EXHIBIT 3.1
BERKSHIRE INCOME REALTY, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
FIRST: Berkshire Income Realty, Inc., a Maryland corporation (the
"Corporation"), desires to amend and restate its Charter as currently in effect
and as hereinafter amended. Capitalized terms not defined when first used in
these Articles of Amendment and Restatement are defined in Article 11.
SECOND: The following provisions are all the provisions of the Charter as
currently in effect and as hereinafter amended:
ARTICLE 1
INCORPORATOR
The undersigned, James J. Hanks, Jr., whose address is c/o Ballard Spahr
Andrews & Ingersoll, LLP, 300 East Lombard Street, Baltimore, Maryland 21202,
being at least 18 years of age, does hereby form a corporation under the general
laws of the State of Maryland.
ARTICLE 2
NAME
The name of the Corporation is Berkshire Income Realty, Inc.
ARTICLE 3
PURPOSE
The purposes for which the Corporation is formed are to engage in any
lawful act or activity for which corporations may be organized under the general
laws of the State of Maryland as now or hereafter in force. Subject to and not
in limitation of the authority of the preceding sentence, the Corporation
intends to engage in business as a REIT.
ARTICLE 4
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State of
Maryland is c/o CSC-Lawyers Incorporating Service Company, 11 East Chase Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
the State of Maryland is CSC-Lawyers Incorporating Service Company, whose post
office address is 11 East Chase Street,
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Baltimore, Maryland 21202. The resident agent is a citizen of and resides in the
State of Maryland.
ARTICLE 5
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS
Section 5.1 Number of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. The
number of directors of the Corporation initially shall be five, which number may
be increased or decreased pursuant to the Bylaws, but shall never be less than
the minimum number required by the MGCL.The names of the directors who shall
serve until the first annual meeting of stockholders and until their successors
are duly elected and qualify are:
George D. Krupp
Randolph B. Hawthorne
Robert M. Kaufman
Richard B. Peiser
David C. Quade
These directors may increase the number of directors and may fill any vacancy,
whether resulting from an increase in the number of directors or otherwise, on
the Board of Directors. The Corporation elects, at such time as it becomes
eligible to make the election provided for under Section 3-802(b) of the MGCL,
that, except as may be provided by the Board of Directors in setting the terms
of any class or series of stock, any and all vacancies on the Board of Directors
may be filled only by the affirmative vote of a majority of the remaining
directors in office, even if the remaining directors do not constitute a quorum,
and any director elected to fill a vacancy shall serve for the remainder of the
full term of the directorship in which such vacancy occurred.
Section 5.2 Extraordinary Actions. Notwithstanding any provision of law
permitting or requiring any action to be taken or approved by the affirmative
vote of the holders of shares entitled to cast a greater number of votes, any
such action shall be effective and valid if taken or approved by the affirmative
vote of holders of shares entitled to cast a majority of all the votes entitled
to be cast on the matter.
Section 5.3 Authorization by the Board of Directors of Stock Issuance. The
Board of Directors may authorize the issuance from time to time of shares of
stock of the Corporation of any class or series, whether now or hereafter
authorized, or securities or rights convertible into shares of its stock of any
class or series, whether now or hereafter authorized, for such consideration as
the Board of Directors may deem advisable (or without consideration in the case
of a stock split or stock dividend), subject to such restrictions or
limitations, if any, as may be set forth in the Charter or the Bylaws.
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Section 5.4 Preemptive Rights. Except as may be provided by the Board of
Directors in setting the terms of classified or reclassified shares of stock
pursuant to Section 6.4 or as may otherwise be provided by contract, no holder
of shares of stock of the Corporation shall, as such holder, have any preemptive
right to purchase or subscribe for any additional shares of stock of the
Corporation or any other security of the Corporation which it may issue or sell.
Section 5.5 Indemnification. The Corporation shall have the power, to the
maximum extent permitted by Maryland law in effect from time to time, to
obligate itself to indemnify, and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to, (a) any individual who is a
current or former director or officer of the Corporation or (b) any individual
who, while a director of the Corporation and at the request of the Corporation,
serves or has served as a director, officer, partner or trustee of any other
corporation, real estate investment trust, partnership, limited liability
company, joint venture, trust, employee benefit plan or any other enterprise
from and against any claim or liability to which such person may become subject
or which such person may incur by reason of his or her status as a current or
former director or officer of the Corporation. The Corporation shall have the
power, with the approval of the Board of Directors, to provide such
indemnification and advancement of expenses to a person who served a predecessor
of the Corporation in any of the capacities described in (a) or (b) above and to
any employee or agent of the Corporation or a predecessor of the Corporation.
Section 5.6 Determinations by the Board of Directors. The determination as
to any of the following matters, made in good faith by or pursuant to the
direction of the Board of Directors consistent with the Charter and, as
applicable, consistent with generally accepted accounting principles and the
Code (including, without limitation, the requirements of the Code applicable to
REITs and to the qualification of the Corporation as a REIT), and in the absence
of actual receipt of an improper benefit in money, property or services or
active and deliberate dishonesty established by a court, shall be final and
conclusive and shall be binding upon the Corporation and every holder of shares
of its stock: (a) the amount of the net income of the Corporation for any period
and the amount of assets at any time legally available for the payment of
dividends, redemption of its stock or the payment of other distributions on its
stock; (b) the amount of paid-in surplus, net assets, other surplus, annual or
other net profit, net assets in excess of capital, undivided profits or excess
of profits over losses on sales of assets; (c) the amount, purpose, time of
creation, increase or decrease, alteration or cancellation of any reserves or
charges and the propriety thereof (whether or not any obligation or liability
for which such reserves or charges shall have been created shall have been paid
or discharged); (d) the fair value, or any sale, bid or asked price to be
applied in determining the fair value, of any asset owned or held by the
Corporation; (e) any matter relating to the acquisition, holding and disposition
of any assets by the Corporation; or (f) any other matter relating to the
business and affairs of the Corporation.
Section 5.7 REIT Qualification. The Corporation shall make a timely
election to be a REIT and the Board of Directors shall use its commercially
reasonable efforts to take such actions as are necessary or appropriate in its
sole discretion to cause the Corporation
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to qualify as a REIT and to preserve the status of the Corporation as a REIT
with respect to each taxable year of the Corporation commencing with the taxable
year of the Corporation during which the Issue Date occurs; however, if the
Board of Directors determines that it is no longer in the best interests of the
Corporation to continue to be qualified as a REIT, the Board of Directors may
revoke the Corporation's REIT election pursuant to section 856(g) of the Code.
Subject to such approval that may be required by the MGCL with respect to
charter amendments, the Board of Directors also may determine that compliance
with any restriction or limitation on stock ownership and transfers set forth in
Article 7 is no longer required for REIT qualification.
Section 5.8 Removal of Directors. Subject to the rights of holders of one
or more classes or series of Preferred Stock to elect or remove one or more
directors, any director, or the entire Board of Directors, may be removed from
office at any time, with or without cause, by the affirmative vote of at least a
majority of the votes entitled to be cast generally in the election of
directors.
Section 5.9 Advisor Agreements. Subject to such approval of stockholders
and other conditions, if any, as may be required by any applicable statute, rule
or regulation, the Board of Directors may authorize the execution and
performance by the Corporation of one or more agreements with any person,
corporation, association, company, trust, limited liability company, partnership
(limited or general) or other organization whereby, subject to the supervision
and control of the Board of Directors, any such person or entity shall render or
make available to the Corporation managerial, investment, advisory and/or
related services, office space and other services and facilities (including, if
deemed advisable by the Board of Directors, the management or supervision of the
investments of the Corporation) upon such terms and conditions as may be
provided in such agreement or agreements (including, if deemed fair and
equitable by the Board of Directors, the compensation payable thereunder by the
Corporation). Notwithstanding the foregoing, so long as the Corporation intends
to engage in business as a REIT, any such person or entity hired or retained to
perform property management or related services for the Corporation, the
Operating Partnership or any of their subsidiary entities shall not also serve
as the "advisor" that is engaged by the Corporation to provide such advisory
services to the Corporation, the Operating Partnership or any of their
respective subsidiary entities.
Section 5.10 Specific Authorization. Without limiting the provisions of any
other section of the Charter, the Board of Directors is expressly authorized to
take such action as it deems reasonable in order that the Corporation will not
be deemed to be an "investment company" required to be registered under the
Investment Company Act of 1940, as amended.
ARTICLE 6
STOCK
Section 6.1 Authorized Shares. The Corporation has authority to issue
30,000,000 shares of stock, consisting of (a) 10,000,000 shares of Common Stock,
$.01 par value per share ("Common Stock"), of which 5,000,000 shares shall be
designated as Class A Common
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Stock (the "Class A Common Stock") and 5,000,000 shall be designated as Class B
Common Stock (the "Class B Common Stock"), (b) 5,000,000 shares of Preferred
Stock, $.01 par value per share ("Preferred Stock"), of which 5,000,000 shares
shall be designated as 9% Series A Cumulative Redeemable Preferred Stock
pursuant to Section 6.7 hereof, and (c) 15,000,000 shares of excess stock, $.01
par value per share (the "Excess Stock"), of which 5,000,000 shares shall be
designated as Excess Class A Common Stock, 5,000,000 shares shall be designated
as Excess Class B Common Stock and 5,000,000 shares shall be designated as
Excess Series A Preferred Stock. The aggregate par value of all authorized
shares of stock having par value is $300,000. If shares of one class of stock
are classified or reclassified into shares of another class of stock pursuant to
this Article 6, the number of authorized shares of the former class shall be
automatically decreased and the number of shares of the latter class shall be
automatically increased, in each case by the number of shares so classified or
reclassified, so that the aggregate number of shares of stock of all classes
that the Corporation has authority to issue shall not be more than the total
number of shares of stock set forth in the first sentence of this paragraph. To
the extent permitted by Maryland law, the Board of Directors, without any action
by the stockholders of the Corporation, may amend the Charter from time to time
to increase or decrease the aggregate number of shares of stock or the number of
shares of stock of any class or series that the Corporation has authority to
issue.
