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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
REALTY INCOME CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 33-0580106
(State of Incorporation) (IRS Employer Identification Number)
220 West Crest Street, Escondido, California 92025
(Address of principal executive offices) (Zip Code)
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If this form relates to the If this form relates to the
registration of a class of securities registration of a class of securities
pursuant to Section 12(b) of the pursuant to Section 12(g) of the
Exchange Act and is effective Exchange Act and is effective
pursuant to General Instruction A.(c), pursuant to General Instruction A.(d),
please check the following box. /X/ please check the following box. / /
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Securities to be registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange on which
to be so registered each class is to be registered
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9 3/8% Class B Cumulative Redeemable New York Stock Exchange, Inc.
Preferred Stock
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Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
This registration statement relates to the registration with the
Securities and Exchange Commission of up to 2,760,000 shares of 9 3/8% Class
B Cumulative Redeemable Preferred Stock (the "Preferred Stock") of Realty
Income Corporation, a Maryland corporation (the "Registrant"). A description
of the Preferred Stock is incorporated herein by reference to the Section
entitled "Description of Class B Preferred Stock" in the Registrant's
Prospectus Supplement relating to the Preferred Stock which was filed with
the Securities and Exchange Commission (the "SEC") pursuant to Rule 424(b) on
May 21, 1999, and the Section entitled "Description of Preferred Stock" in
the related prospectus dated October 1, 1997 filed with the SEC on October 2,
1997.
Item 2. EXHIBITS
1. Articles of Incorporation, incorporated herein by reference to Appendix
B in the Registrant's 1997 Proxy Statement on Schedule 14A filed with
the Securities and Exchange Commission on March 28, 1997.
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2. Bylaws as amended and restated, incorporated herein by reference to
Appendix C in the Registrant's 1997 Proxy Statement on Schedule 14A
filed with the Securities and Exchange Commission on March 28, 1997.
3. Rights Agreement, dated as of June 25, 1998 between Realty Income
Corporation and The Bank of New York incorporated herein by reference
from the form of Articles Supplementary of the Class A Junior
Participating Preferred Stock of Realty Income Corporation as Exhibit
A, the Form of Right Certificate as Exhibit B and the Summary of Rights
to Purchase Preferred Shares as Exhibit C to the Registrant's
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on June 26, 1998.
4. Articles Supplementary relating to the 9 3/8% Class B Cumulative
Redeemable Preferred Stock, dated May 24, 1999.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned hereunto duly
authorized.
REALTY INCOME CORPORATION
Dated: May 24, 1999 By: /s/ Michael R. Pfeiffer
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Name: Michael R. Pfeiffer
Title: Senior Vice-President, General Counsel
and Secretary
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REALTY INCOME CORPORATION
ARTICLES SUPPLEMENTARY CLASSIFYING
SHARES OF
9 3/8% CLASS B CUMULATIVE REDEEMABLE PREFERRED STOCK
Realty Income Corporation, a Maryland corporation (the "Company"),
certifies to the State Department of Assessments and Taxation of Maryland (the
"Department") that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Company (the "Board of Directors") by Article VI of the charter
of the Company filed with the Department on March 25, 1997 (the "Charter") and
Section 2-208 of the Maryland General Corporation Law ("MGCL"), the Board of
Directors of the Company has, by resolution duly adopted at meetings duly called
and held on May 5, 1999 and May 20, 1999, classified and designated a separate
class of unissued preferred stock of the Company, $1.00 par value per share
("Preferred Stock"), to consist of 2,760,000 shares of such class of Preferred
Stock, and has provided for the issuance of such shares.
SECOND: The classification increases the number of shares classified as
Class B Preferred Stock from no shares immediately prior to the classification
to 2,760,000 shares immediately after the classification. The classification
decreases the number of shares classified as Preferred Stock from 19,000,000
shares immediately prior to the reclassification to 16,240,000 shares
immediately after the classification.
THIRD: The following is a description of the preferences, conversion and
other rights, voting powers, restrictions and limitations as to dividends and
other distributions, qualifications and terms and conditions of redemption,
which upon any restatement of the Charter shall be made part of Article VI of
the Charter, with any necessary or appropriate changes to the enumeration or
lettering of sections or subsections hereof:
9 3/8% CLASS B CUMULATIVE REDEEMABLE
PREFERRED STOCK
A. DESIGNATION AND NUMBER. A class of Preferred Stock, designated the "9
3/8% Class B Cumulative Redeemable Preferred Stock" (the "Class B Preferred
Stock"), is hereby established. The number of shares of the Class B Preferred
Stock shall be 2,760,000 shares.
B. MATURITY. The Class B Preferred Stock has no stated maturity and will
not be subject to any sinking fund or mandatory redemption.
C. RANK. The Class B Preferred Stock will rank, with respect to rights
to the payment of dividends and the distribution of assets in the event of any
liquidation, dissolution or winding up of the Company, (i) senior to all classes
or series of common stock of the Company ("Common Stock"), senior to the
Company's Class A Junior Participating Preferred Stock, par
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value $1.00 per share (the "Class A Preferred Stock"), and senior to all
other equity securities of the Company other than equity securities referred
to in clauses (ii) and (iii) of this sentence; (ii) on a parity with all
equity securities of the Company the terms of which specifically provide that
such equity securities rank on a parity with the Class B Preferred Stock with
respect to rights to the payment of dividends and the distribution of assets
in the event of any liquidation, dissolution or winding up of the Company;
and (iii) junior to all equity securities of the Company the terms of which
specifically provide that such equity securities rank senior to the Class B
Preferred Stock with respect to rights to the payment of dividends and the
distribution of assets in the event of any liquidation, dissolution or
winding up of the Company. The term "equity securities" does not include
convertible debt securities.
D. DIVIDENDS.
(1) Holders of shares of the Class B Preferred Stock are entitled to
receive, when, as, and if authorized by the Board of Directors and declared by
the Company, out of funds of the Company legally available for the payment of
dividends, cumulative cash dividends at the rate of 9 3/8% of the Liquidation
Preference (as defined below) per annum per share (equivalent to an annual rate
of $2.34375 per share). Dividends on the Class B Preferred Stock shall accrue
daily, shall accrue and be cumulative from May 25, 1999 (the "Original Issue
Date") and shall be payable quarterly in arrears on the last day of March, June,
September and December (each a "Dividend Payment Date") of each year, commencing
June 30, 1999; provided that if any Dividend Payment Date is not a Business Day
(as hereinafter defined), then the dividend which would otherwise have been
payable on such Dividend Payment Date may be paid on the next succeeding
Business Day with the same force and effect as if paid on such Dividend Payment
Date and no interest or additional dividends or other sum shall accrue on the
amount so payable for the period from and after such Dividend Payment Date to
such next succeeding Business Day. The period from and including the Original
Issue Date to but excluding the first Dividend Payment Date, and each subsequent
period from and including a Dividend Payment Date to but excluding the next
succeeding Dividend Payment Date, is hereafter called a "Dividend Period." Any
dividend payable on the Class B Preferred Stock, including dividends payable for
any partial dividend period, will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Dividends will be payable to holders of
record as they appear in the stock records of the Company at the close of
business on the applicable record date, which shall be the 15th day of the
calendar month in which the applicable Dividend Payment Date falls or such other
date designated by the Board of Directors for the payment of dividends that is
not more than 30 nor less than 10 days prior to such Dividend Payment Date
(each, a "Dividend Record Date"). Notwithstanding any provision to the contrary
contained herein, each outstanding share of Class B Preferred Stock shall be
entitled to receive, and shall receive, a dividend with respect to any Dividend
Record Date equal to the dividend paid with respect to each other share of
Class B Preferred Stock which is outstanding on such date. The dividends
payable on any Dividend Payment Date shall include dividends accrued to but
excluding such Dividend Payment Date.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
not a day on which banking institutions in The City of New York are authorized
or required by law, regulation
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or executive order to close. All references herein to "accrued and unpaid"
dividends or "accumulated and unpaid" dividends on the Class B Preferred
Stock (and all references of like import) shall include, unless otherwise
expressly stated or the context otherwise requires, both accrued dividends
and accumulated dividends, if any, on the Class B Preferred Stock; and all
references herein to "accrued and unpaid" dividends or "accumulated and
unpaid" dividends on any other class or series of stock of the Company shall
include, if (and only if) such class or series of stock provides for
cumulative dividends and unless otherwise expressly stated or the context
otherwise requires, accumulated dividends, if any, on such class or series of
stock.
