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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 2, 1998
COMMISSION FILE NUMBER: 1-6828
STARWOOD HOTELS & RESORTS
TRUST
(Exact name of registrant as specified in its charter)
MARYLAND
(State or other jurisdiction
of incorporation or organization)
52-0901263
(I.R.S. employer identification no.)
2231 EAST CAMELBACK ROAD., SUITE 410
PHOENIX, ARIZONA 85016
(Address of principal executive
offices, including zip code)
(602) 852-3900
(Registrant's telephone number, including area code)
COMMISSION FILE NUMBER: 1-7959
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
MARYLAND
(State or other jurisdiction
of incorporation or organization)
52-1193298
(I.R.S. employer identification no.)
2231 EAST CAMELBACK ROAD, SUITE 400
PHOENIX, ARIZONA 85016
(Address of principal executive
offices, including zip code)
(602) 852-3900
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 2, 1998, Starwood Hotels & Resorts Trust, formerly named
Starwood Lodging Trust (the "Trust"), and Starwood Hotels & Resorts Worldwide,
Inc., formerly named Starwood Lodging Corporation (the "Corporation" and,
together with the Trust, the "Company"), closed the transactions contemplated
by the Transaction Agreement dated as of September 8, 1997 (the "Transaction
Agreement") among WHWE L.L.C. ("WHWE"), Woodstar Investor Partnership
("Woodstar"), Nomura Asset Capital Corporation ("Nomura"), Juergen Bartels
("Bartels" and, together with WHWE, Woodstar and Nomura, the "Members"), Westin
Hotels & Resorts Worldwide, Inc. ("Westin Worldwide"), W&S Lauderdale Corp.
("Lauderdale"), W&S Seattle Corp. ("Seattle"), Westin St. John Hotel Company,
Inc. ("St. John"), W&S Denver Corp. ("Denver"), W&S Atlanta Corp. ("Atlanta"
and, together with Westin Worldwide, Lauderdale, Seattle, St. John and Denver,
"Westin"), W&S Hotel L.L.C. ("W&S LLC" and, together with Westin, the "Westin
Companies"), the Trust, SLT Realty Limited Partnership (the "Realty
Partnership"), the Corporation and SLC Operating Limited Partnership (the
"Operating Partnership" and, together with the Trust, the Realty Partnership
and the Corporation, the "Starwood Companies").
Pursuant to the terms of the Transaction Agreement, Westin Worldwide
merged into the Trust (the "Merger"). In connection with the Merger, all of
the issued and outstanding shares of capital stock of Westin Worldwide (other
than dissenting shares and shares held by Westin and its subsidiaries or held
by the Starwood Companies and their subsidiaries) were converted into an
aggregate of 6,285,783 Class A Exchangeable Preferred Shares, par value $.01
per share (the "Class A EPS"), of the Trust and 5,294,783 Class B Exchangeable
Preferred Shares, liquidation value $38.50 per share (the "Class B EPS"), of
the Trust and cash in the amount of $177.9 million.
The Company borrowed the cash portion of the consideration under a $2.265
billion credit facility which was co-arranged by Bankers Trust Company and
The Chase Manhattan Bank, and co-syndicated by Bank of Montreal (acting through
its Chicago Branch) and Nationsbank, N.A.
Pursuant to the Transaction Agreement, the stockholders of Lauderdale,
Seattle and Denver contributed all of the outstanding shares of such companies
to the Realty Partnership. In exchange for such contribution and after giving
effect to the deemed exchange of certain units, the Realty Partnership issued
to such stockholders an aggregate of 470,309 units of the Realty Partnership
and the Trust issued to such stockholders an aggregate of 127,534 shares of
Class B EPS. In addition, in connection with the foregoing share contribution,
the Realty Partnership assumed, repaid or refinanced the indebtedness of
Lauderdale, Seattle and Denver and assumed $84.2 million of indebtedness
incurred by the Members prior to such contributions.
Pursuant to the Transaction Agreement, the stockholders of Atlanta and St.
John contributed all of the outstanding shares of such companies to the
Operating Partnership. In exchange for such contribution and after giving
effect to the deemed exchange of certain units, the Operating Partnership
issued to such stockholders an aggregate of 312,741 units of the Operating
Partnership and the Trust issued to such stockholders an aggregate of 80,415
shares of Class B EPS. In addition, in connection with the foregoing share
contributions, the Operating Partnership assumed, repaid or refinanced
indebtedness of Atlanta and St. John and assumed $3.4 million of indebtedness
incurred by the Members prior to such contributions.
The Class A EPS, Class B EPS and partnership units issued in connection
with the Merger and the contribution of Seattle, Lauderdale, Denver, St. John
and Atlanta to the Realty Partnership and the Operating Partnership provide the
holders thereof with substantially the same economics as and are exchangeable
on a one-for-one basis (subject to certain adjustments) for, the paired shares
of the Trust and the Corporation.
In addition, the shares of Class B EPS issued in the transactions
contemplated by the Transaction Agreement provide a liquidation preference
of $38.50 and provide the holders with the right, from and after the fifth
anniversary of the Closing Date, to require the Trust to redeem such shares of
Class B EPS at a price of $38.50. The partnership units are also exchangeable
on a one-for-one basis for shares of Class B EPS.
For more information concerning these transactions, including a discussion
of the nature of the relationships between stockholders of the Westin Companies
and directors and officers of the Company, see the Company's Joint Proxy
Statement dated November 12, 1997.
Effective with the effective time of the Merger, Stuart M. Rothenberg,
Managing Director in the Real Estate Principal Investment Area of Goldman,
Sachs & Co. ("Goldman Sachs"), became a Trustee of the Trust, and Juergen
Bartels, Chairman and Chief Executive Officer of Westin Hotel Company, and
Barry S. Volpert, Managing Director in the Principal Investment Area of Goldman
Sachs, became directors of the Corporation.
ITEM 5. OTHER EVENTS
On December 18, 1997, the Corporation announced that it had reached a
binding agreement with VNU, a leading international publishing and information
company based in The Netherlands, for the disposition of ITT World Directories,
Inc. ("World Directories"), currently a wholly-owned subsidiary of ITT
Corporation ("ITT"), for a total consideration to the Corporation valued at
$2.1 billion. The transaction is scheduled to close following the special
meeting of the stockholders of ITT at which the stockholders will consider and
vote upon a proposal to approve and adopt the Amended and Restated Agreement
and Plan of Merger dated as of November 12, 1997 (the "Merger Agreement") among
the Corporation, a subsidiary of the Corporation, the Trust and ITT, and prior
to the effective time of the merger (the "Merger") of such subsidiary of the
Corporation into ITT as contemplated by the Merger Agreement and is contingent
upon certain customary closing conditions. The proceeds from the sale of World
Directories will be used in part to purchase outstanding indebtedness of the
Company or ITT. On January 13, 1998, ITT's Board of Directors authorized ITT
to become a party to, and to close, the VNU transaction prior to the effective
time of the Merger, subject to the approval of the Merger by the stockholders
of ITT and the Company and appropriate documentation.
The terms of the transaction are set forth in a Reorganization Agreement
dated as of December 18, 1997 (the "Reorganization Agreement") among the
Corporation, WD Parent, Inc. ("WD Parent"), WD Acquisition Corp. ("WD
Acquisition"), Noterizon B.V. ("Noterizon") and VNU International B.V. ("VNU").
The Reorganization Agreement contemplates that at the effective time, WD
Acquisition will be merged with and into World Directories (the
"Reorganization"), with World Directories surviving (the "Surviving
Corporation"). After giving effect to the transactions contemplated by the
Reorganization Agreement, VNU, directly or through one or more subsidiaries,
will own 100% of the Surviving Corporation's common stock (the "Surviving
Corporation Common") and 100% of the Surviving Corporation's Class B preferred
stock (the "Surviving Corporation Class B Preferred"). After giving effect to
the transactions contemplated by the Reorganization Agreement, ITT will own
100% of WD Parent's common stock (the "WD Parent Common") and VNU, directly or
through one or more subsidiaries, will own WD Parent's preferred stock with a
liquidation value of approximately $50 million, a 6% cumulative compounding
dividend rate, redemption of 10% of the liquidation value (plus unpaid
dividends thereon) on each of the first five anniversaries of the
Reorganization and redemption in full on the tenth anniversary of the
Reorganization, and priority over all other classes of WD Parent equity (the
"WD Parent Preferred"). After giving effect to the transactions contemplated by
the Reorganization Agreement, WD Parent's only assets will consist of 100% of
the membership interests in a newly-formed limited liability company (the
"LLC") and the Surviving Corporation's class A preferred stock with a
liquidation value of approximately $50 million, a 6% cumulative compounding
dividend rate and redemption in full on the tenth anniversary of the
Reorganization (the "Surviving Corporation Class A Preferred") (collectively,
the "WD Parent Assets").
WD Parent shall be governed by a board consisting of five directors,
four of whom shall be designated by the holders of the WD Parent Preferred and
one of whom shall be designated by the holders of the WD Parent Common.
Unanimous board approval shall be required for any early redemption of WD
Parent Preferred other than in connection with a reduction of more than
one-third of VNU's direct or indirect equity interest in the Surviving
Corporation, as well as for entry into any investment, trade or other activity
other than owning, holding, disposing or distributing the WD Parent Assets.
After giving effect to the transactions contemplated by the Reorganization
Agreement, the LLC's only assets will be approximately $2 billion in the form
of indebtedness for borrowed money owed by ITT, the Corporation or their
respective affiliates and cash. ITT or an affiliate thereof shall be the sole
manager of the LLC. After giving effect to the transactions contemplated by the
Reorganization Agreement, VNU will, directly or indirectly, have voting control
over the Surviving Corporation and WD Parent, while ITT will, directly or
indirectly, control the LLC and its assets through its direct or indirect role
as the LLC's manager and its ownership of WD Parent Common (which effectively
entitles ITT to the economic benefits of WD Parent's membership interest in the
LLC).
Pursuant to the terms of the Reorganization Agreement, if the Corporation
requests an extension of the closing beyond February 16, 1997, the risk of
currency fluctuations between the U.S. dollar and the Dutch guilder will
shift to the Corporation.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses to be Acquired. Previously
filed. See the Company's Joint Proxy Statement dated November
12, 1997.
(b) Pro Forma Financial Information. Previously filed. See the
Company's Joint Current Report on Form 8-K dated November 12,
1997 (as amended by the Form 8-K/A dated December 18, 1997 and
the Form 8-K/A dated January 7, 1998).
EXHIBITS.
2 Transaction Agreement dated as of September 8, 1997 among WHWE
L.L.C., Woodstar Investor Partnership, Nomura Asset Capital
Corporation, Juergen Bartels, Westin Hotels & Resorts Worldwide,
Inc., W&S Lauderdale Corp., W&S Seattle Corp., Westin St. John
Hotel Company, Inc., W&S Denver Corp., W&S Atlanta Corp., W&S
Hotel L.L.C., Starwood Lodging Trust, SLT Realty Limited
Partnership, Starwood Lodging Corporation and SLC Operating
Limited Partnership (incorporated by reference to Exhibit 2 to
the Company's Joint Current Report on Form 8-K dated September 9,
1997).
4 Articles of Merger between Starwood Lodging Trust and Westin
Hotels & Resorts Worldwide, Inc., which include articles
supplementary classifying and designating the Class A
Exchangeable Preferred Shares and the Class B Exchangeable
Preferred Shares of the Trust.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STARWOOD HOTELS & RESORTS TRUST STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
By: /s/ Ronald C. Brown By: /s/ Alan M. Schnaid
--------------------------- ----------------------------------------
Ronald C. Brown Alan M. Schnaid
Senior Vice President and Vice President and Corporate Controller
Chief Financial Officer Principal Accounting Officer
Date: January 15, 1998
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EXHIBIT 4
ARTICLES OF MERGER
BETWEEN
STARWOOD LODGING TRUST
(a Maryland real estate investment trust)
AND
WESTIN HOTELS & RESORTS WORLDWIDE, INC.
(a Delaware corporation)
Starwood Lodging Trust, a real estate investment trust duly formed
and existing under the laws of the State of Maryland ("Starwood"), and Westin
Hotels & Resorts Worldwide, Inc., a corporation duly organized and existing
under the laws of the State of Delaware ("Westin"), do hereby certify that:
FIRST: Starwood and Westin agree to merge.
SECOND: The name and place of organization of each party to these
Articles are Starwood Lodging Trust, a Maryland real estate investment trust,
and Westin Hotels & Resorts Worldwide, Inc., a Delaware corporation. Starwood
shall survive the merger and shall continue under the name "Starwood Hotels &
Resorts Trust" as a real estate investment trust of the State of Maryland.
THIRD: Starwood has its principal office in Maryland in Baltimore
City. Westin has its principal office in Seattle, Washington and owns no
interest in land in Maryland. Westin was incorporated on May 9, 1995 under the
general laws of the State of Delaware. Westin has not applied to do business in
Maryland.
FOURTH: The terms and conditions of the transaction set forth in
these Articles were advised, authorized, and approved by each entity party to
the Articles in the manner and by the vote required by its certificate of
incorporation or declaration of trust, as the case may be, and the laws of the
state of its organization. The manner of approval was as follows:
(a) The Board of Trustees of Starwood at a meeting held on
September 7, 1997, and the Board of Directors of Westin by written consent dated
September 8, 1997, adopted resolutions which declared that the proposed merger
was advisable on substantially the terms and conditions set forth or referred to
in the resolutions. The Board of Trustees of Starwood directed that the proposed
merger be submitted for consideration at a meeting of the shareholders of
Starwood. The Board of Directors of Westin directed that the proposed merger be
submitted for consideration by the stockholders of Westin.
(b) Notice which stated that the purpose of the meeting was to act
on the proposed merger was given by Starwood as required by law. Prompt notice
of approval of the merger was given to those stockholders of Westin that did not
sign a written consent as required by law.
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(c) The proposed merger was approved by the shareholders of
Starwood at the annual meeting of shareholders held December 12, 1997, by the
affirmative vote of a majority of all the votes entitled to be cast on the
matter. The proposed merger was approved by the stockholders of Westin by
written consent of holders of at least a majority of the shares of stock
entitled to vote on the matter, dated September 8, 1997.
FIFTH: The following amendments to the Declaration of Trust of
Starwood are to be effected as a part of the merger:
Article 1.1 of the Declaration of Trust of Starwood will be
replaced in its entirety with the following provision:
1.1 Name. The name of the Trust shall be "Starwood Hotels &
Resorts Trust." As far as practicable and except as otherwise provided
in this Declaration, the Trustees shall conduct the Trust's activities,
execute all documents, and sue or be sued in the name of Starwood
Hotels & Resorts Trust, or in their names as Trustees of Starwood
Hotels & Resorts Trust.
Article 6.1 of the Declaration of Trust of Starwood will be
replaced in its entirety with the following provision:
6.1 Shares. The units into which the beneficial interests in
the Trust will be divided shall be designated as Shares consisting of
(a) 200,000,000 Trust Shares with a par value of $0.01 per share and
having equal dividend, distribution, liquidation and other rights but
without preference, pre-emptive, appraisal, conversion or exchange
rights of any kind, (b) 40,000,000 Excess Trust Shares with a par value
of $0.01 per share and having the rights provided in Article VI hereof
and (c) 10,000,000 Excess Preferred Shares with a par value of $0.01
per share and having the rights provided in Article VI hereof;
provided, however, that the Trustees may, in their discretion, create
and authorize the issuance of Shares of Beneficial Interest evidencing
units of beneficial interest in the Trust of one or more additional
classes, or one or more series within any such class, with or without
par value, having such voting rights, such rights to dividends,
distributions and in liquidation, such conversion, exchange and
redemption rights, and such designations, preferences, participation,
and other limitations or restrictions, as shall not be prohibited by
this Declaration or the Real Estate Investment Trust provisions of the
Internal Revenue Code or the laws of the State of Maryland and as shall
be specified by the Trustees in their discretion in a resolution or
resolutions duly adopted by the Trustees and recorded within the State
of Maryland in such public offices as this Declaration and amendments
shall have been recorded in accordance with Section 9.8 of this
Declaration. As used herein, the term "Shares" shall mean and include
(i) the Trust Shares, Excess Trust Shares and Excess Preferred Shares,
and (ii) from and after the issuance of Shares of any other and
additional classes of Shares of Beneficial Interest so
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created and authorized by the Trustees, such Shares of Beneficial
Interest. The certificates evidencing the Shares shall be in such form
and signed (manually or by facsimile) on behalf of the Trust in such
manner as the Trustees may from time to time prescribe or as may be
prescribed in the Trustees' Regulations. The certificates shall be
negotiable and title thereto and to the Shares represented thereby
shall be transferred by assignment and delivery thereof to the same
extent and in all respects as a share certificate of a Maryland
corporation. There shall be no more than 305,000,000 Shares issued. The
Shares may be issued for such consideration as the Trustees shall
determine or by way of share dividend or share split in the discretion
of the Trustees. Shares reacquired by the Trust shall no longer be
deemed outstanding and shall have no voting or other rights unless and
until reissued. Shares reacquired by the Trust may be cancelled and
restored to the status of authorized and unissued Shares by action of
the Trustees. All Shares shall be fully paid and non-assessable by or
on behalf of the Trust upon receipt of full consideration for which
they have been issued or without additional consideration if issued by
way of share dividend or share split.