Section 6.2 Common Stock.
Section 6.2.1 Classification. The Board of Directors may classify any
unissued shares of Common Stock and reclassify any previously classified
but unissued shares of Common Stock of any class from time to time in one
or more classes or series of stock.
Section 6.2.2 Voting Rights. The Corporation shall not issue any
shares of Class A Common Stock without the consent of the holders of a
majority of the outstanding shares of Class B Common Stock. Subject to the
provisions of Article 7, each share of Class A Common Stock shall entitle
the holder thereof to one vote and each share of Class B Common Stock shall
entitle the holder thereof to ten votes. Except as otherwise required by
law or otherwise provided with respect to shares of Preferred Stock
outstanding at any time, the holders of Common Stock shall have the
exclusive right and power to vote. No alteration of or change to the
powers, preferences or special rights of the shares of Class B Common
Stock, whether effected by merger, amendment or otherwise, shall be made
without the consent of the holders of shares representing a majority of the
outstanding shares of Class B Common Stock, voting as a single class, if
such alteration or change would have an adverse effect on such holders.
Section 6.2.3 Dividends and Distributions. Subject to the preferences
applicable to shares of Preferred Stock outstanding at any time, the
holders of outstanding shares of Class A Common Stock and the holders of
outstanding shares of Class B Common Stock shall be entitled to receive
such dividends and other distributions in cash, property or shares of stock
of the Corporation as may be authorized thereon by the Board of Directors
and declared by the Corporation from time to time out of assets or funds of
the Corporation legally available therefor. Shares of Class A Common Stock
and Class B Common Stock shall be equal in respect of rights to dividends
and other distributions in cash, property or shares of stock of the
Corporation.
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Except as otherwise provided in the immediately following sentence, no
dividend in cash, property or shares of stock of the Corporation may be
declared and paid on any shares of Common Stock unless a dividend of the
same character (i.e., cash, property or shares of stock of the Corporation)
is simultaneously declared and paid on all shares of Common Stock. In the
case of dividends or other distributions payable in Class A Common Stock or
Class B Common Stock, including distributions pursuant to stock splits or
divisions of Class A Common Stock or Class B Common Stock which occur after
the first date upon which the Corporation has issued shares of both Class A
Common Stock and Class B Common Stock, only shares of Class A Common Stock
shall be distributed with respect to Class A Common Stock and only shares
of Class B Common Stock shall be distributed with respect to Class B Common
Stock.
Section 6.2.4 Liquidation Rights. In the event of any dissolution,
liquidation or winding up of the affairs of the Corporation, whether
voluntary or involuntary, after payment or provision for payment of the
debts and other liabilities of the Corporation and after making provision
for the holders of each series of Preferred Stock, if any, the remaining
assets and funds of the Corporation, if any, shall be divided among and
paid ratably to the holders of each class or series of Common Stock,
treated as a single class.
Section 6.2.5 Optional Conversion of Class B Common Stock. The holders
of shares of Class B Common Stock shall have the right, at their option, to
convert any or all of such shares into shares of Class A Common Stock on
the terms and conditions contained in this Section 6.2.5.
(a) Each share of Class B Common Stock shall be convertible, at
any time, at the office of any transfer agent for Class A Common
Stock, and at such other place or places, if any, as the Board of
Directors may determine, into one fully paid and nonassessable share
of Class A Common Stock, upon surrender at such office or other place
of the shares of Class B Common Stock to be so converted.
(b) Shares of Class B Common Stock shall be deemed to have been
converted and the person converting the same shall become a holder of
Class A Common Stock for the purpose of receiving dividends and for
all other purposes whatsoever as of the date when the shares of Class
B Common Stock to be converted are surrendered to the Corporation as
provided in paragraph (e) of this Section 6.2.5.
(c) A number of shares of Class A Common Stock sufficient to
provide for the conversion of all shares of Class B Common Stock
outstanding shall at all times be reserved by the Corporation for the
exercise of the conversion rights of the holders of the shares of
Class B Common Stock.
(d) If the Corporation shall issue shares of Class A Common Stock
to the holders of Class A Common Stock as a stock dividend or stock
split, or if the Corporation reduces the number of outstanding shares
of Class A Common Stock in a reverse stock split or stock combination,
the number of shares of Class A Common Stock issuable upon conversion
of a share of Class B Common Stock shall be adjusted such that the
holder of the shares of Class B Common Stock converting such shares of
Class B Common Stock into shares
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of Class A Common Stock shall receive the proportionate number of
shares of Class A Common Stock that such holder would have received if
such conversion had occurred immediately prior to the record date for
such stock split, stock dividend, reverse stock split or stock
combination of the Class A Common Stock, as the case may be. If the
Corporation shall issue shares of Class B Common Stock to the holders
of Class B Common Stock in a reverse stock split or stock combination,
then the number of shares of Class A Common Stock shall be adjusted
such that the holder of the shares of Class B Common Stock converting
such shares of Class B Common Stock into shares of Class A Common
Stock shall receive the proportionate number of shares of Class A
Common Stock that such holder would have received if such conversion
had occurred immediately prior to the record date for such stock
split, stock dividend, reverse stock split or stock combination of the
Class B Common Stock, as the case may be. In the event of a
reclassification or other similar transaction as a result of which the
shares of Class A Common Stock are converted into another security,
then the amount of such security issuable upon conversion of a share
of Class B Common Stock shall be determined such that the holder of
the shares of Class B Common Stock converting such shares of Class B
Common Stock into such other security shall receive the amount of such
security that such holder would have received if such conversion had
occurred immediately prior to the record date of such reclassification
or other similar transaction. No adjustments in respect of dividends
(other than stock dividends) shall be made upon the conversion of any
share of Class B Common Stock; provided, that if a share of Class B
Common Stock shall be converted after the record date for the payment
of a dividend (other than stock dividends) or other distribution on
shares of Class B Common Stock but prior to such payment, then the
holder of such share at the close of business on such record date
shall be entitled to receive the dividend (other than stock dividends)
or other distribution payable on such share on such date
notwithstanding the conversion thereof.
(e) Before any holder of shares of Class B Common Stock shall be
entitled to convert such shares into shares of Class A Common Stock,
such holder must surrender a certificate or certificates for such
shares of Class B Common Stock (if such Class B Common Stock shall be
certificated) to the Corporation at the office of a transfer agent for
the Class A Common Stock, or at such other place or places, if any, as
the Board of Directors may determine, duly endorsed or accompanied by
duly executed instruments of transfer, and shall give written notice
to the Corporation at such office or place that the holder elects so
to convert the shares of Class B Common Stock so surrendered. Unless
the shares of Class A Common Stock are to be issued in the name of the
registered owner of the shares so surrendered, the holder shall state
in writing the name or names in which the holder wishes the shares of
Class A Common Stock to be issued, and shall furnish all requisite
stock transfer and stock issuance stamps, or funds therefor. As soon
as practicable after such surrender of shares of Class B Common Stock,
accompanied by the written notice above prescribed, the Corporation
shall issue and deliver, at the office or place at which such
certificates were surrendered and such notice was delivered, to the
person for whose account shares of Class B Common Stock were so
surrendered, or to such holder's assignee or assignees, the number of
whole shares of Class A Common Stock to which the holder shall be
entitled.
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(f) The shares of Class B Common Stock converted into shares of
Class A Common Stock as provided in this Section 6.2.5 shall have the
status of authorized but unissued shares of Common Stock.
Section 6.3 Preferred Stock. The Board of Directors may classify any
unissued shares of Preferred Stock and reclassify any previously classified but
unissued shares of Preferred Stock of any series from time to time, in one or
more classes or series of stock.
Section 6.4 Classified or Reclassified Shares. Prior to issuance of
classified or reclassified shares of any class or series, the Board of Directors
by resolution shall: (a) designate that class or series to distinguish it from
all other classes and series of stock of the Corporation; (b) specify the number
of shares to be included in the class or series; (c) set or change, subject to
the provisions of Article 7 and subject to the express terms of any class or
series of stock of the Corporation outstanding at the time, the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications and terms and conditions of
redemption for each class or series; and (d) cause the Corporation to file
articles supplementary with the State Department of Assessments and Taxation of
Maryland ("SDAT"). Any of the terms of any class or series of stock set or
changed pursuant to clause (c) of this Section 6.4 may be made dependent upon
facts or events ascertainable outside the Charter (including determinations by
the Board of Directors or other facts or events within the control of the
Corporation) and may vary among holders of different classes or series, provided
that the manner in which such facts, events or variations shall operate upon the
terms of such class or series of stock is clearly and expressly set forth in the
articles supplementary filed with the SDAT.
Section 6.5 Charter and Bylaws. All persons who shall acquire stock in the
Corporation shall acquire the same subject to the provisions of the Charter and
the Bylaws.
