
of these Articles Supplementary, the Charter or the ByLaws of the Corporation
that materially adversely affects the voting powers, rights or preferences of
the holders of the Class D Preferred Stock; provided, however, that the
amendment of the provisions of the Charter so as to authorize or create, or to
increase the authorized amount of, or issue any Junior Stock or any shares of
any class of Parity Stock shall not be deemed to materially adversely affect the
voting powers, rights or preferences of the holders of Class D Preferred Stock;
or
(ii) The authorization, creation of, the increase in the
authorized amount of, or issuance of any shares of any class of Senior Stock or
any security convertible into shares of any class of Senior Stock (whether or
not such class of Senior Stock is currently authorized); provided, however, that
no such vote of the holders of Class D Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security is
to be made, as the case may be, provision
13
is made for the redemption of all shares of Class D Preferred Stock at the time
outstanding to the extent such redemption is authorized by Section 5 of this
Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class D Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock shall have the right to vote with the Class D Preferred Stock as a single
class on any matter, then the Class D Preferred Stock and such other class or
series shall have with respect to such matters one quarter of one (.25) vote per
$25 of stated liquidation preference. Except as otherwise required by applicable
law or as set forth herein, the Class D Preferred Stock shall not have any
relative, participating, optional or other special voting rights and powers
other than as set forth herein, and the consent of the holders thereof shall not
be required for the taking of any corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class D Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section
10.8, from and after the Issue Date, no Person (other than the Initial Holder or
a Look-Through Entity) shall Beneficially Own shares of Class D Preferred Stock
in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class D Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class D Preferred Stock in
excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated interdealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class D Preferred Stock in excess of the Ownership Limit shall
be void AB INITIO as to the Transfer of such shares of Class D Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class D Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into
14
through the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system) that, if effective, would result in the Initial
Holder Beneficially Owning shares of Class D Preferred Stock in excess of the
Initial Holder Limit shall be void AB INITIO as to the Transfer of such shares
of Class D Preferred Stock that would be otherwise Beneficially Owned by the
Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class D Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated interdealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class D Preferred Stock in
excess of the Look-Through Ownership limit shall be void AB INITIO as to the
Transfer of such shares of Class D Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class D Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class D Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class D
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class
D Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class D Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class D Preferred Stock in the same or any
other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has
15
attempted to acquire Beneficial Ownership of any shares of Class D Preferred
Stock in violation of Section 10.1 of this Article (whether or not such
violation is intended), 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, causing the Corporation to redeem such shares at the then current
Market Price and upon such terms and conditions as may be specified by the Board
of Directors in its sole discretion (including, but not limited to, by means of
the issuance of longterm indebtedness for the purpose of such redemption),
demanding the repayment of any distributions received in respect of shares of
Class D Preferred Stock acquired in violation of Section 10.1 of this Article or
instituting proceedings to enjoin such Transfer or to rescind such Transfer or
attempted Transfer; PROVIDED, HOWEVER, that any Transfers or attempted Transfers
(or in the case of events other than a Transfer, Beneficial Ownership) in
violation of Section 10.1 of this Article, regardless of any action (or
nonaction) by the Board of Directors or such committee, (a) shall be void AB
INITIO or (b) shall automatically result in the transfer described in Section
10.3 of this Article; PROVIDED, FURTHER, that the provisions of this Section
10.2 shall be subject to the provisions of Section 10.12 of this Article;
PROVIDED, FURTHER, that neither the Board of Directors nor any committee thereof
may exercise such authority in a manner that interferes with any ownership or
transfer of Class D Preferred Stock that is expressly authorized pursuant to
Section 10.8(d) of this Article.
10.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated interdealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Preferred Stock) or other event (including, but not limited to,
any acquisition of any share of Equity Stock) such that (a) any Person (other
than the Initial Holder or a Look-Through Entity) would Beneficially Own shares
of Class D Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class D Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class D Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class D Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class D
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the
16
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the Excess Transfer, change in capital structure or
another event giving rise to a potential violation of the Ownership Limit, the
Initial Holder Limit or the Look-Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class D
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10.3(E), the Prohibited Transferee shall have no rights in the Class D Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class D Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class D Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void AB
INITIO with respect to such shares of Class D Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class D
Preferred Stock have been transferred to the Trustee will be rescinded as void
AB INITIO and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class D Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price
17
paid by the Prohibited Transferee for the shares or, if the Prohibited
Transferee did not give value for the shares (through a gift, devise or other
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
proceeds in excess of the amount payable to the Prohibited Transferee shall be
payable to the Charitable Beneficiary. If any of the transfer restrictions set
forth in this Section 10.3(E) or any application thereof is determined in a
final judgment to be void, invalid or unenforceable by any court having
jurisdiction over the issue, the Prohibited Transferee may be deemed, at the
option of the Corporation, to have acted as the agent of the Corporation in
acquiring the Class D Preferred Stock as to which such restrictions would, by
their terms, apply, and to hold such Class D Preferred Stock on behalf of the
Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class D Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to
the Trustee, the Corporation shall designate one or more nonprofit organizations
to be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class D Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to
acquire shares of Class D Preferred Stock in violation of Section 10.1 of this
Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 10.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted 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.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date
certain record and Beneficial Owners and transferees of shares of Class D
Preferred Stock will be required to provide certain information as set out
below.
18
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more
than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class D Preferred 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 Class D Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record or Beneficial Owner of Class D Preferred Stock shall, upon demand by
the Corporation, disclose to the Corporation in writing such additional
information with respect to the Beneficial Ownership of the Class D Preferred
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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class D Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 10.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is
a Beneficial Owner of shares of Class D Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class D
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class D Preferred Stock already Beneficially 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.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 10.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 10 of this Article, or in the case of an ambiguity in
any definition contained in Section 10 of this Article, the Board of Directors
shall have the power to determine the application of the provisions of this
Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
19
10.8 EXCEPTIONS. The following exceptions shall apply or may be established
with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt
of a ruling from the Internal Revenue Service or an opinion of tax counsel or
other evidence or undertaking acceptable to it, may waive the application, in
whole or in part, of the Ownership Limit to a Person subject to the Ownership
Limit, if such person is not an individual for purposes of Section 542(a) of the
Code and is a corporation, partnership, estate or trust. In connection with any
such exemption, the Board of Directors may require such representations and
undertakings from such Person and may impose such other conditions as the Board
deems necessary, in its sole discretion, to determine the effect, if any, of the
proposed Transfer on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of
this Article, the pledge by the Initial Holder of all or any portion of the
Class D Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 10.1 of this Article and the pledgee shall
not be subject to the Ownership Limit with respect to the Class D Preferred
Stock so pledged to it either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days following the purchase of
Class D Preferred Stock by an underwriter that (i) is a corporation or a
partnership and (ii) participates in an offering of the Class D Preferred Stock,
such underwriter shall not be subject to the Ownership Limit with respect to the
Class D Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class D Preferred Stock purchased in connection
with market making activities.
10.9 LEGEND. Each certificate for Class D Preferred Stock shall bear the
following legend:
"The shares of Class D Cumulative Preferred Stock represented by
this certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class D Cumulative Preferred Stock in excess of
the Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Corporation's Charter
(including the Articles Supplementary setting forth the terms of the Class
D Cumulative Preferred Stock). Any Person that attempts to Beneficially Own
shares of Class D Cumulative Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All capitalized terms
in this legend have the meanings ascribed to such terms in the
Corporation's Charter (including the Articles Supplementary setting forth
the terms of the Class D Cumulative Preferred Stock), as the same may be
amended from time to time, a copy of which, including the restrictions on
transfer, will be sent
20
without charge to each stockholder that so requests. If the restrictions on
transfer are violated, the shares of Class D Cumulative Preferred Stock
represented hereby will be either (i) void in accordance with the
Certificate or (ii) automatically transferred to a Trustee of a Trust for
the benefit of one or more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article 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.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
interdealer quotation system.
FOURTH: The terms of the Class D Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XV of the Charter.
21
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Senior Vice President and Chief Financial
Officer and witnessed by its Secretary on February 17, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Leeann Morein /s/ Troy D. Butts
- --------------------------- ------------------------------
Leeann Morein, Troy D. Butts
Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Troy D. Butts
-----------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS G CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has
duly divided and classified 4,050,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class G Cumulative Preferred Stock, par
value $.01 per share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified as
Class G Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 4,050,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 502,377,500 shares immediately prior to
the reclassification to 498,327,500 shares immediately after the
reclassification.
THIRD: The terms of the Class G Cumulative Preferred Stock (including the
preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms
or conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class G Cumulative
Preferred Stock, par value $.01 per share (the "Class G Preferred Stock") and
Four Million Fifty Thousand (4,050,000) shall be the authorized number of
shares of such Class G Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class G Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity Stock,
the sum of the products of (i) the number of shares of each class of Equity
Stock within such block multiplied by (ii) the corresponding Market Price
of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of
Equity Stock directly owned by such Person, (ii) the number of shares of
Equity Stock indirectly owned by such Person (if such Person is an
"individual" as defined in Section 542(a)(2) of the Code) taking into
account the constructive ownership rules of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code, and (iii) the number of
shares of Equity Stock that such Person is deemed to beneficially own
pursuant to Rule 13d-3 under the Exchange Act or that is attributed to such
Person pursuant to Section 318 of the Code, as modified by Section
856(d)(5) of the Code, provided that when applying this definition of
Beneficial Ownership to the Initial Holder, clause (iii) of this
definition, and clause (ii) of the definition of "Person" shall be
disregarded. The terms "Beneficial Owner,""Beneficially Owns" and
"Beneficially Owned" shall have the correlative meanings.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of
its responsibilities with respect to the Class G Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 10.3 of this Article, each of which shall
be an organization described in Section 170(b)(1)(A), 170(c)(2) and
501(c)(3) of the Code.
2
"Class G Preferred Stock" shall have the meaning set forth in Section 1 of this
Article.
"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 thereto, as interpreted by any applicable
regulations or other administrative pronouncements as in effect from time to
time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per share,
of the Corporation or such shares of the Corporation's capital stock into which
outstanding shares of Common Stock shall be reclassified.
"Dividend Payment Date" shall mean January 15, April 15, July 15 and October 15
of each year; provided, further, that if any Dividend Payment Date falls on any
day other than a Business Day, the dividend payment payable on such Dividend
Payment Date shall be paid on the Business Day immediately following such
Dividend Payment Date and no interest shall accrue on such dividend from such
date to such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each subsequent
quarterly dividend period commencing on and including January 15, April 15,
July 15 and October 15 of each year and ending on and including the day
preceding the first day of the next succeeding Dividend Period, other than the
Dividend Period during which any Class G Preferred Stock shall be redeemed
pursuant to Section 5 hereof, which shall end on and include the Redemption
Date with respect to the Class G Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital stock of
the Corporation.
"Excess Transfer" has the meaning set forth in Section 10.3(A) of this Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Issue Date" shall mean July 15, 1998.
"Initial Dividend Period" shall mean the period commencing on and including the
Issue Date and ending on and including October 15, 1998.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of Class G
Preferred Stock of the Corporation having an Aggregate Value not in excess of
the excess of (x) 15% of the Aggregate Value of all Outstanding shares of
3
Equity Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class G Preferred Stock that are Beneficially Owned by the Initial
Holder. From the Issue Date, the secretary of the Corporation, or such other
person as shall be designated by the Board of Directors, shall upon request
make available to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder Limit
applicable to the Initial Holder.
"Junior Stock" shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the shares of Class G Preferred
Stock have preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
"Look-Through Entity" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or
(ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class G Preferred Stock of the Corporation
having an Aggregate Value not in excess of the excess of (x) 15% of the
Aggregate Value of all Outstanding shares of Equity Stock over (y) by the
Aggregate Value of all shares of Equity Stock other than Class G Preferred
Stock that are Beneficially Owned by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of share of that class of Equity Stock on the Trading
Day immediately preceding such date. The term "Closing Price" on any date
shall mean that 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 NYSE or, if the Equity Stock is not listed or admitted to trading on the
NYSE, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Equity Stock is listed or admitted to trading or, if the Equity
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 Equity 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 Equity Stock selected by the
Board of Directors of the Company. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which
4
the Equity Stock is listed or admitted to trading is open for the
transaction of business or, if the Equity 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.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock of the
Corporation, provided that for purposes of the application of the Ownership
Limit, the Look-Through Ownership Limit or the Initial Holder Limit to any
Person, the term "Outstanding" shall be deemed to include the number of shares
of Equity Stock that such Person alone, at that time, could acquire pursuant to
any options or convertible securities.
"Ownership Limit" shall mean, for any Person other than the Initial Holder or a
Look-Through Entity, a number of the Outstanding shares of Class G Preferred
Stock of the Corporation having an Aggregate Value not in excess of the excess
of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock
over (y) the Aggregate Value of all shares of Equity Stock other than Class G
Preferred Stock that are Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit as applied
to Persons other than the Initial Holder or Look-Through Entities, the Initial
Holder Limit as applied to the Initial Holder and the Look-Through Ownership
Limit as applied to Look-Through Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of Section 7
of this Article. The Class B Preferred Stock, the Class C Preferred Stock and
the Class D Preferred Stock shall each be a Parity Stock.
"Person" shall mean (a) for purposes of Section 10 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association, private
foundation within the meaning of Section 509(a) of the Code, joint stock
company or other entity, and (ii) also includes a group as that term is used
for purposes of Section 13(d)(3) of the Exchange Act and (b) for purposes of the
remaining Sections of this Article, any individual, firm, partnership,
corporation or other entity and shall include any successor (by merger or
otherwise) of such entity.
"Prohibited Transferee" has the meaning set forth in Section 10.3(A) of this
Article.
"Redemption Date" shall have the meaning set forth in paragraph (b) of Section
5 of this Article.
5
"REIT" shall mean a "real estate investment trust" as defined in Section 856 of
the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of Section 7
of this Article.
"set apart for payment" shall be deemed to include, without any action other
than the following, the recording by the Corporation in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of
the Corporation; provided, however, that if any funds for any class or series
of Junior Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or other
similar agent, then "set apart for payment" with respect to the Class G
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day", as to any securities, shall mean any day on which such
securities are traded on the principal national securities exchange on which
such securities are listed or admitted or, if such securities are not listed or
admitted for trading on any national securities exchange, the NASDAQ National
Market or, if such securities are not listed or admitted for trading on the
NASDAQ National Market, in the securities market in which such securities are
traded.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class G Preferred Stock (including (i) the granting of
an option or any series of such options or entering into any agreement for the
sale, transfer or other disposition of Class G Preferred Stock or (ii) the
sale, transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Class G Preferred Stock), whether
voluntary or involuntary, whether of record or Beneficial Ownership, and
whether by operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in the
Beneficial Ownership of shares of Class G Preferred Stock). The term
"Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the Board of
Directors or their designee as the transfer agent for the Class G Preferred
Stock; provided, that if the Corporation has not designated a transfer agent
then the Corporation shall act as the transfer agent for the Class G Preferred
Stock.
"Trust" shall mean the trust created pursuant to Section 10.3 of this Article.
6
"Trustee" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 8 of
this Article.
3. DIVIDENDS.
(a) The holders of Class G Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class G Preferred Stock equal to $2.34375 per annum. Such
dividends shall be cumulative from the Issue Date, whether or not in any
Dividend Period or Periods such dividends shall be declared or there shall be
funds of the Corporation legally available for the payment of such dividends,
and shall be payable quarterly in arrears on each Dividend Payment Date,
commencing on October 15, 1998. Each such dividend shall be payable in arrears
to the holders of record of the Class G Preferred Stock, as they appear on the
stock records of the Corporation at the close of business on the January 1,
April 1, July 1 or October 1, as the case may be, immediately preceding such
Dividend Payment Date. Accumulated, accrued and unpaid dividends for any past
Dividend Periods may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to holders of record on such date, which date
shall not precede by more than 45 days the payment date thereof, as may be fixed
by the Board of Directors.
(b) Any dividend payable on the Class G Preferred Stock for any
partial dividend period shall be computed ratably on the basis of twelve 30-day
months and a 360-day year. Holders of Class G 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 Class G 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 Class G Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class G Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment on the Class G Preferred
Stock for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Stock. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class G Preferred Stock and all
dividends declared upon any
7
other class or series of Parity Stock shall be declared ratably in proportion
to the respective amounts of dividends accumulated, accrued and unpaid on the
Class G Preferred Stock and accumulated, accrued and unpaid on such Parity
Stock.
(d) So long as any of the shares of Class G 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or
rights to subscribe for or purchase shares of, 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 in respect thereof, directly or
indirectly, by the Corporation unless in each case the full cumulative
dividends (including all accumulated, accrued and unpaid dividends) on all
outstanding shares of Class G Preferred Stock shall have been paid or such
dividends have been declared and set apart for payment for all past Dividend
Periods with respect to the Class G Preferred Stock.
Notwithstanding the provisions of this Section 3(d), the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii) or
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation
as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital or surplus) shall be made
to or set apart for the holders of Junior Stock, the holders of shares of Class
G Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per
share of Class G Preferred Stock (the "Liquidation Preference"), plus an amount
equal to all dividends (whether or not earned or declared) accumulated, accrued
and unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class G Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the
8
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Class G Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of Class G Preferred
Stock and any such other Parity Stock ratably in the same proportion as the
respective amounts that would be payable on such Class G Preferred Stock and
any such other Parity Stock if all amounts payable thereon were paid in full.
For the purposes of this Section 4, (i) a consolidation or merger of the
Corporation with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets, or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
G Preferred Stock and any Parity Stock, as provided in this Section 4, 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 Class G Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class G Preferred Stock shall not be redeemable by the
Corporation prior to July 15, 2008, except as set forth in Section 10.2 of this
Article. On and after July 15, 2008, the Corporation, at its option, may redeem
shares of Class G Preferred Stock, in whole or from time to time in part, at a
redemption price payable in cash equal to 100% of the Liquidation Preference
thereof, plus all accrued and unpaid dividends to the date fixed for redemption
(the "Redemption Date"). In connection with any redemption pursuant to this
Section 5(a), the redemption price of the Class G Preferred Stock (other than
any portion thereof consisting of accrued and unpaid dividends) shall be payable
solely with the proceeds from the sale by the Corporation or AIMCO Properties,
L.P., a Delaware limited Partnership (the "Operating Partnership"), of other
capital shares of the Corporation or the Operating Partnership (whether or not
such sale occurs concurrently with such redemption). For purposes of the
preceding sentence, "capital shares" means any common stock, preferred stock,
depositary shares, partnership or other interests, participations or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable at the option of the holder for
equity securities (unless and to the extent such debt securities are
subsequently converted into capital shares)) or options to purchase any of the
foregoing of or in the Corporation or the Operating Partnership.
(b) The Redemption 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.
9
(c) If full cumulative dividends on all outstanding shares of Class G
Preferred Stock have not been paid or declared and set apart for payment, no
shares of Class G Preferred Stock may be redeemed unless all outstanding shares
of Class G Preferred Stock are simultaneously redeemed and neither the
Corporation nor any affiliate of the Corporation may purchase or acquire shares
of Class G Preferred Stock, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of shares of Class G Preferred
Stock.
(d) If the Corporation shall redeem shares of Class G Preferred Stock
pursuant to paragraph (a) of this Section 5, 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. Neither the failure
to mail any notice required by this paragraph (d), nor any defect therein or in
the mailing thereof to any particular holder, shall affect the sufficiency of
the notice of 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 notice shall state,
as appropriate: (1) the Redemption Date; (2) the number of shares of Class G
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; and (3) the place or places at which certificates for such shares are
to be surrendered for cash. Notice having been mailed as aforesaid, from and
after the Redemption Date (unless the Corporation shall fail to make available
the amount of cash necessary to effect such redemption), (i) except as
otherwise provided herein, dividends on the shares of Class G Preferred Stock
so called for redemption shall cease to accumulate or accrue on the shares of
Class G Preferred Stock called for redemption(except that, in the case of a
Redemption Date after a dividend record date and prior to the related Dividend
Payment Date, holders of Class G Preferred Stock on the dividend record date
will be entitled to 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 Class G Preferred
Stock of the Corporation shall cease (except the rights to receive the cash
payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Corporation's obligation to make available the redemption
price in accordance with the preceding sentence shall be deemed fulfilled if, on
or before the Call Date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) that has, or is an
affiliate of a bank or trust company that has, a capital and surplus of at least
$50,000,000, such amount of cash as is necessary for such redemption, in trust,
with irrevocable instructions that such cash be applied to the redemption of the
shares of Class G Preferred Stock so called for redemption. No interest shall
accrue for the benefit of the holders of shares of Class G 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
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class G Preferred
10
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 such
notice of the certificates for any such shares of Class G Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and 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 Class G Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class G
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class G Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class G Preferred Stock represented by any
certificate are redeemed, then a new certificate representing the unredeemed
shares shall be issued without cost to the holders thereof.
6. Status of Reacquired Stock.
All shares of Class G Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class G Preferred Stock.
7. Ranking.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class G Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class G Preferred Stock ("Senior Stock");
(b) on a parity with the Class G Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class G Preferred Stock, if the holders of such class of stock or series and
the Class G Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the other
("Parity Stock"); and
11
(c) junior to the Class G Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Class G Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series
("Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class G Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (if not already increased by reason
of similar types of provisions with respect to shares of Parity Stock of any
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class G Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class G
Preferred Stock and the Voting Preferred Stock called as hereinafter
provided. Whenever all arrears in dividends on the Class G Preferred Stock and
the Voting Preferred Stock then outstanding shall have been paid and dividends
thereon for the current quarterly dividend period shall have been paid or
declared and set apart for payment, then the right of the holders of the Class G
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages), and the
terms of office of all Persons elected as directors by the holders of the Class
G Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class G Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Class G Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Class G Preferred Stock and of the Voting Preferred Stock for the
election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Class G Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall hold
office until the next annual meeting of the stockholders or special meeting held
in lieu thereof if such office shall not have
12
previously terminated as above provided. If any vacancy shall occur among the
directors elected by the holders of the Class G Preferred Stock and the Voting
Preferred Stock, a successor shall be elected by the Board of Directors, upon
the nomination of the then-remaining director elected by the holders of the
Class G Preferred Stock and the Voting Preferred Stock or the successor of such
remaining director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.
(b) So long as any shares of Class G Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class G
Preferred Stock voting as a single class with the holders of all other classes
or series of Preferred Stock entitled to vote on such matters, given in Person
or by proxy, either in writing without a meeting or by vote at any meeting
called for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary, the Charter or the By-Laws of the
Corporation that materially adversely affects the voting powers, rights or
preferences of the holders of the Class G Preferred Stock; provided, however,
that the amendment of the provisions of the Charter so as to authorize or
create, or to increase the authorized amount of, or issue any Junior Stock or
any shares of any class of Parity Stock shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the holders of
Class G Preferred Stock; or
(ii) The authorization, creation of, the increase in the
authorized amount of, or issuance of any shares of any class of Senior Stock or
any security convertible into shares of any class of Senior Stock (whether or
not such class of Senior Stock is currently authorized); provided, however, that
no such vote of the holders of Class G Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such prior shares or convertible security
is to be made, as the case may be, provision is made for the redemption of all
shares of Class G Preferred Stock at the time outstanding to the extent such
redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class G Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock shall have the right to vote with the Class G Preferred Stock as a single
class on any matter, then the Class G Preferred Stock and such other class or
series shall have with respect to such matters one quarter of one(.25) vote per
$25 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the Class G Preferred Stock shall not
have any relative, participating, optional or other special voting rights and
powers other than as set forth herein, and the consent of the holders thereof
shall not be required for the taking of any corporate action.
13
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class G Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 10.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class G
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class G Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class G
Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or
automated inter-dealer quotation system) that, if effective, would result in
any Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class G Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class G Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class G Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided
in Section 10.8, from and after the Issue Date (and subject to Section 10.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class G Preferred Stock in excess
of the Initial Holder Limit shall be void ab initio as to the Transfer of such
shares of Class G Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class G Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Look-Through Entity Beneficially Owning shares of Class G Preferred Stock in
excess of the Look-Through Ownership limit shall be void ab initio as to the
Transfer of such shares of Class G
14
Preferred Stock that would be otherwise Beneficially Owned by such Look-Through
Entity in excess of the Look-Through Ownership Limit and such Look-Through
Entity shall acquire no rights in such shares of Class G Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the Issue
Date any Transfer that, if effective would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class G Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class G
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class G
Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class G Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class G Preferred Stock in the same or
any other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class G Preferred Stock in violation of Section 10.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem
such shares at the then current Market Price and upon such terms and conditions
as may be specified by the Board of Directors in its sole discretion
(including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of
any distributions received in respect of shares of Class G Preferred Stock
acquired in violation of Section 10.1 of this Article or instituting
proceedings to enjoin such Transfer or to rescind such Transfer or attempted
Transfer; provided, however, that any Transfers or attempted Transfers (or in
the case of events other than a Transfer, Beneficial Ownership) in violation of
Section 10.1 of this Article, regardless of any action (or non-action) by the
Board of Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 10.3 of this
15
Article; provided, further, that the provisions of this Section 10.2 shall be
subject to the provisions of Section 10.12 of this Article; provided, further,
that neither the Board of Directors nor any committee thereof may exercise such
authority in a manner that interferes with any ownership or transfer of Class G
Preferred Stock that is expressly authorized pursuant to Section 10.8(d) of
this Article.
10.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "Excess Transfer") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated interdealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Preferred Stock) or other event (including, but not limited to,
any acquisition of any share of Equity Stock) such that (a) any Person (other
than the Initial Holder or a Look-Through Entity) would Beneficially Own shares
of Class G Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class G Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class G Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class G Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "Prohibited Transferee"), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class G
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the business day prior to the Excess Transfer,
change in capital structure or another event giving rise to a potential
violation of the Ownership Limit, the Initial Holder Limit or the Look-Through
Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class G
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10.3(E), the Prohibited Transferee shall have no rights in the Class G
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
16
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights
and rights to dividends with respect to shares of Class G Preferred Stock held
in the Trust, which rights shall be exercised for the benefit of the Charitable
Beneficiary. Any dividend or distribution paid prior to the discovery by the
Corporation that the shares of Class G Preferred Stock have been transferred to
the Trustee shall be repaid to the Corporation upon demand, and any dividend or
distribution declared but unpaid shall be rescinded as void ab initio with
respect to such shares of Class G Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class G
Preferred Stock have been transferred to the Trustee will be rescinded as void
ab initio and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class G Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the
Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 10.3(E) or any application thereof is determined in a final judgement
to be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class G Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class G Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class G Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall
have the right to accept such offer for a period of 90 days after the later of
(i) the date of the Excess Transfer or other event resulting in a transfer to
the Trust and
17
(ii) the date that the Board of Directors determines in good faith that an
Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class G Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class G Preferred Stock in violation of Section
10.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 10.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or attempted
Transfer or other event on the Corporations'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.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class G
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class G Preferred 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 Class G Preferred
Stock Beneficially Owned, and a full description of how such shared are held.
Each such record or Beneficial Owner of Class G Preferred Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class G
Preferred 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 under the Code and
(ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class G Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to
obtain the written notice described in this Section 10.5 from the Beneficial
Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class G Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class G
Preferred Stock for a Beneficial
18
Owner, and any proposed transferee of shares, 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, to determine any such compliance or to
ensure compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit, and shall provide a statement or affidavit to the
Corporation setting forth the number of shares of Class G Preferred Stock
already Beneficially 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.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 10.12 of
this Article) (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 insure compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 10 of this Article, or in the case of an ambiguity
in any definition contained in Section 10 of this Article, the Board of
Directors shall have the power to determine the application of the provisions
of this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
10.8 EXPECTATIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of
Section 542(a) of the Code and is a corporation, partnership, estate or trust.
In connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person 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 on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class G Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 10.1 of this Article and the
pledgee shall not be subject to the Ownership Limit with respect to the Class G
Preferred Stock so pledged to it either as a result of the pledge or upon
foreclosure.
19
(C) UNDERWRITERS. For a period of 270 days following the purchase
of Class G Preferred Stock by an underwriter that (i) is a corporation or a
partnership and (ii) participates in an offering of the Class G Preferred
Stock, such underwriter shall not be subject to the Ownership Limit with
respect to the Class G Preferred Stock purchased by it as a part of or in
connection with such offering and with respect to any Class G Preferred Stock
purchased in connection with market making activities.
10.9 LEGEND. Each certificate for Class G Preferred Stock shall bear the
following legend:
"The shares of Class G Cumulative Preferred Stock
represented by this certificate are subject to restrictions on transfer.
No person may Beneficially Own shares of Class G Cumulative Preferred
Stock in excess of the Ownership Restrictions, as applicable, with certain
further restrictions and exceptions set forth in the Charter (including
the Articles Supplementary setting forth the terms of the Class G
Cumulative Preferred Stock). Any Person that attempts to Beneficially
Own shares of Class G Cumulative Preferred Stock in excess of the
applicable limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed to such terms
in the Charter (including the Articles Supplementary setting forth the
terms of the Class G Cumulative Preferred Stock), 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 that so requests.
If the restrictions on transfer are violated (i) the transfer of the
shares of Class G Cumulative Preferred Stock represented hereby will be
void in accordance with the Charter (including the Articles Supplementary
setting forth the terms of the Class G Cumulative Preferred Stock) or (ii)
the shares of Class G Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit of one
or more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article 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.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
20
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall
be interpreted to preclude the settlement of any transaction entered into
through the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class G Cumulative Preferred Stock set forth in
Article Third hereof shall become Article XVI of the Charter.
21
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Senior Vice President and Chief Financial
Officer and witnessed by its Secretary on July 13, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL BONDER /s/ TROY D. BUTTS
- ------------------------------ -----------------------------
Joel Bonder Troy D. Butts
Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a
part, hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
/s/ TROY D. BUTTS
-----------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
22
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS H CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has
duly divided and classified 2,300,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class H Cumulative Preferred Stock, par
value $.01 per share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class H Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 2,300,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 498,327,500 shares immediately prior to
the reclassification to 496,027,500 shares immediately after the
reclassification.
THIRD: The terms of the Class H Cumulative Preferred Stock (including
the preferences, conversions or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms
or conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class H Cumulative
Preferred Stock, par value $.01 per share (the "Class H Preferred Stock") and
Two Million Three Hundred Thousand (2,300,000) shall be the authorized number
of shares of such Class H Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class H Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial
Holder, clause (iii) of this definition, and clause (a) (ii) of the
definition of "Person" shall be disregarded. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class H
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 10.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class H Preferred Stock" shall have the meaning set forth in Section
1 of this Article.
2
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation, and the Class B Common Stock, $.01 par
value per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such
Class A Common Stock or Class B Common Stock shall be reclassified.
"Dividend Payment Date" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business
Day immediately following such Dividend Payment Date and no interest
shall accrue on such dividend from such date to such Dividend Payment
Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
January 15, April 15, July 15 and October 15 of each year and ending
on and including the day preceding the first day of the next
succeeding Dividend Period, other than the Dividend Period during
which any Class H Preferred Stock shall be redeemed pursuant to
Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class H Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 10.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean August 14, 1998.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including October 14, 1998.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares
of Class H Preferred Stock of the Corporation having an Aggregate
Value not in excess of the excess of (x) 15% of the Aggregate Value of
all Outstanding shares of
3
Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class H Preferred Stock that are Beneficially Owned
by the Initial Holder. From the Issue Date, the secretary of the
Corporation, or such other person as shall be designated by the Board
of Directors, shall upon request make available to the
representative(s) of the Initial Holder and the Board of Directors, a
schedule that sets forth the then-current Initial Holder Limit
applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 7 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through
Entity, a number of the Outstanding shares of Class H Preferred Stock
of the Corporation having an Aggregate Value not in excess of the
excess of (x) 15% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class H Preferred Stock that are Beneficially Owned
by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date. The term
"Closing Price," when used with respect to a share of any Equity Stock
and for 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 NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity 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 Equity 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 Equity Stock selected
by the Board of Directors of the Corporation. The term "Trading Day,"
when used with respect to the Closing Price of a share of any Equity
Stock, shall mean (i) if the Equity Stock is listed or admitted to
trading on the NYSE, a day on which the NYSE is open for the
4
transaction of business, (ii) if the Equity Stock is not listed or
admitted to trading on the NYSE but is listed or admitted to trading
on another national securities exchange or automated quotation system,
a day on which the principal national securities exchange or automated
quotation system, as the case may be, on which the Equity Stock is
listed or admitted to trading is open for the transaction of business,
or (iii) if the Equity Stock is not listed or admitted to trading on
any national securities exchange or automated quotation system, 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.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone,
at that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class H Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class H Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit as applied to the Initial Holder
and the Look-Through Ownership Limit as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 7 of this Article.
"Person" shall mean (a) for purposes of Section 10 of this Article,
(i) an individual, corporation, partnership, estate, trust (including
a trust qualifying under Section 401(a) or 501(c) of the Code),
association, private foundation within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) also
includes a group as that term is used for purposes of Section 13(d)(3)
of the Exchange Act and (b) for purposes of the remaining
5
Sections of this Article, any individual, firm, partnership,
corporation or other entity and shall include any successor (by merger
or otherwise) of such entity.
"Prohibited Transferee" has the meaning set forth in Section 10.3(A)
of this Article.
"Redemption Date" shall have the meaning set forth in paragraph (a) of
Section 5 of this Article.
"REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 7 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other
distribution by the Board of Directors, the allocation of funds to be
so paid on any series or class of capital stock of the Corporation;
provided, however, that if any funds for any class or series of Junior
Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the
Class H Preferred Stock shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other
similar agent.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of a share of Class H Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of
Class H Preferred Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or
exchangeable for Class H Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class H Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class H Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class H Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 10.3 of this
Article.
6
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 8
of this Article.
3. DIVIDENDS.
(a) The holders of Class H Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors out of
funds legally available for that purpose, cumulative dividends payable in cash
in an amount per share of Class H Preferred Stock equal to $2.375 per annum
(equivalent to 9 1/2% per annum of the per share Liquidation Preference (as
hereinafter defined)). Such dividends shall be cumulative from the Issue Date,
whether or not in any Dividend Period or Periods such dividends shall be
declared or there shall be funds of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly in arrears on each
Dividend Payment Date, commencing on October 15, 1998. Each such dividend
shall be payable in arrears to the holders of record of the Class H Preferred
Stock, as they appear on the stock records of the Corporation at the close of
business on the January 1, April 1, July 1 or October 1, as the case may be,
immediately preceding such Dividend Payment Date. Accumulated, accrued and
unpaid dividends for any past Dividend Periods may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to holders of
record on such date, which date shall not precede by more than 45 days the
payment date thereof, as may be fixed by the Board of Directors.
(b) Any dividend payable on the Class H Preferred Stock
for any partial dividend period shall be computed ratably on the basis of
twelve 30-day months and a 360-day year. Holders of Class H Preferred Stock
shall not be entitled to any dividends, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided, on the Class
H 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 Class H Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class H Preferred
Stock are outstanding, except as described in the immediately following
sentence, no dividends shall be declared or paid or set apart for payment by
the Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Parity Stock unless, in each case, dividends equal to the full
amount of accumulated, accrued and unpaid dividends on all outstanding shares
of Class H Preferred Stock have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof has been or
contemporaneously is set apart for payment of such dividends on the Class H
Preferred Stock for all Dividend Periods ending on or prior to the date such
dividend
7
or distribution is declared, paid, set apart for payment or made, as the case
may be, with respect to such shares of Parity Stock. When dividends are not
paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class H Preferred Stock and all
dividends declared upon any shares of Parity Stock shall be declared ratably in
proportion to the respective amounts of dividends accumulated, accrued and
unpaid on the Class H Preferred Stock and accumulated, accrued and unpaid on
such Parity Stock.
(d) So long as any of the shares of Class H 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 declared or paid or set apart for payment by
the Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or
rights to subscribe for or purchase shares of, 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 in respect thereof, directly or
indirectly, by the Corporation unless, in each case, dividends equal to the
full amount of all accumulated, accrued and unpaid dividends on all outstanding
shares of Class H Preferred Stock have been declared and paid, or such
dividends have been declared and a sum sufficient for the payment thereof has
been set apart for such payment, on all outstanding shares of Class H Preferred
Stock for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, redemption, purchase or other acquisition
is necessary in order to maintain the continued qualification of the
Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, before any
payment or distribution by
8
the Corporation (whether of capital, surplus or otherwise) shall be made to or
set apart for the holders of Junior Stock, the holders of shares of Class H
Preferred Stock shall be entitled to receive Twenty-Five Dollars ($25) per
share of Class H Preferred Stock (the "Liquidation Preference"), plus an amount
equal to all dividends (whether or not earned or declared) accumulated, accrued
and unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class H Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Class H
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series
of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class H Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that
would be payable on such Class H Preferred Stock and any such other Parity
Stock if all amounts payable thereon were paid in full. For the purposes of
this Section 4, (i) a consolidation or merger of the Corporation with one or
more corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed
to be a liquidation, dissolution or winding up, voluntary or involuntary, of
the Corporation.
(b) Upon any liquidation, dissolution or winding up of
the Corporation, after payment shall have been made in full to the holders of
Class H Preferred Stock and any Parity Stock, as provided in this Section 4,
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 Class H Preferred Stock and
any Parity Stock shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class H Preferred Stock shall not be
redeemable by the Corporation prior to August 14, 2003, except as set forth in
Section 10.2 of this Article. On and after August 14, 2003, the Corporation,
at its option, may redeem shares of Class H Preferred Stock, in whole or from
time to time in part, at a redemption price payable in cash equal to 100% of
the Liquidation Preference thereof, plus all accumulated, accrued and unpaid
dividends to the date fixed for redemption (the "Redemption Date"); provided,
however, that in the event of a redemption of shares of Class H Preferred
Stock, if the Redemption Date occurs after a dividend record date and on or
prior to the related Dividend Payment Date, the dividend payable on such
Dividend Payment Date in respect of such shares called for redemption shall be
payable on such Dividend Payment Date to the holders of record at the close of
9
business on such dividend record date, and shall not be payable as part of the
redemption price for such shares. In connection with any redemption pursuant
to this Section 5(a), the redemption price of the Class H Preferred Stock
(other than any portion thereof consisting of accumulated, accrued and unpaid
dividends) shall be payable solely with the proceeds from the sale by the
Corporation or the Operating Partnership, of other capital shares of the
Corporation or the Operating Partnership (whether or not such sale occurs
concurrently with such redemption). For purposes of the preceding sentence,
"capital shares" means any common stock, preferred stock, depositary shares,
partnership or other interests, participations or other ownership interests
(however designated) and any rights (other than debt securities convertible
into or exchangeable at the option of the holder for equity securities (unless
and to the extent such debt securities are subsequently converted into capital
shares)) or options to purchase any of the foregoing of or in the Corporation
or the Operating Partnership.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares
of Class H Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class H Preferred Stock may be redeemed unless
all outstanding shares of Class H Preferred Stock are simultaneously redeemed
and neither the Corporation nor any affiliate of the Corporation may purchase
or acquire shares of Class H Preferred Stock, otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of shares of
Class H Preferred Stock.
(d) If the Corporation shall redeem shares of Class H
Preferred Stock pursuant to paragraph (a) of this Section 5, 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. Neither the failure to mail any notice required by this paragraph
(d), nor any defect therein or in the mailing thereof to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which was mailed
in the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such notice shall state, as appropriate: (1) the Redemption Date; (2) the
number of shares of Class H 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 place or places at which
certificates for such shares are to be surrendered for cash; and (4) the
redemption price payable on such Redemption Date, including, without
limitation, a statement as to whether or not accumulated, accrued and unpaid
dividends will be (x) payable as part of the redemption price, or (y) payable
on the next Dividend Payment Date to the record holder at the close of business
on the relevant record date as described in the next succeeding sentence.
10
Notice having been mailed as aforesaid, from and after the Redemption Date
(unless the Corporation shall fail to make available the amount of cash
necessary to effect such redemption), (i) dividends on the shares of Class H
Preferred Stock so called for redemption shall cease to accumulate or accrue on
the shares of Class H Preferred Stock called for redemption, (ii) said shares
shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class H Preferred Stock of the Corporation shall
cease except the rights to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required; provided, however, that if the Redemption Date for any shares
of Class H Preferred Stock occurs after any dividend record date and on or
prior to the related Dividend Payment Date, the full dividend payable on such
Dividend Payment Date in respect of such shares of Class H Preferred Stock
called for redemption shall be payable on such Dividend Payment Date to the
holders of record of such shares at the close of business on the corresponding
dividend record date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the redemption price in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the
applicable Redemption Date, the Corporation shall irrevocably deposit in trust
with a bank or trust company (which may not be an affiliate of the Corporation)
that has, or is an affiliate of a bank or trust company that has, a capital and
surplus of at least $50,000,000, such amount of cash as is necessary for such
redemption plus, if such Redemption Date occurs after any dividend record date
and on or prior to the related Dividend Payment Date, such amount of cash as is
necessary to pay the dividend payable on such Dividend Payment Date in respect
of such shares of Class H Preferred Stock called for redemption, with
irrevocable instructions that such cash be applied to the redemption of the
shares of Class H Preferred Stock so called for redemption and, if applicable,
the payment of such dividend. No interest shall accrue for the benefit of the
holders of shares of Class H 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 Redemption Date shall revert to the
general funds of the Corporation, after which reversion the holders of shares
of Class H 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 such
notice of the certificates for any such shares of Class H Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and 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 Class H Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class H
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class H Preferred Stock held of record by each holder
of such shares, pro rata (as nearly as may be) 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 Class H Preferred Stock represented by any
certificate are redeemed,
11
then a new certificate representing the unredeemed shares shall be issued
without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class H Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class H Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Class H Preferred Stock, as to
the payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class H Preferred Stock ("Senior Stock");
(b) on a parity with the Class H Preferred Stock, as to
the payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class H Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, or Class G Cumulative Preferred Stock of
the Corporation, or (ii) the holders of such class of stock or series and the
Class H Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority of one over the other
(the capital stock referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class H Preferred Stock, as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, if (i) such capital stock or series shall be Common
Stock or (ii) the holders of Class H Preferred Stock shall be entitled to
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
shares of such class or series (the capital stock referred to in clauses (i)
and (ii) of this paragraph being hereinafter referred to, collectively, as
"Junior Stock").
12
8. VOTING.
(a) If and whenever six quarterly dividends (whether or
not consecutive) payable on the Class H Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of similar types of provisions with respect to shares of Parity Stock of
any other class or series which is entitled to similar voting rights (the
"Voting Preferred Stock")) and the holders of shares of Class H Preferred
Stock, together with the holders of shares of all other Voting Preferred Stock
then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors
to serve on the Board of Directors at any annual meeting of stockholders or
special meeting held in place thereof, or at a special meeting of the holders
of the Class H Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever all arrears in dividends on the Class H
Preferred Stock and the Voting Preferred Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been declared and paid, or declared and set apart for payment, then the right
of the holders of the Class H Preferred Stock and the Voting Preferred Stock to
elect such additional two directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearages), and the terms of office of all persons elected as directors
by the holders of the Class H Preferred Stock and the Voting Preferred Stock
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class H Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class H Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Class H Preferred Stock and of the
Voting Preferred Stock for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that
provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class H Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors elected
at any such special meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu thereof if such office shall
not have previously terminated as above provided. If any vacancy shall occur
among the directors elected by the holders of the Class H Preferred Stock and
the Voting Preferred Stock, a successor shall be elected by the Board of
Directors, upon the nomination of the then-remaining director elected by the
holders of the Class H Preferred Stock and the Voting Preferred Stock or the
successor of such remaining director, to serve until the next annual meeting of
the stockholders or special meeting held in place thereof if such office shall
not have previously terminated as provided above.
13
(b) So long as any shares of Class H Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66- 2/3% of the votes entitled to be cast by the holders of the Class H
Preferred Stock voting as a single class with the holders of all other classes
or series of Parity Stock entitled to vote on such matters, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of
the provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of
the Class H Preferred Stock; provided, however, that the amendment of the
provisions of the Charter so as to authorize or create, or to increase the
authorized amount of, or issue any Junior Stock or any shares of any class of
Parity Stock shall not be deemed to materially adversely affect the voting
powers, rights or preferences of the holders of Class H Preferred Stock; or
(ii) The authorization, creation of, increase in
the authorized amount of, or issuance of any shares of any class or series of
Senior Stock or any security convertible into shares of any class or series of
Senior Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class H Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration
or repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class H Preferred Stock
at the time outstanding to the extent such redemption is authorized by Section
5 of this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class H Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class
H Preferred Stock as a single class on any matter, then the Class H Preferred
Stock and such other class or series shall have with respect to such matters
one quarter of one (.25) vote per $25 of stated liquidation preference. Except
as otherwise required by applicable law or as set forth herein or in the
Charter, the Class H Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers other than as
set forth herein, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class H Preferred Stock as the true and lawful owner
thereof for all
14
purposes, and neither the Corporation nor the Transfer Agent shall be affected
by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided
in Section 10.8, from and after the Issue Date, no Person (other than the
Initial Holder or a Look-Through Entity) shall Beneficially Own shares of Class
H Preferred Stock in excess of the Ownership Limit, the Initial Holder shall
not Beneficially Own shares of Class H Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class
H Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as
provided in Section 10.8, from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Person (other than the Initial Holder or a
Look-Through Entity) Beneficially Owning shares of Class H Preferred Stock in
excess of the Ownership Limit shall be void ab initio as to the Transfer of
such shares of Class H Preferred Stock that would be otherwise Beneficially
Owned by such Person in excess of the Ownership Limit, and the intended
transferee shall acquire no rights in such shares of Class H Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 10.8, from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in the Initial Holder Beneficially Owning shares of
Class H Preferred Stock in excess of the Initial Holder Limit shall be void ab
initio as to the Transfer of such shares of Class H Preferred Stock that would
be otherwise Beneficially Owned by the Initial Holder in excess of the Initial
Holder limit, and the Initial Holder shall acquire no rights in such shares of
Class H Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 10.8 from and after the Issue Date (and subject
to Section 10.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Look-Through Entity Beneficially Owning shares
of Class H Preferred Stock in excess of the Look-Through Ownership limit shall
be void ab initio as to the Transfer of such shares of Class H Preferred Stock
that would be otherwise Beneficially Owned by such Look-Through Entity in
excess of the Look- Through Ownership Limit and such Look-Through Entity shall
acquire no rights in such shares of Class H Preferred Stock.
15
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant
that is described in Section 856(d)(2)(B) of the Code if the income derived by
the Corporation from such tenant would cause the Corporation to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code) shall be
void ab initio as to the Transfer of shares of Class H Preferred Stock that
would cause the Corporation (i) to be "closely held" within the meaning of
Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the
case may be, and the intended transferee shall acquire no rights in such shares
of Class H Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class H Preferred Stock that is null and void under Sections 10.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class H Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation
being "closely held" within the meaning of Section 856(h) of the Code or (iii)
the Corporation otherwise failing to qualify as a REIT, shall not adversely
affect the validity of the Transfer of any other share of Class H Preferred
Stock in the same or any other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other
event has taken place in violation of Section 10.1 of this Article or that a
Person intends to acquire or has attempted to acquire Beneficial Ownership of
any shares of Class H Preferred Stock in violation of Section 10.1 of this
Article (whether or not such violation is intended), 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, causing the Corporation to redeem
such shares at the then current Market Price and upon such terms and conditions
as may be specified by the Board of Directors in its sole discretion
(including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of
any distributions received in respect of shares of Class H Preferred Stock
acquired in violation of Section 10.1 of this Article or instituting
proceedings to enjoin such Transfer or to rescind such Transfer or attempted
Transfer; provided, however, that any Transfers or attempted Transfers (or, in
the case of events other than a Transfer, Beneficial Ownership) in violation of
Section 10.1 of this Article, regardless of any action (or non-action) by the
Board of Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 10.3 of this Article;
provided, further, that the provisions of this Section 10.2 shall be subject to
the provisions of Section 10.12 of this Article; provided, further, that
neither the Board of Directors nor any committee thereof may
16
exercise such authority in a manner that interferes with any ownership or
transfer of Class H Preferred Stock that is expressly authorized pursuant to
Section 10.8(C) of this Article.
10.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is
the result of transactions entered into through the facilities of the NYSE or
other securities exchange or an automated inter-dealer quotation system) or
other change in the capital structure of the Corporation (including, but not
limited to, any redemption of Equity Stock) or other event (including, but not
limited to, any acquisition of any share of Equity Stock) such that (a) any
Person (other than the Initial Holder or a Look-Through Entity) would
Beneficially Own shares of Class H Preferred Stock in excess of the Ownership
Limit, or (b) the Initial Holder would Beneficially Own shares of Class H
Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that
is a Look-Through Entity would Beneficially Own shares of Class H Preferred
Stock in excess of the Look-Through Ownership Limit (in any such event, the
Person, Initial Holder or Look-Through Entity that would Beneficially Own
shares of Class H Preferred Stock in excess of the Ownership Limit, the Initial
Holder Limit or the Look-Through Entity Limit, respectively, is referred to as
a "Prohibited Transferee"), then, except as otherwise provided in Section 10.8
of this Article, such shares of Class H Preferred Stock in excess of the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as the case may be, (rounded up to the nearest whole share) shall be
automatically transferred to a Trustee in his capacity as trustee of a Trust
for the exclusive benefit of one or more Charitable Beneficiaries. Such
transfer to the Trustee shall be deemed to be effective as of the close of
business on the Business Day prior to the Excess Transfer, change in capital
structure or another event giving rise to a potential violation of the
Ownership Limit, the Initial Holder Limit or the Look-Through Entity Ownership
Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed
by the Corporation and shall be a Person unaffiliated with either the
Corporation or any Prohibited Transferee. The Trustee may be an individual or
a bank or trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class H
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10.3(E), the Prohibited Transferee shall have no rights in the Class H
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
17
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class H
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class H Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class H Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class H Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure
or other event giving rise to a potential violation of the Ownership Limit,
Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to
have given an irrevocable proxy to the Trustee to vote the shares of Class H
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the
Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 10.3(E) or any application thereof is determined in a final judgment to
be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class H Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class H Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE.
Shares of Class H Preferred Stock transferred to the Trustee shall be deemed to
have been offered for sale to the Corporation, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift,
the Market Price at the time of such devise or gift) and (ii) the Market Price
on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of
18
90 days after the later of (i) the date of the Excess Transfer or other event
resulting in a transfer to the Trust and (ii) the date that the Board of
Directors determines in good faith that an Excess Transfer or other event
occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class H Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class H Preferred Stock in violation of Section
10.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 10.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or attempted
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.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the
Issue Date certain record and Beneficial Owners and transferees of shares of
Class H Preferred Stock will be required to provide certain information as set
out below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class H Preferred 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 Class H Preferred
Stock Beneficially Owned, and a full description of how such shares are held.
Each such record or Beneficial Owner of Class H Preferred Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class H
Preferred 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 under the Code and
(ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class H Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to
obtain the written notice described in this Section 10.5 from the Beneficial
Owner.
19
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class H Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class H
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall
provide a statement or affidavit to the Corporation setting forth the number of
shares of Class H Preferred Stock already Beneficially 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.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 10.12 of
this Article) (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 insure compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of
any of the provisions of Section 10 of this Article, or in the case of an
ambiguity in any definition contained in Section 10 of this Article, the Board
of Directors shall have the power to determine the application of the
provisions of this Article with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
10.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of
Section 542(a) of the Code and is a corporation, partnership, estate or trust.
In connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person 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 on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class H Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 10.1 of this Article and
the pledgee shall not be subject to the
20
Ownership Limit with respect to the Class H Preferred Stock so pledged to it
either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold
allotment of Class H Preferred Stock) following the purchase of Class H
Preferred Stock by an underwriter that (i) is a corporation, partnership or
other legal entity and (ii) participates in an offering of the Class H
Preferred Stock, such underwriter shall not be subject to the Ownership Limit
with respect to the Class H Preferred Stock purchased by it as a part of or in
connection with such offering and with respect to any Class H Preferred Stock
purchased in connection with market making activities.
10.9 LEGEND. Each certificate for Class H Preferred Stock shall
bear substantially the following legend:
"The shares of Class H Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class H Cumulative
Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class H Cumulative Preferred Stock). Any Person that
attempts to Beneficially Own shares of Class H Cumulative Preferred
Stock in excess of the applicable limitation must immediately notify
the Corporation. All capitalized terms in this legend have the
meanings ascribed to such terms in the Charter (including the Articles
Supplementary setting forth the terms of the Class H Cumulative
Preferred Stock), 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 that so requests. If the restrictions on
transfer are violated (i) the transfer of the shares of Class H
Cumulative Preferred Stock represented hereby will be void in
accordance with the Charter (including the Articles Supplementary
setting forth the terms of the Class H Cumulative Preferred Stock) or
(ii) the shares of Class H Cumulative Preferred Stock represented
hereby will automatically be transferred to a Trustee of a Trust for
the benefit of one or more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article 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.
21
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall
be interpreted to preclude the settlement of any transaction entered into
through the facilities of the NYSE or other securities exchange or an automated
inter- dealer quotation system.
FOURTH: The terms of the Class H Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XVII of the Charter.
22
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on August 12,
1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ KATHLEEN HARVEY /s/ TROY D. BUTTS
- ---------------------------------- -------------------------------------
Kathleen Harvey Troy D. Butts
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a
part, hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
/s/ TROY D. BUTTS
-------------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS J CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has
duly divided and classified 2,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class J Cumulative Convertible Preferred
Stock, par value $.01 per share, and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified
as Class J Cumulative Convertible Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 2,000,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 486,027,500 shares
immediately prior to the reclassification to 484,027,500 shares immediately
after the reclassification.
THIRD: The terms of the Class J Cumulative Convertible Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions and
qualifications) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class J
Cumulative Convertible Preferred Stock, par value $.01 per share (the "Class J
Preferred Stock") and Two Million (2,000,000) shall be the authorized number of
shares of such Class J Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class J Preferred Stock, the following terms shall
have the meanings indicated:
"ABP Subscription Agreement" shall mean the Subscription Agreement
dated as of November 6, 1998 between the Corporation and Stichting
Pensioenfonds ABP.
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial
Holder, clause (iii) of this definition, and clause (a) (ii) of the
definition of "Person" shall be disregarded. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class J
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
2
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class E Articles Supplementary" shall have the meaning set forth in
Section 7.3 of this Article.
"Class J Preferred Stock" shall have the meaning set forth in Section
1 of this Article.
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if
the Equity Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Equity Stock is listed or admitted to trading
or, if the Equity 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 ("NASDAQ") or, if
such system is no longer in use, the principal other automated
quotations system that may then be in use or, if the Equity 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 Equity Stock selected by the Board of Directors of the
Corporation.
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation, and the Class B Common Stock, $.01 par
value per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such
Class A Common Stock or Class B Common Stock shall be reclassified.
"Conversion Price" shall mean the conversion price per share of Class
A Common Stock for which each share of Class J Preferred Stock is
convertible,
3
as such Conversion Price may be adjusted pursuant to Section 7 of this
Article. The initial Conversion Price shall be $40 (equivalent to a
conversion rate of 2.50 shares of Class A Common Stock for each share
of Class J Preferred Stock).
"Current Market Price" of a share of any Equity Stock shall mean the
closing price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices,
regular way, on such day, in either case as reported on the principal
national securities exchange on which such securities are listed or
admitted for trading, or, if such security is not quoted on any
national securities exchange, on the NASDAQ National Market or if such
security is not quoted on the NASDAQ National Market, the average of
the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for each
security on such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished by any
New York Stock Exchange or National Association of Securities Dealers,
Inc. member firm regularly making a market in such security selected
for such purpose by the Chief Executive Officer of the Corporation or
the Board of Directors of the Corporation or if any class or series of
securities are not publicly traded, the fair value of the shares of
such class as determined reasonably and in good faith by the Board of
Directors of the Corporation.
"distribution" shall have the meaning set forth in paragraph (a)(iii)
of Section 7.3 of this Article.
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, (a) the date that cash dividends are paid on the Class A
Common Stock with respect to such Dividend Period; or (b) if such
dividends have not been paid on the Class A Common Stock by 9:00 a.m.,
New York City time, on the sixtieth day from and including the last
day of such Dividend Period, then on such day; provided, that if any
Dividend Payment Date falls on any day other than a Business Day, the
dividend payment payable on such Dividend Payment Date shall be paid
on the Business Day immediately following such Dividend Payment Date
and no interest shall accrue on such dividend from such date to such
Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
February 15, May 15, August 15 and November 15 of each year and ending
on and including the day preceding the first day of the next
succeeding Dividend Period.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
4
"Excess Transfer" has the meaning set forth in Section 11.3(a) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Class A Common Stock during five (5) consecutive
Trading Days selected by the Corporation commencing not more than
twenty (20) Trading Days before, and ending not later than, the
earlier of the day in question and the day before the "ex" date, if
any, with respect to any issuance or distribution requiring such
computation. The term "'ex' date," when used with respect to any
issuance or distribution, means the first day on which the share of
Class A Common Stock trades regular way, without the right to receive
such issuance or distribution, on the exchange or in the market, as
the case may be, used to determine that day's Current Market Price.
"Issue Date" shall mean the date on which shares of Class J Preferred
Stock are issued pursuant to the ABP Subscription Agreement and the OP
Subscription Agreement.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including November 14,
1998.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares
of Class J Preferred Stock of the Corporation having an Aggregate
Value not in excess of the excess of (x) 15% of the Aggregate Value of
all Outstanding shares of Equity Stock over (y) the Aggregate Value of
all shares of Equity Stock other than Class J Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make
available to the representative(s) of the Initial Holder and the Board
of Directors, a schedule that sets forth the then-current Initial
Holder Limit applicable to the Initial Holder.
"Internal Rate of Return" shall mean, as of any determination date,
the effective discount rate under which the present value of the
Inflows associated with an outstanding share of Class J Preferred
Stock equals the Outflow on the Issue Date associated with such share.
For purposes of calculation of Internal Rate of Return:
(i) "Inflows" shall mean (a) all dividends (whether paid in
cash, property or stock) that have been received on such share, (b)
any other distributions that have been received on such share, and (c)
as of the determination date, the average of the daily Current Market
Prices of a share
5
of the Corporation's Class A Common Stock during the five most recent
Trading Days, such average multiplied by the Liquidation Preference
(excluding any accumulated, accrued and unpaid dividends) per share of
Class J Preferred Stock, and such product divided by the Conversion
Price. For purposes of calculating the amounts of any Inflows, all
dividends or distributions received in property or stock shall be
deemed to have a value equal to the fair market value of such
dividends or distributions as of the date such dividend or
distribution is received, as determined in good faith by the Board of
Directors. All Inflows shall be deemed to have taken place on the date
on which payment was actually received by the holder.
(ii) "Outflow" shall mean $100 plus an amount equal to one
one-millionth of any and all out-of-pocket costs of Stichting
Pensioenfonds ABP relating to the acquisition of 1,000,000 shares of
the Corporation's Class J Preferred Stock on the Issue Date. Outflow
shall be deemed to have taken place on the Closing Date of the ABP
Subscription Agreement and the OP Subscription Agreement, and
(iii) Neither the fact of any transfer of Class J Preferred
Stock nor the amount of any consideration received by the holder
thereof or paid by any successor holder in connection with any
transfer shall affect the calculation of Internal Rate of Return.
Schedule A attached hereto shows the calculation of Internal Rate of
Return at certain hypothetical dates of determination and given a
certain hypothetical aggregate purchase price, certain hypothetical
Inflows and certain hypothetical levels of the Current Market Price of
the Corporation's Class A Common Stock.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OP Subscription Agreement" shall mean the Stock Purchase Agreement
dated as of November 6, 1998 between the Corporation and AIMCO
Properties, L.P.
6
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit or the Initial Holder Limit to any Person, the
term "Outstanding" shall be deemed to include the number of shares of
Equity Stock that such Person alone, at that time, could acquire
pursuant to any options or convertible securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder, a number of the Outstanding shares of Class J Preferred Stock
of the Corporation having an Aggregate Value not in excess of the
excess of (x) 8.7% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class J Preferred Stock that are Beneficially Owned
by the Person.
"Ownership Restrictions" shall mean, collectively, the Ownership Limit
as applied to Persons other than the Initial Holder and the Initial
Holder Limit as applied to the Initial Holder.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article,
(i) an individual, corporation, partnership, estate, trust (including
a trust qualifying under Section 401(a) or 501(c) of the Code),
association, private foundation within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) also
includes a group as that term is used for purposes of Section 13(d)(3)
of the Exchange Act and (b) for purposes of the remaining Sections of
this Article, any individual, firm, partnership, corporation or other
entity and shall include any successor (by merger or otherwise) of
such entity.
"Prohibited Transferee" has the meaning set forth in Section 11.3(a)
of this Article.
"REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other
distribution by the Board of Directors, the allocation of funds to be
so paid on any series or class of capital stock of the Corporation;
provided, however, that if any funds for any class or series of
7
Junior Stock or any class or series of Parity Stock are placed in a
separate account of the Corporation or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with
respect to the Class J Preferred Stock shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying
or other similar agent.
"Trading Day" shall mean, when used with respect to the Closing Price
of a share of any Equity Stock, (i) if the Equity Stock is listed or
admitted to trading on the NYSE, a day on which the NYSE is open for
the transaction of business, (ii) if the Equity Stock is not listed or
admitted to trading on the NYSE but is listed or admitted to trading
on another national securities exchange or automated quotation system,
a day on which the principal national securities exchange or automated
quotation system, as the case may be, on which the Equity Stock is
listed or admitted to trading is open for the transaction of business,
or (iii) if the Equity Stock is not listed or admitted to trading on
any national securities exchange or automated quotation system, 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.
"Transaction" shall have the meaning set forth in Section 7.3 of this
Article.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of a share of Class J Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of
Class J Preferred Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or
exchangeable for Class J Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class J Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class J Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class J Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
8
"Voting Preferred Stock" shall have the meaning set forth in Section 9
of this Article.
3. DIVIDENDS.
(a) The holders of Class J Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class J Preferred Stock equal to (i) 7% per annum of the per share
Liquidation Preference (as hereinafter defined) for the period beginning on and
including the Issue Date and lasting until November 15, 1998; (ii) 8% per annum
of the per share Liquidation Preference for the period beginning on and
including November 15, 1998 and lasting until November 15, 1999; (iii) 9% per
annum of the per share Liquidation Preference for the period beginning on and
including November 15, 1999 and lasting until November 15, 2000; and (iv) 9.5%
per annum of the per share Liquidation Preference thereafter. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend Period
or Periods such dividends shall be declared or there shall be funds of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly in arrears on each Dividend Payment Date, commencing on
November 15, 1998. Each such dividend shall be payable in arrears to the
holders of record of the Class J Preferred Stock, as they appear on the stock
records of the Corporation at the close of business on a record date fixed by
the Board of Directors which shall not be more than 60 days prior to the
applicable Dividend Payment Date and, within such 60 day period, shall be the
same date as the record date for the regular quarterly dividend payable with
respect to the Class A Common Stock for the Dividend Period to which such
Dividend Payment Date relates (or if there is no such record date for Class A
Common Stock, then such date as the Board of Directors may fix). Accumulated,
accrued and unpaid dividends for any past Dividend Periods may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to
holders of record on such date, which date shall not precede by more than 45
days the payment date thereof, as may be fixed by the Board of Directors.
(b) Any dividend payable on the Class J Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class J Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the Class J
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 Class J Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class J Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other
9
distribution of cash or other property shall be declared or made, directly or
indirectly, by the Corporation with respect to any shares of Parity Stock
unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class J Preferred
Stock have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof has been or contemporaneously is set
apart for payment of such dividends on the Class J Preferred Stock for all
Dividend Periods ending on or prior to the date such dividend or distribution
is declared, paid, set apart for payment or made, as the case may be, with
respect to such shares of Parity Stock. When dividends are not paid in full or
a sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class J Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the
respective amounts of dividends accumulated, accrued and unpaid on the Class J
Preferred Stock and accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class J 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or
rights to subscribe for or purchase shares of, 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 in respect thereof, directly or
indirectly, by the Corporation unless, in each case, dividends equal to the
full amount of all accumulated, accrued and unpaid dividends on all outstanding
shares of Class J Preferred Stock have been declared and paid, or such
dividends have been declared and a sum sufficient for the payment thereof has
been set apart for such payment, on all outstanding shares of Class J Preferred
Stock for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) redeeming, purchasing
10
or otherwise acquiring any Parity Stock, in each case, if such declaration,
payment, setting apart for payment, redemption, purchase or other acquisition
is necessary in order to maintain the continued qualification of the
Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise)
shall be made to or set apart for the holders of Junior Stock, the holders of
shares of Class J Preferred Stock shall be entitled to receive One Hundred
Dollars ($100) per share of Class J Preferred Stock (the "Liquidation
Preference"), plus an amount equal to all dividends (whether or not earned or
declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Class J Preferred Stock have been
paid the Liquidation Preference in full, plus an amount equal to all dividends
(whether or not earned or declared) accumulated, accrued and unpaid thereon to
the date of final distribution to such holders, no payment will be made to any
holder of Junior Stock upon the liquidation, dissolution or winding up of the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Class J Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of Class J Preferred
Stock and any such other Parity Stock ratably in the same proportion as the
respective amounts that would be payable on such Class J Preferred Stock and
any such other Parity Stock if all amounts payable thereon were paid in full.
For the purposes of this Section 4, (i) a consolidation or merger of the
Corporation with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets, or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
J Preferred Stock and any Parity Stock, as provided in this Section 4, 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 Class J Preferred Stock and
any Parity Stock shall not be entitled to share therein.
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5. REDEMPTION.
The Class J Preferred Stock is not redeemable, other than as
specified in Section 11.2 hereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class J Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation (including without limitation
shares of Class J Preferred Stock which have been surrendered for conversion
into Class A Common Stock) shall be returned to the status of authorized, but
unissued shares of Class J Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, holders of shares of
Class J Preferred Stock shall have the right to convert all or a portion of
such shares into shares of Class A Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of
this Section 7, a holder of shares of Class J Preferred Stock shall have the
right, at such holder's option, at any time on or after the Issue Date to
convert such shares, in whole or in part, into the number of fully paid and
non-assessable shares of authorized but previously unissued shares of Class A
Common Stock per each share of Class J Preferred Stock obtained by dividing the
Liquidation Preference (excluding any accumulated accrued and unpaid dividends)
per share of Class J Preferred Stock by the Conversion Price (as in effect at
the time and on the date provided for in subparagraph (b)(iv) of this Section
7.1) and by surrendering such shares to be converted, such surrender to be made
in the manner provided in paragraph (b) of this Section 7.1.
(b) (i) In order to exercise the conversion right, the holder
of each share of Class J Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent, accompanied by
written notice to the Corporation that the holder thereof elects to convert
such share of Class J Preferred Stock. Unless the shares issuable on conversion
are to be issued in the same name as the name in which such share of Class J
Preferred Stock is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
12
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
(ii) A holder of shares of Class J Preferred Stock shall,
as of the date of the conversion of such shares to shares of Class A Common
Stock, be entitled to receive cash payment in respect of any dividends (whether
or not earned or declared) that are accumulated, accrued and unpaid thereon as
of the time of such conversion, provided, however, that payment in respect of
any dividend on such shares that has been declared but for which the Dividend
Payment Date has not yet been reached shall be payable as of such Dividend
Payment Date. Except as provided above, the Corporation shall make no payment
or allowance for unpaid dividends, whether or not in arrears, on converted
shares.
(iii) As promptly as practicable after the surrender of
certificates for shares of Class J Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver at such office to such holder, or
send on such holder's written order, a certificate or certificates for the
number of full shares of Class A Common Stock issuable upon the conversion of
such shares of Class J Preferred Stock in accordance with provisions of this
Section 7, and any fractional interest in respect of a share of Class A Common
Stock arising upon such conversion shall be settled as provided in paragraph
(c) of this Section 7.1.
(iv) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which the
certificates for shares of Class J Preferred Stock shall have been surrendered
and such notice received by the Corporation as aforesaid, and the Person or
Persons in whose name or names any certificate or certificates for shares of
Class A Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby
at such time on such date and such conversion shall be at the Conversion Price
in effect at such time on such date unless the stock transfer books of the
Corporation shall be closed on that date, in which event such Person or Persons
shall be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date on which such shares shall have been surrendered and such notice received
by the Corporation. If the dividend payment record date for the Class J
Preferred Stock and Class A Common Stock do not coincide, and the preceding
sentence does not operate to ensure that a holder of shares of Class J
Preferred Stock whose shares are converted into Class A Common Stock does not
receive dividends on both the shares of Class J Preferred Stock and the Class A
Common Stock into which such shares are converted for the same Dividend Period,
then notwithstanding anything herein to the contrary, it is the intent, and the
Transfer Agent is authorized to ensure, that no conversion after the earlier of
such record dates will be accepted until after the latter of such record dates.
13
(c) No fractional share of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of the shares of Class J Preferred Stock. Instead of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of shares of Class J Preferred Stock, the Corporation shall
pay to the holder of such share an amount in cash based upon the Current Market
Price of the Class A Common Stock on the Trading Day immediately preceding the
date of conversion. If more than one share shall be surrendered for conversion
at one time by the same holder, the number of full shares of Class A Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Class J Preferred Stock so surrendered.
7.2 MANDATORY CONVERSION.
(a) The Corporation shall have the right to require that all
or part of the issued and outstanding shares of Class J Preferred Stock be
converted into shares of Class A Common Stock under the following
circumstances:
(i) At any time on or prior to the fourth anniversary of
the Issue Date, in the event that the Internal Rate of Return exceeds 12.5%,
the Corporation shall have the right to require the issued and outstanding
shares of Class J Preferred Stock to be converted, in whole or in part, into
shares of Class A Common Stock as set forth in this Section 7.2.
(ii) At any time after the fourth anniversary of the
Issue Date, so long as the average of the daily Current Market Prices of the
issued and outstanding shares of Class A Common Stock during the five most
recent Trading Days is equal to or greater than $40, the Corporation shall have
the right to require the issued and outstanding shares of Class J Preferred
Stock to be converted, in whole or in part, into shares of Class A Common Stock
as set forth in this Section 7.2.
(b) Subject to and upon compliance with the provisions of
this Section 7, the Corporation shall have the right, under the circumstances
set forth in (a) (i) or (ii) above, to convert such shares, in whole or in
part, into the number of fully paid and non-assessable shares of authorized but
previously unissued shares of Class A Common Stock per each share of Class J
Preferred Stock obtained by dividing the Liquidation Preference (excluding any
accumulated accrued and unpaid dividends) per share of Class J Preferred Stock
by the Conversion Price (as in effect at the time and on the date provided for
in subparagraph (c)(v) of this Section 7.2).
(c) (i) In order to exercise the conversion right, the
Corporation shall, promptly upon the occurrence of an event described in (a)(i)
or (ii) above, and in no event later than the close of business on the next
succeeding business day, give notice of such conversion to each holder of
record of the shares to be converted. Such
14
notice shall be provided by facsimile or, if facsimile is not available, then
by first class mail, postage prepaid, at such holder's address as the same
appears on the stock records of the Corporation. Any notice which was
transmitted or mailed in the manner herein provided shall be conclusively
presumed to have been duly given on the date received by the holder. Each such
notice shall state, as appropriate: (1) the date of conversion, which date may
be any date within one business day following the date on which the notice is
transmitted or mailed; (2) the number of shares of Class J Preferred Stock to
be converted and, if fewer than all such shares held by such holder are to be
converted, the number of such shares to be converted; (3) the event which gave
rise to the conversion right; and (4) the then current Conversion Price.
(ii) Upon receiving such notice of conversion, each such
holder shall promptly surrender the certificates representing such shares of
Class J Preferred Stock as are being converted on the conversion date, duly
endorsed or assigned to the Corporation or in blank, at the office of the
Transfer Agent; provided, however, that the failure to so surrender any such
certificates shall not in any way affect the validity of the conversion of the
underlying shares of Class J Preferred Stock into shares of Class A Common
Stock. Unless the shares issuable on conversion are to be issued in the same
name as the name in which such shares of Class J Preferred Stock are
registered, each such share surrendered following conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
(iii) A holder of shares of Class J Preferred Stock
shall, as of the date of the conversion of such shares to shares of Class A
Common Stock, be entitled to receive cash payment in respect of any dividends
(whether or not earned or declared) that are accumulated, accrued and unpaid
thereon as of the time of such conversion, provided, however, that payment in
respect of any dividend on such shares that has been declared but for which the
Dividend Payment Date has not yet been reached shall be payable as of such
Dividend Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares.
(iv) As promptly as practicable after the surrender of
certificates for shares of Class J Preferred Stock as aforesaid, and in any
event no later than three business days after the date of such surrender, the
Corporation shall issue and shall deliver at such office to such holder, or
send on such holder's written order, a certificate or certificates for the
number of full shares of Class A Common Stock issuable upon the conversion of
such shares of Class J Preferred Stock in accordance with the provisions of
this Section 7.2, and any fractional interest in respect of a share of Class A
Common Stock arising upon such conversion shall be settled as provided in
paragraph (d) of this Section 7.2.
15
(v) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date identified as the
conversion date in the notice of conversion sent by the Corporation as
aforesaid, and the Person or Persons in whose name or names any certificate or
certificates for shares of Class A Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of
the shares represented thereby at such time on such date and such conversion
shall be at the Conversion Price in effect at such time on such date unless the
stock transfer books of the Corporation shall be closed on that date, in which
event such Person or Persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such stock transfer books are open, but such conversion shall be at the
Conversion Price in effect on the date identified as the conversion date in the
notice of conversion sent by the Corporation as aforesaid. If the dividend
payment record dates for the Class J Preferred Stock and Class A Common Stock
do not coincide, and the preceding sentence does not operate to ensure that a
holder of shares of Class J Preferred Stock whose shares are converted into
Class A Common Stock does not receive dividends on both the shares of Class J
Preferred Stock and the Class A Common Stock into which such shares are
converted for the same Dividend Period, then notwithstanding anything herein to
the contrary, it is the intent, and the Transfer Agent is authorized to ensure,
that no conversion after the earlier of such record dates will be accepted
until after the latter of such record dates.
(d) No fractional share of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of the shares of Class J Preferred Stock. Instead of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of shares of Class J Preferred Stock, the Corporation shall
pay to the holder of such share an amount of cash based upon the Current Market
Price of the Class A Common Stock on the Trading Day immediately preceding the
date of conversion. If more than one of any holder's shares shall be converted
at one time, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class J Preferred Stock so surrendered.
7.3 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to time
as follows:
(i) If the Corporation shall after the Issue Date (A) pay
a dividend or make a distribution on its capital stock in shares of Class A
Common Stock, (B) subdivide its outstanding Class A Common Stock into a greater
number of shares, (C) combine its outstanding Class A Common Stock into a
smaller number of shares or (D) issue any shares of capital stock by
reclassification of its outstanding Class A Common Stock, the Conversion Price
in effect at the opening of business on
16
the day following the date fixed for the determination of stockholders entitled
to receive such dividend or distribution or at the opening of business on the
day following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted so
that the holder of any share of Class J Preferred Stock thereafter converted
shall be entitled to receive the number of shares of Class A Common Stock (or
fraction of a share of Class A Common Stock) that such holder would have owned
or have been entitled to receive after the happening of any of the events
described above had such share of Class J Preferred Stock been converted
immediately prior to the record date in the case of a dividend or distribution
or the effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this paragraph (a)(i) of this
Section 7.3 shall become effective immediately after the opening of business on
the day next following the record date (except as provided in paragraph (e)
below) in the case of a dividend or distribution and shall become effective
immediately after the opening of business on the day next following the
effective date in the case of a subdivision, combination or reclassification.
(ii) If the Corporation shall, after the Issue Date,
issue rights, options or warrants to all holders of Class A Common Stock
entitling them (for a period expiring within 45 days after the record date
described below in this paragraph (a)(ii) of this Section 7.3) to subscribe for
or purchase Class A Common Stock at a price per share less than the Fair Market
Value per share of the Class A Common Stock on the record date for the
determination of stockholders entitled to receive such rights, options or
warrants, then the Conversion Price in effect at the opening of business on the
day next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately prior
to the opening of business on the day following the date fixed for such
determination by (B) a fraction, the numerator of which shall be the sum of (X)
the number of shares of Class A Common Stock outstanding on the close of
business on the date fixed for such determination and (Y) the number of shares
that could be purchased at such Fair Market Value from the aggregate proceeds
to the Corporation from the exercise of such rights, options or warrants for
Class A Common Stock, and the denominator of which shall be the sum of (XX) the
number of shares of Class A Common Stock outstanding on the close of business
on the date fixed for such determination and (YY) the number of additional
shares of Class A Common Stock offered for subscription or purchase pursuant to
such rights, options or warrants. Such adjustment shall become effective
immediately after the opening of business on the day next following such record
date (except as provided in paragraph (e) below). In determining whether any
rights, options or warrants entitle the holders of Class A Common Stock to
subscribe for or purchase Class A Common Stock at less than such Fair Market
Value, there shall be taken into account any consideration received by the
Corporation upon issuance and upon exercise of such rights, options or
warrants, the value of such consideration, if other than cash, to be determined
in good faith by the Board of Directors.
17
(iii) If the Corporation shall after the Issue Date make
a distribution on its Class A Common Stock other than in cash or shares of
Class A Common Stock (including any distribution in securities (other than
rights, options or warrants referred to in paragraph (a)(ii) of this Section
7.3)) (each of the foregoing being referred to herein as a "distribution"),
then the Conversion Price in effect at the opening of business on the next day
following the record date for determination of stockholders entitled to receive
such distribution shall be adjusted to equal the price determined by
multiplying (A) the Conversion Price in effect immediately prior to the opening
of business on the day following the record date by (B) a fraction, the
numerator of which shall be the difference between (X) the number of shares of
Class A Common Stock outstanding on the close of business on the record date
and (Y) the number of shares determined by dividing (aa) the aggregate value of
the property being distributed by (bb) the Fair Market Value per share of Class
A Common Stock on the record date, and the denominator of which shall be the
number of shares of Class A Common Stock outstanding on the close of business
on the record date. Such adjustment shall become effective immediately after
the opening of business on the day next following such record date (except as
provided below). The value of the property being distributed shall be as
determined in good faith by the Board of Directors; provided, however, if the
property being distributed is a publicly traded security, its value shall be
calculated in accordance with the procedure for calculating the Fair Market
Value of a share of Class A Common Stock (calculated for a period of five
consecutive Trading Days commencing on the twentieth Trading Day after the
distribution). Neither the issuance by the Corporation of rights, options or
warrants to subscribe for or purchase securities of the Corporation nor the
exercise thereof shall be deemed a distribution under this paragraph.
(iv) No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price: provided, however, that any adjustments that by
reason of this paragraph (a)(iv) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in accordance
with the provisions of this Section 7.3 (other than this paragraph (a)(iv)) not
later than such time as may be required in order to preserve the tax-free
nature of a distribution to the holders of shares of Class A Common Stock.
Notwithstanding any other provisions of this Section 7, the Corporation shall
not be required to make any adjustment of the Conversion Price for the issuance
of (A) any shares of Class A Common Stock pursuant to any plan providing for
the reinvestment of dividends or interest payable on securities of the
Corporation and the investment of optional amounts in shares of Class A Common
Stock under such plan or (B) any options, rights or shares of Class A Common
Stock pursuant to any stock option, stock purchases or other stock-based plan
maintained by the Corporation. All calculations under this Section 7 shall be
made to the nearest cent ($.005 being rounded upward) or to the nearest
one-tenth of a share (with .05 of a share being rounded upward), as the case
may be. Anything in this paragraph (a) of this Section 7 to the contrary
notwithstanding, the Corporation
18
shall be entitled, to the extent permitted by law, to make such reductions in
the Conversion Price, in addition to those required by this paragraph (a), as
it in its discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or combination of shares,
distribution of rights or warrants to purchase stock or securities, or a
distribution of other assets (other than cash dividends) hereafter made by the
Corporation to its stockholders shall not be taxable, or if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event.
(b) If the Corporation shall be a party to any transaction
(including with limitation a merger, consolidation, statutory share exchange,
sale of all or substantially all of the Corporation's assets or
recapitalization of the Class A Common Stock, but excluding any transaction as
to which paragraph (a)(i) of this Section 7.3 applies) (each of the foregoing
being referred to herein as a "Transaction"), in each case as a result of which
shares of Class A Common Stock shall be converted into the right to receive
stock, securities or other property (including cash or any combination
thereof), each share of Class J Preferred Stock which is not converted into the
right to receive stock, securities or other property in connection with such
Transaction shall thereupon be convertible into the kind and amount of shares
of stock, securities and other property (including cash or any combination
thereof) receivable upon such consummation by a holder of that number of shares
of Class A Common Stock into which one share of Class J Preferred Stock was
convertible immediately prior to such Transaction. The Corporation shall not be
a party to any Transaction unless the terms of such Transaction are consistent
with the provisions of this paragraph (b), and it shall not consent or agree to
the occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Class J Preferred Stock that will contain
provisions enabling the holders of the Class J Preferred Stock that remain
outstanding after such Transaction to convert into the consideration received
by holders of Class A Common Stock at the Conversion Price in effect
immediately apply to successive Transactions:
(c) If:
(i) the Corporation shall declare a dividend (or any
other distribution) on the Class A Common Stock (other than cash dividends and
cash distributions); or
(ii) the Corporation shall authorize the granting to all
holders of the Class A Common Stock of rights or warrants to subscribe for or
purchase any shares of any class or series of capital stock or any other rights
or warrants; or
(iii) there shall be any reclassification of the
outstanding Class A Common Stock or any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of the
Corporation is required, or a statutory share exchange, or the sale or transfer
of all or substantially all of the assets of the Corporation as an entirety; or
19
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Class J Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, a notice stating (A) the record date for the payment of such
dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Class A Common Stock of record
to be entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Class A Common Stock of record shall be entitled to
exchange their shares of Class A Common Stock for securities or other property,
if any, deliverable upon such reclassification, consolidation, merger, statutory
share exchange, sale, transfer, liquidation, dissolution or winding up. Failure
to give or receive such notice or any defect therein shall not affect the
legality or validity of the proceedings described in this Section 7.
(d) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment
which certificate shall be conclusive evidence of the correctness of such
adjustment absent manifest error. Promptly after delivery of such certificate,
the Corporation shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder of shares of Class J Preferred Stock at
such holder's address as shown on the stock record of the Corporation.
(e) In any case in which paragraph (a) of this Section 7.3
provides that an adjustment shall become effective on the day next following
the record date for an event, the Corporation may defer until the occurrence of
such event (A) issuing to the holder of any share of Class J Preferred Stock
converted after such record date and before the occurrence of such event the
additional Class A Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Class A Common Stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of any fraction pursuant to
Section 7.2(d) or Section 7.1(c).
(f) There shall be no adjustment of the Conversion Price in
case of the issuance of any capital stock of the Corporation except as
specifically set forth in
20
this Section 7. In addition, notwithstanding any other provision contained
in this Section 7, there shall be no adjustment of the Conversion Price upon
the payment of any cash dividends or distributions on any capital stock of the
Corporation, including, without limitation, the Special Dividend (as such term
is defined in the Class E Articles Supplementary) on the Corporation's Class E
Preferred Stock or upon the automatic conversion of the shares of such
Preferred Stock into shares of Class A Common Stock, as provided in the Class E
Articles Supplementary.
(g) If the Corporation shall take any action affecting the
Class A Common Stock, other than action described in this Section 7, that in
the opinion of the Board of Directors would materially adversely affect the
conversion rights of the holders of Class J Preferred Stock, the Conversion
Price for the Class J Preferred Stock may be adjusted, to the extent permitted
by law in such manner, if any, and at such time as the Board of Directors, in
its sole discretion, may determine to be equitable under the circumstances.
(h) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Class A Common Stock solely for the purpose of effecting
conversion of the Class J Preferred Stock, the full number of shares of Class A
Common Stock deliverable upon the conversion of all outstanding shares of Class
J Preferred Stock not theretofore converted into Class A Common Stock. For
purposes of this paragraph (h), the number of shares of Class A Common Stock
that shall be deliverable upon the conversion of all outstanding shares of
Class J Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single holder (and without regard to the
Ownership Limit).
The Corporation covenants that any shares of Class A Common Stock
issued upon conversion of the shares of Class J Preferred Stock shall be
validly issued, fully paid and nonassessable.
The Corporation shall use its best efforts to list the shares of Class
A Common Stock required to be delivered upon conversion of the shares of Class
J Preferred Stock, prior to such delivery, upon each national securities
exchange, if any, upon which the outstanding shares of Class A Common Stock are
listed at the time of such delivery.
(i) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Class A Common Stock or other securities or property on conversion of
shares of Class J Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issue or delivery of shares of Class A Common
Stock or other securities or property in a name other than that of the holder
of the shares of Class J Preferred Stock to be converted, and no such issue or
delivery shall be made unless
21
and until the Person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
(j) In addition to any other adjustment required hereby, to
the extent permitted by law, the Corporation from time to time may decrease the
Conversion Price by any amount, permanently or for a period of at least twenty
Business Days, if the decrease is irrevocable during the period.
(k) Notwithstanding anything to the contrary contained in
this Section 7, conversion of Class J Preferred Stock pursuant to this Section
7 shall be permitted only to the extent that such conversion would not result
in a violation of the Ownership Restrictions (as defined in the Charter), after
taking into account any waiver of such limitation granted to any holder of the
shares of Class J Preferred Stock.
8. RANKING.
Any class or series of capital stock of the Corporation shall be
deemed to rank:
(a) prior or senior to the Class J Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class J Preferred Stock ("Senior Stock");
(b) on a parity with the Class J Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or liquidation prices per share thereof be different from those of the
Class J Preferred Stock, if (i) such capital stock is Class B Cumulative
Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D
Cumulative Preferred Stock, Class G Cumulative Preferred Stock, or Class H
Cumulative Preferred Stock of the Corporation, or (ii) the holders of such
class of stock or series and the Class J Preferred Stock shall be entitled to
the receipt of dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation preferences, without preference
or priority of one over the other (the capital stock referred to in clauses (i)
and (ii) of this paragraph being hereinafter referred to, collectively, as
"Parity Stock"); and
(c) junior to the Class J Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Common Stock, (ii)
such capital stock is Class E Cumulative Convertible Preferred Stock or (iii)
the holders of Class J
22
Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of shares of such class or series (the
capital stock referred to in clauses (i), (ii) and (iii) of this paragraph
being hereinafter referred to, collectively, as "Junior Stock").
9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class J Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of similar types of provisions with respect to shares of Parity Stock of
any other class or series which is entitled to similar voting rights (the
"Voting Preferred Stock")) and the holders of shares of Class J Preferred
Stock, together with the holders of shares of all other Voting Preferred Stock
then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors
to serve on the Board of Directors at any annual meeting of stockholders or
special meeting held in place thereof, or at a special meeting of the holders
of the Class J Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever all arrears in dividends on the Class J
Preferred Stock and the Voting Preferred Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been declared and paid, or declared and set apart for payment, then the right
of the holders of the Class J Preferred Stock and the Voting Preferred Stock to
elect such additional two directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearages), and the terms of office of all persons elected as directors
by the holders of the Class J Preferred Stock and the Voting Preferred Stock
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class J Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class J Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Class J Preferred Stock and of the
Voting Preferred Stock for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that
provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class J Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors elected
at any such special meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu
23
thereof if such office shall not have previously terminated as above provided.
If any vacancy shall occur among the directors elected by the holders of the
Class J Preferred Stock and the Voting Preferred Stock, a successor shall be
elected by the Board of Directors, upon the nomination of the then-remaining
director elected by the holders of the Class J Preferred Stock and the Voting
Preferred Stock or the successor of such remaining director, to serve until the
next annual meeting of the stockholders or special meeting held in place
thereof if such office shall not have previously terminated as provided above.
(b) So long as any shares of Class J Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class J
Preferred Stock voting as a single class with the holders of all other classes
or series of Parity Stock entitled to vote on such matters, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of
the Class J Preferred Stock; provided, however, that the amendment of or
supplement to the provisions of the Charter so as to authorize or create, or to
increase or decrease the authorized amount of, or to issue any Junior Stock,
Class J Preferred Stock or any shares of any class of Parity Stock shall not be
deemed to materially adversely affect the voting powers, rights or preferences
of the holders of Class J Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of
Senior Stock or any security convertible into shares of any class or series of
Senior Stock (whether or not such class or series of Senior Stock is currently
authorized).
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class J Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class
J Preferred Stock as a single class on any matter, then the Class J Preferred
Stock and such other class or series shall have with respect to such matters
one quarter of one (.25) vote per $25 of stated liquidation preference. Except
as otherwise required by applicable law or as set forth herein or in the
Charter, the Class J Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers other than as
set forth herein, and the consent of the holders thereof shall not be required
for the taking of any corporate action.
24
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class J Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
11. OWNERSHIP AND TRANSFERS.
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(a) Limitation on Beneficial Ownership. Except as
provided in Section 11.8, from and after the Issue Date, no Person (other than
the Initial Holder) shall Beneficially Own shares of Class J Preferred Stock in
excess of the Ownership Limit and the Initial Holder shall not Beneficially Own
shares of Class J Preferred Stock in excess of the Initial Holder Limit.
(b) Transfers in Excess of Ownership Limit. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Person (other than the Initial Holder)
Beneficially Owning shares of Class J Preferred Stock in excess of the
Ownership Limit shall be void ab initio as to the Transfer of such shares of
Class J Preferred Stock that would be otherwise Beneficially Owned by such
Person in excess of the Ownership Limit, and the intended transferee shall
acquire no rights in such shares of Class J Preferred Stock.
(c) Transfers in Excess of Initial Holder Limit. Except
as provided in Section 11.8, from and after the Issue Date (and subject to
Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in the Initial Holder Beneficially Owning shares of
Class J Preferred Stock in excess of the Initial Holder Limit shall be void ab
initio as to the Transfer of such shares of Class J Preferred Stock that would
be otherwise Beneficially Owned by the Initial Holder in excess of the Initial
Holder limit, and the Initial Holder shall acquire no rights in such shares of
Class J Preferred Stock.
(d) Transfers Resulting in "Closely Held" Status. From
and after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant
that is described in Section
25
856(d)(2)(B) of the Code if the income derived by the Corporation from such
tenant would cause the Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code) shall be void ab initio as to the
Transfer of shares of Class J Preferred Stock that would cause the Corporation
(i) to be "closely held" within the meaning of Section 856(h) of the Code or
(ii) otherwise fail to qualify as a REIT, as the case may be, and the intended
transferee shall acquire no rights in such shares of Class J Preferred Stock.
(e) Severability on Void Transactions. A Transfer of a
share of Class J Preferred Stock that is null and void under Sections 11.1(b),
(c) or (d) of this Article because it would, if effective, result in (i) the
ownership of Class J Preferred Stock in excess of the Initial Holder Limit or
the Ownership Limit, (ii) the Corporation being "closely held" within the
meaning of Section 856(h) of the Code or (iii) the Corporation otherwise
failing to qualify as a REIT, shall not adversely affect the validity of the
Transfer of any other share of Class J Preferred Stock in the same or any other
related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a
committee thereof shall at any time determine in good faith that a Transfer or
other event has taken place in violation of Section 11.1 of this Article or
that a Person intends to acquire or has attempted to acquire Beneficial
Ownership of any shares of Class J Preferred Stock in violation of Section 11.1
of this Article (whether or not such violation is intended), 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, causing the
Corporation to redeem such shares at the then Current Market Price and upon
such terms and conditions as may be specified by the Board of Directors in its
sole discretion (including, but not limited to, by means of the issuance of
long-term indebtedness for the purpose of such redemption), demanding the
repayment of any distributions received in respect of shares of Class J
Preferred Stock acquired in violation of Section 11.1 of this Article or
instituting proceedings to enjoin such Transfer or to rescind such Transfer or
attempted Transfer; provided, however, that any Transfers or attempted
Transfers (or, in the case of events other than a Transfer, Beneficial
Ownership) in violation of Section 11.1 of this Article, regardless of any
action (or non-action) by the Board of Directors or such committee, (a) shall
be void ab initio or (b) shall automatically result in the transfer described
in Section 11.3 of this Article; provided, further, that the provisions of this
Section 11.2 shall be subject to the provisions of Section 11.12 of this
Article; provided, further, that neither the Board of Directors nor any
committee thereof may exercise such authority in a manner that interferes with
any ownership or transfer of Class J Preferred Stock that is expressly
authorized pursuant to Section 11.8(c) of this Article.
26
11.3 TRANSFER IN TRUST.
(a) Establishment of Trust. If, notwithstanding the
other provisions contained in this Article, at any time after the Issue Date
there is a purported Transfer (an "Excess Transfer") (whether or not such
Transfer is the result of transactions entered into through the facilities of
the NYSE or other securities exchange or an automated inter-dealer quotation
system) or other change in the capital structure of the Corporation (including,
but not limited to, any redemption of Equity Stock) or other event (including,
but not limited to, any acquisition of any share of Equity Stock) such that (a)
any Person (other than the Initial Holder) would Beneficially Own shares of
Class J Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class J Preferred Stock in excess of
the Initial Holder Limit (in either such event, the Person or Initial Holder
that would Beneficially Own shares of Class J Preferred Stock in excess of the
Ownership Limit or the Initial Holder Limit, respectively, is referred to as a
"Prohibited Transferee"), then, except as otherwise provided in Section 11.8 of
this Article, such shares of Class J Preferred Stock in excess of the Ownership
Limit or the Initial Holder Limit, as the case may be, (rounded up to the
nearest whole share) shall be automatically transferred to a Trustee in his
capacity as trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be
effective as of the close of business on the Business Day prior to the Excess
Transfer, change in capital structure or another event giving rise to a
potential violation of the Ownership Limit or the Initial Holder Limit.
(b) Appointment of Trustee. The Trustee shall be
appointed by the Corporation and shall be a Person unaffiliated with either the
Corporation or any Prohibited Transferee. The Trustee may be an individual or a
bank or trust company duly licensed to conduct a trust business.
(c) Status of Shares Held by the Trustee. Shares of
Class J Preferred Stock held by the Trustee shall be issued and outstanding
shares of capital stock of the Corporation. Except to the extent provided in
Section 11.3(e), the Prohibited Transferee shall have no rights in the Class J
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
(d) Dividend and Voting Rights. The Trustee shall have
all voting rights and rights to dividends with respect to shares of Class J
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class J Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class J Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable
27
Beneficiary. Any vote cast by a Prohibited Transferee prior to the discovery by
the Corporation that the shares of Class J Preferred Stock have been
transferred to the Trustee will be rescinded as void ab initio and shall be
recast in accordance with the desires of the Trustee acting for the benefit of
the Charitable Beneficiary. The owner of the shares at the time of the Excess
Transfer, change in capital structure or other event giving rise to a potential
violation of the Ownership Limit or the Initial Holder Limit shall be deemed to
have given an irrevocable proxy to the Trustee to vote the shares of Class J
Preferred Stock for the benefit of the Charitable Beneficiary.
(e) Restrictions on Transfer. The Trustee of the Trust
may sell the shares held in the Trust to a Person, designated by the Trustee,
whose ownership of the shares will not violate the Ownership Restrictions. If
such a sale is made, the interest of the Charitable Beneficiary shall terminate
and proceeds of the sale shall be payable to the Prohibited Transferee and to
the Charitable Beneficiary as provided in this Section 11.3(e). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the
Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 11.3(e) or any application thereof is determined in a final judgment to
be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class J Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class J Preferred Stock on behalf of the Corporation.
(f) Purchase Right in Stock Transferred to the Trustee.
Shares of Class J Preferred Stock transferred to the Trustee shall be deemed to
have been offered for sale to the Corporation, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift,
the Market Price at the time of such devise or gift) and (ii) the Market Price
on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of 90 days
after the later of (i) the date of the Excess Transfer or other event resulting
in a transfer to the Trust and (ii) the date that the Board of Directors
determines in good faith that an Excess Transfer or other event occurred.
(g) Designation of Charitable Beneficiaries. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class J Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii)
28
each Charitable Beneficiary is an organization described in Sections
170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires
or attempts to acquire shares of Class J Preferred Stock in violation of
Section 11.1 of this Article, or any Person that is a Prohibited Transferee
such that stock is transferred to the Trustee under Section 11.3 of this
Article, shall immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as the Corporation
may request in order to determine the effect, if any, of such Transfer or
attempted 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.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after
the Issue Date certain record and Beneficial Owners and transferees of shares
of Class J Preferred Stock will be required to provide certain information as
set out below.
(a) Annual Disclosure. Every record and Beneficial Owner
of more than 5% (or such other percentage between 0.5% and 5%, as provided in
the applicable regulations adopted under the Code) of the number of Outstanding
shares of Class J Preferred 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 Class J Preferred
Stock Beneficially Owned, and a full description of how such shares are held.
Each such record or Beneficial Owner of Class J Preferred Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class J
Preferred 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 under the Code and
(ii) ensure compliance with the Ownership Limit or the Initial Holder Limit, as
applicable. Each stockholder of record, including without limitation any Person
that holds shares of Class J Preferred Stock on behalf of a Beneficial Owner,
shall take all reasonable steps to obtain the written notice described in this
Section 11.5 from the Beneficial Owner.
(b) Disclosure at the Request of the Corporation. Any
Person that is a Beneficial Owner of shares of Class J Preferred Stock and any
Person (including the stockholder of record) that is holding shares of Class J
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit
and the Initial Holder Limit, and shall provide a statement or affidavit to the
Corporation setting forth the number of shares of Class J Preferred Stock
already Beneficially Owned by such stockholder or
29
proposed transferee and any related persons specified, which statement or
affidavit shall be in the form prescribed by the Corporation for that purpose.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article
shall limit the authority of the Board of Directors to take such other action
as it deems necessary or advisable (subject to the provisions of Section 11.12
of this Article) (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 insure compliance with the Ownership Limit and the Initial Holder Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of Section 11 of this Article, or in the
case of an ambiguity in any definition contained in Section 11 of this Article,
the Board of Directors shall have the power to determine the application of the
provisions of this Article with respect to any situation based on its
reasonable belief, understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may
be established with respect to the limitations of Section 11.1 of this Article.
(a) Waiver of Ownership Limit. The Board of Directors,
upon receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may, but shall not
be required to, waive the application, in whole or in part, of the Ownership
Limit to a Person subject to the Ownership Limit, if such person is not an
individual for purposes of Section 542(a) of the Code and is a corporation,
partnership, estate or trust. In connection with any such exemption, the Board
of Directors may require such representations and undertakings from such Person
and may impose such other conditions as the Board of Directors deems necessary,
in its sole discretion.
(b) Pledge by Initial Holder. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class J Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and
the pledgee shall not be subject to the Ownership Limit with respect to the
Class J Preferred Stock so pledged to it either as a result of the pledge or
upon foreclosure.
(c) Underwriters. For a period of 270 days (or such
longer period of time as any underwriter described below shall hold an unsold
allotment of Class J Preferred Stock) following the purchase of Class J
Preferred Stock by an underwriter that (i) is a corporation, partnership or
other legal entity and (ii) participates in an offering of the Class J
Preferred Stock, such underwriter shall not be subject to the Ownership Limit
with respect to the Class J Preferred Stock purchased by it as a part of or in
connection with such offering and with respect to any Class J Preferred Stock
purchased in connection with market making activities.
30
11.9 LEGEND. Each certificate for Class J Preferred Stock
shall bear substantially the following legend:
"The shares of Class J Cumulative Convertible Preferred
Stock represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class J Cumulative
Convertible Preferred Stock in excess of the Ownership Restrictions,
as applicable, with certain further restrictions and exceptions set
forth in the Charter (including the Articles Supplementary setting
forth the terms of the Class J Cumulative Convertible Preferred
Stock). Any Person that attempts to Beneficially Own shares of Class J
Cumulative Convertible Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All capitalized
terms in this legend have the meanings ascribed to such terms in the
Charter (including the Articles Supplementary setting forth the terms
of the Class J Cumulative Convertible Preferred Stock), 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 that so requests. If the restrictions on transfer are
violated (i) the transfer of the shares of Class J Cumulative
Convertible Preferred Stock represented hereby will be void in
accordance with the Charter (including the Articles Supplementary
setting forth the terms of the Class J Cumulative Convertible
Preferred Stock) or (ii) the shares of Class J Cumulative Convertible
Preferred Stock represented hereby will automatically be transferred
to a Trustee of a Trust for the benefit of one or more Charitable
Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article 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.
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article
to the contrary notwithstanding, 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 the Ownership Limit
and the Initial Holder Limit in the event of a change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article
shall be interpreted to preclude the settlement of any transaction entered into
through the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
31
FOURTH: The terms of the Class J Cumulative Convertible Preferred
Stock set forth in Article Third hereof shall become Article XX of the Charter.
32
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on November 6, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LUCY CORDOVA /s/ TROY D. BUTTS
- ------------------------- ---------------------------------------------
Lucy Cordova Troy D. Butts
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a
part, hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
/s/ TROY D. BUTTS
---------------------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
CERTIFICATE OF CORRECTION
to
ARTICLES SUPPLEMENTARY
Class C Cumulative Preferred Stock
(Par Value $.01 Per Share)
of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(a Maryland corporation)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(the "Corporation"), having its principal office in Baltimore City, Maryland,
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: Articles Supplementary, dated December 22, 1997, of the
Corporation were filed with the State Department of Assessments and Taxation of
Maryland on December 22, 1997, at 1:38 p.m. (as corrected by the Certificate of
Correction to Articles Supplementary of the Corporation, dated February 17,
1998 and filed with the State Department of Assessments and Taxation of
Maryland on February 18, 1998) and said Articles Supplementary require
correction as permitted by Section 1-207 of the Corporations and Associations
Article of the Annotated Code of Maryland.
SECOND: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as
previously filed and to be corrected hereby reads as follows:
10.9 Legend. Each certificate for Class C Preferred Stock
shall bear the following legend:
"The shares of Class C Cumulative Preferred Stock
represented by this certificate are subject to restrictions
on transfer. No person may Beneficially Own shares of Class C
Cumulative Preferred Stock in excess of the Ownership
Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Corporation's
Charter (including the Articles Supplementary setting forth
the terms of the Class C Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class C
Cumulative Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed
to such terms in the Corporation's Charter (including the
Articles Supplementary setting forth the terms of the Class C
Cumulative Preferred Stock), 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
that so requests. If the restrictions on transfer are
violated, the shares of Class C Cumulative Preferred Stock
represented hereby will be either (i)
void in accordance with the Certificate or (ii) automatically
transferred to a Trustee of a Trust for the benefit of one or
more Charitable Beneficiaries."
