SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
Amendment No. 1 to
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Kranzco Realty Trust
--------------------
(Exact name of registrant as specified in its charter)
Maryland 23-2691327
- - ---------------------------------------- -----------------
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
128 Fayette Street, Conshohocken, Pennsylvania 19428
- - -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
If this form relates to
the registration of a
class of debt securities
and is effective upon
filing pursuant to
General Instruction
A(c)(1) please check the
following box. _____
\____\<PAGE>
If this form relates to
the registration of a
class of debt securities
and is to become
effective simultaneously
with the effectiveness of
a concurrent registration
statement under the
Securities Act of 1933
pursuant to General
Instruction A(c)(2)
please check the____
following box. \____\
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Series B-1 Cumulative Convertible
Preferred Shares of Beneficial Interest,
par value $.01 per share
(liquidation preference of $25 per share)
---------------------------------------
(Title of each class to be registered)
New York Stock Exchange
---------------------
(Name of each exchange
on which each class is
to be registered)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
- - -----------------------------------------------------------------
NONE
ITEM 1. Description of Registrant's Securities to be
Registered. The description of the Registrant's
securities to be registered is (i) incorporated herein
by reference to the information in Registrant's
Registration Statement No. 333-18249 under the heading
"Description of Kranzco Shares -- Kranzco Preferred
Shares -- Kranzco Series B-1 Preferred Shares and
Kranzco Series B-2 Preferred Shares" and (ii) attached
hereto as Exhibit 99.1.
ITEM 2. Exhibits
3.1 - Amended and Restated Declaration of Trust of
Registrant.*
3.2 - Amendment No. 1 to Amended and Restated
Declaration of Trust of Registrant.**
3.3 - Amended and Restated Bylaws of Registrant, as
amended.*
3.4 - Articles Supplementary Classifying Series B-1
Cumulative Convertible Preferred Shares of
Beneficial Interest.
99.1 - Description of Registrant's Securities to be
Registered.
* Previously filed as an exhibit to the Registrant's
Registration Statement on Form S-11 (Registration No. 33-
49434) and incorporated herein by reference.
** Previously filed as an exhibit to the Registrant's
Registration Statement on Form S-8 (No. 33-94294) and
incorporated herein by reference.<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
KRANZCO REALTY TRUST
Date: June 2, 1997 By: /s/ Robert H. Dennis
------------------------
Robert H. Dennis
Chief Financial Officer
Exhibit 3.4
KRANZCO REALTY TRUST
ARTICLES SUPPLEMENTARY CLASSIFYING
1,235,000 SHARES OF BENEFICIAL INTEREST
AS
9.75% SERIES B-1 CUMULATIVE CONVERTIBLE PREFERRED SHARES
OF
BENEFICIAL INTEREST
(Pursuant to Section 8-203(b) of the
Corporations and Associations Article
of the Annotated Code of Maryland)
Kranzco Realty Trust, a real estate investment trust
organized and existing under the laws of the State of Maryland
(the "Company"), and having its executive office at 128 Fayette
Street, Conshohocken, Pennsylvania 19428, hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested in
the Board of Trustees of the Company (the "Board of Trustees") in
accordance with the Amended and Restated Declaration of Trust of
the Company, dated November 4, 1992, as amended (the "Declaration
of Trust"), the Board of Trustees at a meeting duly convened and
held on November 7, 1996 and by unanimous written consent dated
as of December 18, 1996 adopted resolutions authorizing, creating
and classifying, out of the 100,000,000 authorized shares of
beneficial interest of the Company (the "Shares"), a separate
class of preferred shares of beneficial interest consisting of
1,235,000 preferred shares of beneficial interest to be known as
the "Series B-1 Cumulative Convertible Preferred Shares of
Beneficial Interest" (the "Series B-1 Preferred Shares"). The
Series B-1 Preferred Shares shall have a par value of $.01 per
share. The designation, preferences, conversion and other
rights, voting powers, restrictions, or limitations as to
dividends or other distributions of the Series B-1 Preferred
Shares, which shall be deemed to be part of Article VI of the
Declaration of Trust, are as follows:
9.75% SERIES B-1 CUMULATIVE CONVERTIBLE PREFERRED SHARES
OF BENEFICIAL INTEREST
The Series B-1 Preferred Shares shall be identical in all
respects to the 9.75% Series B-2 Cumulative Convertible Preferred
Shares of Beneficial Interest, $.01 par value per share, of the
Company (the "Series B-2 Preferred Shares", and, together with
the Series B-1 Preferred Shares, the "Series B Preferred
Shares"), and shall have the same rights, privileges and
preferences as the Series B-2 Preferred Shares in all
circumstances, except with respect to the conversion rights set
forth in Subparagraph (D)(1) herein.
A. Certain Definitions.
Unless the context otherwise requires, the terms defined in
this Paragraph (A) shall have, for all purposes of the provisions
of the Declaration of Trust in respect of the Series B-1
Preferred Shares, the meanings herein specified (with terms
defined in the singular having comparable meanings when used in
the plural):
Additional Common Equity. The term "Additional Common
Equity" shall have the meaning set forth in Subparagraph
(D)(6)(ii).
