<PAGE> 1
Exhibit 3(i)
ARTICLES SUPPLEMENTARY
RECLASSIFYING 2,142,857 SHARES OF COMMON STOCK
INTO SERIES B CONVERTIBLE CUMULATIVE PREFERRED
STOCK
PARKWAY PROPERTIES, INC.
Parkway Properties, Inc., a Maryland corporation (the "Corporation"),
having its principal office in Baltimore City, Maryland DOES HEREBY CERTIFY TO
THE STATE DEPARTMENT OF ASSESSMENT AND TAXATION OF MARYLAND THAT:
FIRST: Pursuant to authority granted to and vested in the Board of
Directors of the Corporation (the "Board") by Article V, Section 3 the Charter
of the Corporation (the "Charter"), and pursuant to the provisions of Section
2-208 of the Maryland General Corporation Law (the "M.G.C.L."), the Board, by
unanimous written consent dated October 4, 2000, regarding the possible sale and
issuance by the Corporation of convertible preferred stock, adopted resolutions
duly classifying 2,142,857 shares of Common Stock, par value $.001 per share
(the "Common Stock") of the Corporation into a new series of preferred stock to
be designated as "Series B Convertible Cumulative Preferred Stock, par value
$.001 per share", of the Corporation (the "Series B Preferred Stock") and has
provided for the issuance of such shares;
SECOND: The classification provides that the number of shares
classified as Series B Preferred Stock shall be 2,142,857 shares. Such
classification decreases the number of shares classified as Common Stock from
67,240,000 shares immediately prior to the reclassification to 65,097,143 shares
immediately after such classification.
THIRD: The terms of the Series B Preferred Stock set forth in Article
Fourth hereof shall become Article V, Section 7 of the Charter.
FOURTH: Subject to the provisions of Article V, Section 2, of the
Charter with respect to Excess Stock, the following is a description of the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption of the Series B Preferred Stock of the Corporation:
Section 1. Series B Preferred Stock - Designation, Amount and Rank.
This series of preferred stock is designated as Series B Convertible Cumulative
Preferred Stock, par
Articles Supplementary
<PAGE> 2
value $.001 per share. The number of shares constituting the Series B Preferred
Stock shall be 2,142,857. The Series B Preferred Stock, both as to payment of
dividends and to distribution of assets upon redemption of such shares or
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, shall rank senior to the Common Stock and pari passu with (i) the
Corporation's 8.75% Series A Cumulative Redeemable Preferred Stock ("Series A
Preferred Stock"), (ii) any class or series of preferred stock with an aggregate
liquidation preference of up to $35,000,000 that the Corporation is permitted to
issue pursuant to Section 4(n) hereof, and (iii) any other class or series of
preferred stock approved by the holders of the Series B Preferred Stock as
provided for in these Articles Supplementary (collectively, the "Parity Stock").
Section 2. Series B Preferred Stock -- Dividend Rights.
(a) General. Subject to Section 9, and in addition to any other
dividends provided for herein, the Corporation shall pay in cash, when, as and
if declared by the Board, out of funds legally available therefor as provided by
the M.G.C.L. ("Legally Available Funds"), dividends at the quarterly rate equal
to the Applicable Dividend Rate (as defined below) per issued and outstanding
share of Series B Preferred Stock, per quarter. Such dividends shall be
cumulative and payable (if declared) quarterly on each January 15, April 15,
July 15 and October 15, with respect to the prior quarter, commencing October
15, 2000 (except that if such date is not a Business Day (as defined below),
then such dividend will be payable on the next succeeding Business Day) to the
holders of record at the close of business on the date specified by the Board at
the time such dividend is declared no more than thirty (30) days prior to the
date fixed for payment thereof. Dividends shall begin to accrue and be
cumulative from the date of issuance of such share of Series B Preferred Stock
to and including the first to occur of (i) the date on which the Liquidation
Value (as defined herein) of such share of Series B Preferred Stock or Put
Payment (plus all accrued and unpaid dividends thereon whether or not declared)
is paid to the holder thereof in connection with the liquidation of the
Corporation or the redemption of such share of Series B Preferred Stock by the
Corporation, (ii) the date on which such shares of Series B Preferred Stock are
converted into shares of Common Stock hereunder (on which date all accrued and
unpaid dividends thereon whether or not accrued shall be paid), or (iii) the
date on which such share is otherwise acquired and paid for by the Corporation.
(b) Cumulative Dividends. Each of such dividends shall be fully
cumulative, to the extent not previously paid. Dividends not paid in full on the
dates set forth above (whether or not declared) shall accrue at the Applicable
Dividend Rate stated as a percentage equivalent to the Applicable Dividend Rate
divided by $34.30, compounded quarterly until such dividends are paid. Any
dividend payment with respect to the Series B Preferred Stock shall first be
credited against any prior accrued and unpaid dividends. No dividends shall be
set apart for or paid upon the Common Stock or any other shares of stock ranking
junior to the Series B Preferred Stock unless all such cumulative dividends on
the Series B Preferred Stock have been paid in full or declared and set aside
for payment. Dividend payments shall be made pari passu with the dividend
payments on the Parity Stock.
(c) Applicable Dividend Rate. With respect to any share of Series B
Preferred Stock then issued and outstanding the "Applicable Dividend Rate" per
fiscal quarter shall be the
-2-
Articles Supplementary
<PAGE> 3
greater of (i) the quarterly dividend payable for the applicable quarter per
share of Common Stock into which the Series B Preferred Stock are convertible or
(ii) $.73. Dividends payable on the Series B Preferred Stock shall be pro rated
for the actual number of days in any partial quarter, calculated on the basis of
a calendar quarter.
(d) Pro Rata Distribution. All dividends paid with respect to the
Series B Preferred Stock pursuant to this Section 2 shall be paid pro rata in
respect of each share of Series B Preferred Stock entitled thereto. In the event
that the Legally Available Funds available for the payment of dividends shall be
insufficient for the payment of the entire amount of dividends payable with
respect to the Series B Preferred Stock on any date on which the Board has
declared the payment of a dividend or otherwise, the amount of any available
surplus shall be allocated for the payment of dividends with respect to the
Series B Preferred Stock and any other shares of capital stock that are ranked
pari passu as to dividends pro rata based upon the amount of accrued and unpaid
dividends of such shares of capital stock.