(2) No dividends on shares of Class B Preferred Stock shall be authorized
by the Board of Directors or paid or set apart for payment by the Company at any
time when the terms and provisions of any agreement of the Company, including
any agreement relating to its indebtedness, prohibits such authorization,
payment or setting apart for payment or provides that such authorization,
payment or setting apart for payment would constitute a breach of or a default
under any such agreement, or if such authorization, payment or setting apart
shall be restricted or prohibited by law.
(3) Anything in these terms of the Class B Preferred Stock to the contrary
notwithstanding, dividends on the Class B Preferred Stock will accrue and be
cumulative from the Original Issue Date, whether or not the Company has
earnings, whether or not there are funds legally available for the payment of
such dividends and whether or not such dividends are declared. No interest, or
sum in lieu of interest, shall be payable in respect of any dividend payment or
payments on the Class B Preferred Stock which may be in arrears, and holders of
the Class B Preferred Stock will not be entitled to any dividends, whether
payable in cash, securities or other property, in excess of full cumulative
dividends described above. Any dividend payment made on the Class B Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to the Class B Preferred Stock.
(4) If, for any taxable year, the Company elects to designate as a
"capital gain dividend" (as defined in Section 857 of the Internal Revenue Code
of 1986, as amended (the "Code")) any portion (the "Capital Gains Amount") of
the dividends (as determined for federal income tax purposes) paid or made
available for the year to holders of all classes of the Company's stock (the
"Total Dividends"), then that portion of the Capital Gains Amount that shall be
allocable to the holders of Class B Preferred Stock shall be in proportion to
the amount that the total dividends (as determined for federal income tax
purposes) paid or made available to the holders of the Class B Preferred Stock
for the year bears to the Total Dividends. The Company will make a similar
allocation with respect to any undistributed long-term capital gains of the
Company which are to be included in its stockholders' long-term capital gains,
based on the allocation of the Capital Gains Amount which would have resulted if
such undistributed long-term capital gains had been distributed as "capital
gains dividends" by the Company to its stockholders.
(5) No full dividends will be declared or paid or set apart for payment on
any class or series of Preferred Stock ranking, as to dividends, on a parity
with or junior to the Class B Preferred Stock for any period unless full
cumulative dividends have been or contemporaneously
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are declared and paid or declared and a sum sufficient for the payment
thereof is set apart for such payment on the Class B Preferred Stock for all
past Dividend Periods and the then current Dividend Period. When dividends
are not paid in full (or a sum sufficient for such full payment is not so set
apart) upon the Class B Preferred Stock and the shares of any other class or
series of Preferred Stock ranking on a parity as to dividends with the Class
B Preferred Stock, all dividends declared upon the Class B Preferred Stock
and any other class or series of Preferred Stock ranking on a parity as to
dividends with the Class B Preferred Stock shall be declared pro rata so that
the amount of dividends declared per share of Class B Preferred Stock and
such other class or series of Preferred Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on the Class
B Preferred Stock and such other class or series of Preferred Stock (which
shall not include any accumulation in respect of unpaid dividends for prior
dividend periods if such other class or series of Preferred Stock does not
have a cumulative dividend) bear to each other.
(6) Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Class B Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment for all past Dividend Periods and
the then current Dividend Period, no dividends (other than in shares of Common
Stock or other shares of stock of the Company ranking junior to the Class B
Preferred Stock as to dividends and as to the distribution of assets upon
liquidation, dissolution and winding up of the Company) shall be declared or
paid or set aside for payment nor shall any other distribution be declared or
made upon the Common Stock or any other class or series of stock of the Company
ranking junior to or on a parity with the Class B Preferred Stock as to
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up of the Company nor shall any shares of Common Stock or shares of any
other class or series of stock of the Company ranking junior to or on a parity
with the Class B Preferred Stock as to dividends or as to the distribution of
assets upon liquidation, dissolution or winding up of the Company be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such shares of
any such stock) by the Company (except by conversion into or exchange for other
stock of the Company ranking junior to the Class B Preferred Stock as to
dividends and as to the distribution of assets upon liquidation, dissolution and
winding up of the Company and except for purchases of stock of the Company
pursuant to Paragraph I hereof for the purpose of preserving the Company's
qualification as a REIT (as defined below) for federal and/or state income tax
purposes, or pursuant to comparable Charter provisions with respect to other
classes or series of the Company's stock).
E. RESERVED.
F. LIQUIDATION PREFERENCE. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of the
outstanding shares of Class B Preferred Stock shall be entitled to receive and
to be paid out of the assets of the Company legally available for distribution
to its shareholders a liquidation preference of $25 per share (the "Liquidation
Preference"), plus an amount equal to any accrued and unpaid dividends to the
date of payment, before any distribution of assets or payment is made to holders
of Common Stock or
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any other class or series of stock of the Company that ranks junior to the
Class B Preferred Stock with respect to the distribution of assets upon
liquidation, dissolution or winding up of the Company, but subject to the
preferential rights of the holders of shares of any class or series of stock
of the Company ranking senior to the Class B Preferred Stock with respect to
such distribution of assets upon liquidation, dissolution or winding up. If,
upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, the assets of the Company legally available therefor are
insufficient to pay the full amount of liquidating distributions payable on
all outstanding shares of Class B Preferred Stock and the full amount of the
liquidating distributions payable on all outstanding shares of any other
classes or series of stock of the Company ranking on a parity with the Class
B Preferred Stock with respect to the distribution of assets upon
liquidation, dissolution or winding up of the Company, then the holders of
the Class B Preferred Stock and all such other classes or series of stock
will share ratably in any such distribution of assets in proportion to the
full liquidating distributions (including, if applicable, accrued and unpaid
dividends) to which they would otherwise respectively be entitled.
If liquidating distributions shall have been made in full to all holders of
Class B Preferred Stock, the remaining assets of the Company shall be
distributed among the holders of any other classes or series of stock of the
Company ranking junior to the Class B Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up, according to their
respective rights and preferences.
For purposes of these terms of the Class B Preferred Stock, neither the
consolidation or merger of the Company with or into any other company, trust or
other entity, nor the sale, lease, transfer or conveyance of all or
substantially all of the property or business of the Company, shall be deemed to
constitute a liquidation, dissolution or winding up of the Company.
After payment to the holders of the Class B Preferred Stock of the full
liquidating distributions to which they are entitled, the holders of the Class B
Preferred Stock, as such, shall have no right or claim to any of the remaining
assets of the Company.
In determining whether a distribution (other than upon voluntary or
involuntary liquidation, dissolution or winding up) by dividend, redemption or
other acquisition of shares of stock of the Company or otherwise is permitted
under the MGCL, no effect shall be given to amounts that would be needed if the
Company would be dissolved at the time of the distribution, to satisfy the
preferential rights upon distribution of holders of Class B Preferred Stock.