Articles 6.15 and 6.16 set forth as part of Exhibit A will be made a
part of the Declaration of Trust of Starwood immediately following Article 6.14.
SIXTH: (a) The total number of shares of beneficial interest of all
classes which Starwood has authority to issue is 135,000,000 shares, of which
100,000,000 shares are Trust Shares (par value $0.01 per share), 20,000,000
shares are Excess Trust Shares (par value $0.01 per share) and 5,000,000 shares
are Excess Preferred Shares (par value $0.01 per share). The aggregate par value
of all the shares of beneficial interest of all classes of Starwood is
$1,250,000.
(b) The total number of shares of stock of all classes which Westin
has authority to issue is 10,000,000 shares, of which 987,931.4 shares are Class
A Common Stock (par value $.00165 per share) and 9,012,068.6 shares are Class B
Common Stock (par value $.00165 per share). The aggregate par value of all the
shares of stock of all classes of Westin is $16,500.
SEVENTH: The merger increases the authorized shares of beneficial
interest of Starwood in the following manner:
(a) Immediately before the merger, the total number of shares of
beneficial interest of all classes which Starwood has authority to issue is
135,000,000 shares, of which 100,000,000 shares are Trust Shares (par value
$0.01 per share), 20,000,000 shares are Excess Trust Shares (par value $0.01 per
share) and 5,000,000 shares are Excess Preferred Shares (par value $0.01 per
share). The aggregate par value of all the shares of beneficial interest of all
classes of Starwood is $1,250,000.
(b) As changed by the merger, the total number of shares of
beneficial interest of all classes which Starwood will have authority to issue
is 305,000,000 shares, of which 200,000,000
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shares are Trust Shares (par value $0.01 per share), 40,000,000 shares are
Excess Trust Shares (par value $0.01 per share), 10,000,000 shares are Excess
Preferred Shares (par value $0.01 per share), 30,000,000 shares are Class A
Exchangeable Preferred Shares ($0.01 par value per share) and 15,000,000 shares
are Class B Exchangeable Preferred Shares ($0.01 par value per share). The
aggregate par value of all the shares of beneficial interest of all classes of
Starwood will be $2,950,000.
EIGHTH: The manner and basis of converting or exchanging issued
shares of stock of Westin into shares of beneficial interest of Starwood or
other consideration and the treatment of any issued stock of Westin and shares
of beneficial interest of Starwood not to be converted or exchanged are as
follows:
(a) Each issued and outstanding share of beneficial interest of
Starwood as of the effective time shall continue, without change, to be an
issued and outstanding share of beneficial interest of Starwood.
(b) Each issued and outstanding share of Common Stock of Westin on
the effective time of the merger, other than shares held by Westin or its
subsidiaries or Starwood, Starwood Lodging Corporation or any of their
subsidiaries, shall upon the effective time and without further act, be
converted into, and become exchangeable for, (i) a pro rata portion of 6,285,783
shares of Class A Exchangeable Preferred Shares, (ii) a pro rata portion of
5,294,783 shares of Class B Exchangeable Preferred Shares and (iii) a pro rata
portion of $177,900,000 in cash, in each case subject to adjustment, all as
provided in the Transaction Agreement dated as of September 8, 1997 (the
"Transaction Agreement") by and among Starwood, Starwood Lodging Corporation,
Westin, WHWE L.L.C., Woodstar Investor Partnership, Nomura Asset Capital
Corporation, Juergen Bartels, W&S Hotel L.L.C., W&S Lauderdale Corp., W&S
Seattle Corp., Westin St. John Hotel Company, Inc., W&S Denver Corp., W&S
Atlanta Corp., SLT Realty Limited Partnership, and SLC Operating Limited
Partnership. Any issued and outstanding shares of the Common Stock of Westin
held as of the effective time of the merger by Westin or its subsidiaries or
Starwood, Starwood Lodging Corporation or any of their subsidiaries shall be
cancelled.
(c) As soon as practicable following the effective time of the
merger, each holder of issued and outstanding shares of Common Stock of Westin
shall be entitled to surrender the certificates representing the shares of
Common Stock of Westin held by such holder immediately prior to effective time
of the merger, and, upon such surrender, shall be entitled to receive in
exchange therefor cash and/or a certificate or certificates evidencing the
number of shares of Class A Exchangeable Preferred Shares and Class B
Exchangeable Preferred Shares deliverable in respect thereof.
NINTH: The merger shall become effective upon the later of (i) the
acceptance for record by the State Department of Assessments and Taxation of
Maryland of these Articles of Merger and (ii) acceptance for filing of the
Agreement and Plan of Merger by the Secretary of State of the State of Delaware.
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IN WITNESS WHEREOF, Starwood Lodging Trust and Westin Hotels &
Resorts Worldwide, Inc. have caused these presents to be signed in their
respective names and on their respective behalves by their respective presidents
or vice presidents and witnessed by their respective secretaries or assistant
secretaries on January 2, 1998.
WITNESS: STARWOOD LODGING TRUST
(a Maryland real estate investment trust)
/s/ Sherwin L. Samuels By: /s/ Ronald C. Brown
- ----------------------------- ------------------------------------
Secretary Senior Vice President and Chief
Financial Officer
WITNESS: WESTIN HOTELS & RESORT WORLDWIDE, INC.
(a Delaware corporation)
/s/ Catherine L. Walker By: /s/ Richard Mahoney
- ----------------------------- ------------------------------------
Secretary Vice President
THE UNDERSIGNED, Senior Vice President and Chief Financial Officer
of Starwood Lodging Trust, who executed on behalf of the Trust the foregoing
Articles of Merger of which this certificate is made a part, hereby acknowledges
in the name and on behalf of said Trust the foregoing Articles of Merger to be
the act of said Trust and hereby certifies that to the best of his knowledge,
information and belief the matters and facts set forth therein with respect to
the authorization and approval thereof are true in all material respects under
the penalties of perjury.
/s/ Ronald C. Brown
----------------------------------------
Senior Vice President and Chief Financial
Officer
THE UNDERSIGNED, Vice President of Westin Hotels & Resorts
Worldwide, Inc., who executed on behalf of the Corporation the foregoing
Articles of Merger of which this certificate is made a part, hereby acknowledges
in the name and on behalf of said Corporation the foregoing Articles of Merger
to be the corporate act of said Corporation and hereby certifies that to the
best of his knowledge, information and belief the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Richard Mahoney
----------------------------------------
Vice President
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EXHIBIT A
to
ARTICLES OF MERGER
*******************************************
Pursuant to the authority granted to the Board of Trustees of the Trust
under Section 6.1 of the Amended and Restated Declaration of Trust of the Trust,
as heretofore amended (the "Declaration"), the Board of Trustees of the Trust,
by resolution adopted by the Board of Trustees of the Trust on September 8,
1997, classified and designated 30,000,000 shares of beneficial interest in the
Trust as Class A Exchangeable Preferred Shares, par value $.01 per share, with
the following preferences, exchange and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption, such classification and
designation to become effective upon the effective time of the merger of Westin
Hotels & Resorts Worldwide, Inc., a Delaware corporation, with and into the
Trust:
6.15 Class A Exchangeable Preferred Shares Articles Supplementary
6.15.1. NUMBER OF SHARES AND DESIGNATION.
The class of shares of beneficial interest in the Trust being
created by these Articles Supplementary shall be designated as "Class A
Exchangeable Preferred Shares", par value $.01 per share ("Class A EPS"), and
30,000,000 shall be the number of shares of Class A EPS constituting such class.
6.15.2. DEFINITIONS.
For purposes of the Class A EPS, the following terms have the
meanings indicated:
"Affiliate" shall mean with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is
under common control with such Person.
"Articles Supplementary" shall mean either this Article 6.15
or Article 6.16, as the case may be, of the Declaration of Trust.
"Board of Trustees" shall mean the Board of Trustees of the
Trust or any committee authorized by the Board of Trustees from time to
time to exercise any of its powers or perform any of its
responsibilities with respect to the Class A EPS.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open.
"Cash Equivalent" of Paired Shares or any other shares of
beneficial interest or other securities of the Trust or any other
issuer as of any date shall mean an amount of
1
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cash equal to (i) the average of the daily Current Market Prices per
unit of such Paired Shares or other shares or securities during the
five (5) consecutive Trading Days immediately preceding such date or
(ii) if the Paired Shares or such other shares or securities are not
publicly traded on such date, the fair market value of such Paired
Shares or other securities as of such date as determined by the Board
of Trustees in good faith (subject to the rights of the holders of the
Class A EPS to request a valuation from a nationally recognized
investment banking firm as provided in paragraph (g)(v) of Article
6.15.5 hereof).
"Class A Articles Supplementary" shall mean this Article 6.15.
"Class A Dividend Replacement Shares" shall have the meaning
set forth in paragraph (d)(v) of Article 6.15.5 hereof.
"Class A EPS" shall have the meaning set forth in Article
6.15.1 hereof.
"Class A Exchange Notice" shall have the meaning set forth in
paragraph (a)(i) of Article 6.15.5 hereof.
"Class A Exchange Right" shall have the meaning set forth in
paragraph (a)(i) of Article 6.15.5 hereof.
"Class A Liquidation Preference" shall have the meaning set
forth in paragraph (b) of Article 6.15.4 hereof.
"Class A Liquidation Participation Right" shall have the
meaning set forth in paragraph (a) of Article 6.15.4 hereof.
"Class A Participation Dividend" shall have the meaning set
forth in paragraph (a) of Article 6.15.3 hereof.
"Class A Preferred Dividend" shall have the meaning set forth
in paragraph (a) of Article 6.15.3 hereof.
"Class A Underlying Corporation Shares" as of any time shall
mean the Corporation Shares component of the Class A Underlying Paired
Shares as of such time.
"Class A Underlying Paired Shares" as of any time shall mean
the Paired Shares (including, unless otherwise expressly provided
herein, fractional units of Paired Shares) for which each share of
Class A EPS is then exchangeable upon exercise of the Class A Exchange
Right but excluding (except for the purposes of an actual exercise of
the Class A Exchange Right) any Class A Dividend Replacement Shares.
"Class A Underlying Trust Shares" as of any time shall mean
the Trust Shares component of the Class A Underlying Paired Shares as
of such time.
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<PAGE> 8
"Class B Articles Supplementary" shall mean Article 6.16 of
the Declaration of Trust pursuant to which the Trust has classified and
designated 15,000,000 shares of beneficial interest in the Trust as
"Class B Exchangeable Preferred Shares".
"Class B EPS" shall mean the Class B Exchangeable Preferred
Shares, par value $0.01 per share, of the Trust created pursuant to the
Class B Articles Supplementary.
"Class B Liquidation Preference" shall have the meaning set
forth in paragraph (b) of Articles 6.16.4 hereof.
"Class B Liquidation Participation Right" shall have the
meaning set forth in paragraph (a) of Article 6.16.4 hereof.
"Class B Participation Dividend" shall have the meaning set
forth in paragraph (a) of Article 6.16.3 hereof.
"Class B Preferred Dividend" shall have the meaning set forth
in paragraph (a) of Article 6.16.3 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Conditionally Declared Class A Dividend" shall have the
meaning set forth in paragraph (b)(i) of Article 6.15.3 hereof.
"Constituent Person" shall have the meaning set forth in
paragraph (e)(ii) of Article 6.15.5 hereof.
"Corporation" shall mean Starwood Lodging Corporation, a
Maryland corporation, and any successor.
"Corporation Common Adjustment Event" shall mean any of the
following events that occurs after the Issue Date:
(i) The payment by the Corporation of a dividend on
the outstanding Corporation Shares that is payable in
additional Corporation Shares;
(ii) The subdivision of the outstanding Corporation
Shares into a greater number of shares (whether by share split
or otherwise);
(iii) The combination of the outstanding Corporation
Shares into a smaller number of shares (whether by reverse
share split or otherwise); or
(iv) The issuance of any shares of stock of the
Corporation by reclassification of the Corporation Shares.
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<PAGE> 9
"Corporation Common Distribution" shall mean any dividend or
distribution paid or made by the Corporation (including, without
limitation, any distribution of assets on any liquidation, dissolution
or winding up of the Corporation) in respect of the Corporation Shares,
other than a dividend or distribution that constitutes a Corporation
Common Adjustment Event. In addition, a distribution to the holders of
Corporation Shares of rights to subscribe for or purchase additional
Corporation Shares under a shareholders protective rights plan or
agreement shall not be deemed to constitute a Corporation Common
Distribution to the extent that the Corporation makes provision so that
such rights, to the extent still outstanding with respect to the
outstanding Corporation Shares, shall be issued to the holders of any
Corporation Shares issued upon exercise of the Class A Exchange Right
(and, to the extent applicable, shall attach to such Corporation
Shares) in an amount and manner and to the extent provided in such
shareholders protective rights plans or agreements with respect to
already outstanding Corporation Shares.
"Corporation Shares" shall mean the shares of common stock,
par value $.01 per share, of the Corporation or any stock of the
Corporation into which such common stock may hereafter be changed.
"Current Market Price" of publicly traded Paired Shares or any
other shares of beneficial interest or other securities of the Trust or
any other issuer as of any Trading Day shall mean the last reported
sales price, regular way, on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the NYSE or, if
such shares or other securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which
such shares or other securities are listed or admitted for trading or,
if not listed or admitted for trading on any national securities
exchange, on the NASDAQ National Market or, if such shares or other
securities are not quoted on such NASDAQ National Market, the average
of the closing bid and asked prices on such day in the
over-the-countermarket as reported by NASDAQ or, if bid and asked
prices for such shares or other securities on such day shall not have
been reported through NASDAQ, the average of the bid and asked prices
on such day as furnished by any NYSE member firm regularly making a
market in such shares or other securities selected for such purpose by
the Chief Executive Officer or Chief Financial Officer of the Trust or
the Board of Trustees.
"Declaration" shall mean the Amended and Restated Declaration
of Trust of the Trust, as amended from time to time.
"Delivered Shares" shall have the meaning set forth in
paragraph (a)(ii) of Article 6.15.5 hereof.
"Dividend Correspondence Ratio" shall have the meaning set
forth in paragraph (b)(i) of Article 6.15.3 hereof.
"Excess Shares" shall have the meaning set forth in paragraph
(a)(ii) of Article 6.15.5 hereof.
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<PAGE> 10
"Exchange Election Notice" shall have the meaning set forth in
paragraph (a)(i) of Article 6.15.5 hereof.
"Exchange Issuance Date" shall have the meaning set forth in
paragraph (b) of Article 6.15.5 hereof.
"Exchange Promissory Note" shall mean an unsecured promissory
note of the Trust in such form as the Trust shall reasonably prescribe
with a maturity date ninety (90) days after the date of issuance of
such note. Such Exchange Promissory Note shall bear interest in a
amount equal to the amount of any dividends paid during the period that
such note remains outstanding on a number of Paired Shares equal to the
number of Excess Shares for which such Exchange Promissory Note is
being substituted pursuant to paragraph (a)(ii) of Article 6.15.5
hereof, which interest shall be payable on the dates of payment of the
corresponding dividends.
"Exchange Ratio" shall have the meaning set forth in paragraph
(d)(i) of Article 6.15.5 hereof.
"Issue Date" shall mean the first date on which any shares of
Class A EPS are issued by the Trust.
"Junior Dividend" means a dividend payable in respect of any
class or series of shares of beneficial interest in the Trust over
which the Class A Preferred Dividends have preference or priority as to
the payment of dividends, including, without limitation, any Trust
Common Dividend, any Class A Participation Dividend and any Class B
Participation Dividend.
"Junior Liquidating Distribution" shall mean any distribution
of assets of the Trust in connection with a Liquidation Event to
holders of any class or series of shares of beneficial interest in the
Trust over which the Class A Liquidation Preference has preference or
priority in the distribution of assets upon the occurrence of such
Liquidation Event, including, without limitation, any such distribution
of assets to holders of Trust Shares or in respect of the Class A
Liquidation Participation Right or the Class B Liquidation
Participation Right.