Adjustment Event. The term "Adjustment Event" shall mean
any event described in Subparagraph (D)(6).
Board of Trustees. The term "Board of Trustees" shall mean
the Board of Trustees of the Company.
Business Day. The term "Business Day" shall mean any day,
other than a Saturday or a Sunday, that is neither a legal
holiday nor a day on which banking institutions in New York City
are authorized or required by law to close.
Call Price. The term "Call Price" shall have the meaning
set forth in Subparagraph (G)(1).
Capital Gains Amount. The term "Capital Gains Amount" shall
have the meaning set forth in Subparagraph (B)(7).
Capital Lease. The term "Capital Lease" shall mean any
lease of property, real or personal, the obligations of the
lessee in respect of which are required in accordance with
generally accepted accounting principles to be capitalized on the
balance sheet of the lessee.
Code. The term "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
Common Equity. The term "Common Equity" shall mean all
shares now or hereafter authorized of any class or series of
common shares of beneficial interest of the Company, including
the Common Shares, and any other shares, howsoever designated,
which have the right (subject always to prior rights of any class
or series of preferred shares of beneficial interest) to
participate in the distribution of the assets and earnings of the
Company without limit as to per share amount.
Common Share Distribution. The term "Common Share
Distribution" shall have the meaning set forth in Subparagraph
(D)(1).
Common Share Distribution Period. The term "Common Share
Distribution Period" shall have the meaning set forth in
Subparagraph (D)(1).
Common Share Equivalent. The term "Common Share Equivalent"
shall have the meaning set forth in Subparagraph (D)(6)(ii).
Common Shares. The term "Common Shares" shall mean the
Common Shares of Beneficial Interest, $.01 par value per share,
of the Company.
Company Affiliate. The term "Company Affiliate" shall have
the meaning set forth in Subparagraph (D)(6)(ii).
Converted Series B-1 Preferred Share Distribution. The term
"Converted Series B-1 Preferred Share Distribution" shall have
the meaning set forth in Subparagraph (D)(1).
Convertible Securities. The term "Convertible Securities"
shall have the meaning set forth in Subparagraph (D)(6)(ii).
Current Market Price per Common Share. The term "Current
Market Price per Common Share" shall mean the average of the
closing prices for a Common Share for the thirty trading days
preceding the tenth trading day prior to the relevant date of
determination. The closing price for such days shall be the last
reported sale price regular way or, in case no such reported sale
takes place on such date, the average of the reported closing bid
and asked prices regular way, in either case on the New York
Stock Exchange, Inc., or if the Common Shares are not listed or
admitted to trading on the New York Stock Exchange, Inc., on the
principal national securities exchange on which the Common Shares
are listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the closing sale
price of the Common Shares or in case no reported sale takes
place, the average of the closing bid and asked prices, on NASDAQ
or any comparable system. If the Common Shares are not quoted on
NASDAQ or any comparable system, the Board of Trustees shall in
good faith determine the current market price on such basis as it
considers appropriate.
Distribution. The term "Distribution" or "Distributions"
shall mean any cash or other property paid or payable on or with
respect to any share of beneficial interest, common or preferred,
including, without limitation, any dividend or other
distribution, whether in liquidation or otherwise.
Distribution Payment Date. The term "Distribution Payment
Date" shall have the meaning set forth in Subparagraph (B)(2).
Distribution Period. The term "Distribution Period" shall
mean the period from and including the Initial Issue Date to, but
not including, the first Distribution Payment Date and
thereafter, each quarterly period from and including any
Distribution Payment Date to, but not including, the next
Distribution Payment Date.
Distributions Accrued and Accrued Distributions. The terms
"Distributions Accrued" and "Accrued Distributions" shall mean,
with respect to any class or series of preferred shares of
beneficial interest, an amount which shall be equal to
distributions thereon at the annual distribution rates per share
for the respective class or series thereof from the date or dates
on which such distributions commence to accrue to the end of the
then current distribution period for such preferred shares, less
the amount of all distributions paid, with respect to such
preferred shares for such period from the date such distributions
commenced to accrue.
Excess Amount. The term "Excess Amount" shall have the
meaning set forth in Subparagraph (D)(1).
Excess Shares. The term "Excess Shares" shall have the
meaning set forth in Subparagraph (F)(4).
Four Quarter Preferential Distribution Non-Payment. The
term "Four Quarter Preferential Distribution Non-Payment" shall
have the meaning set forth in Subparagraph (E)(2)(ii).
Initial Issue Date. The term "Initial Issue Date" shall
mean February 27, 1997.
