EXHIBIT 3.1
THE MACERICH COMPANY
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Articles Supplementary of Board of Directors
Classifying and Designating a Series of
Preferred Stock as
Series A Cumulative Convertible Redeemable
Preferred Stock and
Fixing Distribution and Other Preferences
and Rights of Such Series
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The Macerich Company, a Maryland corporation (the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland
pursuant to section 2-208 of the Corporations and Associations Article of the
Annotated Code of Maryland that:
FIRST: Pursuant to authority granted by the Articles of Amendment and
Restatement of the Corporation (the "Articles"), the Board of Directors on
January 15, 1998 adopted a resolution designating and classifying 3,627,131
unissued and unclassified shares of preferred stock of the Corporation as
Series A Cumulative Convertible Redeemable Preferred Stock.
SECOND: The following is a description of the Series A Cumulative
Convertible Redeemable Preferred Stock of the Corporation (the "Series A
Preferred Shares"), including the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemption
thereof, which, shall become, upon any restatement of the Charter, part of
Article Fifth of the Charter with any appropriate changes in enumeration or
lettering of any section or subsections thereof:
SERIES A
CUMULATIVE CONVERTIBLE
REDEEMABLE PREFERRED SHARES
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ARTICLES SUPPLEMENTARY
Section 1. NUMBER OF SHARES AND DESIGNATION. This class of
preferred stock shall be designated as Series A Cumulative Convertible
Redeemable Preferred Stock and the number of shares
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which shall constitute such series shall not be more than 3,627,131 shares,
par value $0.01 per share, which number may be decreased (but not below the
aggregate number thereof then outstanding and/or which have been reserved for
issuance) from time to time by the Board of Directors upon reacquisition
thereof in any manner or by retirement thereof.
Section 2. DEFINITIONS. For purposes of the Series A Preferred Shares,
the following terms shall have the meanings indicated:
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation or any committee authorized by such Board of Directors to
perform any of its responsibilities with respect to the Series A Preferred
Shares.
"BUSINESS DAY" shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions in
New York City, New York are authorized or required by law, regulation or
executive order to close.
"CALL DATE" shall mean the date specified in the notice to holders
required under Section 5(d) as the Call Date.
"CHANGE OF CONTROL" shall have the meaning set forth in Section 6(a).
"CHARTER" shall mean the charter of the Corporation.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMON SHARES" shall mean the shares of common stock, par value $0.01
per share, of the Corporation.
"CONVERSION DATE" shall have the meaning set forth in Section 6(a).
"CONVERSION PRICE" shall mean the conversion price per Common Share
for which the Series A Preferred Shares are convertible, as such Conversion
Price may be adjusted pursuant to Section 6. The initial Conversion Price
shall be $27.57.
"CURRENT MARKET PRICE" of publicly traded Common Shares or any other
class of capital stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sales price, regular way,
on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either
case as reported on the New York Stock Exchange ("NYSE") or, if such
security is not listed or admitted for
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trading on the NYSE, on the principal national securities exchange on which
such security is listed or admitted for trading or, if not listed or
admitted for trading on any national securities exchange, on the Nasdaq
National Market ("NASDAQ") or, if such security is not quoted on NASDAQ,
the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by the National Association of
Securities Dealers, Inc. (the "NASD") or, if bid and asked prices for such
security on such day shall not have been reported through the NASD, the
average of the bid and asked prices on such day as furnished by any NYSE
member firm regularly making a market in such security selected for such
purpose by the Board of Directors of, if any class or series of securities
is not publicly traded, the fair value of the shares of such class or
series as determined reasonably and in good faith by the Board.
"DIVIDEND PAYMENT DATE" shall mean (i) for any Dividend Period with
respect to which the Corporation pays a dividend on the Common Shares, the
date on which such dividend is paid, or (ii) for any Dividend Period with
respect to which the Corporation does not pay a dividend on the Common
Shares, a date to be set by the Board of Directors, but in no event shall
the Dividend Payment Date be later than the ninetieth calendar day after
the end of the applicable Dividend Period.
"DIVIDEND PERIODS" shall mean quarterly dividend periods commencing on
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 with respect to any Series A Preferred Shares (other than the
initial Dividend Period, which shall commence on the Issue Date for such
Series A Preferred Shares and end on and include the last day of the
calendar quarter immediately following such Issue Date, and other than the
Dividend Period during which any Series A Preferred Shares shall be
redeemed pursuant to Section 5 or converted pursuant to Section 6, which
shall end on and include the Call Date with respect to the Series A
Preferred Shares being redeemed or the date that such Series A Preferred
Shares are converted, as the case may be).
"EXPIRATION TIME" shall have the meaning set forth in Section
6(d)(iv).
"FAIR MARKET VALUE" shall mean the number obtained, for the 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, by dividing (a) the sum of the
products for all sales of Common Shares during such 20 day period of (i)
the sale price per Common Share and (ii) the
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number of Common Shares sold by (b) the total number of Common Shares sold
during such 20 day period. The term "ex date," when used with respect to
any issuance or distribution, means the first day on which the Common
Shares trade regular way, without the right to receive such issuance or
distribution, on the exchange or in the market, as the case may be, used
to determine that day's Current Market Price.
"FULLY JUNIOR SHARES" shall mean the Common Shares and any other class
or series of stock of the Corporation now or hereafter issued and
outstanding over which the Series A Preferred Shares have preference or
priority in both (i) the payment of dividends and (ii) the distribution of
assets on any liquidation, dissolution or winding up of the Corporation.
"FUNDS FROM OPERATIONS" shall mean net income (computed in accordance
with generally accepted accounting principles, consistently applied),
excluding gains (or losses) from debt restructuring and sales of property,
plus real property depreciation and real estate-related amortization, and
after adjustments for unconsolidated affiliates, partnerships and joint
ventures (such adjustments being calculated to reflect funds from
operations from such entities on the same basis), all computed in a manner
consistent with the revised definition of Funds from Operations adopted by
the National Association of Real Estate Investment Trusts ("NAREIT") in its
White Paper dated March 1995.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or any
successor authority) that are applicable, at the Corporation's option, as
of the Issue Date or as of the date of determination, consistently applied.