THIRD: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as
corrected hereby is as follows:
10.9 Legend. Each certificate for Class C Preferred Stock
shall bear the following legend:
"The shares of Class C Cumulative Preferred Stock
represented by this certificate are subject to restrictions
on transfer. No person may Beneficially Own shares of Class C
Cumulative Preferred Stock in excess of the Ownership
Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter
(including the Articles Supplementary setting forth the terms
of the Class C Cumulative Preferred Stock). Any Person that
attempts to Beneficially Own shares of Class C Cumulative
Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in
this legend have the meanings ascribed to such terms in the
Charter (including the Articles Supplementary setting forth
the terms of the Class C Cumulative Preferred Stock), 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 that so requests. If the
restrictions on transfer are violated (i) the transfer of the
shares of Class C Cumulative Preferred Stock represented
hereby will be void in accordance with the Charter (including
the Articles Supplementary setting forth the terms of the
Class C Cumulative Preferred Stock) or (ii) the shares of
Class C Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the
benefit of one or more Charitable Beneficiaries."
FOURTH: The inaccuracy or defect in the legend contained in Section
10.9 of ARTICLE THIRD of the Articles Supplementary as previously filed is
that the legend contains an inaccurate description of the effects of an
improper transfer as set forth elsewhere in the Charter.
2
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its
behalf by its Vice Chairman and President and witnessed by its Secretary on
October 21, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- ------------------------------- -----------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Certificate of Correction to be
the act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
By: /s/ PETER K. KOMPANIEZ
--------------------------------
Peter K. Kompaniez,
Vice Chairman and President
3
CERTIFICATE OF CORRECTION
to
ARTICLES SUPPLEMENTARY
Class D Cumulative Preferred Stock
(Par Value $.01 Per Share)
of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(a Maryland corporation)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(the "Corporation"), having its principal office in Baltimore City, Maryland,
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: Articles Supplementary, dated February 17, 1998, of the
Corporation were filed with the State Department of Assessments and Taxation of
Maryland on February 18, 1998, at 1:40 p.m. and said Articles Supplementary
require correction as permitted by Section 1-207 of the Corporations and
Associations Article of the Annotated Code of Maryland.
SECOND: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as
previously filed and to be corrected hereby reads as follows:
10.9 Legend. Each certificate for Class D Preferred Stock
shall bear the following legend:
"The shares of Class D Cumulative Preferred Stock
represented by this certificate are subject to restrictions
on transfer. No person may Beneficially Own shares of Class D
Cumulative Preferred Stock in excess of the Ownership
Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Corporation's
Charter (including the Articles Supplementary setting forth
the terms of the Class D Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class D
Cumulative Preferred Stock in excess of the applicable
limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed
to such terms in the Corporation's Charter (including the
Articles Supplementary setting forth the terms of the Class D
Cumulative Preferred Stock), 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
that so requests. If the restrictions on transfer are
violated, the shares of Class D Cumulative Preferred Stock
represented hereby will be either (i) void in accordance with
the Certificate or (ii) automatically transferred to a
Trustee of a Trust for the benefit of one or more Charitable
Beneficiaries."
THIRD: Section 10.9 of ARTICLE THIRD of the Articles Supplementary as
corrected hereby is as follows:
10.9 Legend. Each certificate for Class D Preferred Stock
shall bear the following legend:
"The shares of Class D Cumulative Preferred Stock
represented by this certificate are subject to restrictions
on transfer. No person may Beneficially Own shares of Class D
Cumulative Preferred Stock in excess of the Ownership
Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter
(including the Articles Supplementary setting forth the terms
of the Class D Cumulative Preferred Stock). Any Person that
attempts to Beneficially Own shares of Class D Cumulative
Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in
this legend have the meanings ascribed to such terms in the
Charter (including the Articles Supplementary setting forth
the terms of the Class D Cumulative Preferred Stock), 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 that so requests. If the
restrictions on transfer are violated (i) the transfer of
shares of Class D Cumulative Preferred Stock represented
hereby will be void in accordance with the Charter (including
the Articles Supplementary setting forth the terms of the
Class D Cumulative Preferred Stock) or (ii) the shares of
Class D Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the
benefit of one or more Charitable Beneficiaries.
FOURTH: The inaccuracy or defect in the legend contained in Section
10.9 of ARTICLE THIRD of the Articles Supplementary as previously filed is that
the legend contains an inaccurate description of the effects of an improper
transfer as set forth elsewhere in the Charter.
2
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its
behalf by its Vice Chairman and President and witnessed by its Secretary on
October 21, 1998.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL F. BONDER By: /s/ PETER K. KOMPANIEZ
- ------------------------------- -----------------------------
Joel F. Bonder, Peter K. Kompaniez,
Secretary Vice Chairman and President
THE UNDERSIGNED, Vice Chairman and President of APARTMENT INVESTMENT
AND MANAGEMENT COMPANY, with respect to the foregoing Certificate of Correction
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Certificate of Correction to be
the act of said Corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects, under the penalties of perjury.
By: /s/ PETER K. KOMPANIEZ
--------------------------------
Peter K. Kompaniez,
Vice Chairman and President
3
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS K CONVERTIBLE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in
Baltimore City, Maryland, hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has
duly divided and classified 5,750,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class K Convertible Cumulative Preferred
Stock, par value $.01 per share, and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified
as Class K Convertible Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 5,750,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 484,027,500 shares
immediately prior to the reclassification to 478,277,500 shares immediately
after the reclassification.
THIRD: The terms of the Class K Convertible Cumulative Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class K
Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class K
Preferred Stock"), and Five Million Seven Hundred Fifty Thousand (5,750,000)
shall be the authorized number of shares of such Class K Preferred Stock
constituting such class.
2. DEFINITIONS.
For purposes of the Class K Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial
Holder, clause (iii) of this definition, and clause (a) (ii) of the
definition of "Person" shall be disregarded. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class K
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 9 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Cash Redemption Price" shall mean, with respect to any shares of
Class K Preferred Stock to be redeemed, (i) if the Redemption Date
occurs during the period from and including February 20, 2002, to but
excluding February 18, 2003, 102% of the Liquidation Preference
thereof, and (ii) if the Redemption Date occurs on or after February
18, 2003, 100% of the Liquidation Preference thereof, plus, in the
case of clause (i) or (ii), all accumulated, accrued and unpaid
dividends (whether or not earned or declared), if any, to the
Redemption Date.
2
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class K Preferred Stock" shall have the meaning set forth in Section
1 of this Article.
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if
the Equity Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Equity Stock is listed or admitted to trading
or, if the Equity 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 quotation system
that may then be in use or, if the Equity 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 Equity
Stock selected by the Board of Directors of the Corporation.
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation, and the Class B Common Stock, $.01 par
value per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such
Class A Common Stock or Class B Common Stock shall be reclassified.
"Conversion Price" shall mean the conversion price per share of Class
A Common Stock for which each share of Class K Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section 7 of this Article. The initial Conversion Price shall be
$42.00 (equivalent to a
3
conversion rate of 0.59524 shares of Class A Common Stock for each
share of Class K Preferred Stock).
"Dividend Payment Date" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business
Day immediately following such Dividend Payment Date and no interest
shall accrue on such dividend from such date to such Dividend Payment
Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
February 18, May 18, August 18 and November 18 of each year and ending
on and including the day preceding the first day of the next
succeeding Dividend Period, other than the Dividend Period during
which any Class K Preferred Stock shall be redeemed pursuant to
Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class K Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 11.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean February 18, 1999.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including May 17, 1999.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares
of Class K Preferred Stock of the Corporation having an Aggregate
Value not in excess of the excess of (x) 15% of the Aggregate Value of
all Outstanding shares of Equity Stock over (y) the Aggregate Value of
all shares of Equity Stock other than Class K Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make
available to the representative(s) of the Initial Holder and the Board
of Directors, a schedule that sets forth the then-current Initial
Holder Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
4
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through
Entity, a number of the Outstanding shares of Class K Preferred Stock
of the Corporation having an Aggregate Value not in excess of the
excess of (x) 15% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class K Preferred Stock that are Beneficially Owned
by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone,
at that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class K Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class K Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
5
"Person" shall mean (a) for purposes of Section 11 of this Article,
(i) an individual, corporation, partnership, estate, trust (including
a trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section
509(a) of the Code, joint stock company or other entity, and (ii) a
"group," as that term is used for purposes of Section 13(d)(3) of the
Exchange Act, and (b) for purposes of the remaining Sections of this
Article, any individual, firm, partnership, corporation or other
entity, including any successor (by merger or otherwise) of such
entity.
"Prohibited Transferee" has the meaning set forth in Section 11.3(A)
of this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of
Section 3 of this Article.
"Redemption Market Price" shall mean, with respect to any redemption
of shares of Class K Preferred Stock, the lesser of (i) the average of
the daily Closing Prices of the Class A Common Stock for the 20
consecutive Trading Days immediately preceding the first Business Day
immediately preceding the date of the applicable redemption notice and
(ii) the Closing Price of the Class A Common Stock on the Trading Day
immediately preceding the first Business Day immediately preceding the
date of the applicable redemption notice.
"Redemption Date" shall mean, in the case of any redemption of any
shares of Class K Preferred Stock, the date fixed for redemption of
such shares.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other
distribution by the Board of Directors, the allocation of funds to be
so paid on any series or class of capital stock of the Corporation;
provided, however, that if any funds for any class or series of Junior
Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the
Class K Preferred Stock shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other
similar agent.
6
"Trading Day" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE,
a day on which the NYSE is open for the transaction of business, (ii)
if the Equity Stock is not listed or admitted to trading on the NYSE
but is listed or admitted to trading on another national securities
exchange or automated quotation system, a day on which the principal
national securities exchange or automated quotation system, as the
case may be, on which the Equity Stock is listed or admitted to
trading is open for the transaction of business, or (iii) if the
Equity Stock is not listed or admitted to trading on any national
securities exchange or automated quotation system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class K Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of
Class K Preferred Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or
exchangeable for Class K Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class K Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class K Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class K Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 9
of this Article.
3. DIVIDENDS.
(a) The holders of Class K Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of funds
legally available for that purpose, quarterly cash dividends on the Class K
Preferred Stock in an amount per share equal to (i) during the period from the
Issue Date through and including
7
February 17, 2002, the greater of $0.50 or the quarterly cash dividend paid or
payable (determined on each Dividend Payment Date) on the number of shares of
Class A Common Stock (or portion thereof) into which a share of Class K
Preferred Stock is convertible, and (ii) during the period from and after
February 18, 2002, the greater of $0.625 or the quarterly cash dividend paid or
payable (determined on each Dividend Payment Date) on the number of shares of
Class A Common Stock (or portion thereof) into which a share of Class K
Preferred Stock is convertible. Such dividends shall be cumulative from the
Issue Date, whether or not in any Dividend Period or Periods such dividends
shall be declared or there shall be funds of the Corporation legally available
for the payment of such dividends, and shall be payable quarterly in arrears on
each Dividend Payment Date, commencing on May 18, 1999. Each such dividend
shall be payable in arrears to the holders of record of the Class K Preferred
Stock, as they appear on the stock records of the Corporation at the close of
business on the February 1, May 1, August 1 or November 1 (each a "Record
Date"), as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, which date shall not precede
by more than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) Any dividend payable on the Class K Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class K Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the Class K
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 Class K Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class K Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class K Preferred
Stock have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof has been or contemporaneously is set
apart for payment of such dividends on the Class K Preferred Stock for all
Dividend Periods ending on or prior to the date such dividend or distribution
is declared, paid, set apart for payment or made, as the case may be, with
respect to such shares of Parity Stock. When dividends are not paid in full or
a sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class K Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the
respective amounts of dividends accumulated, accrued and unpaid on the Class K
Preferred Stock and accumulated, accrued and unpaid on such Parity Stock.
8
(d) So long as any of the shares of Class K 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or
rights to subscribe for or purchase shares of, 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 in respect thereof, directly or
indirectly, by the Corporation unless, in each case, dividends equal to the
full amount of all accumulated, accrued and unpaid dividends on all outstanding
shares of Class K Preferred Stock have been declared and paid, or such
dividends have been declared and a sum sufficient for the payment thereof has
been set apart for such payment, on all outstanding shares of Class K Preferred
Stock for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, redemption, purchase or other acquisition
is necessary in order to maintain the continued qualification of the
Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise)
shall be made to or set apart for the holders of Junior Stock, the holders of
shares of Class K Preferred Stock shall be entitled to receive Twenty-Five
Dollars ($25) per share of Class K Preferred Stock (the "Liquidation
Preference"), plus an amount equal to all dividends (whether or not earned or
declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Class K Preferred Stock have been
paid the Liquidation Preference in full, plus an amount equal to all dividends
(whether or not
9
earned or declared) accumulated, accrued and unpaid thereon to the date of
final distribution to such holders, no payment will be made to any holder of
Junior Stock upon the liquidation, dissolution or winding up of the
Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or proceeds thereof, distributable
among the holders of Class K Preferred Stock shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of Class K Preferred
Stock and any such other Parity Stock ratably in the same proportion as the
respective amounts that would be payable on such Class K Preferred Stock and
any such other Parity Stock if all amounts payable thereon were paid in full.
For the purposes of this Section 4, (i) a consolidation or merger of the
Corporation with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Corporation's assets, or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
K Preferred Stock and any Parity Stock, as provided in Section 4(a), 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 Class K Preferred Stock and any Parity
Stock shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class K Preferred Stock shall not be redeemable
by the Corporation prior to February 20, 2002, except as set forth in Section
11.2 of this Article. During the period beginning on February 20, 2002, the
Corporation, at its option, may redeem shares of Class K Preferred Stock, in
whole or from time to time in part, at a redemption price payable in cash equal
to the Cash Redemption Price applicable thereto. On and after February 20,
2002, the Corporation, at its option, may redeem shares of Class K Preferred
Stock, in whole or from time to time in part, in exchange for a number of
shares of Class A Common Stock equal to (i) 105% of the applicable Cash
Redemption Price, divided by (ii) the Redemption Market Price applicable to
such redemption. In lieu of any fractional shares of Class A Common Stock which
would otherwise be issuable upon any redemption of Class K Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional interest
in an amount in cash (computed to the nearest cent) equal to the applicable
Redemption Market Price multiplied by the fractional interest (computed to the
nearest 1/100th of a percent) that otherwise would have been deliverable upon
such redemption of Class K Preferred Stock. In the event of a redemption of
shares of Class K Preferred Stock, if the Redemption Date occurs after a
dividend record date and on or prior to the related Dividend Payment Date, the
dividend payable on such Dividend Payment Date in respect of such shares called
for redemption shall be payable on such Dividend Payment Date to the holders of
record at the close of business on such dividend record
10
date notwithstanding the redemption of such shares, and shall not be payable as
part of the redemption price for such shares. In connection with any redemption
for cash pursuant to this Section 5(a), the redemption price of the Class K
Preferred Stock (other than any portion thereof consisting of accumulated,
accrued and unpaid dividends) shall be payable solely with the proceeds from
the sale by the Corporation or the Operating Partnership of other capital
shares of the Corporation or the Operating Partnership (whether or not such
sale occurs concurrently with such redemption). For purposes of the preceding
sentence, "capital shares" means any common stock, preferred stock, depositary
shares, partnership or other interests, participations or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable at the option of the holder for equity
securities (unless and to the extent such debt securities are subsequently
converted into capital shares)) or options to purchase any of the foregoing of
or in the Corporation or the Operating Partnership.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of
Class K Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class K Preferred Stock may be redeemed unless
all outstanding shares of Class K Preferred Stock are simultaneously redeemed,
and neither the Corporation nor any affiliate of the Corporation may purchase
or acquire shares of Class K Preferred Stock, otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of shares of
Class K Preferred Stock.
(d) If the Corporation shall redeem shares of Class K
Preferred Stock pursuant to paragraph (a) of this Section 5, 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. Neither the failure to mail any notice required by this paragraph
(d), nor any defect therein or in the mailing thereof to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which has been
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 notice shall state, as appropriate: (i) the Redemption Date;
(ii) the number of shares of Class K 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; (iii) the place or places at
which certificates for such shares are to be surrendered for cash or shares of
Class A Common Stock; and (iv) the redemption price payable on such Redemption
Date (whether in cash or shares of Class A Common Stock), including, without
limitation, a statement as to whether or not accumulated, accrued and unpaid
dividends will be payable as part of the redemption price, or payable on the
next Dividend
11
Payment Date to the record holder at the close of business on the relevant
record date as described in the next succeeding sentence. Notice having been
mailed as aforesaid, from and after the Redemption Date (unless the Corporation
shall fail to make available the amount of cash necessary to effect such
redemption), (i) dividends on the shares of Class K Preferred Stock so called
for redemption shall cease to accumulate or accrue on the shares of Class K
Preferred Stock called for redemption, (ii) said shares shall no longer be
deemed to be outstanding, and (iii) all rights of the holders thereof as
holders of Class K Preferred Stock of the Corporation shall cease except the
right to receive the cash payable, or shares of Class A Common Stock issuable,
upon such redemption, without interest thereon, upon surrender of their
certificates if so required; provided, however, that if the Redemption Date for
any shares of Class K Preferred Stock occurs after any dividend record date and
on or prior to the related Dividend Payment Date, the full dividend payable on
such Dividend Payment Date in respect of such shares of Class K Preferred Stock
called for redemption shall be payable on such Dividend Payment Date to the
holders of record of such shares at the close of business on the corresponding
dividend record date notwithstanding the prior redemption of such shares. At
the close of business on the Redemption Date, without any further action, each
holder of shares of Class K Preferred Stock redeemed for shares of Class A
Common Stock shall be deemed a holder of the number of shares of Class A Common
Stock for which such Class K Convertible Preferred Stock has been redeemed
(unless the Corporation defaults on its obligation to deliver shares of Class A
Common Stock or cash). The Corporation's obligation to make available the cash
necessary to effect such redemption in accordance with the preceding sentence
shall be deemed fulfilled if, on or before the applicable Redemption Date, the
Corporation shall irrevocably deposit in trust with a bank or trust company
(which may not be an affiliate of the Corporation) that has, or is an
affiliate of a bank or trust company that has, a capital and surplus of at
least $50,000,000, such amount of cash as is necessary for such redemption
plus, if such Redemption Date occurs after any dividend record date and on or
prior to the related Dividend Payment Date, such amount of cash as is necessary
to pay the dividend payable on such Dividend Payment Date in respect of such
shares of Class K Preferred Stock called for redemption, with irrevocable
instructions that such cash be applied to the redemption of the shares of Class
K Preferred Stock so called for redemption and, if applicable, the payment of
such dividend. No interest shall accrue for the benefit of the holders of
shares of Class K 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 Redemption Date shall revert to the general funds
of the Corporation, after which reversion the holders of shares of Class K
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 such
notice of the certificates for any such shares of Class K Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon) or shares of Class A Common Stock
for which such shares have been
12
redeemed in accordance with such notice. If fewer than all the outstanding
shares of Class K Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class K
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class K Preferred Stock held of record by each holder
of such shares, pro rata (as nearly as may be) 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 Class K Preferred Stock represented by any
certificate are redeemed, then a new certificate representing the unredeemed
shares shall be issued without cost to the holders thereof.
(e) All shares of Class A Common Stock that may be issued
upon redemption of shares of Class K Preferred Stock shall be duly and validly
issued and fully paid and non-assessable, and prior to giving any notice of
redemption the Corporation shall take any corporate action necessary therefor.
6. STATUS OF REACQUIRED STOCK.
All shares of Class K Preferred Stock that have been issued and
reacquired in any manner by the Corporation (including, without limitation,
shares of Class K Preferred Stock which have been surrendered for conversion)
shall be returned to the status of authorized but unissued shares of Class K
Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, holders of shares of Class K
Preferred Stock shall have the right to convert all or a portion of such shares
into shares of Class A Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of
this Section 7, each share of Class K Preferred Stock shall, at the option of
the holder thereof, be convertible at any time (unless such share is called for
redemption, then to and including but not after the close of business on the
date immediately prior to the Redemption Date, unless the Corporation shall
default in payment due upon redemption thereof), into that number of fully paid
and non-assessable shares of Class A Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing $25 by the
Conversion Price in effect at such time and by surrender of the certificate
representing such shares to be converted in the manner provided in subsection
(b) of this Section 7.1.
(b) In order to convert shares of Class K Preferred Stock,
the holder of the shares to be converted shall surrender the certificate
representing such shares at any office or agency maintained by the Corporation
for such purpose, accompanied by
13
the funds, if any, required by the last paragraph of this subsection (b), and
shall give written notice of conversion in the form provided on such
certificate representing shares of Class K Preferred Stock (or such other
notice as is acceptable to the Corporation) to the Corporation at such office
or agency that the holder elects to convert the shares of Class K Preferred
Stock specified in such notice. Such notice shall also state the name or names,
together with address or addresses, in which the certificate or certificates
for shares of Class A Common Stock which shall be issuable in such conversion
shall be issued. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Class K Preferred Stock is
registered, each certificate representing a share of Class K Preferred Stock
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax.
As promptly as practicable after the surrender of
certificates representing such shares of Class K Preferred Stock and the
receipt of such notice, instruments of transfer and funds, if any, as
aforesaid, the Corporation shall issue and shall deliver at such office or
agency to such holder, or as designated in such holder's written instructions,
a certificate or certificates for the number of full shares of Class A Common
Stock issuable upon the conversion of such share or shares of Class K Preferred
Stock in accordance with provisions of this Section 7, and a check or cash in
respect of any fractional interest in a share of Class A Common Stock arising
upon such conversion, as provided in paragraph (c) of this Section 7.1.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which certificates
representing such shares of Class K Preferred Stock shall have been surrendered
and such notice (and any applicable instruments of transfer and any required
taxes) received by the Corporation as aforesaid, and the Person or Persons in
whose name or names any certificate or certificates for shares of Class A
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby at
such time on such date, and such conversion shall be at the Conversion Price in
effect at such time on such date, unless the stock transfer books of the
Corporation shall be closed on that date, in which event such Person or Persons
shall be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price in effect on the
date on which such shares shall have been surrendered and such notice received
by the Corporation.
Holders of Class K Preferred Stock at the close of business
on a Record Date will be entitled to receive an amount equal to the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following such Record Date and
prior to such Dividend Payment Date; provided, however, that Class K Preferred
Stock surrendered for conversion during the period between the close of
business on any Record Date and the opening of business
14
on the corresponding Dividend Payment Date (except shares converted after the
issuance of a notice of redemption with respect to a Redemption Date during
such period or coinciding with such Dividend Payment Date, which will be
entitled to such dividend) must be accompanied by payment of an amount equal to
the dividend payable on such shares on such Dividend Payment Date. A holder of
Class K Preferred Stock on a Record Date who (or whose transferee) tenders any
such shares for conversion into shares of Class A Common Stock on such Dividend
Payment Date will receive the dividend payable by the Corporation on such
shares of Class K Preferred Stock on such date, and the converting holder need
not include payment of the amount of such dividend upon surrender of Class K
Preferred Stock for conversion. Except as provided herein, the Corporation will
make no payment or allowance for unpaid dividends, whether or not in arrears,
on converted shares or for dividends on the Class A Common Stock issued upon
such conversion.
(c) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class K Preferred Stock. If more than one share of
Class K Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class K Preferred Stock so surrendered. In lieu of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of any share of Class K Preferred Stock, the Corporation
shall pay to the holder of such shares an amount in cash (computed to the
nearest cent) equal to the Closing Price of the Class A Common Stock on the
Trading Day immediately preceding the date of conversion, multiplied by the
fractional interest that otherwise would have been deliverable upon conversion
of such share.
7.2 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to
time as follows:
(i) If the Corporation shall after the Issue Date
(A) pay a dividend or make a distribution on its Class A Common Stock in shares
of Class A Common Stock, (B) subdivide its outstanding shares of Class A Common
Stock into a greater number of shares, (C) combine its outstanding shares of
Class A Common Stock into a smaller number of shares or (D) issue any shares of
capital stock by reclassification of its outstanding Class A Common Stock,
then, in each such case, the Conversion Price in effect immediately prior to
such action shall be adjusted so that the holder of any share of Class K
Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Class A Common Stock or other capital stock of
the Corporation which such holder would have owned or been entitled to receive
immediately following such action had such share been converted immediately
prior to the occurrence of such event. An adjustment made pursuant to
15
this subsection (i) of this Section 7.2(a) shall become effective immediately
after the record date, in the case of a dividend or distribution, or
immediately after the effective date, in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
subsection (i), the holder of any share of Class K Preferred Stock thereafter
surrendered for conversion shall become entitled to receive shares of two or
more classes of capital stock or shares of Class A Common Stock and other
capital stock of the Corporation, the Board of Directors (whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent) shall determine the allocation of the
adjusted Conversion Price between or among shares of such classes of capital
stock or shares of Class A Common Stock and other capital stock.
(ii) If the Corporation shall, after the Issue Date,
issue rights, options or warrants to all holders of its outstanding shares of
Class A Common Stock entitling them (for a period expiring within 45 days after
the record date described below) to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the current market price per share
(determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A
Common Stock (other than pursuant to any stock option, restricted stock or
other incentive or benefit plan or stock ownership or purchase plan for the
benefit of employees, directors or officers or any dividend reinvestment plan
of the Corporation in effect at the time hereof or any other similar plan
adopted or implemented hereafter), then the Conversion Price in effect
immediately prior thereto shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date by a fraction, the numerator of which shall be the sum of (A)
the number of shares of Class A Common Stock outstanding on the record date and
(B) the number of shares which the aggregate proceeds to the Corporation from
the exercise of such rights, options or warrants for Class A Common Stock would
purchase at such current market price, and the denominator of which shall be
the sum of (A) the number of shares of Class A Common Stock outstanding on the
record date and (B) the number of additional shares of Class A Common Stock
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall be made successively whenever any rights,
options or warrants are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
rights, options or warrants; provided, however, that if all of the shares of
Class A Common Stock offered for subscription or purchase are not delivered
upon the exercise of such rights, options or warrants, upon the expiration of
such rights, options or warrants, the Conversion Price shall be readjusted to
the Conversion Price which would have been in effect had the numerator and the
denominator of the foregoing fraction and the resulting adjustment been made
based upon the number of shares of Class A Common Stock actually delivered upon
the exercise of such rights, options or warrants rather than upon the number of
shares of Class A Common Stock offered for subscription or purchase. In
determining whether any rights, options or warrants entitle the holders to
subscribe for or purchase shares of Class A Common Stock at less than such
current market price, and in determining
16
the aggregate offering price of such shares of Class A Common Stock, there
shall be taken into account any consideration received by the Corporation for
such rights, options or warrants, with the value of such consideration, if
other than cash, determined by the Board of Directors (whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent).
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its outstanding Class A Common Stock
any capital stock (other than Class A Common Stock), evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase
securities of the Corporation (excluding (A) those referred to in subsections
(i) and (ii) of this Section 7.2(a), (B) dividends and distributions paid in
cash out of the retained earnings of the Corporation, and (C) distributions
upon mergers or consolidations to which subsection (b) of this Section 7.2
applies), then, in each such case, the Conversion Price shall be adjusted to
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the record date of such distribution by a fraction, the
numerator of which shall be the current market price per share (determined
pursuant to subsection (iv) of this Section 7.2(a)) of the Class A Common
Stock, less the fair market value on such record date (determined by the Board
or Directors, whose determination shall be conclusive and shall be described in
a statement filed by the Corporation with the Transfer Agent) of the portion of
the capital stock or assets or the evidences of indebtedness or assets so
distributed to the holder of one share of Class A Common Stock or of such
subscription rights or warrants applicable to one share of Class A Common
Stock, and the denominator of which shall be such current market price per
share of Class A Common Stock. Such adjustment shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such distribution.
(iv) For the purpose of any computation under
subsections (ii) and (iii) of this Section 7.2(a), the current market price per
share of Class A Common Stock on any date shall be the average of the Closing
Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading
Days ending on the last full Trading Day prior to the Time of Determination or
(B) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such distribution
through such last full Trading Day prior to the Time of Determination. For
purposes of the foregoing, the term "Time of Determination" shall mean the time
and date of the earlier of (A) the record date for determining stockholders
entitled to receive the rights, warrants or distribution referred to in
subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of
"ex-dividend" trading on the exchange or market referred to in the definition
of "Closing Price."
(v) No adjustment in the Conversion Price shall
be required to be made unless such adjustment would require an increase or
decrease of at least one percent of such price; provided, however, that any
adjustment which by reason of this subsection (v) is not required to be made
shall be carried forward and taken into
17
account in any subsequent adjustment. All calculations under this Section 7.2
shall be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be. Anything in this Section 7.2 to the contrary notwithstanding, the
Corporation shall be entitled to make such reduction in the Conversion Price,
in addition to those required by this Section 7.2, as it shall determine in its
discretion to be advisable in order that any stock dividend, subdivision of
shares, distribution of rights to purchase stock or securities, or distribution
of securities convertible into or exchangeable for stock hereafter made by the
Corporation to its stockholders shall not be taxable to the recipients. Except
as set forth in subsections (i), (ii) and (iii) above, the Conversion Price
shall not be adjusted for the issuance of Class A Common Stock, or any
securities convertible into or exchangeable for Class A Common Stock or
carrying the right to purchase any of the foregoing, in exchange for cash,
property or services.
(vi) The Corporation from time to time may decrease the
Conversion Price by any amount for any period of time if the period is at least
20 days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Corporation shall mail to holders of
record of shares of Class K Preferred Stock a notice of the decrease at least
15 days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be in
effect.
(b) Notwithstanding any other provision herein to the
contrary, in case of any merger or consolidation to which the Corporation is a
party (other than a merger or consolidation in which the Corporation is the
continuing entity and in which the Class A Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, or the
securities or other property of another entity), or in the case of any sale or
transfer of all or substantially all of the Corporation's property and assets
to another entity, there will be no adjustment of the Conversion Price, and
lawful provision shall be made by the entity formed by such consolidation or
the entity whose securities, cash or other property will immediately after the
merger or consolidation be owned, by virtue of the merger or consolidation, by
the holders of Class A Common Stock immediately prior to the merger or
consolidation, or the entity which shall have acquired such assets of the
Corporation, such that each share of Class K Preferred Stock then outstanding
will, without the consent of the holder thereof, become convertible into the
kind and amount of securities, cash or other property receivable upon such
merger, consolidation, sale or transfer by a holder of the number of shares of
Class A Common Stock into which such share of Class K Preferred Stock was
convertible immediately prior to such merger, consolidation, sale or transfer
assuming such holder of Class A Common Stock did not exercise his rights of
election, if any, as to the kind or amount of securities, cash or other
property receivable upon such merger, consolidation, sale or transfer. In the
case of a cash merger of the Corporation into another entity or any other cash
transaction of the type mentioned in this Section 7.2(b), each share of Class K
Preferred Stock will thereafter be convertible at the Conversion Price in
effect at such time into the same amount of cash per share into which each
share of Class K Preferred Stock would have been convertible had
18
such share been converted into Class A Common Stock immediately prior to the
effective date of such cash merger or other transaction. The foregoing
provisions of this Section 7.2(b) shall similarly apply to successive mergers,
consolidations, sales or transfers.
(c) If (i) the Corporation shall take any action that would
require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the
Corporation shall authorize the granting to the holders of the Class A Common
Stock generally of rights or warrants to subscribe for or purchase any shares
of stock of any class or series or of any other rights or warrants; (iii) there
shall be any reorganization or reclassification of the Class A Common Stock
(other than an event to which subsection (i) of Section 7.2(a) applies) or any
consolidation or merger to which the Corporation is a party or any sale or
transfer of all or substantially all of the assets of the Corporation, in each
case, for which approval of any stockholders of the Corporation is required; or
(iv) there shall be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation; then, in each such case, the Corporation shall
cause to be given to the holders of shares of Class K Preferred Stock and the
Transfer Agent as promptly as possible, but in any event at least 15 days prior
to the applicable date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such action or granting of
rights or warrants, or, if a record is not to be taken, the date as of which
the holders of Class A Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (ii) the date on
which such reorganization, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective or occur, and the date as of which it is expected that holders of
Class A Common Stock of record shall be entitled to exchange their shares of
Class A Common Stock for securities, cash or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up. Failure to give such notice or any
defect therein shall not affect the legality or validity of the proceedings
described in this Section 7.2(c).
(d) Whenever the Conversion Price is adjusted as herein
provided, (i) the Corporation shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment and a
brief statement of the facts requiring such adjustment and the manner of
computing the same, which certificate shall be conclusive evidence of the
correctness of such adjustment, and (ii) the Corporation shall mail or cause to
be mailed by first class mail, postage prepaid, as soon as practicable to each
holder of record of shares of Class K Preferred Stock a notice stating that the
Conversion Price has been adjusted and setting forth the adjusted Conversion
Price.
(e) In any case in which paragraph (a) of this Section 7.2
shall require that an adjustment be made immediately following a record date or
an effective date, the Corporation may elect to defer (but only until the
filing by the Corporation with the Transfer Agent of the certificate required
by subsection 7.2(d)) (i) issuing to
19
the holder of any share of Class K Preferred Stock converted after such record
date or effective date the shares of Class A Common Stock issuable upon such
conversion in excess of the shares of Class A Common Stock issuable upon such
conversion on the basis of the Conversion Price prior to adjustment, and (ii)
paying to such holder any amount of cash in lieu of a fractional share.
(f) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any
share of Class K Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares of
Class A Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any share of Class K Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A Common
Stock contained in this Section 7.2.
(g) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Class A Common Stock, for the purpose of effecting
conversion of shares of Class K Preferred Stock, the full number of shares of
Class A Common Stock deliverable upon the conversion of all outstanding shares
of Class K Preferred Stock not theretofore converted and on or before (and as a
condition of) taking any action that would cause an adjustment of the
Conversion Price resulting in an increase in the number of shares of Class A
Common Stock deliverable upon conversion in excess of the number thereof
previously reserved and available therefor, the Corporation shall take all such
action so required. For purposes of this paragraph (g), the number of shares of
Class A Common Stock which shall be deliverable upon the conversion of all
outstanding shares of Class K Preferred Stock shall be computed as if at the
time of computation all such outstanding shares of Class K Preferred Stock were
held by a single holder (and without regard to the Ownership Limit).
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Class A
Common Stock deliverable upon conversion of the shares of Class K Preferred
Stock, the Corporation shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and non-assessable shares of Class A Common Stock
at such adjusted Conversion Price.
(h) The Corporation will pay any and all documentary stamp,
issue or transfer taxes, and any other similar taxes, payable in respect of the
issue or delivery of shares of Class A Common Stock upon conversion of shares
of Class K Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issue or delivery of shares of Class A Common
Stock in a name other than that of the holder of the shares of Class K
Preferred Stock to be converted, and no such issue or delivery shall be made
unless and until the Person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
20
(i) Notwithstanding anything to the contrary contained in
this Section 7, conversion of Class K Preferred Stock pursuant to this Section
7 shall be permitted only to the extent that such conversion would not result
in a violation of the Ownership Restrictions (as defined in the Charter).
8. RANKING.
Any class or series of capital stock of the Corporation shall be
deemed to rank:
(a) prior or senior to the Class K Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class K Preferred Stock ("Senior Stock");
(b) on a parity with the Class K Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class K Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock or Class J Cumulative Convertible Preferred Stock of
the Corporation, or (ii) the holders of such class of stock or series and the
Class K Preferred Stock shall be entitled to the receipt of dividends and of
amounts distributable upon liquidation, dissolution or winding up in proportion
to their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority of one over the other
(the capital stock referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class K Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Common Stock or
(ii) the holders of Class K Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
21
9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class K Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of similar types of provisions with respect to shares of Parity Stock of
any other class or series which is entitled to similar voting rights (the
"Voting Preferred Stock")) and the holders of shares of Class K Preferred
Stock, together with the holders of shares of all other Voting Preferred Stock
then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors
to serve on the Board of Directors at any annual meeting of stockholders or
special meeting held in place thereof, or at a special meeting of the holders
of the Class K Preferred Stock and the Voting Preferred Stock called as
hereinafter provided. Whenever all arrears in dividends on the Class K
Preferred Stock and the Voting Preferred Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been declared and paid, or declared and set apart for payment, then the right
of the holders of the Class K Preferred Stock and the Voting Preferred Stock to
elect such additional two directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearages), and the terms of office of all persons elected as directors
by the holders of the Class K Preferred Stock and the Voting Preferred Stock
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class K Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class K Preferred Stock
(addressed to the Secretary at the principal office of the Corporation) shall,
call a special meeting of the holders of the Class K Preferred Stock and of the
Voting Preferred Stock for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that
provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class K Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors elected
at any such special meeting shall hold office until the next annual meeting of
the stockholders or special meeting held in lieu thereof if such office shall
not have previously terminated as above provided. If any vacancy shall occur
among the directors elected by the holders of the Class K Preferred Stock and
the Voting Preferred Stock, a successor shall be elected by the Board of
Directors, upon the nomination of the then-remaining director elected by the
holders of the Class K Preferred Stock and the Voting Preferred Stock or the
successor of such remaining director, to serve until the next annual meeting of
the stockholders or special meeting held in place thereof if such office shall
not have previously terminated as provided above.
22
(b) So long as any shares of Class K Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class K
Preferred Stock voting as a single class with the holders of all other classes
or series of Parity Stock entitled to vote on such matters, given in person or
by proxy, either in writing without a meeting or by vote at any meeting called
for the purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any
of the provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of
the Class K Preferred Stock; provided, however, that the amendment of the
provisions of the Charter so as to authorize or create, or to increase the
authorized amount of, or issue any Junior Stock or any shares of any class of
Parity Stock shall not be deemed to materially adversely affect the voting
powers, rights or preferences of the holders of Class K Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of
Senior Stock or any security convertible into shares of any class or series of
Senior Stock (whether or not such class or series of Senior Stock is currently
authorized); provided, however, that no such vote of the holders of Class K
Preferred Stock shall be required if, at or prior to the time when such
amendment, alteration or repeal is to take effect, or when the issuance of any
such Senior Stock or convertible or exchangeable security is to be made, as the
case may be, provision is made for the redemption of all shares of Class K
Preferred Stock at the time outstanding to the extent such redemption is
authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class K Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class
K Preferred Stock as a single class on any matter, then the Class K Preferred
Stock and such other class or series shall have with respect to such matters
one quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class K Preferred Stock shall not have any relative, participating,
optional or other special voting rights and powers other than as set forth
herein, and the consent of the holders thereof shall not be required for the
taking of any corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class K Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
23
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class K
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class K Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class
K Preferred Stock in excess of the Look- Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Person (other than the Initial Holder or a
Look-Through Entity) Beneficially Owning shares of Class K Preferred Stock in
excess of the Ownership Limit shall be void ab initio as to the Transfer of
such shares of Class K Preferred Stock that would be otherwise Beneficially
Owned by such Person in excess of the Ownership Limit, and the intended
transferee shall acquire no rights in such shares of Class K Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in the Initial Holder Beneficially Owning shares of
Class K Preferred Stock in excess of the Initial Holder Limit shall be void ab
initio as to the Transfer of such shares of Class K Preferred Stock that would
be otherwise Beneficially Owned by the Initial Holder in excess of the Initial
Holder limit, and the Initial Holder shall acquire no rights in such shares of
Class K Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 11.8 from and after the Issue Date (and subject
to Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) that, if
effective, would result in any Look-Through Entity Beneficially Owning shares
of Class K Preferred Stock in excess of the Look- Through Ownership limit shall
be void ab initio as to the Transfer of such shares of Class K Preferred Stock
that would be otherwise Beneficially Owned by such Look- Through Entity in
excess of the Look-Through Ownership Limit and such Look- Through Entity shall
acquire no rights in such shares of Class K Preferred Stock.
24
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant
that is described in Section 856(d)(2)(B) of the Code if the income derived by
the Corporation from such tenant would cause the Corporation to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code) shall be
void ab initio as to the Transfer of shares of Class K Preferred Stock that
would cause the Corporation (i) to be "closely held" within the meaning of
Section 856(h) of the Code or (ii) otherwise fail to qualify as a REIT, as the
case may be, and the intended transferee shall acquire no rights in such shares
of Class K Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class K Preferred Stock that is null and void under Sections 11.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class K Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation
being "closely held" within the meaning of Section 856(h) of the Code or (iii)
the Corporation otherwise failing to qualify as a REIT, shall not adversely
affect the validity of the Transfer of any other share of Class K Preferred
Stock in the same or any other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other
event has taken place in violation of Section 11.1 of this Article or that a
Person intends to acquire or has attempted to acquire Beneficial Ownership of
any shares of Class K Preferred Stock in violation of Section 11.1 of this
Article (whether or not such violation is intended), 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, causing the Corporation to redeem
such shares at the then current Market Price and upon such terms and conditions
as may be specified by the Board of Directors in its sole discretion
(including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of
any distributions received in respect of shares of Class K Preferred Stock
acquired in violation of Section 11.1 of this Article or instituting
proceedings to enjoin such Transfer or to rescind such Transfer or attempted
Transfer; provided, however, that any Transfers or attempted Transfers (or, in
the case of events other than a Transfer, Beneficial Ownership) in violation of
Section 11.1 of this Article, regardless of any action (or non-action) by the
Board of Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 11.3 of this Article;
provided, further, that the provisions of this Section 11.2 shall be subject to
the provisions of Section 11.12 of this Article; provided, further, that
neither the Board of Directors nor any committee thereof may exercise such
authority in a manner that interferes with any ownership or transfer of Class K
Preferred Stock that is expressly authorized pursuant to Section 11.8(C) of
this Article.
25
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is
the result of transactions entered into through the facilities of the NYSE or
other securities exchange or an automated inter-dealer quotation system) or
other change in the capital structure of the Corporation (including, but not
limited to, any redemption of Equity Stock) or other event (including, but not
limited to, any acquisition of any share of Equity Stock) such that (a) any
Person (other than the Initial Holder or a Look-Through Entity) would
Beneficially Own shares of Class K Preferred Stock in excess of the Ownership
Limit, or (b) the Initial Holder would Beneficially Own shares of Class K
Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that
is a Look-Through Entity would Beneficially Own shares of Class K Preferred
Stock in excess of the Look- Through Ownership Limit (in any such event, the
Person, Initial Holder or Look- Through Entity that would Beneficially Own
shares of Class K Preferred Stock in excess of the Ownership Limit, the Initial
Holder Limit or the Look-Through Entity Limit, respectively, is referred to as
a "Prohibited Transferee"), then, except as otherwise provided in Section 11.8
of this Article, such shares of Class K Preferred Stock in excess of the
Ownership Limit, the Initial Holder Limit or the Look-Through Ownership Limit,
as the case may be, (rounded up to the nearest whole share) shall be
automatically transferred to a Trustee in his capacity as trustee of a Trust
for the exclusive benefit of one or more Charitable Beneficiaries. Such
transfer to the Trustee shall be deemed to be effective as of the close of
business on the Business Day prior to the Excess Transfer, change in capital
structure or another event giving rise to a potential violation of the
Ownership Limit, the Initial Holder Limit or the Look- Through Entity Ownership
Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class K
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
11.3(E), the Prohibited Transferee shall have no rights in the Class K
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
26
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class K
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class K Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class K Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class K Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure
or other event giving rise to a potential violation of the Ownership Limit,
Initial Holder Limit or Look-Through Entity Ownership Limit shall be deemed to
have given an irrevocable proxy to the Trustee to vote the shares of Class K
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the
Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Trust. Any proceeds in excess of
the amount payable to the Prohibited Transferee shall be payable to the
Charitable Beneficiary. If any of the transfer restrictions set forth in this
Section 11.3(E) or any application thereof is determined in a final judgment to
be void, invalid or unenforceable by any court having jurisdiction over the
issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class K Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class K Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE.
Shares of Class K Preferred Stock transferred to the Trustee shall be deemed to
have been offered for sale to the Corporation, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Trust (or, in the case of a devise or gift,
the Market Price at the time of such devise or gift) and (ii) the Market Price
on the date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer for a period of
27
90 days after the later of (i) the date of the Excess Transfer or other event
resulting in a transfer to the Trust and (ii) the date that the Board of
Directors determines in good faith that an Excess Transfer or other event
occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written
notice to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class K Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class K Preferred Stock in violation of Section
11.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 11.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or attempted
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.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class K
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class K Preferred 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 Class K Preferred
Stock Beneficially Owned, and a full description of how such shares are held.
Each such record or Beneficial Owner of Class K Preferred Stock shall, upon
demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class K
Preferred 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 under the Code and
(ii) ensure compliance with the Ownership Limit, the Initial Holder Limit or
the Look- Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class K Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to
obtain the written notice described in this Section 11.5 from the Beneficial
Owner.
28
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class K Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class K
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look- Through Ownership Limit, and shall
provide a statement or affidavit to the Corporation setting forth the number
of shares of Class K Preferred Stock already Beneficially 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.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 11.12 of
this Article) (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 insure compliance with the Ownership Limit, the Initial Holder Limit
and the Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 11 of this Article, or in the case of an ambiguity
in any definition contained in Section 11 of this Article, the Board of
Directors shall have the power to determine the application of the provisions
of this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of
Section 542(a) of the Code and is a corporation, partnership, estate or trust.
In connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person 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 on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class K Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and
the pledgee shall not be subject to the Ownership Limit with respect to the
Class K Preferred Stock so pledged to it either as a result of the pledge or
upon foreclosure.
29
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold
allotment of Class K Preferred Stock) following the purchase of Class K
Preferred Stock by an underwriter that (i) is a corporation, partnership or
other legal entity and (ii) participates in an offering of the Class K
Preferred Stock, such underwriter shall not be subject to the Ownership Limit
with respect to the Class K Preferred Stock purchased by it as a part of or in
connection with such offering and with respect to any Class K Preferred Stock
purchased in connection with market making activities.
11.9 LEGEND. Each certificate for Class K Preferred Stock shall bear
substantially the following legend:
"The shares of Class K Convertible Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class K Convertible
Cumulative Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class K Convertible Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class K Convertible
Cumulative Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter
(including the Articles Supplementary setting forth the terms of the
Class K Convertible Cumulative Preferred Stock), 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 that so
requests. If the restrictions on transfer are violated (i) the
transfer of the shares of Class K Convertible Cumulative Preferred
Stock represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class K Convertible Cumulative Preferred Stock) or (ii) the shares of
Class K Convertible Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit
of one or more Charitable Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article 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.
30
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of
a change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class K Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXI of the Charter.
31
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on February 17,
1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LUCY CORDOVA /s/ TROY D. BUTTS
- ----------------------------- --------------------------------
Lucy Cordova Troy D. Butts
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a
part, hereby acknowledges in the name and on behalf of said Corporation the
foregoing Articles Supplementary to be the corporate act of said Corporation
and hereby certifies that the matters and facts set forth herein with respect
to the authorization and approval thereof are true in all material respects
under the penalties of perjury.
/s/ TROY D. BUTTS
--------------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
32
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS I CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 10,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class I Cumulative Preferred Stock, par
value $.01 per share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class I Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 10,000,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 478,277,500 shares immediately prior to
the reclassification to 468,277,500 shares immediately after the
reclassification.
THIRD: The terms of the Class I Cumulative Preferred Stock (including
the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class I Cumulative
Preferred Stock, par value $.01 per share (the "Class I Preferred Stock") and
Ten Million (10,000,000) shall be the authorized number of shares of such Class
I Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class I Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial Holder,
clause (iii) of this definition, and clause (a) (ii) of the definition
of "Person" shall be disregarded. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class I
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 10(c) of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class I Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
2
"Closing Price," when used with respect to a share of any Equity Stock
and for 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 NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity 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 ("NASDAQ") or, if such system is no
longer in use, the principal other automated quotations system that may
then be in use or, if the Equity 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 Equity
Stock selected by the Board of Directors of the Corporation.
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation, and the Class B Common Stock, $.01 par value
per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such Class
A Common Stock or Class B Common Stock shall be reclassified.
"Dividend Payment Date" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
quarterly dividend period commencing on and including, January 15,
April 15, July 15 and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
I Preferred Stock shall be redeemed pursuant
3
to Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class I Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 10(c)(i) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean the date on which shares of Class I Preferred
Stock are first issued.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including the day preceding
the first January 15, April 15, July 15, or October 15 to occur
thereafter.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class I Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class I Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
Secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 7 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class I Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the
4
Aggregate Value of all shares of Equity Stock other than Class I
Preferred Stock that are Beneficially Owned by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone, at
that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class I Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class I Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit as
applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit as applied to the Initial Holder and
the Look-Through Ownership Limit as applied to Look-Through Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 7 of this Article.
"Person" shall mean (a) for purposes of Section 10 of this Article, (i)
an individual, corporation, partnership, limited liability company,
estate, trust (including a trust qualifying under Section 401(a) or
501(c) of the Code), association, private foundation within the meaning
of Section 509(a) of the Code, joint stock company or other entity, and
(ii) also includes a group as that term is used for purposes of Section
13(d)(3) of the Exchange Act and (b) for purposes of the remaining
Sections of this Article, any individual, firm, partnership, limited
liability company, corporation or other entity and shall include any
successor (by merger or otherwise) of such entity.
5
"Prohibited Transferee" has the meaning set forth in Section 10(c)(i)
of this Article.
"Redemption Date" shall have the meaning set forth in paragraph (a) of
Section 5 of this Article.
"REIT" shall mean a "real estate investment trust" as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 7 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class I
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day," when used with respect to the Closing Price of a share
of any Equity Stock, shall mean (i) if the Equity Stock is listed or
admitted to trading on the NYSE, a day on which the NYSE is open for
the transaction of business, (ii) if the Equity Stock is not listed or
admitted to trading on the NYSE but is listed or admitted to trading on
another national securities exchange or automated quotation system, a
day on which the principal national securities exchange or automated
quotation system, as the case may be, on which the Equity Stock is
listed or admitted to trading is open for the transaction of business,
or (iii) if the Equity Stock is not listed or admitted to trading on
any national securities exchange or automated quotation system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class I Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
I Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class I Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
6
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class I Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class I Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class I Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 10(c) of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 8
of this Article.
3. DIVIDENDS.
(a) The holders of Class I Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class I Preferred Stock equal to $2.00 per annum (equivalent to 8%
per annum of the per share Liquidation Preference (as hereinafter defined)). As
of any particular date, such dividends shall be cumulative from the later of (i)
the Issue Date or (ii) the first day after the most recent Dividend Period in
respective of which dividends have been paid or a sum sufficient for such
payment has been set apart for such payment, in each case, whether or not in any
Dividend Period or Dividend Periods such dividends shall be declared or there
shall be funds of the Corporation legally available for the payment of such
dividends. Dividends shall be payable quarterly in arrears on each Dividend
Payment Date. Each such dividend shall be payable in arrears to the holders of
record of the Class I Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on the January 1, April 1, July 1 or
October 1, as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors. All holders of record of shares of Class I Preferred Stock as of any
record date shall be entitled to receive the same per share dividend payment,
notwithstanding the fact that any of such shares were not outstanding during the
entire Dividend Period in respect of which such payment is made.
7
(b) Any dividend payable on the Class I Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class I Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the Class I
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 Class I Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class I Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class I Preferred
Stock have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is set apart
for payment of such dividends on the Class I Preferred Stock for all Dividend
Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made, as the case may be, with respect
to such shares of Parity Stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class I Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the respective
amounts of dividends accumulated, accrued and unpaid on the Class I Preferred
Stock and accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class I 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or rights to
subscribe for or purchase shares of, 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 in respect thereof, directly or indirectly, by
the Corporation unless, in each case, dividends equal to the full amount of all
accumulated, accrued and unpaid dividends on all outstanding shares of Class I
Preferred Stock have been declared and paid, or such dividends have been
declared and a sum sufficient for the payment thereof has been set apart for
such payment, on all outstanding shares of Class I Preferred Stock
8
for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) or redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, setting apart for payment, redemption,
purchase or other acquisition is necessary in order to maintain the continued
qualification of the Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class I Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class I Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class I Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class I Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class I Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class I Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
I
9
Preferred Stock and any Parity Stock, as provided in this Section 4, 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 Class I Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class I Preferred Stock shall not be redeemable
by the Corporation prior to March 1, 2005, except as set forth in Section 10(b)
of this Article. On and after March 1, 2005, the Corporation, at its option, may
redeem shares of Class I Preferred Stock, in whole or from time to time in part,
at a redemption price payable in cash equal to 100% of the Liquidation
Preference thereof, plus all accumulated, accrued and unpaid dividends to the
date fixed for redemption (the "Redemption Date"); provided, however, that in
the event of a redemption of shares of Class I Preferred Stock, if the
Redemption Date occurs after a dividend record date and on or prior to the
related Dividend Payment Date, the dividend payable on such Dividend Payment
Date in respect of such shares called for redemption shall be payable on such
Dividend Payment Date to the holders of record at the close of business on such
dividend record date, and shall not be payable as part of the redemption price
for such shares. In connection with any redemption pursuant to this Section
5(a), the redemption price of the Class I Preferred Stock (other than any
portion thereof consisting of accumulated, accrued and unpaid dividends) shall
be payable solely with the proceeds from the sale by the Corporation or the
Operating Partnership, of other capital shares of the Corporation or the
Operating Partnership (whether or not such sale occurs concurrently with such
redemption). For purposes of the preceding sentence, "capital shares" means any
common stock, preferred stock, depositary shares, partnership or other
interests, participations or other ownership interests (however designated) and
any rights (other than debt securities convertible into or exchangeable at the
option of the holder for equity securities (unless and to the extent such debt
securities are subsequently converted into capital shares)) or options to
purchase any of the foregoing of or in the Corporation or the Operating
Partnership.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of
Class I Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class I Preferred Stock may be redeemed unless
all outstanding shares of Class I Preferred Stock are simultaneously redeemed
and neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Class I Preferred Stock, otherwise than pursuant to a purchase
or exchange offer made on the same terms to all holders of shares of Class I
Preferred Stock.
10
(d) If the Corporation shall redeem shares of Class I
Preferred Stock pursuant to paragraph (a) of this Section 5, 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.
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state, as appropriate: (1) the Redemption Date; (2) the number of shares
of Class I 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 place or places at which certificates for such shares
are to be surrendered for cash; and (4) the redemption price payable on such
Redemption Date, including, without limitation, a statement as to whether or not
accumulated, accrued and unpaid dividends will be (x) payable as part of the
redemption price, or (y) payable on the next Dividend Payment Date to the record
holder at the close of business on the relevant record date as described in the
next succeeding sentence. Notice having been mailed as aforesaid, from and after
the Redemption Date (unless the Corporation shall fail to make available the
amount of cash necessary to effect such redemption), (i) dividends on the shares
of Class I Preferred Stock so called for redemption shall cease to accumulate or
accrue on the shares of Class I Preferred Stock called for redemption, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class I Preferred Stock of the Corporation shall
cease except the rights to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required; provided, however, that if the Redemption Date for any shares of
Class I Preferred Stock occurs after any dividend record date and on or prior to
the related Dividend Payment Date, the full dividend payable on such Dividend
Payment Date in respect of such shares of Class I Preferred Stock called for
redemption shall be payable on such Dividend Payment Date to the holders of
record of such shares at the close of business on the corresponding dividend
record date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the redemption price in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the
applicable Redemption Date, the Corporation shall irrevocably deposit in trust
with a bank or trust company (which may not be an affiliate of the Corporation)
that has, or is an affiliate of a bank or trust company that has, a capital and
surplus of at least $50,000,000, such amount of cash as is necessary for such
redemption plus, if such Redemption Date occurs after any dividend record date
and on or prior to the related Dividend Payment Date, such amount of cash as is
necessary to pay the dividend payable on such Dividend Payment Date in respect
of such shares of Class I Preferred Stock called for redemption, with
irrevocable instructions that such cash be applied to the redemption of the
shares of Class I Preferred Stock so called for redemption and, if applicable,
the payment of such dividend. No interest shall accrue for the benefit of the
holders of shares of Class
11
I 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 Redemption Date shall revert to the general funds of the
Corporation, after which reversion the holders of shares of Class I 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 such
notice of the certificates for any such shares of Class I Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and 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 Class I Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class I
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class I Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class I Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class I Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized, but unissued shares of Class I Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Class I Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class I Preferred Stock ("Senior Stock");
(b) on a parity with the Class I Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class I Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class J Cumulative Convertible Preferred Stock or
Class K Convertible Cumulative Preferred Stock of the
12
Corporation, or (ii) the holders of such class of stock or series and the Class
I Preferred Stock shall be entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up in proportion to
their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority of one over the other
(the capital stock referred to in clauses (i) and (ii) of this paragraph being
hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class I Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Common Stock or (ii)
the holders of Class I Preferred Stock shall be entitled to receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of shares of such class or
series (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class I Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two (if not already increased by reason
of similar types of provisions with respect to shares of Parity Stock of any
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class I Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class I
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class I Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been declared and paid, or
declared and set apart for payment, then the right of the holders of the Class I
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages), and the
terms of office of all persons elected as directors by the holders of the Class
I Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class I Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of
13
Class I Preferred Stock (addressed to the Secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of the Class I
Preferred Stock and of the Voting Preferred Stock for the election of the two
directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the stockholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of any such request, then any holder of Class I
Preferred Stock may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock books of the Corporation. The
directors elected at any such special meeting shall hold office until the next
annual meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Class I
Preferred Stock and the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the then-remaining director
elected by the holders of the Class I Preferred Stock and the Voting Preferred
Stock or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(b) So long as any shares of Class I Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class I Preferred
Stock voting as a single class with the holders of all other classes or series
of Parity Stock entitled to vote on such matters, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for the
purpose, shall be necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of the
Class I Preferred Stock; provided, however, that the amendment of or supplement
to the provisions of the Charter so as to authorize or create, or to increase or
decrease the authorized amount of, or to issue any Junior Stock, Class I
Preferred Stock or any shares of any class of Parity Stock shall not be deemed
to materially adversely affect the voting powers, rights or preferences of the
holders of Class I Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of Senior
Stock or any security convertible into shares of any class or series of Senior
Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class I Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to
14
take effect, or when the issuance of any such Senior Stock or convertible or
exchangeable security is to be made, as the case may be, provision is made for
the redemption of all shares of Class I Preferred Stock at the time outstanding
to the extent such redemption is authorized by Section 5 of this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class I Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class I
Preferred Stock as a single class on any matter, then the Class I Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class I Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class I Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
10. RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(a) (i) LIMITATION ON BENEFICIAL OWNERS. Except as provided in Section
10(h), from and after the Issue Date, no Person (other than the Initial Holder
or a Look-Through Entity) shall Beneficially Own shares of Class I Preferred
Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class I Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class I
Preferred Stock in excess of the Look-Through Ownership Limit.
(ii) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10(h), from and after the Issue Date (and subject to Section 10(l)), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class I Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class I Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class I Preferred Stock.
15
(iii) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 10(h), from and after the Issue Date (and subject to Section
10(l)), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class I Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class I Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder Limit, and the
Initial Holder shall acquire no rights in such shares of Class I Preferred
Stock.
(iv) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10(h) from and after the Issue Date (and subject to Section
10(l)), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class I Preferred Stock in
excess of the Look-Through Ownership Limit shall be void ab initio as to the
Transfer of such shares of Class I Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class I Preferred Stock.
(v) TRANSFERS RESULTING IN "CLOSELY HELD" SHARES. From and after
the Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class I Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class I
Preferred Stock.
(vi) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of
Class I Preferred Stock that is null and void under Sections 10(a)(ii), (iii),
(iv), or (v) of this Article because it would, if effective, result in (i) the
ownership of Class I Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class I Preferred Stock in
the same or any other related transaction.
16
(b) REMEDIES FOR BREACH. If the Board of Directors shall at any time
determine in good faith that a Transfer or other event has taken place in
violation of Section 10(a) of this Article or that a Person intends to acquire
or has attempted to acquire Beneficial Ownership of any shares of Class I
Preferred Stock in violation of Section 10(a) of this Article (whether or not
such violation is intended), the Board of Directors 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, causing the
Corporation to redeem such shares at the then current Market Price and upon such
terms and conditions as may be specified by the Board of Directors in its sole
discretion (including, but not limited to, by means of the issuance of long-term
indebtedness for the purpose of such redemption), demanding the repayment of any
distributions received in respect of shares of Class I Preferred Stock acquired
in violation of Section 10(a) of this Article or instituting proceedings to
enjoin such Transfer or to rescind such Transfer or attempted Transfer;
provided, however, that any Transfers or attempted Transfers (or, in the case of
events other than a Transfer, Beneficial Ownership) in violation of Section
10(a) of this Article, regardless of any action (or non-action) by the Board of
Directors (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 10(c) of this Article; provided, further, that the
provisions of this Section 10(b) shall be subject to the provisions of Section
10(l) of this Article; provided, further, that the Board of Directors may not
exercise such authority in a manner that interferes with any ownership or
transfer of Class I Preferred Stock that is expressly authorized pursuant to
Section 10(h)(iii) of this Article.
(c)(i) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "Excess Transfer") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Equity Stock) or other event (including, but not limited to, any
acquisition of any share of Equity Stock) such that (a) any Person (other than
the Initial Holder or a Look-Through Entity) would Beneficially Own shares of
Class I Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class I Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class I Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class I Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "Prohibited Transferee"), then, except
as otherwise provided in Section 10(h) of this Article, such shares of Class I
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the
17
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
Business Day prior to the Excess Transfer, change in capital structure or
another event giving rise to a potential violation of the Ownership Limit, the
Initial Holder Limit or the Look-Through Entity Ownership Limit.
(ii) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(iii) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class I
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10(c)(v), the Prohibited Transferee shall have no rights in the Class I
Preferred Stock held by the Trustee, and the Prohibited Transferee shall not
benefit economically from ownership of any shares held in trust by the Trustee,
shall have no rights to dividends and shall not possess any rights to vote or
other rights attributable to the shares held in the Trust.
(iv) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class I Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class I Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void ab
initio with respect to such shares of Class I Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class I
Preferred Stock have been transferred to the Trustee will be rescinded as void
ab initio and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class I Preferred Stock
for the benefit of the Charitable Beneficiary.
(v) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a Person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10(c)(v). The Prohibited Transferee
shall receive the lesser of (1) the price paid by the Prohibited Transferee for
the shares or, if the Prohibited Transferee
18
did not give value for the shares (through a gift, devise or other transaction),
the Market Price of the shares on the day of the event causing the shares to be
held in the Trust and (2) the price per share received by the Trustee from the
sale or other disposition of the shares held in the Trust. Any proceeds in
excess of the amount payable to the Prohibited Transferee shall be payable to
the Charitable Beneficiary. If any of the transfer restrictions set forth in
this Section 10(c)(v) or any application thereof is determined in a final
judgment to be void, invalid or unenforceable by any court having jurisdiction
over the issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class I Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class I Preferred Stock on behalf of the Corporation.
(vi) PURCHASE RIGHT IN STOCK TRANSFERRED TO TRUSTEE. Shares of
Class I Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors or a committee thereof
determines in good faith that an Excess Transfer or other event occurred.
(vii) REGISTRATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class I Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
(d) NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts
to acquire shares of Class I Preferred Stock in violation of Section 10(a) of
this Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 10(c) of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted 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.
(e) OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class I
Preferred Stock will be required to provide certain information as set out
below.
19
(i) ANNUAL DISCLOSURE. Every record and Beneficial Owner of more
than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class I Preferred 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 Class I Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record or Beneficial Owner of Class I Preferred Stock shall, upon demand by
the Corporation, disclose to the Corporation in writing such additional
information with respect to the Beneficial Ownership of the Class I Preferred
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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class I Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 10(e) from the Beneficial Owner.
(ii) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that
is a Beneficial Owner of shares of Class I Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class I
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class I Preferred Stock already Beneficially 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.
(f) REMEDIES NOT LIMITED. Nothing contained in this Article shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 10(l) of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
(g) AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 10 of this Article, or in the case of an ambiguity in
any definition contained in Section 10 of this Article, the Board of Directors
shall have the power to determine the application of the provisions of this
Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
20
(h) EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10(a) of this Article.
(i) WAIVER OF OWNERSHIP LIMITS. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code and is a corporation, partnership, estate or trust. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person 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 on the Corporation's
status as a REIT.
(ii) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision
of this Article, the pledge by the Initial Holder of all or any portion of the
Class I Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 10(a) of this Article and the pledgee
shall not be subject to the Ownership Limit with respect to the Class I
Preferred Stock so pledged to it either as a result of the pledge or upon
foreclosure.
(iii) UNDERWRITERS. For a period of 270 days (or such longer period
of time as any underwriter described below shall hold an unsold allotment of
Class I Preferred Stock) following the purchase of Class I Preferred Stock by an
underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class I Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class I Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class I Preferred Stock purchased in connection
with market making activities.
(i) LEGEND. Each certificate for Class I Preferred Stock shall bear
substantially the following legend:
"The shares of Class I Cumulative Preferred Stock represented
by this certificate are subject to restrictions on transfer. No person
may Beneficially Own shares of Class I Cumulative Preferred Stock in
excess of the Ownership Restrictions, as applicable, with certain
further restrictions and exceptions set forth in the Charter (including
the Articles Supplementary setting forth the terms of the Class I
Cumulative Preferred Stock). Any Person that attempts to Beneficially
Own shares of Class I Cumulative Preferred Stock in excess of the
applicable limitation must immediately notify the Corporation. All
capitalized terms in this legend have the meanings ascribed to such
terms in the Charter (including the Articles Supplementary setting
forth the terms of the Class I Cumulative Preferred
21
Stock), 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 that so requests. If the restrictions on transfer are
violated (i) the transfer of the shares of Class I Cumulative Preferred
Stock represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class I Cumulative Preferred Stock) or (ii) the shares of Class I
Cumulative Preferred Stock represented hereby will automatically be
transferred to a Trustee of a Trust for the benefit of one or more
Charitable Beneficiaries."
(j) SEVERABILITY. If any provision of this Article 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.
(k) BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
(l) SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class I Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXII of the Charter.
22
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on April 21, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LESLIE OBLAS /s/ JOEL BONDER
- ------------------------------ ---------------------------------
Leslie Oblas
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ JOEL BONDER
---------------------------------
Senior Vice President and
Chief Financial Officer
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS L CONVERTIBLE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 5,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class L Convertible Cumulative Preferred
Stock, par value $.01 per share, and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified
as Class L Convertible Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 5,000,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 480,937,500 shares
immediately prior to the reclassification to 475,937,500 shares immediately
after the reclassification.
THIRD: The terms of the Class L Convertible Cumulative Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class L
Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class L
Preferred Stock"), and Five Million (5,000,000) shall be the authorized number
of shares of such Class L Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class L Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial Holder,
clause (iii) of this definition, and clause (a) (ii) of the definition
of "Person" shall be disregarded. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class L
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 9 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class L Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
2
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity 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 quotation system that may then be in use
or, if the Equity 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 Equity Stock selected
by the Board of Directors of the Corporation.
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Common Stock" shall mean the Class A Common Stock, $.01 par value per
share, of the Corporation and such other shares of the Corporation's
capital stock into which outstanding shares of such Class A Common
Stock shall be reclassified.
"Conversion Price" shall mean the conversion price per share of Class A
Common Stock for which each share of Class L Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section 7 of this Article. The initial Conversion Price shall be $46.48
(equivalent to a conversion rate of 0.5379 shares of Class A Common
Stock for each share of Class L Preferred Stock).
"Dividend Payment Date" shall mean February 28, May 28, August 28, and
November 28 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
3
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
February 28, May 28, August 28, and November 28 of each year and ending
on and including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
L Preferred Stock shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the Optional Redemption Date or Mandatory
Redemption Date, as applicable, with respect to the Class L Preferred
Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 11.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean May 28, 1999.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including August 27, 1999.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class L Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class L Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
4
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class L Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class L Preferred Stock that are Beneficially Owned by the
Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone, at
that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class L Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class L Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article, (i)
an individual, corporation, partnership, estate, trust (including a
trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) a "group,"
as that term is used for purposes of Section 13(d)(3) of the Exchange
Act, and (b) for purposes of the remaining Sections of this Article,
any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity.
5
"Prohibited Transferee" has the meaning set forth in Section 11.3(A) of
this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of
Section 3 of this Article.
"Redemption Date" shall mean, in the case of any redemption of any
shares of Class L Preferred Stock, the date fixed for redemption of
such shares.
"Redemption Price" shall mean, with respect to any shares of Class L
Preferred Stock to be redeemed, (i) if the Redemption Date occurs
during the period from and including May 28, 2002, to but excluding May
27, 2003, 102.025% of the Liquidation Preference thereof, and (ii) if
the Redemption Date occurs on or after May 28, 2003, 100.000% of the
Liquidation Preference thereof, plus, in the case of clause (i) or
(ii), all accumulated, accrued and unpaid dividends (whether or not
earned or declared), if any, to the Redemption Date; provided, however,
that if a Redemption Date occurs after a dividend record date and on or
prior to the related Dividend Payment Date, the dividend payable on
such Dividend Payment Date in respect of such shares called for
redemption shall be payable on such Dividend Payment Date to the
holders of record at the close of business on such dividend record date
notwithstanding the redemption of such shares, and shall not be payable
as part of the redemption price for such shares.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class L
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE, a
day on which the NYSE is open for the transaction of business, (ii) if
the Equity Stock is not
6
listed or admitted to trading on the NYSE but is listed or admitted to
trading on another national securities exchange or automated quotation
system, a day on which the principal national securities exchange or
automated quotation system, as the case may be, on which the Equity
Stock is listed or admitted to trading is open for the transaction of
business, or (iii) if the Equity Stock is not listed or admitted to
trading on any national securities exchange or automated quotation
system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class L Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
L Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class L Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class L Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class L Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class L Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 9
of this Article.
3. DIVIDENDS.
(a) The holders of Class L Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class L Preferred
Stock in an amount per share equal to (i) during the period from the Issue Date
through and including May 27, 2002, the greater of $0.50625 or the quarterly
cash dividend paid or payable (determined on each Dividend Payment Date by
reference to the dividend most recently declared on the Class A Common Stock) on
the number of shares of Class A
7
Common Stock (or portion thereof) into which a share of Class L Preferred Stock
is convertible, and (ii) during the period from and after May 28, 2002, the
greater of $0.625 or the quarterly cash dividend paid or payable (determined on
each Dividend Payment Date by reference to the dividend most recently declared
on the Class A Common Stock) on the number of shares of Class A Common Stock (or
portion thereof) into which a share of Class L Preferred Stock is convertible.
Such dividends shall be cumulative from the Issue Date, whether or not in any
Dividend Period or Periods such dividends shall be declared or there shall be
funds of the Corporation legally available for the payment of such dividends,
and shall be payable quarterly in arrears on each Dividend Payment Date,
commencing on August 28, 1999. Each such dividend shall be payable in arrears to
the holders of record of the Class L Preferred Stock, as they appear on the
stock records of the Corporation at the close of business on the tenth Business
Day immediately preceding such Dividend Payment Date (each a "Record Date").
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) Any dividend payable on the Class L Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class L Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on the Class L
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 Class L Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class L Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class L Preferred
Stock have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is set apart
for payment of such dividends on the Class L Preferred Stock for all Dividend
Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made, as the case may be, with respect
to such shares of Parity Stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class L Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the respective
amounts of dividends accumulated, accrued and unpaid on the Class L Preferred
Stock and accumulated, accrued and unpaid on such Parity Stock.
8
(d) So long as any of the shares of Class L 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or rights to
subscribe for or purchase shares of, 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 in respect thereof, directly or indirectly, by
the Corporation unless, in each case, dividends equal to the full amount of all
accumulated, accrued and unpaid dividends on all outstanding shares of Class L
Preferred Stock have been declared and paid, or such dividends have been
declared and a sum sufficient for the payment thereof has been set apart for
such payment, on all outstanding shares of Class L Preferred Stock for all
Dividend Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made with respect to such shares of
Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or
otherwise acquired or monies paid to or made available for any sinking fund for
such redemption, or the date any such cash or other property is paid or
distributed to or for the benefit of any holders of Junior Stock in respect
thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class L Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class L Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class L Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not
9
earned or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class L Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class L Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class L Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
L Preferred Stock and any Parity Stock, as provided in Section 4(a), 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 Class L Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION
(a) Shares of Class L Preferred Stock shall not be redeemable
by the Corporation prior to May 28, 2002, except as set forth in Section 11.2 of
this Article. On or after May 28, 2002, the Corporation, at its option, may
redeem shares of Class L Preferred Stock, in whole or from time to time in part,
for cash in an amount equal to the applicable Redemption Price.
(b) In the event of any redemption, the Redemption 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.
(c) If full cumulative dividends on all outstanding shares of
Class L Preferred Stock have not been declared and paid, or declared and set
apart for payment, for all preceding Dividend Periods no shares of Class L
Preferred Stock may be redeemed unless all outstanding shares of Class L
Preferred Stock are simultaneously redeemed, and neither the Corporation nor any
affiliate of the Corporation may purchase or acquire shares of Class L Preferred
Stock, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of shares of Class L Preferred Stock.
10
(d) In the event of a redemption, 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. Neither the
failure to mail any notice required by this paragraph (d), nor any defect
therein or in the mailing thereof to any particular holder, shall affect the
sufficiency of the notice or the validity of the proceedings for redemption with
respect to the other holders. Any notice which has been 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 notice
shall state, as appropriate: (i) the Redemption Date; (ii) the number of shares
of Class L 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; (iii) the place or places at which certificates for such
shares are to be surrendered for cash; and (iv) the Redemption Price payable on
such Redemption Date, including, without limitation, a statement as to whether
or not accumulated, accrued and unpaid dividends will be payable as part of the
Redemption Price, or payable on the next Dividend Payment Date to the record
holder at the close of business on the relevant record date as described in the
next succeeding sentence. Notice having been mailed as aforesaid, from and after
the Redemption Date (unless the Corporation shall fail to make available the
amount of cash necessary to effect such redemption), (i) dividends on the shares
of Class L Preferred Stock so called for redemption shall cease to accumulate or
accrue on the shares of Class L Preferred Stock called for redemption, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class L Preferred Stock of the Corporation shall
cease except the right to receive the cash payable upon such redemption, without
interest thereon, upon surrender of their certificates if so required. The
Corporation's obligation to make available the cash necessary to effect such
redemption in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the applicable Redemption Date, the Corporation shall
irrevocably deposit in trust with a bank or trust company (which may not be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption plus, if such Redemption Date occurs
after any dividend record date and on or prior to the related Dividend Payment
Date, such amount of cash as is necessary to pay the dividend payable on such
Dividend Payment Date in respect of such shares of Class L Preferred Stock
called for redemption, with irrevocable instructions that such cash be applied
to the redemption of the shares of Class L Preferred Stock so called for
redemption and, if applicable, the payment of such dividend. No interest shall
accrue for the benefit of the holders of shares of Class L 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
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class L Preferred Stock so called for
redemption shall look only to the general funds of the Corporation for the
payment of such cash.
11
As promptly as practicable after the surrender in accordance
with such notice of the certificates for any such shares of Class L Preferred
Stock to be so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), such certificates
shall be exchanged for the cash (without interest thereon) for which such shares
have been redeemed in accordance with such notice. If fewer than all the
outstanding shares of Class L Preferred Stock are to be redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding shares of Class L
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class L Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class L Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class L Preferred Stock that have been issued
and reacquired in any manner by the Corporation (including, without limitation,
shares of Class L Preferred Stock which have been surrendered for conversion)
shall be returned to the status of authorized but unissued shares of Class L
Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, holders of shares of
Class L Preferred Stock shall have the right to convert all or a portion of such
shares into shares of Class A Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, each share of Class L Preferred Stock shall, at the option of the
holder thereof, be convertible at any time (unless such share is called for
redemption, then to and including but not after the close of business on the
date immediately prior to the Redemption Date, unless the Corporation shall
default in payment due upon redemption thereof), into that number of fully paid
and non-assessable shares of Class A Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing $25 by the
Conversion Price in effect at such time and by surrender of the certificate
representing such shares to be converted in the manner provided in subsection
(b) of this Section 7.1.
(b) In order to convert shares of Class L Preferred Stock, the
holder of the shares to be converted shall surrender the certificate
representing such shares at any office or agency maintained by the Corporation
for such purpose, accompanied by the funds, if any, required by the last
paragraph of this subsection (b) to be paid by
12
such holder, and shall give written notice of conversion in the form provided on
such certificate representing shares of Class L Preferred Stock (or such other
notice as is acceptable to the Corporation) to the Corporation at such office or
agency that the holder elects to convert the shares of Class L Preferred Stock
specified in such notice. Such notice shall also state the name or names,
together with address or addresses, in which the certificate or certificates for
shares of Class A Common Stock which shall be issuable in such conversion shall
be issued. Unless the shares issuable on conversion are to be issued in the same
name as the name in which such share of Class L Preferred Stock is registered,
each certificate representing a share of Class L Preferred Stock surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation that such taxes have been
paid).
As promptly as practicable after the surrender of certificates
representing such shares of Class L Preferred Stock and the receipt of such
notice and instruments of transfer as aforesaid, the Corporation shall issue and
shall deliver at such office or agency to such holder, or as designated in such
holder's written instructions, a certificate or certificates for the number of
full shares of Class A Common Stock issuable upon the conversion of such share
or shares of Class L Preferred Stock in accordance with provisions of this
Section 7, and a check or cash in respect of (i) the cash amount payable to such
holder, if any, referred to in the last paragraph of this subsection (b), and
(ii) any fractional interest in a share of Class A Common Stock arising upon
such conversion, as provided in paragraph (c) of this Section 7.1.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which certificates
representing such shares of Class L Preferred Stock shall have been surrendered
and such notice (and any applicable instruments of transfer and any required
taxes) received by the Corporation as aforesaid, and the Person or Persons in
whose name or names any certificate or certificates for shares of Class A Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby at such time on
such date, and such conversion shall be at the Conversion Price in effect at
such time on such date, unless the stock transfer books of the Corporation shall
be closed on that date, in which event such Person or Persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on which such
shares shall have been surrendered and such notice received by the Corporation.
Except as provided herein, the Corporation will make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends (other than dividends on the Class A Common
Stock the record date for
13
which is after the conversion date and which the Corporation shall pay in the
ordinary course to the record holder as of the record date) on the Class A
Common Stock issued upon such conversion. Holders of Class L Preferred Stock at
the close of business on a Record Date will be entitled to receive an amount
equal to the dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the conversion of such shares following such Record
Date. If the Dividend Adjustment Amount (as defined below) with respect to any
shares of Class L Preferred Stock surrendered for conversion is positive, the
holders of such shares shall, as of the date of conversion, be entitled to
receive a cash payment equal to such Dividend Adjustment Amount. If the Dividend
Adjustment Amount with respect to any shares of Class L Preferred Stock
surrendered for conversion is negative, such shares must be accompanied by
payment of a cash amount equal to the absolute value of such Dividend Adjustment
Amount. As used herein, "Dividend Adjustment Amount" shall mean, with respect to
any share of Class L Preferred Stock that has been surrendered for conversion,
the sum of:
(i) the aggregate amount of any dividends (whether or not
earned or declared) that are accumulated, accrued and unpaid on such
share as of the time of such conversion; minus
(ii) if such share has been surrendered for conversion during
the period between the close of business on any Record Date and the
opening of business on the corresponding Dividend Payment Date, the
amount of the dividend payable thereon on such Dividend Payment Date;
minus
(iii) if such share has not been surrendered for conversion
during the period between the close of business on any record date for
the payment of a dividend on the Class A Common Stock and the opening
of business on the corresponding dividend payment date, an amount equal
to the product of (A) the quarterly cash dividend per share that was
most recently declared on the Class A Common Stock, determined as of
the date of conversion, and (B) a fraction, the numerator of which is
the number of days in the period from and including the date of the
most recent dividend payment date for the Class A Common Stock or the
Class L Preferred Stock, whichever is later, to but excluding the date
of such conversion, and the denominator of which is 90.
(c) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class L Preferred Stock. If more than one share of Class
L Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class L Preferred Stock so surrendered. In lieu of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of any share of Class L Preferred Stock, the Corporation
shall pay to the holder of such shares an amount
14
in cash (computed to the nearest cent) equal to the Closing Price of the Class A
Common Stock on the Trading Day immediately preceding the date of conversion,
multiplied by the fractional interest that otherwise would have been deliverable
upon conversion of such share.
7.2 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to
time as follows:
(i) If the Corporation shall after the Issue Date (A)
pay a dividend or make a distribution on its Class A Common Stock in shares of
Class A Common Stock, (B) subdivide its outstanding shares of Class A Common
Stock into a greater number of shares, (C) combine its outstanding shares of
Class A Common Stock into a smaller number of shares or (D) issue any shares of
capital stock by reclassification of its outstanding Class A Common Stock
(including a reclassification pursuant to a merger or consolidation in which the
Corporation is the continuing entity and in which the Class A Common Stock
outstanding immediately prior to the merger or consolidation is not exchanged
for cash, or securities or other property of another entity), then, in each such
case, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any share of Class L Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Class A Common Stock or other capital stock of the Corporation which such holder
would have owned or been entitled to receive immediately following such action
had such share been converted immediately prior to the occurrence of such event.
An adjustment made pursuant to this subsection (i) of this Section 7.2(a) shall
become effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification. If, as a result of an adjustment
made pursuant to this subsection (i), the holder of any share of Class L
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes of capital stock or shares of Class A
Common Stock and other capital stock of the Corporation, the Board of Directors
(whose determination shall be conclusive and shall be described in a statement
filed by the Corporation with the Transfer Agent) shall determine the allocation
of the adjusted Conversion Price between or among shares of such classes of
capital stock or shares of Class A Common Stock and other capital stock.
(ii) If the Corporation shall, after the Issue Date,
issue rights, options or warrants to all holders of its outstanding shares of
Class A Common Stock entitling them (for a period expiring within 45 days after
the record date described below) to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the current market price per share
(determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A
Common Stock (other than pursuant to any stock option, restricted stock or other
incentive or benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers or any dividend
15
reinvestment plan of the Corporation in effect at the time hereof or any other
similar plan adopted or implemented hereafter), then the Conversion Price in
effect immediately prior thereto shall be adjusted so that it shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the record date by a fraction, the numerator of which shall be the sum of (A)
the number of shares of Class A Common Stock outstanding on the record date and
(B) the number of shares which the aggregate proceeds to the Corporation from
the exercise of such rights, options or warrants for Class A Common Stock would
purchase at such current market price, and the denominator of which shall be the
sum of (A) the number of shares of Class A Common Stock outstanding on the
record date and (B) the number of additional shares of Class A Common Stock
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall be made successively whenever any rights,
options or warrants are issued, and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants; provided, however, that if all of the shares of
Class A Common Stock offered for subscription or purchase are not delivered upon
the exercise of such rights, options or warrants, upon the expiration of such
rights, options or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would have been in effect had the numerator and the
denominator of the foregoing fraction and the resulting adjustment been made
based upon the number of shares of Class A Common Stock actually delivered upon
the exercise of such rights, options or warrants rather than upon the number of
shares of Class A Common Stock offered for subscription or purchase. In
determining whether any rights, options or warrants entitle the holders to
subscribe for or purchase shares of Class A Common Stock at less than such
current market price, and in determining the aggregate offering price of such
shares of Class A Common Stock, there shall be taken into account any
consideration received by the Corporation for such rights, options or warrants,
with the value of such consideration, if other than cash, determined by the
Board of Directors (whose determination shall be conclusive and shall be
described in a statement filed by the Corporation with the Transfer Agent).
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its outstanding Class A Common Stock any
capital stock (other than Class A Common Stock), evidences of its indebtedness
or assets or rights or warrants to subscribe for or purchase securities of the
Corporation (excluding (A) those referred to in subsections (i) and (ii) of this
Section 7.2(a), (B) dividends and distributions paid in cash out of the retained
earnings of the Corporation, and (C) distributions upon mergers or
consolidations to which subsection (b) of this Section 7.2 applies), then, in
each such case, the Conversion Price shall be adjusted to equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date of such distribution by a fraction, the numerator of which shall
be the current market price per share (determined pursuant to subsection (iv) of
this Section 7.2(a)) of the Class A Common Stock, less the fair market value on
such record date (determined by the Board or Directors, whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent) of
16
the portion of the capital stock or assets or the evidences of indebtedness or
assets so distributed to the holder of one share of Class A Common Stock or of
such subscription rights or warrants applicable to one share of Class A Common
Stock, and the denominator of which shall be such current market price per share
of Class A Common Stock. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such distribution.
(iv) For the purpose of any computation under
subsections (ii) and (iii) of this Section 7.2(a), the current market price per
share of Class A Common Stock on any date shall be the average of the Closing
Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading
Days ending on the last full Trading Day prior to the Time of Determination or
(B) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such distribution
through such last full Trading Day prior to the Time of Determination. For
purposes of the foregoing, the term "Time of Determination" shall mean the time
and date of the earlier of (A) the record date for determining stockholders
entitled to receive the rights, warrants or distribution referred to in
subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of
"ex-dividend" trading on the exchange or market referred to in the definition of
"Closing Price."
(v) No adjustment in the Conversion Price shall be
required to be made unless such adjustment would require an increase or decrease
of at least one percent of such price; provided, however, that any adjustment
which by reason of this subsection (v) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 7.2 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to
the contrary notwithstanding, the Corporation shall be entitled to make such
reduction in the Conversion Price, in addition to those required by this Section
7.2, as it shall determine in its discretion to be advisable in order that any
stock dividend, subdivision of shares, distribution of rights to purchase stock
or securities, or distribution of securities convertible into or exchangeable
for stock hereafter made by the Corporation to its stockholders shall not be
taxable to the recipients. Except as set forth in subsections (i), (ii) and
(iii) above, the Conversion Price shall not be adjusted for the issuance of
Class A Common Stock, or any securities convertible into or exchangeable for
Class A Common Stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
(vi) The Corporation from time to time may decrease
the Conversion Price by any amount for any period of time if the period is at
least 20 days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Corporation shall mail to holders of
record of shares of Class L Preferred Stock a notice of the decrease at least 15
days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be in
effect.
17
(b) Notwithstanding any other provision herein to the
contrary, in case of any merger or consolidation to which the Corporation is a
party (other than a merger or consolidation in which the Corporation is the
continuing entity and in which the Class A Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, or the
securities or other property of another entity), or in the case of any sale or
transfer of all or substantially all of the Corporation's property and assets to
another entity, there will be no adjustment of the Conversion Price, and lawful
provision shall be made by the entity formed by such consolidation or the entity
whose securities, cash or other property will immediately after the merger or
consolidation be owned, by virtue of the merger or consolidation, by the holders
of Class A Common Stock immediately prior to the merger or consolidation, or the
entity which shall have acquired such assets of the Corporation, such that each
share of Class L Preferred Stock then outstanding will, without the consent of
the holder thereof, become convertible into the kind and amount of securities,
cash or other property receivable upon such merger, consolidation, sale or
transfer by a holder of the number of shares of Class A Common Stock into which
such share of Class L Preferred Stock was convertible immediately prior to such
merger, consolidation, sale or transfer assuming such holder of Class A Common
Stock did not exercise his rights of election, if any, as to the kind or amount
of securities, cash or other property receivable upon such merger,
consolidation, sale or transfer. In the case of a cash merger of the Corporation
into another entity or any other cash transaction of the type mentioned in this
Section 7.2(b), each share of Class L Preferred Stock will thereafter be
convertible at the Conversion Price in effect at such time into the same amount
of cash per share into which each share of Class L Preferred Stock would have
been convertible had such share been converted into Class A Common Stock
immediately prior to the effective date of such cash merger or other
transaction. The foregoing provisions of this Section 7.2(b) shall similarly
apply to successive mergers, consolidations, sales or transfers.
(c) If (i) the Corporation shall take any action that would
require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the
Corporation shall authorize the granting to the holders of the Class A Common
Stock generally of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants; (iii) there
shall be any reorganization or reclassification of the Class A Common Stock
(other than an event to which subsection (i) of Section 7.2(a) applies) or any
consolidation or merger to which the Corporation is a party or any sale or
transfer of all or substantially all of the assets of the Corporation, in each
case, for which approval of any stockholders of the Corporation is required; or
(iv) there shall be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation; then, in each such case, the Corporation shall
cause to be given to the holders of shares of Class L Preferred Stock and the
Transfer Agent as promptly as possible, but in any event at least 15 days prior
to the applicable date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such action or granting of
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Class A Common Stock of record to be entitled to such
18
dividend, distribution, rights or warrants are to be determined, or (ii) the
date on which such reorganization, reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is expected to become
effective or occur, and the date as of which it is expected that holders of
Class A Common Stock of record shall be entitled to exchange their shares of
Class A Common Stock for securities, cash or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up. Failure to give such notice or any
defect therein shall not affect the legality or validity of the proceedings
described in this Section 7.2(c).
(d) Whenever the Conversion Price is adjusted as herein
provided, (i) the Corporation shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment and a brief
statement of the facts requiring such adjustment and the manner of computing the
same, which certificate shall be conclusive evidence of the correctness of such
adjustment, and (ii) the Corporation shall mail or cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder of record of
shares of Class L Preferred Stock a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price.
(e) In any case in which paragraph (a) of this Section 7.2
shall require that an adjustment be made immediately following a record date or
an effective date, the Corporation may elect to defer (but only until the filing
by the Corporation with the Transfer Agent of the certificate required by
subsection 7.2(d)) (i) issuing to the holder of any share of Class L Preferred
Stock converted after such record date or effective date the shares of Class A
Common Stock issuable upon such conversion in excess of the shares of Class A
Common Stock issuable upon such conversion on the basis of the Conversion Price
prior to adjustment, and (ii) paying to such holder any amount of cash in lieu
of a fractional share.
(f) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any
share of Class L Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares of
Class A Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any share of Class L Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A Common Stock
contained in this Section 7.2.
(g) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Class A Common Stock, for the purpose of effecting
conversion of shares of Class L Preferred Stock, the full number of shares of
Class A Common Stock deliverable upon the conversion of all outstanding shares
of Class L Preferred Stock not theretofore converted and on or before (and as a
condition of) taking any action that
19
would cause an adjustment of the Conversion Price resulting in an increase in
the number of shares of Class A Common Stock deliverable upon conversion in
excess of the number thereof previously reserved and available therefor, the
Corporation shall take all such action so required. For purposes of this
paragraph (g), the number of shares of Class A Common Stock which shall be
deliverable upon the conversion of all outstanding shares of Class L Preferred
Stock shall be computed as if at the time of computation all such outstanding
shares of Class L Preferred Stock were held by a single holder (and without
regard to the Ownership Limit).
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value (if any) of the shares of
Class A Common Stock deliverable upon conversion of the shares of Class L
Preferred Stock, the Corporation shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of Class A Common
Stock at such adjusted Conversion Price.
(h) The Corporation will pay any and all documentary stamp,
issue or transfer taxes, and any other similar taxes, payable in respect of the
issue or delivery of shares of Class A Common Stock upon conversion of shares of
Class L Preferred Stock pursuant hereto; provided, however, that the Corporation
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Class A Common Stock in
a name other than that of the holder of the shares of Class L Preferred Stock to
be converted, and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Corporation the amount
of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
(i) Notwithstanding anything to the contrary contained in this
Section 7, conversion of Class L Preferred Stock pursuant to this Section 7
shall be permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in the Charter).
(j) If the Corporation shall take any action affecting the
Class A Common Stock, other than action described in this Section 7, that in the
opinion of the Board of Directors would materially adversely affect the
conversion rights of the holders of Class L Preferred Stock, the Board of
Directors may, but shall have no obligation to, adjust the Conversion Price for
the Class L Preferred Stock to the extent permitted by law in such manner, if
any, and at such time as the Board of Directors, in its sole discretion, may
determine to be equitable under the circumstances.
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8. RANKING.
Any class or series of capital stock of the Corporation shall
be deemed to rank:
(a) prior or senior to the Class L Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class L Preferred Stock ("Senior Stock");
(b) on a parity with the Class L Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class L Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock or Class K Convertible Cumulative
Preferred Stock of the Corporation, or (ii) the holders of such class of stock
or series and the Class L Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority of one over the
other (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class L Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Common Stock or (ii)
the holders of Class L Preferred Stock shall be entitled to receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of shares of such class or
series (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Junior Stock").
9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class L Preferred Stock shall be in arrears (which
shall, with respect to any such quarterly dividend, mean that any such dividend
has not been paid in full), whether or not earned or declared, the number of
directors then constituting the Board of Directors shall be increased by two (if
not already increased by reason of similar types of provisions with respect to
shares of Parity Stock of any
21
other class or series which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class L Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class L
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class L Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been declared and paid, or
declared and set apart for payment, then the right of the holders of the Class L
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages), and the
terms of office of all persons elected as directors by the holders of the Class
L Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class L Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Class L Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Class L Preferred Stock and of the Voting Preferred Stock for the
election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Class L Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall hold office
until the next annual meeting of the stockholders or special meeting held in
lieu thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the directors elected by the holders
of the Class L Preferred Stock and the Voting Preferred Stock, a successor shall
be elected by the Board of Directors, upon the nomination of the then-remaining
director elected by the holders of the Class L Preferred Stock and the Voting
Preferred Stock or the successor of such remaining director, to serve until the
next annual meeting of the stockholders or special meeting held in place thereof
if such office shall not have previously terminated as provided above.
(b) So long as any shares of Class L Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class L Preferred
Stock voting as a single class, given in person or by proxy, either in writing
without a meeting or by vote at any meeting called for the purpose, shall be
necessary for effecting or validating:
22
(i) Any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of the
Class L Preferred Stock (including any amendment, alteration or repeal effected
pursuant to a merger, consolidation or similar transaction) or would convert the
Class L Preferred Stock into cash or any other security other than a preferred
stock with terms and provisions equivalent to those set forth in these Articles
Supplementary; provided, however, that the amendment of the provisions of the
Charter so as to authorize or create, or to increase the authorized amount of,
or issue any Junior Stock or any shares of any class of Parity Stock shall not
be deemed to materially adversely affect the voting powers, rights or
preferences of the holders of Class L Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of Senior
Stock or any security convertible into shares of any class or series of Senior
Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class L Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class L Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting
rights under these Articles Supplementary, each share of Class L Preferred Stock
shall have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class L
Preferred Stock as a single class on any matter, then the Class L Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class L Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the
record holder of any share of Class L Preferred Stock as the true and lawful
owner thereof for all purposes, and neither the Corporation nor the Transfer
Agent shall be affected by any notice to the contrary.
23
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class L
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class L Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class L
Preferred Stock in excess of the Look- Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided
in Section 11.8, from and after the Issue Date (and subject to Section 11.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class L Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class L Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class L Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class L Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class L Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder limit, and the
Initial Holder shall acquire no rights in such shares of Class L Preferred
Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 11.8 from and after the Issue Date (and subject to
Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Class L
Preferred Stock in excess of the Look- Through Ownership limit shall be void ab
initio as to the Transfer of such shares of Class L Preferred Stock that would
be otherwise Beneficially Owned by such Look- Through Entity in excess of the
Look-Through Ownership Limit and such Look- Through Entity shall acquire no
rights in such shares of Class L Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being
24
"closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class L Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class L
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class L Preferred Stock that is null and void under Sections 11.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class L Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class L Preferred Stock in
the same or any other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 11.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class L Preferred Stock in violation of Section 11.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class L Preferred Stock acquired in violation of Section
11.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; provided, however, that any
Transfers or attempted Transfers (or, in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 11.3 of this Article; provided, further, that the
provisions of this Section 11.2 shall be subject to the provisions of Section
11.12 of this Article; provided, further, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of
25
Class L Preferred Stock that is expressly authorized pursuant to Section 11.8(C)
of this Article.
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) or other
change in the capital structure of the Corporation (including, but not limited
to, any redemption of Equity Stock) or other event (including, but not limited
to, any acquisition of any share of Equity Stock) such that (a) any Person
(other than the Initial Holder or a Look-Through Entity) would Beneficially Own
shares of Class L Preferred Stock in excess of the Ownership Limit, or (b) the
Initial Holder would Beneficially Own shares of Class L Preferred Stock in
excess of the Initial Holder Limit, or (c) any Person that is a Look-Through
Entity would Beneficially Own shares of Class L Preferred Stock in excess of the
Look- Through Ownership Limit (in any such event, the Person, Initial Holder or
Look- Through Entity that would Beneficially Own shares of Class L Preferred
Stock in excess of the Ownership Limit, the Initial Holder Limit or the
Look-Through Entity Limit, respectively, is referred to as a "Prohibited
Transferee"), then, except as otherwise provided in Section 11.8 of this
Article, such shares of Class L Preferred Stock in excess of the Ownership
Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case
may be, (rounded up to the nearest whole share) shall be automatically
transferred to a Trustee in his capacity as trustee of a Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the Business Day
prior to the Excess Transfer, change in capital structure or another event
giving rise to a potential violation of the Ownership Limit, the Initial Holder
Limit or the Look- Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class L
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
11.3(E), the Prohibited Transferee shall have no rights in the Class L Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
26
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class L
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class L Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class L Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class L Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure or
other event giving rise to a potential violation of the Ownership Limit, Initial
Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have
given an irrevocable proxy to the Trustee to vote the shares of Class L
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the Trust
and (2) the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any proceeds in excess of the
amount payable to the Prohibited Transferee shall be payable to the Charitable
Beneficiary. If any of the transfer restrictions set forth in this Section
11.3(E) or any application thereof is determined in a final judgment to be void,
invalid or unenforceable by any court having jurisdiction over the issue, the
Prohibited Transferee may be deemed, at the option of the Corporation, to have
acted as the agent of the Corporation in acquiring the Class L Preferred Stock
as to which such restrictions would, by their terms, apply, and to hold such
Class L Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares
of Class L Preferred Stock transferred to the Trustee shall be deemed to have
been offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of
27
90 days after the later of (i) the date of the Excess Transfer or other event
resulting in a transfer to the Trust and (ii) the date that the Board of
Directors determines in good faith that an Excess Transfer or other event
occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class L Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class L Preferred Stock in violation of Section
11.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 11.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted 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.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class L
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class L Preferred Stock shall, upon written request by the
Corporation, such request to be made 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 Class L Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record or Beneficial Owner of Class L Preferred Stock shall, upon demand by
the Corporation, disclose to the Corporation in writing such additional
information with respect to the Beneficial Ownership of the Class L Preferred
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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the Look-
Through Ownership Limit, as applicable. Each stockholder of record, including
without limitation any Person that holds shares of Class L Preferred Stock on
behalf of a Beneficial Owner, shall take all reasonable steps to obtain the
written notice described in this Section 11.5 from the Beneficial Owner.
28
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class L Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class L
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall
provide a statement or affidavit to the Corporation setting forth the number of
shares of Class L Preferred Stock already Beneficially 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.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 11 of this Article, or in the case of an ambiguity
in any definition contained in Section 11 of this Article, the Board of
Directors shall have the power to determine the application of the provisions of
this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code and is a corporation, partnership, estate or trust. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person 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 on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class L Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and the
pledgee shall not be subject to the
29
Ownership Limit with respect to the Class L Preferred Stock so pledged to it
either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold allotment
of Class L Preferred Stock) following the purchase of Class L Preferred Stock by
an underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class L Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class L Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class L Preferred Stock purchased in connection
with market making activities.
11.9 LEGEND. Each certificate for Class L Preferred Stock shall bear
substantially the following legend:
"The shares of Class L Convertible Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class L Convertible
Cumulative Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class L Convertible Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class L Convertible
Cumulative Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter
(including the Articles Supplementary setting forth the terms of the
Class L Convertible Cumulative Preferred Stock), 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 that so
requests. If the restrictions on transfer are violated (i) the transfer
of the shares of Class L Convertible Cumulative Preferred Stock
represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class L Convertible Cumulative Preferred Stock) or (ii) the shares of
Class L Convertible Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit of
one or more Charitable Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article 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.
30
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look- Through Ownership Limit in the event of a
change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class L Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXIII of the Charter.
(the next page is the signature page)
31
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on May 28, 1999.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ KATHLEEN HARVEY /s/ TROY D. BUTTS
- ------------------------- ---------------------------
Kathleen Harvey Troy D. Butts
Assistant Secretary Senior Vice President and
Chief Financial Officer
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ TROY D. BUTTS
---------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
32
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS M CONVERTIBLE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
as amended to date (the "Charter"), the Board of Directors has duly divided and
classified 1,600,000 authorized but unissued shares of Class A Common Stock of
the Corporation, par value $.01 per share (the "Class A Common Stock"), into a
class designated as Class M Convertible Cumulative Preferred Stock, par value
$.01 per share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified as
Class M Convertible Cumulative Preferred Stock, par value $.01 per share, from
no shares immediately prior to the reclassification to 1,600,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 475,937,500 shares
immediately prior to the reclassification to 474,337,500 shares immediately
after the reclassification.
THIRD: The terms of the Class M Convertible Cumulative Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class M Convertible
Cumulative Preferred Stock, par value $.01 per share (the "Class M Preferred
Stock"), and One Million, Six Hundred Thousand (1,600,000) shall be the
authorized number of shares of such Class M Preferred Stock constituting such
class.
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2. DEFINITIONS.
For purposes of the Class M Preferred Stock, the following terms shall have
the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity Stock,
the sum of the product of (i) the number of shares of each class of Equity
Stock within such block multiplied by (ii) the corresponding Market Price
of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (i) the number of shares of
Equity Stock directly owned by such Person, (ii) the number of shares of
Equity Stock indirectly owned by such Person (if such Person is an
"individual" as defined in Section 542(a)(2) of the Code) taking into
account the constructive ownership rules of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code, and (iii) the number of
shares of Equity Stock that such Person is deemed to beneficially own
pursuant to Rule 13d-3 under the Exchange Act, provided that when applying
this definition of Beneficial Ownership to the Initial Holder, clause (iii)
of this definition, and clause (a) (ii) of the definition of "Person" shall
be disregarded. The terms "Beneficial Owner," "Beneficially Owns" and
"Beneficially Owned" shall have the correlative meanings.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of
its responsibilities with respect to the Class M Preferred Stock; provided
that, for purposes of paragraph (a) of Section 9 of this Article, the term
"Board of Directors" shall not include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 11.3 of this Article, each of which shall
be an organization described in Section 170(b)(1)(A), 170(c)(2) and
501(c)(3) of the Code.
"Class M Preferred Stock" shall have the meaning set forth in Section 1 of
this Article.
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"Closing Price" shall mean, when used with respect to a share of any Equity
Stock and for any date, 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 NYSE or, if the Equity Stock is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Equity Stock is listed
or admitted to trading or, if the Equity 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 quotation system that may
then be in use or, if the Equity 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 Equity Stock selected
by the Board of Directors of the Corporation.
"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 thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in effect
from time to time.
"Common Stock" shall mean the Class A Common Stock, par value $.01 per
share, of the Corporation, and such other shares of the Corporation's
capital stock into which outstanding shares of such Class A Common Stock
shall be reclassified.
"Conversion Price" shall mean the conversion price per share of Class A
Common Stock for which each share of Class M Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to Section 7
of this Article. The initial Conversion Price shall be $44.00 (equivalent
to a conversion rate of approximately 0.5681818 shares of Class A Common
Stock for each share of Class M Preferred Stock).