Junior Shares. The term "Junior Shares" shall mean, as the
case may be, (i) the Common Equity and any other class or series
of Shares which is not entitled to receive any distributions in
any Distribution Period unless all distributions required to have
been paid or declared and set apart for payment on the Series B-1
Preferred Shares shall have been so paid or declared and set
apart for payment or (ii) the Common Equity and any other class
or series of Shares which is not entitled to receive any assets
upon liquidation, dissolution or winding up of the affairs of the
Company until the Series B-1 Preferred Shares shall have received
the entire amount to which such Class B Preferred Shares is
entitled upon such liquidation, dissolution or winding up.
Liquidation Preference. The term "Liquidation Preference"
shall mean $25.00 per share.
Notice of Redemption. The term "Notice of Redemption" shall
have the meaning set forth in Subparagraph (G)(2).
Overlapping Period. The term "Overlapping Period" shall
have the meaning set forth in Subparagraph (D)(1).
Parity Shares. The term "Parity Shares" shall mean, as the
case may be, (i) any class or series of Shares which is entitled
to receive payment of distributions on a parity with the Series
B-1 Preferred Shares or (ii) any class or series of Shares which
is entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of the Company on a parity with the
Series B-1 Preferred Shares.
Person. The term "Person" shall mean an individual,
corporation, partnership, estate, trust (including a trust
classified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the
Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company, limited
liability company or other entity, and also includes a group as
that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, but does not include
an underwriter which participates in a public offering of the
Series B-1 Preferred Shares; provided, that such ownership by
such underwriter would not result in the Company being "closely
held" within the meaning of Section 856(h) of the Code, or
otherwise result in the Company failing to qualify as a REIT.
Preferential Distribution Non-Payment. The term
"Preferential Distribution Non-Payment" shall have the meaning
set forth in Subparagraph (E)(2)(ii).
Preferred Shares Trustee. The term "Preferred Shares
Trustee" shall have the meaning set forth in Subparagraph
(E)(2)(ii).
Record Date. The term "Record Date" shall mean the date
designated by the Board of Trustees at the time a distribution is
declared; provided, that such Record Date shall be the first day
of the calendar month in which the applicable Distribution
Payment Date falls or such other date designated by the Board of
Trustees for the payment of distributions that is not more than
ninety (90) days prior to such Distribution Payment Date.
Redemption Date. The term "Redemption Date" shall have the
meaning set forth in Subparagraph (G)(2).
Redemption Distributions. The term "Redemption
Distributions" shall have the meaning set forth in Subparagraph
(G)(1).
REIT. The term "REIT" shall mean a real estate investment
trust under Section 856 of the Code.
Senior Shares. The term "Senior Shares" shall mean, as the
case may be, (i) any class or series of Shares ranking senior to
the Series B-1 Preferred Shares in respect of the right to
receive distributions or (ii) any class or series of Shares
ranking senior to the Series B-1 Preferred Shares in respect of
the right to participate in any distribution upon liquidation,
dissolution or winding up of the affairs of the Company.
Series A Preferred Shares. The term "Series A Preferred
Shares" shall mean the Series A Increasing Rate Cumulative
Convertible Preferred Shares of Beneficial Interest, $.01 par
value per share, of the Company.
Series A-1 Preferred Shares. The term "Series A-1 Preferred
Shares" shall mean the Series A-1 Increasing Rate Cumulative
Convertible Preferred Shares of Beneficial Interest, $.01 par
value per share, of the Company.
Series A Preferred Share Conversion Limit. The term "Series
A Preferred Share Conversion Limit" shall have the meaning set
forth in Subparagraph (D)(6).
Series B-1 Conversion Price. The term "Series B-1
Conversion Price" shall have the meaning set forth in
Subparagraph (D)(1).
Series B-1 Excepted Person. The term "Series B-1 Excepted
Person" shall have the meaning set forth in Subparagraph (F)(5).
Series B-1 Excess Shares. The term "Series B-1 Excess
Shares" shall have the meaning set forth in Subparagraph (F)(4).
Shares. The term "Shares" shall mean any transferable
shares of beneficial interest of the Company of any class or
series.
Six Quarter Preferential Distribution Non-Payment. The term
"Six Quarter Preferential Distribution Non-Payment" shall have
the meaning set forth in Subparagraph (E)(2)(ii).
