Exhibit 4.1
ARTICLES SUPPLEMENTARY
OF
CORPORATE OFFICE PROPERTIES TRUST
SERIES A CONVERTIBLE PREFERRED SHARES
ARTICLE ONE
CORPORATE OFFICE PROPERTIES TRUST (the "Trust"), pursuant to the
provisions of Section 8-203(b) of Title 8 of the Corporations and
Associations Article of the Annotated Code of Maryland, as amended (the
"Maryland REIT Law"), hereby files these Articles Supplementary classifying
its Series A Convertible Preferred Shares of Beneficial Interest of the Trust
(the "Articles") prior to the issuance of any shares of Series A Convertible
Preferred Shares of Beneficial Interest, such series of unissued shares
having been established by a resolution duly adopted by all necessary action
on the part of the Trust and the Board of Trustees of the Trust (the "Board
of Trustees"), as provided for in the Amended and Restated Declaration of
Trust, as amended (the "Declaration of Trust").
ARTICLE TWO
The name of the Trust is Corporate Office Properties Trust.
ARTICLE THREE
Pursuant to the authority conferred upon the Board of Trustees by the
Declaration of Trust and Section 8-203(a)(6) of the Maryland REIT Law, the
Board of Trustees adopted a resolution establishing the Series A Convertible
Preferred Shares of Beneficial Interest of the Trust and designating the
series and fixing and determining the preferences, limitations, and relative
rights thereof, as set forth in the true and correct copy of the resolution
attached hereto as Exhibit A (the "Designating Resolution").
ARTICLE FOUR
The Designating Resolution was adopted effective as of September 28,
1998.
ARTICLE FIVE
The Designating Resolution has been duly adopted by all necessary action on
the part of the Trust.
IN WITNESS WHEREOF, the undersigned officer has executed these Articles
effective as of September 28, 1998.
CORPORATE OFFICE PROPERTIES TRUST
By:
-------------------------------------
Clay W. Hamlin, III
President and Chief Executive Officer
Attest:
- ----------------------------------
Name: Denise Liszewski
Title: Assistant Secretary
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EXHIBIT A
DESIGNATING RESOLUTION
BOARD OF TRUSTEES
CORPORATE OFFICE PROPERTIES TRUST
September 28, 1998
AUTHORIZATION OF SERIES A CONVERTIBLE PREFERRED SHARES
OF BENEFICIAL INTEREST
WHEREAS, the Board of Trustees of Corporate Office Properties Trust (the
"Trust") has deemed it to be in the best interest of the Trust and its
shareholders for the Trust to establish a series of preferred shares pursuant to
the authority granted to the Board of Trustees in the Amended and Restated
Declaration of Trust, as amended (the "Declaration of Trust"), of the Trust:
NOW, THEREFORE, BE IT RESOLVED, that, pursuant to the authority vested in
the Board of Trustees by the Declaration of Trust, a series of preferred shares
is hereby established, and the terms of the same shall be as follows:
Section 1. Number of Shares and Designation. This series of Preferred
Shares of Beneficial Interest shall be designated as Series A Convertible
Preferred Shares of Beneficial Interest, $.01 par value per share (the "Series A
Preferred Shares") and up to 1,025,000 shall be the number of such Preferred
Shares of Beneficial Interest constituting such series.
Section 2. Definitions. For purposes of the Series A Preferred Shares,
the following terms shall have the meanings indicated:
"Affiliate" shall mean, with respect to a particular Person, any other
Person controlling, controlled by or under common control with such
particular Person, including any directors and majority-owned entities of
that Person and of its other Affiliates.
"Change of Control" shall mean (i) a sale or other transfer of more than
50% of the then outstanding Common Shares to an Unrelated Third Party or
its Affiliates, (ii) a merger or consolidation of the Trust with an
Unrelated Third Party where the Trust is not the surviving entity, (iii)
the sale of all or substantially all of the assets of the Trust or (iv) the
voluntary or involuntary liquidation, dissolution and winding up of the
Trust.
"Common Shares" shall mean Common Shares of Beneficial Interest, $.01 par
value per share, of the Trust or such shares of the Trust's capital shares
into
which such Common Shares of Beneficial Interest shall be reclassified.
