OMEGA HEALTHCARE INVESTORS, INC.
ARTICLES SUPPLEMENTARY
FOR SERIES C CONVERTIBLE PREFERRED STOCK
OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation (the
"Company"), hereby certifies to the State Department of Assessments and Taxation
of Maryland that:
FIRST: Pursuant to authority contained in the charter of the
Company (the "Charter"), 2,000,000 shares of authorized but unissued shares of
the Company's Preferred Stock have been duly classified by the Board of
Directors of the Company (the "Board") as authorized but unissued shares of the
Company's Series C Preferred Stock.
SECOND: A description of the Series C Preferred Stock is as
follows:
1. Designation and Number. A series of Preferred Stock, designated the
"Series C Convertible Preferred Stock" (the "Series C Preferred Stock"), is
hereby established. The number of shares of the Series C Preferred Stock shall
be 2,000,000, subject to increase pursuant to Section 4(b) prior to payment by
the Company of any dividend in shares of Series C Preferred Stock in accordance
with Section 4.
2. Maturity. The Series C Preferred Stock has no stated maturity.
3. Rank. The Series C Preferred Stock will, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of the Company,
rank (i) senior to all classes or series of Common Stock of the Company, and to
all equity securities ranking junior to the Series C Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of the Company, (ii) on a parity with the Series A Preferred Stock, Series B
Preferred Stock and all other equity securities issued by the Company the terms
of which specifically provide that such equity securities rank on a parity with
the Series C Preferred Stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Company, and (iii) junior to all
existing and future indebtedness of the Company. The term "equity securities"
does not include convertible debt securities, which will rank senior to the
Series C Preferred Stock prior to conversion.
4. Dividends. (a) Except as set forth in Section 4(b), holders of
shares of the Series C Preferred Stock are entitled to receive, out of funds
legally available for the payment of dividends, preferential cumulative
dividends at the greater of (i) 10% per annum of the Liquidation Preference per
share (equivalent to a fixed annual amount of $10.00 per share) and (ii) the
amount per share declared or paid or set aside for payment based on the number
of shares of Common Stock into which such shares of Series C Preferred Stock are
then convertible in accordance with Section 8 (disregarding Section 8.17 for
such purpose). Dividends on each share of the Series C Preferred Stock shall be
cumulative commencing from the date of issuance of such share of Series C
Preferred Stock and shall be payable in arrears for each period ended July 31,
October 31, January 31 and April 30 (each a "Dividend Period") on or before the
15th day of August, November, February and May of each year, or, if not a
Business Day, the next succeeding Business Day (each, a "Dividend Payment
Date"). The first dividend will be paid on November 15, 2000, with respect to
the period commencing on the date of first issuance of Series C Preferred Stock
(the "Issue Date") and ending on October 31, 2000. Any dividend payable on
shares of the Series C Preferred Stock for any partial period will be computed
based on the actual number of days elapsed (commencing with and including the
date of issuance of such shares) and on the basis of a 360-day year consisting
of twelve 30-day months. Dividends will be payable to holders of record as they
appear in the stock records of the Company at the close of business on the
applicable record date, which shall be the last day of the preceding calendar
month prior to the applicable Dividend Payment Date or on such other date
designated by the Board that is not more than 30 nor less than 10 days prior to
such Dividend Payment Date (each, a "Dividend Record Date").
(b) For any Dividend Period ending prior to February 1, 2001,
dividends will be payable, at the election of the Board, (i) by the issuance as
of the relevant Dividend Payment Date of additional shares of fully paid,
nonassessable Series C Preferred Stock having an aggregate liquidation
preference equal to the amount of such accrued dividends or (ii) in cash. In the
event that dividends are declared and paid pursuant to clause (i), (A) such
dividends will be deemed paid in full and will not accumulate and (B) prior to
paying any such dividends, the Board will take such action as is necessary to
increase the number of authorized shares of Series C Preferred Stock by the
number of shares to be issued pursuant to this Section 4, including but not
limited to the filing of Articles Supplementary with the State Department of
Assessments and Taxation of Maryland in accordance with Article VII of the
Charter. The Company will deliver certificates representing shares of Series C
Preferred Stock issued pursuant to this Section 4(b) promptly after the relevant
Dividend Payment Date. For any Dividend Period ending after February 1, 2001,
dividends will be payable in cash.
(c) No dividends on shares of Series C Preferred Stock shall
be declared by the Board or paid or set apart for payment by the Company at such
time as the terms and provisions of any agreement of the Company, including any
agreement relating to its indebtedness, prohibits such declaration, payment or
setting apart for payment or provides that such declaration, payment or setting
apart for payment would constitute a breach thereof or a default thereunder, or
if such declaration or payment shall be restricted or prohibited by law.