Section 6.6 Rights of Objecting Stockholders. Holders of shares of stock of
the Corporation shall not be entitled to exercise any rights of an objecting
stockholder provided for under Title 3, Subtitle 2 of the MGCL unless the Board
of Directors, upon the affirmative vote of a majority of the entire Board, shall
determine that such rights shall apply to a particular transaction or all
transactions occurring after the date of such determination in connection with
which holders of shares of stock of the Corporation would otherwise be entitled
to exercise such rights.
Section 6.7 Series A Preferred Stock.
Section 6.7.1 Number of Shares and Designation. 5,000,000 shares of
Preferred Stock shall be designated as 9% Series A Cumulative Redeemable
Preferred Stock (the "Series A Preferred Stock"), subject, however, to
increase or decrease upon further action of the Board of Directors in the
future as permitted by the Charter and applicable law.
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Section 6.7.2 Dividends.
(a) The holders of Series A Preferred Stock shall be entitled to
receive, when, as and if authorized by the Board of Directors out of
assets legally available for that purpose, Cumulative Dividends in
cash at the annual rate of 9% of the liquidation preference as set
forth in Section 6.7.3 hereof. Such dividends shall be payable
quarterly in arrears, on or before February 15th, May 15th, August
15th and November 15th (each a "Dividend Payment Date") to holders of
record as they appear on the stock records of the Corporation at the
close of business on such date (the "Dividend Record Date") that the
Board of Directors shall have fixed, which will not be more than 15
Business Days prior to the Dividend Payment Date. The amount of
dividends payable on any Dividend Payment Date will be computed on the
basis of a 360-day year of twelve 30-day months, and for any period
shorter than a full quarterly period for which dividends are computed,
the amount of the dividend payable will be computed on the basis of
the actual number of days elapsed in such 30-day month. Such dividends
shall be cumulative from the issue date of such shares Series A
Preferred Stock, whether or not such dividends shall be authorized or
there shall be assets of the Corporation legally available for the
payment of such dividends. If the Dividend Payment Date is not on a
Business Day, the payment of such dividends shall be made on the next
succeeding day that is a Business Day. The amount of Cumulative
Dividends on any share of Series A Preferred Stock, or fraction
thereof, at any date shall be the amount of any dividends thereon
calculated at the applicable rate to and including such date, whether
or not earned or authorized, which has not been paid.
(b) Holders of Series A Preferred Stock shall not be entitled to
any dividends, whether payable in cash, property or stock, in excess
of Cumulative Dividends, as herein provided, on the Series A Preferred
Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series A
Preferred Stock that may be in arrears.
(c) So long as any of the shares of Series A Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid
in shares of or options, warrants or rights to subscribe for or
purchase shares of Junior Stock) shall be authorized or paid or set
apart for payment by the Corporation or other distribution of cash or
other property authorized or made directly or indirectly by the
Corporation with respect to any shares of Junior Stock or Parity
Stock, nor shall any shares of Junior Stock or Parity Stock be
redeemed, purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of Common Stock made for purposes of an
employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any
such stock) directly or indirectly by the Corporation (except by
conversion into or exchange for Junior Stock), nor shall any other
cash or other property otherwise be paid or distributed to or for the
benefit of any holder of shares of Junior Stock or Parity Stock in
respect thereof, directly or indirectly, by the Corporation unless in
each case the full Cumulative Dividends on all outstanding shares of
Series A Preferred Stock and any other Parity Stock of the Corporation
shall have been paid or such dividends have been authorized and set
apart for payment with respect to the Series A Preferred Stock and any
such Parity Stock.
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Section 6.7.3 Liquidation Preference.
(a) In the event of any liquidation, dissolution, winding up or
termination of the affairs of the Corporation, whether voluntary or
involuntary, before any assets of the Corporation shall be
distributed, paid or set aside for the holders of Junior Stock, the
Corporation shall pay to the holders of shares of Series A Preferred
Stock an amount equal to $25 per share of Series A Preferred Stock
(which is the "liquidation preference" referred to in Section
6.7.2(a)) plus an amount equal to all Cumulative Dividends (whether or
not earned or authorized) to the date of final distribution to such
holders; and such holders shall not be entitled to any further
payment. Until this liquidation preference and liquidating payments on
any other shares of any class or series of Parity Stock have been paid
in full, no payment will be made to any holder of Junior Stock upon
the liquidation, dissolution, winding up or termination of the
Corporation. If, upon any liquidation, dissolution, winding up or
termination of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of Series A
Preferred Stock shall be insufficient to pay in full this liquidation
preference and liquidating payments on any other shares of any class
or series of Parity Stock, then such assets, or the proceeds thereof,
shall be distributed among the holders of Series A Preferred Stock and
any such other Parity Stock ratably in the same proportion as the
respective amounts that would be payable on such Series A Preferred
Stock and any such other Parity Stock if all amounts payable thereon
were paid in full. For the purposes of this Section 6.7.3, (i) a
consolidation or merger of the Corporation with or into one or more
entities or (ii) a sale, lease or conveyance of all or substantially
all of the Corporation's assets shall not be deemed to be a
liquidation, dissolution, winding up or termination, voluntary or
involuntary, of the Corporation.
(b) Subject to the rights of the holders of any shares of Parity
Stock, upon any liquidation, dissolution, winding up or termination of
the Corporation, after payment shall have been made in full to the
holders of Series A Preferred Stock and any Parity Stock, as provided
in this Section 6.7.3, any other series or class or classes of Junior
Stock shall, subject to the respective terms thereof, be entitled to
receive any and all assets remaining to be paid or distributed, and
the holders of the Series A Preferred Stock and any Parity Stock shall
not be entitled to share therein.
(c) In determining whether a distribution (other than upon
voluntary or involuntary liquidation) by dividend, redemption or other
acquisition of shares of stock of the Corporation or otherwise is
permitted under the MGCL, no effect shall be given to amounts that
would be needed, if the Corporation were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon
dissolution of holders of shares of stock of the Corporation whose
preferential rights upon dissolution are superior to those receiving
the distribution.
Section 6.7.4 Redemption at the Option of the Corporation.
(a) Except as provided in Section 6.7.4(b), shares of Series A
Preferred Stock shall not be redeemable by the Corporation prior to
February 15, 2010. On or after such date, the Corporation, at its
option, may redeem shares of Series A Preferred Stock, in
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whole or in part, at any time out of assets legally available therefor
at a redemption price payable in cash equal to $25 per share of Series
A Preferred Stock (plus an amount equal to all Cumulative Dividends,
if any, to the Call Date, whether or not earned or authorized) (the
"Redemption Price").
(b) If, at any time, a Tax Event or Investment Company Act Event
shall occur and be continuing, the Corporation, at its option, may
redeem shares of Series A Preferred Stock, in whole but not in part,
out of assets legally available therefor at the Redemption Price.
However, if at such time there is available to the Corporation the
opportunity to eliminate, within a 90-day period, the Tax Event or the
Investment Company Act Event, as the case may be, by taking some
ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure, which in the sole
judgment of the Corporation has or will cause no adverse effect on the
Corporation or the holders of the Series A Preferred Stock and will
involve no material cost to the Corporation, the Corporation shall
pursue such measure instead of redeeming the Series A Preferred Stock,
and the Corporation will have no right to redeem the Series A
Preferred Stock while it is pursuing such ministerial action. The
Corporation may redeem the Series A Preferred Stock as provided under
this paragraph (b) within 90 days following the occurrence of the Tax
Event or Investment Company Act Event, which 90 day period shall be
subject to extension for the number of days that such ministerial
actions are being pursued.
(c) Shares of Series A Preferred Stock being redeemed under
paragraphs (a) or (b) of this Section 6.7.4 shall be redeemed by the
Corporation on the date specified in the notice to holders required
under paragraph (e) of this Section 6.7.4 (the "Call Date"). The Call
Date shall be selected by the Corporation, shall be specified in the
notice of redemption and shall be not less than 30 days nor more than
60 days after the date notice of redemption is sent by the
Corporation. If the Call Date does not fall on a Business Day, then
payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that,
if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price is improperly withheld
or refused and not paid, distributions on such Series A Preferred
Stock will continue to accrue, from the Call Date to the date of
payment, in which case the actual payment date will be used for
purposes of calculating the portion of the Redemption Price consisting
of Cumulative Dividends. Except as provided above, the Corporation
shall make no payment or allowance for accumulated or accrued
dividends on shares of Series A Preferred Stock called for redemption.
(d) If full Cumulative Dividends on all outstanding shares of
Series A Preferred Stock have not been paid or authorized and set
apart for payment, no shares of Series A Preferred Stock may be
redeemed unless all outstanding shares of Series A Preferred Stock are
simultaneously redeemed.
(e) If the Corporation shall redeem shares of Series A Preferred
Stock pursuant to paragraphs (a) or (b) of this Section 6.7.4, notice
of such redemption shall be
11
given to each holder of record of the shares to be redeemed. Such
notice shall be provided by first class mail, postage prepaid, at such
holder's address as the same appears on the stock records of the
Corporation not less than 30 days nor more than 60 days prior to the
Call Date. If the Corporation elects to provide such notice by
publication, it shall also promptly mail notice of such redemption to
the holders of the shares of Series A Preferred Stock to be redeemed.