G. REDEMPTION.
(1) The Class B Preferred Stock is not redeemable prior to May 25, 2004;
provided that the foregoing shall not prevent or limit the ability of the
Company to purchase Class B Preferred Stock pursuant to these terms of the
Class B Preferred Stock in order to preserve the qualification of the Company as
a REIT for federal and/or state income tax purposes or otherwise affect the
application of such terms to the Class B Preferred Stock. On and after May 25,
2004, the Company, at its option, upon not less than 30 nor more than 60 days'
written notice, may redeem shares of the Class B Preferred Stock, in whole or in
part, at any time or from time to
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time, for cash at a redemption price of $25 per share, plus accrued and
unpaid dividends thereon to the date fixed for redemption. The redemption
price (other than the portion thereof consisting of accrued and unpaid
dividends) is payable solely out of the sale proceeds of other stock of the
Company. For purposes of the preceding sentence, "stock" means any common
stock, Preferred Stock (other than Class B Preferred Stock), interests,
participations or other ownership interests (however designated), depositary
shares representing any of the foregoing, and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options
to purchase any of the foregoing. Holders of Class B Preferred Stock to be
redeemed shall surrender certificates representing such Class B Preferred
Stock at the place designated in such notice and shall thereafter be entitled
to receive the redemption price and any accrued and unpaid dividends payable
upon such redemption. If notice of redemption of any shares of Class B
Preferred Stock has been given and if the funds necessary for such redemption
have been irrevocably set aside by the Company, separate and apart from its
other funds, in trust for the benefit of the holders of the shares of Class B
Preferred Stock so called for redemption, then from and after the redemption
date (unless default shall be made by the Company in providing for the
payment of the redemption price plus accrued and unpaid dividends, if any),
dividends will cease to accrue on such shares of Class B Preferred Stock,
such shares of Class B Preferred Stock shall no longer be deemed outstanding
and all rights of the holders of such shares will terminate, except the right
to receive the redemption price plus accrued and unpaid dividends, if any. In
the event that any redemption date shall not be a Business Day, then payment
of the redemption price plus, if applicable, accrued and unpaid dividends, if
any, need not be made on such redemption date but may be made on the next
succeeding Business Day with the same force and effect as if made on such
redemption date and no interest, additional dividends or other sums shall
accrue on the amount so payable for the period from and after such redemption
date to such next succeeding Business Day. If less than all of the
outstanding shares of Class B Preferred Stock are to be redeemed, the shares
of Class B Preferred Stock to be redeemed shall be selected pro rata (as
nearly as may be practicable without creating fractional shares) or by any
other equitable method determined by the Company but that will not result in
the automatic transfer of any shares of Class B Preferred Stock to a Trust
(as hereinafter defined) pursuant Paragraph I of these terms of the Class B
Preferred Stock.
Anything herein to the contrary notwithstanding, and except as otherwise
required by law, the persons who were the holders of record of shares of Class B
Preferred Stock at the close of business on a Dividend Record Date will be
entitled to receive the dividend payable on the corresponding Dividend Payment
Date notwithstanding the redemption of those shares after such Dividend Record
Date and on or prior to such Dividend Payment Date or the default by the Company
in the payment of the dividend due on that Dividend Payment Date, in which case
the amount payable upon redemption of such shares of Class B Preferred Stock
will not include such dividend, and the full amount of the dividend payable for
the applicable Dividend Period shall instead be paid on such Dividend Payment
Date to the holders of record at the close of business on such Dividend Record
Date as aforesaid. Except as provided in this paragraph and except to the
extent that accrued and unpaid dividends are payable upon redemption pursuant to
the preceding paragraph, the Company will make no payment or allowance for
unpaid dividends, whether or not in arrears, on shares of Class B Preferred
Stock called for redemption.
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(2) Unless full cumulative dividends on all outstanding shares of Class B
Preferred Stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past Dividend Periods and the then current Dividend Period, no shares of
Class B Preferred Stock shall be redeemed unless all outstanding shares of
Class B Preferred Stock are simultaneously redeemed and the Company shall not
purchase or otherwise acquire directly or indirectly any shares of Class B
Preferred Stock (except by exchange for stock of the Company ranking junior to
the Class B Preferred Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution and winding up of the
Company); PROVIDED, HOWEVER, that the foregoing shall not prevent the purchase
by the Company of shares of Class B Preferred Stock pursuant to Paragraph I of
these terms of the Class B Preferred Stock in order to preserve the
qualification of the Company as a REIT for federal and/or state income tax
purposes, or the purchase or acquisition of shares of Class B Preferred Stock
pursuant to a purchase or exchange offer made on the same terms to the holders
of all outstanding shares of Class B Preferred Stock. In addition, unless full
cumulative dividends on all outstanding shares of Class B Preferred Stock have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for all past Dividend Periods and
the then current Dividend Period, the Company shall not purchase or otherwise
acquire, directly or indirectly, any shares of Class B Preferred Stock (except
by conversion into or exchange for stock of the Company ranking junior to the
Class B Preferred Stock with respect to the payment of dividends and the
distribution of assets upon liquidation, dissolution and winding up of the
Company); PROVIDED, that the foregoing shall not prevent the purchase by the
Company of shares of Class B Preferred Stock pursuant to Paragraph I of these
terms of the Class B Preferred Stock in order to preserve the qualification of
the Company as a REIT for federal and/or state income tax purposes, or the
purchase or acquisition by the Company of shares of Class B Preferred Stock
pursuant to a purchase or exchange offer made on the same terms to the holders
of all outstanding shares of Class B Preferred Stock. So long as no dividends
are in arrears, the Company shall be entitled at any time and from time to time
to repurchase shares of Class B Preferred Stock in open-market transactions duly
authorized by the Board of Directors and effected in compliance with applicable
laws.
(3) Notice of redemption will be given by publication in The Wall Street
Journal or, if such newspaper is not then being published, another newspaper of
general circulation in the City of New York, such publication to be made once a
week for two successive weeks commencing not less than 30 nor more than 60 days
prior to the redemption date. A similar notice furnished by the Company will be
mailed, postage prepaid, not less than 30 nor more than 60 days prior to the
redemption date, addressed to the holders of record of the Class B Preferred
Stock to be redeemed at their addresses as they appear on the stock transfer
records of the transfer agent. No failure to give such notice or any defect
therein or in the mailing thereof shall affect the validity of the proceedings
for the redemption of any shares of Class B Preferred Stock except as to the
holder to whom notice was defective or not given. Each notice shall state: (i)
the redemption date; (ii) the redemption price and whether or not accrued and
unpaid dividends will be payable to holders surrendering shares of Class B
Preferred Stock or to the persons who were holders of record at the close of
business on the relevant Dividend Record Date; (iii) the number of shares of
Class B Preferred Stock to be redeemed; (iv) the place or places (which shall
include a place
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in the Borough of Manhattan, The City of New York) where the Class B
Preferred Stock is to be surrendered for payment of the redemption price; and
(v) that dividends on the shares to be redeemed will cease to accrue on such
redemption date. If less than all of the Class B Preferred Stock held by any
holder is to be redeemed, the notice mailed to such holder shall also specify
the number of shares of Class B Preferred Stock held by such holder to be
redeemed.
Upon surrender, in accordance with such notice, of the certificates
representing any shares of Class B Preferred Stock to be so redeemed (properly
endorsed or assigned for transfer, if the Company shall so require and the
notice shall so state), such shares of Class B Preferred Stock shall be redeemed
by the Company at the redemption price plus, except as provided in the second
paragraph of Subparagraph G(1) above, accrued and unpaid dividends, if any. In
case fewer than all the shares of Class B Preferred Stock represented by any
such certificate are redeemed, a new certificate or certificates shall be issued
representing the unredeemed shares of Class B Preferred Stock without cost to
the holder thereof.