(e) Business Day. For purposes hereof, the term "Business Day" shall
mean any Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on
which banking institutions in New York City are authorized or obligated by law
or executive order to close.
Section 3. Series B Preferred Stock -- Certain Restrictions. (a) Unless
the dividends (including accrued and unpaid dividends in arrears whether or not
declared) described above in Section 2, which but for the insufficiency of
Legally Available Funds should have been paid, have been paid in full or
declared and set apart for payment, the Corporation shall be prohibited from
paying dividends on, making any other distributions on, or redeeming or
purchasing or otherwise acquiring for consideration any capital stock of the
Corporation (without regard to its rank, either as to dividends or upon
liquidation, dissolution or winding up), other than (i) any series of preferred
stock of the Corporation which ranks pari passu with the Series B Preferred
Stock, all of which payments shall be made pari passu with the Series B
Preferred Stock or (ii) shares of preferred stock of the Corporation that rank
senior to the Series B Preferred Stock, in each case under clause (i) or (ii) if
the issuance of such preferred stock (other than Series A Preferred Stock or
preferred stock ranking pari passu with the Series B Preferred Stock up to an
aggregate liquidation preference of $35,000,000 that the Corporation is
permitted to issue pursuant to Section 4(n) hereof) has been approved by the
holders of a majority of the Series B Preferred Stock.
(b) The Corporation shall not permit any subsidiary or subpartnership
of the Corporation to purchase or otherwise acquire for consideration or make
any payment with respect to any shares of capital stock of the Corporation if
the Corporation is prohibited from purchasing or otherwise acquiring for
consideration or making any payment with respect to such shares at such time and
in such manner pursuant to Section 3(a).
Section 4. Series B Preferred Stock -- Voting Rights.
(a) General. Except as limited or provided by law the holders of the
Series B Preferred Stock shall be entitled (i) to vote or consent on all matters
submitted to the holders of
-3-
Articles Supplementary
<PAGE> 4
Common Stock together with the holders of the Common Stock as a single class and
(ii) to vote or consent on all matters affecting the Series B Preferred Stock as
a separate class.
(b) Calculation of Votes When Voting With Common Stock. For the
purposes of calculating the votes cast for a particular matter when voting or
consenting pursuant to Section 4(a), each share of Series B Preferred Stock will
entitle the holder thereof to one vote for each share of Common Stock into which
such share of Series B Preferred Stock is convertible as provided in Section
7(c) herein as of the record date for such vote or consent or, if no record date
is specified, as of the date of such vote or consent.
(c) Section 4(c) Director. (i) In addition to the other voting rights
described herein, the number of directors constituting the Board shall be
automatically increased by one (1) member to be elected by the holders of the
Series B Preferred Stock so long as Five Arrows Realty Securities III L.L.C. and
its Affiliates and/or one or more of their respective members or partners,
beneficially own in the aggregate (A) at least fifty percent (50%) of the
outstanding Series B Preferred Stock or (B) an amount of voting securities of
the Corporation which, if converted into shares of Common Stock, would exceed
10% of the outstanding Common Stock on a fully diluted basis (determined on the
basis of then convertible, exercisable or exchangeable securities, warrants or
options issued by the Corporation (such amount as set forth in clauses (A) and
(B) above, the "Minimum Threshold").
(ii) The position on the Board established pursuant to Section 4(c)(i)
shall remain available until the Minimum Threshold fails to be satisfied.
(iii) Any director elected pursuant to Section 4(c)(i) shall have the
right to be a full voting member of any and all committees of the Board.
(iv) Any director elected pursuant to Section 4(c)(i) shall be deemed
to have resigned upon the position created hereby no longer being available.
(v) The term "Affiliate" means Rothschild Realty Inc. and each member
of Five Arrows Realty Securities III L.L.C. The term "Regular Quarterly
Dividend" means any cash dividend or dividends paid in any calendar quarter that
do not in the aggregate exceed the Corporations reported Funds From Operations
(as defined by the National Association of Real Estate Investment Trusts,
including amendments to the definition after the date hereof) for the quarter
relating to such dividend.
(d) Section 4(d) Directors. (i) In addition to the other voting rights
described herein and the increase in the number of directors constituting the
Board as described in Section 4(c) above, the number of directors constituting
the Board shall be automatically increased by one (1) member upon the first of
the following to occur: (I) the Corporation's failure to pay, or its
determination that it is not likely to pay, Regular Quarterly Dividends on its
Common Stock aggregating at least $2.20 per share (adjusted to reverse the
effect of any event set forth in Section 7 herein that would require an
adjustment to the Conversion Price) for any four consecutive quarters (a
"Dividend Reduction Event"); (II) the Corporation's failure to pay in full
(after payment of all previously accrued and unpaid dividends) the quarterly
dividend payable
-4-
Articles Supplementary
<PAGE> 5
hereunder (whether or not declared) at any time in respect of the Series B
Preferred Stock (a "Dividend Payment Default"); (III) the Corporation's failure
to maintain an Income to Debt Ratio (as defined below) of at least 1.50 to 1.0
for three consecutive quarterly periods (a "Financial Ratio Event"), or (IV) the
Corporation being in default (which in the case of a non-monetary default shall
mean that such default remains unremedied after thirty days) under the terms of
any credit facility or loan documentation to which it or the Operating
Partnership or any of their respective subsidiaries is a party (a "Credit
Default Event").
(ii) The position on the Board created pursuant to Section 4(d)(i)
shall terminate when (A) there are no shares of Series B Preferred Stock of the
Corporation outstanding or (B) each of the following has occurred and continues
to occur: (I) the Dividend Reduction Cure (as defined below), (II) the Dividend
Payment Cure (as defined below), (III) the Financial Ratio Cure (as defined
below) and (IV) Credit Default Cure (as defined below).
(iii) "Income to Debt Ratio" as used herein, shall mean the ratio of
the Corporation's consolidated earnings before interest, taxes, depreciation and
amortization, net of reserves for capital improvements of $1.00 per square foot
per annum, to the interest and principal payable (without giving effect to any
waivers) in respect of the Corporation's consolidated indebtedness during the
same period.
(e) Section 4(e) Directors. In addition, if at any time after the
Minimum Threshold ceases to be satisfied a Dividend Payment Default occurs for
three consecutive fiscal quarters, the number of directors constituting the
Board shall be automatically increased by a maximum of two (2) members. The
positions on the Board created pursuant to this Section 4(e) shall continue to
be available until the earlier to occur of such time as (A) there are no shares
of Series B Preferred Stock of the Corporation outstanding and (B) the Dividend
Payment Cure (as defined herein). Any director elected pursuant to this section
shall be deemed to have resigned upon the position created hereby not being
available.
