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"), 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
Articles of Amendment and Restatement dated July 13, 1994 and filed on July
15, 1994 (as corrected by Certificate of Correction dated November 6, 1997
and filed on November 6, 1997), Articles of Amendment dated July 27, 1994 and
filed July 28, 1994 at 11:33 a.m. (as corrected by Certificate of Correction
dated November 6, 1997 and filed on November 6, 1997), Articles of Amendment
dated July 27, 1994 and filed July 28, 1994 at 11:35 a.m. (as corrected by
Certificate of Correction dated November 6, 1997 and filed on November 6,
1997), Articles Supplementary dated May 20, 1997 and filed May 21, 1997, and
Articles Supplementary dated August 1, 1997 and filed August 4, 1997. The
Charter of the Corporation is hereby restated in its entirety as follows:
ARTICLE I
NAME
The name of the corporation (the "Corporation") is Apartment Investment
and Management Company.
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 The Prentice-Hall Corporation System, Maryland,
11 East Chase Street, Baltimore, Maryland 21202. The name and address of the
resident agent of the Corporation in the State of Maryland is The
Prentice-Hall Corporation System, Maryland, 11 East Chase Street, Baltimore,
Maryland 21202. The resident agent is a Maryland corporation located in the
State of Maryland.
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
160,750,000 shares of capital stock having a par value of $.01 per share,
amounting to an aggregate par value of $1,607,500, consisting of 150,000,000
shares initially classified as Class A Common Stock having a par value of
$.01 per share ("Class A Common Stock"), 750,000(1) shares initially classified
as Class B Common Stock having a par value of $.01 per share (the "Class B
Common Stock") (the Class A Common Stock and Class B Common Stock being
referred to collectively herein as the "Common Stock") and 10,000,000(2) shares
initially classified as Preferred Stock having a par value of $.01 per share
("Preferred Stock").
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 1 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.
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.
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(1) See Article SIXTH.
(2) See Article SEVENTH.
(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 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.
(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.
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.
(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 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 (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 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.
(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 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 Common Stock Beneficially Owned,
and a full 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.
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, "ESA" (as that term is defined in the "Glossary" to
the Prospectus), any entity controlled by ESA, 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 Common Stock represented by this certificate are
subject to restrictions on transfer. No person may Beneficially Own
shares of Common Stock in excess of the Ownership Restrictions, as
applicable, with certain further restrictions and exceptions set forth in
the Corporation's Amended and Restated Certificate of Incorporation
("Certificate"). Any Person that attempts to Beneficially Own shares of
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 Corporation's Certificate, 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 shareholder
that so requests. If the restrictions on transfer are violated, the shares
of Common 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."
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 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 these Articles
of Amendment and Restatement.(3)
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,"
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(3) See Article FOURTH
"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) 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 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.
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.
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 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.(4)
SECTION 3. INTENTIONALLY DELETED.
SECTION 4. VACANCIES. Except as otherwise provided in these Articles of
Amendment and Restatement(5), 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 these Articles of
Amendment and Restatement(6), 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"
- ---------------------
(4) See Article THIRD.
(5) See Article FOURTH.
(6) See Article FOURTH.
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 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 these Articles of Amendment and
Restatement(7) shall in no way be limited or restricted by reference to or
inference from the terms of any other clause of this or any other Article of
these Articles of Amendment and Restatement(8), 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 or 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.
- -------------------------
(7) See Article FOURTH.
(8) See Article FOURTH.
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 these Articles of Amendment and
Restatement(9) 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.
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
CLASS B COMMON STOCK
GENERAL. The holders of the Class B Common Stock shall have the same
rights and privileges as, and shall be subject to the same restrictions and
limitations contained in the Charter as apply to, the holders of the Class A
Common Stock, except as set forth below.
SECTION 1. DEFINITIONS. Capitalized terms used in these Articles
Supplementary(10) shall have the meanings ascribed to them in the Charter or
elsewhere in these Articles Supplementary, except that the terms set forth
below shall have the meanings specified below when used in this Article.
- --------------------
(9) See Article FOURTH.
(10) See Article FOURTH.
"ADJUSTED FUNDS FROM OPERATIONS" shall have the same meaning as the
term "Adjusted Funds from Operations" used in the Prospectus and shall be
calculated in the manner specified in the Prospectus and based on generally
accepted accounting principles. Adjusted Funds from Operations shall be
determined from the Corporation's financial statements audited and certified by
an independent public accountant.
"ADJUSTED FUNDS FROM OPERATIONS PER SHARE" when used with respect to
any period shall mean the Adjusted Funds from Operations for such period
DIVIDED by the sum of (a) the number of shares of the Class A Common Stock
outstanding on the last day of such period (excluding any shares of the Class A
Common Stock into which shares of the Class B Common Stock shall have been
converted as a result of the conversion of shares of the Class B Common Stock
on the last day of such period) and (b) the number of shares of the Class A
Common Stock issuable to acquire units of limited partnership that (i) may be
tendered for redemption in any limited partnership in which the Corporation
serves as general partner and (ii) are outstanding on the last day of such
period.
"AVERAGE MARKET PRICE" for a period shall mean the average of the
Closing Prices for a share of the Class A Common Stock for the Trading Days in
such period.