Special Conversion Event. The term "Special Conversion
Event" shall mean:
(i) Norman M. Kranzdorf ceasing to be any of the
following: (A) Chief Executive Officer, (B) Chief Operating
Officer or (C) any other senior executive officer of the
Company having an active role in such capacity in the
management of the business of the Company;
(ii) the merger or consolidation of the Company with or
into any Person, unless (A) immediately following such
merger or consolidation, more than 50% of the surviving
company's issued and outstanding voting securities are held
by the holders of the Company's issued and outstanding
voting securities immediately prior to such merger or
consolidation and (B) effective provision is made in the
charter documents of the surviving Person or otherwise for
the recognition, preservation and protection of the
preferences, conversion and other rights, voting powers,
restrictions and limitations as to dividends or other
distributions of the Series B-1 Preferred Shares;
(iii) the sale, lease, transfer, spin-off, or other
disposal or distribution of all or substantially all of the
assets of the Company;
(iv) a tender offer or other similar offer for at least
a majority of the voting shares of beneficial interest of
the Company by any Person or group of related Persons for
purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended, is commenced and completed, and as a
result thereof such Person or related group of Persons owns
or controls more than a majority of the issued and
outstanding voting securities of the Company;
(v) with respect to any agreements for, or notes or
other instruments evidencing, borrowed money of the Company
or any of the Subsidiaries for, individually or in the
aggregate, $10,000,000 or more (including as a result of any
cross-default provisions), if (A) the Company or any of the
Subsidiaries defaults in any payment of principal or
interest, (B) a non-monetary default by the Company or any
of the Subsidiaries occurs which is not contested by the
Company or the applicable Subsidiary and is not cured within
any applicable grace period or waived or (C) a non-monetary
default by the Company or any of the Subsidiaries occurs
which is contested by the Company or the applicable
Subsidiary and is not cured within 30 days after it is
determined by a court of competent jurisdiction that the
Company or the applicable Subsidiary has committed such
default, and, in any case, the holders (or trustees on
behalf of such holders) of any indebtedness for borrowed
money of the Company or any of the Subsidiaries for an
aggregate amount of $10,000,000 or more, pursuant to such
agreements, notes or instruments, or any cross-default
provisions contained in any agreements, notes or instruments
representing indebtedness for borrowed money, elect to
accelerate the stated maturity or payment dates of such
indebtedness;
(vi) with respect to any Capital Lease of the Company
or any of the Subsidiaries pursuant to which the Company or
any of the Subsidiaries has rental obligations in an
aggregate amount of $25,000,000 or more over the term of
such Capital Lease (including as a result of any cross-
default provisions), if (A) a default by the Company or any
of the Subsidiaries occurs in any payment of any rental
obligations, (B) a non-monetary default by the Company or
any of the Subsidiaries occurs which is not contested by the
Company or the applicable Subsidiary and is not cured within
any applicable grace period or waived or (C) a non-monetary
default by the Company or any of the Subsidiaries occurs
which is contested by the Company or the applicable
Subsidiary and is not cured within 30 days after it is
determined by a court of competent jurisdiction that the
Company or the applicable Subsidiary has committed such
default, and, in each case, if the lessors of Capital Leases
of the Company or any of the Subsidiaries pursuant to which
the Company or any of the Subsidiaries has rental
obligations in an aggregate amount of $25,000,000 or more
over the term of such Capital Leases, pursuant to such
Capital Leases, or any cross-default provisions contained in
any Capital Leases, elect to accelerate all remaining rental
obligations under such Capital Leases to become due prior to
the stated payment dates thereof;
(vii) the commencement by or against the Company of any
insolvency, bankruptcy, dissolution, liquidation or
receivership proceedings with respect to the Company;
(viii) the loss of the Company's status as a REIT; or
(ix) if the Company shall have failed to pay a
distribution on the outstanding Series B-1 Preferred Shares
for any quarterly Distribution Period within five days of
the Distribution Payment Date therefor.
Subsidiaries. The term "Subsidiaries" shall mean all
corporations, partnerships or other business entities of which
more than 50% of the total voting securities or equity securities
are owned or controlled by the Company.
Total Distributions. The term "Total Distributions" shall
have the meaning set forth in Subparagraph (B)(7).
B. Distributions.
1. The record holders of Series B-1 Preferred Shares shall
be entitled to receive from the Initial Issue Date, when, as and
if authorized by the Board of Trustees, out of assets legally
available for payment of distributions, cumulative cash
distributions at a rate of 9.75% per annum of the Liquidation
Preference per Series B-1 Preferred Share, computed on the basis
of a 360-day year consisting of twelve 30-day months.
2. Distributions on the Series B-1 Preferred Shares shall
accrue and be cumulative from the Initial Issue Date.
Distributions shall be payable quarterly in arrears for each
Distribution Period when, as and if authorized by the Board of
Trustees, on January 20, April 20, July 20 and October 20 of each
year (each, a "Distribution Payment Date"), commencing on the
first Distribution Payment Date following the Initial Issue Date.
If any Distribution Payment Date occurs on a day that is not a
Business Day, any accrued distributions otherwise payable on such
Distribution Payment Date shall be paid on the next succeeding
Business Day. The amount of distributions payable on Series B-1
Preferred Shares for each full Distribution Period shall be
computed by dividing by four the annual distribution rate set
forth in Subparagraph (B)(1). Distributions payable in respect
of any Distribution Period which is less than a full Distribution
Period in length will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Subject to Subparagraph