(d) Notwithstanding the foregoing, dividends on the Series C
Preferred Stock will accrue whether or not the Company has earnings, whether or
not there are funds legally available for the payment of such dividends and
whether or not such dividends are declared. Accrued but unpaid dividends on the
Series C Preferred Stock will not bear interest and holders of the Series C
Preferred Stock will not be entitled to any distributions in excess of full
cumulative distributions described above. Except as set forth in the next
sentence, no dividends will be declared or paid or set apart for payment on any
capital stock of the Company or any other series of Preferred Stock ranking, as
to dividends, on a parity with or junior to the Series C Preferred Stock (other
than a dividend in shares of the Company's Common Stock or in shares of any
other class of stock ranking junior to the Series C Preferred Stock as to
dividends and upon liquidation) for any period unless full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on the Series C
Preferred Stock for all past dividend periods and the then current dividend
period. When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series C Preferred Stock and the shares of
any other series of Preferred Stock ranking on a parity as to dividends with the
Series C Preferred Stock, all dividends declared upon the Series C Preferred
Stock and any other series of Preferred Stock ranking on a parity as to
dividends with the Series C Preferred Stock shall be declared pro rata so that
the amount of dividends declared per share of Series C Preferred Stock and such
other series of Preferred Stock shall in all cases bear to each other the same
ratio that accrued dividends per share on the Series C Preferred Stock and such
other series of Preferred Stock (which shall not include any accrual in respect
of unpaid dividends for prior dividend periods if such Preferred Stock does not
have a cumulative dividend) bear to each other.
(e) Except as provided in the immediately preceding paragraph,
unless full cumulative dividends on the Series C Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for all past dividend periods and the
then current dividend period, no dividends (other than in shares of Common Stock
or other shares of capital stock ranking junior to the Series C Preferred Stock
as to dividends and upon liquidation) shall be declared or paid or set aside for
payment nor shall any other distribution be declared or made upon the Common
Stock, or any other capital stock of the Company ranking junior to or on a
parity with the Series C Preferred Stock as to dividends or upon liquidation,
nor shall any shares of Common Stock, or any other shares of capital stock of
the Company ranking junior to or on a parity with the Series C Preferred Stock
as to dividends or upon liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any such shares) by the Company (except by conversion
into or exchange for other capital stock of the Company ranking junior to the
Series C Preferred Stock as to dividends and upon liquidation or redemption or
for the purpose of preserving the Company's qualification as a real estate
investment trust under the Internal Revenue Code of 1986, as amended). Holders
of shares of the Series C Preferred Stock shall not be entitled to any dividend,
whether payable in cash, property or stock, in excess of full cumulative
dividends on the Series C Preferred Stock as provided above. Any dividend
payment made on shares of the Series C Preferred Stock shall first be credited
against the earliest accrued but unpaid dividend due with respect to such shares
which remains payable.
5. Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the
holders of shares of Series C Preferred Stock are entitled to be paid out of the
assets of the Company legally available for distribution to its shareholders the
Liquidation Preference (as defined in Section 10(e)) before any distribution of
assets is made to holders of Common Stock or any other class or series of
capital stock of the Company that ranks junior to the Series C Preferred Stock
as to liquidation rights. The Company will promptly provide to the holders of
Series C Preferred Stock written notice of any event triggering the right to
receive such Liquidation Preference. After payment of the full amount of the
Liquidation Preference, plus any accrued and unpaid dividends to which they are
entitled, the holders of Series C Preferred Stock will have no right or claim to
any of the remaining assets of the Company. The consolidation or merger of the
Company with or into any other corporation, trust or entity or of any other
corporation with or into the Company in a manner that constitutes a Change in
Control (as defined in Section 10(b)), or the sale, lease or conveyance of all
or substantially all of the property or business of the Company, shall be deemed
to constitute a liquidation, dissolution or winding up of the Company.
In determining whether a distribution (other than upon voluntary or involuntary
liquidation) by dividend, redemption or other acquisition of shares of stock of
the Company or otherwise is permitted under the Maryland General Corporation Law
(the "MGCL"), no effect shall be given to amounts that would be needed if the
Company would be dissolved at the time of the distribution, to satisfy the
preferential rights upon distribution of holders of shares of stock of the
Company whose preferential rights upon distribution are superior to those
receiving the distribution.
6. Redemption. The Series C Preferred Stock is not redeemable, subject,
however, to the provisions in Section 9 of these Articles Supplementary.
7. Voting Rights. (a) Holders of the Series C Preferred Stock will not
have any voting rights, except as set forth below. Notwithstanding the
provisions of this Section 7, no holder of Series C Preferred Stock shall be
entitled to vote any shares of Series C Preferred Stock that would result in
such holder and any of its affiliates controlled by it or any group (as such
term is used in Section 13(d)(3) of the Exchange Act) of which any of them is a
member voting in excess of 49.9% of the then-outstanding Voting Stock, except in
any separate class vote consisting solely of any one or more classes of
Preferred Stock.