H. VOTING RIGHTS.
(1) Holders of the Class B Preferred Stock will not have any voting
rights, except as set forth below.
(2) Whenever dividends on any shares of Class B Preferred Stock shall be
in arrears for six or more Dividend Periods, whether or not such Dividend
Periods are consecutive, the number of directors then constituting the Board of
Directors shall be automatically increased by two (if not already increased by
two by reason of the election of directors by the holders of any other class or
series of Preferred Stock of the Company upon which like voting rights have been
conferred and are exercisable and with which the Class B Preferred Stock is
entitled to vote as a class with respect to the election of such two directors)
and the holders of shares of Class B Preferred Stock (voting separately as a
class with all other classes or series of Preferred Stock of the Company upon
which like voting rights have been conferred and are exercisable and which are
entitled to vote as a class with the Class B Preferred Stock in the election of
such two directors) will be entitled to vote for the election of such two
directors to the Board of Directors at a special meeting called by an officer of
the Company at the request of the holders of record of at least 10% of the
outstanding shares of Class B Preferred Stock or by the holders of any other
class or series of Preferred Stock of the Company upon which like voting rights
have been conferred and are exercisable and which is entitled to vote as a class
with the Class B Preferred Stock in the election of such two directors (unless
such request is received less than 90 days before the date fixed for the next
annual or special meeting of stockholders, in which case the vote for such two
directors shall be held at the earlier of the next such annual or special
meeting of stockholders), and at each subsequent annual meeting of stockholders
until all dividends accumulated on the Class B Preferred Stock for all past
Dividend Periods and the then current Dividend Period shall have been fully paid
or declared and a sum sufficient for the payment thereof set aside for payment,
whereupon the right of the holders of Class B Preferred Stock to elect such two
directors shall cease and (unless there are one or more other classes or series
of Preferred Stock of the Company upon which like voting rights have been
conferred and remain exercisable) the terms of office of such persons so elected
as directors shall automatically
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terminate and the authorized number of directors of the Company shall
thereupon be reduced accordingly, but subject always to the same provisions
for the reinstatement and divestment of the right to elect such two
additional directors in the case of any such future dividend arrearage.
In the case of any such request for a special meeting (unless such request
is received less than 90 days before the date fixed for the next annual or
special meeting of stockholders), such meeting shall be held on the earliest
practicable date at the place within the United States designated by the holders
of Class B Preferred Stock requesting such meeting or, if none, at a place
within the United States designated by the Secretary of the Company, upon notice
similar to that required for an annual meeting of stockholders. If such special
meeting is not called by an officer of the Company within 30 days after such
request, then the holders of record of at least 10% of the outstanding shares of
Class B Preferred Stock may designate in writing a holder of Class B Preferred
Stock to call such meeting at the expense of the Company and such meeting may be
called by the holder so designated upon notice similar to that required for
annual meetings of stockholders and shall be held at the place within the United
States designated by the holder calling such meeting. At all times that the
voting rights conferred by this Subparagraph H(2) are exercisable, the holders
of Class B Preferred Stock shall have reasonable access to the preferred stock
transfer records of the Company. The Company shall pay all costs and expenses
of calling and holding any meeting and of electing directors pursuant to this
Subparagraph H(2), including, without limitation, the cost of preparing,
reproducing and mailing the notice of such meeting, the cost of renting a room
for such meeting to be held, and the cost of collecting and tabulating votes.
The provisions of this Subparagraph H(2) supersede anything inconsistent
contained in the Charter or Bylaws of the Company.
If, at any time when the voting rights conferred upon the Class B Preferred
Stock pursuant to this Subparagraph H(2) are exercisable, any vacancy in the
office of a director elected pursuant to this Subparagraph H(2) shall occur,
then such vacancy may be filled only by the remaining such director or by vote
of the holders of record of the outstanding Class B Preferred Stock and any
other classes or series of Preferred Stock of the Company upon which like voting
rights have been conferred and are exercisable and which are entitled to vote as
a class with the Class B Preferred Stock in the election of directors pursuant
to this Subparagraph H(2). Any director elected or appointed pursuant to this
Subparagraph H(2) may be removed only by the affirmative vote of holders of the
outstanding Class B Preferred Stock and any other classes or series of Preferred
Stock of the Company upon which like voting rights have been conferred and are
exercisable and which are entitled to vote as a class with the Class B Preferred
Stock in the election of directors pursuant to this Subparagraph H(2), such
removal to be effected by the affirmative vote of a majority of the votes
entitled to be cast by the holders of the outstanding Class B Preferred Stock
and any such other classes or series of Preferred Stock, and may not be removed
by the holders of the Common Stock.
(3) So long as any shares of Class B Preferred Stock remain outstanding,
the Company shall not, without the consent or the affirmative vote of the
holders of at least two-thirds of the shares of the Class B Preferred Stock
outstanding at the time, given in person or by
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proxy, either in writing or at a meeting (with the Class B Preferred Stock
voting separately as a class), (i) authorize, create or issue, or increase
the authorized or issued amount of, any class or series of stock of the
Company ranking senior to the Class B Preferred Stock with respect to the
payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Company, or reclassify any authorized stock
of the Company into any such shares, or create, authorize or issue any
obligation or security convertible into, exchangeable or exercisable for, or
evidencing the right to purchase, any such shares or (ii) amend, alter or
repeal any of the provisions of the Charter, including without limitation,
any of these terms of the Class B Preferred Stock, so as to materially and
adversely affect any right, preference, privilege or voting power of the
Class B Preferred Stock or the holders thereof or (iii) enter into any share
exchange that affects shares of Class B Preferred Stock, or consolidate with
or merge into any other entity, or permit any other entity to consolidate
with or merge into the Company, unless in each such case described in this
clause (iii) each share of Class B Preferred Stock then outstanding remains
outstanding without a material adverse change to its terms and rights or is
converted into or exchanged for preferred stock of the surviving or resulting
entity having preferences, rights, dividends, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption identical to those of the Class B Preferred Stock; PROVIDED,
HOWEVER, that any amendment to the Charter to authorize any increase in the
amount of the authorized Preferred Stock or Common Stock or the creation or
issuance of any other class or series of Preferred Stock or any increase in
the amount of authorized or outstanding shares of Class B Preferred Stock or
any other class or series of Preferred Stock, in each case ranking on a
parity with or junior to the Class B Preferred Stock with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution and winding up of the Company, shall not be deemed to materially
and adversely affect any right, preference, privilege or voting power of the
Class B Preferred Stock or the holders thereof. For purposes of this
paragraph, the filing in accordance with applicable law of articles
supplementary or any similar document setting forth or changing the
designations, preferences, conversion or other rights, voting powers,
restrictions, limitation as to dividends and other distributions,
qualifications or other terms of any class or series of stock of the Company
shall be deemed an amendment to the Charter.
(4) The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of Class B Preferred Stock shall have
been redeemed or called for redemption upon proper notice and sufficient funds
shall have been irrevocably deposited in trust to effect such redemption in
accordance with the provisions of Subparagraph G(1) hereof.
(5) Except as expressly stated in these terms of the Class B Preferred
Stock, the Class B Preferred Stock will not have any relative, participating,
optional or other voting rights or powers, and the consent of the holders
thereof shall not be required for the taking of any corporate action.