(f) Election of Preferred Directors. The holders of the Series B
Preferred Stock shall have the special right, voting separately as a single
class, to elect as soon as practical, a director to fill each vacancy created
pursuant to Section 4(c), 4(d) or 4(e) and to elect their respective successors
at each succeeding annual meeting of the Corporation thereafter at which such
successor is to be elected. The director so elected from time to time in respect
of clause (i) of Section 4(c) shall be referred to herein as the "Section 4(c)
Director." The director so elected from time to time in respect of clause (i) of
Section 4(d) shall be referred to herein as the "Section 4(d) Director." The
directors elected from time to time in respect of Section 4(e) shall be referred
to herein as the "Section 4(e) Directors." As used herein, the term "Preferred
Director" shall refer to each of the Section 4(c) Director, the Section 4(d)
Director or a Section 4(e) Director, as appropriate, and the term "Preferred
Directors" shall refer to all such directors. At no time shall there be more
than two Preferred Directors on the Board.
(g) Classification of Board. Each vacancy created upon the Board from
time to time pursuant to Section 4(c), (d) or (e) as the case may be, shall be
apportioned among the classes of directors, if any, so that the number of
directors in each of the classes of directors is as nearly equal in number as
possible. The Preferred Directors shall be classified accordingly.
-5-
Articles Supplementary
<PAGE> 6
(h) Cures.
(i) Upon the occurrence of a Dividend Reduction Event, the same shall
be deemed to continue to exist until such time as the earlier to occur of (x)
none of the Series B Preferred Stock shall remain outstanding or (y) the regular
quarterly dividends to be paid on the Common Stock for the four quarters in
respect of which the Dividend Reduction Event was estimated to occur have been
restored in the good faith estimate of the Corporation to at least $2.20 per
share of Common Stock (adjusted to reverse the effect of any event set forth in
Section 7 that would require an adjustment to the Conversion Price) (a
"Distribution Reduction Cure").
(ii) Upon the occurrence of the Dividend Payment Event, the same shall
be deemed to continue and exist until such time as the earlier to occur of (x)
none of the Series B Preferred Stock shall remain outstanding or (y) all
distributions, including accrued and unpaid distributions on the Series B
Preferred Stock, whether or not declared, have been paid or made available for
payment (a "Dividend Payment Cure").
(iii) Upon the occurrence of a Financial Ratio Event, the same shall be
deemed to continue and exist until such time as the earlier to occur of (x) none
of the Series B Preferred Stock shall remain outstanding or (y) an Income to
Debt Ratio of at least 1.50 to 1.0 has been maintained by the Corporation for
three consecutive quarterly periods or the Financial Ratio Event has been waived
at a meeting by a vote of the holders of a majority of the Series B Preferred
Stock (a "Financial Ratio Cure").
(iv) Upon the occurrence of a Credit Default Event, the same shall be
deemed to continue and exist until such time as the earlier to occur of (x) none
of the Series B Preferred Stock shall remain outstanding or (y) such credit
default has been remedied or the Credit Default Event has been waived at a
meeting by a vote of the holders of a majority of the Series B Preferred Stock
(a "Credit Default Cure").
(i) Board Committees. Such Preferred Director as is first elected shall
have the right to be designated as a member of every committee of the Board. Any
Preferred Director elected under Section 4(d) shall be designated as a member of
each committee of the Board on which the Section 4(c) Director is not a member
or, if the other Preferred Director was appointed pursuant to Section 4(d)
above, each committee of the Board on which the first Preferred Director is not
a member.
(j) Voting Procedures. At each meeting of the stockholders of the
Corporation at which the holders of the Series B Preferred Stock shall have the
right to vote as a single class, as provided in this Section 4, the presence in
person or by proxy of the holders of record of a majority of the total number of
shares of Series B Preferred Stock then outstanding shall be necessary and
sufficient to constitute a quorum of such class for such election by such
stockholders as a class. At any such meeting or adjournment thereof the absence
of a quorum of holders of Series B Preferred Stock shall not prevent the
election of directors other than the Preferred Directors, and the absence of a
quorum of the holders of any other class or series of
-6-
Articles Supplementary
<PAGE> 7
stock for the election of such other directors shall not prevent the election of
any Preferred Directors by the holders of the Series B Preferred Stock.
(k) Vacancy. In case any vacancy shall occur among the directors
elected by the holders of the Series B Preferred Stock such vacancy shall be
filled by the vote of holders of the Series B Preferred Stock, voting as a
single class, at a special meeting of such stockholders called for that purpose.
(l) Written Consent. Notwithstanding the foregoing, any action required
or permitted to be taken by holders of Series B Preferred Stock at any meeting
of stockholders may be taken without a meeting, without prior notice and without
a vote, if a unanimous consent, in writing, setting forth the action so taken,
shall be signed by each of the holders of Series B Preferred Stock and shall be
executed and delivered to the Secretary of the Corporation for placement among
the minutes of proceedings of the stockholders of the Corporation.
(m) Approval by the Corporation. The Corporation acting through a
majority of its Directors shall have the right to approve the nomination of any
Section 4(c) Director, Section 4(d) Director or Section 4(e) Director, such
approval not to be unreasonably withheld; provided that such approval shall not
be required for the following individuals: John McGurk, D. Pike Aloian, Matthew
Kaplan and James E. Quigley III, or other senior officers of Rothschild Realty
Inc. who are also appointed as managers of Five Arrows Realty Securities III
L.L.C.
