<PAGE>
EXHIBIT 3(i).4
BURNHAM PACIFIC PROPERTIES, INC.
ARTICLES SUPPLEMENTARY
Designating 4,800,000 shares of Preferred Stock
as 4,800,000 shares of
SERIES 2000-C CONVERTIBLE PREFERRED STOCK
Burnham Pacific Properties, Inc., a corporation organized and existing
under the laws of Maryland (the "CORPORATION"), does hereby certify to the State
Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority contained in Article VI of the charter
of the Corporation, as amended (the "CHARTER"), and in accordance with Section
2-208 of the Maryland General Corporation Law, the Board of Directors of the
Corporation at a meeting held on August 27, 2000 duly adopted a resolution
reclassifying 5,000,000 shares of Common Stock (as defined in the Charter) as
Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"), and
designating a series of Preferred Stock as Series 2000-C Convertible Preferred
Stock, having the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption set forth below and
authorizing the issuance of such series of Preferred Stock as set forth below.
Upon any restatement of the Charter, Sections 1 through 14 of this Article FIRST
shall become subsection (6.7) of ARTICLE VI of the Charter, with any necessary
or appropriate changes to the enumeration and lettering of sections and
subsections hereof.
Section 1. DESIGNATION AND AMOUNT.
Of the 10,000,000 authorized shares of Preferred Stock,
4,800,000 shares are designated Series 2000-C Convertible Preferred Stock (the
"SERIES 2000-C CONVERTIBLE PREFERRED STOCK").
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(a) Holders of shares of Series 2000-C Convertible Preferred
Stock will be entitled to receive, when, as and if authorized by the Board of
Directors out of funds legally available for the payment of dividends,
cumulative quarterly cash dividends per share (rounded up to the nearest whole
cent) equal to the greater of (i) 2.00% (per quarter) of the Stated Value per
share of Series 2000-C Convertible Preferred Stock, ("STATED VALUE" means $25.00
per share of Series 2000-C Convertible Preferred Stock, as such amount is
reduced from time to time pursuant to payments in respect of the Change of
Control Preference (as defined below) or the Liquidation Preference (as defined
below)), and (ii) the Common Stock Dividend Amount (as hereinafter defined) per
share of Series 2000-C Convertible Preferred Stock, payable in each case in
arrears on the last Business Day (as hereafter defined) of each March, June,
September and December of each year, commencing on the first such day after the
issuance of a share of Series 2000-C Convertible Preferred Stock (each a
"DIVIDEND PAYMENT DATE"). The "COMMON STOCK DIVIDEND AMOUNT" applicable as of
any Dividend Payment Date shall mean the amount of the product of (i) the
dividend payable on (or immediately preceding, as set forth below) such Dividend
Payment Date with respect to each share of Common Stock, and (ii) the number of
shares of Common Stock into which each share of Series 2000-C
<PAGE>
2
Convertible Preferred Stock would be entitled to be converted, at the Conversion
Price (as hereinafter defined) then in effect and otherwise as set forth in
these Articles Supplementary, as of the record date established for such
Dividend Payment Date (determined, for purposes of this computation, to the
fourth decimal place), less the Dividend Catch-Up Amount (as hereinafter
defined). The "DIVIDEND CATCH-UP AMOUNT" shall mean an amount per share of
Common Stock equal to the amount by which the regular ($0.25 per share of Common
Stock per quarter, adjusted for splits, share dividends and other similar
events, as such $0.25 per share dividend amount may from time to time be
reasonably and sustainably increased by the Board of Directors by resolution
stating that such increased dividend amount is "REGULAR") aggregate dividends
per share of Common Stock payable on the three most recent dates fixed for
payment of dividends on the Common Stock (excluding the date concurrent with or
within five Business Days preceding such Dividend Payment Date), whether or not
declared, exceed the aggregate dividends per share of Common Stock actually paid
on said three payment dates. Such cumulative quarterly cash dividends will
accrue daily on the basis of a 360-day year of twelve 30-day months, and will,
to the extent not paid in full on a Dividend Payment Date, together with
accruals thereon, accrue at the compounded quarterly rate of 2.00% from such
Dividend Payment Date until payment is made, whether or not the Corporation has
earnings or surplus. The dividend payable to a holder of a share of Series
2000-C Convertible Preferred Stock on the first Dividend Payment Date after the
share is issued will be the accrued dividend calculated from the date of
issuance to such Dividend Payment Date plus any "ACCRUED DIVIDENDS" (as defined
in the Articles Supplementary of the Corporation relating to the Series 1997-A
Convertible Preferred Stock) or "ACCRUED DISTRIBUTIONS" (as defined in Exhibit C
to the First Amendment to the Agreement of Limited Partnership of Burnham
Pacific Operating Partnership, L.P.), as the case may be, owing to such holder
in respect of the share of Series 1997-A Convertible Preferred Stock or the
Preferred Unit (as defined in paragraph (c) below) exchanged, directly or
indirectly, for such share of Series 2000-C Convertible Preferred Stock,
calculated as of the date prior to the date of such exchange. Each Dividend
Payment Date will be a date which is the date fixed for payment of dividends
with respect to the shares of Common Stock or is not more than five Business
Days after the date fixed for payment of dividends with respect to the shares of
Common Stock. As used with regard to the Series 2000-C Convertible Preferred
Stock, the term "BUSINESS DAY" means a day on which both state and federally
chartered banks in New York, New York are required to be open for general
banking business; "ACCRUED DIVIDENDS" means in respect of a share of Series
2000-C Convertible Preferred Stock all accrued and due dividends (compounded as
provided above and together with accruals thereon) and all accrued but not yet
due dividends (whether or not declared or authorized) with respect to such share
plus, to the extent not previously paid, any "ACCRUED DIVIDENDS" (as defined in
the Articles Supplementary of the Corporation relating to the Series 1997-A
Convertible Preferred Stock) or "ACCRUED DISTRIBUTIONS" (as defined in Exhibit C
to the First Amendment to the Agreement of Limited Partnership of Burnham
Pacific Operating Partnership, L.P.), as the case may be, owing to such holder
in respect of the share of Series 1997-A Convertible Preferred Stock or the
Preferred Unit exchanged, directly or indirectly, for such share of Series
2000-C Convertible Preferred Stock, calculated as of the date of such exchange;
and "OUTSTANDING DIVIDENDS" means in respect of a share of Series 2000-C
Convertible Preferred Stock all accrued and due dividends (compounded as
provided above and together with accruals thereon) (whether or not declared or
authorized) but excluding all accrued but not yet due dividends with respect to
such share, plus, to the extent not previously paid, any "ACCRUED DIVIDENDS" (as
defined in the Articles Supplementary of the Corporation relating to the Series
1997-A Convertible
<PAGE>
3
Preferred Stock) or "ACCRUED DISTRIBUTIONS" (as defined in Exhibit C to the
First Amendment to the Agreement of Limited Partnership of Burnham Pacific
Operating Partnership, L.P.), as the case may be, owing to such holder in
respect of the share of Series 1997-A Convertible Preferred Stock or the
Preferred Unit exchanged, directly or indirectly, for such share of Series
2000-C Convertible Preferred Stock, calculated as of the date of such exchange.
(b) Each dividend will be payable to holders of record of the
Series 2000-C Convertible Preferred Stock on a date (a "RECORD DATE") selected
by the Board of Directors which is not less than 10 nor more than 45 days before
the Dividend Payment Date on which the dividend is to be paid. No Record Date
will precede the close of business on the date the Record Date is fixed.
(c) Unless and until all Accrued Dividends on the Series 2000-C
Convertible Preferred Stock under Section 2(a) through the most recent preceding
Dividend Payment Date have been paid (or are being paid contemporaneously
therewith), the Corporation may not (i) declare or pay any dividend, make any
distribution (other than a distribution payable solely in shares of Common
Stock), or set aside any funds or assets for payment or distribution with regard
to any Junior Shares (as hereinafter defined), (ii) redeem or purchase (directly
or indirectly, including, without limitation, through the Operating Partnership
(as hereinafter defined) or Subsidiaries (as hereinafter defined)), or set aside
any funds or other assets for the redemption or purchase of, any Junior Shares
(as hereinafter defined) or (iii) authorize, take or cause or permit to be taken
any action of the general partner of the Operating Partnership, that will result
in (A) the declaration or payment by the Operating Partnership of any
distribution to its partners (other than distributions made concurrently with
distributions payable to the Corporation in respect of its partnership interest
or Preferred Units in each case that will be used by the Corporation to fund the
payment in full of all such Accrued Dividends (such distributions to the
Corporation in respect of its partnership interest being referred to as
"AUTHORIZED LP DISTRIBUTIONS" and such distributions to the Corporation in
respect of its Preferred Units being referred to as "AUTHORIZED PREFERRED UNIT
DISTRIBUTIONS")), or the setting aside of any funds or assets for payment of any
distributions to its partners (other than those made concurrently with
Authorized LP Distributions or Authorized Preferred Unit Distributions) or (B)
the redemption or purchase (directly or indirectly, including, without
limitation, through the Operating Partnership or Subsidiaries), or the setting
aside of any funds or other assets for the redemption or purchase of any
partnership interests in the Operating Partnership, except for exchange or
conversions of partnership interests in the Operating Partnership in the
ordinary course into shares of (1) Common Stock or (2) pursuant to the Operating
Partnership Agreement (as defined herein), Series 2000-C Convertible Preferred
Stock. As used herein, the term "JUNIOR SHARES" means, with regard to the Series
2000-C Convertible Preferred Stock, all partnership interests in the Operating
Partnership other than those partnership interests held of record and
beneficially by the Corporation and the Preferred Units, all shares of Common
Stock and all shares of any other class or series of stock of the Corporation to
which the shares of Series 2000-C Convertible Preferred Stock are prior in rank
with regard to payment of dividends or payments upon the liquidation,
dissolution or winding-up of the Corporation; the term "OPERATING PARTNERSHIP"
means Burnham Pacific Operating Partnership, L.P., a Delaware limited
partnership, or any successor thereto; the term "SUBSIDIARY" means any Person in
which the Company directly or indirectly owns any equity interest; the term
"PERSON" shall mean an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
<PAGE>
4
association, joint venture, nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government or other
entity of whatever nature; the term "PREFERRED UNITS" means the Series 1997-A
Preferred Units issued pursuant to the Agreement of Limited Partnership, dated
as of November 14, 1997, by and among Burnham Pacific Properties, Inc., as
General Partner and Burnham Pacific L.P., Inc., and Burnham Pacific Properties,
Inc., as limited partners, as amended through and including the Thirteenth
Amendment to Agreement of Limited Partnership (and exhibits thereto), dated as
of August , 2000 (as amended from time to time, the "OPERATING PARTNERSHIP
AGREEMENT").