(6) On each matter submitted to a vote of the holders of Class B Preferred
Stock or on which the holders of Class B Preferred Stock are otherwise entitled
to vote, including any action by written consent, each share of Class B
Preferred Stock shall be entitled to one vote, except that when shares of any
other class or series of Preferred Stock of the Company have the right to
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vote with the Class B Preferred Stock as a single class on any matter, the
Class B Preferred Stock and the shares of each such other class or series
will have one vote for each $25.00 of liquidation preference (excluding
accrued and unpaid dividends).
(7) The Class A Preferred Stock shall not be entitled to vote as a class
with the Class B Preferred Stock on any matter described in this Paragraph H.
I. RESTRICTIONS ON OWNERSHIP AND TRANSFER TO PRESERVE TAX BENEFIT.
(1) DEFINITIONS. For the purposes of Paragraph I of these terms of the
Class B Preferred Stock, the following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Class B Preferred Stock by a
Person who is or would be treated as an owner of such Class B Preferred Stock
either actually or constructively through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial
Owner," "Beneficially Own," "Beneficially Owns" and "Beneficially Owned" shall
have correlative meanings.
"Charitable Beneficiary" shall mean one or more beneficiaries of a Trust,
as determined pursuant to Subparagraph I(3)(f) of these terms of the Class B
Preferred Stock, each of which shall be an organization described in
Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended. All
section references to the Code shall include any successor provisions thereof as
may be adopted from time to time.
"Constructive Ownership" shall mean ownership of Class B Preferred Stock by
a Person who is or would be treated as an owner of such Class B Preferred Stock
either actually or constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Own," "Constructively Owns" and "Constructively Owned"
shall have correlative meanings.
"IRS" means the United States Internal Revenue Service.
"Market Price" shall mean the last reported sales price reported on the New
York Stock Exchange of the Class B Preferred Stock on the trading day
immediately preceding the relevant date, or if the Class B Preferred Stock is
not then traded on the New York Stock Exchange, the last reported sales price of
the Class B Preferred Stock on the trading day immediately preceding the
relevant date as reported on any exchange or quotation system over which the
Class B Preferred Stock may be traded, or if the Class B Preferred Stock is not
then traded over any exchange or quotation system, then the market price of the
Class B Preferred Stock on the relevant date as determined in good faith by the
Board of Directors.
"MGCL" shall mean the Maryland General Corporation Law, as amended from
time to time, and any successor statute hereafter enacted.
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"Ownership Limit" shall mean 9.8% (by value or by number of shares,
whichever is more restrictive) of the outstanding Class B Preferred Stock.
"Person" shall mean an individual, corporation, partnership, limited
liability company, estate, trust (including a trust qualified under Section
401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside
for or to be used exclusively for the purposes described in Section 642(c) of
the Code, association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity; but does not include
an underwriter acting in a capacity as such in a public offering of shares of
Class B Preferred Stock provided that the ownership of such shares of Class B
Preferred Stock by such underwriter would not result in the Company being
"closely held" within the meaning of Section 856(h) of the Code, or otherwise
result in the Company failing to qualify as a REIT.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer (or other event) which results in a transfer to a Trust,
as provided in Subparagraph I(2)(b) of these terms of the Class B Preferred
Stock, the Purported Record Transferee, unless the Purported Record
Transferee would have acquired or owned shares of Class B Preferred Stock for
another Person who is the beneficial transferee or owner of such shares, in
which case the Purported Beneficial Transferee shall be such other Person.
"Purported Record Transferee" shall mean, with respect to any purported
Transfer (or other event) which results in a transfer to a Trust, as provided
in Subparagraph I(2)(b) of these terms of the Class B Preferred Stock, the
record holder of the Class B Preferred Stock if such Transfer had been valid
under Subparagraph I(2)(a) of these terms of the Class B Preferred Stock.
"REIT" shall mean a real estate investment trust under Sections 856
through 860 of the Code, and, for purposes of taxation of the Company under
applicable state law, comparable provisions of the law of such state.
"Restriction Termination Date" shall mean the first day after the date
hereof on which the Board of Directors determines that it is no longer in the
best interests of the Company to attempt to, or continue to, qualify as a
REIT.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of Class B Preferred Stock, including (i) the granting of
any option or entering into any agreement for the sale, transfer or other
disposition of Class B Preferred Stock or (ii) the sale, transfer, assignment
or other disposition of any securities (or rights convertible into or
exchangeable for Class B Preferred Stock), whether voluntary or involuntary,
whether such transfer has occurred of record or through a change in
beneficial ownership, Beneficial Ownership or Constructive Ownership
(including but not limited to transfers of interests in other entities which
result in changes in Beneficial or Constructive Ownership of Class B
Preferred Stock), and whether such transfer has occurred by operation of law
or otherwise.
"Trust" shall mean each of the trusts provided for in Subparagraph I(3)
of these terms of the Class B Preferred Stock.
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"Trustee" shall mean any Person unaffiliated with the Company, a
Purported Beneficial Transferee or a Purported Record Transferee, that is
appointed by the Company to serve as trustee of a Trust.
(2) RESTRICTION ON OWNERSHIP AND TRANSFERS.
(a) Prior to the Restriction Termination Date:
(i) except as provided in Subparagraph I(9) of these terms
of the Class B Preferred Stock, no Person shall Beneficially Own Class B
Preferred Stock in excess of the Ownership Limit;
(ii) except as provided in Subparagraph I(9) of these terms
of the Class B Preferred Stock, no Person shall Constructively Own Class B
Preferred Stock in excess of the Ownership Limit;
(iii) no Person shall Beneficially or Constructively Own
Class B Preferred Stock which, taking into account any other stock of the
Company Beneficially or Constructively Owned by such Person, would result in
the Company being "closely held" within the meaning of Section 856(h) of the
Code, or otherwise failing to qualify as a REIT (including but not limited to
Beneficial or Constructive Ownership that would result in the Company owning
(actually or Constructively) an interest in a tenant that is described in
Section 856(d)(2)(B) of the Code if the income derived by the Company (either
directly or indirectly through one or more partnerships) from such tenant
would cause the Company to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code or comparable provisions of any
applicable state law).
(b) If prior to the Restriction Termination Date, any Transfer
(whether or not such Transfer is the result of a transaction entered into
through the facilities of the New York Stock Exchange ("NYSE")) or other
event occurs that, if effective, would result in any Person Beneficially or
Constructively Owning Class B Preferred Stock in violation of Subparagraph
I(2)(a) of these terms of the Class B Preferred Stock, (1) then that number
of shares of Class B Preferred Stock that otherwise would cause such Person
to violate Subparagraph I(2)(a) of these terms of the Class B Preferred Stock
(rounded up to the nearest whole share) shall be automatically transferred to
a Trust for the benefit of a Charitable Beneficiary, as described in
Subparagraph I(3), effective as of the close of business on the business day
prior to the date of such Transfer or other event, and such Purported
Beneficial Transferee shall thereafter have no rights in such shares or (2)
if, for any reason, the transfer to the Trust described in clause (1) of this
sentence is not automatically effective as provided therein to prevent any
Person from Beneficially or Constructively Owning Class B Preferred Stock in
violation of Subparagraph I(2)(a) of these terms of the Class B Preferred
Stock, then the Transfer of that number of shares of Class B Preferred Stock
that otherwise would cause any Person to violate Subparagraph I(2)(a) shall
be void AB INITIO, and the Purported Beneficial Transferee shall have no
rights in such shares.
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(c) Notwithstanding any other provisions contained herein, prior
to the Restriction Termination Date, any Transfer of Class B Preferred Stock
(whether or not such Transfer is the result of a transaction entered into
through the facilities of the NYSE) that, if effective, would result in the
stock of the Company being beneficially owned by less than 100 Persons
(determined without reference to any rules of attribution) shall be void AB
INITIO, and the intended transferee shall acquire no rights in such Class B
Preferred Stock.