"Junior Shares" shall mean the Trust Shares and any other
class or series of shares of beneficial interest in the Trust now or
hereafter issued and outstanding over which the Class A Preferred
Dividends have full preference or priority in the payment of dividends
or over which the Class A Liquidation Preference has full preference or
priority in the distribution of assets on the occurrence of any
Liquidation Event, including, without limitation, the Trust Shares but
excluding the Class B EPS.
"Liquidation Date" shall have the meaning set forth in
paragraph (a) of Article 6.15.4 hereof.
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<PAGE> 11
"Liquidation Event" shall mean any liquidation, dissolution or
winding up of the affairs of the Trust, whether voluntary or
involuntary. For the purposes hereof, (i) a consolidation or merger of
the Trust with one or more entities, (ii) a statutory share exchange
and (iii) a sale or transfer of all or substantially all of the Trust's
assets shall not be deemed to be a Liquidation Event.
"Non-Electing Shares" shall have the meaning set forth in
paragraph (e)(ii) of Article 6.15.5 hereof.
"NYSE" shall mean the New York Stock Exchange.
"Offered Shares" shall have the meaning set forth in paragraph
(a)(ii) of Article 6.15.5 hereof.
"Ownership Limit" shall have the meaning set forth in Section
6.12 of the Declaration.
"Paired Shares" shall mean units consisting of one Trust Share
paired with one Corporation Share (subject to adjustment as
contemplated provided in paragraph (e) of Article 6.15.5 hereof) and
represented by a single share certificate, as provided in the Pairing
Agreement dated as of June 25, 1980, between the Trust and the
Corporation, as amended from time to time.
"Paired Shares Adjustment Event" shall have the meaning set
forth in paragraph (d)(i) of Article 6.15.5 hereof.
"Parity Liquidation Preference" shall mean the liquidation
preference of any class or series of shares of beneficial interest in
the Trust that ranks on a parity with the Class A Liquidation
Preference.
"Parity Preferred Dividend" shall mean any dividend payable in
respect of any class or series of shares of beneficial interest in the
Trust that ranks on a parity in right of payment with the Class A
Preferred Dividends, whether or not the dividend rate, dividend payment
dates, liquidation preference, redemption rights, conversion or
exchange rights or other features of such class or series are different
from those of the Class A EPS.
"Person" shall mean any individual, firm, partnership,
corporation, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Registered Sale Option" shall have the meaning set forth in
paragraph (a)(ii) of Article 6.15.5 hereof.
"REIT Rules" shall mean the requirements (i) for the Trust to
qualify as a real estate investment trust under the Code as set forth
in Sections 856(a)(5) and 856(a)(6) of the Code and (ii) for the
Corporation or any affiliate of the Corporation which is a tenant
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<PAGE> 12
of the Trust to not be treated as a related party pursuant to Section
856(d)(2)(B) of the Code.
"Requested Shares" shall have the meaning set forth in
paragraph (a)(ii) of Article 6.15.5 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Trust in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Trustees, the allocation of funds to be so paid on any
series or class of shares of beneficial interest of the Trust;
provided, however, that if any funds for any class or series of Junior
Shares or any class or series of shares of beneficial interest of the
Trust ranking on a parity with the Class A EPS as to the payment of
dividends are placed in a separate account of the Trust or delivered to
a disbursing, paying or other similar agent, then "set apart for
payment" with respect to the Class A EPS shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying
or similar agent.
"Trading Day" with respect to publicly traded Paired Shares or
any other shares of beneficial interest or other securities of the
Trust or any other issuer shall mean any day on which the shares or
other securities in question are traded on the NYSE, or if such shares
or other securities are not listed or admitted for trading on the NYSE,
on the principal national securities exchange on which such shares or
other securities are listed or admitted, or if not listed or admitted
for trading on any national securities exchange, on the NASDAQ National
Market, or if such shares or other securities are not quoted on such
NASDAQ National Market, in the applicable securities market in which
such shares or other securities are traded.
"Transaction" shall have the meaning set forth in paragraph
(e)(ii) of Article 6.15.5 hereof.
"Transfer Agent" shall mean ChaseMellon Shareholder Services,
L.L.C. (or any successor thereof), or such other agent or agents of the
Trust as may be designated by the Board of Trustees or their designee
as the transfer agent for the Class A EPS and the Class B EPS.
"Trust" shall mean Starwood Lodging Trust, a Maryland real
estate investment trust, and any successor.
"Trust Common Adjustment Event" shall mean any of the
following events that occurs after the Issue Date:
(i) The payment by the Trust of a dividend on the
outstanding Trust Shares that is payable in additional Trust
Shares;
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<PAGE> 13
(ii) The subdivision of the outstanding Trust Shares
into a greater number of shares (whether by share split or
otherwise);
(iii) The combination of the outstanding Trust Shares
into a smaller number of shares (whether by reverse share
split or otherwise); or
(iv) The issuance of any shares of beneficial
interest in the Trust by reclassification of the Trust Shares.
"Trust Common Dividend" shall mean any dividend or
distribution paid or made by the Trust pro rata on the outstanding
Trust Shares other than (i) a distribution of assets of the Trust upon
the occurrence of a Trust Liquidation Event or (ii) on a dividend or
distribution that constitutes a Trust Common Adjustment Event. In
addition, a distribution to the holders of shares of beneficial
interest in the Trust of rights to subscribe for or purchase additional
Trust Shares under a shareholders protective rights plan or agreement
or any similar plan or agreement shall not be deemed to constitute a
Trust Common Dividend to the extent that the Trust makes provision so
that such rights, to the extent still outstanding with respect to the
outstanding Trust Shares, shall be issued to the holders of any Trust
Shares issued upon exercise of the Class A Exchange Right (and, to the
extent applicable, shall attach to such Trust Shares) in an amount and
manner and to the extent provided in such plans or agreements with
respect to already outstanding Trust Shares.
"Trust Shares" shall mean the common shares of beneficial
interest in the Trust, par value $.01 per share, or any shares of
beneficial interest in the Trust into which such common shares may be
changed.
"Westin Transaction Agreement" shall mean the Transaction
Agreement dated as of September 8, 1997 among WHWE L.L.C., Woodstar
Investor Partnership, Nomura Asset Capital Corporation, Juergen
Bartels, W&S Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S
Lauderdale Corp., W&S Seattle Corp., Westin St. John Hotel Company,
Inc., W&S Denver Corp., W&S Atlanta Corp., the Trust, SLT Realty
Limited Partnership, the Corporation and SLC Operating Limited
Partnership, as such agreement may be amended from time to time.
"Westin Transaction Securities" shall mean, with respect to a
holder of Class A EPS or an Affiliate thereof, any shares of Class A
EPS, shares of Class B EPS, Starwood Operating Partnership Units and
Starwood Realty Partnership Units (as such terms are defined in the
Westin Transaction Agreement) received by such holder or Affiliate
pursuant to the Westin Transaction Agreement, together with any shares
of Class B EPS, Class A EPS or Paired Shares (or other securities)
issued upon exchange or conversion of any such Westin Transaction
Securities.
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<PAGE> 14
6.15.3. DIVIDENDS.
(a) In General. The holders of Class A EPS will be entitled
(i) to receive a preferred dividend payable as described in paragraph (b) below
(a "Class A Preferred Dividend"), when, as and if declared by the Board of
Trustees out of assets of the Trust legally available for that purpose, based on
the payment of any Corporation Common Distribution and (ii) to participate on
the basis described in paragraph (c) below in any Trust Common Dividend, when,
as and if declared by the Board of Trustees out of assets of the Trust available
for that purpose (a "Class A Participation Dividend").
(b) Class A Preferred Dividend.
(i) Upon the payment by the Corporation of any
Corporation Common Distribution prior to the occurrence of a Liquidation Event,
the right to receive a Class A Preferred Dividend will automatically accrue with
respect to each share of Class A EPS as of the payment date for such Corporation
Common Distribution in an amount equal to the value of the Corporation Common
Distribution paid on each Corporation Share multiplied by the applicable
Dividend Correspondence Ratio described below. To the extent that any
Corporation Common Distribution consists of securities or other property (other
than cash), the Trust will have the option of paying the corresponding Class A
Preferred Dividend either (A) in the same form as such Corporation Common
Distribution (i.e., by delivery of the same type of securities or other property
as distributed in the Corporation Common Distribution), (B) in cash in an amount
equal to the fair market value of such securities or other property as
determined in good faith by the Board of Trustees (subject to the rights of the
affected holders of Class A EPS to request a valuation from a nationally
recognized investment banking firm as provided in paragraph (g)(v) of Article
6.15.5 hereof) or (C) a combination thereof. Each Class A Preferred Dividend
will be cumulative from the payment date for the related Corporation Common
Distribution and will be payable to holders of record of Class A EPS on such
record date as shall be fixed by the Board of Trustees, which record date shall
be the same as the record date for the corresponding Class B Preferred Dividend
that will have accrued or will accrue based on such Corporation Common
Distribution and not earlier than the record date for such Corporation Common
Distribution. The Board of Trustees may, at any time between the declaration of
a Corporation Common Distribution and the related payment date, declare a
corresponding Class A Preferred Dividend conditioned on the actual payment of
such Corporation Common Distribution (any such Class A Preferred Dividend being
sometimes referred to herein as a "Conditionally Declared Class A Dividend"
until such time as the corresponding Corporation Common Distribution is paid, at
which time it will no longer be a Conditionally Declared Class A Dividend but
will instead be deemed to be an accrued Class A Preferred Dividend). The
"Dividend Correspondence Ratio" for the purposes of determining the amount of
any Class A Preferred Dividend shall mean the number of Class A Underlying
Corporation Shares for which each share of Class A EPS is exchangeable as of the
record date for the related Corporation Common Distribution upon exercise of the
Class A Exchange Right, as such number shall be proportionately adjusted to
reflect any share dividend, share split, reverse share split or other
combination or subdivision of the Class A EPS that becomes effective between
(or, if the record date for such event is different from the effective date
therefor, that has a record date that falls between) (A) the record date for
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<PAGE> 15
the Corporation Common Distribution and (B) the date of payment of such
Corporation Common Distribution or, if earlier, the record date for such Class A
Preferred Dividend.
(ii) So long as any shares of Class A EPS are
outstanding: (A) no Junior Dividend may be declared or paid or set apart for
payment unless all accrued Class A Preferred Dividends and Conditionally
Declared Class A Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment, (B)
no Parity Preferred Dividend shall be declared or paid or set aside for payment
unless a ratable portion of all accrued but unpaid Class A Preferred Dividends
and Conditionally Declared Class A Dividends has been or is concurrently
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for payment (with such ratable portion being based on the portion of the
accrued but unpaid Parity Preferred Dividends being paid) and (C) no Junior
Shares may be redeemed, purchased or otherwise acquired by the Trust (other than
a redemption, purchase or other acquisition of Trust Shares made for purposes of
and in compliance with requirements of an employee incentive or benefit plan of
the Trust or any subsidiary or upon any exchange or redemption of other
securities at the option of the holders thereof, or as required or permitted
under Article VI of the Declaration) for consideration (or any moneys paid or
made available for a sinking fund for the redemption of any Junior Shares),
directly or indirectly (except for conversion into or exchange for Junior
Shares) unless all accrued Class A Preferred Dividends and Conditionally
Declared Class A Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment.
(c) Class A Participation Dividend. No Trust Common Dividend
may be declared in respect of the Trust Shares unless the Board of Trustees
concurrently declares a Class A Participation Dividend entitling each share of
Class A EPS to receive an amount equal to the amount of the Trust Common
Dividend declared on each Trust Share multiplied by the number of Class A
Underlying Trust Shares for which each share of Class A EPS is then exchangeable
upon exercise of the Class A Exchange Right as of the record date for such Trust
Common Dividend. Such Class A Participation Dividend shall be payable on the
same date on which the corresponding Trust Common Dividend is payable, shall be
payable in the same form as the corresponding Trust Common Dividend and shall be
paid to holders of record of the Class A EPS on the same record date as is fixed
by the Board of Trustees for the payment of such Trust Common Dividend.
6.15.4. LIQUIDATION RIGHTS.
(a) In General. Upon the occurrence of any Liquidation Event,
the holders of Class A EPS will be entitled (i) to receive out of the assets of
the Trust legally available for liquidating distributions to holders of shares
of beneficial interests in the Trust, prior to the making of any Junior
Liquidating Distribution, a liquidating distribution in an amount equal to the
Class A Liquidation Preference described in paragraph (b) below determined as of
the effective date of such Liquidation Event or, if no effective date is
provided, as of the record date of the first liquidating distribution relating
to such Liquidation Event (in either such case, the "Liquidation Date") and (ii)
to participate on the basis described in paragraph (c) below in any liquidating
distribution to holders of Trust Shares (the "Class A Liquidation Participation
Right"). In determining whether a distribution (other than upon the occurrence
of a Liquidation
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<PAGE> 16
Event), by dividend, redemption or other acquisition of shares of beneficial
interest in the Trust or otherwise, is permitted under Maryland law, amounts
that would be needed, if the Trust were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of the holders
of Class A EPS whose preferential rights upon dissolution are senior to those
receiving the distribution shall not be added to the Trust's total liabilities.
(b) Class A Liquidation Preference. The "Class A Liquidation
Preference" of a share of Class A EPS as of the applicable Liquidation Date
shall mean the sum of (A) the fair market value (as determined in good faith by
the Board of Trustees, subject to the right of the holders of Class A EPS to
request a valuation from a nationally recognized investment banking firm
pursuant to paragraph (g)(v) of Article 6.15.5 hereof) as of such date of the
number of Class A Underlying Corporation Shares for which each Class A EPS is
exchangeable as of such date upon exercise of the Class A Exchange Right plus
(B) the amount of any accrued but unpaid Class A Preferred Dividends in respect
of each share of Class A EPS as of such date (other than any such accrued but
unpaid Class A Preferred Dividends that have been declared with a record date
prior to such Liquidation Date, which the Trust shall separately be obligated to
pay to the holders of record of the Class A EPS as of such record date). Until
each holder of shares of Class A EPS has received distributions equal to the
Class A Liquidation Preference, no Junior Liquidating Distributions may be paid
to holders of any other class or series of shares of beneficial interest in the
Trust. Subject to the rights of the holders of shares of beneficial interest in
the Trust with liquidation preferences ranking prior to or on a parity with the
Class A Liquidation Preference, after payment shall have been made in full of
the Class A Liquidation Preference as provided in this paragraph (b), Junior
Liquidating Distributions may be paid to the holders of any shares of beneficial
interest entitled to receive such distributions and the holders of the Class A
EPS shall not be entitled to share therein except as provided in paragraph (c)
of this Article 6.15.4. In the event that the assets of the Trust available for
liquidating distributions to holders of shares of beneficial interest in the
Trust in connection with any Liquidation Event are insufficient to pay the Class
A Liquidation Preference on all outstanding Class A EPS and any Parity
Liquidation Preferences in respect of any other classes or series of shares of
beneficial interest in the Trust, then the holders of the Class A EPS and such
other classes and series of shares of beneficial interest in the Trust shall
share ratably in any such distribution of assets in proportion to the Class A
Liquidation Preference and the Parity Liquidation Preferences to which they
would otherwise be respectively entitled.
(c) Class A Liquidation Participation Right. In addition to
being entitled to receive the Class A Liquidation Preference, upon the
occurrence of any Liquidation Event the holders of Class A EPS shall be entitled
to participate, pursuant to the Class A Liquidation Participation Right, ratably
with the holders of Trust Shares in any liquidating distributions to such
holders. For such purpose, each share of Class A EPS shall be deemed to
represent a number of Trust Shares equal to the number of Class A Underlying
Trust Shares for which each share of Class A EPS could be exchanged upon
exercise of the Class A Exchange Right as of the record date for such
distribution.