(d) While any shares of Series 2000-C Convertible Preferred
Stock are outstanding, the Corporation may not pay any dividend, or set aside
any funds for the payment of a dividend, with regard to any shares of any class
or series of stock of the Corporation which ranks on a parity with Series 2000-C
Convertible Preferred Stock as to payment of dividends unless at least a
proportionate payment is made with regard to all Accrued Dividends on the Series
2000-C Convertible Preferred Stock (except, as to any shares of the Series
2000-C Convertible Preferred Stock as to which a notice of conversion has been
furnished by the holder thereof, at the effective time of conversion) under
Section 2(a) through the most recent preceding Dividend Payment Date. A payment
of dividends with regard to the Series 2000-C Convertible Preferred Stock will
be proportionate to a payment of a dividend with regard to another class or
series of stock if the dividend per share of Series 2000-C Convertible Preferred
Stock is the same percentage of the Accrued Dividends (except as aforesaid),
under Section 2(a) through the most recent preceding Dividend Payment Date, with
regard to a share of Series 2000-C Convertible Preferred Stock that the
dividend paid with regard to a share of stock of the other class or series is of
the Accrued Dividends (except as aforesaid), under Section 2(a) through the most
recent preceding Dividend Payment Date, with regard to a share of stock of that
other class or series.
(e) Any dividend paid with regard to shares of Series 2000-C
Convertible Preferred Stock will be paid equally with regard to each outstanding
share of Series 2000-C Convertible Preferred Stock except to the extent that
shares of Series 2000-C Convertible Preferred Stock are outstanding for
differing amounts of time during the relevant dividend period.
Section 3. VOTING RIGHTS.
The voting rights of the holders of shares of Series 2000-C
Convertible Preferred Stock will be only the following:
(a) The holders of shares of Series 2000-C Convertible
Preferred Stock will have the right to vote on all matters on which the holders
of Common Stock are entitled to vote on an "as converted" basis with holders of
shares of the Common Stock, as though part of the same class as holders of
Common Stock, with such number of shares of Common Stock deemed held of record
by holders of shares of Series 2000-C Convertible Preferred Stock on any Record
Date as would be the number of shares of Common Stock into which the shares of
Series 2000-C Convertible Preferred Stock held by such holders would be entitled
to be converted on such Record Date (assuming for purposes of determining the
voting rights associated with a share of Series 2000-C Convertible Preferred
Stock on an "as converted" basis that the Stated Value of such
<PAGE>
5
share always equals $25.00). The holders of shares of Series 2000-C Convertible
Preferred Stock shall receive all notices of meetings of the holders of shares
of Common Stock, and all other notices and correspondence to the holders of
shares of Common Stock provided by the Corporation, and shall be entitled to
take such actions, and shall have such rights, as are set forth herein or are
otherwise available to the holders of shares of Common Stock in the Charter and
in the Bylaws of the Corporation as in effect on the date hereof, in each case
with the same effect as would be taken by holders of Series 2000-C Convertible
Preferred Stock if deemed to be holders of such number of shares of Common Stock
as determined as aforesaid.
(b) While any shares of Series 2000-C Convertible Preferred
Stock are outstanding, the Corporation will not, directly or indirectly,
including through a recapitalization, reorganization, or a merger or
consolidation with any other Person, or otherwise, without approval of holders
of at least a majority of the outstanding shares of Series 2000-C Convertible
Preferred Stock, voting separately as a class, (i) issue any shares of Series
2000-C Convertible Preferred Stock, except (A) pursuant to that certain Stock
Purchase Agreement dated as of December 5, 1997 (as amended from time to time,
the "STOCK PURCHASE AGREEMENT") by and among the Corporation, the Operating
Partnership, and Westbrook Burnham Holdings, L.L.C., and Westbrook Burnham
Co-Holdings, L.L.C. (together, the "INITIAL PURCHASER") and the Exchange
Agreement dated as of August - , 2000 (as amended from time to time, the
"EXCHANGE AGREEMENT") by and among the Corporation, the Operating Partnership,
the Initial Purchaser, Blackacre SMC Master Holdings, LLC or (B) as to not more
than 400,000 shares of Series 2000-C Convertible Preferred Stock, pursuant to
the Operating Partnership Agreement, by and among the Corporation, HPBA, LLC,
and HPBA II, LLC, as in effect on the date hereof and pertaining to the exchange
of Preferred Units for shares of Series 2000-C Convertible Preferred Stock, (ii)
issue any additional Preferred Units except pursuant to the Operating
Partnership Agreement as in effect on the date hereof; (iii) increase the number
of authorized shares of Series 2000-C Convertible Preferred Stock; (iv) combine,
split or reclassify the outstanding shares of Series 2000-C Convertible
Preferred Stock into a smaller or larger number of shares; (v) exchange or
convert any shares of Series 2000-C Convertible Preferred Stock for other
securities or the right to receive cash, or propose or require an exchange or
conversion other than as provided herein, or reclassify any shares of Series
2000-C Convertible Preferred Stock (other than shares of Series 2000-C
Convertible Preferred Stock that are redeemed in accordance with the terms
hereof), or authorize, create, classify, reclassify or issue any class or series
of stock ranking prior to or on a parity with the Series 2000-C Convertible
Preferred Stock either as to dividends or upon liquidation, dissolution or
winding-up of the Corporation or as to the rights of the Series 2000-C
Convertible Preferred Stock; (vi) amend, alter or repeal, or permit to be
amended, altered or repealed, the following provisions of the Bylaws of the
Corporation in a manner which would affect adversely the rights and preferences
of any holders of Series 2000-C Convertible Preferred Stock, including, without
limitation, any exception set forth therein applicable to Series 2000-C
Convertible Preferred Stock: Article II, Section 11; Article III, Sections 2, 5
(last sentence), 9 (last sentence) and 10; Article IV, Sections 2 (last
sentence), 3 (second sentence), 5 (last sentence); and Article XIV (last
sentence); (vii) amend, alter or repeal, or permit to be amended, altered or
repealed, the Operating Partnership Agreement pertaining to or affecting the
terms and conditions of, or the rights or preferences of the Preferred Units or
(viii) amend, alter or repeal, or permit to be amended, altered or repealed, any
of the provisions of the Charter (including the terms of the Series 2000-C
Convertible Preferred Stock), the Bylaws of the Corporation, the Operating
Partnership Agreement, or any organizational document of
<PAGE>
6
any Subsidiary, or enter into any agreement or take any other action, in such a
manner as would affect adversely the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of (A) the
Series 2000-C Convertible Preferred Stock (including, without limitation, taking
any such action the result of which could be to alter the manner or rate of
exchange of partnership interests in the Operating Partnership, including,
without limitation, the Preferred Units, for securities of the Corporation as in
effect on the date hereof), or (B) the Common Stock; provided, however, that the
designation of classes of capital stock which have rights superior to those of
the class of Common Stock, as otherwise permitted hereby, shall not be deemed
adversely to affect the Common Stock.
(c) While any shares of Series 2000-C Convertible Preferred
Stock are outstanding, the Corporation will not, directly or indirectly,
including through a recapitalization or a merger or consolidation with any other
Person, or otherwise, without the approval of the holders of not less than a
majority of the outstanding shares of the Series 2000-C Convertible Preferred
Stock, voting separately as a class, propose, authorize, take, or cause to be
taken or allow to occur any of the following actions: (i) the Transfer (as
hereinafter defined) by the Corporation to a Person of the right to exercise all
or a portion of the Corporation's rights as the general partner of the Operating
Partnership, or the Transfer in a single transaction or series of transactions
of all or substantially all of the assets of the Corporation, the Operating
Partnership and the Subsidiaries, considered as a whole, including for such
purpose any Person (but excluding from the applicability of this clause (i) any
Person in which the Corporation or the Operating Partnership has a direct or
indirect minority interest such that a sale, transfer or assignment is not
within the Corporation's or Operating Partnership's control and a merger or
consolidation of the Corporation with or into a wholly-owned Subsidiary of the
Corporation in which the Corporation Market Capitalization (as hereinafter
defined) is unchanged as a result thereof) owned directly or indirectly by the
Corporation to the extent of the Corporation's attributed interest in such other
Person; (ii) any reorganization or recapitalization of the Corporation, the
Operating Partnership and the Subsidiaries, considered as a whole, in a single
transaction or in more than one transaction, in or as a result of which the
Common Stock Valuation (as hereinafter defined) is not in excess of $15.375;
(iii) any merger or consolidation of the Corporation or the Operating
Partnership with any Person (except a merger or consolidation of the Corporation
with or into a wholly-owned Subsidiary in which the Corporation Market
Capitalization is unchanged) in or as a result of which the Common Stock
Valuation is not in excess of $15.375; (iv) the Corporation's termination of the
election, or the taking of any action by the Corporation which would cause
termination other than by election, of the Corporation as a real estate
investment trust under the Internal Revenue Code of 1986, as amended; or (v) a
Change of Control (as defined in Section 4 hereof). As used herein, "COMMON
STOCK VALUATION" is the value of each share of Common Stock determined, in
connection with any reorganization, recapitalization, merger or consolidation,
absent manifest error, by reference to the opinion of a nationally-recognized
investment bank obtained by the Board of Directors of the Corporation at the
expense of the Corporation for such purpose, unless the Corporation and the
Initial Purchaser otherwise agree. As used herein, "CORPORATION MARKET
CAPITALIZATION" is the total market equity capitalization of the Corporation
determined by reference to (determined based upon the Current Market Price, as
defined in Section 5(e)(vii) hereof) (i) outstanding (assuming for this purpose
the exercise of all then outstanding and exercisable warrants or other rights to
acquire Common Stock issued in the ordinary
<PAGE>
7
course of business and the exercise or conversion of all other then exercisable
or convertible Common Stock equivalents not otherwise referenced below and
Preferred Units) shares of Common Stock, (ii) the number of shares of Common
Stock which would be issued on conversion of outstanding shares of Series 2000-C
Convertible Preferred Stock (determined in accordance with the terms hereof
without regard to any timing restrictions on conversion), and (iii) all
partnership and other equity interests in the Operating Partnership and the
other Subsidiaries held by Persons (other than the Company and the Subsidiaries)
(assuming for this purpose the exchange or conversion of all such third-Person
partnership and other equity interests in the Operating Partnership or other
Subsidiaries for shares of Common Stock). As used herein, "TRANSFER" means any
sale, transfer by operation of law or otherwise, assignment, disposition or
arrangement, whether voluntary or involuntary, which has the effect, directly or
indirectly, of altering the holding of or causing or permitting another Person
to succeed to, any voting control or economic interest, whether beneficial or of
record or both (other than as a nominee of the transferor), including any
arrangement for collateral purposes only, or which could, with the passage of
time or the occurrence of any event, or both, have such effect.