Neither the failure to mail any notice required by this paragraph (e),
nor any defect therein or in the mailing thereof, to any particular
holder, shall affect the sufficiency of the notice or the validity of
the proceedings for redemption with respect to the other holders. Any
notice which was mailed in the manner herein provided shall be
conclusively presumed to have been duly given on the date mailed
whether or not the holder receives the notice. Each such mailed or
published notice shall state, as appropriate: (1) the Call Date; (2)
the number of shares of Series A Preferred Stock to be redeemed and,
if fewer than all such shares held by such holder are to be redeemed,
the number of such shares to be redeemed from such holder; (3) the
Redemption Price; (4) the place or places at which certificates for
such shares (if certificated) are to be surrendered for payment; (5)
that dividends on the shares of Series A Preferred Stock to be
redeemed shall cease to accrue on such Call Date except as otherwise
provided herein; and (6) that the payment of the Redemption Price will
be made upon presentation and surrender of such shares of Series A
Preferred Stock (if certificated). Notice having been published or
mailed as aforesaid, from and after the Call Date (unless the
Corporation shall fail to issue and make available the amount of cash
necessary to effect such redemption, including all Cumulative
Dividends to the Call Date, whether or not earned or authorized), (i)
except as otherwise provided herein, dividends on the shares of Series
A Preferred Stock so called for redemption shall cease to accumulate
or accrue on the shares of Series A Preferred Stock called for
redemption (except that, in the case of a Call Date after a Dividend
Record Date and prior to the related Dividend Payment Date, holders of
Series A Preferred Stock on the Dividend Record Date will be entitled
on such Dividend Payment Date to receive the dividend payable on such
shares), (ii) said shares shall no longer be deemed to be outstanding,
and (iii) all rights of the holders thereof as holders of Series A
Preferred Stock of the Corporation shall cease (except the rights to
receive the cash payable upon such redemption, without interest
thereon, upon surrender thereof and to receive any dividends payable
thereon). The Corporation's obligation to provide cash in accordance
with the preceding sentence shall be deemed fulfilled if, on or before
the Call Date by 12:00 noon New York City time, the Corporation shall
deposit with its paying agent (which may be the Corporation), such
amount of cash as is necessary for such redemption with irrevocable
instructions that such cash be applied to the redemption of the shares
of Series A Preferred Stock so called for redemption. No interest
shall accrue for the benefit of the holders of shares of Series A
Preferred Stock to be redeemed on any cash so set aside by the
Corporation. Subject to applicable escheat laws, any such cash
unclaimed at the end of two years from the Call Date shall revert to
the general funds of the Corporation, after which reversion the
holders of shares of Series A Preferred Stock so called for redemption
shall look only to the general funds of the Corporation for the
payment of such cash.
As promptly as practicable after the surrender in accordance with
said notice of the certificates for any such shares (if certificated)
so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and if the notice shall so state), such
certificates shall be exchanged for cash (without interest thereon)
for which such shares have been redeemed
12
in accordance with such notice. If fewer than all the outstanding
shares of Series A Preferred Stock are to be redeemed, shares to be
redeemed shall be selected by the Corporation from outstanding shares
of Series A Preferred Stock not previously called for redemption by
lot or by any other method as may be determined by the Board of
Directors in its discretion to be equitable. If fewer than all the
shares of Series A Preferred Stock are redeemed and such shares are
represented by a certificate, then a new certificate representing the
unredeemed shares shall be issued without cost to the holders thereof.
Section 6.7.5 Status of Shares. All shares of Series A Preferred Stock
which shall have been issued and redeemed, converted or reacquired in any
manner by the Corporation shall be restored to the status of authorized,
but unissued shares of Preferred Stock, without designation as to series.
Section 6.7.6 Ranking. Any other class or series of stock of the
Corporation shall be deemed to rank:
(a) senior to the Series A Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation,
dissolution, winding up or termination, if the holders thereof shall
be entitled, by the terms of such stock, to receipt of dividends or of
amounts distributable upon liquidation, dissolution, winding up or
termination, as the case may be, in preference or priority to the
holders of Series A Preferred Stock ("Senior Stock");
(b) on a parity with the Series A Preferred Stock, as to the
payment of dividends and as to distribution of assets upon
liquidation, dissolution, winding up or termination, whether or not
the dividend rates, dividend payment dates or redemption or
liquidation prices per share thereof be different from those of the
Series A Preferred Stock, if the holders of such class or series of
stock, by the terms of such stock, and the Series A Preferred Stock
shall be entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution, winding up or termination
in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or
priority one over the other ("Parity Stock"); or
(c) junior to the Series A Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation,
dissolution, winding up or termination, if such class or series shall
be Common Stock or if, by the terms of such class or series of stock,
the holders of Series A Preferred Stock shall be entitled to receipt
of dividends or of amounts distributable upon liquidation,
dissolution, winding up or termination, as the case may be, in
preference or priority to the holders of shares of such class or
series ("Junior Stock").
Section 6.7.7 Voting Rights.
(a) The holders of Series A Preferred Stock shall not have any
voting rights except as set forth below.
13
(b) Whenever dividends on any shares of Series A Preferred Stock
shall be in arrears for six or more consecutive quarterly periods (a
"Dividend Default"), the holders of such shares of Series A Preferred
Stock (voting separately as a class with all other classes of
preferred stock upon which like voting rights have been conferred and
are exercisable) will be entitled, by the vote of holders of Series A
Preferred Stock and such other classes of preferred stock with like
voting rights representing a majority in aggregate liquidation amount
of such outstanding preferred stock, to elect a total of two
additional directors of the Corporation (who need not be officers or
employees or Affiliates of the Corporation and who shall have the same
rights, powers and privileges as regular members of the Board of
Directors, except as described below) (the "Preferred Directors"). Not
later than 30 days after such right to elect Preferred Directors
arises, the Board of Directors shall convene a meeting for the purpose
of electing the Preferred Directors. If the Board of Directors fails
to do so within such 30-day period, a special meeting called by the
holders of record of at least 10% in aggregate liquidation amount of
such outstanding Series A Preferred Stock and such other classes of
preferred stock with like voting rights will be entitled to convene
the meeting. The provisions of this Charter and the Bylaws relating to
convening and conduct of the meetings will apply with respect to any
such meeting. If, at any such meeting, holders of less than a majority
in aggregate liquidation amount of preferred stock of all series
entitled to vote for the election of Preferred Directors vote for such
election, no Preferred Directors shall be elected. During the term of
the Preferred Directors, the Board of Directors shall not be permitted
to increase the number of directors, except to add the Preferred
Directors. One of the Preferred Directors, at such Preferred
Director's request, shall be appointed as an additional member of the
audit committee of the Board of Directors, if the director otherwise
qualifies as an independent director (as determined in accordance with
Section 3.2 of the Bylaws). Any Preferred Director may be removed with
or without cause at any time by the vote of the holders of a majority
in liquidation amount of each series of preferred stock upon which
like voting rights have been conferred and are then exercisable as a
single class. The holders of 10% in liquidation amount shall be
entitled to convene a meeting for the purpose of removing a Preferred
Director. If and when all dividends accumulated on such shares of
Series A Preferred Stock for the past dividend periods and the then
current dividend period shall have been fully paid or declared and a
sum sufficient for the payment thereof set aside for payment, the
holders of such shares of Series A Preferred Stock shall be divested
of the voting rights set forth in paragraph (b) of this Section 6.7.7
(subject to revesting in the event of each and every Dividend Default)
and, if all dividends accumulated on all other classes of preferred
stock upon which like voting rights have been conferred and are
exercisable for the past dividend periods and the then current
dividend period shall have been fully paid or declared and a sum
sufficient for the payment thereof set aside for payment, the term of
office of each Preferred Director so elected shall terminate and the
Board of Directors shall take such action as may be necessary to
reduce the number of directors by two.
(c) So long as any shares of Series A Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders
required by the Charter or required by the MGCL, the affirmative vote
of holders of the Series A Preferred Stock representing at least
two-thirds in liquidation amount of the outstanding Series A Preferred
Stock shall be necessary for (i) the authorization or creation of, or
any increase in the authorized amount of, any class or series of
Senior Stock or (ii) effecting or validating any amendment,
14
modification or repeal, whether by merger, consolidation or otherwise,
of any of the provisions of the Charter (including the preferences,
rights, voting powers, restrictions, limitations as to dividends and
other distributions, qualifications and terms and conditions of
redemption of the Series A Preferred Stock) that materially and
adversely affects the preferences, rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series A
Preferred Stock. Notwithstanding the foregoing, any amendment of the
provisions of the Charter so as to (A) authorize, create or increase
the number of authorized shares of any class or series of Parity Stock
or Junior Stock or (B) decrease the number of authorized shares of
Series A Preferred Stock, but not below the number of shares of Series
A Preferred Stock of the series then outstanding, shall not be deemed
to materially and adversely affect the preferences, rights, voting
powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption
of the Series A Preferred Stock. Notwithstanding the foregoing, no
vote or consent of the holders of the Series A Preferred Stock will be
required for the Corporation to redeem and cancel preferred stock of
any series.
No vote or consent of the holders of the Series A Preferred Stock
will be required for the authorization or creation, or any increase in
the authorized amount, of any class or series of Parity Stock or
Junior Stock.
For purposes of the foregoing provisions of this paragraph (c),
each share of Series A Preferred Stock shall have one vote per share,
except that when any other series of Preferred Stock shall have the
right to vote with the Series A Preferred Stock as a single class on
any matter, then the Series A Preferred Stock and such other series
shall have with respect to such matters one vote per $25 of stated
liquidation preference, and fractional votes shall be ignored.