(n) Restrictions. So long as the Series B Preferred Stock is
outstanding, without the consent of the holders of at least the majority of the
Series B Preferred Stock at the time outstanding, given in person or by proxy,
at a meeting called for that purpose at which the holders of the Series B
Preferred Stock shall vote separately as a class, or by the unanimous consent in
writing of all of the holders of the Series B Preferred Stock (in addition to
any other vote or consent of stockholders required by law or by the Charter),
the Corporation may not (i) effect or validate the amendment, alteration or
repeal of any provision of these Articles Supplementary, (ii) effect or validate
the amendment, alteration or repeal of any provision of the Charter of the
Corporation which would adversely effect the rights of the holders of the Series
B Preferred Stock as such, (iii) effect or validate the amendment, alteration or
repeal of any provision of the Charter of the Corporation which would increase
in any respect the restrictions or limitations on ownership applicable to the
Series B Preferred Stock pursuant thereto, (iv) effect or validate the
amendment, alteration or repeal of any provision of the Charter of the
Corporation or By-Laws of the Corporation so as to limit the right to
indemnification provided to any present or future member or members of the Board
elected by the holders of the Series B Preferred Stock, (v) other than the
Series B Preferred Stock authorized herein, issue Series B Preferred Stock (or a
series of preferred stock that would vote as a class with the Series B Preferred
Stock with respect to the election of any Preferred Director) or shares of stock
ranking senior or pari passu to the Series B Preferred Stock (as to dividends or
upon liquidation, dissolution or winding up), provided that the Corporation may
sell preferred stock ranking pari passu with the Series B Preferred Stock up to
an aggregate liquidation preference of $35,000,000, or (vi) effect or validate
the amendment, alteration or repeal of any provision of the Charter of the
Corporation or By-Laws of the Corporation so as to increase the number of
members of the Board beyond nine (9) members (not including any Preferred
Directors).
-7-
Articles Supplementary
<PAGE> 8
(o) Reports. The Corporation shall mail to each holder of record of
Series B Preferred Stock, at such holder's address in the records of the
Corporation, within 45 days after the end of the first three fiscal quarters of
each fiscal year and within 90 days after the end of each fiscal year, its
financial reports for such fiscal period in such form and containing such
independent accountants report as set forth under the rules of the Securities
and Exchange Commission (together with the report of the Corporation's
independent accountants with respect to such fiscal period) irrespective of
whether the Corporation is then required to file reports under such rules.
Section 5. Series B Preferred Stock --Redemption Rights.
(a) General. The Corporation may, at its option, to the extent it shall
have legally available funds therefor, redeem all or, solely in the event of,
and using the net proceeds from, the issuance of securities ranking junior to
the Series B Preferred Stock in terms of dividends, distributions and
liquidation preferences, any portion (on a pro rata basis) of the outstanding
Series B Preferred Stock, at any time on or after the date which is the fifth
anniversary of the original date of issuance of Series B Preferred Stock;
provided, however, that the initial redemption of the Series B Preferred Stock
shall not be for less than 50% of the outstanding Series B Preferred Stock.
(b) Notice. The option of the Corporation to redeem the Series B
Preferred Stock pursuant to this Section 5 shall be exercised by mailing of a
written notice of election (a "Redemption Notice") by the Corporation to the
holders of the Series B Preferred Stock at such holder's address appearing on
the records of the Corporation at least 60 days prior to the date specified
therein for the redemption of the Series B Preferred Stock. Any such notice
under this Section 5(b) shall state, at a minimum, the amount of Series B
Preferred Stock to be redeemed, the date on which such redemption shall occur
and the last date on which such holder can exercise the conversion rights
provided for in Section 7 herein (the "Final Conversion Date").
(c) Conversion. During the period beginning on the date on which the
Corporation mailed to each holder of the Series B Preferred Stock a written
notice of election pursuant to subsection (b) above and ending on the sixtieth
day following the date of such mailing, each holder of the Series B Preferred
Stock may exercise its rights pursuant to Section 7 herein.
(d) Redemption Price. Upon the sixtieth day following the mailing to
the holder of the Series B Preferred Stock of a written notice of election
pursuant to subsection (b) above, the Corporation shall be required, unless such
holder of Series B Preferred Stock has exercised its rights pursuant to
subsection (c) above, to purchase from such holder of Series B Preferred Stock
(upon surrender by such holder at the Corporation's principal office of the
certificate representing such Share), such Series B Preferred Stock specified in
the Redemption Notice, at a price equal to the product of (i) $35.00 per share
plus accrued and unpaid dividends (whether or not declared and accrued through
the date of payment for redemption or the date payment is made available for
payment to the holder thereof) plus a premium equal to the following percentage
of $35.00:
-8-
Articles Supplementary
<PAGE> 9
<TABLE>
<CAPTION>
Redemption Occurs
On or After But Prior to % Premium
----------- ------------ ---------
<S> <C> <C>
October 6, 2005 October 5, 2006 5.0
October 6, 2006 October 5, 2007 4.0
October 6, 2007 October 5, 2008 3.0
October 6, 2008 October 5, 2009 2.0
October 6, 2009 October 5, 2010 1.0
October 6, 2010 0.0
</TABLE>
and (ii) the number of shares of Series B Preferred Stock to be redeemed as
provided in the Redemption Notice (the "Redemption Price").
(e) Dividends. No share of Series B Preferred Stock as may be redeemed
shall be entitled to any dividends accruing thereon after the date on which the
payments provided by and in accordance with Section 5(d) are paid or made
available for payment to the holder thereof. On such date all rights of the
holder of such share of Series B Preferred Stock shall cease, and such share of
Series B Preferred Stock shall not be deemed to be outstanding.
Section 6. Series B Preferred Stock -- Liquidation Rights.
(a) Liquidation Payment. In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, then out of
the assets of the Corporation before any distribution or payment to the holders
of shares of capital stock of the Corporation ranking junior to the Series B
Preferred Stock (as to dividends or upon liquidation, dissolution or winding
up), the holders of the Series B Preferred Stock shall be entitled to be paid
$35.00 per share (the "Liquidation Value") plus accrued and unpaid dividends
whether or not declared, if any, (or a pro rata portion thereof with respect to
fractional shares), to the date of final distribution or the distribution is
made available; provided, however, that if such liquidation, dissolution or
winding up of the Corporation occurs in connection with or subsequent to a
Change of Control (as defined in Section 8(e)), then the holders of the Series B
Preferred Stock shall be entitled to be paid the Put Payment (as defined
herein). Except as provided in this Section 6, the holders of the Series B
Preferred Stock shall be entitled to no other or further distribution in
connection with such liquidation, dissolution or winding up.
(b) Pro Rata Distribution. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation available for
distribution to the holders of Series B Preferred Stock and the Parity Stock
shall be insufficient to permit payment in full to such holders the sums which
such holders are entitled to receive in such case, then all of the assets
available for distribution to the holders of the Series B Preferred Stock and
the Parity Stock shall be distributed among and paid to the holders of the
Series B Preferred Stock and the Parity Stock, ratably in proportion to the
respective amounts that would be payable to such holders if such assets were
sufficient to permit payment in full.