"Common Share Dilution Price" shall have the meaning set forth in Section
8(c).
"Constellation" shall mean Constellation Real Estate Group, Inc. or any of
its Affiliates.
"Conversion Rate" shall mean 1.8748 Common Shares for each Series A
Preferred Share, subject to adjustment as provided in paragraph (f) of
Section 6 hereof.
"Current Market Price" of publicly traded Common Shares or any other class
or series of capital shares or other security of the Trust or of any
similar security of any other issuer for any day shall mean the last
reported sales price, regular way settlement 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 New York
Stock Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which
such security is listed or admitted for trading or, if not listed or
admitted for trading on any national securities exchange, on the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or, if such security is not quoted on such
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 NYSE member firm regularly making a market in such
security selected for such purpose by the Chief Executive Officer or the
Trustees 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 Trustees.
"Declaration of Trust" shall have the meaning set forth in the Preamble.
"Dilutive Transaction" shall have the meaning set forth in Section 8(c).
"Junior Shares" shall mean the Common Shares and any other class or series
of capital shares of the Trust over which the Series A Preferred Shares
have preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Trust.
"Person" shall mean any individual, firm, partnership, corporation or other
entity and shall include any successor (by merger or otherwise) of such
entity.
"Series A Preferred Shares" shall have the meaning set forth in Section 1
hereof.
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"Standstill Period" shall mean the period ending on the earliest of (i)
September 28, 2000, (ii) five business days prior to the effective date of
any Change of Control or (iii) a date established by resolution of the
Board of Trustees.
"Tendered Non-Converted Shares" shall have the meaning set forth in Section
6(a).
"Trading Day", as to any Common Shares, shall mean any day on which such
Common Shares are traded on the NYSE or, if such Common Shares are not
listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such Common Shares are listed or admitted or,
if such Common Shares are not listed or admitted for trading on any
national securities exchange, on the National Market of NASDAQ or, if such
Common Shares are not quoted on such National Market, in the Common Shares
market in which such Common Shares are traded.
"Transaction" shall have the meaning set forth in paragraph (d) of Section
6 hereof.
"Transfer Agent" means Norwest Banks (or its Affiliates) or any U.S. bank
with aggregate capital, surplus and undivided profits, as shown on its last
published report, of at least $30,000,000 as may be designated by the
Trustees or their designee as the transfer agent for the Series A Preferred
Shares.
"Trust" shall have the meaning set forth in the Preamble.
"Trustees" shall mean the Trustees of the Trust or any committee authorized
by such Trustees to perform any of its responsibilities with respect to the
Series A Preferred Shares.
"Unrelated Third Party" shall mean a Person other than the Trust or any
Affiliate of the Trust and other than Constellation.
"45% Ceiling Requirement" shall have the meaning set forth in Section 6(a).
Section 3. Dividends. Except as provided in paragraph (a) of
Section 6, the holders of each Series A Preferred Share shall be entitled to
receive cumulative dividends and distributions payable from the date of
issuance of such Series A Preferred Stock quarterly and in preference and
priority to the dividends and distributions payable on each Junior Share,
when, as and if declared by the Board of Trustees of the Trust out of funds
legally available therefor, at the annual rate of $1.375 per share.
Cumulative dividends will accrue whether or not there are profits, surplus or
other funds of the Trust legally available for payment of dividends. The
record and payment dates for the Common Shares, if any, shall be the same as
the record and
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payment dates for the Series A Preferred Shares. If such cumulative
dividends in respect of any prior or current quarterly dividend period shall
not have been declared and paid or if there shall not have been a sum
sufficient for the payment thereof set apart, the deficiency shall first be
fully paid before (i) any dividend or other distribution (other than
dividends payable in Common Shares) shall be paid or declared and set apart
with respect to the Junior Shares or (ii) any Junior Shares shall be
repurchased or redeemed by the Trust. Dividends shall be payable pro rata
for partial quarterly periods. In the event that any Series A Preferred
Share is converted into Common Shares pursuant to Section 6 below, holders of
Series A Preferred Shares whose conversion is deemed effective before the
close of business on a dividend payment record date will not be entitled to
receive any portion of the dividend payable on such Series A Preferred Shares
on the corresponding dividend payment date for the current quarter to which
that record date pertains but will, however, be entitled to receive the
entire dividend for such quarterly period payable, if any, on the Common
Shares issuable upon conversion provided that any conversion of Series A
Preferred Shares becomes effective prior to the close of business on the
record date for such dividend payable on such Common Shares. A holder of
Series A Preferred Shares on a dividend payment record date who (or whose
transferee) tenders such shares for conversion into Common Shares after such
dividend payment record date will be entitled to receive the dividend payable
on such Series A Preferred Shares on the corresponding dividend payment date.