"CAUSE" shall mean the termination of employment of an individual with
an Employer as a result of (a) the performance by such individual of any
activity involving fraud or dishonesty, (b) the conviction of the individual of
a felony or a crime involving moral turpitude, (c) the failure or refusal of
such individual to reasonably or satisfactorily perform any material duties or
responsibilities reasonably required of such individual by an Employer, (d) the
gross negligence or willful neglect or malfeasance by the individual in the
performance or non-performance of such individual's duties or responsibilities
to the Employer, or (e) any unauthorized act or omission by such individual
that is injurious in any material respect to the financial condition or
business reputation of any Employer.
"CHANGE IN CONTROL" shall mean the occurrence of any of the
following events:
(a) An acquisition (other than directly from the Corporation) of any
voting securities of the Corporation (the "VOTING SECURITIES") by any "person"
(as the term "person" is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 ACT")) immediately
after which such person has "beneficial ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) ("BENEFICIAL OWNERSHIP") of 20% or more
of the combined voting power of the Corporation's then outstanding Voting
Securities; PROVIDED, HOWEVER, in determining whether a Change in Control has
occurred. Voting Securities that are acquired in a Non-Control Acquisition (as
hereinafter defined) shall not constitute an acquisition that would cause a
Change in Control. "NON-CONTROL ACQUISITION" shall mean an acquisition by (1)
an employee benefit plan (or a trust forming a part thereof) maintained by (a)
the Corporation or (b) any corporation, partnership or other Person of which a
majority of its voting power or its equity securities or equity interest is
owned directly or indirectly by the Corporation or in which the Corporation
serves as a general partner or manager (a "SUBSIDIARY"), (2) the Corporation or
any Subsidiary, or (3) any Person in connection with a Non-Control Transaction
(as hereinafter defined);
(b) The individuals who are named in the Prospectus as constituting
the Board of Directors of the Corporation following the Initial Public
Offering (the "INCUMBENT BOARD") cease for any reason to constitute at least
two-thirds (2/3rds) of the Board of Directors; PROVIDED, HOWEVER, that if the
election, or nomination for election by the Corporation's stockholders, of
any new director was approved by a vote of at least two-thirds (2/3rds) of
the Incumbent Board, such new director shall be considered as a member of the
Incumbent Board; PROVIDED, FURTHER, 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 1934 Act) (an "ELECTION CONTEST") or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board of Directors (a "PROXY CONTEST")
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) Approval by stockholders of the Corporation of:
(1) A merger, consolidation, share exchange or reorganization
involving the Corporation, unless
(A) the stockholders of the Corporation, immediately before such
merger, consolidation, share exchange or reorganization, own, directly or
indirectly immediately following such merger, consolidation, share exchange or
reorganization, at least 80% of the combined voting power of the outstanding
voting securities of the corporation that is the successor in such merger,
consolidation, share exchange or reorganization (the "SURVIVING CORPORATION")
in substantiality the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation, share exchange or
reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation, share exchange or reorganization constitute at least two-thirds
(2/3rds) of the members of the board of directors of the Surviving Corporation,
and
(C) no Person (other than the corporation or any subsidiary, any
employee benefit plan (or any trust forming a part thereof) maintained by the
Corporation, the Surviving Corporation or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation, share exchange or
reorganization had Beneficial Ownership of 15% or more of the then outstanding
Voting Securities) has Beneficial Ownership of 15% or more of the combined
voting power of the Surviving Corporation's then outstanding voting securities
(a transaction described in clauses (i) through (iii) is referred to herein as
a "NON-CONTROL TRANSACTION");
(2) A complete liquidation or dissolution of the Corporation,
or
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Corporation to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (a "SUBJECT PERSON") acquired Beneficial Ownership of
more than the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Corporation that, by reducing
the number of Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by such Subject Person, provided that if a Change
in Control would occur (but for the operation of this sentence) as a result of
the acquisition of Voting Securities by the Corporation, and after such share
acquisition by the Corporation, such subject Person becomes the Beneficial
Owner of any additional Voting Securities that increases the percentage of the
then outstanding Voting Securities Beneficially Owned by such Subject Person,
then a Change in Control shall occur.
"CLOSING PRICE" on any date shall mean the last sale price, regular
way, or, in case that 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 shares of the Class A Common
Stock are 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 shares of the
Class A Common Stock are listed or admitted to trading or, if shares of the
Class A Common Stock are 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 shares of the Class A Common
Stock are 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
shares of the Class A Common Stock selected by the Board of Directors of the
Corporation.
"CONVERTIBLE CLASS B SHARES" shall mean Eligible Class B Shares that
shall have become subject to automatic conversion into shares of the Class A
Common Stock, subject to Article IV, Section 3.4 of the Charter, pursuant to
Sections 3 and 4 of this Article.
"DISABILITY" shall mean the mental or physical illness or disability
of an individual that substantially impairs the ability of the individual to
perform substantially all of his duties as an employee of an Employer in a
satisfactory manner for a period in excess of ninety (90) days in any
consecutive 12-month period.
"ELIGIBLE CLASS B SHARES" shall mean the following percentages
(subject to modification as provided
in Section 3(c) of this Article) of the Outstanding Class B Shares as of the
Year-End Testing Dates indicated.
PERCENTAGE OF OUTSTANDING
CLASS B SHARES
YEAR-END TESTING DATE
--------------------------------------------------
December 31, 1994 10.0000%
December 31, 1995 22.2222%
December 31, 1996 28.5714%
December 31, 1997 50.0000%
December 31, 1998 100.0000%
"EMPLOYER" shall mean (a) the Corporation, (b) any partnership in
which the Corporation serves as a general partner, (c) any corporation
directly or indirectly controlled by or under common control with the
Corporation, (d) any partnership or company in which any of the foregoing may
own, directly or indirectly, an equity interest or (e) any limited liability
company in which any of the foregoing may be a member.