Any required approval or direction of holders of Series A
Preferred Stock may be given at separate meetings of holders of Series
A Preferred Stock convened for such purpose, at a meeting of all of
the holders of the Series A Preferred Stock or pursuant to written
consent. The Corporation will cause a notice of any meeting at which
holders of Series A Preferred Stock are entitled to vote, or of any
matter upon which action by written consent of such holders is to be
taken, to be mailed to each holder of record of Series A Preferred
Stock. Each such notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is to be taken,
(ii) a description of any resolution proposed for adoption at such
meeting on which such holders are entitled to vote or of such matter
upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
(d) Nothing contained in paragraph (c) of this Section 6.7.7
shall require a vote of the holders of the Series A Preferred Stock in
connection with any merger or consolidation or transfer or lease of
substantially all of the Corporation's assets as an entirety to any
entity if such event does not materially and adversely affect the
preferences, rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of
the Series A Preferred Stock (including any Successor Securities).
15
Section 6.7.8 Severability of Provisions. If any preference, right,
voting power, restriction, limitation as to dividends or other
distributions, qualification or term or condition of redemption of the
Series A Preferred Stock set forth herein is invalid, unlawful or incapable
of being enforced by reason of any rule of law or public policy, all other
preferences, rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
redemption of the Series A Preferred Stock set forth herein which can be
given effect without the invalid, unlawful or unenforceable provision
thereof shall, nevertheless, remain in full force and effect, and no
preferences, rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
redemption of the Series A Preferred Stock herein set forth shall be deemed
dependent upon any other provision thereof unless so expressed therein.
ARTICLE 7
RESTRICTIONS ON OWNERSHIP AND TRANSFER
OF SHARES OF CAPITAL STOCK
Section 7.1 Capital Stock.
Section 7.1.1 Restriction on Ownership and Transfers.
(a) Except as provided in Section 7.1.8, (i) from the Issue Date
and prior to the Restriction Termination Date, no Person (or Persons
in the aggregate, in the case of the Initial Class B Parties) shall
Beneficially Own shares of Capital Stock in excess of the applicable
Ownership Limit.
(b) Except as provided in Section 7.1.8 (and subject to Section
7.3), from the Issue Date and prior to the Restriction Termination
Date, any Transfer (whether or not such Transfer is the result of one
or more transactions entered into through the facilities of the AMEX)
that, if effective, would result in any Person (or Persons, in the
case of the Initial Class B Parties) Beneficially Owning shares of
Capital Stock in excess of the applicable Ownership Limit shall be
void ab initio as to the Transfer of that number of shares of Capital
Stock which would be otherwise Beneficially Owned by such Person or
Persons, as applicable, in excess of the applicable Ownership Limit,
and the intended transferee or transferees shall acquire no rights in
such shares of Capital Stock.
(c) Subject to Section 7.3, from the Issue Date and prior to the
Restriction Termination Date, any Transfer (whether or not such
Transfer is the result of one or more transactions entered into
through the facilities of the AMEX) that, if effective, would result
in the Capital Stock being actually owned by less than 100 Persons
(determined without reference to any rules of attribution) shall be
void ab initio as to the Transfer of that number of shares of Capital
Stock which would be otherwise owned (determined without reference to
any rules of attribution) by the transferee and the intended
transferee shall acquire no rights in such shares of Capital Stock.
16
(d) Subject to Section 7.3, from the Issue Date and prior to the
Restriction Termination Date, any Transfer (whether or not such
Transfer is the result of one or more transactions entered into
through the facilities of the AMEX) that, if effective, would cause
the Corporation to fail to qualify as a REIT by reason of being
"closely held" within the meaning of section 856(h) of the Code shall
be void ab initio as to the Transfer of that number of shares of
Capital Stock which would cause the Corporation to be "closely held"
within the meaning of section 856(h) of the Code, and the intended
transferee or transferees shall acquire no rights in such shares of
Capital Stock.
(e) Subject to Section 7.3, from the Issue Date and prior to the
Restriction Termination Date, any Transfer (whether or not such
Transfer is the result of one or more transactions entered into
through the facilities of the AMEX) that, if effective, would (i)
cause the Corporation to Constructively Own shares of Capital Stock
that would result in the Corporation being treated as owning 9.9% or
more of the ownership interests in a tenant of the real property of
the Corporation, the Operating Partnership or any direct or indirect
subsidiary (including, without limitation, partnerships, joint
ventures and limited liability companies) of the Corporation or the
Operating Partnership (each, a "Subsidiary"), within the meaning of
section 856(d)(2)(B) of the Code or (ii) otherwise, directly or
indirectly, cause the Corporation to fail to qualify as a REIT, shall
be void ab initio as to the Transfer of that number of shares of
Capital Stock which would cause the Corporation to Constructively Own
shares of Capital Stock that would result in the Corporation being
treated as owning 9.9% or more of the ownership interests in a tenant
of the Corporation's, the Operating Partnership's or any Subsidiary's
real property, within the meaning of section 856(d)(2)(B) of the Code
or otherwise, directly or indirectly, would cause the Corporation to
fail to qualify as a REIT, and the intended transferee or transferees
shall acquire no rights in such shares of Capital Stock.
Section 7.1.2 Remedies for Breach. If the Board of Directors or a
committee thereof shall at any time determine in good faith that a
purported Transfer or other event has taken place in violation of Section
7.1.1 (whether or not such violation is intended), or that a Person intends
to acquire or has attempted to acquire Beneficial or Constructive Ownership
of any shares of Capital Stock in violation of Article 7, the Board of
Directors or a committee thereof shall be empowered to take any action as
it deems advisable to refuse to give effect to or to prevent such Transfer
or other event, including, but not limited to, refusing to give effect to
such Transfer or other event on the books of the Corporation, demanding the
repayment of any distributions received in respect of shares of Capital
Stock purportedly acquired in violation of Section 7.1.1 or instituting
proceedings to enjoin or rescind such purported Transfer or attempted
Transfer; provided, however, that any Transfers or attempted Transfers (or
in the case of events other than a Transfer, Beneficial or Constructive
Ownership) in violation of Section 7.1.1, regardless of any action (or
non-action) by the Board of Directors or such committee, (i) shall be void
ab initio and (ii) shall automatically result in the exchange described in
Section 7.1.3.
Section 7.1.3 Conversion into Excess Stock.
(a) If, notwithstanding the other provisions contained in this
Article 7, there is a purported Transfer (whether or not such Transfer
is the result of one or more
17
transactions entered into through the facilities of the AMEX) or other
change in the capital structure of the Corporation or other event such
that any Person (or Persons, in the case of the Initial Class B
Parties) would Beneficially Own shares of Capital Stock in excess of
the applicable Ownership Limit, then, except as otherwise provided in
Section 7.1.8, such shares of Capital Stock (rounded up to the next
whole number of shares) in excess of the applicable Ownership Limit
shall be automatically converted into an equal number of shares of
Excess Class A Common Stock, Excess Class B Common Stock or Excess
Series A Preferred Stock, as the case may be, having identical terms
except as set forth in this Article 7. Such conversion shall be
effective as of the close of business on the Business Day prior to the
date of the purported Transfer or change in capital structure or other
event.
(b) If, notwithstanding the other provisions contained in this
Article 7, there is a purported Transfer (whether or not such Transfer
is the result of a transaction entered into through the facilities of
the AMEX) or other change in the capital structure of the Corporation
or other event that, if effective, would result in a violation of any
of the restrictions contained in Section 7.1.1(c), (d) or (e) or
otherwise, directly or indirectly, would cause the Corporation to fail
to qualify as a REIT, then the shares of Capital Stock (rounded up to
the next whole number of shares) purportedly being Transferred or
which are otherwise affected by the change in the capital structure of
the Corporation or other event and which would result in such
violation or otherwise would cause the Corporation to fail to qualify
as a REIT shall be automatically converted into an equal number of
shares of Excess Class A Common Stock, Excess Class B Common Stock or
Excess Series A Preferred Stock, as the case may be, having identical
terms except as set forth in this Article 7. Such conversion shall be
effective as of the close of business on the Business Day prior to the
date of the purported Transfer or change in capital structure or other
event.
Section 7.1.4 Notice of Restricted Transfer. Any Person who acquires
or attempts to acquire shares of Capital Stock in violation of Section
7.1.1, or any Person who is a transferee such that Excess Stock results
under Section 7.1.3, shall immediately give written notice to the
Corporation or, in the case of a proposed or attempted Transfer or
acquisition, shall give at least 15 days prior written notice to the
Corporation of such event and shall promptly provide to the Corporation
such other information as the Corporation in its sole discretion may
request in order to determine the effect, if any, of such Transfer or
proposed or attempted Transfer or other event on the Corporation's status
as a REIT. Failure to give such notice shall not limit the rights and
remedies of the Board of Directors provided herein in any way.
Section 7.1.5 Owners Required to Provide Information.
Prior to the Restriction Termination Date:
(a) Every record and Beneficial Owner of more than 5% (or such
other percentage determined pursuant to regulations under the Code or
as may be requested by the Board of Directors in its sole discretion)
of the outstanding shares of any class or series of Capital Stock
shall, within 30 days after January 1 of each year, give written
notice to the Corporation stating the name and address of such record
or Beneficial Owner, the number of
18
shares of each class or series of Capital Stock Beneficially Owned,
and a full description of how such shares are held. Each such record
or Beneficial Owner of Capital Stock shall, promptly after demand by
the Corporation, disclose to the Corporation in writing such
additional information with respect to the Beneficial or Constructive
Ownership of the Capital Stock as the Board of Directors, in its sole
discretion, deems appropriate or necessary to (i) comply with the
provisions of the Code regarding the qualification of the Corporation
as a REIT, and (ii) ensure compliance with the Ownership Limit. Each
stockholder of record, including without limitation any Person who
holds shares of Capital Stock on behalf of a Beneficial or
Constructive Owner, shall take all reasonable steps to obtain the
written notice described in this paragraph.