(b) Each holder of shares of Series C Preferred Stock shall be
entitled to notice of any stockholder meeting in accordance with the bylaws of
the Company (the "Bylaws"), shall be entitled to a number of votes equal to the
number of shares of Common Stock into which the shares of Series C Preferred
Stock held by such holder could then be converted pursuant to Section 8 (giving
effect to the limitations on conversion in Section 8.17), shall have voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock, and shall vote together as a single class with holders of Common Stock,
except as expressly required by law. Fractional votes shall not be permitted,
and any fractional voting rights resulting from the right of any holder of
Series C Preferred Stock to vote on an as converted basis (after aggregating the
shares into which all shares of Series C Preferred Stock held such holder could
be converted) shall be rounded to the nearest whole number (with one-half being
rounded upward). The holders of Series C Preferred Stock shall have no separate
class or series vote on any matter except as expressly required by law or as
otherwise set forth in these Articles Supplementary.
(c) Whenever dividends on any shares of Series C Preferred
Stock shall be in arrears for four or more Dividend Periods (a "Preferred
Dividend Default"), the number of directors then constituting the Board shall be
increased, if necessary, by such number that would, if such number were added to
the number of directors already designated by the holders of the Series C
Preferred Stock (whether pursuant to the Stockholders Agreement or otherwise),
constitute a majority of the Board (if not already increased by reason of a
similar arrearage with respect to any Parity Preferred (as hereinafter
defined)). The holders of such shares of Series C Preferred Stock (voting
separately as a class with all other series of Preferred Stock ranking on a
parity with the Series C Preferred Stock as to dividends or upon liquidation,
dissolution or winding up ("Parity Preferred") upon which like voting rights
have been conferred and are exercisable) will be entitled to vote separately as
a class, in order to fill the vacancies thereby created, for the election of
such additional number of directors of the Company determined pursuant to the
first sentence of this Section 7(c) (the "Additional Preferred Stock Directors")
at a special meeting called by the holders of record of at least 20% of the
Series C Preferred Stock or the holders of record of at least 20% of any series
of Parity Preferred so in arrears and entitled to vote (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of the shareholders) or at the next annual meeting of shareholders, and
at each subsequent annual meeting until all dividends accumulated on such shares
of Series C Preferred Stock and Parity Preferred for the past dividend periods
and the dividend for the then current dividend period shall have been fully paid
or declared and a sum sufficient for the payment thereof set aside. In any vote
to elect or remove additional directors pursuant to this Section 7, each holder
of shares of Series C Preferred Stock or Parity Preferred so entitled to vote
will be entitled to one vote for each $1.00 amount of Liquidation Preference
attributable to the aggregate number of such shares held by such holder. In the
event the directors of the Company are divided into classes, each such vacancy
shall be apportioned among the classes of directors to prevent stacking in any
one class and to ensure that the number of directors in each of the classes of
directors are as equal as possible. Each Additional Preferred Stock Director, as
a qualification for election as such (and regardless of how elected), shall
submit to the Board a duly executed, valid, binding and enforceable letter of
resignation from the Board, to be effective upon the date upon which all
dividends accumulated on such shares of Series C Preferred Stock and Parity
Preferred for the past dividend periods and the dividend for the then current
dividend period shall have been fully paid or declared and a sum sufficient for
the payment thereof set aside for payment, whereupon the terms of office of all
persons elected as Additional Preferred Stock Directors by the holders of the
Series C Preferred Stock and any Parity Preferred shall, upon the effectiveness
of their respective letters of resignation, forthwith terminate, and the number
of directors then constituting the Board shall be reduced accordingly. A quorum
for any such meeting shall exist if at least a majority of the outstanding
shares of Series C Preferred Stock and shares of Parity Preferred upon which
like voting rights have been conferred and are exercisable are represented in
person or by proxy at such meeting. Such Additional Preferred Stock Directors
shall be elected upon the affirmative vote of a plurality of the shares of
Series C Preferred Stock and such Parity Preferred present and voting in person
or by proxy at a duly called and held meeting at which a quorum is present. If
and when all accumulated dividends and the dividend for the then current
dividend period on the Series C Preferred Stock shall have been paid in full or
declared and a sum sufficient for the payment thereof in full shall have been
set aside, the holders thereof shall be divested of the foregoing voting rights
(subject to revesting in the event of each and every Preferred Dividend Default)
and, if and when all accumulated dividends and the dividend for the then current
dividend period on all series of Parity Preferred upon which like voting rights
have been conferred and are exercisable have been paid in full or declared and a
sum sufficient for the payment thereof in full shall have been set aside, the
term of office of each Additional Preferred Stock Director so elected shall
terminate. Any Additional Preferred Stock Director may be removed at any time
with or without cause by, and shall not be removed otherwise than by the vote
of, the holders of record of a majority of the outstanding shares of the Series
C Preferred Stock and Parity Preferred upon which like voting rights have been
conferred and are exercisable (voting together as a class). So long as a
Preferred Dividend Default shall continue, any vacancy in the office of an
Additional Preferred Stock Director may be filled by written consent of the
Additional Preferred Stock Directors remaining in office, or if none remains in
office, by a vote of the holders of record of a majority of the outstanding
shares of Series C Preferred Stock and Parity Preferred upon which like voting
rights have been conferred and are exercisable (voting together as a class). The
Additional Preferred Stock Directors shall each be entitled to one vote per
director on any matter.