Except as provided above, the Trust will pay at the time of conversion all
accrued and unpaid dividends, whether or not declared, on converted Series A
Preferred Shares.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Trust, whether voluntary or involuntary, before any payment or distribution
of the assets of the Trust (whether capital or surplus) shall be made to or
set apart for the holders of Junior Shares, the holders of Series A Preferred
Shares shall be entitled to receive $25.00 per Series A Preferred Share plus
an amount equal to all accrued and unpaid dividends thereon to the date fixed
for distribution whether or not declared; but such holders shall not be
entitled to any further payment. Until the holders of the Series A Preferred
Shares have been paid the liquidation preference in full, no payment will be
made to any holder of Junior Shares upon the liquidation, dissolution or
winding up of the Trust. If, upon any liquidation, dissolution or winding up
of the Trust, the assets of the Trust, or proceeds thereof, distributable
among the holders of Series A Preferred Shares shall be insufficient to pay
in full the preferential amount aforesaid, then such assets, or the proceeds
thereof, shall be distributed among the holders of Series A Preferred Shares
ratably in the same proportion as the respective amounts that would be
payable on such Series A Preferred Shares if all amounts payable thereon were
paid in full. For the purposes of this Section 4, (i) a consolidation or
merger of the Trust with one or more corporations or (ii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Trust. A sale or
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transfer of all or substantially all of the Trust's assets shall be deemed to
be a liquidation, dissolution or winding up of the Trust.
(b) Upon any liquidation, dissolution or winding up of the Trust, after
payment shall have been made in full to the holders of Series A Preferred
Shares, as provided in this Section 4, any other series or class or classes
of Junior Shares shall, subject to the respective terms thereof, be entitled
to receive any and all assets remaining to be paid or distributed, and the
holders of the Series A Preferred Shares shall not be entitled to share
therein.
Section 5. Shares To Be Retired. All Series A Preferred Shares
which shall have been issued and reacquired in any manner by the Trust shall
be restored to the status of authorized, but unissued Preferred Shares,
without designation as to series. The Trust may also retire any unissued
Series A Preferred Shares, and such shares shall then be restored to the
status of authorized but unissued Preferred Shares, without designation as to
series.
Section 6. Conversion.
Holders of Series A Preferred Shares shall have the right to convert all
or a portion of such shares into Common Shares, as follows:
(a) Subject to and upon compliance with the provisions of this Section
6, a holder of Series A Preferred Shares shall have the right, at such
holder's option, at any time after the end of the Standstill Period to
convert such shares, in whole or in part, into the number of fully paid and
nonassessable shares of authorized but previously unissued Common Shares
obtained by multiplying the Conversion Rate by the number of Series A
Preferred Shares to be converted by surrendering such shares to be converted,
such surrender to be made in the manner provided in paragraph (b) of this
Section 6; provided, however, that no holder of such shares shall convert
such shares if such holder and its Affiliates would hold after such
conversion 45% or more of the outstanding Common Shares (the "45% Ceiling
Requirement"). If such conversion would exceed the 45% Ceiling Requirement,
then upon surrendering the Series A Preferred Share certificates pertaining
to such excess Common Shares as provided in paragraph (b) of this Section 6,
the holder shall continue to be a holder of Series A Preferred Shares (the
"Tendered Non-Converted Shares") pertaining to such excess Common Shares
except that, in lieu of the dividends otherwise payable on such Tendered
Non-Converted Shares (but not in lieu of accrued and unpaid dividends
applicable to quarterly periods prior to such delivery) the holder of
Tendered Non-Converted Shares shall receive the dividends on the Common
Shares into which such Tendered Non-Converted Shares would have been
convertible but for the 45% Ceiling Requirement, and such Tendered
Non-Converted Shares shall convert thereafter to Common Shares without
further action by such holder as of the last day of each calendar quarter to
the extent then permitted by the 45% Ceiling Requirement.