"Dividend Payment Date" shall mean January 13, April 13, July 13 and
October 13 of each year; provided, that if any Dividend Payment Date falls
on any day other than a Business Day, the dividend payment payable on such
Dividend Payment Date shall be paid on the Business Day immediately
following such Dividend Payment Date and no interest shall accrue on such
dividend from such date to such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January
13, April 13, July 13 and October 13 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, other than the Dividend Period during which any Class M
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Preferred Stock shall be redeemed pursuant to Section 5 hereof, which shall
end on and include the Redemption Date with respect to the Class M
Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital stock
of the Corporation.
"Excess Transfer" has the meaning set forth in Section 11.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Issue Date" shall mean January 13, 2000.
"Initial Dividend Period" shall mean the period commencing on and including
the Issue Date and ending on and including April 12, 2000.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class M Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding
shares of Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class M Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors, a schedule that sets forth the then-current
Initial Holder Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of Section
8 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph (a)
of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code
or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class M Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of (x)
15% of the Aggregate Value of all Outstanding shares of Equity
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Stock over (y) the Aggregate Value of all shares of Equity Stock other than
Class M Preferred Stock that are Beneficially Owned by the Look-Through
Entity.
"Market Price" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of a share of that class of Equity Stock on the
Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock of
the Corporation, provided that for purposes of the application of the
Ownership Limit, the Look-Through Ownership Limit or the Initial Holder
Limit to any Person, the term "Outstanding" shall be deemed to include the
number of shares of Equity Stock that such Person alone, at that time,
could acquire pursuant to any options or convertible securities.
"Ownership Limit" shall mean, for any Person other than the Initial Holder
or a Look-Through Entity, a number of the Outstanding shares of Class M
Preferred Stock of the Corporation having an Aggregate Value not in excess
of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value of all shares of Equity Stock
other than Class M Preferred Stock that are Beneficially Owned by the
Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit, as
applied to Persons other than the Initial Holder or Look-Through Entities,
the Initial Holder Limit, as applied to the Initial Holder, and the
Look-Through Ownership Limit, as applied to Look-Through Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of Section
8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association,
"private foundation," within the meaning of Section 509(a) of the Code,
joint stock company or other entity, and (ii) a "group," as that term is
used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for
purposes of the remaining Sections of this Article, any individual, firm,
partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity.
"Prohibited Transferee" has the meaning set forth in Section 11.3(A) of
this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of Section
3 of this Article.
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"Redemption Date" shall mean, in the case of any redemption of any shares
of Class M Preferred Stock, the date fixed for redemption of such shares.
"Redemption Price" shall mean, with respect to any shares of Class M
Preferred Stock to be redeemed, (i) if the Redemption Date occurs during
the period from and including January 13, 2003, to but excluding January
13, 2004, 102% of the Liquidation Preference thereof, and (ii) if the
Redemption Date occurs on or after January 13, 2004, 100% of the
Liquidation Preference thereof, plus, in the case of clause (i) or (ii),
all accumulated, accrued and unpaid dividends (whether or not earned or
declared), if any, to the Redemption Date.
"REIT" shall mean a "real estate investment trust," as defined in Section
856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of Section
8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board
of Directors, the allocation of funds to be so paid on any series or class
of capital stock of the Corporation; provided, however, that if any funds
for any class or series of Junior Stock or any class or series of Parity
Stock are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment"
with respect to the Class M Preferred Stock shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying or
other similar agent.
"Trading Day" shall mean, when used with respect to any Equity Stock, (i)
if the Equity Stock is listed or admitted to trading on the NYSE, a day on
which the NYSE is open for the transaction of business, (ii) if the Equity
Stock is not listed or admitted to trading on the NYSE but is listed or
admitted to trading on another national securities exchange or automated
quotation system, a day on which the principal national securities exchange
or automated quotation system, as the case may be, on which the Equity
Stock is listed or admitted to trading is open for the transaction of
business, or (iii) if the Equity Stock is not listed or admitted to trading
on any national securities exchange or automated quotation system, 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.
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"Transfer" shall mean any sale, transfer, gift, assignment, devise or other
disposition of a share of Class M Preferred Stock (including (i) the
granting of an option or any series of such options or entering into any
agreement for the sale, transfer or other disposition of Class M Preferred
Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Class M Preferred
Stock), whether voluntary or involuntary, whether of record or Beneficial
Ownership, and whether by operation of law or otherwise (including, but not
limited to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of Class M Preferred Stock).
The term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the Class M
Preferred Stock; provided, that if the Corporation has not designated a
transfer agent then the Corporation shall act as the transfer agent for the
Class M Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 9 of
this Article.
3. DIVIDENDS.
(a) The holders of Class M Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class M Preferred
Stock in an amount per share equal to (i) during the period from the Issue Date
through and including January 13, 2003, the greater of $0.53125 or the quarterly
cash dividend paid or payable (determined on each Dividend Payment Date by
reference to the dividend most recently declared on the Class A Common Stock) on
the number of shares of Class A Common Stock (or portion thereof) into which a
share of Class M Preferred Stock is then convertible, and (ii) during the period
from and after January 13, 2003, the greater of $0.578125 or the quarterly cash
dividend paid or payable (determined on each Dividend Payment Date by reference
to the dividend most recently declared on the Class A Common Stock) on the
number of shares of Class A Common Stock (or portion thereof) into which a share
of Class M Preferred Stock is then convertible. Such dividends shall be
cumulative from the Issue Date, whether or not in any Dividend Period or Periods
such dividends shall be declared or there shall be funds of the Corporation
legally available for the payment of such dividends, and shall be payable
quarterly in arrears on each Dividend Payment Date, commencing on April 13,
2000. Each such dividend shall be payable in arrears to the holders of record of
the Class M Preferred Stock, as they appear on the stock records of the
Corporation at the close of business on the tenth Business Day immediately
preceding such Dividend Payment
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Date (each a "Record Date"). Accumulated, accrued and unpaid dividends for any
past Dividend Periods may be declared and paid at any time, without reference to
any regular Dividend Payment Date, to holders of record on such date, which date
shall not precede by more than 45 days the payment date thereof, as may be fixed
by the Board of Directors.
(b) Any dividend payable on the Class M Preferred Stock for any partial
dividend period shall be computed ratably on the basis of twelve 30-day months
and a 360-day year. Holders of Class M Preferred Stock shall not be entitled to
any dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on the Class M 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 Class M Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class M Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class M Preferred
Stock have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is set apart
for payment of such dividends on the Class M Preferred Stock for all Dividend
Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made, as the case may be, with respect
to such shares of Parity Stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class M Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the respective
amounts of dividends accumulated, accrued and unpaid on the Class M Preferred
Stock and accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class M 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior 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 shares of, or options, warrants or rights to
subscribe for or purchase shares of, 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 in respect thereof, directly or indirectly, by
the
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Corporation unless, in each case, dividends equal to the full amount of all
accumulated, accrued and unpaid dividends on all outstanding shares of Class M
Preferred Stock have been declared and paid, or such dividends have been
declared and a sum sufficient for the payment thereof has been set apart for
such payment, on all outstanding shares of Class M Preferred Stock for all
Dividend Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made with respect to such shares of
Junior Stock, or the date such shares of Junior Stock are redeemed, purchased or
otherwise acquired or monies paid to or made available for any sinking fund for
such redemption, or the date any such cash or other property is paid or
distributed to or for the benefit of any holders of Junior Stock in respect
thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the Corporation shall
not be prohibited from (i) declaring or paying or setting apart for payment any
dividend or distribution on any shares of Parity Stock or (ii) redeeming,
purchasing or otherwise acquiring any Parity Stock, in each case, if such
declaration, payment, redemption, purchase or other acquisition is necessary in
order to maintain the continued qualification of the Corporation as a REIT under
Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class M Preferred Stock shall be entitled to receive the greater of (i)
Twenty-Five Dollars ($25) per share of Class M Preferred Stock (the "Liquidation
Preference"), plus an amount equal to all dividends (whether or not earned or
declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, or (ii) the amount that would be payable to the
holders of Class M Preferred Stock if they had converted all outstanding shares
of Class M Preferred Stock into shares of Common Stock immediately prior to such
liquidation, dissolution or winding up; but such holders shall not be entitled
to any further payment. Until the holders of the Class M Preferred Stock have
been paid the Liquidation Preference in full, plus an amount equal to all
dividends (whether or not earned or declared) accumulated, accrued and unpaid
thereon to the date of final distribution to such holders, no payment will be
made to any holder of Junior Stock upon the liquidation, dissolution or winding
up of the Corporation. If, upon any liquidation, dissolution or winding up of
the Corporation, the assets of the Corporation, or proceeds thereof,
distributable among the holders of Class M Preferred Stock shall be insufficient
to pay in full the preferential amount aforesaid and liquidating payments on any
other shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of Class M Preferred
Stock and any such other Parity Stock ratably in the same proportion as the
respective amounts that would be payable on such Class M Preferred Stock and any
such other Parity Stock if all amounts payable thereon were paid in full. For
the purposes of this Section 4, (i) a
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consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the Corporation,
after payment shall have been made in full to the holders of Class M Preferred
Stock and any Parity Stock, as provided in Section 4(a), 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 Class M Preferred Stock and any Parity Stock shall not be
entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class M Preferred Stock shall not be redeemable by the
Corporation prior to January 13, 2003, except as set forth in Section 11.2 of
this Article. On and after January 13, 2003, except as set forth in paragraph
(e) below, the Corporation, at its option, may redeem shares of Class M
Preferred Stock, in whole but not in part, at a redemption price payable in cash
equal to the Redemption Price applicable thereto. In the event of a redemption
of shares of Class M Preferred Stock, if the Redemption Date occurs after a
dividend record date and on or prior to the related Dividend Payment Date, the
dividend payable on such Dividend Payment Date in respect of such shares called
for redemption shall be payable on such Dividend Payment Date to the holders of
record at the close of business on such dividend record date notwithstanding the
redemption of such shares, and shall not be payable as part of the redemption
price for such shares.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of Class M
Preferred Stock have not been declared and paid, or declared and set apart for
payment, no shares of Class M Preferred Stock may be redeemed unless all
outstanding shares of Class M Preferred Stock are simultaneously redeemed.
Neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Class M Preferred Stock, otherwise than pursuant to a purchase
or exchange offer made on the same terms to all holders of shares of Class M
Preferred Stock.
(d) If the Corporation shall redeem shares of Class M Preferred Stock
pursuant to paragraph (a) of this Section 5, 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. Neither the failure to
mail any notice required by this paragraph (d), nor any defect
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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 has been 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 notice
shall state, as appropriate: (i) the Redemption Date; (ii) the place or places
at which certificates for such shares are to be surrendered for cash; and (iii)
the redemption price payable on such Redemption Date, including, without
limitation, a statement as to whether or not accumulated, accrued and unpaid
dividends will be payable as part of the redemption price, or payable on the
next Dividend Payment Date to the record holder at the close of business on the
relevant record date as described in the next succeeding sentence. Notice having
been mailed as aforesaid, from and after the Redemption Date (unless the
Corporation shall fail to make available the amount of cash necessary to effect
such redemption), (i) dividends on the shares of Class M Preferred Stock so
called for redemption shall cease to accumulate or accrue on the shares of Class
M Preferred Stock called for redemption, (ii) said shares shall no longer be
deemed to be outstanding, and (iii) all rights of the holders thereof as holders
of Class M Preferred Stock of the Corporation shall cease except the right to
receive the cash payable upon such redemption, without interest thereon, upon
surrender of their certificates if so required; provided, however, that if the
Redemption Date for any shares of Class M Preferred Stock occurs after any
dividend record date and on or prior to the related Dividend Payment Date, the
full dividend payable on such Dividend Payment Date in respect of such shares of
Class M Preferred Stock called for redemption shall be payable on such Dividend
Payment Date to the holders of record of such shares at the close of business on
the corresponding dividend record date notwithstanding the prior redemption of
such shares. The Corporation's obligation to make available the cash necessary
to effect such redemption in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the applicable Redemption Date, the
Corporation shall irrevocably deposit in trust with a bank or trust company
(which may not be an affiliate of the Corporation) that has, or is an affiliate
of a bank or trust company that has, a capital and surplus of at least
$50,000,000, such amount of cash as is necessary for such redemption plus, if
such Redemption Date occurs after any dividend record date and on or prior to
the related Dividend Payment Date, such amount of cash as is necessary to pay
the dividend payable on such Dividend Payment Date in respect of such shares of
Class M Preferred Stock called for redemption, with irrevocable instructions
that such cash be applied to the redemption of the shares of Class M Preferred
Stock so called for redemption and, if applicable, the payment of such dividend.
No interest shall accrue for the benefit of the holders of shares of Class M
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 Redemption Date shall revert to the general funds of the
Corporation, after which reversion the holders of shares of Class M 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 such
notice of the certificates for any such shares of Class M Preferred Stock to be
so redeemed (properly endorsed
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or assigned for transfer, if the Corporation shall so require and 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.
6. STATUS OF REACQUIRED STOCK.
All shares of Class M Preferred Stock that have been issued and reacquired
in any manner by the Corporation (including, without limitation, shares of Class
M Preferred Stock which have been surrendered for conversion) shall be returned
to the status of authorized but unissued shares of Class M Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, except as set forth in Section
7.2(i) of this Article, holders of shares of Class M Preferred Stock shall have
the right to convert all or a portion of such shares into shares of Class A
Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section
7, each share of Class M Preferred Stock shall, at the option of the holder
thereof, be convertible at any time (unless such share is called for redemption,
then to and including but not after the close of business on the date
immediately prior to the Redemption Date, unless the Corporation shall default
in payment due upon redemption thereof), into that number of fully paid and
non-assessable shares of Class A Common Stock (calculated as to each conversion
to the nearest 1/100th of a share) obtained by dividing $25 by the Conversion
Price in effect at such time and by surrender of the certificate representing
such shares to be converted in the manner provided in subsection (b) of this
Section 7.1.
(b) In order to convert shares of Class M Preferred Stock, the holder
of the shares to be converted shall surrender the certificate representing such
shares at any office or agency maintained by the Corporation for such purpose,
accompanied by the funds, if any, required by the last paragraph of this
subsection (b) to be paid by such holder, and shall give written notice of
conversion in the form provided on such certificate representing shares of Class
M Preferred Stock (or such other notice as is acceptable to the Corporation) to
the Corporation at such office or agency that the holder elects to convert the
shares of Class M Preferred Stock specified in such notice. Such notice shall
also state the name or names, together with address or addresses, in which the
certificate or certificates for shares of Class A Common Stock which shall be
issuable in such conversion shall be issued. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such share of
Class M Preferred Stock is registered, each certificate representing a share of
Class M Preferred Stock surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the
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Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation that such taxes have been
paid).
As promptly as practicable after the surrender of certificates
representing such shares of Class M Preferred Stock and the receipt of such
notice, instruments of transfer and funds, if any, as aforesaid, the Corporation
shall issue and shall deliver at such office or agency to such holder, or as
designated in such holder's written instructions, a certificate or certificates
for the number of full shares of Class A Common Stock issuable upon the
conversion of such share or shares of Class M Preferred Stock in accordance with
provisions of this Section 7, and a check or cash in respect of (i) the cash
amount payable to such holder, if any, referred to in the last paragraph of this
subsection (b), and (ii) any fractional interest in a share of Class A Common
Stock arising upon such conversion, as provided in paragraph (c) of this Section
7.1.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which certificates representing such
shares of Class M Preferred Stock shall have been surrendered and such notice
(and any applicable instruments of transfer and any required taxes) received by
the Corporation as aforesaid, and the Person or Persons in whose name or names
any certificate or certificates for shares of Class A Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date,
and such conversion shall be at the Conversion Price in effect at such time on
such date, unless the stock transfer books of the Corporation shall be closed on
that date, in which event such Person or Persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation.
Except as provided herein, the Corporation will make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends (other than dividends on the Class A Common Stock the record
date for which is after the conversion date and which the Corporation shall pay
in the ordinary course to the record holder as of the record date) on the Class
A Common Stock issued upon such conversion. Holders of Class M Preferred Stock
at the close of business on a Record Date will be entitled to receive an amount
equal to the dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the conversion of such shares following such Record
Date. In addition to any such dividend, if the Dividend Adjustment Amount (as
defined below) with respect to any shares of Class M Preferred Stock surrendered
for conversion is positive, the holders of such shares shall, as of the date of
conversion, be entitled to receive a cash payment equal to the Dividend
Adjustment Amount. If the Dividend Adjustment Amount with respect to any shares
of Class M Preferred Stock surrendered for conversion is negative, such shares
must be accompanied by payment of a cash amount equal to the absolute value of
the Dividend Adjustment Amount. As used herein,
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the "Dividend Adjustment Amount" shall mean, with respect to any share of Class
M Preferred Stock that has been surrendered for conversion, the sum of:
(i) the aggregate amount of any dividends (whether or not earned
or declared) that are accumulated, accrued and unpaid on such share as of the
time of such conversion; minus
(ii) if such share has been surrendered for conversion during the
period between the close of business on any Record Date and the opening of
business on the corresponding Dividend Payment Date, the amount of the dividend
payable thereon on such Dividend Payment Date; minus
(iii) an amount equal to the product of (A) the number (which may
be a fraction) of shares of Class A Common Stock into which a share of Class M
Preferred Stock is then convertible, multiplied by (B) the quarterly cash
dividend per share that was most recently declared on the Class A Common Stock,
determined as of the date of conversion, and if the date of such conversion is
not a record date for the payment of a dividend on the Class A Common Stock,
multiplied by (C) a fraction, the numerator of which is the number of days in
the period from and including the date of the most recent record date for the
payment of a dividend on the Class A Common Stock to but excluding the date of
such conversion, and the denominator of which is 90.
(c) No fractional shares of Class A Common Stock or scrip representing
fractions of a share of Class A Common Stock shall be issued upon conversion of
shares of Class M Preferred Stock. If more than one share of Class M Preferred
Stock shall be surrendered for conversion at one time by the same holder, the
number of full shares of Class A Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares of Class M
Preferred Stock so surrendered. In lieu of any fractional interest in a share of
Class A Common Stock that would otherwise be deliverable upon the conversion of
any share of Class M Preferred Stock, the Corporation shall pay to the holder of
such shares an amount in cash (computed to the nearest cent) equal to the
Closing Price of the Class A Common Stock on the Trading Day immediately
preceding the date of conversion, multiplied by the fractional interest that
otherwise would have been deliverable upon conversion of such share.
7.2 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its Class A Common Stock in shares of Class A
Common Stock, (B) subdivide its outstanding shares of Class A Common Stock into
a greater number of shares, (C) combine its outstanding shares of Class A Common
Stock into a smaller number of shares or (D)
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issue any shares of capital stock by reclassification of its outstanding Class A
Common Stock, then, in each such case, the Conversion Price in effect
immediately prior to such action shall be adjusted so that the holder of any
share of Class M Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Class A Common Stock or other
capital stock of the Corporation which such holder would have owned or been
entitled to receive immediately following such action had such share been
converted immediately prior to the occurrence of such event. An adjustment made
pursuant to this subsection (i) of this Section 7.2(a) shall become effective
immediately after the record date, in the case of a dividend or distribution, or
immediately after the effective date, in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
subsection (i), the holder of any share of Class M Preferred Stock thereafter
surrendered for conversion shall become entitled to receive shares of two or
more classes of capital stock or shares of Class A Common Stock and other
capital stock of the Corporation, the Board of Directors (whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent) shall determine the allocation of the
adjusted Conversion Price between or among shares of such classes of capital
stock or shares of Class A Common Stock and other capital stock.
(ii) If the Corporation shall, after the Issue Date, issue
rights, options or warrants to all holders of its outstanding shares of Class A
Common Stock entitling them (for a period expiring within 45 days after the
record date described below) to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the current market price per share
(determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A
Common Stock (other than pursuant to any stock option, restricted stock or other
incentive or benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers or any dividend reinvestment plan of the
Corporation in effect at the time hereof or any other similar plan adopted or
implemented hereafter), then the Conversion Price in effect immediately prior
thereto shall be adjusted so that it shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the record date
by a fraction, the numerator of which shall be the sum of (A) the number of
shares of Class A Common Stock outstanding on the record date and (B) the number
of shares which the aggregate proceeds to the Corporation from the exercise of
such rights, options or warrants for Class A Common Stock would purchase at such
current market price, and the denominator of which shall be the sum of (A) the
number of shares of Class A Common Stock outstanding on the record date and (B)
the number of additional shares of Class A Common Stock offered for subscription
or purchase pursuant to such rights, options or warrants. Such adjustment shall
be made successively whenever any rights, options or warrants are issued, and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights, options or warrants; provided,
however, that if all of the shares of Class A Common Stock offered for
subscription or purchase are not delivered upon the exercise of such rights,
options or warrants, upon the expiration of such rights, options or warrants,
the Conversion Price shall be readjusted to the Conversion Price which would
have been in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the number of shares
of Class A Common
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Stock actually delivered upon the exercise of such rights, options or warrants
rather than upon the number of shares of Class A Common Stock offered for
subscription or purchase. In determining whether any rights, options or warrants
entitle the holders to subscribe for or purchase shares of Class A Common Stock
at less than such current market price, and in determining the aggregate
offering price of such shares of Class A Common Stock, there shall be taken into
account any consideration received by the Corporation for such rights, options
or warrants, with the value of such consideration, if other than cash,
determined by the Board of Directors (whose determination shall be conclusive
and shall be described in a statement filed by the Corporation with the Transfer
Agent).
(iii) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its outstanding Class A Common Stock any capital
stock (other than Class A Common Stock), evidences of its indebtedness or assets
or rights or warrants to subscribe for or purchase securities of the Corporation
(excluding (A) those referred to in subsections (i) and (ii) of this Section
7.2(a), (B) dividends and distributions paid in cash out of the retained
earnings of the Corporation, and (C) distributions upon mergers or
consolidations to which subsection (b) of this Section 7.2 applies), then, in
each such case, the Conversion Price shall be adjusted to equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date of such distribution by a fraction, the numerator of which shall
be the current market price per share (determined pursuant to subsection (iv) of
this Section 7.2(a)) of the Class A Common Stock, less the fair market value on
such record date (determined by the Board or Directors, whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent) of the portion of the capital stock or
assets or the evidences of indebtedness or assets so distributed to the holder
of one share of Class A Common Stock or of such subscription rights or warrants
applicable to one share of Class A Common Stock, and the denominator of which
shall be such current market price per share of Class A Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution.
(iv) For the purpose of any computation under subsections (ii)
and (iii) of this Section 7.2(a), the current market price per share of Class A
Common Stock on any date shall be the average of the Closing Price of the Class
A Common Stock for the shorter of (A) 10 consecutive Trading Days ending on the
last full Trading Day prior to the Time of Determination or (B) the period
commencing on the date next succeeding the first public announcement of the
issuance of such rights or warrants or such distribution through such last full
Trading Day prior to the Time of Determination. For purposes of the foregoing,
the term "Time of Determination" shall mean the time and date of the earlier of
(A) the record date for determining stockholders entitled to receive the rights,
warrants or distribution referred to in subsections (ii) and (iii) of this
Section 7.2, or (B) the commencement of "ex-dividend" trading on the exchange or
market referred to in the definition of "Closing Price."
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(v) No adjustment in the Conversion Price shall be required to be
made unless such adjustment would require an increase or decrease of at least
one percent of such price; provided, however, that any adjustment which by
reason of this subsection (v) is not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 7.2 shall be made to the nearest cent or to the nearest
1/100th of a share, as the case may be. Anything in this Section 7.2 to the
contrary notwithstanding, the Corporation shall be entitled to make such
reduction in the Conversion Price, in addition to those required by this Section
7.2, as it shall determine in its discretion to be advisable in order that any
stock dividend, subdivision of shares, distribution of rights to purchase stock
or securities, or distribution of securities convertible into or exchangeable
for stock hereafter made by the Corporation to its stockholders shall not be
taxable to the recipients. Except as set forth in subsections (i), (ii) and
(iii) above, the Conversion Price shall not be adjusted for the issuance of
Class A Common Stock, or any securities convertible into or exchangeable for
Class A Common Stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
(vi) The Corporation from time to time may decrease the
Conversion Price by any amount for any period of time if the period is at least
20 days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Corporation shall mail to holders of
record of shares of Class M Preferred Stock a notice of the decrease at least 15
days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be in
effect.
(b) Notwithstanding any other provision herein to the contrary, in case
of any merger or consolidation to which the Corporation is a party (other than a
merger or consolidation in which the Corporation is the continuing entity and in
which the Class A Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, or the securities or other property of
another entity), or in the case of any sale or transfer of all or substantially
all of the Corporation's property and assets to another entity, there will be no
adjustment of the Conversion Price, and lawful provision shall be made by the
entity formed by such consolidation or the entity whose securities, cash or
other property will immediately after the merger or consolidation be owned, by
virtue of the merger or consolidation, by the holders of Class A Common Stock
immediately prior to the merger or consolidation, or the entity which shall have
acquired such assets of the Corporation, such that each share of Class M
Preferred Stock then outstanding will, without the consent of the holder
thereof, become convertible into the kind and amount of securities, cash or
other property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Class A Common Stock into which such share of
Class M Preferred Stock was convertible immediately prior to such merger,
consolidation, sale or transfer (without regard to any Ownership Restrictions as
defined in Article IV of the Charter) assuming such holder of Class A Common
Stock did not exercise his rights of election, if any, as to the kind or amount
of securities, cash or other property receivable upon such merger,
consolidation, sale or transfer. In the case of a cash merger of the Corporation
into another entity or any other cash transaction of the type mentioned in this
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Section 7.2(b), each share of Class M Preferred Stock will thereafter be
convertible at the Conversion Price in effect at such time into the same amount
of cash per share into which each share of Class M Preferred Stock would have
been convertible had (without regard to any Ownership Restrictions as defined in
Article IV of the Charter) such share been converted into Class A Common Stock
immediately prior to the effective date of such cash merger or other
transaction. The foregoing provisions of this Section 7.2(b) shall similarly
apply to successive mergers, consolidations, sales or transfers.
(c) If (i) the Corporation shall take any action that would require an
adjustment in the Conversion Price pursuant to Section 7.2; (ii) the Corporation
shall authorize the granting to the holders of the Class A Common Stock
generally of rights or warrants to subscribe for or purchase any shares of stock
of any class or series or of any other rights or warrants; (iii) there shall be
any reorganization or reclassification of the Class A Common Stock (other than
an event to which subsection (i) of Section 7.2(a) applies) or any consolidation
or merger to which the Corporation is a party or any sale or transfer of all or
substantially all of the assets of the Corporation, in each case, for which
approval of any stockholders of the Corporation is required; or (iv) there shall
be a voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; then, in each such case, the Corporation shall cause to be given to
the holders of shares of Class M Preferred Stock and the Transfer Agent as
promptly as possible, but in any event at least 15 days prior to the applicable
date hereinafter specified, a notice stating (i) the date on which a record is
to be taken for the purpose of such action or granting of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Class A
Common Stock of record to be entitled to such dividend, distribution, rights or
warrants are to be determined, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is expected to become effective or occur, and the date
as of which it is expected that holders of Class A Common Stock of record shall
be entitled to exchange their shares of Class A Common Stock for securities,
cash or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up.
Failure to give such notice or any defect therein shall not affect the legality
or validity of the proceedings described in this Section 7.2(c).
(d) Whenever the Conversion Price is adjusted as herein provided, (i)
the Corporation shall promptly file with the Transfer Agent a certificate
setting forth the Conversion Price after such adjustment and a brief statement
of the facts requiring such adjustment and the manner of computing the same,
which certificate shall be conclusive evidence of the correctness of such
adjustment, and (ii) the Corporation shall mail or cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder of record of
shares of Class M Preferred Stock a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price and the effective
date thereof.
(e) In any case in which paragraph (a) of this Section 7.2 shall require
that an adjustment be made immediately following a record date or an effective
date, the Corporation
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may elect to defer (but only until the filing by the Corporation with the
Transfer Agent of the certificate required by subsection 7.2(d)) (i) issuing to
the holder of any share of Class M Preferred Stock converted after such record
date or effective date the shares of Class A Common Stock issuable upon such
conversion in excess of the shares of Class A Common Stock issuable upon such
conversion on the basis of the Conversion Price prior to adjustment, and (ii)
paying to such holder any amount of cash in lieu of a fractional share.
(f) In the event that at any time, as a result of an adjustment made
pursuant to subsection (i) of Section 7.2(a), the holder of any share of Class M
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of the Corporation other than shares of Class A Common Stock,
thereafter the Conversion Price of such other shares so receivable upon
conversion of any share of Class M Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Class A Common Stock contained in
this Section 7.2.
(g) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
shares of Class A Common Stock, for the purpose of effecting conversion of
shares of Class M Preferred Stock, the full number of shares of Class A Common
Stock deliverable upon the conversion of all outstanding shares of Class M
Preferred Stock not theretofore converted and on or before (and as a condition
of) taking any action that would cause an adjustment of the Conversion Price
resulting in an increase in the number of shares of Class A Common Stock
deliverable upon conversion in excess of the number thereof previously reserved
and available therefor, the Corporation shall take all such action so required.
For purposes of this paragraph (g), the number of shares of Class A Common Stock
which shall be deliverable upon the conversion of all outstanding shares of
Class M Preferred Stock shall be computed as if at the time of computation all
such outstanding shares of Class M Preferred Stock were held by a single holder
(and without regard to the Ownership Limit).
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Class A
Common Stock deliverable upon conversion of the shares of Class M Preferred
Stock, the Corporation shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and non-assessable shares of Class A Common Stock at
such adjusted Conversion Price.
(h) The Corporation will pay any and all documentary stamp, issue or
transfer taxes, and any other similar taxes, payable in respect of the issue or
delivery of shares of Class A Common Stock upon conversion of shares of Class M
Preferred Stock pursuant hereto; provided, however, that the Corporation shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Class A Common Stock in a name
other than that of the holder of the shares of Class M Preferred Stock to be
converted, and no
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such issue or delivery shall be made unless and until the Person requesting such
issue or delivery has paid to the Corporation the amount of any such tax or
established, to the reasonable satisfaction of the Corporation, that such tax
has been paid.
(i) Notwithstanding anything to the contrary contained in this Section
7, conversion of Class M Preferred Stock pursuant to this Section 7 shall be
permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in Article IV of the
Charter), after taking into account any applicable waivers. This limitation
shall not, however, be taken into account in determining any amounts to which
the holders of any shares of Class M Preferred Stock may be entitled under
Sections 3, 4 or 5.
(j) If the Corporation shall take any action affecting the Class A
Common Stock, other than an action described in this Section 7, that in the
opinion of the Board of Directors would materially adversely affect the
conversion rights of the holders of Class M Preferred Stock, the Board of
Directors may, but shall have no obligation to, adjust the Conversion Price for
the Class M Preferred Stock to the extent permitted by law in such manner, if
any, and at such time as the Board of Directors, in its sole discretion, may
determine to be equitable under the circumstances.
8. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class M Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class M Preferred Stock ("Senior Stock");
(b) on a parity with the Class M Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class M Preferred Stock, if (i) such capital stock is Class B Cumulative
Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D
Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock or Class L Convertible Cumulative Preferred Stock of the Corporation, or
(ii) the holders of such class of stock or series and the Class M Preferred
Stock shall be entitled to the receipt of dividends and of amounts distributable
upon liquidation, dissolution or winding up in proportion to their respective
amounts of accrued and unpaid dividends per share or liquidation preferences,
without preference or priority of one over the other (the capital stock referred
to in clauses (i) and (ii) of this paragraph being hereinafter referred to,
collectively, as "Parity Stock"); and
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(c) junior to the Class M Preferred Stock, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if (i) such capital stock or series shall be Common Stock or (ii)
the holders of Class M Preferred Stock shall be entitled to receipt of dividends
or of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of shares of such class or
series (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Junior Stock").
9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class M Preferred Stock shall be in arrears (which
shall, with respect to any such quarterly dividend, mean that any such dividend
has not been paid in full), whether or not earned or declared, the number of
directors then constituting the Board of Directors shall be increased by two (if
not already increased by reason of similar types of provisions with respect to
shares of Parity Stock of any other class or series which is entitled to similar
voting rights (the "Voting Preferred Stock")) and the holders of shares of Class
M Preferred Stock, together with the holders of shares of all other Voting
Preferred Stock then entitled to exercise similar voting rights, voting as a
single class regardless of series, shall be entitled to elect the two additional
directors to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special meeting
of the holders of the Class M Preferred Stock and the Voting Preferred Stock
called as hereinafter provided. Whenever all arrears in dividends on the Class M
Preferred Stock and the Voting Preferred Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been declared and paid, or declared and set apart for payment, then the right of
the holders of the Class M Preferred Stock and the Voting Preferred Stock to
elect such additional two directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearages), and the terms of office of all persons elected as directors
by the holders of the Class M Preferred Stock and the Voting Preferred Stock
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class M Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and
upon the written request of any holder of Class M Preferred Stock (addressed to
the Secretary at the principal office of the Corporation) shall, call a special
meeting of the holders of the Class M Preferred Stock and of the Voting
Preferred Stock for the election of the two directors to be elected by them as
herein provided, such call to be made by notice similar to that provided in the
Bylaws of the Corporation for a special meeting of the stockholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days after receipt of
any such request, then any holder of Class M Preferred Stock may call such
meeting, upon the notice above provided, and for that purpose shall have access
to the
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stock books of the Corporation. The directors elected at any such special
meeting shall hold office until the next annual meeting of the stockholders or
special meeting held in lieu thereof if such office shall not have previously
terminated as above provided. If any vacancy shall occur among the directors
elected by the holders of the Class M Preferred Stock and the Voting Preferred
Stock, a successor shall be elected by the Board of Directors, upon the
nomination of the then-remaining director elected by the holders of the Class M
Preferred Stock and the Voting Preferred Stock or the successor of such
remaining director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.
(b) So long as any shares of Class M Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the
votes entitled to be cast by the holders of the Class M Preferred Stock voting
as a single class, given in person or by proxy, either in writing without a
meeting or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating:
(i) Any amendment, alteration or repeal of any of the provisions
of, or the addition of any provision to, these Articles Supplementary, the
Charter or the By-Laws of the Corporation that materially adversely affects the
voting powers, rights or preferences of the holders of the Class M Preferred
Stock; provided, however, that the amendment of the provisions of the Charter so
as to authorize or create, or to increase the authorized amount of, or issue any
Junior Stock or any shares of any class of Parity Stock shall not be deemed to
materially adversely affect the voting powers, rights or preferences of the
holders of Class M Preferred Stock; or
(ii) The authorization, creation of, increase in the authorized
amount of, or issuance of any shares of any class or series of Senior Stock or
any security convertible into shares of any class or series of Senior Stock
(whether or not such class or series of Senior Stock is currently authorized);
provided, however, that no such vote of the holders of Class M Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class M Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class M Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock of the Corporation shall have the right to vote with the Class M Preferred
Stock as a single class on any matter, then the Class M Preferred Stock and such
other class or series shall have with respect to such matters one quarter of one
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vote per $25 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein or in the Charter, the Class M Preferred
Stock shall not have any relative, participating, optional or other special
voting rights and powers other than as set forth herein, and the consent of the
holders thereof shall not be required for the taking of any corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class M Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
11.1. RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section
11.8, from and after the Issue Date, no Person (other than the Initial Holder or
a Look-Through Entity) shall Beneficially Own shares of Class M Preferred Stock
in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class M Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class M Preferred Stock in
excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 11.8, from and after the Issue Date (and subject to Section 11.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class M Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class M Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class M Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided
in Section 11.8, from and after the Issue Date (and subject to Section 11.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class M Preferred Stock in excess
of the Initial Holder Limit shall be void ab initio as to the Transfer of such
shares of Class M Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class M Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 11.8 from and after the Issue Date (and subject to Section
11.12), any
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Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Look-Through Entity Beneficially Owning shares of Class M Preferred Stock in
excess of the Look-Through Ownership limit shall be void ab initio as to the
Transfer of such shares of Class M Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class M Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class M Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class M
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class
M Preferred Stock that is null and void under Sections 11.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class M Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class M Preferred Stock in the same or any
other related transaction.
11.2. REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 11.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class M Preferred Stock in violation of Section 11.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class M Preferred Stock acquired
-24-
in violation of Section 11.1 of this Article or instituting proceedings to
enjoin such Transfer or to rescind such Transfer or attempted Transfer;
provided, however, that any Transfers or attempted Transfers (or, in the case of
events other than a Transfer, Beneficial Ownership) in violation of Section 11.1
of this Article, regardless of any action (or non-action) by the Board of
Directors or such committee, (a) shall be void ab initio or (b) shall
automatically result in the transfer described in Section 11.3 of this Article;
provided, further, that the provisions of this Section 11.2 shall be subject to
the provisions of Section 11.12 of this Article; provided, further, that neither
the Board of Directors nor any committee thereof may exercise such authority in
a manner that interferes with any ownership or transfer of Class M Preferred
Stock that is expressly authorized pursuant to Section 11.8(C) of this Article.
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "Excess Transfer") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Equity Stock) or other event (including, but not limited to, any
acquisition of any share of Equity Stock) such that (a) any Person (other than
the Initial Holder or a Look-Through Entity) would Beneficially Own shares of
Class M Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class M Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class M Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class M Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "Prohibited Transferee"), then, except
as otherwise provided in Section 11.8 of this Article, such shares of Class M
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the Business Day prior to the Excess Transfer,
change in capital structure or another event giving rise to a potential
violation of the Ownership Limit, the Initial Holder Limit or the Look-Through
Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class M Preferred
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Stock held by the Trustee shall be issued and outstanding shares of capital
stock of the Corporation. Except to the extent provided in Section 11.3(E), the
Prohibited Transferee shall have no rights in the Class M Preferred Stock held
by the Trustee, and the Prohibited Transferee shall not benefit economically
from ownership of any shares held in trust by the Trustee, shall have no rights
to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class M Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class M Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void ab
initio with respect to such shares of Class M Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class M
Preferred Stock have been transferred to the Trustee will be rescinded as void
ab initio and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class M Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a Person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 11.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price paid by the Prohibited Transferee for the
shares or, if the Prohibited Transferee did not give value for the shares
(through a gift, devise or other transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2) the
price per share received by the Trustee from the sale or other disposition of
the shares held in the Trust. Any proceeds in excess of the amount payable to
the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any
of the transfer restrictions set forth in this Section 11.3(E) or any
application thereof is determined in a final judgment to be void, invalid or
unenforceable by any court having jurisdiction over the issue, the Prohibited
Transferee may be deemed, at the option of the Corporation, to have acted as the
agent of the Corporation in acquiring the Class M Preferred Stock as to which
such restrictions would, by their terms, apply, and to hold such Class M
Preferred Stock on behalf of the Corporation.
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(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class
M Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class M Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
11.4. NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts
to acquire shares of Class M Preferred Stock in violation of Section 11.1 of
this Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 11.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted 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.
11.5. OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date
certain record and Beneficial Owners and transferees of shares of Class M
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of shares of
Class M Preferred Stock convertible into more than 5% (or such other percentage
between 0.5% and 5%, as provided in the applicable regulations adopted under the
Code) of the number of Outstanding shares of Equity Stock shall upon written
request by the Corporation, such request to be made 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 Class M
Preferred Stock Beneficially Owned, and a full description of how such shares
are held. Each such record or Beneficial Owner of Class M Preferred Stock shall,
upon demand by the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial Ownership of the Class M
Preferred 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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership
-27-
Limit, as applicable. Each stockholder of record, including without limitation
any Person that holds shares of Class M Preferred Stock on behalf of a
Beneficial Owner, shall take all reasonable steps to obtain the written notice
described in this Section 11.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that
is a Beneficial Owner of shares of Class M Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class M
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class M Preferred Stock already Beneficially 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.
11.6. REMEDIES NOT LIMITED. Nothing contained in this Article shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
11.7. AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 11 of this Article, or in the case of an ambiguity in
any definition contained in Section 11 of this Article, the Board of Directors
shall have the power to determine the application of the provisions of this
Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8. EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code (as modified to exclude qualified trusts from treatment as
individuals pursuant to Section 856(h)(3) of the Code) and is a corporation,
partnership, limited liability company, estate or trust. In connection with any
such exemption, the Board of Directors may require such representations and
undertakings from such Person 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 on the Corporation's status as a REIT.
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(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision
of this Article, the pledge by the Initial Holder of all or any portion of the
Class M Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 11.1 of this Article and the pledgee shall
not be subject to the Ownership Limit with respect to the Class M Preferred
Stock so pledged to it either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer period
of time as any underwriter described below shall hold an unsold allotment of
Class M Preferred Stock) following the purchase of Class M Preferred Stock by an
underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class M Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class M Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class M Preferred Stock purchased in connection
with market making activities.
11.9. LEGEND. Each certificate for Class M Preferred Stock shall bear
substantially the following legend:
"The shares of Class M Convertible Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class M Convertible
Cumulative Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class M Convertible Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class M Convertible
Cumulative Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter
(including the Articles Supplementary setting forth the terms of the
Class M Convertible Cumulative Preferred Stock), 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 that so
requests. If the restrictions on transfer are violated (i) the transfer
of the shares of Class M Convertible Cumulative Preferred Stock
represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class M Convertible Cumulative Preferred Stock) or (ii) the shares of
Class M Convertible Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit of
one or more Charitable Beneficiaries."
11.10. SEVERABILITY. If any provision of this Article or any application of
any such provision is determined in a final and unappealable judgment to be
void, invalid or unenforceable
-29-
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.
11.11. BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
11.12. SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class M Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXIV of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Executive Vice President, General Counsel
and Secretary and witnessed by its Assistant Secretary on January 12, 2000.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ BARB FOSTER /s/ JOEL BONDER
- ------------------- ---------------------------------------------
Barb Foster Joel Bonder
Assistant Secretary Executive Vice President, General Counsel and
Secretary
THE UNDERSIGNED, Executive Vice President, General Counsel and Secretary of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ JOEL BONDER
---------------------------------------------
Joel Bonder
Executive Vice President, General Counsel and
Secretary
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ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS N CONVERTIBLE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 4,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class N Convertible Cumulative Preferred
Stock, par value $.01 per share, and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified
as Class N Convertible Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 4,000,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 474,337,500 shares
immediately prior to the reclassification to 470,337,500 shares immediately
after the reclassification.
THIRD: The terms of the Class N Convertible Cumulative Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class N
Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class N
Preferred Stock"), and Four Million (4,000,000) shall be the authorized number
of shares of such Class N Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class N Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"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.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Base Common Stock Dividend" shall have the meaning set forth in
paragraph (a) of Section 9 of this Article.
"Base Rate" shall mean a quarterly dividend payment in an amount per
share equal to $0.5625; provided, however, that from and after the date
of a Change of Control, the "Base Rate" shall mean a quarterly dividend
payment in an amount per share equal to (i) for all Dividend Periods
commencing after the date of such Change of Control, the greater of (a)
$0.75 or (b) the product of (x) $6.25 and (y) the sum of 800 basis
points plus the greater of (x) the annual yield to maturity of U.S.
Treasury securities with a five year maturity and (y) the annual yield
to maturity of U.S. Treasury securities with a ten year maturity, in
each case as compiled by and published in the most recent Federal
Reserve Statistical Release H.15(519) which has become publicly
available on the second Business Day prior to the date of such Change
of Control (or, if such Statistical Release is no longer published, any
publicly available source of similar data), and (ii) for the Dividend
Period in which such Change of Control occurs, a weighted average
(based on the number of days in such Dividend Period occurring before
and after the date of such Change of Control) of (a) the Base Rate in
effect prior thereto and (b) the Base Rate determined in accordance
with the foregoing clause (i).
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial Holder,
clause (iii) of this definition, and clause (a) (ii) of the definition
of "Person" shall be
2
disregarded. The terms "Beneficial Owner," "Beneficially Owns" and
"Beneficially Owned" shall have the correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class N
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 9 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Change of Control" shall mean the occurrence of any of the following:
(i) the acquisition, directly or indirectly, by any individual or
entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act) (other than a holder of the Class N Preferred Stock or
any of its affiliates) of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act, except that such individual or entity
shall be deemed to have beneficial ownership of all shares that any
such individual or entity has the right to acquire, whether such right
is exercisable immediately or only after passage of time) of more than
25% of the Corporation's outstanding capital stock with voting power,
under ordinary circumstances, to elect directors of the Corporation;
(ii) other than with respect to the election, resignation or
replacement of any director designated, appointed or elected by the
holders of the Class N Preferred Stock (each, a "Preferred Director"),
during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Corporation (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders
of the Corporation was approved by a vote of 66-2/3% of the directors
of the Corporation (excluding Preferred Directors) (the "Incumbent
Board") then still in office who were either directors at the beginning
of such period, or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors of the Corporation then in office, provided,
however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened "Election Contest" (as described in
Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest; (iii) the Corporation or one of its subsidiaries is not the
general partner of the Operating Partnership; or (iv) (A) the
Corporation consolidating with or merging with or into another entity
or conveying, transferring or leasing all or substantially all of its
assets (including, but not limited to, real property investments) to
any individual or entity, or (B) any
3
corporation consolidating with or merging into the Corporation which,
in either event (A) or (B), is pursuant to a transaction in which the
outstanding voting capital stock of the Corporation is reclassified or
changed into or exchanged for cash, securities or other property;
provided, however, that the events described in clause (iv) shall not
be deemed to be a Change of Control (a) if the sole purpose of such
event is that the Corporation is seeking to change its domicile or to
change its form of organization from a corporation to a statutory
business trust or (b) if (x) the holders of the exchanged securities of
the Corporation immediately after such transaction beneficially own at
least a majority of the securities of the merged or consolidated entity
normally entitled to vote in elections of directors, (y) the chairman
and the president of the Corporation immediately prior to the execution
of the transaction agreement are the chairman and the president of the
merged or consolidated company, and (z) the individuals who were
members of the Incumbent Board immediately prior to the execution of
the transaction agreement constitute at least a majority of the members
of the board of directors of the merged or consolidated company.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class A Common Stock" shall mean the Class A Common Stock, $.01 par
value per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such Class
A Common Stock shall be reclassified.
"Class N Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity 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 quotation system that may then be in use
or, if the Equity Stock is not quoted by any
4
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Equity
Stock selected by the Board of Directors of the Corporation.
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Conversion Price" shall mean the conversion price per share of Class A
Common Stock for which each share of Class N Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section 7 of this Article. The initial Conversion Price shall be $52.50
(equivalent to a conversion rate of 0.4762 shares of Class A Common
Stock for each share of Class N Preferred Stock).
"Dividend Payment Date" shall mean January 1, April 1, July 1 and
October 1 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
N Preferred Stock shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the date on which the Class N Preferred Stock
is redeemed in accordance with Section 5 hereof.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" shall have the meaning set forth in Section 11.3(A)
of this Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean September 12, 2000.
5
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including September 30,
2000.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class N Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class N Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"Internal Rate of Return" shall mean, as of any determination date, the
effective discount rate (compounded monthly) under which the present
value of the Inflows associated with an outstanding share of Class N
Preferred Stock equals the Outflow on the Issue Date associated with
such share. For purposes of calculation of Internal Rate of Return:
(i) "Inflows" shall mean (a) all dividends (whether paid in
cash, property or stock (other than Class N Preferred Stock)) that have
been received on such share, (b) any other distributions that have been
received on such share, and (c) as of the determination date, the
Weighted Average Trading Price (as defined below) of a share of Class A
Common Stock during the 45 most recent Trading Days, such weighted
average multiplied by the Liquidation Preference (excluding any
accumulated, accrued and unpaid dividends) per share of Class N
Preferred Stock, and such product divided by the Conversion Price;
provided, that notwithstanding the foregoing, "Inflows" shall not
include (x) any commitment or placement fees payable in connection with
the issuance of shares of Class N Preferred Stock and (y) the amount of
any dividends or distributions (in excess of the dividends or
distributions otherwise payable) resulting from an increase in the Base
Rate upon the occurrence of a Change of Control. For purposes of the
preceding sentence, the "Weighted Average Trading Price" shall be
determined by dividing (a) the sum of, for each reported sale of Class
A Common Stock on the NYSE during such 45 Trading Day period, the
product of (i) the sale price per share of Class A Common Stock and
(ii) the number of shares of Class A Common Stock sold, by (b) the
total number of shares of Class A Common Stock sold on the NYSE during
such 45 Trading Days. For purposes of calculating the amounts of any
Inflows, all dividends or distributions received in property or stock
(other than Class N Preferred Stock) shall be deemed to have a value
equal to the fair market value of such dividends or distributions as of
the date such dividend or distribution is received, as
6
determined in good faith by the Board of Directors. All Inflows shall
be deemed to have taken place on the date on which payment was actually
received by the holder.
(ii) "Outflow" shall mean $25 and shall be deemed to have
taken place on the Closing Date of the Subscription Agreement.
(iii) Neither the fact of any transfer of Class N Preferred
Stock nor the amount of any consideration received by the holder
thereof or paid by any successor holder in connection with any transfer
shall affect the calculation of Internal Rate of Return.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class N Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class N Preferred Stock that are Beneficially Owned by the
Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone, at
that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class N Preferred Stock of the Corporation having an Aggregate Value
not in excess
7
of the excess of (x) 8.7% of the Aggregate Value of all Outstanding
shares of Equity Stock over (y) the Aggregate Value of all shares of
Equity Stock other than Class N Preferred Stock that are Beneficially
Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article, (i)
an individual, corporation, partnership, estate, trust (including a
trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) a "group,"
as that term is used for purposes of Section 13(d)(3) of the Exchange
Act, and (b) for purposes of the remaining Sections of this Article,
any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity.
"Prohibited Transferee" shall have the meaning set forth in Section
11.3(A) of this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of
Section 3 of this Article.
"Redemption Date" shall mean, in the case of any redemption of any
shares of Class N Preferred Stock, the date fixed for redemption of
such shares.
"Redemption Price" shall mean, with respect to any shares of Class N
Preferred Stock to be redeemed, (i) if the Redemption Date occurs
during the period from the Issue Date to but excluding September 12,
2003, 105% of the Liquidation Preference thereof, (ii) if the
Redemption Date occurs during the period from and including September
12, 2003 to but excluding September 12, 2004, 104% of the Liquidation
Preference thereof, and (iii) if the Redemption Date occurs on or after
September 12, 2004, 102% of the Liquidation Preference thereof, plus,
in the case of clause (i), (ii) or (iii), all accumulated, accrued and
unpaid dividends (whether or not earned or declared), if any, to the
Redemption Date; provided, however, that if a Redemption Date occurs
after a dividend record date and on or prior to the related Dividend
Payment Date, the dividend payable on such Dividend Payment Date in
respect of such shares called for redemption shall be payable on such
Dividend Payment Date to the holders of record at the close of business
on such dividend record date
8
notwithstanding the redemption of such shares, and shall not be payable
as part of the redemption price for such shares.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class N
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Subscription Agreement" shall mean the Class N Convertible Cumulative
Preferred Stock Subscription Agreement, dated as of September 12, 2000,
by and among the Corporation and GE Capital Equity Investments, Inc.
"Trading Day" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE, a
day on which the NYSE is open for the transaction of business, (ii) if
the Equity Stock is not listed or admitted to trading on the NYSE but
is listed or admitted to trading on another national securities
exchange or automated quotation system, a day on which the principal
national securities exchange or automated quotation system, as the case
may be, on which the Equity Stock is listed or admitted to trading is
open for the transaction of business, or (iii) if the Equity Stock is
not listed or admitted to trading on any national securities exchange
or automated quotation system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class N Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
N Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class N Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
9
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class N Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" shall mean such transfer agent as may be designated by
the Board of Directors or their designee as the transfer agent for the
Class N Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class N Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3(A) of
this Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in paragraph
(a) of Section 9 of this Article.
3. DIVIDENDS.
(a) The holders of Class N Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class N Preferred
Stock in an amount per share equal to the greater of (i) the Base Rate, or (ii)
the quarterly cash dividend paid or payable (determined on each Dividend Payment
Date by reference to the dividend most recently declared on the Class A Common
Stock) on the number of shares of Class A Common Stock (or portion thereof) into
which a share of Class N Preferred Stock is convertible. Such dividends shall be
cumulative from the Issue Date, whether or not in any Dividend Period or Periods
such dividends shall be declared or there shall be funds of the Corporation
legally available for the payment of such dividends, and shall be payable
quarterly in arrears on each Dividend Payment Date, commencing on October 1,
2000. Each such dividend shall be payable in arrears to the holders of record of
the Class N Preferred Stock, as they appear on the stock records of the
Corporation at the close of business on the tenth Business Day immediately
preceding such Dividend Payment Date (each a "Record Date"). Accumulated,
accrued and unpaid dividends for any past Dividend Periods may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to
holders of record on such date, which date shall not precede by more than 45
days the payment date thereof, as may be fixed by the Board of Directors.
(b) Any dividend payable on the Class N Preferred Stock for
any partial dividend period shall be computed ratably on the basis of twelve 30
day months and a 360-day year. Holders of Class N Preferred Stock shall not be
entitled to any
10
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on the Class N 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 Class N Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class N Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class N Preferred
Stock have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is set apart
for payment of such dividends on the Class N Preferred Stock for all Dividend
Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made, as the case may be, with respect
to such shares of Parity Stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class N Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the respective
amounts of dividends accumulated, accrued and unpaid on the Class N Preferred
Stock and accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class N 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Class A 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 shares of, or options, warrants or
rights to subscribe for or purchase shares of, 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 in respect thereof, directly or
indirectly, by the Corporation unless, in each case, dividends equal to the full
amount of all accumulated, accrued and unpaid dividends on all outstanding
shares of Class N Preferred Stock have been declared and paid, or such dividends
have been declared and a sum sufficient for the payment thereof has been set
apart for such payment, on all outstanding shares of Class N Preferred Stock for
all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed,
11
purchased or otherwise acquired or monies paid to or made available for any
sinking fund for such redemption, or the date any such cash or other property is
paid or distributed to or for the benefit of any holders of Junior Stock in
respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class N Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class N Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class N Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class N Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class N Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class N Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
N Preferred Stock and any Parity Stock, as provided in Section 4(a), 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
12
holders of the Class N Preferred Stock and any Parity Stock shall not be
entitled to share therein.
5. REDEMPTION
(a) The Corporation, at its option, may redeem shares of Class
N Preferred Stock, in whole or from time to time in part, for cash in an amount
equal to the applicable Redemption Price (i) at any time on or after September
12, 2003, (ii) on or after the occurrence of a Change of Control, or (iii) as
set forth in Section 11.2 of this Article.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of
Class N Preferred Stock have not been declared and paid, or declared and set
apart for payment, for all preceding Dividend Periods no shares of Class N
Preferred Stock may be redeemed unless all outstanding shares of Class N
Preferred Stock are simultaneously redeemed, and neither the Corporation nor
any affiliate of the Corporation may purchase or acquire shares of Class N
Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on
the same terms to all holders of shares of Class N Preferred Stock.
(d) In the event of a redemption of Class N Preferred Stock
pursuant to paragraph (a) above, 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. Neither the failure to
mail any notice required by this paragraph (d), nor any defect therein or in the
mailing thereof to any particular holder, shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice which has been 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 notice shall state, as
appropriate: (i) the Redemption Date; (ii) the number of shares of Class N
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; (iii) the place or places at which certificates for such shares are to
be surrendered for cash; and (iv) the Redemption Price payable on such
Redemption Date, including, without limitation, a statement as to whether or not
accumulated, accrued and unpaid dividends will be payable as part of the
Redemption Price, or payable on the next Dividend Payment Date to the record
holder at the close of business on the relevant record date as described in the
next succeeding sentence. Notice having been mailed as aforesaid, from and after
the Redemption Date (unless the Corporation shall fail to make available the
amount of cash necessary to effect such redemption), (i) dividends on the
13
shares of Class N Preferred Stock so called for redemption shall cease to
accumulate or accrue on the shares of Class N Preferred Stock called for
redemption, (ii) said shares shall no longer be deemed to be outstanding, and
(iii) all rights of the holders thereof as holders of Class N Preferred Stock of
the Corporation shall cease except the right to receive the cash payable upon
such redemption, without interest thereon, upon surrender of their certificates
if so required. The Corporation's obligation to make available the cash
necessary to effect such redemption in accordance with the preceding sentence
shall be deemed fulfilled if, on or before the applicable Redemption Date, the
Corporation shall irrevocably deposit in trust with a bank or trust company
(which may not be an affiliate of the Corporation) that has, or is an affiliate
of a bank or trust company that has, a capital and surplus of at least
$200,000,000, such amount of cash as is necessary for such redemption plus, if
such Redemption Date occurs after any dividend record date and on or prior to
the related Dividend Payment Date, such amount of cash as is necessary to pay
the dividend payable on such Dividend Payment Date in respect of such shares of
Class N Preferred Stock called for redemption, with irrevocable instructions
that such cash be applied to the redemption of the shares of Class N Preferred
Stock so called for redemption and, if applicable, the payment of such dividend.
No interest shall accrue for the benefit of the holders of shares of Class N
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 Redemption Date shall revert to the general funds of the
Corporation, after which reversion the holders of shares of Class N 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 such notice of the certificates for any such shares of Class N Preferred
Stock to be so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), such certificates
shall be exchanged for the cash (without interest thereon) for which such shares
have been redeemed in accordance with such notice. If fewer than all the
outstanding shares of Class N Preferred Stock are to be redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding shares of Class N
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class N Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class N Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class N Preferred Stock that have been issued
and reacquired in any manner by the Corporation (including, without limitation,
shares of
14
Class N Preferred Stock which have been surrendered for conversion) shall be
returned to the status of authorized but unissued shares of Class N Preferred
Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, holders of shares of
Class N Preferred Stock shall have the right to convert all or a portion of such
shares into shares of Class A Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, each share of Class N Preferred Stock shall, at the option of the
holder thereof, be convertible at any time (unless such share is called for
redemption, then to and including but not after the close of business on the
date immediately prior to the Redemption Date, unless the Corporation shall
default in payment due upon redemption thereof), into that number of fully paid
and non-assessable shares of Class A Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing $25 by the
Conversion Price in effect at such time and by surrender of the certificate
representing such shares to be converted in the manner provided in subsection
(b) of this Section 7.1.
(b) In order to convert shares of Class N Preferred Stock, the
holder of the shares to be converted shall surrender the certificate
representing such shares at any office or agency maintained by the Corporation
for such purpose, accompanied by the funds, if any, required by the last
paragraph of this subsection (b) to be paid by such holder, and shall give
written notice of conversion in the form provided on such certificate
representing shares of Class N Preferred Stock (or such other notice as is
acceptable to the Corporation) to the Corporation at such office or agency that
the holder elects to convert the shares of Class N Preferred Stock specified in
such notice. Such notice shall also state the name or names, together with
address or addresses, in which the certificate or certificates for shares of
Class A Common Stock which shall be issuable in such conversion shall be issued.
Unless the shares issuable on conversion are to be issued in the same name as
the name in which such share of Class N Preferred Stock is registered, each
certificate representing a share of Class N Preferred Stock surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation that such taxes have been
paid).
As promptly as practicable after the surrender of certificates
representing such shares of Class N Preferred Stock and the receipt of such
notice and instruments of transfer as aforesaid, the Corporation shall issue and
shall deliver at such office or agency to such holder, or as designated in such
holder's written
15
instructions, a certificate or certificates for the number of full shares of
Class A Common Stock issuable upon the conversion of such share or shares of
Class N Preferred Stock in accordance with provisions of this Section 7, and a
check or cash in respect of (i) the cash amount payable to such holder, if any,
referred to in the last paragraph of this subsection (b), and (ii) any
fractional interest in a share of Class A Common Stock arising upon such
conversion, as provided in paragraph (c) of this Section 7.1.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which certificates
representing such shares of Class N Preferred Stock shall have been surrendered
and such notice (and any applicable instruments of transfer and any required
taxes) received by the Corporation as aforesaid, and the Person or Persons in
whose name or names any certificate or certificates for shares of Class A Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby at such time on
such date, and such conversion shall be at the Conversion Price in effect at
such time on such date, unless the stock transfer books of the Corporation shall
be closed on that date, in which event such Person or Persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on which such
shares shall have been surrendered and such notice received by the Corporation.
Except as provided herein, the Corporation will make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends (other than dividends on the Class A Common
Stock the record date for which is after the conversion date and which the
Corporation shall pay in the ordinary course to the record holder as of the
record date) on the Class A Common Stock issued upon such conversion. Holders of
Class N Preferred Stock at the close of business on a Record Date will be
entitled to receive an amount equal to the dividend payable on such shares on
the corresponding Dividend Payment Date notwithstanding the conversion of such
shares following such Record Date. If the Dividend Adjustment Amount (as defined
below) with respect to any shares of Class N Preferred Stock surrendered for
conversion is positive, the holders of such shares shall, as of the date of
conversion, be entitled to receive a cash payment equal to such Dividend
Adjustment Amount. If the Dividend Adjustment Amount with respect to any shares
of Class N Preferred Stock surrendered for conversion is negative, such shares
must be accompanied by payment of a cash amount equal to the absolute value of
such Dividend Adjustment Amount. As used herein, "Dividend Adjustment Amount"
shall mean, with respect to any share of Class N Preferred Stock that has been
surrendered for conversion, the sum of:
(i) the aggregate amount of any dividends (whether or not
earned or declared) that are accumulated, accrued and unpaid on such
share as of the time of such conversion; minus
16
(ii) if such share has been surrendered for conversion during
the period between the close of business on any Record Date and the
opening of business on the corresponding Dividend Payment Date, the
amount of the dividend payable thereon on such Dividend Payment Date;
minus
(iii) an amount equal to the product of (A) the number of
shares of Class A Common Stock (or fraction thereof) into which such
share of Class N Preferred Stock has been converted, (B) the quarterly
cash dividend per share that was most recently declared on the Class A
Common Stock, determined as of the date of conversion, and (C) a
fraction, the numerator of which is the number of days in the period
from and including the date of the most recent dividend payment date
for the Class A Common Stock to but excluding the date of such
conversion, and the denominator of which is 90.
(c) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class N Preferred Stock. If more than one share of Class
N Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class N Preferred Stock so surrendered. In lieu of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of any share of Class N Preferred Stock, the Corporation
shall pay to the holder of such shares an amount in cash (computed to the
nearest cent) equal to the Closing Price of the Class A Common Stock on the
Trading Day immediately preceding the date of conversion, multiplied by the
fractional interest that otherwise would have been deliverable upon conversion
of such share.
7.2 MANDATORY CONVERSION.
(a) The Corporation shall have the right to require that all
or part of the issued and outstanding shares of Class N Preferred Stock be
converted into shares of Class A Common Stock under the following circumstances:
(i) at any time from and including the first
anniversary of the Issue Date to but excluding the second anniversary of the
Issue Date, if the Internal Rate of Return exceeds 20.0% per annum from and
including the Issue Date (such condition, the "Conversion Condition"), on one
occasion only the Corporation shall have the right, upon 30 days advance written
notice, to require that up to 2,000,000 shares of Class N Preferred Stock be
converted into shares of Class A Common Stock as set forth in this Section 7.2;
(ii) at any time from and including the second
anniversary of the Issue Date to but excluding the third anniversary of the
Issue Date, if the Internal
17
Rate of Return exceeds 20.0% per annum from and including the Issue Date, on one
occasion only the Corporation shall have the right, upon 30 days advance written
notice, to require that all or any portion of the outstanding shares of Class N
Preferred Stock be converted into shares of Class A Common Stock as set forth in
this Section 7.2;
provided, however, that
(A) if a Conversion Condition occurs and the Corporation is
entitled to require the conversion referred to in Section 7.2(a)(i) and does not
so convert, then the Corporation's right to require the conversion referred to
in Section 7.2(a)(ii) will be limited to a right to require that up to 2,000,000
shares of Class N Preferred Stock be converted into shares of Class A Common
Stock as set forth in this Section 7.2(a)(ii);
(B) if the Corporation receives a Liquidity Failure Notice
pursuant to Section 7.2(c)(vi), then the right to cause a conversion under
Section 7.2(a)(ii) shall thereupon terminate; and
(C) the Corporation may not exercise its right to convert
under Section 7.2(a)(ii) unless and until at least 90 days have transpired since
the date of any conversion under Section 7.2(a)(i).
(b) Subject to and upon compliance with the provisions of this
Section 7.2, the Corporation shall have the right, under the circumstances set
forth in (a)(i) or (ii) above, to convert such shares, in whole or in part, into
the number of fully paid and non-assessable shares of authorized but previously
unissued shares of Class A Common Stock per each share of Class N Preferred
Stock obtained by dividing the Liquidation Preference (excluding any accumulated
accrued and unpaid dividends) per share of Class N Preferred Stock by the
Conversion Price (as in effect at the time and on the date provided for in
subparagraph (c)(v) of this Section 7.2).
(c) (i) In order to exercise the conversion right, the
Corporation shall, promptly upon the Corporation exercising its right to require
conversion pursuant to (a)(i) or (ii) above, and in no event later than the
close of business on the next succeeding business day, give notice of such
conversion to each holder of record of the shares to be converted. Such notice
shall be provided by facsimile or, if facsimile is not available, then by first
class mail, postage prepaid, at such holder's address as the same appears on the
stock records of the Corporation. Any notice which was transmitted or mailed in
the manner herein provided shall be conclusively presumed to have been duly
given on the date received by the holder. Each such notice shall state, as
appropriate: (1) the date of conversion, which date may be any date within
thirty days following the date on which the notice is transmitted or mailed; (2)
the number of shares of Class N Preferred Stock to be converted and, if fewer
than all such shares held by such holder are to be converted, the number of such
shares to be converted; and (3) the then current Conversion Price.
18
(ii) Upon receiving such notice of conversion, each
such holder shall promptly (and in any event, within 30 days) surrender the
certificates representing such shares of Class N Preferred Stock as are being
converted on the conversion date, duly endorsed or assigned to the Corporation
or in blank, at the office of the Transfer Agent; provided, however, that the
failure to so surrender any such certificates shall not in any way affect the
validity of the conversion of the underlying shares of Class N Preferred Stock
into shares of Class A Common Stock. Unless the shares issuable on conversion
are to be issued in the same name as the name in which such shares of Class N
Preferred Stock are registered, each such share surrendered following conversion
shall be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax, if any (or
evidence reasonably satisfactory to the Corporation that such taxes have been
paid).
(iii) A holder of shares of Class N Preferred Stock
shall, as of the date of the conversion of such shares to shares of Class A
Common Stock, be entitled to receive a cash payment in respect of any dividends
(whether or not earned or declared) that are accumulated, accrued and unpaid
thereon as of the time of such conversion, provided, however, that payment in
respect of any dividend on such shares that has been declared but for which the
Dividend Payment Date has not yet been reached shall be payable as of such
Dividend Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares.
(iv) As promptly as practicable after the surrender
of certificates for shares of Class N Preferred Stock as aforesaid, and in any
event no later than three business days after the date of such surrender, the
Corporation shall issue and shall deliver at such office to such holder, or send
on such holder's written order, a certificate or certificates for the number of
full shares of Class A Common Stock issuable upon the conversion of such shares
of Class N Preferred Stock in accordance with the provisions of this Section
7.2, and any fractional interest in respect of a share of Class A Common Stock
arising upon such conversion shall be settled as provided in paragraph (d) of
this Section 7.2.
(v) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date identified as
the conversion date in the notice of conversion sent by the Corporation as
aforesaid, and the Person or Persons in whose name or names any certificate or
certificates for shares of Class A Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such dates and such conversion shall
be at the Conversion Price in effect at such time on such date unless the stock
transfer books of the Corporation shall be closed on that date, in which event
such Person or Persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect
19
on the date identified as the conversion date in the notice of conversion sent
by the Corporation as aforesaid. If the dividend payment record dates for the
Class N Preferred Stock and Class A Common Stock do not coincide, and the
preceding sentence does not operate to ensure that a holder of shares of Class N
Preferred Stock whose shares are converted into Class A Common Stock does not
receive dividends on both the shares of Class N Preferred Stock and the Class A
Common Stock into which such shares are converted for the same Dividend Period,
then notwithstanding anything herein to the contrary, it is the intent, and the
Transfer Agent is authorized to ensure, that no conversion after the earlier of
such record dates will be accepted until after the latter of such record dates.
(vi) In the event that the Corporation has elected to
cause a conversion of the shares of Class N Preferred Stock pursuant to Section
7.2(a)(i) above, and the holders of a majority of the shares of Class N
Preferred Stock so converted provide a written notice (a "Liquidity Failure
Notice") to the Corporation within 90 days after the date of conversion that
during such 90 day period, such holders were unable (based on commercially
reasonable efforts, taking into account volume) to sell the shares of Class A
Common Stock received upon conversion on the open market at price(s) that would
have provided such holder(s) with an Internal Rate of Return of at least 20% per
annum thereon from the Issue Date through the date of sale of all such shares of
Class A Common Stock (provided that in calculating the Inflows, instead of
calculating the Weighted Average Trading Prices as provided in clause (i) of the
definition of Internal Rate of Return, the Internal Rate of Return shall be
calculated using the actual sale prices obtained by the holder(s)), then from
and after the delivery of the Liquidity Failure Notice, the right of the
Corporation to convert shares of Class N Preferred Stock under Section 7.2(ii)
shall terminate. The Liquidity Failure Notice shall include a list of dates on
which shares of Class A Common Stock were sold, the number and price per share
so sold and shall include a calculation of the Internal Rate of Return on the
aggregate number of shares of Class A Common Stock so sold during the period.
(d) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class N Preferred Stock. If more than one share of Class
N Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class N Preferred Stock so converted. In lieu of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of any share of Class N Preferred Stock, the Corporation
shall pay to the holder of such shares an amount in cash (computed to the
nearest cent) equal to the Closing Price of the Class A Common Stock on the
Trading Day immediately preceding the date of conversion, multiplied by the
fractional interest that otherwise would have been deliverable upon conversion
of such share.
20
7.3 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to time
as follows:
(i) If the Corporation shall after the Issue Date (A)
pay a dividend or make a distribution on its Class A Common Stock in shares of
Class A Common Stock, (B) subdivide its outstanding shares of Class A Common
Stock into a greater number of shares, (C) combine its outstanding shares of
Class A Common Stock into a smaller number of shares or (D) issue any shares of
capital stock by reclassification of its outstanding Class A Common Stock
(including a reclassification pursuant to a merger or consolidation in which the
Corporation is the continuing entity and in which the Class A Common Stock
outstanding immediately prior to the merger or consolidation is not exchanged
for cash, or securities or other property of another entity), then, in each such
case, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any share of Class N Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Class A Common Stock or other capital stock of the Corporation which such holder
would have owned or been entitled to receive immediately following such action
had such share been converted immediately prior to the occurrence of such event.
An adjustment made pursuant to this subsection (i) of this Section 7.3(a) shall
become effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification. If, as a result of an adjustment
made pursuant to this subsection (i), the holder of any share of Class N
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes of capital stock or shares of Class A
Common Stock and other capital stock of the Corporation, the Board of Directors
(whose determination shall be conclusive and shall be described in a statement
filed by the Corporation with the Transfer Agent) shall determine the allocation
of the adjusted Conversion Price between or among shares of such classes of
capital stock or shares of Class A Common Stock and other capital stock.
(ii) If the Corporation shall, after the Issue Date,
issue rights, options or warrants to all holders of its outstanding shares of
Class A Common Stock entitling them (for a period expiring within 45 days after
the record date described below) to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the current market price per share
(determined pursuant to subsection (iv) of this Section 7.3(a)) of the Class A
Common Stock (other than pursuant to any stock option, restricted stock or other
incentive or benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers or any dividend reinvestment plan of the
Corporation in effect at the time hereof or any other similar plan adopted or
implemented hereafter), then the Conversion Price in effect immediately prior
thereto shall be adjusted so that it shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the record date
by a fraction, the numerator of which shall be the sum of (A) the number of
shares of Class A Common Stock outstanding on the record date and (B) the number
of shares which the aggregate proceeds to the Corporation from the exercise of
such rights,
21
options or warrants for Class A Common Stock would purchase at such current
market price, and the denominator of which shall be the sum of (A) the number of
shares of Class A Common Stock outstanding on the record date and (B) the number
of additional shares of Class A Common Stock offered for subscription or
purchase pursuant to such rights, options or warrants. Such adjustment shall be
made successively whenever any rights, options or warrants are issued, and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights, options or warrants; provided,
however, that if all of the shares of Class A Common Stock offered for
subscription or purchase are not delivered upon the exercise of such rights,
options or warrants, upon the expiration of such rights, options or warrants,
the Conversion Price shall be readjusted to the Conversion Price which would
have been in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the number of shares
of Class A Common Stock actually delivered upon the exercise of such rights,
options or warrants rather than upon the number of shares of Class A Common
Stock offered for subscription or purchase. In determining whether any rights,
options or warrants entitle the holders to subscribe for or purchase shares of
Class A Common Stock at less than such current market price, and in determining
the aggregate offering price of such shares of Class A Common Stock, there shall
be taken into account any consideration received by the Corporation for such
rights, options or warrants, with the value of such consideration, if other than
cash, determined by the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed by the Corporation with
the Transfer Agent).
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its outstanding Class A Common Stock any
capital stock (other than Class A Common Stock), evidences of its indebtedness
or assets or rights or warrants to subscribe for or purchase securities of the
Corporation (excluding (A) those referred to in subsections (i) and (ii) of this
Section 7.3(a), (B) dividends and distributions paid in cash out of the retained
earnings of the Corporation, and (C) distributions upon mergers or
consolidations to which subsection (b) of this Section 7.3 applies), then, in
each such case, the Conversion Price shall be adjusted to equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the record date of such distribution by a fraction, the numerator of which shall
be the current market price per share (determined pursuant to subsection (iv) of
this Section 7.3(a)) of the Class A Common Stock, less the fair market value on
such record date (determined by the Board or Directors, whose determination
shall be conclusive and shall be described in a statement filed by the
Corporation with the Transfer Agent) of the portion of the capital stock or
assets or the evidences of indebtedness or assets so distributed to the holder
of one share of Class A Common Stock or of such subscription rights or warrants
applicable to one share of Class A Common Stock, and the denominator of which
shall be such current market price per share of Class A Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution.
22
(iv) For the purpose of any computation under
subsections (ii) and (iii) of this Section 7.3(a), the current market price per
share of Class A Common Stock on any date shall be the average of the Closing
Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading
Days ending on the last full Trading Day prior to the Time of Determination or
(B) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such distribution
through such last full Trading Day prior to the Time of Determination. For
purposes of the foregoing, the term "Time of Determination" shall mean the time
and date of the earlier of (A) the record date for determining stockholders
entitled to receive the rights, warrants or distribution referred to in
subsections (ii) and (iii) of this Section 7.3, or (B) the commencement of
"ex-dividend" trading on the exchange or market referred to in the definition of
"Closing Price."
(v) No adjustment in the Conversion Price shall be
required to be made unless such adjustment would require an increase or decrease
of at least one percent of such price; provided, however, that any adjustment
which by reason of this subsection (v) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 7.3 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be. Anything in this Section 7.3 to
the contrary notwithstanding, the Corporation shall be entitled to make such
reduction in the Conversion Price, in addition to those required by this Section
7.3, as it shall determine in its discretion to be advisable in order that any
stock dividend, subdivision of shares, distribution of rights to purchase stock
or securities, or distribution of securities convertible into or exchangeable
for stock hereafter made by the Corporation to its stockholders shall not be
taxable to the recipients. Except as set forth in subsections (i), (ii) and
(iii) above, the Conversion Price shall not be adjusted for the issuance of
Class A Common Stock, or any securities convertible into or exchangeable for
Class A Common Stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
(vi) The Corporation from time to time may decrease
the Conversion Price by any amount for any period of time if the period is at
least 20 days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Corporation shall mail to holders of
record of shares of Class N Preferred Stock a notice of the decrease at least 15
days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be in
effect.
(b) Notwithstanding any other provision herein to the
contrary, in case of any merger or consolidation to which the Corporation is a
party (other than a merger or consolidation in which the Corporation is the
continuing entity and in which the Class A Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, or the
securities or other property of another entity), or in the case of any sale or
transfer of all or substantially all of the Corporation's property and assets to
another entity, there will be no adjustment of the Conversion
23
Price, and lawful provision shall be made by the entity formed by such
consolidation or the entity whose securities, cash or other property will
immediately after the merger or consolidation be owned, by virtue of the merger
or consolidation, by the holders of Class A Common Stock immediately prior to
the merger or consolidation, or the entity which shall have acquired such assets
of the Corporation, such that each share of Class N Preferred Stock then
outstanding will, without the consent of the holder thereof, become convertible
into the kind and amount of securities, cash or other property receivable upon
such merger, consolidation, sale or transfer by a holder of the number of shares
of Class A Common Stock into which such share of Class N Preferred Stock was
convertible immediately prior to such merger, consolidation, sale or transfer
assuming such holder of Class A Common Stock did not exercise his rights of
election, if any, as to the kind or amount of securities, cash or other property
receivable upon such merger, consolidation, sale or transfer. In the case of a
cash merger of the Corporation into another entity or any other cash transaction
of the type mentioned in this Section 7.3(b), each share of Class N Preferred
Stock will thereafter be convertible at the Conversion Price in effect at such
time into the same amount of cash per share into which each share of Class N
Preferred Stock would have been convertible had such share been converted into
Class A Common Stock immediately prior to the effective date of such cash merger
or other transaction. The foregoing provisions of this Section 7.3(b) shall
similarly apply to successive mergers, consolidations, sales or transfers.
(c) If (i) the Corporation shall take any action that would
require an adjustment in the Conversion Price pursuant to Section 7.3; (ii) the
Corporation shall authorize the granting to the holders of the Class A Common
Stock generally of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants; (iii) there
shall be any reorganization or reclassification of the Class A Common Stock
(other than an event to which subsection (i) of Section 7.3(a) applies) or any
consolidation or merger to which the Corporation is a party or any sale or
transfer of all or substantially all of the assets of the Corporation, in each
case, for which approval of any stockholders of the Corporation is required; or
(iv) there shall be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation; then, in each such case, the Corporation shall
cause to be given to the holders of shares of Class N Preferred Stock and the
Transfer Agent as promptly as possible, but in any event at least 15 days prior
to the applicable date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such action or granting of
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Class A Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (ii) the date on which
such reorganization, reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is expected to become effective or occur,
and the date as of which it is expected that holders of Class A Common Stock of
record shall be entitled to exchange their shares of Class A Common Stock for
securities, cash or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up. Failure to give such
24
notice or any defect therein shall not affect the legality or validity of the
proceedings described in this Section 7.3(c).
(d) Whenever the Conversion Price is adjusted as herein
provided, (i) the Corporation shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment and a brief
statement of the facts requiring such adjustment and the manner of computing the
same, which certificate shall be conclusive evidence of the correctness of such
adjustment, and (ii) the Corporation shall mail or cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder of record of
shares of Class N Preferred Stock a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price.
(e) In any case in which paragraph (a) of this Section 7.3
shall require that an adjustment be made immediately following a record date or
an effective date, the Corporation may elect to defer (but only until the filing
by the Corporation with the Transfer Agent of the certificate required by
subsection 7.3(d)) (i) issuing to the holder of any share of Class N Preferred
Stock converted after such record date or effective date the shares of Class A
Common Stock issuable upon such conversion in excess of the shares of Class A
Common Stock issuable upon such conversion on the basis of the Conversion Price
prior to adjustment, and (ii) paying to such holder any amount of cash in lieu
of a fractional share.
(f) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of Section 7.3(a), the holder of any
share of Class N Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares of
Class A Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any share of Class N Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A Common Stock
contained in this Section 7.3.
(g) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Class A Common Stock, for the purpose of effecting
conversion of shares of Class N Preferred Stock, the full number of shares of
Class A Common Stock deliverable upon the conversion of all outstanding shares
of Class N Preferred Stock not theretofore converted and on or before (and as a
condition of) taking any action that would cause an adjustment of the Conversion
Price resulting in an increase in the number of shares of Class A Common Stock
deliverable upon conversion in excess of the number thereof previously reserved
and available therefor, the Corporation shall take all such action so required.
For purposes of this paragraph (g), the number of shares of Class A Common Stock
which shall be deliverable upon the conversion of all outstanding shares of
Class N Preferred Stock shall be computed as if at the time
25
of computation all such outstanding shares of Class N Preferred Stock were held
by a single holder (and without regard to the Ownership Limit).
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value (if any) of the shares of
Class A Common Stock deliverable upon conversion of the shares of Class N
Preferred Stock, the Corporation shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of Class A Common
Stock at such adjusted Conversion Price.
(h) The Corporation will pay any and all documentary stamp,
issue or transfer taxes, and any other similar taxes, payable in respect of the
issue or delivery of shares of Class A Common Stock upon conversion of shares of
Class N Preferred Stock pursuant hereto; provided, however, that the Corporation
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Class A Common Stock in
a name other than that of the holder of the shares of Class N Preferred Stock to
be converted, and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Corporation the amount
of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
(i) Notwithstanding anything to the contrary contained in this
Section 7, conversion of Class N Preferred Stock pursuant to this Section 7
shall be permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in the Charter).
(j) If the Corporation shall take any action affecting the
Class A Common Stock, other than action described in this Section 7, that in the
opinion of the Board of Directors would materially adversely affect the
conversion rights of the holders of Class N Preferred Stock, the Board of
Directors may, but shall have no obligation to, adjust the Conversion Price for
the Class N Preferred Stock to the extent permitted by law in such manner, if
any, and at such time as the Board of Directors, in its sole discretion, may
determine to be equitable under the circumstances.
8. RANKING.
Any class or series of capital stock of the Corporation shall
be deemed to rank:
(a) prior or senior to the Class N Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class N Preferred Stock ("Senior Stock");
26
(b) on a parity with the Class N Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class N Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock, Class L Convertible Cumulative Preferred Stock or Class M Convertible
Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class
of stock or series and the Class N Preferred Stock shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or priority
of one over the other (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Parity Stock");
and
(c) junior to the Class N Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Class A Common Stock
or (ii) the holders of Class N Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
9. VOTING.
(a) If and whenever (i) six quarterly dividends (whether or
not consecutive) payable on the Class N Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, or (ii) for two consecutive quarterly
dividend periods the Corporation fails to pay dividends on the Class A Common
Stock in an amount per share at least equal to $0.5950 (subject to adjustment
consistent with any adjustment of the Conversion Price pursuant to Section 7.3
of this Article) (the "Base Common Stock Dividend") the number of directors then
constituting the Board of Directors shall be increased by two (in the case of an
arrearage in dividends described in clause (i)) or one additional director (in
the case of an arrearage in dividends described in clause (ii) (in each case if
not already increased by reason of similar types of provisions with respect to
shares of any other class or series which is entitled to similar voting rights
(the "Voting Preferred Stock")) and the holders of shares of Class N Preferred
Stock, together with the holders of shares of all other Voting Preferred Stock
then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors
(in the case of an arrearage in dividends described in clause (i)) or one (in
the case of an arrearage in
27
dividends described in clause (ii)) to serve on the Board of Directors at any
annual meeting of stockholders or special meeting held in place thereof, or at a
special meeting of the holders of the Class N Preferred Stock and the Voting
Preferred Stock called as hereinafter provided. Whenever (1) in the case of an
arrearage in dividends described in clause (i), all arrears in dividends on the
Class N Preferred Stock and the Voting Preferred Stock then outstanding shall
have been paid and dividends thereon for the current quarterly dividend period
shall have been declared and paid, or declared and set apart for payment, or (2)
in the case of an arrearage in dividends described in clause (ii), the
Corporation makes a quarterly dividend payment on the Class A Common Stock in an
amount per share equal to or exceeding the Base Common Stock Dividend, then the
right of the holders of the Class N Preferred Stock and the Voting Preferred
Stock to elect such additional two directors (in the case of an arrearage in
dividends described in clause (i)) or one additional director (in the case of an
arrearage in dividends described in clause (ii)) shall cease (but subject always
to the same provision for the vesting of such voting rights in the case of any
similar future arrearages), and the terms of office of all persons elected as
directors by the holders of the Class N Preferred Stock and the Voting Preferred
Stock shall forthwith terminate and the number of directors constituting the
Board of Directors shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of Class N Preferred Stock and
the Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class N Preferred Stock (addressed
to the Secretary at the principal office of the Corporation) shall, call a
special meeting of the holders of the Class N Preferred Stock and of the Voting
Preferred Stock for the election of the two directors (in the case of an
arrearage in dividends described in clause (i)) or one director (in the case of
an arrearage in dividends described in clause (ii)) to be elected by them as
herein provided, such call to be made by notice similar to that provided in the
Bylaws of the Corporation for a special meeting of the stockholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days after receipt of
any such request, then any holder of Class N Preferred Stock may call such
meeting, upon the notice above provided, and for that purpose shall have access
to the stock books of the Corporation. The directors or director elected at any
such special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the directors elected by the holders of the Class N Preferred Stock and the
Voting Preferred Stock, a successor shall be elected by the Board of Directors,
upon the nomination of the then-remaining director elected by the holders of
the Class N Preferred Stock and the Voting Preferred Stock or the successor of
such remaining director, to serve until the next annual meeting of the
stockholders or special meeting held in place thereof if such office shall not
have previously terminated as provided above.
(b) So long as any shares of Class N Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class N Preferred
Stock voting as a single
28
class, given in person or by proxy, either in writing without a meeting or by
vote at any meeting called for the purpose, shall be necessary for effecting or
validating:
(i) any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of the
Class N Preferred Stock (including any amendment, alteration or repeal effected
pursuant to a merger, consolidation, or similar transaction) or would convert
the Class N Preferred Stock into cash or any other security other than a
preferred stock with terms and provisions equivalent to those set forth in these
Articles Supplementary; provided, however, that the amendment of the provisions
of the Charter so as to authorize or create, or to increase the authorized
amount of, or issue any Junior Stock or any shares of any class of Parity Stock
shall not be deemed to materially adversely affect the voting powers, rights or
preferences of the holders of Class N Preferred Stock; or
(ii) the authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of Senior
Stock or any security convertible into shares of any class or series of Senior
Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class N Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class N Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting
rights under these Articles Supplementary, each share of Class N Preferred Stock
shall have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class N
Preferred Stock as a single class on any matter, then the Class N Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class N Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the
record holder of any share of Class N Preferred Stock as the true and lawful
owner thereof
29
for all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class N
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class N Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class N
Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided
in Section 11.8, from and after the Issue Date (and subject to Section 11.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in
any Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class N Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class N Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class N Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class N Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class N Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder limit, and the
Initial Holder shall acquire no rights in such shares of Class N Preferred
Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 11.8 from and after the Issue Date (and subject to
Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Class N
Preferred Stock in excess of the Look-Through Ownership limit shall be void ab
initio as to the Transfer of such shares of Class N Preferred Stock that would
be otherwise Beneficially Owned by such Look-Through Entity in excess of the
Look-Through Ownership Limit and such Look-Through Entity shall acquire no
rights in such shares of Class N Preferred Stock.
30
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant that
is described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class N Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class N
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class N Preferred Stock that is null and void under Sections 11.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class N Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class N Preferred Stock in
the same or any other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 11.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class N Preferred Stock in violation of Section 11.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class N Preferred Stock acquired in violation of Section
11.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; provided, however, that any
Transfers or attempted Transfers (or, in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 11.3 of this Article; provided, further, that the
provisions of this Section 11.2 shall be subject to the provisions of Section
11.12 of this Article; provided, further, that neither the Board of Directors
nor any committee thereof may
31
exercise such authority in a manner that interferes with any ownership or
transfer of Class N Preferred Stock that is expressly authorized pursuant to
Section 11.8(C) of this Article.
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) or other
change in the capital structure of the Corporation (including, but not limited
to, any redemption of Equity Stock) or other event (including, but not limited
to, any acquisition of any share of Equity Stock) such that (a) any Person
(other than the Initial Holder or a Look-Through Entity) would Beneficially Own
shares of Class N Preferred Stock in excess of the Ownership Limit, or (b) the
Initial Holder would Beneficially Own shares of Class N Preferred Stock in
excess of the Initial Holder Limit, or (c) any Person that is a Look-Through
Entity would Beneficially Own shares of Class N Preferred Stock in excess of the
Look- Through Ownership Limit (in any such event, the Person, Initial Holder or
Look- Through Entity that would Beneficially Own shares of Class N Preferred
Stock in excess of the Ownership Limit, the Initial Holder Limit or the
Look-Through Entity Limit, respectively, is referred to as a "Prohibited
Transferee"), then, except as otherwise provided in Section 11.8 of this
Article, such shares of Class N Preferred Stock in excess of the Ownership
Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case
may be, (rounded up to the nearest whole share) shall be automatically
transferred to a Trustee in his capacity as trustee of a Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the Business Day
prior to the Excess Transfer, change in capital structure or another event
giving rise to a potential violation of the Ownership Limit, the Initial Holder
Limit or the Look-Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class N
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
11.3(E), the Prohibited Transferee shall have no rights in the Class N Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
32
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class N
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class N Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class N Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class N Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure or
other event giving rise to a potential violation of the Ownership Limit, Initial
Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have
given an irrevocable proxy to the Trustee to vote the shares of Class N
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the Trust
and (2) the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any proceeds in excess of the
amount payable to the Prohibited Transferee shall be payable to the Charitable
Beneficiary. If any of the transfer restrictions set forth in this Section
11.3(E) or any application thereof is determined in a final judgment to be void,
invalid or unenforceable by any court having jurisdiction over the issue, the
Prohibited Transferee may be deemed, at the option of the Corporation, to have
acted as the agent of the Corporation in acquiring the Class N Preferred Stock
as to which such restrictions would, by their terms, apply, and to hold such
Class N Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares
of Class N Preferred Stock transferred to the Trustee shall be deemed to have
been offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of
33
90 days after the later of (i) the date of the Excess Transfer or other event
resulting in a transfer to the Trust and (ii) the date that the Board of
Directors determines in good faith that an Excess Transfer or other event
occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class N Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class N Preferred Stock in violation of Section
11.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 11.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted 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.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class N
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class N Preferred Stock shall, upon written request by the
Corporation, such request to be made 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 Class N Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record or Beneficial Owner of Class N Preferred Stock shall, upon demand by
the Corporation, disclose to the Corporation in writing such additional
information with respect to the Beneficial Ownership of the Class N Preferred
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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the Look-
Through Ownership Limit, as applicable. Each stockholder of record, including
without limitation any Person that holds shares of Class N Preferred Stock on
behalf of a Beneficial Owner, shall take all reasonable steps to obtain the
written notice described in this Section 11.5 from the Beneficial Owner.
34
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class N Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class N
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall
provide a statement or affidavit to the Corporation setting forth the number of
shares of Class N Preferred Stock already Beneficially 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.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 11 of this Article, or in the case of an ambiguity
in any definition contained in Section 11 of this Article, the Board of
Directors shall have the power to determine the application of the provisions of
this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code and is a corporation, partnership, estate or trust. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person 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 on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class N Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and the
pledgee shall not be subject to the
35
Ownership Limit with respect to the Class N Preferred Stock so pledged to it
either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold allotment
of Class N Preferred Stock) following the purchase of Class N Preferred Stock by
an underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class N Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class N Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class N Preferred Stock purchased in connection
with market making activities.
11.9 LEGEND. Each certificate for Class N Preferred Stock shall bear
substantially the following legend:
"The shares of Class N Convertible Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class N Convertible
Cumulative Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class N Convertible Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class N Convertible
Cumulative Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter
(including the Articles Supplementary setting forth the terms of the
Class N Convertible Cumulative Preferred Stock), 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 that so
requests. If the restrictions on transfer are violated (i) the transfer
of the shares of Class N Convertible Cumulative Preferred Stock
represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class N Convertible Cumulative Preferred Stock) or (ii) the shares of
Class N Convertible Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit of
one or more Charitable Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article 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.
36
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
37
FOURTH: The terms of the Class N Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXV of the Charter.
(the next page is the signature page)
38
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on September 12,
2000.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ KATHLEEN HARVEY /s/ PAUL J. MCAULIFFE
- -------------------------- ------------------------------
Kathleen Harvey Paul J. McAuliffe
Assistant Secretary Executive Vice President and
Chief Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer
of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ PAUL J. MCAULIFFE
------------------------------
Paul J. McAuliffe
Executive Vice President and
Chief Financial Officer
39
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS O CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland
corporation (hereinafter called the "Corporation"), having its principal office
in Baltimore City, Maryland, hereby certifies to the Department of Assessments
and Taxation of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 1,904,762 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share, into a class
designated as Class O Cumulative Convertible Preferred Stock, par value $.01 per
share, and has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class O Cumulative Convertible Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 1,904,762 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 470,337,500 shares
immediately prior to the reclassification to 468,432,738 shares immediately
after the reclassification. The number of shares classified as Class O
Cumulative Convertible Preferred Stock may be decreased pursuant to Section 6 of
Article Third of these Articles Supplementary upon reacquisition thereof in any
manner, or by retirement thereof, by the Corporation.
THIRD: The terms of the Class O Cumulative Convertible Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class O Cumulative
Convertible Preferred Stock (the "Class O Preferred Stock") and One Million Nine
Hundred Four Thousand Seven Hundred and Sixty-Two (1,904,762) shall be the
authorized number of shares of such Class O Preferred Stock constituting such
class.
2. DEFINITIONS.
For purposes of the Class O Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the product of (i) the number of shares of each class of Equity
Stock within such block and (ii) the corresponding Market Price of one
share of Equity Stock of such class.
"Base Common Stock Dividend" shall have the meaning set forth in
paragraph (a) of Section 9 of this Article.
"Base Rate" shall mean a quarterly dividend payment in an amount per
share equal to $1.18125; provided, however, that, if the Corporation
gives notice of its election to make a Dividend Increase following a
Change of Control in accordance with Section 6.5(a) of the Purchase
Agreement, then, from and after the date of such notice, the "Base
Rate" shall mean a quarterly dividend payment in an amount per share
equal to (i) for all Dividend Periods commencing after the date such
notice is given, the greater of (a) $1.575 or (b) the product of (x)
$13.125 and (y) the sum of 800 basis points plus the greater of (x) the
annual yield to maturity of U.S. Treasury securities with a five year
maturity and (y) the annual yield to maturity of U.S. Treasury
securities with a ten year maturity, in each case as compiled by and
published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business
days prior to the date of such notice (or, if such Statistical Release
is no longer published, any publicly available source of similar data),
and (ii) for the Dividend Period in which such notice is given, a
weighted average (based on the number of days in such Dividend Period
occurring before and after the date of such notice) of (a) the Base
Rate in effect prior thereto and (b) the Base Rate determined in
accordance with the foregoing clause (i).
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (without
duplication) (i) the number of shares of Equity Stock directly owned by
such Person, (ii) the number of shares of Equity Stock indirectly owned
by such Person (if such Person is an "individual" as defined in Section
542(a)(2) of the Code) taking into account the constructive ownership
rules of Section 544 of the Code, as modified by Section 856(h)(1)(B)
of the Code, and (iii) the number of shares of Equity Stock that such
Person is deemed to beneficially own pursuant to Rule 13d-3 under the
Exchange Act, or that is attributed to such Person pursuant to Section
318 of
2
the Code, as modified by Section 856(d)(5) of the Code, provided that
when applying this definition of Beneficial Ownership to the Initial
Holder, clause (iii) of this definition, and clause (ii) of the
definition of "Person" shall be disregarded. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class O
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 9 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Change of Control" shall have the meaning set forth in the Purchase
Agreement.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class A Common Stock" shall mean the Class A Common Stock, par value
$.01 per share, of the Corporation, and such other shares of the
Corporation's capital stock into which outstanding shares of such Class
A Common Stock shall be reclassified.
"Class O Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity 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 quotation system that may then be in use
or, if the Equity 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 Equity Stock selected
by the Board of Directors of the Corporation or, if the Equity Stock is
not publicly traded,
3
the fair value of a share of such Equity Stock as reasonably determined
in good faith by the Board of Directors.
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Conversion Price" shall mean the conversion price per share of Class A
Common Stock for which each share of Class O Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section 7 of this Article. The initial Conversion Price shall be $52.50
(equivalent to a conversion rate of one share of Class A Common Stock
for each share of Class O Preferred Stock).
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, (a) the date that cash dividends are paid on the Class A Common
Stock with respect to such Dividend Period; or (b) if such dividends
have not been paid on the Class A Common Stock by 11:00 a.m., New York
City time, on the sixtieth day from and including the last day of such
Dividend Period, then on such day; provided, further, that if any
Dividend Payment Date falls on any day other than a Business Day, the
dividend payment payable on such Dividend Payment Date shall be paid on
the Business Day immediately following such Dividend Payment Date and
no interest shall accrue on such dividend from such date to such
Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
O Preferred Stock shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the Redemption Date with respect to the Class
O Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 11.3(A) of this
Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean the average of the daily Closing Prices
of a share of Class A Common Stock during the twenty (20) consecutive
Trading Days before, and ending not later than, the earlier of the day
in question and the day before the "ex date" with respect to the
issuance or distribution requiring such computation. The term "ex
date," when used with respect to any issuance or distribution, means
the first day on
4
which the share of Class A Common Stock trades regular way, without the
right to receive such issuance or distribution, on the exchange or in
the market, as the case may be, used to determine that day's Closing
Price.
"Issue Date" shall mean September 15, 2000.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including September 30,
2000.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class O Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class O Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"Internal Rate of Return" shall mean, as of any determination date, the
effective discount rate under which the present value of the Inflows
associated with an outstanding share of Class O Preferred Stock equals
the Outflow on the Issue Date associated with such share. For purposes
of calculation of Internal Rate of Return:
(i) "Inflows" shall mean (a) all dividends (whether paid in
cash, property or stock (other than stock of the Corporation)) that
have been received on such share, (b) any other distributions that have
been received on such share, and (c) as of the determination date, the
weighted average price of a share of the Class A Common Stock during
the forty-five most recent Trading Days, such weighted average
multiplied by the Liquidation Preference (excluding any accumulated,
accrued and unpaid dividends) per share of Class O Preferred Stock, and
such product divided by the Conversion Price; provided, that
notwithstanding the foregoing, "Inflows" shall not include (x) any
commitment or placement fees payable in connection with the issuance of
shares of Class O Preferred Stock and (y) the amount of any dividends
or distributions (in excess of the dividends or distributions otherwise
payable) resulting from an increase in the Base Rate upon the
occurrence of a Change of Control. For purposes of calculating the
amounts of any Inflows, the weighted average price of a share of Class
A Common Stock is determined by dividing (a) the sum of the product for
all sales of Class A Common Stock during such 45 Trading Days of (i)
the sale price per share of Class A Common Stock and (ii) the number of
shares of Class A Common Stock sold by (b) the total number of shares
of Class A Common Stock sold during such 45 Trading Days. For purposes
of calculating the amounts of any Inflows, all dividends or
distributions received in property or stock (other than stock of the
Corporation) shall be deemed to have a value equal to
5
the fair market value of such dividends or distributions as of the date
such dividend or distribution is received, as determined in good faith
by the Board of Directors. All Inflows shall be deemed to have taken
place on the date on which payment was actually received by the holder.
(ii) "Outflow" shall mean $52.50 and shall be deemed to have
taken place on the Closing Date of the Purchase Agreement.
(iii) Neither the fact of any transfer of Class O Preferred
Stock nor the amount of any consideration received by the holder
thereof or paid by any successor holder in connection with any transfer
shall affect the calculation of Internal Rate of Return.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class O Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class O Preferred Stock that are Beneficially Owned by the
Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean The New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided, however, that for purposes of the
application of the Ownership Limit, the Look-Through Ownership Limit or
the Initial Holder Limit to any Person, the term "Outstanding" shall be
deemed to include the number of shares of Equity Stock that such Person
alone, at that time, could acquire pursuant to any options or
convertible securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class O Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the
6
Aggregate Value of all Outstanding shares of Equity Stock over (y) the
Aggregate Value of all shares of Equity Stock other than Class O
Preferred Stock that are Beneficially Owned by the Person.
"Ownership Restrictions" shall mean, collectively, the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article, (i)
an individual, corporation, partnership, estate, trust (including a
trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) a "group,"
as that term is used for purposes of Section 13(d)(3) of the Exchange
Act, and (b) for purposes of the remaining Sections of this Article,
any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity.
"Prohibited Transferee" shall have the meaning set forth in Section
11.3(A) of this Article.
"Purchase Agreement" shall mean the Class O Cumulative Convertible
Preferred Share Purchase Agreement, dated as of September 13, 2000, by
and among Security Capital Preferred Growth Incorporated, the
Corporation and AIMCO Properties, L.P.
"Redemption Date" shall mean, in the case of any redemption of any
shares of Class O Preferred Stock, the date fixed for redemption of
such shares.
"Redemption Price" shall mean, with respect to any share of Class O
Preferred Stock to be redeemed, (i) if the Redemption Date occurs
during the period from and including the third anniversary of the Issue
Date, to but excluding the fourth anniversary of the Issue Date, 104%
of the Liquidation Preference thereof, and (ii) if the Redemption Date
occurs on or after the fourth anniversary of the Issue Date, 102% of
the Liquidation Preference thereof, plus, in the case of clause (i) or
(ii), all accumulated, accrued and unpaid dividends (whether or not
earned or declared), if any, to the Redemption Date.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"Repurchase Offer" shall have the meaning set forth in the Purchase
Agreement.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
7
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class O
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE, a
day on which the NYSE is open for the transaction of business, (ii) if
the Equity Stock is not listed or admitted to trading on the NYSE but
is listed or admitted to trading on another national securities
exchange or automated quotation system, a day on which the principal
national securities exchange or automated quotation system, as the case
may be, on which the Equity Stock is listed or admitted to trading is
open for the transaction of business, or (iii) if the Equity Stock is
not listed or admitted to trading on any national securities exchange
or automated quotation system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class O Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
O Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class O Preferred Stock), whether voluntary or
involuntary, whether of record ownership or Beneficial Ownership, and
whether by operation of law or otherwise (including, but not limited
to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of Class O Preferred
Stock). The term "Transfers" and "Transferred" shall have correlative
meanings.
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class O Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class O Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3 of this
Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 9
of this Article.