(d) So long as any shares of Series C Preferred Stock remain
outstanding, the Company will not, without the affirmative vote or consent of
the holders of at least two-thirds of the shares of the Series C Preferred Stock
outstanding at the time, given in person or by proxy, either in writing or at a
meeting (voting separately as a class together with any other classes of
Preferred Stock adversely affected in the same manner), amend, alter or repeal
the provisions of the Charter or the Articles Supplementary, whether by merger,
consolidation or otherwise (an "Event"), so as to materially and adversely
affect any right, preference, privilege or voting power of the Series C
Preferred Stock or the holders thereof, including without limitation, the
creation of any series of Preferred Stock ranking senior to the Series C
Preferred Stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, but not including the
creation or issuance of Parity Preferred.
(e) Except as expressly stated in these Articles
Supplementary, the Series C Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers and the
consent of the holders thereof shall not be required for the taking of any
corporate action, including but not limited to, any merger or consolidation
involving the Company or a sale of all or substantially all of the assets of the
Company, irrespective of the effect that such merger, consolidation or sale may
have upon the rights, preferences or voting power of the holders of the Series C
Preferred Stock.
8. Conversion. The holders of Series C Preferred Stock shall have the
following conversion rights with respect to such shares:
8.1 Optional Conversion. Subject to the limitations on
conversion in Section 8.17, each share of Series C Preferred Stock (including
all accrued and unpaid dividends thereon, to the extent declared) may be
converted, at any time at the option of the holder thereof, into fully paid and
nonassessable shares of Common Stock (and any other securities or property
expressly provided in this Section 8) as set forth in this Section 8.
8.2 Conversion Price. Subject to the limitations on conversion
in Section 8.17, each share of Series C Preferred Stock may be converted into
such number of shares of Common Stock as is equal to the quotient obtained by
dividing the Original Issue Price for such share by the Conversion Price (as
defined below) in effect at the time of conversion. The Conversion Price
initially shall be equal to $6.25 per share of Common Stock, subject to
adjustment from time to time as provided herein (the "Conversion Price").
8.3 Mechanics of Conversion. A holder of Series C Preferred
Stock who desires to convert the same into Common Stock shall surrender the
certificate or certificates representing such shares, duly endorsed, at the
office of the Company or at the office of any transfer agent for the Series C
Preferred Stock or Common Stock, and shall give written notice to the Company at
such office that such holder elects to convert the same and shall state therein
both the number of shares of Series C Preferred Stock being converted and the
name or names in which the holder wishes the certificate or certificates for
Common Stock to be issued. The Company shall, as soon as practicable after such
surrender, issue and deliver at such office to such holder a certificate or
certificates representing the number of shares of Common Stock to which such
holder is entitled and a new certificate or certificates representing the number
of shares of Series C Preferred Stock represented by the certificate or
certificates surrendered by the holder minus the number of Series C Preferred
Stock so converted by the holder. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the certificate representing the Series C Preferred Stock to be converted, and
the Person entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder of such Common Stock on
such date. Any Series C Preferred Stock converted into Common Stock shall be
retired and may not be reissued by the Company.
8.4 Adjustment for Stock Splits and Combinations. If the
Company at any time or from time to time after the Issue Date effects a
subdivision of the outstanding Common Stock, the Conversion Price then in effect
immediately before that subdivision shall be proportionately decreased, and
conversely, if the Company at any time or from time to time after the Issue Date
combines the outstanding Common Stock into a smaller number of shares, the
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 8.4 shall become
effective at the close of business on the date such subdivision or combination
becomes effective.
8.5 Adjustment for Certain Dividends and Distributions. If the
Company at any time or from time to time after the Issue Date makes, or fixes a
record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in additional Common Stock,
then and in each such event the Conversion Price then in effect shall be
decreased as of the time of such issuance or, in the event such record date is
fixed, as of the close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction (1) the numerator of which is the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution; provided, however, that if
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion Price
shall be recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Price shall be adjusted pursuant to this Section
8.5 as of the time of actual payment of such dividends or distributions.