(b) Each Person who is a Beneficial or Constructive Owner of
shares of any class or series of Capital Stock and each Person
(including the stockholder of record) who is holding shares of Capital
Stock for a Beneficial or Constructive Owner, and any proposed
transferee of shares of Capital Stock, shall provide such information
as the Corporation, in its sole discretion, may request in order to
determine the Corporation's status as a REIT, to comply with the
requirements of any taxing authority or other governmental agency, or
to determine any such compliance or to ensure compliance with the
Ownership Limit and other restrictions set forth in this Article 7,
and shall provide a statement or affidavit to the Corporation setting
forth the number of shares of any class or series of Capital Stock
Beneficially or Constructively Owned by such stockholder or proposed
transferee and any related Persons specified, which statement or
affidavit shall be in the form prescribed by the Corporation for that
purpose.
Section 7.1.6 Remedies Not Limited. Nothing contained in Article 6 or
this Article 7 shall limit the authority of the Board of Directors to take
such other action as it deems necessary or advisable (subject to the
provisions of Section 7.3) (i) to protect the Corporation and the interests
of its stockholders in the preservation of the Corporation's status as a
REIT, and (ii) to ensure compliance with the Ownership Limit and other
restrictions set forth in this Article 7.
Section 7.1.7 Ambiguity. In the case of an ambiguity in the
application of any of the provisions of Article 7, including any definition
contained in this Article or in Article 11, the Board of Directors shall
have the power to determine the application of the provisions of Article 7
with respect to any situation based on its reasonable belief, understanding
or knowledge of the circumstances.
Section 7.1.8 Exception.
(a) The Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of tax counsel or other
evidence or undertakings acceptable to it, may waive the application,
in whole or in part, of the applicable Ownership Limit to a Person or
Persons (other than any individual, as such term is defined pursuant
to section 542(a)(2) of the Code) subject to such Ownership Limit, if
a Transfer of shares of Capital Stock or other applicable event to
which the Ownership Limit applies does not or will not cause any of
the Corporation, Krupp Government Income Trust, a Massachusetts
business trust,
19
or Krupp Government Income Trust II, a Massachusetts business trust,
to violate the "closely held" provisions of section 856(h) of the Code
or otherwise cause the Corporation to fail to qualify as a REIT. In
connection with any such exemption, the Board of Directors may require
such representations and undertakings from such Person or Persons and
may impose such other conditions as the Board of Directors deems
necessary, in its sole discretion, to determine the effect, if any, of
the proposed Transfer or other event on the Corporation's status as a
REIT. Notwithstanding the foregoing, the Board of Directors will not
waive the application of clause (ii) of the definition of Ownership
Limit during such time as either of the Corporation or the Operating
Partnership Beneficially Owns more than 9.8% of the outstanding shares
of beneficial interest in Krupp Government Income Trust or Krupp
Government Income Trust II.
(b) For a period of 90 days following the purchase of Capital
Stock by an underwriter that (i) is a corporation, limited liability
company, partnership or other entity and (ii) participates in an
offering of the Capital Stock, such underwriter shall not be subject
to the application of clause (i) of the definition of Ownership Limit
with respect to the Capital Stock purchased by it as part of or in
connection with such offering and with respect to any Capital Stock
purchased in connection with market making activities, provided that
the restrictions contained in Section 7.1.1 will not be violated
following the distribution by such underwriter of such shares.
Section 7.1.9 Notice to Stockholders. Upon issuance or transfer on the
stock transfer records of the Corporation of shares of Capital Stock, the
Corporation shall provide the recipient or transferee with a notice
containing information about the shares so issued or transferred, in lieu
of issuance of a share certificate, in a form substantially similar to the
following:
"NOTICE OF ISSUANCE OR TRANSFER OF UNCERTIFICATED
SHARES OF BERKSHIRE INCOME REALTY, INC.
As permitted by Section 2-210(c) of the Maryland General
Corporation Law, shares of stock of Berkshire Income Realty,
Inc., a Maryland corporation (the "Corporation"), shall be
issued or transferred without certificates. Shares of stock
of the Corporation issued or transferred are subject to
restrictions on transfer and ownership for the purpose of
maintenance of the Corporation's status as a real estate
investment trust (a "REIT") under sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the
"Code"). Except as otherwise provided pursuant to the
charter of the Corporation, (i) no Person other than KRF
Company, L.L.C. and certain related Persons may Beneficially
Own shares of Capital Stock of the Corporation in excess of
4.9% (or such greater
20
percentage as may be determined by the Board of Directors of
the Corporation) of any class or series of the outstanding
shares; (ii) KRF Company, L.L.C. and certain related Persons
may Beneficially Own all of the shares of Class B Common
Stock of the Corporation but may not Beneficially Own any
other shares of Capital Stock of the Corporation in excess
of the percentages set forth in the charter of the
Corporation; (iii) no Person may own shares if such
ownership would result in the Capital Stock of the
Corporation being owned by less than 100 Persons; (iv) no
Person may Beneficially Own shares of any class or series of
Capital Stock of the Corporation which would result in the
Corporation being "closely held" under section 856(h) of the
Code; and (v) no Person may Beneficially or Constructively
Own shares of any class or series of Capital Stock of the
Corporation that would cause the Corporation to
Constructively Own shares of Capital Stock that would result
in the Corporation being treated as owning 9.9% or more of
the ownership interests in a tenant of the Corporation's,
the Operating Partnership's or a Subsidiary's real property,
within the meaning of section 856(d)(2)(B) of the Code or
which otherwise would cause the Corporation to fail to
qualify as a REIT. Any Person who has Beneficial or
Constructive Ownership, or who acquires or attempts to
acquire Beneficial or Constructive Ownership of shares in
excess of the above limitations and any Person who
Beneficially or Constructively Owns Excess Stock as a
transferee of shares resulting in the conversion of shares
into Excess Stock (as described below) immediately must
notify the Corporation. Any Transfer or acquisition of
shares or other event which results in a violation of the
ownership or transfer limitations set forth in the
Corporation's charter shall be void ab initio and the
intended transferee shall acquire no rights in such shares.
If the transfer and ownership limitations referred to herein
are violated, the shares issued or transferred automatically
will be converted into Excess Stock to the extent of
violation of such limitations, and such Excess Stock will be
held in trust by a trustee appointed by the Corporation, all
as provided by the charter of the Corporation. All defined
terms used
21
in this legend have the meanings identified in the
Corporation's charter, as the same may be amended from time
to time, a copy of which, including the restrictions on
transfer, will be sent without charge to each stockholder
who so requests."
Section 7.1.10 Severability. If any provision of this Article 7 or any
application of any such provision is determined in a final and unappealable
judgment to be void, invalid or unenforceable by any federal or state court
having jurisdiction over the issues, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
Section 7.1.11 Board of Directors' Discretion. Anything in this
Charter to the contrary notwithstanding, and subject to such approval that
may be required by the MGCL with respect to charter amendments, the Board
of Directors shall be entitled to take or omit to take such actions as it
in its discretion shall determine to be advisable in order that the
Corporation maintain its status as and continue to qualify as a REIT,
including, but not limited to, reducing any applicable Ownership Limit in
the event of a change in law.
Section 7.2 Excess Stock. The following is a description of the
preferences, rights, voting powers, restrictions, limitations as to dividends
and other distributions, qualifications and terms and conditions of redemption
of the Excess Stock of the Corporation:
Section 7.2.1 Ownership in Trust. Upon any purported Transfer, change
in the capital structure of the Corporation, purported change in Beneficial
or Constructive Ownership or other event that results in Excess Stock
pursuant to Section 7.1.3, such Excess Stock shall be deemed to have been
transferred to a Person who is unaffiliated with each of the Corporation,
each Purported Beneficial Transferee, and each Purported Record Transferee
as trustee of a Trust for the exclusive benefit of one or more
organizations described in section 170(c)(2) and 501(c)(3) of the Code (the
"Charitable Beneficiary" or "Charitable Beneficiaries"), as shall be
designated by resolution of the Board of Directors. At all times at least
one Charitable Beneficiary shall be designated by the Board of Directors.
Where a Transfer or other event results in an automatic conversion of
shares of more than one class into Excess Stock, then separate Trusts shall
be deemed to have been established for the Excess Stock attributable to the
shares of each such class. Shares of Excess Stock held in a Trust for the
exclusive benefit of the Charitable Beneficiary shall be issued and
outstanding shares of Capital Stock. The Purported Record Transferee and
the Purported Beneficial Transferee shall have no rights in the shares of
Excess Stock except the right to receive an amount for its interest in the
shares of Capital Stock which were converted into Excess Stock upon the
terms specified in Section 7.2.3 or 7.2.5, as applicable.
Section 7.2.2 Distribution Rights. Shares of Excess Stock shall be
entitled to dividends and distributions as if such shares of Excess Stock
were shares of the applicable class or series of Common Stock or Preferred
Stock provided that the dividends and
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distributions shall be paid to the Trustee to be held in trust for the
exclusive benefit of the Charitable Beneficiary. Any dividend or
distribution paid prior to the discovery by the Corporation that the shares
of Capital Stock have been converted into Excess Stock shall be repaid to
the Corporation upon demand or, at the Corporation's sole election, shall
be offset against any future dividends or distributions payable on the
shares. Any dividends so disgorged shall be paid over to the Trust for the
exclusive benefit of the Charitable Beneficiary.