"ISSUE DATE" shall mean the date on which Series A Preferred Shares
are issued.
"ISSUE PRICE" shall mean $27.57 per Series A Preferred Share.
"JUNIOR SHARES" shall mean the Common Shares and any other class or
series of stock of the Corporation now or hereafter issued and outstanding
over which the Series A Preferred Shares 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.
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"OPERATING PARTNERSHIP" shall mean The Macerich Partnership, L.P., a
Delaware limited partnership.
"PARITY SHARES" shall have the meaning set forth in Section 9(b).
"PERSON" shall mean any individual, firm, partnership, corporation,
limited liability company, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"PURCHASED SHARES" shall have the meaning set forth in Section
6(d)(iv).
"REIT TERMINATION EVENT" shall mean the earliest to occur of:
(i) the filing of a federal income tax return by the Corporation for
any taxable year on which the Corporation does not elect to be
taxed as a real estate investment trust;
(ii) the approval by the stockholders of the Corporation of a proposal
for the Corporation to cease to qualify as a real estate
investment trust;
(iii) a determination by the Board of Directors of the
Corporation, based on the advice of counsel, that the
Corporation has ceased to qualify as a real estate
investment trust; or
(iv) a "determination" within the meaning of Section 1313(a) of the
Code that the Corporation has ceased to qualify as a real estate
investment trust.
"SECURITIES" and "SECURITY" shall have the meanings set forth in
Section 6(d)(iii).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES A PREFERRED SHARES" shall have the meaning given such term in
the preamble to these Articles Supplementary.
"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 an authorization of dividends or other distribution by the
Board of Directors, the allocation of funds to be so paid on
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any series or class of stock of the Corporation; PROVIDED, HOWEVER, that
if any funds for any class or series of Junior Shares or any class or
series of stock ranking on a parity with the Series A Preferred Shares as
to the payment of dividends are placed in a separate account of the
Corporation or delivered to a disbursing, paying or other similar agent,
then "set apart for payment" with respect to the Series A Preferred
Shares 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 any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted
for trading on the NYSE, on the principal national securities exchange on
which such securities are listed or admitted, or if not listed or admitted
for trading on any national securities exchange, on NASDAQ, or if such
securities are not quoted on NASDAQ, in the securities market in which the
securities are traded.
"TRANSACTION" shall have the meaning set forth in Section 6(e).
"TRANSFER AGENT" shall mean the Corporation, or such other agent or
agents of the Corporation as may be designated by the Board of Directors or
their designee as the transfer agent, registrar and dividend disbursing
agent for the Series A Preferred Shares.
"VOTING PREFERRED SHARES" shall have the meaning set forth in Section
10.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Articles.
Section 3. DIVIDENDS.
(a) Subject to the preferential rights of the holders of any
preferred shares that rank senior in the payment of dividends to the Series
A Preferred Shares, the holders of Series A Preferred Shares shall be
entitled to receive, when, as and if authorized by the Board of Directors,
out of funds legally available for the payment of dividends, cumulative
preferential dividends payable in cash in an amount per share equal to the
greater of (i) an annual dividend of $1.84 or (ii) the regular cash
dividends (determined on each Dividend Payment Date) on the Common Shares,
or portion thereof, into which a Series A Preferred Share is convertible
(without giving effect to the Conversion Lockout). The dividends referred
to in clause (ii) of the preceding sentence shall equal the number of
Common Shares, or portion thereof, into which one Series A Preferred Share
will be convertible on or after the
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Conversion Date, multiplied by the most current quarterly dividend on
one Common Share on or before the applicable Dividend Payment Date. If
the Corporation pays a regular cash dividend on the Common Shares with
respect to a Dividend Period after the date on which the Dividend Payment
Date is determined pursuant to clause (ii) of the definition of Dividend
Payment Date and the dividend calculated pursuant to clause (ii) of this
paragraph (a) with respect to such Dividend Period is greater than the
dividend previously declared on the Series A Preferred Shares with respect
to such Dividend Period, the Corporation shall pay an additional dividend
to the holders of the Series A Preferred Shares on the date on which the
dividend on the Common Shares is paid, in an amount equal to the
difference between (y) the dividend calculated pursuant to clause (ii)
of this paragraph (a) and (z) the amount of dividends previously
declared on the Series A Preferred Shares with respect to such Dividend
Period. Subject to Section 3(b), the dividends shall begin to accrue and
shall be fully cumulative from the first day of the applicable Dividend
Period, whether or not in any Dividend Period or Periods there shall be
funds of the Corporation legally available for the payment of such
dividends, and shall be payable quarterly, when, as and if authorized by
the Board of Directors, in arrears on Dividend Payment Dates. Each such
dividend shall be payable in arrears to the holders of record of Series A
Preferred Shares as they appear in the records of the Corporation at the
close of business on such record dates, not more than 60 days preceding
such Dividend Payment Dates thereof, as shall be fixed by the Board of
Directors. Accrued and unpaid dividends for any past Dividend Periods may
be authorized and paid at any time and for such interim periods, without
reference to any regular Dividend Payment Date, to holders of record on
such date, not more than 60 days preceding the payment date thereof, as may
be fixed by the Board of Directors. Any dividend payment made on Series A
Preferred Shares shall first be credited against the earliest accrued but
unpaid dividend due with respect to Series A Preferred Shares which remains
payable.
(b) The amount of dividends referred to in clause (i) of Section 3(a)
payable for each full Dividend Period on the Series A Preferred Shares
shall be computed by dividing the annual dividend rate by four. The
initial Dividend Period for the Series A Preferred Shares will include a
partial dividend for the period from the Issue Date until the last day of
the calendar quarter immediately following such Issue Date. The holders of
Series A Preferred Shares will not be entitled to receive dividends
authorized subsequent to the Issue Date with respect to periods ending
prior to the Issue Date. The amount of dividends payable for such period,
or any other period shorter than a full Dividend Period, on the
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Series A Preferred Shares shall be computed by dividing the number of days
in such period by 365 and multiplying the result by the Series A
Preferred Shares dividend rate determined in accordance with Section 3(a).