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<PAGE> 17
6.15.5. EXCHANGE RIGHT.
(a) Class A Exchange Right. (i) A holder of shares of Class A
EPS shall have the right to exchange such shares in whole or in part at any time
for fully paid and non-assessable Paired Shares to the extent described below
(the "Class A Exchange Right"). A holder of shares of Class A EPS desiring to
exchange such shares for Paired Shares shall surrender the certificate or
certificates evidencing such shares, duly endorsed or assigned to the Trust or
in blank, to the Transfer Agent together with a duly completed and executed
exchange notice (a "Class A Exchange Notice") in such form as the Trust shall
prescribe from time to time and such related certifications as the Trust may
reasonably prescribe from time to time. Unless any Paired Shares to be issued in
exchange for such shares of Class A EPS are to be issued in the same name as the
name in which such shares of Class A EPS are registered, each share certificate
surrendered shall be accompanied by instruments of transfer, in form reasonably
satisfactory to the Trust, duly executed by the holder or such holder's duly
authorized attorney and an amount sufficient to pay any applicable transfer or
similar tax (or evidence reasonably satisfactory to the Trust demonstrating that
such taxes have been paid). As promptly as practicable (and in any event within
five (5) Business Days after receipt of a Class A Exchange Notice and such
required certificates and documents, the Trust shall elect, pursuant to an
election notice given to the exchanging holder (an "Exchange Election Notice"),
to either: (i) deliver to such holder the number of Paired Shares corresponding
to the number of shares of Class A EPS being exchanged based on the Exchange
Ratio described in paragraph (d) of this Article 6.15.5 (including procuring the
issuance by the Corporation of the Corporation Shares component of such Paired
Shares) or (ii) pay to the holder the Cash Equivalent of such Paired Shares or
(iii) a combination of (i) and (ii).
(ii) If the delivery to such holder of the full
number of Paired Shares requested to be delivered pursuant to the Class A
Exchange Notice (the "Requested Shares") would result in a violation of either
the Ownership Limit or the REIT Rules, the Trust may elect in the Exchange
Election Notice to either (A) deliver to such holder the maximum number of
Paired Shares that may be delivered without causing such a violation (the
"Delivered Shares", with the number of Requested Shares in excess of the
Delivered Shares being referred to herein as the "Excess Shares"), together with
either the Cash Equivalent (determined as of the date of delivery of the
applicable Class A Exchange Notice and the related certificates and other
documents described above) of the Excess Shares or an Exchange Promissory Note
in a principal amount equal to such Cash Equivalent or (B) deliver to such
holder the Cash Equivalent (determined as of such notice delivery date) of the
Requested Shares. Notwithstanding the foregoing, in the event that the delivery
of the full number of Requested Shares pursuant to a Class A Exchange Notice
would violate either the Ownership Limit or the REIT Rules because the
exchanging Class A EPS holder, together with such holder's Affiliates (but
without giving effect to any other applicable attribution rules under the Code),
beneficially owns, as of the date the Exchange Election Notice is given, Paired
Shares other than through the ownership of Westin Transaction Securities, the
Trust will have the option (the "Registered Sale Option"), exercisable in the
Exchange Election Notice, in lieu of delivering an Exchange Promissory Note in a
principal amount equal to the Cash Equivalent of the Excess Shares, to procure
the filing of a registration statement under the Securities Act, and to publicly
offer and sell pursuant to such registration statement in such manner as the
Trust in good faith determines to be appropriate a
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<PAGE> 18
number of Paired Shares equal to the number of such Excess Shares (the "Offered
Shares"), the net proceeds of which sale (after deducting any applicable
underwriting discounts or commissions and the expenses of such offering) shall
be paid to such holder.
(iii) In the event that the issuance of the full
number of Requested Shares upon any exercise of the Class A Exchange Right would
violate either the Ownership Limit or the REIT Rules and either (i) the Trust
elects to deliver the Delivered Shares together with an Exchange Promissory Note
in a principal amount equal to the Cash Equivalent of the Excess Shares or (ii)
the Trust exercises the Registered Sale Option, the holder of the shares of
Class A EPS being exchanged will have the right to withdraw his or her Class A
Exchange Notice as to the Excess Shares, which withdrawal must be made by
written notice to the Transfer Agent within ten (10) Business Days after receipt
of the Trust's Exchange Election Notice.
(b) Delivery of Securities and Cash. If the Exchange Election
Notice relating to an exercise of the Class A Exchange Right does not give rise
to a withdrawal right pursuant to paragraph (a)(iii) above, such Exchange
Election Notice shall be accompanied by the delivery of the Paired Shares and/or
cash required to be delivered pursuant to such Exchange Election Notice. If the
Exchange Election Notice does give rise to such a withdrawal right, but such
right is not exercised by the exchanging holder, the Trust shall deliver the
Paired Shares, Exchange Promissory Note and/or cash required to be delivered
pursuant to such Exchange Election Notice within five (5) Business Days after
the expiration of such withdrawal right. If the Exchange Election Notice
includes the exercise of the Registered Sale Option, the proceeds from the sale
of the Offered Shares shall be paid over to the applicable holder promptly upon
receipt. Any cash payable to an exchanging holder hereunder shall be payable at
the election of the Trust by check or by wire transfer to an account designated
in writing by the exchanging holder, if one has been so designated. With respect
to any Paired Shares to be issued pursuant to an Exchange Election Notice, the
Trust shall issue and deliver (and shall cause the Corporation to issue and
deliver) at the office of the Transfer Agent to the exchanging holder, or on his
or her written order, a certificate or certificates for the number of full
Paired Shares deliverable in accordance with the provisions of this Article
6.15.5, and any fractional interest in respect of a unit of Paired Shares
arising upon such exercise of the Class A Exchange Right shall be settled as
provided in paragraph (c) of this Article 6.15.5 (the date of delivery of such
certificate or certificates being sometimes referred to herein as the "Exchange
Issuance Date"). Any such Paired Shares issued upon such exercise shall be
deemed to have been issued immediately prior to the close of business on the
Exchange Issuance Date, and the Person or Persons in whose name or names any
certificate or certificates for Paired Shares shall be issuable pursuant to such
Class A Exchange Notice shall be deemed to have become the holder or holders of
record of the Paired Shares represented thereby at such time on such date unless
the share transfer records for the Paired Shares shall be closed on such date,
in which event such Person or Persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such share transfer books are open. If less than the full number of shares
of Class A EPS represented by the certificate or certificates surrendered to the
Trust in connection with an exercise of the Class A Exchange Right are being
exchanged pursuant to such exercise, the Trust shall also deliver to the
exchanging holder a new certificate or certificates evidencing the excess shares
not being exchanged.
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(c) Fractional Interests. No fractional Paired Share units or
scrip evidencing fractions of Paired Shares shall be issued upon exercise of the
Class A Exchange Right. Instead of any fractional interest in a unit of Paired
Shares that would otherwise be deliverable upon such exercise, the Trust shall
pay to the exchanging holder an amount in cash equal to the corresponding
fraction of the Current Market Price of the Paired Shares on the Trading Day
immediately preceding the Exchange Issuance Date. If more than one share of
Class A EPS shall be surrendered for exchange at one time by the same holder,
the number of full Paired Shares issuable upon exercise of the Class A Exchange
Right shall be computed on the basis of the aggregate number of shares of Class
A EPS so surrendered.
(d) Exchange Ratio and Adjustments.
(i) Initially, one unit of Paired Shares will be
issuable upon exchange of each share of Class A EPS pursuant to the exercise of
the Class A Exchange Right (the "Exchange Ratio"). If, at any time after the
Issue Date, a Trust Common Adjustment Event shall occur in conjunction with the
occurrence of a corresponding Corporation Common Adjustment Event as a result of
which the number of outstanding Paired Shares is increased or decreased but
neither the nature of the securities comprising the Paired Shares nor the ratio
of outstanding Trust Shares to Common Shares is affected (a "Paired Shares
Adjustment Event"), the Exchange Ratio in effect as of the close of business on
the record date for such Paired Shares Adjustment Event or, if no such record
date applies, the effective date of such Paired Shares Adjustment Event shall be
adjusted so that a holder of shares of Class A EPS who thereafter exercises the
Class A Exchange Right with respect to such shares will be entitled to receive
upon such exercise the number of Paired Shares that such holder would have owned
or have been entitled to receive after the happening of such Paired Shares
Adjustment Event if such holder had exercised the Class A Exchange Right
immediately prior to such record date or effective date. An adjustment pursuant
to this subparagraph (i) shall become effective (subject to subparagraph (iv)
below) immediately upon the opening of business on the Business Day next
following the record date for the applicable Paired Shares Adjustment Event or,
if no such record date applies, the Business Day next following the effective
date of such Paired Shares Adjustment Event.
(ii) No adjustment in the Exchange Ratio shall be
required pursuant to subparagraph (i) above unless such adjustment would require
a cumulative increase or decrease of at least one percent (1%) in such ratio;
provided, however, that any adjustments that by reason of this subparagraph (ii)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment until made. All calculations of the Exchange Ratio
under this paragraph (d) shall be made to the nearest one-tenth of a share (with
.05 of a share being rounded upward).
(iii) Notwithstanding any other provisions of this
Article 6.15.5, the Trust shall not be required to make any adjustment to the
Exchange Ratio based on any issuance of Paired Shares pursuant to any plan
providing for the reinvestment of dividends or interest payable on securities of
the Trust (or the Corporation) and the investment of additional optional amounts
in Paired Shares under such plan.
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(iv) In any case in which this paragraph (d) provides
that an adjustment to the Exchange Ratio shall become effective immediately
following the record date for an event, the Trust may defer until the occurrence
of such event (A) issuing to the holder of any shares of Class A EPS exchanged
after such record date but before the occurrence of such event the additional
Paired Shares (or the cash, Exchange Promissory Notes or other property to be
delivered in lieu thereof pursuant to this Article 6.15.5) issuable pursuant to
such exchange by reason of the adjustment required pursuant to this paragraph
(d) in respect of such event and (B) paying to the exchanging holder any amount
of cash in lieu of any fractional interest in Paired Shares pursuant to
paragraph (c) of this Article 6.15.5.
(v) If at the time of any exercise of the Class A
Exchange Right there are any accrued but unpaid Class A Preferred Dividends or
Class A Participation Dividends other than Class A Preferred Dividends or Class
A Participation Dividends that have been declared with a record date prior to
such exercise, the Exchange Ratio shall be adjusted so that the number of Paired
Shares into which the shares of Class A EPS being exchanged are then
exchangeable is increased by a number of Paired Shares (the "Class A Dividend
Replacement Shares") equal to (A) the aggregate amount of such accrued but
unpaid Class A Preferred Dividends and Class A Participation Dividends with
respect to each share of Class A EPS being exchanged divided by (B) the Current
Market Price of the Paired Shares during the five (5) Trading Days immediately
preceding the date of delivery of the applicable Class A Exchange Notice and all
related certificates and other documents.
(e) Adjustments to Composition of Paired Shares Issuable Upon
Exchange.
(i) If, at any time after the Issue Date, a Trust
Common Adjustment Event or a Corporation Common Adjustment Event shall occur
other than as part of a Paired Shares Adjustment Event, each unit of Paired
Shares issuable upon exercise of the Class A Exchange Right shall be adjusted
(subject to subparagraph (iii) below) as of the close of business on the record
date for such event or, if no such record date applies, the effective date of
such event so as to consist of the number of Trust Shares, the number of
Corporation Shares and the number of any other shares of beneficial interest in
the Trust or shares of stock of the Corporation that a holder of one unit of
Paired Shares would have held or have been entitled to receive after giving
effect to such event.
(ii) If, at any time after the Issue Date, the Trust
or the Corporation shall become a party to any transaction, including, without
limitation, a merger, consolidation, statutory share exchange, self tender offer
for all or substantially all outstanding Trust Shares and/or Corporation Shares,
sale of all or substantially all of the Trust's or the Corporation's assets or
recapitalization of the Trust Shares and/or the Corporation Shares (but
excluding any event constituting a Trust Common Adjustment Event or a
Corporation Common Adjustment Event) (each of the foregoing being referred to
herein as a "Transaction"), in each case as a result of which the outstanding
Trust Shares and/or Corporation Shares shall be converted into or exchanged for
the right to receive stock, securities or other property (including cash or any
combination thereof), effective as of the effective date of such Transaction,
each unit of Paired Shares issuable upon exercise of the Class A Exchange Right
with respect to any shares of Class A EPS that are not converted into or
exchanged for the right to receive stock, securities or other
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property in connection with such Transaction shall thereafter be deemed to
consist of the kind and amount of shares of beneficial interest in the Trust,
shares of stock of the Corporation and other securities and property (including
cash or any combination thereof) that would have been held or receivable upon
the consummation of such Transaction by a holder of a number of Paired Shares
equal to the number of Class A Underlying Paired Shares for which one share of
Class A EPS would have been exchangeable immediately prior to such Transaction,
assuming such holder of Paired Shares (A) is not a Person with which the Trust
or the Corporation consolidated or into which the Trust or the Corporation was
merged or which merged into the Trust or the Corporation or to which such sale
or transfer was made, as the case may be (a "Constituent Person"), or an
Affiliate of a Constituent Person and (B) failed to exercise his or her rights
of election, if any, as to the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction (provided that if the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction is not the same for each unit of Paired Shares
held immediately prior to such Transaction by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-Electing Shares"), then for the purposes of this
subparagraph (ii) the kind and amount of stock, securities and other property
(including cash) receivable upon such Transaction in respect of each
Non-Electing Share shall be deemed to be the kind and amount so receivable per
share by a plurality of the Non-Electing Shares). The provisions of this
paragraph (e) shall similarly apply to successive transactions.
(iii) In any case in which this paragraph (e)
provides that an adjustment to the composition of the units of Paired Shares
issuable upon exercise of the Class A Exchange Right shall become effective
immediately following the record date for an event, the Trust may defer until
the occurrence of such event (A) issuing to the holder of any shares of Class A
EPS exchanged after such record date but before the occurrence of such event the
additional Paired Shares (or the cash, Exchange Promissory Notes or other
property to be delivered in lieu thereof pursuant to this Article 6.15.5)
issuable pursuant to such exchange before giving effect to such adjustment and
(B) paying to the exchanging holder any amount of cash in lieu of any fractional
interest in Paired Shares pursuant to paragraph (c) of this Article 6.15.5.
(f) Notice of Adjustments. Whenever the Exchange Ratio or the
composition of a unit of Paired Shares is adjusted as provided in paragraph (d)
or (e) above, the Trust shall promptly file with the Transfer Agent an officer's
certificate setting forth the Exchange Ratio after such adjustment and, in the
case of an adjustment pursuant to paragraph (e), describing the kind and amount
of stock, securities and other property (including cash) then constituting a
unit of Paired Shares. Such certificate shall also set forth a brief statement
of the facts requiring such adjustment and shall be conclusive evidence of the
correctness of such adjustment absent manifest error. Promptly after delivery of
such certificate, the Trust shall prepare a notice of such adjustment setting
forth the adjusted Exchange Ratio, the effective date of such adjustment and, in
the case of an adjustment pursuant to paragraph (e), a description of the kind
and amount of stock, securities and other property (including cash) then
constituting a unit of Paired Shares, and shall mail such notice of such
adjustment to the holder of each share of Class A EPS, and to the extent that
any shares of Class B EPS are then outstanding to each holder of Class B EPS, at
such holder's last address as shown on the share records of the Trust.
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(g) Miscellaneous Provisions.
(i) There shall be no adjustment of the Exchange
Ratio or the composition of the units of Paired Shares issuable upon exercise of
the Class A Exchange Right in case of the issuance of any shares of beneficial
interest in the Trust in a reorganization, acquisition or other similar
transaction except as specifically set forth in this Article 6.15.5.
(ii) If the Trust shall take any action affecting the
Trust Shares or the Corporation shall take any action affecting the Corporation
Shares, other than an action described in this Article 6.15.5, that in the
opinion of the Board of Trustees would materially affect the exchange rights of
the holders of the Class A EPS provided for in this Article 6.15.5, the Exchange
Ratio and/or the composition of the units of Paired Shares may be adjusted, to
the extent permitted by law, in such manner, if any, and at such time, as the
Board of Trustees, in its sole discretion, may determine to be equitable in the
circumstances.
(iii) The Trust covenants that any Paired Shares
issued upon exercise of the Class A Exchange Right will be validly issued, fully
paid and non-assessable. The Trust shall reserve and shall at all times have
reserved out of its authorized but unissued Trust Shares, solely for issuance
pursuant to exercise of the Class A Exchange Right and shall use its best
efforts to cause the Corporation to reserve and at all times have, solely for
issuance pursuant to exercise of the Class A Exchange Right, sufficient
Corporation shares to permit the exercise of such Class A Exchange Right. The
Trust shall use its best efforts to cause the Corporation not to close its
transfer books so as to prevent the timely issuance of Corporation Shares upon
the exercise of the Class A Exchange Right. The Trust shall not close its
transfer books so as to prevent the timely issuance of Trust Shares upon the
exercise of the Class A Exchange Right. The Trust shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of Paired Shares or other securities or property upon exercise
of the Class A Exchange Right; provided, however, that the Trust shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of any Paired Shares or other securities or property in
a name other than that of the holder of the shares of Class A EPS being
exchanged, and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Trust the amount of any
such tax or established, to the reasonable satisfaction of the Trust, that such
tax has been paid.