-9-
Articles Supplementary
<PAGE> 10
Section 7. Series B Preferred Stock--Conversion.
(a) Conversion Rights. Subject to and upon compliance with the
provisions of this Section 7, a holder of Series B Preferred Stock shall have
the right, at such holder's option at any time after December 31, 2002 or as
otherwise provided in these Articles Supplementary, to convert all or a portion
of such shares into the number of fully paid and non-assessable shares of Common
Stock obtained by multiplying the number of shares of Series B Preferred Stock
being converted by the Conversion Ratio (as defined below and as in effect at
the time and on the date provided for in this Section 7(a)) by surrendering such
Series B Preferred Stock to be converted. Such surrender shall be made in the
manner provided in Section 7, paragraph (b); provided, however, that the right
to convert any Series B Preferred Stock called for redemption pursuant to
Section 5 shall terminate at the close of business on the Final Conversion Date,
unless the Corporation shall default in making payment of any cash payable upon
such redemption under Section 5 hereof. The "Conversion Ratio" with respect to
any Series B Preferred Stock will initially be equal to 1.0 shares of Common
Stock to per share of Series B Preferred Stock, subject to adjustment as
described below.
(b) Manner of Conversion.
(i) In order to exercise the conversion right, the holder of each
share of Series B Preferred Stock to be converted shall surrender to the
Corporation the certificate representing such share, duly endorsed or assigned
to the Corporation or in blank, accompanied by written notice to the Corporation
that the holder thereof elects to convert such Series B Preferred Stock. Unless
the shares of Common Stock issuable on conversion are to be issued in the same
name as the name in which such Series B Preferred Stock are registered, each
share of Series B Preferred Stock surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
(ii) As promptly as practicable after the surrender of certificates
of Series B Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on such holder's written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such Series B Preferred Stock in accordance with
the provisions of this Section 7, and any fractional interest in respect of a
share of Common Stock arising upon such conversion shall be settled as provided
in paragraph (c) of this Section 7.
(iii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which certificates for
the Series B Preferred Stock have been surrendered and such notice received by
the Corporation as aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby at such time on such date and such
conversion shall be at the Conversion Ratio in effect at such time on such date
unless the stock transfer books of the Corporation shall be closed on that date,
in which event such conversion
-10-
Articles Supplementary
<PAGE> 11
shall have been deemed to have been effected and such person or persons shall be
deemed to have become the holder or holders of record at the close of business
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Ratio in effect on the date on which such
shares shall have been surrendered and such notice received by the Corporation.
(c) Fractional Shares. No fractional shares or scrip representing
fractions of shares of Common Stock shall be issued upon conversion of the
Series B Preferred Stock. Instead of any fractional interest in a share of
Common Stock that would otherwise be deliverable upon the conversion of Series B
Preferred Stock, the Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of Common Stock on the Trading Day
immediately preceding the date of conversion. If more than one share of Series B
Preferred Stock shall be surrendered for conversion at one time by the share
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of Series B
Preferred Stock so surrendered.
(d) Adjustment of Conversion Ratio. The Conversion Ratio shall be
adjusted from time to time as follows:
(i) Payment of Dividends; Subdivisions, Combinations,
Reclassifications. If the Corporation shall, while any Series B Preferred Stock
are outstanding, (A) pay a dividend or make a distribution with respect to its
capital stock in shares of its Common Stock, (B) subdivide its outstanding
Common Stock into a greater number of shares, (C) combine its outstanding Common
Stock into a smaller number of shares or (D) issue any shares of capital stock
by reclassification of its Common Stock, the Conversion Ratio in effect at the
opening of business on the day next following the date fixed for the
determination of stockholders entitled to receive such dividend or distribution
or at the opening of business on the day following the day on which such
subdivision, combination or reclassification becomes effective, as the case may
be, shall be adjusted so that the holder of any Series B Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock that such holder would have owned or have been entitled
to receive after the happening of any of the events described above had such
Series B Preferred Stock been converted immediately prior to the record date in
the case of a dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made pursuant to
this subparagraph (i) shall become effective immediately after the opening of
business on the day next following the record date (except as provided in
paragraph (h) below) in the case of a dividend or distribution and shall become
effective immediately after the opening of business on the day next following
the effective date in the case of a subdivision, combination or
reclassification.
(ii) Rights, Options and Warrants. If the Corporation shall, while
any shares of Series B Preferred Stock are outstanding, issue rights, options or
warrants to all holders of Common Stock entitling them (for a period expiring
within 45 days after the record date mentioned below) to subscribe for or
purchase Common Stock at a price per share less than the Current Market Price
per share of Common Stock on the record date for the determination of
stockholders entitled to receive such rights or warrants, then the Conversion
Ratio in effect at the opening of business on the day next following such record
date shall be adjusted to equal the
-11-
Articles Supplementary
<PAGE> 12
ratio determined by dividing (I) the Conversion Ratio in effect immediately
prior to the opening of business on the day next following the date fixed for
such determination by (II) a fraction, the numerator of which shall be the sum
of (A) the number of shares of Common Stock outstanding on the close of business
on the date fixed for such determination and (B) the number of shares that the
aggregate proceeds to the Corporation from the exercise of such rights or
warrants for Common Stock would purchase at such Current Market Price, and the
denominator of which shall be the sum of (A) the number of Shares of Common
Stock outstanding on the close of business on the date fixed for such
determination and (B) the number of additional shares of Common Stock offered
for subscription or purchase pursuant to such rights or warrants. Such
adjustment shall become effective immediately after the opening of business on
the day next following such record date (except as provided in paragraph (h)
below). In determining whether any rights or warrants entitle the holders of
Common Stock to subscribe for or purchase shares of Common Stock at less than
such Current Market Price, there shall be taken into account any consideration
received by the Corporation upon issuance and upon exercise of such rights or
warrants, the value of such consideration, if other than cash, to be determined
by the Board of Directors.