(D)(1), distributions shall be paid to the record holders of the
Series B-1 Preferred Shares as their names shall appear on the
share records of the Company at the close of business on the
Record Date for such distribution. Subject to Subparagraph
(D)(1), distributions in respect of any past Distribution Periods
that are in arrears may be authorized, declared, set apart for
payment and paid at any time to record holders on the Record Date
therefor. Any distribution payment made on Series B-1 Preferred
Shares shall be first credited against the earliest accrued but
unpaid distribution due which remains payable. Upon issuance,
the Series B-1 Preferred Shares will rank on a parity as to
distributions with the Series A-1 Preferred Shares, the Series B-
2 Preferred Shares and the Series C Preferred Shares.
3. Except as provided in the next sentence, if any Series
B-1 Preferred Shares are outstanding, no distributions (other
than in Junior Shares or Common Shares) shall be authorized,
declared, set apart for payment or paid on any class or series of
Junior Shares or Parity Shares unless all accrued distributions
on the Series B-1 Preferred Shares for all prior Distribution
Periods and the then current Distribution Period have been or
contemporaneously are authorized, declared, set apart for payment
or paid. When distributions are not so paid in full (or a sum
sufficient for such full payment is not so set apart for payment)
upon the Series B-1 Preferred Shares and any other class or
series of Parity Shares, all distributions authorized or declared
upon the Series B-1 Preferred Shares and any such class or series
of Parity Shares shall be authorized or declared pro rata so that
the amount of distributions authorized or declared per share on
the Series B-1 Preferred Shares and such class or series of
Parity Shares shall in all cases bear to each other the same
ratio that accrued and unpaid distributions per share on the
Series B-1 Preferred Shares and such class or series of Parity
Shares bear to each other.
4. Except as provided in Subparagraph (B)(3), unless all
accrued distributions on the Series B-1 Preferred Shares have
been or contemporaneously are authorized, declared, set apart for
payment or paid for all prior Distribution Periods and the then
current Distribution Period, no Junior Shares or Parity Shares
shall 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 Junior Shares
or Common Shares). Holders of the Series B-1 Preferred Shares
shall not be entitled to any distributions, whether payable in
cash, property or Shares, in excess of accrued and cumulative
distributions as herein provided. No interest or sum of money in
lieu of interest shall be payable in respect of any distribution
payment or payments on the Series B-1 Preferred Shares that may
be in arrears.
5. No distribution on Series B-1 Preferred Shares shall be
required to be authorized, declared, set apart for payment or
paid by the Company to the extent such authorization,
declaration, setting apart for payment or payment shall be
restricted or prohibited by law. Notwithstanding that any
distributions on Series B-1 Preferred Shares are restricted or
prohibited by law, such distributions shall accrue and be
cumulative.
6. Distributions on the Series B-1 Preferred Shares, if not
paid on the applicable Distribution Payment Date, will accrue
whether or not distributions are authorized or declared for such
Distribution Payment Date, whether or not the Company has
earnings and whether or not there are assets legally available
for the payment of such distributions.
7. If, for any taxable year, the Board of Trustees elects
to designate as "capital gain dividends" (as defined in Section
857 of the Code) any portion (the "Capital Gains Amount") of the
distributions paid or made available for the year to holders of
all classes of Shares (the "Total Distributions"), then the
portion of the Capital Gains Amount that shall be allocable to
holders of the Series B-1 Preferred Shares shall be the Capital
Gains Amount multiplied by a fraction, the numerator of which
shall be the total distributions paid or made available to the
holders of the Series B-1 Preferred Shares for the year and the
denominator of which shall be the Total Distributions.
C. Distributions Upon Liquidation, Dissolution or Winding Up.
1. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, before
any distribution shall be made to the holders of any Junior
Shares, and subject to the payment or provision or reserve for
payment of the debts and liabilities (whether absolute, accrued,
asserted or unasserted, contingent or otherwise) and the
preferences of Senior Shares, if any, of the Company, the holders
of Series B-1 Preferred Shares shall be entitled to receive, out
of the assets of the Company legally available for payment of
distributions, liquidating distributions in cash (or property at
its fair market value as determined in good faith by the Board of
Trustees (or a combination thereof)) in the amount of the
Liquidation Preference for each Series B-1 Preferred Share plus
an amount equal to all accrued and unpaid distributions pursuant
to Paragraph (B) (whether or not authorized or declared, and
whether or not there would be assets legally available for the
payment of such distributions) to the date of such liquidation,
dissolution or winding up. After payment of the full amount of
the liquidating distributions to which they are entitled pursuant
to this Subparagraph (C)(1), the holders of Series B-1 Preferred
Shares will have no right or claim to any of the remaining assets
of the Company and shall not be entitled to any other
distribution.
2. Notwithstanding any provision in Subparagraph (C)(1) to
the contrary, in the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up of the affairs
of the Company, the assets legally available for payment of
distributions are insufficient to pay (x) the full amount of the
liquidating distributions to which holders of Series B-1
Preferred Shares would otherwise be entitled pursuant to
Subparagraph (C)(1) and (y) the corresponding amounts of the
liquidating distributions to which holders of Parity Shares would
be entitled upon liquidation, dissolution or winding up of the
affairs of the Company, then the holders of the Series B-1
Preferred Shares and the holders of the Parity Shares shall share
ratably in any such distribution of assets in proportion to the
full liquidating distributions to which they otherwise would be
respectively entitled. Upon issuance, the Series B-1 Preferred
Shares will rank on a parity with the Series A-1 Preferred
Shares, the Series B-2 Preferred Shares and the Series C
Preferred Shares as to the distribution of assets upon any
liquidation, dissolution or winding up of the affairs of the
Company.