8
3. DIVIDENDS.
(a) The holders of Class O Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of funds legally
available for that purpose, cumulative dividends payable in cash in an amount
per share of Class O Preferred Stock equal to the greater of (i) the Base Rate,
or (ii) the cash dividends declared on the number of shares of Class A Common
Stock, or portion thereof, into which a share of Class O Preferred Stock is
convertible. The dividends payable with respect to the Initial Dividend Period
shall be determined solely by reference to the Base Rate. The amount referred to
in clause (ii) of this paragraph (a) with respect to each succeeding Dividend
Period shall be determined as of the applicable Dividend Payment Date by
multiplying the number of shares of Class A Common Stock, or portion thereof
calculated to the fourth decimal point, into which a share of Class O Preferred
Stock would be convertible at the opening of business on such Dividend Payment
Date (based on the Conversion Price then in effect) by the aggregate cash
dividends payable or paid for such Dividend Period in respect of a share of
Class A Common Stock outstanding as of the record date for the payment of
dividends on the Class A Common Stock with respect to such Dividend Period. If
(A) the Corporation pays a cash dividend on the Class A Common Stock after the
Dividend Payment Date for the corresponding Dividend Period and (B) the dividend
on the Class O Preferred Stock for such Dividend Period calculated pursuant to
clause (ii) of this paragraph (a), taking into account the Class A Common Stock
dividend referenced in clause (A), exceeds the dividend previously declared on
the Class O Preferred Stock for such Dividend Period, the Corporation shall pay
an additional dividend to the holders of the Class O Preferred Stock on the date
that the Class A Common Stock dividend referenced in clause (A) is paid, in an
amount equal to the difference between the dividend calculated pursuant to
clause (B) and the dividends previously declared on the Class O Preferred Stock
with respect to such Dividend Period. Such dividends shall be cumulative from
the Issue Date, whether or not in any Dividend Period or Periods such dividends
shall be declared or there shall be funds of the Corporation legally available
for the payment of such dividends, and shall be payable quarterly in arrears on
the Dividend Payment Dates, commencing on the first Dividend Payment Date after
the Issue Date. Each such dividend shall be payable in arrears to the holders of
record of the Class O Preferred Stock, as they appear on the stock records of
the Corporation at the close of business on a record date fixed by the Board of
Directors which shall be not more than 60 days prior to the applicable Dividend
Payment Date and, within such 60 day period, shall be the same date as the
record date for the regular quarterly dividend payable with respect to the Class
A Common Stock for the Dividend Period to which such Dividend Payment Date
relates (or, if there is no such record date for Class A Common Stock, then such
date as the Board of Directors may fix). Accumulated, accrued and unpaid
dividends for any past Dividend Periods may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to holders of record on
such date, which date shall not precede by more than 45 days the payment date
thereof, as may be fixed by the Board of Directors.
(b) The amount of dividends payable per share of Class O
Preferred Stock for the Initial Dividend Period, or any other period shorter
than a full Dividend Period, shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class O Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or
9
stock, in excess of cumulative dividends, as herein provided, on the Class O
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 Class O Preferred
Stock that may be in arrears.
(c) So long as any of the shares of Class O Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation with respect to any class or series of
Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment on the Class O Preferred
Stock for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Stock. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Class O Preferred Stock and all
dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class O Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class O 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made directly or indirectly by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Class A 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 in respect thereof, directly or indirectly, by
the Corporation unless in each case (i) the full cumulative dividends (including
all accumulated, accrued and unpaid dividends) on all outstanding shares of
Class O Preferred Stock and any other Parity Stock of the Corporation shall have
been paid or such dividends have been declared and set apart for payment for all
past Dividend Periods with respect to the Class O Preferred Stock and all past
dividend periods with respect to such Parity Stock and (ii) sufficient funds
shall have been paid or set apart for the payment of the full dividend for the
current Dividend Period with respect to the Class O Preferred Stock and the
current dividend period with respect to such Parity Stock.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the
10
holders of Junior Stock, the holders of shares of Class O Preferred Stock shall
be entitled to receive Fifty Two Dollars and Fifty Cents ($52.50) per share of
Class O Preferred Stock (the "Liquidation Preference"), plus an amount equal to
all dividends (whether or not earned or declared) accumulated, accrued and
unpaid thereon to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. Until the holders of the
Class O Preferred Stock have been paid the Liquidation Preference in full, plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders, no payment will be made to any holder of Junior Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon any
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Class O
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series of
Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Class O Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Class O Preferred Stock and any such other Parity Stock if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
O Preferred Stock and any Parity Stock, as provided in Section 4(a), 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 Class O Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class O Preferred Stock shall not be redeemable
by the Corporation prior to the third anniversary of the Issue Date, except as
set forth in Section 11.2 of this Article. On and after the third anniversary of
the Issue Date, the Corporation, at its option, may redeem shares of Class O
Preferred Stock, in whole or from time to time in part, at a price payable in
cash equal to the Redemption Price applicable thereto.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of
Class O Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class O Preferred Stock may be redeemed unless
all outstanding shares of Class O Preferred Stock are simultaneously redeemed.
Neither the Corporation nor any affiliate of the Corporation may
11
purchase or acquire shares of Class O Preferred Stock, other than pursuant to a
purchase or exchange offer made on the same terms to all holders of shares of
Class O Preferred Stock.
(d) If the Corporation shall redeem shares of Class O
Preferred Stock pursuant to paragraph (a) of this Section 5, notice of such
redemption shall be given to each holder of record of the shares to be redeemed.
Such notice shall be provided by recognized overnight courier at such holder's
address as the same appears on the stock records of the Corporation. Neither the
failure to mail any notice required by this paragraph (d), nor any defect
therein or in the mailing thereof to any particular holder, shall affect the
sufficiency of the notice or the validity of the proceedings for redemption with
respect to the other holders. Any notice mailed in the manner herein provided
shall be conclusively presumed to have been duly given on the day after the date
mailed whether or not the holder receives the notice. Each such notice shall
state, as appropriate: (i) the Redemption Date; (ii) the number of shares of
Class O 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; (iii) the place or places at which certificates for such shares are
to be surrendered for cash; (iv) the then-current Conversion Price; (v) the
Redemption Price payable on such Redemption Date; and (vi) a statement as to
whether or not accumulated, accrued and unpaid dividends will be payable as part
of the Redemption Price, or payable on the next Dividend Payment Date to the
record holder at the close of business on the relevant record date as described
in the next sentence. Notice having been mailed as aforesaid, from and after the
Redemption Date (unless the Corporation shall fail to make available the amount
of cash necessary to effect such redemption), (i) dividends on the shares of
Class O Preferred Stock so called for redemption shall cease to accumulate or
accrue on the shares of Class O Preferred Stock called for redemption, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class O Preferred Stock of the Corporation shall
cease (except the right to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required); provided, however, that if the Redemption Date for any shares
of Class O Preferred Stock occurs after any dividend record date and on or prior
to the related Dividend Payment Date, the full dividend payable on such Dividend
Payment Date in respect of such shares of Class O Preferred Stock called for
redemption shall be payable on such Dividend Payment Date to the holders of
record of such shares at the close of business on the corresponding dividend
record date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the cash necessary to effect the
redemption in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the applicable Redemption Date, the Corporation shall
irrevocably deposit in trust with a bank or trust company (which may not be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $200,000,000, such amount of
cash as is necessary for such redemption, plus, if such Redemption Date occurs
after any dividend record date and on or prior to the related Dividend Payment
Date, such amount of cash as is necessary to pay the dividend payable on such
Dividend Payment Date in respect of such shares of Class O Preferred Stock
called for redemption, with irrevocable instructions that such cash be applied
to the redemption of the shares of Class O Preferred Stock so called for
redemption and, if applicable, the payment of such dividend. No interest shall
accrue for the benefit of the holders of shares of Class O Preferred Stock to be
redeemed on any cash so set aside by the Corporation.
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Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Redemption Date shall revert to the general funds of the
Corporation, after which reversion the holders of shares of Class O 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 such
notice of the certificates for any such shares of Class O Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and 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 Class O Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class O
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class O Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class O Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class O Preferred Stock that have been issued and
reacquired in any manner by the Corporation (including, without limitation,
shares of Class O Preferred Stock which have been surrendered for conversion)
shall be returned to the status of authorized but unissued shares of Class O
Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, except as set forth in Section
7.2 of this Article, holders of shares of Class O Preferred Stock shall have the
right to convert all or a portion of such shares into shares of Class A Common
Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, each share of Class O Preferred Stock shall, at the option of the
holder thereof, be convertible at any time (unless such share is called for
redemption, then to and including but not after the close of business on the
date immediately prior to the Redemption Date, unless the Corporation shall
default in payment due upon redemption thereof), in whole or in part, into the
number of fully paid and non-assessable shares of Class A Common Stock
(calculated as to each conversion to the nearest 1/100th of a share) obtained by
dividing the Liquidation Preference (excluding any accumulated, accrued and
unpaid dividends) per share of Class O Preferred Stock by the Conversion Price
(as in effect at the time and on the date provided for in paragraph (b) of this
Section 7.1) and by surrendering such shares to be converted, such surrender to
be made in the manner provided in paragraph (b) of this Section 7.1; provided,
however, that the right to convert shares of Class O Preferred Stock called for
redemption pursuant to Section 5 shall terminate at
13
the close of business on the Redemption Date fixed for such redemption, unless
the Corporation shall default in making payment of cash payable upon such
redemption under Section 5 of this Article.
(b) To convert shares of Class O Preferred Stock, the holder
of the shares to be converted shall surrender the certificate representing such
shares at the office of the Transfer Agent, accompanied by the funds, if any,
required by the last paragraph of this subsection (b) to be paid by such holder,
and shall give written notice of conversion in the form provided on such
certificate representing shares of Class O Preferred Stock (or such other notice
as is reasonably acceptable to the Corporation) to the Corporation at such
office or agency that the holder elects to convert the shares of Class O
Preferred Stock specified in such notice. Such notice shall also state the name
or names, together with address or addresses, in which the certificate or
certificates for shares of Class A Common Stock which shall be issuable on such
conversion shall be issued. Unless the shares issuable on conversion are to be
issued in the same name as the name in which such share of Class O Preferred
Stock is registered, each certificate representing a share of Class O Preferred
Stock surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the holder
or such holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the Corporation
that such taxes have been paid).
As promptly as practicable, but in no event later than three Business
Days after the surrender of certificates representing such shares of Class O
Preferred Stock and the receipt of such notice, instruments of transfer and
funds, if any, as aforesaid, the Corporation shall issue and shall deliver at
such office or agency to such holder, or as designated in such holder's written
instructions, a certificate or certificates for the number of full shares of
Class A Common Stock issuable upon the conversion of such share or shares of
Class O Preferred Stock in accordance with provisions of this Section 7.1, and a
check or cash in respect of the cash amount payable to such holder, if any,
referred to in subsection (c), below.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which certificates representing such
shares of Class O Preferred Stock shall have been surrendered and such notice
(and any applicable instruments of transfer and any required taxes) received by
the Corporation as aforesaid, and the Person or Persons in whose name or names
any certificate or certificates for shares of Class A Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date,
and such conversion shall be at the Conversion Price in effect at such time on
such date, unless the stock transfer books of the Corporation shall be closed on
that date, in which event such Person or Persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation.
Except as provided herein, the Corporation will make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends (other
14
than dividends on the Class A Common Stock the record date for which is after
the conversion date and which the Corporation shall pay in the ordinary course
to the record holder as of the record date) on the Class A Common Stock issued
upon such conversion. Holders of Class O Preferred Stock at the close of
business on a record date for the payment of dividends on the Class O Preferred
Stock will be entitled to receive an amount equal to the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such record date. If the Dividend Adjustment
Amount (as defined below) with respect to any shares of Class O Preferred Stock
surrendered for conversion is positive, the holders of such shares shall, as of
the date of conversion, be entitled to receive a cash payment equal to such
Dividend Adjustment Amount. If the Dividend Adjustment Amount with respect to
any shares of Class O Preferred Stock surrendered for conversion is negative,
such shares must be accompanied by payment of a cash amount equal to the
absolute value of such Dividend Adjustment Amount. As used herein, "Dividend
Adjustment Amount" shall mean, with respect to any share of Class O Preferred
Stock that has been surrendered for conversion, the sum of:
(i) the aggregate amount of any dividends (whether or not
earned or declared) that are accumulated, accrued and unpaid on such
share as of the time of such conversion; minus
(ii) if such share has been surrendered for conversion during
the period between the close of business on any dividend record date
and the opening of business on the corresponding Dividend Payment Date,
the amount of the dividend payable thereon on such Dividend Payment
Date; minus
(iii) an amount equal to the product of (A) the number of
shares of Class A Common Stock (or fraction thereof) into which such
share of Class O Preferred Stock has been converted, (B) the quarterly
cash dividend per share that was most recently declared on the Class A
Common Stock, determined as of the date of conversion, and (C) a
fraction, the numerator of which is the number of days in the period
from and including the date of the most recent dividend payment date
for the Class A Common Stock to but excluding the date of such
conversion, and the denominator of which is 90.
(c) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class O Preferred Stock. If more than one share of Class
O Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class O Preferred Stock so converted. In lieu of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of any share of Class O Preferred Stock, the Corporation
shall pay to the holder of such shares an amount in cash (computed to the
nearest cent) equal to the Closing Price of the Class A Common Stock on
15
the Trading Day immediately preceding the date of conversion, multiplied by the
fractional interest that otherwise would have been deliverable upon conversion
of such share.
7.2 MANDATORY CONVERSION.
(a) The Corporation shall have the right to require that all
or part of the issued and outstanding shares of Class O Preferred Stock be
converted into shares of Class A Common Stock under the following circumstances:
(i) At any time from and including the first
anniversary of the Issue Date to but excluding the second anniversary of the
Issue Date, if the Internal Rate of Return exceeds 20.0% per annum, from and
including the Issue Date (such condition the "Conversion Condition) on one
occasion only, the Corporation shall have the right, upon 30 days advance
written notice, to require that up to 952,381 shares of Class O Preferred Stock
be converted into shares of Class A Common Stock as set forth in this Section
7.2.
(ii) At any time from and including the second
anniversary of the Issue Date to but excluding the third anniversary of the
Issue Date, if the Internal Rate of Return exceeds 20.0% per annum, from and
including the Issue Date, on one occasion only, the Corporation shall have the
right, upon 30 days advance written notice, to require that all or any portion
of the outstanding shares of Class O Preferred Stock be converted into shares of
Class A Common Stock as set forth in this Section 7.2;
provided, however, that
(A) if a Conversion Condition occurs and the Corporation is
entitled to require the conversion referred to in Section 7.2(a)(i) and does not
so convert, then the Corporation's right to require the conversion referred to
in Section 7.2(a)(ii) will be limited to a right to require that up to 952,381
shares of Class O Preferred Stock be converted into shares of Class A Common
Stock as set forth in this Section 7.2(a)(ii);
(B) if the Corporation receives a Liquidity Failure Notice
pursuant to Section 7.2(c)(vi), then the right to cause a conversion under
Section 7.2(a)(ii) shall thereupon terminate; and
(C) the Corporation may not exercise its right to convert
under Section 7.2(a)(ii) unless and until at least 90 days have transpired since
the date of any conversion under Section 7.2(a)(i).
(b) Subject to and upon compliance with the provisions of this
Section 7.2, the Corporation shall have the right, under the circumstances set
forth in (a)(i) or (ii) above, to convert such shares, in whole or in part, into
the number of fully paid and non-assessable shares of authorized but previously
unissued shares of Class A Common Stock per each share of Class O Preferred
Stock obtained by dividing the Liquidation Preference (excluding any accumulated
16
accrued and unpaid dividends) per share of Class O Preferred Stock by the
Conversion Price (as in effect at the time and on the date provided for in
subparagraph (c)(v) of this Section 7.2).
(c) (i) In order to exercise the conversion right, the
Corporation shall, promptly upon the Corporation exercising its right to require
conversion pursuant to (a)(i) or (ii) above, and in no event later than the
close of business on the next succeeding business day, give notice of such
conversion to each holder of record of the shares to be converted. Such notice
shall be provided by facsimile or, if facsimile is not available, then by
recognized overnight courier at such holder's address as the same appears on the
stock records of the Corporation. Any notice which was transmitted or mailed in
the manner herein provided shall be conclusively presumed to have been duly
given on the date received by the holder. Each such notice shall state, as
appropriate: (1) the date of conversion, which date may be any date at least two
business days following the date on which the notice is transmitted or mailed;
(2) the number of shares of Class O Preferred Stock to be converted and, if
fewer than all such shares held by such holder are to be converted, the number
of such shares to be converted, and (3) the then current Conversion Price.
(ii) Upon receiving such notice of conversion, each
such holder shall promptly surrender the certificates representing such shares
of Class O Preferred Stock as are being converted on the conversion date, duly
endorsed or assigned to the Corporation or in blank, at the office of the
Transfer Agent; provided, however, that the failure to so surrender any such
certificates shall not in any way affect the validity of the conversion of the
underlying shares of Class O Preferred Stock into shares of Class A Common
Stock. Unless the shares issuable on conversion are to be issued in the same
name as the name in which such shares of Class O Preferred Stock are registered,
each such share surrendered following conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax, if any (or evidence reasonably satisfactory
to the Corporation that such taxes have been paid).
(iii) A holder of shares of Class O Preferred Stock
shall, as of the date of the conversion of such shares to shares of Class A
Common Stock, be entitled to receive a cash payment in respect of any dividends
(whether or not earned or declared) that are accumulated, accrued and unpaid
thereon as of the time of such conversion, provided, however, that payment in
respect of any dividend on such shares that has been declared but for which the
Dividend Payment Date has not yet been reached shall be payable as of such
Dividend Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares.
(iv) As promptly as practicable after the surrender
of certificates for shares of Class O Preferred Stock as aforesaid, and in any
event no later than three business days after the date of such surrender, the
Corporation shall issue and shall deliver at such office to such holder, or send
on such holder's written order, a certificate or certificates for the number of
full shares of Class A Common Stock issuable upon the conversion of such shares
of Class O Preferred Stock in accordance with the provisions of this Section
7.2, and any fractional interest
17
in respect of a share of Class A Common Stock arising upon such conversion shall
be settled as provided in paragraph (d) of this Section 7.2.
(v) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date identified as
the conversion date in the notice of conversion sent by the Corporation as
aforesaid, and the Person or Persons in whose name or names any certificate or
certificates for shares of Class A Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such dates and such conversion shall
be at the Conversion Price in effect at such time on such date unless the stock
transfer books of the Corporation shall be closed on that date, in which event
such Person or Persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect on the date identified as the conversion date in the notice of conversion
sent by the Corporation as aforesaid. If the dividend payment record dates for
the Class O Preferred Stock and Class A Common Stock do not coincide, and the
preceding sentence does not operate to ensure that a holder of shares of Class O
Preferred Stock whose shares are converted into Class A Common Stock does not
receive dividends on both the shares of Class O Preferred Stock and the Class A
Common Stock into which such shares are converted for the same Dividend Period,
then notwithstanding anything herein to the contrary, it is the intent, and the
Transfer Agent is authorized to ensure, that no conversion after the earlier of
such record dates will be accepted until after the latter of such record dates.
(vi) In the event that the Corporation has elected to
cause a conversion of the shares of Class O Preferred Stock pursuant to Section
7.2(a)(i) above, and the holders of a majority of the shares of Class O
Preferred Stock so converted provide a written notice (a "Liquidity Failure
Notice") to the Corporation within 90 days after the date of conversion that
during such 90 day period, such holders were unable (based on commercially
reasonable efforts, taking into account volume) to sell the shares of Class A
Common Stock received upon conversion on the open market at price(s) that would
have provided such holder(s) with an Internal Rate of Return of at least 20% per
annum thereon from the Issue Date through the date of sale of all such shares of
Class A Common Stock (provided that in calculating the Inflows, instead of
calculating the weighted average price as provided in clause (i) of the
definition of Internal Rate of Return, the Internal Rate of Return shall be
calculated using the actual sale prices obtained by the holder(s)), then from
and after the delivery of the Liquidity Failure Notice, the right of the
Corporation to convert shares of Class O Preferred Stock under Section 7.2(ii)
shall terminate. The Liquidity Failure Notice shall include a list of dates on
which shares of Class A Common Stock were sold, the number and price per share
so sold and shall include a calculation of the Internal Rate of Return on the
aggregate number of shares of Class A Common Stock so sold during the period.
(d) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class O Preferred Stock. If more than one share of Class
O Preferred Stock shall be surrendered for
18
conversion at one time by the same holder, the number of full shares of Class A
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of Class O Preferred Stock so converted. In lieu
of any fractional interest in a share of Class A Common Stock that would
otherwise be deliverable upon the conversion of any share of Class O Preferred
Stock, the Corporation shall pay to the holder of such shares an amount in cash
(computed to the nearest cent) equal to the Closing Price of the Class A Common
Stock on the Trading Day immediately preceding the date of conversion,
multiplied by the fractional interest that otherwise would have been deliverable
upon conversion of such share.
7.3 ADJUSTMENTS TO CONVERSION PRICE
(a) The Conversion Price shall be adjusted from time to
time as follows:
(i) If the Corporation shall, after the Issue Date,
(A) pay a dividend or make a distribution on its Class A Common Stock in shares
of Class A Common Stock, (B) subdivide its outstanding Class A Common Stock into
a greater number of shares, (C) combine its outstanding Class A Common Stock
into a smaller number of shares or (D) issue any shares of capital stock by
reclassification of its outstanding Class A Common Stock (including a
reclassification pursuant to a merger or consolidation in which the Corporation
is the continuing entity and in which the Class A Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash, or
securities or other property of another entity), then, in each such case the
Conversion Price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or distribution or at the opening of business on the day following the
day on which such subdivision, combination or reclassification becomes
effective, as the case may be, shall be adjusted so that the holder of any share
of Class O Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Class A Common Stock (or fraction of
a share of Class A Common Stock) that such holder would have owned or have been
entitled to receive after the happening of any of the events described above had
such share of Class O Preferred Stock been converted immediately prior to the
record date in the case of a dividend or distribution or the effective date in
the case of a subdivision, combination or reclassification. An adjustment made
pursuant to this paragraph (a)(i) of this Section 7.3 shall become effective
immediately after the opening of business on the day next following the record
date (except as provided in paragraph (e) below) in the case of a dividend or
distribution and shall become effective immediately after the opening of
business on the day next following the effective date in the case of a
subdivision, combination or reclassification.
(ii) If the Corporation shall issue, after the Issue
Date, rights, options or warrants to all holders of Class A Common Stock
entitling them (for a period expiring within 45 days after the record date
described below in this paragraph (a)(ii) of this Section 7.3) to subscribe for
or purchase Class A Common Stock at a price per share less than the Fair Market
Value per share of the Class A Common Stock on the record date for the
determination of stockholders entitled to receive such rights, options or
warrants, then the Conversion Price in effect at the opening of business on the
day next following such record date shall be adjusted to equal the price
determined by multiplying (A) the Conversion Price in effect immediately prior
19
to the opening of business on the day following the date fixed for such
determination by (B) a fraction, the numerator of which shall be the sum of (X)
the number of shares of Class A Common Stock outstanding on the close of
business on the date fixed for such determination and (Y) the number of shares
that could be purchased at such Fair Market Value from the aggregate proceeds to
the Corporation from the exercise of such rights, options or warrants for Class
A Common Stock, and the denominator of which shall be the sum of (XX) the number
of shares of Class A Common Stock outstanding on the close of business on the
date fixed for such determination and (YY) the number of additional shares of
Class A Common Stock offered for subscription or purchase pursuant to such
rights, options or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date (except
as provided in paragraph (e) below). In determining whether any rights, options
or warrants entitle the holders of Class A Common Stock to subscribe for or
purchase Class A Common Stock at less than such Fair Market Value, there shall
be taken into account any consideration received by the Corporation upon
issuance and upon exercise of such rights, options or warrants, the value of
such consideration, if other than cash, to be determined in good faith by the
Board of Directors.
(iii) If the Corporation shall, after the Issue Date,
make a distribution on its Class A Common Stock other than in cash or shares of
Class A Common Stock (including any distribution in securities (other than
rights, options or warrants referred to in paragraph (a)(ii) of this Section
7.3)) (each of the foregoing being referred to herein as a "distribution"), then
the Conversion Price in effect at the opening of business on the next day
following the record date for determination of stockholders entitled to receive
such distribution shall be adjusted to equal the price determined by multiplying
(A) the Conversion Price in effect immediately prior to the opening of business
on the day following the record date by (B) a fraction, the numerator of which
shall be the difference between (X) the number of shares of Class A Common Stock
outstanding on the close of business on the record date and (Y) the number of
shares determined by dividing (aa) the aggregate value of the property being
distributed by (bb) the Fair Market Value per share of Class A Common Stock on
the record date, and the denominator of which shall be the number of shares of
Class A Common Stock outstanding on the close of business on the record date.
Such adjustment shall become effective immediately after the opening of business
on the day next following such record date (except as provided below). The value
of the property being distributed shall be as determined in good faith by the
Board of Directors; provided, however, that if the property being distributed is
a publicly traded security, its value shall be calculated in accordance with the
procedure for calculating the Fair Market Value of a share of Class A Common
Stock (calculated for a period of five consecutive Trading Days commencing on
the twentieth Trading Day after the distribution). Neither the issuance by the
Corporation of rights, options or warrants to subscribe for or purchase
securities of the Corporation nor the exercise thereof shall be deemed a
distribution under this paragraph.
(iv) If, after the Issue Date, the Corporation shall
acquire, pursuant to an issuer or self tender offer, all or any portion of the
outstanding Class A Common Stock and such tender offer involves the payment of
consideration per share of Class A Common Stock having a fair market value (as
determined in good faith by the Board of Directors), at the last
20
time (the "Expiration Time") tenders may be made pursuant to such offer, that
exceeds the Closing Price per share of Class A Common Stock on the Trading Day
next succeeding the Expiration Time, then the Conversion Price in effect on the
opening of business on the day next succeeding the Expiration Time shall be
adjusted to equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the Expiration Time by (B) a fraction, the
numerator of which shall be (X) the number of shares of Class A Common Stock
outstanding (including the shares acquired in the tender offer (the "Acquired
Shares")) immediately prior to the Expiration Time, multiplied by (Y) the
Closing Price per share of Class A Common Stock on the Trading Day next
succeeding the Expiration Time, and the denominator of which shall be the sum of
(XX) the fair market value (determined as aforesaid) of the aggregate
consideration paid to acquire the Acquired Shares and (YY) the product of (I)
the number of shares of Class A Common Stock outstanding (less any Acquired
Shares) at the Expiration Time, multiplied by (II) the Closing Price per share
of Class A Common Stock on the Trading Day next succeeding the Expiration Time.
(v) No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any adjustments that by
reason of this paragraph (a)(v) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made;
provided, further, that any adjustment shall be required and made in accordance
with the provisions of this Section 7.3 (other than this paragraph (a)(v)) not
later than such time as may be required in order to preserve the tax-free nature
of a distribution to the holders of shares of Class A Common Stock.
Notwithstanding any other provisions of this Section 7.3, the Corporation shall
not be required to make any adjustment of the Conversion Price for the issuance
of (A) any shares of Class A Common Stock pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the Corporation
and the investment of optional amounts in shares of Class A Common Stock under
such plan or (B) any options, rights or shares of Class A Common Stock pursuant
to any stock option, stock purchase or other stock-based plan maintained by the
Corporation. All calculations under this Section 7.3 shall be made to the
nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a
share (with .05 of a share being rounded upward), as the case may be. Anything
in this paragraph (a) of this Section 7.3 to the contrary notwithstanding, the
Corporation shall be entitled, to the extent permitted by law, to make such
reductions in the Conversion Price, in addition to those required by this
paragraph (a), as it in its discretion shall determine to be advisable in order
that any stock dividends, subdivision of shares, reclassification or combination
of shares, distribution of rights or warrants to purchase stock or securities,
or a distribution of other assets (other than cash dividends) hereafter made by
the Corporation to its stockholders shall not be taxable, or if that is not
possible, to diminish any income taxes that are otherwise payable because of
such event.
(b) If the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation, statutory share exchange,
issuer or self tender offer for at least 30% of the shares of Class A Common
Stock outstanding, sale of all or substantially all of the Corporation's assets
or recapitalization of the Class A Common Stock, but excluding any transaction
as to which paragraph (a)(i) of this Section 7.3 applies) (each of the foregoing
being referred to herein as a "Transaction"), in each case, as a result of which
shares of Class A
21
Common Stock shall be converted into the right to receive stock, securities or
other property (including cash or any combination thereof), each share of Class
O Preferred Stock which is not converted into the right to receive stock,
securities or other property in connection with such Transaction shall thereupon
be convertible into the kind and amount of shares of stock, securities and other
property (including cash or any combination thereof) receivable upon such
consummation by a holder of that number of shares of Class A Common Stock into
which one share of Class O Preferred Stock was convertible immediately prior to
such Transaction (without giving effect to any Conversion Price adjustment
pursuant to Section 7.3(a)(iv) of this Article). The Corporation shall not be a
party to any Transaction unless the terms of such Transaction are consistent
with the provisions of this paragraph (b), and it shall not consent or agree to
the occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Class O Preferred Stock that will contain
provisions enabling the holders of the Class O Preferred Stock that remain
outstanding after such Transaction to convert into the consideration received by
holders of Class A Common Stock at the Conversion Price in effect immediately
prior to such Transaction. The provisions of this paragraph (b) shall similarly
apply to successive Transactions.
(c) If:
(i) the Corporation shall declare a dividend (or any
other distribution) on the Class A Common Stock (other than cash dividends and
cash distributions); or
(ii) the Corporation shall authorize the granting to
all holders of the Class A Common Stock of rights or warrants to subscribe for
or purchase any shares of any class or series of capital stock or any other
rights or warrants; or
(iii) there shall be any reclassification of the
outstanding Class A Common Stock or any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of the
Corporation is required, or a statutory share exchange, an issuer or self tender
offer shall have been commenced for at least 30% of the outstanding shares of
Class A Common Stock (or an amendment thereto changing the maximum number of
shares sought or the amount or type of consideration being offered therefor
shall have been adopted), or the sale or transfer of all or substantially all of
the assets of the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the Transfer Agent and shall
cause to be mailed to each holder of shares of Class O Preferred Stock at such
holder's address as shown on the stock records of the Corporation, as promptly
as possible, a notice stating (A) the record date for the payment of such
dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Class A Common Stock of record
to be entitled to such dividend, distribution or rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation,
22
dissolution or winding up is expected to become effective, and the date as of
which it is expected that holders of Class A Common Stock of record shall be
entitled to exchange their shares of Class A Common Stock for securities or
other property, if any, deliverable upon such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up or (C) the date on which such tender offer commenced, the date on
which such tender offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto). Failure to give or receive such notice or any
defect therein shall not affect the legality or validity of the proceedings
described in this Section 7.3.
(d) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment which
certificate shall be conclusive evidence of the correctness of such adjustment
absent manifest error. Promptly after delivery of such certificate, the
Corporation shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder of shares of Class O Preferred Stock at such
holder's last address as shown on the stock records of the Corporation.
(e) In any case in which paragraph (a) of this Section 7.3
provides that an adjustment shall become effective on the day next following the
record date for an event, the Corporation may defer until the occurrence of such
event (A) issuing to the holder of any share of Class O Preferred Stock
converted after such record date and before the occurrence of such event the
additional Class A Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Class A Common Stock
issuable upon such conversion before giving effect to such adjustment and (B)
paying to such holder any amount of cash in lieu of any fraction pursuant to
paragraph (c) of Section 7.1 or paragraph (d) of Section 7.2, as the case may
be.
(f) There shall be no adjustment of the Conversion Price in
case of the issuance of any capital stock of the Corporation in a
reorganization, acquisition or other similar transaction except as specifically
set forth in this Section 7.3.
(g) If the Corporation shall take any action affecting the
Class A Common Stock, other than action described in this Section 7.3, that in
the opinion of the Board of Directors would materially adversely affect the
conversion rights of the holders of Class O Preferred Stock, the Conversion
Price for the Class O Preferred Stock may be adjusted, to the extent permitted
by law, in such manner, if any, and at such time as the Board of Directors, in
its sole discretion, may determine to be equitable under the circumstances.
(h) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Class A Common Stock solely for the purpose of effecting conversion
of the Class O Preferred Stock, the full number of shares of Class A Common
Stock deliverable upon the conversion of all outstanding shares of
23
Class O Preferred Stock not theretofore converted into Class A Common Stock. For
purposes of this paragraph (h), the number of shares of Class A Common Stock
that shall be deliverable upon the conversion of all outstanding shares of Class
O Preferred Stock shall be computed as if at the time of computation all such
outstanding shares were held by a single holder (and without regard to the
Ownership Limit set forth in the Charter of the Corporation).
The Corporation covenants that any shares of Class A Common Stock
issued upon conversion of the shares of Class O Preferred Stock shall be validly
issued, fully paid and nonassessable.
The Corporation shall use its best efforts to list the shares of Class
A Common Stock required to be delivered upon conversion of the shares of Class O
Preferred Stock, prior to such delivery, upon each national securities exchange,
if any, upon which the outstanding shares of Class A Common Stock are listed at
the time of such delivery.
(i) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
shares of Class A Common Stock or other securities or property on conversion or
redemption of shares of Class O Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issue or delivery of shares
of Class A Common Stock or other securities or property in a name other than
that of the holder of the shares of Class O Preferred Stock to be converted or
redeemed, and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Corporation the amount
of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
(j) In addition to any other adjustment required hereby, to
the extent permitted by law, the Corporation from time to time may decrease the
Conversion Price by any amount, permanently or for a period of at least twenty
Business Days, if the decrease is irrevocable during the period.
(k) Notwithstanding anything to the contrary contained in this
Section 7.3, conversion of Class O Preferred Stock pursuant to this Section 7.3
shall be permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in the Charter), after
taking into account any waiver of such limitation granted to any holder of the
shares of Class O Preferred Stock.
8. RANKING.
Any class or series of capital stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Class O Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts
24
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of Class O Preferred Stock ("Senior
Stock");
(b) on a parity with the Class O Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class O Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock, Class L Convertible Cumulative Preferred Stock or Class M Convertible
Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class
of stock or series and the Class O Preferred Stock shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or priority
of one over the other (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Parity Stock");
and
(c) junior to the Class O Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Class A Common Stock
or (ii) the holders of Class O Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
9. VOTING.
(a) If and whenever (i) six quarterly dividends (whether or
not consecutive) payable on the Class O Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, or (ii) for two consecutive quarterly
dividend periods the Corporation fails to pay dividends on the Class A Common
Stock in an amount per share at least equal to Fifty-Nine and One-Half Cents
($0.595) (subject to adjustment consistent with any adjustment of the Conversion
Price pursuant to Section 7.3 of this Article) (the "Base Common Stock
Dividend") the number of directors then constituting the Board of Directors
shall be increased by two (in the case of an arrearage in dividends described in
clause (i)) or one additional director (in the case of an arrearage in dividends
described in clause (ii) (in each case if not already increased by reason of
similar types of provisions with respect to shares of any other class or series
of Parity Stock which is entitled to similar voting rights (the "Voting
Preferred Stock")) and the holders of shares of Class O Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single class regardless
of series, shall be entitled to elect the two additional directors (in the case
of an arrearage in dividends described in clause (i)) or one (in the case of an
arrearage in dividends described in clause (ii)) to serve on the Board of
Directors at any
25
annual meeting of stockholders or special meeting held in place thereof, or at a
special meeting of the holders of the Class O Preferred Stock and the Voting
Preferred Stock called as hereinafter provided. Whenever (1) in the case of an
arrearage in dividends described in clause (i), all arrears in dividends on the
Class O Preferred Stock and the Voting Preferred Stock then outstanding shall
have been paid and dividends thereon for the current quarterly dividend period
shall have been declared and paid, or declared and set apart for payment, or (2)
in the case of an arrearage in dividends described in clause (ii), the
Corporation makes a quarterly dividend payment on the Class A Common Stock in an
amount per share equal to or exceeding the Base Common Stock Dividend, then the
right of the holders of the Class O Preferred Stock and the Voting Preferred
Stock to elect such additional two directors (in the case of an arrearage in
dividends described in clause (i)) or one additional director (in the case of an
arrearage in dividends described in clause (ii)) shall cease (but subject always
to the same provision for the vesting of such voting rights in the case of any
similar future arrearages), and the terms of office of all persons elected as
directors by the holders of the Class O Preferred Stock and the Voting Preferred
Stock shall forthwith terminate and the number of directors constituting the
Board of Directors shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of Class O Preferred Stock and
the Voting Preferred Stock, if applicable, the Secretary of the Corporation may,
and upon the written request of any holder of Class O Preferred Stock (addressed
to the Secretary at the principal office of the Corporation) shall, call a
special meeting of the holders of the Class O Preferred Stock and of the Voting
Preferred Stock for the election of the two directors (in the case of an
arrearage in dividends described in clause (i)) or one director (in the case of
an arrearage in dividends described in clause (ii)) to be elected by them as
herein provided, such call to be made by notice similar to that provided in the
Bylaws of the Corporation for a special meeting of the stockholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days after receipt of
any such request, then any holder of Class O Preferred Stock may call such
meeting, upon the notice above provided, and for that purpose shall have access
to the stock books of the Corporation. The directors or director elected at any
such special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the directors elected by the holders of the Class O Preferred Stock and the
Voting Preferred Stock, a successor shall be elected by the Board of Directors,
upon the nomination of the then-remaining director elected by the holders of the
Class O Preferred Stock and the Voting Preferred Stock or the successor of such
remaining director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.
(b) So long as any shares of Class O Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class O Preferred
Stock, voting as a single class, given in person or by proxy, either in writing
without a meeting or by vote at any meeting called for the purpose, shall be
necessary for effecting or validating:
26
(i) any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of the
Class O Preferred Stock (including any amendment, alteration or repeal effected
pursuant to a merger, consolidation or similar transaction) or would convert the
Class O Preferred Stock into cash or any other security other than a preferred
stock with terms and provisions equivalent to those set forth in these Articles
Supplementary; provided, however, that the amendment of the provisions of the
Charter so as to authorize or create, or to increase the authorized amount of,
or issue any Junior Stock or any shares of any class of Parity Stock shall not
be deemed to materially adversely affect the voting powers, rights or
preferences of the holders of Class O Preferred Stock; or
(ii) The authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of Senior
Stock or any security convertible into shares of any class or series of Senior
Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class O Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class O Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class O Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class O
Preferred Stock as a single class on any matter, then the Class O Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class O Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class O Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class O
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class O Preferred Stock in excess
27
of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own
shares of Class O Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided
in Section 11.8, from and after the Issue Date (and subject to Section 11.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class O Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class O Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class O Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class O Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class O Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder limit, and the
Initial Holder shall acquire no rights in such shares of Class O Preferred
Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 11.8 from and after the Issue Date (and subject to
Section 11.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Class O
Preferred Stock in excess of the Look-Through Ownership limit shall be void ab
initio as to the Transfer of such shares of Class O Preferred Stock that would
be otherwise Beneficially Owned by such Look-Through Entity in excess of the
Look-Through Ownership Limit and such Look-Through Entity shall acquire no
rights in such shares of Class O Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant that
is described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class O Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class O
Preferred Stock.
28
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class O Preferred Stock that is null and void under Sections 11.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class O Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class O Preferred Stock in
the same or any other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 11.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class O Preferred Stock in violation of Section 11.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class O Preferred Stock acquired in violation of Section
11.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; provided, however, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 11.3 of this Article; provided, further, that the
provisions of this Section 11.2 shall be subject to the provisions of Section
11.12 of this Article; provided, further, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class O Preferred Stock that is
expressly authorized pursuant to Section 11.8(C) of this Article.
11.3 TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such
Transfer is the result of transactions entered into through the facilities of
the NYSE or other securities exchange or an automated inter-dealer quotation
system) or other change in the capital structure of the Corporation (including,
but not limited to, any redemption of Equity Stock) or other event (including,
but not limited to, any acquisition of any share of Equity Stock) such that (a)
any Person (other than the Initial Holder or a Look-Through Entity) would
Beneficially Own shares of Class O Preferred Stock in excess of the Ownership
Limit, or (b) the Initial Holder would Beneficially Own shares of Class O
Preferred Stock in excess of the Initial Holder Limit, or (c) any Person that is
a Look-Through
29
Entity would Beneficially Own shares of Class O Preferred Stock in excess of the
Look-Through Ownership Limit (in any such event, the Person, Initial Holder or
Look-Through Entity that would Beneficially Own shares of Class O Preferred
Stock in excess of the Ownership Limit, the Initial Holder Limit or the
Look-Through Entity Limit, respectively, is referred to as a "Prohibited
Transferee"), then, except as otherwise provided in Section 11.8 of this
Article, such shares of Class O Preferred Stock in excess of the Ownership
Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case
may be, (rounded up to the nearest whole share) shall be automatically
transferred to a Trustee in his capacity as trustee of a Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the Business Day
prior to the Excess Transfer, change in capital structure or another event
giving rise to a potential violation of the Ownership Limit, the Initial Holder
Limit or the Look Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class O
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
11.3(E), the Prohibited Transferee shall have no rights in the Class O Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class O
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class O Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class O Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class O Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure or
other event giving rise to a potential violation of the Ownership Limit, Initial
Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have
given an irrevocable proxy to the Trustee to vote the shares of Class O
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not
30
violate the Ownership Restrictions. If such a sale is made, the interest of the
Charitable Beneficiary shall terminate and proceeds of the sale shall be payable
to the Prohibited Transferee and to the Charitable Beneficiary as provided in
this Section 11.3(E). The Prohibited Transferee shall receive the lesser of (1)
the price paid by the Prohibited Transferee for the shares or, if the Prohibited
Transferee did not give value for the shares (through a gift, devise or other
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Trust and (2) the price per share received by the
Trustee from the sale or other disposition of the shares held in the Trust. Any
proceeds in excess of the amount payable to the Prohibited Transferee shall be
payable to the Charitable Beneficiary. If any of the transfer restrictions set
forth in this Section 11.3(E) or any application thereof is determined in a
final judgment to be void, invalid or unenforceable by any court having
jurisdiction over the issue, the Prohibited Transferee may be deemed, at the
option of the Corporation, to have acted as the agent of the Corporation in
acquiring the Class O Preferred Stock as to which such restrictions would, by
their terms, apply, and to hold such Class O Preferred Stock on behalf of the
Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares
of Class O Preferred Stock transferred to the Trustee shall be deemed to have
been offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class O Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class O Preferred Stock in violation of Section
11.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 11.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted 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.
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class O
Preferred Stock will be required to provide certain information as set out
below.
31
(A) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner
of shares of Class O Preferred Stock convertible into more than 5% (or such
other percentage between 0.5% and 5%, as provided in the applicable regulations
adopted under the Code) of the number of Outstanding shares of Equity Stock
shall upon written request by the Corporation, such request to be made within 30
days after January 1 of each year, give written notice to the Corporation
stating the name and address of such record holder or Beneficial Owner, the
number of shares of Class O Preferred Stock Beneficially Owned, and a full
description of how such shares are held. Each such record holder or Beneficial
Owner of Class O Preferred Stock shall, upon demand by the Corporation, disclose
to the Corporation in writing such additional information with respect to the
Beneficial Ownership of the Class O Preferred 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
under the Code and (ii) ensure compliance with the Ownership Limit, the Initial
Holder Limit or the Look-Through Ownership Limit, as applicable. Each
stockholder of record, including without limitation any Person that holds shares
of Class O Preferred Stock on behalf of a Beneficial Owner, shall take all
reasonable steps to obtain the written notice described in this Section 11.5
from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class O Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class O
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class O Preferred Stock already Beneficially 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.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 11 of this Article, or in the case of an ambiguity
in any definition contained in Section 11 of this Article, the Board of
Directors shall have the power to determine the application of the provisions of
this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
32
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code (as modified to exclude qualified trusts from treatment as
individuals pursuant to Section 856(h)(3) of the Code) and is a corporation,
partnership, limited liability company, estate or trust. In connection with any
such exemption, the Board of Directors may require such representations and
undertakings from such Person 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 on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class O Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and the
pledgee shall not be subject to the Ownership Limit with respect to the Class O
Preferred Stock so pledged to it either as a result of the pledge or upon
foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold allotment
of Class O Preferred Stock) following the purchase of Class O Preferred Stock by
an underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class O Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class O Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class O Preferred Stock purchased in connection
with market making activities.
11.9 LEGEND. Each certificate for Class O Preferred Stock shall bear
substantially the following legend:
"The shares of Class O Cumulative Convertible
Preferred Stock represented by this certificate are subject to
restrictions on transfer. No person may Beneficially Own shares of
Class O Cumulative Convertible Preferred Stock in excess of the
Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter (including the
Articles Supplementary setting forth the terms of the Class O
Cumulative Convertible Preferred Stock). Any Person that attempts to
Beneficially Own shares of Class O Cumulative Convertible Preferred
Stock in excess of the applicable limitation must immediately notify
the Corporation. All capitalized terms in this legend have the meanings
ascribed to such terms in the Charter (including the Articles
Supplementary setting forth the terms of the Class O Cumulative
Convertible Preferred Stock), 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 that so requests. If the
restrictions on transfer are violated, (i) the transfer of the shares
of Class O Cumulative Convertible Preferred Stock represented hereby
will be void in accordance with the Charter (including the Articles
Supplementary setting forth the terms of the Class O Cumulative
Convertible Preferred Stock) or (ii) the shares of Class O
33
Cumulative Convertible Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit of
one or more Charitable Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article 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.
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class O Cumulative Convertible Preferred Stock
set forth in Article Third hereof shall become Article XXVI of the Charter.
34
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on September 15,
2000.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ KATHLEEN HARVEY /s/ PAUL J. MCAULIFFE
- -------------------------- ------------------------------
Kathleen Harvey Paul J. McAuliffe
Assistant Secretary Executive Vice President and
Chief Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer
of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ PAUL J. MCAULIFFE
------------------------------
Paul J. McAuliffe
Executive Vice President and
Chief Financial Officer
35
[STATE OF MARYLAND STAMP]
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS P CONVERTIBLE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 4,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share (the "Class A Common
Stock"), into a class designated as Class P Convertible Cumulative Preferred
Stock, par value $.01 per share, and has provided for the issuance of such
class.
SECOND: The reclassification increases the number of shares classified
as Class P Convertible Cumulative Preferred Stock, par value $.01 per share,
from no shares immediately prior to the reclassification to 4,000,000 shares
immediately after the reclassification. The reclassification decreases the
number of shares classified as Class A Common Stock from 468,432,738 shares
immediately prior to the reclassification to 464,432,738 shares immediately
after the reclassification.
THIRD: The terms of the Class P Convertible Cumulative Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class P
Convertible Cumulative Preferred Stock, par value $.01 per share (the "Class P
Preferred Stock"), and Four Million (4,000,000) shall be the authorized number
of shares of such Class P Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class P Preferred Stock, the following terms shall
have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"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.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the sum of the products of (i) the number of shares of each
class of Equity Stock within such block multiplied by (ii) the
corresponding Market Price of one share of Equity Stock of such class.
"Base Common Stock Dividend" shall have the meaning set forth in
paragraph (a) of Section 9 of this Article.
"Base Rate" shall mean a quarterly dividend payment in an amount per
share equal to $.5625; provided, however, that from and after the date
of a Change of Control, the "Base Rate" shall mean a quarterly dividend
payment in an amount per share equal to (i) for all Dividend Periods
commencing after the date of such Change of Control, the greater of (a)
$0.75 or (b) the product of (x) $6.25 and (y) the sum of 800 basis
points plus the greater of (x) the annual yield to maturity of U.S.
Treasury securities with a five year maturity and (y) the annual yield
to maturity of U.S. Treasury securities with a ten year maturity, in
each case as compiled by and published in the most recent Federal
Reserve Statistical Release H.15(519) which has become publicly
available on the second Business Day prior to the date of such Change
of Control (or, if such Statistical Release is no longer published, any
publicly available source of similar data), and (ii) for the Dividend
Period in which such Change of Control occurs, a weighted average
(based on the number of days in such Dividend Period occurring before
and after the date of such Change of Control) of (a) the Base Rate in
effect prior thereto and (b) the Base Rate determined in accordance
with the foregoing clause (i).
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if
such Person is an "individual" as defined in Section 542(a)(2) of the
Code) taking into account the constructive ownership rules of Section
544 of the Code, as modified by Section 856(h)(1)(B) of the Code, and
(iii) the number of shares of Equity Stock that such Person is deemed
to beneficially own pursuant to Rule 13d-3 under the Exchange Act or
that is attributed to such Person pursuant to Section 318 of the Code,
as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial Holder,
clause (iii) of this definition, and clause (a) (ii) of the definition
of "Person" shall be disregarded. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
2
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class P
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 9 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Change of Control" shall mean the occurrence of any of the following:
(i) the acquisition, directly or indirectly, by any individual or
entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act) (other than a holder of the Class P Preferred Stock or
any of its affiliates) of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act, except that such individual or entity
shall be deemed to have beneficial ownership of all shares that any
such individual or entity has the right to acquire, whether such right
is exercisable immediately or only after passage of time) of more than
25% of the Corporation's outstanding capital stock with voting power,
under ordinary circumstances, to elect directors of the Corporation;
(ii) other than with respect to the election, resignation or
replacement of any director designated, appointed or elected by the
holders of the Class P Preferred Stock (each, a "Preferred Director"),
during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Corporation (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders
of the Corporation was approved by a vote of 66-2/3% of the directors
of the Corporation (excluding Preferred Directors) (the "Incumbent
Board") then still in office who were either directors at the beginning
of such period, or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors of the Corporation then in office, provided,
however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened "Election Contest" (as described in
Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest; (iii) the Corporation or one of its subsidiaries is not the
general partner of the Operating Partnership; or (iv) (A) the
Corporation consolidating with or merging with or into another entity
or conveying, transferring or leasing all or substantially all of its
assets (including, but not limited to, real property investments) to
any individual or entity, or (B) any corporation consolidating with or
merging into the Corporation which, in either event (A) or (B), is
pursuant to a transaction in which the outstanding voting capital stock
of the Corporation
3
is reclassified or changed into or exchanged for cash, securities or
other property; provided, however, that the events described in clause
(iv) shall not be deemed to be a Change of Control (a) if the sole
purpose of such event is that the Corporation is seeking to change its
domicile or to change its form of organization from a corporation to a
statutory business trust or (b) if (x) the holders of the exchanged
securities of the Corporation immediately after such transaction
beneficially own at least a majority of the securities of the merged or
consolidated entity normally entitled to vote in elections of
directors, (y) the chairman and the president of the Corporation
immediately prior to the execution of the transaction agreement are the
chairman and the president of the merged or consolidated company, and
(z) the individuals who were members of the Incumbent Board immediately
prior to the execution of the transaction agreement constitute at least
a majority of the members of the board of directors of the merged or
consolidated company.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 11.3 of this Article, each of
which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class A Common Stock" shall mean the Class A Common Stock, $.01 par
value per share, of the Corporation and such other shares of the
Corporation's capital stock into which outstanding shares of such Class
A Common Stock shall be reclassified.
"Class P Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity 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 quotation system that may then be in use
or, if the Equity 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 Equity Stock selected
by the Board of Directors of the Corporation.
4
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Conversion Price" shall mean the conversion price per share of Class A
Common Stock for which each share of Class P Preferred Stock is
convertible, as such Conversion Price may be adjusted pursuant to
Section 7 of this Article. The initial Conversion Price shall be $56.00
(equivalent to a conversion rate of 0.4464 shares of Class A Common
Stock for each share of Class P Preferred Stock).
"Dividend Payment Date" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
January 15, April 15, July 15 and October 15 of each year and ending on
and including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
P Preferred Stock shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the date on which the Class P Preferred Stock
is redeemed in accordance with Section 5 hereof.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" shall have the meaning set forth in Section 11.3(A)
of this Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean March 26, 2001.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including April 14, 2001.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class P Preferred Stock of the Corporation having an Aggregate Value
not in excess of the
5
excess of (x) 15% of the Aggregate Value of all Outstanding shares of
Equity Stock over (y) the Aggregate Value of all shares of Equity Stock
other than Class P Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation,
or such other person as shall be designated by the Board of Directors,
shall upon request make available to the representative(s) of the
Initial Holder and the Board of Directors, a schedule that sets forth
the then-current Initial Holder Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 8 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class P Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class P Preferred Stock that are Beneficially Owned by the
Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"Merger" shall mean the merger of AIMCO/OTEF, LLC with and into Oxford
Tax Exempt Fund II Limited Partnership.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation, provided that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial
Holder Limit to any Person, the term "Outstanding" shall be deemed to
include the number of shares of Equity Stock that such Person alone, at
that time, could acquire pursuant to any options or convertible
securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class P Preferred Stock of the
6
Corporation having an Aggregate Value not in excess of the excess of
(x) 8.7% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class P Preferred Stock that are Beneficially Owned by the Person.
"Ownership Restrictions" shall mean collectively the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8 of this Article.
"Person" shall mean (a) for purposes of Section 11 of this Article, (i)
an individual, corporation, partnership, estate, trust (including a
trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) a "group,"
as that term is used for purposes of Section 13(d)(3) of the Exchange
Act, and (b) for purposes of the remaining Sections of this Article,
any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity.
"Prohibited Transferee" shall have the meaning set forth in Section
11.3(A) of this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of
Section 3 of this Article.
"Redemption Date" shall mean, in the case of any redemption of any
shares of Class P Preferred Stock, the date fixed for redemption of
such shares.
"Redemption Price" shall mean, with respect to any shares of Class P
Preferred Stock to be redeemed, 100% of the Liquidation Preference
thereof plus all accumulated, accrued and unpaid dividends (whether or
not earned or declared), if any, to the Redemption Date; provided,
however, that if a Redemption Date occurs after a dividend record date
and on or prior to the related Dividend Payment Date, the dividend
payable on such Dividend Payment Date in respect of such shares called
for redemption shall be payable on such Dividend Payment Date to the
holders of record at the close of business on such dividend record date
notwithstanding the redemption of such shares, and shall not be payable
as part of the redemption price for such shares.
7
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 8 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class P
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE, a
day on which the NYSE is open for the transaction of business, (ii) if
the Equity Stock is not listed or admitted to trading on the NYSE but
is listed or admitted to trading on another national securities
exchange or automated quotation system, a day on which the principal
national securities exchange or automated quotation system, as the case
may be, on which the Equity Stock is listed or admitted to trading is
open for the transaction of business, or (iii) if the Equity Stock is
not listed or admitted to trading on any national securities exchange
or automated quotation system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class P Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
P Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class P Preferred Stock), whether voluntary or
involuntary, whether of record or Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities that results in a change in
the Beneficial Ownership of shares of Class P Preferred Stock). The
term "Transfers" and "Transferred" shall have correlative meanings.
"Transfer Agent" shall mean such transfer agent as may be designated by
the Board of Directors or their designee as the transfer agent for the
Class P Preferred Stock;
8
provided, that if the Corporation has not designated a transfer agent
then the Corporation shall act as the transfer agent for the Class P
Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 11.3(A) of
this Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in paragraph
(a) of Section 9 of this Article.
3. DIVIDENDS.
(a) The holders of Class P Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of
funds legally available for that purpose, quarterly cash dividends on
the Class P Preferred Stock in an amount per share equal to the greater
of (i) the Base Rate, or (ii) the quarterly cash dividend paid or
payable (determined on each Dividend Payment Date by reference to the
dividend most recently declared on the Class A Common Stock) on the
number of shares of Class A Common Stock (or portion thereof) into
which a share of Class P Preferred Stock is convertible. Such dividends
shall be cumulative from the Issue Date, whether or not in any Dividend
Period or Periods such dividends shall be declared or there shall be
funds of the Corporation legally available for the payment of such
dividends, and shall be payable quarterly in arrears on each Dividend
Payment Date, commencing on April 15, 2001. Each such dividend shall be
payable in arrears to the holders of record of the Class P Preferred
Stock, as they appear on the stock records of the Corporation at the
close of business on the tenth Business Day immediately preceding such
Dividend Payment Date (each a "Record Date"). Accumulated, accrued and
unpaid dividends for any past Dividend Periods may be declared and paid
at any time, without reference to any regular Dividend Payment Date, to
holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) Any dividend payable on the Class P Preferred Stock for
any partial dividend period shall be computed ratably on the basis of
twelve 30-day months and a 360-day year. Holders of Class P Preferred
Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends, as herein
provided, on the Class P 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 Class P Preferred Stock that may be in
arrears.
9
(c) So long as any of the shares of Class P Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Parity
Stock unless, in each case, dividends equal to the full amount of accumulated,
accrued and unpaid dividends on all outstanding shares of Class P Preferred
Stock have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is set apart
for payment of such dividends on the Class P Preferred Stock for all Dividend
Periods ending on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made, as the case may be, with respect
to such shares of Parity Stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class P Preferred Stock and all dividends declared upon any
shares of Parity Stock shall be declared ratably in proportion to the respective
amounts of dividends accumulated, accrued and unpaid on the Class P Preferred
Stock and accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class P 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Class A 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 shares of, or options, warrants or
rights to subscribe for or purchase shares of, 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 in respect thereof, directly or
indirectly, by the Corporation unless, in each case, dividends equal to the full
amount of all accumulated, accrued and unpaid dividends on all outstanding
shares of Class P Preferred Stock have been declared and paid, or such dividends
have been declared and a sum sufficient for the payment thereof has been set
apart for such payment, on all outstanding shares of Class P Preferred Stock for
all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or
10
distributed to or for the benefit of any holders of Junior Stock in respect
thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the
Corporation shall not be prohibited from (i) declaring or paying or setting
apart for payment any dividend or distribution on any shares of Parity Stock or
(ii) redeeming, purchasing or otherwise acquiring any Parity Stock, in each
case, if such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class P Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class P Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class P Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class P Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class P Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class P Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
P Preferred Stock and any Parity Stock, as provided in Section 4(a), any other
series or class or classes of Junior Stock shall, subject to the respective
terms thereof, be
11
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Class P Preferred Stock and any Parity Stock shall not be
entitled to share therein.
5. REDEMPTION
(a) The Corporation, at its option, may redeem shares of Class
P Preferred Stock, in whole or from time to time in part, for cash in an amount
equal to the Redemption Price (i) at any time on or before March 26, 2004, if
the Market Price of the Class A Common Stock is $56 or higher, in which case the
Corporation may redeem shares of Class P Preferred Stock pursuant to this
Section 5(a)(i) for 6 months following any date on which such Market Price
exceeds $56, (ii) at any time after March 26, 2004, (iii) on or after the
occurrence of a Change of Control, or (iv) as set forth in Section 11.2 of this
Article.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of
Class P Preferred Stock have not been declared and paid, or declared and set
apart for payment, for all preceding Dividend Periods no shares of Class P
Preferred Stock may be redeemed unless all outstanding shares of Class P
Preferred Stock are simultaneously redeemed, and neither the Corporation nor any
affiliate of the Corporation may purchase or acquire shares of Class P Preferred
Stock, otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of shares of Class P Preferred Stock.
(d) In the event of a redemption of Class P Preferred Stock
pursuant to paragraph (a) above, 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. Neither the failure to
mail any notice required by this paragraph (d), nor any defect therein or in the
mailing thereof to any particular holder, shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice which has been 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 notice shall state, as
appropriate: (i) the Redemption Date; (ii) the number of shares of Class P
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; (iii) the place or places at which certificates for such shares are to
be
12
surrendered for cash; and (iv) the Redemption Price payable on such Redemption
Date, including, without limitation, a statement as to whether or not
accumulated, accrued and unpaid dividends will be payable as part of the
Redemption Price, or payable on the next Dividend Payment Date to the record
holder at the close of business on the relevant record date as described in the
next succeeding sentence. Notice having been mailed as aforesaid, from and after
the Redemption Date (unless the Corporation shall fail to make available the
amount of cash necessary to effect such redemption), (i) dividends on the shares
of Class P Preferred Stock so called for redemption shall cease to accumulate or
accrue on the shares of Class P Preferred Stock called for redemption, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class P Preferred Stock of the Corporation shall
cease except the right to receive the cash payable upon such redemption, without
interest thereon, upon surrender of their certificates if so required. The
Corporation's obligation to make available the cash necessary to effect such
redemption in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the applicable Redemption Date, the Corporation shall
irrevocably deposit in trust with a bank or trust company (which may not be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $200,000,000, such amount of
cash as is necessary for such redemption plus, if such Redemption Date occurs
after any dividend record date and on or prior to the related Dividend Payment
Date, such amount of cash as is necessary to pay the dividend payable on such
Dividend Payment Date in respect of such shares of Class P Preferred Stock
called for redemption, with irrevocable instructions that such cash be applied
to the redemption of the shares of Class P Preferred Stock so called for
redemption and, if applicable, the payment of such dividend. No interest shall
accrue for the benefit of the holders of shares of Class P 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
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class P 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 such notice of the certificates for any such shares of Class P Preferred
Stock to be so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), such certificates
shall be exchanged for the cash (without interest thereon) for which such shares
have been redeemed in accordance with such notice. If fewer than all the
outstanding shares of Class P Preferred Stock are to be redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding shares of Class P
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class P Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method
13
as may be determined by the Board of Directors in its discretion to be
equitable. If fewer than all the shares of Class P Preferred Stock represented
by any certificate are redeemed, then a new certificate representing the
unredeemed shares shall be issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class P Preferred Stock that have been issued
and reacquired in any manner by the Corporation (including, without limitation,
shares of Class P Preferred Stock which have been surrendered for conversion)
shall be returned to the status of authorized but unissued shares of Class P
Preferred Stock.
7. CONVERSION.
7.1 CONVERSION AT HOLDERS' OPTION.
At any time on or after the Issue Date, holders of shares of
Class P Preferred Stock shall have the right to convert all or a portion of such
shares into shares of Class A Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, each share of Class P Preferred Stock shall, at the option of the
holder thereof, be convertible at any time (unless such share is called for
redemption, then to and including but not after the close of business on the
date immediately prior to the Redemption Date, unless the Corporation shall
default in payment due upon redemption thereof), into that number of fully paid
and non-assessable shares of Class A Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing $25 by the
Conversion Price in effect at such time and by surrender of the certificate
representing such shares to be converted in the manner provided in subsection
(b) of this Section 7.1.
(b) In order to convert shares of Class P Preferred Stock, the
holder of the shares to be converted shall surrender the certificate
representing such shares at any office or agency maintained by the Corporation
for such purpose, accompanied by the funds, if any, required by the last
paragraph of this subsection (b) to be paid by such holder, and shall give
written notice of conversion in the form provided on such certificate
representing shares of Class P Preferred Stock (or such other notice as is
acceptable to the Corporation) to the Corporation at such office or agency that
the holder elects to convert the shares of Class P Preferred Stock specified in
such notice. Such notice shall also state the name or names, together with
address or addresses, in which the certificate or certificates for shares of
Class A Common Stock which shall be issuable in such conversion shall be issued.
Unless the shares issuable on
14
conversion are to be issued in the same name as the name in which such share of
Class P Preferred Stock is registered, each certificate representing a share of
Class P Preferred Stock surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Corporation that such taxes have been paid).
As promptly as practicable after the surrender of certificates
representing such shares of Class P Preferred Stock and the receipt of such
notice and instruments of transfer as aforesaid, the Corporation shall issue and
shall deliver at such office or agency to such holder, or as designated in such
holder's written instructions, a certificate or certificates for the number of
full shares of Class A Common Stock issuable upon the conversion of such share
or shares of Class P Preferred Stock in accordance with provisions of this
Section 7, and a check or cash in respect of (i) the cash amount payable to such
holder, if any, referred to in the last paragraph of this subsection (b), and
(ii) any fractional interest in a share of Class A Common Stock arising upon
such conversion, as provided in paragraph (c) of this Section 7.1.
Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which certificates
representing such shares of Class P Preferred Stock shall have been surrendered
and such notice (and any applicable instruments of transfer and any required
taxes) received by the Corporation as aforesaid, and the Person or Persons in
whose name or names any certificate or certificates for shares of Class A Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby at such time on
such date, and such conversion shall be at the Conversion Price in effect at
such time on such date, unless the stock transfer books of the Corporation shall
be closed on that date, in which event such Person or Persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on which such
shares shall have been surrendered and such notice received by the Corporation.
Except as provided herein, the Corporation will make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends (other than dividends on the Class A Common
Stock the record date for which is after the conversion date and which the
Corporation shall pay in the ordinary course to the record holder as of the
record date) on the Class A Common Stock issued upon such conversion. Holders of
Class P Preferred Stock at the close of business on a Record Date will be
entitled to receive an amount equal to the dividend
15
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following such Record Date. If the
Dividend Adjustment Amount (as defined below) with respect to any shares of
Class P Preferred Stock surrendered for conversion is positive, the holders of
such shares shall, as of the date of conversion, be entitled to receive a cash
payment equal to such Dividend Adjustment Amount. If the Dividend Adjustment
Amount with respect to any shares of Class P Preferred Stock surrendered for
conversion is negative, such shares must be accompanied by payment of a cash
amount equal to the absolute value of such Dividend Adjustment Amount. As used
herein, "Dividend Adjustment Amount" shall mean, with respect to any share of
Class P Preferred Stock that has been surrendered for conversion, the sum of:
(i) the aggregate amount of any dividends (whether or not
earned or declared) that are accumulated, accrued and unpaid on such
share as of the time of such conversion; minus
(ii) if such share has been surrendered for conversion during
the period between the close of business on any Record Date and the
opening of business on the corresponding Dividend Payment Date, the
amount of the dividend payable thereon on such Dividend Payment Date;
minus
(iii) an amount equal to the product of (A) the number of
shares of Class A Common Stock (or fraction thereof) into which such
share of Class P Preferred Stock has been converted (B) the quarterly
cash dividend per share that was most recently declared on the Class A
Common Stock, determined as of the date of conversion, and (C) a
fraction, the numerator of which is the number of days in the period
from and including the date of the most recent dividend payment date
for the Class A Common Stock to but excluding the date of such
conversion, and the denominator of which is 90.
(c) No fractional shares of Class A Common Stock or scrip
representing fractions of a share of Class A Common Stock shall be issued upon
conversion of shares of Class P Preferred Stock. If more than one share of Class
P Preferred Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Class P Preferred Stock so surrendered. In lieu of any fractional
interest in a share of Class A Common Stock that would otherwise be deliverable
upon the conversion of any share of Class P Preferred Stock, the Corporation
shall pay to the holder of such shares an amount in cash (computed to the
nearest cent) equal to the Closing Price of the Class A Common Stock on the
Trading Day immediately preceding the date of conversion,
16
multiplied by the fractional interest that otherwise would have been deliverable
upon conversion of such share.
7.2 Adjustments to Conversion Price
(a) The Conversion Price shall be adjusted from time to time
as follows:
(i) If the Corporation shall after the Issue Date (A)
pay a dividend or make a distribution on its Class A Common Stock in shares of
Class A Common Stock, (B) subdivide its outstanding shares of Class A Common
Stock into a greater number of shares, (C) combine its outstanding shares of
Class A Common Stock into a smaller number of shares or (D) issue any shares of
capital stock by reclassification of its outstanding Class A Common Stock
(including a reclassification pursuant to a merger or consolidation in which the
Corporation is the continuing entity and in which the Class A Common Stock
outstanding immediately prior to the merger or consolidation is not exchanged
for cash, or securities or other property of another entity), then, in each such
case, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any share of Class P Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Class A Common Stock or other capital stock of the Corporation which such holder
would have owned or been entitled to receive immediately following such action
had such share been converted immediately prior to the occurrence of such event.
An adjustment made pursuant to this subsection (i) of this Section 7.2(a) shall
become effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification. If, as a result of an adjustment
made pursuant to this subsection (i), the holder of any share of Class P
Preferred Stock thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes of capital stock or shares of Class A
Common Stock and other capital stock of the Corporation, the Board of Directors
(whose determination shall be conclusive and shall be described in a statement
filed by the Corporation with the Transfer Agent) shall determine the allocation
of the adjusted Conversion Price between or among shares of such classes of
capital stock or shares of Class A Common Stock and other capital stock.
(ii) If the Corporation shall, after the Issue Date,
issue rights, options or warrants to all holders of its outstanding shares of
Class A Common Stock entitling them (for a period expiring within 45 days after
the record date described below) to subscribe for or purchase shares of Class A
Common Stock at a price per share less than the current market price per share
(determined pursuant to subsection (iv) of this Section 7.2(a)) of the Class A
Common Stock (other than pursuant to any stock option, restricted stock or other
incentive or benefit plan or
17
stock ownership or purchase plan for the benefit of employees, directors or
officers or any dividend reinvestment plan of the Corporation in effect at the
time hereof or any other similar plan adopted or implemented hereafter), then
the Conversion Price in effect immediately prior thereto shall be adjusted so
that it shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the record date by a fraction, the numerator of
which shall be the sum of (A) the number of shares of Class A Common Stock
outstanding on the record date and (B) the number of shares which the aggregate
proceeds to the Corporation from the exercise of such rights, options or
warrants for Class A Common Stock would purchase at such current market price,
and the denominator of which shall be the sum of (A) the number of shares of
Class A Common Stock outstanding on the record date and (B) the number of
additional shares of Class A Common Stock offered for subscription or purchased
pursuant to such rights, options or warrants. Such adjustment shall be made
successively whenever any rights, options or warrants are issued, and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights, options or warrants; provided,
however, that if all of the shares of Class A Common Stock offered for
subscription or purchase are not delivered upon the exercise of such rights,
options or warrants, upon the expiration of such rights, options or warrants,
the Conversion Price shall be readjusted to the Conversion Price which would
have been in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the number of shares
of Class A Common Stock actually delivered upon the exercise of such rights,
options or warrants rather than upon the number of shares of Class A Common
Stock offered for subscription or purchase. In determining whether any rights,
options or warrants entitle the holders to subscribe for or purchase shares of
Class A Common Stock at less than such current market price, and in determining
the aggregate offering price of such shares of Class A Common Stock, there shall
be taken into account any consideration received by the Corporation for such
rights, options or warrants, with the value of such consideration, if other than
cash, determined by the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed by the Corporation with
the Transfer Agent).
(iii) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its outstanding Class A Common Stock any
capital stock (other than Class A Common Stock), evidences of its indebtedness
or assets or rights or warrants to subscribe for or purchase securities of the
Corporation (excluding (A) those referred to in subsections (i) and (ii) of this
Section 7.2(a), (B) dividends and distributions paid in cash out of the retained
earnings of the Corporation, and (C) distributions upon mergers or
consolidations to which subsection (b) of this Section 7.2 applies), then, in
each such case, the Conversion Price shall be adjusted to equal the price
determined by multiplying the Conversion Price in effect immediately prior
18
to the record date of such distribution by a fraction, the numerator of which
shall be the current market price per share (determined pursuant to subsection
(iv) of this Section 7.2(a)) of the Class A Common Stock, less the fair market
value on such record date (determined by the Board or Directors, whose
determination shall be conclusive and shall be described in a statement filed by
the Corporation with the Transfer Agent) of the portion of the capital stock or
assets or the evidences of indebtedness or assets so distributed to the holder
of one share of Class A Common Stock or of such subscription rights or warrants
applicable to one share of Class A Common Stock, and the denominator of which
shall be such current market price per share of Class A Common Stock. Such
adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution.
(iv) For the purpose of any computation under
subsections (ii) and (iii) of this Section 7.2(a), the current market price per
share of Class A Common Stock on any date shall be the average of the Closing
Price of the Class A Common Stock for the shorter of (A) 20 consecutive Trading
Days ending on the last full Trading Day prior to the Time of Determination or
(B) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such distribution
through such last full Trading Day prior to the Time of Determination. For
purposes of the foregoing, the term "Time of Determination" shall mean the time
and date of the earlier of (A) the record date for determining stockholders
entitled to receive the rights, warrants or distribution referred to in
subsections (ii) and (iii) of this Section 7.2, or (B) the commencement of
"ex-dividend" trading on the exchange or market referred to in the definition of
"Closing Price."
(v) No adjustment in the Conversion Price shall be
required to be made unless such adjustment would require an increase or decrease
of at least one percent of such price; provided, however, that any adjustment
which by reason of this subsection (v) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 7.2 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be. Anything in this Section 7.2 to
the contrary notwithstanding, the Corporation shall be entitled to make such
reduction in the Conversion Price, in addition to those required by this Section
7.2, as it shall determine in its discretion to be advisable in order that any
stock dividend, subdivision of shares, distribution of rights to purchase stock
or securities, or distribution of securities convertible into or exchangeable
for stock hereafter made by the Corporation to its stockholders shall not be
taxable to the recipients. Except as set forth in subsections (i), (ii) and
(iii) above, the Conversion Price shall not be adjusted for the issuance of
Class A Common Stock, or any
19
securities convertible into or exchangeable for Class A Common Stock or carrying
the right to purchase any of the foregoing, in exchange for cash, property or
services.
(vi) The Corporation from time to time may decrease
the Conversion Price by any amount for any period of time if the period is at
least 20 days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Corporation shall mail to holders of
record of shares of Class P Preferred Stock a notice of the decrease at least 15
days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price and the period it will be in
effect.
(b) Notwithstanding any other provision herein to the
contrary, in case of any merger or consolidation to which the Corporation is a
party (other than a merger or consolidation in which the Corporation is the
continuing entity and in which the Class A Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, or the
securities or other property of another entity), or in the case of any sale or
transfer of all or substantially all of the Corporation's property and assets to
another entity, there will be no adjustment of the Conversion Price, and lawful
provision shall be made by the entity formed by such consolidation or the entity
whose securities, cash or other property will immediately after the merger or
consolidation be owned, by virtue of the merger or consolidation, by the holders
of Class A Common Stock immediately prior to the merger or consolidation, or the
entity which shall have acquired such assets of the Corporation, such that each
share of Class P Preferred Stock then outstanding will, without the consent of
the holder thereof, become convertible into the kind and amount of securities,
cash or other property receivable upon such merger, consolidation, sale or
transfer by a holder of the number of shares of Class A Common Stock into which
such share of Class P Preferred Stock was convertible immediately prior to such
merger, consolidation, sale or transfer assuming such holder of Class A Common
Stock did not exercise his rights of election, if any, as to the kind or amount
of securities, cash or other property receivable upon such merger,
consolidation, sale or transfer. In the case of a cash merger of the Corporation
into another entity or any other cash transaction of the type mentioned in this
Section 7.2(b), each share of Class P Preferred Stock will thereafter be
convertible at the Conversion Price in effect at such time into the same amount
of cash per share into which each share of Class P Preferred Stock would have
been convertible had such share been converted into Class A Common Stock
immediately prior to the effective date of such cash merger or other
transaction. The foregoing provisions of this Section 7.2(b) shall similarly
apply to successive mergers, consolidations, sales or transfers.
(c) If (i) the Corporation shall take any action that would
require an adjustment in the Conversion Price pursuant to Section 7.2; (ii) the
Corporation
20
shall authorize the granting to the holders of the Class A Common Stock
generally of rights or warrants to subscribe for or purchase any shares of stock
of any class or series or of any other rights or warrants; (iii) there shall be
any reorganization or reclassification of the Class A Common Stock (other than
an event to which subsection (i) of Section 7.2(a) applies) or any consolidation
or merger to which the Corporation is a party or any sale or transfer of all or
substantially all of the assets of the Corporation, in each case, for which
approval of any stockholders of the Corporation is required; or (iv) there shall
be a voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; then, in each such case, the Corporation shall cause to be given to
the holders of shares of Class P Preferred Stock and the Transfer Agent as
promptly as possible, but in any event at least 15 days prior to the applicable
date hereinafter specified, a notice stating (i) the date on which a record is
to be taken for the purpose of such action or granting of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Class A
Common Stock of record to be entitled to such dividend, distribution, rights or
warrants are to be determined, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is expected to become effective or occur, and the date
as of which it is expected that holders of Class A Common Stock of record shall
be entitled to exchange their shares of Class A Common Stock for securities,
cash or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up.
Failure to give such notice or any defect therein shall not affect the legality
or validity of the proceedings described in this Section 7.2(c).
(d) Whenever the Conversion Price is adjusted as herein
provided, (i) the Corporation shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment and a brief
statement of the facts requiring such adjustment and the manner of computing the
same, which certificate shall be conclusive evidence of the correctness of such
adjustment, and (ii) the Corporation shall mail or cause to be mailed by first
class mail, postage prepaid, as soon as practicable to each holder of record of
shares of Class P Preferred Stock a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price.
(e) In any case in which paragraph (a) of this Section 7.2
shall require that an adjustment be made immediately following a record date or
an effective date, the Corporation may elect to defer (but only until the filing
by the Corporation with the Transfer Agent of the certificate required by
subsection 7.2(d)) (i) issuing to the holder of any share of Class P Preferred
Stock converted after such record date or effective date the shares of Class A
Common Stock issuable upon such conversion in excess of the shares of Class A
Common Stock issuable upon such
21
conversion on the basis of the Conversion Price prior to adjustment, and (ii)
paying to such holder any amount of cash in lieu of a fractional share.
(f) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of Section 7.2(a), the holder of any
share of Class P Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than shares of
Class A Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any share of Class P Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A Common Stock
contained in this Section 7.2.
(g) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Class A Common Stock, for the purpose of effecting
conversion of shares of Class P Preferred Stock, the full number of shares of
Class A Common Stock deliverable upon the conversion of all outstanding shares
of Class P Preferred Stock not theretofore converted and on or before (and as a
condition of) taking any action that would cause an adjustment of the Conversion
Price resulting in an increase in the number of shares of Class A Common Stock
deliverable upon conversion in excess of the number thereof previously reserved
and available therefor, the Corporation shall take all such action so required.
For purposes of this paragraph (g), the number of shares of Class A Common Stock
which shall be deliverable upon the conversion of all outstanding shares of
Class P Preferred Stock shall be computed as if at the time of computation all
such outstanding shares of Class P Preferred Stock were held by a single holder
(and without regard to the Ownership Limit).
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value (if any) of the shares of
Class A Common Stock deliverable upon conversion of the shares of Class P
Preferred Stock, the Corporation shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of Class A Common
Stock at such adjusted Conversion Price.
(h) The Corporation will pay any and all documentary stamp,
issue or transfer taxes, and any other similar taxes, payable in respect of the
issue or delivery of shares of Class A Common Stock upon conversion of shares of
Class P Preferred Stock pursuant hereto; provided, however, that the Corporation
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Class A Common Stock in
a name other than that of the holder of the shares of Class P Preferred Stock to
be converted, and no such issue or
22
delivery shall be made unless and until the Person requesting such issue or
delivery has paid to the Corporation the amount of any such tax or established,
to the reasonable satisfaction of the Corporation, that such tax has been paid.
(i) Notwithstanding anything to the contrary contained in this
Section 7, conversion of Class P Preferred Stock pursuant to this Section 7
shall be permitted only to the extent that such conversion would not result in a
violation of the Ownership Restrictions (as defined in the Charter).
(j) If the Corporation shall take any action affecting the
Class A Common Stock, other than action described in this Section 7, that in the
opinion of the Board of Directors would materially adversely affect the
conversion rights of the holders of Class P Preferred Stock, the Board of
Directors may, but shall have no obligation to, adjust the Conversion Price for
the Class P Preferred Stock to the extent permitted by law in such manner, if
any, and at such time as the Board of Directors, in its sole discretion, may
determine to be equitable under the circumstances.
8. RANKING.
Any class or series of capital stock of the Corporation shall
be deemed to rank:
(a) prior or senior to the Class P Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class P Preferred Stock ("Senior Stock");
(b) on a parity with the Class P Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class P Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible
Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock or
Class O Convertible Cumulative Preferred Stock of the Corporation, or (ii) the
holders of such class of stock or series and the Class P Preferred Stock shall
be entitled to the receipt of dividends and of amounts
23
distributable upon liquidation, dissolution or winding up in proportion to their
respective amounts of accrued and unpaid dividends per share or liquidation
preferences, without preference or priority of one over the other (the capital
stock referred to in clauses (i) and (ii) of this paragraph being hereinafter
referred to, collectively, as "Parity Stock"); and
(c) junior to the Class P Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Class A Common Stock
or (ii) the holders of Class P Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
9. VOTING.
(a) If and whenever (i) six quarterly dividends (whether or
not consecutive) payable on the Class P Preferred Stock or any series or class
of Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, or (ii) for two consecutive quarterly
dividend periods the Corporation fails to pay dividends on the Class A Common
Stock in an amount per share at least equal to $0.5950 (subject to adjustment
consistent with any adjustment of the Conversion Price pursuant to Section 7.2
of this Article) (the "Base Common Stock Dividend") the number of directors then
constituting the Board of Directors shall be increased by two (in the case of an
arrearage in dividends described in clause (i)) or one additional director (in
the case of an arrearage in dividends described in clause (ii) (in each case if
not already increased by reason of similar types of provisions with respect to
shares of any other class or series which is entitled to similar voting rights
(the "Voting Preferred Stock")) and the holders of shares of Class P Preferred
Stock, together with the holders of shares of all other Voting Preferred Stock
then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors
(in the case of an arrearage in dividends described in clause (i)) or one (in
the case of an arrearage in dividends described in clause (ii)) to serve on the
Board of Directors at any annual meeting of stockholders or special meeting held
in place thereof, or at a special meeting of the holders of the Class P
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever (1) in the case of an arrearage in dividends described in clause (i),
all arrears in dividends on the Class P Preferred Stock and the Voting Preferred
Stock then outstanding shall have been paid and dividends thereon for the
current quarterly dividend period shall have been declared and paid, or declared
and set apart for
24
payment, or (2) in the case of an arrearage in dividends described in clause
(ii), the Corporation makes a quarterly dividend payment on the Class A Common
Stock in an amount per share equal to or exceeding the Base Common Stock
Dividend, then the right of the holders of the Class P Preferred Stock and the
Voting Preferred Stock to elect such additional two directors (in the case of an
arrearage in dividends described in clause (i)) or one additional director (in
the case of an arrearage in dividends described in clause (ii)) shall cease (but
subject always to the same provision for the vesting of such voting rights in
the case of any similar future arrearages), and the terms of office of all
persons elected as directors by the holders of the Class P Preferred Stock and
the Voting Preferred Stock shall forthwith terminate and the number of directors
constituting the Board of Directors shall be reduced accordingly. At any time
after such voting power shall have been so vested in the holders of Class P
Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of
the Corporation may, and upon the written request of any holder of Class P
Preferred Stock (addressed to the Secretary at the principal office of the
Corporation) shall, call a special meeting of the holders of the Class P
Preferred Stock and of the Voting Preferred Stock for the election of the two
directors (in the case of an arrearage in dividends described in clause (i)) or
one director (in the case of an arrearage in dividends described in clause (ii))
to be elected by them as herein provided, such call to be made by notice similar
to that provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Class P Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. The directors or
director elected at any such special meeting shall hold office until the next
annual meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Class P
Preferred Stock and the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the then-remaining director
elected by the holders of the Class P Preferred Stock and the Voting Preferred
Stock or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(b) So long as any shares of Class P Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class P Preferred
Stock voting as a single class, given in person or by proxy, either in writing
without a meeting or by
25
vote at any meeting called for the purpose, shall be necessary for effecting or
validating:
(i) any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the Corporation that materially
adversely affects the voting powers, rights or preferences of the holders of the
Class P Preferred Stock (including any amendment, alteration or repeal effected
pursuant to a merger, consolidation, or similar transaction) or would convert
the Class P Preferred Stock into cash or any other security other than a
preferred stock with terms and provisions equivalent to those set forth in these
Articles Supplementary; provided, however, that the amendment of the provisions
of the Charter so as to authorize or create, or to increase the authorized
amount of, or issue any Junior Stock or any shares of any class of Parity Stock
shall not be deemed to materially adversely affect the voting powers, rights or
preferences of the holders of Class P Preferred Stock; or
(ii) the authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of Senior
Stock or any security convertible into shares of any class or series of Senior
Stock (whether or not such class or series of Senior Stock is currently
authorized);
provided, however, that no such vote of the holders of Class P Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class P Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting
rights under these Articles Supplementary, each share of Class P Preferred Stock
shall have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class P
Preferred Stock as a single class on any matter, then the Class P Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class P Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
26
10. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the
record holder of any share of Class P Preferred Stock as the true and lawful
owner thereof for all purposes, and neither the Corporation nor the Transfer
Agent shall be affected by any notice to the contrary.
11.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 11.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class P
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class P Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class P
Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided
in Section 11.8, from and after the Issue Date (and subject to Section 11.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class P Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class P Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class P Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 11.8, from and after the Issue Date (and subject to Section
11.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class P Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class P Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder limit, and the
Initial Holder shall acquire no rights in such shares of Class P Preferred
Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 11.8 from and after the Issue Date (and subject to
Section 11.12), any Transfer (whether or not such Transfer is the result of
27
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Class P
Preferred Stock in excess of the Look-Through Ownership limit shall be void ab
initio as to the Transfer of such shares of Class P Preferred Stock that would
be otherwise Beneficially Owned by such Look-Through Entity in excess of the
Look-Through Ownership Limit and such Look-Through Entity shall acquire no
rights in such shares of Class P Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant that
is described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class P Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class P
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class P Preferred Stock that is null and void under Sections 11.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class P Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class P Preferred Stock in
the same or any other related transaction.
11.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 11.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class P Preferred Stock in violation of Section 11.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
28
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class P Preferred Stock acquired in violation of Section
11.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; provided, however, that any
Transfers or attempted Transfers (or, in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 11.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 11.3 of this Article; provided, further, that the
provisions of this Section 11.2 shall be subject to the provisions of Section
11.12 of this Article; provided, further, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class P Preferred Stock that is
expressly authorized pursuant to Section 11.8(C) of this Article.
11.3. TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) or other
change in the capital structure of the Corporation (including, but not limited
to, any redemption of Equity Stock) or other event (including, but not limited
to, any acquisition of any share of Equity Stock) such that (a) any Person
(other than the Initial Holder or a Look-Through Entity) would Beneficially Own
shares of Class P Preferred Stock in excess of the Ownership Limit, or (b) the
Initial Holder would Beneficially Own shares of Class P Preferred Stock in
excess of the Initial Holder Limit, or (c) any Person that is a Look-Through
Entity would Beneficially Own shares of Class P Preferred Stock in excess of the
Look-Through Ownership Limit (in any such event, the Person, Initial Holder or
Look-Through Entity that would Beneficially Own shares of Class P Preferred
Stock in excess of the Ownership Limit, the Initial Holder Limit or the
Look-Through Entity Limit, respectively, is referred to as a "Prohibited
Transferee"), then, except as otherwise provided in Section 11.8 of this
Article, such shares of Class P Preferred Stock in excess of the Ownership
Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case
may be, (rounded up to the nearest whole share) shall be automatically
transferred to a Trustee in his capacity as trustee of a Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the Business Day
prior to the Excess Transfer, change in capital structure or another event
giving
29
rise to a potential violation of the Ownership Limit, the Initial Holder Limit
or the Look-Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class P
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
11.3(E), the Prohibited Transferee shall have no rights in the Class P Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class P
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class P Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void ab initio with respect to such shares of Class P Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class P Preferred Stock have been transferred to the Trustee will be
rescinded as void ab initio and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure or
other event giving rise to a potential violation of the Ownership Limit, Initial
Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have
given an irrevocable proxy to the Trustee to vote the shares of Class P
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 11.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee
30
did not give value for the shares (through a gift, devise or other transaction),
the Market Price of the shares on the day of the event causing the shares to be
held in the Trust and (2) the price per share received by the Trustee from the
sale or other disposition of the shares held in the Trust. Any proceeds in
excess of the amount payable to the Prohibited Transferee shall be payable to
the Charitable Beneficiary. If any of the transfer restrictions set forth in
this Section 11.3(E) or any application thereof is determined in a final
judgment to be void, invalid or unenforceable by any court having jurisdiction
over the issue, the Prohibited Transferee may be deemed, at the option of the
Corporation, to have acted as the agent of the Corporation in acquiring the
Class P Preferred Stock as to which such restrictions would, by their terms,
apply, and to hold such Class P Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares
of Class P Preferred Stock transferred to the Trustee shall be deemed to have
been offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class P Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
11.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class P Preferred Stock in violation of Section
11.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 11.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted 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.
31
11.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class P
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record and Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class P Preferred Stock shall, upon written request by the
Corporation, such request to be made 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 Class P Preferred Stock
Beneficially Owned, and a full description of how such shares are held. Each
such record or Beneficial Owner of Class P Preferred Stock shall, upon demand by
the Corporation, disclose to the Corporation in writing such additional
information with respect to the Beneficial Ownership of the Class P Preferred
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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class P Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 11.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class P Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class P
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class P Preferred Stock already Beneficially 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.
11.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 11.12 of this
Article) (i) to protect the Corporation and the interests of its stockholders in
the preservation of the
32
Corporation's status as a REIT and (ii) to insure compliance with the Ownership
Limit, the Initial Holder Limit and the Look-Through Ownership Limit.
11.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 11 of this Article, or in the case of an ambiguity
in any definition contained in Section 11 of this Article, the Board of
Directors shall have the power to determine the application of the provisions of
this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
11.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 11.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code and is a corporation, partnership, estate or trust. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person 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 on the Corporation's
status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class P Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 11.1 of this Article and the
pledgee shall not be subject to the Ownership Limit with respect to the Class P
Preferred Stock so pledged to it either as a result of the pledge or upon
foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold allotment
of Class P Preferred Stock) following the purchase of Class P Preferred Stock by
an underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class P Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class P Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class P Preferred Stock purchased in connection
with market making activities.
11.9 LEGEND. Each certificate for Class P Preferred Stock shall bear
substantially the following legend:
33
"The shares of Class P Convertible Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class P Convertible
Cumulative Preferred Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth
in the Charter (including the Articles Supplementary setting forth the
terms of the Class P Convertible Cumulative Preferred Stock). Any
Person that attempts to Beneficially Own shares of Class P Convertible
Cumulative Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter
(including the Articles Supplementary setting forth the terms of the
Class P Convertible Cumulative Preferred Stock), 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 that so
requests. If the restrictions on transfer are violated (i) the transfer
of the shares of Class P Convertible Cumulative Preferred Stock
represented hereby will be void in accordance with the Charter
(including the Articles Supplementary setting forth the terms of the
Class P Convertible Cumulative Preferred Stock) or (ii) the shares of
Class P Convertible Cumulative Preferred Stock represented hereby will
automatically be transferred to a Trustee of a Trust for the benefit of
one or more Charitable Beneficiaries."
11.10 SEVERABILITY. If any provision of this Article 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.
11.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
11.12 SETTLEMENT. Nothing in this Section 11 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the
34
facilities of the NYSE or other securities exchange or an automated inter-dealer
quotation system.
FOURTH: The terms of the Class P Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXVII of the Charter.
(the next page is the signature page)
35
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on March 1, 2001.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ KATHLEEN HARVEY /s/ PAUL J. MCAULIFFE
- ------------------------ ------------------------------
Kathleen Harvey Paul J. McAuliffe
Assistant Secretary Executive Vice President and
Chief Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer
of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ PAUL J. MCAULIFFE
----------------------------
Paul J. McAuliffe
Executive Vice President and
Chief Financial Officer
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS Q CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 2,530,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share, into a class
designated as Class Q Cumulative Preferred Stock, par value $.01 per share, and
has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class Q Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 2,530,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 464,432,738 shares immediately prior to
the reclassification to 461,902,738 shares immediately after the
reclassification. The number of shares classified as Class Q Cumulative
Preferred Stock may be decreased upon reacquisition thereof in any manner, or by
retirement thereof, by the Corporation.
THIRD: The terms of the Class Q Cumulative Preferred Stock (including
the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class Q Cumulative
Preferred Stock (the "Class Q Preferred Stock") and Two Million Five Hundred
Thirty Thousand (2,530,000) shall be the authorized number of shares of such
Class Q Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class Q Preferred Stock, the following terms shall
have the meanings indicated:
STATE OF MARYLAND
[SEAL]
I hereby certify that this is a true and complete copy of the 23 page document
on file in this office. DATED: 3/15/01. --
-------
STATE DEPARTMENT OF ASSIGNMENTS AND TAXATION
BY: /s/ ANN CUSTIS, Custodian
----------------
This stamp replaces our previous certification system. Effective: 6/95
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity
Stock, the product of (i) the number of shares of Equity Stock within
such block and (ii) the corresponding Market Price of one share of
Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (without
duplication) (i) the number of shares of Equity Stock directly owned by
such Person, (ii) the number of shares of Equity Stock indirectly owned
by such Person (if such Person is an "individual" as defined in Section
542(a)(2) of the Code) taking into account the constructive ownership
rules of Section 544 of the Code, as modified by Section 856(h)(1)(B)
of the Code, and (iii) the number of shares of Equity Stock that such
Person is deemed to beneficially own pursuant to Rule 13d-3 under the
Exchange Act, or that is attributed to such Person pursuant to Section
318 of the Code, as modified by Section 856(d)(5) of the Code, provided
that when applying this definition of Beneficial Ownership to the
Initial Holder, clause (iii) of this definition, and clause (ii) of the
definition of "Person" shall be disregarded. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Board of Directors" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class Q
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "Board of Directors" shall not
include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 10.3(G) of this Article, each
of which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Class A Common Stock" shall mean the Class A Common Stock, par value
$.01 per share, of the Corporation, and such other shares of the
Corporation's capital stock into which outstanding shares of such Class
A Common Stock shall be reclassified.
"Class Q Preferred Stock" shall have the meaning set forth in Section 1
of this Article.
2
"Closing Price" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Equity Stock is listed or admitted to trading or, if the
Equity 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 quotation system that may then be in use
or, if the Equity 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 Equity Stock selected
by the Board of Directors of the Corporation or, if the Equity Stock is
not publicly traded, the fair value of a share of such Equity Stock as
reasonably determined in good faith by the Board of Directors.
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"Dividend Payment Date" shall mean March 15, June 15, September 15, and
December 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including March
15, June 15, September 15, and December 15 of each year and ending on
and including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
Q Preferred Stock shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the Redemption Date with respect to the Class
Q Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital
stock of the Corporation.
"Excess Transfer" has the meaning set forth in Section 10.3(A) of this
Article.
3
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Issue Date" shall mean March 19, 2001.
"Initial Dividend Period" shall mean the period commencing on and
including the Issue Date and ending on and including June 15, 2001.
"Initial Holder" shall mean Terry Considine.
"Initial Holder Limit" shall mean a number of the Outstanding shares of
Class Q Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class Q Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of
Section 7 of this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class Q Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class Q Preferred Stock that are Beneficially Owned by the
Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean The New York Stock Exchange, Inc.
4
"Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"Outstanding" shall mean issued and outstanding shares of Equity Stock
of the Corporation; provided, however, that for purposes of the
application of the Ownership Limit, the Look-Through Ownership Limit or
the Initial Holder Limit to any Person, the term "Outstanding" shall be
deemed to include the number of shares of Equity Stock that such Person
alone, at that time, could acquire pursuant to any options or
convertible securities.
"Ownership Limit" shall mean, for any Person other than the Initial
Holder or a Look- Through Entity, a number of the Outstanding shares of
Class Q Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class Q Preferred Stock that are
Beneficially Owned by the Person.
"Ownership Restrictions" shall mean, collectively, the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 7 of this Article.
"Person" shall mean (a) for purposes of Section 10 of this Article, (i)
an individual, corporation, partnership, estate, trust (including a
trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) a "group,"
as that term is used for purposes of Section 13(d)(3) of the Exchange
Act, and (b) for purposes of the remaining Sections of this Article,
any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity.
"Prohibited Transferee" shall have the meaning set forth in Section
10.3(A) of this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of
Section 3 of this Article.
"Redemption Date" shall mean, in the case of any redemption of any
shares of Class Q Preferred Stock, the date fixed for redemption of
such shares.
5
"Redemption Price" shall mean, with respect to any share of Class Q
Preferred Stock to be redeemed, 100% of the Liquidation Preference
thereof, plus all accumulated, accrued and unpaid dividends (whether or
not earned or declared), if any, to the Redemption Date.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of
Section 7 of this Article.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; provided, however,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class Q
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Trading Day" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE, a
day on which the NYSE is open for the transaction of business, (ii) if
the Equity Stock is not listed or admitted to trading on the NYSE but
is listed or admitted to trading on another national securities
exchange or automated quotation system, a day on which the principal
national securities exchange or automated quotation system, as the case
may be, on which the Equity Stock is listed or admitted to trading is
open for the transaction of business, or (iii) if the Equity Stock is
not listed or admitted to trading on any national securities exchange
or automated quotation system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class Q Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
Q Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class Q Preferred Stock), whether voluntary or
involuntary, whether of record ownership or Beneficial Ownership, and
whether by operation of law or otherwise (including, but not limited
to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of Class Q Preferred
Stock). The term "Transfers" and "Transferred" shall have correlative
meanings.
6
"Transfer Agent" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class Q Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class Q Preferred Stock.
"Trust" shall mean the trust created pursuant to Section 10.3(A) of
this Article.
"Trustee" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 8
of this Article.
3. DIVIDENDS.
(a) The holders of Class Q Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class Q Preferred
Stock in an amount per share equal to $0.63125. Such dividends shall be
cumulative from the Issue Date, whether or not in any Dividend Period or Periods
such dividends shall be declared or there shall be funds of the Corporation
legally available for the payment of such dividends, and shall be payable
quarterly in arrears on each Dividend Payment Date, commencing on June 15, 2001.
Each such dividend shall be payable in arrears to the holders of record of the
Class Q Preferred Stock, as they appear on the stock records of the Corporation
at the close of business on March 1, June 1, September 1 or December 1 (each a
"Record Date"), as the case may be, immediately preceding such Dividend Payment
Date. Accumulated, accrued and unpaid dividends for any past Dividend Periods
may be declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, which date shall not precede by
more than 45 days the payment date thereof, as may be fixed by the Board of
Directors.
(b) The amount of dividends payable per share of Class Q Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30-day months
and a 360-day year. Holders of Class Q 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 Class Q 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 Class Q Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class Q Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any class or series
of Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid, or declared
7
and a sum sufficient for the payment thereof has been or contemporaneously is
set apart for such payment, on the Class Q Preferred Stock for all Dividend
Periods terminating on or prior to the date such dividend or distribution is
declared, paid, set apart for payment or made, as the case may be, with respect
to such class or series of Parity Stock. When dividends are not paid in full or
a sum sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon the Class Q Preferred Stock and all dividends declared upon any
other class or series of Parity Stock shall be declared ratably in proportion to
the respective amounts of dividends accumulated, accrued and unpaid on the Class
Q Preferred Stock and accumulated, accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class Q 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 declared or paid or set apart for payment by the Corporation and
no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Junior
Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Class A
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 shares of, or options, warrants, or rights to subscribe for or
purchase shares of, 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 in respect thereof, directly or indirectly, by the Corporation
unless, in each case, dividends equal to the full amount of all accumulated,
accrued and unpaid dividends on all outstanding shares of Class Q Preferred
Stock have been declared and paid, or such dividends have been declared and a
sum sufficient for the payment thereof has been set apart for such payment, on
all outstanding shares of Class Q Preferred Stock for all Dividend Periods
ending on or prior to the date such dividend or distribution is declared, paid,
set apart for payment or made with respect to such shares of Junior Stock, or
the date such shares of Junior Stock are redeemed, purchased or otherwise
acquired or monies paid to or made available for any sinking fund for such
redemption, or the date any such cash or other property is paid or distributed
to or for the benefit of any holders of Junior Stock in respect thereof, as the
case may be.
Notwithstanding the provisions of this Section 3, the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii)
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
8
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class Q Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class Q Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class Q Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class Q Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class Q Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class Q Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
Q Preferred Stock and any Parity Stock, as provided in Section 4(a), 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 Class Q Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class Q Preferred Stock shall not be redeemable by
the Corporation prior to March 19, 2006, except as set forth in Section 10.2 of
this Article. On and after March 19, 2006, the Corporation, at its option, may
redeem shares of Class Q Preferred Stock, in whole or from time to time in part,
at a redemption price payable in cash equal to the Redemption Price applicable
thereto. In the event of a redemption of shares of Class Q Preferred Stock, if
the Redemption Date occurs after a Record Date and on or prior to the related
Dividend Payment Date, the dividend payable on such Dividend Payment Date in
respect of such shares called for redemption shall be payable on such Dividend
Payment Date to the holders of record at the close of business on such Record
Date notwithstanding the redemption of such shares, and shall not be payable as
part of the redemption price for such shares. In connection with any redemption
pursuant to this Section 5(a), the redemption price of the Class Q Preferred
Stock
9
(other than any portion thereof consisting of accumulated, accrued and unpaid
dividends) shall be payable solely with the proceeds from the sale by the
Corporation or the Operating Partnership of other capital shares of the
Corporation or the Operating Partnership (whether or not such sale occurs
concurrently with such redemption). For purposes of the preceding sentence,
"capital shares" means any common stock, preferred stock, depositary shares,
partnership or other interests, participations or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable at the option of the holder for equity securities (unless and to
the extent such debt securities are subsequently converted into capital shares))
or options to purchase any of the foregoing of or in the Corporation or the
Operating Partnership.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of Class
Q Preferred Stock have not been declared and paid, or declared and set apart for
payment, no shares of Class Q Preferred Stock may be redeemed unless all
outstanding shares of Class Q Preferred Stock are simultaneously redeemed.
Neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Class Q Preferred Stock, other than pursuant to a purchase or
exchange offer made on the same terms to all holders of shares of Class Q
Preferred Stock.
(d) If the Corporation shall redeem shares of Class Q Preferred
Stock pursuant to paragraph (a) of this Section 5, 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. Neither the
failure to mail any notice required by this paragraph (d), nor any defect
therein or in the mailing thereof to any particular holder, shall affect the
sufficiency of the notice or the validity of the proceedings for redemption with
respect to the other holders. Any notice 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 notice shall state, as
appropriate: (i) the Redemption Date; (ii) the number of shares of Class Q
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; (iii) the place or places at which certificates for such shares are to
be surrendered; and (iv) the Redemption Price payable on such Redemption Date,
including, without limitation, a statement as to whether or not accumulated,
accrued and unpaid dividends will be payable as part of the Redemption Price, or
payable on the next Dividend Payment Date to the record holder at the close of
business on the relevant record date as described in the next sentence. Notice
having been mailed as aforesaid, from and after the Redemption Date (unless the
Corporation shall fail to make available the amount of cash necessary to effect
such redemption), (i) dividends on the shares of Class Q Preferred Stock so
called for redemption shall cease to accumulate or accrue on the shares of Class
Q Preferred Stock called for redemption, (ii) said shares shall no longer be
deemed to be outstanding, and (iii)
10
all rights of the holders thereof as holders of Class Q Preferred Stock of the
Corporation shall cease (except the right to receive the cash payable upon such
redemption, without interest thereon, upon surrender and endorsement of their
certificates if so required); provided, however, that if the Redemption Date for
any shares of Class Q Preferred Stock occurs after any dividend record date and
on or prior to the related Dividend Payment Date, the full dividend payable on
such Dividend Payment Date in respect of such shares of Class Q Preferred Stock
called for redemption shall be payable on such Dividend Payment Date to the
holders of record of such shares at the close of business on the corresponding
dividend record date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the cash necessary to effect the
redemption in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the applicable Redemption Date, the Corporation shall
irrevocably deposit in trust with a bank or trust company (which may not be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption plus, if such Redemption Date occurs
after any dividend record date and on or prior to the related Dividend Payment
Date, such amount of cash as is necessary to pay the dividend payable on such
Dividend Payment Date in respect of such shares of Class Q Preferred Stock
called for redemption, with irrevocable instructions that such cash be applied
to the redemption of the shares of Class Q Preferred Stock so called for
redemption and, if applicable, the payment of such dividend. No interest shall
accrue for the benefit of the holders of shares of Class Q Preferred Stock to be
redeemed on any cash so set aside by the Corporation. Subject to applicable
escheat laws, any such cash un claimed at the end of two years from the
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class Q 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 such
notice of the certificates for any such shares of Class Q Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon). If fewer than all the outstanding
shares of Class Q Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class Q
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class Q Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class Q Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class Q Preferred Stock that have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized but unissued shares of Class Q Preferred Stock.