Holders of Series A Preferred Shares shall not be entitled to any
dividends, whether payable in cash, property or shares, in excess of
cumulative dividends, as herein provided, on the Series A Preferred
Shares. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on the Series A Preferred
Shares which may be in arrears.
(c) So long as any Series A Preferred Shares are outstanding, no
dividends, except as described in the immediately following sentence,
shall be declared or paid or set apart for payment on any class or series
of Parity Shares for any period unless full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the
Series A Preferred Shares for all Dividend Periods terminating on or prior
to the dividend payment date on such class or series of Parity Shares.
When dividends are not paid in full or a sum sufficient for such payment
is not set apart, as aforesaid, all dividends declared upon Series A
Preferred Shares and all dividends declared upon any other class or series
of Parity Shares shall be declared ratably in proportion to the respective
amounts of dividends accumulated and unpaid on the Series A Preferred
Shares and accumulated and unpaid on such Parity Shares.
(d) So long as any Series A Preferred Shares are outstanding, no
dividends (other than dividends or distributions paid solely in shares of,
or options, warrants or rights to subscribe for or purchase shares of,
Fully Junior Shares) shall be declared or paid or set apart for payment or
other distribution shall be declared or made or set apart for payment upon
Junior Shares, nor shall any Junior Shares be redeemed, purchased or
otherwise acquired (other than a redemption, purchase or other acquisition
of Common Shares 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 Junior Shares) by the Corporation, directly or indirectly (except
by conversion into or exchange for Fully Junior Shares) nor shall any
other cash or other property otherwise be paid or distributed to or for
the benefit of any holder of Junior Shares in respect thereof, directly or
indirectly, unless in each case (i) the full cumulative dividends on all
outstading Series A Preferred Shares and any other Parity Shares of the
Corporation shall have been or contemporaneously are declared and paid or
declared and set
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apart for payment for all past Dividend Periods with respect to the Series
A Preferred Shares and all past dividend periods with respect to such
Parity Shares and (ii) sufficient funds shall have been or
contemporaneously are declared and paid or declared and set apart for the
payment of the dividend for the current Dividend Period with respect to
the Series A Preferred Shares and the current dividend period with respect
to such Parity Shares.
(e) No distributions on Series A Preferred Shares shall be declared
by the Board of Directors or paid or set apart for payment by the
Corporation at such time as the terms and provisions of any agreement of
the Corporation, including any agreement relating to its indebtedness,
prohibits such declaration, payment or setting apart for payment or
provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such
declaration or payment shall be restricted or prohibited by law.
(f) In determining whether a distribution by dividend, redemption or
other acquisition of Shares or otherwise is permitted under Maryland law,
no effect shall be given to amounts, to the extent such amounts would be
needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights on dissolution are superior to
those receiving the distribution.
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, subject to the prior
preferences and other rights of any series of stock ranking senior to the
Series A Preferred Shares upon liquidation, distribution or winding up of
the Corporation, before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart for
the holders of Junior Shares, the holders of the Series A Preferred Shares
shall be entitled to receive Twenty Seven Dollars and Fifty-Seven Cents
($27.57) (the "Liquidation Preference") per Series A Preferred Share plus
an amount equal to all dividends (whether or not earned or declared)
accrued and unpaid thereon to the date of final distribution to such
holders; but such holders shall not be entitled to any further payment;
PROVIDED, that the dividend payable with respect to the Dividend Period
containing the date of final distribution shall be equal to the greater of
(i) the dividend provided in Section 3(a)(i) or (ii) the dividend
determined pursuant to Section 3(a)(ii) for the preceding Dividend Period.
If, upon any liquidation, dissolution or
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winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the Series A Preferred Shares
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 Shares, then such assets, or the proceeds thereof, shall be
distributed among the holders of Series A Preferred Shares and any such
other Parity Shares ratably in accordance with the respective amounts that
would be payable on such Series A Preferred Shares and any such other
Parity Shares if all amounts payable thereon were paid in full. For the
purposes of this Section 4, (i) a consolidation, merger or other business
combination of the Corporation with one or more corporations, real estate
investment trusts or other entities, (ii) a sale, lease or conveyance of
all or substantially all of the Corporation's property or business or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on a parity with or prior to the Series
A Preferred Shares upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Corporation, after payment
shall have been made in full to the holders of the Series A Preferred
Shares, as provided in this Section 4, the holders of Series A Preferred
Shares shall have no other claim to the remaining assets of the
Corporation and any other series or class or classes of Junior Shares
shall, subject to the respective terms and provisions (if any) applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Series A Preferred Shares shall not be
entitled to share therein.
Section 5. REDEMPTION AT THE OPTION OF THE CORPORATION.
(a) The Series A Preferred Shares shall not be redeemable by the
Corporation prior to February 25, 2004; provided, however, that if at any
time fewer than 362,713 Series A Preferred Shares remain outstanding, the
Corporation may redeem all such shares at any time in the manner provided
in this Section 5. On and after February 25, 2004, the Corporation, at
its option, may redeem the Series A Preferred Shares, in whole at any time
or from time to time in part out of funds legally available therefor at a
redemption price payable in cash equal to 100% of the Liquidation
Preference per Series A Preferred Share (plus all accumulated, accrued and
unpaid dividends as provided below).
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(b) Upon any redemption of Series A Preferred Shares pursuant to
this Section 5, the Corporation shall pay all accrued and unpaid
dividends, if any, thereon to the Call Date, without interest. If the
Call Date falls after a dividend payment record date and prior to the
corresponding Dividend Payment Date, then each holder of Series A
Preferred Shares at the close of business on such dividend payment record
date shall be entitled to the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding any redemption of such
shares before such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for unpaid dividends,
whether or not in arrears, on Series A Preferred Shares called for
redemption.