D. Conversion.
1. Holders of Series B-1 Preferred Shares shall have the
right, exercisable after February 27, 1998 (unless otherwise
exercisable earlier pursuant to this Subparagraph (D)(1)), at any
time and from time to time, to convert all or any Series B-1
Preferred Shares (except that upon any dissolution, liquidation
or winding up of the affairs of the Company the right of
conversion shall terminate at the close of business on the
Business Day fixed for payment of the liquidating distributions
to which holders of Series B-1 Preferred Shares are entitled)
into such number of fully paid Common Shares as is obtained by:
(i) multiplying the number of Series B-1 Preferred Shares to be
converted by $25.00 and (ii) dividing the result by the
conversion price listed below that will be in effect during the
corresponding date of conversion listed below:
Date of Conversion Conversion Price
Prior to the occurrence of Special Conversion Event
February 28, 1998 to and including
February 27, 1999 $ 19.1750
February 28, 1999 to and including
February 27, 2000 $ 18.6875
February 28, 2000 to and including
February 27, 2001 $ 18.2000
February 28, 2001 and thereafter $ 17.7125
At any time after a Special Conversion Event
shall have occurred $ 17.7125
At any time after Notice of Redemption
pursuant to Paragraph (G) hereof $ 16.2500
If, and each time, a conversion price listed above then in effect
(the "Series B-1 Conversion Price") shall be adjusted pursuant to
the terms of these Paragraphs (A) through (N), all of the
conversion prices listed above shall be so adjusted as though
such conversion prices were in effect on the date of adjustment.
The Series B-1 Conversion Price shall be the conversion price as
last adjusted and then in effect. Notwithstanding anything else
to the contrary, (x) after any Special Conversion Event under
clauses (i), (iv), (v), (vi), (vii), (viii) or (ix) of the
definition thereof and (y) immediately prior to any Special
Conversion Event under clauses (ii) or (iii) of the definition
thereof, holders of Series B-1 Preferred Shares shall have the
right, exercisable at any time, to convert, in accordance with
the terms of this Paragraph (D), all or any such Series B-1
Preferred Shares (except that upon any dissolution, liquidation
or winding up of the affairs of the Company the right of
conversion shall terminate at the close of business on the
Business Day fixed for payment of the liquidating distributions
to which holders of Series B-1 Preferred Shares are entitled)
into such number of fully paid Common Shares as is obtained by:
(x) multiplying the number of Series B-1 Preferred Shares to be
converted by $25.00 and (y) dividing the result by $17.7125, as
adjusted pursuant to this Paragraph (D).
Notwithstanding anything to the contrary, during the period
from the date the Company resolves to take any action that would
constitute a Special Conversion Event under clauses (ii) or (iii)
of the definition thereof until the consummation of such Special
Conversion Event, the holders of Series B-1 Preferred Shares
shall have the right to make an election to convert all or any
Series B-1 Preferred Shares conditional upon approval of such
Special Conversion Event by the holders entitled to vote on such
matter, in which case, if such Special Conversion Event is
approved, conversion of such Series B-1 Preferred Shares as to
which a conditional election has been made shall occur
immediately prior to such Special Conversion Event.
In the event that a tender offer or other similar offer
shall have been commenced which if consummated would result in a
Special Conversion Event under clause (iv) of the definition
thereof, holders shall have the right to convert their Series B-1
Preferred Shares pursuant to the terms hereof within the five
business day period prior to the consummation of such tender
offer or other similar offer; provided, however, if such tender
offer or other similar offer is not consummated or, if
consummated, does not result in a Special Conversion Event under
clause (iv) of the definition thereof, then the Company shall
have the right to redeem any and all Common Shares into which any
Series B-1 Preferred Shares were converted pursuant to such
clause (iv) for the same number of Series B-1 Preferred Shares
converted pursuant thereto, upon written notice from the Company
notifying such holder of the election of the Company to redeem
such Series B-1 Preferred Shares stating the number of Common
Shares to be surrendered, the number of Series B-1 Preferred
Shares to be issued therefor and the date and the place(s) where
the certificate(s) representing such Series B-1 Preferred Shares
are to be surrendered. On or after the date specified in such
notice, each such holder shall present and surrender his
certificate or certificates for such Common Shares to the Company
at the place designated in such notice for redemption and
thereupon such holder shall be issued the same number of Series
B-1 Preferred Shares converted and each surrendered certificate
shall be cancelled. From and after the date of issuance of the
number of Series B-1 Preferred Shares set forth in the notice,
(i) all distributions on the Common Shares to be redeemed shall
cease to accrue, and (ii) all rights of the holders thereof as
holders of Common Shares shall cease and terminate, except for
the right to receive the number of Series B-1 Preferred Shares
upon the surrender of Common Shares certificates as set forth in
the notice.