(iii) Issuance of Securities. If the Corporation shall distribute
to all holders of its Common Stock any shares of capital stock of the
Corporation (other than Common Stock) or evidence of its indebtedness or assets
(excluding Regular Quarterly Dividends) or rights or warrants to subscribe for
or purchase any of its securities (excluding those rights and warrants issued to
all holders of Common Stock entitling them for a period expiring within 45 days
after the record date referred to in subparagraph (ii) above to subscribe for or
purchase Common Stock, which rights and warrants are referred to in and treated
under subparagraph (ii) above) (any of the foregoing being hereinafter in this
subparagraph (iii) called the "Securities"), then in each such case each holder
of Series B Preferred Stock shall receive concurrently with the receipt by
holders of the Common Stock the kind and amount of such Securities that it would
have owned or been entitled to receive had such Series B Preferred Stock been
converted immediately prior to such distribution or related record date, as the
case may be.
(iv) Distribution of Cash. In case the Corporation shall pay or
make a dividend or other distribution on its Common Stock exclusively in cash
(excluding Regular Quarterly Dividends), each holder of Series B Preferred Stock
shall receive concurrently with the receipt by holders of the Common Stock the
kind and amount of any such distribution that it would have owned or been
entitled to receive had such Series B Preferred Stock been converted immediately
prior to such distribution or related record date, as the case may be.
(v) Minimum Adjustment. No adjustment in the Conversion Ratio shall
be required unless such adjustment would require a cumulative increase or
decrease of at least 1%; provided, however, that any adjustments that by reason
of this subparagraph (v) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment until made. Notwithstanding
any other provisions of this Section 7, the Corporation shall not be required to
make any adjustment of the Conversion Ratio for (x) the issuance of any shares
of Common Stock pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Corporation and the investment of
additional optional amounts in
-12-
Articles Supplementary
<PAGE> 13
shares of Common Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation, (y) the issuance
of contingent rights issued pursuant to a stockholders' rights plan adopted by
the Corporation pursuant to which the acquisition by any third party of a
specified percentage of Common Stock triggers the exercisability of such rights
to purchase Common Stock, for so long as no event has occurred triggering such
rights to exercise, and (z) the issuance of Common Stock or options to purchase
Common Stock pursuant to an employee benefit plan. All calculations under this
Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or
to the nearest one-tenth of a share (with .05 of a share being rounded upward),
as the case may be. Anything in this paragraph (d) to the contrary
notwithstanding, the Corporation shall be entitled, to the extent permitted by
law, to make such reductions in the Conversion Ratio, in addition to those
required by this paragraph (d), as it in its discretion shall determine to be
advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or warrants to
purchase stock or securities, or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its stockholders shall not be
taxable, or if that is not possible, to diminish any income taxes that are
otherwise payable because of such event.
(e) Adjustment of Conversion Ratio Upon Certain Transactions. If the
Corporation shall be a party to any transaction (including, without limitation,
a merger, consolidation, statutory share exchange, self tender offer for all or
substantially all shares of Common Stock, sale of all or substantially all of
the Corporation's assets or recapitalization of the Common Stock and excluding
any transaction as to which subparagraph (d)(i) of this Section 7 applies) (each
of the foregoing being referred to herein as a "Transaction"), in each case as a
result of which shares of Common Stock shall be converted into the right to
receive stock, securities or other property (including cash or any combination
thereof), each share of Series B Preferred Stock that is not converted into the
right to receive stock, securities or other property in connection with such
Transaction shall thereafter be convertible into the kind and amount of shares
of stock, securities and other property (including cash or any combination
thereof) receivable upon the consummation of such Transaction by a holder of
that number of shares of Common Stock into which one share of Series B Preferred
Stock was convertible immediately prior to such Transaction, assuming such
holder of Common Stock (i) is not a person with which the Corporation
consolidated or into which the Corporation merged or which merged into 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 or (ii) 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 share of Common Stock of the Corporation 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 purpose of this paragraph (e) the kind and
amount of stock, securities and other property (including cash) receivable upon
such Transaction by 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
Corporation shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph (e), and it
shall not consent or agree to the occurrence of any Transaction until the
-13-
Articles Supplementary
<PAGE> 14
Corporation has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series B
Preferred Stock that will contain provisions enabling the holders of the Series
B Preferred Stock that remain outstanding after such Transaction to convert into
the consideration received by holders of Common Stock at the Conversion Ratio in
effect immediately prior to such Transaction. The provisions of this paragraph
(e) shall similarly apply to successive Transactions.
(f) Notice of Certain Events. If:
(i) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than the Regular Quarterly Dividend);
or
(ii) the Corporation shall authorize the granting to all holders of
the Common Stock of rights or warrants to subscribe for or purchase any shares
of any class or any other rights or warrants; or
(iii) there shall be any reclassification of the Common Stock
(other than any event to which subparagraph (d)(i) of this Section 7 applies) or
any consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation is required, or a statutory
share exchange, or self tender offer by the Corporation for all or substantially
all of its outstanding shares of Common Stock or the sale or transfer of all or
substantially all of the assets of the Corporation as an entity; or
(iv) a Change of Control, as defined below, shall occur; or
(v) there shall occur the involuntary or voluntary liquidation,
dissolution or winding up of the Corporation, then the Corporation shall cause
to be mailed to the holders of Series B Preferred Stock, at the address as shown
on the stock records of the Corporation, as promptly as possible, but at least
15 Business Days prior to the applicable date hereinafter specified, a notice
stating (A) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights or warrants are to be determined or (B)
the date on which such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up or Change of
Control is expected to become effective, and the date as of which it is expected
that holders of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 7.
(g) Notice of Adjustment of Conversion Ratio. Whenever the Conversion
Ratio is adjusted as herein provided, the Corporation shall prepare a notice of
such adjustment of the Conversion Ratio setting forth the adjusted Conversion
Ratio and the effective date of such adjustment and shall mail such notice of
such adjustment of the Conversion Ratio to the holders
-14-
Articles Supplementary
<PAGE> 15
of the Series B Preferred Stock at such holders' last address as shown on the
stock records of the Corporation.
(h) Timing of Adjustment. In any case in which paragraph (d) of this
Section 7 provides that an adjustment shall become effective on the day next
following the record date for an event, the Corporation may defer until the
occurrence of such event (A) issuing to the holder of Series B Preferred Stock
converted after such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock issuable upon
such conversion before (giving effect to such adjustment and (B) paying to Such
holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of
this Section 7.
(i) No Duplication of Adjustments. There shall be no adjustment of the
Conversion Ratio in case of the issuance of any stock of the Corporation in a
reorganization, acquisition or other similar transaction except as specifically
set forth in this Section 7. If any action or transaction would require
adjustment of the Conversion Ratio pursuant to more than one paragraph of this
Section 7, only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value.