(d) While any shares of Series 2000-C Convertible Preferred
Stock are outstanding, the holders of the Series 2000-C Convertible Preferred
Stock, voting as a separate class, shall be entitled to elect two directors in
addition to any directors they may be entitled to elect pursuant to Section
9(e). The right of the holders of shares of Series 2000-C Convertible Preferred
Stock, voting as a class, so to elect two members of the Board of Directors
pursuant to this Section 3(d) shall continue without interruption until no
shares of Series 2000-C Convertible Preferred Stock remain outstanding. Such
directors shall be referred to herein as the "SERIES 2000-C DIRECTORS." At such
time when no shares of Series 2000-C Convertible Preferred Stock remain
outstanding the right to elect Series 2000-C Directors provided for in this
paragraph and the terms of the incumbent Series 2000-C Directors shall
immediately terminate. No action of any committee established by the Board of
Directors or any other group so acting shall be effective unless the Board of
Directors has afforded a Series 2000-C Director the opportunity to sit on such
committee; PROVIDED that if all Series 2000-C Directors are prohibited from
sitting on such committee by applicable law or governmental regulation or rules
of any stock exchange on which the Corporation's securities are listed, the
Board of Directors shall not be required to afford any Series 2000-C Director
the opportunity to sit on such committee in order for such committee's action to
be effective so long as a Series 2000-C Director shall, upon his or her request,
be included in all meetings of such committee as a non-voting member. The
election of a Series 2000-C Director shall be by the affirmative vote of the
holders of a plurality of the votes cast by holders of the shares of Series
2000-C Convertible Preferred Stock, which vote may be evidenced by a consent to
action without a meeting signed by the holders of such shares or may be obtained
at a special meeting of the holders of Series 2000-C Convertible Preferred Stock
held as provided in Section 3(e) hereof. Any Series 2000-C Director from time to
time sitting as a member of the Board may be removed by the affirmative vote of
the holders of record of not less than a majority of the outstanding shares of
Series 2000-C Convertible Preferred Stock and, if so removed, a successor
individual to serve as a Series 2000-C Director may be elected by the holders of
record of not less than a majority of the outstanding shares of Series 2000-C
Convertible Preferred Stock. At any annual meeting of the holders of Common
Stock at which directors are to be elected, the incumbent Series 2000-C
Directors shall be nominated and, upon the affirmative vote of not less than the
holders of a plurality of shares of Series 2000-C Convertible Preferred Stock,
shall be elected to serve as the Series 2000-C Directors.
<PAGE>
8
(e) Whenever the holders of shares of Series 2000-C Convertible
Preferred Stock have the right under Section 3(d) to elect a director or
directors or wish to remove a director, but have not done so, the Secretary of
the Corporation will, upon the written request of the holders of record of at
least 15% of the outstanding shares of Series 2000-C Convertible Preferred
Stock, call a special meeting of the holders of Series 2000-C Convertible
Preferred Stock for the purpose of removing and/or electing a director or
directors, as the case may be. The meeting will be held at the earliest
practicable date upon the notice required for annual meetings of the
shareholders of the Corporation (or such shorter notice as is stipulated in the
written requests for such meeting or is otherwise agreed in writing by the
holders of record of the outstanding shares of Series 2000-C Convertible
Preferred Stock before or within 10 days after the meeting) at the place
specified in the request for a meeting, or if there is none, at a place in New
York, New York, designated by the Secretary of the Corporation. If the meeting
has not been called within 2 days after delivery of the written request to the
Secretary of the Corporation, or within 4 days after the request is mailed by
registered mail, addressed to the Secretary of the Corporation at the
Corporation's principal office, the holders of record of at least 25% of the
outstanding shares of Series 2000-C Convertible Preferred Stock may designate in
writing one holder to call and appoint an individual to chair (who need not be
an officer or member of the Board) the meeting at the expense of the
Corporation, and the meeting may be called by that person upon the notice
required for annual meetings (or such shorter notice as aforesaid). Any holder
of shares of Series 2000-C Convertible Preferred Stock or its representative
will have access to the stock ledger of the Corporation relating to the Series
2000-C Convertible Preferred Stock for the purpose of causing a meeting of
shareholders to be called in accordance with this Section 3(e). Except as
otherwise provided above in Section 3(d) or this Section 3(e), a director
elected in accordance with Section 3(d) and this Section 3(e) will serve until
the next annual meeting of the shareholders of the Corporation and until his or
her successor is elected and qualified by the holders of Series 2000-C
Convertible Preferred Stock, voting as a class, and qualified. Any action which
may be taken by the holders of shares of Series 2000-C Convertible Preferred
Stock at a meeting thereof may be taken if holders of the required number of
shares consent thereto in writing in accordance with the applicable provisions
of the Maryland General Corporation Law.
(f) The Corporation shall act on or with respect to any matter
as to which it is entitled or requested to act in its capacity as a holder of
Preferred Units by voting or otherwise acting with respect to all such Preferred
Units solely in accordance with instructions received from a majority of the
holders of Series 2000-C Convertible Preferred Shares.
Section 4. CHANGE OF CONTROL; LIQUIDATION.
(a) (i) upon the Transfer in a single transaction, or series of
transactions, of all or substantially all of the assets of the Corporation, the
Operating Partnership and the Subsidiaries, considered as a whole, including for
such purpose the assets of any Subsidiary (except that with respect to any such
Subsidiary in which the Corporation or the Operating Partnership has a direct or
indirect minority interest such that a sale, transfer or assignment is not
within the Corporation's or Operating Partnership's control, and is not a part
of, or occurring in connection with, a transaction or series of transactions
covered hereby, this provision shall not apply), (ii) upon the merger or
consolidation of the Corporation or the Operating Partnership with any other
Person (other than a merger of the Corporation with or into a wholly-owned
Subsidiary in which
<PAGE>
9
the Corporation Market Capitalization is unchanged), (iii) upon any
recapitalization of the Corporation, the Operating Partnership and the
Subsidiaries, considered as a whole, in a single transaction or a series of
transactions, in an amount or amounts which aggregate 30% or more of Corporation
Market Capitalization, excluding for the purpose hereof the refinancing of any
commercial loans (including loans secured by real estate in amounts and subject
to terms and conditions substantially the same as the commercial loans of the
Corporation on December 5, 1997), (iv) upon a Change of Control (as defined in
this Section 4), (v) if the requisite shareholders of the Corporation do not
approve both the "PLAN" and the "SLATE" (as such terms are defined in the
Exchange Agreement) at the next annual meeting of the Corporation's
shareholders, (vi) if the next annual meeting of the Corporation's shareholders
is not held on or prior to November 14, 2000, (vii) on or after March 31, 2001,
(viii) on or after the date on which (A) the Board of Directors shall have
delivered a "NOTICE OF SUPERIOR PROPOSAL" (as such term is defined in the
Exchange Agreement) to the holders of Series 2000-C Convertible Preferred Stock
or (B) the Board of Directors shall have been required to deliver such a notice
pursuant to the terms of the Exchange Agreement or (ix) on or after the date on
which the "PLAN" (as such term is defined in the Exchange Agreement) after
having been approved by the Corporation's shareholders, is terminated by the
Board of Directors, each holder of the Series 2000-C Convertible Preferred
Stock, may at its option receive, and, if so electing by written notice to the
Corporation to such effect, will be entitled to receive, out of the assets of
the Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, before any distributions made to holders of any
Junior Shares, an amount per share (the "CHANGE OF CONTROL PREFERENCE") equal to
the sum of (1) Stated Value plus the per share amount of Accrued Dividends with
regard to the Series 2000-C Convertible Preferred Stock to the date of final
distribution (whether or not declared), (2) $1.25 (which amount is 5% of the
original Stated Value) (the "STATED VALUE PREMIUM", as such amount is reduced
from time to time pursuant to payments in respect of the Change of Control
Preference or the Liquidation Preference) and (3) 5% of the per share amount of
the aggregate amount of Outstanding Dividends with regard to the Series 2000-C
Convertible Preferred Stock during the period from the date hereof to the date
of final distribution (the "OUTSTANDING DIVIDEND PREMIUM"); PROVIDED that any
Change of Control Preference elected in violation of Section 4(c) of the
Exchange Agreement shall be void. Notwithstanding the foregoing, each holder of
the Series 2000-C Convertible Preferred Stock shall be entitled to receive
amounts in respect of the Change of Control Preference as provided in the
Exchange Agreement. Any amounts paid to a holder of the Series 2000-C
Convertible Preferred Stock in respect of the Change of Control Preference shall
be applied (i) first, towards payment of the Accrued Dividends of such holder's
Series 2000-C Convertible Preferred Stock and (ii) second, towards payment of
(A) the Stated Value Premium of such holder's Series 2000-C Convertible
Preferred Stock, (B) the Outstanding Dividend Premium, if any, of such holder's
Series 2000-C Convertible Preferred Stock and (C) the Stated Value of such
holder's Series 2000-C Convertible Preferred Stock, ratably in accordance with
the relative outstanding amounts of the Stated Value Premium, the Outstanding
Dividend Premium, if any, and the Stated Value of such holder's Series 2000-C
Convertible Preferred Stock. For the purposes of this Section 4(a), Corporation
Market Capitalization shall be calculated on the date of the first of any
transactions in a series for purposes of determining the percentage thereof
represented by all transactions in such series. The Corporation shall provide
proper notice to each holder of record of shares of Series 2000-C Convertible
Preferred Stock of any event of the nature set forth in clauses (i) through (iv)
of this Section 4(a).
<PAGE>
10
(b) In the event of any involuntary or a voluntary liquidation,
dissolution or winding-up of the Corporation, each holder of the Series 2000-C
Convertible Preferred Stock, may at its option receive, and, if so electing by
written notice to the Corporation to such effect, shall be entitled to receive,
out of the assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, before any
distributions made to holders of any Junior Shares, an amount per share equal to
the sum of (i) Stated Value plus the per share amount of Accrued Dividends with
respect to the Series 2000-C Convertible Preferred Stock to the date of final
distribution (whether or not declared), (ii) the Stated Value Premium and (iii)
the Outstanding Dividend Premium. All amounts payable under this Section 4(b)
shall be payable as a liquidation preference (the "LIQUIDATION PREFERENCE"). Any
amounts paid to a holder of the Series 2000-C Convertible Preferred Stock in
respect of the Liquidation Preference shall be applied (i) first, towards
payment of the Accrued Dividends of such holder's Series 2000-C Convertible
Preferred Stock and (ii) second, towards payment of (A) the Stated Value Premium
of such holder's Series 2000-C Convertible Preferred Stock, (B) the Outstanding
Dividend Premium, if any, of such holder's Series 2000-C Convertible Preferred
Stock and (C) the Stated Value of such holder's Series 2000-C Convertible
Preferred Stock, ratably in accordance with the relative outstanding amounts of
the Stated Value Premium, the Outstanding Dividend Premium, if any, and the
Stated Value of such holder's Series 2000-C Convertible Preferred Stock.