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(b) In order to exercise the conversion right, the holder of each
Series A Preferred Share to be converted shall surrender the certificate
representing such shares, duly endorsed or assigned to the Trust or in blank,
at the office of the Transfer Agent, accompanied by written notice to the
Trust that the holder thereof elects to convert such Series A Preferred
Shares. Unless the shares issuable on conversion are to be issued in the
same name as the name in which such Series A Preferred Shares are registered,
each share surrendered for conversion shall be accompanied by instruments of
transfer, in form reasonably satisfactory to the Trust, 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
Trust demonstrating that such taxes have been paid) as required by paragraph
(j) of this Section 6. As promptly as practicable after the surrender of
certificates for Series A Preferred Shares as aforesaid, the Trust 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
Common Shares issuable upon the conversion of such Series A Preferred Shares
in accordance with provisions of this Section 6, and any fractional interest
in respect of a Common Share arising upon such conversion shall be settled as
provided in paragraph (c) of this Section 6. If all Series A Preferred
Shares evidenced by any certificate are not converted, the Trust shall issue
and deliver at such office to such holder a certificate for the remaining
Series A Preferred Shares not converted. Each conversion shall be deemed to
have been effected immediately prior to the close of business on the date on
which the certificates for Series A Preferred Shares shall have been
surrendered and such notice received by the Trust as aforesaid, and the
Person or Persons in whose name or names any certificate or certificates for
Common Shares shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby at
such time on such date unless the share transfer books of the Trust 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 transfer books are open, provided that such
closure of the share transfer books shall not delay the date on which such
Person shall become a holder of such shares by more than two business days.
(c) No fractional Common Share or scrip representing fractions of a
Common Share shall be issued upon conversion of the Series A Preferred
Shares. Instead of any fractional interest in a Common Share that would
otherwise be deliverable upon the conversion of Series A Preferred Shares,
the Trust shall pay to the holder of such share an amount in cash based upon
the Current Market Price of the Common Shares on the Trading Day immediately
preceding the date of conversion. If more than one share shall be
surrendered for conversion at one time by the same holder, the number of full
Common Shares issuable upon conversion thereof shall be computed on the basis
of the aggregate number of Series A Preferred Shares so surrendered.
(d) If the Trust shall be a party to any transaction (including without
limitation
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a merger, consolidation, statutory share exchange or reclassification
of the Common Shares (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which Common Shares shall be
converted into the right to receive shares, securities or other property
(including cash or any combination thereof), each Series A Preferred Share which
is not converted into the right to receive shares, securities or other property
in connection with such Transaction shall thereupon be convertible into the kind
and amount of shares, securities and other property (including cash or any
combination thereof) receivable upon such consummation by a holder of that
number of Common Shares into which one Series A Preferred Share was convertible
immediately prior to such Transaction. The Trust shall not be a party to any
Transaction unless the terms of such Transaction are consistent with the
provisions of this paragraph (d), and it shall not consent or agree to the
occurrence of any Transaction until the Trust has entered into an agreement with
the successor or purchasing entity, as the case may be, for the benefit of the
holders of the Series A Preferred Shares that will contain provisions enabling
the holders of the Series A Preferred Shares that remain outstanding after such
Transaction to convert into the consideration received by holders of Common
Shares at the Conversion Rate. The provisions of this paragraph (d) shall
similarly apply to successive Transactions.
(e) If there shall be any reclassification of the Common Shares or any
consolidation or merger to which the Trust is a party and for which approval
of any shareholders of the Trust is required, or a statutory share exchange,
or the voluntary or involuntary liquidation, dissolution and winding up of
the Trust, then the Trust shall cause to be mailed to each holder of Series A
Preferred Shares at such holder's address as shown on the records of the
Trust, as promptly as possible, but at least 15 days prior to the applicable
date hereinafter specified, a notice stating the date on which such
reclassification, consolidation, merger, statutory share exchange or
liquidation, dissolution and winding up is expected to become effective, and
the date as of which it is expected that holders of Common Shares of record
shall be entitled to exchange their Common Shares for securities or other
property, if any, deliverable upon such event. Failure to give or receive
such notice or any defect therein shall not affect the legality or validity
of the proceedings described in this Section 6.