(j) Other Adjustments to Conversion Ratio. If the Corporation shall
take any action affecting the Common Stock, other than action described in this
Section 7, that would materially adversely affect the conversion rights of the
holders of the Series B Preferred Stock or the value of such conversion rights,
the Conversion Ratio for the Series B Preferred Stock may be adjusted, to the
extent permitted by law, in such manner, if any, and at such time, as the Board
of Directors, in its sole discretion, may determine to be equitable in the
circumstances.
(k) Reservation, Validity, Listing and Securities Law Compliance With
Respect to Shares of Common Stock.
(i) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock for the purpose of effecting
conversion of the Series B Preferred Stock, the full number of shares of Common
Stock deliverable upon the conversion of all outstanding Series B Preferred
Stock not therefore converted.
(ii) The Corporation covenants that any shares of Common Stock
issued upon the conversion of the Series B Preferred Stock shall be validly
issued, fully paid and non-assessable.
(iii) The Corporation shall endeavor to list the shares of Common
Stock required to be delivered upon conversion of the Series B Preferred Stock,
prior to such delivery, upon each national securities exchange, if any, upon
which the outstanding Common Stock is listed at the time of such delivery.
(iv) Prior to the delivery of any securities that the Corporation
shall be obligated to deliver upon conversion of the Series B Preferred Stock,
the Corporation shall
-15-
Articles Supplementary
<PAGE> 16
endeavor to comply with all federal and state laws and regulations thereunder
requiring the registration of such securities with, or any approval of or
consent to the delivery thereof, by any governmental authority.
(l) Transfer Taxes. The Corporation will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock or other securities or property on conversion
of the Series B Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock or
other securities or property in a name other than that of the holder of the
Series B Preferred Stock to be converted, and no such issue or delivery shall be
made unless and until the person requesting such issue or delivery has paid to
the Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
(m) Certain Defined Terms. The following definitions shall apply to
terms used in this Section 7:
(i) Current Market Price. For the purpose of any computation under this
Section 7, the Current Market Price per share of Common Stock on any
date in question shall be deemed to be the average of the daily closing
prices for the five consecutive Trading Days preceding such date in
question; provided, however, that if another event occurs that would
require an adjustment pursuant to subsection (f) through (j),
inclusive, the Board may make such adjustments to the closing prices
during such five Trading Day period as it deems appropriate to
effectuate the intent of the adjustments in this Section 7, in which
case any such determination by the Board shall be set forth in a
resolution of the Board and shall be conclusive.
(ii) "Trading Day" shall mean a day on which the Common Stock is traded
on the New York Stock Exchange, or other national exchange or quotation
system used to determine the Closing Price.
Section 8. Series B Preferred Stock -- Change of Control and Put
Option.
(a) Subject to the last sentence of this Section 8(a), if a Change of
Control or Put Event occurs, in either case as a result of the voluntary (and
not legally compelled) act, omission or participation of the Corporation, which
act, omission or participation the Corporation had the discretion under existing
laws and regulations to refrain from, then each holder of Series B Preferred
Stock will have the right to require that the Corporation, to the extent it
shall have legally available funds therefor, redeem such holder's Series B
Preferred Stock at a redemption price payable in cash in an amount equal to 102%
of the Liquidation Value thereof, plus accrued and unpaid distributions whether
or not declared, if any (the "Put Payment"), to the date of purchase or the date
payment is made available (the "Put Date") pursuant to the offer described in
paragraph (b) below (the "Put Offer"). If a Change of Control or Put Event
occurs that is not the result of such voluntary act, omission or participation
of the Corporation, the Corporation may elect to make the foregoing Put Payment
but may, in its discretion, elect not to make the foregoing Put Payment by not
commencing the Put Offer on the
-16-
Articles Supplementary
<PAGE> 17
Put Date, in which event the Conversion Ratio shall be revised to the greater of
(i) 125% of the then current Conversion Ratio so that each share of Series B
Preferred Stock will be convertible into 125% of the number of Common Shares
into which it would otherwise have been convertible and (ii) a fraction the
denominator of which is 80.00% of the Current Market Price and the numerator of
which is $35.00. Notwithstanding the foregoing, if the Securities and Exchange
Commission or its staff, by written communication to the Corporation, indicates
that the provisions of the first sentence of this Section 8(a) would preclude
the Corporation from treating the Series B Preferred Stock as equity on its
financial statements, then the Corporation shall have the right, in lieu of
application of the first sentence of this Section 8(a), to apply the Conversion
Ratio revision alternative set forth in the second sentence of this Section
8(a).
(b) Within 15 days following the Corporation becoming aware that an
event has occurred that has resulted in any Change of Control or Put Event, the
Corporation shall mail a notice to each holder of Series B Preferred Stock, at
such holder's address appearing in the records of the Corporation, stating (i)
that a Change of Control or Put Event, as applicable, has occurred and that such
holder has the right to require the Corporation to redeem such holder's Series B
Preferred Stock in cash, (ii) the date of redemption (which shall be a Business
Day, no earlier than 30 days and no later than 60 days from the date such notice
is mailed, or such later date as may be necessary to comply with the
requirements of applicable law including the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in no event shall such date be earlier than 20
business days after the notice was mailed pursuant to the second sentence of
Section 5(b) herein,), (iii) the redemption price for the redemption, and (iv)
the instructions determined by the Corporation, consistent with this subsection,
that a holder must follow in order to have its Series B Preferred Stock
redeemed.
(c) On the Put Date, the Corporation will, to the extent lawful, accept
for payment the Series B Preferred Stock or portions thereof tendered pursuant
to the Put Offer and pay an amount equal to the Put Payment in respect of all
Series B Preferred Stock or portions thereof so tendered. The Corporation shall
promptly mail to each holder of shares of Series B Preferred Stock to be
redeemed the Put Payment for such Series B Preferred Stock.
(d) Notwithstanding anything else herein, to the extent they are
applicable to any Change of Control, the Corporation will comply with Section 14
of the Exchange Act and the provisions of Regulation 14D and 14E and any other
tender offer rules under the Exchange Act and any other federal and state
securities laws, rules and regulations and all time periods and requirements
shall be adjusted accordingly.