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7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Class Q Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class Q Preferred Stock ("Senior Stock");
(b) on a parity with the Class Q Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class Q Preferred Stock, if (i) such capital stock is Class B Cumulative
Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D
Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible
Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock,
Class O Cumulative Convertible Preferred Stock or Class P Convertible Cumulative
Preferred Stock of the Corporation, or (ii) the holders of such class of stock
or series and the Class Q Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority of one over the
other (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class Q Preferred Stock, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if (i) such capital stock or series shall be Class A Common Stock or
(ii) the holders of Class Q Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class Q Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two if not already increased by reason
of similar types of provisions with respect to shares of any other class or
series of Parity Stock which is
12
entitled to similar voting rights (the "Voting Preferred Stock") and the holders
of shares of Class Q Preferred Stock, together with the holders of shares of all
other Voting Preferred Stock then entitled to exercise similar voting rights,
voting as a single class regardless of series, shall be entitled to elect the
two additional directors to serve on the Board of Directors at any annual
meeting of stockholders or special meeting held in place thereof, or at a
special meeting of the holders of the Class Q Preferred Stock and the Voting
Preferred Stock called as hereinafter provided. Whenever all arrears in
dividends on the Class Q Preferred Stock and the Voting Preferred Stock then
outstanding shall have been paid and dividends thereon for the current quarterly
dividend period shall have been declared and paid, or declared and set apart for
payment, then the right of the holders of the Class Q Preferred Stock and the
Voting Preferred Stock to elect such additional two directors shall cease (but
subject always to the same provision for the vesting of such voting rights in
the case of any similar future arrearages), and the terms of office of all
persons elected as directors by the holders of the Class Q Preferred Stock and
the Voting Preferred Stock shall forthwith terminate and the number of directors
constituting the Board of Directors shall be reduced accordingly. At any time
after such voting power shall have been so vested in the holders of Class Q
Preferred Stock and the Voting Preferred Stock, if applicable, the Secretary of
the Corporation may, and upon the written request of any holder of Class Q
Preferred Stock (addressed to the Secretary at the principal office of the
Corporation) shall, call a special meeting of the holders of the Class Q
Preferred Stock and of the Voting Preferred Stock for the election of the two
directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the stockholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 20 days after receipt of any such request, then any holder of Class Q
Preferred Stock may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock books of the Corporation. The
directors elected at any such special meeting shall hold office until the next
annual meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Class Q
Preferred Stock and the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the then-remaining director
elected by the holders of the Class Q Preferred Stock and the Voting Preferred
Stock or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above.
(b) So long as any shares of Class Q Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class Q Preferred
Stock voting as a single class with the holders of all other classes or series
of Parity Stock entitled to vote on such matters, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for the
purpose, shall be necessary for effecting or validating:
13
(i) any amendment, alteration or repeal of any of the provisions
of, or the addition of any provision to, these Articles Supplementary, the
Charter or the By-Laws of the Corporation that materially adversely affects the
voting powers, rights or preferences of the holders of the Class Q Preferred
Stock; provided, however, that the amendment of the provisions of the Charter so
as to authorize or create, or to increase the authorized amount of, or issue any
Junior Stock or any shares of any class of Parity Stock shall not be deemed to
materially adversely affect the voting powers, rights or preferences of the
holders of Class Q Preferred Stock; or
(ii) The authorization, creation of, increase in the authorized
amount of, or issuance of any shares of any class or series of Senior Stock or
any security convertible into shares of any class or series of Senior Stock
(whether or not such class or series of Senior Stock is currently authorized);
provided, however, that no such vote of the holders of Class Q Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class Q Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class Q Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class Q
Preferred Stock as a single class on any matter, then the Class Q Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class Q Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class Q Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 10.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class Q
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class Q Preferred Stock in excess
14
of the Initial Holder Limit and no Look-Through Entity shall Beneficially Own
shares of Class Q Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class Q Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class Q Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class Q Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 10.8, from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class Q Preferred Stock in
excess of the Initial Holder Limit shall be void ab initio as to the Transfer of
such shares of Class Q Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder limit, and the
Initial Holder shall acquire no rights in such shares of Class Q Preferred
Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class Q Preferred Stock in
excess of the Look-Through Ownership limit shall be void ab initio as to the
Transfer of such shares of Class Q Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class Q Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after
the Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class Q Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
15
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class Q
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of
Class Q Preferred Stock that is null and void under Sections 10.1(B), (C), (D),
or (E) of this Article because it would, if effective, result in (i) the
ownership of Class Q Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class Q Preferred Stock in
the same or any other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class Q Preferred Stock in violation of Section 10.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class Q Preferred Stock acquired in violation of Section
10.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; provided, however, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 10.3 of this Article; provided, further, that the
provisions of this Section 10.2 shall be subject to the provisions of Section
10.12 of this Article; provided, further, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class Q Preferred Stock that is
expressly authorized pursuant to Section 10.8(C) of this Article.
10.3 TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "Excess Transfer") (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) or other
change in the capital structure of the Corporation (including, but not limited
to, any redemption of Equity Stock) or other event (including, but not limited
to, any acquisition of
16
any share of Equity Stock) such that (a) any Person (other than the Initial
Holder or a Look- Through Entity) would Beneficially Own shares of Class Q
Preferred Stock in excess of the Ownership Limit, or (b) the Initial Holder
would Beneficially Own shares of Class Q Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class Q Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class Q Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a {-1- 34}Prohibited Transferee{-1- 34}),
then, except as otherwise provided in Section 10.8 of this Article, such shares
of Class Q Preferred Stock in excess of the Ownership Limit, the Initial Holder
Limit or the Look-Through Ownership Limit, as the case may be, (rounded up to
the nearest whole share) shall be automatically transferred to a Trustee in his
capacity as trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be
effective as of the close of business on the Business Day prior to the Excess
Transfer, change in capital structure or another event giving rise to a
potential violation of the Ownership Limit, the Initial Holder Limit or the Look
Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class Q
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10.3(E), the Prohibited Transferee shall have no rights in the Class Q Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class Q Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the
discovery by the Corporation that the shares of Class Q Preferred Stock have
been transferred to the Trustee shall be repaid to the Corporation upon demand,
and any dividend or distribution declared but unpaid shall be rescinded as void
ab initio with respect to such shares of Class Q Preferred Stock. Any dividends
or distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class Q
Preferred Stock have been transferred to the Trustee will be rescinded as void
ab initio and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
17
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class Q Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell
the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the Trust
and (2) the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any proceeds in excess of the
amount payable to the Prohibited Transferee shall be payable to the Charitable
Beneficiary. If any of the transfer restrictions set forth in this Section
10.3(E) or any application thereof is determined in a final judgment to be void,
invalid or unenforceable by any court having jurisdiction over the issue, the
Prohibited Transferee may be deemed, at the option of the Corporation, to have
acted as the agent of the Corporation in acquiring the Class Q Preferred Stock
as to which such restrictions would, by their terms, apply, and to hold such
Class Q Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class Q Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall
have the right to accept such offer for a period of 90 days after the later of
(i) the date of the Excess Transfer or other event resulting in a transfer to
the Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to
the Trustee, the Corporation shall designate one or more nonprofit organizations
to be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class Q Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class Q Preferred Stock in violation of Section
10.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 10.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine
18
the effect, if any, of such Transfer 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.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class Q
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class Q Preferred 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 holder or Beneficial Owner, the number of shares of Class Q
Preferred Stock Beneficially Owned, and a full description of how such shares
are held. Each such record holder or Beneficial Owner of Class Q Preferred Stock
shall, upon demand by the Corporation, disclose to the Corporation in writing
such additional information with respect to the Beneficial Ownership of the
Class Q Preferred 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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class Q Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 10.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that
is a Beneficial Owner of shares of Class Q Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class Q
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class Q Preferred Stock already Beneficially 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.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 10.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
19
10.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 10 of this Article, or in the case of an ambiguity
in any definition contained in Section 10 of this Article, the Board of
Directors shall have the power to determine the application of the provisions
of this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
10.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code (as modified to exclude qualified trusts from treatment as
individuals pursuant to Section 856(h)(3) of the Code) and is a corporation,
partnership, limited liability company, estate or trust. In connection with any
such exemption, the Board of Directors may require such representations and
undertakings from such Person 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 on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision
of this Article, the pledge by the Initial Holder of all or any portion of the
Class Q Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 10.1 of this Article and the pledgee shall
not be subject to the Ownership Limit with respect to the Class Q Preferred
Stock so pledged to it either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer period
of time as any underwriter described below shall hold an unsold allotment of
Class Q Preferred Stock) following the purchase of Class Q Preferred Stock by an
underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class Q Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class Q Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class Q Preferred Stock purchased in connection
with market making activities.
10.9 LEGEND. Each certificate for Class Q Preferred Stock shall bear
substantially the following legend:
"The shares of Class Q Cumulative Preferred Stock represented by
this certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class Q Cumulative Preferred Stock in excess
of the Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter (including the
Articles Supplementary setting forth the terms of the Class Q
Cumulative Preferred Stock). Any Person that attempts to Beneficially
Own shares of Class Q
20
Cumulative Preferred Stock in excess of the applicable limitation must
immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter
(including the Articles Supplementary setting forth the terms of the
Class Q Cumulative Preferred Stock), 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 that so requests. If
the restrictions on transfer are violated, (i) the transfer of the
shares of Class Q Cumulative Preferred Stock represented hereby will be
void in accordance with the Charter (including the Articles
Supplementary setting forth the terms of the Class Q Cumulative
Preferred Stock) or (ii) the shares of Class Q Cumulative Preferred
Stock represented hereby will automatically be transferred to a Trustee
of a Trust for the benefit of one or more Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article 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.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class Q Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXVIII of the Charter.
21
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on March 15, 2001.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ KATHLEEN HARVEY /s/ PAUL J. MCAULIFFE
Kathleen Harvey Paul J. McAuliffe
Assistant Secretary Executive Vice President and
Chief Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer
of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ PAUL J. MCAULIFFE
Paul J. McAuliffe
Executive Vice President and
Chief Financial Officer
22
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS R CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
as amended to date (the "Charter"), the Board of Directors has duly divided and
classified 4,140,000 authorized but unissued shares of Class A Common Stock of
the Corporation, par value $.01 per share, into a class designated as Class R
Cumulative Preferred Stock, par value $.01 per share, and has provided for the
issuance of such class.
SECOND: The reclassification increases the number of shares classified as
Class R Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 4,140,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 461,902,738 shares immediately prior to
the reclassification to 457,762,738 shares immediately after the
reclassification. The number of shares classified as Class R Cumulative
Preferred Stock may be decreased upon reacquisition thereof in any manner, or by
retirement thereof, by the Corporation.
THIRD: The terms of the Class R Cumulative Preferred Stock (including the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class R Cumulative
Preferred Stock (the "Class R Preferred Stock") and Four Million One Hundred
Forty Thousand (4,140,000) shall be the authorized number of shares of such
Class R Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class R Preferred Stock, the following terms shall have
the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
1
- -------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 22 page document
on file in this office. DATED: 8-3-01.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: Ann Custis, Custodian
This stamp replaces our previous certification system. Effective: 6/95
- -------------------------------------------------------------------------------
"affiliate" of a Person means a Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with, the Person specified.
"Aggregate Value" shall mean, with respect to any block of Equity Stock, the
product of (i) the number of shares of Equity Stock within such block and (ii)
the corresponding Market Price of one share of Equity Stock of such class.
"Beneficial Ownership" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (without duplication) (i) the number
of shares of Equity Stock directly owned by such Person, (ii) the number of
shares of Equity Stock indirectly owned by such Person (if such Person is an
"individual" as defined in Section 542(a)(2) of the Code) taking into account
the constructive ownership rules of Section 544 of the Code, as modified by
Section 856(h)(1)(B) of the Code, and (iii) the number of shares of Equity Stock
that such Person is deemed to beneficially own pursuant to Rule 13d-3 under the
Exchange Act, or that is attributed to such Person pursuant to Section 318 of
the Code, as modified by Section 856(d)(5) of the Code, provided that when
applying this definition of Beneficial Ownership to the Initial Holder, clause
(iii) of this definition, and clause (ii) of the definition of "Person" shall be
disregarded. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially
Owned" shall have the correlative meanings.
"Board of Directors" shall mean the Board of Directors of the Corporation or any
committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Class R Preferred Stock; provided that, for
purposes of paragraph (a) of Section 8 of this Article, the term "Board of
Directors" shall not include any such committee.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New York
are not required to be open.
"Charitable Beneficiary" shall mean one or more beneficiaries of the Trust as
determined pursuant to Section 10.3(G) of this Article, each of which shall be
an organization described in Section 170(b)(1)(A), 170(c)(2) and 501(c)(3) of
the Code.
"Class A Common Stock" shall mean the Class A Common Stock, par value $.01 per
share, of the Corporation, and such other shares of the Corporation's capital
stock into which outstanding shares of such Class A Common Stock shall be
reclassified.
"Class R Preferred Stock" shall have the meaning set forth in Section 1 of this
Article.
"Closing Price" shall mean, when used with respect to a share of any Equity
Stock and for any date, 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 NYSE or, if the Equity Stock is not listed or admitted to trading
2
on the NYSE, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Equity Stock is listed or admitted to trading or, if the
Equity 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 quotation
system that may then be in use or, if the Equity 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 Equity Stock selected by the
Board of Directors of the Corporation or, if the Equity Stock is not publicly
traded, the fair value of a share of such Equity Stock as reasonably determined
in good faith by the Board of Directors.
"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 thereto, as interpreted by any applicable regulations
or other administrative pronouncements as in effect from time to time.
"Dividend Payment Date" shall mean March 15, June 15, September 15, and December
15 of each year; provided, that if any Dividend Payment Date falls on any day
other than a Business Day, the dividend payment payable on such Dividend Payment
Date shall be paid on the Business Day immediately following such Dividend
Payment Date and no interest shall accrue on such dividend from such date to
such Dividend Payment Date.
"Dividend Periods" shall mean the Initial Dividend Period and each subsequent
quarterly dividend period commencing on and including March 15, June 15,
September 15, and December 15 of each year and ending on and including the day
preceding the first day of the next succeeding Dividend Period, other than the
Dividend Period during which any Class R Preferred Stock shall be redeemed
pursuant to Section 5 hereof, which shall end on and include the Redemption Date
with respect to the Class R Preferred Stock being redeemed.
"Equity Stock" shall mean one or more shares of any class of capital stock of
the Corporation.
"Excess Transfer" has the meaning set forth in Section 10.3(A) of this Article.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Issue Date" shall mean July 20, 2001.
"Initial Dividend Period" shall mean the period commencing on and including the
Issue Date and ending on and including September 15, 2001.
"Initial Holder" shall mean Terry Considine.
3
"Initial Holder Limit" shall mean a number of the Outstanding shares of Class R
Preferred Stock of the Corporation having an Aggregate Value not in excess of
the excess of (x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other than
Class R Preferred Stock that are Beneficially Owned by the Initial Holder. From
the Issue Date, the secretary of the Corporation, or such other person as shall
be designated by the Board of Directors, shall upon request make available to
the representative(s) of the Initial Holder and the Board of Directors, a
schedule that sets forth the then-current Initial Holder Limit applicable to the
Initial Holder.
"Junior Stock" shall have the meaning set forth in paragraph (c) of Section 7 of
this Article.
"Liquidation Preference" shall have the meaning set forth in paragraph (a) of
Section 4 of this Article.
"Look-Through Entity" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code or
(ii) registered under the Investment Company Act of 1940.
"Look-Through Ownership Limit" shall mean, for any Look-Through Entity, a number
of the Outstanding shares of Class R Preferred Stock of the Corporation having
an Aggregate Value not in excess of the excess of (x) 15% of the Aggregate Value
of all Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class R Preferred Stock that are Beneficially
Owned by the Look-Through Entity.
"Market Price" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of a share of that class of Equity Stock on the Trading
Day immediately preceding such date.
"NYSE" shall mean The New York Stock Exchange, Inc.
"Operating Partnership" shall mean AIMCO Properties, L.P., a Delaware limited
partnership.
"Outstanding" shall mean issued and outstanding shares of Equity Stock of the
Corporation; provided, however, that for purposes of the application of the
Ownership Limit, the Look-Through Ownership Limit or the Initial Holder Limit to
any Person, the term "Outstanding" shall be deemed to include the number of
shares of Equity Stock that such Person alone, at that time, could acquire
pursuant to any options or convertible securities.
"Ownership Limit" shall mean, for any Person other than the Initial Holder or a
Look-Through Entity, a number of the Outstanding shares of Class R Preferred
Stock of the Corporation having an Aggregate Value not in excess of the excess
of (x) 8.7% of the Aggregate Value of all Outstanding shares of Equity Stock
over (y) the Aggregate Value of all shares of Equity Stock other than Class R
Preferred Stock that are Beneficially Owned by the Person.
4
"Ownership Restrictions" shall mean, collectively, the Ownership Limit, as
applied to Persons other than the Initial Holder or Look-Through Entities, the
Initial Holder Limit, as applied to the Initial Holder, and the Look-Through
Ownership Limit, as applied to Look-Through Entities.
"Parity Stock" shall have the meaning set forth in paragraph (b) of Section 7 of
this Article.
"Person" shall mean (a) for purposes of Section 10 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association, "private
foundation," within the meaning of Section 509(a) of the Code, joint stock
company or other entity, and (ii) a "group," as that term is used for purposes
of Section 13(d)(3) of the Exchange Act, and (b) for purposes of the remaining
Sections of this Article, any individual, firm, partnership, corporation or
other entity, including any successor (by merger or otherwise) of such entity.
"Prohibited Transferee" shall have the meaning set forth in Section 10.3(A) of
this Article.
"Record Date" shall have the meaning set forth in paragraph (a) of Section 3 of
this Article.
"Redemption Date" shall mean, in the case of any redemption of any shares of
Class R Preferred Stock, the date fixed for redemption of such shares.
"Redemption Price" shall mean, with respect to any share of Class R Preferred
Stock to be redeemed, 100% of the Liquidation Preference thereof, plus all
accumulated, accrued and unpaid dividends (whether or not earned or declared),
if any, to the Redemption Date.
"REIT" shall mean a "real estate investment trust," as defined in Section 856 of
the Code.
"Senior Stock" shall have the meaning set forth in paragraph (a) of Section 7 of
this Article.
"set apart for payment" shall be deemed to include, without any action other
than the following, the recording by the Corporation in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; provided, however, that if any funds for any class or series of
Junior Stock or any class or series of Parity Stock are placed in a separate
account of the Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class R Preferred Stock
shall mean placing such funds in a separate account or delivering such funds to
a disbursing, paying or other similar agent.
"Trading Day" shall mean, when used with respect to any Equity Stock, (i) if the
Equity Stock is listed or admitted to trading on the NYSE, a day on which the
NYSE is open for the transaction of business, (ii) if the Equity Stock is not
listed or admitted to trading on the NYSE but is listed or admitted to trading
on another national securities exchange or automated quotation system, a
5
day on which the principal national securities exchange or automated quotation
system, as the case may be, on which the Equity Stock is listed or admitted to
trading is open for the transaction of business, or (iii) if the Equity Stock is
not listed or admitted to trading on any national securities exchange or
automated quotation system, 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 sale, transfer, gift, assignment, devise or other
disposition of a share of Class R Preferred Stock (including (i) the granting of
an option or any series of such options or entering into any agreement for the
sale, transfer or other disposition of Class R Preferred Stock or (ii) the sale,
transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Class R Preferred Stock), whether voluntary
or involuntary, whether of record ownership or Beneficial Ownership, and whether
by operation of law or otherwise (including, but not limited to, any transfer of
an interest in other entities that results in a change in the Beneficial
Ownership of shares of Class R Preferred Stock). The term "Transfers" and
"Transferred" shall have correlative meanings.
"Transfer Agent" means such transfer agent as may be designated by the Board of
Directors or their designee as the transfer agent for the Class R Preferred
Stock; provided, that if the Corporation has not designated a transfer agent
then the Corporation shall act as the transfer agent for the Class R Preferred
Stock.
"Trust" shall mean the trust created pursuant to Section 10.3(A) of this
Article.
"Trustee" shall mean the Person unaffiliated with either the Corporation or the
Prohibited Transferee that is appointed by the Corporation to serve as trustee
of the Trust.
"Voting Preferred Stock" shall have the meaning set forth in Section 8 of this
Article.
3. DIVIDENDS.
(a) The holders of Class R Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class R Preferred
Stock in an amount per share equal to $0.625. Such dividends shall be cumulative
from the Issue Date, whether or not in any Dividend Period or Periods such
dividends shall be declared or there shall be funds of the Corporation legally
available for the payment of such dividends, and shall be payable quarterly in
arrears on each Dividend Payment Date, commencing on September 15, 2001. Each
such dividend shall be payable in arrears to the holders of record of the Class
R Preferred Stock, as they appear on the stock records of the Corporation at the
close of business on March 1, June 1, September 1 or December 1 (each a "Record
Date"), as the case may be, immediately preceding such Dividend Payment Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to
6
holders of record on such date, which date shall not precede by more than 45
days the payment date thereof, as may be fixed by the Board of Directors.
(b) The amount of dividends payable per share of Class R Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30-day months
and a 360-day year. Holders of Class R 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 Class R 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 Class R Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class R Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any class or series
of Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment, on the Class R
Preferred Stock for all Dividend Periods terminating on or prior to the date
such dividend or distribution is declared, paid, set apart for payment or made,
as the case may be, with respect to such class or series of Parity Stock. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon the Class R Preferred Stock and
all dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class R Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class R 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 declared or paid or set apart for payment by the Corporation and
no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any shares of Junior
Stock, nor shall any shares of Junior Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Class A
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 shares of, or options, warrants, or rights to subscribe for or
purchase shares of, 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 in respect thereof, directly or indirectly, by the Corporation
unless, in each case, dividends equal to the full amount of all accumulated,
accrued and unpaid dividends on all outstanding shares of Class R Preferred
Stock have been declared and paid, or such dividends have been declared and a
sum sufficient for the payment thereof has
7
been set apart for such payment, on all outstanding shares of Class R Preferred
Stock for all Dividend Periods ending on or prior to the date such dividend or
distribution is declared, paid, set apart for payment or made with respect to
such shares of Junior Stock, or the date such shares of Junior Stock are
redeemed, purchased or otherwise acquired or monies paid to or made available
for any sinking fund for such redemption, or the date any such cash or other
property is paid or distributed to or for the benefit of any holders of Junior
Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii)
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
such declaration, payment, redemption, purchase or other acquisition is
necessary in order to maintain the continued qualification of the Corporation as
a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class R Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class R Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class R Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class R Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class R Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class R Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
R Preferred Stock and any Parity Stock, as provided in Section 4(a), any other
series or class or classes of Junior Stock shall,
8
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 Class R
Preferred Stock and any Parity Stock shall not be entitled to share therein.
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class R Preferred Stock shall not be redeemable by the
Corporation prior to July 20, 2006, except as set forth in Section 10.2 of this
Article. On and after July 20, 2006, the Corporation, at its option, may redeem
shares of Class R Preferred Stock, in whole or from time to time in part, at a
redemption price payable in cash equal to the Redemption Price applicable
thereto. In the event of a redemption of shares of Class R Preferred Stock, if
the Redemption Date occurs after a Record Date and on or prior to the related
Dividend Payment Date, the dividend payable on such Dividend Payment Date in
respect of such shares called for redemption shall be payable on such Dividend
Payment Date to the holders of record at the close of business on such Record
Date notwithstanding the redemption of such shares, and shall not be payable as
part of the redemption price for such shares. In connection with any redemption
pursuant to this Section 5(a), the redemption price of the Class R Preferred
Stock (other than any portion thereof consisting of accumulated, accrued and
unpaid dividends) shall be payable solely with the proceeds from the sale by the
Corporation or the Operating Partnership of other capital shares of the
Corporation or the Operating Partnership (whether or not such sale occurs
concurrently with such redemption). For purposes of the preceding sentence,
"capital shares" means any common stock, preferred stock, depositary shares,
partnership or other interests, participations or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable at the option of the holder for equity securities (unless and to
the extent such debt securities are subsequently converted into capital shares))
or options to purchase any of the foregoing of or in the Corporation or the
Operating Partnership.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of Class R
Preferred Stock have not been declared and paid, or declared and set apart for
payment, no shares of Class R Preferred Stock may be redeemed unless all
outstanding shares of Class R Preferred Stock are simultaneously redeemed.
Neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Class R Preferred Stock, other than pursuant to a purchase or
exchange offer made on the same terms to all holders of shares of Class R
Preferred Stock.
(d) If the Corporation shall redeem shares of Class R Preferred Stock
pursuant to paragraph (a) of this Section 5, 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. Neither the failure to
mail any notice required by this paragraph (d), nor any defect therein or in the
mailing thereof to any particular holder, shall affect the sufficiency of the
notice or the
9
validity of the proceedings for redemption with respect to the other holders.
Any notice 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 notice shall state, as appropriate: (i) the Redemption
Date; (ii) the number of shares of Class R 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; (iii) the place or places at
which certificates for such shares are to be surrendered; and (iv) the
Redemption Price payable on such Redemption Date, including, without limitation,
a statement as to whether or not accumulated, accrued and unpaid dividends will
be payable as part of the Redemption Price, or payable on the next Dividend
Payment Date to the record holder at the close of business on the relevant
record date as described in the next sentence. Notice having been mailed as
aforesaid, from and after the Redemption Date (unless the Corporation shall fail
to make available the amount of cash necessary to effect such redemption), (i)
dividends on the shares of Class R Preferred Stock so called for redemption
shall cease to accumulate or accrue on the shares of Class R Preferred Stock
called for redemption, (ii) said shares shall no longer be deemed to be
outstanding, and (iii) all rights of the holders thereof as holders of Class R
Preferred Stock of the Corporation shall cease (except the right to receive the
cash payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required); provided, however, that if
the Redemption Date for any shares of Class R Preferred Stock occurs after any
dividend record date and on or prior to the related Dividend Payment Date, the
full dividend payable on such Dividend Payment Date in respect of such shares of
Class R Preferred Stock called for redemption shall be payable on such Dividend
Payment Date to the holders of record of such shares at the close of business on
the corresponding dividend record date notwithstanding the prior redemption of
such shares. The Corporation's obligation to make available the cash necessary
to effect the redemption in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the applicable Redemption Date, the
Corporation shall irrevocably deposit in trust with a bank or trust company
(which may not be an affiliate of the Corporation) that has, or is an affiliate
of a bank or trust company that has, a capital and surplus of at least
$50,000,000, such amount of cash as is necessary for such redemption plus, if
such Redemption Date occurs after any dividend record date and on or prior to
the related Dividend Payment Date, such amount of cash as is necessary to pay
the dividend payable on such Dividend Payment Date in respect of such shares of
Class R Preferred Stock called for redemption, with irrevocable instructions
that such cash be applied to the redemption of the shares of Class R Preferred
Stock so called for redemption and, if applicable, the payment of such dividend.
No interest shall accrue for the benefit of the holders of shares of Class R
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 Redemption Date shall revert to the general funds of the
Corporation, after which reversion the holders of shares of Class R 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 such
notice of the certificates for any such shares of Class R Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such
10
certificates shall be exchanged for cash (without interest thereon). If fewer
than all the outstanding shares of Class R Preferred Stock are to be redeemed,
shares to be redeemed shall be selected by the Corporation from outstanding
shares of Class R Preferred Stock not previously called for redemption by lot
or, with respect to the number of shares of Class R Preferred Stock held of
record by each holder of such shares, pro rata (as nearly as may be) 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 Class R Preferred Stock
represented by any certificate are redeemed, then a new certificate representing
the unredeemed shares shall be issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class R Preferred Stock that have been issued and reacquired
in any manner by the Corporation shall be returned to the status of authorized
but unissued shares of Class R Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class R Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class R Preferred Stock ("Senior Stock");
(b) on a parity with the Class R Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class R Preferred Stock, if (i) such capital stock is Class B Cumulative
Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D
Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible
Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock,
Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative
Preferred Stock or Class Q Cumulative Preferred Stock of the Corporation, or
(ii) the holders of such class of stock or series and the Class R Preferred
Stock shall be entitled to the receipt of dividends and of amounts distributable
upon liquidation, dissolution or winding up in proportion to their respective
amounts of accrued and unpaid dividends per share or liquidation preferences,
without preference or priority of one over the other (the capital stock referred
to in clauses (i) and (ii) of this paragraph being hereinafter referred to,
collectively, as "Parity Stock"); and
(c) junior to the Class R Preferred Stock, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if (i) such capital stock or series shall be Class A Common Stock or
(ii) the holders of Class R Preferred Stock
11
shall be entitled to receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of such class or series (the capital stock
referred to in clauses (i) and (ii) of this paragraph being hereinafter referred
to, collectively, as "Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class R Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two if not already increased by reason
of similar types of provisions with respect to shares of any other class or
series of Parity Stock which is entitled to similar voting rights (the _Voting
Preferred Stock_) and the holders of shares of Class R Preferred Stock, together
with the holders of shares of all other Voting Preferred Stock then entitled to
exercise similar voting rights, voting as a single class regardless of series,
shall be entitled to elect the two additional directors to serve on the Board of
Directors at any annual meeting of stockholders or special meeting held in place
thereof, or at a special meeting of the holders of the Class R Preferred Stock
and the Voting Preferred Stock called as hereinafter provided. Whenever all
arrears in dividends on the Class R Preferred Stock and the Voting Preferred
Stock then outstanding shall have been paid and dividends thereon for the
current quarterly dividend period shall have been declared and paid, or declared
and set apart for payment, then the right of the holders of the Class R
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages), and the
terms of office of all persons elected as directors by the holders of the Class
R Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class R Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Class R Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Class R Preferred Stock and of the Voting Preferred Stock for the
election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Class R Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall hold office
until the next annual meeting of the stockholders or special meeting held in
lieu thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the directors elected by the holders
of the Class R Preferred Stock and the Voting Preferred Stock, a successor shall
be elected by the Board of Directors, upon the nomination of the then-remaining
director elected by the holders of the Class R Preferred Stock and the Voting
Preferred Stock or the successor of
12
such remaining director, to serve until the next annual meeting of the
stockholders or special meeting held in place thereof if such office shall not
have previously terminated as provided above.
(b) So long as any shares of Class R Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the
votes entitled to be cast by the holders of the Class R Preferred Stock voting
as a single class with the holders of all other classes or series of Parity
Stock entitled to vote on such matters, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
(i) any amendment, alteration or repeal of any of the provisions
of, or the addition of any provision to, these Articles Supplementary, the
Charter or the By-Laws of the Corporation that materially adversely affects the
voting powers, rights or preferences of the holders of the Class R Preferred
Stock; provided, however, that the amendment of the provisions of the Charter so
as to increase the authorized amount of Class R Preferred Stock, or to authorize
or create, or to increase the authorized amount of, or issue any Junior Stock or
any shares of any class of Parity Stock, shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the holders of
Class R Preferred Stock; or
(ii) the authorization, creation of, increase in the authorized
amount of, or issuance of any shares of any class or series of Senior Stock or
any security convertible into shares of any class or series of Senior Stock
(whether or not such class or series of Senior Stock is currently authorized);
provided, however, that no such vote of the holders of Class R Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class R Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting
rights under these Articles Supplementary, each share of Class R Preferred Stock
shall have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class R
Preferred Stock as a single class on any matter, then the Class R Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class R Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
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9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class R Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section
10.8, from and after the Issue Date, no Person (other than the Initial Holder or
a Look-Through Entity) shall Beneficially Own shares of Class R Preferred Stock
in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class R Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class R Preferred Stock in
excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class R Preferred Stock in excess of the Ownership Limit shall
be void ab initio as to the Transfer of such shares of Class R Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class R Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class R Preferred Stock in excess
of the Initial Holder Limit shall be void ab initio as to the Transfer of such
shares of Class R Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class R Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class R Preferred Stock in
excess of the Look-Through Ownership limit shall be void ab initio as to the
Transfer of such shares of Class R Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class R Preferred Stock.
14
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of shares of Class R Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class R
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class R
Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class R Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class R Preferred Stock in the same or any
other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class R Preferred Stock in violation of Section 10.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class R Preferred Stock acquired in violation of Section
10.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; provided, however, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void ab initio or (b) shall automatically result in the
transfer described in Section 10.3 of this Article; provided, further, that the
provisions of this Section 10.2 shall be subject to the provisions of Section
10.12 of this Article; provided, further, that neither the Board of Directors
nor any committee thereof may exercise such authority in a
15
manner that interferes with any ownership or transfer of Class R Preferred Stock
that is expressly authorized pursuant to Section 10.8(C) of this Article.
10.3 TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "Excess Transfer") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Equity Stock) or other event (including, but not limited to, any
acquisition of any share of Equity Stock) such that (a) any Person (other than
the Initial Holder or a Look-Through Entity) would Beneficially Own shares of
Class R Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class R Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class R Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class R Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a _Prohibited Transferee_), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class R
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the Business Day prior to the Excess Transfer,
change in capital structure or another event giving rise to a potential
violation of the Ownership Limit, the Initial Holder Limit or the Look Through
Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class R Preferred
Stock held by the Trustee shall be issued and outstanding shares of capital
stock of the Corporation. Except to the extent provided in Section 10.3(E), the
Prohibited Transferee shall have no rights in the Class R Preferred Stock held
by the Trustee, and the Prohibited Transferee shall not benefit economically
from ownership of any shares held in trust by the Trustee, shall have no rights
to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class R Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution
16
paid prior to the discovery by the Corporation that the shares of Class R
Preferred Stock have been transferred to the Trustee shall be repaid to the
Corporation upon demand, and any dividend or distribution declared but unpaid
shall be rescinded as void ab initio with respect to such shares of Class R
Preferred Stock. Any dividends or distributions so disgorged or rescinded shall
be paid over to the Trustee and held in trust for the Charitable Beneficiary.
Any vote cast by a Prohibited Transferee prior to the discovery by the
Corporation that the shares of Class R Preferred Stock have been transferred to
the Trustee will be rescinded as void ab initio and shall be recast in
accordance with the desires of the Trustee acting for the benefit of the
Charitable Beneficiary. The owner of the shares at the time of the Excess
Transfer, change in capital structure or other event giving rise to a potential
violation of the Ownership Limit, Initial Holder Limit or Look-Through Entity
Ownership Limit shall be deemed to have given an irrevocable proxy to the
Trustee to vote the shares of Class R Preferred Stock for the benefit of the
Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a Person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price paid by the Prohibited Transferee for the
shares or, if the Prohibited Transferee did not give value for the shares
(through a gift, devise or other transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2) the
price per share received by the Trustee from the sale or other disposition of
the shares held in the Trust. Any proceeds in excess of the amount payable to
the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any
of the transfer restrictions set forth in this Section 10.3(E) or any
application thereof is determined in a final judgment to be void, invalid or
unenforceable by any court having jurisdiction over the issue, the Prohibited
Transferee may be deemed, at the option of the Corporation, to have acted as the
agent of the Corporation in acquiring the Class R Preferred Stock as to which
such restrictions would, by their terms, apply, and to hold such Class R
Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Class
R Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of
17
Class R Preferred Stock held in the Trust would not violate the Ownership
Restrictions in the hands of such Charitable Beneficiary and (ii) each
Charitable Beneficiary is an organization described in Sections 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
10.5 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts
to acquire shares of Class R Preferred Stock in violation of Section 10.1 of
this Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 10.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted 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.
10.6 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class R
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner of more
than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class R Preferred 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 holder or Beneficial Owner, the number of shares of Class R
Preferred Stock Beneficially Owned, and a full description of how such shares
are held. Each such record holder or Beneficial Owner of Class R Preferred Stock
shall, upon demand by the Corporation, disclose to the Corporation in writing
such additional information with respect to the Beneficial Ownership of the
Class R Preferred 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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class R Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 10.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is a
Beneficial Owner of shares of Class R Preferred Stock and any Person (including
the stockholder of record) that is holding shares of Class R Preferred Stock for
a Beneficial Owner, and any proposed transferee of shares, 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, to determine any such
compliance or to ensure compliance with the Ownership Limit, the Initial Holder
Limit and the Look-Through Ownership Limit, and shall provide a statement or
affidavit to the Corporation setting forth the number of shares of Class R
Preferred Stock already Beneficially 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.
18
10.7 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 10.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.8 AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 10 of this Article, or in the case of an ambiguity in
any definition contained in Section 10 of this Article, the Board of Directors
shall have the power to determine the application of the provisions of this
Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
10.9 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt of
a ruling from the Internal Revenue Service or an opinion of tax counsel or other
evidence or undertaking acceptable to it, may waive the application, in whole or
in part, of the Ownership Limit to a Person subject to the Ownership Limit, if
such person is not an individual for purposes of Section 542(a) of the Code (as
modified to exclude qualified trusts from treatment as individuals pursuant to
Section 856(h)(3) of the Code) and is a corporation, partnership, limited
liability company, estate or trust. In connection with any such exemption, the
Board of Directors may require such representations and undertakings from such
Person 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 on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of
this Article, the pledge by the Initial Holder of all or any portion of the
Class R Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 10.1 of this Article and the pledgee shall
not be subject to the Ownership Limit with respect to the Class R Preferred
Stock so pledged to it either as a result of the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer period of
time as any underwriter described below shall hold an unsold allotment of Class
R Preferred Stock) following the purchase of Class R Preferred Stock by an
underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class R Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class R Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class R Preferred Stock purchased in connection
with market making activities.
19
10.10 LEGEND. Each certificate for Class R Preferred Stock shall bear
substantially the following legend:
"The shares of Class R Cumulative Preferred Stock represented by this
certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class R Cumulative Preferred Stock in excess of
the Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter (including the
Articles Supplementary setting forth the terms of the Class R Cumulative
Preferred Stock). Any Person that attempts to Beneficially Own shares of
Class R Cumulative Preferred Stock in excess of the applicable limitation
must immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter (including
the Articles Supplementary setting forth the terms of the Class R
Cumulative Preferred Stock), 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 that so requests. If the restrictions on
transfer are violated, (i) the transfer of the shares of Class R Cumulative
Preferred Stock represented hereby will be void in accordance with the
Charter (including the Articles Supplementary setting forth the terms of
the Class R Cumulative Preferred Stock) or (ii) the shares of Class R
Cumulative Preferred Stock represented hereby will automatically be
transferred to a Trustee of a Trust for the benefit of one or more
Charitable Beneficiaries."
10.11 SEVERABILITY. If any provision of this Article 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.
10.12 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.13 SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class R Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXIX of the Charter.
20
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on July 17, 2001.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LUCY CORDOVA /s/ PAUL J. MCAULIFFE
- -------------------------------- ----------------------------------
Lucy Cordova Paul J. McAuliffe
Assistant Secretary Executive Vice President and
Chief Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer
of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ PAUL J. MCAULIFFE
-------------------------------
Paul J. McAuliffe
Executive Vice President and
Chief Financial Officer
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS R CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 800,000 authorized but unissued shares of Class A Common
Stock of the Corporation, par value $.01 per share, into additional shares of
preferred stock heretofore designated as "Class R Cumulative Preferred Stock,
par value $.01 per share," (the "Class R Preferred Stock") and has provided for
the issuance of such additional shares.
SECOND: The reclassification increases the number of shares classified
as Class R Preferred Stock from 4,140,000 shares immediately prior to the
reclassification to 4,940,000 shares immediately after the reclassification. The
reclassification decreases the number of shares classified as Class A Common
Stock from 457,762,738 shares immediately prior to the reclassification to
456,962,738 shares immediately after the reclassification. The number of shares
classified as Class R Preferred Stock may be decreased upon reacquisition
thereof in any manner, or by retirement thereof, by the Corporation.
THIRD: The terms of the Class R Preferred Stock (including the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as set forth in
Article THIRD of the Articles Supplementary to the Charter (dated July 17, 2001
and filed with the MSDAT on July 18, 2001) and remain unchanged by these
Articles Supplementary.
- -------------------------------------------------------------------------------
STATE OF MARYLAND
I hereby certify that this is a true and complete copy of the 3 page document
on file in this office. DATED: 8-3-01.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
BY: Ann Custis, Custodian
This stamp replaces our previous certification system. Effective: 6/95
- -------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Chairman of the Board and witnessed
by its Assistant Secretary on July 31, 2001.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LUCY CORDOVA /s/ TERRY CONSIDINE
- ------------------- ------------------------
Lucy Cordova Terry Considine
Assistant Secretary Chairman of the Board
THE UNDERSIGNED, Chairman of the Board of APARTMENT INVESTMENT AND
MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles
Supplementary of which this Certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that the
matters and facts set forth herein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
/s/ TERRY CONSIDINE
------------------------
Terry Considine
Chairman of the Board
CERTIFICATE OF CORRECTION
TO
ARTICLES SUPPLEMENTARY
CLASS K CONVERTIBLE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A MARYLAND CORPORATION)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(the "Corporation"), having its principal office in Baltimore City, Maryland,
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Articles Supplementary, dated February 17, 1999, of the
Corporation relating to its Class K Convertible Cumulative Preferred Stock (par
value $.01 per share) were filed with the State Department of Assessments and
Taxation of Maryland on February 17, 1999, and said Articles Supplementary
require correction as permitted by Section 1-207 of the Corporations and
Associations Article of the Annotated Code of Maryland.
SECOND: The definition of "Dividend Payment Date" contained in Section
2 of ARTICLE THIRD of the Articles Supplementary as previously filed and to be
corrected hereby reads as follows:
"DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15 and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
THIRD: The definition of "Dividend Payment Date" contained in Section 2
of ARTICLE THIRD of the Articles Supplementary as corrected hereby is as
follows:
"DIVIDEND PAYMENT DATE" shall mean February 18, May 18, August 18 and
November 18 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date
FOURTH: The inaccuracy or defect in the definition of "Dividend Payment
Date" contained in Section 2 of ARTICLE THIRD of the Articles Supplementary as
previously filed is an error in transcription or other error in the dates used
for the Dividend Payment Dates.
IN WITNESS WHEREOF, Apartment Investment and Management Company has
caused this Certificate of Correction to be signed in its name and on its behalf
by its Chairman and witnessed by its Secretary on October 17, 2001
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Joel F. Bonder By: /s/ Terry Considine
Joel F. Bonder, Secretary Terry Considine, Chairman
THE UNDERSIGNED, Chairman of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, with respect to the foregoing Certificate of Correction of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said Corporation, the foregoing Certificate of Correction to be the act of said
Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the authorization and approval thereof are true in all material respects, under
the penalties of perjury.
/s/ Terry Considine
Terry Considine, Chairman
- 2 -
[STAMP]
ARTICLES OF MERGER
BETWEEN
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
(A MARYLAND CORPORATION)
and
CASDEN PROPERTIES INC.
(A MARYLAND CORPORATION)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a corporation duly
organized and existing under the laws of the State of Maryland ("AIMCO") and
CASDEN PROPERTIES INC., a corporation duly organized and existing under the laws
of the State of Maryland ("CASDEN"), do hereby certify that:
FIRST: AIMCO and CASDEN agree to merge.
SECOND: The name and place of incorporation of each party to these
Articles are APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland
corporation, and CASDEN PROPERTIES INC., a Maryland corporation. AIMCO shall
survive the merger as the successor corporation and shall continue under the
name "APARTMENT INVESTMENT AND MANAGEMENT COMPANY" as a corporation of the State
of Maryland.
THIRD: AIMCO has its principal office in the State of Maryland in
Baltimore City. CASDEN has its principal office in the State of Maryland in
Baltimore City. CASDEN does not own an interest in land in the State of
Maryland.
FOURTH: The terms and conditions of the transaction set forth in these
Articles were advised, authorized, and approved by each corporation party to
the Articles in the manner and by the vote required by its Charter and the laws
of the state of its incorporation. The manner of approval was as follows:
(a) The Board of Directors of AIMCO by unanimous written
consent dated November 29, 2001 signed by all the directors and filed
with the minutes of proceedings of the Board of Directors of AIMCO
adopted resolutions which declared that the proposed merger was
advisable on substantially the terms and conditions set forth or
referred to in the resolutions. No vote of stockholders was necessary
because the merger does not reclassify or change the terms of any class
or series of its stock that is outstanding immediately before the
merger becomes effective or otherwise amend its charter and the number
of shares of Class A Common Stock of AIMCO to be issued or delivered in
the merger is less than 20
-1-
percent of the shares of Class A Common Stock of AIMCO outstanding
immediately before the proposed merger becomes effective.
(b) The Board of Directors of CASDEN at telephonic meetings
duly called and held on November 30, 2001 and December 3, 2001 adopted
resolutions which declared that the proposed merger was advisable on
substantially the terms and conditions set forth or referred to in the
resolutions and directed that the proposed merger be submitted for
consideration at a special meeting of the stockholders of CASDEN.
Notice which stated that a purpose of the special meeting was to act on
the proposed merger was given by CASDEN as required by law. The only
votes of the holders of any class or series of the shares of CASDEN
that are required to approve the proposed merger are the affirmative
votes of (a) holders of at least a majority of the shares of CASDEN
Common Stock outstanding on the record date for the special meeting,
voting as a class, and (b) holders of 55% of the shares of CASDEN Class
A Preferred Stock, voting as a class. At a special meeting of
stockholders of CASDEN duly called and held on February 4, 2002 and
adjourned from time to time until March 7, 2002, the proposed merger
was approved by the stockholders of CASDEN by the affirmative vote
required by law and the charter of CASDEN
FIFTH: No amendment to the Charter of AIMCO is to be effected as a part
of the merger. The merger does not reclassify or change the terms of any class
or series of outstanding capital stock of AIMCO.
SIXTH: The total number of shares of capital stock of all classes
which AIMCO or CASDEN, respectively, has authority to issue, the number of
shares of each class which AIMCO or CASDEN, respectively, has authority to
issue, and the par value of the shares of each class which AIMCO or CASDEN,
respectively, has authority to issue are as follows:
(a) The total number of shares of stock of all classes which
AIMCO has authority to issue is set forth on Schedule A hereto. The
aggregate par value of all the shares of stock of all classes of AIMCO
is $5,105,875.00. The merger does not change the authorized stock of
AIMCO.
(b) The total number of shares of stock of all classes which
CASDEN has authority to issue is 250,000,000 shares, of which
150,000,000 shares are classified as Common Stock (par value $0.01 per
share); 15,000,000 shares are classified as Class A Preferred Stock
(par value $0.01 per share); 424,000 shares are classified as Junior
Preferred Stock (par value $0.01 per share), and 84,576,000 shares are
classified as Preferred Stock (par value $0.01 per share). The
aggregate par value of all the shares of stock of all classes of CASDEN
is $2,500,000.00.
SEVENTH: The manner and basis of converting or exchanging issued stock
of the merging corporations into different stock of a corporation or for other
consideration and the
-2-
treatment of any issued stock of the merging corporations not to be converted or
exchanged are as follows:
(a) Each issued and outstanding share of the capital stock of
AIMCO on the effective time of the merger shall continue, without
change as to class, series or otherwise, to be an issued and
outstanding share of capital stock of AIMCO.
(b) The issued and outstanding shares of capital stock of
CASDEN, options to purchase shares of capital stock of CASDEN and
warrants for the purchase of shares of capital stock of CASDEN shall be
exchanged for AIMCO stock and other consideration according to, and
in the manner set forth in, the Agreement and Plan of Merger attached
as Schedule B hereto.
EIGHTH: The merger shall become effective at 10:15 A.M. EST on
March 11, 2002.
-3-
IN WITNESS WHEREOF, AIMCO has caused these presents to be signed in
its name and on its behalf by its chairman and witnessed by its secretary on
March 11, 2002.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
(a Maryland corporation)
/s/ MILES CORTEZ By: /s/ TERRY CONSIDINE
- ------------------------------- ---------------------------------
Miles Cortez, Secretary Terry Considine, Chairman
THE UNDERSIGNED, Chairman of APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, who executed on behalf of the Corporation the foregoing Articles of
Merger of which this certificate is made a part, hereby acknowledges in the name
and on behalf of said Corporation the foregoing Articles of Merger to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
By: /s/ TERRY CONSIDINE
---------------------------------
Terry Considine, Chairman
-4-
IN WITNESS WHEREOF, CASDEN has caused these presents to be signed in
its name and on its behalf by its chairman and witnessed by its secretary on
March 11, 2002.
WITNESS; CASDEN PROPERTIES INC.
(a Maryland Corporation)
/s/ ANDREW J. STARRELS By: /s/ ALAN I. CASDEN
- -------------------------------- --------------------------------
Andrew J. Starrels, Secretary Alan I. Casden, Chairman
THE UNDERSIGNED, Chairman of CASDEN PROPERTIES INC., who executed on
behalf of the Corporation the foregoing Articles of Merger of which this
certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles of Merger to be the corporate act of
said Corporation and hereby certifies that to the best of his knowledge,
information and belief the matters and facts set forth therein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
/s/ ALAN I. CASDEN
--------------------------------
Alan I. Casden, Chairman
-5-
Schedule A
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AUTHORIZED CAPITAL STOCK
<Table>
<Caption>
NUMBER OF
CLASS OF CAPITAL STOCK SHARES AUTHORIZED
---------------------- -----------------
Class A Common Stock, par value $0.01 per share 456,962,738
Class B Cumulative Convertible Preferred Stock, par value $0.01 per share 750,000
Class C Cumulative Preferred Stock par value $0.01 per share 2,400,000
Class D Cumulative Preferred Stock, par value $0.01 per share 4,200,000
Class G Cumulative Preferred Stock, par value $0.01 per share 4,050,000
Class H Cumulative Preferred Stock, par value $0.01 per share 2,000,000
Class I Cumulative Preferred Stock, par value $0.01 per share 10,000,000
Class J Cumulative Convertible Preferred Stock, par value $0.01 per share 1,250.000
Class K Convertible Cumulative Preferred Stock, par value $0.01 per share 5,000,000
Class L Convertible Cumulative Preferred Stock, par value $0.01 per share 5,000,000
Class M Convertible Cumulative Preferred Stock, par value $0.01 per share 1,600,000
Class N Convertible Cumulative Preferred Stock, par value $0.01 per share 4,000,000
Class 0 Cumulative Convertible Preferred Stock, par value $0.01 per share 1,904,762
Class P Convertible Cumulative Preferred Stock, par value $0.01 per share 4,000,000
Class Q Cumulative Preferred Stock, par value $0.01 per share 2,530,000
Class R Cumulative Preferred Stock, par value $0.01 per share 4,940,000
Total Authorized Stock $10,587,500
</Table>
Note: All of the unissued or reacquired shares of capital stock of AIMCO are
subject to classification and reclassification by the Board of Directors.
-6-
SCHEDULE B
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
CASDEN PROPERTIES INC.
AND
XYZ HOLDINGS LLC
Dated as of December 3, 2001
-7-
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
CASDEN PROPERTIES INC.
AND
XYZ HOLDINGS LLC
Dated as of December 3, 2001
TABLE OF CONTENTS
<Table>
<Caption>
Page
ARTICLE I THE MERGER............................................................................................5
Section 1.1 THE MERGER............................................................................5
Section 1.2 EFFECTS OF THE MERGER.................................................................5
Section 1.3 EFFECTIVE TIME OF THE MERGER..........................................................6
ARTICLE II TREATMENT OF SHARES..................................................................................6
Section 2.1 CERTAIN DEFINITIONS...................................................................6
Section 2.2 EFFECT OF THE MERGER ON SHARES.......................................................13
Section 2.3 PAYMENT OF MERGER CONSIDERATION......................................................17
Section 2.4 APPRAISAL RIGHTS.....................................................................20
ARTICLE III THE CLOSING........................................................................................20
Section 3.1 CLOSING..............................................................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CASDEN............................................................20
Section 4.1 ORGANIZATION AND QUALIFICATION; ASSETS...............................................20
Section 4.2 CAPITALIZATION.......................................................................23
Section 4.3 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE........................24
Section 4.4 CASDEN FINANCIAL STATEMENTS..........................................................26
Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................26
Section 4.6 LITIGATION...........................................................................27
Section 4.7 TAX MATTERS..........................................................................27
Section 4.8 EMPLOYEE MATTERS; ERISA..............................................................30
Section 4.9 ENVIRONMENTAL PROTECTION.............................................................34
Section 4.10 VOTE REQUIRED........................................................................36
Section 4.11 HUD..................................................................................36
Section 4.12 ABSENCE OF INDUCEMENT................................................................37
Section 4.13 REAL PROPERTIES......................................................................37
Section 4.14 BOOKS AND RECORDS....................................................................40
Section 4.15 NO UNDISCLOSED LIABILITIES...........................................................40
Section 4.16 INSURANCE............................................................................40
Section 4.17 CONTRACTS............................................................................41
Section 4.18 PROPRIETY OF PAST PAYMENTS...........................................................41
Section 4.19 BANK ACCOUNTS........................................................................42
Section 4.20 DEFICIT RESTORATION OBLIGATIONS, ADJUSTED CAPITAL ACCOUNT DEFICITS AND
CAPITAL CONTRIBUTION OBLIGATIONS.....................................................42
Section 4.21 COMPLIANCE WITH LAWS.................................................................42
Section 4.22 RELATIONSHIPS WITH RELATED PERSONS...................................................42
Section 4.23 MARYLAND TAKEOVER LAWS...............................................................42
Section 4.24 OFFICERS AND DIRECTORS...............................................................43
Section 4.25 NO CASDEN MATERIAL MISSTATEMENTS.....................................................43
</Table>
i
<Table>
Section 4.26 TAX QUESTIONNAIRES...................................................................43
Section 4.27 CLOSING PAYOFF AMOUNTS...............................................................43
Section 4.28 CASDEN BOARD OF DIRECTORS APPROVAL...................................................43
ARTICLE V REPRESENTATIONS AND WARRANTIES OF AIMCO..............................................................43
Section 5.1 ORGANIZATION AND QUALIFICATION.......................................................43
Section 5.2 AIMCO SUBSIDIARIES...................................................................43
Section 5.3 CAPITALIZATION.......................................................................44
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE........................44
Section 5.5 REPORTS AND FINANCIAL STATEMENTS.....................................................46
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................46
Section 5.7 LITIGATION...........................................................................46
Section 5.8 REGISTRATION STATEMENT...............................................................46
Section 5.9 TAX MATTERS..........................................................................47
Section 5.10 EMPLOYEE MATTERS; ERISA..............................................................48
Section 5.11 ENVIRONMENTAL PROTECTION.............................................................49
Section 5.12 HUD ...............................................................................50
Section 5.13 ABSENCE OF INDUCEMENT................................................................51
Section 5.14 NO AIMCO MATERIAL MISSTATEMENTS......................................................51
Section 5.15 MARYLAND TAKEOVER LAWS...............................................................51
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER..............................................................51
Section 6.1 COVENANTS OF CASDEN..................................................................51
Section 6.2 COVENANTS OF AIMCO...................................................................56
ARTICLE VII ADDITIONAL AGREEMENTS..............................................................................56
Section 7.1 ACCESS TO INFORMATION................................................................56
Section 7.2 REGISTRATION RIGHTS AGREEMENT........................................................57
Section 7.3 LETTERS OF ACCOUNTANTS...............................................................57
Section 7.4 REGULATORY MATTERS...................................................................58
Section 7.5 APPROVAL OF CASDEN STOCKHOLDERS......................................................58
Section 7.6 PUBLIC ANNOUNCEMENTS.................................................................58
Section 7.7 NO SOLICITATION......................................................................59
Section 7.8 EXPENSES.............................................................................59
Section 7.9 FURTHER ASSURANCES...................................................................59
Section 7.10 REIT STATUS..........................................................................60
Section 7.11 EMPLOYEES; EMPLOYEE PLANS............................................................60
Section 7.12 RECORD DATES AND DIVIDEND PAYMENT DATES..............................................61
Section 7.13 INSURANCE............................................................................61
Section 7.14 BREACHES ............................................................................61
Section 7.15 TRANSFER TAXES.......................................................................61
Section 7.16 NAMES AND TRADEMARKS.................................................................62
Section 7.17 PREPARATION OF TAX RETURNS...........................................................62
Section 7.18 DEPOSIT BY AIMCO.....................................................................62
Section 7.19 TAX FREE REORGANIZATION..............................................................63
Section 7.20 MEZZANINE LOAN.......................................................................63
Section 7.21 PLEDGE AND GUARANTY AGREEMENTS.......................................................63
</Table>
ii
<Table>
Section 7.22 RELEASE .............................................................................63
Section 7.23 QUESTIONNAIRES.......................................................................63
Section 7.24 CPLB DISTRIBUTION....................................................................64
Section 7.25 COMMERCIAL PROPERTIES................................................................64
Section 7.26 LEGAL MATTERS........................................................................64
Section 7.27 RESERVATION OF AIMCO STOCK...........................................................64
Section 7.28 CASDEN WARRANTS......................................................................64
Section 7.29 MATERIAL ADVERSE EFFECTS; KNOWLEDGE OF BREACHES......................................64
Section 7.30 LITIGATION...........................................................................64
Section 7.31 LISTING OF SHARES....................................................................65
Section 7.32 NAPICO SYNDICATED PROPERTIES.........................................................65
Section 7.33 COMPLIANCE WITH THE MGCL.............................................................65
Section 7.34 CASDEN CHARTER.......................................................................65
Section 7.35 NAPICO PROPERTY CONSENTS.............................................................65
Section 7.36 CLOSING PAYOFF AMOUNTS...............................................................65
ARTICLE VIII CONDITIONS........................................................................................66
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER...........................66
Section 8.2 CONDITIONS TO OBLIGATION OF AIMCO TO EFFECT THE MERGER...............................66
Section 8.3 CONDITIONS TO OBLIGATION OF CASDEN TO EFFECT THE MERGER..............................68
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER...................................................................70
Section 9.1 TERMINATION..........................................................................70
Section 9.2 EFFECT OF TERMINATION................................................................71
Section 9.3 TERMINATION FEES.....................................................................71
Section 9.4 AMENDMENT............................................................................72
Section 9.5 WAIVER...............................................................................72
Section 9.6 DAMAGES..............................................................................72
ARTICLE X GENERAL PROVISIONS...................................................................................72
Section 10.1 BROKERS .............................................................................72
Section 10.2 NOTICES .............................................................................73
Section 10.3 MISCELLANEOUS........................................................................74
Section 10.4 INTERPRETATION.......................................................................75
Section 10.5 COUNTERPARTS; EFFECT.................................................................75
Section 10.6 PARTIES' INTEREST....................................................................75
Section 10.7 ENFORCEMENT..........................................................................75
Section 10.8 SEVERABILITY.........................................................................76
</Table>
iii
EXHIBITS TO AGREEMENT
Exhibit A Form of OP Contribution Agreement
Exhibit B-1 Form of Casden Contribution Agreement
Exhibit B-2 Form of Commercial Purchase Agreement
Exhibit C-1 Form of Tri-Party Agreement
Exhibit C-2 Form of WW Letter Agreement
Exhibit C-3 Form of Villa Azure Letter Agreement
Exhibit D Form of CPLB Merger Agreement
Exhibit E-1 Form of Development LLC Agreement
Exhibit E-2 Form of Ross Purchase Agreement
Exhibit E-3 Form of Development LLC Purchase Agreement
Exhibit F Form of Consent and Voting Agreement
Exhibit G Form of Tax Indemnification and Tax Contest Agreement
Exhibit H Form of Master Indemnification Agreement
Exhibit I Form of Amended and Restated Limited Liability Company
Operating Agreement of Casden Park La Brea A LLC
Exhibit J Form of Amended and Restated Limited Liability Company
Operating Agreement of Casden Park La Brea B LLC
Exhibit K Form of Amended and Restated Limited Liability Company
Operating Agreement of Casden Park La Brea C LLC
Exhibit L Form of Amended and Restated Limited Liability Company
Operating Agreement of Casden Glendon LLC
Exhibit M Form of Registration Rights Agreement (Stock)
Exhibit N Form of Consulting Agreement
Exhibit O List of Core Properties
Exhibit P-1 Form of Tax Questionnaires - Subsidiaries
Exhibit P-2 Form of General Questionnaires
Exhibit P-3 Form of Tax Questionnaires - NAPICO
Exhibit Q-1 Form of Non-Foreign Status (1)
Exhibit Q-2 Form of Non-Foreign Status (2)
Exhibit R Form of Casden Comfort Letter
Exhibit S Form of AIMCO Comfort Letter
Exhibit T Form of Investor Representation Letter
Exhibit U Form of Escrow Agreement
Exhibit V Form of Mezzanine Loan Documents
Exhibit W-1 Form of Pledge Agreement
Exhibit W-2 Form of Guaranty Agreement
Exhibit X-1 Form of Release (Casden)
Exhibit X-2 Form of Release (Blackacre)
Exhibit Y CPLB Instrument of Assignment
Exhibit 8.2(c)-1 Form of Opinion of Casden's Maryland Counsel(1)
Exhibit 8.2(c)-2 Form of Opinion of Casden's Maryland Counsel(2)
Exhibit 8.2(d) Form of Opinion of Casden Special Counsel
Exhibit 8.2(f) Form of Casden REIT Opinion
Exhibit 8.3(c) Form of Opinion of AIMCO's Maryland Counsel
Exhibit 8.3(d)(i) Form of Merger Opinion of Casden's Counsel
iv
Exhibit 8.3(d)(ii) Form of AIMCO Officer's Certificate re: REIT
Exhibit 8.3(e) Form of Opinion of AIMCO's Counsel
SCHEDULES TO AGREEMENT
Schedule 2.1(a) Closing Payoff Amounts
Schedule 2.1(b) Casden Mortgage Debt
v
TABLE OF DEFINED TERMS
<Table>
<Caption>
Cross Reference
Term in Agreement Page
Acquisition Proposal .............................................Section 2.1.....................................6
Additional Tax Liabilities .......................................Section 2.1.....................................6
Affected Employees ...............................................Section 7.11(a)................................60
Affiliate ........................................................Section 2.1.....................................6
Aggregate Consideration ..........................................Section 2.1.....................................6
Agreement ........................................................Preamble........................................1
AIC...............................................................Recitals........................................1
AIC Common Per Share Consideration................................Section 2.1.....................................6
AIC Common Stock..................................................Section 2.1.....................................6
AIMCO ............................................................Preamble........................................1
AIMCO Benefit Plans ..............................................Section 5.10(a)................................48
AIMCO Charter ....................................................Section 1.2.....................................5
AIMCO Common Stock ...............................................Section 2.1.....................................6
AIMCO Common Stock Price .........................................Section 2.1.....................................7
AIMCO CPLB Merger Sub ............................................Recitals........................................2
AIMCO Disclosure Letter ..........................................Article V......................................43
AIMCO Financial Statements .......................................Section 5.5....................................46
AIMCO Material Adverse Effect ....................................Section 2.1.....................................7
AIMCO OP .........................................................Recitals........................................1
AIMCO Required Statutory Approvals ...............................Section 5.4(c).................................45
AIMCO SEC Reports ................................................Section 2.1.....................................7
AIMCO Subsidiary .................................................Section 2.1.....................................7
ARP...............................................................Recitals........................................1
Articles of Merger ...............................................Recitals........................................1
Asset Purchase....................................................Recitals........................................3
Blackacre.........................................................Section 8.2(d).................................67
Blackacre Parties.................................................Section 8.2(d).................................67
Canceled Shares ..................................................Section 2.3(b)(i)..............................17
Casden ...........................................................Preamble........................................1
Casden Benefit Plans .............................................Section 4.8(a).................................30
Casden Capital Stock .............................................Section 2.1.....................................7
Casden Charter ...................................................Section 4.1(a).................................20
Casden Class A Preferred Stock ...................................Section 2.1.....................................7
Casden Common Stock ..............................................Section 2.1.....................................7
Casden Contribution Agreement.....................................Recitals........................................1
Casden Contribution Consideration.................................Section 2.1.....................................6
Casden Disclosure Letter .........................................Article IV.....................................20
Casden Financial Statements ......................................Section 2.1.....................................7
Casden Junior Preferred Stock ....................................Section 2.1.....................................7
Casden Material Adverse Effect ...................................Section 2.1.....................................8
</Table>
vi
<Table>
Casden Meeting ...................................................Section 7.5(a).................................58
Casden OP ........................................................Recitals........................................1
Casden Option.....................................................Section 2.2(c).................................15
Casden OPUs ......................................................Recitals........................................1
Casden Pro Forma Financial Information............................Section 4.4(b).................................26
Casden Property Consents..........................................Section 4.3(b).................................24
Casden Properties ................................................Section 4.13(a)................................37
Casden Required Consents..........................................Section 7.35...................................24
Casden Required Statutory Approvals ..............................Section 4.3(c).................................25
Casden Reverse Stock Split .......................................Recitals........................................1
Casden Stock Plan ................................................Section 2.1.....................................8
Casden Stockholders' Approval ....................................Section 4.10...................................36
Casden Subsidiary ................................................Section 2.1.....................................8
Casden Transfer Tax Amount........................................Section 2.1.....................................8
Casden I Warrants ................................................Section 2.1.....................................8
Casden II Warrants ...............................................Section 2.1.....................................8
Cerberus Partners.................................................Recitals........................................3
Certificate ......................................................Section 2.3(b)(i)..............................17
Certificates .....................................................Section 2.3(b)(i)..............................17
CIC...............................................................Recitals........................................1
Closing ..........................................................Section 3.1....................................20
Closing Agreement ................................................Section 2.1.....................................8
Closing Date .....................................................Section 3.1....................................20
Code .............................................................Recitals........................................5
CommercialCo .....................................................Recitals........................................2
Commercial Debt ..................................................Recitals........................................2
Commercial Properties ............................................Recitals........................................2
Commercial Sale ..................................................Recitals........................................2
Common Per Share Value............................................Section 2.2(d).................................15
Confidentiality Agreement ........................................Section 7.1....................................56
Consulting Agreement ............................................Recitals........................................4
Contract .........................................................Section 2.1.....................................8
Contribution Effective Date.......................................Section 2.1.....................................8
Core Properties ..................................................Section 2.1.....................................9
Core Properties Earnout Amount ...................................Section 2.1.....................................9
CPLB .............................................................Recitals........................................1
CPLB LLC..........................................................Recitals........................................3
CPLB Merger ......................................................Recitals........................................2
CPLB Merger Agreement ............................................Recitals........................................2
CPLB Merger Consideration.........................................Section 2.1.....................................9
CPLB Reverse Stock Split .........................................Recitals........................................1
Deferred Consideration............................................Section 2.1.....................................9
Development LLC ..................................................Recitals........................................2
Development LLC Agreement ........................................Recitals........................................2
Development LLC Assets ...........................................Recitals........................................2
Development LLC Purchase Agreement ...............................Recitals........................................3
Development Properties ...........................................Recitals........................................2
</Table>
vii
<Table>
Dissenting Shares ................................................Section 2.1.....................................9
Effective Time ...................................................Section 1.3.....................................6
Environmental Claim ..............................................Section 2.1.....................................9
Environmental Laws ...............................................Section 2.1.....................................9
Environmental Permits ............................................Section 4.9(b).................................35
Environmental Release.............................................Section 2.1.....................................9
Equity Consideration..............................................Section 2.2(d).................................15
ERISA ............................................................Section 4.8(a).................................30
ERISA Affiliate ..................................................Section 4.8(a).................................30
Escrow Agent .....................................................Section 7.18...................................62
Escrow Agreement..................................................Section 7.18...................................62
Escrow Amount ....................................................Section 7.18...................................62
Exchange Act .....................................................Section 2.1....................................10
Exchange Fund ....................................................Section 2.3(a).................................17
GAAP .............................................................Section 4.4(a).................................26
General Questionnaires............................................Section 2.1....................................10
Governmental Authority ...........................................Section 4.3(c).................................25
Ground Lease .....................................................Section 4.13(b)................................38
Hazardous Materials ..............................................Section 2.1....................................10
Holder ...........................................................Section 2.1....................................10
HSR Act ..........................................................Section 4.3(c).................................25
HUD ..............................................................Section 4.3(c).................................25
HUD Approval .....................................................Section 7.4(a).................................58
IRS ..............................................................Section 4.8(a).................................31
Joint Venture ....................................................Recitals........................................2
Junior Preferred Liquidation Amount ..............................Section 2.1....................................10
knowledge ........................................................Section 2.1....................................10
Latest Casden Financial Statements................................Section 2.1....................................10
Latest Casden Pro Forma Financial Information.....................Section 2.1....................................11
Laws .............................................................Section 4.13(a)................................38
Leased Properties ................................................Section 4.13(a)(ii)............................37
Leased Properties Lessees ........................................Section 4.13(a)(ii)............................37
Liens ............................................................Section 4.1(b).................................21
Liquidated Damages ...............................................Section 9.3(a).................................71
Master Indemnification Agreement .................................Recitals........................................3
Merger ...........................................................Recitals........................................1
Mezzanine Loan ...................................................Section 7.20...................................63
Mezzanine Loan Documents .........................................Section 7.20...................................63
Mortgage Debt Amortization........................................Section 2.1....................................11
MGCL .............................................................Section 1.2.....................................5
MSDAT ............................................................Section 1.3.....................................6
NAPICO ...........................................................Section 4.1(e).................................22
NAPICO Entities ..................................................Section 4.1(e).................................22
NAPICO Properties ................................................Section 4.13(a)(iii)...........................37
NAPICO Property Consents .........................................Section 7.35...................................65
NAPICO Property Owners ...........................................Section 4.13(a)(iii)...........................37
</Table>
viii
<Table>
NAPICO Syndicated Properties .....................................Section 7.32...................................65
New Merger Sub....................................................Section 2.2(f).................................66
Non-Equity Consideration..........................................Section 2.2(d).................................15
Non-Equity Ratio..................................................Section 2.2(d).................................15
NYSE .............................................................Section 2.1....................................11
OP Contribution ..................................................Recitals........................................1
OP Contribution Agreement ........................................Recitals........................................1
OP Contribution Consideration.....................................Section 2.1....................................11
Option Settlement Amount..........................................Section 2.2(c).................................15
Other Common Per Share Consideration..............................Section 2.1....................................11
Other Common Stock................................................Section 2.1....................................11
Owned Properties .................................................Section 4.13(a)(i).............................37
Owner Property Owners.............................................Section 2.1....................................11
PBGC .............................................................Section 4.8(d).................................31
Per Share Casden Jenior Preferred Liquidation Amount .............Section 4.13(a)(i).............................37
Permitted Encumbrances ...........................................Section 4.13(a)................................38
Person ...........................................................Section 2.1....................................11
PLB ..............................................................Recitals........................................2
Proposed Transferred Employees....................................Section 4.8(s).................................34
Qualified REIT Subsidiary.........................................Section 4.1(c).................................21
Questionnaires....................................................Section 2.1....................................10
Registration Rights Agreement (Stock).............................Recitals........................................4
Registration Rights Agreement (Units).............................Recitals........................................4
Registration Statement ...........................................Section 2.1....................................11
REIT .............................................................Recitals........................................5
REIT Cash Consideration...........................................Section 2.1....................................11
REIT Common Consideration ........................................Section 2.1....................................12
REIT Common Deferred Consideration................................Section 2.1....................................12
REIT Merger Consideration.........................................Section 2.1....................................12
REIT Preferred Consideration......................................Section 2.1....................................12
Related Transaction Documents ....................................Section 2.1....................................12
Related Transactions .............................................Section 2.1....................................12
Release ..........................................................Section 7.22...................................63
Representatives ..................................................Section 7.1....................................56
Ross Purchase Agreement...........................................Recitals........................................3
Ross Retail LLC ..................................................Recitals........................................3
Ross Store Sale...................................................Recitals........................................3
SEC ..............................................................Section 2.1....................................12
Securities Act ...................................................Section 2.1....................................12
Spin-Off..........................................................Recitals........................................2
Status Requirements ..............................................Section 4.7(f).................................28
Subsidiary .......................................................Section 2.1....................................12
Surviving Corporation ............................................Section 1.1.....................................5
Tax Indemnity Agreement ..........................................Recitals........................................3
Tax Questionnaires-NAPICO.........................................Section 2.1....................................10
Tax Questionnaires-Subsidiaries...................................Section 2.1....................................10
Tax Return .......................................................Section 2.1....................................13
Tax Ruling .......................................................Section 2.1....................................13
Taxable Election..................................................Section 2.2(f).................................16
Taxable REIT Subsidiary...........................................Section 4.1(c).................................21
Taxes ............................................................Section 2.1....................................13
Termination Date .................................................Section 9.1(c).................................70
Test Date.........................................................Section 2.2(f).................................16
Total Consideration...............................................Section 2.2(d).................................15
Trademarks .......................................................Section 7.16(a)................................62
Transaction Documents ............................................Section 2.1....................................13
Transactions .....................................................Section 2.1....................................13
Transfer Taxes ...................................................Section 7.15...................................61
Transferred Employees.............................................Section 7.11(a)................................60
Transition Period ................................................Section 7.16(c)................................62
Tri-Party Agreement ..............................................Recitals........................................2
Villa Azure Earnout Amount .......................................Section 2.1....................................13
Villa Azure Letter Agreement......................................Recitals........................................2
Villa Azure Property .............................................Section 2.1....................................13
Violation ........................................................Section 4.3(b).................................24
Voting Agreement .................................................Recitals........................................3
Voting Debt ......................................................Section 4.2(a).................................23
WARN Act .........................................................Section 2.1....................................13
Westwood..........................................................Recitals........................................2
WW Letter Agreement...............................................Recitals........................................2
XYZ ..............................................................Preamble........................................1
XYZ Agreement.....................................................Section 2.1....................................13
</Table>
ix
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of December 3, 2001, by and between Apartment Investment and
Management Company, a Maryland corporation ("AIMCO"), Casden Properties Inc., a
Maryland corporation ("Casden"), and XYZ Holdings LLC, a Delaware limited
liability company ("XYZ").
WHEREAS, the respective boards of directors of AIMCO and Casden deem it
advisable and in the best interests of their respective stockholders that AIMCO
acquire Casden in a merger (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, pursuant to this Agreement, AIMCO shall acquire Casden REIT,
and pursuant to the OP Unit Contribution Agreement (as defined herein), the CPLB
Merger Agreement (as defined herein) and the Casden Contribution Agreement (as
defined herein), AIMCO shall acquire certain affiliated entities, all in
exchange for the Aggregate Consideration;
WHEREAS, immediately prior to the Closing Date (as defined in Section
3.1), Casden shall effect a reverse stock split with respect to the Casden
Common Stock, whereby every 100 shares of Casden Common Stock will represent one
share of Casden Common Stock after giving effect thereto (the "Casden Reverse
Stock Split");
WHEREAS, immediately prior to the Closing Date, Casden Park La Brea,
Inc., a Maryland corporation ("CPLB"), shall effect a reverse stock split with
respect to its common stock, whereby every 10 shares of CPLB common stock will
represent one share of CPLB common stock after giving effect thereto (the "CPLB
Reverse Stock Split");
WHEREAS, upon the terms and subject to the conditions set forth herein,
AIMCO and Casden shall execute Articles of Merger ("Articles of Merger") and
shall file such Articles of Merger in accordance with Maryland law to effectuate
the Merger;
WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution
Effective Date, holders of limited partnership interests in Casden Properties
Operating Partnership, L.P., a Delaware limited partnership ("Casden OP"), will
exchange such limited partnership interests ("Casden OPUs") for cash and limited
partnership interests in AIMCO Properties, L.P., a Delaware limited partnership
("AIMCO OP"), on the terms and subject to the conditions of an OP Unit
Contribution Agreement, dated as of December 3, 2001 and attached hereto as
Exhibit A (the "OP Contribution Agreement"), by and among the holders of Casden
OPUs, Casden, Casden OP and AIMCO OP (the "OP Contribution");
WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution
Effective Date, (i) Alan I. Casden ("AIC") will contribute all of his interests
in AIC REIT Properties LLC, a Delaware limited liability company ("ARP"), and
(ii) Casden Investment Corp., a California corporation ("CIC"), will contribute
all of its interests in NAPICO (as defined in Section 4.1(e)) to AIMCO OP in
exchange for cash and/or limited partnership interests in AIMCO OP, on the terms
and subject to the conditions of a Contribution Agreement, dated as of the date
hereof and attached hereto as Exhibit B-1 (the "Casden Contribution Agreement"),
by and among ARP, AIC, CIC and AIMCO OP;
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WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution
Effective Date, certain commercial real estate properties of Casden (the
"Commercial Properties") either (i) shall be sold to, and certain indebtedness
of Casden relating to such Commercial Properties (the "Commercial Debt") shall
be assumed by, one or more entities pursuant to an asset purchase agreement
substantially in the form attached hereto as Exhibit B-2 or (ii) any Commercial
Debt and the interests in the limited liability companies that own the
Commercial Properties shall be distributed by Casden to its stockholders in a
spin-off transaction (the "Spin-Off") (collectively, such entity or entities
referred to herein as "CommercialCo" and such transaction(s), including the
Spin-Off, referred to herein as the "Commercial Sale");
WHEREAS, Casden and AIMCO desire that, on the Closing Date, AIMCO
acquire 100% of the ownership interest in certain real estate properties
currently under development and commonly referred to as the "PLB" and "Westwood"
developments (the "Development Properties"), subject to compliance with the
terms and conditions of the Tri-Party and Construction Completion Agreement, by
and among XYZ, AIMCO, Development LLC, AIMCO OP, Casden Park La Brea A LLC,
Casden Park La Brea B LLC, Casden Park La Brea C LLC, Casden Glendon, LLC and
the agent for the construction lenders named therein, substantially in the form
attached hereto as Exhibit C-1 (the "Tri-Party Agreement"), subject to Section
7.9, providing for, among other things, the financing, development and
completion of the construction of the Development Properties;
WHEREAS, XYZ and AIMCO desire that, concurrently with the execution of
the Tri-Party Agreement, AIMCO and XYZ shall execute and deliver a letter
agreement relating to the "Westwood" Development Property, substantially in the
form attached hereto as Exhibit C-2 (the "WW Letter Agreement");
WHEREAS, Casden and AIMCO desire that on the Closing Date, AIMCO shall
execute and deliver, and Casden shall cause The Casden Company to execute and
deliver, a letter agreement relating to the Villa Azure Property (as defined
herein), substantially in the form attached hereto as Exhibit C-3 (the "Villa
Azure Letter Agreement");
WHEREAS, on or prior to the date of the OP Contribution, Casden shall
cause Casden OP to distribute to Casden its entire interest in CPLB;
WHEREAS, immediately after the Effective Time (as defined in Section
1.3), a wholly-owned subsidiary of AIMCO ("AIMCO CPLB Merger Sub") will be
merged with and into CPLB (the "CPLB Merger"), pursuant to an Agreement and Plan
of Merger, dated as of December 3, 2001 (the "CPLB Merger Agreement"), by and
among AIMCO, CPLB, AIMCO CPLB Merger Sub and XYZ and attached hereto as Exhibit
D;
WHEREAS, AIMCO and certain Casden stockholders desire to enter into a
joint venture with respect to the development of real estate properties (the
"Joint Venture"), and for such purpose AIMCO and certain Casden stockholders
shall contribute cash and certain other assets (the "Development LLC Assets") to
a newly formed limited liability company ("Development LLC"), on the terms and
subject to the conditions of a limited liability company agreement substantially
in the form attached hereto as Exhibit E-1 (the "Development LLC Agreement");
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WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution
Effective Date, either (i) Casden Park La Brea LLC, a Delaware limited liability
company ("CPLB LLC"), shall sell all of the issued and outstanding ownership
interests of Casden Park La Brea Retail LLC, a Delaware limited liability
company ("Ross Retail LLC"), to Development LLC, on the terms and subject to the
conditions of a purchase agreement (the "Ross Purchase Agreement"),
substantially in the form attached hereto as Exhibit E-2 or (ii) the limited
liability company interests in Ross Retail LLC shall be distributed to the
stockholders of CPLB in a spin-off transaction (the transactions described in
clauses (i) and (ii) above being referred to herein, collectively, as the "Ross
Store Sale");
WHEREAS, Casden and AIMCO desire that, on or prior to the Contribution
Effective Date, Casden shall sell certain assets it owns, together with all
development rights that it acquires after the date hereof, to Development LLC
(the "Asset Purchase"), on the terms and subject to the conditions of an asset
purchase agreement (the "Development LLC Purchase Agreement") substantially in
the form attached hereto as Exhibit E-3;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to AIMCO and Casden to enter into this Agreement, the following
parties have entered into the following agreements (each of even date herewith):
(i) certain of the holders of Casden OPUs, Casden, Casden OP
and AIMCO OP have entered into the OP Contribution Agreement;
(ii) ARP, AIC, CIC and AIMCO OP have entered into the Casden
Contribution Agreement;
(iii) AIMCO, AIMCO CPLB Merger Sub, CPLB and XYZ have entered
into the CPLB Merger Agreement;
(iv) the holders of at least two-thirds (2/3) of the Casden
Common Stock and at least 55% of the Casden Class A Preferred Stock
(each term as defined in Section 2.1) have entered into a Consent and
Voting Agreement substantially in the form attached as Exhibit F hereto
(the "Voting Agreement"), pursuant to which (a) such holders of Casden
Class A Preferred Stock have delivered their consent to the approval of
the Merger and the approval of this Agreement and (b) such holders of
Casden Common Stock have agreed to vote their shares of Casden Capital
Stock in favor of the approval of this Agreement and in favor of the
Merger and the Casden Reverse Stock Split, subject to the terms of the
Voting Agreement;
(v) AIMCO, AIC, Cerberus Partners, L.P., a Delaware limited
partnership ("Cerberus Partners"), XYZ, CIC, The Casden Company, CPLB
and NAPICO have entered into a Tax Indemnification and Tax Contest
Agreement (the "Tax Indemnity Agreement") substantially in the form
attached hereto as Exhibit G providing for certain Tax indemnification
rights and obligations of the parties thereto;
(vi) AIMCO, AIMCO OP, AIC, Cerberus Partners, XYZ, CIC and The
Casden Company have entered into a Master Indemnification Agreement
(the "Master
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Indemnification Agreement") substantially in the form attached hereto
as Exhibit H, providing for certain indemnification rights and
obligations of the parties thereto;
(vii) AIMCO and the Persons named therein have entered into
the registration rights agreement (the "Registration Rights Agreement
(Units)") attached as an exhibit to the OP Contribution Agreement,
providing for, among other things, AIMCO's registration of the AIMCO
Common Stock issued in exchange for AIMCO OP Units received pursuant to
the OP Contribution Agreement that are surrendered for redemption;
WHEREAS, on or prior to the Closing Date, the following additional
agreements shall have been entered into and the following actions shall have
occurred:
(i) AIMCO and certain Casden stockholders have entered into
the Development LLC Agreement;
(ii) Casden Park La Brea LLC and an appropriate Casden entity
shall have executed and delivered amended and restated limited
liability company agreements for the following entities: (A) Casden
Park La Brea A LLC, substantially in the form attached hereto as
Exhibit I, (B) Casden Park La Brea B LLC, substantially in the form
attached hereto as Exhibit J, and (C) Casden Park La Brea C LLC,
substantially in the form attached hereto as Exhibit K;
(iii) Casden Glendon LLC and an appropriate Casden entity
shall have executed and delivered an amended and restated limited
liability company agreement for Casden Glendon LLC, substantially in
the form attached hereto as Exhibit L;
(iv) AIMCO and the Persons named therein shall have executed
and delivered the registration rights agreement (the "Registration
Rights Agreement (Stock)") substantially in the form attached hereto as
Exhibit M providing for, among other things, AIMCO's registration of
the AIMCO Common Stock issued in the Merger;
(v) Development LLC and AIMCO shall have executed and
delivered the consulting agreement (the "Consulting Agreement")
substantially in the form attached hereto as Exhibit N;
(vi) Casden, CommercialCo and the other parties named therein
shall have executed and delivered the Commercial Sale Agreement;
(vii) AIMCO and The Casden Company shall have executed and
delivered the Villa Azure Letter Agreement;
(viii) CPLB LLC and Development LLC shall have executed and
delivered the Ross Purchase Agreement; and
(ix) Casden and Development LLC shall have executed and
delivered the Development LLC Purchase Agreement;
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(x) each of the other Transaction Documents not previously
executed and delivered by the parties thereto;
WHEREAS, on or after the Closing, AIMCO, AIMCO OP, XYZ, Development
LLC, Casden Park La Brea A LLC, Casden Park La Brea B LLC, Casden Park La Brea C
LLC, Casden Glendon LLC and the agent for the construction lenders named therein
shall execute and deliver the Tri-Party Agreement (and AIMCO and XYZ shall
execute and deliver the WW Letter Agreement), subject to the terms of Section
7.9 hereof;
WHEREAS, on or after the Closing, AIMCO will cause one or more
mezzanine loans to be made to XYZ pursuant to the Mezzanine Loan Documents;
WHEREAS, for Federal income tax purposes it is intended that the Merger
will qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), unless the Taxable
Election (as defined in Section 2.2(f) is made);
WHEREAS, AIMCO intends that, following the Merger, it shall continue to
be subject to taxation as a real estate investment trust (a "REIT") within the
meaning of Section 856 of the Code; and
WHEREAS, AIMCO and Casden desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.3), Casden shall
be merged with and into AIMCO in accordance with the laws of the State of
Maryland. AIMCO shall be the surviving corporation in the Merger and shall
continue its corporate existence under the laws of the State of Maryland. AIMCO
after the Effective Time is sometimes referred to herein as the "Surviving
Corporation." The effects and the consequences of the Merger shall be as set
forth in Section 1.2.
Section 1.2 EFFECTS OF THE MERGER. At the Effective Time, (i) the
charter of AIMCO, as in effect immediately prior to the Effective Time (the
"AIMCO Charter"), shall be the charter of the Surviving Corporation until
thereafter amended as provided by law and the AIMCO Charter, (ii) the bylaws of
AIMCO, as in effect immediately prior to the Effective Time, shall be the bylaws
of the Surviving Corporation until thereafter amended as provided by law, the
AIMCO Charter and such bylaws, and (iii) the directors and officers of AIMCO
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective successors are
duly elected and qualified. Subject to the
5
foregoing, the additional effects of the Merger shall be as provided in the
applicable provisions of the Maryland General Corporation Law ("MGCL").
Section 1.3 EFFECTIVE TIME OF THE MERGER. On the Closing Date, the
Articles of Merger shall be executed and filed by AIMCO and Casden with the
Maryland State Department of Assessments and Taxation (the "MSDAT") pursuant to
the MGCL. The Merger shall become effective upon the acceptance by the MSDAT of
the Articles of Merger or at such other time as is provided in the Articles of
Merger (the "Effective Time").
ARTICLE II
TREATMENT OF SHARES
Section 2.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the following meanings:
"Acquisition Proposal" means a proposal or offer (other than
by AIMCO or an Affiliate of AIMCO) to acquire at least 10% of the outstanding
equity securities of Casden or Casden OP, or a merger, consolidation, share
exchange, or other business combination or spin off or similar distribution
involving Casden or Casden OP or any proposal to acquire in any manner all or
substantially all of the assets of Casden or Casden OP.
"Additional Tax Liabilities" shall mean the aggregate of (i)
the $949,927 plus interest and penalties payable in connection with the Closing
Agreement executed by Casden on September 21, 2001, as described in Section
4.7(b) of the Casden Disclosure Letter and (ii) all taxes, costs and expenses
incurred as a result of the transactions undertaken, whether incurred by Casden
or CPLB, in connection with the Commercial Sale, the Ross Store Sale and the
Asset Purchase.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Aggregate Consideration" means the REIT Merger Consideration,
the OP Contribution Consideration, the CPLB Merger Consideration and the Casden
Contribution Consideration.
"AIC Common Per Share Consideration" means 97.77% of the REIT
Common Consideration, divided by the aggregate number of shares of AIC Common
Stock outstanding as of the Effective Time, divided by the AIMCO Common Stock
Price.
"AIC Common Stock" means shares of Casden Common Stock held by
any of AIC, CIC or TCC.
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"AIMCO Common Stock" means the Class A Common Stock, par value
$0.01 per share, of AIMCO.
"AIMCO Common Stock Price" means $47 per share, as such price
may be appropriately adjusted pursuant to any reclassification,
recapitalization, split-up, combination, stock dividend or exchange of AIMCO
Common Stock.
"AIMCO Material Adverse Effect" means the existence of any
fact or condition which has had or will have a material adverse effect on the
business, assets, financial condition or results of operations of AIMCO and the
AIMCO Subsidiaries taken as a whole; provided, however, that adverse effects on
the business, assets, financial condition or results of operations of AIMCO or
the AIMCO Subsidiaries due to general economic conditions, loss of employees,
unsolicited third party offers for limited partnership interests of AIMCO
Subsidiaries and AIMCO's response thereto, unsolicited offers to acquire one or
more assets of any AIMCO Subsidiary and AIMCO's or any AIMCO Subsidiary's sale
in response thereto and conditions affecting generally the multi-family
apartment property market or any of the markets in which AIMCO or any AIMCO
Subsidiary operates shall not be deemed to be an AIMCO Material Adverse Effect
and shall not be taken into account in determining the existence of an AIMCO
Material Adverse Effect.
"AIMCO SEC Reports" means each Quarterly Report on Form 10-Q,
Annual Report on Form 10-K, Current Report on Form 8-K and definitive proxy
statement filed with the SEC by AIMCO pursuant to the requirements of the
Exchange Act since December 31, 1998, as such documents have been amended since
the time of their filing.
"AIMCO Subsidiary" means any "significant subsidiary" (within
the meaning of Rule 1-02 of SEC Regulation S-X) of AIMCO.
"Casden Capital Stock" means, collectively, the Casden Common
Stock, the Casden Class A Preferred Stock and the Casden Junior Preferred Stock.
"Casden Class A Preferred Stock" means the Class A Cumulative
Preferred Stock, par value $0.01 per share, of Casden.
"Casden Common Stock" means the common stock, par value $0.01
per share, of Casden.
"Casden Contribution Consideration" is (a) a number of
Partnership Common Units of AIMCO OP equal to (i) $17,592,000, as reduced by the
applicable pro rata share of the shortfall of the Villa Azure Earnout Amount and
the shortfall of the Core Properties Earnout Amount and increased by the
applicable pro rata share of the Mortgage Debt Amortization, divided by (ii) the
AIMCO Common Stock Price, and (b) 8.56% of the Deferred Consideration
(consisting of 4.47% of the Deferred Consideration attributable to PLB and
18.24% of the Deferred Consideration attributable to Westwood).
"Casden Financial Statements" means the financial statements
listed in Section 4.4(a) of the Casden Disclosure Letter.
7
"Casden Junior Preferred Stock" means the Junior Cumulative
Preferred Stock, par value $0.01 per share, of Casden.
"Casden Material Adverse Effect" means the existence of any
fact or condition which has had or will have a material adverse effect on the
business, assets, financial condition or results of operations of Casden and the
Casden Subsidiaries taken as a whole; provided, however, that adverse effects on
the business, assets, financial condition or results of operations of Casden or
the Casden Subsidiaries due to general economic conditions, loss of employees,
unsolicited third party offers for limited partnership interests of Casden
Subsidiaries and Casden Subsidiaries' responses thereto, unsolicited offers to
acquire one or more assets of any Casden Subsidiary and Casden's or any Casden
Subsidiary's sale in response thereto, and conditions affecting generally the
multi-family apartment property market or any of the markets in which Casden or
any Casden Subsidiary operates shall not be deemed to be a Casden Material
Adverse Effect and shall not be taken into account in determining the existence
of a Casden Material Adverse Effect.
"Casden Stock Plan" means the Casden Properties Inc. 1998
Stock Option Plan.
"Casden Subsidiary" means (a) NAPICO, (b) Casden Properties
Sub LLC, a Delaware limited liability company, (c) Casden Properties GP I LLC, a
Delaware limited liability company, (d) Casden Properties GP I L.P., a Delaware
limited partnership, (e) any limited liability company in which Casden or any
Casden Subsidiary is a direct or indirect (including through attribution under
the Code) manager or managing member, (f) any partnership of which Casden or any
Casden Subsidiary is a direct or indirect (including through attribution under
the Code) general partner and (g) any other Person with respect to which a
majority of the voting power to elect directors or similar members of the
governing body of such Person is directly or indirectly (including through
attribution under the Code) held by Casden or a Casden Subsidiary, in each case
with respect to clauses (b) through (g) above, other than the NAPICO Entities.
"Casden Transfer Tax Amount" means $600,000.
"Casden I Warrants" means warrants issued by Casden providing
the holders thereof the right to purchase up to an aggregate of 14,298,997
shares of Casden Common Stock at an exercise price of $18.00 per share.
"Casden II Warrants" means warrants issued by Casden providing
the holders thereof the right to purchase up to an aggregate of 500,000 shares
of Casden Common Stock at an exercise price of $19.80 per share.
"Closing Agreement" means a written and legally binding
agreement with a taxing authority relating to Taxes.
"Contract" means any written contract, agreement, lease,
obligation, note, bond, indenture, license, sublicense, promise or other
instrument or undertaking that is legally binding.
"Contribution Effective Date" shall have the meaning set forth
in the OP Contribution Agreement.
8
"Core Properties" means, collectively, all of the properties
identified on Exhibit O attached hereto.
"Core Properties Earnout Amount" means an amount, not to
exceed $26,000,000, equal to the quotient of (a) the positive difference, if
any, between (i) the actual gross revenue attributable (in accordance with
generally accepted accounting principles of accrual) to the Core Properties for
the year 2001, minus (ii) $61,179,170, divided by (b) 0.085.
"CPLB Merger Consideration" means (a) $1,000, and (b) 39.15%
of the Deferred Consideration (consisting of 55.69% of the Deferred
Consideration attributable to PLB).
"Deferred Consideration" has the meaning set forth in the
Tri-Party Agreement, provided that references in this Agreement to Deferred
Consideration shall be deemed to refer to the net amount of Deferred
Consideration payable to XYZ under the Tri-Party Agreement.
"Dissenting Shares" means each share of Casden Capital Stock
that is issued and outstanding immediately prior to the Effective Time and that
is held by a stockholder who has properly exercised and perfected appraisal
rights under Sections 3-203 through 3-213 of the MGCL.
"Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (written or oral) by any Person (including any Governmental Authority)
alleging potential liability (including potential responsibility for or
liability for enforcement, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, Environmental Release or threatened
Environmental Release into the environment of any Hazardous Materials at any
location, whether or not owned, operated, leased or managed by Casden or any of
the Casden Subsidiaries (for purposes of Section 4.9); or (B) circumstances
forming the basis of any violation or alleged violation of any Environmental
Law; or (C) any and all claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the presence or Environmental Release of any Hazardous Materials.
"Environmental Laws" means all federal, state and local laws,
rules and regulations relating to pollution, the environment (including ambient
air, surface water, groundwater, land surface or subsurface strata) or
protection of human health as it relates to the environment, including laws and
regulations relating to Environmental Releases or threatened Environmental
Releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
"Environmental Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or property.
9
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any equivalent successor law, including the rules and regulations
promulgated thereunder or under such successor law.
"Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers or other equipment
that contain dielectric fluid containing polychlorinated biphenyls; (B) any
chemicals, materials or substances which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import under any Environmental Law and
(C) any other chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated under any Environmental Law in a jurisdiction
in which Casden or any of the Casden Subsidiaries operates.
"Holder" means a holder of one or more of (i) shares of Casden
Capital Stock, (ii) options to acquire Casden Common Stock or (iii) the Casden I
Warrants or Casden II Warrants.
"Junior Preferred Liquidation Amount" means $10,015,250 plus
accumulated and unpaid dividends to the Effective Time.
"knowledge" of Casden, any Casden Subsidiary or any ERISA
Affiliate of Casden or any Casden Subsidiary shall mean the actual knowledge of
Alan I. Casden and Andrew J. Starrels or either of them, based on their actual
knowledge of the day-to-day business and operations of Casden and the Casden
Subsidiaries (other than NAPICO and the NAPICO Entities) and after (i) reviewing
the responses to the questionnaires in the form attached hereto as Exhibit P-1
(the "Tax Questionnaires - Subsidiaries") sent to each manager and assistant
manager of the Owned Properties and the Leased Properties and each regional
supervisor employed by Casden and the Casden Subsidiaries (other than the NAPICO
Entities) prior to the date hereof and (ii) conducting additional inquiries
consisting solely of submitting questionnaires in the form attached hereto as
Exhibit P-2 (the "General Questionnaires") and reviewing the responses to such
General Questionnaires. With respect to NAPICO and the NAPICO Entities, the
"knowledge" of Casden or any Casden Subsidiary or any ERISA Affiliate of Casden
or any Casden Subsidiary shall mean the actual knowledge of Charles Boxenbaum
and Bruce Nelson, or either of them, after (i) reviewing the responses to the
questionnaires in the form attached hereto as Exhibit P-3 (the "Tax
Questionnaires - NAPICO" and, together with the General Questionnaires and the
Tax Questionnaires - Subsidiaries, the "Questionnaires") sent to the asset
manager or property manager of each NAPICO Property and (ii) conducting
additional inquiries consisting solely of submitting the General Questionnaires
to the asset manager or property manager of each NAPICO Property and reviewing
the responses to such General Questionnaires. The "knowledge" of AIMCO or any
AIMCO Subsidiary shall mean the actual knowledge of Terry Considine and Peter
Kompaniez, or either of them, except that with respect to property-related
matters only, the "knowledge" of AIMCO shall mean the actual knowledge of
Messrs. Considine and Kompaniez and Harry Alcock, or any of them.
"Latest Casden Financial Statements" means, as of any date,
the Casden Financial Statements or, if Casden has delivered to AIMCO, pursuant
to Section 7.1, any financial
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statements in respect of a fiscal quarter subsequent to June 30, 2001, the
financial statements so delivered that relate to the most recently completed
fiscal quarter of Casden and its subsidiaries.
"Latest Casden Pro Forma Financial Information" means, as of
any date, the Casden Pro Forma Financial Information or, if Casden has delivered
to AIMCO, pursuant to Section 7.1, any financial statements in respect of a
fiscal quarter subsequent to June 30, 2001, pro forma schedules that present
fairly, in all material respects, the financial position of Casden and its
subsidiaries, on a consolidated basis, as of the last day of such fiscal
quarter, and the results of operations of Casden and its subsidiaries, on a
consolidated basis, for the interim period then ended, in each case, after
giving effect to the Commercial Sale, the Ross Store Sale, the Asset Purchase
and the other transactions and adjustments disclosed in the Casden Pro Forma
Financial Information.
"Mortgage Debt Amortization" means the amount of normal
amortization of Casden mortgage debt set forth on Schedule 2.1(b) hereto through
the Effective Time, the exact amount of which Casden shall provide AIMCO written
notice at least five (5) business days prior to the Effective Time.
"NYSE" means the New York Stock Exchange, Inc.
"OP Contribution Consideration" means (a) a number of
Partnership Common Units of AIMCO OP equal to (i) $27,148,000, as reduced by the
applicable pro rata share of the shortfall of the Villa Azure Earnout Amount and
the shortfall of the Core Properties Earnout Amount and increased by the
applicable pro rata share of the Mortgage Debt Amortization, divided by the
AIMCO Common Stock Price, and (b) 11.92% of the Deferred Consideration (as
further allocated in the OP Contribution Agreement).
"Other Common Per Share Consideration" means 2.23% of the REIT
Common Consideration divided by the AIMCO Common Stock Price divided by the
number of shares of Other Common Stock outstanding as of the Effective Time.
"Other Common Stock" means shares of Casden Common Stock other
than the shares of AIC Common Stock.
"Per Share Casden Junior Preferred Liquidation Amount" means
the Junior Preferred Liquidation Amount divided by the number of shares of
Casden Junior Preferred Stock outstanding as of the Effective Time.
"Person" means any natural person, corporation, general or
limited partnership, limited liability company, joint venture, trust,
association or entity of any kind.
"Registration Statement" means the Registration Statement on
Form S-3 to be filed by AIMCO with respect to the AIMCO Common Stock issued in
the Merger.
"REIT Cash Consideration" means $205,418,000, minus (a) the
aggregate Option Settlement Amount (as defined in Section 2.2(c) hereof), minus
(b) the Casden Transfer Tax Amount, minus (c) the Additional Tax Liabilities,
and minus (d) the amounts set forth on Schedule 2.1(a).
11
"REIT Common Consideration" means $108,049,000, as reduced by
the applicable pro rata share of the shortfall of the Villa Azure Earnout Amount
and the shortfall of the Core Properties Earnout Amount and increased by the
applicable pro rata share of the Mortgage Debt Amortization.
"REIT Common Deferred Consideration" means 0.58% of the
Deferred Consideration (consisting of 0.48% of the Deferred Consideration
attributable to PLB and 0.81% of the Deferred Consideration attributable to
Westwood), provided that pursuant to the XYZ Agreement, the recipients of REIT
Common Deferred Consideration will have no indemnification obligations to XYZ or
AIMCO under the XYZ Agreement or the Master Indemnification Agreement, unlike
AIC and holders of Casden Class A Preferred Stock.
"REIT Merger Consideration" means the REIT Common
Consideration, the REIT Common Deferred Consideration and the REIT Preferred
Consideration.
"REIT Preferred Consideration" means (a) a number of shares of
AIMCO Common Stock equal to $60,630,000, divided by the AIMCO Common Stock
Price, (b) cash in an amount equal to the REIT Cash Consideration, and (c)
39.79% of the Deferred Consideration (consisting of 32.45% of the Deferred
Consideration attributable to PLB and 57.16% of the Deferred Consideration
attributable to Westwood), and, with respect to clauses (a) and (b) above, as
reduced by the applicable pro rata share of the shortfall of the Villa Azure
Earnout Amount and the shortfall of the Core Properties Earnout Amount and
increased by the applicable pro rata share of the Mortgage Debt Amortization.
"Related Transaction Documents" means all the documents listed
as Exhibits hereto, and all exhibits and schedules attached thereto.
"Related Transactions" means, collectively, the OP
Contribution, the Casden Contribution, the Commercial Sale, the CPLB Merger, the
Joint Venture, the Mezzanine Loan, the Ross Store Sale, the Asset Purchase, the
payments contemplated by the Villa Azure Letter Agreement and the other
transactions contemplated by the Related Transaction Documents.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
or any equivalent successor law, including the rules and regulations promulgated
thereunder or under such successor law.