(f) (i) In the event the Trust should at any time or from time to
time after the date of issuance of the Series A Preferred Shares fix a record
date for the effectuation of a split or subdivision of the outstanding Common
Shares or the determination of holders of Common Shares entitled to receive a
dividend or other distribution payable in additional Common Shares without
payment of any consideration by such holder for the additional Common Shares,
then, as of such record date (or the date of such dividend distribution,
split or subdivision if no record date is fixed), the Conversion Rate shall
be appropriately increased so that the number of Common Shares issuable on
conversion of each Series A Preferred Share shall be increased in proportion
to such increase of outstanding Common Shares and the Common Shares Dilution
Price shall be correspondingly decreased. If the number of Common Shares
outstanding at any time after the date of issuance of the Series A Preferred
Shares is decreased by a
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combination of the then outstanding Common Shares, then, following the record
date of such combination (or the date of such combination if no record date
is fixed), the Conversion Rate for the Series A Preferred Shares shall be
appropriately decreased so that the number of shares of Common Stock issuable
on conversion of each Series A Preferred Share shall be decreased in
proportion to such decrease in outstanding Common Shares and the Common Share
Dilution Price shall be correspondingly increased. Whenever the Conversion
Rate and Common Share Dilution Price are adjusted as herein provided, the
Trust shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Rate and Common Share Dilution 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 Trust shall prepare a notice of such adjustment setting
forth the adjusted Conversion Rate and Common Share Dilution Price and the
effective date such adjustment becomes effective and shall mail such notice
of such adjustment to each holder of Series A Preferred Shares at such
holder's last address as shown on the share records of the Trust.
(ii) In the event the Trust at any time, or from time to time,
shall make or issue, or fix a record date for the determination of holders of
Common Shares entitled to receive, a dividend or other distribution payable
in securities of the Trust other than Common Shares, then and in each such
event, provision shall be made so that the holders of Series A Preferred
Shares shall receive upon conversion thereof, in addition to the number of
Common Shares receivable thereupon, the amount of securities of the Trust
which they would have received had their Series A Preferred Shares been
converted into Common Share on the date of such event and had thereafter,
during the period from the date of such event to and including the date of
conversion, retained such securities receivable by them as aforesaid during
such period, giving application to all adjustments called for during such
period under this Section 6(f) with respect to the rights of the holders of
Series A Preferred Shares.
(g) In any case in which paragraph (f) of this Section 6 provides that
an adjustment shall become effective on the day next following the record
date for an event, the Trust may defer until the occurrence of such event (A)
issuing to the holder of any Series A Preferred Share converted after such
record date and before the occurrence of such event the additional Common
Shares issuable upon such conversion by reason of the adjustment required by
such event over and above the Common Shares issuable upon such conversion
before giving effect to such adjustment and (B) paying to such holder any
amount of cash in lieu of any fraction pursuant to paragraph (c) of this
Section 6; provided, however, that the holder of such Series A Preferred
Shares shall be entitled to such additional Common Shares and cash, as
applicable, upon such event.
(h) There shall be no adjustment of the Conversion Rate in case of the
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issuance of any capital shares of the Trust, including issuance in connection
with a reorganization, acquisition or other similar transaction except as
specifically set forth in this Section 6. If any action or transaction would
require adjustment of the Conversion Rate pursuant to more than one paragraph
of this Section 6, only one adjustment shall be made and such adjustment
shall be the amount of adjustment that has the highest absolute value to the
holder of Series A Preferred Shares.
(i) The Trust shall at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Common
Shares solely for the purpose of effecting conversion of the Series A
Preferred Shares, the full number of Common Shares deliverable upon the
conversion of all outstanding Series A Preferred Shares not theretofore
converted into Common Shares. For purposes of this paragraph (i), the number
of Common Shares that shall be deliverable upon the conversion of all
outstanding Series A Preferred Shares shall be computed as if at the time of
computation all such outstanding shares were held by a single holder. The
Trust covenants that any Common Shares issued upon conversion of the Series A
Preferred Shares shall be validly issued, fully paid and non-assessable. The
Trust shall list the Common Shares required to be delivered upon conversion
of the Series A Preferred Shares, prior to such delivery, upon each national
securities exchange, if any, upon which the outstanding Common Shares are
listed at the time of such delivery.