8.6 Adjustments for Other Dividends and Distributions. In the
event the Company at any time or from time to time after the Issue Date makes,
or fixes a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of the
Company other than Common Stock or other assets or property of the Company
(other than ordinary cash dividends and any special dividends necessary to
preserve the Company's qualification as a REIT), then and in each such event
provision shall be made so that the holders of Series C Preferred Stock shall
receive upon conversion thereof, in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the Company or other
assets or property of the Company which they would have received had their
Series C Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the conversion date, retained such securities or other assets or
property of the Company receivable by them as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 8 with respect to the rights of the holders of the Series C Preferred
Stock.
8.7 Adjustment for Reclassification, Exchange and
Substitution. In the event that at any time or from time to time after the Issue
Date, the Common Stock or other securities as provided herein issuable upon the
conversion of the Series C Preferred Stock are changed into the same or a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets, provided for elsewhere in this Section 8), then
and in any such event each holder of Series C Preferred Stock shall have the
right thereafter to convert such Series C Preferred Stock into the kind and
amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change, by holders of Common Stock
or other securities as provided herein into which such shares of Series C
Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein.
8.8 Reorganizations, Mergers, Consolidations or Transfers of
Assets. If at any time or from time to time after the Issue Date there is a
capital reorganization of the Common Stock or other securities issuable upon
conversion of Series C Preferred Stock as provided herein (other than a
recapitalization, subdivision, combination, reclassification or exchange of
shares provided for elsewhere in this Section 8) or a merger or consolidation or
statutory binding share exchange of the Company with or into another Person, or
the transfer of all or substantially all of the Company's properties and assets
to any other Person and such capital reorganization, merger, consolidation or
transfer does not constitute a Change in Control, then, as a part of such
capital reorganization, merger, consolidation, exchange or transfer (subject to
the provisions of Section 9), provision shall be made so that the holders of the
Series C Preferred Stock shall thereafter be entitled to receive upon conversion
of Series C Preferred Stock the number of shares of stock or other securities,
cash or property to which a holder of the number of shares of Common Stock or
other securities deliverable upon conversion of the Series C Preferred Stock
would have been entitled on such capital reorganization, merger, consolidation,
exchange or transfer. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 8 with respect to the rights
of the holders of the Series C Preferred Stock after the capital reorganization,
merger, consolidation, exchange or transfer to the end that the provisions of
this Section 8 (including adjustment of the Conversion Price then in effect and
the number of shares receivable upon conversion of the Series C Preferred Stock)
shall be applicable after that event and be as nearly equivalent as may be
practicable.
8.9 Sale of Shares Below Fair Market Value. (a) If at any time
or from time to time after the Issue Date, the Company issues or sells, or is
deemed by the express provisions of this Section 8.9 to have issued or sold,
Additional Common Stock (as defined below), other than as a dividend or other
distribution on any class of stock as provided in Section 8.5 above and other
than upon a subdivision or combination of Common Stock as provided in Section
8.4 above, for an Effective Price (as defined below) less than the Fair Market
Value, then and in each such case the then existing Conversion Price shall be
reduced, as of the opening of business on the date of such issue or sale, to a
price determined by multiplying that Conversion Price by a fraction (i) the
numerator of which shall be equal to the sum of (A) the number of shares of
Common Stock issued and outstanding at the close of business on the Business Day
immediately preceding the date of such issue or sale, (B) the number of shares
of Common Stock which the aggregate consideration received (or by the express
provisions hereof is deemed to have been received) by the Company for the total
number of shares of Additional Common Stock so issued or sold would purchase at
such Fair Market Value, (C) the number of shares of Common Stock into which all
outstanding Series C Preferred Stock are convertible at the close of business on
the Business Day immediately preceding the date of such issuance or sale, and
(D) the number of shares of Common Stock underlying all Convertible Securities
(as defined below) at the close of business on the Business Day immediately
preceding the date of such issuance or sale, and (ii) the denominator of which
shall be equal to the sum of (A) the number of shares of Common Stock issued and
outstanding at the close of business on the date of such issuance or sale after
giving effect to such issuance or sale of Additional Common Stock, (B) the
number of shares of Common Stock into which all outstanding Series C Preferred
Stock are convertible at the close of business on the Business Day immediately
preceding the date of such issuance or sale, and (C) the number of shares of
Common Stock underlying all Convertible Securities at the close of business on
the Business Day immediately preceding the date of such issuance or sale.
(b) For the purpose of making any adjustment required under
this Section 8.9, the consideration for any issuance or sale of securities shall
be deemed to be (A) to the extent it consists of cash, equal to the gross amount
paid in such issuance or sale, (B) to the extent it consists of property other
than cash, equal to the Fair Market Value of that property, and (C) if
Additional Common Stock, Convertible Securities (as defined below) or rights or
options to purchase either Additional Common Stock or Convertible Securities are
issued or sold together with other stock, securities or assets of the Company
for a consideration which covers both, that portion of the consideration so
received that is determined in good faith by the Board to be allocable to such
Additional Common Stock, Convertible Securities or rights or options.