(c) If full cumulative dividends on the Series A Preferred Shares
and any other class or series of Parity Shares of the Corporation have not
been declared and paid or declared and set apart for payment, the Series A
Preferred Shares may not be redeemed in part under this Section 5 and the
Corporation may not purchase or acquire Series A Preferred Shares,
otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of Series A Preferred Shares.
(d) Notice of the redemption of any Series A Preferred Shares under
this Section 5 shall be mailed by first-class mail to each holder of
record of Series A Preferred Shares to be redeemed at the address of
each such holder as shown on the Corporation's records, not less than 30
nor more than 90 days prior to the Call Date. Neither the failure to
mail any notice required by this 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. Each such mailed notice
shall state, as appropriate: (1) the Call Date; (2) the number of Series A
Preferred Shares to be redeemed and, if fewer than all the shares held by
such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (3) the redemption price; (4) the place or places at
which certificates for such shares are to be surrendered; (5) the then-
current Conversion Price; and (6) that dividends on the shares to be
redeemed shall cease to accrue on such Call Date except as otherwise
provided herein. Notice having been mailed as aforesaid, from and after
the Call Date (unless the Corporation shall fail to make available an
amount of cash necessary to effect such redemption), (i) except as
otherwise provided herein, dividends on the Series A Preferred Shares so
called for redemption shall cease to accrue, (ii) such shares shall no
longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Series A Preferred Shares shall cease (except the
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rights to convert and 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 provide cash in accordance with the
preceding sentence shall be deemed fulfilled if, on or before the Call
Date, the Corporation shall deposit with a bank or trust company that has
an office in the Borough of Manhattan, City of New York, and that has
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 Series A Preferred
Shares so called for redemption. No interest shall accrue for the benefit
of the holders of Series A Preferred Shares to be redeemed on any cash so
set aside by the Corporation. Subject to applicable escheat laws, any
such cash unclaimed at the end of two years from the Call Date shall
revert to the general funds of the Corporation, after which reversion the
holders of such shares so called for redemption shall look only to the
general funds of the Corporation for the payment of such cash.
As promptly as practicable after the surrender in accordance with
such notice of the certificates for any such shares so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so require and
if the notice shall so state), such shares shall be exchanged for any cash
(without interest thereon) for which such shares have been redeemed. If
fewer than all the outstanding Series A Preferred Shares are to be
redeemed, shares to be redeemed shall be selected by the Corporation from
outstanding Series A Preferred Shares not previously called for redemption
pro rata (as nearly as may be), by lot or by any other method determined
by the Corporation in its sole discretion to be equitable. If fewer than
all the Series A Preferred Shares represented by any certificate are
redeemed, then new certificates representing the unredeemed shares shall
be issued without cost to the holder thereof.
Section 6. CONVERSION. Holders of Series A Preferred Shares shall
have the right to convert all or a portion of such shares into Common Shares,
as follows:
(a) Subject to and upon compliance with the provisions of this
Section 6, a holder of Series A Preferred Shares shall have the right, at
his or her option, upon the earliest to occur of (i) the termination of
the Conversion Lockout (as defined below), (ii) the first day on which a
Change of Control occurs, (iii) the occurrence of a REIT Termination Event
or (iv) the first day on which any dividends payable on the Series A
Preferred Shares shall be in arrears (which shall, with respect to any
such quarterly
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dividend, mean that any such dividend has not been paid in full), whether
or not earned or declared (the "Conversion Date"), to convert all or any
portion of such shares into the number of fully paid and non-assessable
Common Shares obtained by dividing the aggregate Liquidation Preference of
such shares (inclusive of accrued but unpaid dividends) by the Conversion
Price (as in effect at the time and on the date provided for in the last
paragraph of paragraph (b) of this Section 6) by surrendering such shares
to be converted, such surrender to be made in the manner provided in
paragraph (b) of this Section 6; PROVIDED, HOWEVER, that the right to
convert shares 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 the cash payable
upon such redemption under Section 5. "Conversion Lockout" shall mean,
with respect to any Series A Preferred Share or Shares, the period of time
beginning on the Issue Date and terminating on the earlier to occur of (i)
the 61st day following the delivery to the Corporation by the holder of
such Series A Preferred Share or Shares of a notice (a "Conversion Lockout
Termination Notice") stating such holder's intention to terminate the
Conversion Lockout with respect to such Series A Preferred Share or Shares
or (ii) such date as is mutually agreed upon by the Corporation and such
holder. No holder of Series A Preferred Shares shall be permitted to
deliver a Conversion Lockout Termination Notice prior to the 120th day
following the Issue Date.
"Change of Control" means each 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) 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 Series A Preferred Shares (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) then still in office who were
either directors at the beginning of such period, or whose election
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or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors then in office;
and (iii) (A) the Corporation consolidating with or merging 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 entity consolidating with or merging
into the Corporation, which in either event (A) or (B) is pursuant to a
transaction in which the outstanding shares of voting stock of the
Corporation are reclassified or changed into or exchanged for cash,
securities or other property; provided, however, that the events described
in clause (iii) 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
trust or (b) if the holders of the exchanged securities of the Corporation
immediately after such transaction beneficially own at least a majority of
the securities of the surviving or consolidated entity normally entitled to
vote in elections of directors.
(b) In order to exercise the conversion right, the holder of each
Series A Preferred Share 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 irrevocably elects to
convert such Series A Preferred Shares. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such
Series A Preferred Share 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 Series A Preferred Shares at the close of business on a
dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment
record date and prior to such Dividend Payment Date. However, Series A
Preferred Shares surrendered for conversion during the period between the
close of business on any dividend payment record date and the opening of
business on the corresponding Dividend Payment Date (except shares
converted after the issuance of notice of redemption with respect to a
Call Date during such period, such Series A Preferred Shares being
entitled to such dividend on the Dividend Payment Date) must be
accompanied by payment of an amount equal to
14
the dividend payable on such shares on such Dividend Payment Date. A
holder of Series A Preferred Shares on a dividend payment record date who
(or whose transferee) tenders any such shares for conversion into Common
Shares on the corresponding Dividend Payment Date will receive the
dividend payable by the Corporation on such Series A Preferred Shares on
such date, and the converting holder need not include payment of the
amount of such dividend upon surrender of Series A Preferred Shares for
conversion. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the Common Shares issued upon such
conversion.