(c) Holders of Series 2000-C Convertible Preferred Stock may
further elect, when delivering the written notice to the Corporation with
respect to the election under Section 4(a) or Section 4(b), in lieu of receiving
the Change of Control Preference or the Liquidation Preference, as the case may
be, to receive Common Stock on conversion of Series 2000-C Convertible Preferred
Stock in the manner and as provided in Section 5 hereof.
(d) If, upon any liquidation, dissolution or winding-up of the
Corporation, the assets of the Corporation, or proceeds of those assets,
available for distribution to the holders of Series 2000-C Convertible Preferred
Stock and of shares of all other classes or series which are on a parity as to
distributions on liquidation with the Series 2000-C Convertible Preferred Stock
are not sufficient to pay in full the Change of Control Preference or the
Liquidation Preference, as the case may be, to the holders of the Series 2000-C
Convertible Preferred Stock which have not elected to convert shares of Series
2000-C Convertible Preferred Stock as provided in Section 4(c) by reference to
Section 5 hereof, and any liquidation preference of all other classes or series
which are on a parity as to distributions on liquidation with the Series 2000-C
Convertible Preferred Stock, then the assets, or the proceeds of those assets,
which are available for distribution to such holders of shares of Series 2000-C
Convertible Preferred Stock and of the shares of all other classes or series
which are on a parity as to distributions on liquidation with Series 2000-C
Convertible Preferred Stock will be distributed to the holders of the Series
2000-C Convertible Preferred Stock and of the shares of all other classes or
series which are on a parity as to distributions on liquidation with the Series
2000-C Convertible Preferred Stock ratably in accordance with the respective
amounts of the Liquidation Preference, with respect to shares of the Series
2000-C Convertible Preferred Stock entitled thereto, and the liquidation
preferences applicable to the shares of other classes or series which are on a
parity as to distributions on liquidation with Series 2000-C Convertible
Preferred Stock, with respect to the shares of any such other class or series
entitled thereto. Upon payment of amounts in respect of the Change of Control
<PAGE>
11
Preference and/or the Liquidation Preference in respect of any share of Series
2000-C Convertible Stock, which in the aggregate equal the Change of Control
Preference or the Liquidation Preference for such share, such share shall be
deemed to have been redeemed by the Corporation, such share shall be
automatically canceled, and the holder of such share of Series 2000-C
Convertible Preferred Stock will not be entitled to any further distribution of
assets of the Corporation or any other rights under these Articles Supplementary
with respect to such share.
As used herein, a "CHANGE OF CONTROL" of the Corporation or the
Operating Partnership shall be deemed to have occurred if any of the following
occur (or in the case of any proposal made by any Person to the Corporation or
the Operating Partnership, if any of the following could occur as a result
thereof): (i) the Corporation takes or fails to take any action such that it
ceases to be required to file reports under Section 13 of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or any successor to that
Section; (ii) any "person" (as defined in Sections 13(d) and 14(d) of the
Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of either (A) 30% or more of the
outstanding shares of Common Stock, or (B) 30% (by right to vote or grant or
withhold any approval) of the outstanding securities of any other class or
classes which individually or together have the power to elect a majority of the
members of the Board; (iii) other than as a result of the death or disability of
one or more of the directors within a three-month period, a majority of the
members of the Board (excluding any Series 2000 Director) for any period of
three consecutive months are not persons who (A) had been directors of the
Corporation for at least the preceding 24 consecutive months or (B) when they
initially were elected to the Board, (x) were nominated (if they were elected by
the stockholders) or elected (if they were elected by the directors) with the
affirmative concurrence of 66-2/3% of the directors who were Continuing
Directors at the time of the nomination or election by the Board and (y) were
not elected as a result of an actual or threatened solicitation of proxies or
consents by a person other than the Board or an agreement intended to avoid or
settle such a proxy solicitation (the directors described in clauses (A) and (B)
of this clause (iii) being "CONTINUING DIRECTORS"); (iv) the Corporation or a
Subsidiary of the Corporation ceases to be the sole General Partner of the
Operating Partnership or grants or sells to any person, or consents to any
amendment to the agreement of limited partnership of the Operating Partnership,
or the organizational documents of the other Subsidiaries, which has the effect
of transferring, the power to control or direct the actions of the Operating
Partnership or such other Subsidiaries as if such person (A) is a general
partner of the Operating Partnership or (B) is a limited partner of the
Operating Partnership with consent or approval rights greater than the consent
or approval rights held by the limited partners of the Operating Partnership on
the date hereof; or (v) the Operating Partnership is a party to any entity
conversion or any merger or consolidation in which the Operating Partnership is
not surviving entity in such merger or consolidation or in which the effect is
of the nature set forth in the next preceding clause (iv). Notwithstanding
anything to the contrary herein, the term "CHANGE OF CONTROL" shall not include
any of the foregoing events to the extent that they arise in connection with an
underwritten, widely distributed offering or sale to the public of equity
securities.
(e) The Corporation shall give the holders of Series 2000-C
Convertible Preferred Stock no less than 30 days' prior written notice of the
occurrence of any of the events described in Section 4(a) with a description of
the event or events which are occurring and the rights of the holders in respect
thereof.
<PAGE>
12
Section 5. CONVERSION INTO COMMON STOCK.
(a) Optional Conversion. (i) Each holder of shares of Series
2000-C Convertible Preferred Stock will have the right, at the holder's option,
exercised by notice to such effect (the "NOTICE OF ELECTION TO CONVERT"), to
convert the shares of Series 2000-C Convertible Preferred Stock held of record
by the holder into shares of Common Stock, such that any and all shares of
Series 2000-C Convertible Preferred Stock will be subject to conversion, at the
holder's option, and such that each share of Series 2000-C Convertible Preferred
Stock will be entitled to be converted into (A) a number of fully paid and
non-assessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) equal to Stated Value plus the amount, if any, of
the per share amount of Outstanding Dividends as of the effective time of the
conversion, divided by the Conversion Price, as hereinafter defined, then in
effect, or (B) such other securities or assets as the holder is entitled to
receive in accordance with Section 5(e).
(ii) The holder of each share of Series 2000-C Convertible
Preferred Stock to be converted must surrender the certificate representing that
share to the conversion agent for the Series 2000-C Convertible Preferred Stock
appointed by the Corporation (which may be the Corporation itself), with the
Notice of Election to Convert on the back of that certificate duly completed and
signed, at the principal office of the conversion agent. If the shares issuable
on conversion are to be issued in a name other than the name in which the Series
2000-C Convertible Preferred Stock is registered, each share surrendered for
conversion must be accompanied by an instrument of transfer, in form reasonably
satisfactory to the Corporation, duly executed by the holder or the holder's
duly authorized attorney and by funds in an amount sufficient to pay any
transfer or similar tax which is required to be paid in connection with the
transfer or evidence that such tax has been paid or is not payable.
(b) MANDATORY CONVERSION. Subject to Section 7 hereof, if,
after December 31, 2002, the Current Market Price and the VWAP (each as
hereinafter defined) of the Common Stock on the Trading Day immediately before
the Notice of Mandatory Conversion and the Trading Day immediately before the
Mandatory Conversion Date referred to below shall be greater than the Initial
Conversion Price (as hereinafter defined), the Corporation shall have the right,
subject to the rights of the holders under Section 3(d), 4, 7 and 9 hereof, to
convert at any time and from time to time not less than all of the outstanding
shares of Series 2000-C Convertible Preferred Stock into a number of shares of
Common Stock as determined in accordance with Section 5(a) of these Articles
Supplementary. In order to elect to effect the mandatory conversion of Series
2000-C Convertible Preferred Stock, subject to the requirements as set forth
above, the Corporation shall issue a notice that all shares of Series 2000-C
Convertible Preferred Stock are to converted into shares of Common Stock,
setting forth the date of the intended conversion (such notice, the "Notice of
Mandatory Conversion", and such date, the "Mandatory Conversion Date") to all
holders of outstanding shares of Series 2000-C Convertible Preferred Stock on a
date (the "Mandatory Conversion Notice Date") at least 90 but not more than 120
days prior to the Mandatory Conversion Date. The Notice of Mandatory Conversion
shall also specify a record date (the "Mandatory Conversion Record Date")
selected by the Board of Directors which is not less than but not more than 45
days before the Mandatory Conversion Date and the number of shares of Common
Stock into which each share 12 of Series 2000-C Convertible Preferred Stock will
be converted. If the Corporation gives a Notice of Mandatory Conversion, then,
provided that the computation set forth in the Notice of Mandatory Conversion is
not
<PAGE>
13
clearly erroneous, the outstanding shares of Series 2000-C Convertible Preferred
Stock will be automatically be converted into shares of Common Stock at the
close of business on the Mandatory Conversion Date regardless of whether the
holders of such shares of Series 2000-C Convertible Preferred Stock actually
surrender the certificates representing their shares of Series 2000-C
Convertible Preferred Stock for conversion and on such date the Corporation will
pay the holders an amount equal to all Accrued Dividends through the Mandatory
Conversion Date in accordance with Section 5(a) hereof. At the close of business
on the Mandatory Conversion Date, (i) the certificates representing the shares
of Series 2000-C Convertible Preferred Stock will cease to represent anything
other than the shares of Common Stock into which the shares of the Series 2000-C
Convertible Preferred Stock were automatically converted and the right to
receive any unpaid Accrued Dividends as provided herein and (ii) the Corporation
shall, at its option (the exercise of which will be described in the Notice of
Mandatory Conversion), either (A) deliver certificates representing the shares
of Common Stock to which the holders of the Series 2000-C Convertible Preferred
Stock are entitled without requiring the surrender of the certificates which
formerly represented shares of Series 2000-C Convertible Preferred Stock, or (B)
deliver certificates representing the shares of Common Stock to which the
holders of Series 2000-C Convertible Preferred Stock are entitled when the
holder surrenders the certificates representing Series 2000-C Convertible
Preferred Stock issued before the Mandatory Conversion Date and complies with
the other requirements of subparagraph 5(a)(ii) (excluding the completion of the
Notice of Election to Convert). As used with regard to the Series 1997 A
Convertible Preferred Stock, the term "Trading Day" means (A) if the Common
Stock is listed on at least one stock exchange, a day on which there is trading
on the principal stock exchange on which the Common Stock is listed, (B) if the
Common Stock is not listed on a stock exchange, but sale prices of the Common
Stock are reported on an automated quotation system, a day on which trading is
reported on the principal automated quotation system on which sales of the
Common Stock are reported, or (C) if the Common Stock is not listed on a stock
exchange and sale prices of the Common Stock are not reported on an automated
quotation system, a day on which quotations are reported by National Quotation
Bureau Incorporated.