(e) "Change of Control" means each occurrence of any of the following:
(i) a change in control of the Corporation of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act, whether or not the Company is then subject
to such reporting requirements; (ii) the acquisition, directly or indirectly, by
any individual or entity or group (as such term is used in Section 13(d)(3) and
Section 14(d) of the Exchange Act) of beneficial ownership (as defined in Rule
13d-3 promulgated under the Exchange Act, except that such individual or entity
shall be deemed to have beneficial ownership of all shares that any such
individual or entity has the right to acquire, whether such right is exercisable
immediately or only after passage of time) of 30% or more of
-17-
Articles Supplementary
<PAGE> 18
the aggregate outstanding voting capital stock of the Corporation; (iii) other
than with respect to the election, resignation or replacement of the Preferred
Directors, during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Corporation
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Corporation was
approved by a vote of 66 2/3% of the directors of the Corporation (excluding
Preferred Directors) then still in office who were either directors at the
beginning of such period, or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Corporation then in office; (iv) the holders of
capital stock of the Corporation vote to approve (A) the consolidation or merger
of the Corporation into another entity (the "Merger Entity) or the conveyance,
disposition, transfer or lease of all or substantially all of its respective
assets (including, but not limited to, real property investments) to any
individual or entity (the "Acquiring Entity", and, together with the Merger
Entity, the "Successor Entity"), or (B) any consolidation or merger of another
entity into the Corporation, which in either event (A) or (B) is pursuant to a
transaction in which the outstanding voting capital stock of the Corporation is
reclassified or changed into or exchanged for cash, securities or other property
(unless the holders of the voting capital stock of the Corporation immediately
prior to such transaction hold immediately after such transaction more than a
majority of the outstanding voting capital stock of the Successor Entity), or
(v) the holders of capital stock of the Corporation vote to approve a plan of
complete liquidation of the Corporation.
(f) "Put Event" means each occurrence of any of (i) the Corporation
fails to qualify as a real estate investment trust as described in Section 856
of the Internal Revenue Code of 1986, as amended, other than as a result of any
action, or unreasonable failure to act, by any holder of Series B Preferred
Stock; (ii) the Corporation becomes a "Pension-held REIT" as defined in Section
856(h)(3)(D) of the Internal Revenue Code of 1986, as amended, other than as a
result of any action, or unreasonable failure to act, by the holders of Series B
Preferred Stock; or (iii) the Corporation ceases to be engaged primarily in the
business of owning and managing office properties directly or through
subsidiaries, as carried on as of the date hereof and described in the
Corporation's Annual Report on Form 10-K, as amended, as filed with the
Securities and Exchange Commission for the year ended December 31, 1999.
Section 9. Series B Preferred Stock -- Restrictions on Ownership
Transfer to Preserve Tax Benefit.
(a) The Series B Preferred Stock shall be governed by the restrictions
on ownership and transfer set forth in Section 2(b) of Article V of the Charter.
(b) So long as shares of Series B Preferred Stock are outstanding,
without the consent of the holders of at least a majority of the Series B
Preferred Stock at the time outstanding, given in person or by proxy, at a
meeting called for that purpose at which the holders of the Series B Preferred
Stock shall vote separately as a class, or by unanimous written consent in
writing of all holders of the Series B Preferred Stock, the Corporation will not
effect or validate any amendment, alteration or repeal of any Section of the
Charter, so as to increase in any respect the restrictions or limitations on
ownership applicable to the Series B Preferred Stock pursuant thereto.
-18-
Articles Supplementary
<PAGE> 19
Section 10. Series B Preferred Stock--Conversion and Exchange for
Excess Stock. The Series B Preferred Stock exchanged for Excess Stock pursuant
to Section 2(c) of the Charter shall be governed by Article V of the Charter.
Section 11. Miscellaneous.
(a) Exchange or Market Transactions. Nothing in Section 9, Section 10
or this Section 11 shall preclude the settlement of any transaction entered into
through the facilities of the New York Stock Exchange or any other national
securities exchange or automated inter-dealer quotation system. However, as set
forth in Section 9, Section 10 or this Section 11, certain transactions may be
settled by providing shares of Excess Stock.
(b) Severability. If any provision of Section 9, Section 10 or this
Section 11 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
provisions shall be affected only to the extent necessary to comply with the
determination of such court.
(c) Mailings. So long as Series B Preferred Stock is held by less than
ten record holders, all mailings shall be made by overnight United States mail
or by another overnight courier service; provided, that for so long as Five
Arrows Realty Securities III L.L.C. is a record holder of Preferred Stock, it
shall receive all mailings by overnight United States mail or by overnight
courier service regardless of the total number of record holders.
(d) Reacquired Shares. All shares of Series B Preferred Stock that have
been issued and reacquired in any manner by the Corporation (including, without
limitation, shares of Series B Preferred Stock which have been surrendered for
conversion) shall be returned to the status of authorized but unissued shares of
Series B Preferred Stock and shall not be re-issued as Series B Preferred Stock
or transferred by the Corporation without the written consent of Five Arrows
Realty Securities III L.L.C. (regardless of whether Five Arrows Realty
Securities III L.L.C. owns any shares of Series B Preferred Stock); provided,
however, that the Corporation may, at any time, reclassify such shares of Series
B Preferred Stock as Common Stock without the consent of Five Arrows Realty
Securities III L.L.C.
-19-
Articles Supplementary
<PAGE> 20
IN WITNESS WHEREOF, PARKWAY PROPERTIES, INC. has caused these Articles
Supplementary to be signed by its President, Steven G. Rogers, and witnessed by
its Chief Financial Officer and Secretary, Sarah P. Clark, this 6 day of
October, 2000.
PARKWAY PROPERTIES, INC.
By: /s/ Steven G. Rogers
--------------------------------------------
Name: Steven G. Rogers
Title: President and Chief Executive Officer
WITNESS:
By: /s/ Sarah P. Clark
--------------------------------------------
Name: Sarah P. Clark
Title: Chief Financial Officer and Secretary
THE UNDERSIGNED, President and Chief Executive Officer of Parkway
Properties, Inc. who executed on behalf of said corporation the foregoing
Articles Supplementary, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said corporation, the foregoing
Articles Supplementary to be the corporate act of said corporation and further
certify that, to the best of his knowledge, information and belief, the matters
and facts set forth therein with respect to the approval thereof or otherwise
required to be verified under oath are true in all material respects, under the
penalties of perjury.
By: /s/ Steven G. Rogers
-----------------------
Name: Steven G. Rogers
Title: President and Chief Executive Officer
-20-
Articles Supplementary