As promptly as practicable after the surrender of certificates for
Series A Preferred Shares as aforesaid, the Corporation shall issue and
shall deliver at such office to such holder, or on his or her written
order, a certificate or certificates for the number of full Common Shares
issuable upon the conversion of such shares in accordance with provisions
of this Section 6, and any fractional interest in respect of a Common
Share arising upon such conversion shall be settled as provided in
paragraph (c) of this Section 6.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for
Series A Preferred Shares shall have been surrendered and such notice
shall have been received by the Corporation as aforesaid (and if
applicable, payment of an amount equal to the dividend payable on such
shares shall have been received by the Corporation as described above),
and the person or persons in whose name or names any certificate or
certificates for Common Shares 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 share transfer books of the Corporation shall be closed on that
date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next
succeeding day on which such share transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date on
which such shares shall have been surrendered and such notice received
by the Corporation.
(c) No fractional shares or scrip representing fractions of Common
Shares shall be issued upon conversion of the Series A Preferred Shares.
Instead of any fractional interest in a Common Share that would otherwise
be deliverable upon the conversion of a Series A Preferred Share, the
Corporation shall pay to the holder of such share
15
an amount in cash based upon the Current Market Price of the Common Shares
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 Common Shares issuable upon conversion thereof
shall be computed on the basis of the aggregate number of Series A
Preferred Shares so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its shares of stock in Common
Shares, (B) subdivide its outstanding Common Shares into a greater
number of shares, (C) combine its outstanding Common Shares into a
smaller number of shares or (D) issue any shares of stock by
reclassification of its Common Shares, 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 Business Day next
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be
adjusted so that the holder of any Series A Preferred Share thereafter
surrendered for conversion shall be entitled to receive the number of
Common Shares that such holder would have owned or have been entitled
to receive after the happening of any of the events described above as
if such Series A Preferred Shares had been converted immediately prior
to the record date in the case of a dividend or distribution or the
effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this subparagraph
(i) shall become effective immediately after the opening of business
on the Business Day next following the record date (except as provided
in paragraph (h) below) in the case of a dividend or distribution and
shall become effective immediately after the opening of business on
the Business Day next following the effective date in the case of a
subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights,
options or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Shares at a price per share
less than 95% (100% if a stand-by underwriter is used and charges the
Corporation a commission) of the Fair Market Value per Common Share on
the record
16
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 Business 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 Business Day next following the date fixed for such
determination by (B) a fraction, the numerator of which shall be the
sum of (x) the number of Common Shares outstanding on the close of
business on the date fixed for such determination and (y) the of
shares that the aggregate proceeds to the Corporation from the
exercise of such rights, options or warrants for Common Shares would
purchase at 95% of such Fair Market Value (or 100% in the case of a
stand-by underwriting), and the denominator of which shall be the
sum of (x) the number of Common Shares outstanding on the close of
business on the date fixed for such determination and (y) the number
of additional Common Shares 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 Shares to subscribe for or purchase
Common Shares at less than 95% of such Fair Market Value (or 100% in
the case of a stand-by underwriting), there shall be taken into
account any consideration received by the Corporation upon issuance
and upon exercise of such rights, options or warrants, the value of
such consideration, if other than cash, to be determined by the Board
of Directors whose determination shall be conclusive.
(iii) If the Corporation shall distribute to all holders of
its Common Shares any securities of the Corporation (other than Common
Shares) or evidence of its indebtedness or assets (excluding
cumulative cash dividends or distributions paid with respect to the
Common Shares after December 31, 1996 which are not in excess of the
following: the sum of (A) the Corporation's cumulative undistributed
Funds from Operations at December 31, 1996, plus (B) the cumulative
amount of Funds from Operations, as determined by the Board of
Directors, after December 31, 1996, minus (C) the cumulative amount of
dividends accrued or paid in respect of the Series A Preferred Shares
or any other class or series of preferred stock of the Corporation
after the Issue Date or rights, options or warrants to subscribe for
or purchase any of its securities (excluding those rights, options and
17
warrants issued to all holders of Common Shares entitling them for a
period expiring within 45 days after the record date referred to in
subparagraph (ii) above to subscribe for or purchase Common Shares,
which rights and warrants are referred to in and treated under
subparagraph (ii) above) (any of the foregoing being hereinafter in
this subparagraph (iii) collectively called the "SECURITIES" and
individually a "SECURITY"), then in each such case the Conversion
Price shall be adjusted so that it shall equal the price determined by
multiplying (x) the Conversion Price in effect immediately prior to
the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by (y) a fraction,
the numerator of which shall be the Fair Market Value per Common Share
on the record date mentioned below less the then fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive) of the portion of the Securities or assets or evidences of
indebtedness so distributed or of such rights, options or warrants
applicable to one Common Share, and the denominator of which shall be
the Fair Market Value per Common Share on the record date mentioned
below. Such adjustment shall become effective immediately at the
opening of business on the Business Day next following (except as
provided in paragraph (h) below) the record date for the determination
of stockholders entitled to receive such distribution. For the
purposes of this subparagraph (iii), the distribution of a Security,
which is distributed not only to the holders of the Common Shares on
the date fixed for the determination of stockholders entitled to such
distribution of such Security, but also is distributed with each
Common Share delivered to a Person converting a Series A Preferred
Share after such determination date, shall not require an adjustment
of the Conversion Price pursuant to this subparagraph (iii); PROVIDED
that on the date, if any, on which a person converting a Series A
Preferred Share would no longer be entitled to receive such Security
with a Common Share (other than as a result of the termination of all
such Securities), a distribution of such Securities shall be deemed to
have occurred and the Conversion Price shall be adjusted as provided
in this subparagraph (iii) (and such day shall be deemed to be "the
date fixed for the determination of the stockholders entitled to
receive such distribution" and "the record date" within the meaning of
the two preceding sentences).