Section 7.2.3 Rights Upon Liquidation.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up, or any other distribution of the assets, of
the Corporation, each holder of shares of Excess Stock resulting from
the conversion of shares of Capital Stock of any class or series into
shares of Excess Stock shall be entitled to receive, ratably with each
other holder of shares of Excess Stock resulting from the conversion
of shares of Capital Stock of such class or series into shares of
Excess Stock and each holder of shares of Capital Stock of such class
or series, that portion of the remaining assets of the Corporation as
are due to the holders of shares of Preferred Stock of such series or
available for distribution to the holders of shares of Common Stock of
such class, as applicable.
(b) The Trustee shall distribute to the Purported Record
Transferee or purported record holder of the shares the amounts
received upon such liquidation, dissolution, winding up or
distribution, provided that the Purported Record Transferee or
purported record holder of the shares shall not be entitled to receive
amounts pursuant to this Section 7.2.3 in excess of the price per
share in the transaction that created such shares of Excess Stock (or,
in the case of a gift or devise, the Market Price per share on the
date of such purported transfer) less the amount of any distributions
received by the Purported Record Transferee or purported record holder
of the shares and not repaid or offset against future distributions
pursuant to Section 7.2.2. Any remaining amounts shall be distributed
to the Charitable Beneficiary.
Section 7.2.4 Voting Rights. Subject to Maryland law, effective as of
the date that Capital Stock is converted into Excess Stock pursuant to
Section 7.1.3, the holders of Capital Stock that has been converted into
Excess Stock shall not be entitled to vote such Capital Stock on any
matter, and, if such Capital Stock has voting rights, all votes cast with
respect to shares of Excess Stock into which such Capital Stock has been
converted shall be voted in accordance with the direction of the Trustee of
the Trust acting for the exclusive benefit of the Charitable Beneficiary.
Any vote taken with respect to shares of Capital Stock prior to the
discovery by the Corporation that the shares have been converted into
Excess Stock shall, subject to applicable law, be rescinded and be void ab
initio and be recast by the Trustee, in its sole and absolute discretion,
provided that if the Corporation has already taken irreversible corporate
action based on such vote, then the Trustee shall not have the authority to
rescind and recast such vote. The Purported Record Transferee or purported
record holder of the shares shall be deemed to have given, as of the date
of the conversion of such shares into shares of Excess Stock pursuant to
Section 7.1.3, an irrevocable proxy to the Trustee to vote the shares of
Excess Stock in the manner in which the Trustee, in its sole and absolute
discretion, desires.
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Section 7.2.5 Sales of Excess Stock.
(a) Excess Stock shall not be transferable. However, for purposes
of sales by the Trustee as set forth herein, the Trustee shall
designate a permitted transferee of the shares of Capital Stock
represented by such Excess Stock provided that the transferee (i)
purchases such shares for valuable consideration and (ii) acquires
such shares without such acquisition resulting in a violation of
Section 7.1.1 or another automatic conversion of shares of Capital
Stock into Excess Stock. If the Corporation does not purchase the
Excess Stock, the Trustee shall (i) sell that number of shares
represented by such Excess Stock to the permitted transferee, (ii)
cause to be recorded on the books of the Corporation that the
permitted transferee is the holder of record of such number of shares
and (iii) cause the Excess Stock to be cancelled.
(b) In the event of a sale by the Trustee of the shares
represented by such Excess Stock, the Purported Record Transferee or
purported record holder of such shares shall receive from the Trustee
a per share price equal to the lesser of (i) the price per share in
the transaction that created such Excess Stock (or, in the case of a
gift or devise, the Market Price per share on the date of such
purported transfer) and (ii) the price per share received by the
Trustee, provided that such price per share shall be net of any
commissions and other expenses of the sale. The proceeds shall be sent
to such Person within five Business Days after the closing of such
sale transaction.
(c) All Excess Stock will be deemed to have been offered for sale
to the Corporation, or its designee, and the Corporation will have the
right to accept such offer for a period of 20 days after the later of
(i) the date of the purported Transfer or acquisition or change in the
capital structure of the Corporation or other event which resulted in
such Excess Stock and (ii) the date the Corporation determines in good
faith that a purported Transfer or acquisition or change in the
capital structure of the Corporation or other event resulting in such
Excess Stock occurred, if the Corporation does not receive a notice
pursuant to Section 7.1.4. If the Corporation accepts the offer to
purchase such Excess Stock, the purchase price per share shall be
equal to the lesser of (i) the price per share in the transaction that
created such Excess Stock (or, in the case of a gift or devise, the
Market Price per share on the date of such purported transfer) and
(ii) the Market Price on the date the Corporation or its designee,
accepts such offer.
(d) Any amounts received by the Trustee in excess of the amounts
paid to the Purported Record Transferee or purported record holder of
the shares shall be distributed to the Charitable Beneficiary.
Section 7.2.6 Authorization. At such time as the Board of Directors
authorizes a class or series of Common or Preferred Stock pursuant to
Section 6.2.1 or 6.3, there shall be automatically authorized a series of
Excess Stock consisting of the number of shares included in the class or
series of Common or Preferred Stock and having preferences, rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption identical thereto,
except to the extent that this Article 7
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requires different terms. In such event, any appropriate correlative
modification in all defined terms shall be deemed to have been made.
Section 7.3 Settlement. Nothing in this Article 7 shall be interpreted to
preclude the settlement of any transaction entered into through the facilities
of the AMEX. The fact that the settlement of any transaction occurs shall not
negate the effect of any provisions of this Article 7, and any transferee in
such a transaction shall be subject to all of the provisions and limitations of
this Article.
ARTICLE 8
AMENDMENTS
The Corporation reserves the right from time to time to make any amendment
to the Charter, now or hereafter authorized by law, including any amendment
altering the terms or contract rights, as expressly set forth in the Charter, of
any shares of outstanding stock. All rights and powers conferred by the Charter
on stockholders, directors and officers are granted subject to this reservation.
ARTICLE 9
LIMITATION OF LIABILITY
To the maximum extent that Maryland law in effect from time to time permits
limitation of the liability of directors and officers of a corporation, no
director or officer of the Corporation shall be liable to the Corporation or its
stockholders for money damages. Neither the amendment nor repeal of this Article
9, nor the adoption or amendment of any other provision of the Charter or Bylaws
inconsistent with this Article 9, shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.
ARTICLE 10
GOVERNING LAW
This Charter shall be governed in accordance with the laws of the State of
Maryland.
ARTICLE 11
DEFINITIONS
As used in this Charter, the following terms shall have the meanings
indicated:
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"Affiliate" of a person shall mean a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified.
"AMEX" shall mean The American Stock Exchange, Inc.
"Beneficial Ownership" shall mean, with respect to any Person, ownership of
shares of a class of Common Stock or a series of Preferred Stock equal to the
sum of (i) the number of shares of such class of Common Stock or such series of
Preferred Stock directly owned by such Person and (ii) the number of shares of
such class of Common Stock or such series of Preferred Stock indirectly owned by
such Person, taking into account the constructive ownership rules of section 544
of the Code, as modified by section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns," "Beneficially Own" and "Beneficially
Owned" shall have the correlative meanings.
"Board of Directors" shall mean the Board of Directors of the Corporation
or any committee authorized by such Board of Directors to perform any of its
responsibilities as permitted by law.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York, New
York or Boston, Massachusetts are authorized or required by law, regulation or
executive order to close.
"Bylaws" shall mean the bylaws of the Corporation.
"Call Date" has the meaning given it in Section 6.7.4.
"Capital Stock" shall mean all classes or series of stock of the
Corporation, including, without limitation, Common Stock and Preferred Stock.
"Charitable Beneficiary" shall mean the beneficiary of the Trust as
determined pursuant to Section 7.2.1.
"Charter" shall mean the charter of the Corporation, as that term is
defined in the MGCL.
"Class A Common Stock" has the meaning given it in Section 6.1.
"Class B Common Stock" has the meaning given it in Section 6.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time or any successor statute thereto. Reference to any provision of the Code
shall mean such provision as in effect from time to time, as the same may be
amended, and any successor provision thereto, as interpreted by any applicable
regulations or other administrative pronouncements as in effect from time to
time.
"Common Stock" has the meaning given it in Section 6.1.
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"Constructive Ownership" shall mean, with respect to any Person, ownership
of shares of Capital Stock equal to the sum of (i) the number of shares of
Capital Stock directly owned by such Person and (ii) the number of shares of
Capital Stock indirectly owned by such Person, taking into account the
constructive ownership rules of section 318 of the Code, as modified by section
856(d)(5) of the Code. The terms "Constructive Owner," "Constructively Owns,"
"Constructively Own" and "Constructively Owned" shall have the correlative
meanings.
"Corporation" shall mean Berkshire Income Realty, Inc., a Maryland
corporation, and any successor entity.
"Cumulative Dividends" shall mean all accumulated, accrued and unpaid
dividends.
"Dividend Payment Date" has the meaning given it in Section 6.7.2.
"Dividend Record Date" has the meaning given it in Section 6.7.2.
"Excess Class A Common Stock" shall mean Excess Stock into
which, under Section 7.1.3, Class A Common Stock would automatically convert
upon a Transfer of Class A Common Stock in violation of Section 7.1.1.
"Excess Class B Common Stock" shall mean Excess Stock into which, under
Section 7.1.3, Class B Common Stock would automatically convert upon a Transfer
of Class B Common Stock in violation of Section 7.1.1.
"Excess Series A Preferred Stock" shall mean Excess Stock into which, under
Section 7.1.3, Series A Preferred Stock would automatically convert upon a
Transfer of Series A Preferred Stock in violation of Section 7.1.1.