(iv) Except as provided in paragraph (g)(v) below,
any determination required or permitted to be made by the Board of Trustees by
these Articles Supplementary shall be final, conclusive and binding on the
holders of Class A EPS.
(v) In the event that: (A) the Trust elects to pay
the Cash Equivalent of Paired Shares or other securities pursuant to an exercise
of the Class A Exchange Right and in connection therewith the Board of Trustees
makes a determination of the value of the Paired Shares or other securities at a
time when the Paired Shares or such other securities are not publicly traded,
(B) the Trust elects to pay in cash a Class A Preferred Dividend corresponding
to a Corporation Common Distribution in the form of securities or other property
and in connection therewith the Board of Trustees makes a determination of the
fair market value of such securities or other property or (C) the Board of
Trustees makes a determination of the fair market value of
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<PAGE> 23
Class A Underlying Corporation Shares for the purpose of determining the amount
of the Class A Liquidation Preference in connection with a Liquidation Event,
then the Trust shall deliver to each affected holder of Class A EPS a written
notice (which, in the case of an exercise of the Class A Exchange Right may be
set forth in the related Exchange Election Notice) setting forth the valuation
determined by the Board of Trustees. At any time within ten (10) Business Days
after receipt of such notice, any affected holder of Class A EPS may request in
writing that the Trust obtain a written valuation of such Paired Shares, Class A
Underlying Corporation Shares or other securities or property from an investment
banking firm. Promptly after receipt of any such request, the Trust shall select
a nationally recognized investment banking firm to perform such valuation and
shall provide such investment banking firm with such relevant information as the
Trust may have in relation thereto. Such investment banking firm shall be
instructed to prepare a written valuation report within thirty (30) days after
its appointment, and upon receipt of such valuation report, the Trust shall mail
a copy to each affected holder of Class A EPS. If the valuation as determined by
such investment banking firm is greater than the valuation as determined by the
Board of Trustees, the Trust shall promptly pay the amount of such difference to
each affected holder of Class A EPS. If, however, the valuation as determined by
such investment banking firm is less than the valuation determined by the Board
of Trustees, the Trust may at its option require each affected holder of Class A
EPS to repay the amount of such difference to the Trust, which amount shall be
so repaid by each such holder promptly after receipt of the Trust's request. The
fees and expenses of such investment banking firm shall be paid by the Trust.
6.15.6. REACQUIRED SHARES TO BE RETIRED.
All shares of Class A EPS which shall have been issued and
reacquired in any manner by the Trust shall be restored to the status of
authorized but unissued shares of beneficial interest in the Trust without
designation as to class.
6.15.7. VOTING.
(a) General Voting Rights. The holders of shares of Class A
EPS shall be entitled to vote upon all matters upon which holders of Trust
Shares have the right to vote, and shall be entitled to the number of votes
equal to the largest whole number of Class A Underlying Trust Shares for which
such shares of Class A EPS could be exchanged pursuant to the provisions of
Article 6.15.5 hereof as of the record date for determination of the
shareholders entitled to vote on such matters, or, if no such record date is
established, as of the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of beneficial interest in the Trust having general voting powers and not
separately as a class.
(b) Special Voting Rights. So long as any shares of Class A
EPS are outstanding, in addition to any other vote or consent of holders of such
shares required by the Declaration or these Articles Supplementary, the
affirmative vote of at least a majority of the votes entitled to be cast by the
holders of all outstanding shares of Class A EPS, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for that
purpose, shall be necessary for effecting or validating any amendment,
alteration or repeal of any of the provisions of the
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Declaration or these Articles Supplementary that materially and adversely
affects the voting powers, rights or preferences of the holders of the Class A
EPS disproportionately (based on the number of Underlying Class A Trust Shares
at the time) to the effect of such amendment, alteration or repeal on the
holders of Trust Shares; provided, however, that (i) any amendment of the
provisions of the Declaration so as to authorize or create, or to increase the
authorized amount of, any class or series of shares of beneficial interest in
the Trust, whether ranking prior to, on a parity with or junior to the Class A
EPS shall not be deemed to materially and adversely affect the voting powers,
rights or preferences of the holders of Class A EPS and (ii) no filing with the
State Department of Assessments and Taxation of Maryland by the Trust in
connection with a merger, consolidation or sale of all or substantially all of
the assets of the Trust shall be deemed to be an amendment, alteration or repeal
of any of the provisions of the Declaration or these Articles Supplementary
unless such filing expressly purports to amend, alter or repeal one or more of
such provisions. For the purposes of this paragraph (b), each share of Class A
EPS will have one vote per share.
6.15.8. RECORD HOLDERS.
The Trust and the Transfer Agent may deem and treat the record
holder of any shares of Class A EPS as the true and lawful owner thereof for all
purposes, and neither the Trust nor the Transfer Agent shall be affected by any
notice to the contrary.
6.15.9. RESTRICTIONS ON OWNERSHIP AND TRANSFER.
The Class A EPS constitute shares of beneficial interest in
the Trust that are governed by and issued subject to all the limitations, terms
and conditions of the Declaration applicable to shares of beneficial interest in
the Trust generally, including, without limitation, the terms and conditions
(including exceptions and exemptions) of Article VI of the Declaration
applicable to shares of beneficial interest in the Trust. The foregoing sentence
shall not be construed to limit the applicability to the Class A EPS of any
other term or provision of the Declaration. No restrictions on the
transferability of shares of Class A EPS shall be enforced by the Trust to the
extent that such restrictions would otherwise cause the Trust to fail to meet
the requirements of Section 856(a)(2) of the Code.
**********************************
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Pursuant to the authority granted to the Board of Trustees of the Trust
under Section 6.1 of the Amended and Restated Declaration of Trust of the Trust,
as heretofore amended (the "Declaration"), the Board of Trustees of the Trust,
by resolution adopted by the Board of Trustees of the Trust on September 8,
1997, classified and designated 15,000,000 shares of beneficial interest in the
Trust as Class B Exchangeable Preferred Shares, par value $.01 per share, with
the following preferences, exchange and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption, such classification and
designation to become effective upon the effective time of the merger of Westin
Hotels & Resorts Worldwide, Inc., a Delaware corporation, with and into the
Trust:
6.16 Class B Exchangeable Preferred Shares Articles Supplementary
6.16.1. NUMBER OF SHARES AND DESIGNATION.
There are hereby designated 15,000,000 "Class B Exchangeable
Preferred Shares", par value $.01 per share ("Class B EPS").
6.16.2. DEFINITIONS.
For purposes of the Class B EPS, the following terms have the
meanings indicated:
"Affiliate" shall mean with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is
under common control with such Person.
"Articles Supplementary" shall mean either Article 6.15 or
Article 6.16, as the case may be, of the Declaration of Trust.
"Base Preference Amount" per share of Class B EPS as of any
date shall mean the Stated Value per share as of such date.
"Board of Trustees" shall mean the Board of Trustees of the
Trust or any committee authorized by the Board of Trustees from time to
time to exercise any of its powers or perform any of its
responsibilities with respect to the Class B EPS.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open.
"Class A Articles Supplementary" shall mean Article 6.15
hereof pursuant to which the Trust has classified and designated
30,000,000 shares of beneficial interest in the Trust as "Class A
Exchangeable Preferred Shares".
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"Class A EPS" means the Class A Exchangeable Preferred Shares,
par value $0.01 per share, created by the Class A Articles
Supplementary.
"Class A EPS Adjustment Event" shall mean any of the following
events that occurs after the Issue Date:
(i) The payment by the Trust of a dividend on the
outstanding Class A EPS that is payable in additional shares
of Class A EPS;
(ii) The subdivision of the outstanding Class A EPS
into a greater number of shares (whether by share split or
otherwise);
(iii) The combination of the outstanding Class A EPS
into a smaller number of shares (whether by reverse share
split or otherwise); or
(iv) The issuance of any shares of beneficial
interest in the Trust by reclassification of the Class A EPS.
"Class A Exchange Right" shall have the meaning set forth in
paragraph (a) of Article 6.15.5 hereof.
"Class A Liquidation Preference" shall have the meaning set
forth in paragraph (b) of Article 6.15.4 hereof.
"Class A Liquidation Participation Right" shall have the
meaning set forth in paragraph (a) of Article 6.15.4 hereof.
"Class A Participation Dividend" shall have the meaning set
forth in paragraph (a) of Article 6.15.3 hereof.
"Class A Preferred Dividend" shall have the meaning set forth
in paragraph (a) of Article 6.15.3 hereof.
"Class B Articles Supplementary" shall mean this Article 6.16.
"Class B Conversion Notice" shall have the meaning set forth
in paragraph (b)(ii) of Article 6.16.5 hereof.
"Class B Conversion/Redemption Election Right" shall have the
meaning set forth in Article 6.16.7 hereof.
"Class B Conversion/Redemption Notice" shall have the meaning
set forth in Article 6.16.7 hereof.
"Class B Conversion Right" shall have the meaning set forth in
paragraph (b)(i) of Article 6.16.5 hereof.
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"Class B Dividend Replacement Shares" shall have the meaning
set forth in paragraph (e)(v) of Article 6.16.5 hereof.
"Class B EPS" shall have the meaning set forth in Article
6.16.1 hereof.
"Class B Liquidation Preference" shall have the meaning set
forth in paragraph (b) of Article 6.16.4 hereof.
"Class B Liquidation Participation Right" shall have the
meaning set forth in paragraph (a) of Article 6.16.4 hereof.
"Class B Participation Dividend" shall have the meaning set
forth in paragraph (a) of Article 6.16.3 hereof.
"Class B Preferred Dividend" shall have the meaning set forth
in paragraph (a) of Article 6.16.3 hereof.
"Class B Redemption Date" shall have the meaning set forth in
paragraph (c)(ii) of Article 6.16.6 hereof.
"Class B Redemption Notice" shall have the meaning set forth
in paragraph (c)(ii) of Article 6.16.6 hereof.
"Class B Redemption Right" shall have the meaning set forth in
paragraph (a) of Article 6.16.6 hereof.
"Class B Underlying Class A EPS" with respect to any shares of
Class B EPS as of a specified date shall mean the number of shares of
Class A EPS issuable on such date upon exercise of the Class B
Conversion Right with respect to such shares of Class B EPS (including
fractional interests but without taking into account any Class B
Dividend Replacement Shares except for the purposes of an actual
exercise of the Class B Conversion Right).
"Class B Underlying Corporation Shares" as of any time shall
mean the Corporation Shares component of the Class B Underlying Paired
Shares as of such time.
"Class B Underlying Paired Shares" as of any time shall mean
the Paired Shares for which each share of Class B EPS is then
indirectly exchangeable assuming both (i) the conversion at such time
of such share of Class B EPS into the corresponding number of shares of
Class B Underlying Class A EPS upon exercise of the Class B Conversion
Right and (ii) the simultaneous exchange of such shares of Class A EPS
for Paired Shares (including, unless otherwise expressly provided
herein, fractional shares but excluding any Class A Dividend
Replacement Shares, as defined in paragraph (d)(v) of Article 6.15.5
hereof) upon exercise of the Class A Exchange Right.
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"Class B Underlying Trust Shares" as of any time shall mean
the Trust Shares component of the Class B Underlying Paired Shares as
of such time.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Conditionally Declared Class B Dividend" shall have the
meaning set forth in paragraph (b)(i) of Article 6.16.3 hereof.
"Constituent Person" shall have the meaning set forth in
paragraph (f) of Article 6.16.5 hereof.
"Conversion Ratio" shall have the meaning set forth in
paragraph (e)(i) of Article 6.16.5 hereof.
"Corporation" shall mean Starwood Lodging Corporation, a
Maryland corporation, and any successor.
"Corporation Common Adjustment Event" shall mean any of the
following events that occurs after the Issue Date:
(i) The payment by the Corporation of a dividend on
the outstanding Corporation Shares that is payable in
additional Corporation Shares;
(ii) The subdivision of the outstanding Corporation
Shares into a greater number of shares (whether by stock split
or otherwise);
(iii) The combination of the outstanding Corporation
Shares into a smaller number of shares (whether by reverse
stock split or otherwise); or
(iv) The issuance of any shares of stock of the
Corporation by reclassification of the Corporation Shares.
"Corporation Common Distribution" shall mean any dividend or
distribution paid or made by the Corporation (including, without
limitation, any distribution of assets on any liquidation, dissolution
or winding up of the Corporation) in respect of the Corporation Shares,
other than a dividend or distribution that constitutes a Corporation
Common Adjustment Event. In addition, a distribution to the holders of
Corporation Shares of rights to subscribe for or purchase additional
Corporation Shares under a shareholders protective rights plan or
agreement shall not be deemed to constitute a Corporation Common
Distribution to the extent that the Corporation makes provision so that
such rights, to the extent still outstanding with respect to the
outstanding Corporation Shares, shall be issued to the holders of any
Corporation Shares issued upon exercise of the Class A Exchange Right
(and, to the extent applicable, shall attach to such Corporation
Shares) in an amount and manner and to the extent provided in such
shareholders protective rights plans or agreements with respect to
already outstanding Corporation Shares.
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"Corporation Shares" shall mean the shares of common stock,
par value $.01 per share, of the Corporation or any stock of the
Corporation into which such common stock may hereafter be changed.
"Cross-Over Date" shall mean the fifth anniversary of the
Issue Date, subject to extension as described in paragraph (a) of
Article 6.16.9 hereof.
"Current Market Price" of publicly traded Paired Shares or any
other shares of beneficial interest or other securities of the Trust or
any other issuer as of any Trading Day shall mean the last reported
sales price, regular way, on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the NYSE or, if
such shares or other securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which
such shares or other securities are listed or admitted for trading or,
if not listed or admitted for trading on any national securities
exchange, on the NASDAQ National Market or, if such shares or other
securities are not quoted on such NASDAQ National Market, the average
of the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for such
shares or other securities on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such
security selected for such purpose by the Chief Executive Officer or
Chief Financial Officer of the Trust or the Board of Trustees.
"Declaration" shall mean the Amended and Restated Declaration
of Trust of the Trust, as amended from time to time.
"Default Rate Dividends" shall have the meaning set forth in
paragraph (d) of Article 6.16.3 hereof.
"Dividend Correspondence Ratio" shall have the meaning set
forth in paragraph (b)(i) of Article 6.16.3 hereof.
"Issue Date" shall mean the first date on which any Class B
EPS are issued by the Trust.
"Junior Dividend" means a dividend payable in respect of any
class or series of shares of beneficial interest in the Trust over
which the Class B Preferred Dividends have preference or priority as to
the payment of dividends, including, without limitation, any Trust
Common Dividend, any Class B Participation Dividend and any Class A
Preferred Dividend and any Class A Participation Dividend.
"Junior Liquidating Distribution" shall mean any distribution
of assets of the Trust in connection with a Liquidation Event to
holders of any class or series of shares of beneficial interest in the
Trust over which the Class B Liquidation Preference has preference or
priority in the distribution of assets upon the occurrence of such
Liquidation
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Event, including, without limitation, any such distribution of assets
to holders of Trust Shares or in respect of the Class B Liquidation
Participation Right, the Class A Liquidation Preference or the Class A
Liquidation Participation Right.
"Junior Shares" shall mean the Trust Shares and any other
class or series of shares of beneficial interest in the Trust now or
hereafter issued and outstanding over which the Class B Preferred
Dividends have full preference or priority in the payment of dividends
or over which the Class B Liquidation Preference has full preference or
priority in the distribution of assets on the occurrence of any
Liquidation Event. Without limiting the generality of the foregoing,
for the purposes hereof the Class A EPS and the Trust Shares constitute
Junior Shares.
"LIBOR" as of any date shall mean the rate of interest per
annum for United States dollar deposits in the amount of $100,000,000
with a one-month maturity which appears on "Telerate Page 3750" (as
defined below) as of 11:00 a.m. (London time) on such date; provided
that if such rate is no longer published, an interest rate per annum
equal to the arithmetic mean (rounded if necessary to the nearest
one-hundredth of one percent (0.01%) of the interest rates per annum
for United States dollar deposits in such amount and with such a
maturity quoted on Reuters Screen Page "LIBO" (or if such page on such
service ceases to display such information, such other page as may
replace it on that service for the purpose of displaying such
information) as of 11:00 a.m. on such date (the rate determined as
aforesaid being the "LIBO Screen Rate"). For such purposes, the term
"Telerate Page 3750" shall mean the display designated as "Page 3750"
on the Associated Press-Dow Jones Telerate Service (or such other page
as may replace Page 3750 on the Associated Press-Dow Jones Telerate
Service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association interest rate settlement rates
for United States dollar deposits). Any LIBOR rate determined on the
basis of the rate displayed on Telerate Page 3750 or the LIBO Screen
Rate determined in accordance with the foregoing provisions of this
definition shall be subject to corrections, if any, made in such rate
and displayed by the Associated Press-Dow Jones Telerate Service or
Reuters, as applicable, within one hour of the time when such rate is
first displayed by such service. For the purposes of paragraph (d) of
Article 6.16.3, the LIBOR rate shall be determined in accordance with
the foregoing as of the date on which an Uncured Default arises and on
the nearest corresponding day of each subsequent calendar month and
shall apply for the approximate one-month period between the date of
such determination and the next succeeding date of determination.