(c) For the purpose of the adjustment required under this
Section 8.9, if the Company issues or sells any rights or options for the
purchase of, or stock or other securities convertible into or exchangeable or
exercisable for, Additional Common Stock (such convertible or exchangeable or
exercisable stock or securities being hereinafter referred to as "Convertible
Securities") and if the Effective Price of such Additional Common Stock is less
than the Fair Market Value, then in each case the Company shall be deemed to
have (i) issued at the time of the issuance of such rights or options or
Convertible Securities the number of shares of Additional Common Stock issuable
upon exercise, conversion or exchange thereof irrespective of whether the
holders thereof have the fully vested legal right to exercise, convert or
exchange the Convertible Securities for Additional Common Stock and (ii)
received as consideration for the issuance of such Additional Common Stock an
amount equal to the total amount of the consideration, if any, received by the
Company for the issuance of such rights or options or Convertible Securities,
plus, in the case of such rights or options, the consideration, if any, payable
to the Company upon the exercise of such rights or options, plus, in the case of
Convertible Securities, the consideration, if any, payable to the Company (other
than by cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the exercise, conversion or exchange thereof. No further
adjustment of the Conversion Price, as adjusted upon the issuance of such
rights, options or Convertible Securities, shall be made as a result of the
actual issuance of Additional Common Stock on the exercise of any such rights or
options or the conversion or exchange of any such Convertible Securities. If any
such rights or options or the conversion or exchange privilege represented by
any such Convertible Securities shall expire without having been exercised, the
Conversion Price as adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the only
shares of Additional Common Stock so issued were the shares of Additional Common
Stock, if any, actually issued or sold on the exercise of such rights or options
or rights of conversion or exchange of such Convertible Securities, and such
shares of Additional Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of the
rights or options whether or not exercised, plus the consideration received for
issuing or selling the Convertible Securities actually converted or exchanged,
plus the consideration, if any, actually received by the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion or exchange of such Convertible Securities.
(d) "Additional Common Stock" shall mean all Common Stock
issued or issuable by the Company after the Issue Date, whether or not
subsequently reacquired or retired by the Company, other than (i) Common Stock
issued or issuable upon conversion of, or as a dividend on, any Series C
Preferred Stock, (ii) Common Stock issued or issuable pursuant to any employee
benefit plan or similar plan or arrangement intended to provide compensation and
other benefits to officers, directors, employees and consultants of the Company
provided that such plans and any grants or awards thereunder have been approved
by the Board or a committee thereof, (iii) securities issued by the Company in
payment of a purchase price to the seller or any Person who beneficially owns
equity securities of such seller for any acquisition of assets or a business,
which acquisition is approved by the Board, or pursuant to the Additional Equity
Financing (as defined in the Investment Agreement dated as of May 11, 2000 (the
"Investment Agreement"), by and between Explorer Holdings, L.P. and the
Company), and (iv) securities issued pursuant to the Rights Offerings (as
defined in Exhibit B to the Investment Agreement). The "Effective Price" of
Additional Common Stock shall mean the quotient determined by dividing the total
number of shares of Additional Common Stock issued or sold, or deemed to have
been issued or sold by the Company, by the aggregate consideration received, or
deemed to have been received, by the Company for such Additional Common Stock.
The share numbers in this Section 8.9(d) shall be appropriately adjusted for any
stock dividends, combinations, splits, reverse splits, recapitalizations and
similar events affecting the securities of the Company.
8.10 Certificate of Adjustment. In each case of an adjustment
or readjustment of the Conversion Price or the number of shares of Common Stock
or other securities issuable upon conversion of the Series C Preferred Stock,
the Company, at its expense, shall cause the Chief Financial Officer of the
Company to compute such adjustment or readjustment in accordance with the
provisions hereof and prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class mail, postage
prepaid, to each registered holder of the Series C Preferred Stock at the
holder's address as shown in the Company's books. The certificate shall set
forth such adjustment or readjustment, showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (1) the
consideration received or deemed to be received by the Company for any
Additional Common Stock issued or sold or deemed to have been issued or sold,
(2) the Conversion Price in effect immediately prior to the occurrence of the
event giving rise to such adjustment, (3) the number of shares of Additional
Common Stock, and (4) the type and amount, if any, of other property which at
the time would be received upon conversion of the Series C Preferred Stock.
8.11 Notices of Record Date. In the event of (i) any taking by
the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution or (ii) any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company, any merger or consolidation of the Company with or into any other
entity, or any transfer of all or substantially all of the assets of the Company
to any other person or any voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company shall mail to each holder of Series C
Preferred Stock at least ten days prior to the record date specified therein, a
notice specifying (1) the date on which any such record is to be taken for the
purpose of such dividend or distribution and a description of such dividend or
distribution, (2) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to become effective, and (3) the date, if any, that is to be fixed, as
to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their Common Stock (or other securities) for securities or
other property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up.