"INITIAL HOLDER" shall refer to each person holding Outstanding
Class B Shares on the date of the closing of the Initial Public Offering,
whether such Outstanding Class B Shares result from designation of
outstanding common stock or from new issuance by the Corporation.
"OP UNITS" shall mean units of limited partnership interest in the
Operating Partnership.
"OPERATING PARTNERSHIP" shall mean AIMCO Properties, L.P., a
Delaware limited partnership in which the Corporation holds a general
partnership interest.
"OUTSTANDING CLASS B SHARES" shall mean issued and outstanding
shares of the Class B Common Stock of the Corporation, excluding any
Convertible Class B Shares that have been converted into shares of the Class
A Common Stock.
"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.
"TRADING DAY" shall mean a day on which the principal national
securities exchange on which shares of the Class A Common Stock are listed or
admitted to trading is open for the transaction of business or, if shares of
the Class A Common Stock are not listed or admitted to trading on any
national securities exchange, "TRADING DAY" 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.
"YEAR-END TESTING DATE" shall mean each of December 31, 1994,
December 31, 1995, December 31, 1996, December 31, 1997 and December 31,
1998; PROVIDED, HOWEVER, that December 31, 1999 shall be substituted in place
of December 31, 1998 each place such earlier date appears in this Article if,
as of December 31, 1998, either the Annual Growth Target requirement or the
Compounded Cumulative Growth Target requirement set forth in Section 3(a) of
this Article in respect of the Year-End Testing Date of December 31, 1998 is
not satisfied as of December 31, 1998.
SECTION 2. RESTRICTIONS ON DIVIDENDS AND VOTING RIGHTS.
(a) NO DIVIDENDS. No dividends shall accrue or be paid on any
shares of the Class B Common Stock.
(b) No Voting Rights; Exception for Convertible Class B Shares.
Holders of shares of the Class B Common Stock shall not have the right to
vote on any matter, including, but not limited to, the election of
directors, the merger of the Corporation, the sale or other disposition of
the Corporation's assets, or the dissolution or liquidation of the
Corporation; PROVIDED, HOWEVER, that holders of Convertible Class B Shares
shall have the right to one (1) vote per share on all matters for which
holders of shares of the Class A Common Stock shall have the right to vote.
SECTION 3. CONVERTIBILITY OF OUTSTANDING CLASS B SHARES.
(a) IN GENERAL. The Eligible Class B Shares as of a Year-End
Testing Date shall automatically become Convertible Class B Shares according
to the Adjusted Funds from Operations Per Share and the Average Market Values
of a share of the Class A Common Stock for the periods indicated, provided
that (i) the "Annual Growth Target" requirement set forth below in this
Section 3(a) is satisfied, (ii) the "Compounded Cumulative Growth Target"
requirement set forth below in this Section 3(a) is satisfied AND (iii) the
"MARKET VALUE" requirement set forth in Section 3(b) of this Article is
satisfied; PROVIDED, HOWEVER, that, if in any calendar year an applicable
Annual Growth Target requirement is not satisfied, the Eligible Class B
Shares becoming Convertible Class B Shares in the following calendar year or
years shall include, as a carryforward from year to year, the Eligible Class
B Shares otherwise applicable to the first year provided that in the later
year (which need not immediately follow the first year) the Annual Growth
Target requirement, the Cumulative Compounded Growth Target requirement and
the Market Value requirement for such later year are all satisfied:
YEAR-END TESTING COMPOUNDED CUMULATIVE
DATE. ANNUAL GROWTH TARGET GROWTH TARGET
- ------------------------------------------------------------------------------
December 31, 1994 Adjusted Funds from Adjusted Funds from
Operations Per Share for the Operations Per Share for
period beginning on the the period beginning on the
Initial Public Offering and Initial Public Offering and
ending on the Year-End ending on the Year-End
Testing Date is at least Testing Date is at least
$0.864 $0.864
December 31, 1995 ANNUALIZED Adjusted Funds ANNUALIZED Adjusted Funds
from Operations Per Share from Operations Per Share
for the period beginning on for the period beginning on
the Initial Public Offering the Initial Public Offering
and ending on the Year-End and ending on the Year-End
Testing Date is at least Testing Date is at least
$2.161 $2.161
December 31, 1996 Adjusted Funds from ANNUALIZED Adjusted Funds
Operations Per Share for the from Operations Per Share
calendar year ending on the for the period beginning on
Year-End Testing Date is at the Initial Public Offering
least 108.5% of the Adjusted and ending on the Year-End
Funds from Operations Per Testing Date is at least
Share for the calendar year $2.345
ending on the previous
Year-End Testing Date
December 31, 1997 Adjusted Funds from ANNUALIZED Adjusted Funds
Operations Per Share for the from Operations Per Share
calendar year ending on the for the period beginning on
Year-End Testing Date is at the Initial Public Offering
least 108.5% of the Adjusted and ending on the Year-End
Funds from Operations Per Testing Date is at least
Share for the calendar year $2.544
ending on the previous
Year-End Testing Date
December 31, 1998 Adjusted Funds from ANNUALIZED Adjusted Funds
Operations Per Share for the from Operations Per Share
calendar year ending on the for the period beginning on
Year-End Testing Date is at the Initial Public Offering
least 108.5% of the Adjusted and ending on the Year-End
Funds from Operations Per Testing Date is at least
Share for the calendar year $2.760
ending on the previous
Year-End Testing Date
(b) MARKET VALUE REQUIREMENT. The Market Value requirement shall
be satisfied as to any Year-End Testing Date if the Average Market Value of a
share of the Class A Common Stock shall equal or exceed the amount set forth
in the following table for any 90 calendar day period (whether or not a
calendar quarter or an exact three-month period) beginning on any day
(whether or not a Trading Day) on or after October 1 immediately preceding
the applicable Year-End Testing Date:
YEAR-END TESTING DATE AVERAGE MARKET PRICE
-------------------------------------------
December 31, 1994 $19.030
December 31, 1995 $20.648
December 31, 1996 $22.403
December 31, 1997 $24.307
December 31, 1998 $26.373
By way of illustration, the Market Value requirement for the Year-End Testing
Date of December 31, 1996 would be satisfied if the Average Market Value of a
share of the Class A Common Stock equaled or exceeded $22.403 for (i) the
90-day period beginning on October 1, 1986 and ending on December 30, 1996,
(ii) the 90-day period beginning on April 17, 1997 and ending on July 16,
1997 OR (iii) the 90-day period beginning on November 20, 1997 and ending on
February 18, 1998.