(3) TRANSFERS OF CLASS B PREFERRED STOCK IN TRUST.
(a) Upon any purported Transfer or other event described in
Subparagraph I(2)(b) of these terms of the Class B Preferred Stock, such
Class B Preferred Stock shall be deemed to have been automatically
transferred to the Trustee in his capacity as trustee of a Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to
the Trustee shall be deemed to be effective as of the close of business on
the business day prior to the purported Transfer or other event that results
in a transfer to the Trust pursuant to Subparagraph I(2)(b). The Trustee
shall be appointed by the Company and shall be a Person unaffiliated with the
Company, any Purported Beneficial Transferee, or any Purported Record
Transferee. Each Charitable Beneficiary shall be designated by the Company
as provided in Subparagraph I(3)(f) of these terms of the Class B Preferred
Stock.
(b) Class B Preferred Stock held by the Trustee shall be issued and
outstanding Class B Preferred Stock of the Company. The Purported Beneficial
Transferee or Purported Record Transferee shall have no rights in the shares
of Class B Preferred Stock held by the Trustee. The Purported Beneficial
Transferee or Purported Record Transferee shall not benefit economically from
ownership of any shares held in trust by the Trustee, shall have no rights to
dividends and shall not possess any rights to vote or other rights
attributable to the shares of Class B Preferred Stock held in the Trust.
(c) The Trustee shall have all voting rights and rights to dividends
with respect to Class B Preferred Stock held in the Trust, which rights shall
be exercised for the exclusive benefit of the Charitable Beneficiary. Any
dividend or distribution paid prior to the discovery by the Company that
shares of Class B Preferred Stock have been transferred to the Trustee shall
be paid to the Trustee upon demand, and any dividend or distribution declared
but unpaid shall be paid when due to the Trustee with respect to such Class B
Preferred Stock. Any dividends or distributions so paid over to the Trustee
shall be held in trust for the Charitable Beneficiary.
The Purported Record Transferee and Purported Beneficial Transferee
shall have no voting rights with respect to the Class B Preferred Stock held
in the Trust and, subject to Maryland law, effective as of the date the Class
B Preferred Stock has been transferred to the Trustee, the Trustee shall have
the authority (at the Trustee's sole discretion) (i) to rescind as void any
vote cast by a Purported Record Transferee with respect to such Class B
Preferred Stock prior to the discovery by the Company that the Class B
Preferred Stock has been transferred to the Trustee and (ii) to recast such
vote in accordance with the desires of the Trustee acting for the benefit of
the Charitable Beneficiary; provided, however, that if the Company has
already taken irreversible corporate action, then the Trustee shall not have
the authority to
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rescind and recast such vote. Notwithstanding any other provision of these
terms of the Class B Preferred Stock to the contrary, until the Company has
received notification that the Class B Preferred Stock has been transferred
into a Trust, the Company shall be entitled to rely on its share transfer and
other stockholder records for purposes of preparing lists of stockholders
entitled to vote at meetings, determining the validity and authority of
proxies and otherwise conducting votes of stockholders.
(d) Within 20 days of receiving notice from the Company that shares of
Class B Preferred Stock have been transferred to the Trust, the Trustee of
the Trust shall sell the shares of Class B Preferred Stock held in the Trust
to a Person, designated by the Trustee, whose ownership of the shares of
Class B Preferred Stock will not violate the ownership limitations set forth
in Subparagraph I(2)(a). Upon such sale, the interest of the Charitable
Beneficiary in the shares of Class B Preferred Stock sold shall terminate and
the Trustee shall distribute the net proceeds of the sale to the Purported
Record Transferee and to the Charitable Beneficiary as provided in this
Subparagraph I(3)(d). The Purported Record Transferee shall receive the
lesser of (1) the price paid by the Purported Record Transferee or Purported
Beneficial Transferee, as the case may be, for the shares of Class B
Preferred Stock in the transaction that resulted in such transfer to the
Trust (or, if the event which resulted in the transfer to the Trust did not
involve a purchase of such shares of Class B Preferred Stock for fair value,
the Market Price of such shares of Class B Preferred Stock on the day of the
event which resulted in the transfer of such shares of Class B Preferred
Stock to the Trust) and (2) the price per share received by the Trustee (net
of any commissions and other expenses of sale) from the sale or other
disposition of the shares of Class B Preferred Stock held in the Trust. Any
net sales proceeds in excess of the amount payable to the Purported Record
Transferee shall be immediately paid to the Charitable Beneficiary together
with any dividends or other distributions thereon. If, prior to the
discovery by the Company that shares of such Class B Preferred Stock have
been transferred to the Trustee, such shares of Class B Preferred Stock are
sold by a Purported Record Transferee then (i) such shares of Class B
Preferred Stock shall be deemed to have been sold on behalf of the Trust and
(ii) to the extent that the Purported Record Transferee or Purported
Beneficial Transferee, as the case may be, received an amount for such shares
of Class B Preferred Stock that exceeds the amount that such Purported Record
Transferee or Purported Beneficial Transferee, as the case may be, was
entitled to receive pursuant to this Subparagraph I(3)(d), such excess shall
be paid to the Trustee upon demand.
(e) Class B Preferred Stock transferred to the Trustee shall be deemed
to have been offered for sale to the Company, or its designee, at a price per
share equal to the lesser of (i) the price paid by the Purported Record
Transferee or Purported Beneficial Transferee, as the case may be, for the
shares of Class B Preferred Stock in the transaction that resulted in such
transfer to the Trust (or, if the event which resulted in the transfer to the
Trust did not involve a purchase of such shares of Class B Preferred Stock
for fair value, the Market Price of such shares of Class B Preferred Stock on
the day of the event which resulted in the transfer of such shares of Class B
Preferred Stock to the Trust) and (ii) the Market Price on the date the
Company, or its designee, accepts such offer. The Company shall have the
right to accept such offer until the Trustee has sold the shares of Class B
Preferred Stock held in the Trust pursuant to Subparagraph I(3)(d). Upon
such a sale to the Company, the interest of the Charitable
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<PAGE>
Beneficiary in the shares of Class B Preferred Stock sold shall terminate and
the Trustee shall distribute the net proceeds of the sale to the Purported
Record Transferee and any dividends or other distributions held by the
Trustee with respect to such Class B Preferred Stock shall thereupon be paid
to the Charitable Beneficiary.
(f) By written notice to the Trustee, the Company shall designate one
or more nonprofit organizations to be the Charitable Beneficiary of the
interest in the Trust such that the Class B Preferred Stock held in the Trust
would not violate the restrictions set forth in Subparagraph I(2)(a) in the
hands of such Charitable Beneficiary.
(4) REMEDIES FOR BREACH. If the Board of Directors or, if permitted by
the MGCL, a committee thereof or other designees shall at any time determine
in good faith that a Transfer or other event has taken place in violation of
Subparagraph I(2) of these terms of the Class B Preferred Stock or that a
Person intends to acquire, has attempted to acquire or may acquire beneficial
ownership (determined without reference to any rules of attribution),
Beneficial Ownership or Constructive Ownership of any shares of Class B
Preferred Stock of the Company in violation of Subparagraph I(2) of these
terms of the Class B Preferred Stock, the Board of Directors or, if permitted
by the MGCL, a committee thereof or other designees, shall take such action
as it deems advisable to refuse to give effect or to prevent such Transfer,
including, but not limited to, causing the Company to redeem shares of Class
B Preferred Stock, refusing to give effect to such Transfer on the books of
the Company or instituting proceedings to enjoin such Transfer; PROVIDED,
HOWEVER, that any Transfers (or, in the case of events other than a Transfer,
ownership or Constructive Ownership or Beneficial Ownership) in violation of
Subparagraph I(2)(a) of these terms of the Class B Preferred Stock, shall
automatically result in the transfer to a Trust as described in Subparagraph
I(2)(b) and any Transfer in violation of Subparagraph I(2)(c) shall
automatically be void AB INITIO irrespective of any action (or non-action) by
the Board of Directors.