(iv) In case a tender or exchange offer (which term shall not
include open market repurchases by the Corporation) made by the
Corporation or any subsidiary
18
of the Corporation for all or any portion of the Common Shares shall
expire and such tender or exchange offer shall involve the payment
by the Corporation or such subsidiary of consideration per Common
Share having a fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors), at the last
time (the "EXPIRATION TIME") tenders or exchanges may be made
pursuant to such tender or exchange offer, that exceeds the Current
Market Price per Common Share on the Trading Day next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph, by a
fraction of which the numerator shall be the number of Common
Shares outstanding (including any tendered or exchanged shares) at
the Expiration Time, multiplied by the Current Market Price per
Common Share on the Trading Day next succeeding the Expiration
Time, and the denominator shall be the sum of (A) the fair market
value (determined as aforesaid) of the aggregate consideration payable
to stockholders based upon the acceptance (up to any maximum specified
in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any maximum, being referred to as the
"PURCHASED SHARES") and (B) the product of the number of Common Shares
outstanding (less any Purchased Shares) at the Expiration Time and the
Current Market Price per Common Share on the Trading Day next
succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following 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 subparagraph (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 6 (other than this subparagraph (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 Common Shares. Notwithstanding any
other provisions of this Section 6, the Corporation shall not be
required to make any adjustment of the Conversion Price for the
issuance of (A) any Common Shares pursuant to any plan
19
providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional
optional amounts in Common Shares under such plan or (B) any
options, rights or Common Stock pursuant to any stock option,
stock purchase or other stock-based compensation plan maintained by
the Corporation in the ordinary course of business. All calculations
under this Section 6 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) 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 share dividends,
subdivision of shares, reclassification or combination of shares,
distribution of rights or warrants to purchase shares or securities,
or 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, self
tender offer for 30% or more of its Common Shares, sale of all or
substantially all of the Corporation's assets or recapitalization of the
Common Shares and excluding any transaction as to which subparagraph (d)(i)
of this Section 6 applies) (each of the foregoing being referred to herein
as a "TRANSACTION"), in each case as a result of which all or substantially
all of the Common Shares are converted into the right to receive shares,
securities or other property (including cash or any combination thereof),
each Series A Preferred Share which is not redeemed or converted into the
right to receive shares, securities or other property prior to such
Transaction shall thereafter be convertible into the kind and amount of
shares, securities and other property (including cash or any combination
thereof) receivable upon the consummation of such Transaction by a holder
of that number of Common Shares into which one Series A Preferred Share 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 (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 Series A Preferred
Shares that will
20
contain provisions enabling the holders of the Series A Preferred Shares
that remain outstanding after such Transaction to convert into the
consideration received by holders of Common Shares 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 its Common Shares (other than cash dividends or
distributions paid with respect to the Common Shares after December
31, 1997 not in excess of the sum of the Corporation's cumulative
undistributed Funds from Operations at December 31, 1997, plus the
cumulative amount of Funds from Operations, as determined by the Board
of Directors, after December 31, 1997, minus the cumulative amount of
dividends accrued or paid in respect of the Series A Preferred Shares
or any other class or series of preferred stock of the Corporation
after the Issue Date); or
(ii) the Corporation shall authorize the granting to all holders
of Common Shares of rights, options or warrants to subscribe for or
purchase any shares of any class or any other rights, options or
warrants; or
(iii) there shall be any reclassification of the Common Shares
(other than an event to which subparagraph (d)(i) of this Section 6
applies) or any consolidation or merger to which the Corporation
is a party (other than a merger in which the Corporation is the
surviving entity) and for which approval of any stockholders of the
Corporation is required, or a statutory share exchange, or a self
tender offer by the Corporation for all or substantially all of its
outstanding Common Shares or the sale or transfer of all or
substantially all of the assets of the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent and
shall cause to be mailed to the holders of Series A Preferred Shares at
their addresses as shown on the records of the Corporation, as promptly as
possible, but at least 10 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken
for the purpose of such dividend, distribution or granting of rights,
options or warrants, or, if a record is not to be taken, the date as of
which the holders of Common Shares of record to be entitled to such
dividend,
21
distribution or rights, options or warrants are to be determined or
(B) the date on which such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Shares of record shall be entitled to
exchange their Common Shares 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 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's
certificate setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment
which certificate shall be conclusive evidence of the correctness of such
adjustment absent manifest error. Promptly after delivery of such
certificate, the Corporation shall prepare a notice of such adjustment of
the Conversion Price setting forth the adjusted Conversion Price and the
effective date of such adjustment and shall mail such notice of such
adjustment of the Conversion Price to the holder of each Series A Preferred
Share at such holder's last address as shown on the records of the
Corporation.
(h) In any case in which paragraph (d) of this Section 6 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 Series A Preferred Share
converted after such record date and before the occurrence of such event
the additional Common Shares issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Shares 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 6.
(i) There shall be no adjustment of the Conversion Price in case of
the issuance of any shares of stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set forth
in this Section 6. If any action or transaction would require adjustment
of the Conversion Price pursuant to more than one paragraph of this Section
6, only one adjustment shall be
22
made and such adjustment shall be the amount of adjustment that has
the highest absolute value.
(j) If the Corporation shall take any action affecting the Common
Shares, other than action described in this Section 6, that in the opinion
of the Board of Directors would materially and adversely affect the
conversion rights of the holders of the Series A Preferred Shares, the
Conversion Price for the Series A Preferred Shares may be adjusted, to the
extent permitted by law, in such manner, if any, and at such time, as the
Board of Directors, in its sole discretion, may determine to be equitable
in the circumstances.
(k) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Shares, for the purpose of effecting
conversion of the Series A Preferred Shares, the full number of Common
Shares deliverable upon the conversion of all outstanding Series A
Preferred Shares not theretofore converted. Subject to the Ownership Limit
(as defined in the Charter and any waivers thereof), for purposes of this
paragraph (k), the number of Common Shares that shall be deliverable upon
the conversion of all outstanding Series A Preferred Shares shall be
computed as if at the time of computation all such outstanding shares were
held by a single holder.