(j) The Trust will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of Common
Shares or other securities or property on conversion of Series A Preferred
Shares pursuant hereto; provided, however, that the Trust shall not be
required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of Common Shares or other securities or
property in a name other than that of the holder of the Series A Preferred
Shares to be converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue or delivery has paid to the Trust
the amount of any such tax or established, to the reasonable satisfaction of
the Trust, that such tax has been paid.
Section 7. Additional Parity and Junior Shares. Without vote or
consent of the holders of Series A Preferred Shares, the Trust may issue any
class or series of capital shares of the Trust with voting rights, if any, as
determined by the Trust which may rank:
(a) on a parity with the Series A Preferred Shares, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution
or winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Series A Preferred Shares, if the holders of such class of Shares or
series and the Series A Preferred Shares shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and
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unpaid dividends per share or liquidation preferences, without preference or
priority one over the other;
(b) junior to the Series A Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up, if such Shares or series shall be Common Shares or other
Junior Shares; and
(c) prior or senior to the Series A Preferred Shares as to the payment
of dividends or distributions of assets upon liquidation, dissolution or
winding up; provided, however, that the vote of the holders of Series A
Preferred Shares required by paragraph (b) of Section 8 has been obtained,
where applicable.
Section 8. Voting.
(a) Except as otherwise provided in paragraphs (b) and (c) of this
Section 8, the holders of Series A Preferred Shares shall have no right to
vote on any matter to be voted on by the shareholders of the Trust
(including, without limitation, any election or removal of a Trustee), and
the Series A Preferred Shares shall not be included in the number of shares
voting or entitled to vote on such matters.
(b) So long as any Series A Preferred Shares are outstanding, in
addition to any other vote or consent of shareholders required by law or by
the Declaration of Trust, the affirmative vote of at least 66 2/3% of the
votes entitled to be cast by the holders of the Series A Preferred Shares at
the time outstanding, acting as a single class, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for the
purpose, shall be necessary for (i) an increase in the number of authorized
shares of Series A Preferred Shares, (ii) effecting or validating any
amendment, alteration or repeal of any of the provisions of these Articles,
the Declaration of Trust or the Bylaws of the Trust that adversely affects
the voting powers, rights or preferences of the holders of the Series A
Preferred Shares or (iii) consummating a Dilutive Transaction (as defined in
paragraph (c) below) during the Standstill Period. So long as not less than
100,000 Series A Preferred Shares are outstanding excluding in such
calculation the Tendered Non-Converted Shares, the affirmative vote of at
least 66 2/3% of the votes entitled to be cast by the holders of the Series A
Preferred Shares at the time outstanding (including the Tendered
Non-Converted Shares), acting as a single class, given in person or by proxy,
either in writing or without a meeting or by vote at any meeting called for
the purpose, shall be necessary to create or authorize any class or series of
capital shares of the Trust ranking prior or senior to the Series A Preferred
Shares (or any class or series of partnership units of Corporate Office
Properties, L.P. of which the Trust is the general partner ranking prior or
senior to the Series A Preferred Units to be issued to the Trust in
connection with the issuance of the Series A Preferred Shares to
Constellation) as to the payment of dividends or as to distributions of
assets upon liquidation, dissolution or winding up. Notwithstanding the
foregoing provisions of this paragraph (b) of Section 8,
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any amendment of the provisions of the Declaration of Trust (or the
partnership agreement of Corporate Office Properties, L.P.) so as to
authorize or create, or to increase the authorized amount of, any Junior
Shares (or units of partnership interest with or without voting rights junior
as to the payment of dividends and as to asset distributions to the Series A
Units) or any shares of any class with or without voting rights ranking on a
parity with the Series A Preferred Shares (or Series A Preferred Units) shall
not be deemed to adversely affect the voting powers, rights or preferences of
the holders of Series A Preferred Shares (or Series A Preferred Units). For
the purpose of this paragraph, the holder of Series A Preferred Shares shall
have the right to one vote for each such Series A Preferred Share.