(c) CONVERSION PROCEDURES. (i) The effective time of the
conversion under Section 5(a) shall be immediately prior to the close of
business on the day when all the conditions in Section 5(a)(ii) have been
satisfied.
(ii) If shares of Series 2000-C Convertible Preferred Stock
are noticed for conversion between the close of business on a dividend payment
Record Date and the opening of business on the corresponding Dividend Payment
Date ("EX RECORD DATE SHARES"), the dividend with respect to those shares will
be payable on the Dividend Payment Date to the holder of record of the Ex Record
Date Shares on the dividend payment Record Date notwithstanding the surrender of
the Ex Record Date Shares for conversion after the dividend payment Record Date
and prior to the Dividend Payment Date. The Corporation will make no payment or
adjustment for Accrued Dividends on Ex Record Date Shares, whether or not in
arrears, or for dividends on the shares of Common Stock issued upon conversion
of the Ex Record Date Shares, other than to make payment to the holder of record
thereof on the Record Date. All Accrued Dividends payable with respect to shares
of Series 2000-C Convertible Preferred Stock noticed for conversion during any
period commencing with the close of business on each Dividend Payment Date and
ending with the opening of business on the next succeeding Record Date will be
paid to the holder converting such shares on the related conversion date. The
provisions
<PAGE>
14
of this Section 5(c)(ii) shall not limit the obligation of the Corporation to
issue shares of Common Stock in conversion of shares of Series 2000-C
Convertible Preferred Stock, including Ex Record Date Shares, at Stated Value
plus Outstanding Dividends, as elsewhere provided herein.
(iii) As promptly as practicable after the effective time
for conversion of shares of Series 2000-C Convertible Preferred Stock, the
Corporation will issue and will deliver to the holder at the office of the
holder set forth in the Notice of Election to Convert, or on the holder's
written order, a certificate or certificates representing the number of full
shares of Common Stock issued upon the conversion of the shares of Series 2000-C
Convertible Preferred Stock. Any fractional interest in respect of a share of
Common Stock arising upon a conversion will be settled as provided in Section
5(d).
(iv) Each conversion will be deemed to have been effected at
the effective time provided in Section 5(c)(i) or on the Mandatory Conversion
Date as provided in Section 5(b), as applicable, and the person in whose name a
certificate for shares of Common Stock is to be issued upon a conversion will be
deemed to have become the holder of record of the shares of Common Stock
represented by that certificate at such effective time. All shares of Common
Stock delivered upon conversion of Series 2000-C Convertible Preferred Stock
will upon delivery be duly and validly issued and fully paid and non-assessable,
free of all liens and charges and not subject to any preemptive rights except
such preemptive rights as may exist pursuant to the Stock Purchase Agreement.
The shares of Series 2000-C Convertible Preferred Stock so converted will no
longer be deemed to be outstanding and all rights of the holder with respect to
those shares will immediately terminate, except the right to receive the shares
of Common Stock, and, if applicable, other securities, cash or other assets to
be issued or distributed as a result of the conversion.
(d) FRACTIONAL SHARES. No fractional shares of Common Stock
will be issued upon conversion of shares of Series 2000-C Convertible Preferred
Stock. Any fractional interest in a share of Common Stock resulting from
conversion of shares of Series 2000-C Convertible Preferred Stock will be paid
in cash (computed to the nearest cent) based on the Current Market Price (as
defined in Section 5(e)(vii) hereof) of the Common Stock as of the Trading Day
next preceding the date of conversion. If more than one share of Series 2000-C
Convertible Preferred Stock is surrendered for conversion at substantially the
same time by the same holder, the number of full shares of Common Stock issuable
upon the conversion will be computed on the basis of all the shares of Series
2000-C Convertible Preferred Stock surrendered at that time by that holder.
(e) CONVERSION PRICE. The "CONVERSION PRICE" per share of
Series 2000-C Convertible Preferred Stock will initially be a price (the
"INITIAL CONVERSION PRICE") equal to $15.375, established as a 7% premium to
$14.375 (such $14.375, "BASE PRICE"), and will be further adjusted as follows
from time to time, subject to Section 5(e)(viii), if any of the events described
below has occurred or occurs after December 31, 1997 (it being understood that
the Exchange (as defined in the Exchange Agreement) shall not cause an
adjustment of the Conversion Price):
(i) If the Corporation (A) pays a dividend or makes a
distribution on its Common Stock in shares of its Common Stock or (B)
subdivides, splits
<PAGE>
15
or reclassifies its outstanding Common Stock into a greater number of shares,
the Conversion Price in effect immediately prior to that event will be reduced
so that the holder of a share of Series 2000-C Convertible Preferred Stock
surrendered for conversion after that event will receive the number of shares of
Common Stock which the holder would have received if the share of Series 2000-C
Convertible Preferred Stock had been converted immediately before the happening
of the event (or, if there is more than one such event, if the share of Series
2000-C Convertible Preferred Stock had been converted immediately before the
first of those events and the holder had retained all the Common Stock or other
securities or assets received after the conversion). If the Corporation combines
its outstanding Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to that event will be increased so that the
holder of a share of Series 2000-C Convertible Preferred Stock surrendered for
conversion after that event will receive the number of shares of Common Stock
which the holder would have received if the shares of Series 2000-C Convertible
Preferred Stock had been converted immediately before the happening of the event
(or, if there is more than one such event, if the share of Series 2000-C
Convertible Preferred Stock had been converted immediately before the first of
those events and the holder had retained all the Common Stock or other
securities or assets received after the conversion). An adjustment made pursuant
to this Section 5(e)(i) will become effective immediately after the Record Date,
in the case of a dividend or distribution, and will become effective immediately
after the effective date, in the case of a subdivision, split, reclassification
or combination. If such dividend or distribution is declared but is not paid or
made, the Conversion Price then in effect will be appropriately readjusted.
However, a readjustment of the Conversion Price will not affect any conversion
which takes place before the readjustment.
(ii) If the Corporation issues rights or warrants to the
holders of its Common Stock as a class entitling them to subscribe for or
purchase Common Stock at a price per share less than the lesser of the Base
Price and the Conversion Price then in effect at the Record Date for the
determination of stockholders entitled to receive the rights or warrants, then
the Conversion Price in effect immediately before the issuance of the rights or
warrants will be reduced in accordance with the equation set forth on Exhibit A
hereto, which is hereby incorporated by reference herein. The adjustment
provided for in this Section 5(e)(ii) will be made successively whenever any
rights or warrants are issued, and will become effective immediately after each
Record Date. In determining the subscription or purchase price, as the case may
be, there will be taken into account any consideration received by the
Corporation for the rights or warrants, with the value of that consideration, if
other than cash, to be reasonably determined by the Board of Directors of the
Corporation (whose determination, if made in good faith, will be conclusive). If
any rights or warrants which lead to an adjustment of the Conversion Price
expire or terminate without having been exercised, the Conversion Price then in
effect will be appropriately readjusted. However, a readjustment of the
Conversion Price will not affect any conversion which takes place before the
readjustment. In the event that a transaction may be viewed as causing this
Section 5(e)(ii) to be applicable and Section 5(e)(iv) hereof may also be
construed as being applicable, then Section 5(e)(iv) will be applied and this
Section 5(e)(ii) will not be applied.
(iii) If the Corporation distributes to the holders of its
Common Stock as a class any shares of stock of the Corporation (other than
Common Stock) or evidences of indebtedness or assets (other than cash dividends
or distributions) or rights
<PAGE>
16
or warrants or other derivative securities (other than those referred to in
Section 5(e)(ii) or in Section 5(e)(iv)) to subscribe for or purchase any
securities, then, in each such case, the Conversion Price will be reduced so
that it will equal the price determined by multiplying the Conversion Price in
effect immediately prior to the Record Date for the distribution by a fraction
of which the numerator is the Current Market Price of the Common Stock on the
Record Date for the distribution less the then fair market value (as determined
by the Board of Directors, whose determination, if made in good faith, will be
conclusive) of the stock, evidences of indebtedness, assets, rights or warrants
which are distributed with respect to one share of Common Stock, and of which
the denominator is the Current Market Price of the Common Stock on that Record
Date. Each adjustment will become effective immediately after the Record Date
for the determination of the stockholders entitled to receive the distribution.
If any distribution is declared but not made, or if any rights or warrants
expire or terminate without having been exercised, effective immediately after
the decision is made not to make the distribution or the rights or warrants
expire or terminate, the Conversion Price then in effect will be appropriately
readjusted. However, a readjustment will not affect any conversion which takes
place before the readjustment. In the event that a transaction may be viewed as
causing this Section 5(e)(iii) to be applicable and Section 5(e)(iv) hereof may
also be construed as being applicable, then Section 5(e)(iv) will be applied and
this Section 5(e)(iii) will not be applied.
(iv) If the Corporation issues or sells (or the Operating
Partnership or any Subsidiary issues or sells) any equity or debt securities
which are convertible, directly or indirectly, into or exchangeable for shares
of Common Stock ("CONVERTIBLE SECURITIES"), or any rights, options (other than
the issuance or exercise after December 31, 1997 of stock options covering no
more than 1,367,777 shares of Common Stock issued pursuant to currently
outstanding options outstanding on such date, subject to appropriate adjustment
to the extent that the Corporation (A) pays a dividend or makes a distribution
on its Common Stock in shares of its Common Stock, (B) subdivides its
outstanding Common Stock into a greater number of shares or (C) combines its
outstanding Common Stock into a smaller number of shares, and other than shares
issued to members of the Corporation's Board of Directors under the
Corporation's Stock Options and Incentive Plan as amended to May 6, 1997 and
other than Preferred Units) or warrants to purchase or subscribe for Common
Stock at a conversion, exchange or exercise price per share which is less than
the lesser of the Base Price and the Conversion Price then in effect, the
Corporation will be deemed to have issued or sold, on the date on which the
Convertible Securities, rights, options or warrants are issued, the maximum
number of shares of Common Stock into or for which the Convertible Securities
may then be converted or exchanged or which are then issuable upon the exercise
of the rights, options or warrants immediately prior to the close of business on
the date on which the Convertible Securities, rights, options or warrants are
issued, and the Conversion Price shall be adjusted downward as if it were an
event covered by Section 5(e)(v) hereof (and, if applicable, Section
5(e)(viii)(B) hereof). However, no further adjustment of the Conversion Price
will be made as a result of the actual issuance of shares of Common Stock upon
conversion, exchange or exercise of the Convertible Securities, rights, options
or warrants. If any Convertible Securities, rights, options or warrants to which
this Section applies are redeemed, retired or otherwise extinguished or expire
without any shares of Common Stock having been issued upon conversion, exchange
or exercise thereof, effective immediately after the Convertible Securities,
rights, options or warrants expire, the Conversion Price then in effect will be
readjusted to what it would have been if those Convertible Securities, rights,
options or warrants had not been issued. However,
<PAGE>
17
a readjustment will not affect any conversion which takes place before the
readjustment. For the purposes of this Section 5(e)(iv), (x) the price of shares
of Common Stock issued or sold upon conversion or exchange of Convertible
Securities or upon exercise of rights, options or warrants will be (A) the
consideration paid to the Corporation for the Convertible Securities, rights,
options or warrants, plus (B) the consideration paid to the Corporation upon
conversion, exchange or exercise of the Convertible Securities, rights, options
or warrants, with the value of the consideration, if other than cash, to be
determined reasonably by the Board of Directors of the Corporation (whose
determination, if made reasonably and in good faith, will be conclusive) and (y)
any change in the conversion or exchange price of Convertible Securities or the
exercise price of rights, options or warrants will be treated as an
extinguishment, when the change becomes effective, of the Convertible
Securities, rights, options or warrants which had the old conversion, exchange
or exercise price and an immediate issuance of new Convertible Securities,
rights, options or warrants with the new conversion, exchange or exercise price.