"Liquidation Date" shall have the meaning set forth in
paragraph (a) of Article 6.16.4 hereof.
"Liquidation Event" shall mean any liquidation, dissolution or
winding up of the affairs of the Trust, whether voluntary or
involuntary. For the purposes hereof, (i) a consolidation or merger of
the Trust with one or more entities, (ii) a statutory share exchange
and (iii) a sale or transfer of all or substantially all of the Trust's
assets shall not be deemed to be a Liquidation Event.
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"Non-Electing Shares" shall have the meaning set forth in
paragraph (f) of Article 6.16.5 hereof.
"NYSE" shall mean the New York Stock Exchange.
"Ownership Limit" shall have the meaning set forth in Section
6.12 of the Declaration.
"Paired Shares" shall mean units consisting of one Trust Share
paired with one Corporation Share (subject to adjustment as
contemplated in paragraph (e) of Article 6.15.5 hereof) and represented
by a single share certificate, as provided in the Pairing Agreement
dated as of June 25, 1980, between the Trust and the Corporation, as
amended from time to time.
"Parity Liquidation Preference" shall mean the liquidation
preference of any class or series of shares of beneficial interest in
the Trust that ranks on a parity with the Class B Liquidation
Preference. For such purposes: (i) the Base Preference Amount portion
of the Class B Liquidation Preference will rank on a parity with the
liquidation preferences of any class or series of Preferred Shares
issued by the Trust (other than the Class A EPS to which said portion
of the Class B Liquidation Preference will rank senior in liquidation
preference), unless the articles supplementary creating such class or
series provide that such class or series will rank junior to such
portion of the Class B Liquidation Preference in the distribution of
assets upon the occurrence of a Liquidation Event, and (ii) the
Supplemental Preference Amount portion of the Class B Liquidation
Preference will rank junior to the liquidation preferences of any class
or series of Preferred Shares issued by the Trust (other than the Class
A EPS), unless the articles supplementary creating such class or series
provide that such class or series will rank junior to or on a parity
with such portion of the Class B Liquidation Preference in the
distribution of assets upon the occurrence of a Liquidation Event.
"Parity Preferred Dividend" shall mean any dividend payable in
respect of any class or series of shares of beneficial interest in the
Trust that ranks on a parity in right of payment with the Class B
Preferred Dividends, whether or not the dividend rate, dividend payment
dates, liquidation preference or redemption price are different from
those of the Class B EPS.
"Person" shall mean any individual, firm, partnership,
corporation, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Preferred Shares" shall mean any class or series of shares of
beneficial interest in the Trust now or hereafter issued and
outstanding that have preference or priority over Trust Shares in the
payment of dividends or in the distribution of assets on the occurrence
of any Liquidation Event.
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"Redemption Price" shall have the meaning set forth in
paragraph (b)(i) of Article 6.16.6 hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement entered into by the Trust, the Corporation and the other
parties thereto pursuant to the Westin Transaction Agreement.
"REIT Rules" shall mean the requirements (i) for the Trust to
qualify as a real estate investment trust under the Code as set forth
in Sections 856(a)(5) and 856(a)(6) of the Code and (ii) for the
Corporation or any affiliate of the Corporation which is a tenant of
the Trust to not be treated as a related party pursuant to Section
856(d)(2)(B) of the Code.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Trust in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Trustees, the allocation of funds to be so paid on any
series or class of shares of beneficial interest in the Trust;
provided, however, that if any funds for any class or series of Junior
Shares or any class or series of shares of beneficial interest in the
Trust ranking on a parity with the Class B EPS as to the payment of
dividends are placed in a separate account of the Trust or delivered to
a disbursing, paying or other similar agent, then "set apart for
payment" with respect to the Class B EPS shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying
or similar agent.
"Stated Value" of each share of Class B EPS shall initially
mean Thirty-Eight Dollars and Fifty Cents ($38.50) per share. Upon the
occurrence of any share split, reverse share split or other subdivision
or combination of the Class B EPS subsequent to the Issue Date, the
Stated Amount shall be proportionately adjusted as determined in good
faith by the Board of Trustees.
"Supplemental Preference Amount" shall have the meaning set
forth in paragraph (b) of Article 6.16.4 hereof.
"Trading Day" with respect to publicly traded Paired Shares or
any other shares of beneficial interest or other securities of the
Trust or any other issuer shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed
or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted, or
if not listed or admitted for trading on any national securities
exchange, on the NASDAQ National Market, or if such securities are not
quoted on such NASDAQ National Market, in the applicable securities
market in which such securities are traded.
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"Transaction" shall have the meaning set forth in paragraph
(f) of Article 6.16.5 hereof.
"Transfer Agent" shall mean ChaseMellon Shareholder Services,
L.L.C. (or any successor thereof), or such other agent or agents of the
Trust as may be designated by the Board of Trustees or their designee
as the transfer agent for the Class B EPS and the Class A EPS.
"Trust" shall mean Starwood Lodging Trust, a Maryland real
estate investment trust, and any successor.
"Trust Common Adjustment Event" shall mean any of the
following events that occurs after the Issue Date:
(i) The payment by the Trust of a dividend on the
outstanding Trust Shares that is payable in additional Trust
Shares;
(ii) The subdivision of the outstanding Trust Shares
into a greater number of shares (whether by share split or
otherwise);
(iii) The combination of the outstanding Trust Shares
into a smaller number of shares (whether by reverse share
split or otherwise); or
(iv) The issuance of any shares of beneficial
interest in the Trust by reclassification of the Trust Shares.
"Trust Common Dividend" shall mean any dividend or
distribution paid or made by the Trust pro rata on the outstanding
Trust Shares other than (i) a distribution of assets of the Trust upon
the occurrence of a Trust Liquidation Event or (ii) on a dividend or
distribution that constitutes a Trust Common Adjustment Event. In
addition, a distribution to the holders of shares of beneficial
interest in the Trust of rights to subscribe for or purchase additional
Trust Shares under a shareholders protective rights plan or agreement
or any similar plan or agreement shall not be deemed to constitute a
Trust Common Dividend to the extent that the Trust makes provision so
that such rights, to the extent still outstanding with respect to the
outstanding Trust Shares, shall be issued to the holders of any Trust
Shares issued upon exercise of the Class A Exchange Right (and, to the
extent applicable, shall attach to such Trust Shares) in an amount and
manner and to the extent provided in such plans or agreements with
respect to already outstanding Trust Shares.
"Trust Conversion Notice" shall have the meaning set forth in
paragraph (c)(ii) of Article 6.16.5 hereof.
"Trust Conversion Right" shall have the meaning set forth in
paragraph (c)(i) of Article 6.16.5 hereof.
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"Trust Redemption Date" shall have the meaning set forth in
paragraph (b)(ii) of Article 6.16.6 hereof.
"Trust Redemption Notice" shall have the meaning set forth in
paragraph (b)(ii) of Article 6.16.6 hereof.
"Trust Redemption Right" shall have the meaning set forth in
paragraph (a) of Article 6.16.6 hereof.
"Trust Shares" shall mean the common shares of beneficial
interest in the Trust, par value $.01 per share, or any shares of
beneficial interest in the Trust into which such common shares may be
changed.
"Uncured Default" shall have the meaning set forth in
paragraph (a) of Article 6.16.9 hereof.
"Westin Transaction Agreement" shall mean the Transaction
Agreement dated as of September 8, 1997 among WHWE L.L.C., Woodstar
Investor Partnership, Nomura Asset Capital Corporation, Juergen
Bartels, W&S Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S
Lauderdale Corp., W&S Seattle Corp., Westin St. John Hotel Company,
Inc., W&S Denver Corp., W&S Atlanta Corp., the Trust, SLT Realty
Limited Partnership, the Corporation and SLC Operating Limited
Partnership, as such agreement may be amended from time to time.
6.16.3. DIVIDENDS.
(a) In General. The holders of Class B EPS will be entitled
(i) to receive a preferred dividend payable as described in paragraph (b) below
(a "Class B Preferred Dividend"), when, as and if declared by the Board of
Trustees out of assets of the Trust legally available for that purpose, based on
the payment of any Corporation Common Distribution and (ii) to participate on
the basis described in paragraph (c) below in any Trust Common Dividend, when,
as and if declared by the Board of Trustees out of assets of the Trust available
for that purpose (a "Class B Participation Dividend"). In certain circumstances,
the holders of Class B EPS will also be entitled to receive a Default Rate
Dividend, as provided in paragraph (d) below.
(b) Class B Preferred Dividend.
(i) Upon the payment by the Corporation of any
Corporation Common Distribution prior to the occurrence of a Liquidation Event,
the right to receive a Class B Preferred Dividend will automatically accrue with
respect to each share of Class B EPS as of the payment date for such Corporation
Common Distribution in an amount equal to the value of the Corporation Common
Distribution paid on each Corporation Share multiplied by the applicable
Dividend Correspondence Ratio described below. To the extent that any
Corporation Common Distribution consists of securities or other property (other
than cash), the Trust will have the option of paying the corresponding Class B
Preferred Dividend either (A) in the same form as such Corporation Common
Distribution (i.e., by delivery of the same type of securities or other
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<PAGE> 35
property as distributed in the Corporation Common Distribution), (B) in cash in
an amount equal to the fair market value of such securities or other property as
determined in good faith by the Board of Trustees subject to the rights of the
holders of the Class B EPS to request a valuation from a nationally recognized
investment banking firm as provided in paragraph (h)(v) of Article 6.16.5 hereof
or (C) a combination thereof. Each Class B Preferred Dividend will be cumulative
from the payment date for the related Corporation Common Distribution and will
be payable to holders of record of Class B EPS on such record date as shall be
fixed by the Board of Trustees, which record date shall be the same as the
record date for the corresponding Class A Preferred Dividend based on such
Corporation Common Distribution and not earlier than the record date for such
Corporation Common Distribution. The Board of Trustees may, at any time between
the declaration of a Corporation Common Distribution and the related payment
date, declare a corresponding Class B Preferred Dividend conditioned on the
actual payment of such Corporation Common Distribution (any such Class B
Preferred Dividend being sometimes referred to herein as a "Conditionally
Declared Class B Dividend" until such time as the corresponding Corporation
Common Distribution is paid, at which time it will no longer be deemed to be a
Conditionally Declared Class B Dividend but will instead be deemed to be an
accrued Class A Preferred Dividend). The "Dividend Correspondence Ratio" for the
purposes of determining the amount of any Class B Preferred Dividend accrual
shall mean the number of Class B Underlying Corporation Shares for which each
share of Class B EPS is indirectly exchangeable as of the record date for the
related Corporation Common Distribution upon exercise of the Class B Exchange
Right, as such number shall be proportionately adjusted to reflect any share
dividend, share split, reverse share split or other combination or subdivision
of the Class B EPS or the Class A EPS that becomes effective between (or, if the
record date for such event is different from the effective date therefor, that
has a record date that falls between) (A) the record date for the Corporation
Common Distribution and (B) the date of payment of such Corporation Common
Distribution or, if earlier, the record date for such Class B Preferred
Dividend.
(ii) So long as any shares of Class B EPS are
outstanding: (A) no Junior Dividend may be declared or paid or set apart for
payment unless all accrued Class B Preferred Dividends and Conditionally
Declared Class B Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment, (B)
no Parity Preferred Dividend shall be declared or paid or set aside for payment
unless a ratable portion of all accrued but unpaid Class B Preferred Dividends
and Conditionally Declared Class B Dividends has been or is concurrently
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for payment (with such ratable portion being based on the portion of the
accrued but unpaid Parity Preferred Dividends being paid) and (C) no Junior
Shares may be redeemed, purchased or otherwise acquired by the Trust (other than
a redemption, purchase or other acquisition of Trust Shares made for purposes of
and in compliance with requirements of an employee incentive or benefit plan of
the Trust or any subsidiary or upon any exchange or redemption of other
securities at the option of the holders thereof, or as required or permitted
under Article VI of the Declaration) for consideration (or any moneys paid or
made available for a sinking fund for the redemption of any Junior Shares),
directly or indirectly (except for conversion into or exchange for Junior
Shares) unless all accrued Class B Preferred Dividends and Conditionally
Declared Class B Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment.
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(c) Class B Participation Dividend. No Trust Common Dividend
may be declared in respect of the Trust Shares unless the Board of Trustees
concurrently declares a Class B Participation Dividend entitling each share of
Class B EPS to receive an amount equal to the amount of the Trust Common
Dividend declared on each Trust Share multiplied by the number of Class B
Underlying Trust Shares for which each share of Class B EPS is indirectly
exchangeable upon exercise of the Class B Conversion Right as of the record date
for such Trust Common Dividend. Such Class B Participation Dividend shall be
payable on the same date on which the corresponding Trust Common Dividend is
payable, shall be payable in the same form as the corresponding Trust Common
Dividend and shall be paid to holders of record of the Class B EPS on the same
record date as is fixed by the Board of Trustees for the payment of such Trust
Common Dividend.
(d) Default Rate Dividends. Notwithstanding the foregoing
provisions of this Article 6.16.3 but subject to paragraph (b) of Article
6.16.9, upon the occurrence and during the continuation of any Uncured Default,
dividends ("Default Rate Dividends") shall accrue with respect to the
outstanding shares of Class B EPS in an amount equal to the product of (i) the
Stated Value of each such share multiplied by (ii) an interest rate per annum
equal to LIBOR plus four percent (4%). Any such Default Rate Dividends shall be
cumulative, shall be deemed to constitute Class B Preferred Dividends for the
purposes hereof and shall be payable quarterly on March 1, June 1, September 1
and December 1 of each year, when, as and if declared by the Board of Trustees
out of assets of the trust legally available for that purpose; provided that,
if, at any time when there are accrued but unpaid Default Rate Dividends on the
Class B EPS, a Class B Preferred Dividend or Class B Participation Dividend
accrues pursuant to paragraph (b) or (c) of this Article 6.16.3 in an amount per
share that exceeds the amount of such accrued but unpaid Default Rate Dividends
per share, the holders of shares of Class B EPS shall be entitled to receive
such Class B Preferred Dividend or Class B Participation Dividend in accordance
with the provisions of such paragraphs (b) and (c) and the Default Rate
Dividends accrued through the date of accrual of such Class B Preferred Dividend
or Class B Participation Dividend shall be reduced to zero (although additional
Default Rate Dividends shall again commence to accrue immediately following such
date of accrual to the extent that the Uncured Default continues unremedied).
6.16.4. LIQUIDATION RIGHTS.
(a) In General. Upon the occurrence of any Liquidation Event,
the holders of Class B EPS will be entitled (i) to receive out of the assets of
the Trust legally available for liquidating distributions to holders of shares
of beneficial interests in the Trust, prior to the making of any Junior
Liquidating Distribution, a liquidating distribution in an amount equal to the
Class B Liquidation Preference described in paragraph (b) below determined as of
the effective date of such Liquidation Event or, if no effective date is
provided, as of the record date of the first liquidating distribution relating
to such Liquidation Event (in either such case, the "Liquidation Date") and (ii)
to participate on the basis described in paragraph (c) below in any liquidating
distribution to holders of Trust Shares (the "Class B Liquidation Participation
Right"). In determining whether a distribution (other than upon the occurrence
of a Liquidation Event), by dividend, redemption or other acquisition of shares
of beneficial interest in the Trust
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or otherwise, is permitted under Maryland law, amounts that would be needed, if
the Trust were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of the holders of Class A EPS whose
preferential rights upon dissolution are senior to those receiving the
distribution shall not be added to the Trust's total liabilities.