"Subsidiary" of a Person (other than Casden or AIMCO) means
(a) any limited liability company in which such Person or any Subsidiary of such
Person is a direct or indirect (including through attribution under the Code)
manager or managing member, (b) any partnership in which such Person or any
Subsidiary of such Person is a direct or indirect general partner and (c) any
other Person with respect to which a majority of the voting power represented by
the outstanding shares of capital stock or other voting securities or interests
(including general partner interests) having voting power under ordinary
circumstances to elect directors or similar members of the governing body of
such corporation or entity shall at the time be held, directly or indirectly, by
such Person or any Subsidiary of such Person.
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"Taxes" means any federal, state, county, local or foreign
taxes, charges, fees, levies or other assessments, including all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, capital stock, share,
production, business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any such Taxes.
"Tax Return" means a report, return or other information
required to be supplied to a governmental entity with respect to Taxes,
including, where permitted or required, combined or consolidated returns for any
group of entities that includes Casden or any Casden Subsidiary, or AIMCO or any
AIMCO Subsidiary, as the case may be.
"Tax Ruling" means a written ruling of a taxing authority
relating to Taxes.
"Transaction Documents" means, collectively, this Agreement
and the Related Transaction Documents.
"Transactions" means, collectively, the Merger and the Related
Transactions.
"Villa Azure Earnout Amount" means an amount, not to exceed
$10,000,000, equal to the quotient of (a) the positive difference, if any,
between (i) the product of the revenue reflected on the rent roll for the Villa
Azure Property as of January 1, 2002 (including any amounts actually paid
pursuant to the terms of the Villa Azure Letter Agreement), multiplied by
twelve, minus (ii) $12,595,787, divided by (b) 0.085.
"Villa Azure Property" means that certain real property
located at 5700 W. Centinela Avenue, Los Angeles, California, and commonly known
as "Villa Azure."
"WARN Act" means the Workers Adjustment and Retraining
Notification Act of 1988, 29 U.S.C. Section 2101 et seq.
"XYZ Agreement" means the limited liability company agreement
of XYZ, as such agreement may be amended from time to time.
Section 2.2 EFFECT OF THE MERGER ON SHARES.
(a) CONVERSION OF CAPITAL STOCK OF CASDEN. Subject to Section
2.3, as of the Effective Time, by virtue of the Merger and without any action on
the part of any person or the holder of any shares of Casden Capital Stock, each
issued and outstanding share of Casden Capital Stock, other than shares of
Casden Capital Stock (i) to be cancelled pursuant to Section 2.2(b)(ii) or (ii)
as to which appraisal rights are perfected under Sections 3-203 through 3-213 of
the MGCL, shall be converted as follows:
(i) with respect to each share of Casden Common Stock and
subject to Section 2.2(d):
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(A) for each such share of AIC Common Stock the right
to receive that number of fully paid and non-assessable shares of AIMCO Common
Stock equal to the AIC Common Per Share Consideration.
(B) for each share of Other Common Stock the right to
receive (1) the number of fully paid and non-assessable shares of AIMCO Common
Stock equal to the Other Per Share Common Consideration and (2) the REIT Common
Deferred Consideration divided by the number of shares of Other Common Stock
outstanding as of the Effective Time.
(ii) with respect to each share of Casden Class A
Preferred Stock, the right to receive the REIT Preferred Consideration, divided
by the number of shares of Casden Class A Preferred Stock outstanding as of the
Effective Time, provided, that cash payable pursuant to Section 2.2(a)(ii) shall
be paid in shares of AIMCO Common Stock to the extent required under Section
2.2(d);
(iii) with respect to each share of Casden Junior
Preferred Stock, the right to receive the Per Share Casden Junior Preferred
Liquidation Amount;
(iv) notwithstanding Section 2.2(a)(i), with respect to
each share of Casden Common Stock held by a Person that AIMCO reasonably
believes may not be an accredited investor (as defined in Rule 501(a) of the
Securities Act), the right to receive cash in an amount equal to the Other
Common Per Share Consideration; and
(v) it shall be a condition to the receipt of any
Deferred Consideration pursuant to the Merger that the holder of a share of
Casden Capital Stock shall have agreed (A) to be bound by the XYZ Agreement, (B)
to contribute such interest in Deferred Consideration to XYZ in accordance with
the terms of the XYZ Agreement and (B) that any Deferred Consideration shall be
paid to a holder of Casden Capital Stock solely pursuant to and in accordance
with the provisions of the XYZ Agreement.
(b) CANCELLATION OF CASDEN CAPITAL STOCK.
(i) As of the Effective Time, all such shares of Casden
Capital Stock (other than shares to be cancelled pursuant to Section 2.2(b)(ii))
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a Certificate (as defined in
Section 2.3(b)) formerly representing any such shares shall cease to have any
rights with respect to such shares, except the right to receive the REIT Merger
Consideration in accordance with Section 2.2(a), and cash in lieu of fractional
shares and dividends and other distributions in accordance with Section 2.3(c)
and Section 2.3(d).
(ii) As of the Effective Time, by virtue of the Merger
and without any action on the part of any person or any holder of any Casden
Capital Stock, all shares of Casden Capital Stock that are (x) beneficially
owned by Casden or any wholly-owned Subsidiary of Casden or (y) owned by AIMCO
or any wholly owned subsidiary of AIMCO shall be canceled and retired and shall
cease to exist and no REIT Merger Consideration or other consideration shall be
issued or delivered in exchange therefor.
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(c) STOCK OPTIONS. Section 2.2(c) of the Casden Disclosure
Letter sets forth the options granted under the Casden Stock Plan, the dates on
which options under the plan were granted, name of the optionee for each such
grant, the number of options granted on each such date, the exercise price
thereof, and the vesting schedule thereof. Pursuant to Section 10 of the Casden
Stock Plan, upon notice from the Board (as defined in the Casden Stock Plan) of
the pendency of the Merger, each unexpired and unexercised option to purchase a
share of Casden Common Stock granted under the Casden Stock Plan (each, a
"Casden Option") will become exercisable in full for a period of thirty (30)
days following the delivery of such notice. AIC shall exercise his Casden
Options prior to the Effective Time on a net exercise basis. Immediately prior
to the expiration of such thirty (30) day period, each holder of an unexercised
Casden Option shall be entitled to receive from Casden in cancellation thereof a
payment (subject to applicable withholding taxes) in an amount equal to (i) the
excess, if any, of $21.66, over the per share exercise price of such Casden
Option, multiplied by the number of unexercised shares of Casden Common Stock
subject to such Casden Option (the "Option Settlement Amount"). The aggregate
Option Settlement Amount in respect of each Casden Option shall be paid by AIMCO
in cash to such option holder concurrently with the Closing. The surrender of a
Casden Option shall be deemed a release of any and all rights the holder had or
may have in respect of such option.
(d) ADJUSTMENT TO CONSIDERATION. Subject to Section 2.2(f)
below, if the Non-Equity Ratio is equal to or greater than 60%, first, cash
payable pursuant to Section 2.2(a)(ii) shall be converted (on a pro rata basis
among all holders of Casden Class A Preferred Stock) into the right to receive
shares of AIMCO Common Stock at a value equal to the Common Per Share Value in
lieu of cash, second, the Deferred Consideration payable in cash pursuant to
Section 2.2(a)(i)(B)(2) shall be converted (on a pro rata basis among all
holders of Other Common Stock) into the right to receive shares of AIMCO Common
Stock at a value equal to the Common Per Share Value in lieu of cash, third, the
Deferred Consideration payable in cash pursuant to Section 2.2(a)(ii) shall be
converted (on a pro rata basis among all holders of Casden Class A Preferred
Stock) into the right to receive the shares of AIMCO Common Stock at a value
equal to the Common Per Share Value in lieu of cash, and fourth, any other
amounts payable in cash to the holders of Casden Capital Stock pursuant to this
Agreement shall be converted into the right to receive shares of AIMCO Common
Stock at a value equal to the Common Per Share Value in lieu of cash, in amounts
sufficient to cause the Non-Equity Ratio to be less than 60%; provided, that,
the aggregate consideration payable pursuant to this Agreement shall not be
increased or decreased as a result of any such adjustment. The "Non-Equity
Ratio" shall equal the Non-Equity Consideration divided by the Total
Consideration. The "Non-Equity Consideration" shall equal the aggregate of (A)
the aggregate amount of cash payable pursuant to Section 2.2(a)(ii) (other than
Deferred Consideration), (B) the aggregate amount of cash payable pursuant to
Section 2.2(a)(iii), (C) the maximum amount of the portion of the Deferred
Consideration payable in cash pursuant to the Tri-Party Agreement into which
Casden Capital Stock was converted into the right to receive pursuant to Section
2.2(a), (D) the aggregate amount payable pursuant to Section 2.3(d) in lieu of
fractional shares, (E) the aggregate amount payable in respect of Dissenting
Shares, (F) the aggregate amount of cash paid pursuant to the Casden Reverse
Stock Split, (G) the aggregate amount of cash payable pursuant to Section
2.2(a)(iv), and (H) any amount described in Treasury Reg. Section
1.368-1(e)(ii). The "Total Consideration" shall equal the aggregate of the
Non-Equity Consideration and the Equity Consideration. The "Equity
Consideration" shall equal the aggregate of the product of (x) the
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Common Per Share Value of AIMCO Common Stock and (y) the number of shares of
AIMCO Common Stock to be issued pursuant to Section 2.2(a). The "Common Per
Share Value" shall equal the lower of (i) the mean between the highest and
lowest quoted selling prices on the NYSE of a share of AIMCO Common Stock on the
Closing Date and (ii) the price at which the last trade was made on the Closing
Date.
(e) CASDEN I AND II WARRANTS. At the Effective Time, each
then outstanding, unexercised Casden I Warrant and Casden II Warrant which has
been amended pursuant to Section 7.28 shall, in accordance with its terms, as
amended, and by virtue of this Agreement and without any further action of
Casden, AIMCO or the holder of such warrant, terminate.
(f) TAXABLE ELECTION. In the event that on the third NYSE
trading day prior to the anticipated Closing Date (the "Test Date") the Common
Per Share Value of AIMCO Common Stock is such that if the Closing were to occur
on the Test Date the provisions of Section 2.2(d) would require an adjustment to
the consideration otherwise payable under Section 2.2(a), then Casden shall have
the right to elect, in its sole discretion (or, alternatively, AIC in his sole
discretion), to restructure the Merger as a reverse subsidiary merger. In the
event Casden or AIC notifies AIMCO in writing, not later than the day following
the Test Date, that it or he has determined to make the election permitted by
this Section 2.2(f) (a "Taxable Election"), AIMCO shall form a new, wholly-owned
subsidiary corporation ("New Merger Sub") solely for the purpose of merging into
Casden, and the following provisions will apply: (i) the Merger will be effected
by the merger of New Merger Sub with and into Casden in accordance with the laws
of the State of Maryland, with Casden as the surviving corporation; (ii) all
references to the term "Merger" shall be deemed references to the merger
contemplated by this Section 2.2(f); (iii) all references to the term "Surviving
Corporation" shall be deemed references to Casden; (iv) at the Effective Time,
the charter and bylaws of New Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Charter and bylaws, respectively, of the surviving
corporation and the directors and officers of New Merger Sub shall be the
directors and officers of the surviving corporation; (v) the provisions of
Section 2.2(d) shall have no further force and effect, and in the Merger each
holder of Casden Capital Stock will receive the consideration such holder would
have received pursuant to Section 2.2 without application of Section 2.2(d);
(vi) the covenants set forth in Section 7.19 and the condition set forth in
Section 8.3(d) shall thereafter cease to apply; and (vii) except as expressly
provided in this Section 2.2(f), all terms, conditions and provisions of this
Agreement shall remain in full force and effect; provided, however, that in the
event the Common Per Share Value is less than $36 on the Test Date, a Taxable
Election shall automatically, and without any action of any party hereto, be
deemed to have been made. The parties shall cooperate to implement such reverse
subsidiary merger structure in the event a Taxable Election is made (or is
deemed to have been made pursuant to the immediately preceding sentence). If a
Taxable Election is made pursuant to this Section 2.2(f), the parties hereto
covenant and agree that the transaction effected pursuant to this Agreement
shall be treated by the parties as a sale of the shares of Casden acquired by
AIMCO hereunder for all income tax purposes and that the parties shall treat
such transaction consistent therewith on all income tax returns and filings. No
election provided under Section 338 of the Code shall be made with respect to
this transaction without the prior written consent of all the shareholders of
Casden prior to the Merger.
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(g) CONSIDERATION ALLOCATION. Notwithstanding any provision in
this Agreement or in any Related Transaction Documents to the contrary, at any
time prior to the Effective Time, Casden may modify the allocation of the
Aggregate Consideration among the REIT Common Consideration, the REIT Common
Deferred Consideration, the REIT Preferred Consideration, the OP Contribution
Consideration, the CPLB Merger Consideration and the Casden Contribution
Consideration, and may reallocate the REIT Merger Consideration among and with
respect to all recipients thereof, and may in connection therewith adjust the
deemed $21.66 in Section 2.2(c), by giving written notice of such revised
allocation(s) to AIMCO without the consent or approval of any Casden stockholder
or any other party hereto, provided however that (i) neither the Aggregate
Consideration nor the aggregate amount of Deferred Consideration may be
increased, (ii) Casden may not modify the allocation of the Aggregate
Consideration in any way that increases the aggregate number of shares of AIMCO
Common Stock and AIMCO OP Units to be issued in the Transactions without the
prior written consent of AIMCO and (iii) Casden may not modify the Aggregate
Consideration without appropriate approval of the board of directors and
independent directors of Casden. At least three (3) business days before the
Effective Time, Casden shall provide AIMCO with written notice of its
determination of its allocation in respect of the Villa Azure Earnout Amount,
Core Properties Earnout Amount and Mortgage Debt Amortization.
Section 2.3 PAYMENT OF MERGER CONSIDERATION.
(a) EXCHANGE FUND. As promptly as practicable after the
Effective Time, AIMCO shall hold, in trust for the benefit of holders of
Certificates, cash in an amount sufficient to pay the aggregate cash portion of
the REIT Merger Consideration plus the option payout and warrant payout amounts
and (ii) the cash payable in respect of fractional shares pursuant to Section
2.3(d) (collectively, the "Exchange Fund"). The Exchange Fund shall not be used
for any other purpose.
(b) PAYMENT PROCEDURES.
(i) Prior to the Effective Time, AIMCO (or any agent or
agents appointed by AIMCO) shall deliver to each holder of record (identified on
Schedule 4.2(c) of the Casden Disclosure Letter) of a certificate or
certificates (a "Certificate" or the "Certificates") which immediately prior to
the Effective Time will represent outstanding shares of Casden Capital Stock
(the "Canceled Shares") that will be canceled and become instead a portion of
the Closing Merger Consideration pursuant to Section 2.2(a): (w) an investor
representation letter in the form attached hereto as Exhibit T, (x) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual delivery of the
Certificates to AIMCO), and (y) instructions for use in effecting the surrender
of the Certificates in exchange for that portion of the REIT Merger
Consideration payable with respect to such shares. Casden hereby acknowledges
that AIMCO shall rely solely on Section 4.2(c) of the Casden Disclosure Letter
as to the holders of record to whom the foregoing should be delivered.
(ii) Upon surrender of a Certificate to AIMCO for
cancellation (or to such agent or agents as may be appointed by AIMCO), together
with a duly executed letter of transmittal and a duly executed certificate of
non-foreign status in the form attached hereto as
17
Exhibit Q-1 or Exhibit Q-2, the holder of such Certificate shall be entitled to
receive with respect to the shares of Casden Capital Stock formerly represented
thereby (in addition to any Deferred Consideration to which such holder may be
entitled under the Tri-Party Agreement, if applicable), (A) a certificate or
certificates representing that number of whole shares of AIMCO Common Stock into
which such holder's Casden Capital Stock was converted pursuant to the
provisions of Section 2.2, (B) the amount of cash which such holder is entitled
to receive pursuant to Section 2.2 and (C) cash in lieu of fractional shares
which such holder is entitled to receive pursuant to Section 2.3(d).
(iii) In the event of a transfer of ownership of Canceled
Shares which is not registered in the transfer records of Casden, that portion
of the REIT Merger Consideration into which such holder's Casden Capital Stock
was converted in the Merger may be issued to a transferee if the Certificate
representing such Canceled Shares is surrendered to AIMCO, accompanied by all
documents required to evidence and effect such transfer and by evidence
satisfactory to AIMCO that any applicable share transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.3(b) or as otherwise
provided in Section 2.3(e), each Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive upon such surrender a
portion of the REIT Merger Consideration.
(iv) Notwithstanding the foregoing, with respect to any
holder of a Certificate who presents any Certificate to AIMCO on or prior to the
Closing Date, together with a duly executed letter of transmittal and such other
documents as AIMCO shall reasonably require, AIMCO shall deliver to such holder,
on the Closing Date, all of that portion of the REIT Merger Consideration to
which such holder is entitled with respect to such Certificate.
(c) DISTRIBUTIONS WITH RESPECT TO SHARES. Notwithstanding any
other provision of this Agreement, all dividends or other distributions declared
or made after the Effective Time with respect to shares of AIMCO Common Stock
with a record date after the Effective Time shall be paid into an escrow account
for the benefit of the holder of any unsurrendered Certificate with respect to
the shares of AIMCO Common Stock represented thereby, and no cash amount or cash
payment in lieu of fractional shares shall be paid to any such holder until the
holder of such Certificate shall surrender such Certificate, at which time all
proceeds in escrow for the benefit of such surrendering holder shall be released
to such surrendering holder as though such shares of AIMCO Common Stock had been
issued and outstanding at the Effective Time. Subject to the effect of unclaimed
property, escheat and other applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
whole shares of AIMCO Common Stock issued in consideration therefor, without
interest, (i) at the time of such surrender, the applicable cash amount payable
pursuant to Section 2.2(a), any cash payable in lieu of fractional shares to
which such holder is entitled pursuant to Section 2.3(d) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid into escrow with respect to such whole shares of AIMCO Common
Stock and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of AIMCO Common Stock.
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(d) NO FRACTIONAL SHARES. No scrip representing fractional
shares of AIMCO Common Stock shall be issued in the Merger and no dividend or
other distribution, stock split or interest shall relate to any such fractional
share, and such fractional share shall not entitle the owner thereof to any
voting or other rights of a stockholder of AIMCO. In lieu of any fractional
share of AIMCO Common Stock to which a holder of Casden Capital Stock would
otherwise be entitled, upon surrender of a Certificate representing Casden
Capital Stock as described in this Section, such holder shall be paid an amount
in cash (without interest) equal to the product of (i) the AIMCO Common Stock
Price multiplied by (ii) the fraction of a share of AIMCO Common Stock to which
such holder would otherwise be entitled. AIMCO shall make available to AIMCO the
amount of cash necessary to make such payments without regard to any other cash
being provided to AIMCO.
(e) BOOK ENTRY. Notwithstanding any other provision of this
Agreement, the letter of transmittal referred to in Section 2.3(b) may, at the
option of AIMCO, provide for the right of a holder of one or more Certificates
to elect that any shares of AIMCO Common Stock into which such holder's AIMCO
Common Stock was converted in the Merger be in uncertificated form.
(f) CLOSING OF TRANSFER BOOKS; ETC. From and after the
Effective Time, the Casden stock transfer books shall be closed and no
registration of any transfer of any capital stock of Casden shall thereafter be
made on the Casden stock transfer books. If Certificates are presented to AIMCO
after the Effective Time they shall be canceled and exchanged for (i)
certificates representing the appropriate number of shares of AIMCO Common
Stock, (ii) the applicable cash amount payable pursuant to Section 2.2(a), and
(iii) cash in lieu of fractional shares and dividends and other distributions,
as provided in Sections 2.3(c) and 2.3(d). Shares of AIMCO Common Stock into
which Canceled Shares are converted in the Merger shall be outstanding as of the
Effective Time. AIMCO shall cause all such shares of AIMCO Common Stock to be
duly authorized, validly issued, fully paid and non-assessable and not subject
to preemptive rights. In the event any Certificate(s) shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate(s) to be lost, stolen or destroyed and, if reasonably
required by AIMCO, upon the provision by such Person of an unsecured indemnity
against any claim that may be made against AIMCO with respect to such
Certificate(s), AIMCO will deliver in respect of such lost, stolen or destroyed
Certificate(s), a certificate representing the AIMCO Common Stock into which the
shares of Casden Common Stock represented by such lost, stolen or destroyed
Certificate(s) were converted in the Merger and the applicable cash amount
payable pursuant to Section 2.2(a) and cash in lieu of fractional shares in
accordance with Section 2.3(d) and such Person shall be entitled to the voting,
dividend and other distribution rights provided herein with respect thereto.
(g) TERMINATION OF EXCHANGE FUND. All unclaimed cash in the
Exchange Fund on the first anniversary of the Effective Time shall be retained
by AIMCO, and thereafter, any holder of unsurrendered Certificates shall look
only to AIMCO for payment of such funds and the delivery of certificates
representing shares of AIMCO Common Stock to which such holder may be due,
subject to applicable law as described in the following sentence. AIMCO shall
not be liable to any Person for such shares or funds delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
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Section 2.4 APPRAISAL RIGHTS. Notwithstanding anything to the contrary
in this Agreement, Dissenting Shares shall not be converted into or exchangeable
for the right to receive any portion of the REIT Merger Consideration, but shall
be entitled to receive cash consideration as shall be determined pursuant to
Sections 3-203 through 3-213 of the MGCL; provided, however, that if a holder of
Casden Common Stock or Casden Class A Preferred Stock fails to perfect or
effectively withdraws or loses the right to appraisal and payment under the
MGCL, each share of such Casden Capital Stock of such holder shall thereupon be
deemed to have been converted into and become exchangeable for, as of the
Effective Time, the right to receive any portion of the REIT Merger
Consideration, assuming that such shares were shares of Other Common Stock, and
such shares shall no longer be Dissenting Shares. Casden shall give prompt
notice to AIMCO of any written demands received by Casden for appraisal of
Casden Common Stock or Casden Class A Preferred Stock and any objections to the
Merger received prior to the Merger and AIMCO shall have the right to
participate in all negotiations with respect to such demands or objections.
ARTICLE III
THE CLOSING
Section 3.1 CLOSING. The closing of the Merger (the "Closing") shall
take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 300 South
Grand Avenue, Suite 3400, Los Angeles, California 90071 at 10:00 A.M., local
time, on January 31, 2002 or earlier following the third NYSE trading day
immediately following the date on which the last of the conditions set forth in
Article VIII hereof is fulfilled or has been waived or at such other time, date
and place as AIMCO and Casden shall mutually agree (the "Closing Date");
provided, however, that in the event the Closing does not occur on or before
December 31, 2001, AIMCO and Casden shall determine a mutually agreeable Closing
Date that would not adversely affect Casden's REIT status for the taxable year
ending on the Closing Date. The parties shall use commercially reasonable
efforts to close on or prior to January 31, 2002.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CASDEN
Casden makes the following representations and warranties to AIMCO.
Except as set forth in the disclosure letter from Casden to AIMCO dated the date
hereof (the "Casden Disclosure Letter"):
Section 4.1 ORGANIZATION AND QUALIFICATION; ASSETS.
(a) CASDEN. Casden is a corporation duly formed, validly
existing and in good standing under the laws of the State of Maryland. Casden is
duly qualified and in good standing as a foreign corporation under the laws of
each jurisdiction where such qualification is required, other than in such
jurisdictions where the failure to so qualify would not reasonably be expected
to have a Casden Material Adverse Effect, has all requisite corporate power and
authority, and has been duly authorized by all necessary approvals and orders to
own, lease and operate its assets and properties to the extent owned, leased and
operated and to carry on its
20
business as it is now being conducted. Each outstanding share of capital stock
of Casden has been validly issued free of preemptive rights, and is fully paid
and non-assessable. Casden has furnished to AIMCO true and complete copies of
Casden's charter (the "Casden Charter") and Casden's bylaws, each as currently
in effect.
(b) CASDEN OP. Casden OP is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware.
As of the date hereof, the sole general partner of Casden OP is Casden, and the
limited partners of Casden OP are set forth in Section 4.1(b)(i) of the Casden
Disclosure Letter. Other than as set forth in Section 4.1(b)(ii) of the Casden
Disclosure Letter, Casden OP is not the record owner of more than 10% of any
class of voting securities of any Person other than a Casden Subsidiary. Casden
OP is duly qualified and in good standing as a foreign entity under the laws of
each jurisdiction where such qualification is required, other than in such
jurisdictions where the failure to so qualify would not reasonably be expected
to have a Casden Material Adverse Effect. Casden OP has all requisite
partnership power and authority, and has been duly authorized by all necessary
approvals and orders to own, lease and operate its assets and properties to the
extent owned, leased and operated and to carry on its business as it is now
being conducted. Except as set forth in Section 4.1(b)(iii) of the Casden
Disclosure Letter and in the Amended and Restated Agreement of Limited
Partnership of Casden OP, each partnership interest in Casden OP has been
validly issued free of preemptive rights, and is fully paid and non-assessable,
and each partnership interest in Casden OP owned by Casden or any Casden
Subsidiary is owned free and clear of any pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Casden has furnished to AIMCO true and complete copies
of the Amended and Restated Agreement of Limited Partnership of Casden OP (a
copy of which is attached in Section 4.1(b) of the Casden Disclosure Letter)
which is the partnership agreement of Casden OP in effect on the date of this
Agreement.
(c) CASDEN SUBSIDIARIES. Section 4.1(c)(i) of the Casden
Disclosure Letter sets forth (i) each Casden Subsidiary, (ii) the ownership
interest therein of Casden or a Casden Subsidiary, (iii) if not wholly-owned by
Casden or a Casden Subsidiary, to the extent known by Casden, the identity and
ownership interest of each of the other owners of such Casden Subsidiary and
(iv) the Federal Tax status of each Casden Subsidiary as a corporation, "Taxable
REIT Subsidiary" of Casden (within the meaning of Section 856(l) of the Code),
"Qualified REIT Subsidiary" of Casden (within the meaning of Section 856(i)(2)
of the Code), partnership, or disregarded entity. Section 4.1(c)(ii) of the
Casden Disclosure Letter contains a complete and accurate organizational chart
of Casden and the Casden Subsidiaries.
(d) OWNERSHIP OF CASDEN SUBSIDIARIES. Except as set forth in
Section 4.1(d) of the Casden Disclosure Letter, (i) all outstanding shares of
capital stock of each Casden Subsidiary that is a corporation have been validly
issued and are (A) fully paid and non-assessable, (B) owned by Casden or by a
Casden Subsidiary and (C) in the case of any capital stock owned by Casden or a
Casden Subsidiary, owned free and clear of all Liens and (ii) all equity
interests in each Casden Subsidiary that is a partnership, joint venture,
limited liability company or trust have been validly issued and all equity
interests in each Casden Subsidiary which are owned by Casden or a Casden
Subsidiary are owned free and clear of all Liens. Each Casden Subsidiary that is
a corporation is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to carry on
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its business as now being conducted, and each Casden Subsidiary that is a
partnership, limited liability company or trust is duly organized and validly
existing under the laws of its jurisdiction of organization and has the
requisite power and authority to carry on its business as now being conducted.
Each Casden Subsidiary is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, would not reasonably be expected
to have a Casden Material Adverse Effect. Copies of the charter and bylaws or
similar organizational and governing documents and copies of the partnership,
joint venture and operating agreements of each Casden Subsidiary, each as
amended to the date of this Agreement, previously have been delivered or made
available to AIMCO.
(e) NAPICO ENTITIES. Section 4.1(e) of the Casden Disclosure
Letter sets forth, as of November 1, 2001, the name and state of organization
of, and ownership interest in, each Person of which National Partnership
Investments Corp. ("NAPICO") or one of its Subsidiaries is a direct or indirect
general partner (other than any Person (i) in which NAPICO is an administrative
general partner and does not control the day-to-day operations of such Person,
(ii) which does not operate, has not operated, and will not operate prior to the
Closing Date, a "lodging facility" or "health care facility" within the meaning
of Section 856(1)(4)(A) and 856(1)(4)(B) of the Code, respectively, and (iii)
that does not license, has not licensed, and will not license prior to the
Closing Date, rights to any brand name under which any such lodging facility or
health care facility is operated), each wholly-owned corporate subsidiary of
NAPICO or one of its Subsidiaries and each limited liability company in which
NAPICO or one of its Subsidiaries is the direct or indirect managing member
(collectively, the "NAPICO Entities"). The ownership interests of NAPICO and its
Subsidiaries in each NAPICO Entity are owned by NAPICO or its Subsidiaries free
and clear of all Liens (other than Liens described in Section 4.1(b) of the
Casden Disclosure Letter). Each of the NAPICO Entities is an entity validly
existing and in good standing under the laws of the jurisdiction of its
organization and is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, would not reasonably be expected
to have a Casden Material Adverse Effect. To Casden's knowledge, all outstanding
ownership interests in the NAPICO Entities and each Person in which the NAPICO
Entities hold an ownership interest have been validly issued. Copies of the
organizational and governing documents of each NAPICO Entity, as amended to the
date of this Agreement, have been previously delivered or made available to
AIMCO.
(f) COMMERCIAL PROPERTIES. The Commercial Properties and the
Commercial Debt to be assumed by CommercialCo, in the Commercial Sale are not
used in and do not relate to the multi-family apartment business of Casden or
any Casden Subsidiary (except to the extent such Commercial Properties are used
by Casden or any Casden Subsidiary pursuant to a commercial lease for all or a
portion of such Commercial Property), and such assets and liabilities will not
be assets or liabilities of Casden or any Casden Subsidiary at the Effective
Time, nor will title to such Commercial Properties directly or indirectly pass
to AIMCO or any Affiliate of AIMCO in connection with the Merger.
22
(g) RESIDENTIAL PROPERTIES. As a result of the Merger, and
assuming the receipt of all AIMCO Statutory Approvals and Casden Statutory
Approvals, AIMCO will succeed to all of the assets of Casden relating to the
multifamily apartment business of Casden and the Casden Subsidiaries, other than
the Development LLC Assets and the Commercial Properties.
Section 4.2 CAPITALIZATION.
(a) CASDEN. The authorized shares of Casden Capital Stock
consist of (i) 150,000,000 shares of Casden Common Stock; (ii) 15,000,000 shares
of Casden Class A Preferred Stock; (iii) 424,000 shares of Casden Junior
Preferred Stock and (iv) 84,576,000 shares of Preferred Stock, par value $0.01
per share. As of the date hereof, (A) 5,397,197 shares of Casden Common Stock
were issued and outstanding, of which no shares of Casden Common Stock were held
by Casden's wholly-owned Subsidiaries; (B) 2,000,000 shares of Casden Common
Stock were reserved for issuance under the Casden Stock Plan, under which
options to acquire 1,642,800 shares of Casden Common Stock have been granted and
are outstanding; (C) 14,298,997 shares of Casden Common Stock were reserved for
issuance upon exercise of the Casden I Warrants; (D) 500,000 shares of Casden
Common Stock were reserved for issuance upon exercise of the Casden II Warrants;
(E) 10,295,272 shares of Casden Class A Preferred Stock were issued and
outstanding; (F) 400,610 shares of Casden Junior Preferred Stock were issued and
outstanding; and (G) no bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into securities having the right to vote) on
any matters on which stockholders may vote ("Voting Debt"), were issued or
outstanding. Except as set forth in the preceding sentence above, in Section
4.2(b) below, in Section 4.2 of the Casden Disclosure Letter or pursuant to this
Agreement, there are no securities, options, warrants, calls, rights,
commitments or agreements of any character to which Casden or any Casden
Subsidiary is a party or by which any of them are bound obligating Casden or any
Casden Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of Casden or any Voting Debt of Casden
or any Casden Subsidiary or obligating Casden or any Casden Subsidiary to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.
(b) CASDEN OP. The issued and outstanding Casden OPUs consist
of (i) 10,295,272 Class A limited partnership units; (ii) 1,110,183 Class B
restricted limited partnership units; (iii) 577,886 Junior limited partnership
units; and (iv) 7,657,223 common limited partnership units and no other Casden
OPUs are issued and outstanding. Except as set forth in Section 4.2(b) of the
Casden Disclosure Letter, there are no securities, outstanding subscriptions,
calls, options, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security, instrument or
other agreement to which Casden OP is a party or by which it is bound obligating
Casden OP to issue, deliver or sell, or cause to be issued, delivered or sold,
additional partnership units or Voting Debt of Casden OP or obligating Casden OP
to grant, extend or enter into any such option, warrant, call, right, commitment
or agreement, other than rights to receive further vesting of up to 48,264 Class
B restricted limited partnership units pursuant to the award agreements set
forth in Section 4.2(b) of the Casden Disclosure Letter.
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(c) Section 4.2(c) of the Casden Disclosure Letter sets forth
a complete and accurate list of all of the holders of record of the Casden
Capital Stock and the number of shares held by each such holder (i) as of the
date hereof and (ii) after giving effect to the Casden Reverse Stock Split.
(d) Section 4.2(d) of the Casden Disclosure Letter sets forth
a complete and accurate list of all of the holders of record of Casden OPUs and
the number of units held by each such holder.
Section 4.3 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. Casden has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to the receipt of
the applicable Casden Stockholders' Approval (as defined in Section 4.10) and
the applicable Casden Required Statutory Approvals (as defined in Section
4.3(c)), to consummate the Transactions. The execution and delivery of this
Agreement and the consummation by Casden of the Transactions have been duly
authorized by all necessary corporate action on the part of Casden, subject to
obtaining the applicable Casden Stockholders' Approval. This Agreement has been
duly and validly executed and delivered by Casden and, assuming the due
authorization, execution and delivery hereof by AIMCO, constitutes the valid and
binding obligation of Casden enforceable against Casden in accordance with the
terms of this Agreement, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
(b) NON-CONTRAVENTION. Except as set forth in Section 4.3(b)
of the Casden Disclosure Letter, the execution and delivery of this Agreement by
Casden does not, and the consummation of the Transactions will not, violate,
conflict with, result in a breach of any provision of, constitute a default
(with or without notice or lapse of time or both) under, or result in the
termination or modification of, or accelerate the performance required by, or
result in a right of termination, cancellation or acceleration of any obligation
or the loss of a benefit under, or result in the creation of any Lien upon any
of the properties or assets of Casden or any of the Casden Subsidiaries (each of
the foregoing, a "Violation" with respect to Casden and such term when used in
Article V has correlative meanings with respect to AIMCO) pursuant to any
provisions of (i) the charter and bylaws, any declaration of trust or similar
organizational or governing documents of Casden or any Casden Subsidiary, (ii)
any Contract with any third party to which Casden or any of the Casden
Subsidiaries is a party or (iii) subject to obtaining the Casden Required
Statutory Approvals and the Casden Stockholders' Approval, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any Governmental Authority (as defined in Section
4.3(c))applicable to Casden or any of its properties or assets, except in the
case of the foregoing clauses (ii) and (iii) for any such Violation which would
not reasonably be expected to have a Casden Material Adverse Effect. Section
4.3(b) of the Casden Disclosure Letter sets forth, (x) each construction lender
under any construction loan encumbering any of the Casden Properties (other than
the NAPICO Properties) and (y) each lender or housing agency in connection with
any tax exempt bond financing affecting any of the Casden Properties (other than
the NAPICO Properties), in either case, the consent or approval of which is
necessary to prevent or avoid a Violation by Casden or any of
24
the Casden Subsidiaries as a result of the execution and delivery of this
Agreement or any of the Related Transaction Documents or the consummation or
performance of any of the Transactions (any and all such consents and approvals,
the "Casden Property Consents").
(c) STATUTORY APPROVALS. No declaration, filing or
registration with, or notice to or authorization, consent or approval of, any
court, federal, state, local or foreign governmental or regulatory body or
authority (including the United States Department of Housing and Urban
Development, and/or applicable state housing agencies (collectively, "HUD"), a
stock exchange or other self-regulatory body (each of the foregoing entities,
bodies or authorities, including HUD, a "Governmental Authority") is necessary
for the execution and delivery of this Agreement by Casden or the consummation
of the Transactions by Casden, except (i) acceptance of the Articles of Merger
by the Maryland Department of Assessments and Taxation, (ii) the filing of an
amended Articles Supplementary relating to the Casden Junior Preferred Stock
with the MSDAT (if desired by Casden under Section 6.1(d)), (iii) as described
in Section 4.3(c) of the Casden Disclosure Letter or (iv) declarations, filings,
registrations, notices, authorizations, consents or approvals, the failure of
which to make, give or obtain would not result in a Casden Material Adverse
Effect (all of the foregoing, the "Casden Required Statutory Approvals," it
being understood that references in this Agreement to "obtaining" such Casden
Required Statutory Approvals shall mean making such declarations, filings or
registrations; giving such notices; obtaining such authorizations, consents or
approvals; and observing such waiting periods as are necessary to avoid a
violation of law). For purposes of determining compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), Casden confirms that the conduct of its business consists primarily of
investing in, owning, developing and operating real estate for the benefit of
its stockholders.
(d) COMPLIANCE. Except as set forth in Section 4.6, Section
4.7, Section 4.8, Section 4.9 or Section 4.11 of the Casden Disclosure Letter,
neither Casden nor any of the Casden Subsidiaries (i) is in violation of or has
been given notice or been charged with any violation of, or (ii) to the
knowledge of Casden, is under investigation with respect to any violation of,
any law, statute, order, rule, regulation, ordinance, writ, injunction, decree
or judgment (including any applicable Environmental Laws) of any Governmental
Authority, except for violations which would not reasonably be expected to have
a Casden Material Adverse Effect. Except as set forth in Section 4.9 or Section
4.11 of the Casden Disclosure Letter, Casden and the Casden Subsidiaries have
all permits, licenses (including licenses required to operate as a property
manager), franchises and other governmental authorizations, consents and
approvals necessary to conduct their businesses as presently conducted, except
where the failure to obtain such permits, licenses (including licenses required
to operate as a property manager), franchises and other authorizations, consents
and approvals would not reasonably be expected to have a Casden Material Adverse
Effect. Except as set forth in Section 4.3(d), Section 4.6 or Section 4.8 of the
Casden Disclosure Letter, neither Casden nor any Casden Subsidiary is in breach
or violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a default by Casden or any Casden Subsidiary under
(i) their respective organizational documents or (ii) any Contract (other than
any organizational documents or loan agreements, notes and mortgages with
respect to non-residential properties) to which Casden or any Casden Subsidiary
is a party or by which it is bound or to which its property is subject,
25
except for possible Violations which individually or in the aggregate would not
reasonably be expected to have a Casden Material Adverse Effect.
Section 4.4 CASDEN FINANCIAL STATEMENTS.
(a) The Casden Financial Statements have been provided by
Casden to AIMCO prior to the date hereof. The audited consolidated financial
statements and unaudited interim financial statements included in the Casden
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated therein or in the notes thereto, and except for the
absence of notes in the case of unaudited statements) and fairly present in all
material respects the financial position of the applicable entities (or
consolidated group of entities) referenced therein as of the dates thereof and
the results of their operations and cash flows for the periods then ended,
subject to normal recurring audit and year-end adjustments, in the case of the
unaudited interim financial statements.
(b) The schedules attached as Section 4.4(b) of the Casden
Disclosure Letter (collectively, the "Casden Pro Forma Financial Information")
present fairly, in all material respects, the financial position of Casden and
its subsidiaries, on a consolidated basis, as of December 31, 2000 and June 30,
2001, and the results of operations of Casden and its subsidiaries, on a
consolidated basis, for the twelve months and six months then ended, in each
case after giving effect to the Commercial Sale, the Ross Store Sale, the Asset
Purchase and certain other transactions and adjustments disclosed therein.
(c) Casden has delivered, or caused to be delivered, to AIMCO
(i) a report of Deloitte & Touche LLP relating to its review, in accordance with
standards promulgated by the American Institute of Certified Public Accountants,
of the Casden Financial Statements as of June 30, 2001 and for the six months
then ended, and (ii) a letter of Deloitte & Touche LLP, addressed to AIMCO, with
respect to the Casden Financial Statements and the Casden Pro Forma Financial
Information, and customary in scope and substance for comfort letters delivered
by independent public accountants in connection with acquisition transactions in
which there is an exchange of stock.
Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Section 4.5 of the Casden Disclosure Letter or as otherwise expressly
permitted in Section 6.1 of this Agreement or required under Article VII of this
Agreement, since December 31, 2000, (i) Casden and each of the Casden
Subsidiaries have conducted their business only in the ordinary course of
business consistent with past practice (it being understood that acquisitions
and dispositions of multi-family apartment properties and interests therein by
the NAPICO Entities are ordinary course business activities and are consistent
with past practice), (ii) neither Casden nor any Casden Subsidiary (other than
any NAPICO Entity) has transferred any material assets other than to or among
Casden, Casden OP and any wholly owned Subsidiary of Casden and (iii) there has
not been any event or condition that would reasonably be expected to result in a
Casden Material Adverse Effect.
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Section 4.6 LITIGATION.
Except as set forth in Section 4.6(i), Section 4.6(ii),
Section 4.7, Section 4.8, Section 4.9 or Section 4.11 of the Casden Disclosure
Letter, (i) there are no claims, suits, actions or proceedings by or against
Casden or any of the Casden Subsidiaries or any of their respective properties
(other than unlawful detainer actions by Casden against its tenants or
counterclaims resulting therefrom) pending or, to the knowledge of Casden or a
Casden Subsidiary, threatened in which damages in excess of $10,000 are asserted
or alleged, (ii) there are no claims, suits, actions or proceedings by or
against Casden or any of the Casden Subsidiaries or any of their respective
properties pending or to the knowledge of Casden or any Casden Subsidiary
threatened that could reasonably be expected to affect all or any portion of any
of Casden's properties or any of Casden Subsidiary's properties or Casden's or
any Casden Subsidiary's ownership, rights, use, development or maintenance of
their respective properties, including, without limitation, tax reduction
proceedings; (iii) there are no claims, suits, actions or proceedings by any
Governmental Authority or third party pending nor, to the knowledge of Casden,
threatened, nor are there, to the knowledge of Casden, any investigations or
reviews by any Governmental Authority pending or threatened against, relating to
or affecting Casden or any of the Casden Subsidiaries, (iv) there have not been
any significant adverse developments since December 31, 2000 with respect to
such disclosed claims, suits, actions, proceedings, investigations or reviews
and (v) there are no judgments, decrees, injunctions, or orders of any
Governmental Authority specifically applicable to Casden or any Casden
Subsidiary which would, if fully enforced, result in payments or losses in
excess of $10,000 individually. Section 4.6(i) of the Casden Disclosure Letter
sets forth the claims, litigation, disputes and matters existing on the Closing
Date over which AIMCO shall maintain responsibility and control following the
Effective Time, subject to the limitations set forth in the Master
Indemnification Agreement. XYZ shall maintain responsibility and control
following the Effective Time over any and all claims, litigation, disputes or
matters, based on facts or circumstances existing or arising prior to the
Effective Time, not set forth specifically in Section 4.6(i) of the Casden
Disclosure Letter, including, without limitation, those set forth in Section
4.6(ii) of the Casden Disclosure Letter.
Section 4.7 TAX MATTERS. Except as set forth in Section 4.7 of the
Casden Disclosure Letter:
(a) TIMELY FILING OF TAX RETURNS. Casden and each of the
Casden Subsidiaries have filed (or there have been filed on such Persons'
behalf) all federal and all material foreign, state and local Tax Returns
required to be filed by each of them under applicable law. All such Tax Returns
were and are in all material respects true, complete and correct and filed on a
timely basis (after giving effect to any filing extension properly granted by a
Governmental Authority having the authority to do so).
(b) PAYMENT OF TAXES. Casden and each of the Casden
Subsidiaries have paid all material Taxes that are currently due and payable for
all periods through and including the Closing Date within the time and in the
manner prescribed by law, except for those Taxes contested in good faith and for
which adequate reserves have been provided on their books and records and except
for the tax under Section 857(b)(5) of the Code on Casden's federal
27
income tax return for the year 2000 for which a cash reserve in the amount of
such liability has been established.
(c) TAX RESERVES. Casden and the Casden Subsidiaries have
established on their books and records reserves adequate to pay all material
Taxes and reserves for deferred income Taxes in accordance with GAAP.
(d) TAX LIENS. There are no Tax liens upon the material assets
of Casden or any of the Casden Subsidiaries, except liens for Taxes not yet
delinquent.
(e) WITHHOLDING TAXES. Casden and each of the Casden
Subsidiaries have complied in all material respects with the provisions of the
Code relating to the withholding of Taxes, as well as similar provisions under
any other laws, and have withheld and paid over to the proper Governmental
Authorities all amounts required within the time and in the manner prescribed by
law.
(f) REIT CLASSIFICATION. At all times since December 30, 1998,
Casden has been organized and operated in conformity with the requirements
necessary to qualify as a REIT pursuant to Section 856 of the Code (the "Status
Requirements"), and the execution or delivery by Casden of this Agreement and
the consummation by Casden of the Transactions or compliance with or fulfillment
of the terms and provisions hereof by Casden, will not adversely affect the
qualification of Casden as a REIT for each taxable year ending on or before the
Closing Date.
(g) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No audits or
other administrative or court proceedings are presently pending with regard to
any material Taxes or Tax Returns of Casden or any of the Casden Subsidiaries.
(h) TAX RULINGS. Except for the rulings previously delivered
by Casden to AIMCO and the Closing Agreement with the IRS executed on September
21, 2001, neither Casden nor any of the Casden Subsidiaries has applied for,
received, or has pending a Tax Ruling or commenced negotiations or entered into
a Closing Agreement with any taxing authority.
(i) TAX SHARING AGREEMENTS. Neither Casden nor any Casden
Subsidiary is a party to any agreement relating to allocating or sharing Taxes.
(j) BUILT IN GAIN. None of Casden or any of the Casden
Subsidiaries (excluding, for purposes of this provision, NAPICO and the NAPICO
Entities) has been or will be subject to tax (i) under the principles of Section
1374, as described in IRS Notice 88-19 and Temporary Treasury Reg. Section
1.337(d)-5T, or (ii) under paragraphs (4), (5), (6) or (7) of Section 857(b) of
the Code.
(k) PAST DISTRIBUTIONS. With respect to the taxable year
ending on the Closing Date, Casden will have distributed to its stockholders, in
distributions qualifying for the dividends paid deduction pursuant to Section
857(b)(2)(B) of the Code, an amount equal to 100% of its real estate investment
trust taxable income as described in Section 857(b) of the Code.
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(l) ADDITIONAL DISTRIBUTIONS. If the Merger were not to occur,
neither Casden nor CPLB would be required to make a distribution to stockholders
pursuant to Section 858 or Section 860 of the Code in order to maintain their
status as a REIT.
(m) TAXABLE REIT SUBSIDIARIES. Each entity identified as a
"Taxable REIT Subsidiary" of Casden (within the meaning of Section 856(l) of the
Code) on Section 4.1(c) of the Casden Disclosure Letter at all times since
January 1, 2001 has satisfied every requirement imposed by Section 856(1) of the
Code. None of such entities (i) operates or manages, has operated or managed, or
will operate or manage prior to the Closing Date a "lodging facility" or "health
care facility" within the meaning of Section 856(1)(4)(A) and 856(1)(4)(B) of
the Code, respectively, or (ii) licenses, has licensed, or will license prior to
the Closing Date, rights to any brand name under which any such lodging facility
or health care facility is operated.
(n) LIABILITY FOR OTHERS. Neither Casden nor any of the Casden
Subsidiaries has any material liability for Taxes of any Person other than
Casden and the Casden Subsidiaries (i) under Treasury Reg. Section 1.1502-6 (or
any similar provision of state, local or foreign law), (ii) by Contract, or
(iii) otherwise.
(o) SECTION 341(f). Neither Casden nor any of the Casden
Subsidiaries has, with regard to any assets or property held or acquired by any
of them, filed a consent to the application of Section 341(f)(2) of the Code, or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
"subsection (f) asset" (as such term is defined in Section 341(f)(4) of the
Code) owned by Casden or any of the Casden Subsidiaries.
(p) DEFICIENCIES. No deficiencies for any Taxes have been
proposed, asserted or assessed against Casden, or any Casden Subsidiary, and
there is no outstanding waiver of the statute of limitations with respect to any
Taxes or Tax Returns of Casden or any Casden Subsidiary.
(q) TEN PERCENT VOTING INTEREST. At the Closing Date, other
than a corporation that is a "Qualified REIT Subsidiary" of Casden within the
meaning of Section 856(i)(2) of the Code or a "Taxable REIT Subsidiary" of
Casden within the meaning of Section 856(l) of the Code, neither Casden nor any
Casden Subsidiary (excluding, for purposes of this provision, NAPICO and the
NAPICO Entities) will own (as determined for purposes of Section 856 of the Code
and the Regulations promulgated thereunder, including Treasury Reg. Section
1.856-3(g) and with the same meaning as when used in the Investment Company Act
of 1940, as amended), directly or indirectly (i) securities (other than "real
estate assets" within the meaning of Section 856(c)(5)(B) of the Code)
possessing more than 10% of the total voting power of any issuer or (ii)
securities (other than "real estate assets" within the meaning of Section
856(c)(5)(B) of the Code) having a value of more than 10% of the total value of
the outstanding securities of any issuer, other than securities satisfying the
straight debt safe harbor of Section 856(c)(7) of the Code.
(r) SERVICES. At no time on or prior to the Closing Date, has
Casden or any of the Casden Subsidiaries provided services to tenants other than
services that (i) do not give rise to "impermissible tenant service income" as
defined in Section 856(d)(7) of the Code or
29
(ii) give rise to impermissible tenant service income with respect to any
property for any taxable year in an amount not in excess of one percent of all
amounts received or accrued by Casden and the Casden Subsidiaries (excluding,
for purposes of this provision, NAPICO) with respect to such property during
such year.
(s) OWNERSHIP OF CORPORATIONS. Neither Casden nor any Casden
Subsidiary owns or has owned, directly or indirectly (including through
attribution under the Code), an interest in a corporation other than interests
in (i) "Qualified REIT Subsidiaries" within the meaning of Section 856(i)(2) of
the Code, (ii) "Taxable REIT Subsidiaries" within the meaning of Section 856(l)
of the Code, (iii) NAPICO, prior to its election to be treated as a "Taxable
REIT Subsidiary" of Casden within the meaning of Section 856(l) of the Code, and
(iv) REITs.
(t) OWNERSHIP OF TRANSPARENT ENTITIES. Neither Casden nor any
Casden Subsidiary other than NAPICO owns or has owned, directly or indirectly
(including through attribution under the Code), other than through its ownership
of NAPICO or a NAPICO Entity, an interest in a partnership or limited liability
company in which Casden was not the direct or indirect (including through
attribution under the Code) managing member or general partner.
Section 4.8 EMPLOYEE MATTERS; ERISA. As of the date hereof, except as
set forth in Section 4.8 of the Casden Disclosure Letter and as contemplated
under Section 6.1(h) of the Casden Disclosure Letter:
(a) BENEFIT PLANS. Section 4.8(a) of the Casden Disclosure
Letter contains a true and complete list of each written or oral material
employment agreement, arrangement, commitment, severance agreement or plan,
change in control, or retention agreement, bonus plan, incentive compensation or
deferred compensation plan, stock option plan or agreement, stock-based
incentive plan, profit sharing plan, restricted stock plan or agreement, welfare
plan, employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), policy, program,
agreement or arrangement and any related trust covering any current or former
officer, director, agent, consultant or employee of Casden, any Casden
Subsidiary or any trade or business, whether or not incorporated, that together
with Casden or any Casden Subsidiary would be deemed a "single employer" within
the meaning of Section 4001(b)(1) of ERISA (each, an "ERISA Affiliate") or their
respective beneficiaries with respect to which AIMCO will have financial
obligations following the Merger (collectively, the "Casden Benefit Plans").
Since December 31, 2000, except as set forth in Section 4.8(a) of the Casden
Disclosure Letter, there have been no new plans, policies, agreements or
arrangements adopted or changes, additions or modification to any existing
Casden Benefit Plan that would reasonably be expected to materially increase the
cost or liability under any Casden Benefit Plan. Neither Casden nor any Casden
Subsidiary nor any of their ERISA Affiliates has any obligation to provide any
former or present employee, director, officer, partner, agent or consultant any
profit sharing, springing or existing equity or profit interest or
participation, any paid sabbatical, or the right to purchase any asset or
property including, without limitation, any apartment. With respect to the
Casden Benefit Plans, a copy of (i) the last two annual reports (IRS Form 5500
Series, together with all required schedules and accountant's reports or
opinions) prepared in connection with any such Casden Benefit Plan, as
30
applicable (ii) the latest determination letter from the Internal Revenue
Service (the "IRS") for any Casden Benefit Plan which is intended to be
qualified under Section 401 of the Code, (iii) the most recent summary plan
description, if any, and (iv) a copy of the material documents and instruments
establishing and governing each Casden Benefit Plan (including all amendments
thereto) previously have been made available to AIMCO.
(b) CONTRIBUTIONS. All contributions and other payments
required to be made by Casden or any of the Casden Subsidiaries or any of their
ERISA Affiliates to any Casden Benefit Plan (or to any person pursuant to the
terms thereof) have been made or the amount of such payment or contribution
obligations has been reflected in the Casden Financial Statements to the extent
required by GAAP.
(c) QUALIFICATION; COMPLIANCE. Except where the failure to so
comply with each of the following representations would not individually or in
the aggregate reasonably be expected to result in a Casden Material Adverse
Effect, and with respect to any "multiemployer plan" (as defined in Section
3(37) of ERISA) the representations in this Section 4.8(c) are limited to the
knowledge of Casden or any Casden Subsidiary, (i) each of the Casden Benefit
Plans intended to be "qualified" within the meaning of Section 401(a) of the
Code has been determined by the IRS to be so qualified, and, to the knowledge of
Casden, the Casden Subsidiaries and their ERISA Affiliates, no circumstances
exist that are reasonably expected by Casden, any Casden Subsidiary or any of
their ERISA Affiliates to result in the revocation of any such determination;
(ii) Casden, the Casden Subsidiaries and their ERISA Affiliates are in
compliance with, and each of the Casden Benefit Plans is and has been operated
in compliance with, all applicable laws, rules and regulations governing such
plan, including, ERISA and the Code; (iii) each Casden Benefit Plan intended to
provide for the deferral of income, the reduction of salary or other
compensation, or to afford other income tax benefits, complies with the
requirements of the applicable provisions of the Code or other laws, rules and
regulations required to provide such income tax benefits; and (iv) no
"prohibited transactions" (as defined in Section 406 or 407 of ERISA or Section
4975 of the Code) have occurred for which a statutory or administrative
exemption is not available with respect to any Casden Benefit Plan and which
could give rise to liability on the part of Casden, any Casden Subsidiary, any
of their ERISA Affiliates, any Casden Benefit Plan, or any fiduciary, party in
interest or disqualified Person with respect to any Casden Benefit Plan.
(d) LIABILITIES. With respect to the Casden Benefit Plans, no
event has occurred, and, to the knowledge of Casden, the Casden Subsidiaries and
their ERISA Affiliates, there does not now exist any condition or set of
circumstances that could reasonably be expected to subject Casden, any of the
Casden Subsidiaries or any of their ERISA Affiliates to any material liability
arising under the Code, ERISA or any other applicable law (including any
liability to any such plan or the Pension Benefit Guaranty Corporation (the
"PBGC")), excluding liabilities for benefit claims and funding obligations
payable in the ordinary course. No liability under Title IV of ERISA has been
incurred by Casden, any of the Casden Subsidiaries or any of their ERISA
Affiliates during the last six (6) years that has not been satisfied in full,
and no condition exists that presents a risk to Casden, any of the Casden
Subsidiaries or any of their ERISA Affiliates of incurring any liability under
such Title, other than liability for premiums due the PBGC, which payments have
been or will be made when due except as would not reasonably be expected to have
a Casden Material Adverse Effect.
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(e) WELFARE PLANS. None of the Casden Benefit Plans that are
"welfare plans," within the meaning of Section 3(1) of ERISA, provide for any
material benefits with respect to current or former employees for periods
extending beyond their retirement or other termination of service, other than
continuation coverage required to be provided under Section 4980B of the Code or
Part 6 of Title I of ERISA.
(f) PENALTIES. To Casden or any Casden Subsidiary's knowledge,
none of any Casden Benefit Plan, any trust created thereunder, nor any trustee
or administrator of any Casden Benefit Plan taken any action or failed to take
any action which could reasonably be expected to subject Casden, any Casden
Subsidiary or any of their ERISA Affiliates to any material liability for either
a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a Tax
imposed pursuant to Section 4975(a) or (b) or 4976 or 4980B of the Code.
(g) PAYMENTS RESULTING FROM THE TRANSACTIONS. Other than with
respect to the option awards referred to in Section 7.11(a), or with respect to
the employment agreements or arrangements set forth in Section 4.8(a) of the
Casden Disclosure Letter, the consummation or announcement of any of the
Transactions will not (either alone or upon the occurrence of any additional or
further acts or events, including the termination of employment of any officers,
directors, employees, agents or directors of Casden or any Casden Subsidiary on
or prior to the Closing), result in any (i) payment (whether of severance pay or
otherwise) becoming due from Casden or any of the Casden Subsidiaries to any
Affected Employee (as defined in Section 7.11(a)) or to the trustee under any
"rabbi trust" or similar arrangement, (ii) benefit of any Affected Employee
under any Casden Benefit Plan becoming accelerated, vested or payable or (iii)
"mass layoff" or "plant closing" as defined in the WARN Act requiring notice or
pay in lieu of notice.
(h) MULTIEMPLOYER PLAN. With respect to any Casden Benefit
Plan that is a "multiemployer plan," as such term is defined in Section 3(37) of
ERISA, (i) neither Casden, any Casden Subsidiary nor any ERISA Affiliate has,
since September 26, 1980, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of
ERISA, (ii) no event has occurred that presents a material risk of a complete or
partial withdrawal, (iii) neither Casden, any Casden Subsidiary nor any ERISA
Affiliate has any contingent liability under Section 4204 of ERISA, (iv) to the
knowledge of Casden or any Casden Subsidiary, no circumstances exist that
present a material risk that any such multi-employer plan will go into
reorganization, and (v) to the knowledge of Casden or any Casden Subsidiary, the
aggregate withdrawal liability of Casden, each Casden Subsidiary and the ERISA
Affiliates, computed as if a complete withdrawal by Casden, each Casden
Subsidiary and all of its ERISA Affiliates had occurred under each such
multiemployer plan on the date hereof, would be zero.
(i) TITLE IV PLANS. Except with respect to any multiemployer
plans, no Casden Employee Plan is subject to Title IV of ERISA and neither
Casden, any ERISA Affiliate, nor any Casden Subsidiary has ever sponsored,
maintained, contributed to, or incurred an obligation to contribute to, any plan
that is subject to Title IV of ERISA.
(j) DEDUCTIBILITY OF PAYMENTS. Except as disclosed in Section
4.8(j) of the Casden Disclosure Letter, there is no Casden Benefit Plan or any
other
32
contract, agreement or arrangement with respect to any "disqualified individual"
within the meaning of Section 1.280G-1 of the Proposed Regulations of Casden
that could, individually or collectively, give rise to the payment of any amount
by Casden or any Casden Subsidiary as a result of the consummation of the
Transactions that would not be deductible pursuant to the terms of Section 280G
of the Code.
(k) LABOR MATTERS. Except as set forth in Section 4.8(k) of
the Casden Disclosure Letter:
(i) there is no labor strike, slowdown, work stoppage or
lockout in effect, or, to the knowledge of Casden, threatened against or
otherwise affecting Casden or any Casden Subsidiary, nor has Casden or any
Casden Subsidiary experienced any such labor controversy since December 31,
1996;
(ii) there is no unfair labor practice charge or complaint
pending or, to the knowledge of Casden, threatened against or otherwise
affecting Casden or any Casden Subsidiary before the National Labor Relations
Board or any similar state or foreign agency;
(iii) no grievance or arbitration proceeding before any
Governmental Authority relating to any of the employees or former employees of
Casden or any Casden Subsidiary, any labor organization or other representative
of the employees or arising out of any collective bargaining agreement is
pending or, to the knowledge of Casden, threatened against or otherwise
affecting Casden or any Casden Subsidiary, which, if adversely decided, would
reasonably be expected to have a Casden Material Adverse Effect; and
(iv) no collective bargaining agreement exists that is
binding on Casden or any Casden Subsidiary, and no petition has been filed or
proceedings instituted by an employee or group of employees of Casden or any
Casden Subsidiary with any labor relations board seeking recognition of a
bargaining representative, and, to the knowledge of Casden, no organizational
effort is currently being made or has been made since December 31, 1996, on
behalf of any labor union to organize any employees of Casden or any Casden
Subsidiary.
(l) CONSENT DECREES OR SETTLEMENTS. Except as set forth on
Section 4.8(l) of the Casden Disclosure Letter, Casden is not a party to, or
otherwise bound by, any consent decree or settlement agreement with, or citation
by, any Government Authority relating to employees or the employment practices
of Casden.
(m) COMPLIANCE WITH LAW. To the knowledge of Casden, Casden is
in material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, immigration, wages,
hours of work, independent contractor classification, income tax withholding and
occupational safety and health.
(n) PENDING OR THREATENED PROCEEDINGS. There are no
proceedings pending or, to the knowledge of Casden, threatened in writing
against or otherwise affecting Casden before any Governmental Authority brought
by or on behalf of any of Casden's employees, prospective employees or former
employees alleging breach of any express or implied contract of employment or
any law or regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the
33
employment relationship, which, if adversely decided, would reasonably be
expected to have a Material Adverse Effect on Casden.
(o) EMPLOYMENT TERMINATIONS. To the knowledge of Casden, and
other than the Transferred Employees, no officer or other key employee of Casden
intends to terminate his or her employment with Casden in connection with the
Merger.
(p) WARN EVENTS. In the past five years, (i) Casden has not
effectuated a "plant closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of Casden's business, (ii) there has not occurred a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of Casden's business, (iii) Casden has not engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation, (iv) Casden has not caused
any of its employees at its corporate headquarters in Beverly Hills, California
to suffer an "employment loss" (as defined in the WARN Act) during the 90 day
period prior to the date hereof and (v) no other single site of employment of
Casden (other than its corporate headquarters in Beverly Hills, California) has
50 or more employees.
(q) EMPLOYEE POLICIES. Section 4.8(q) of the Casden Disclosure
Letter sets forth a complete and accurate list of all written personnel
policies, rules or procedures applicable to Casden's employees.
(r) CASDEN EMPLOYEES. Section 4.8(r) of the Casden Disclosure
Letter sets forth a complete and accurate list of all of the employees of Casden
and the Casden Subsidiaries as of October 31, 2001, other than the Proposed
Transferred Employees (as defined in Section 4.8(s) below), including each such
individual's name, rate of compensation and whether such individual is a
full-time or part-time employee or is on leave.
(s) PROPOSED TRANSFERRED EMPLOYEES. Section 4.8(s) of the
Casden Disclosure Letter sets forth (i) a preliminary list of the proposed
employees of Casden or any subsidiary of Casden that will be given offers of
employment by either CommercialCo or the Development LLC (the "Proposed
Transferred Employees") immediately following the Effective Time and (ii) the
entity that will offer such employment.
Section 4.9 ENVIRONMENTAL PROTECTION. Except as set forth in Section
4.9 of the Casden Disclosure Letter:
(a) COMPLIANCE. Casden and each of the Casden Subsidiaries is
in compliance with all applicable Environmental Laws, except as in the aggregate
would not result in a Casden Material Adverse Effect. Neither Casden nor any of
the Casden Subsidiaries has received any written communication from any
Governmental Authority that alleges that Casden or any of the Casden
Subsidiaries is not in compliance with applicable Environmental Laws, except as
in the aggregate would not result in a Casden Material Adverse Effect.
Compliance with all applicable Environmental Laws will not require Casden or any
Casden Subsidiary to incur costs that would be reasonably likely to result in a
Casden Material Adverse Effect.
34
(b) ENVIRONMENTAL PERMITS. Casden and each of the Casden
Subsidiaries has obtained or has applied for all environmental, health and
safety permits and governmental authorizations (collectively, the "Environmental
Permits") necessary for the construction of their facilities or the conduct of
their operations, and all such Environmental Permits are in good standing or,
where applicable, a renewal application has been timely filed and is pending
agency approval, and Casden and the Casden Subsidiaries are in compliance with
all terms and conditions of the Environmental Permits, except for Environmental
Permits which in the aggregate would not result in a Casden Material Adverse
Effect.
(c) ENVIRONMENTAL CLAIMS. There is no Environmental Claim
pending or, to the knowledge of Casden, threatened in writing (i) against Casden
or any of the Casden Subsidiaries, (ii) against any Person whose liability for
any Environmental Claim Casden or any of the Casden Subsidiaries has or may have
retained or assumed either contractually or by operation of law, or (iii)
against any real or personal property or operations which Casden or any of the
Casden Subsidiaries owns, leases or manages, in whole or in part, except, in
each case, for Environmental Claims which in the aggregate would not result in a
Casden Material Adverse Effect. To the knowledge of Casden, no circumstances,
events or conditions exist that would reasonably be expected to form the basis
of any Environmental Claim against Casden or the Casden Subsidiaries, except as
in the aggregate would not result in a Casden Material Adverse Effect.
(d) HAZARDOUS MATERIALS. To the knowledge of Casden, no
Hazardous Materials are located on any Casden Property, except in compliance
with all Environmental Laws or except as in the aggregate would not reasonably
be expected to result in a Casden Material Adverse Effect.
(e) USTs. To the knowledge of Casden, no underground storage
tank is located on any Casden Property, except in compliance with all
Environmental Laws or except as in the aggregate would not reasonably be
expected to result in a Casden Material Adverse Effect.
(f) PREDECESSORS. To the knowledge of Casden, there is no
pending or threatened Environmental Claim with respect to any predecessor of
Casden or any of the Casden Subsidiaries which would have a Casden Material
Adverse Effect, or any Environmental Release of Hazardous Materials that would
be reasonably likely to form the basis of any Environmental Claim, except for
Environmental Claims which in the aggregate would not result in a Casden
Material Adverse Effect.
(g) REPORTS. Casden has delivered to AIMCO copies of all
environmental assessments, audits and reports in its possession relating to the
Casden Properties.
(h) GOVERNMENTAL APPROVAL. The Transactions do not require
governmental approval under Environmental Laws.
(i) MOLD. To the knowledge of Casden, no colonies or growths
of toxin-producing molds or fungi are located in any habitable structures on any
Casden Property, except as in the aggregate would not result in a Casden
Material Adverse Effect. There are no claims pending or, to the knowledge of
Casden, threatened, against Casden or any of the Casden
35
Subsidiaries or with respect to any real or personal property or operations
which Casden or any of the Casden Subsidiaries owns, leases or manages, in whole
or in part, alleging the presence of any such molds or fungi, except as in the
aggregate would not result in a Casden Material Adverse Effect.
Section 4.10 VOTE REQUIRED. The affirmative vote of (a) the holders of
at least a majority of the shares of Casden Common Stock outstanding on the
record date for the Casden Meeting (as defined in Section 7.5(a)) voting as a
class, and (b) the holders of at least 55% of the shares of Casden Class A
Preferred Stock outstanding as of the date hereof, voting as a class
(collectively, the "Casden Stockholders' Approval"), are the only votes of the
holders of any class or series of the shares of Casden or any of the Casden
Subsidiaries that is required to approve the Merger and this Agreement. The
affirmative vote of (i) the holders of at least 2/3 of the shares of Casden
Common Stock and (ii) the holders of at least 90% of the shares of CPLB common
stock subject to the CPLB Reverse Stock Split outstanding on the record date for
determining the holders entitled to vote thereon are the only votes of the
holders of any class or series of Casden Capital Stock that are required to
approve (a) the Casden Reverse Stock Split and the amendment to the Casden
Charter contemplated by Section 7.34 and (b) the CPLB Reverse Stock Split,
respectively. The shares subject to the Voting Agreement will represent at least
a majority of the shares of Casden Common Stock outstanding on the record date
for the Casden Meeting and at least 55% of the shares of Casden Class A
Preferred Stock as of the date hereof. The Stockholders of Casden set forth on
Section 4.10 of the Casden Disclosure Letter, each of which is a party to the
Voting Agreement are, in the aggregate, the record and beneficial owners of a
sufficient number of shares of Casden Common Stock, Casden Junior Preferred
Stock and Casden Class A Preferred Stock sufficient to constitute the Casden
Stockholder Approval. The Stockholders of PLB that are parties to the Voting
Agreement are, in the aggregate, the record and beneficial owners of a number of
shares of PLB Common Stock sufficient to constitute 90% of the voting power of
PLB Common Stock.
Section 4.11 HUD. Other than as set forth on Section 4.11 of the Casden
Disclosure Letter and except where the failure to obtain, or the presence of
which, would not reasonably be expected to result in a Casden Material Adverse
Effect, each of Casden and the Casden Subsidiaries as of the date hereof: (a)
has all necessary consents and approvals of HUD to act as a general partner of
and/or management agent for, as the case may be, each partnership which is an
owner of a HUD-insured or HUD-assisted property for which Casden or any Casden
Subsidiary acts as a general partner and/or management agent; (b) with respect
to each HUD-insured or HUD-assisted property for which Casden or any Casden
Subsidiary acts as a general partner and/or management agent, has not received
any current physical inspection reviews with a REAC score of less than 60 for
which an MIO plan which is satisfactory to HUD has not been developed (or
disclosing any exigent health and safety matters which have not been resolved)
or any management agent's performance reviews that are graded as less than
"Satisfactory" or, as to state housing agencies, any physical inspection or
management agent reviews with an equivalent or otherwise substandard rating; (c)
has no "flags" or limited denials of participation, suspensions or debarments
currently in effect under the HUD 2530 Previous Participation Clearance
Procedures or any other applicable HUD regulations; (d) has not been notified by
HUD of any matters currently pending before the HUD Departmental Enforcement
Center; (e) has not received any notice from HUD with respect to any audited
financial statement for any year prior to 2000 that remains unresolved to HUD's
satisfaction; and (f) has filed all
36
annual audited financial statements in the timeframe required by HUD for the
calendar year 2000.
Section 4.12 ABSENCE OF INDUCEMENT. In entering into the Transaction
Documents, Casden has not been induced by, or relied upon, any representations,
warranties or statements by AIMCO not set forth or referred to in the
Transaction Documents, the Schedules thereto or the other documents required to
be delivered thereby, whether or not such representations, warranties or
statements have actually been made, and Casden acknowledges that, in entering
into the Transaction Documents, AIMCO has been induced by and relied upon the
representations and warranties of Casden herein set forth, the information set
forth in the Casden Financial Statements and the representations and warranties
of the parties to the Transaction Documents, the Schedules thereto and the other
documents required to be delivered thereby. Casden has made its own
investigation of AIMCO prior to the execution of this Agreement and has not been
induced by or relied upon any representations, warranties, statements or
documents as to the advisability of entering into this Agreement other than as
described above in the first sentence of this Section 4.12.
Section 4.13 REAL PROPERTIES.
(a) OWNERSHIP. Section 4.13(a) of the Casden Disclosure Letter
sets forth a list of each of the following properties (collectively, but
excluding the NAPICO Syndicated Properties (as defined in Section 7.32 below),
the "Casden Properties"), together with the approximate number of apartment
units located on each such property and the location of each such property:
(i) each real property owned in whole or in part by
Casden or a Casden Subsidiary other than the NAPICO Properties
(collectively, the "Owned Properties"), together with the name
of the entity or entities which own each such Owned Property
(the "Owned Property Owners") and the percentage interests and
organizational structure pursuant to which each such Owned
Property is owned;
(ii) each real property leased in whole or in part by
Casden or a Casden Subsidiary as a tenant (collectively, the
"Leased Properties"), together with the name of the entity or
entities which lease each such Leased Property (the "Leased
Property Lessees") and the percentage interests and
organizational structure pursuant to which each such Leased
Property is leased; and
(iii) each real property owned by a NAPICO Entity as
of November 1, 2001 (collectively, the "NAPICO Properties"),
together with the name of the entity or entities which own
each such NAPICO Property (the "NAPICO Property Owners"), the
name of the NAPICO Entity that controls such owner and the
percentage interest and organizational structure pursuant to
which such NAPICO Entity controls such owner.
Each Owned Property Owner holds good, valid, marketable and indefeasible fee
simple title to the Owned Property, or the applicable portion thereof, that
Section 4.13(a) of the Casden Disclosure Letter indicates as being owned by such
Owned Property Owner, free and clear of all Liens, rights of way, easements and
any other matters affecting title, other than encumbrances
37
which do not materially adversely affect the value of such property or the use
thereof, which are described in Section 4.13(a) of the Casden Disclosure Letter
or which are shown on the title insurance policy or title report with respect
thereto ("Permitted Encumbrances"), with full right to convey the same. To
Casden's knowledge, each Leased Property Lessee holds a good, valid, marketable
and indefeasible leasehold interest in and to the Leased Property that Section
4.13(a) of the Casden Disclosure Letter indicates as being leased by such Leased
Property Lessee, free and clear of all Liens, rights of way, easements and any
other matters affecting title, other than Permitted Encumbrances, with full
right to convey the same, subject to obtaining the consents specified on Section
4.13(a) of the Casden Disclosure Letter. Each NAPICO Property Owner holds good,
valid, marketable and indefeasible fee simple title to the NAPICO Property, or
the applicable portion thereof, that Section 4.13(a) of the Casden Disclosure
Letter indicates as being owned by such NAPICO Property Owner, free and clear of
all Liens, rights of way, easements and any other matters affecting title, other
than Permitted Encumbrances, with full right to convey the same. Except as may
be set forth in Section 4.13(a) of the Casden Disclosure Letter, neither Casden
nor any Casden Subsidiary nor, to Casden's knowledge, any owner or lessee of any
Casden Property has granted any option, right of first refusal, rights of first
offer or comparable right to any third party to purchase or otherwise acquire a
direct or indirect interest in any of the Casden Properties; provided, however,
that in certain jurisdictions, tenants may have rights of first refusal or
rights of first offer pursuant to applicable laws, ordinances, statutes, rules
and regulations governing the transfer, ownership, use, operation, management
and occupation of residential real estate and rental properties (collectively,
"Laws"). The Casden Properties include all real properties used by Casden and
the Casden Subsidiaries in the conduct of their respective businesses. The
NAPICO Properties include all real properties used by the NAPICO Entities in the
conduct of their respective businesses.
(b) GROUND LEASES. A true, accurate and complete copy of each
lease pursuant to which each Leased Property Lessee leases a Leased Property
(each, a "Ground Lease") has heretofore been delivered to AIMCO. To Casden's
knowledge, each Ground Lease is valid, binding and enforceable in accordance
with its terms and is in full force and effect. There are no existing material
defaults by any Leased Property Lessee under any of the Ground Leases.
(c) NOTICES TO REPAIR. Except as set forth in Section 4.13(c)
of the Casden Disclosure Letter, neither Casden nor any owner or lessee of any
of the Casden Properties has received any written notice of any requirements by
any insurance company that has issued a policy covering any Casden Property or
by any board of fire underwriters or other body of competent jurisdiction of any
repairs or work to be done on any part of any Casden Property, which repair or
work has not been completed.
(d) APPROVALS. Except as set forth in Section 4.13(d) of the
Casden Disclosure Letter, to Casden's knowledge, Casden (or the applicable owner
or lessee of the Casden Properties) has obtained all appropriate material
certificates of occupancy, licenses, easements and rights of way, including
proofs of dedication, required to use and operate the Casden Properties in the
manner in which the Casden Properties are currently being used and operated.
True, accurate and complete copies of all such certificates, permits and
licenses have heretofore been furnished to AIMCO. Except as set forth in Section
4.13(d) of the Casden Disclosure Letter, to Casden's knowledge, Casden and each
owner (or lessee in the case of
38
Leased Properties) of each Casden Property has all material approvals, permits
and licenses necessary to own or operate the Casden Properties as currently
owned and operated, and no such material approvals, permits or licenses will be
required to be issued after the date hereof as a result of the Transactions in
order to permit AIMCO and its Subsidiaries to continue to own or operate the
Casden Properties following the Closing in the same manner as heretofore owned
or operated, other than any such approvals, permits and licenses that are
ministerial in nature and are normally issued in due course upon application
therefor without further action by the applicant or the failure of which to
obtain would not, in the aggregate, result in a Casden Material Adverse Effect.
(e) COMPLIANCE WITH LAWS. Except as set forth in Section
4.13(e) of the Casden Disclosure Letter, to Casden's knowledge, each Casden
Property is in material compliance with all material Laws, including, all
material Laws with respect to zoning, building, fire and health codes, and
sanitation and pollution control.
(f) CONDEMNATION; SPECIAL ASSESSMENTS. Except as set forth in
Section 4.13(f) of the Casden Disclosure Letter, Casden has no knowledge of any
pending or threatened condemnation, eminent domain or similar proceeding or
special assessment which would materially and adversely affect any of the Casden
Properties.
(g) PERSONAL PROPERTY. Except as set forth in Section 4.13(g)
of the Casden Disclosure Letter and except for personal property of which any
owner or lessee of any Casden Property is a lessee, all of the personal property
owned by Casden and the Casden Subsidiaries is owned by each such entity free
and clear of all Liens, other than Permitted Encumbrances and, in the case of
personal property located on a Leased Property, other than any applicable
landlord's Lien, and each such entity has good and marketable title to its
respective personal property.
(h) MORTGAGES; ENCUMBRANCES. Section 4.13(h) of the Casden
Disclosure Letter sets forth a list of each and every outstanding mortgage or
deed of trust encumbering any Owned Property or interest in Casden Property, or
Casden's interest in any other Casden Property (together with the name of the
Owned Property encumbered thereby), and there are no other mortgages or deeds of
trust (other than Permitted Encumbrances) encumbering the Owned Properties, or
Casden's interest in any other Casden Property. Except as set forth in Section
4.13(h) of the Casden Disclosure Letter, Casden has not received any written
notice of any proceedings, claims, disputes or conditions affecting any Casden
Property that might materially curtail or interfere with the use of the Casden
Properties. Except as set forth in Section 4.13(h) of the Casden Disclosure
Letter, neither Casden nor any owner (or lessee in the case of Leased Property)
of any of the Casden Properties is a party to any commercial lease or similar
arrangement under which Casden or such owner (or lessee in the case of Leased
Property) is a lessor or otherwise makes available for use by any third party
for any commercial purpose any portion of any Casden Property, in each case
where such commercial lease or similar arrangement or permitted use is material
to the income derived from, or the value of, such Casden Property.
(i) PROPERTY LEVEL RESERVES. Except as set forth in Section
4.13(i) of the Casden Disclosure Letter, to the knowledge of Casden, all Owned
Properties (other than
39
the "conventional" and the "80-20" properties) have property level reserves, and
such property level reserves are sufficient for the reasonably anticipated
immediate capital requirements of the respective Owned Properties for the
12-month period following the Effective Time, provided, however, that no
representation or warranty is herein made as to (i) the needs or available funds
related to such conventional and 80-20 properties or (ii) any future exercise by
HUD or any state affordable housing agency of its discretion to (A) allow or
disallow use of such reserves or (B) require additional reserves or additional
repairs or capital improvements.
Section 4.14 BOOKS AND RECORDS. The books of account, minute books,
stock record books and other records of Casden and the Casden Subsidiaries, all
of which have been made available to AIMCO, are complete and correct in all
material respects and have been maintained in accordance with sound business
practices, including an adequate system of internal controls. The minute books
of Casden contain accurate and complete records of all meetings held of, and
corporate action taken by, the Casden stockholders, the Casden Board of
Directors and committees of the Casden Board of Directors, and no meeting of any
of such Casden stockholders, the Casden Board of Directors or such committees
has been held for which minutes have not been prepared and are not contained in
such minute books. All of such books and records are in the possession of Casden
or the Casden Subsidiary to which they relate.
Section 4.15 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in the
Casden Financial Statements, (b) pursuant to the terms and conditions of any
Contracts listed in Section 4.17 of the Casden Disclosure Letter and (c) for
liabilities and obligations incurred in the ordinary course of business and
consistent with past practice since December 31, 2000, neither Casden nor any
Casden Subsidiary has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, material to Casden and the Casden
Subsidiaries, taken as a whole. The reserves reflected in the Casden Financial
Statements are adequate, appropriate and reasonable and have been calculated in
a consistent manner.
Section 4.16 INSURANCE. Section 4.16 of the Casden Disclosure Letter
contains a complete and accurate description of all fire, liability, workmen's
compensation and other insurance policies owned or held by Casden and each
Casden Subsidiary, including insurance policies covering material litigation
against Casden or any Casden Subsidiary. Copies of all such insurance policies
have been made available to AIMCO. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the Closing Date have been, or will be, paid within the time specified
in such policies, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and all Contracts to which Casden or any Casden
Subsidiary is a party; are valid, outstanding and enforceable policies; provide
adequate insurance coverage for the assets and operations of Casden and each
Casden Subsidiary; will remain in full force and effect through the respective
dates set forth in the Casden Disclosure Letter without the payment of
additional premiums; and will not in any way be affected by, or terminate or
lapse by reason of, the Transactions. The Casden Disclosure Letter identifies
all risks which Casden, its Board of Directors or officers have designated as
being self insured. Neither Casden nor any Casden Subsidiary has been refused
any insurance with respect to its assets or operations, nor has its coverage
been limited, by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance since December 31, 1998.
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Section 4.17 CONTRACTS. Section 4.17 of the Casden Disclosure Letter
contains a complete and accurate list, and each of Casden and the Casden
Subsidiaries has delivered to AIMCO, true and complete copies, including any
amendments, supplements and modifications thereto, of:
(a) each Contract (other than Contracts between Casden or any
of its wholly owned Subsidiaries, on the one hand, and Casden or any of its
wholly owned Subsidiaries, on the other hand) that involves performance of
services or delivery of goods or materials by or to Casden or any of the Casden
Subsidiaries of an amount or value in excess of $100,000 per year;
(b) each collective bargaining agreement and other Contract to
or with any labor union or other employee representative of a group of employees
that is binding on Casden or any Casden Subsidiary;
(c) each Contract (other than employment contracts) with any
officer, director, employee or Affiliate of Casden or any of the Casden
Subsidiaries, or any of such Person's family members or Affiliates calling for
payments in excess of $100,000 per year;
(d) each written warranty, guaranty, or other similar
undertaking with respect to contractual performance extended by Casden or any of
the Casden Subsidiaries, other than in the ordinary course of business; and
(e) each other Contract that is material to Casden and the
Casden Subsidiaries, taken as a whole.
Section 4.18 PROPRIETY OF PAST PAYMENTS. To Casden's knowledge, (a) no
unrecorded fund or asset of Casden or any Casden Subsidiary has been established
for any purpose, (b) no accumulation or use of corporate funds of Casden or any
Casden Subsidiary has been made without being properly accounted for in the
books and records of Casden or such Casden Subsidiary and (c) none of Casden,
any Casden Subsidiary, or any director, officer, employee or agent of Casden or
any Casden Subsidiary has, directly or indirectly, made any illegal
contribution, gift, bribe, rebate, payoff, influence payment, kickback or other
illegal payment to any Person, private or public, regardless of form, whether in
money, property or services, (i) to obtain favorable treatment for any Casden
stockholder, Casden, any Casden Subsidiary or any Affiliate of Casden in
securing business, (ii) to pay for favorable treatment for business secured for
any Casden stockholder, Casden, any Casden Subsidiary or any Affiliate of
Casden, (iii) to obtain special concessions, or for special concessions already
obtained, for or in respect of any Casden stockholder, Casden, any Casden
Subsidiary or any Affiliate of Casden or (iv) otherwise for the benefit of any
Holder, Casden, any Casden Subsidiary or any Affiliate of Casden in violation of
any federal, state, local, municipal, foreign, international, multinational or
other administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty (including existing site plan approvals,
zoning or subdivision regulations or urban redevelopment plans relating to real
property) known to Casden. Neither Casden nor any Casden Subsidiary, nor, to
Casden's knowledge, any current director, officer, agent, employee or other
authorized Person acting on behalf of Casden or any Casden Subsidiary, has
accepted or received any unlawful contribution, payment, gift, kickback,
expenditure or other item of value.
41
Section 4.19 BANK ACCOUNTS. Section 4.19 of the Casden Disclosure
Letter sets forth the names of all banks, trust companies, savings and loan
associations and other financial institutions at which Casden or any Casden
Subsidiary maintains safe deposit boxes, checking accounts or other accounts of
any nature, as well as the account numbers or other identifying information
regarding each such safe deposit box or account.
Section 4.20 DEFICIT RESTORATION OBLIGATIONS, ADJUSTED CAPITAL ACCOUNT
DEFICITS AND CAPITAL CONTRIBUTION OBLIGATIONS. Section 4.20 of the Casden
Disclosure Letter sets forth (i) the amount of each obligation to restore a
deficit balance in an adjusted capital account of Casden or any Casden
Subsidiary that owns an equity interest in any non-corporate entity (including a
partnership, limited partnership, limited liability company or joint venture),
calculated through December 31, 2000, (ii) the amount of each deficit balance in
any capital account of Casden or any Casden Subsidiary that owns an equity
interest in any non-corporate entity (including a partnership, limited
partnership, limited liability company or joint venture), calculated as of
December 31, 2000, and (iii) each capital contribution required to be made by
Casden or any Casden Subsidiary (other than to a Casden Subsidiary that is
wholly owned by Casden) that owns an equity interest in any non-corporate entity
(including a partnership, limited partnership, limited liability company or
joint venture).
Section 4.21 COMPLIANCE WITH LAWS. To Casden's knowledge, Casden and
each of the Casden Subsidiaries have complied in a timely manner and in all
respects with all laws, rules and regulations, ordinances, judgments, decrees,
orders, writs and injunctions of all United States federal, state, local,
foreign governments and agencies thereof that affect the business, properties or
assets of Casden or any Casden Subsidiary, except where the failure to comply
would not reasonably be expected to result in a Casden Material Adverse Effect,
and no written notice, claim or action has been received by Casden or any Casden
Subsidiary or has been filed, commenced or, to Casden's knowledge, threatened
against Casden or any Casden Subsidiary alleging any material violation of any
of the foregoing.
Section 4.22 RELATIONSHIPS WITH RELATED PERSONS. To Casden's knowledge,
since December 31, 1998, there have been no transactions, agreements,
arrangements or understandings between Casden or any of the Casden Subsidiaries,
on the one hand, and Casden's Affiliates (other than wholly-owned Subsidiaries
of Casden) or other Persons, on the other hand, pertaining to or affecting
Casden, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act if Casden were the registrant.
Section 4.23 MARYLAND TAKEOVER LAWS. The board of directors of Casden
has authorized and approved the Merger and this Agreement (prior to the
execution of this Agreement by Casden) in accordance with Section
3-603(c)(1)(ii) of the MGCL such that Section 3-602 shall not apply to this
Agreement or the transactions contemplated hereby (including the Casden Reverse
Stock Split). The board of directors of Casden has taken all such action
required to be taken by them to provide that this Agreement and the transactions
contemplated hereby, including without limitation, the direct or indirect
ownership of any Casden Common Stock by AIMCO, and the Casden Reverse Stock
Split shall be exempt from the requirements of any "moratorium," "control
share," "fair price" or other anti-takeover laws or
42
regulations of the State of Maryland, including without limitation Subtitle 7 of
the Title 3 of the MGCL.
Section 4.24 OFFICERS AND DIRECTORS. Section 4.24 of the Casden
Disclosure Letter sets forth a complete and accurate list of all officers and
directors of Casden.
Section 4.25 NO CASDEN MATERIAL MISSTATEMENTS. To Casden's knowledge,
no representation or warranty of Casden contained in the Transaction Documents
contains or will contain any untrue statement of material fact or omit to state
any material fact necessary, in light of the circumstances and taking into
account the express limitations set forth in each such representation and
warranty, in order to make the representations and warranties made by Casden
herein or therein not misleading.
Section 4.26 TAX QUESTIONNAIRES. Casden and the Casden Subsidiaries
(other than NAPICO and the NAPICO Entities) have sent to each manager and
assistant manager of the Owned Properties and the Leased Properties and each
regional supervisor employed by Casden and the Casden Subsidiaries (other than
the NAPICO Entities) prior to the date hereof.
Section 4.27 CLOSING PAYOFF AMOUNTS. After AIMCO pays the amounts set
forth in Schedule 2.1(a) at the Effective Time, the loans and other obligations
set forth on Schedule 7.36 shall be paid in full and there shall be no further
obligations thereunder.
Section 4.28 CASDEN BOARD OF DIRECTORS APPROVAL. The independent
directors of Casden and the Board of Directors of Casden have approved the
treatment of shares of Casden Capital Stock set forth in Article II and the
fairness of the allocation of consideration among the holders of Casden Capital
Stock set forth therein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO
AIMCO makes the following representations and warranties to Casden and
XYZ. Except as set forth in the AIMCO SEC Reports or the disclosure letter from
AIMCO to Casden dated the date hereof (the "AIMCO Disclosure Letter"):
Section 5.1 ORGANIZATION AND QUALIFICATION. AIMCO and each AIMCO
Subsidiary is a corporation or other entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority, and has been duly
authorized by all necessary approvals and orders to own, lease and operate its
assets and properties to the extent owned, leased and operated and to carry on
its business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its assets and properties makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify would not reasonably be expected to have an AIMCO Material Adverse
Effect.
Section 5.2 AIMCO SUBSIDIARIES. All of the issued and outstanding
shares of capital stock and all other equity interests owned in each AIMCO
Subsidiary are, in the case of capital stock, validly issued, fully paid,
non-assessable and free of preemptive rights, and, in the
43
case of capital stock and all other equity interests in any entity, are owned,
directly or indirectly, by AIMCO free and clear of any Liens and there are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or agreement, obligating by AIMCO or any AIMCO Subsidiary
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or other equity interests or obligating it to grant,
extend or enter into any such agreement or commitment.
Section 5.3 CAPITALIZATION. As of the date hereof, the authorized
capital stock of AIMCO consists of (i) 510,587,500 shares of capital stock, of
which 456,962,738 shares are classified as Class A Common Stock and the
remainder are classified as Preferred Stock and (ii) no Voting Debt was issued
or outstanding. All outstanding shares of AIMCO Common Stock and AIMCO Preferred
Stock have been validly issued free of preemptive rights, and are fully paid and
non-assessable. Upon consummation of the Merger and the concurrent automatic
conversion of the Casden Capital Stock into AIMCO Common Stock in accordance
with Section 2.2(a), all such shares will be validly issued, fully paid and
non-assessable and will not be subject to preemptive rights. As of the date
hereof, except as set forth in Section 5.3 of the AIMCO Disclosure Letter or
pursuant to this Agreement and the AIMCO Benefit Plans, there are no securities,
outstanding subscriptions, calls, options, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement to which AIMCO or any AIMCO Subsidiary
is a party or by which any of them are bound obligating AIMCO or any AIMCO
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or any Voting Debt of AIMCO or any AIMCO
Subsidiary or obligating AIMCO or any AIMCO Subsidiary to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement.
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. AIMCO has all requisite power and authority to
execute and deliver this Agreement and, subject to the receipt of the applicable
AIMCO Required Statutory Approvals (as defined in Section 5.4(c)), to consummate
the Transactions. The execution and delivery of this Agreement and the
consummation by AIMCO of the Transactions have been duly authorized by all
necessary corporate action on the part of AIMCO. This Agreement has been duly
and validly executed and delivered by AIMCO and, assuming the due authorization,
execution and delivery hereof by Casden, constitutes the valid and binding
obligation of AIMCO enforceable against AIMCO in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity. No approval of
AIMCO's stockholders is required to execute and deliver this Agreement or to
consummate the Transactions, including the issuance and listing on the NYSE of
the AIMCO Common Stock to be issued in the Merger and the assumption of all
obligations of Casden and the performance of all actions required by the
documents governing such obligations.
44
(b) NON-CONTRAVENTION. Except as set forth in Section 5.4(b)
of the AIMCO Disclosure Letter, the execution and delivery of this Agreement by
AIMCO does not, and the consummation of the Transactions will not, result in a
Violation with respect to AIMCO or any of the AIMCO Subsidiaries pursuant to any
provisions of (i) the AIMCO Charter, bylaws or similar organizational or
governing documents of AIMCO or any of the AIMCO Subsidiaries, (ii) subject to
obtaining the AIMCO Required Statutory Approvals, any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit or license
of any Governmental Authority applicable to AIMCO or any of the AIMCO
Subsidiaries or any of their respective properties or assets or (iii) subject to
obtaining the third-party consents set forth in Section 5.4(b) of the AIMCO
Disclosure Letter, any Contract to which AIMCO or any of the AIMCO Subsidiaries
is a party or to which such Persons or any of their respective properties or
assets are subject, except in the case of the foregoing clause (ii) or (iii) for
any such Violation which would not reasonably be expected to have an AIMCO
Material Adverse Effect.
(c) STATUTORY APPROVALS. No declaration, filing or
registration with, or notice to or authorization, consent or approval of, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by AIMCO or the consummation by AIMCO of the Transactions, except (i)
acceptance of the Articles of Merger by the MSDAT, (ii) as described in Section
5.4(c) of the AIMCO Disclosure Letter or (iii) declarations, filings,
registrations, notices, authorizations, consents or approvals, the failure of
which to make, give or obtain would not result in an AIMCO Material Adverse
Effect (the "AIMCO Required Statutory Approvals," it being understood that
references in this Agreement to "obtaining" such AIMCO Required Statutory
Approvals shall mean making such declarations, filings or registrations; giving
such notices; obtaining such authorizations, consents or approvals; and
observing such waiting periods as are necessary to avoid a violation of law).
For purposes of determining compliance with the HSR Act, AIMCO confirms that the
conduct of its business consists primarily of investing in, owning, developing
and operating real estate for the benefit of its stockholders.
(d) COMPLIANCE. Except as set forth in Section 5.4(d) of the
AIMCO Disclosure Letter, neither AIMCO nor any of the AIMCO Subsidiaries (i) is
in violation of or has been given notice or been charged with any violation of
or (ii) to the knowledge of AIMCO, is under investigation with respect to any
violation of, any law, statute, order, rule, regulation, ordinance or judgment
(including any applicable Environmental Laws) of any Governmental Authority.
AIMCO and the AIMCO Subsidiaries have all permits, licenses (including licenses
to operate as a property manager), franchises and other governmental
authorizations, consents and approvals necessary to conduct their businesses as
presently conducted, except where the failure to obtain such permits, licenses
(including licenses required as a property manager), franchises and other
authorizations, consents and approvals would not reasonably be expected to have
an AIMCO Material Adverse Effect. Neither AIMCO nor any AIMCO Subsidiary is in
breach or violation of, or in default in the performance or observance of, any
term or provision of, and no event has occurred which, with lapse of time or
action by a third party, could result in a default by AIMCO or any AIMCO
Subsidiary under (i) AIMCO's or AIMCO OP's organizational or governing documents
or (ii) any Contract to which AIMCO or any AIMCO Subsidiary is a party or by
which it is bound or to which its property is subject, except for possible
Violations which individually or in the aggregate would not reasonably be
expected to have an AIMCO Material Adverse Effect.
45
Section 5.5 REPORTS AND FINANCIAL STATEMENTS. The AIMCO SEC Reports
have been filed with the SEC, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, and such items complied, as of their
respective dates, in all material respects with all applicable requirements of
the appropriate statutes and the rules and regulations thereunder, except for
such filings the failure of which to have been made or to so comply would not
result in an AIMCO Material Adverse Effect. As of their respective dates, the
AIMCO SEC Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of AIMCO included in the AIMCO SEC
Reports (collectively, the "AIMCO Financial Statements") have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present in all material
respects the financial position of AIMCO as of the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of
the unaudited interim financial statements, to normal, recurring and year-end
audit adjustments. True, accurate and complete copies of the AIMCO Charter and
the AIMCO bylaws, each as amended to date and in effect on the date hereof, have
been provided to Casden.
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise
expressly permitted in Section 6.2 of this Agreement or required by Article VII
of this Agreement, since December 31, 2000, AIMCO and each of the AIMCO
Subsidiaries have conducted their business only in the ordinary course of
business (except for acquisitions and dispositions) consistent with past
practice and there has not been any event or condition which would reasonably be
expected to result in an AIMCO Material Adverse Effect.
Section 5.7 LITIGATION. Except as disclosed in Section 5.7 of the AIMCO
Disclosure Letter, (a) there are no claims, suits, actions or proceedings
against AIMCO or any AIMCO Subsidiary or any of their respective properties
which would reasonably be expected to have an AIMCO Material Adverse Effect, (b)
there are no claims, suits, actions or proceedings by any Governmental Authority
or third party, pending or, to the knowledge of AIMCO, threatened, nor are
there, any investigations or reviews by any Governmental Authority pending or
threatened against, relating to or affecting AIMCO or any of the AIMCO
Subsidiaries which would reasonably be expected to have an AIMCO Material
Adverse Effect, (c) there have not been any significant adverse developments
since December 31, 2000 with respect to such disclosed claims, suits, actions,
proceedings, investigations or reviews and (d) there are no judgments, decrees,
injunctions or orders of any Governmental Authority specifically applicable to
AIMCO or any AIMCO Subsidiary which would reasonably be expected to have an
AIMCO Material Adverse Effect.
Section 5.8 REGISTRATION STATEMENT. None of the information supplied or
to be supplied by or on behalf of AIMCO for inclusion or incorporation by
reference in any Registration Statement will, at the time such Registration
Statement is filed by AIMCO with the SEC and at the time it becomes effective
under the Securities Act or the Exchange Act, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
Each
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Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act or the Exchange Act, as applicable.
Section 5.9 TAX MATTERS. Except as set forth in Section 5.9 of the
AIMCO Disclosure Letter:
(a) FILING OF TIMELY TAX RETURNS. AIMCO and each of the AIMCO
Subsidiaries have filed (or there have been filed on such Persons' behalf) all
Tax Returns required to be filed by each of them under applicable law. All such
Tax Returns were and are in all material respects true, complete and correct and
filed on a timely basis.
(b) PAYMENT OF TAXES. AIMCO and each of the AIMCO Subsidiaries
have paid all Taxes that are currently due and payable for all periods through
and including the Closing Date within the time and in the manner prescribed by
law, except for those Taxes contested in good faith and for which adequate
reserves have been provided on their books and records.
(c) TAX RESERVES. AIMCO and each of the AIMCO Subsidiaries
have established on their books and records reserves adequate to pay all
material Taxes and reserves for deferred income Taxes in accordance with GAAP.
(d) TAX LIENS. There are no Tax liens upon the material assets
of AIMCO or any of the AIMCO Subsidiaries except liens for Taxes not yet
delinquent.
(e) WITHHOLDING TAXES. AIMCO and each of the AIMCO
Subsidiaries have complied in all material respects with the provisions of the
Code relating to the withholding of Taxes, as well as similar provisions under
any other laws, and have, within the time and in the manner prescribed by law,
withheld and paid over to the proper governmental authorities all amounts
required.
(f) REIT CLASSIFICATION. At all times since the initial public
offering of AIMCO, AIMCO has been organized and operated in conformity with the
Status Requirements, and its proposed method of operation after the Merger will
enable it to continue to meet the Status Requirements and otherwise qualify as a
REIT.
(g) CONTINUATION AS REIT. The execution or delivery by AIMCO
of this Agreement and the consummation by AIMCO of the Transactions or
compliance with or fulfillment of the terms and provisions hereof by AIMCO, will
not adversely affect the qualification of AIMCO as a REIT for each taxable year
ending on or after the Closing Date.
(h) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No audits or
other administrative proceedings or court proceedings are presently pending with
regard to any material Taxes or Tax Returns of AIMCO or any of the AIMCO
Subsidiaries.
(i) TAX RULINGS. Neither AIMCO nor any of the AIMCO
Subsidiaries has received or has pending a Tax Ruling or entered into a Closing
Agreement with any taxing authority.
47
(j) TAX SHARING AGREEMENTS. Except as between affiliates of
AIMCO as set forth in Section 5.9 of the AIMCO Disclosure Letter, neither AIMCO
nor any AIMCO Subsidiary is a party to any agreement relating to allocating or
sharing Taxes.
(k) LIABILITY FOR OTHERS. Neither AIMCO nor any of the
Subsidiaries of AIMCO has any liability for material Taxes of any person other
than AIMCO and the AIMCO Subsidiaries (i) under Treasury Reg. Section 1.1502-6
(or any similar provision of state, local or foreign law), (ii) by Contract, or
(iii) otherwise.
(l) SECTION 341(f). Neither AIMCO nor any of the AIMCO
Subsidiaries has, with regard to any assets or property held or acquired by any
of them, filed a consent to the application of Section 341(f)(2) of the Code, or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by AIMCO or any of the AIMCO Subsidiaries.
(m) DEFICIENCIES. No deficiencies for any Taxes have been
proposed, asserted or assessed against AIMCO and there is no outstanding waiver
of the statute of limitations with respect to any Taxes or Tax Returns of AIMCO.
(n) DOMESTIC CONTROL. AIMCO believes that it is a
"domestically controlled" REIT within the meaning of Section 897(h)(4)(B) of the
Code.
Section 5.10 EMPLOYEE MATTERS; ERISA. Except as set forth in Section
5.10 of the AIMCO Disclosure Letter:
(a) BENEFIT PLANS. As of the date hereof, AIMCO has made
available to Casden a copy of each written or oral material employment
agreement, arrangement, commitment, severance or retention agreement or policy,
employee benefit plan, policy or agreement covering employees, former employees
or directors of AIMCO and each of the AIMCO Subsidiaries or their beneficiaries,
or providing benefits to such Persons in respect of services provided to any
such entity, including any material employee benefit plans within the meaning of
Section 3(3) of ERISA and any material severance or change in control agreement
(collectively, the "AIMCO Benefit Plans"). Since December 31, 1996, there have
been no new plans adopted nor changes, additions or modification to any existing
AIMCO Benefit Plans that could reasonably be expected to materially increase the
cost of such AIMCO Benefit Plan.
(b) CONTRIBUTIONS. All material contributions and other
material payments required to be made by AIMCO or any of the AIMCO Subsidiaries
to any AIMCO Benefit Plan (or to any Person pursuant to the terms thereof) have
been made or the amount of such payment or contribution obligations has been
reflected in the AIMCO Financial Statements to the extent required by GAAP.