(v) If the Corporation issues or sells any Common Stock
(excluding, however, from the effects of this Section 5(e)(v), (W) Common Stock
purchased in the open-market and resold pursuant to the Corporation's dividend
reinvestment plan, (X) on conversion or exchange of Convertible Securities, or
(Y) on exercise of rights, options or warrants, to which Section 5(e)(ii), (iii)
or (iv) applies) for a consideration per share less than the lesser of the Base
Price and the Conversion Price then in effect, on the date of the issuance or
sale, upon consummation of the issuance or sale, the Conversion Price in effect
immediately prior to the issuance or sale will be reduced in accordance with the
equation set forth on Exhibit A hereto, which is hereby incorporated by
reference herein.
(vi) If there is a reclassification or change of outstanding
shares of Common Stock (other than a change in par value, or as a result of a
subdivision or combination), or a merger or consolidation of the Corporation
with any other entity that results in a reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common Stock, or a sale or
transfer of all or substantially all of the assets of the Corporation, upon any
subsequent conversion of Series 2000-C Convertible Preferred Stock, each holder
of the Series 2000-C Convertible Preferred Stock will be entitled to receive the
kind and amount of securities, cash and other property which the holder would
have received if the holder had converted the shares of Series 2000-C
Convertible Preferred Stock into Common Stock immediately before the first of
those events and had retained all the securities, cash and other assets received
as a result of all those events. In the event that a transaction may be viewed
as causing this Section 5(e)(vi) to be applicable and 5(e)(iii) is also
applicable, then Section 5(e)(iii) will be applied and this Section 5(e)(vi)
will not be applied.
(vii) For the purpose of any computation under this Section
5(e) or otherwise in these Articles Supplementary, the "CURRENT MARKET PRICE" of
the Common Stock on any date will be, as of any date of determination, the
average of the volume weighted average price of the Company Common Stock (the
"VWAP") on each of the twenty Trading Days immediately preceding such date, as
the VWAP for each day is reported by a firm of national recognition for the
preparation of such reports proposed either by the Initial Purchaser to the
Company, or by the Company to the Initial Purchaser, and in either case,
approved by the non-proposing party (such approval not to be unreasonably
withheld or delayed); provided, however, that Current Market Price will
<PAGE>
18
be computed based on each of the sixty Trading Days immediately preceding the
determination dates called for in Section 5(b) and Section 9 of these Articles
Supplementary.
(viii) Notwithstanding anything to the contrary herein, (A)
subject to the immediately following clause (B), no adjustment in the Conversion
Price will be required unless the adjustment would require a change of at least
1.0% in the Conversion Price; provided, however, that any adjustments which are
not made because of this Section 5(e)(viii) will be carried forward and taken
into account in any subsequent adjustment, and (B) if the Corporation issues or
sells any Common Stock or other capital stock, or any warrants, rights, options
or Convertible Securities that would require adjustment of the Conversion Price
hereunder, and the purchase price of such Common Stock or capital stock sold, or
issuable upon exercise or conversion of such warrants, rights, options or
Convertible Securities, as the case may be, is less than or equal to $11.00,
then the Conversion Price shall be equal to the lesser of (1) the Conversion
Price as adjusted pursuant to the applicable provisions hereof after giving
effect to the issuance or sale giving rise to such readjustment and (2) such
purchase price which is less than or equal to $11.00. All calculations under
this Section 5(e) will be made to the nearest cent or to the nearest one
hundredth of a share, as the case may be.
(ix) If any one of the events in Sections 5(e)(i) through
5(e)(vi) occurs, then the Corporation will mail to the holders of record of the
Series 2000-C Convertible Preferred Stock, at least 15 days before the
applicable date specified below, a notice stating the applicable one of (A) the
date on which a record is to be taken for the purpose of the dividend,
distribution or grant of rights or warrants, or, if no record is to be taken,
the date as of which the holders of Common Stock of record who will be entitled
to the dividend, distribution or rights or warrants will be determined, (B) the
date on which it is expected the Convertible Securities will be issued or the
date on which the change in the conversion, exchange or exercise price of the
Convertible Securities, rights, options or warrants will be effective, (C) the
date on which the Corporation anticipates selling Common Stock for less than the
lesser of the Base Price and the Conversion Price on the date of the sale
(except that no notice need be given of the anticipated date of sale of Common
Stock upon exercise of options or warrants which have been described in a notice
to the holders of record of Series 2000-C Convertible Preferred Stock given at
least 15 days before the options or warrants are exercised, or (D) the date not
less than 30 days before the date on which the reclassification, consolidation,
merger or share exchange, is expected to become effective, and the date not less
than 30 days before the date as of which it is expected that holders of record
of Common Stock will be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon the reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding-up. Whenever the Conversion Price is adjusted, the Corporation will
promptly send each holder of record of shares of Series 2000-C Convertible
Preferred Stock a notice of the adjustment of the Conversion Price setting forth
the adjusted Conversion Price, the date on which the adjustment becomes
effective, a brief description of the events which caused the adjustment, and a
calculation of the adjustment, all of which shall be subject to the approval
(not to be unreasonably delayed or withheld) of the Initial Purchaser.
(f) Reservation of Common Stock. (i) The Corporation will at
all times reserve and keep available, free from preemptive rights, out of the
authorized but unissued shares of Common Stock, for the purpose of effecting
conversion of the Series
<PAGE>
19
2000-C Convertible Preferred Stock, the maximum number of shares of Common Stock
which the Corporation would be required to deliver upon the conversion of all
the outstanding shares of Series 2000-C Convertible Preferred Stock. For the
purposes of this Section 5(f)(i), the number of shares of Common Stock which the
Corporation would be required to deliver upon the conversion of all the
outstanding shares of Series 2000-C Convertible Preferred Stock will be computed
as if at the time of the computation all the outstanding shares of Series 2000-C
Convertible Preferred Stock were held by a single holder.
(ii) Before taking any action that would cause an adjustment
reducing the Conversion Price below the then par value (if any) of the shares of
Common Stock deliverable upon conversion of the Series 2000-C Convertible
Preferred Stock, the Corporation will take all corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of Common Stock
at the adjusted Conversion Price.
(iii) The Corporation will cause to be listed the shares of
Common Stock required to be delivered upon conversion of the Series 2000-C
Convertible Preferred Stock, prior to the delivery, upon each national
securities exchange, if any, upon which the outstanding shares of Common Stock
are listed at the time of delivery.
(g) PAYMENT OF CERTAIN TAXES. The Corporation will pay any
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on conversion of Series 2000-C
Convertible Preferred Stock; provided, however, that the Corporation will not be
required to pay any tax which may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock in a name other than that of
the holder of record of Series 2000-C Convertible Preferred Stock to be
converted and no such issue or delivery will be made unless and until the person
requesting the issue or delivery has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that the
tax has been paid or is not payable.
Section 6. STATUS.
Shares of Series 2000-C Convertible Preferred Stock may only be
issued in accordance with the Stock Purchase Agreement and the Exchange
Agreement or the Operating Partnership Agreement. Shares of Series 2000-C
Convertible Preferred Stock converted or redeemed pursuant to the terms hereof
shall not be reissued as shares of Series 2000-C Convertible Preferred Stock but
may be reclassified as authorized and unissued shares of one or more classes of
Junior Shares.
Section 7. OPTIONAL REDEMPTION AFTER NOTICE OF MANDATORY CONVERSION.
(a) Notwithstanding anything to the contrary contained in
Section 5, each holder of Series 2000-C Convertible Preferred Stock will have
the right, exercised at any time after the Mandatory Conversion Notice Date but
prior to the Mandatory Conversion Date, to require the Corporation to redeem any
or all of the number of shares of Series 2000-C Convertible Preferred Stock
specified in the Notice of Mandatory Conversion that are owned of record by the
holder (the number of shares as to which each holder elects redemption under
this clause (a) being referred to as the "Identified
<PAGE>
20
Redemption Shares"), at a redemption price per share (the "Redemption Price")
equal to (i) the sum of (A) Stated Value plus (B) the per share amount of the
sum of all Accrued Dividends with regard to the Series 2000-C Convertible
Preferred Stock (whether or not declared) through the Redemption Date, as herein
defined, times (ii) the percentage determined in accordance with the following
table:
Redemption Date Percentage
December 31, 2002 to December 31, 2003 105%
December 31, 2003 to December 31, 2004 104%
December 31, 2004 to December 31, 2005 103%
December 31, 2005 to December 31, 2006 102%
December 31, 2006 to December 31, 2007 101%
December 31, 2007 100%
(b) In order to exercise a right to require the Corporation to
redeem a holder's Series 2000-C Convertible Preferred Stock, the holder must
deliver a request for redemption with respect to the Identified Redemption
Shares, accompanied by the certificates representing the shares to be redeemed,
to the Corporation at any time prior to the Mandatory Conversion Date. If a
request for redemption is given with regard to shares of Series 2000-C
Convertible Preferred Stock, promptly (but in no event more than five Business
Days) after the request for redemption is given to the Corporation, the
Corporation will pay the holder cash equal to the Redemption Price of the
shares. The date of such payment is referred to herein as the "Redemption Date."
(c) (i) If a request for redemption accompanied by the
certificates representing the shares to be redeemed is delivered to the
Corporation, on the Redemption Date dividends will cease to accrue with regard
to the shares of Series 2000-C Convertible Preferred Stock to be redeemed, and
at the close of business on that date the holders of those shares will cease to
be stockholders with respect to those shares, will have no interest in or claims
against the Corporation by virtue of such shares (other than as described in
clause (ii) below) and will have no voting or other rights with respect to such
shares.