(c) MODIFICATIONS TO ELIGIBILITY AND CONVERTIBILITY SCHEDULES.
Notwithstanding the provisions of Section 3(a) of this Article, in or as to
any calendar year the Corporation's Board of Directors shall have the
authority, upon consideration of factors and financial performance criteria
that it shall in its sole and absolute discretion consider relevant, to
declare a greater or lesser percentage of (i) Outstanding Class B Shares as
of a Year-End Testing Date to be Eligible Class B Shares and (ii) Eligible
Class B Shares to be Convertible Class B Shares; PROVIDED, HOWEVER, that no
such declaration shall decrease the number of Eligible Class B Shares or
Convertible Class B Shares held by any person without such person's consent.
SECTION 4. CONDITIONAL CONVERSION OF CLASS B COMMON STOCK.
(a) CONVERSION OF CONVERTIBLE CLASS B SHARES. Subject to Section
4(c) of this Article and to the limitations set forth in Article IV, Section
3.4 of the Charter, upon becoming a Convertible Class B Share, each
Convertible Class B Share shall be converted automatically into the number of
shares of the Class A Common Stock that results from dividing $18.50 by the
Conversion Price in effect at the time of conversion (the "CONVERSION
PRICE"). Subject to the limitations set forth in Article IV, Section 3.4 of
the Charter, such conversion shall occur and be effective as of the
applicable Year-End Testing Date or, if later, the satisfaction of the Market
Price requirement set forth in Section 3(b) of this Article. The initial
Conversion Price shall be $18.50 per share and shall be subject to adjustment
as provided in Section 7 of this Article.
(b) CONVERSION UPON OCCURRENCE OF OTHER EVENTS. Notwithstanding
the foregoing provisions of this Section 4, but nevertheless subject to the
limitations set forth in Article IV, Section 3.4 of the Charter:
(1) all Outstanding Class B Shares (whether or not Eligible
Class B Shares) that have not previously converted into shares of the Class A
Common Stock shall convert automatically upon any Change in Control of the
Corporation.
(2) all Outstanding Class B Shares (whether or not Eligible
Class B Shares) held by an Initial Holder and any transferee of such Initial
Holder shall convert automatically into shares of the Class A Common Stock on
the date on which employment of such Initial Holder by an Employer is
terminated by the Employer (and not voluntarily by such Initial Holder) for
any reason other than Cause if following termination such Initial Holder is
no longer employed as an employee by any Employer, and
(3) the Board of Directors of the Corporation may, by
resolution duly adopted by the Board of Directors (and, if there shall be a
duly constituted compensation committee of the Board of Directors at the
time, only with the approval of the compensation committee), accelerate the
conversion of Outstanding Class B Shares (whether or not Eligible Class B
Shares) into shares of the Class A Common Stock at such time and in such
amount as it may determine to be appropriate from time to time.
The conversion of any Outstanding Class B Share pursuant to this Section 4(b)
shall be into the number of shares of the Class A Common Stock that results
from dividing $18.50 by the Conversion Price then in effect.
(c) IDENTIFICATION OF CLASS B COMMON STOCK CONVERTED. Whenever
shares of the Class B Common Stock are converted into shares of the Class A
Common Stock pursuant to Section 4(a), Section 4(b)(1) or Section 4(b)(3) of
this Article, the shares converted shall be allocated among all the record
holders of such shares of the Class B Common Stock in proportion to their
record ownership.
(d) DELAYED CONVERSION. If the conversion of any shares of Class B
Common Stock into shares of the Class A Common Stock shall be limited or
restricted by reason of the provisions of Article IV, Section 3.4 of the
Charter, such shares shall automatically be so converted at such later time,
if any, and to such extent as such limitations and restrictions do not apply.
(e) NO FRACTIONAL SHARES. No fractional shares of the Class A
Common Stock shall be issued upon conversion of any shares of the Class B
Common Stock. Rather, the Corporation shall pay to the record holder cash for
such fractional shares at a rate equal to the Conversion Price per share.
SECTION 5. MANDATORY REPURCHASE OR STOCKHOLDER PURCHASE OF OUTSTANDING
CLASS B SHARES.