(c) For the purpose of paragraph (b) above, the term "Dilutive
Transaction" shall mean any transaction or series of related transactions
during the Standstill Period in which the Trust shall issue or sell Common
Shares with an aggregate then Current Market Price in excess of $50.0 million
with a Common Share price per share less than the Common Share Dilution
Price. The term "Common Share Dilution Price" shall mean $9.50 per share,
subject to adjustment as provided in paragraph (f) of Section 6. For the
purpose of calculating the aggregate Current Market Price of the Common
Shares, securities convertible into Common Shares or warrants, rights or
options to purchase Common Shares at a price less than the Common Share
Dilution Price shall be deemed to have been converted or exercised, as the
case may be, into an additional number of Common Shares at the time of the
Dilutive Transaction, and the Trust shall be deemed to have issued or sold
such additional number of Common Shares at the time of, and in connection
with, the Dilutive Transaction.
(d) So long as any Series A Preferred Shares are owned of record and
beneficially by Constellation and Constellation also owns of record and
beneficially at least 30% of the outstanding Common Shares, Constellation
shall be entitled to vote for and elect two members of the Board of Trustees.
So long as any Series A Preferred Shares are owned of record and
beneficially by Constellation and Constellation also owns of record and
beneficially less than 30% but more than 15% of the outstanding Common
Shares, Constellation shall be entitled to vote for and elect one member of
the Board of Trustees. In determining the percentage of the outstanding
Common Shares for the purposes of this paragraph, the Common Shares issuable
upon conversion of any Series A Preferred Shares owned by Constellation shall
be deemed outstanding. If any member of the Board of Trustees so elected by
Constellation shall withdraw or be removed from the Board for any reason,
Constellation shall have the right to elect the replacement for such member.
Constellation shall have the right to remove a Trustee elected by
Constellation for any reason at any time. The term of office of any Trustee
elected by Constellation pursuant to this paragraph shall expire on the date
that Constellation no longer holds of record and beneficially any Series A
Preferred Shares and the percentage of Common Shares required to elect that
Trustee as provided in this paragraph. If two Trustees have been elected by
Constellation and the term of one Trustee expires by operation of the
preceding sentence, the Board of Trustees may
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determine which Trustee shall have completed service on the Board absent a
determination by Constellation.
(e) If the Trust shall fail at any time or from time to time to pay
when due two consecutive quarterly dividend payments on the Series A
Preferred Shares, then the holders of the Series A Preferred Shares shall be
entitled to elect two additional members to the Board of Trustees of the
Trust to serve until all accrued and unpaid dividends on the Preferred Shares
have been paid in full.
Section 9. Record Holders. The Trust and the Transfer Agent may
deem and treat the record holder of any Series A Preferred Share as the true
and lawful owner thereof for all purposes, and neither the Trust nor the
Transfer Agent shall be affected by any notice to the contrary.
Ratification and Authorization
RESOLVED, that any and all acts and deeds of any officer or Trustee
taken prior to the date hereof on behalf of the Trust with regard to the
foregoing resolutions are hereby approved, ratified and confirmed in all
respects as and for the acts and deeds of the Trust.
FURTHER RESOLVED, that the officers of the Trust be, and each of them
hereby is, severally and without the necessity for joinder of any other
Person, authorized, empowered and directed to execute and deliver any and all
such further documents and instruments and to do and perform any and all such
further acts and deeds that may be necessary or advisable to effectuate and
carry out the purposes and intents of the foregoing resolutions, including,
but not limited to, the filing of Articles Supplementary pursuant to Maryland
REIT Law with the State Department of Assessments and Taxation of Maryland,
setting forth the designations, preferences, limitations and rights of Series
A Preferred Shares pursuant to Section 8-203(b) of the Maryland REIT Law, all
such actions to be performed in such manner, and all such documents and
instruments to be executed and delivered in such form, as the officer
performing or executing the same shall approve, the performance or execution
thereof by such officer to be conclusive evidence of the approval thereof by
such officer and by the Board of Trustees.
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