(ii) The dividend with respect to a share of Series 2000-C
Convertible Preferred Stock which is the subject of a request for redemption
delivered on a day which falls between the close of business on a dividend
payment Record Date and the opening of business on the corresponding Dividend
Payment Date will be payable on the Dividend Payment Date to the holder of
record of the share of Series 2000-C Convertible Preferred Stock on the dividend
payment Record Date notwithstanding the redemption of the share of Series 2000-C
Convertible Preferred Stock after the dividend payment Record Date and prior to
the Dividend Payment Date.
Section 8. RANKING. The shares of Series 2000-C Convertible Preferred
Stock will, with respect to the payment of dividends, the right to redemption in
accordance with Section 7 or Section 9, the right to receive the Change of
Control Preference, the right to receive the Liquidation Preference, and any
other distribution of assets on liquidation, dissolution or winding-up of the
Corporation, rank prior to any other series of Preferred Stock, prior to Common
Stock and prior to any other class or series of stock of the Corporation.
<PAGE>
21
Section 9. OPTIONAL REDEMPTION ON OR AFTER SEPTEMBER 30, 2001.
(a) Notwithstanding anything to the contrary contained in these
Articles Supplementary, each holder of Series 2000-C Convertible Preferred Stock
will have the right, exercised at any time (i) on or after September 30, 2001,
(ii) the first day on which the Corporation shall have made a distribution,
dividend or redemption in violation of Section 3(k) of the Exchange Agreement
that, together with (A) the amount of any other distributions, dividends or
redemptions made in violation of Section 3(k) of the Exchange Agreement and (B)
the aggregate amount of net proceeds of asset dispositions not distributed in
accordance with Section 3(n) of the Exchange Agreement, equals or exceeds
$1,500,000, (iii) the first day on which the Corporation shall have failed to
comply with its obligations set forth in Section 3(n) of the Exchange Agreement;
PROVIDED that for purposes of this clause (iii), the Corporation shall be deemed
not to have failed to comply with its obligations set forth in the first
sentence of Section 3(n) of the Exchange Agreement unless and until the
aggregate amount of net proceeds required to be distributed pursuant to such
Section that were not so distributed, together with the aggregate amount of any
distributions, dividends or redemptions made in violation of Section 3(k) of the
Exchange Agreement, equals or exceeds $1,500,000, (iv) the first day on which
the Corporation shall have failed to comply with its obligations set forth in
Section 3(o) of the Exchange Agreement or (v) on or after the date on which a
"REDEMPTION EVENT" (as such term is defined in the Exchange Agreement) occurs
(the earliest such date, the "OPTIONAL REDEMPTION ELECTION DATE"), to require
the Corporation to redeem any or all of the number of shares of Series 2000-C
Convertible Preferred Stock that are owned of record by the holder (the number
of shares as to which each holder elects redemption under this clause (a) being
referred to as the "OPTIONAL REDEMPTION SHARES"), at a redemption price per
share (the "OPTIONAL REDEMPTION PRICE") equal to the Change of Control
Preference for such share calculated as of the Optional Redemption Date (as
defined below) less any amounts previously distributed in respect of a Change of
Control Preference or Liquidation Preference for such share that has been
applied to the Outstanding Dividend Premium of such share.
(b) In order to exercise a right to require the Corporation to
redeem a holder's Series 2000-C Convertible Preferred Stock, the holder must
deliver a request for redemption with respect to the Optional Redemption Shares,
accompanied by the certificates representing the shares to be redeemed, to the
Corporation at any time on or after the Optional Redemption Election Date. If a
request for redemption is given with regard to shares of Series 2000-C
Convertible Preferred Stock pursuant to this paragraph (b), promptly (but in no
event more than five Business Days) after the request for redemption is given to
the Corporation, the Corporation will pay the holder in cash an amount equal to
the Optional Redemption Price multiplied by the number of such holder's Optional
Redemption Shares. The date of such payment is referred to herein as the
"OPTIONAL REDEMPTION DATE."
(c) (i) If a request for redemption accompanied by the
certificates representing the shares to be redeemed is delivered to the
Corporation, on the Optional Redemption Date dividends will cease to accrue with
regard to the shares of Series 2000- C Convertible Preferred Stock to be
redeemed, and at the close of business on that date the holders of those shares
will cease to be stockholders with respect to those shares, will have no
interest in or claims against the Corporation by virtue of such shares (other
than
<PAGE>
22
as described in clause (ii) below) and will have no voting or other rights with
respect to such shares.
(ii) The dividend with respect to a share of Series 2000-C
Convertible Preferred Stock which is the subject of a request for redemption
delivered pursuant to paragraph (b) above on a day which falls between the close
of business on a dividend payment Record Date and the opening of business on the
corresponding Dividend Payment Date will be payable on the Dividend Payment Date
to the holder of record of the share of Series 2000-C Convertible Preferred
Stock on the dividend payment Record Date notwithstanding the redemption of the
share of Series 2000-C Convertible Preferred Stock after the dividend payment
Record Date and prior to the Dividend Payment Date.
(d) The Optional Redemption Price in respect of each share of
Series 2000-C Preferred Stock redeemed shall be due on the Optional Redemption
Date. If the Corporation fails to deliver the Optional Redemption Price in
respect of each share of Series 2000-C Preferred Stock redeemed to the
applicable holder of such share on or before such date (any such failure, a
"Redemption Default"), then the aggregate Optional Redemption Price which
remains unpaid on such date shall accrue interest at a monthly rate equal to the
lesser of 1.25% per month and highest lawful rate of interest, compounded
monthly until such time as the Corporation pays to such holder of Series 2000-C
Preferred Stock the aggregate Optional Redemption Price due to such holder plus
any accrued interest thereon.
(e) Upon the occurrence of a Redemption Default, the number of
members of the entire Board of Directors (as if there were no vacancies or
unfilled newly-created directorships thereon) shall be automatically increased
by a number equal to (i) the current number of the members of the Board of
Directors minus (ii) three (such number the "Redemption Number"), such that the
holders of the Series 2000-C Convertible Preferred Stock, voting as a separate
class, shall be entitled immediately to elect a number of directors equal to the
Redemption Number, in addition to the two directors they are entitled to elect
pursuant to Section 3(d). Thereafter, such right of the holders of shares of
Series 2000-C Convertible Preferred Stock, voting as a class, so to elect a
number of members of the Board of Directors equal to the Redemption Number
pursuant to this Section 9(e) shall continue without interruption until no
shares of Series 2000-C Convertible Preferred Stock remain outstanding. Such
directors shall be referred to as the "REDEMPTION SERIES 2000-C DIRECTORS." At
such time when no shares of Series 2000-C Convertible Preferred Stock remain
outstanding, then the right to elect Redemption Series 2000-C Directors provided
for in this paragraph and the terms of the incumbent Redemption Series 2000-C
Directors shall immediately terminate, and the number of directors comprising
the Board shall be reduced accordingly. No action of any committee established
by the Board of Directors or any other group so acting shall be effective unless
the Board of Directors has afforded a Redemption Series 2000-C Director the
opportunity to sit on such committee; PROVIDED that if all Redemption Series
2000-C Directors are prohibited from sitting on such committee by applicable law
or governmental regulation or rules of any stock exchange on which the
Corporation's securities are listed, the Board of Directors shall not be
required to afford any Redemption Series 2000-C Director the opportunity to sit
on such committee in order for such committee's action to be effective so long
as a Redemption Series 2000-C Director shall, upon his or her request, be
included in all meetings of such committee as a non-voting member. The election
of a Redemption Series 2000-C Director shall be by the affirmative vote of the
holders of a plurality of the votes cast by holders of the shares of
<PAGE>
23
Series 2000-C Convertible Preferred Stock, which vote may be evidenced by a
consent to action without a meeting signed by the holders of such shares or may
be obtained at a special meeting of the holders of Series 2000-C Convertible
Preferred Stock held as provided in Section 9(f) hereof. Any Redemption Series
2000-C Director from time to time sitting as a member of the Board may be
removed by the affirmative vote of the holders of record of not less than a
majority of the outstanding shares of Series 2000-C Convertible Preferred Stock
and, if so removed, a successor individual to serve as a Redemption Series
2000-C Director may be elected by the holders of record of not less than a
majority of the outstanding shares of Series 2000-C Convertible Preferred Stock.
At any annual meeting of the holders of Common Stock at which directors are to
be elected, the incumbent Redemption Series 2000-C Directors shall be nominated
and, upon the affirmative vote of not less than the holders of a plurality of
shares of Series 2000-C Convertible Preferred Stock, shall be elected to serve
as the Redemption Series 2000-C Directors.
(f) Whenever the holders of shares of Series 2000-C Convertible
Preferred Stock have the right under Section 9(e) to elect a director or
directors or wish to remove a director, but have not done so, the Secretary of
the Corporation will, upon the written request of the holders of record of at
least 15% of the outstanding shares of Series 2000-C Convertible Preferred
Stock, call a special meeting of the holders of Series 2000- C Convertible
Preferred Stock for the purpose of removing and/or electing a director or
directors, as the case may be. The meeting will be held at the earliest
practicable date upon the notice required for annual meetings of the
shareholders of the Corporation (or such shorter notice as is stipulated in the
written requests for such meeting or is otherwise agreed in writing by the
holders of record of the outstanding shares of Series 2000-C Convertible
Preferred Stock before or within 10 days after the meeting) at the place
specified in the request for a meeting, or if there is none, at a place in New
York, New York, designated by the Secretary of the Corporation. If the meeting
has not been called within 2 days after delivery of the written request to the
Secretary of the Corporation, or within 4 days after the request is mailed by
registered mail, addressed to the Secretary of the Corporation at the
Corporation's principal office, the holders of record of at least 25% of the
outstanding shares of Series 2000-C Convertible Preferred Stock may designate in
writing one holder to call and appoint an individual to chair (who need not be
an officer or member of the Board) the meeting at the expense of the
Corporation, and the meeting may be called by that person upon the notice
required for annual meetings (or such shorter notice as aforesaid). Any holder
of shares of Series 2000-C Convertible Preferred Stock or its representative
will have access to the stock ledger of the Corporation relating to the Series
2000-C Convertible Preferred Stock for the purpose of causing a meeting of
shareholders to be called in accordance with this Section 9(f). Except as
otherwise provided above in Section 9(e) or this Section 9(f), a director
elected in accordance with Section 9(e) and this Section 9(f) will serve until
the next annual meeting of the shareholders of the Corporation and until his or
her successor is elected and qualified by the holders of Series 2000-C
Convertible Preferred Stock, voting as a class, and qualified. Any action which
may be taken by the holders of shares of Series 2000-C Convertible Preferred
Stock at a meeting thereof may be taken if holders of the required number of
shares consent thereto in writing in accordance with the applicable provisions
of the Maryland General Corporation Law.