(a) REPURCHASE FOLLOWING THE FIFTH YEAR-END TESTING DATE. Subject
to the limitations set forth in Article IV, Section 3.4 of the Charter, each
Outstanding Class B Share (whether or not an Eligible Class B Share) that has
not converted into shares of the Class A Common Stock in respect of the
Year-End Testing Date of December 31, 1998 shall be subject to mandatory
repurchase by the Corporation at a price of $.10 per Outstanding Class B
Share. Such mandatory repurchase shall close upon the determination, no
earlier than March 31, 2000, that such Outstanding Class B Share is not
convertible into shares of the Class A Common Stock pursuant to Section 3 of
this Article.
(b) INITIAL HOLDER PURCHASE UPON CERTAIN TERMINATIONS OF
EMPLOYMENT. Subject to the limitations set forth in Article IV, Section 3.4
of the Charter, each Outstanding Class B Share (whether or not an Eligible
Class B Share), other than a Convertible Class B Share, held by the Initial
Holder of such Outstanding Class B Share, or by any holder who acquired such
Outstanding Class B Share directly or indirectly from such Initial Holder,
that has neither converted nor become convertible into shares of the Class A
Common Stock or prior to either (i) the date of termination of employment of
such Initial Holder by an Employer for Cause or (ii) the date of such Initial
Holder's voluntary termination of employment with an Employer shall be
subject to mandatory purchase, at the time of such termination of employment,
by the other Initial Holders that are at that time employed by an Employer.
The purchase price shall be $.10 per Outstanding Class B Share. The purchase
of such Outstanding Class B Shares shall be made, by the Initial Holders that
are at that time employed by an Employer, proportionate to the following
percentages:
INITIAL HOLDER PERCENTAGE
-----------------------------------
Terry Considine 68.33%
Peter K. Kompaniez 13.50%
Steven D. Ira 13.67%
Robert P. Lacy 4.50%
(c) REPURCHASE UPON CERTAIN TERMINATIONS OF EMPLOYMENT FOLLOWING
CONVERSION. Subject to the limitations set forth in Article IV, Section 3.4
of the Charter, each share of the Class A Common Stock, whether held by an
Initial Holder of any other person who acquired such share of the Class A
Common Stock directly or indirectly from an Initial Holder, into which an
Outstanding Class B Share was originally converted pursuant to Section 4 of
this Article shall be subject to mandatory repurchase by the Corporation, at
a price of $.10 per share of the Class A Common Stock, upon such Initial
Holder's termination of employment with an Employer, other than (i) by reason
of death, disability or a Change in Control or (ii) the involuntary
termination of employment of such Initial Holder by an Employer without
Cause, within 12 months following such conversion of an Outstanding Class B
Share into such share of the Class A Common Stock; PROVIDED, HOWEVER, that
nothing in this Section 5(c) shall be interpreted or applied 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.
(d) DELAYED REPURCHASE OR PURCHASE. If either the limitations or
restrictions of Article IV, Section 3.4 of the Charter shall apply to (i) a
mandatory repurchase under Section 5(a) or Section 5(c) of this Article or
(ii) a mandatory purchase by the Initial Holders under Section 5(b) of this
Article, or if the Corporation cannot then lawfully effect a repurchase of
its shares, then the repurchase or purchase, as the case may be, shall be
deferred until, and then only to the extent that, such repurchase or purchase
can be lawfully effected within such limitations and restrictions.
(e) PROCEDURES UPON REPURCHASE OR PURCHASE. Any repurchase of
Outstanding Class B Shares as provided by Section 5(a) or Section 5(c) of
this Article shall be effected by delivery by the Corporation to the record
holder of such Outstanding Class B Shares of a certified or cashier's check
in the amount of the aggregate repurchase price. Upon such payment by the
Corporation in repurchase of Outstanding Class B Shares, the certificates
evidencing such repurchased Outstanding Class B Shares shall be canceled.
Any purchase of Outstanding Class B Shares as provided by Section 5(b) of
this Article shall be effected by delivery of the Initial Holders then
employed by an Employer to the record holder of such Outstanding Class B
Shares of a certified or cashier's check in the amount of the aggregate
purchase price.
(f) CHANGE IN CONTROL. The provisions of Sections 5(a), 5(b) and
5(c) of this Article shall not apply following any Change in Control.
SECTION 6. REDUCTION IN AUTHORIZED SHARES. The number of authorized
shares of the Class B Common Stock shall be reduced automatically by (a) the
number of shares of the Class B Common Stock converted into shares of the
Class A Common Stock pursuant to Section 4 of this Article and (b) the number
of shares of the Class B Common Stock repurchased by the Corporation pursuant
to Section 5(a) or Section 5(c) of this Article.
SECTION 7. ADJUSTMENTS. The Conversion Price and the number of shares
of the Class A Common Stock issuable upon the conversion of each share of the
Class B Common Stock shall be subject to adjustment from time to time as
provided in this Section 7.
(a) ADJUSTMENT UPON CERTAIN EVENTS. In case that the Corporation
shall at any time after the date of the Initial Public Offering (i) pay a
dividend in shares of the Class A Common Stock or make a distribution in
shares of the Class A Common Stock, (ii) subdivide the outstanding shares of
the Class A Common Stock, (iii) combine the outstanding Class A Common Stock
into a smaller number of shares of the Class A Common Stock, or (iv) issue
any shares of its capital stock or other securities by reclassification of
the Class A Common Stock, the Conversion Price in effect at the time of the
record date for such dividend or distribution or of the effective date of
such subdivision, combination or reclassification shall be proportionately
adjusted so that each holder of shares of the Class B Common Stock converted
after such time shall be entitled to receive the aggregate number and kind of
the Class A Common Stock or other securities of the Corporation that, if such
shares of the Class B Common Stock had been converted immediately prior to
such time, he would have owned upon such conversion and been entitled to
receive by virtue of such dividend, distribution, subdivision, combination or
reclassification. Such adjustment shall
be made successively whenever any event listed above shall occur.