(b) Class B Liquidation Preference. The "Class B Liquidation
Preference" of a share of Class B EPS as of the applicable Liquidation Date
shall mean the sum of (A) the Base Preference Amount as of such date and (B) the
amount of any accrued but unpaid dividends in respect of each share of Class B
EPS as of such date (other than any such accrued but unpaid Class B Preferred
Dividends that have been declared with a record date prior to such Liquidation
Date, which the Trust shall separately be obligated to pay to the holders of
record of the Class B EPS as of such record date)(the "Supplemental Preference
Amount"). Until each holder of shares of Class B EPS has received distributions
equal to the Class B Liquidation Preference, no Junior Liquidating Distributions
may be paid to holders of any other class or series of shares of beneficial
interest in the Trust. Subject to the rights of the holders of shares of
beneficial interest in the Trust with liquidation preferences ranking prior to
or on a parity with the Class B Liquidation Preference, after payment shall have
been made in full of the Class B Liquidation Preference as provided in this
paragraph (b), Junior Liquidating Distributions may be paid to the holders of
any shares of beneficial interest entitled to receive such distributions and the
holders of the Class B EPS shall not be entitled to share therein except as
provided in paragraph (c) of this Article 6.16.4. In the event that the assets
of the Trust available for liquidating distributions to holders of shares of
beneficial interest in the Trust in connection with any Liquidation Event are
insufficient to pay the Class B Liquidation Preference on all outstanding Class
B EPS and any Parity Liquidation Preferences in respect of any other classes or
series of shares of beneficial interest in the Trust, then the holders of the
Class B EPS and such other classes and series of shares of beneficial interest
in the Trust shall share ratably in any such distribution of assets in
proportion to the Class B Liquidation Preference and the Parity Liquidation
Preferences to which they would otherwise be respectively entitled.
(c) Class B Liquidation Participation Rights. In addition to
being entitled to receive the Class B Liquidation Preference, upon the
occurrence of any Liquidation Event the holders of Class B EPS shall be entitled
to participate, pursuant to the Class B Liquidation Participation Right, ratably
with the holders of Trust Shares in any liquidating distributions to such
holders. For such purpose, each share of Class B EPS shall be deemed to
represent a number of Trust Shares equal to the number of Class B Underlying
Trust Shares for which each share of Class B EPS can be indirectly exchanged as
of the record date for such distribution.
6.16.5. CONVERSION RIGHTS.
(a) In General. Shares of Class B EPS shall be convertible
into shares of Class A EPS (A) at the option of the holder upon exercise of the
Class B Conversion Right at any time after the first anniversary of the Issue
Date and on or prior to the first anniversary of the CrossOver Date, to the
extent provided in paragraph (b) of this Article 6.16.5, or (B) at the option of
the Trust upon exercise of the Trust Conversion Right at any time after the
Cross-Over Date, to the extent provided in paragraph (c) of this Article 6.16.5.
In addition, as more specifically provided in Article 6.16.7 hereof, upon
receipt of a Class B Conversion/Redemption Notice from
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any holder of shares of Class B EPS at any time after the first anniversary of
the Cross-Over Date, the Trust will be required to elect to either exercise the
Trust Conversion Right or the Trust Redemption Right with respect to the shares
specified in such Class B Conversion/Redemption Notice.
(b) Class B Conversion Right.
(i) A holder of shares of Class B EPS shall have the
right, exercisable in the manner described in paragraph (b)(ii) below, at such
holder's option at any time after the first anniversary of the Issue Date and on
or prior to the first anniversary of the Cross-Over Date, to convert such shares
in whole or in part into fully paid and non-assessable shares of Class A EPS
based on the applicable Conversion Ratio described in paragraph (e) of this
Article 6.16.5 (the "Class B Conversion Right"); provided, however, that the
Class B Conversion Right may not be exercised (A) with respect to any shares of
Class B EPS that are already subject to a Trust Conversion Notice, (B) with
respect to any shares of Class B EPS that are already subject to a Class B
Redemption Notice or a Class B Conversion/Redemption Notice or (C) after the
applicable Redemption Date if the Trust has already given a Trust Redemption
Notice with respect to the applicable shares of Class B EPS, unless, in the case
of either (B) or (C), the Trust shall default in its obligations hereunder
arising as a result of such notice and such default shall not have been cured
within ten (10) days thereafter.
(ii) A holder of shares of Class B EPS desiring to
exercise the Class B Conversion Right with respect to such shares shall
surrender the certificate or certificates evidencing such shares, duly endorsed
or assigned to the Trust or in blank, to the Transfer Agent together with a duly
completed and executed conversion notice (a "Class B Conversion Notice") in such
form as the Trust shall prescribe from time to time and such related
certifications as the Trust may reasonably prescribe from time to time. Such
form of Class B Conversion Notice will also permit the holder of the Class B EPS
being converted to concurrently elect to exercise the Class A Exchange Right
with respect to the Class A EPS Shares to be issued pursuant to the exercise of
the Class B Conversion Right. Unless any shares of Class A EPS to be issued upon
conversion of such shares of Class B EPS are to be issued in the same name as
the name in which such shares of Class B EPS are registered, each share
certificate surrendered shall be accompanied by instruments of transfer, in form
reasonably satisfactory to the Trust, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any applicable
transfer or similar tax (or evidence reasonably satisfactory to the Trust
demonstrating that such taxes have been paid).
(iii) As promptly as practicable after receipt by the
Transfer Agent of a Class B Conversion Notice and the certificates and other
documents described above, the Trust shall issue and deliver at the office of
the Transfer Agent to the holder of the shares of Class B EPS being converted,
or on his or her written order, a certificate or certificates for the full
number of shares of Class A EPS issuable upon such conversion in accordance with
the provisions of this Article 6.16.5, and any fractional interest in respect of
a share of Class A EPS resulting from such conversion shall be settled as
provided in paragraph (d) of this Article 6.16.5; provided, however, that to the
extent that the holder of shares of Class B EPS with respect to which the Class
B Conversion Right has been exercised has simultaneously exercised the Class
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A Exchange Right with respect to the shares of Class A EPS issuable upon such
conversion, no such certificate or certificates shall be issued with respect to
such shares of Class A EPS (and there shall be no settlement of any such
fractional interests), but such Class A Exchange Right shall be deemed to have
been exercised with respect to such shares of Class A EPS (including any such
fractional interests) as of the date of receipt of the Class B Conversion Notice
and the certificates and other documents described above, and the rights and
obligations of the Trust and such holder arising therefrom shall be governed by
Article 6.15.5 hereof. If less than the full number of shares of Class B EPS
represented by the certificate or certificates surrendered to the Trust are to
be converted pursuant to an exercise of the Class B Conversion Right, the Trust
shall also deliver to the holder a new certificate or certificates evidencing
the excess shares not being converted.
(iv) The conversion resulting from any exercise of
the Class B Conversion Right shall be deemed to have been effected immediately
prior to the close of business on the date of receipt by the Transfer Agent of
the Class B Conversion Notice and the certificates and other documents described
above, and the Person or Persons in whose name or names any certificate or
certificates for shares of Class A EPS shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Class A EPS represented thereby at such time on such date, unless the
sharetransfer books of the Trust for the Class A EPS shall be closed on such
date, in which event such Person or Persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such sharetransfer books are open.
(c) Trust Conversion Right.
(i) Shares of Class B EPS will also be convertible at
any time after the first anniversary of the Cross-Over Date in whole or in part
at the option of the Trust into fully paid and non-assessable shares of Class A
EPS based on the applicable Conversion Ratio described below (the "Trust
Conversion Right"); provided, however, that the Trust Conversion Right may not
be exercised with respect to any shares of Class B EPS with respect to which (A)
the holder has already given a Class B Redemption Notice or a Class B Conversion
Notice or (B) the Trust has already given a Trust Redemption Notice.
(ii) The Trust Conversion Right may be exercised by
the Trust giving written notice of such exercise to the holders of the shares of
the Class B EPS with respect to which the Trust desires to exercise such right
(a "Trust Conversion Notice").
(iii) The shares of Class B EPS of a holder specified
in such Trust Conversion Notice shall be deemed to have been converted as of the
date of the applicable Trust Conversion Notice into the full number of shares of
Class A EPS issuable upon such conversion in accordance with the provisions of
this Article 6.16.5, and any fractional interest in respect of a share of Class
A EPS resulting from such conversion shall be settled as provided in paragraph
(d) of this Article 6.16.5. The conversion provided for in this paragraph (c)
shall be automatic without the requirement of any action on the part of the
affected holders of shares of Class B EPS and whether or not the certificates
evidencing such shares of Class B EPS are surrendered to the Trust or the
Transfer Agent; provided that the Trust shall not be obligated to issue to any
such
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holders certificates evidencing the shares of Class A EPS into which such Class
B EPS shares have been converted until certificates evidencing the shares of
Class B EPS held by such holder have been delivered to the Trust or the Transfer
Agent. If less than the full number of shares of Class B EPS represented by the
certificate or certificates surrendered to the Trust in connection with an
exercise of the Trust Conversion Right have been converted pursuant to such
exercise, the Trust shall also deliver to the holder a new certificate or
certificates evidencing the excess shares not being converted.
(d) Fractional Interests. No fractional shares or scrip
evidencing fractions of shares of Class A EPS shall be issued upon exercise of
the Class B Conversion Right or the Trust Conversion Right. Instead of any
fractional interest in a share of Class A EPS that would otherwise be
deliverable upon the conversion of shares of Class B EPS, the Trust shall pay to
the holder of such shares of Class B EPS an amount in cash equal to the product
of (A) such fraction, (B) the then current Exchange Ratio of Class A EPS for
Paired Shares, as determined pursuant to the provisions of paragraph (d) of
Article 6.15.5 hereof, and (C) the Current Market Price of the Paired Shares as
of the Trading Day immediately preceding the date on which the applicable Class
B Conversion Notice or Trust Conversion Notice (as applicable) and all related
certificates and other documents were received by the Transfer Agent.
(e) Conversion Ratio and Adjustments.
(i) Initially, one share of Class A EPS will be
issuable upon conversion of each share of Class B EPS pursuant to an exercise of
the Class B Conversion Right or the Trust Conversion Right (the "Conversion
Ratio"), which Conversion Ratio will be subject to adjustment from the Issue
Date through the Cross-Over Date. After such date, the Conversion Ratio will be
equal to the Class B Liquidation Preference (determined without taking into
consideration any accrued but unpaid dividends other than Default Rate
Dividends) as of the date of exercise of the Class B Conversion Right or the
Trust Conversion Right, as applicable, divided by the product of (A) the number
of Class A Underlying Paired Shares (including fractional interests) for which
each share of Class A EPS is exchangeable as of such date pursuant to Article
6.15.5 hereof multiplied by (B) the Current Market Price of the Paired Shares as
of such date. All calculations of the Conversion Ratio under this paragraph (e)
shall be made to the nearest one-tenth of a share (with .05 of a share being
rounded upward).
(ii) If, at any time between the Issue Date and the
Cross-Over Date, a Class A EPS Adjustment Event shall occur, the Conversion
Ratio in effect as of the close of business on the record date for such Class A
EPS Adjustment Event or, if no such record date applies, the effective date of
such Class A EPS Adjustment Event shall be adjusted so that in connection with
any exercise of the Class B Conversion Right or the Trust Conversion Right the
shares of Class B EPS subject to such exercise will be converted into the number
of shares of Class A EPS that such holder would have owned or been entitled to
receive after the happening of such Class A EPS Adjustment Event if such Class B
Conversion Right or Trust Conversion Right had been exercised immediately prior
to such record date or effective date. An adjustment pursuant to this
subparagraph (ii) shall become effective (subject to subparagraph (iv) below)
immediately upon the opening of business on the Business Day next following the
record date
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for the applicable Class A EPS Adjustment Event or, if no such record date
applies, the Business Day next following the effective date of such Class A EPS
Adjustment Event.
(iii) No adjustment in the Conversion Ratio shall be
required pursuant to subparagraph (ii) above unless such adjustment would
require a cumulative increase or decrease of at least one percent (1%) in such
ratio; provided, however, that any adjustments that by reason of this
subparagraph (iii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made.
(iv) In any case in which subparagraph (ii) above
provides that an adjustment to the Conversion Ratio shall become effective
immediately following the record date for a Class A EPS Adjustment Event, the
Trust may defer until the occurrence of such event (A) issuing to the holder of
any shares of Class B EPS converted after such record date but before the
occurrence of such event the additional shares of Class A EPS issuable pursuant
to such conversion by reason of the adjustment required pursuant to subparagraph
(ii) in respect of such Class A EPS Adjustment Event and (B) paying to such
holder any amount of cash in lieu of any fractional interest in shares of Class
EPS pursuant to paragraph (d) of this Article 6.16.5.
(v) If at the time of any exercise of the Class B
Conversion Right on or prior to the Cross-Over Date there are any accrued but
unpaid Default Rate Dividends with respect to the shares of Class B EPS being
converted, the Conversion Ratio shall be adjusted so that the number of shares
of Class A EPS issuable upon such exercise is increased by a number of shares
(the "Class B Dividend Replacement Shares", which term shall also be deemed to
refer to any shares of Class A EPS issued upon exercise of the Class B
Conversion Right in respect of accrued but unpaid Default Rate Dividends
pursuant to subparagraph (ii) above) equal to (A) the amount of the accrued but
unpaid Default Rate Dividends with respect to the shares of Class B EPS being
exchanged divided by (B) the product of (1) the number of Paired Shares for
which each share of Class A EPS is then exchangeable upon exercise of the Class
A Exchange Right multiplied by (2) the Current Market Price of the Paired Shares
during the five (5) Trading Days immediately preceding the date of delivery of
the applicable Class B Conversion Notice or Trust Conversion Notice and all
related certificates and other documents.
(f) Effect of Mergers and Certain Other Transactions. If, at
any time after the Issue Date, the Trust shall become a party to any
transaction, including, without limitation, a merger, consolidation, statutory
share exchange, self tender offer for all or substantially all outstanding Trust
Shares, sale of all or substantially all of the Trust's assets or
recapitalization of the Class A EPS (but excluding any event constituting a
Class A EPS Adjustment Event)(each of the foregoing being referred to herein as
a "Transaction"), in each case as a result of which the outstanding shares of
Class A EPS shall be converted into or exchanged for the right to receive stock,
securities or other property (including cash or any combination thereof),
effective as of the effective date of such Transaction, each share of Class A
EPS issuable upon exercise of the Class B Conversion Right or the Trust
Conversion Right with respect to any shares of Class B EPS that are not
converted into or exchanged for the right to receive stock, securities or other
property in connection with such Transaction shall thereafter be deemed to
consist of the kind and amount of shares of stock and other securities and
property (including cash or any combination thereof) that would have been held
or receivable upon the consummation of such Transaction by a holder of a
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number of shares of Class A EPS equal to the number of Class B Underlying Class
A EPS Shares into which each share of Class B EPS would have been convertible
immediately prior to such Transaction, assuming such holder of shares of Class A
EPS (A) is not a Person with which the Trust consolidated or into which the
Trust was merged or which merged into the Trust or to which such sale or
transfer was made, as the case may be (a "Constituent Person"), or an Affiliate
of a Constituent Person and (B) failed to exercise his or her rights of
election, if any, as to the kind or amount of stock, securities an other
property (including cash) receivable upon such Transaction (provided that if the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction is not the same for each share of Class A EPS
held immediately prior to such Transaction by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-Electing Share"), then for the purposes of this
subparagraph (ii) the kind and amount of stock, securities and other property
(including cash) receivable upon such Transaction by each Non-Electing Shares
shall be deemed to be the kind and amount so receivable per share by a plurality
of the Non-Electing Shares). The provisions of this paragraph (f) shall
similarly apply to successive Transactions.
(g) Notice of Adjustment. Whenever the Conversion Ratio or the
nature and amount of the securities and other property issuable upon exercise of
the Class B Conversion Right or the Trust Conversion Right is adjusted as
provided in paragraph (e) or (f) above, the Trust shall promptly file with the
Transfer Agent an officer's certificate setting forth the Conversion Ratio after
such adjustment and, in the case of an adjustment pursuant to paragraph (f),
describing the kind and amount of stock, securities and other property
(including cash) thereafter issuable upon such exercise. Such certificate shall
also set forth a brief statement of the facts requiring such adjustment and
shall be conclusive evidence of the correctness of such adjustment absent
manifest error. Promptly after delivery of such certificate, the Trust shall
prepare a notice of such adjustment setting forth the adjusted Conversion Ratio,
the effective date of such adjustment and, in the case of an adjustment pursuant
to paragraph (f), a description of the kind and amount of stock, securities and
other property (including cash) thereafter issuable upon exercise of the Class B
Conversion Right or the Trust Conversion Right, and shall mail such notice of
such adjustment to the holder of each share of Class B EPS at such holder's last
address as shown on the sharerecords of the Trust.
(h) Miscellaneous Provisions.
(i) There shall be no adjustment of the Conversion
Ratio in case of the issuance of any shares of beneficial interest in the Trust
in a reorganization, acquisition or other similar transaction except as
specifically set forth in this Article 6.16.5.