In addition to any other notice required to be given
hereunder, (i) if a Special Conversion Event shall have occurred,
or, (ii) if, prior to February 28, 1998, an Adjustment Event
shall have occurred, the Company shall, within five Business Days
of such occurrence, send notice to all holders of Series B-1
Preferred Shares (1) that the Series B-1 Preferred Shares are
convertible and not subject to any waiting period with respect to
the conversion thereof, (2) of the date as of which the Series B-
1 Preferred Shares became convertible, (3) of the ratio at which
the Series B-1 Preferred Shares are convertible and (4) a
description of the nature of the Special Conversion Event or
Adjustment Event, as the case may be. The Company shall send
notice to all holders of Series B-1 Preferred Shares describing
any action that would constitute a Special Conversion Event under
clauses (ii) or (iii) of the definition thereof, together with a
form of conversion notice, at least 30 calendar days prior to any
vote of holders of the Common Shares required to approve such
action, or, if no such vote is so required, prior to the
consummation of the transaction.
Notwithstanding the surrender of Series B-1 Preferred Shares
for conversion into Common Shares, all accrued distributions with
respect to such Series B-1 Preferred Shares for any past
Distribution Periods that are in arrears at the time of such
conversion shall be paid to the registered holder of such Series
B-1 Preferred Shares in the same manner as if such registered
holder continued to be the registered holder of such converted
Series B-1 Preferred Shares following such conversion or, if upon
conversion of such Series B-1 Preferred Shares there will be no
more Series B-1 Preferred Shares outstanding, then at the time of
such conversion. In addition, if any holder surrenders Series B-
1 Preferred Shares for conversion into Common Shares, such holder
shall be entitled to receive a distribution on such Series B-1
Preferred Shares converted for the portion of the current
Distribution Period such holder owned the Series B-1 Preferred
Shares surrendered for conversion, notwithstanding that the
record date for the distribution payable for the current
Distribution Period may not have occurred, in an amount per
Series B-1 Preferred Share converted equal to the product of (i)
the distribution payable on each Series B-1 Preferred Share
converted for the current Distribution Period, multiplied by (ii)
a fraction, the numerator of which is the number of calendar days
in such Distribution Period elapsed to (but not including) the
date of conversion and the denominator of which is the total
number of calendar days in such Distribution Period.
If any holder surrenders Series B-1 Preferred Shares for
conversion into Common Shares and as a result thereof such holder
is or will be entitled to receive distributions with respect to
both such Series B-1 Preferred Shares converted and such Common
Shares into which such Series B-1 Preferred Shares were converted
for the same period of time (the "Overlapping Period"), then, at
the time of and as a condition precedent to such conversion (or,
if at the time of such conversion the amount of the distribution
with respect to such Common Shares has not yet been determined,
at the time of such determination), the Company shall withhold
from any distribution payable on such Series B-1 Preferred Shares
converted, an amount equal to the Excess Amount (defined below),
if any. If the amount of any distribution payable on such Series
B-1 Preferred Shares converted shall not be sufficient to pay any
Excess Amount, such holder hereby authorizes the Company to
withhold from any distribution payable to such holder on any
Series B-1 Preferred Shares owned by such holder or, to the
extent permissible, on any Common Shares owned by such holder, an
amount equal to the Excess Amount. "Excess Amount" shall mean an
amount equal to the product of (i) the sum of the distributions
payable on each Common Share into which such Series B-1 Preferred
Shares were converted for the distribution period relating to the
Common Shares in which the Overlapping Period occurs, multiplied
by (ii) a fraction, the numerator of which is the number of
calendar days in the Overlapping Period and the denominator of
which is the total number of calendar days in such distribution
period relating to the Common Shares in which the Overlapping
Period occurs.
2. Any holder of one or more Series B-1 Preferred Shares
electing to convert such Share or Shares shall deliver the
certificate or certificates therefor to the principal office of
the transfer agent for the Common Shares, with the form of notice
of election to convert prescribed by the Company fully completed
and duly executed and (if so required by the Company or any
conversion agent) accompanied by instruments of transfer in form
reasonably satisfactory to the Company and to any conversion
agent, duly executed by the registered holder or his duly
authorized attorney, and any payments (or evidence of payment)
required pursuant to Subparagraph (D)(4). The conversion right
with respect to any such Series B-1 Preferred Shares shall be
deemed to have been exercised on the date upon which the last of
the conditions for conversion provided in this Subparagraph
(D)(2) have been satisfied by the holder of such Series B-1
Preferred Shares, and the Person or Persons entitled to receive
the Common Shares issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such Common
Shares on such date.