(b) ISSUANCE OF RIGHTS, OPTIONS OR WARRANTS. If after the Initial
Public Offering the Corporation issues any rights, options or warrants to all
holders of its Class A Common Stock entitling them for a period expiring
within 60 days after the record date mentioned below to purchase shares of
the Class A Common Stock (or securities convertible into or exchangeable for
shares of the Class A Common Stock) at a price per share less than the
current market price per share on that record date, the Conversion Price
shall be adjusted in accordance with the formula:
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common Stock
outstanding on the record date.
N equals the number of additional shares of the Class A Common
Stock offered or initially issuable upon conversion or exchange
of the convertible or exchangeable securities offered.
P equals the offering price or conversion price or exchange per
share of the additional shares.
M equals the current market price per share of the Class A Common
Stock on the record date.
The adjustment shall be made successively whenever any such rights, options or
warrants are issued and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights,
options or warrants. If all of the shares of the Class A Common Stock or
securities convertible into or exchangeable for shares of the Class A Common
Stock subject to such rights, options or warrants have not been issued when
such rights, options or warrants expire, then the Conversion Price shall be
immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares of the Class A Common Stock actually issued upon
the exercise of such rights, options or warrants or initially issuable based
upon the number of convertible securities or exchangeable securities actually
issued upon the exercise of such rights or warrants.
(c) DISTRIBUTION OF ASSETS AND DEBT SECURITIES. If after the
Initial Public Offering the Corporation distributes to all holders of its
Class A Common Stock any of its assets or debt securities or any rights or
warrants to purchase debt securities, assets or other securities of the
Corporation (including shares of the Class A Common Stock), the Conversion
Price shall be adjusted in accordance with the formula:
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
M equals the current market price per share of the Class A Common
Stock on the record date mentioned below.
F equals the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of the
Class A Common Stock. The Board of Directors shall determine, in
good faith, such fair market value, which determination shall be
conclusive.
This Section 7(c) does not apply to any rights, options or warrants referred
to in Section 7(b) of this Article.
This Section 7(c) does not apply to cash dividends or cash distributions paid
in respect of the Class A Common Stock for any period if the cash dividends or
cash distributions paid in respect of the Class A Common Stock and OP Units for
that period, when added to the amount of all other cash dividends or cash
distributions paid in respect to the Class A Common Stock and OP Units for the
twelve (12) month period ending on the last day of such period, does not exceed
100% of Cash Available for Distribution for such twelve (12) month period.
"CASH AVAILABLE FOR DISTRIBUTION" shall mean "Funds from Operations" (as that
term is defined in the "Glossary" of the Prospectus but computed at the
Operating Partnership level) minus (i) the amount of any dividend on Preferred
Stock accrued during such twelve (12) month period, whether or not declared or
paid, and (ii) an annual reserve for capital replacements of $300 per apartment
unit for the weighted average number of apartment units owned by the
Corporation during such twelve (12) month period. By way of example, Cash
Available for Distribution for the twelve (12) month
period ending June 15, 1995 as set forth in the Prospectus is projected on a
PRO FORMA basis to be $18,476,000.
(d) ISSUANCE OF DISCOUNTED SHARES. If after the Initial Public
Offering the Corporation issues shares of the Class A Common Stock for a
consideration per share less than the current market price per share, on the
date that the Corporation fixes the offering price of such additional shares,
the Conversion Price shall be adjusted in accordance with the formula:
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common Stock
outstanding immediately prior to the issuance of such additional
shares.
P equals the aggregate consideration received for the issuance of
such additional shares.
M equals the current market price per share of the Class A Common
Stock on the date of issuance of such additional shares.
S equals the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance.
This Section 7(d) does not apply to (i) any of the transactions described in
Section 7(b) or Section 7(c) of this Article, (ii) the conversion or exchange
of shares of the Class B Common Stock or other securities convertible into or
exchangeable for shares of the Class A Common Stock, (iii) shares of the Class
A Common Stock issued by the Corporation upon, and as consideration for, the
purchase of OP Units, (iv) shares of the Class A Common Stock issued to the
Corporation's employees (other than upon the exercise of options of the type
referred to in clause (v) below) under BONA FIDE employee benefit plans adopted
by the Board of Directors, if such Class A Common Stock would otherwise be
covered by this Section 7(d), (v) the Class A Common Stock issued upon the
exercise of options granted to employees at an exercise price equal to at least
85% of the fair market value of such Class A Common Stock at the time that such
options were granted, (vi) the Class A Common Stock issued to stockholders of
any person that merges into the Corporation, or with a subsidiary of the
Corporation, in proportion to their stock holdings in such Person immediately
prior to such merger, upon such merger, (vii) the Class A Common Stock issued
in a BONA FIDE public offering pursuant to a firm commitment or best efforts
underwriting, or (viii) the Class A Common Stock issued in a BONA FIDE private
placement through a placement agent that is a member firm of the National
Association of Securities Dealers, Inc. (except to the extent that any discount
from the current market price attributable to restrictions on transferability
of the Class A Common Stock, as determined in good faith by the Board of
Directors, shall exceed 10% of the then current market price).