(c) QUALIFICATION; COMPLIANCE. Except where the failure to so
comply with each of the following representations would not individually or in
the aggregate be expected to result in an AIMCO Material Adverse Effect: (i)
each of the AIMCO Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to be so qualified,
and, to the knowledge of AIMCO, no circumstances exist that are reasonably
expected by AIMCO to result in the revocation of any such determination;
48
(ii) AIMCO is in compliance with, and each of the AIMCO Benefit Plans is and has
been operated in compliance with, all applicable laws, rules and regulations
governing such plan, including, without limitation, ERISA and the Code; (iii)
each AIMCO Benefit Plan intended to provide for the deferral of income, the
reduction of salary or other compensation, or to afford other income tax
benefits, complies with the requirements of the applicable provisions of the
Code or other laws, rules and regulations required to provide such income tax
benefits; and (iv) no "prohibited transactions" (as defined in Section 406 or
407 of ERISA or Section 4975 of the Code) have occurred for which a statutory or
administrative exemption is not available with respect to any AIMCO Benefit
Plan, and which could give rise to liability on the part of AIMCO, any AIMCO
Benefit Plan, or any fiduciary, party in interest or disqualified Person.
(d) LIABILITIES. With respect to the AIMCO Benefit Plans and
except for liabilities that individually or in the aggregate would not
reasonably be expected to result in an AIMCO Material Adverse Effect, no event
has occurred, and, to the knowledge of AIMCO, there does not now exist any
condition or set of circumstances that could reasonably be expected to subject
AIMCO or any of the AIMCO Subsidiaries to any material liability arising under
the Code, ERISA or any other applicable law (including any liability to any such
plan or the PBGC), excluding liabilities for benefit claims and funding
obligations payable in the ordinary course.
(e) WELFARE PLANS. None of the AIMCO Benefit Plans that are
"welfare plans," within the meaning of Section 3(1) of ERISA, provide for any
material benefits with respect to current or former employees for periods
extending beyond their retirement or other termination of service, other than
continuation coverage required to be provided under Section 4980B of the Code or
Part 6 of Title I of ERISA.
(f) PAYMENTS RESULTING FROM THE MERGER. The consummation or
announcement of any of the Transactions will not (either alone or upon the
occurrence of any additional or further acts or events relating solely to the
Transactions, including the termination of employment of any officers,
directors, employees or agents of AIMCO or any of the AIMCO Subsidiaries) result
in any (i) payment (whether of severance pay or otherwise) becoming due from
AIMCO or any of the AIMCO Subsidiaries to any officer, employee, former employee
or director thereof or to the trustee under any "rabbi trust" or similar
arrangement, or (ii) benefit under any AIMCO Benefit Plan becoming accelerated,
vested or payable.
Section 5.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 5.11 of the AIMCO
Disclosure Letter, to the knowledge of AIMCO:
(i) COMPLIANCE. AIMCO and each of the AIMCO Subsidiaries
is in compliance with all applicable Environmental Laws except, in either case,
in the aggregate would not reasonably be expected to result in an AIMCO Material
Adverse Effect and neither AIMCO nor any of the AIMCO Subsidiaries has received
any written communication from any Governmental Authority that alleges that
AIMCO or any of the AIMCO Subsidiaries is not in compliance with applicable
Environmental Laws, except, in either case, in the aggregate would not
reasonably be expected to result in an AIMCO Material Adverse Effect. Compliance
with all
49
applicable Environmental Laws will not require AIMCO or any AIMCO Subsidiary to
incur costs that would be reasonably likely to result in an AIMCO Material
Adverse Effect.
(ii) ENVIRONMENTAL PERMITS. AIMCO and each of the
AIMCO Subsidiaries have obtained or have applied for all Environmental Permits
necessary for the construction of their facilities or the conduct of their
operations, and all such Environmental Permits are in good standing or, where
applicable, a renewal application has been timely filed and is pending agency
approval, and AIMCO and the AIMCO Subsidiaries are in compliance with all terms
and conditions of the Environmental Permits, except for Environmental Permits
which in the aggregate would not reasonably be expected to result in an AIMCO
Material Adverse Effect.
(iii) ENVIRONMENTAL CLAIMS. There is no Environmental
Claim pending (A) against AIMCO or any of the AIMCO Subsidiaries, (B) against
any Person whose liability for any Environmental Claim AIMCO or any of the AIMCO
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, or (C) against any real or personal property or operations
which AIMCO or any of the AIMCO Subsidiaries owns, leases or manages, in whole
or in part, except, in each case, for Environmental Claims which in the
aggregate would not reasonably be expected to result in an AIMCO Material
Adverse Effect.
(iv) ENVIRONMENTAL RELEASES. There has been no
Environmental Release of any Hazardous Material that would be reasonably likely
to form the basis of any Environmental Claim against AIMCO or any of the AIMCO
Subsidiaries or against any Person whose liability for any Environmental Claim
AIMCO or any of the AIMCO Subsidiaries has or may have retained or assumed
either contractually or by operation of law, except for Environmental Releases
which in the aggregate would not reasonably be expected to result in an AIMCO
Material Adverse Effect.
(v) PREDECESSORS. There is no pending or threatened
Environmental Claim with respect to any predecessor of AIMCO or any of the AIMCO
Subsidiaries which would have a AIMCO Material Adverse Effect, or any
Environmental Release of Hazardous Materials that would be reasonably likely to
form the basis of any Environmental Claim, except for Environmental Claims which
in the aggregate would not reasonably be expected to result in an AIMCO Material
Adverse Effect.
Section 5.12 HUD. Other than as set forth on Section 5.12 of the AIMCO
Disclosure Letter and except where the failure to obtain, or the presence of
which, would not reasonably be expected to result in an AIMCO Material Adverse
Effect, each of AIMCO and the AIMCO Subsidiaries as of the date hereof: (a) has
all necessary consents and approvals of HUD to act as a general partner of
and/or management agent for, as the case may be, each partnership which is an
owner of a HUD-insured or HUD-assisted property for which AIMCO or any AIMCO
Subsidiary acts as a general partner and/or management agent; (b) with respect
to each HUD-insured or HUD-assisted property for which AIMCO or any AIMCO
Subsidiary acts as a general partner and/or management agent, has not received
any current physical inspection reviews with a REAC score of less than 60 for
which an MIO plan is satisfactory to HUD has not been developed (or disclosing
any exigent health and safety matters which have not been resolved), or any
management agent's performance reviews that are graded as less than
"Satisfactory" or, as to
50
state housing agencies, any physical inspection or management agent reviews with
an equivalent or otherwise substandard rating; (c) has no "flags" or limited
denials of participation, suspensions or debarments currently in effect under
the HUD 2530 Previous Participation Clearance Procedures or any other applicable
HUD regulations; (d) has not been notified by HUD of any matters currently
pending before the HUD Departmental Enforcement Center; (e) has not received any
notice from HUD with respect to any audited financial statement for any year
prior to 2000 that remains unresolved to HUD's satisfaction; and (f) has filed
all annual audited financial statements in the timeframe required by HUD for the
calendar year 2000.
Section 5.13 ABSENCE OF INDUCEMENT. In entering into the Transaction
Documents to which it is a party, AIMCO has not been induced by, or relied upon,
any representations, warranties or statements by Casden not set forth or
referred to in the Transaction Documents, the Schedules thereto or the other
documents required to be delivered thereby, whether or not such representations,
warranties or statements have actually been made and AIMCO acknowledges that, in
entering into the Transaction Documents to which it is a party, Casden has been
induced by and relied upon the representations and warranties of AIMCO herein
set forth, the information set forth in the AIMCO Financial Statements and AIMCO
SEC Reports and the representations and warranties of the parties to the
Transaction Documents, the Schedules thereto or the other documents required to
be delivered thereby. AIMCO has made its own investigation of Casden prior to
the execution of this Agreement and has not been induced by or relied upon any
representations, warranties or statements as to the advisability of entering
into this Agreement other than as described above in the first sentence of this
Section 5.13.
Section 5.14 NO AIMCO MATERIAL MISSTATEMENTS. To AIMCO's knowledge, no
representation or warranty of AIMCO contained in the Transaction Documents
contains or will contain any untrue statement of material fact or omit to state
any material fact necessary, in light of the circumstances and taking into
account the express limitations set forth in each such representation and
warranty, in order to make the representations and warranties made by AIMCO
herein or therein not misleading.
Section 5.15 MARYLAND TAKEOVER LAWS. Section 3-602 of the MGCL does not
apply to AIMCO in connection with the transactions contemplated by this
Agreement or the Transactions.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 COVENANTS OF CASDEN. Casden agrees, as to Casden and as to
each of the Casden Subsidiaries, that after the date hereof and prior to the
Effective Time or earlier termination of this Agreement pursuant to Section 9.1,
(i) except as expressly contemplated in this Agreement or the Related
Transaction Documents, (ii) except as AIMCO may otherwise agree in writing
(which decision shall be made as soon as reasonably practicable), (iii) except
with respect to the Commercial Properties, the Commercial Debt, the Commercial
Sale, CommercialCo and Development LLC and (iv) except where a Casden Subsidiary
(A) is a general partner of, or (B) controls a general partner or member of a
Casden Subsidiary which is a partnership or a limited liability company and such
Casden Subsidiary or general partner or
51
member is acting in a manner required by its fiduciary duty as a general partner
or member under applicable law:
(a) ORDINARY COURSE OF BUSINESS. Except with respect to the
transfer of assets or securities constituting (i) the Commercial Properties or
(ii) the Development LLC Assets or pursuant to the Ross Store Sale, the Asset
Purchase, the Spin-Off or the Transaction Documents, Casden shall, and shall
cause the Casden Subsidiaries to, (A) carry on their respective businesses in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and use all commercially reasonable efforts to preserve
intact their present business organizations, (B) duly and timely file all
reports, Tax Returns and other documents required to be filed with federal,
state, local and other authorities, (C) subject to prudent management of work
force needs and ongoing programs currently in force, use commercially reasonable
efforts to keep available the services of the Affected Employees (as defined in
Section 7.11(a)), and (D) take no action which would reasonably be expected to
jeopardize the goodwill or relationships with customers, suppliers or others
having business dealings with them except actions taken in connection with
Casden's or any Casden Subsidiary's good faith disputes in the exercise of
Casden's business judgment, relating to less than $100,000 in the aggregate;
provided, however, nothing in this Section 6.1(a) shall prohibit Casden or any
of the Casden Subsidiaries from transferring operations to Casden, any of its
wholly-owned Subsidiaries, or Casden OP or from engaging in real estate
development activities. Notwithstanding the foregoing, Casden shall not, nor
shall Casden permit any Casden Subsidiary to, enter into a new line of business,
defined as business activities that are substantially different from those
currently conducted by Casden or any Casden Subsidiary or that are not
reasonably related to the business of owning, operating and managing
multi-family residential apartment complexes or communities or other residential
real estate properties.
(b) DISTRIBUTIONS. Except (i) to the extent permitted by
Section 2.2(c) or Section 7.10 , (ii) the Casden Reverse Stock Split, (iii) the
CPLB Reverse Stock Split, (iv) the redemption of the Casden Junior Preferred
Stock in connection with the Merger, (v) in connection with scheduled dividends
(including scheduled dividends in arrears) paid in cash or paid-in-kind with
respect to the Casden Class A Preferred Stock and the Casden Common Stock, (vi)
the distribution of the proceeds from the Commercial Sale or interests in
CommercialCo, the Ross Store Sale or the Asset Purchase, or (vii) as otherwise
set forth in Section 6.1(b) of the Casden Disclosure Letter, Casden shall not,
nor shall Casden permit any Casden Subsidiary to, split, combine or reclassify
any of their shares or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, their shares, or
redeem, repurchase or otherwise acquire any shares, nor shall Casden declare or
pay any distributions, nor permit any Casden Subsidiary to declare or pay any
distributions in respect of any of their shares or partnership units or other
equity interests other than, in the case of Casden or Casden OP, regular
quarterly dividends or distributions not to exceed $0.27 per share or $0.27 per
partnership unit, as the case may be.
(c) ISSUANCE OF SECURITIES. Casden shall not, and shall not
permit any Casden Subsidiary to, issue, agree to issue, deliver, sell, award,
pledge, dispose of or otherwise encumber or authorize or propose the issuance,
delivery, sale, award, pledge, disposal or other encumbrance of, any shares of
any class or any securities convertible into or exchangeable for, or any rights,
warrants or options to acquire, any such shares or convertible or exchangeable
52
securities, other than (i) issuances of shares upon exercise or conversion of
outstanding stock options, warrants or convertible securities described in
Section 4.2 hereof (ii) issuances of partnership units of the NAPICO Entities to
the limited partners of such NAPICO Entities in accordance with the ordinary
course of business consistent with past practice and (iii) distributions of
limited liability interests in connection with the Spin-Off. The parties shall
promptly furnish to each other such information as may be reasonably requested
including financial information and take such action as may be reasonably
necessary and otherwise fully cooperate with each other in the preparation of
any registration statement under the Securities Act and other documents
necessary in connection with the issuance of securities as contemplated by this
Section 6.1(c), subject to obtaining customary indemnities.
(d) CHARTER DOCUMENTS. Casden shall not, and shall not permit
any of the Casden Subsidiaries to, amend or propose to amend its charter, bylaws
or similar organizational or governing documents, other than amendments (i) to
Casden's bylaws to opt out of Maryland's Control Share Act, (ii) to the Casden
Charter required by Section 7.34 or (iii) to Sections 8.5(c) and 12.1(b)(iii) of
the limited partnership agreement of Casden OP to shorten the notice requirement
in Section 8.5(c) and to eliminate the legal opinion delivery requirement in
Section 12.1(b)(iii), in each case, in connection with the Transactions.
(e) ACQUISITIONS. Casden shall not, nor shall Casden permit
any of the Casden Subsidiaries (other than NAPICO and the NAPICO Entities) to,
(i) acquire, or publicly propose to acquire, or agree to acquire an equity
interest in or the assets of, any business or any corporation, partnership,
association or other business organization or division thereof (whether by
merger or consolidation with, or by purchase or otherwise) (ii) acquire or agree
to acquire any operating multifamily apartment complexes or communities or (iii)
acquire or agree to acquire any assets, if such acquisition would adversely
affect the tax-free treatment of the Merger under Section 368(a) of the Code or
the treatment of AIMCO as a REIT following the Merger or Casden as a REIT prior
to the Merger.
(f) NO DISPOSITIONS. Casden shall not, nor shall Casden permit
any of the Casden Subsidiaries (other than NAPICO and the NAPICO Entities) to,
sell or dispose of any of their assets other than (i) dispositions of assets set
forth on Section 6.1(f) of the Casden Disclosure Letter or (ii) the Commercial
Sale, the Ross Store Sale or the Asset Purchase.
(g) INDEBTEDNESS. Casden covenants and agrees that neither it
nor any of the Casden Subsidiaries (other than NAPICO and the NAPICO Entities)
shall incur any indebtedness other than under lines of credit existing on the
date hereof and such indebtedness shall not exceed $9,000,000.
(h) COMPENSATION; BENEFITS. Except as may be required by
applicable law or applicable collective bargaining agreements or as contemplated
by or permitted in this Agreement or as disclosed in Section 6.1(h) of the
Casden Disclosure Letter, or as requested by AIMCO, Casden shall not, nor shall
Casden permit any of the Casden Subsidiaries to, with respect to Affected
Employees:
(i) enter into, adopt or amend or increase the amount or
accelerate the payment or vesting of any benefit or amount payable under, any
Casden Benefit Plan or increase,
53
or enter into any Contract to increase in any manner, the compensation or fringe
benefits, or otherwise to extend, expand or enhance the engagement, employment
or any related rights, other than increases in connection with periodic reviews
on an employee-by-employee basis in the ordinary course of business consistent
with past practice; provided, however, that Casden shall be permitted to amend
the terms of any stock option to allow for the net exercise of such option.
(ii) enter into or amend (A) any employment, severance or
special pay arrangement with respect to the termination of employment or other
similar Contract, other than with respect to employees whose aggregate
compensation is equal to or less than $75,000 per year, or (B) any change in
control agreement or arrangement (in each case other than any severance or stay
bonus arrangement referred to in Section 2(g) of the Master Indemnification
Agreement); or
(iii) deposit into any trust (including any "rabbi trust")
amounts in respect of any obligations to Affected Employees; provided, however,
that transfers into any trust, other than a rabbi or other trust with respect to
any non-qualified deferred compensation, may be made in the ordinary course of
business consistent with past practice.
(i) ACCOUNTING. Casden shall not, nor shall Casden permit any
of the Casden Subsidiaries to, make any changes in their accounting methods,
except as expressly required by law, rule, regulation or GAAP.
(j) AFFILIATE TRANSACTIONS. Except (i) as contemplated under
the Related Transaction Documents or in connection with the Spin-Off or (ii) as
set forth on Section 6.1(j) of the Casden Disclosure Letter, neither Casden (nor
any of the Casden Subsidiaries) shall become a party to any Contract (other than
partnership agreements which are set forth in Section 4.17 of the Casden
Disclosure Letter) or engage in any transaction with any Affiliate of Casden or
any Casden Subsidiary or any Person that beneficially owns 10% or more of any
class of equity securities of Casden, or any Casden Subsidiary.
(k) COOPERATION, NOTIFICATION. Casden shall (i) confer on a
regular basis with one or more representatives of AIMCO to discuss, subject to
applicable law, material operational matters and the general status of its
ongoing operations, (ii) promptly notify AIMCO of any significant changes in its
business, properties, assets, condition (financial or other), results of
operations or prospects, and (iii) promptly provide AIMCO with copies of all
filings made by Casden or any Casden Subsidiary with any state or federal court,
administrative agency, commission or other Governmental Authority in connection
with this Agreement and the Transactions.
(l) NO BREACH, ETC. Casden shall not, nor shall Casden permit
any of the Casden Subsidiaries to, willfully take any action that would result
in (i) a breach of any provision of this Agreement or (ii) any of its
representations and warranties set forth in this Agreement being untrue on and
as of the Closing Date.
(m) CONTRACTS. Except as set forth on Section 6.1(m) of the
Casden Disclosure Letter, or for modifications or amendments made in the
ordinary course of business consistent with past practice, Casden shall not, nor
shall Casden permit any Casden Subsidiary
54
to, modify, amend, terminate, or fail to use reasonable business efforts to
renew, as the case may be, any Contract material to Casden and the Casden
Subsidiaries taken as a whole or waive, release or assign any material rights or
claims.
(n) INSURANCE. Casden shall maintain insurance with
financially responsible insurance companies with respect to Casden and the
Casden Subsidiaries in such amounts and against such risks and losses as are
customary for entities engaged in the multi-family apartment business.
(o) PERMITS. Casden shall, and shall cause the Casden
Subsidiaries to, use reasonable efforts to maintain in effect all existing
governmental permits which are material to the operations of Casden and the
Casden Subsidiaries taken as a whole.
(p) TAX MATTERS. Casden shall not, nor shall Casden permit any
Casden Subsidiary to, (i) make or rescind any election relating to Taxes if such
action would adversely affect the status of Casden or AIMCO as a REIT or the
status of any Casden Subsidiary that is currently a partnership as a partnership
for federal income tax purposes, (ii) without the written consent of AIMCO,
which consent will not be unreasonably withheld, settle or compromise any
material claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes unless such settlement or
compromise results in a change in taxable income or Tax liability that will
reverse in future periods and is therefore, by its nature, a timing difference
or (iii) change in any material respect any of its methods of reporting income
or deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the taxable year ending
December 31, 1998, except as may be required by applicable law or except for
such changes that would reduce consolidated federal taxable income or
alternative minimum taxable income. Notwithstanding any other provision of this
Agreement, in the event that, after the date hereof, Casden or any Casden
Subsidiary seeks a "Closing Agreement" from the IRS or a definitive settlement
agreement from the IRS or any state, local or foreign taxing authority on a
matter that is subject to a representation, warranty or covenant set forth in
this Agreement or any of the Related Transaction Documents, then: (A) Casden
shall, or shall cause such Casden Subsidiary to, keep AIMCO informed as to the
status of such agreement and any discussions, negotiations or arrangements
related thereto, and (B) Casden shall not, and shall cause any such Casden
Subsidiary not to, file or submit any document to any taxing authority in
connection with any such agreement without first providing AIMCO with (1) copies
of any such document and (2) an opportunity to review and comment on any such
document prior to such filing or submission.
(q) PARACHUTE PAYMENTS. Prior to the Effective Time, any
agreements or arrangements that provide for benefits or payments that could
constitute "parachute payments" within the meaning of Code Section 280G to
"disqualified individuals" of Casden or any Casden Subsidiary shall have been
approved by such number of shareholders of Casden as is required by the terms of
Code Section 280G(b)(5)(B) and shall be obtained in a manner which satisfies all
applicable requirements of such Code Section 280(G)(b)(5)(B) and the proposed
Treasury Regulations thereunder, including (without limitation) Q-7 of Section
1.280G-1 of such proposed regulations.
55
(r) RESIGNATIONS. Casden shall obtain the resignations of all
of the individuals listed in Section 4.24 of the Casden Disclosure Letter.
(s) INVESTMENT REPRESENTATION LETTERS. Casden shall use its
best efforts to obtain prior to the Closing Date investment representation
letters, in substantially the form attached hereto as Exhibit T, from each
holder receiving AIMCO Common Stock pursuant to Section 2.2 hereof (other than
such Persons who are party to the Voting Agreement).
Section 6.2 COVENANTS OF AIMCO. AIMCO agrees, as to itself and to each
of its Subsidiaries, that after the date hereof and prior to the Effective Time
or earlier termination of this Agreement:
(a) COOPERATION, NOTIFICATION. AIMCO shall (i) confer on a
regular basis with one or more representatives of Casden to discuss, subject to
applicable law, material operational matters and the general status of its
ongoing operations, (ii) promptly notify Casden of any significant changes in
its business, properties, assets, condition (financial or other), results of
operations or prospects, or of any complaints, investigations or hearings (or
communications indicating the same may be contemplated) of or by any
Governmental Authority and (iii) promptly provide Casden with copies of all
filings made by AIMCO or any of its Subsidiaries with any state or federal
court, administrative agency, commission or other Governmental Authority in
connection with this Agreement and the Transactions.
(b) ORDINARY COURSE, NO BREACH, ETC. AIMCO shall, and shall
cause the AIMCO Subsidiaries to, (i) use their reasonable efforts to preserve
intact their respective business organizations and goodwill and keep available
the services of their respective officers and employees and (ii) not willfully
take any action that would result in (A) a material breach of any provision of
this Agreement or (B) any of AIMCO's material representations and warranties set
forth in this Agreement being untrue on and as of the Closing Date; provided,
however, that AIMCO and the AIMCO Subsidiaries may issue securities, acquire
securities or assets and otherwise act in the ordinary course of their
respective businesses.
(c) ACCOUNTING. AIMCO shall not, nor shall AIMCO permit any
AIMCO Subsidiary to, make any changes in their accounting methods, except as
required by law, rule, regulation, the SEC or GAAP, and shall maintain its
status as a REIT under the Code.
(d) STATE SECURITIES LAWS. AIMCO shall use commercially
reasonable efforts to obtain all necessary consents or approvals required
pursuant to applicable state securities laws.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 ACCESS TO INFORMATION. Upon reasonable notice, each party
shall, and shall cause its Subsidiaries to, afford to the officers, directors,
employees, accountants, counsel, investment bankers, financial advisors and
other representatives of the other party (collectively, "Representatives")
reasonable access, during normal business hours throughout the period prior to
and following the Effective Time, to all of its properties, books, contracts,
56
commitments and records (including, but not limited to, Tax Returns) and, during
such period, each party shall, and shall cause its Subsidiaries to, furnish
promptly to the other party and its Representatives (i) access to each report,
schedule and other document filed or received by it or any of its Subsidiaries
pursuant to the requirements of federal or state securities laws or filed with
or sent to the SEC or any other federal or state regulatory agency or commission
in connection with the Transactions and (ii) access to all information
concerning themselves, their Subsidiaries, directors, officers and stockholders
and such other matters as may be reasonably requested by the other party in
connection with any filings, applications or approvals required or contemplated
by this Agreement or the Related Transaction Documents or for any other reason
related to the Transactions. Without limiting the foregoing, Casden shall
deliver to AIMCO, as soon as available but in any event within 90 days after the
end of each fiscal quarter, a consolidated balance sheet as of the end of such
quarter and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal quarter then ended and the
period from the end of the latest fiscal year end through the end of such fiscal
quarter, including, in each case, the notes thereto and, if available, any
report thereon by Casden's independent accountants, in each case, prepared in
accordance with GAAP, applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and which fairly present in all material
respects the financial position of Casden and its subsidiaries, on a
consolidated basis, as of the dates thereof, and the results of their operations
and cash flows for the periods then ended, subject to normal recurring audit and
year-end adjustments, in the case of any unaudited interim financial statements.
Nothing in this Section 7.1 shall require Casden or AIMCO to take any action or
furnish any access or information which would cause or would reasonably be
expected to cause the waiver of any applicable attorney client privilege or the
violation of any applicable law. In addition, nothing herein shall require
Casden or AIMCO to provide information other than with respect to itself and its
Subsidiaries, or the conduct of their businesses. Each party and its
Representatives shall hold all information obtained by it pursuant to this
Agreement or the Related Transaction Documents in accordance with the terms and
provisions of the confidentiality agreement dated December 19, 2000 (the
"Confidentiality Agreement"), which shall continue in full force and effect
following execution of this Agreement.
Section 7.2 REGISTRATION RIGHTS AGREEMENT. Prior to the Effective Time,
AIMCO shall execute and deliver to Casden the Registration Rights Agreement
(Stock) in the form attached hereto providing for, among other things, AIMCO's
registration of the AIMCO Common Stock issued in the Merger.
Section 7.3 LETTERS OF ACCOUNTANTS.
(a) CASDEN. Casden shall use its reasonable best efforts to
cause to be delivered to AIMCO (i) a report of Deloitte & Touche LLP relating to
its review, in accordance with standards promulgated by the American Institute
of Certified Public Accountants, of the Latest Casden Financial Statements, and
(ii) a letter (or letters) of Deloitte & Touche LLP, substantially in the form
attached hereto as Exhibit R, in form and substance reasonably satisfactory to
AIMCO with respect to the Latest Casden Financial Statements and the Latest
Casden Pro Forma Financial Information, and customary in scope and substance for
letters delivered by independent public accountants in connection with
acquisition transactions in which there is an exchange of stock.
57
(b) AIMCO. AIMCO shall use its reasonable best efforts to
cause to be delivered to Casden and XYZ a letter of Ernst & Young LLP, a form of
which is attached hereto as Exhibit S, dated a date within two business days
before the Closing Date, in form and substance reasonably satisfactory to Casden
and customary in scope and substance for letters delivered by independent public
accountants in connection with acquisition transactions in which there is an
exchange of stock.
(c) COSTS. Each party shall bear its own costs for the letters
described in this Section 7.3.
Section 7.4 REGULATORY MATTERS.
(a) HUD APPROVAL. AIMCO shall, after consultation with Casden,
file or cause to be filed with HUD any documents required to be filed under any
applicable law or the rules and regulations of HUD, with respect to HUD approval
of the Merger and the Related Transactions ("HUD Approval"). AIMCO will use all
commercially reasonable efforts to make such filings in a timely manner and
Casden shall make reasonable efforts to assist AIMCO, upon request, in obtaining
HUD Approval. AIMCO and Casden will respond on a timely basis to any requests
for additional information made by HUD.
(b) OTHER REGULATORY APPROVALS. Each party hereto shall
cooperate and use its reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to use all commercially reasonable
efforts to obtain all necessary permits, consents, approvals and authorizations
of all Governmental Authorities necessary or advisable to obtain the Casden
Required Statutory Approvals and the AIMCO Required Statutory Approvals.
Section 7.5 APPROVAL OF CASDEN STOCKHOLDERS.
(a) CASDEN MEETING. As soon as reasonably practical, Casden
shall (i) take all steps necessary to duly call, give notice of, convene and
hold a meeting of its stockholders for the purpose of securing the vote of such
stockholders as is required to obtain the Casden Stockholders' Approval
(together with any adjournments thereof, the "Casden Meeting"), (ii) distribute
a notice of the Casden Meeting in accordance with applicable federal and state
law and with the Casden Charter and Casden bylaws to the stockholders entitled
to notice of and to vote at the Casden Meeting, (iii) recommend the approval of
the Merger, the charter amendment effecting the Casden Reverse Stock Split and
the amendment to the Casden Charter contemplated by Section 7.34 to its
stockholders, and (iv) cooperate and consult with AIMCO with respect to each of
the foregoing matters.
(b) MEETING DATE. Casden agrees to use commercially reasonable
efforts to hold the Casden Meeting not later than such date as Casden and AIMCO
shall mutually determine.
Section 7.6 PUBLIC ANNOUNCEMENTS. Subject to each party's disclosure
obligations imposed by law and the rules of the NYSE, Casden and AIMCO will
cooperate and consult with each other in the development and distribution of all
news releases and other public information disclosures with respect to this
Agreement or any of the Transactions and shall not
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issue any public announcement or statement with respect hereto or thereto
without the consent of the other party (which consent shall not be unreasonably
delayed or withheld). The initial press releases with respect to the
announcement of this Agreement and the Related Transaction Documents shall be in
a form mutually agreed upon by the parties hereto and shall be issued on the
date hereof. All press releases issued following the initial press releases will
characterize the transaction in a manner consistent with the initial press
releases.
Section 7.7 NO SOLICITATION. From and after the date hereof, Casden
will not, and will not authorize or permit any of its Affiliates or
Representatives to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information) or take any other action to
facilitate knowingly any inquiries or the making of any proposal which
constitutes or may reasonably be expected to lead to an Acquisition Proposal
from any Person, or engage in any discussion or negotiations relating thereto or
accept any Acquisition Proposal. Casden shall immediately cease and terminate
any existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by Casden, its Affiliates or
its Representatives with respect to the foregoing.
Section 7.8 EXPENSES. Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement, the other
Transaction Documents and the Transactions shall be paid by the party incurring
such expenses, it being understood that any fees or expenses of CSFB, Monga LLC,
Gibson, Dunn & Crutcher LLP, Deloitte & Touche LLP, Katten Muchin Zavis and
Schulte, Roth & Zabel LLP (for services rendered to and at the request of Casden
or any of the Casden Subsidiaries) related to the Transactions shall be paid by
Casden and Casden shall provide AIMCO written notice, at least three business
days prior to the Closing Date of the aggregate amount of such fees and
expenses.
Section 7.9 FURTHER ASSURANCES. Each party will, and will cause its
Subsidiaries to, use their respective reasonable best efforts to consummate the
Transactions, including executing such further documents and instruments and
taking such further actions, including applying for any necessary regulatory
approvals or exemptions or any third party consents. Casden shall be primarily
responsible for, and AIMCO shall cooperate with Casden in obtaining, the
consents set forth on Section 4.3(b) of the Casden Disclosure Letter. If, at any
time after the Effective Time, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of Casden or
the Casden Subsidiaries acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of Casden and each of the Casden
Subsidiaries or otherwise, all such deeds, bills of sale, assignments and
assurances and to take and do, in such names and on such behalves or otherwise,
all such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under such
rights, properties or assets in the Surviving Corporation or otherwise to carry
out the purposes of this Agreement. Each party acknowledges and agrees that they
will cooperate with each other and use their respective commercially reasonable
best efforts in obtaining the execution of the Tri-Party Agreement by the
construction lenders and/or their agent (as such terms are defined in the
Tri-Party
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Agreement). In addition, each party acknowledges and agrees to make all
amendments to the Transaction Documents as may be commercially reasonably
requested by the Construction lenders (including, without limitation, separating
the Tri-Party Agreement into four separate agreements to the extent required by
the construction lenders named therein and/or their agent), provided that such
amendments do not substantively alter the economic terms of the Tri-Party
Agreement or substantially increase the parties obligations thereunder.
Section 7.10 REIT STATUS. Notwithstanding anything to the contrary set
forth in this Agreement or any Related Transaction Document, nothing in this
Agreement or any such related Transaction Document shall prohibit Casden from
taking, and Casden hereby agrees to take, any action at any time or from time to
time that in the reasonable judgment of Casden or AIMCO is legally necessary for
Casden to maintain its qualification as a REIT within the meaning of Sections
856-860 of the Code for any period or portion thereof ending on or prior to the
Effective Time, including, without limitation, making distribution payments to
Casden stockholders, which distributions shall not require the consent of AIMCO
under Section 6.1(b) of this Agreement or otherwise.
Section 7.11 EMPLOYEES; EMPLOYEE PLANS.
(a) AFFECTED EMPLOYEES. At least thirty (30) days prior to the
Effective Time, Casden shall deliver to AIMCO a final list of the employees of
Casden or any Casden Subsidiary that will be given offers of employment by
either CommercialCo or the Development LLC (the "Transferred Employees")
indicating the entity which will offer employment to each such employee. Casden
acknowledges and agrees that immediately following the Effective Time, pursuant
to the Tri-Party Agreement, Development LLC will offer, or cause CommercialCo to
offer, employment to the Transferred Employees. From and after the Effective
Time, AIMCO shall, or shall cause the Surviving Corporation to, assume and honor
the obligations of Casden and the Casden Subsidiaries with respect to their
respective employees other than the Transferred Employees (the "Affected
Employees"). From and after the Effective Time, AIMCO shall be the employer of
the Affected Employees and shall have all rights accruing to an employer with
respect to the Affected Employees.
(b) VACATION AND RELATED BENEFITS. AIMCO shall, or shall cause
the Surviving Corporation to, honor all unused vacation, holiday, sick and
personal days accrued but unused for each Affected Employee under the policies
and practices of Casden and the Casden Subsidiaries.
(c) SERVICE CREDIT. In the event of any change in the welfare
benefits provided to an Affected Employee under any Casden Benefit Plan, AIMCO
shall, or shall cause the Surviving Corporation to, (i) waive all limitations as
to preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Affected Employee
under such new or changed plan (except to the extent that such conditions,
exclusions or waiting periods would apply under any Casden Benefit Plan) and
(ii) provide each Affected Employee with credit for any co-payments and
deductibles paid prior to any such change in coverage in satisfying any
applicable deductible or out-of-pocket requirements under such new or changed
plan to the extent not previously reimbursed under any Casden Benefit Plan.
AIMCO shall, or shall cause the Surviving Corporation to, provide each Affected
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Employee with credit for all service with Casden and its Affiliates under each
employee benefit plan, policy, program or arrangement in which such Affected
Employee is eligible to participate, except to the extent the relevant benefits
are provided under any similar Casden Benefit Plan in which such Affected
Employee is entitled to participate, and except where such credit would result
in a duplication of benefits with respect to the same period of service.
(d) WAIVER OF CONDITIONS. On and after the Closing Date, AIMCO
shall cause each AIMCO welfare plan to waive any pre-existing condition
exclusions and waiting periods (except to the extent that such exclusions would
have then applied or such waiting periods were not satisfied under the Casden
welfare plans) with respect to the Affected Employees (and their beneficiaries).
(e) ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENTS. On the
Closing Date, AIMCO agrees to assume and adopt the collective bargaining
agreements of Casden and the Casden Subsidiaries identified in Section 4.17(b)
of the Casden Disclosure Letter and to offer employment to all employees of
Casden and the Casden Subsidiaries covered by those collective bargaining
agreements.
Section 7.12 RECORD DATES AND DIVIDEND PAYMENT DATES. AIMCO covenants
and agrees that from the date hereof until the Effective Time, AIMCO shall (i)
set record dates for the declaration of dividends on all its classes of equity
securities and (ii) set payment dates for the payment of dividends on all its
classes of equity securities, each consistent with past practice.
Section 7.13 INSURANCE. AIMCO agrees to maintain in full force and
effect directors' and officers' insurance and general partner liability
insurance for a period of not less than six years following the Closing Date for
each person covered by such insurance by Casden immediately prior to the
Effective Time, each of whom is listed on Section 7.13 of the Casden Disclosure
Letter; provided, however, that AIMCO shall be entitled to substitute existing
policies with equivalent policies from reputable and financially sound insurers
with the same or better coverage and amounts and containing terms and conditions
no less favorable to such directors, officers and general partners, provided
that no gap in coverage results from any such change or substitution.
Section 7.14 BREACHES. Each party hereto agrees it shall promptly
notify the other parties hereto in writing prior to the Closing if such party is
aware of or has knowledge of another party's breach of any representation,
warranty or covenant hereunder. Each such notice shall specify in reasonable
detail the nature and grounds for the alleged breach, the representation,
warranty or covenant to which such alleged breach relates and a good faith
estimate of the estimates, damages or losses which are reasonably likely to
result from such alleged breach if no curative measures are taken.
Section 7.15 TRANSFER TAXES. The parties will cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding the real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, and any transfer,
recording, registration and other fees or similar Taxes ("Transfer Taxes") which
become payable in connection with the Transactions that are required to be filed
on or before the
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Closing Date and AIMCO shall pay 100% of Transfer Taxes which become payable in
connection with the Transactions.
Section 7.16 NAMES AND TRADEMARKS.
(a) AIMCO acknowledges and agrees that from and after the
Effective Time Development LLC shall retain all right, title, and interest in
and to, and shall be free to use, the Casden name and trademarks set forth in
Section 7.16 of the Casden Disclosure Letter and any other names and trademarks
to which Casden or any Casden Subsidiary has a legal right or claim
(collectively, the "Trademarks") without restriction, including the ability to
compete with AIMCO in any and all markets. From and after the Effective Time,
AIMCO admits the validity of, and agrees not to challenge any, Trademark. AIMCO
also agrees that any and all rights that may be acquired by the use of the
Trademarks by AIMCO during the Transition Period (as defined in Section 7.16(c)
below) shall inure to the sole benefit of Development LLC. From and after the
Effective Time, AIMCO shall not use the Trademarks as part of its corporate name
nor use any mark or name confusingly similar to the Trademarks.
(b) From and after the Effective Time, AIMCO agrees not to
register in the United States of America any name or mark resembling or
confusingly similar to the Trademarks. From and after the Effective Time, AIMCO
further agrees not to register any domain name or trademark resembling or
confusingly similar to the Trademarks with Network Systems, Inc. or any other
registration agency. If any application for registration is, or has been, filed
with the United States Patent and Trademark Office by AIMCO which is deemed by
the United States Patent and Trademark Office to be confusingly similar,
deceptive or misleading with respect to any Trademark, AIMCO shall abandon any
such application or registration or, from and after the Effective Time, assign
it to Development LLC. AIMCO shall reimburse Development LLC, for all the costs
and expenses of any oppositions, cancellation or related legal proceedings,
including attorney's fees, instigated by Development LLC, from and after the
Effective Time, in connection with any such registration or application.
(c) AIMCO and Casden acknowledge and agree that pursuant to a
separate agreement, Development LLC will agree that for a period of 90 days from
the Effective Time (the "Transition Period"), Development LLC will not sue AIMCO
for trademark infringement for use of the Trademarks, and further provided that
the Trademarks shall only be used by AIMCO in the same manner in which they are
currently used by Casden or any Casden Subsidiary. AIMCO and Casden (or
Development LLC, from and after the Effective Time) may, by mutual written
consent, agree to extend the Transition Period for an additional period of time.
However, any use of the Trademarks beyond the Transition Period, shall
constitute a material breach of this Agreement and be actionable by Development
LLC.
Section 7.17 PREPARATION OF TAX RETURNS. Tax Returns will be prepared
in accordance with the Tax Indemnity Agreement.
Section 7.18 DEPOSIT BY AIMCO. No later than the business day after the
date hereof, AIMCO, Casden and Citibank, N.A. (the "Escrow Agent") shall enter
into an Escrow Agreement in the form attached as Exhibit U to this Agreement
(the "Escrow Agreement"), pursuant to which AIMCO shall deposit with the Escrow
Agent pursuant to the terms of the
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Escrow Agreement the sum of $7,000,000 in immediately available funds (the
"Escrow Amount"). The Escrow Amount shall be (a) delivered to Casden upon
termination of this Agreement in the event of a termination of this Agreement
pursuant to which Casden is entitled to Liquidated Damages or (b) delivered to
AIMCO to be used as part of the REIT Merger Consideration on the Closing Date.
Section 7.19 TAX FREE REORGANIZATION. Unless a Taxable Election is made
pursuant to Section 2.2(f), each of AIMCO and Casden shall use their reasonable
best efforts to cause the Merger to qualify as a reorganization under the
provisions of Section 368(a) of the Code and to obtain the tax opinion described
in Section 8.3(d), including by executing and delivering the certificates and
representation letters referred to therein. AIMCO shall not take any action
after the Effective Time that, in the opinion of counsel to AIMCO, would prevent
the Merger from qualifying as a reorganization under Section 368(a) of the Code.
Section 7.20 MEZZANINE LOAN. At or after Closing, AIMCO will cause one
or more mezzanine loans to be made to XYZ (the "Mezzanine Loan") on the terms
and subject to the conditions set forth in the documents included in Exhibit V
attached hereto (collectively, the "Mezzanine Loan Documents").
Section 7.21 PLEDGE AND GUARANTY AGREEMENTS. At or after Closing: (a)
all of the members of XYZ that are affiliates of Casden or Cerberus Partners
shall execute and deliver a pledge agreement substantially in the form attached
hereto as Exhibit W-1 and (b) Development LLC shall execute and deliver a
guaranty agreement substantially in the form attached hereto as Exhibit W-2.
Section 7.22 RELEASE. Casden and each of the Casden Subsidiaries shall
obtain a release (the "Release") in favor of the Surviving Corporation and its
Subsidiaries substantially in the form attached as (a) Exhibit X-1 hereto from
each of its directors (other than its independent directors but including any
director of Casden who is affiliated with BA Casden Investors, LLC) and
executive officers listed in Section 4.24 of the Casden Disclosure Letter and
(b) Exhibit X-2 hereto from each of BA Casden Investors, LLC, Blackacre Park La
Brea LLC, Blackacre Casden Investment, LLC, Blackacre Investment Warrant, LLC,
BA Warrant Investors, LLC and each other Person who owns or has ever owned
Casden Class A Preferred Stock, Casden I Warrants or Casden II Warrants.
Section 7.23 QUESTIONNAIRES. Within 10 days of the date hereof, Casden
shall submit the General Questionnaire to each manager and assistant manager of
the Owned Properties and the Leased Properties and each regional supervisor
employed by Casden, the Casden Subsidiaries (other than NAPICO and the NAPICO
Entities). Casden shall submit the General Questionnaire to the asset manager or
property manager of each NAPICO Property. Casden shall request that each of the
persons receiving a Questionnaire, complete such General Questionnaire as
accurately and completely as possible and use its best efforts to obtain the
completed General Questionnaire as soon as possible, and shall provide complete
and correct copies of the responses to the General Questionnaire promptly upon
the receipt of each such response but in no event later than 20 days prior to
the Effective Time.
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Section 7.24 CPLB DISTRIBUTION. On or prior to the date of the OP
Contribution, Casden shall cause Casden OP to distribute to Casden 100% of
Casden OP's interest in CPLB, pursuant to the form of such instrument of
assignment attached hereto as Exhibit Y.
Section 7.25 COMMERCIAL PROPERTIES. On or prior to the date of the OP
Contribution, Casden shall cause either the Spin-Off to occur or the Commercial
Properties to be sold to and the Commercial Debt to be assumed by CommercialCo.
Section 7.26 LEGAL MATTERS. Within ten business days prior to the
Closing Date, Casden shall provide, or shall cause to be provided, to AIMCO: (i)
the name, telephone number and address of the person or persons who shall be
responsible following the Effective Time for supervising, controlling and making
ultimate decisions with respect to the actions set forth in Section 4.6(ii);
(ii) the names, addresses, and telephone numbers of all counsel of record in
each of those lawsuits, identifying each counsel's respective client(s); (iii)
the most recent offers/demands in those lawsuits, including both monetary and
nonmonetary aspects of such demands and offers; and (iv) the procedural status
of each of those lawsuits.
Section 7.27 RESERVATION OF AIMCO STOCK. AIMCO covenants and agrees
that prior to the Effective Time it will take all necessary actions to reserve
for issuance a sufficient amount of shares of AIMCO Common Stock to be issued in
the Merger.
Section 7.28 CASDEN WARRANTS. Casden covenants and agrees that prior to
the Closing Date, Casden will amend each Casden I Warrant and each Casden II
Warrant such that at the Effective Time, (i) each then outstanding unexercised
Casden I Warrant shall terminate and (ii) each then outstanding unexercised
Casden II Warrant shall terminate.
Section 7.29 MATERIAL ADVERSE EFFECTS; KNOWLEDGE OF BREACHES.
(a) Casden shall promptly notify AIMCO of any event or
condition (i) of which Casden obtains knowledge which individually or in the
aggregate would reasonably be expected to constitute a Casden Material Adverse
Effect, (ii) which, if known as of the date hereof, would have been required to
be disclosed to AIMCO or (iii) of which Casden obtains knowledge which
individually or in the aggregate would reasonably be expected to give rise to
Casden's right to terminate this Agreement pursuant to Article 9 hereof.
(b) AIMCO shall promptly notify Casden of any event or
condition (i) of which AIMCO obtains knowledge which individually or in the
aggregate would reasonably be expected to constitute an AIMCO Material Adverse
Effect, (ii) which, if known as of the date hereof, would have been required to
be disclosed to Casden or (iii) of which AIMCO obtains knowledge which
individually or in the aggregate would reasonably be expected to give rise to
AIMCO's right to terminate this Agreement pursuant to Article 9 hereof.
Section 7.30 LITIGATION. AIMCO shall have monitoring rights on any
action set forth on Section 4.6(ii) of the Casden Disclosure Letter and any
Proceeding assumed by the Casden Indemnitors (as defined in the Master
Indemnification Agreement) pursuant to the Master Indemnification Agreement.
After the Closing Date, as often as AIMCO may reasonably request, but in no
event more often than every six months, XYZ shall provide an amended Section
4.6(ii) of the Casden Disclosure Letter, updating the information previously
provided.
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AIMCO shall have the right to reasonably request further information or any
documents with respect to any or all litigation on Section 4.6(ii) of the Casden
Disclosure Letter, which XYZ shall provide within twenty (20) days of receipt of
AIMCO's request.
Section 7.31 LISTING OF SHARES. AIMCO shall cause the shares of AIMCO
Common Stock issuable in connection with the Merger to be approved for listing
on the NYSE upon official notice of issuance prior to the Effective Time.
Section 7.32 NAPICO SYNDICATED PROPERTIES. Within ten business days
prior to the Closing Date, Casden shall provide, or cause to be provided, to
AIMCO, the name and state of organization, of and ownership interest in, each
Person in which the NAPICO Entities holds an ownership interest and each real
property (except for the NAPICO Properties) in which any fund sponsored by
NAPICO has a limited partnership ownership interest (the "NAPICO Syndicated
Properties").
Section 7.33 COMPLIANCE WITH THE MGCL. Each of the parties agrees to
use their respective best efforts and take all reasonable steps to ensure that
the Transactions contemplated by this Agreement and the Alternative Merger (as
defined in the OP Unit Contribution Agreement), if consummated, complies with
all applicable provisions of the MGCL.
Section 7.34 CASDEN CHARTER. Prior to the Effective Time, Casden shall
amend the Casden Charter to (i) effect the Casden Reverse Stock Split, (ii)
provide that the consideration to be received by the holders of Casden Common
Stock in the Merger may vary among the holders of Casden Common Stock and (iii)
provide that, upon effectiveness the Merger, AIMCO may deliver to any holder of
Casden Common Stock that AIMCO reasonably believes may not be an accredited
investor (as defined in Rule 501(a) of the Securities Act), in lieu of any
shares of AIMCO Common Stock otherwise deliverable to such holder upon the
effectiveness of the Merger, cash in amount equal to the number of shares of
Casden Common Stock held by such holder, multiplied by the Per Share Common
Consideration.
Section 7.35 NAPICO PROPERTY CONSENTS. Within 20 days after the date
hereof, Casden shall deliver to AIMCO a schedule setting forth (x) each
construction lender under any construction loan encumbering any of the NAPICO
Properties and (y) each lender or housing agency in connection with any tax
exempt bond financing affecting any of the NAPICO Properties, in either case,
the consent or approval of which is necessary to prevent or avoid a Violation by
Casden or any of the Casden Subsidiaries as a result of the execution and
delivery of this Agreement or any of the Related Transaction Documents or the
consummation or performance of any of the Transactions (any and all such
consents and approvals, the "NAPICO Property Consents" and, together with the
Casden Property Consents, the "Casden Required Consents").
Section 7.36 CLOSING PAYOFF AMOUNTS. At the Effective Time, AIMCO shall
pay, or cause to be paid, the amounts set forth in Schedule 2.1(a).
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ARTICLE VIII
CONDITIONS
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction on or prior to the Closing Date of the following conditions,
except, to the extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 9.5 by the joint action of the parties
hereto:
(a) CASDEN STOCKHOLDERS' APPROVAL. The Casden Stockholders'
Approval shall have been obtained.
(b) NO INJUNCTION. No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state court
preventing consummation of the Merger or the Related Transactions shall have
been issued and be continuing in effect.
(c) NO CHANGE IN LAW. The Transactions shall not have been
prohibited under any applicable federal or state law or regulation adopted or
amended after the date hereof.
(d) STATE SECURITIES LAWS. All necessary consents or approvals
required pursuant to applicable state securities laws shall have been obtained.
(e) RELATED TRANSACTIONS. Except as expressly set forth in the
Related Transaction Documents, each of the Related Transactions shall be
completed prior to or concurrently with the Contribution Effective Date or the
Effective Time, as applicable.
(f) HUD. Approval of the Transactions by HUD shall have been
obtained.
Section 8.2 CONDITIONS TO OBLIGATION OF AIMCO TO EFFECT THE MERGER. The
obligation of AIMCO to effect the Merger shall be subject to the satisfaction,
on or prior to the Closing Date, of the following conditions, except as may be
waived by AIMCO in writing pursuant to Section 9.5:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Casden set forth in this Agreement shall be
true and correct (i) on and as of the date hereof and (ii) on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except for representations and
warranties that expressly speak only as of a specific date or time which need
only be true and correct as of such date or time) and Casden and each Casden
Subsidiary shall have performed in all material respects each of their
respective obligations required to be performed prior to the Effective Time
pursuant to this Agreement; provided, however, that this condition to the
obligation of AIMCO to consummate the Merger shall be deemed satisfied if the
aggregate loss, cost, damage or expense to AIMCO, if the Transactions were
consummated, as a result of breaches of such representations and warranties
(without giving effect to any materiality qualification or standard contained in
any such representations and warranties) when aggregated with failures to comply
with covenants by Casden would not reasonably be expected to exceed $100
million.
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(b) CLOSING CERTIFICATE. AIMCO shall have received a
certificate, signed by the chief executive officer of Casden, dated the Closing
Date, to the effect that, to the best of such officer's knowledge, the condition
set forth in Section 8.2(a) with respect to Casden has been satisfied.
(c) OPINION OF CASDEN'S MARYLAND COUNSEL. Casden shall have
caused to be delivered to AIMCO the opinion of Ballard Spahr Andrews &
Ingersoll, LLP (or another nationally recognized law firm acceptable to AIMCO)
to the effect that this Agreement and the Articles of Merger are enforceable
under Maryland law, that all requisite approvals have been obtained, at the
Effective Time all shares of Casden Capital Stock exchanged in connection with
the Merger are validly issued, fully paid and non-assessable and not subject to
preemptive rights, and as to such other matters as are customary in a
transaction such as the Merger. AIMCO agrees that the forms of opinion attached
hereto as Exhibit 8.2(c)-1 and Exhibit 8.2(c)-2 shall be acceptable to AIMCO and
that the failure of Casden to deliver either such opinion shall constitute a
breach of Section 7.9 by Casden unless such failure shall be due solely to a
change in law (statutory or case law) or regulation occurring after the date
hereof.
(d) OPINION OF CASDEN'S SPECIAL COUNSEL. Casden shall have
caused to be delivered to AIMCO (i) the opinion of Gibson, Dunn & Crutcher LLP
or such other counsel reasonably acceptable to AIMCO to the effect that each of
the Transaction Documents constitutes the valid and binding obligation of
Casden, XYZ and/or the other parties thereto (other than AIMCO), as applicable,
and that such agreements are enforceable against Casden, XYZ and/or the other
parties thereto (other than AIMCO), as applicable, in accordance with their
terms (with customary exceptions, assumptions and qualifications and based on
customary representations); (ii) the opinion of Delaware counsel reasonably
acceptable to AIMCO to the effect that, with respect to matters of Delaware law,
each of the Related Transaction Documents are enforceable against Casden, XYZ
and/or the parties thereto (other than AIMCO), as applicable, in accordance with
their terms (with customary exceptions, assumptions and qualifications and based
on customary representations); and (iii) the opinion of counsel reasonably
acceptable to AIMCO to the effect that (A) each of Cerberus Partners, LP, BA
Casden Investors LLC, Blackacre Park La Brea LLC, Blackacre Capital Management
LLC ("Blackacre") and the Blackacre entity which will be a signatory to the
Development LLC Agreement (collectively, the "Blackacre Parties") is duly
organized, validly existing and in good standing in the jurisdiction of its
formation, and (B) each of the Related Transaction Documents is duly authorized
by, and constitutes the valid and binding obligation of, the Blackacre Parties
which are parties thereto, as applicable, and that such agreements are
enforceable against the Blackacre Parties which are parties thereto, as
applicable, in accordance with their terms (with customary exceptions,
assumptions and qualifications and based on customary representations). AIMCO
agrees that the form of opinion attached hereto as Exhibit 8.2(d) shall be
acceptable to AIMCO with respect to Casden's obligation pursuant to clause (i)
hereof and that the failure of Casden to deliver any opinion required by this
Section 8.2(d) shall constitute a breach of Section 7.9 by Casden unless such
failure shall be due solely to a change in law (statutory or case law) or
regulation occurring after the date hereof.
(e) CASDEN REQUIRED STATUTORY APPROVALS. Casden shall have
obtained each of the Casden Required Statutory Approvals and delivered copies
thereof to AIMCO.
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(f) CASDEN REIT OPINION. Casden shall have caused to be
delivered to AIMCO the opinion of Gibson, Dunn & Crutcher LLP, dated as of the
Effective Time, reasonably satisfactory to AIMCO that, for each taxable year
since formation ending on or before the Effective Time (including the short
taxable year ending immediately prior to the Effective Time), Casden was
organized and has operated in conformity with the requirements for qualification
as a REIT under the Code (with customary exceptions, assumptions and
qualifications), substantially in the form attached hereto as Exhibit 8.2(f).
Such opinion shall also be addressed to BA Casden Investors, LLC and may rely
upon an officer's certificate of Casden and an officer's certificate of BA
Casden Investors, LLC. The failure of Casden to deliver such opinion to AIMCO
shall constitute a breach of Section 7.9 by Casden unless such failure shall be
due solely to a change in law (statutory or case law) or regulation occurring
after the date hereof.
(g) LETTER OF CASDEN'S ACCOUNTANTS. AIMCO shall have received
letters from Deloitte & Touche LLP, addressed to AIMCO and dated within two
business days prior to the Closing Date, in form and substance reasonably
satisfactory to AIMCO with respect to the most recent Casden Financial
Statements.
(h) RELEASES. AIMCO shall have received duly executed Releases
from: (i) each director of Casden (other than the independent directors but
including any director of Casden who is affiliated with BA Casden Investors,
LLC) and each executive officer of Casden listed in Section 4.24 of the Casden
Disclosure Letter and (ii) BA Casden Investors, LLC, a Delaware limited
liability company, Blackacre Park La Brea LLC, a Delaware limited liability
company, Blackacre Casden Investment, LLC, Blackacre Investment Warrant, LLC, BA
Warrant Investors, LLC and each other Person who owns or has ever owned Casden
Class A Preferred Stock, Casden I Warrants or Casden II Warrants.
(i) CONSENTS. Casden shall have obtained each of the Casden
Required Consents, each of which shall be in full force and effect, and
delivered copies thereof to AIMCO.
(j) RESIGNATIONS. Casden shall have obtained the resignations
of all of the individuals listed in Section 4.24 of the Casden Disclosure Letter
and delivered copies thereof to AIMCO.
(k) LITIGATION INFORMATION. Casden shall have provided the
information specified in Section 7.26 to AIMCO.
(l) NAPICO DISCLOSURE. Casden shall have provided the
information specified in Section 7.32 to AIMCO.
Section 8.3 CONDITIONS TO OBLIGATION OF CASDEN TO EFFECT THE MERGER.
The obligation of Casden to effect the Merger shall be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions,
except as may be waived by Casden in writing pursuant to Section 9.5.
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of AIMCO set forth in this Agreement shall be true and correct (i) on
and as of the date hereof and (ii) on and as of the Closing Date with the same
effect as though such
68
representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that expressly speak only as of a
specific date or time which need only be true and correct as of such date or
time) and AIMCO and each AIMCO Subsidiary shall have performed in all material
respects each of their respective obligations required to be performed prior to
the Effective Time pursuant to this Agreement; provided, however, that this
condition to the obligation of Casden to consummate the Merger shall be deemed
satisfied if the aggregate loss, cost, damage or expense to Casden, if the
Transactions were consummated, as a result of breaches of such representations
and warranties (without giving effect to any materiality qualification or
standard contained in any such representations and warranties) when aggregated
with failures to comply with covenants by AIMCO would not reasonably be expected
to exceed $100 million.
(b) CLOSING CERTIFICATE. Casden shall have received a
certificate signed by an executive officer of AIMCO, dated the Closing Date, to
the effect that, to the best of such officer's knowledge, the condition set
forth in Section 8.3(a) has been satisfied.
(c) OPINION OF AIMCO'S MARYLAND COUNSEL. AIMCO shall have
caused to be delivered to Casden and XYZ the opinion of Piper Marbury Rudnick &
Wolfe LLP (or another nationally recognized law firm acceptable to Casden) to
the effect that this Agreement and the Articles of Merger are enforceable under
Maryland law, that all requisite approvals have been obtained, and at the
Effective Time upon issuance thereof in accordance with the terms of this
Agreement, such shares of AIMCO Common Stock issued in connection with the
Merger will be validly issued, fully paid and non-assessable and not subject to
preemptive rights, and as to such other matters as are customary in a
transaction such as the Merger. Casden agrees that the form of opinion attached
hereto as Exhibit 8.3(c) shall be acceptable to Casden and that the failure of
AIMCO to deliver such opinion shall constitute a breach of Section 7.9 by AIMCO
unless such failure shall be due solely to a change in law (statutory or case
law) or regulation occurring after the date hereof.
(d) MERGER OPINION. Unless a Taxable Election is made pursuant
to Section 2.2(f), Casden shall have received an opinion of Gibson, Dunn &
Crutcher LLP (or another nationally recognized law firm acceptable to Casden)
that, based upon certificates and letters acceptable to Gibson, Dunn & Crutcher
LLP (or another nationally recognized law firm acceptable to Casden) dated as of
the Closing Date, the Merger will qualify as a "reorganization" within the
meaning of Section 368 of the Code (with customary exceptions, assumptions and
qualifications and based on customary representations). Such opinion shall also
be addressed to BA Casden Investors, LLC, AIC, TCC and CIC. Casden agrees that
an opinion substantially in the form attached as Exhibit 8.3(d)(i) hereto shall
be acceptable to Casden and that the failure of Casden to obtain delivery of
such opinion shall constitute a breach of Section 7.9 by Casden unless such
failure shall be due solely to (i) a change in the law (statutory or case law)
or regulation occurring after the date hereof or (ii) the failure of AIMCO to
deliver to such counsel an officers' certificate in substantially the form
attached hereto as Exhibit 8.3(d)(ii), in which case such failure of AIMCO shall
constitute a breach by AIMCO of Section 7.9 and shall not be considered a breach
by Casden of Section 7.9.
(e) OPINION OF AIMCO'S COUNSEL. AIMCO shall have caused to be
delivered to Casden and XYZ the opinion of Skadden, Arps, Slate, Meagher & Flom
LLP (or
69
another nationally known law firm acceptable to Casden) to the effect that each
of the Transaction Documents to which AIMCO is a party constitutes the valid and
binding obligation of AIMCO and AIMCO OP, and that such agreements are
enforceable against AIMCO and AIMCO OP, in accordance with their terms (with
customary exceptions, assumptions and qualifications and based on customary
representations). Casden agrees that an opinion substantially in the form
attached as Exhibit 8.3(e) hereto shall be acceptable to Casden and that the
failure of AIMCO to deliver such opinion shall constitute a breach of Section
7.9 by AIMCO unless such failure shall be due solely to a change in law
(statutory or case law) or regulation occurring after the date hereof.
(f) TRADING OF AIMCO COMMON STOCK. AIMCO Common Stock shall be
listed and admitted for trading on the NYSE and there shall have occurred
trading of AIMCO Common Stock on each of the five (5) trading days immediately
prior to the Closing Date.
(g) LISTING OF SHARES. The shares of AIMCO Common Stock
issuable in connection with the Merger shall have been approved for listing on
the NYSE upon official notice of issuance. The parties acknowledge and agree
that if Casden elects to waive this condition in the event it is not satisfied,
such waiver will not constitute a waiver of (or absolve AIMCO from liability
for) the breach of the covenant in Section 7.31.
(h) AIMCO REQUIRED STATUTORY APPROVALS. Each of the AIMCO
Required Statutory Approvals shall have been obtained.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after obtaining the Casden
Stockholders' Approval, only:
(a) by mutual written consent of the respective Boards of
Directors of Casden and AIMCO;
(b) (i) by either AIMCO or Casden if there has been any breach
by the other party of any representation or warranty set forth in this
Agreement, or failure by the other party to comply with any of its covenants or
obligations set forth in this Agreement and which breach or failure individually
or together with the other breaches or failures by such other party that have
not been cured would result in losses, costs, damages or expenses to the
terminating party, if the Transactions were consummated that would reasonably be
expected to exceed $100 million, and which breach or failure has not been cured
within 30 days following receipt by the breaching or failing party of notice of
such breach or failure or adequate assurance of such cure shall not have been
given by or on behalf of the breaching or failing party within such 30 day
period or (ii) by AIMCO or Casden, if any state or federal law, order, rule or
regulation is adopted or issued after the date hereof, which has the effect, as
supported by the written opinion of outside counsel for such party, of
prohibiting any of the Transactions, or if any court of competent jurisdiction
in the United States or any state shall have issued an order, judgment or
70
decree permanently restraining, enjoining or otherwise prohibiting any of the
Transactions, and such order, judgment or decree shall have become final and
non-appealable; provided, however, that the party seeking to terminate this
Agreement as a result of any such injunction or prohibition shall have used all
reasonable efforts to remove such injunction or overturn such prohibition;
(c) by either AIMCO or Casden, by written notice to the other
party, if the Effective Time shall not have occurred on or before the six month
anniversary of the date hereof (the "Termination Date") subject to AIMCO's and
Casden's right to postpone the Closing pursuant to the proviso in Section 3.1;
provided, however, that in the event the parties have not obtained approval of
the Transactions by HUD by the Termination Date, such date may be extended at
the election of AIMCO or Casden for one-month periods (up to an additional six
months) pending such approval; provided, further, that the right to terminate
this Agreement under this Section 9.1(c) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before the
Termination Date; or
(d) by Casden if (i) all of AIMCO's conditions to closing set
forth in Section 8.1 and Section 8.2 have been satisfied, (ii) within 10 days of
receiving notice of Casden's intent to terminate pursuant to this Section
9.1(d), AIMCO has failed to close and (iii) at such time AIMCO is not entitled
to terminate this Agreement pursuant to Article IX.
Section 9.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 9.1 by either Casden or AIMCO, except as
expressly provided in Section 9.3(a) below, no party hereto shall have any
liability to any other party with respect to this Agreement or the transactions
contemplated hereby and this Agreement shall be of no further force or effect;
provided, however that notwithstanding the foregoing, Sections 9.1, 9.2, 9.3,
9.4, 9.6, 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7 and 10.8 shall survive the
termination indefinitely (unless otherwise specifically provided therein).
Section 9.3 TERMINATION FEES.
(a) CASDEN LIQUIDATED DAMAGES. If the Merger is not
consummated and Casden terminates this Agreement pursuant to Sections 9.1(b) or
9.1(d) above, (i) Casden shall be entitled to receive the Escrow Amount from the
Escrow Agent and (ii) AIMCO shall pay to Casden in cash liquidated damages in
the amount of $50 million (the amounts received by Casden pursuant to the
foregoing clauses (i) and (ii), collectively, the "Liquidated Damages");
provided, however, that Casden shall not be entitled to receive the Liquidated
Damages if AIMCO is entitled to terminate this Agreement pursuant to Section 9.1
above. The payment of the Liquidated Damages shall be compensation and
liquidated damages for the loss suffered by Casden as the result of the failure
to consummate the Merger and the Related Transactions and to avoid the
difficulty of determining damages under the circumstances, and AIMCO and AIMCO
OP shall not have any liability to Casden, other than the payment of the
Liquidated Damages if the Merger is not consummated.
71
(b) NO PENALTY. The parties agree that the agreements
contained in this Section 9.3 are an integral part of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty.
Section 9.4 AMENDMENT. This Agreement may be amended by the parties
hereto (or by Casden pursuant to Section 2.2(g)) at any time before or after the
Casden Stockholders' Approval and prior to the Effective Time, subject to the
requirements of the MGCL. Other than pursuant to Section 2.2(g), this Agreement
may not be amended except by a written instrument signed on behalf of each of
the parties hereto.
Section 9.5 WAIVER. At any time prior to the Effective Time, a party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions of the other party contained herein, to the extent
permitted by applicable law. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
Section 9.6 DAMAGES. Notwithstanding any other provision herein, the
parties agree that if the Merger is consummated, the sole remedy of any such
party for any other party's breach of representations or warranties or failure
to comply with covenants, and any failure to satisfy any condition, shall be the
right to collect damages for any breach of representations or warranties or
failure to comply with covenants or to satisfy any condition, to the extent
provided in the Master Indemnification Agreement (or, with respect to Tax
matters, the Tax Indemnity Agreement). The representations and warranties of the
parties contained herein shall survive the Effective Time in accordance with the
terms of the Master Indemnification Agreement. The waiver of any condition based
on the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or agreement, will not affect the right to
indemnification or other remedy based on such representations, warranties,
covenants and agreements; provided, however, that if either party has knowledge
prior to the Closing Date of any breach of any covenant or any inaccuracy of any
representation or warranty contained in this Agreement prior to the Closing Date
and such party did not comply with its Pre-Closing Notice (as defined in the
Master Indemnification Agreement) obligation pursuant to the Master
Indemnification Agreement, such party shall not be entitled to indemnification
under the Master Indemnification Agreement for such breach or inaccuracy, except
as pursuant to the Tax Indemnity Agreement.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 BROKERS. Casden represents and warrants that, except for
CSFB and Monga LLC whose fees have been disclosed to AIMCO prior to the date
hereof, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of Casden. AIMCO represents and warrants
that no broker, finder or investment banker is entitled to any
72
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of AIMCO.
Section 10.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given (a) when delivered personally, (b)
when sent by reputable overnight courier service, or (c) when telecopied (which
is confirmed by copy sent within one business day by a reputable overnight
courier service) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) If to Casden (or XYZ,
after the Effective Time), to: Casden Properties Inc.
(or XYZ, after the Effective Time)
090 Wilshire Boulevard
Beverly Hills, CA 90211
Attn: Andrew J. Starrels
Telecopy: (310) 273-8418
Telephone: (310) 385-3057
with copies (which shall
not constitute notice) to: Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Attn: Jesse Sharf, Esq.
and Scott Calfas, Esq.
Telecopy: (213) 229-6638
Telephone: (213) 229-7638
Blackacre Capital Management, LLC
450 Park Avenue, 28th Floor
New York, NY 10022
Attn: Mark Neporent/Ronald J. Kravit
Telecopy: (212) 891-2104
Telephone: (212) 891-1540
Katten Muchin Zavis
525 West Monroe Street, Suite 1600
Chicago, IL 60661-3696
Attn: Nina Matis, Esq.
Telecopy: (312) 902-5560
Telephone: (312) 902-1061
and Schulte, Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attn: Alan Waldenberg, Esq.
Telecopy: (212) 756-2501
Telephone: (212) 593-5955
73
(ii) If to AIMCO, to: Apartment Investment and
Management Company
18350 Mt. Langley Avenue, Suite 220
Fountain Valley, CA 92708
Attn: Peter K. Kompaniez
Telecopy: (714) 593-1703
Telephone: (714) 593-1733
and Apartment Investment and
Management Company
2000 South Colorado Boulevard
Tower Two, Suite 2-1000
Denver, CO 80222
Attn: Terry Considine and
Harry Alcock
Telecopy: (303) 753-9538
Telephone: (303) 691-4330
and Apartment Investment and
Management Company
Tower Two
2000 South Colorado Boulevard
Suite 2-1000
Denver, CO 80222
Attn: Terry Considine and Harry Alcock
Telecopy: (303) 691-5662
Telephone: (303) 691-4344
with copies (which
shall not constitute
notice) to: Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, NY 10036
Attn: Joseph A. Coco, Esq.
Telecopy: (212) 735-2000
Telephone: (212) 735-3000
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, CA 90071
Attn: Jonathan L. Friedman, Esq.
Telecopy: (213) 687-5600
Telephone: (213) 687-5000
Section 10.3 MISCELLANEOUS. This Agreement, the Related Transaction
Documents, the Confidentiality Agreement and the documents and instruments
referred to herein and therein constitute the entire agreement and supersede all
other prior or contemporaneous oral or written agreements and understandings
among the parties, or any of them, with respect to the
74
subject matter hereof and thereof. This Agreement shall not be assigned by any
party and shall be governed by and construed in accordance with the laws of the
State of New York, including Sections 5-1401 and 5-1402 of the New York General
Obligations Law and New York Civil Practice Laws and Rules 327(b), except to the
extent the provisions of this Agreement (including the documents or instruments
referred to herein) are expressly governed by or derive their authority from the
MGCL.
Section 10.4 INTERPRETATION. When a reference is made in this Agreement
to Sections or Exhibits, such reference shall be to a Section or Exhibit of this
Agreement, respectively, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Section 10.5 COUNTERPARTS; EFFECT. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
Section 10.6 PARTIES' INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement, except that the directors, officers and general partners covered by
the insurance referred to in Section 7.13 shall have the right to enforce such
provisions.
Section 10.7 ENFORCEMENT.
(a) The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached until the
consummation of the Merger. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of New York or in New York state
court, this being in addition to any other remedy to which they are entitled
pursuant to this Agreement, the Master Indemnification Agreement or the Tax
Indemnity Agreement; provided, however, that following the consummation of the
Merger, specific performance of the terms of this Agreement (other than under
Section 7.30) shall no longer be available.
(b) In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any federal court located in the
State of New York or any New York state court in the event any dispute arises
out of this Agreement or any of the Transactions, (ii) agrees that it will not
attempt to deny such personal jurisdiction by motion or other request for leave
from any such court and (iii) agrees that it will not bring any action relating
to this Agreement, the Related Transaction Documents or any of the Transactions
in any court other than a federal or state court sitting in the State of New
York.
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Section 10.8 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
[signature page follows]
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IN WITNESS WHEREOF, AIMCO, Casden and XYZ have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ PETER KOMPANIEZ
-----------------------------------------
Name: Peter Kompaniez
------------------------------------
Title: President
-----------------------------------
CASDEN PROPERTIES INC.
By: /s/ ALAN I. CASDEN
-----------------------------------------
Name: Alan I. Casden
------------------------------------
Title: Chairman
-----------------------------------
XYZ HOLDINGS LLC
By: /s/ CASDEN INVESTMENT CORP.
-----------------------------------------
its Managing Member
By: /s/ ALAN I. CASDEN
-----------------------------------------
Name: Alan I. Casden
---------------------------------------
Title: Chairman
--------------------------------------
REIT MERGER AGREEMENT SIGNATURE PAGE
SCHEDULE 2.1(a)
1. Comerica Loan. $8,119,583 plus unpaid interest accrued from January 1,
2002 through the Effective Time, pursuant to the Loan Agreement and
Addendum, between Comerica Bank-California and Casden OP, dated as of
June 22, 2000 and the Floating Rate Note, by Casden OP in favor of
Comerica Bank-California, dated June 22, 2000.
2. BCM Madeleine Loan. $20,000,000 plus unpaid interest accrued from January
1, 2002 through the Effective Time, pursuant to the Promissory Note by
Casden OP in favor of Madeleine LLC, dated February 7, 2000.
3. BCM/AIC Glendon Loan. $14,462,784 plus unpaid interest accrued from
January 1, 2002 through the Effective Time, pursuant to a Letter
Agreement dated February 8, 2000 as evidenced by a Promissory Note dated
February 7, 2000.
4. Declared and Unpaid Common Dividends. $23,486,403 for declared and unpaid
dividends on the Casden Common Stock, or such lesser or greater amount as
is outstanding on the Closing Date.
5. Declared and Unpaid Preferred Dividends. $22,824,000 for declared and
unpaid cash dividends on the Casden Class A Preferred Stock, or such
lesser or greater amount as is outstanding on the Closing Date.
6. Payables to AIC. $2,101,447 of payables to AIC pursuant to (i)
Note-Straight for a loan made by The Casden Company to National
Partnership Investments Corp. in the amount of Two Hundred Thousand
Dollars ($200,000) dated February 14, 2000; (ii) Note-Straight for a loan
made by The Casden Company to National Partnership Investments Corp. in
the amount of Seven Hundred Thousand Dollars ($700,000) dated January 28,
2000; (iii) Note-Straight for a loan made by The Casden Company to
National Partnership Investments Corp. in the amount of One Million Four
Hundred Thousand Dollars ($1,400,000) dated October 14, 1999; and (iv)
Note-Straight for a loan made by The Casden Company to National
Partnership Investments Corp. in the amount of Five Hundred Thirty One
Thousand Nine Hundred and Nine Dollars ($531,909) dated August 29, 2000
(principal has been paid, however interest at 12% from August 29, 2000 to
October 31, 2001 in the amount of $5,946.00, remains unpaid).
7. Jr. Preferred Liquidation Amount. $10,015,250 plus accumulated and unpaid
dividends to the Effective Time.
8. Reverse Stock Split. Amounts paid to former stockholders as a result of
the Reverse Stock Split in lieu of the issuance of fractional shares.
9. Transaction Expenses. The expenses contemplated by Section 7.8 which are
incurred after the date hereof or are otherwise due and payable at
Closing (which are currently estimated to be $13 million).
SCHEDULE 2.1(b)
MORTGAGE DEBT
[Attached]
CASDEN PROPERTIES INC. SCHEDULE 2.1(b)
09/30/2001 Mortgage Debt
<Table>
<Caption>
TOTAL TOTAL
INTEREST MORTGAGE DEBT MORTGAGE DEBT CHANGE FROM
DEVELOPMENT NAME RATE AT 9/30/2001 AT 6/30/2001 PRIOR PERIOD
---------------- -------- ------------- ------------- ------------
1 Broadcast Center 3.9% 34,000,000
2 Canyon Terrace 7.5% 6,057,108
3 Creekside Apts 3.8% 19,070,000
4 Crescent Gardens 4.0% 10,700,000
5 Indian Oaks 4.0% 15,500,000
6 Lakes 3.8% 75,600,000
7 Malibu Canyon 3.9% 46,900,000
8 Mariners Cove 5.6% 11,586,059
Pro forma adjustment (7,165,987)
------------- ------------- ------------
212,247,180 213,147,880 (900,700)
------------- ------------- ------------
9 Loch Haven 8.4% 4,710,147
10 HillCreste 7.0% 56,000,000
11 Peppertree 8.5% 6,437,903
12 Pine Lake Terrace 8.5% 4,555,293
13 Rosewood 8.4% 8,119,778
14 Topanga 49 7.0% 2,880,539
15 Villa del Sol 8.4% 4,950,727
16 Village Grove 8.5% 3,664,446
------------- ------------- ------------
91,318,833 91,404,989 (86,156)
------------- ------------- ------------
1 Beacon Hill 7.9% 6,234,929
2 Berger 8.3% 3,741,289
3 Berkeley Gardens 7.0% 1,255,923
4 Boulevard Towers 7.3% 5,655,723
5 Casa de Las Hermanitas 13.5% 2,672,686
6 Cherry Ridge Terrace 12.5% 1,689,518
7 Creekview 7.5% 1,905,368
8 Denny Place 8.5% 2,015,782
9 Echo Valley 6.8% 424,983
10 Edgewater 7.0% 6,918,779
11 Friendship Arms 7.7% 3,682,378
12 Hemet Estates 9.2% 2,389,727
13 Hudson Gardens 8.6% 1,280,414
14 King Towers 8.5% 717,583
15 Locust House 7.7% 1,987,372
16 Norristown 7.4% 5,090,922
17 Northwinds (Arrowhead) 7.4% 2,392,132
18 Oxford House 6.3% 4,465,849
19 Palm Springs Senior 13.0% 4,100,485
20 Parkview 9.3% 3,067,163
21 Paula Maria II (City Line) 7.0% 2,387,491
22 Prospect Towers 7.3% 2,572,917
23 Ridgewood 9.3% 2,215,685
24 Round Barn 6.8% 4,718,168
25 South Park 8.5% 591,195
26 Sterling Village 9.2% 2,392,900
27 Westwood Terrace 6.8% 2,642,300
28 Willowwood 8.5% 1,925,190
29 Bangor House 7.8% 3,520,643
30 Chidester Place 8.0% 2,915,000
31 Daugette Towers 7.9% 1,562,544
32 East Central Towers 7.5% 3,664,989
33 Freeland 8.1% 1,215,000
34 Grant Park 8.5% 4,354,808
35 Kern Villa 7.5% 2,197,801
36 New Baltimore 7.6% 1,699,888
37 Panorama City I 7.5% 658,234
38 Panorama City II 7.5% 613,703
39 Pynchon I 7.0% 5,753,648
40 Sandwich Manor 5.7% 1,806,207
41 Wasco Arms 7.5% 3,031,144
------------- ------------- ------------
Total HUD 114,128,463 115,528,127 (1,399,664)
------------- ------------- ------------
Total REITSub, see attached 184,215,955 185,083,293 (867,338)
------------- ------------- ------------
CONSTRUCTION LOANS
Centinela 74,617,786
Pro forma Adjustment 382,214
------------- ------------- ------------
75,000,000 75,000,000 --
------------- ------------- ------------
TOTAL NEWCO 676,910,430 680,164,289 (3,253,859)
------------- ------------- ------------
OFFICE BUILDINGS
1 Wilshire Doheny 8.3% 10,318,358
2 Wilshire Lapeer 8.3% 9,267,415
3 Wilshire Palm 8.3% 4,299,316
------------- ------------- ------------
Total Office 23,885,090 23,941,525 (56,435)
------------- ------------- ------------
WESTWOOD & PARKLABREA
Westwood (Glendon)
Guaranty Federal 11,400,000
Ralphs 7,687,804
Madeleine - PLB 20,000,000
------------- ------------- ------------
39,087,804 38,556,677 531,127
------------- ------------- ------------
GRAND TOTAL MORTGAGE PAYABLE 739,883,324 742,662,491 (2,779,167)
------------- ------------- ------------
UNSECURED CORPORATE LOANS
Madeleine - Glendon 14,462,784
Comerica 8,119,583
------------- ------------- ------------
22,582,367 24,206,284 (1,623,917)
------------- ------------- ------------
REITSUB NOTES PAYABLE, SEE ATTACHED 5,936,571 5,854,430 82,141
------------- ------------- ------------
GRAND TOTAL NOTES PAYABLE 28,518,938 30,060,714 (1,541,776)
------------- ------------- ------------
</Table>
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS R CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 1,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share, into additional
shares of preferred stock heretofore designated as "Class R Cumulative Preferred
Stock, par value $.01 per share," (the "Class R Preferred Stock") and has
provided for the issuance of such additional shares.
SECOND: The reclassification increases the number of shares classified
as Class R Preferred stock from 4,940,000 shares immediately prior to the
reclassification to 5,940,000 shares immediately after the reclassification. The
reclassification decreases the number of shares classified as Class A Common
Stock from 456,962,738 shares immediately prior to the reclassification to
455,962,738 shares immediately after the reclassification. The number of shares
classified as Class R Preferred Stock may be decreased upon reacquisition
thereof in any manner, or by retirement thereof, by the Corporation.
THIRD: The terms of the Class R Preferred Stock (including the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as set forth in
Article THIRD of the Articles Supplementary to the Charter (dated July 17, 2001
and filed with the MSDAT on July 18, 2001) and remain unchanged by these
Articles Supplementary.
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Senior Vice President and witnessed
by its Assistant Secretary on March 20, 2002.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ JOEL BONDER /s/ PATRIZIA BAILEY
- ----------------------- -----------------------
Joel Bonder Patrizia Bailey
Assistant Secretary Senior Vice President
THE UNDERSIGNED, Senior Vice President of APARTMENT INVESTMENT AND
MANAGEMENT COMPANY, who executed on behalf of the Corporation the Articles
Supplementary of which this Certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that the
matters and facts set forth herein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
/s/ PATRIZIA BAILEY
-----------------------
Patrizia Bailey
Senior Vice President
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS R CUMULATIVE PREFERRED STOCK (PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 1,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share, into additional
shares of preferred stock heretofore designated as "Class R Cumulative Preferred
Stock, par value $.01 per share," (the "Class R Preferred Stock") and has
provided for the issuance of such additional shares.
SECOND: The reclassification increases the number of shares classified
as Class R Preferred stock from 5,940,000 shares immediately prior to the
reclassification to 6,940,000 shares immediately after the reclassification. The
reclassification decreases the number of shares classified as Class A Common
Stock from 455,962,738 shares immediately prior to the reclassification to
454,962,738 shares immediately after the reclassification. The number of shares
classified as Class R Preferred Stock may be decreased upon reacquisition
thereof in any manner, or by retirement thereof, by the Corporation.
THIRD: The terms of the Class R Preferred Stock (including the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as set forth in
Article THIRD of the Articles Supplementary to the Charter (dated July 17, 2001
and filed with the MSDAT on July 18, 2001) and remain unchanged by these
Articles Supplementary.
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on April 9, 2002.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LUCY CORDOVA /s/ PAUL J. MCAULIFFE
- ----------------------- ---------------------------------
Lucy Cordova Paul J. McAuliffe
Assistant Secretary Executive Vice President and Chief
Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer
of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ PAUL J. MCAULIFFE
----------------------------------
Paul J. McAuliffe
Executive Vice President and Chief
Financial Officer
<Page>
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS S CUMULATIVE REDEEMABLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
as amended to date (the "Charter"), the Board of Directors has duly divided and
classified 4,000,000 authorized but unissued shares of Class A Common Stock of
the Corporation, par value $.01 per share, into a class designated as Class S
Cumulative Redeemable Preferred Stock, par value $.01 per share, and has
provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified as
Class S Cumulative Redeemable Preferred Stock, par value $.01 per share, from no
shares immediately prior to the reclassification to 4,000,000 shares immediately
after the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 454,962,738 shares immediately prior to
the reclassification to 450,962,738 shares immediately after the
reclassification. The number of shares classified as Class S Cumulative
Redeemable Preferred Stock may be decreased upon reacquisition thereof in any
manner, or by retirement thereof, by the Corporation.
THIRD: The terms of the Class S Cumulative Redeemable Preferred Stock
(including the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, or terms or conditions of redemption) as set by the Board of
Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class S
Cumulative Redeemable Preferred Stock, par value $.01 per share (the "Class S
Preferred Stock") and Four Million (4,000,000) shall be the authorized number of
shares of such Class S Preferred Stock constituting such class.
2. DEFINITIONS.
For purposes of the Class S Preferred Stock, the following terms shall
have the meanings indicated:
<Page>
"AFFILIATE" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity
Stock, the product of (i) the number of shares of Equity Stock within
such block and (ii) the corresponding Market Price of one share of
Equity Stock of such class.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (without
duplication) (i) the number of shares of Equity Stock directly owned
by such Person, (ii) the number of shares of Equity Stock indirectly
owned by such Person (if such Person is an "individual" as defined in
Section 542(a)(2) of the Code) taking into account the constructive
ownership rules of Section 544 of the Code, as modified by Section
856(h)(1)(B) of the Code, and (iii) the number of shares of Equity
Stock that such Person is deemed to beneficially own pursuant to Rule
13d-3 under the Exchange Act, or that is attributed to such Person
pursuant to Section 318 of the Code, as modified by Section 856(d)(5)
of the Code, provided that when applying this definition of Beneficial
Ownership to the Initial Holder, clause (iii) of this definition, and
clause (ii) of the definition of "Person" shall be disregarded. The
terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED"
shall have the correlative meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class S
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "BOARD OF DIRECTORS" shall not
include any such committee.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open and, when used in the
definition of Three-Month LIBOR, which is also a day on which dealings
in deposits in U.S. dollars are transacted in the London interbank
market.
"CHANGE IN CONTROL" of the Corporation shall mean any transaction or
series of transactions (including any sale (or functional equivalent
of a sale) of all or substantially all of the assets of the
Corporation or any consolidation of the Corporation with, or merger of
the Corporation into, any other person, any merger of another person
into the Corporation, any other business combination (including a
share exchange) involving the Corporation or any tender or exchange
offer) as a result of which (w) the holders of the Corporation's Class
A Common Stock immediately prior to giving effect to such transaction
shall no longer own shares of common stock of the surviving
corporation in such transaction representing fifty percent (50%) or
more of the total value of all common stock of such surviving
corporation, (x) the holders of the Corporation's capital stock
- 2 -
<Page>
immediately prior to giving effect to such transaction shall no longer
own shares of capital stock of the surviving corporation in such
transaction representing fifty percent (50%) or more of the total
voting power of all shares of capital stock of such surviving
corporation entitled to vote generally in the election of directors,
(y) the holders of the Corporation's capital stock immediately prior
to giving effect to such transaction shall no longer own shares of
capital stock of the surviving corporation in such transaction having
the right, as a group or separately, to elect collectively no less
than a majority of the Board of Directors of such surviving
corporation, or (z) the Corporation no longer controls the Operating
Partnership or no longer owns more than sixty percent (60%) of the
partnership interests in the Operating Partnership.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 10.3(G) of this Article, each
of which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"CLASS A COMMON STOCK" shall mean the Class A Common Stock, par value
$.01 per share, of the Corporation, and such other shares of the
Corporation's capital stock into which outstanding shares of such
Class A Common Stock shall be reclassified.
"CLASS S PREFERRED STOCK" shall have the meaning set forth in Section
1 of this Article.
"CLOSING PRICE" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if
the Equity Stock is not listed or admitted to trading on the NYSE, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Equity Stock is listed or admitted to trading
or, if the Equity 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 quotation system
that may then be in use or, if the Equity 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 Equity
Stock selected by the Board of Directors of the Corporation or, if the
Equity Stock is not publicly traded, the fair value of a share of such
Equity Stock as reasonably determined in good faith by the Board of
Directors.
- 3 -
<Page>
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"COMMON EQUITY CAPITALIZATION" shall mean the product of the Current
Market Price and the number of outstanding shares of Class A Common
Stock immediately prior to (i) the "ex date" with respect to any
issuance or distribution requiring such computation, (ii) the date on
which shares are repurchased in the case of any repurchase of shares
of Class A Common Stock (other than by means of a tender or exchange
offer) requiring such computation, or (iii) the last time tenders
could have been made pursuant to a tender or exchange offer (as it may
be amended) requiring such computation.
"CURRENT MARKET PRICE" shall mean (a) in the case of any issuance or
distribution (including any Spin-Off), the average of the Closing
Prices per share of Class A Common Stock on each of the 20 consecutive
Trading Days ending on the day before the "ex date" with respect to
the issuance or distribution requiring such computation, (b) in the
case of any repurchase of shares other than by means of a tender or
exchange offer, the average of the Closing Prices per share of Class A
Common Stock on each of the 20 consecutive Trading Days ending on the
Trading Day immediately preceding such repurchase, and (c) in the case
of any tender or exchange offer, the average of the Closing Prices per
share of Class A Common Stock on each of the 20 consecutive Trading
Days ending on the Trading Day immediately preceding the last time
tenders could have been made pursuant to such tender or exchange offer
(as it may be amended). The term "ex date," when used with respect to
any issuance or distribution, shall mean the first date on which the
Class A Common Stock trades regular way on the NYSE or other
securities exchange or in the principal market in which such shares
trade, in each case without the right to receive such issuance or
distribution.
"DIVIDEND PAYMENT DATE" shall mean January 31, April 30, July 31, and
October 31 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business
Day immediately following such Dividend Payment Date and no interest
shall accrue on such dividend from such date to such Dividend Payment
Date.
"DIVIDEND PERIOD" shall mean the Initial Dividend Period and each
period thereafter of three calendar months beginning on any February
1, May 1, August 1, or November 1.
"DIVIDEND RATE" shall mean a floating rate, expressed as a percentage
of the Liquidation Preference per annum, determined as follows:
- 4 -
<Page>
(a) from the Issue Date through April 30, 2004, a rate equal to
(x) Three-Month LIBOR plus (y) 2.75%;
(b) from May 1, 2004 through and including October 31, 2004, a
rate equal to (x) Three-Month LIBOR plus (y) 6.00%;
(c) for the calendar month beginning November 1, 2004 at a rate
equal to (x) Three-Month LIBOR plus (y) 12.60%; and
(d) for each calendar month thereafter, a rate equal to (x)
Three-Month LIBOR plus (y) 12.60% plus (z) the product of (i) 70 basis
points (0.70%) multiplied by (ii) the number of whole calendar months
elapsed between October 31, 2004 and the first day of such calendar
month;
provided, that, the maximum Dividend Rate at any time shall not exceed
20.00%. Notwithstanding anything to the contrary in this Article, if
the Corporation shall fail to pay (i) any portion of the Repurchase
Price for any shares of Class S Preferred Stock required to be
repurchased as an when required pursuant to Section 5(d) of this
Article or (ii) pay any portion of the Maturity Price as and when
required to be paid pursuant to Section 5(e) of this Article (each
such failure, a "Redemption Default"), the Dividend Rate shall, from
the date of such Redemption Default until the Redemption Default has
been cured in full by the Corporation, be 25.00%; PROVIDED FURTHER, in
the event a Redemption Failure has occurred, the Dividend Rate shall
thereafter be the rate set forth in paragraph (d); however, in such
case, the multiple set forth in clause (z) of such paragraph (d) would
be the product of (i) 70 basis points (0.70%) multiplied by (ii) the
number of whole calendar months elapsed between the date of the
Redemption Failure and the first day of the calendar month in which
that relevant Dividend Payment Date occurs.
To illustrate the computation of the Dividend Rate, assuming no
Redemption Default has occurred, in the month of December 31, 2004,
the Dividend Rate shall equal Three- Month LIBOR plus 13.30% (the sum
of 12.60% plus the product of .70% and the number of calendar months
(one) which elapsed between October 31, 2004 and the first day of
December 2004).
"DIVIDEND RATE CALCULATION AGENT" shall mean such financial
institution (and any legal successor thereto) from time to time as
shall be selected by the Corporation, provided such selection is
approved by the vote or written consent of the holders of a majority
of the outstanding shares of the Class S Preferred Stock, and shall
initially mean Wachovia Bank, National Association.
"EQUITY STOCK" shall mean one or more shares of any class of capital
stock of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this
Article.
- 5 -
<Page>
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" shall mean, (a) in the case of any Spin-Off that
is effected simultaneously with an initial public offering of
securities of the same class and series as those to be distributed in
such Spin-Off, the initial public offering price of such securities,
(b) in the case of any other Spin-Off, the average of the closing
trading price of the securities distributed in such Spin-Off for the
first ten Trading Days after the effective date of such Spin-Off, and
(c) in the case of any other securities, evidences of indebtedness or
assets, the fair market value thereof as determined by the Board of
Directors, whose determination shall be conclusive and described in a
Board resolution delivered to each record holder of Class S Preferred
Stock.
"FUNDAMENTAL CHANGE" shall mean (i) a Change of Control of the
Corporation or (ii) a Significant Distribution.
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and
including the Issue Date and ending on and including July 31, 2003.
"INITIAL HOLDER" shall mean Terry Considine.
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares
of Class S Preferred Stock of the Corporation having an Aggregate
Value not in excess of the excess of (x) 15% of the Aggregate Value of
all Outstanding shares of Equity Stock over (y) the Aggregate Value of
all shares of Equity Stock other than Class S Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make
available to the representative(s) of the Initial Holder and the Board
of Directors a schedule that sets forth the then-current Initial
Holder Limit applicable to the Initial Holder.
"ISSUE DATE" shall mean April 30, 2003.
"JUNIOR STOCK" shall have the meaning set forth in paragraph (c) of
Section 7 of this Article.
"LIQUIDATION PREFERENCE" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940,
as amended.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through
Entity, a number of the Outstanding shares of Class S Preferred Stock
of the Corporation
- 6 -
<Page>
having an Aggregate Value not in excess of the excess of (x) 15% of
the Aggregate Value of all Outstanding shares of Equity Stock over (y)
the Aggregate Value of all shares of Equity Stock other than Class S
Preferred Stock that are Beneficially Owned by the Look-Through
Entity.
"MARKET PRICE" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"MATURITY DATE' shall have the meaning set forth in paragraph (c) of
Section 5 of this Article.
"NYSE" shall mean The New York Stock Exchange, Inc.
"OPERATING PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock
of the Corporation; provided, however, that for purposes of the
application of the Ownership Limit, the Look-Through Ownership Limit
or the Initial Holder Limit to any Person, the term "OUTSTANDING"
shall be deemed to include the number of shares of Equity Stock that
such Person alone, at that time, could acquire pursuant to any options
or convertible securities.
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class S Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class S Preferred Stock that are
Beneficially Owned by the Person.
"OWNERSHIP RESTRICTIONS" shall mean, collectively, the Ownership
Limit, as applied to Persons other than the Initial Holder or
Look-Through Entities, the Initial Holder Limit, as applied to the
Initial Holder, and the Look-Through Ownership Limit, as applied to
Look-Through Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of
Section 7 of this Article.
"PERSON" shall mean (a) for purposes of Section 10 of this Article,
(i) an individual, corporation, partnership, estate, trust (including
a trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section
509(a) of the Code, joint stock company or other entity, and (ii) a
"group," as that term is used for purposes of Section 13(d)(3) of the
Exchange Act, and (b) for purposes of the remaining Sections of this
Article,
- 7 -
<Page>
any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity.
"PROHIBITED TRANSFEREE" shall have the meaning set forth in Section
10.3(A) of this Article.
"RECORD DATE" shall mean, with respect to any Dividend Payment Date,
the January 15, April 15, July 15 or October 15 immediately preceding
such Dividend Payment Date.
"REDEMPTION DATE" shall mean, in the case of any redemption of any
shares of Class S Preferred Stock pursuant to paragraph (a) of Section
5 of this Article, the date fixed for redemption of such shares.
"REDEMPTION FAILURE" shall mean the failure of the Corporation to
redeem or repurchase within (i) 90 days of the Issue Date, shares of
preferred stock of the Corporation having an aggregate redemption or
repurchase price of $48,500,000 or (ii) 180 days after the Issue Date,
shares of preferred stock of the Corporation having an aggregate
redemption or repurchase price of $97,000,000 (including shares
referred to in clause (i)).
"REDEMPTION PRICE" shall mean, with respect to any share of Class S
Preferred Stock to be redeemed, 100% of the Liquidation Preference
thereof, plus all accumulated, accrued and unpaid dividends (whether
or not earned or declared), if any, to the Redemption Date.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"REPURCHASE DATE" (x) for purposes of a repurchase of Shares pursuant
to paragraph (d)(i) of Section 5 of this Article shall mean the date
selected by the Corporation that is not less than ten (10) and no more
than thirty (30) days after the date of the notice delivered to the
holders of record of the Class S Preferred Stock in connection with
the repurchase and (y) for purposes of a repurchase of Shares pursuant
to paragraph (d)(ii) of Section 5 of this Article shall mean the date
the relevant Fundamental Change is consummated.
"REPURCHASE PRICE" shall have the meaning set forth in paragraph (d)
of Section 5 of this Article.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of
Section 7 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of
- 8 -
<Page>
dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital
stock of the Corporation; provided, however, that if any funds for any
class or series of Junior Stock or any class or series of Parity Stock
are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for
payment" with respect to the Class S Preferred Stock shall mean
placing such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.
"SIGNIFICANT DISTRIBUTION" shall mean any transaction or series of
transactions (excluding regularly scheduled dividends paid in an
amount in accordance with past practice) in which the aggregate Fair
Market Value of any cash, evidences of indebtedness, assets or
securities, including shares of capital stock of any class or series,
or similar equity interests, of or relating to a subsidiary or other
business unit of the Corporation (a "Spin-Off"), but excluding any
Junior Stock or any rights or warrants to purchase Junior Stock, (i)
issued or distributed (by dividend or otherwise) by the Corporation to
holders of its Class A Common Stock or (ii) paid or given in respect
of shares of Class A Common Stock repurchased by the Corporation or
any of its subsidiaries (including by means of any tender or exchange
offer), exceeds 30% of the Common Equity Capitalization (determined as
of the date of the last event requiring such computation).
"THREE-MONTH LIBOR" for any Dividend Period means the rate (expressed
as a percentage per annum) for deposits in U.S. dollars having a term
of three months, commencing on the first day of such Dividend Period
(a "Reset Date"), which appears on Page 3750 on Moneyline Telerate
Inc. or any successor page (the "Telerate LIBOR Page") at
approximately 11:00 a.m., London time, on the day that is two Business
Days preceding such Reset Date. If such rate does not appear on the
Telerate LIBOR Page, the rate for such Reset Date will be determined
by reference to the rates at which deposits in U.S. dollars are
offered by four major banks in the London interbank market (the
"Reference Banks") at approximately 11:00 a.m., London time, on the
day that is two Business Days preceding such Reset Date to prime banks
in the London interbank market for a period of three months commencing
from such Reset Date and in a representative amount. The Corporation
shall cause its Dividend Rate Calculation Agent to request the
principal London office of each of the Reference Banks to provide a
quotation of such rate. If at least two such quotations are provided,
the rate for such Reset Date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested,
the rate for such Reset Date will be the arithmetic mean of the rates
quoted by three major banks in New York City, selected by the
Corporation's Dividend Rate Calculation Agent, at approximately 11:00
a.m., New York City time, on such Reset Date for loans in U.S. dollars
to leading European banks for a period of three months commencing on
such Reset Date and in a representative amount. The Corporation shall
promptly (or shall cause its Dividend Rate Calculation Agent promptly
to) notify any holder of the Class S Preferred Stock of the Dividend
Rate for any Dividend Period upon request.
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"TRADING DAY" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE,
a day on which the NYSE is open for the transaction of business, (ii)
if the Equity Stock is not listed or admitted to trading on the NYSE
but is listed or admitted to trading on another national securities
exchange or automated quotation system, a day on which the principal
national securities exchange or automated quotation system, as the
case may be, on which the Equity Stock is listed or admitted to
trading is open for the transaction of business, or (iii) if the
Equity Stock is not listed or admitted to trading on any national
securities exchange or automated quotation system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class S Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of
Class S Preferred Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or
exchangeable for Class S Preferred Stock), whether voluntary or
involuntary, whether of record ownership or Beneficial Ownership, and
whether by operation of law or otherwise (including, but not limited
to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of Class S Preferred
Stock). The term "TRANSFERS" and "TRANSFERRED" shall have correlative
meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class S Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class S Preferred Stock.
"TRUST" shall mean the trust created pursuant to Section 10.3(A) of
this Article.
"TRUSTEE" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8
of this Article.
3. DIVIDENDS.
(a) The holders of Class S Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class S Preferred
Stock. Such dividends shall be cumulative from the Issue Date, shall accumulate
whether or not such dividends shall be authorized, whether or not there shall be
assets of the Corporation legally available for the payment of such dividends,
whether or not the terms and provisions of any agreement of the Corporation,
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including any agreement relating to its indebtedness, prohibits such
authorization or payment or provides that such authorization or payment would
constitute a breach thereof or a default thereunder, and whether or not such
authorization or payment shall be restricted or prohibited by law, and shall be
payable quarterly in arrears on each Dividend Payment Date, commencing on July
31, 2003, to the holders of record of the Class S Preferred Stock, as they
appear on the stock records of the Corporation on the relevant Record Date.
Accumulated, accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Board of
Directors. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Class S Preferred Stock that
may be in arrears.
(b) The amount of dividends payable per share of Class S Preferred
Stock on each Dividend Payment Date shall be equal to the sum of the daily
amounts for each day actually elapsed during such Dividend Period, which daily
amounts shall be computed by dividing (1) the product of (A) the Dividend Rate
in effect for each such day during such Dividend Period multiplied by (B) the
Liquidation Preference of each outstanding share of Class S Preferred Stock by
(2) 360. Any dividend payment made on shares of the Class S Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to such shares. The Corporation shall determine the dividend
payable on each Dividend Payment Date in accordance with this Article, utilizing
the Three-Month LIBOR rate supplied by the Dividend Rate Calculation Agent
(which the Dividend Rate Calculation Agent shall determine in accordance with
the definition of Three-Month LIBOR in this Article). Holders of Class S
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
Class S Preferred Stock.
(c) So long as any of the shares of Class S Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any class or series
of Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment, on the Class S
Preferred Stock for all Dividend Periods terminating on or prior to the date
such dividend or distribution is declared, paid, set apart for payment or made,
as the case may be, with respect to such class or series of Parity Stock. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon the Class S Preferred Stock and
all dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class S Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock (which shall not include any accrual in
respect of unpaid dividends for prior dividend periods if such Parity Stock does
not have a cumulative dividend).