(5) NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or attempts
or intends to acquire shares of Class B Preferred Stock in violation of
Subparagraph I(2) of these terms of the Class B Preferred Stock, or any
Person who is a Purported Beneficial Transferee such that an automatic
transfer to a Trust results under Subparagraph I(2)(b) of these terms of the
Class B Preferred Stock, shall immediately give notice to the Company of such
event and shall provide to the Company such other information as the Company
may request in order to determine the effect, if any, of such Transfer or
attempted Transfer on the Company's status as a REIT.
(6) OWNERS REQUIRED TO PROVIDE INFORMATION. Prior to the Restriction
Termination Date each Person who is a beneficial owner or Beneficial Owner or
Constructive Owner of Class B Preferred Stock and each Person (including the
shareholder of record) who is holding Class B Preferred Stock for a
beneficial owner or Beneficial Owner or Constructive Owner shall provide to
the Company such information that the Company may request, in good faith, in
order to determine the Company's status as a REIT.
(7) REMEDIES NOT LIMITED. Nothing contained in these terms of the
Class B Preferred Stock (but subject to Subparagraph I(13) of these terms of
the Class B Preferred Stock) shall
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limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable to protect the Company and the interests of its
shareholders by preservation of the Company's status as a REIT.
(8) AMBIGUITY. In the case of an ambiguity in the application of any of
the provisions of this Paragraph I of these terms of the Class B Preferred
Stock, including any definition contained in Subparagraph I(1), the Board of
Directors shall have the power to determine the application of the provisions
of this Paragraph I with respect to any situation based on the facts known to
it (subject, however, to the provisions of Subparagraph I(13) of these Terms
of the Class B Preferred Stock). In the event this Paragraph I requires an
action by the Board of Directors and these terms of the Class B Preferred
Stock fail to provide specific guidance with respect to such action, the
Board of Directors shall have the power to determine the action to be taken
so long as such action is not contrary to the provisions of this Paragraph I.
Absent a decision to the contrary by the Board of Directors (which the Board
may make in its sole and absolute discretion), if a Person would have (but
for the remedies set forth in Subparagraph I(2)) acquired Beneficial or
Constructive Ownership of Class B Preferred Stock in violation of
Subparagraph I(2)(a), such remedies (as applicable) shall apply first to the
shares of Class B Preferred Stock which, but for such remedies, would have
been actually owned by such Person, and second to shares of Class B Preferred
Stock which, but for such remedies, would have been Beneficially Owned or
Constructively Owned (but not actually owned) by such Person, pro rata among
the Persons who actually own such shares of Class B Preferred Stock based
upon the relative number of the shares of Class B Preferred Stock held by
each such Person.
(9) EXCEPTIONS.
(a) Subject to Subparagraph I(2)(a)(iii), the Board of Directors, in
its sole discretion, may exempt a Person from the limitation on a Person
Beneficially Owning shares of Class B Preferred Stock in violation of
Subparagraph I(2)(a)(i) if the Board of Directors obtains such
representations and undertakings from such Person as, in the sole discretion
of the Board of Directors, are reasonably necessary to ascertain that no
individual's Beneficial Ownership of such shares of Class B Preferred Stock
will violate Subparagraph I(2)(a)(i) or that any such violation will not
jeopardize the Company's status as a REIT under the Code and the Board of
Directors otherwise decides the action would be in the Company's best
interests.
(b) Subject to Subparagraph I(2)(a)(iii), the Board of Directors, in
its sole discretion, may exempt a Person from the limitation on a Person
Constructively Owning Class B Preferred Stock in violation of Subparagraph
I(2)(a)(ii), if the Board of Directors obtains such representations and
undertakings from such Person as, in the sole discretion of the Board of
Directors, are reasonably necessary to ascertain that such Person does not
and will not actually own or Constructively Own an interest in a tenant of
the Company (or a tenant of any entity owned in whole or in part by the
Company) that would cause the Company to actually own or Constructively Own
more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code)
in such tenant. Notwithstanding the foregoing, the inability of a Person to
make the certification described in this Subparagraph I(9)(b) shall not
prevent the Board of Directors, in its sole discretion, from exempting such
Person from the limitation on a Person Constructively Owning
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Class B Preferred Stock in violation of Subparagraph I(2)(a)(ii) if the Board
of Directors determines that the resulting application of Section
856(d)(2)(B) of the Code will not jeopardize the Company's status as a REIT
and the Board of Directors otherwise decides the action would be in the
Company's best interests.
(c) Prior to granting any exception pursuant to Subparagraph I(9)(a) or
(b) of these terms of the Class B Preferred Stock, the Board of Directors may
require a ruling from the Internal Revenue Service, or an opinion of counsel,
in either case in form and substance satisfactory to the Board of Directors
in its sole discretion, as it may deem necessary or advisable in order to
determine or ensure the Company's status as a REIT.
(10) LEGENDS. Each certificate for Class B Preferred Stock shall bear
substantially the following legends:
CLASSES OF STOCK
"THE COMPANY IS AUTHORIZED TO ISSUE TWO CLASSES OF STOCK
WHICH ARE DESIGNATED AS COMMON STOCK AND PREFERRED STOCK. THE
PREFERRED STOCK MAY BE ISSUED IN ONE OR MORE SERIES OR CLASSES.
THE BOARD OF DIRECTORS IS AUTHORIZED TO DETERMINE THE
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF EACH SERIES OR
CLASS OF PREFERRED STOCK BEFORE THE ISSUANCE OF ANY SUCH SERIES
OR CLASS OF PREFERRED STOCK. THE COMPANY WILL FURNISH, WITHOUT
CHARGE, TO ANY SHAREHOLDER MAKING A REQUEST THEREFOR, A COPY OF
THE COMPANY'S CHARTER AND A FULL STATEMENT OF THE INFORMATION
REQUIRED BY SECTION 2-211(B) OF THE CORPORATIONS AND ASSOCIATIONS
ARTICLE OF THE ANNOTATED CODE OF MARYLAND WITH RESPECT TO THE
DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS,
VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS AND
OTHER DISTRIBUTIONS, QUALIFICATIONS AND TERMS AND CONDITIONS OF
REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE COMPANY HAS THE
AUTHORITY TO ISSUE AND, SINCE THE COMPANY IS AUTHORIZED TO ISSUE
PREFERRED STOCK IN SERIES OR CLASSES, (i) THE DIFFERENCES IN THE
RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES
OR CLASS TO THE EXTENT SET, AND (ii) THE AUTHORITY OF THE BOARD
OF DIRECTORS TO SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT
SERIES OR CLASSES. REQUEST FOR SUCH WRITTEN STATEMENT MUST BE
DIRECTED TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL OFFICE.
THE FOREGOING SUMMARY DOES NOT
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PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE CHARTER OF THE COMPANY."