(ii) If the Trust shall take any action affecting the
Trust Shares or the Corporation shall take any action affecting the Corporation
Shares, other than an action described in this Article 6.16.5, that in the
opinion of the Board of Trustees would materially and adversely affect the
conversion rights of the holders of the Class B EPS provided for in this Article
6.16.5, the Conversion Ratio may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Trustees, in its sole
discretion, may determine to be equitable in the circumstances.
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(iii) The Trust covenants that any shares of Class A
EPS issued upon exercise of the Class B Conversion Right or the Trust Conversion
Right will be validly issued, fully paid and non-assessable. The Trust shall
reserve and shall at all times have reserved out of its authorized but unissued
Class A EPS sufficient Class A EPS to permit the exercise of the Class B
Conversion Right. The Trust shall also comply with its obligations under
paragraph (g)(iii) of Article 6.15.5 hereof as if such shares of Class A EPS
issuable upon exercise of the Class B Conversion Right were issued and
outstanding. The Trust shall pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of Class
A EPS or other securities or property upon exercise of the Class B Conversion
Right or the Trust Conversion Right; provided, however, that the Trust shall not
be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of any shares of Class A EPS or other
securities or property in a name other than that of the holder of the shares of
Class B EPS being converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue or delivery has paid to the Trust the
amount of any such tax or established, to the reasonable satisfaction of the
Trust, that such tax has been paid.
(iv) Except as provided in paragraph (g)(v) below,
any determination required or permitted to be made by the Board of Trustees by
these Articles Supplementary shall be final, conclusive and binding on the
holders of Class B EPS.
(v) In the event that the Trust elects to pay in cash
a Class B Preferred Dividend corresponding to a Corporation Common Distribution
in the form of securities or other property and in connection therewith the
Board of Trustees makes a determination of the fair market value of such
securities or other property, the Trust shall deliver to each affected holder of
Class B EPS a written notice setting forth the valuation determined by the Board
of Trustees. At any time within ten (10) Business Days after receipt of such
notice, any affected holder of Class B EPS may request in writing that the Trust
obtain a written valuation of such securities or other property from an
investment banking firm. Promptly after receipt of any such request, the Trust
shall select a nationally recognized investment banking firm to perform such
valuation and shall provide such investment banking firm with such relevant
information as the Trust may have in relation thereto. Such investment banking
firm shall be instructed to prepare a written valuation report within thirty
(30) days after its appointment, and upon receipt of such valuation report, the
Trust shall mail a copy to each affected holder of Class B EPS. If the valuation
as determined by such investment banking firm is greater than the valuation as
determined by the Board of Trustees, the Trust shall promptly pay the amount of
such difference to each affected holder of Class B EPS. If, however, the
valuation as determined by such investment banking firm is less than the
valuation determined by the Board of Trustees, the Trust may at its option
require each affected holder of Class B EPS to repay the amount of such
difference to the Trust, which amount shall be so repaid by each such holder
promptly after receipt of the Trust's request. The fees and expenses of such
investment banking firm shall be paid by the Trust.
6.16.6. REDEMPTION RIGHTS.
(a) In General. Shares of Class B EPS will be redeemable at
the option of the Trust at any time after the Cross-Over Date in accordance with
the provisions of paragraph (b) of
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this Article 6.16.6 (the "Trust Redemption Right") and will be redeemable at the
option of the holders at any time during the period commencing on the Cross-Over
Date and ending on the first anniversary of the Cross-Over Date in accordance
with the provisions of paragraph (c) of this Article 6.16.6 (the "Class B
Redemption Right"). Prior to the Cross-Over Date, shares of Class B EPS will not
be redeemable at the option of either the Trust or the holder. In addition, as
more specifically provided in Article 6.16.7 hereof, upon receipt of a Class B
Conversion/Redemption Notice from any holder of shares of Class B EPS at any
time after the first anniversary of the Cross-Over Date, the Trust will be
required to elect to either exercise the Trust Conversion Right or the Trust
Redemption Right with respect to the shares specified in such Class B
Conversion/Redemption Notice.
(b) Redemption at the Option of the Trust.
(i) Pursuant to the Trust Redemption Right, shares of
Class B EPS may be redeemed in cash in whole or in part at the option of the
Trust at any time and from time to time (in the case of partial redemptions)
after the Cross-Over Date at a redemption price (the "Redemption Price") equal
to the Class B Liquidation Preference of such shares as of the applicable Trust
Redemption Date; provided, however, that the Trust Redemption Right may not be
exercised with respect to any shares of Class B EPS that are already subject to
(A) a Trust Conversion Notice or (B) a Class B Conversion Notice or a Class B
Redemption Notice. Such redemption shall be deemed to have been made as of the
close of business on the applicable Trust Redemption Date, and after such Trust
Redemption Date, provided that the Trust Redemption Price has been duly paid or
set apart for payment, dividends shall cease to accrue on the shares of Class B
EPS called for redemption, such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as shareholders of the
Trust shall cease, except the right to receive the Redemption Price, without
interest thereon, upon surrender of the certificates evidencing such shares.
(ii) Notice of any exercise of the Trust Redemption
Right (a "Trust Redemption Notice") shall be given to the holders of the shares
of Class B EPS to be redeemed not less than ten (10) nor more than sixty (60)
days prior to the date fixed for redemption (the "Trust Redemption Date"). Each
Trust Redemption Notice shall be given by first class mail to each holder of
shares to be redeemed at such holder's address as shown on the sharebooks of the
Trust and shall specify (A) the Trust Redemption Date, (B) the number of shares
of Class B EPS to be redeemed from such holder, (C) the Trust Redemption Price,
(D) the place or places where certificates for the shares of Class B EPS to be
redeemed are to be surrendered for payment of the Trust Redemption Price, (E)
that dividends will cease to accrue on the shares of Class B EPS to be redeemed
on the Redemption Date and (F) that the ability of the holders to exercise the
Class B Conversion Right with respect to the shares to be redeemed will
terminate on the Trust Redemption Date. If less than all outstanding shares of
Class B EPS are to be redeemed upon exercise of the Trust Redemption Right, the
shares to be redeemed shall be selected in such manner as the Trust deems
appropriate.
(iii) Upon receipt of a Trust Redemption Notice, each
holder of shares of Class B EPS being redeemed shall surrender to the Transfer
Agent a certificate or certificates evidencing such shares. As soon as
practicable, and in any event within five (5) Business Days,
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after such surrender, the Trust shall pay the applicable Redemption Price to
such holder and, if less than the full number of shares represented by the
certificate or certificates so surrendered are to be redeemed, the Trust shall
deliver to such holder a certificate or certificates evidencing the excess
shares not being redeemed. The Redemption Price shall be payable at the election
of the Trust by check or by wire transfer to an account designated in writing by
the holder at least two (2) Business Days prior to the applicable Trust
Redemption Date, if one has been so designated.
(c) Redemption at the Option of the Holders.
(i) Under the Class B Redemption Right, to the extent
permitted under applicable law, each holder of shares of Class B EPS shall have
the right, at his or her option, to require the Trust at any time or from time
to time (in the case of partial redemptions) after the Cross-Over Date and on or
prior to the first anniversary of the Cross-Over Date to redeem some or all of
such shares in cash at the Redemption Price (determined as of the Class B
Redemption Date); provided, however, that the Class B Redemption Right may not
be exercised with respect to any shares of Class B EPS that are already subject
to (A) a Trust Conversion Notice or a Trust Redemption Notice or (B) a Class B
Conversion Notice. Such redemption shall be deemed to have been made as of the
close of business on the applicable Class B Redemption Date, and after such
Class B Redemption Date, provided that the Redemption Price has been duly paid
or set apart for payment, dividends shall cease to accrue on the shares of Class
B EPS surrendered for redemption, such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as shareholders of the
Trust shall cease, except the right to receive the Redemption Price, without
interest thereon.
(ii) A holder of shares of Class B EPS may exercise
the Class B Redemption Right with respect to some or all of such shares by
surrendering a certificate or certificates evidencing the shares to be redeemed,
duly endorsed or assigned to the Trust in blank, to the Transfer Agent
accompanied by a written notice (a "Class B Redemption Notice") in such form as
the Trust shall prescribe from time to time specifying the number of shares
(which shall be a whole number) to be redeemed in accordance with the provisions
of this paragraph (c). As soon as practicable, and in any event within five (5)
Business Days, after receipt of a Class B Redemption Notice and the related
certificates (the date of such receipt being sometimes referred to herein as the
"Class B Redemption Date"), to the extent permitted under applicable law, the
Trust shall pay the Redemption Price to the holder and, if less than the full
number of shares of Class B EPS represented by the certificate or certificates
surrendered together with such Class B Redemption Notice are to be redeemed, the
Trust shall deliver to such holder a certificate or certificates evidencing the
excess shares not being redeemed. The Redemption Price shall be payable at the
election of the Trust by check or by wire transfer to an account designated in
writing by the holder at least two (2) Business Days prior to the applicable
Class B Redemption Date, if one has been so designated.
6.16.7. CLASS B CONVERSION/REDEMPTION ELECTION RIGHT.
In addition to the Class B Conversion Right and the Class B
Redemption Right, at any time after the first anniversary of the Cross-Over
Date, each holder of shares of Class B EPS will have the right (the "Class B
Conversion/Redemption Election Right"), upon written notice to
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the Trust in such form as the Trust shall prescribe from time to time (a "Class
B Conversion/Redemption Notice"), to require that the Trust elect either to
exercise the Trust Conversion Right or the Trust Redemption Right described
below with respect to the shares of Class B EPS held by such holder and
designated in the Class B Conversion/Redemption Notice; provided, however, that
the Class B Conversion Right may not be exercised with respect to any shares of
Class B EPS (A) with respect to which the holder has already given a Class B
Redemption Notice or (B) after the applicable Redemption Date if the Trust has
already given a Trust Redemption Notice with respect to such shares unless, in
either such case, the Trust shall default in the payment of the applicable
Redemption Price required to be paid pursuant to Article 6.16.6 above. Within
five (5) Business Days after receipt of any such Class B Conversion/Redemption
Notice, the Trust shall either give the relevant holder a Trust Conversion
Notice or a Trust Redemption Notice with respect to the shares of Class B EPS
specified in such Class B Conversion/Redemption Notice.
6.16.8. REACQUIRED SHARES TO BE RETIRED.
All shares of Class B EPS which shall have been issued and
reacquired in any manner by the Trust shall be restored to the status of
authorized but unissued shares of beneficial interest in the Trust without
designation as to class.
6.16.9. DEFAULT RIGHTS.
(a) Consequences of Uncured Default. Subject to paragraph (b)
of this Article 6.16.9, in the event that the Trust at any time defaults in its
obligations with respect to any exercise of the Class B Redemption Right, the
Class B Conversion Right or the Class B Conversion/Redemption Election Right,
and such default shall continue for a period of thirty (30) days from the date
that performance of such obligations was due (an "Uncured Default"), then: (i)
the holders of the outstanding shares of Class B EPS will have the rights with
respect to the election of two additional members of the Board of Trustees
described in paragraph (c) of Article 6.16.10 hereof, (ii) the dividend rate on
the Class B EPS will be increased as provided in paragraph (d) of Article 6.16.3
hereof, (iii) the Registration Rights Agreement will be amended to provide the
holders of Class B EPS with registration rights thereunder and (iv) the
Cross-Over Date (if not already past) will be extended by a number of days equal
to the number of days that an Uncured Default continues unremedied. Any Uncured
Default may be waived at any time by the holders of shares of Class B EPS
constituting a majority of all shares of Class B EPS then outstanding.
6.16.10. VOTING.
(a) General Voting Rights. The holders of shares of Class B
EPS shall be entitled to vote upon all matters upon which holders of Trust
Shares have the right to vote, and shall be entitled to the number of votes
equal to the largest whole number of Class B Underlying Trust Shares for which
such shares of Class B EPS could be indirectly exchanged (assuming the exercise
of the Class B Conversion Right and the concurrent exercise of the Class A
Exchange Right with respect to the shares of Class A EPS issuable upon exercise
of such Class B Conversion Right) as of the record date for determination of the
shareholders entitled to vote on
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such matters, or, if no such record date is established, as of the date such
vote is taken or any written consent of shareholders is solicited, such votes to
be counted together with all other shares of beneficial interest in the Trust
having general voting powers and not separately as a class.
(b) Special Voting Rights. So long as any shares of Class B
EPS are outstanding, in addition to any other vote or consent of holders of such
shares required by the Declaration or these Articles Supplementary, the
affirmative vote of at least a majority of the votes entitled to be cast by the
holders of all outstanding shares of Class B EPS, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for that
purpose, shall be necessary for effecting or validating any amendment,
alteration or repeal of any of the provisions of the Declaration or these
Articles Supplementary that materially and adversely affects the voting powers,
rights or preferences of the holders of the Class B EPS disproportionately
(based on the number of Underlying Class B Trust Shares at the time) to the
effect of such amendment, alteration or repeal on the holders of the Trust
Shares; provided, however, that (i) any amendment of the provisions of the
Declaration so as to authorize or create, or to increase the authorized amount
of, any class or series of shares of beneficial interest in the Trust, whether
ranking prior to, on a parity with or junior to the Class B EPS shall not be
deemed to materially and adversely affect the voting powers, rights or
preferences of the holders of Class B EPS and (ii) no filing with the State
Department of Assessments and Taxation of Maryland by the Trust in connection
with a merger, consolidation or sale of all or substantially all of the assets
of the Trust shall be deemed to be an amendment, alteration or repeal of any of
the provisions of the Declaration or these Articles Supplementary unless such
filing expressly purports to amend, alter or repeal one or more of such
provisions. For the purposes of this paragraph (b), each share of Class B EPS
will have one vote per share.
(c) Default Voting Rights.
(i) Upon the occurrence of any Uncured Default, the
number of trustees then constituting the Board of Trustees shall be increased by
two and the holders of the outstanding shares of Class B EPS shall be entitled
to elect the two additional trustees to serve on the Board of Trustees at any
annual meeting of shareholders, or at a special meeting of the holders of Class
B EPS then outstanding called as provided in subparagraph (ii) below. If such
Uncured Default shall at any time cease to be continuing or shall be waived,
then the right of the holders of the Class B EPS to elect such additional two
trustees shall cease (but subject always to the same provision for the vesting
of such voting rights upon the occurrence of any subsequent Uncured Default) and
the terms of office of all persons elected as trustees by such holders shall
forthwith terminate and the number of trustees constituting the Board of
Trustees shall be reduced accordingly. For the purposes of this paragraph (c),
each share of Class B EPS will have one vote per share.
(ii) At any time after the voting power described in
subparagraph (i) above shall have been vested in the holders of shares of Class
B EPS, the Secretary of the Trust may, and upon the written request of any
holder of Class B EPS (addressed to the Secretary at the principal office of the
Trust) shall, call a special meeting of the holders of the Class B EPS for the
election of the two trustees to be elected by them as herein provided, such call
to be made
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by notice similar to that provided in the Trustees' Regulations of the Trust for
a special meeting of the shareholders or as required by law. If any such special
meeting required to be called as above provided shall not be called by the
Secretary within twenty (20) days after receipt of such request, then any holder
of shares of Class B EPS may call such meeting, upon the notice above provided
and for that purpose shall have access to the sharebooks of the Trust. The
trustees elected at any such special meeting shall hold office until the next
annual meeting of the shareholders or special meeting held in lieu thereof if
such office shall not have previously terminated as above provided. If any
vacancy shall occur among the trustees elected by the holders of the Class B
EPS, a successor shall be elected by the Board of Trustees, upon the nomination
of the then-remaining trustee elected by the holders of the Class B EPS or the
successor of such remaining trustee, to serve until the next annual meeting of
the shareholders if such office shall not have previously terminated as provided
above.
6.16.11. RECORD HOLDERS.
The Trust and the Transfer Agent may deem and treat the record
holder of any Class B EPS as the true and lawful owner thereof for all purposes,
and neither the Trust nor the Transfer Agent shall be affected by any notice to
the contrary.
6.16.11. RESTRICTIONS ON OWNERSHIP AND TRANSFER.
The Class B EPS constitute shares of beneficial interest in
the Trust that are governed by and issued subject to all the limitations, terms
and conditions of the Declaration applicable to shares of beneficial interest in
the Trust generally, including, without limitation, the terms and conditions
(including exceptions and exemptions) of Article VI of the Declaration
applicable to shares of beneficial interest in the Trust. The foregoing sentence
shall not be construed to limit the applicability to the Class B EPS of any
other term or provision of the Declaration. No restrictions on the
transferability of shares of Class A EPS shall be enforced by the Trust to the
extent that such restrictions would otherwise cause the Trust to fail to meet
the requirements of Section 856(a)(2) of the Code.
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