"Excess Stock" has the meaning given it in Section 6.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Percentage" shall mean, with respect to the outstanding shares of
Series A Preferred Stock, that percentage equal to (i) the number of shares of
Series A Preferred Stock received by Berkshire Mortgage Advisors Limited
Partnership on the Issue Date in exchange for the tender of the 10,000 shares of
beneficial interest of each of Krupp Government Income Trust and Krupp
Government Income Trust II owned by it immediately prior to the Issue Date,
divided by (ii) the total number of shares of Series A Preferred Stock
outstanding on the Issue Date.
"Initial Class B Holder" shall mean KRF Company, L.L.C., a Delaware limited
liability company.
"Initial Class B Parties" shall mean the Initial Class B Holder, the KRF
Individuals and the KRF Related Parties.
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"Investment Company Act Event" shall mean that the Corporation has received
an opinion of nationally recognized independent counsel experienced in practice
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"), that because of the occurrence of a change in law or regulation or a
change in interpretation or application of law or regulation by a legislative
body, court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Corporation is or will be considered an "investment
company" that is required to be registered under the Investment Company Act,
which change in law became effective after the Issue Date.
"IRS" shall mean the Internal Revenue Service.
"Issue Date" shall mean the first date on which the Series A Preferred
Stock is issued in exchange for interests tendered pursuant to the exchange
offers described in the Corporation's prospectus, dated January 9, 2003,
relating to the Series A Preferred Stock.
"Junior Stock" has the meaning given it in Section 6.7.6.
"KRF Individual" shall mean each individual (as such term is defined
pursuant to section 542(a)(2) of the Code) who Beneficially Owns any shares of
Capital Stock owned by the Initial Class B Holder.
"KRF Related Party" shall mean each Person, other than the Initial Class B
Holder and each KRF Individual, whose Beneficial Ownership of shares of Capital
Stock causes the number of shares of Capital Stock Beneficially Owned by any KRF
Individual to increase.
"Market Price" on any date shall mean the Closing Price on the Trading Day
immediately preceding such date. The "Closing Price" on any date shall mean the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the AMEX or, if the applicable
class or series of Capital Stock is not listed or admitted to trading on the
AMEX, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the applicable class or series of Capital Stock is listed or admitted
to trading or, if the applicable class or series of Capital Stock is not listed
or admitted to trading on any national securities exchange, the last quoted
price, or if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use, or if the applicable class or series of Capital Stock is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the applicable class
or series of Capital Stock selected by the Board of Directors, or if no such
market maker exists, as determined in good faith by the Board of Directors.
"MGCL" shall mean the Maryland General Corporation Law, as amended from
time to time.
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"Operating Partnership" shall mean Berkshire Income Realty-OP, L.P., a
Delaware limited partnership.
"Operating Partnership Agreement" shall mean the agreement of limited
partnership of the Operating Partnership, dated as of July 22, 2002, as such
agreement has been or in the future may be amended, modified or restated from
time to time. A copy of the Operating Partnership Agreement shall be available
for inspection at the office of the Secretary at the corporate headquarters of
the Corporation.
"Ownership Limit" shall mean, (i) for any Person other than the Initial
Class B Parties, 4.9% of the number of the outstanding shares of any class or
series of Capital Stock and (ii) for the Initial Class B Parties, (A) 100% of
the number of the outstanding shares of Class B Common Stock and (B) that
percentage of the number of the outstanding shares of Series A Preferred Stock
equal to the Exchange Percentage.
"Parity Stock" has the meaning given it in Section 6.7.6.
"Person" shall mean (a) an individual, corporation, partnership, estate,
trust (including a trust qualified under section 401(a) or 501(c)(17) of the
Code), a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in section 642(c) of the Code, association, private
foundation within the meaning of section 509(a) of the Code, joint stock company
or other entity and (b) also includes a group as that term is used for purposes
of Section 13(d)(3) of the Exchange Act.
"Preferred Stock" has the meaning given it in Section 6.1.
"Purported Beneficial Transferee" shall mean, with respect to any purported
Transfer of shares of Capital Stock or other event which results in Excess
Stock, the purported beneficial transferee for whom the Purported Record
Transferee would have acquired shares of Capital Stock, if such Transfer or
other event had not resulted in a conversion of any such shares of Capital Stock
into such Excess Stock pursuant to Section 7.1.3 (or in the event the provisions
of paragraphs (b)-(e) of Section 7.1.1 are in effect, had been valid under
Section 7.1.1.) The Purported Beneficial Transferee and the Purported Record
Transferee may be the same Person.
"Purported Record Transferee" shall mean, with respect to any purported
Transfer of shares of Capital Stock or other event which results in Excess
Stock, the Person that would have been the record holder of the shares of
Capital Stock if such Transfer or other event had not resulted in a conversion
of any such shares of Capital Stock into such Excess Stock pursuant to Section
7.1.3 (or in the event the provisions of paragraphs (b)-(e) of Section 7.1.1 are
in effect, had been valid under Section 7.1.1.)
"REIT" shall mean a real estate investment trust within the meaning of the
Code.
"Redemption Price" has the meaning given it in Section 6.7.4.
29
"Restriction Termination Date" shall mean the first day after the Issue
Date on which the Board of Directors determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify as a REIT.
"Senior Stock" has the meaning given it in Section 6.7.6.
"Series A Preferred Stock" has the meaning given it in Section 6.7.1.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to an
authorization of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of stock of the
Corporation.
"Subsidiary" has the meaning given it in Section 7.1.1(e).
"Successor Securities" shall mean any securities that the Series A
Preferred Stock has been substituted for pursuant to an event described in
Section 6.7.7(d).
"Tax Event" means that the Corporation has received an opinion of
nationally recognized independent tax counsel experienced in such matters that
there is more than an insubstantial risk that the Corporation does not qualify,
or within 90 days of the date of such opinion would no longer qualify, as a REIT
under the Code for any reason whatsoever, provided, however, that a Tax Event
will not include the voluntary election by the Board of Directors to terminate
the Corporation's status as a REIT for federal income tax purposes.
"Trading Day" shall mean a day on which the principal national securities
exchange on which the applicable class or series of Capital Stock is listed or
admitted to trading is open for the transaction of business or, if the
applicable class or series of Capital Stock is not listed or admitted to trading
on any national securities exchange, shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Transfer" shall mean any issuance, sale, transfer, gift, assignment,
devise or other disposition of a direct or indirect interest in a share of
Capital Stock (including without limitation (i) the granting of any option
(including, but not limited to, an option to acquire an option or any series of
such options) or entering into any agreement for the sale, transfer or other
disposition of Capital Stock or the right to vote or receive dividends on
Capital Stock or (ii) the issuance, sale, transfer, assignment or other
disposition of any securities or rights convertible into or exchangeable for
Capital Stock), whether voluntary or involuntary, whether of record,
constructively or beneficially, and whether by operation of law or otherwise
(including, but not limited to, any transfer of an interest in other entities
which results in a change in the Beneficial Ownership or Constructive Ownership
of shares of Capital Stock). The terms "Transfers" and "Transferred" shall have
correlative meaning.
"Trust" shall mean the applicable trust created pursuant to Section 7.2.1.
30
"Trustee" shall mean the trustee for the Trust, and any successor trustee
in each case appointed by the Corporation, meeting the requirements of Section
7.2.1.
THIRD: The amendment to and restatement of the Charter as herein above set
forth have been duly advised by the Board of Directors and approved by the
stockholders of the Corporation as required by law.
FOURTH: The current address of the principal office of the Corporation is
as set forth in Article 4 of the foregoing amendment and restatement of the
Charter.
FIFTH: The name and address of the Corporation's current resident agent is
as set forth in Article 4 of the foregoing amendment and restatement of the
Charter.
SIXTH: The number of directors of the Corporation and the names of those
currently in office are as set forth in Article 5 of the foregoing amendment and
restatement of the Charter.
SEVENTH: The total number of shares of stock which the Corporation had
authority to issue immediately prior to this amendment and restatement was
100,000 shares of Common Stock, $.01 par value, all of one class. The aggregate
par value of all shares of stock having par value was $1,000.
EIGHTH: The total number of shares of stock which the Corporation has
authority to issue pursuant to the foregoing amendment and restatement of the
charter is 30,000,000, consisting of 10,000,000 shares of Common Stock, $.01 par
value per share, of which 5,000,000 shares are designated as Class A Common
Stock and 5,000,000 shares are designated as Class B Common Stock; 5,000,000
shares of Preferred Stock, $.01 par value per share, of which 5,000,000 shares
are designated as 9% Series A Cumulative Redeemable Preferred Stock; and
15,000,000 shares of Excess Stock, of which 5,000,000 shares are designated as
Excess Class A Common Stock, 5,000,000 shares are designated as Excess Class B
Common Stock and 5,000,000 shares are designated as Excess Series A Preferred
Stock. The aggregate par value of all authorized shares of stock having par
value is $300,000.
NINTH: The undersigned President acknowledges these Articles of Amendment
and Restatement to be the corporate act of the Corporation and as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
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IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
and Restatement to be signed in its name and on its behalf by its President and
attested to by its Secretary on this 3rd day of April, 2003.
ATTEST: BERKSHIRE INCOME REALTY, INC.
/s/ Scott D. Spelfogel By: /s/ David C. Quade
- -------------------------------- -----------------------------------
Scott D. Spelfogel, Secretary Name: David C. Quade
Title: President
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