8.12 Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of Series C Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the Company
shall pay cash equal to the product of such fraction multiplied by the Fair
Market Value of one share of Common Stock on the date of conversion.
8.13 Reservation of Stock Issuable Upon Conversion. The
Company shall at all times reserve and keep available out of its authorized but
unissued Common Stock, solely for the purpose of effecting the conversion of the
Series C Preferred Stock, such number of shares of its Common Stock and other
securities, if any, issuable upon conversion thereof as expressly provided in
Section 8 as shall from time to time be sufficient to effect the conversion of
all outstanding Series C Preferred Stock.
8.14 Notices. Any notice required or permitted by this Section
8 to be given to a holder of Series C Preferred Stock or to the Company shall be
in writing and be deemed given upon the earlier of actual receipt or five days
after the same has been deposited in the United States mail, by certified or
registered mail, return receipt requested, postage prepaid, and addressed (i) to
each holder of record at the address of such holder appearing on the books of
the Company, or (ii) to the Company at its registered office, or (iii) to the
Company or any holder, at any other address specified in a written notice given
to the other for the giving of notice.
8.15 Payment of Taxes. The Company will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to the issue and delivery of Common Stock upon conversion of Series
C Preferred Stock, including without limitation any tax or other charge imposed
in connection with the issue and delivery of Common Stock or other securities,
if any, issuable upon conversion thereof as expressly provided in Section 8 in a
name other than that in which the Series C Preferred Stock so converted were
registered.
8.16 Cancellation of Shares. Any shares of Series C Preferred
Stock which are converted in accordance with Section 8 or which are redeemed,
repurchased or otherwise acquired by the Company, shall be canceled and added to
the authorized but undesignated Preferred Stock of the Company but shall not be
reissued as Series C Preferred Stock.
8.17 Limitations on Conversions. Notwithstanding the
provisions of this Section 8, no holder of Series C Preferred Stock shall be
permitted to convert a number of its shares of Series C Preferred Stock which
would result in such holder and its Affiliates or any group (as such term is
used in Section 13(d)(3) of the Exchange Act) of which any of them is a member
having beneficial ownership, after giving effect to such conversion, of more
than 49.9% of the then-outstanding Voting Stock without the prior approval of
the Board.
9. Restrictions on Ownership and Transfer. Once there is a completed
public offering of the Series C Preferred Stock, if the Board shall, at any time
and in good faith, be of the opinion that actual or constructive ownership of at
least 9.9% or more of the value of the outstanding capital stock of the Company
has or may become concentrated in the hands of one owner (other than Explorer
Holdings, L.P. and its direct and indirect equity owners), the Board shall have
the power (i) by means deemed equitable by the Board, and pursuant to written
notice, to call for the purchase from any shareholder of the corporation a
number of shares of Series C Preferred Stock sufficient, in the opinion of the
Board, to maintain or bring the direct or indirect ownership of such beneficial
owner to no more than 9.9% of the value of the outstanding capital stock of the
corporation, and (ii) to refuse to transfer or issue shares of Series C
Preferred Stock to any person whose acquisition of such Series C Preferred Stock
would, in the opinion of the Board, result in the direct or indirect ownership
by that person of more than 9.9% of the value of the outstanding capital stock
of the Company. The purchase price for any shares of Series C Preferred Stock
shall be equal to the fair market value of the shares reflected in the closing
sales price for the shares, if then listed on a national securities exchange, or
if the shares are not then listed on a national securities exchange, the
purchase price shall be equal to the Liquidation Preference of such shares of
Series C Preferred Stock. Payment of the purchase price shall be made within
thirty days following the date set forth in the notice of call for purchase, and
shall be made in such manner as may be determined by the Board. From and after
the date fixed for purchase by the Board, as set forth in the notice, the holder
of any shares so called for purchase shall cease to be entitled to distributions
and other benefits with respect to such shares, excepting only the right to
payment of the purchase price fixed as aforesaid. Any transfer of Series C
Preferred Stock that would create an actual or constructive owner of more than
9.9% of the value of the outstanding shares of capital stock of this Company
shall be deemed void ab initio and the intended transferee shall be deemed never
to have had an interest therein. If the foregoing provision is determined to be
void or invalid by virtue of any legal decision, statute, rule or regulation,
then the transferee of such Series C Preferred Stock shall be deemed, at the
option of the Company, to have acted as agent on behalf of the Company in
acquiring such shares and to hold such shares on behalf of the Company.
Notwithstanding anything herein to the contrary, the Company and its transfer
agent may refuse to transfer any shares of Series C Preferred Stock, passing
either by voluntary transfer, by operation of law, or under the last will and
testament of any shareholder if such transfer would or might, in the opinion of
the Board or counsel to the Company, disqualify the Company as a Real Estate
Investment Trust under the Internal Revenue Code. Nothing herein contained shall
limit the ability of the Company to impose or to seek judicial or other
imposition of additional restrictions if deemed necessary or advisable to
preserve the Company's tax status as a qualified Real Estate Investment Trust.