(d) So long as any of the shares of Class S Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to
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subscribe for or purchase shares of, Junior Stock) shall be declared or paid or
set apart for payment by the Corporation and no other distribution of cash or
other property shall be declared or made, directly or indirectly, by the
Corporation with respect to any shares of Junior Stock, nor shall any shares of
Junior Stock be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Class A 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
shares of, or options, warrants, or rights to subscribe for or purchase shares
of, 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 in
respect thereof, directly or indirectly, by the Corporation unless, in each
case, dividends equal to the full amount of all accumulated, accrued and unpaid
dividends on all outstanding shares of Class S Preferred Stock have been
declared and paid, or such dividends have been declared and a sum sufficient for
the payment thereof has been set apart for such payment, on all outstanding
shares of Class S Preferred Stock for all Dividend Periods ending on or prior to
the date such dividend or distribution is declared, paid, set apart for payment
or made with respect to such shares of Junior Stock, or the date such shares of
Junior Stock are redeemed, purchased or otherwise acquired or monies paid to or
made available for any sinking fund for such redemption, or the date any such
cash or other property is paid or distributed to or for the benefit of any
holders of Junior Stock in respect thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the Corporation
shall not be prohibited from (i) declaring or paying or setting apart for
payment any dividend or distribution on any shares of Parity Stock or (ii)
redeeming, purchasing or otherwise acquiring any Parity Stock, in each case, if
(but only to the extent that) such declaration, payment, redemption, purchase or
other acquisition is necessary in order to maintain the continued qualification
of the Corporation as a REIT under Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class S Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25.00) per share of Class S Preferred Stock (the "Liquidation Preference"),
plus an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class S Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class S Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series
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of Parity Stock, then such assets, or the proceeds thereof, shall be distributed
among the holders of Class S Preferred Stock and any such other Parity Stock
ratably in the same proportion as the respective amounts that would be payable
on such Class S Preferred Stock and any such other Parity Stock if all amounts
payable thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation's assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
S Preferred Stock and any Parity Stock, as provided in Section 4(a), 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 Class S Preferred Stock and any Parity Stock
shall not be entitled to share therein.
5. REDEMPTION.
(a) The Corporation, at its option, may redeem shares of Class S
Preferred Stock, in whole or from time to time in part (provided that the
Corporation may not call for redemption a number of shares (i) which have an
aggregate Liquidation Preference of less than twenty million dollars
($20,000,000) or (ii) the redemption of which would result in less than twenty
million dollars ($20,000,000) in liquidation amount of Class S Preferred
remaining outstanding, at any one time, at a redemption price per share redeemed
payable in cash equal to (x) the Liquidation Preference per share of Class S
Preferred Stock being redeemed multiplied by the following amount:
(i) if the Redemption Date is on or before July 31, 2003,
97.75%;
(ii) if the Redemption Date is after July 31, 2003 and on or
before October 31, 2003, 98.00%;
(iii) if the Redemption Date is after October 31, 2003 and on
or before January 31, 2004, 98.50%;
(iv) if the Redemption Date is after January 31, 2004 and on
or before April 30, 2004, 99.00%; and
(v) if the Redemption Date is after April 30, 2004, 100%,
plus in each case, (y) an amount equal to all accumulated, accrued and unpaid
dividends, if any, to and including the Redemption Date (whether or not earned
or authorized). The date on which shares called for redemption pursuant to this
paragraph (a) of this Section 5 (the "Redemption Date") shall be selected by the
Corporation, shall be specified in the notice of redemption and shall be not
less than thirty (30) days nor more than sixty (60) days after the date notice
of redemption is sent by the Corporation. If a Redemption Date occurs after a
Record Date and on
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or prior to the related Dividend Payment Date, the dividend payable on such
Dividend Payment Date in respect of such shares called for redemption shall be
payable on such Dividend Payment Date to the holders of record at the close of
business on such Record Date notwithstanding the redemption of such shares, and
shall not be payable as part of the redemption price for such shares.
(b) If full cumulative dividends on all outstanding shares of
Class S Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class S Preferred Stock may be redeemed pursuant
to paragraph (a) of this Section 5 unless all outstanding shares of Class S
Preferred Stock are simultaneously redeemed. Neither the Corporation nor any
affiliate of the Corporation may purchase or acquire shares of Class S Preferred
Stock, other than pursuant to a tender or exchange offer made on the same terms
to all holders of shares of Class S Preferred Stock. If fewer than all the
outstanding shares of Class S Preferred Stock are to be redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding shares of Class S
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class S Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) or by any other method as may be
determined by the Board of Directors in its discretion to be equitable.
(c) If the Corporation shall redeem shares of Class S Preferred
Stock pursuant to paragraph (a) of this Section 5, 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 (except that
if the sole record holder of the shares of Class S Preferred Stock is Wachovia
Bank, National Association, or one of its affiliates, such notice may be given
by telecopy to Wachovia Securities Debt Capital Markets at (704) 283-6205 (to
the attention of Rex Rudy, or to such other person as may be designated from
time to time)). Neither the failure to mail any notice required by this
paragraph (d), nor any defect therein or in the mailing thereof to any
particular holder, shall affect the sufficiency of the notice or the validity of
the proceedings for redemption with respect to the other holders. Any notice
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 notice shall state, as appropriate: (i) the Redemption Date; (ii) the
number of shares of Class S 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; (iii) the place or places at which
certificates for such shares are to be surrendered; and (iv) the Redemption
Price payable on such Redemption Date, including, without limitation, a
statement as to whether or not accumulated, accrued and unpaid dividends will be
payable as part of the Redemption Price, or payable on the next Dividend Payment
Date to the record holder at the close of business on the relevant Record Date
as described in the next sentence. Notice having been mailed as aforesaid, from
and after the Redemption Date (provided the Corporation has available the amount
of cash necessary to effect such redemption as set forth below), (i) dividends
on the shares of Class S Preferred Stock so called for redemption shall cease to
accumulate or accrue on the shares of Class S Preferred Stock called for
redemption, (ii) said shares shall no longer be deemed to be outstanding, and
(iii) all rights of the holders thereof as holders of Class S Preferred Stock of
the Corporation shall cease (except the right to receive the cash payable upon
such redemption, without interest thereon, upon surrender and endorsement of
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their certificates if so required); provided, however, that if the Redemption
Date for any shares of Class S Preferred Stock occurs after any Record Date and
on or prior to the related Dividend Payment Date, the full dividend payable on
such Dividend Payment Date in respect of such shares of Class S Preferred Stock
called for redemption shall be payable on such Dividend Payment Date to the
holders of record of such shares at the close of business on the corresponding
Record Date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the cash necessary to effect the
redemption in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the applicable Redemption Date, the Corporation shall
irrevocably deposit in trust with a bank or trust company (which may not be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption plus, if such Redemption Date occurs
after any Record Date and on or prior to the related Dividend Payment Date, such
amount of cash as is necessary to pay the dividend payable on such Dividend
Payment Date in respect of such shares of Class S Preferred Stock called for
redemption, with irrevocable instructions that such cash be applied to the
redemption of the shares of Class S Preferred Stock so called for redemption
and, if applicable, the payment of such dividend. No interest shall accrue for
the benefit of the holders of shares of Class S Preferred Stock to be redeemed
on any cash so set aside by the Corporation.
(d) (i) Upon the occurrence of any Fundamental Change
(including a Change in Control to which the Company is a party), each
holder of Class S Preferred Stock shall have the right, at the holder's
option, to require the Corporation to repurchase all of the shares of Class
S Preferred Stock held by such holder as of the Repurchase Date at a price
per share equal to $25.00 per share, plus an amount equal to accumulated,
accrued and unpaid dividends, if any, to and including the Repurchase Date
(whether or not earned or authorized) (the "Repurchase Price"). Within
thirty (30) days of the consummation of a Fundamental Change, the
Corporation shall mail to all holders of record of the Class S Preferred
Stock a notice, by first-class mail, postage prepaid, at such holder's
address as the same appears on the stock records of the Corporation (except
that if the sole record holder of the shares of Class S Preferred Stock is
Wachovia Bank, National Association, or an affiliate thereof such notice
may be given by telecopy to Wachovia Securities Debt Capital Markets at
(704) 283-6205 (to the attention of Rex Rudy, or to such other person as
may be designated from time to time)), which notice shall: (w) describe the
Fundamental Change and the repurchase right arising as a result thereof;
(x) state the Repurchase Price; (y) state the Repurchase Date; and (z)
state the place or places where certificates for such shares are to be
surrendered.
(ii) In addition to the obligations set forth in (i) above,
the Corporation shall not complete any Fundamental Change to which it is a
party unless it or, in the case of a Change in Control, the party with whom
it has entered into an agreement to effect such Change in Control and any
entity which controls such party has agreed to satisfy the Corporation's
obligations under this paragraph (d) of this Section 5. No later than
thirty (30) days prior to the consummation of a Fundamental Change (other
than a Change in Control in which the Corporation is not a party), the
Corporation shall mail to all holders of record of the Class S Preferred
Stock a notice, by first-class mail, postage prepaid, at such holder's
address as the same appears on the stock records of the Corporation (except
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that if the sole record holder of the shares of Class S Preferred Stock is
Wachovia Bank, National Association, or an affiliate thereof such notice
may be given by telecopy to Wachovia Securities Debt Capital Markets at
(704) 283-6205 (to the attention of Rex Rudy, or to such other person as
may be designated from time to time), which notice shall: (i) describe the
pending Fundamental Change and the repurchase right arising as a result
thereof; (ii) state the Repurchase Price; (iii) state the Repurchase Date;
and (iv) state the place or places where certificates for such shares are
to be surrendered.
(e) On April 30, 2043 (the "Maturity Date"), the Corporation shall
repurchase all of the shares of Class S Preferred Stock on that date at a price
per share equal to $25.00 per share, plus an amount equal to accumulated,
accrued and unpaid dividends, if any, to and including the Maturity Date
(whether or not earned or authorized) (the "Maturity Price"). Not earlier than
February 1, 2043 nor later than April 15, 2043, the Corporation shall mail to
all holders of record of the Class S Preferred Stock a notice, by first-class
mail, postage prepaid, at such holder's address as the same appears on the stock
records of the Corporation (except that if the sole record holder of the shares
of Class S Preferred Stock is Wachovia Bank, National Association, or an
affiliate thereof, such notice may be given by telecopy to Wachovia Securities
Debt Capital Markets at (704) 283-6205 (to the attention of Rex Rudy, or to such
other person as may be designated from time to time)), which notice shall state
the Maturity Price and the place or places where certificates for shares must be
surrendered.
(f) Subject to applicable escheat laws, any such cash unclaimed at
the end of two years from any Redemption Date, Repurchase Date or Maturity Date,
as applicable, shall revert to the general funds of the Corporation, after which
reversion the holders of shares of Class S Preferred Stock so called for
redemption shall look only to the general funds of the Corporation for the
payment of such cash.
(g) As promptly as practicable and in no event later than five (5)
business days after the surrender of the certificates for any shares of Class S
Preferred Stock to be redeemed or repurchased (properly endorsed or assigned for
transfer, if the Corporation shall so require and the notice shall so state),
such certificates shall be exchanged for cash (without interest thereon) and in
the event of a repurchase pursuant to paragraph (d) of this Section 5, the
Corporation (or any successor to the Corporation) shall deliver funds in an
amount sufficient to satisfy its obligations under paragraph (d) to an escrow
agent no later than five (5) days prior to the Repurchase Date. If fewer than
all the shares of Class S Preferred Stock represented by any certificate are
redeemed or repurchased, then a new certificate representing the unredeemed
shares shall be issued without cost to the holders thereof.
6. STATUS OF REACQUIRED STOCK.
All shares of Class S Preferred Stock that have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized but unissued shares of Class S Preferred Stock , but may not be
reissued by the Corporation as Class S Preferred Stock so long as any shares of
Class S Preferred Stock remain issued and outstanding.
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7. RANKING.
Any class or series of capital stock of the Corporation shall be
deemed to rank:
(a) prior or senior to the Class S Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class S Preferred Stock ("Senior Stock");
(b) on a parity with the Class S Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class S Preferred Stock, if (i) such capital stock is Class B Cumulative
Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D
Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible
Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock,
Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative
Preferred Stock, Class Q Cumulative Preferred Stock, or Class R Cumulative
Preferred Stock of the Corporation, or (ii) the holders of such class of stock
or series and the Class S Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends per
share or liquidation preferences, without preference or priority of one over the
other (the capital stock referred to in clauses (i) and (ii) of this paragraph
being hereinafter referred to, collectively, as "Parity Stock"); and
(c) junior to the Class S Preferred Stock, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if (i) such capital stock or series shall be Class A Common Stock or
(ii) the holders of Class S Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class S Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting the
Board of Directors shall be increased by two if not already increased by reason
of similar types of provisions with respect to shares of any other class or
series of Parity Stock which is entitled to similar voting rights (the "Voting
Preferred Stock") and the holders of shares of Class S Preferred Stock, together
with the holders of shares of all other Voting Preferred Stock
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then entitled to exercise similar voting rights, voting as a single class
regardless of series, shall be entitled to elect the two additional directors to
serve on the Board of Directors at any annual meeting of stockholders or special
meeting held in place thereof, or at a special meeting of the holders of the
Class S Preferred Stock and the Voting Preferred Stock called as hereinafter
provided. Whenever all arrears in dividends on the Class S Preferred Stock and
the Voting Preferred Stock then outstanding shall have been paid and dividends
thereon for the current quarterly Dividend Period shall have been declared and
paid, or declared and set apart for payment, then the right of the holders of
the Class S Preferred Stock and the Voting Preferred Stock to elect such
additional two directors shall cease (but subject always to the same provision
for the vesting of such voting rights in the case of any similar future
arrearages), and the terms of office of all persons elected as directors by the
holders of the Class S Preferred Stock and the Voting Preferred Stock shall
forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class S Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and
upon the written request of any holder of 20% or more of the Class S Preferred
Stock (addressed to the Secretary at the principal office of the Corporation)
shall, call a special meeting of the holders of the Class S Preferred Stock and
of the Voting Preferred Stock for the election of the two directors to be
elected by them as herein provided, such call to be made by notice similar to
that provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of 20% or more of the Class S
Preferred Stock may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock books of the Corporation. The
directors elected at any such special meeting shall hold office until the next
annual meeting of the stockholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the directors elected by the holders of the Class S
Preferred Stock and the Voting Preferred Stock, a successor shall be elected by
the Board of Directors, upon the nomination of the then-remaining director
elected by the holders of the Class S Preferred Stock and the Voting Preferred
Stock or the successor of such remaining director, to serve until the next
annual meeting of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as provided above. The
directors elected pursuant to this paragraph (a) shall each be entitled to one
vote per director on any matter.
(b) So long as any shares of Class S Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the
votes entitled to be cast by the holders of the Class S Preferred Stock voting
as a single class, given in person or by proxy, either in writing without a
meeting or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles Supplementary
or the Charter of the Corporation, whether by merger, consolidation or
otherwise, that materially adversely affects any voting powers, rights,
preferences or privileges of the Class S Preferred Stock or the holders thereof
(which shall include any amendment of the provisions of the Charter so as to
increase the authorized amount of Class S Preferred Stock or to authorize any
reissuance of Class S Preferred Stock redeemed or otherwise reacquired by the
Corporation); provided, however, that the
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amendment of the provisions of the Charter so as to increase the authorized
amount of, or issue any Junior Stock or any shares of any class of Parity Stock,
shall not be deemed to materially adversely affect the voting powers, rights or
preferences of the holders of Class S Preferred Stock; PROVIDED, HOWEVER, that
no such vote of the holders of Class S Preferred Stock shall be required if, at
or prior to the time when such amendment, alteration or repeal is to take
effect, or when the issuance of any such Senior Stock or convertible or
exchangeable security is to be made, as the case may be, all outstanding shares
of Class S Preferred Stock shall have been redeemed or called for redemption
upon proper notice and sufficient funds shall have been deposited in trust to
effect such redemption. Nothing contained in of this section shall require a
vote of the holders of the Class S Preferred Stock in connection with the
redemption, purchase or other acquisition by the Corporation of shares of stock
of the Corporation not in violation of this Article.
(c) So long as any shares of Class S Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the
votes entitled to be cast by the holders of the Class S Preferred Stock voting
as a single class together with the holders of all other classes of Parity Stock
entitled to vote on such matters, given in person or by proxy, either in writing
without a meeting or by vote at any meeting called for the purpose, shall be
necessary for (i) any amendment, alteration or repeal of any of the provisions
of, or the addition of any provision to the Bylaws of the Company that
materially adversely effects any voting powers, rights, preferences or
privileges of the Class S Preferred Stock or the holders thereof or (ii)
effecting or validating the authorization, creation, increase in the authorized
amount, or issuance of, or reclassification of any authorized stock of the
Corporation into, any shares of any class or series of Senior Stock or any
security convertible into or evidencing the right to purchase shares of any
class or series of Senior Stock (whether or not such class or series of Senior
Stock is currently authorized); PROVIDED, HOWEVER, that no such vote of the
holders of Class S Preferred Stock shall be required if, at or prior to the time
when such amendment, authorization, creation, increase, issuance or
reclassification is to take effect, or when the issuance of any such Senior
Stock or convertible or exchangeable security is to be made, as the case may be,
all outstanding shares of Class S Preferred Stock shall have been redeemed or
called for redemption upon proper notice and sufficient funds shall have been
deposited in trust to effect such redemption. Nothing contained in of this
section shall require a vote of the holders of the Class S Preferred Stock in
connection with the redemption, purchase or other acquisition by the Corporation
of shares of stock of the Corporation not in violation of this Article.
(d) For purposes of the foregoing provisions and all other voting
rights under these Articles Supplementary, each share of Class S Preferred Stock
shall have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class S
Preferred Stock as a single class on any matter, then the Class S Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25.00 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class S Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
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9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the
record holder of any share of Class S Preferred Stock as the true and lawful
owner thereof for all purposes, and neither the Corporation nor the Transfer
Agent shall be affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section
10.8, from and after the Issue Date, no Person (other than the Initial Holder or
a Look-Through Entity) shall Beneficially Own shares of Class S Preferred Stock
in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class S Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class S Preferred Stock in
excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
Owning shares of Class S Preferred Stock in excess of the Ownership Limit shall
be void AB INITIO as to the Transfer of such shares of Class S Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class S Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided
in Section 10.8, from and after the Issue Date (and subject to Section 10.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class S Preferred Stock in excess
of the Initial Holder Limit shall be void ab initio as to the Transfer of such
shares of Class S Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class S Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class S Preferred Stock in
excess of the Look-Through Ownership limit shall be void ab initio as to the
Transfer of such shares of Class S Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class S Preferred Stock.
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(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class S Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class S
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class
S Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class S Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
of the Transfer of any other share of Class S Preferred Stock in the same or any
other related transaction.
10.2 REMEDIES FOR BREACH.
If the Board of Directors or a committee thereof shall at any time
determine in good faith that a Transfer or other event has taken place in
violation of Section 10.1 of this Article or that a Person intends to acquire or
has attempted to acquire Beneficial Ownership of any shares of Class S Preferred
Stock in violation of Section 10.1 of this Article (whether or not such
violation is intended), 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, causing the Corporation to redeem such shares at the then current
Market Price and upon such terms and conditions as may be specified by the Board
of Directors in its sole discretion (including, but not limited to, by means of
the issuance of long-term indebtedness for the purpose of such redemption),
demanding the repayment of any distributions received in respect of shares of
Class S Preferred Stock acquired in violation of Section 10.1 of this Article or
instituting proceedings to enjoin such Transfer or to rescind such Transfer or
attempted Transfer; provided, however, that any Transfers or attempted Transfers
(or in the case of events other than a Transfer, Beneficial Ownership) in
violation of Section 10.1 of this Article, regardless of any action (or
non-action) by the Board of Directors or such committee, (a) shall be void ab
initio or (b) shall automatically result in the transfer described in Section
10.3 of this Article; provided, further, that the provisions of this Section
10.2 shall be subject to the provisions of Section 10.12 of this Article;
provided, further, that neither the Board of Directors nor any committee thereof
may exercise such authority in a manner that interferes with any ownership or
transfer of Class S Preferred Stock that is expressly authorized pursuant to
Section 10.8(C) of this Article.
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10.3 TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "Excess Transfer") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Equity Stock) or other event (including, but not limited to, any
acquisition of any share of Equity Stock) such that (a) any Person (other than
the Initial Holder or a Look-Through Entity) would Beneficially Own shares of
Class S Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class S Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class S Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class S Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "Prohibited Transferee"), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class S
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the Business Day prior to the Excess Transfer,
change in capital structure or another event giving rise to a potential
violation of the Ownership Limit, the Initial Holder Limit or the Look Through
Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class S Preferred
Stock held by the Trustee shall be issued and outstanding shares of capital
stock of the Corporation. Except to the extent provided in Section 10.3(E), the
Prohibited Transferee shall have no rights in the Class S Preferred Stock held
by the Trustee, and the Prohibited Transferee shall not benefit economically
from ownership of any shares held in trust by the Trustee, shall have no rights
to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class S Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class S Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void AB
INITIO with respect to such shares of Class S Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any
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vote cast by a Prohibited Transferee prior to the discovery by the Corporation
that the shares of Class S Preferred Stock have been transferred to the Trustee
will be rescinded as void AB INITIO and shall be recast in accordance with the
desires of the Trustee acting for the benefit of the Charitable Beneficiary. The
owner of the shares at the time of the Excess Transfer, change in capital
structure or other event giving rise to a potential violation of the Ownership
Limit, Initial Holder Limit or Look-Through Entity Ownership Limit shall be
deemed to have given an irrevocable proxy to the Trustee to vote the shares of
Class S Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a Person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price paid by the Prohibited Transferee for the
shares or, if the Prohibited Transferee did not give value for the shares
(through a gift, devise or other transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2) the
price per share received by the Trustee from the sale or other disposition of
the shares held in the Trust. Any proceeds in excess of the amount payable to
the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any
of the transfer restrictions set forth in this Section 10.3(E) or any
application thereof is determined in a final judgment to be void, invalid or
unenforceable by any court having jurisdiction over the issue, the Prohibited
Transferee may be deemed, at the option of the Corporation, to have acted as the
agent of the Corporation in acquiring the Class S Preferred Stock as to which
such restrictions would, by their terms, apply, and to hold such Class S
Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class S Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class S Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
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10.4 NOTICE OF RESTRICTED TRANSFER.
Any Person that acquires or attempts to acquire shares of Class S
Preferred Stock in violation of Section 10.1 of this Article, or any Person that
is a Prohibited Transferee such that stock is transferred to the Trustee under
Section 10.3 of this Article, shall immediately give written notice to the
Corporation of such event and shall provide to the Corporation such other
information as the Corporation may request in order to determine the effect, if
any, of such Transfer or attempted 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.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION.
From and after the Issue Date certain record and Beneficial Owners and
transferees of shares of Class S Preferred Stock will be required to provide
certain information as set out below.
(A) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class S Preferred 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 holder or Beneficial Owner, the number of shares of Class S
Preferred Stock Beneficially Owned, and a full description of how such shares
are held. Each such record holder or Beneficial Owner of Class S Preferred Stock
shall, upon demand by the Corporation, disclose to the Corporation in writing
such additional information with respect to the Beneficial Ownership of the
Class S Preferred 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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class S Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 10.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is
a Beneficial Owner of shares of Class S Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class S
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class S Preferred Stock already Beneficially 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.
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10.6 REMEDIES NOT LIMITED.
Nothing contained in this Article shall limit the authority of the
Board of Directors to take such other action as it deems necessary or advisable
(subject to the provisions of Section 10.12 of this Article) (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 insure compliance with the Ownership
Limit, the Initial Holder Limit and the Look-Through Ownership Limit.
10.7 AMBIGUITY.
In the case of an ambiguity in the application of any of the
provisions of Section 10 of this Article, or in the case of an ambiguity in any
definition contained in Section 10 of this Article, the Board of Directors shall
have the power to determine the application of the provisions of this Article
with respect to any situation based on its reasonable belief, understanding or
knowledge of the circumstances.
10.8 EXCEPTIONS.
The following exceptions shall apply or may be established with
respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt
of a ruling from the Internal Revenue Service or an opinion of tax counsel or
other evidence or undertaking acceptable to it, may waive the application, in
whole or in part, of the Ownership Limit to a Person subject to the Ownership
Limit, if such person is not an individual for purposes of Section 542(a) of the
Code (as modified to exclude qualified trusts from treatment as individuals
pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership,
limited liability company, estate or trust. In connection with any such
exemption, the Board of Directors may require such representations and
undertakings from such Person 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 on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of
this Article, the pledge by the Initial Holder of all or any portion of the
Class S Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 10.1 of this Article and the pledgee shall
not be subject to the Ownership Limit with respect to the Class S Preferred
Stock so pledged to it either as a result of the pledge or upon foreclosure.
10.9 LEGEND.
Each certificate for Class S Preferred Stock shall bear substantially
the following legend:
The shares of Class S Cumulative Preferred Stock represented by
this certificate are subject to restrictions on transfer. No
person may Beneficially Own shares of Class S Cumulative
Preferred Stock in excess of the
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Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter (including
the Articles Supplementary setting forth the terms of the Class S
Cumulative Preferred Stock). Any Person that attempts to
Beneficially Own shares of Class S Cumulative Preferred Stock in
excess of the applicable limitation must immediately notify the
Corporation. All capitalized terms in this legend have the
meanings ascribed to such terms in the Charter (including the
Articles Supplementary setting forth the terms of the Class S
Cumulative Preferred Stock), 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 that so requests.
If the restrictions on transfer are violated, (i) the transfer of
the shares of Class S Cumulative Preferred Stock represented
hereby will be void in accordance with the Charter (including the
Articles Supplementary setting forth the terms of the Class S
Cumulative Preferred Stock) or (ii) the shares of Class S
Cumulative Preferred Stock represented hereby will automatically
be transferred to a Trustee of a Trust for the benefit of one or
more Charitable Beneficiaries.
10.10 SEVERABILITY.
If any provision of this Article 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.
10.11 BOARD OF DIRECTORS DISCRETION.
Anything in this Article to the contrary notwithstanding, 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 the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit in the event of a change in law.
10.12 SETTLEMENT.
Nothing in this Section 10 of this Article shall be interpreted to
preclude the settlement of any transaction entered into through the facilities
of the NYSE or other securities exchange or an automated inter-dealer quotation
system.
FOURTH: The terms of the Class S Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXX of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on April 30, 2003.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Lisa Cohn /s/ Paul J. McAuliffe
- --------------------------------- -----------------------------------
Lisa Cohn Paul J. McAuliffe
Vice President, Assistant General Executive Vice President and
Counsel and Assistant Secretary Chief Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Paul J. McAuliffe
-----------------------------------
Paul J. McAuliffe
Executive Vice President and
Chief Financial Officer
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ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS T CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Section 1.2 of Article IV of the Charter of the
Corporation, as amended to date (the "Charter"), the Board of Directors has duly
divided and classified 6,000,000 authorized but unissued shares of Class A
Common Stock of the Corporation, par value $.01 per share, into a class
designated as Class T Cumulative Preferred Stock, par value $.01 per share, and
has provided for the issuance of such class.
SECOND: The reclassification increases the number of shares classified
as Class T Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 6,000,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 450,962,738 shares immediately prior to
the reclassification to 444,962,738 shares immediately after the
reclassification. The number of shares classified as Class T Cumulative
Preferred Stock may be decreased upon reacquisition thereof in any manner, or by
retirement thereof, by the Corporation.
THIRD: The terms of the Class T Cumulative Preferred Stock (including
the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class T Cumulative
Preferred Stock (the "Class T Preferred Stock") and Six Million (6,000,000)
shall be the authorized number of shares of such Class T Preferred Stock
constituting such class.
2. DEFINITIONS.
For purposes of the Class T Preferred Stock, the following terms shall
have the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
"AFFILIATE" of a Person means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity
Stock, the product of (i) the number of shares of Equity Stock within
such block and (ii) the corresponding Market Price of one share of
Equity Stock of such class.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person,
ownership of shares of Equity Stock equal to the sum of (without
duplication) (i) the number of shares of Equity Stock directly owned by
such Person, (ii) the number of shares of Equity Stock indirectly owned
by such Person (if such Person is an "individual" as defined in Section
542(a)(2) of the Code) taking into account the constructive ownership
rules of Section 544 of the Code, as modified by Section 856(h)(1)(B)
of the Code, and (iii) the number of shares of Equity Stock that such
Person is deemed to beneficially own pursuant to Rule 13d-3 under the
Exchange Act, or that is attributed to such Person pursuant to Section
318 of the Code, as modified by Section 856(d)(5) of the Code, PROVIDED
that when applying this definition of Beneficial Ownership to the
Initial Holder, clause (iii) of this definition, and clause (ii) of the
definition of "Person" shall be disregarded. The terms "BENEFICIAL
OWNER," "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" shall have the
correlative meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Class T
Preferred Stock; provided that, for purposes of paragraph (a) of
Section 8 of this Article, the term "BOARD OF DIRECTORS" shall not
include any such committee.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the
Trust as determined pursuant to Section 10.3(G) of this Article, each
of which shall be an organization described in Section 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"CLASS A COMMON STOCK" shall mean the Class A Common Stock, par value
$.01 per share, of the Corporation, and such other shares of the
Corporation's capital stock into which outstanding shares of such Class
A Common Stock shall be reclassified.
"CLASS T PREFERRED STOCK" shall have the meaning set forth in Section 1
of this Article.
"CLOSING PRICE" shall mean, when used with respect to a share of any
Equity Stock and for any date, 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 NYSE or, if the Equity
Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction
2
reporting system with respect to securities listed on the principal
national securities exchange on which the Equity Stock is listed or
admitted to trading or, if the Equity 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 quotation
system that may then be in use or, if the Equity 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
Equity Stock selected by the Board of Directors of the Corporation or,
if the Equity Stock is not publicly traded, the fair value of a share
of such Equity Stock as reasonably determined in good faith by the
Board of Directors.
"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 thereto, as
interpreted by any applicable regulations or other administrative
pronouncements as in effect from time to time.
"DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15, and
October 15 of each year; provided, that if any Dividend Payment Date
falls on any day other than a Business Day, the dividend payment
payable on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date and no interest shall
accrue on such dividend from such date to such Dividend Payment Date.
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including
January 15, April 15, July 15, and October 15 of each year and ending
on and including the day preceding the first day of the next succeeding
Dividend Period, other than the Dividend Period during which any Class
T Preferred Stock shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the Redemption Date with respect to the Class
T Preferred Stock being redeemed.
"EQUITY STOCK" shall mean one or more shares of any class of capital
stock of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this
Article.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ISSUE DATE" shall mean July 31, 2003.
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and
including the Issue Date and ending on and including October 14, 2003.
"INITIAL HOLDER" shall mean Terry Considine.
3
"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class T Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 15% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value of all
shares of Equity Stock other than Class T Preferred Stock that are
Beneficially Owned by the Initial Holder. From the Issue Date, the
secretary of the Corporation, or such other person as shall be
designated by the Board of Directors, shall upon request make available
to the representative(s) of the Initial Holder and the Board of
Directors, a schedule that sets forth the then-current Initial Holder
Limit applicable to the Initial Holder.
"JUNIOR STOCK" shall have the meaning set forth in paragraph (c) of
Section 7 of this Article.
"LIQUIDATION PREFERENCE" shall have the meaning set forth in paragraph
(a) of Section 4 of this Article.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described
in Section 401(a) of the Code as provided under Section 856(h)(3) of
the Code or (ii) registered under the Investment Company Act of 1940.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity,
a number of the Outstanding shares of Class T Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of
(x) 15% of the Aggregate Value of all Outstanding shares of Equity
Stock over (y) the Aggregate Value of all shares of Equity Stock other
than Class T Preferred Stock that are Beneficially Owned by the
Look-Through Entity.
"MARKET PRICE" on any date shall mean, with respect to any share of
Equity Stock, the Closing Price of a share of that class of Equity
Stock on the Trading Day immediately preceding such date.
"NYSE" shall mean The New York Stock Exchange, Inc.
"OPERATING PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock
of the Corporation; PROVIDED, HOWEVER, that for purposes of the
application of the Ownership Limit, the Look-Through Ownership Limit or
the Initial Holder Limit to any Person, the term "Outstanding" shall be
deemed to include the number of shares of Equity Stock that such Person
alone, at that time, could acquire pursuant to any options or
convertible securities.
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial
Holder or a Look-Through Entity, a number of the Outstanding shares of
Class T Preferred Stock of the Corporation having an Aggregate Value
not in excess of the excess of (x) 8.7% of the Aggregate Value of all
Outstanding shares of Equity Stock over (y) the Aggregate Value
4
of all shares of Equity Stock other than Class T Preferred Stock that
are Beneficially Owned by the Person.
"OWNERSHIP RESTRICTIONS" shall mean, collectively, the Ownership Limit,
as applied to Persons other than the Initial Holder or Look-Through
Entities, the Initial Holder Limit, as applied to the Initial Holder,
and the Look-Through Ownership Limit, as applied to Look-Through
Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of
Section 7 of this Article.
"PERSON" shall mean (a) for purposes of Section 10 of this Article, (i)
an individual, corporation, partnership, estate, trust (including a
trust qualifying under Section 401(a) or 501(c) of the Code),
association, "private foundation," within the meaning of Section 509(a)
of the Code, joint stock company or other entity, and (ii) a "group,"
as that term is used for purposes of Section 13(d)(3) of the Exchange
Act, and (b) for purposes of the remaining Sections of this Article,
any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity.
"PROHIBITED TRANSFEREE" shall have the meaning set forth in Section
10.3(A) of this Article.
"RECORD DATE" shall have the meaning set forth in paragraph (a) of
Section 3 of this Article.
"REDEMPTION DATE" shall mean, in the case of any redemption of any
shares of Class T Preferred Stock, the date fixed for redemption of
such shares.
"REDEMPTION PRICE" shall mean, with respect to any share of Class T
Preferred Stock to be redeemed, 100% of the Liquidation Preference
thereof, plus all accumulated, accrued and unpaid dividends (whether or
not earned or declared), if any, to the Redemption Date.
"REIT" shall mean a "real estate investment trust," as defined in
Section 856 of the Code.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of
Section 7 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Directors, the allocation of funds to be so paid on any
series or class of capital stock of the Corporation; PROVIDED, HOWEVER,
that if any funds for any class or series of Junior Stock or any class
or series of Parity Stock are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Class T
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
5
"TRADING DAY" shall mean, when used with respect to any Equity Stock,
(i) if the Equity Stock is listed or admitted to trading on the NYSE, a
day on which the NYSE is open for the transaction of business, (ii) if
the Equity Stock is not listed or admitted to trading on the NYSE but
is listed or admitted to trading on another national securities
exchange or automated quotation system, a day on which the principal
national securities exchange or automated quotation system, as the case
may be, on which the Equity Stock is listed or admitted to trading is
open for the transaction of business, or (iii) if the Equity Stock is
not listed or admitted to trading on any national securities exchange
or automated quotation system, 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 sale, transfer, gift, assignment, devise or
other disposition of a share of Class T Preferred Stock (including (i)
the granting of an option or any series of such options or entering
into any agreement for the sale, transfer or other disposition of Class
T Preferred Stock or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Class T Preferred Stock), whether voluntary or
involuntary, whether of record ownership or Beneficial Ownership, and
whether by operation of law or otherwise (including, but not limited
to, any transfer of an interest in other entities that results in a
change in the Beneficial Ownership of shares of Class T Preferred
Stock). The term "TRANSFERS" and "TRANSFERRED" shall have correlative
meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the
Class T Preferred Stock; provided, that if the Corporation has not
designated a transfer agent then the Corporation shall act as the
transfer agent for the Class T Preferred Stock.
"TRUST" shall mean the trust created pursuant to Section 10.3(A) of
this Article.
"TRUSTEE" shall mean the Person unaffiliated with either the
Corporation or the Prohibited Transferee that is appointed by the
Corporation to serve as trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8
of this Article.
3. DIVIDENDS.
(a) The holders of Class T Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class T Preferred
Stock in an amount per share equal to $0.50. Such dividends shall be cumulative
from the Issue Date, whether or not in any Dividend Period or Periods such
dividends shall be declared or there shall be funds of the Corporation legally
available for the payment of such dividends, and shall be payable quarterly in
arrears on each Dividend Payment Date, commencing on October 15, 2003. Each such
dividend shall be payable in arrears to the holders of record of the Class T
Preferred Stock, as they appear on the stock records of the Corporation at the
close of business on January 1, April 1, July 1 or October 1 (each a "Record
Date"), as the case may be, immediately preceding such Dividend
6
Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend
Periods may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to holders of record on such date, which date shall not
precede by more than 45 days the payment date thereof, as may be fixed by the
Board of Directors.
(b) The amount of dividends payable per share of Class T
Preferred Stock for the Initial Dividend Period, or any other period shorter
than a full Dividend Period, shall be computed ratably on the basis of twelve
30-day months and a 360-day year. Holders of Class T 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 Class T 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 Class T Preferred Stock that
may be in arrears.
(c) So long as any of the shares of Class T Preferred Stock
are outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any class or series
of Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment, on the Class T
Preferred Stock for all Dividend Periods terminating on or prior to the date
such dividend or distribution is declared, paid, set apart for payment or made,
as the case may be, with respect to such class or series of Parity Stock. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon the Class T Preferred Stock and
all dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class T Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class T 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to any
shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Class A 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 shares of, or options, warrants, or rights to
subscribe for or purchase shares of, 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 in respect thereof, directly or indirectly, by
the Corporation unless, in each case, dividends equal to the full amount of all
accumulated, accrued and unpaid dividends on all outstanding shares of Class T
Preferred Stock have been declared and paid, or such dividends have been
declared and a sum sufficient for the payment thereof has been set apart for
such payment, on all outstanding shares of Class T Preferred Stock for all
Dividend Periods ending on or prior to the date such dividend or distribution is
declared, paid,
7
set apart for payment or made with respect to such shares of Junior Stock, or
the date such shares of Junior Stock are redeemed, purchased or otherwise
acquired or monies paid to or made available for any sinking fund for such
redemption, or the date any such cash or other property is paid or distributed
to or for the benefit of any holders of Junior Stock in respect thereof, as the
case may be.
Notwithstanding the provisions of this Section 3, the Corporation shall
not be prohibited from (i) declaring or paying or setting apart for payment any
dividend or distribution on any shares of Parity Stock or (ii) redeeming,
purchasing or otherwise acquiring any Parity Stock, in each case, if such
declaration, payment, redemption, purchase or other acquisition is necessary in
order to maintain the continued qualification of the Corporation as a REIT under
Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class T Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class T Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class T Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class T Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class T Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class T Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
T Preferred Stock and any Parity Stock, as provided in Section 4(a), 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 Class T Preferred Stock and any Parity Stock
shall not be entitled to share therein.
8
5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class T Preferred Stock shall not be redeemable
by the Corporation prior to July 31, 2008, except as set forth in Section 10.2
of this Article. On and after July 31, 2008, the Corporation, at its option, may
redeem shares of Class T Preferred Stock, in whole or from time to time in part,
at a redemption price payable in cash equal to the Redemption Price applicable
thereto. In the event of a redemption of shares of Class T Preferred Stock, if
the Redemption Date occurs after a Record Date and on or prior to the related
Dividend Payment Date, the dividend payable on such Dividend Payment Date in
respect of such shares called for redemption shall be payable on such Dividend
Payment Date the holders of record at the close of business on such Record Date,
notwithstanding the redemption of such shares, and shall not be payable as part
of the redemption price for such shares. In connection with any redemption
pursuant to this Section 5(a), the redemption price of the Class T Preferred
Stock (other than any portion thereof consisting of accumulated, accrued and
unpaid dividends) shall be payable solely with the proceeds from the sale by the
Corporation or the Operating Partnership of other capital shares of the
Corporation or the Operating Partnership (whether or not such sale occurs
concurrently with such redemption). For purposes of the preceding sentence,
"capital shares" means any common stock, preferred stock, depositary shares,
partnership or other interests, participations or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable at the option of the holder for equity securities (unless and to
the extent such debt securities are subsequently converted into capital shares))
or options to purchase any of the foregoing of or in the Corporation or the
Operating Partnership.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of
Class T Preferred Stock have not been declared and paid, or declared and set
apart for payment, no shares of Class T Preferred Stock may be redeemed unless
all outstanding shares of Class T Preferred Stock are simultaneously redeemed.
Neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Class T Preferred Stock, other than pursuant to a purchase or
exchange offer made on the same terms to all holders of shares of Class T
Preferred Stock.
(d) If the Corporation shall redeem shares of Class T
Preferred Stock pursuant to paragraph (a) of this Section 5, 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.
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice 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 notice shall
state, as appropriate: (i) the Redemption Date; (ii) the number of shares of
Class T 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; (iii) the place or places at which certificates for
9
such shares are to be surrendered; and (iv) the Redemption Price payable on such
Redemption Date, including, without limitation, a statement as to whether or not
accumulated, accrued and unpaid dividends will be payable as part of the
Redemption Price, or payable on the next Dividend Payment Date to the record
holder at the close of business on the relevant record date as described in the
next sentence. Notice having been mailed as aforesaid, from and after the
Redemption Date (unless the Corporation shall fail to make available the amount
of cash necessary to effect such redemption), (i) dividends on the shares of
Class T Preferred Stock so called for redemption shall cease to accumulate or
accrue on the shares of Class T Preferred Stock called for redemption, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class T Preferred Stock of the Corporation shall
cease (except the right to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required); provided, however, that if the Redemption Date for any shares
of Class T Preferred Stock occurs after any dividend record date and on or prior
to the related Dividend Payment Date, the full dividend payable on such Dividend
Payment Date in respect of such shares of Class T Preferred Stock called for
redemption shall be payable on such Dividend Payment Date to the holders of
record of such shares at the close of business on the corresponding dividend
record date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the cash necessary to effect the
redemption in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the applicable Redemption Date, the Corporation shall
irrevocably deposit in trust with a bank or trust company (which may not be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption plus, if such Redemption Date occurs
after any dividend record date and on or prior to the related Dividend Payment
Date, such amount of cash as is necessary to pay the dividend payable on such
Dividend Payment Date in respect of such shares of Class T Preferred Stock
called for redemption, with irrevocable instructions that such cash be applied
to the redemption of the shares of Class T Preferred Stock so called for
redemption and, if applicable, the payment of such dividend. No interest shall
accrue for the benefit of the holders of shares of Class T 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
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class T 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 such
notice of the certificates for any such shares of Class T Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon). If fewer than all the outstanding
shares of Class T Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class T
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class T Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class T Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
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6. STATUS OF REACQUIRED STOCK.
All shares of Class T Preferred Stock that have been issued and
reacquired in any manner by the Corporation shall be returned to the status of
authorized but unissued shares of Class T Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed
to rank:
(a) prior or senior to the Class T Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Class T Preferred Stock ("Senior Stock");
(b) on a parity with the Class T Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Class T Preferred Stock, if (i) such capital stock is Class B
Cumulative Convertible Preferred Stock, Class C Cumulative Preferred Stock,
Class D Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible
Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock,
Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative
Preferred Stock , Class Q Cumulative Preferred Stock Class R Cumulative
Preferred Stock or Class S Cumulative Redeemable Preferred Stock of the
Corporation, or (ii) the holders of such class of stock or series and the Class
T Preferred Stock shall be entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up in proportion to their
respective amounts of accrued and unpaid dividends per share or liquidation
preferences, without preference or priority of one over the other (the capital
stock referred to in clauses (i) and (ii) of this paragraph being hereinafter
referred to, collectively, as "Parity Stock"); and
(c) junior to the Class T Preferred Stock, as to the payment
of dividends and as to the distribution of assets upon liquidation, dissolution
or winding up, if (i) such capital stock or series shall be Class A Common Stock
or (ii) the holders of Class T Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class T Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
11
the Board of Directors shall be increased by two if not already increased by
reason of similar types of provisions with respect to shares of any other class
or series of Parity Stock which is entitled to similar voting rights (the
"Voting Preferred Stock") and the holders of shares of Class T Preferred Stock,
together with the holders of shares of all other Voting Preferred Stock then
entitled to exercise similar voting rights, voting as a single Class regardless
of series, shall be entitled to elect the two additional directors to serve on
the Board of Directors at any annual meeting of stockholders or special meeting
held in place thereof, or at a special meeting of the holders of the Class T
Preferred Stock and the Voting Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Class T Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been declared and paid, or
declared and set apart for payment, then the right of the holders of the Class T
Preferred Stock and the Voting Preferred Stock to elect such additional two
directors shall cease (but subject always to the same provision for the vesting
of such voting rights in the case of any similar future arrearages), and the
terms of office of all persons elected as directors by the holders of the Class
T Preferred Stock and the Voting Preferred Stock shall forthwith terminate and
the number of directors constituting the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of Class T Preferred Stock and the Voting Preferred Stock, if
applicable, the Secretary of the Corporation may, and upon the written request
of any holder of Class T Preferred Stock (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Class T Preferred Stock and of the Voting Preferred Stock for the
election of the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Class T Preferred Stock may call such meeting, upon the notice
above provided, and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall hold office
until the next annual meeting of the stockholders or special meeting held in
lieu thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the directors elected by the holders
of the Class T Preferred Stock and the Voting Preferred Stock, a successor shall
be elected by the Board of Directors, upon the nomination of the then-remaining
director elected by the holders of the Class T Preferred Stock and the Voting
Preferred Stock or the successor of such remaining director, to serve until the
next annual meeting of the stockholders or special meeting held in place thereof
if such office shall not have previously terminated as provided above.
(b) So long as any shares of Class T Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter of the Corporation, the affirmative vote of at least
66-2/3% of the votes entitled to be cast by the holders of the Class T Preferred
Stock voting as a single class with the holders of all other classes or series
of Parity Stock entitled to vote on such matters, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for the
purpose, shall be necessary for effecting or validating:
(i) any amendment, alteration or repeal of any of the
provisions of, or the addition of any provision to, these Articles
Supplementary, the Charter or the By-Laws of the
12
Corporation that materially adversely affects the voting powers, rights or
preferences of the holders of the Class T Preferred Stock; PROVIDED, HOWEVER,
that the amendment of the provisions of the Charter so as to increase the
authorized amount of Class T Preferred Stock, or to authorize or create, or to
increase the authorized amount of, or issue any Junior Stock or any shares of
any class of Parity Stock, shall not be deemed to materially adversely affect
the voting powers, rights or preferences of the holders of Class T Preferred
Stock; or
(ii) the authorization, creation of, increase in the
authorized amount of, or issuance of any shares of any class or series of Senior
Stock or any security convertible into shares of any class or series of Senior
Stock (whether or not such class or series of Senior Stock is currently
authorized);
PROVIDED, HOWEVER, that no such vote of the holders of Class T Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class T Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting rights
under these Articles Supplementary, each share of Class T Preferred Stock shall
have one (1) vote per share, except that when any other class or series of
preferred stock of the Corporation shall have the right to vote with the Class T
Preferred Stock as a single class on any matter, then the Class T Preferred
Stock and such other class or series shall have with respect to such matters one
quarter of one vote per $25 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein or in the Charter,
the Class T Preferred Stock shall not have any relative, participating, optional
or other special voting rights and powers other than as set forth herein, and
the consent of the holders thereof shall not be required for the taking of any
corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record
holder of any share of Class T Preferred Stock as the true and lawful owner
thereof for all purposes, and neither the Corporation nor the Transfer Agent
shall be affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in
Section 10.8, from and after the Issue Date, no Person (other than the Initial
Holder or a Look-Through Entity) shall Beneficially Own shares of Class T
Preferred Stock in excess of the Ownership Limit, the Initial Holder shall not
Beneficially Own shares of Class T Preferred Stock in excess of the Initial
Holder Limit and no Look-Through Entity shall Beneficially Own shares of Class T
Preferred Stock in excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided
in Section 10.8, from and after the Issue Date (and subject to Section 10.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in any
Person (other than the Initial Holder or a Look-Through Entity) Beneficially
13
Owning shares of Class T Preferred Stock in excess of the Ownership Limit shall
be void AB INITIO as to the Transfer of such shares of Class T Preferred Stock
that would be otherwise Beneficially Owned by such Person in excess of the
Ownership Limit, and the intended transferee shall acquire no rights in such
shares of Class T Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as
provided in Section 10.8, from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
the Initial Holder Beneficially Owning shares of Class T Preferred Stock in
excess of the Initial Holder Limit shall be void AB INITIO as to the Transfer of
such shares of Class T Preferred Stock that would be otherwise Beneficially
Owned by the Initial Holder in excess of the Initial Holder limit, and the
Initial Holder shall acquire no rights in such shares of Class T Preferred
Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT.
Except as provided in Section 10.8 from and after the Issue Date (and subject to
Section 10.12), any Transfer (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) that, if effective,
would result in any Look-Through Entity Beneficially Owning shares of Class T
Preferred Stock in excess of the Look-Through Ownership limit shall be void AB
INITIO as to the Transfer of such shares of Class T Preferred Stock that would
be otherwise Beneficially Owned by such Look-Through Entity in excess of the
Look-Through Ownership Limit and such Look-Through Entity shall acquire no
rights in such shares of Class T Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and
after the Issue Date, any Transfer that, if effective would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to qualify as a REIT
(including, without limitation, a Transfer or other event that would result in
the Corporation owning (directly or constructively) an interest in a tenant that
is described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class T Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class T
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share
of Class T Preferred Stock that is null and void under Sections 10.1(B), (C),
(D), or (E) of this Article because it would, if effective, result in (i) the
ownership of Class T Preferred Stock in excess of the Initial Holder Limit, the
Ownership Limit, or the Look-Through Ownership Limit, (ii) the Corporation being
"closely held" within the meaning of Section 856(h) of the Code or (iii) the
Corporation otherwise failing to qualify as a REIT, shall not adversely affect
the validity of the Transfer of any other share of Class T Preferred Stock in
the same or any other related transaction.
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10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee
thereof shall at any time determine in good faith that a Transfer or other event
has taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class T Preferred Stock in violation of Section 10.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class T Preferred Stock acquired in violation of Section
10.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void AB INITIO or (b) shall automatically result in the
transfer described in Section 10.3 of this Article; PROVIDED, FURTHER, that the
provisions of this Section 10.2 shall be subject to the provisions of Section
10.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class T Preferred Stock that is
expressly authorized pursuant to Section 10.8(C) of this Article.
10.3 TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other
provisions contained in this Article, at any time after the Issue Date there is
a purported Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the
result of transactions entered into through the facilities of the NYSE or other
securities exchange or an automated inter-dealer quotation system) or other
change in the capital structure of the Corporation (including, but not limited
to, any redemption of Equity Stock) or other event (including, but not limited
to, any acquisition of any share of Equity Stock) such that (a) any Person
(other than the Initial Holder or a Look-Through Entity) would Beneficially Own
shares of Class T Preferred Stock in excess of the Ownership Limit, or (b) the
Initial Holder would Beneficially Own shares of Class T Preferred Stock in
excess of the Initial Holder Limit, or (c) any Person that is a Look-Through
Entity would Beneficially Own shares of Class T Preferred Stock in excess of the
Look-Through Ownership Limit (in any such event, the Person, Initial Holder or
Look-Through Entity that would Beneficially Own shares of Class T Preferred
Stock in excess of the Ownership Limit, the Initial Holder Limit or the
Look-Through Entity Limit, respectively, is referred to as a "PROHIBITED
TRANSFEREE"), then, except as otherwise provided in Section 10.8 of this
Article, such shares of Class T Preferred Stock in excess of the Ownership
Limit, the Initial Holder Limit or the Look-Through Ownership Limit, as the case
may be, (rounded up to the nearest whole share) shall be automatically
transferred to a Trustee in his capacity as trustee of a Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the Business Day
prior to the Excess Transfer, change in capital structure or another event
giving rise to a potential violation of the Ownership Limit, the Initial Holder
Limit or the Look Through Entity Ownership Limit.
15
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by
the Corporation and shall be a Person unaffiliated with either the Corporation
or any Prohibited Transferee. The Trustee may be an individual or a bank or
trust company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class T
Preferred Stock held by the Trustee shall be issued and outstanding shares of
capital stock of the Corporation. Except to the extent provided in Section
10.3(E), the Prohibited Transferee shall have no rights in the Class T Preferred
Stock held by the Trustee, and the Prohibited Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all
voting rights and rights to dividends with respect to shares of Class T
Preferred Stock held in the Trust, which rights shall be exercised for the
benefit of the Charitable Beneficiary. Any dividend or distribution paid prior
to the discovery by the Corporation that the shares of Class T Preferred Stock
have been transferred to the Trustee shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid shall be rescinded
as void AB INITIO with respect to such shares of Class T Preferred Stock. Any
dividends or distributions so disgorged or rescinded shall be paid over to the
Trustee and held in trust for the Charitable Beneficiary. Any vote cast by a
Prohibited Transferee prior to the discovery by the Corporation that the shares
of Class T Preferred Stock have been transferred to the Trustee will be
rescinded as void AB INITIO and shall be recast in accordance with the desires
of the Trustee acting for the benefit of the Charitable Beneficiary. The owner
of the shares at the time of the Excess Transfer, change in capital structure or
other event giving rise to a potential violation of the Ownership Limit, Initial
Holder Limit or Look-Through Entity Ownership Limit shall be deemed to have
given an irrevocable proxy to the Trustee to vote the shares of Class T
Preferred Stock for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may
sell the shares held in the Trust to a Person, designated by the Trustee, whose
ownership of the shares will not violate the Ownership Restrictions. If such a
sale is made, the interest of the Charitable Beneficiary shall terminate and
proceeds of the sale shall be payable to the Prohibited Transferee and to the
Charitable Beneficiary as provided in this Section 10.3(E). The Prohibited
Transferee shall receive the lesser of (1) the price paid by the Prohibited
Transferee for the shares or, if the Prohibited Transferee did not give value
for the shares (through a gift, devise or other transaction), the Market Price
of the shares on the day of the event causing the shares to be held in the Trust
and (2) the price per share received by the Trustee from the sale or other
disposition of the shares held in the Trust. Any proceeds in excess of the
amount payable to the Prohibited Transferee shall be payable to the Charitable
Beneficiary. If any of the transfer restrictions set forth in this Section
10.3(E) or any application thereof is determined in a final judgment to be void,
invalid or unenforceable by any court having jurisdiction over the issue, the
Prohibited Transferee may be deemed, at the option of the Corporation, to have
acted as the agent of the Corporation in acquiring the Class T Preferred Stock
as to which such restrictions would, by their terms, apply, and to hold such
Class T Preferred Stock on behalf of the Corporation.
16
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares
of Class T Preferred Stock transferred to the Trustee shall be deemed to have
been offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice
to the Trustee, the Corporation shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Trust
relating to such Prohibited Transferee if (i) the shares of Class T Preferred
Stock held in the Trust would not violate the Ownership Restrictions in the
hands of such Charitable Beneficiary and (ii) each Charitable Beneficiary is an
organization described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the
Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or
attempts to acquire shares of Class T Preferred Stock in violation of Section
10.1 of this Article, or any Person that is a Prohibited Transferee such that
stock is transferred to the Trustee under Section 10.3 of this Article, shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer or attempted 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.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue
Date certain record and Beneficial Owners and transferees of shares of Class T
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner
of more than 5% (or such other percentage between 0.5% and 5%, as provided in
the applicable regulations adopted under the Code) of the number of Outstanding
shares of Class T Preferred 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 holder or Beneficial Owner, the number of shares of Class T
Preferred Stock Beneficially Owned, and a full description of how such shares
are held. Each such record holder or Beneficial Owner of Class T Preferred Stock
shall, upon demand by the Corporation, disclose to the Corporation in writing
such additional information with respect to the Beneficial Ownership of the
Class T Preferred 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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that holds shares of Class T Preferred
Stock on behalf of a Beneficial Owner, shall take all reasonable steps to obtain
the written notice described in this Section 10.5 from the Beneficial Owner.
17
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person
that is a Beneficial Owner of shares of Class T Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class T
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class T Preferred Stock already Beneficially 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.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable (subject to the provisions of Section 10.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of any
of the provisions of Section 10 of this Article, or in the case of an ambiguity
in any definition contained in Section 10 of this Article, the Board of
Directors shall have the power to determine the application of the provisions of
this Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
10.8 EXCEPTIONS. The following exceptions shall apply or may be
established with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon
receipt of a ruling from the Internal Revenue Service or an opinion of tax
counsel or other evidence or undertaking acceptable to it, may waive the
application, in whole or in part, of the Ownership Limit to a Person subject to
the Ownership Limit, if such person is not an individual for purposes of Section
542(a) of the Code (as modified to exclude qualified trusts from treatment as
individuals pursuant to Section 856(h)(3) of the Code) and is a corporation,
partnership, limited liability company, estate or trust. In connection with any
such exemption, the Board of Directors may require such representations and
undertakings from such Person 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 on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other
provision of this Article, the pledge by the Initial Holder of all or any
portion of the Class T Preferred Stock directly owned at any time or from time
to time shall not constitute a violation of Section 10.1 of this Article and the
pledgee shall not be subject to the Ownership Limit with respect to the Class T
Preferred Stock so pledged to it either as a result of the pledge or upon
foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer
period of time as any underwriter described below shall hold an unsold allotment
of Class T Preferred Stock)
18
following the purchase of Class T Preferred Stock by an underwriter that (i) is
a corporation, partnership or other legal entity and (ii) participates in an
offering of the Class T Preferred Stock, such underwriter shall not be subject
to the Ownership Limit with respect to the Class T Preferred Stock purchased by
it as a part of or in connection with such offering and with respect to any
Class T Preferred Stock purchased in connection with market making activities.
10.9 LEGEND. Each certificate for Class T Preferred Stock shall bear
substantially the following legend:
"The shares of Class T Cumulative Preferred Stock
represented by this certificate are subject to restrictions on
transfer. No person may Beneficially Own shares of Class T Cumulative
Preferred Stock in excess of the Ownership Restrictions, as applicable,
with certain further restrictions and exceptions set forth in the
Charter (including the Articles Supplementary setting forth the terms
of the Class T Cumulative Preferred Stock). Any Person that attempts to
Beneficially Own shares of Class T Cumulative Preferred Stock in excess
of the applicable limitation must immediately notify the Corporation.
All capitalized terms in this legend have the meanings ascribed to such
terms in the Charter (including the Articles Supplementary setting
forth the terms of the Class T Cumulative Preferred Stock), 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 that so requests. If the restrictions on transfer are
violated, (i) the transfer of the shares of Class T Cumulative
Preferred Stock represented hereby will be void in accordance with the
Charter (including the Articles Supplementary setting forth the terms
of the Class T Cumulative Preferred Stock) or (ii) the shares of Class
T Cumulative Preferred Stock represented hereby will automatically be
transferred to a Trustee of a Trust for the benefit of one or more
Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article 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.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class T Cumulative Preferred Stock set forth
in Article Third hereof shall become Article XXXI of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on July 16, 2003.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ Lisa Cohn /s/ Paul J. McAuliffe
- -------------------------- ---------------------------------
Lisa Cohn Paul J. McAuliffe
Assistant Secretary Executive Vice President and
Chief Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer
of APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Paul J. McAuliffe
---------------------------------
Paul J. McAuliffe
Executive Vice President and
Chief Financial Officer
<Page>
ARTICLES SUPPLEMENTARY
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CLASS U CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation
(hereinafter called the "Corporation"), having its principal office in Baltimore
City, Maryland, hereby certifies to the Department of Assessments and Taxation
of the State of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by Section 1.2 of Article IV of the Charter of the Corporation,
as amended to date (the "Charter"), the Board of Directors has duly divided and
classified 8,000,000 authorized but unissued shares of Class A Common Stock of
the Corporation, par value $.01 per share, into a class designated as Class U
Cumulative Preferred Stock, par value $.01 per share, and has provided for the
issuance of such class.
SECOND: The reclassification increases the number of shares classified as
Class U Cumulative Preferred Stock, par value $.01 per share, from no shares
immediately prior to the reclassification to 8,000,000 shares immediately after
the reclassification. The reclassification decreases the number of shares
classified as Class A Common Stock from 444,962,738 shares immediately prior to
the reclassification to 436,962,738 shares immediately after the
reclassification. The number of shares classified as Class U Cumulative
Preferred Stock may be decreased upon reacquisition thereof in any manner, or by
retirement thereof, by the Corporation.
THIRD: The terms of the Class U Cumulative Preferred Stock (including the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, or terms or
conditions of redemption) as set by the Board of Directors are as follows:
1. NUMBER OF SHARES AND DESIGNATION.
This class of Preferred Stock shall be designated as Class U Cumulative
Preferred Stock (the "Class U Preferred Stock") and Eight Million (8,000,000)
shall be the authorized number of shares of such Class U Preferred Stock
constituting such class.
2. DEFINITIONS.
For purposes of the Class U Preferred Stock, the following terms shall have
the meanings indicated:
"ACT" shall mean the Securities Act of 1933, as amended.
<Page>
"AFFILIATE" of a Person means a Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Person specified.
"AGGREGATE VALUE" shall mean, with respect to any block of Equity Stock,
the product of (i) the number of shares of Equity Stock within such block
and (ii) the corresponding Market Price of one share of Equity Stock of
such class.
"BENEFICIAL OWNERSHIP" shall mean, with respect to any Person, ownership of
shares of Equity Stock equal to the sum of (without duplication) (i) the
number of shares of Equity Stock directly owned by such Person, (ii) the
number of shares of Equity Stock indirectly owned by such Person (if such
Person is an "individual" as defined in Section 542(a)(2) of the Code)
taking into account the constructive ownership rules of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code, and (iii) the number
of shares of Equity Stock that such Person is deemed to beneficially own
pursuant to Rule 13d-3 under the Exchange Act, or that is attributed to
such Person pursuant to Section 318 of the Code, as modified by Section
856(d)(5) of the Code, PROVIDED that when applying this definition of
Beneficial Ownership to the Initial Holder, clause (iii) of this
definition, and clause (ii) of the definition of "Person" shall be
disregarded. The terms "BENEFICIAL OWNER," "BENEFICIALLY OWNS" and
"BENEFICIALLY OWNED" shall have the correlative meanings.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of
its responsibilities with respect to the Class U Preferred Stock; provided
that, for purposes of paragraph (a) of Section 8 of this Article, the term
"BOARD OF DIRECTORS" shall not include any such committee.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York, New
York are not required to be open.
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the Trust
as determined pursuant to Section 10.3(G) of this Article, each of which
shall be an organization described in Section 170(b)(1)(A), 170(c)(2) and
501(c)(3) of the Code.
"CLASS A COMMON STOCK" shall mean the Class A Common Stock, par value $.01
per share, of the Corporation, and such other shares of the Corporation's
capital stock into which outstanding shares of such Class A Common Stock
shall be reclassified.
"CLASS U PREFERRED STOCK" shall have the meaning set forth in Section 1 of
this Article.
"CLOSING PRICE" shall mean, when used with respect to a share of any Equity
Stock and for any date, 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 NYSE or, if the Equity Stock is not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction
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reporting system with respect to securities listed on the principal
national securities exchange on which the Equity Stock is listed or
admitted to trading or, if the Equity 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 quotation system that may
then be in use or, if the Equity 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 Equity Stock selected
by the Board of Directors of the Corporation or, if the Equity Stock is not
publicly traded, the fair value of a share of such Equity Stock as
reasonably determined in good faith by the Board of Directors.
"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 thereto, as interpreted by any
applicable regulations or other administrative pronouncements as in effect
from time to time.
"DIVIDEND PAYMENT DATE" shall mean January 15, April 15, July 15, and
October 15 of each year; provided, that if any Dividend Payment Date falls
on any day other than a Business Day, the dividend payment payable on such
Dividend Payment Date shall be paid on the Business Day immediately
following such Dividend Payment Date and no interest shall accrue on such
dividend from such date to such Dividend Payment Date.
"DIVIDEND PERIODS" shall mean the Initial Dividend Period and each
subsequent quarterly dividend period commencing on and including January
15, April 15, July 15, and October 15 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period, other than the Dividend Period during which any Class U Preferred
Stock shall be redeemed pursuant to Section 5 hereof, which shall end on
and include the Redemption Date with respect to the Class U Preferred Stock
being redeemed.
"EQUITY STOCK" shall mean one or more shares of any class of capital stock
of the Corporation.
"EXCESS TRANSFER" has the meaning set forth in Section 10.3(A) of this
Article.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ISSUE DATE" shall mean March 24, 2004.
"INITIAL DIVIDEND PERIOD" shall mean the period commencing on and including
the Issue Date and ending on and including July 14, 2004.
"INITIAL HOLDER" shall mean Terry Considine.
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"INITIAL HOLDER LIMIT" shall mean a number of the Outstanding shares of
Class U Preferred Stock of the Corporation having an Aggregate Value not in
excess of the excess of (x) 15% of the Aggregate Value of all Outstanding
shares of Equity Stock over (y) the Aggregate Value of all shares of Equity
Stock other than Class U Preferred Stock that are Beneficially Owned by the
Initial Holder. From the Issue Date, the secretary of the Corporation, or
such other person as shall be designated by the Board of Directors, shall
upon request make available to the representative(s) of the Initial Holder
and the Board of Directors, a schedule that sets forth the then-current
Initial Holder Limit applicable to the Initial Holder.
"JUNIOR STOCK" shall have the meaning set forth in paragraph (c) of Section
7 of this Article.
"LIQUIDATION PREFERENCE" shall have the meaning set forth in paragraph (a)
of Section 4 of this Article.
"LOOK-THROUGH ENTITY" shall mean a Person that is either (i) described in
Section 401(a) of the Code as provided under Section 856(h)(3) of the Code
or (ii) registered under the Investment Company Act of 1940.
"LOOK-THROUGH OWNERSHIP LIMIT" shall mean, for any Look-Through Entity, a
number of the Outstanding shares of Class U Preferred Stock of the
Corporation having an Aggregate Value not in excess of the excess of (x)
15% of the Aggregate Value of all Outstanding shares of Equity Stock over
(y) the Aggregate Value of all shares of Equity Stock other than Class U
Preferred Stock that are Beneficially Owned by the Look-Through Entity.
"MARKET PRICE" on any date shall mean, with respect to any share of Equity
Stock, the Closing Price of a share of that class of Equity Stock on the
Trading Day immediately preceding such date.
"NYSE" shall mean The New York Stock Exchange, Inc.
"OPERATING PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware
limited partnership.
"OUTSTANDING" shall mean issued and outstanding shares of Equity Stock of
the Corporation; PROVIDED, HOWEVER, that for purposes of the application of
the Ownership Limit, the Look-Through Ownership Limit or the Initial Holder
Limit to any Person, the term "Outstanding" shall be deemed to include the
number of shares of Equity Stock that such Person alone, at that time,
could acquire pursuant to any options or convertible securities.
"OWNERSHIP LIMIT" shall mean, for any Person other than the Initial Holder
or a Look-Through Entity, a number of the Outstanding shares of Class U
Preferred Stock of the Corporation having an Aggregate Value not in excess
of the excess of (x) 8.7% of the Aggregate Value of all Outstanding shares
of Equity Stock over (y) the Aggregate Value
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of all shares of Equity Stock other than Class U Preferred Stock that are
Beneficially Owned by the Person.
"OWNERSHIP RESTRICTIONS" shall mean, collectively, the Ownership Limit, as
applied to Persons other than the Initial Holder or Look-Through Entities,
the Initial Holder Limit, as applied to the Initial Holder, and the
Look-Through Ownership Limit, as applied to Look-Through Entities.
"PARITY STOCK" shall have the meaning set forth in paragraph (b) of Section
7 of this Article.
"PERSON" shall mean (a) for purposes of Section 10 of this Article, (i) an
individual, corporation, partnership, estate, trust (including a trust
qualifying under Section 401(a) or 501(c) of the Code), association,
"private foundation," within the meaning of Section 509(a) of the Code,
joint stock company or other entity, and (ii) a "group," as that term is
used for purposes of Section 13(d)(3) of the Exchange Act, and (b) for
purposes of the remaining Sections of this Article, any individual, firm,
partnership, corporation or other entity, including any successor (by
merger or otherwise) of such entity.
"PROHIBITED TRANSFEREE" shall have the meaning set forth in Section 10.3(A)
of this Article.
"RECORD DATE" shall have the meaning set forth in paragraph (a) of Section
3 of this Article.
"REDEMPTION DATE" shall mean, in the case of any redemption of any shares
of Class U Preferred Stock, the date fixed for redemption of such shares.
"REDEMPTION PRICE" shall mean, with respect to any share of Class U
Preferred Stock to be redeemed, 100% of the Liquidation Preference thereof,
plus all accumulated, accrued and unpaid dividends (whether or not earned
or declared), if any, to the Redemption Date.
"REIT" shall mean a "real estate investment trust," as defined in Section
856 of the Code.
"SENIOR STOCK" shall have the meaning set forth in paragraph (a) of Section
7 of this Article.
"SET APART FOR PAYMENT" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board
of Directors, the allocation of funds to be so paid on any series or class
of capital stock of the Corporation; PROVIDED, HOWEVER, that if any funds
for any class or series of Junior Stock or any class or series of Parity
Stock are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment"
with respect to the Class U Preferred Stock shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying or
other similar agent.
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"TRADING DAY" shall mean, when used with respect to any Equity Stock, (i)
if the Equity Stock is listed or admitted to trading on the NYSE, a day on
which the NYSE is open for the transaction of business, (ii) if the Equity
Stock is not listed or admitted to trading on the NYSE but is listed or
admitted to trading on another national securities exchange or automated
quotation system, a day on which the principal national securities exchange
or automated quotation system, as the case may be, on which the Equity
Stock is listed or admitted to trading is open for the transaction of
business, or (iii) if the Equity Stock is not listed or admitted to trading
on any national securities exchange or automated quotation system, 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 sale, transfer, gift, assignment, devise or other
disposition of a share of Class U Preferred Stock (including (i) the
granting of an option or any series of such options or entering into any
agreement for the sale, transfer or other disposition of Class U Preferred
Stock or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Class U Preferred
Stock), whether voluntary or involuntary, whether of record ownership or
Beneficial Ownership, and whether by operation of law or otherwise
(including, but not limited to, any transfer of an interest in other
entities that results in a change in the Beneficial Ownership of shares of
Class U Preferred Stock). The term "TRANSFERS" and "TRANSFERRED" shall have
correlative meanings.
"TRANSFER AGENT" means such transfer agent as may be designated by the
Board of Directors or their designee as the transfer agent for the Class U
Preferred Stock; provided, that if the Corporation has not designated a
transfer agent then the Corporation shall act as the transfer agent for the
Class U Preferred Stock.
"TRUST" shall mean the trust created pursuant to Section 10.3(A) of this
Article.
"TRUSTEE" shall mean the Person unaffiliated with either the Corporation or
the Prohibited Transferee that is appointed by the Corporation to serve as
trustee of the Trust.
"VOTING PREFERRED STOCK" shall have the meaning set forth in Section 8 of
this Article.
3. DIVIDENDS.
(a) The holders of Class U Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available for that purpose, quarterly cash dividends on the Class U Preferred
Stock in an amount per share equal to $0.484375. Such dividends shall be
cumulative from the Issue Date, whether or not in any Dividend Period or Periods
such dividends shall be declared or there shall be funds of the Corporation
legally available for the payment of such dividends, and shall be payable
quarterly in arrears on each Dividend Payment Date, commencing on July 15, 2004.
Each such dividend shall be payable in arrears to the holders of record of the
Class U Preferred Stock, as they appear on the stock records of the Corporation
at the close of business on January 1, April 1, July 1 or October 1 (each a
"Record Date"), as the case may be, immediately preceding such Dividend
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Payment Date. Accumulated, accrued and unpaid dividends for any past Dividend
Periods may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to holders of record on such date, which date shall not
precede by more than 45 days the payment date thereof, as may be fixed by the
Board of Directors.
(b) The amount of dividends payable per share of Class U Preferred
Stock for the Initial Dividend Period, or any other period shorter than a full
Dividend Period, shall be computed ratably on the basis of twelve 30-day months
and a 360-day year. Holders of Class U 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 Class U 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 Class U Preferred Stock that may be in
arrears.
(c) So long as any of the shares of Class U Preferred Stock are
outstanding, except as described in the immediately following sentence, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made,
directly or indirectly, by the Corporation with respect to any class or series
of Parity Stock for any period unless dividends equal to the full amount of
accumulated, accrued and unpaid dividends have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof has
been or contemporaneously is set apart for such payment, on the Class U
Preferred Stock for all Dividend Periods terminating on or prior to the date
such dividend or distribution is declared, paid, set apart for payment or made,
as the case may be, with respect to such class or series of Parity Stock. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon the Class U Preferred Stock and
all dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Class U Preferred Stock and accumulated,
accrued and unpaid on such Parity Stock.
(d) So long as any of the shares of Class U 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 declared or paid or set apart for payment by the
Corporation and no other distribution of cash or other property shall be
declared or made, directly or indirectly, by the Corporation with respect to
any shares of Junior Stock, nor shall any shares of Junior Stock be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or other
acquisition of Class A 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 shares of, or
options, warrants, or rights to subscribe for or purchase shares of, 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 in
respect thereof, directly or indirectly, by the Corporation unless, in each
case, dividends equal to the full amount of all accumulated, accrued and
unpaid dividends on all outstanding shares of Class U Preferred Stock have
been declared and paid, or such dividends have been declared and a sum
sufficient for the payment thereof has been set apart for such payment, on
all outstanding shares of Class U Preferred Stock for all Dividend Periods
ending on or prior to the date such dividend or distribution is declared,
paid,
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set apart for payment or made with respect to such shares of Junior Stock, or
the date such shares of Junior Stock are redeemed, purchased or otherwise
acquired or monies paid to or made available for any sinking fund for such
redemption, or the date any such cash or other property is paid or
distributed to or for the benefit of any holders of Junior Stock in respect
thereof, as the case may be.
Notwithstanding the provisions of this Section 3, the Corporation shall not
be prohibited from (i) declaring or paying or setting apart for payment any
dividend or distribution on any shares of Parity Stock or (ii) redeeming,
purchasing or otherwise acquiring any Parity Stock, in each case, if such
declaration, payment, redemption, purchase or other acquisition is necessary in
order to maintain the continued qualification of the Corporation as a REIT under
Section 856 of the Code.
4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution by the Corporation (whether of capital, surplus or otherwise) shall
be made to or set apart for the holders of Junior Stock, the holders of shares
of Class U Preferred Stock shall be entitled to receive Twenty-Five Dollars
($25) per share of Class U Preferred Stock (the "Liquidation Preference"), plus
an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Class U Preferred Stock have been paid the Liquidation
Preference in full, plus an amount equal to all dividends (whether or not earned
or declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders, no payment will be made to any holder of Junior
Stock upon the liquidation, dissolution or winding up of the Corporation. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of
Class U Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Class U Preferred Stock and any such other
Parity Stock ratably in the same proportion as the respective amounts that would
be payable on such Class U Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this Section
4, (i) a consolidation or merger of the Corporation with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Corporation's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of Class
U Preferred Stock and any Parity Stock, as provided in Section 4(a), 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 Class U Preferred Stock and any Parity Stock
shall not be entitled to share therein.
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5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) Shares of Class U Preferred Stock shall not be redeemable by the
Corporation prior to March 24, 2009, except as set forth in Section 10.2 of this
Article. On and after March 24, 2009 the Corporation, at its option, may redeem
shares of Class U Preferred Stock, in whole or from time to time in part, at a
redemption price payable in cash equal to the Redemption Price applicable
thereto. In the event of a redemption of shares of Class U Preferred Stock, if
the Redemption Date occurs after a Record Date and on or prior to the related
Dividend Payment Date, the dividend payable on such Dividend Payment Date in
respect of such shares called for redemption shall be payable on such Dividend
Payment Date the holders of record at the close of business on such Record Date,
notwithstanding the redemption of such shares, and shall not be payable as part
of the redemption price for such shares. In connection with any redemption
pursuant to this Section 5(a), the redemption price of the Class U Preferred
Stock (other than any portion thereof consisting of accumulated, accrued and
unpaid dividends) shall be payable solely with the proceeds from the sale by the
Corporation or the Operating Partnership of other capital shares of the
Corporation or the Operating Partnership (whether or not such sale occurs
concurrently with such redemption). For purposes of the preceding sentence,
"capital shares" means any common stock, preferred stock, depositary shares,
partnership or other interests, participations or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable at the option of the holder for equity securities (unless and to
the extent such debt securities are subsequently converted into capital shares))
or options to purchase any of the foregoing of or in the Corporation or the
Operating Partnership.
(b) The Redemption 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.
(c) If full cumulative dividends on all outstanding shares of Class U
Preferred Stock have not been declared and paid, or declared and set apart for
payment, no shares of Class U Preferred Stock may be redeemed unless all
outstanding shares of Class U Preferred Stock are simultaneously redeemed.
Neither the Corporation nor any affiliate of the Corporation may purchase or
acquire shares of Class U Preferred Stock, other than pursuant to a purchase or
exchange offer made on the same terms to all holders of shares of Class U
Preferred Stock.
(d) If the Corporation shall redeem shares of Class U Preferred Stock
pursuant to paragraph (a) of this Section 5, 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. Neither the failure to
mail any notice required by this paragraph (d), nor any defect therein or in the
mailing thereof to any particular holder, shall affect the sufficiency of the
notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice 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 notice shall state, as appropriate:
(i) the Redemption Date; (ii) the number of shares of Class U 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; (iii) the
place or places at which certificates for
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such shares are to be surrendered; and (iv) the Redemption Price payable on such
Redemption Date, including, without limitation, a statement as to whether or not
accumulated, accrued and unpaid dividends will be payable as part of the
Redemption Price, or payable on the next Dividend Payment Date to the record
holder at the close of business on the relevant record date as described in the
next sentence. Notice having been mailed as aforesaid, from and after the
Redemption Date (unless the Corporation shall fail to make available the amount
of cash necessary to effect such redemption), (i) dividends on the shares of
Class U Preferred Stock so called for redemption shall cease to accumulate or
accrue on the shares of Class U Preferred Stock called for redemption, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Class U Preferred Stock of the Corporation shall
cease (except the right to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their certificates
if so required); provided, however, that if the Redemption Date for any shares
of Class U Preferred Stock occurs after any dividend record date and on or prior
to the related Dividend Payment Date, the full dividend payable on such Dividend
Payment Date in respect of such shares of Class U Preferred Stock called for
redemption shall be payable on such Dividend Payment Date to the holders of
record of such shares at the close of business on the corresponding dividend
record date notwithstanding the prior redemption of such shares. The
Corporation's obligation to make available the cash necessary to effect the
redemption in accordance with the preceding sentence shall be deemed fulfilled
if, on or before the applicable Redemption Date, the Corporation shall
irrevocably deposit in trust with a bank or trust company (which may not be an
affiliate of the Corporation) that has, or is an affiliate of a bank or trust
company that has, a capital and surplus of at least $50,000,000, such amount of
cash as is necessary for such redemption plus, if such Redemption Date occurs
after any dividend record date and on or prior to the related Dividend Payment
Date, such amount of cash as is necessary to pay the dividend payable on such
Dividend Payment Date in respect of such shares of Class U Preferred Stock
called for redemption, with irrevocable instructions that such cash be applied
to the redemption of the shares of Class U Preferred Stock so called for
redemption and, if applicable, the payment of such dividend. No interest shall
accrue for the benefit of the holders of shares of Class U 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
Redemption Date shall revert to the general funds of the Corporation, after
which reversion the holders of shares of Class U 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 such
notice of the certificates for any such shares of Class U Preferred Stock to be
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such certificates shall be
exchanged for cash (without interest thereon). If fewer than all the outstanding
shares of Class U Preferred Stock are to be redeemed, shares to be redeemed
shall be selected by the Corporation from outstanding shares of Class U
Preferred Stock not previously called for redemption by lot or, with respect to
the number of shares of Class U Preferred Stock held of record by each holder of
such shares, pro rata (as nearly as may be) 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 Class U Preferred Stock represented by any certificate
are redeemed, then a new certificate representing the unredeemed shares shall be
issued without cost to the holders thereof.
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6. STATUS OF REACQUIRED STOCK.
All shares of Class U Preferred Stock that have been issued and reacquired
in any manner by the Corporation shall be returned to the status of authorized
but unissued shares of Class U Preferred Stock.
7. RANKING.
Any class or series of capital stock of the Corporation shall be deemed to
rank:
(a) prior or senior to the Class U Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Class U Preferred Stock ("Senior Stock");
(b) on a parity with the Class U Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Class U Preferred Stock, if (i) such capital stock is Class B Cumulative
Convertible Preferred Stock, Class C Cumulative Preferred Stock, Class D
Cumulative Preferred Stock, Class G Cumulative Preferred Stock, Class H
Cumulative Preferred Stock, Class I Cumulative Preferred Stock, Class J
Cumulative Convertible Preferred Stock, Class K Convertible Cumulative Preferred
Stock, Class L Convertible Cumulative Preferred Stock, Class M Convertible
Cumulative Preferred Stock, Class N Convertible Cumulative Preferred Stock,
Class O Cumulative Convertible Preferred Stock, Class P Convertible Cumulative
Preferred Stock , Class Q Cumulative Preferred Stock Class R Cumulative
Preferred Stock or Class S Cumulative Redeemable Preferred Stock or Class T
Cumulative Preferred Stock of the Corporation, or (ii) the holders of such class
of stock or series and the Class U Preferred Stock shall be entitled to the
receipt of dividends and of amounts distributable upon liquidation, dissolution
or winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or priority
of one over the other (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Parity Stock");
and
(c) junior to the Class U Preferred Stock, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if (i) such capital stock or series shall be Class A Common Stock or
(ii) the holders of Class U Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series (the capital stock referred to in clauses (i) and (ii) of
this paragraph being hereinafter referred to, collectively, as "Junior Stock").
8. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Class U Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not
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been paid in full), whether or not earned or declared, the number of directors
then constituting the Board of Directors shall be increased by two if not
already increased by reason of similar types of provisions with respect to
shares of any other class or series of Parity Stock which is entitled to similar
voting rights (the "Voting Preferred Stock") and the holders of shares of Class
U Preferred Stock, together with the holders of shares of all other Voting
Preferred Stock then entitled to exercise similar voting rights, voting as a
single Class regardless of series, shall be entitled to elect the two additional
directors to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special meeting
of the holders of the Class U Preferred Stock and the Voting Preferred Stock
called as hereinafter provided. Whenever all arrears in dividends on the Class U
Preferred Stock and the Voting Preferred Stock then outstanding shall have been
paid and dividends thereon for the current quarterly dividend period shall have
been declared and paid, or declared and set apart for payment, then the right of
the holders of the Class U Preferred Stock and the Voting Preferred Stock to
elect such additional two directors shall cease (but subject always to the same
provision for the vesting of such voting rights in the case of any similar
future arrearages), and the terms of office of all persons elected as directors
by the holders of the Class U Preferred Stock and the Voting Preferred Stock
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the holders of Class U Preferred Stock and the
Voting Preferred Stock, if applicable, the Secretary of the Corporation may, and
upon the written request of any holder of Class U Preferred Stock (addressed to
the Secretary at the principal office of the Corporation) shall, call a special
meeting of the holders of the Class U Preferred Stock and of the Voting
Preferred Stock for the election of the two directors to be elected by them as
herein provided, such call to be made by notice similar to that provided in the
Bylaws of the Corporation for a special meeting of the stockholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days after receipt of
any such request, then any holder of Class U Preferred Stock may call such
meeting, upon the notice above provided, and for that purpose shall have access
to the stock books of the Corporation. The directors elected at any such special
meeting shall hold office until the next annual meeting of the stockholders or
special meeting held in lieu thereof if such office shall not have previously
terminated as above provided. If any vacancy shall occur among the directors
elected by the holders of the Class U Preferred Stock and the Voting Preferred
Stock, a successor shall be elected by the Board of Directors, upon the
nomination of the then-remaining director elected by the holders of the Class U
Preferred Stock and the Voting Preferred Stock or the successor of such
remaining director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.
(b) So long as any shares of Class U Preferred Stock are outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Charter of the Corporation, the affirmative vote of at least 66-2/3% of the
votes entitled to be cast by the holders of the Class U Preferred Stock voting
as a single class with the holders of all other classes or series of Parity
Stock entitled to vote on such matters, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for the purpose,
shall be necessary for effecting or validating:
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(i) any amendment, alteration or repeal of any of the provisions
of, or the addition of any provision to, these Articles Supplementary, the
Charter or the By-Laws of the Corporation that materially adversely affects the
voting powers, rights or preferences of the holders of the Class U Preferred
Stock; PROVIDED, HOWEVER, that the amendment of the provisions of the Charter so
as to increase the authorized amount of Class U Preferred Stock, or to authorize
or create, or to increase the authorized amount of, or issue any Junior Stock or
any shares of any class of Parity Stock, shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the holders of
Class U Preferred Stock; or
(ii) the authorization, creation of, increase in the authorized
amount of, or issuance of any shares of any class or series of Senior Stock or
any security convertible into shares of any class or series of Senior Stock
(whether or not such class or series of Senior Stock is currently authorized);
PROVIDED, HOWEVER, that no such vote of the holders of Class U Preferred Stock
shall be required if, at or prior to the time when such amendment, alteration or
repeal is to take effect, or when the issuance of any such Senior Stock or
convertible or exchangeable security is to be made, as the case may be,
provision is made for the redemption of all shares of Class U Preferred Stock at
the time outstanding to the extent such redemption is authorized by Section 5 of
this Article.
For purposes of the foregoing provisions and all other voting rights under
these Articles Supplementary, each share of Class U Preferred Stock shall have
one (1) vote per share, except that when any other class or series of preferred
stock of the Corporation shall have the right to vote with the Class U Preferred
Stock as a single class on any matter, then the Class U Preferred Stock and such
other class or series shall have with respect to such matters one quarter of one
vote per $25 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein or in the Charter, the Class U Preferred
Stock shall not have any relative, participating, optional or other special
voting rights and powers other than as set forth herein, and the consent of the
holders thereof shall not be required for the taking of any corporate action.
9. RECORD HOLDERS.
The Corporation and the Transfer Agent may deem and treat the record holder
of any share of Class U Preferred Stock as the true and lawful owner thereof for
all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
10.1 RESTRICTIONS ON OWNERSHIP AND TRANSFERS.
(A) LIMITATION ON BENEFICIAL OWNERSHIP. Except as provided in Section
10.8, from and after the Issue Date, no Person (other than the Initial Holder or
a Look-Through Entity) shall Beneficially Own shares of Class U Preferred Stock
in excess of the Ownership Limit, the Initial Holder shall not Beneficially Own
shares of Class U Preferred Stock in excess of the Initial Holder Limit and no
Look-Through Entity shall Beneficially Own shares of Class U Preferred Stock in
excess of the Look-Through Ownership Limit.
(B) TRANSFERS IN EXCESS OF OWNERSHIP LIMIT. Except as provided in
Section 10.8, from and after the Issue Date (and subject to Section 10.12), any
Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE
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or other securities exchange or an automated inter-dealer quotation system)
that, if effective, would result in any Person (other than the Initial Holder or
a Look-Through Entity) Beneficially Owning shares of Class U Preferred Stock in
excess of the Ownership Limit shall be void AB INITIO as to the Transfer of such
shares of Class U Preferred Stock that would be otherwise Beneficially Owned by
such Person in excess of the Ownership Limit, and the intended transferee shall
acquire no rights in such shares of Class U Preferred Stock.
(C) TRANSFERS IN EXCESS OF INITIAL HOLDER LIMIT. Except as provided
in Section 10.8, from and after the Issue Date (and subject to Section 10.12),
any Transfer (whether or not such Transfer is the result of transactions entered
into through the facilities of the NYSE or other securities exchange or an
automated inter-dealer quotation system) that, if effective, would result in the
Initial Holder Beneficially Owning shares of Class U Preferred Stock in excess
of the Initial Holder Limit shall be void AB INITIO as to the Transfer of such
shares of Class U Preferred Stock that would be otherwise Beneficially Owned by
the Initial Holder in excess of the Initial Holder limit, and the Initial Holder
shall acquire no rights in such shares of Class U Preferred Stock.
(D) TRANSFERS IN EXCESS OF LOOK-THROUGH OWNERSHIP LIMIT. Except as
provided in Section 10.8 from and after the Issue Date (and subject to Section
10.12), any Transfer (whether or not such Transfer is the result of transactions
entered into through the facilities of the NYSE or other securities exchange or
an automated inter-dealer quotation system) that, if effective, would result in
any Look-Through Entity Beneficially Owning shares of Class U Preferred Stock in
excess of the Look-Through Ownership limit shall be void AB INITIO as to the
Transfer of such shares of Class U Preferred Stock that would be otherwise
Beneficially Owned by such Look-Through Entity in excess of the Look-Through
Ownership Limit and such Look-Through Entity shall acquire no rights in such
shares of Class U Preferred Stock.
(E) TRANSFERS RESULTING IN "CLOSELY HELD" STATUS. From and after the
Issue Date, any Transfer that, if effective would result in the Corporation
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT (including,
without limitation, a Transfer or other event that would result in the
Corporation owning (directly or constructively) an interest in a tenant that is
described in Section 856(d)(2)(B) of the Code if the income derived by the
Corporation from such tenant would cause the Corporation to fail to satisfy any
of the gross income requirements of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of shares of Class U Preferred Stock that would cause
the Corporation (i) to be "closely held" within the meaning of Section 856(h) of
the Code or (ii) otherwise fail to qualify as a REIT, as the case may be, and
the intended transferee shall acquire no rights in such shares of Class U
Preferred Stock.
(F) SEVERABILITY ON VOID TRANSACTIONS. A Transfer of a share of Class
U Preferred Stock that is null and void under Sections 10.1(B), (C), (D), or (E)
of this Article because it would, if effective, result in (i) the ownership of
Class U Preferred Stock in excess of the Initial Holder Limit, the Ownership
Limit, or the Look-Through Ownership Limit, (ii) the Corporation being "closely
held" within the meaning of Section 856(h) of the Code or (iii) the Corporation
otherwise failing to qualify as a REIT, shall not adversely affect the validity
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of the Transfer of any other share of Class U Preferred Stock in the same or any
other related transaction.
10.2 REMEDIES FOR BREACH. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Transfer or other event has
taken place in violation of Section 10.1 of this Article or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership of any
shares of Class U Preferred Stock in violation of Section 10.1 of this Article
(whether or not such violation is intended), 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, causing the Corporation to redeem such shares at
the then current Market Price and upon such terms and conditions as may be
specified by the Board of Directors in its sole discretion (including, but not
limited to, by means of the issuance of long-term indebtedness for the purpose
of such redemption), demanding the repayment of any distributions received in
respect of shares of Class U Preferred Stock acquired in violation of Section
10.1 of this Article or instituting proceedings to enjoin such Transfer or to
rescind such Transfer or attempted Transfer; PROVIDED, HOWEVER, that any
Transfers or attempted Transfers (or in the case of events other than a
Transfer, Beneficial Ownership) in violation of Section 10.1 of this Article,
regardless of any action (or non-action) by the Board of Directors or such
committee, (a) shall be void AB INITIO or (b) shall automatically result in the
transfer described in Section 10.3 of this Article; PROVIDED, FURTHER, that the
provisions of this Section 10.2 shall be subject to the provisions of Section
10.12 of this Article; PROVIDED, FURTHER, that neither the Board of Directors
nor any committee thereof may exercise such authority in a manner that
interferes with any ownership or transfer of Class U Preferred Stock that is
expressly authorized pursuant to Section 10.8(C) of this Article.
10.3 TRANSFER IN TRUST.
(A) ESTABLISHMENT OF TRUST. If, notwithstanding the other provisions
contained in this Article, at any time after the Issue Date there is a purported
Transfer (an "EXCESS TRANSFER") (whether or not such Transfer is the result of
transactions entered into through the facilities of the NYSE or other securities
exchange or an automated inter-dealer quotation system) or other change in the
capital structure of the Corporation (including, but not limited to, any
redemption of Equity Stock) or other event (including, but not limited to, any
acquisition of any share of Equity Stock) such that (a) any Person (other than
the Initial Holder or a Look-Through Entity) would Beneficially Own shares of
Class U Preferred Stock in excess of the Ownership Limit, or (b) the Initial
Holder would Beneficially Own shares of Class U Preferred Stock in excess of the
Initial Holder Limit, or (c) any Person that is a Look-Through Entity would
Beneficially Own shares of Class U Preferred Stock in excess of the Look-Through
Ownership Limit (in any such event, the Person, Initial Holder or Look-Through
Entity that would Beneficially Own shares of Class U Preferred Stock in excess
of the Ownership Limit, the Initial Holder Limit or the Look-Through Entity
Limit, respectively, is referred to as a "PROHIBITED TRANSFEREE"), then, except
as otherwise provided in Section 10.8 of this Article, such shares of Class U
Preferred Stock in excess of the Ownership Limit, the Initial Holder Limit or
the Look-Through Ownership Limit, as the case may be, (rounded up to the nearest
whole share) shall be automatically transferred to a Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be
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deemed to be effective as of the close of business on the Business Day prior to
the Excess Transfer, change in capital structure or another event giving rise to
a potential violation of the Ownership Limit, the Initial Holder Limit or the
Look Through Entity Ownership Limit.
(B) APPOINTMENT OF TRUSTEE. The Trustee shall be appointed by the
Corporation and shall be a Person unaffiliated with either the Corporation or
any Prohibited Transferee. The Trustee may be an individual or a bank or trust
company duly licensed to conduct a trust business.
(C) STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Class U Preferred
Stock held by the Trustee shall be issued and outstanding shares of capital
stock of the Corporation. Except to the extent provided in Section 10.3(E), the
Prohibited Transferee shall have no rights in the Class U Preferred Stock held
by the Trustee, and the Prohibited Transferee shall not benefit economically
from ownership of any shares held in trust by the Trustee, shall have no rights
to dividends and shall not possess any rights to vote or other rights
attributable to the shares held in the Trust.
(D) DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting
rights and rights to dividends with respect to shares of Class U Preferred Stock
held in the Trust, which rights shall be exercised for the benefit of the
Charitable Beneficiary. Any dividend or distribution paid prior to the discovery
by the Corporation that the shares of Class U Preferred Stock have been
transferred to the Trustee shall be repaid to the Corporation upon demand, and
any dividend or distribution declared but unpaid shall be rescinded as void AB
INITIO with respect to such shares of Class U Preferred Stock. Any dividends or
distributions so disgorged or rescinded shall be paid over to the Trustee and
held in trust for the Charitable Beneficiary. Any vote cast by a Prohibited
Transferee prior to the discovery by the Corporation that the shares of Class U
Preferred Stock have been transferred to the Trustee will be rescinded as void
AB INITIO and shall be recast in accordance with the desires of the Trustee
acting for the benefit of the Charitable Beneficiary. The owner of the shares at
the time of the Excess Transfer, change in capital structure or other event
giving rise to a potential violation of the Ownership Limit, Initial Holder
Limit or Look-Through Entity Ownership Limit shall be deemed to have given an
irrevocable proxy to the Trustee to vote the shares of Class U Preferred Stock
for the benefit of the Charitable Beneficiary.
(E) RESTRICTIONS ON TRANSFER. The Trustee of the Trust may sell the
shares held in the Trust to a Person, designated by the Trustee, whose ownership
of the shares will not violate the Ownership Restrictions. If such a sale is
made, the interest of the Charitable Beneficiary shall terminate and proceeds of
the sale shall be payable to the Prohibited Transferee and to the Charitable
Beneficiary as provided in this Section 10.3(E). The Prohibited Transferee shall
receive the lesser of (1) the price paid by the Prohibited Transferee for the
shares or, if the Prohibited Transferee did not give value for the shares
(through a gift, devise or other transaction), the Market Price of the shares on
the day of the event causing the shares to be held in the Trust and (2) the
price per share received by the Trustee from the sale or other disposition of
the shares held in the Trust. Any proceeds in excess of the amount payable to
the Prohibited Transferee shall be payable to the Charitable Beneficiary. If any
of the transfer restrictions set forth in this Section 10.3(E) or any
application thereof is determined in a final judgment to be void, invalid or
unenforceable by any court having jurisdiction over the issue, the Prohibited
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Transferee may be deemed, at the option of the Corporation, to have acted as the
agent of the Corporation in acquiring the Class U Preferred Stock as to which
such restrictions would, by their terms, apply, and to hold such Class U
Preferred Stock on behalf of the Corporation.
(F) PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of
Class U Preferred Stock transferred to the Trustee shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share equal
to the lesser of (i) the price per share in the transaction that resulted in
such transfer to the Trust (or, in the case of a devise or gift, the Market
Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have
the right to accept such offer for a period of 90 days after the later of (i)
the date of the Excess Transfer or other event resulting in a transfer to the
Trust and (ii) the date that the Board of Directors determines in good faith
that an Excess Transfer or other event occurred.
(G) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Trust relating to such
Prohibited Transferee if (i) the shares of Class U Preferred Stock held in the
Trust would not violate the Ownership Restrictions in the hands of such
Charitable Beneficiary and (ii) each Charitable Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
10.4 NOTICE OF RESTRICTED TRANSFER. Any Person that acquires or attempts to
acquire shares of Class U Preferred Stock in violation of Section 10.1 of this
Article, or any Person that is a Prohibited Transferee such that stock is
transferred to the Trustee under Section 10.3 of this Article, shall immediately
give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted 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.
10.5 OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the Issue Date
certain record and Beneficial Owners and transferees of shares of Class U
Preferred Stock will be required to provide certain information as set out
below.
(A) ANNUAL DISCLOSURE. Every record holder or Beneficial Owner of
more than 5% (or such other percentage between 0.5% and 5%, as provided in the
applicable regulations adopted under the Code) of the number of Outstanding
shares of Class U Preferred 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 holder or Beneficial Owner, the number of shares of Class U
Preferred Stock Beneficially Owned, and a full description of how such shares
are held. Each such record holder or Beneficial Owner of Class U Preferred Stock
shall, upon demand by the Corporation, disclose to the Corporation in writing
such additional information with respect to the Beneficial Ownership of the
Class U Preferred 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 under the Code and (ii) ensure
compliance with the Ownership Limit, the Initial Holder Limit or the
Look-Through Ownership Limit, as applicable. Each stockholder of record,
including without limitation any Person that
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holds shares of Class U Preferred Stock on behalf of a Beneficial Owner, shall
take all reasonable steps to obtain the written notice described in this Section
10.5 from the Beneficial Owner.
(B) DISCLOSURE AT THE REQUEST OF THE CORPORATION. Any Person that is
a Beneficial Owner of shares of Class U Preferred Stock and any Person
(including the stockholder of record) that is holding shares of Class U
Preferred Stock for a Beneficial Owner, and any proposed transferee of shares,
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, to
determine any such compliance or to ensure compliance with the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit, and shall provide
a statement or affidavit to the Corporation setting forth the number of shares
of Class U Preferred Stock already Beneficially 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.
10.6 REMEDIES NOT LIMITED. Nothing contained in this Article shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 10.12 of this
Article) (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 insure
compliance with the Ownership Limit, the Initial Holder Limit and the
Look-Through Ownership Limit.
10.7 AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of Section 10 of this Article, or in the case of an ambiguity in
any definition contained in Section 10 of this Article, the Board of Directors
shall have the power to determine the application of the provisions of this
Article with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
10.8 EXCEPTIONS. The following exceptions shall apply or may be established
with respect to the limitations of Section 10.1 of this Article.
(A) WAIVER OF OWNERSHIP LIMIT. The Board of Directors, upon receipt
of a ruling from the Internal Revenue Service or an opinion of tax counsel or
other evidence or undertaking acceptable to it, may waive the application, in
whole or in part, of the Ownership Limit to a Person subject to the Ownership
Limit, if such person is not an individual for purposes of Section 542(a) of the
Code (as modified to exclude qualified trusts from treatment as individuals
pursuant to Section 856(h)(3) of the Code) and is a corporation, partnership,
limited liability company, estate or trust. In connection with any such
exemption, the Board of Directors may require such representations and
undertakings from such Person 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 on the Corporation's status as a REIT.
(B) PLEDGE BY INITIAL HOLDER. Notwithstanding any other provision of
this Article, the pledge by the Initial Holder of all or any portion of the
Class U Preferred Stock directly owned at any time or from time to time shall
not constitute a violation of Section 10.1 of
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this Article and the pledgee shall not be subject to the Ownership Limit with
respect to the Class U Preferred Stock so pledged to it either as a result of
the pledge or upon foreclosure.
(C) UNDERWRITERS. For a period of 270 days (or such longer period of
time as any underwriter described below shall hold an unsold allotment of Class
U Preferred Stock) following the purchase of Class U Preferred Stock by an
underwriter that (i) is a corporation, partnership or other legal entity and
(ii) participates in an offering of the Class U Preferred Stock, such
underwriter shall not be subject to the Ownership Limit with respect to the
Class U Preferred Stock purchased by it as a part of or in connection with such
offering and with respect to any Class U Preferred Stock purchased in connection
with market making activities.
10.9 LEGEND. Each certificate for Class U Preferred Stock shall bear
substantially the following legend:
"The shares of Class U Cumulative Preferred Stock represented by this
certificate are subject to restrictions on transfer. No person may
Beneficially Own shares of Class U Cumulative Preferred Stock in excess of
the Ownership Restrictions, as applicable, with certain further
restrictions and exceptions set forth in the Charter (including the
Articles Supplementary setting forth the terms of the Class U Cumulative
Preferred Stock). Any Person that attempts to Beneficially Own shares of
Class U Cumulative Preferred Stock in excess of the applicable limitation
must immediately notify the Corporation. All capitalized terms in this
legend have the meanings ascribed to such terms in the Charter (including
the Articles Supplementary setting forth the terms of the Class U
Cumulative Preferred Stock), 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 that so requests. If the restrictions on
transfer are violated, (i) the transfer of the shares of Class U Cumulative
Preferred Stock represented hereby will be void in accordance with the
Charter (including the Articles Supplementary setting forth the terms of
the Class U Cumulative Preferred Stock) or (ii) the shares of Class U
Cumulative Preferred Stock represented hereby will automatically be
transferred to a Trustee of a Trust for the benefit of one or more
Charitable Beneficiaries."
10.10 SEVERABILITY. If any provision of this Article 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.
10.11 BOARD OF DIRECTORS DISCRETION. Anything in this Article to the
contrary notwithstanding, 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 the Ownership Limit,
the Initial Holder Limit and the Look-Through Ownership Limit in the event of a
change in law.
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10.12 SETTLEMENT. Nothing in this Section 10 of this Article shall be
interpreted to preclude the settlement of any transaction entered into through
the facilities of the NYSE or other securities exchange or an automated
inter-dealer quotation system.
FOURTH: The terms of the Class U Cumulative Preferred Stock set forth in
Article Third hereof shall become Article XXXII of the Charter.
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IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Executive Vice President and Chief
Financial Officer and witnessed by its Assistant Secretary on March 17, 2004.
WITNESS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY
/s/ LISA COHN /s/ PAUL J. MCAULIFFE
- ------------------- ----------------------------
Lisa Cohn Paul J. McAuliffe
Assistant Secretary Executive Vice President and
Chief Financial Officer
THE UNDERSIGNED, Executive Vice President and Chief Financial Officer of
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, who executed on behalf of the
Corporation the Articles Supplementary of which this Certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ PAUL J. MCAULIFFE
----------------------------
Paul J. McAuliffe
Executive Vice President and
Chief Financial Officer