<PAGE>
24
Section 10. MISCELLANEOUS.
(a) Except as otherwise expressly provided herein, whenever a
notice or other communication is required or permitted to be given to holders of
shares of Series 2000-C Convertible Preferred Stock, the notice or other
communication will be deemed properly given if deposited in the United States
mail, postage prepaid, addressed to the persons shown on the books of the
Corporation as the holders of the shares of Series 2000-C Convertible Preferred
Stock at the addresses as they appear on the books of the Corporation, as of the
Record Date or dates determined in accordance with applicable law and with the
Charter and Bylaws, as in effect from time to time, with a copy sent to each of
Westbrook Burnham Holdings, L.L.C., Westbrook Burnham Co-Holdings, L.L.C., c/o
Westbrook Partners, L.L.C., at 265 Franklin Street, Suite 1800, Boston,
Massachusetts 02110 and at 13155 Noel Road, LB 54, Suite 2300, Dallas, Texas
75240 and Blackacre SMC Master Holdings L.P., c/o Blackacre Capital Management
LLC, 450 Park Avenue, New York, New York 10022, in each case by documented
overnight delivery service or, to the extent receipt is confirmed, telecopy,
telex or other electronic transmission service.
(b) Shares of Series 2000-C Convertible Preferred Stock will
not have any designations, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications or terms and conditions of redemption, other than those
specifically set forth herein, in the Charter, and as may be provided under
applicable law.
(c) The headings of the various subdivisions herein are for
convenience only and will not affect the meaning or interpretation of any of the
provisions herein.
(d) The preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series 2000-C
Convertible Preferred Stock may be waived, and any of such provisions of the
Series 2000-C Convertible Preferred Stock may be amended, with the approval of
holders of at least a majority of the outstanding shares of Series 2000-C
Convertible Preferred Stock, voting separately as a class.
(e) Notwithstanding anything to the contrary contained in
Section 2, 3, 4, 5, 7, 8 or 10(d) hereof, each holder of record of Series 2000-C
Convertible Preferred Stock hereby agrees (subject to relinquishment by
Westbrook Real Estate Fund II, L.P. as permitted below) that, in determining
whether any holder of Series 2000-C Convertible Preferred Stock has (i) voted to
remove or elect any director of the Corporation under Section 3 or Section 9,
(ii) approved any action by the Corporation under Section 3, (iii) elected the
Change of Control Preference or the Liquidation Preference, as the case may be,
or shares of Common Stock in lieu of either thereof under Section 4, (iv)
elected to cause the conversion of such holder's Series 2000-C Convertible
Preferred Stock into Common Stock or other assets under Section 5, (v) elected
to cause the redemption of such holder's Series 2000-C Convertible Preferred
Stock under Section 9 or (vi) received any notice of the Corporation required or
permitted herein, Westbrook Real Estate Fund II, L.P., shall have the right to
grant or deny such approvals, make or decline any such elections or receive any
such notices with regard to all shares of the Series 2000-C Convertible
Preferred Stock held of record by such holder, and a notice received by
Westbrook Real Estate Fund II, L.P., and a document executed by Westbrook Real
Estate Fund II, L.P., calling a meeting of shareholders, exercising the right to
take action by
<PAGE>
25
written consent without a meeting, exercising voting rights either together with
holders of shares of Common Stock or separately as a class, including without
limitation the granting or denying of approval to any action by the Corporation,
or electing or removing any director, or electing or declining to the
Corporation to effect the conversion as to any shares of Series 2000-C
Convertible Preferred Stock, or electing or declining to the Corporation to
effect the redemption as to any shares of Series 2000-C Convertible Preferred
Stock, shall determine the matter for such holders as Westbrook Real Estate Fund
II, L.P. may indicate. Upon written notice by Westbrook Real Estate Fund II,
L.P. to the Corporation, Westbrook Real Estate Fund II, L.P. may relinquish such
rights and powers over any or all shares of Series 2000-C Convertible Preferred
Stock. The foregoing may, but need not, be evidenced by execution by each holder
of Series 2000-C Convertible Preferred Stock, other than Westbrook Burnham
Holdings, L.L.C., and Westbrook Burnham Co-Holdings, L.L.C., of a proxy in favor
of Westbrook Real Estate Fund II, L.P.
Section 11. CERTAIN DISTRIBUTIONS.
In determining whether a distribution that is required to be made in
order for the Corporation to maintain its status as a REIT (other than upon
voluntary or involuntary liquidation), by dividend, redemption or other
acquisition of shares or otherwise, is permitted under the Maryland General
Corporation Law, amounts that would be needed, if the Corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of holders of the Series 2000-C Convertible Preferred Stock
shall not be added to the Corporation's total liabilities; provided, that to the
extent that any such distribution exceeds the amount that would be permitted if
such amounts were added to the Corporation's total liabilities, then such excess
shall be distributed solely to the holders of the Series 2000-C Convertible
Preferred Stock and, provided further, to the extent that any distributions to
such holders exceed the amounts otherwise due and payable hereunder, then the
amount of such excess (per share) shall be applied in reduction of the Stated
Value of each share of Series 2000-C Convertible Preferred Stock in respect of
which such distribution is paid.
Section 12. SEVERABILITY OF PROVISIONS.
Whenever possible, each provision hereof shall be interpreted
in a manner as to be effective and valid under applicable law, but if any
provision hereof is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should determine that a
provision hereof would be valid or enforceable if a period of time were extended
or shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
Section 13. IRREVOCABILITY OF EXEMPTION FROM LIMITS.
The Board of Directors shall not amend, alter or repeal the
exemption from the Ownership Limits of Section 7.2.1 of the Charter granted to
prospective holders of the Series 2000-C Convertible Preferred Stock on August
27, 2000 to the detriment of such a holder without the consent of such a holder
("holder" herein including any affiliated successor of the persons named in such
resolutions).
<PAGE>
26
Section 14. TRANSACTIONS WITH AFFILIATES.
While any shares of the Series 2000-C Convertible Preferred
Stock are outstanding, the Corporation will not sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates (including without limitation any Affiliate of a Director of
the Corporation) without the approval of the holders of not less than a majority
of the outstanding shares of the Series 2000-C Convertible Preferred Stock,
except transactions that the Board determines in good faith are at prices and on
terms and conditions not less favorable to the Corporation than could be
obtained on an arm's-length basis from unrelated third parties. For purposes of
this Section 14, "AFFILIATE" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified;
"CONTROL" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise
("CONTROLLING" and "CONTROLLED" have meanings correlative thereto) and "PERSON"
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, governmental authority or other
entity.
Section 15. MANDATORY REDEMPTION.
(a) Notwithstanding anything to the contrary contained in these
Articles Supplementary, the Corporation shall have the right, subject to the
right of the holders of Series 2000-C Convertible Preferred Stock to exercise
their conversion right pursuant to Section 5 at any time prior to the Mandatory
Redemption Date (as defined below), at any time, to redeem all of the shares of
Series 2000-C Convertible Preferred Stock at a redemption price per share (the
"MANDATORY REDEMPTION PRICE") equal to the Change of Control Preference for such
shares calculated as of the Mandatory Redemption Date (as defined below) less
any amounts previously distributed in respect of a Change of Control Preference
or Liquidation Preference for such shares that have been applied to the
Outstanding Dividend Premium of such shares.
(b) In order to exercise its right to redeem the Series 2000-C
Convertible Preferred Stock, the Corporation must deliver a notice of redemption
to each holder of Series 2000-C Convertible Preferred Stock. If a notice of
redemption is given with regard to shares of Series 2000-C Convertible Preferred
Stock pursuant to this paragraph (b), promptly (but in no event less than three
Business Days nor more than five Business Days) after the request for redemption
is given to each holder of Series 2000-C Convertible Preferred Stock, the
Corporation will pay each holder of Series 2000-C Convertible Preferred Stock in
cash an amount equal to the Mandatory Redemption Price with respect to such
holder's shares of Series 2000-C Convertible Preferred Stock multiplied by the
number of such holder's Series 2000-C Convertible Preferred Stock. The date of
such payment is referred to herein as the "MANDATORY REDEMPTION DATE."
(c) (i) Upon payment by the Corporation of the amounts
specified in paragraph (b) above to each holder of Series 2000-C Convertible
Preferred Stock, dividends will cease to accrue with regard to shares of Series
2000-C Convertible Preferred Stock, and, upon such payment, the holders of such
shares will cease to be stockholders with respect to such shares, will have no
interest in or claims against the
<PAGE>
27
Corporation by virtue of such shares (other than as described in clause (ii)
below), will have no voting or other rights with respect to such shares and such
shares will be deemed to be canceled.
(ii) The dividend with respect to a share of Series 2000-C
Convertible Preferred Stock which is the subject of a notice of redemption
delivered pursuant to paragraph (b) above on a day which falls between the close
of business on a dividend payment Record Date and the opening of business on the
corresponding Dividend Payment Date will be payable on the Dividend Payment Date
to the holder of record of the share of Series 2000-C Convertible Preferred
Stock on the dividend payment Record Date notwithstanding the redemption of the
share of Series 2000-C Convertible Preferred Stock after the dividend payment
Record Date and prior to the Dividend Payment Date.
(d) The Mandatory Redemption Price in respect of each share of
Series 2000-C Preferred Stock redeemed shall be due on the Mandatory Redemption
Date. Notwithstanding anything to the contrary set forth herein, if the
Corporation fails to deliver the Mandatory Redemption Price in respect of each
share of Series 2000-C Preferred Stock to the applicable holder of such share on
or before such date, the holders of the Series 2000-C Convertible Preferred
Stock shall continue to own their shares of the Series 2000-C Convertible
Preferred Stock and shall be entitled to the preferences, voting powers,
redemption, conversion and other rights, dividends and distributions set forth
herein as if the Corporation had not exercised its right to redeem the Series
2000-C Convertible Preferred Stock pursuant to this Section 15.
SECOND: The Series 2000-C Convertible Preferred Stock have been
classified and designated by the Board of Directors under the authority
contained in the Charter.
THIRD: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
FOURTH: The undersigned acknowledges these Articles Supplementary to be
the act of the Corporation and states as to all manners and facts required to be
verified under the oath that, to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and such
statement is made under penalties for perjury.
<PAGE>
28
IN WITNESS WHEREOF, these Articles Supplementary are executed
on behalf of the Corporation by its President and attested by its Secretary this
th day of August 31, 2000.
BURNHAM PACIFIC PROPERTIES, INC.
By: /S/ SCOTT C. VERGES
___________________
Scott C. Verges
President
[SEAL]
Attest:
/S/ PENNY M. EVANS
_______________________
Name: Penny M. Evans
Title: Assistant Secretary