RESTRICTION ON OWNERSHIP AND TRANSFER
"THE SHARES OF CLASS B PREFERRED STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND
CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE, AMONG
OTHERS, OF THE COMPANY'S MAINTENANCE OF ITS STATUS AS A REAL
ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS
AND EXCEPT AS EXPRESSLY PROVIDED IN THE CHARTER, (i) NO PERSON
MAY BENEFICIALLY OWN SHARES OF THE COMPANY'S CLASS B PREFERRED
STOCK IN EXCESS OF 9.8% (BY VALUE OR BY NUMBER OF SHARES,
WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING CLASS B
PREFERRED STOCK OF THE COMPANY; (ii) NO PERSON MAY CONSTRUCTIVELY
OWN SHARES OF THE COMPANY'S CLASS B PREFERRED STOCK IN EXCESS OF
9.8% (BY VALUE OR BY NUMBER OF SHARES, WHICHEVER IS MORE
RESTRICTIVE) OF THE OUTSTANDING CLASS B PREFERRED STOCK OF THE
COMPANY; (iii) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN
CLASS B PREFERRED STOCK THAT, TAKING INTO ACCOUNT ANY OTHER STOCK
OF THE COMPANY BENEFICIALLY OR CONSTRUCTIVELY OWNED BY SUCH
PERSON, WOULD RESULT IN THE COMPANY BEING "CLOSELY HELD" UNDER
SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE COMPANY TO FAIL
TO QUALIFY AS A REIT; AND (iv) NO PERSON MAY TRANSFER CLASS B
PREFERRED STOCK IF SUCH TRANSFER WOULD RESULT IN THE STOCK OF THE
COMPANY BEING BENEFICIALLY OWNED BY FEWER THAN 100 PERSONS. ANY
PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO
BENEFICIALLY OR CONSTRUCTIVELY OWN CLASS B PREFERRED STOCK WHICH
CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY
OWN CLASS B PREFERRED STOCK IN VIOLATION OF THE ABOVE LIMITATIONS
MUST IMMEDIATELY NOTIFY THE COMPANY. IF ANY OF THE RESTRICTIONS
ON TRANSFER OR OWNERSHIP REFERRED TO IN CLAUSE (i), (ii) OR (iii)
ABOVE ARE VIOLATED, THE CLASS B PREFERRED STOCK REPRESENTED
HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO THE TRUSTEE OF A
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TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES.
IN ADDITION, THE COMPANY MAY REDEEM SHARES UPON THE TERMS AND
CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE
DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR
A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED
ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS,
ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED
ABOVE MAY BE VOID AB INITIO. ALL TERMS IN THIS LEGEND WHICH ARE
DEFINED IN THE TERMS OF THE CLASS B PREFERRED STOCK SHALL HAVE
THE MEANINGS ASCRIBED TO THEM IN SUCH TERMS, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE
RESTRICTIONS ON TRANSFER AND OWNERSHIP, AND ANY OTHER INFORMATION
REQUIRED BY SECTION 2-211(d) OF THE CORPORATIONS AND ASSOCIATIONS
ARTICLE OF THE ANNOTATED CODE OF MARYLAND WILL BE FURNISHED TO
EACH HOLDER OF CLASS B PREFERRED STOCK ON REQUEST AND WITHOUT
CHARGE. REQUESTS FOR SUCH A COPY MUST BE DIRECTED TO THE
SECRETARY OF THE COMPANY AT ITS PRINCIPAL OFFICE."
Instead of the foregoing legend, the certificate may state that the
Class B Preferred Stock is subject to certain restrictions on ownership and
transfer and that the Company will furnish a full statement about the
restrictions on transferability and ownership of the Class B Preferred Stock
to any stockholder of the Company on request and without charge. Such
request must be made to the Secretary of the Company at the Company's
principal office.
(12) SEVERABILITY. Without limitation to Subparagraph I(5), if any
provision of this Paragraph I or any application of any such provision is
determined to be invalid by any federal or state court having jurisdiction
over the issues, the validity of the remaining provisions shall not be
affected and other applications of such provision shall be affected only to
the extent necessary to comply with the determination of such court.
(13) NYSE. Nothing in this Paragraph I shall preclude the settlement of
any transaction entered into through the facilities of the NYSE. The shares
of Class B Preferred Stock that are the subject of such transaction shall
continue to be subject to the provisions of this Paragraph I after such
settlement
(14) APPLICABILITY OF PARAGRAPH I. The provisions set forth in this
Paragraph I shall apply to the Class B Preferred Stock notwithstanding any
contrary provisions of the Class B Preferred Stock provided for elsewhere in
these terms of the Class B Preferred Stock.
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J. MISCELLANEOUS.
(1) CONVERSION. The Class B Preferred Stock is not convertible into or
exchangeable for any other property or securities of the Company.
(2) PREEMPTIVE RIGHTS. No holder of shares of Class B Preferred Stock,
as such, shall have any preemptive or preferential right to subscribe for or
to purchase any additional shares of any class or series of stock of the
Company or any securities convertible into or exercisable or exchangeable for
shares of any class or series of stock of the Company.
(3) OFFICE OR AGENCY IN NEW YORK CITY. The Company will at all times
maintain an office or agency in the Borough of Manhattan, The City of New
York, where shares of Class B Preferred Stock may be surrendered for payment
(including upon redemption), registration of transfer or exchange.
(4) STATUS OF REDEEMED AND REACQUIRED CLASS B PREFERRED STOCK. In the
event any shares of Class B Preferred Stock shall be redeemed or otherwise
reacquired by the Company, the shares so redeemed or reacquired shall become
authorized but unissued shares of Class B Preferred Stock, available for
future issuance and reclassification by the Company.
(5) SEVERABILITY. If any preference, right, voting power, restriction,
limitation as to dividends or other distributions, qualification, term or
condition of redemption or other term of the Class B Preferred Stock is
invalid, unlawful or incapable of being enforced by reason of any rule of law
or public policy, then, to the extent permitted by law, all other
preferences, rights, voting powers, restrictions, limitations as to
dividends, qualifications, terms or conditions of redemption and other terms
of the Class B Preferred Stock which can be given effect without the invalid,
unlawful or unenforceable preference, right, voting power, restriction,
limitation as to dividends or other distributions, qualification, term or
condition of redemption or other term of the Class B Preferred Stock shall
remain in full force and effect and shall not be deemed dependent upon any
other such preference, right, voting power, restriction, limitation as to
dividends or other distributions, qualification, term or condition of
redemption or other term of the Class B Preferred Stock unless so expressed
herein; provided that Paragraph I shall be governed by Subparagraph I(12) and
not this Subparagraph J(5).
(6) TERMS OF THE CLASS B PREFERRED STOCK. All references to the
"terms" of the Class B Preferred Stock (and all similar references) shall
include all of the preferences, conversion and other rights, voting powers,
restrictions and limitations as to dividends and other distributions,
qualifications, terms and conditions of redemption and other terms and
provisions set forth in Paragraphs A through J, inclusive, hereof.
FOURTH: The shares have been classified by the Board of Directors, or a
duly authorized committee thereof, under the authority contained in the
Charter.
FIFTH: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
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SIXTH: The undersigned President and Chief Operating Officer of the
Company acknowledges these terms of the Class B Preferred Stock to be the
corporate act of the Company and, as to all matters or facts required to be
verified under oath, the undersigned President and Chief Operating Officer of
the Company acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
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IN WITNESS WHEREOF, REALTY INCOME CORPORATION, has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
President and Chief Operating Officer and attested to by its Secretary on this
____ day of _________, 1999.
REALTY INCOME CORPORATION
By: ___________________________ (SEAL)
Name: Richard J. VanDerhoff
Title: President and Chief
Operating Officer
Attest:
By: ___________________________
Name: Michael R. Pfeiffer
Title: Senior Vice President,
General Counsel and Secretary