(e) ISSUANCE OF CONVERTIBLE DISCOUNTED SECURITIES. If after the
Initial Public Offering the Corporation issues any securities convertible
into or exchangeable for shares of the Class A Common Stock (other than
securities issued in transactions described in Section 7(b) or Section 7(c))
of this Article for a consideration per share of the Class A Common Stock
initially deliverable upon conversion or exchange of such securities less
than the current market price per share of the Class A Common Stock on the
date of issuance of such securities, the Conversion Price shall be adjusted
in accordance with the formula:
where
A equals the adjusted Conversion Price.
C equals the then current Conversion Price.
O equals the number of shares of the Class A Common Stock
outstanding immediately prior to the issuance of such securities.
P equals the aggregate consideration received for the issuance of
such securities.
M equals the current market price per share of the Class A Common
Stock on the date of issuance of such securities.
D equals the maximum number of shares deliverable upon conversion
or in exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance. If all of the
Class A Common Stock deliverable upon conversion or exchange of such securities
have not been issued when such securities are no longer outstanding, then the
Conversion Price shall promptly be readjusted to the conversion price that
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of the actual number of shares of the Class A Common
Stock issued upon conversion or exchange of such securities.
This Section 7(e) does not apply to (i) convertible securities issued to
stockholders of any Person that merges into the Corporation, or with a
subsidiary of the Corporation, in proportion to their stock holdings in such
Person immediately prior to such merger, upon such merger, (ii) convertible
securities issued in a BONA FIDE public offering pursuant to a firm
commitment or best efforts underwriting, or (iii) convertible securities
issued in a BONA FIDE private placement through a placement agent that is a
member firm of the National Association of Securities Dealers, Inc. (except
to the extent that any discount from the current market price attributable to
restrictions on transferability of the Class A Common Stock issuable upon
conversion, as determined in good faith by the Board of Directors and
described in a Board resolution, shall exceed 20% of the then current market
price).
(f) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS.
If at any time or from time to time there is a capital reorganization of the
Corporation (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section
7 or Section 4 of this Article) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation's properties and assets to any other
person then, each share of the Class B Common Stock then outstanding shall
thereafter be convertible into, in lieu of the Class A Common Stock issuable
upon such conversion prior to consummation of such reorganization, merger,
consolidation or sale, the kind and amount of shares of stock and other
securities and property receivable (including cash) upon the consummation of
such reorganization, merger, consolidation or sale by a holder of that number
of shares of Class A Common Stock into which one share of the Class B Common
Stock was convertible immediately prior to such reorganization, merger,
consolidation or sale (including, on a PRO RATA basis, the cash, securities
or property received by holders of Class A Common Stock in any tender or
exchange offer that is a step in such transaction). In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 7 and Section 4 of this Article with respect to the rights of
the holders of the shares of the Class B Common Stock after the
reorganization, merger, consolidation or sale to the end that the provisions
of this Section 7 (including adjustment of the Conversion Price then in
effect and the number of shares issuable upon conversion of the shares of the
Class B Common Stock) shall be applicable after that event and be as nearly
equivalent as may be practicable.
(g) COMPUTATION OF CONSIDERATION. For purposes of any computation
respecting consideration received pursuant to Sections 7(d) and 7(e) of this
Article, the following shall apply:
(1) In the case of the issuance of shares of the Class A
Common Stock for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Corporation for any underwriting
of the issue or otherwise in connection therewith;
(2) In the case of the issuance of shares of the Class A
Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined in good faith by the Board of Directors (irrespective
of the accounting treatment thereof), whose determination shall be
conclusive, and described in a Board resolution; and
(3) In the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Corporation for the
issuance of such securities plus the additional minimum consideration if any,
to be received by the Corporation upon the conversion of exchange thereof
(the consideration in each case to be determined in the same manner
provided in Sections 7(g)(1) and 7(g)(2) of this Article.
(h) COMPUTATION OF CURRENT MARKET PRICE. For the purpose of any
computation pursuant to Sections 7(b), 7(c), 7(d) and 7(e) of this Article,
the current market price per share of the Class A Common Stock on any date
shall be deemed to be the average of the Closing Prices for 15 consecutive
Trading Days commencing 30 Trading Days before that date. However, if the
Class A Common Stock is not publicly listed or publicly traded, current
market price shall mean the fair market value per share of Class A Common
Stock, as determined in good faith by the Board of Directors, based on the
opinion of an independent investment banking firm.
(i) EXCEPTIONS. No adjustment in the Conversion Price need be made:
(1) unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Price. Any adjustments that are
not made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 7 shall be made to the
nearest cent or to the nearest one hundredth (1/100th) of a share, as the
case may be. The Conversion Price shall not be adjusted upward except in the
event of a combination of the outstanding shares of the Class A Common Stock
into a smaller number of shares of Common Stock or in the event of a
readjustment of the Conversion Price pursuant to Section 7(b) or Section 7(e)
of this Article;
(2) for a transaction referred to in Section 7(a), Section
7(b), Section 7(c), Section 7(d) or Section 7(e) of this Article if holders
of the Class B Common Stock are to participate in the transaction on a basis
and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of the Class A
Common Stock participate in the transaction;
(3) for rights to purchase shares of the Class A Common Stock
pursuant to a plan for reinvestment of dividends or interest;
(4) for a change in the part value or no par value of the
Class A Common Stock; or
(5) to the extent that the Class B Common Stock becomes
convertible into cash, as to such cash. Interest will not accrue on any such
cash.