The Corporation covenants that any Common Shares issued upon
conversion of the Series A Preferred Shares shall be validly issued, fully
paid and non-assessable. Before taking any action that would cause an
adjustment reducing the Conversion Price below the then-par value of the
Common Shares deliverable upon conversion of the Series A Preferred Shares,
the Corporation will take any action that, in the opinion of its counsel,
may be necessary in order that the Corporation may validly and legally
issue fully paid and (subject to any customary qualification based upon the
nature of a real estate investment Corporation) non-assessable Common
Shares at such adjusted Conversion Price.
The Corporation shall use its best efforts to list the Common
Shares required to be delivered upon conversion of the Series A Preferred
Shares, prior to such delivery, upon each national securities exchange, if
any, upon which the outstanding Common Shares are listed at the time of
such delivery.
The Corporation shall use its reasonable efforts to comply with
all federal and state securities laws and regulations thereunder in
connection with the issuance of any securities that the Corporation shall
be obligated to
23
deliver upon conversion of the Series A Preferred Shares. The
certificates representing such securities shall bear such legends
restricting transfer thereof in the absence of registration under
applicable securities laws or an exemption therefrom as the Corporation may
in good faith deem appropriate.
(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
Common Shares or other securities or property on conversion of the Series A
Preferred Shares pursuant hereto; PROVIDED, HOWEVER, that the Corporation
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of Common Shares or other
securities or property in a name other than that of the holder of the
Series A Preferred Shares 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.
(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 Series A Preferred Shares pursuant to this Section
7 shall be permitted only to the extent that such conversion would not
result in a violation of the Ownership Limit (as defined in the Charter),
after taking into account any waiver of such limitation granted to any
holder of Series A Preferred Shares.
Section 7. FIXED CHARGE COVERAGE; LIMITATION ON ISSUANCE OF ADDITIONAL
PREFERRED SHARES AND INDEBTEDNESS.
(a) So long as 25% of the Series A Preferred Shares remain issued and
outstanding, without the written consent of the holders of a majority of
the issued and outstanding shares of Series A Preferred Shares, none of the
Corporation, the Operating Partnership or any of their subsidiaries may
issue any additional preferred securities of any such entity or incur any
additional indebtedness (other than trade payables or accrued expenses
incurred in the ordinary course of business) for borrowed money if,
immediately following such issuance and after giving effect to such
issuance and the application of the net proceeds therefrom, the
Corporation's Consolidated EBITDA to
24
Consolidated Fixed Charges for any of the four fiscal quarters immediately
preceding such issuance would be less than 1.40 to 1.0.
(b) "Consolidated EBITDA" for any period means the consolidated net
income of the Corporation (before minority interest and extraordinary
income or loss) calculated in accordance with GAAP increased by the sum of
the following (without duplication), each as calculated in accordance with
GAAP:
(i) all income and state franchise taxes paid or accrued for
such period (other than income taxes attributable to extraordinary,
unusual or non-recurring gains or losses except to the extent that
such gains were not included in Consolidated EBITDA),
(ii) all interest expense (other than capitalized interest) paid
or accrued for such period (including financing fees and amortization
of deferred financing fees and amortization of original issue
discount),
(iii) depreciation and depletion reflected in such reported
net income,
(iv) amortization reflected in such reported net income
including, without limitation, amortization of capitalized debt
issuance costs (only to the extent that such amounts have not been
previously included in the amount of Consolidated EBITDA pursuant to
clause (b) above), goodwill, other intangibles and management fees,
(v) losses on sales of fixed assets, and writedowns of assets
pursuant to Financial Accounting Standards Board Statement No. 121 (to
the extent such losses and writedowns were included in the calculation
of the Corporation's consolidated net income (before extraordinary
income or gains)), and
(vi) any other non-cash charges or discretionary prepayment
penalties, to the extent deducted from consolidated net income
(including, but not limited to, income allocated to minority
interests).
and decreased by gains on the sale of fixed assets as calculated in
accordance with GAAP (to the extent such gains were included in the
calculation of the Corporation's consolidated net income (before
extraordinary income or gains)).
25
(c) "Consolidated Fixed Charges" for any period means the sum of the
following (without duplication), each as calculated in accordance with
GAAP:
(i) all interest expense (other than capitalized interest) paid
or accrued for such period (including financing fees and amortization
of deferred financing fees with respect to debt incurred on or after
January 19, 1998 and amortization of original issue discount),
(ii) dividend and distribution requirements on shares of
preferred stock (other than Fully Junior Shares) and other preferred
securities for such period, whether or not declared or paid,
(iii) regularly scheduled amortization of principal during such
period (other than any balloon payments at maturity) with respect to
any indebtedness, and
(iv) rent payments under any ground leases (excluding deferred
ground lease payments) (to the extent not included in (a) or (c)
above).
Section 8. SHARES TO BE RETIRED. All Series A Preferred Shares which
shall have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued preferred stock, without
designation as to class or series, and subject to applicable limitations set
forth in the Articles may thereafter be reissued as shares of any series of
preferred stock.
Section 9. RANKING. Any class or series of stock of the Corporation
shall be deemed to rank:
(a) prior to the Series A Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in preference or priority to
the holders of Series A Preferred Shares;
(b) on a parity with the Series A Preferred Shares, 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 shall be different from
those of the Series A Preferred Shares, if the holders of such class or
series and the Series A Preferred Shares 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
26
dividends per share or liquidation preferences, without preference or
priority one over the other ("PARITY SHARES");
(c) junior to the Series A Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Junior Shares; and
(d) junior to the Series A Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, if such class or series shall be Fully Junior
Shares.
Section 10. VOTING.