Nothing herein contained shall preclude settlement of any transaction entered
into through the facilities of the New York Stock Exchange.
10. Certain Defined Terms. In addition to the terms defined elsewhere
in these Articles Supplementary or the Charter, the following terms will have
the following meanings when used herein with initial capital letters:
(a) "Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in New York City, or any day on which banks in
New York City are authorized by law to close).
(b) "Change in Control" means the acquisition of the Company
by means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger, consolidation or other business
combination transaction), unless the Company's stockholders of record as
constituted immediately prior to such acquisition will, immediately after such
acquisition (by virtue of securities issued as consideration for the Company's
acquisition or otherwise), hold at least 50% of the voting power of the
surviving or acquiring entity in approximately the same relative percentages
after such acquisition or sale as before such acquisition or sale.
(c) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(d) "Fair Market Value" of any security or other asset means:
(i) in the case of any security:
(A) if the security is traded on a
securities exchange, the weighted average trading volume of the per
share closing prices of the security on such exchange over the five
trading day period ending three trading days prior to the date on which
such value is measured;
(B) if the security is traded
over-the-counter, the weighted average trading volume of the per share
closing bid prices of the security over the five trading day period
ending three trading days prior to the date on which such value is
measured; or
(C) if there is no public market for such
security that meets the criteria set forth in (A) or (B) above, the
Fair Market Value shall be the per share fair market value of such
security as of the date on which such value is measured, as determined
in good faith by the Board.
(ii) In the case of assets other than securities, the
Fair Market Value shall be the fair market value of such assets, as determined
in good faith by the Board.
(e) "Liquidation Preference" measured per share of Series C
Preferred Stock as of any date in question (the "Relevant Date"), means an
amount equal to the Original Issue Price of such share plus any declared but
unpaid dividends, but without interest, at the rate set forth in Section 4
hereof, if any, for such share of Series C Preferred Stock. In connection with
the determination of the Liquidation Preference of a share of Series C Preferred
Stock upon liquidation, dissolution or winding up of the Company, the Relevant
Date shall be the date of distribution of amounts payable to stockholders in
connection with any such liquidation, dissolution or winding up.
(f) "Original Issue Price" means $100 per share of Series C
Preferred Stock, subject to appropriate adjustment to reflect any stock
dividends, combinations, splits, reverse splits, recapitalizations or similar
events affecting the Series C Preferred Stock after the Issue Date.
(g) "Person" means any individual, firm, corporation,
partnership, limited liability company, or group (within the meaning of Section
13(d)(3) of the Exchange Act).
(h) "Stockholders Agreement" means the Stockholders Agreement
by and between Explorer Holdings, L.P. and the Company, dated the Issue Date.
(i) "Voting Stock" means, with respect to the Company, the
shares of any class or kind ordinarily having the power to vote for the election
of directors or other members of the governing body of the Company. For
avoidance of doubt, (i) Common Stock and Series C Preferred Stock both
constitute Voting Stock of the Company and (ii) no class of Preferred Stock
shall be deemed to be Voting Stock by virtue of the rights of such holder upon
any Preferred Dividend Default.
11. Effect of Mergers, Consolidations and Other Business Combination
Transactions. In the event of any merger, consolidation or other business
combination transaction, the limitations on conversion in Section 8.17 and the
limitations on voting in Section 7(a) shall not impair, reduce or otherwise
modify the rights of any holder of Series C Preferred Stock in such merger,
consolidation or business combination transaction, such holder being entitled to
receive upon consummation of such merger, consolidation or other transaction in
respect of all shares of Series C Preferred Stock then held the consideration
that is receivable with respect to each share of Series C Preferred Stock
without regard to any limitation otherwise imposed by Section 7(a) or 8.17.
THIRD: The classification of authorized but unissued shares as
set forth in these Articles Supplementary does not increase the authorized
capital of the Company or the aggregate par value thereof.
FOURTH: These Articles Supplementary have been approved by
the Board in the manner and by the vote required by law.
FIFTH: The undersigned Vice President of the Company
acknowledges these Articles Supplementary to be the corporate act of the Company
and, as to all matters or facts required to be verified under oath, the
undersigned Vice President of the Company acknowledges that to the best of his
or her knowledge, information and belief, these matters and facts are true in
all material respects and that this statement is made under the penalties for
perjury.
<PAGE>
IN WITNESS WHEREOF, the Company has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
Vice President and attested to by its Secretary on this 13th day of July, 2000.
ATTEST OMEGA HEALTHCARE INVESTORS, INC.
By:/s/ Susan Allene Kovach By: /s/ Laurence D. Rich
----------------------- ------------------------
Secretary Vice President