(j) NOTICE. Whenever the Conversion Price is adjusted or reduced,
the Corporation shall promptly mail, at least 12 days prior to the record
date of the distribution triggering the adjustment or reduction, to holders
of the Class B Common Stock and file with the transfer agent therefor a
notice of the adjustment or reduction and, in the case of an adjustment, file
with the transfer agent for the Class B Common Stock an officer's certificate
briefly stating the facts requiring the adjustment and the manner of
computing it. The certificate shall be conclusive evidence that the
adjustment is correct.
(k) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of the Class A Common Stock, solely for the purpose of
effecting the conversion of the shares of the Class B Common Stock, such
number of its shares of the Class A Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of the Class
B Common Stock; and if at any time the number of authorized but unissued
shares of the Class A Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Class B Common Stock, the
Corporation will take such corporate and other action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares
of the Class A Common Stock to such number of shares as shall be sufficient
for such purpose.
(l) DISCRETIONARY ADJUSTMENTS. The Board of Directors may (but
shall not be required to) make such adjustments in the Conversion Price, in
addition to those required by this Section 7, as shall be determined by the
Board of Directors, as evidenced by a Board resolution, to be advisable in
order that any event that would otherwise be treated for federal income tax
purposes as a dividend of stock or stock rights will, to the extent
practicable, not be so treated or not be taxable to all the recipients.
(m) AMBIGUITY. The Board of Directors may interpret the provisions
of this Section 7 to resolve any inconsistency or ambiguity that may arise or
be revealed in connection with the adjustment procedures provided herein, and
if such inconsistency or ambiguity reflects an inaccurate provision hereof,
the Board of Directors may, in appropriate circumstances, authorize the
filing of additional articles supplementary or a certificate of designation.
SECTION 8. RESTRICTION ON ADDITIONAL ISSUANCES. Upon the filing of
these Articles of Amendment, there shall be authorized 750,000 shares and
issued and outstanding 650,000 shares of the Class B Common Stock.(11) No
additional shares of the Class B Common Stock shall be issued without the
affirmative consent or vote of a majority of the Corporation's Board of
Directors other than employees of an Employer.
ARTICLE XIII
CLASS B PREFERRED STOCK
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:
"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.
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(11) See Article FIFTH.
"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 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.
"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.
"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 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.
"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 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 declred
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.
(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 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 involuntar, 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 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 Coporation 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 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 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.
(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 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 fith 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 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 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 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 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");
(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 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 ofthe 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
(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.
(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 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 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 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 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 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.
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.
* * * * * *
SECOND: 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, as of October 23, 1997, adopted a
resolution that set forth and approved the foregoing restatement of the
Charter.
THIRD: The Charter of the Corporation is not amended by these Articles
of 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 Section 2 of Article VI of the restated Charter of the
Corporation.
FOURTH: References to "these Articles of Amendment and Restatement" have
been retained in Section 4 of Article IV, in Section 4, Section 5, and
Section 7 of Article VI, and in Article VIII of the restated Charter and to
"these Articles Supplementary" have been retained in Section 1 of Article XII
of the restated Charter to conform to the original text of the provisions.
In the context of these Articles of Restatement the term "these Articles of
Amendment and Restatement" should be read as "the Charter" and the term
"these Articles Supplementary" should be read as "this Article".
FIFTH: The sentence "Upon the filing of these Articles of Amendment,
there shall be authorized 750,000 shares and issued and outstanding 650,000
shares of the Class B Common Stock" has been retained in Section 8 of Article
XII of the restated Charter to conform to the original text of the provision.
In the context of these Articles of Restatement the sentence is not
necessary.
SIXTH: The number of shares of Class B Common Stock shown as "750,000"
has been retained in Section 1.1 of Article IV of the restated Charter to
conform to the original text of the provision. As of August 11, 1997 a total
of 325,000 shares of Class B Common Stock have been converted which causes
the number of authorized shares of Class B Common Stock to be reduced from
750,000 shares to 425,000 shares as provided in Sections 6(a) and 8 of
Article XII of the restated Charter.
SEVENTH: The number of shares of Preferred Stock shown as "10,000,000"
has been retained in Section 1.1 of Article IV of the restated Charter to
conform to the original text of the provision. As of August 4, 1997 a total
of 750,000 shares of Preferred Stock were reclassified as Class B Cumulative
Convertible Preferred Stock, par value $.01 per share (the "Class B Preferred
Stock"), which causes the number of authorized shares of Preferred Stock to
be reduced from 10,000,000 shares to 9,250,000 shares and the number of
authorized shares of Class B Preferred Stock to be increased from zero shares
to 750,000 shares as provided in Sections 1 Article XIII of the restated
Charter.
IN WITNESS WHEREOF, APARTMENT INVESTMENT AND MANAGEMENT COMPANY has
caused these presents to be signed in its name and on its behalf by its
President and witnessed by its Secretary on November 7, 1997.
WITNESS: APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
/s/ LEEANN MOREIN By: /s/ PETER K. KOMPANIEZ
Leeann Morein, Secretary Peter K. Kompaniez, President
THE UNDERSIGNED, 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, President
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 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 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 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 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 30-day 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 Twenty-Five 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 66-2/3% 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 By-Laws 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.
16
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 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 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 inter-dealer 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 inter-dealer 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 long-term 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 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 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 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 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 inter-dealer 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
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 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 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
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
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.
5
"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.
6
"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 30-day
months and a 360-day 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
7
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 Twenty-Five 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 Debruary 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
10
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");
11
(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
12
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 66-2/3% 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 By-Laws 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 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 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 inter-dealer 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 inter-dealer 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 long-term 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 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 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 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 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
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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.
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(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.
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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
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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 inter-dealer 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.
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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 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