(a) If and whenever (i) four consecutive quarterly dividends payable
on the Series A Preferred Shares or any series or class of Parity Shares
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 four consecutive quarterly dividend
periods the Corporation fails to pay dividends on the Common Shares in an
amount per share at least equal to $0.437 (subject to adjustment consistent
with any adjustment of the Conversion Price pursuant to Section 6(a) of
this Article), then the number of directors then constituting the Board of
Directors shall be increased by the greater of (x) one director or (y) such
number of directors as would represent 10% of the total number of directors
serving on the Corporation's Board of Directors (after giving effect to
such appointments and rounded down to the nearest whole number) and the
holders of Series A Preferred Shares, together with the holders of shares
of every other series of Parity Shares (any such series, the "Voting
Preferred Shares"), voting as a single class regardless of series, shall be
entitled to elect the additional director(s) 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 Series A
Preferred Shares and the Voting Preferred Shares called as hereinafter
provided. Whenever, as the case may be, (i) all arrears in dividends on
the Series A Preferred Shares and the Voting Preferred Shares then
outstanding shall have been paid and the Corporation has paid dividends
thereon for two consecutive quarters or (ii) the Corporation has paid
dividends on the Common Shares in an amount per share at least equal to
$0.437 (subject to adjustment consistent with any adjustment of the
Conversion Price pursuant to Section 6(a) of these Articles Supplementary)
for two consecutive quarters, then the right of the holders of the Series A
Preferred Shares and the Voting Preferred Shares to elect such additional
director(s) shall cease (but subject always to the same provision for
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the vesting of such voting rights in the case of any similar future
arrearage in quarterly dividends), and the terms of office of all persons
elected as director(s) by the holders of the Series A Preferred Shares and
the Voting Preferred Shares shall forthwith terminate and the number of the
Board of Directors shall be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of Series A Preferred
Shares and the Voting Preferred Shares, the Secretary of the Corporation
may, and upon the written request of any holder of Series A Preferred
Shares or Voting Preferred Shares (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Series A Preferred Shares and the Voting Preferred Shares
for the election of the director(s) 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 Series A Preferred Shares
or Voting Preferred Shares may call such meeting, upon the notice above
provided, and for that purpose shall have access to the records of the
Corporation. The director(s) 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 the term of such director(s) shall not
have previously terminated as above provided. If any vacancy shall occur
among the director(s) elected by the holders of the Series A Preferred
Shares and the Voting Preferred Shares, a successor shall be elected by
the Board of Directors, upon the nomination of the then-remaining
director(s) elected by the holders of the Series A Preferred Shares and
the Voting Preferred Shares or the successor of such remaining
director(s), to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if the term of such director(s)
shall not have previously terminated as provided above.
(b) So long as any Series A Preferred Shares are outstanding, in
addition to any other vote or consent of stockholders required by law or by
the Articles, the affirmative vote of at least 66 2/3% of the votes
entitled to be cast by the holders of the Series A Preferred Shares 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 the Charter, these Articles Supplementary or the Agreement of
Limited Partnership of the Operating Partnership that materially and
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adversely affects the voting powers, rights or preferences of the
holders of the Series A Preferred Shares; PROVIDED, HOWEVER, that,
subject to Section 7 of these Articles Supplementary, the amendment of
the provisions of the Charter so as to authorize or create or to
increase the authorized amount of any shares of stock of the
Corporation shall not be deemed to materially and adversely affect the
voting powers, rights or preferences of the holders of Series A
Preferred Shares; or
(ii) A share exchange that affects the Series A Preferred Shares,
a consolidation with or merger of the Corporation into another entity,
or a consolidation with or merger of another entity into the
Corporation, unless in each such case each Series A Preferred Share
(i) shall remain outstanding without a material and adverse change to
its terms and rights or (ii) shall be converted into or exchanged for
convertible preferred shares of the surviving entity having
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications
and terms or conditions of redemption thereof identical to that of a
Series A Preferred Share (except for changes that do not materially
and adversely affect the holders of the Series A Preferred Shares);
PROVIDED, HOWEVER, that no such vote of the holders of Series A
Preferred Shares 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
Series A Preferred Shares at the time outstanding to the extent such
redemption is authorized by Section 5 of this Article.
(c) For purposes of the foregoing provisions of this Section 10, each
Series A Preferred Share shall have one (1) vote per share, except that
when any other series of Preferred Shares shall have the right to vote with
the Series A Preferred Shares as a single class on any matter, then the
Series A Preferred Shares and such other series shall have with respect to
such matters one (1) vote per $27.57 (or less pursuant to Section 4(a)) of
stated liquidation preference. Except as set forth herein, the Series A
Preferred Shares shall not have any voting rights or powers other than as
expressly set forth herein, and the consent of the holders thereof shall
not be required for the taking of any Corporation action.
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Section 11. RECORD HOLDERS. The Corporation and the Transfer Agent may
deem and treat the record holder of any Series A Preferred Shares as the true
and lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
Section 12. OWNERSHIP RESTRICTIONS. The Series A Preferred Shares shall
be subject to the restrictions and limitations set forth in Article Eighth of
the Charter.
Section 13. SINKING FUND. The Series A Preferred Shares shall not be
entitled to the benefit of any retirement or sinking fund.
Section 14. LEGENDS. In addition to the legend required by section
(a)(13) of Article Eighth of the Charter, any certificate representing Series A
Preferred Shares and any certificate representing common stock or other
securities into which the Series A Preferred Shares may be converted shall bear
the following legend:
"THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM."
THIRD: The Series A Preferred Shares have been classified and designated
by the Board under the authority contained in Article Fifth of the Charter.
FOURTH: The undersigned officer of the Corporation acknowledges these
Articles Supplementary to be the act of the Corporation and, as to all other
matters or facts required to be verified under oath, acknowledges that to the
best of his knowledge, information and belief, these matters and facts are true
in all material respects and that this statement is made under the penalties for
perjury.
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IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be duly executed by its President and CEO and attested by
its Secretary and General Counsel this 20th day of February, 1998.
THE MACERICH COMPANY
By: /s/ ARTHUR M. COPPOLA
-------------------------
Its: President and CEO
Attest:
/s/ RICHARD A. BAYER
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Its: Secretary and General Counsel