3. No fractional Common Share or scrip representing a
fractional Common Share shall be issued upon conversion of Series
B-1 Preferred Shares. If more than one Series B-1 Preferred
Share shall be surrendered for conversion on any day by the same
holder, the number of full Common Shares which shall be issuable
upon conversion thereof shall be computed on the basis of the
aggregate number of Series B-1 Preferred Shares so surrendered by
such holder on such day. Instead of any fractional Common Share
which would otherwise be issuable upon conversion of any Series
B-1 Preferred Shares, the Company shall pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction
of the Current Market Price per Common Share.
4. If a holder converts Series B-1 Preferred Shares, the
Company shall pay, at the time of and as a condition precedent to
conversion, any documentary, stamp or similar issue or transfer
tax due on the issuance of Common Shares upon the conversion.
The holder, however, shall pay to the Company the amount of any
tax which is due (or shall establish to the satisfaction of the
Company payment thereof) if the shares are to be issued in a name
other than the name of the Person in whose name such Series B-1
Preferred Shares are registered.
5. The Company shall reserve and shall at all times keep
reserved out of its authorized but unissued Common Shares a
sufficient number of Common Shares to permit the conversion of
the then outstanding Series B-1 Preferred Shares that may then be
converted. All Common Shares which may be issued upon conversion
of Series B-1 Preferred Shares shall be validly issued and fully
paid, and not subject to preemptive or other similar rights. In
order that the Company may issue Common Shares upon conversion of
Series B-1 Preferred Shares, the Company will endeavor to comply
with all applicable Federal and State securities laws and will
endeavor to list such Common Shares to be issued upon conversion
on each securities exchange on which the Common Shares are
listed.
The Series B-1 Preferred Shares converted pursuant to the
provisions of this Paragraph (D) shall thereupon be retired and
may not be reissued as Series B-1 Preferred Shares but shall
thereafter have the status of authorized but unissued Shares.
6. The conversion rate in effect at any time shall be
subject to adjustment from time to time upon the happening of
certain events as follows:
(i) Distribution of Common Shares; Reclassification;
Subdivision; Combination. In case the Company shall (1) pay
a dividend payable in, effect a split up of, or make any
other distribution in, Common Shares to holders of the
Common Shares, (2) reclassify the outstanding Common Shares
into Shares of some other class or series of Shares, (3)
subdivide the outstanding Common Shares into a greater
number of Common Shares or (4) combine the outstanding
Common Shares into a smaller number of Common Shares, the
conversion rate immediately prior to such action shall be
adjusted so that the holder of any Series B-1 Preferred
Shares thereafter surrendered for conversion shall be
entitled to receive the number of Common Shares which he
would have owned immediately following such action had such
Series B-1 Preferred Shares been converted immediately prior
thereto. An adjustment made pursuant to this Subparagraph
(D)(6)(i) shall become effective immediately after the
record date in the case of a distribution and shall become
effective immediately after the effective date in the case
of a reclassification, subdivision or combination.
(ii) Issuance of Additional Common Equity. (A) If the
Company shall issue to a Person who is not a Company
Affiliate (as defined below) at the time of issuance any
Additional Common Equity (as defined below) at a price per
share less than 85% of the Current Market Price per Common
Share then in effect on the date of such issuance, then the
number of Common Shares into which each Series B-1 Preferred
Share shall be convertible shall be adjusted so that the
same shall be equal to the number determined by multiplying
the number of Common Shares into which such Series B-1
Preferred Share was convertible immediately prior to such
issuance by a fraction of which the numerator shall be the
number of shares of Common Equity outstanding immediately
prior to such issuance plus the number of shares of
Additional Common Equity offered, and of which the
denominator shall be the number of shares of Common Equity
outstanding immediately prior to such issuance plus the
number of shares of Common Equity which the aggregate
offering price of the Additional Common Equity offered would
purchase at such Current Market Price per Share. Such
adjustments shall become effective immediately after such
issuance.
(B) If the Company shall issue to a Person who is a
Company Affiliate at the time of issuance, in any one or a
series of related transactions, any Additional Common Equity
at a price per share less than the Current Market Price per
Common Share then in effect on the date of such issuance,
then the number of Common Shares into which each Series B-1
Preferred Share shall be convertible shall be adjusted so
that the same shall be equal to the number determined by
multiplying the number of Common Shares into which such
Series B-1 Preferred Share was convertible immediately prior
to such issuance by a fraction of which the numerator shall
be the number of shares of Common Equity outstanding
immediately prior to such issuance plus the number of shares
of Additional Common Equity offered, and of which the
denominator shall be the number of shares of Common Equity
outstanding immediately prior to such issuance plus the
number of shares of Common Equity which the aggregate
offering price of the Additional Common Equity offered would
purchase at such Current Market Price per Share. Such
adjustments shall become effective immediately after such
issuance.
"Additional Common Equity" shall mean all Common Equity
issued by the Company except: (1) the Common Shares issued
upon conversion of the Series B-1 Preferred Shares; (2) the
Common Equity issued upon conversion of any Senior Shares,
Parity Shares, Common Share Equivalents or any other shares
of beneficial interest which, by their terms, are
convertible into Common Equity and (a) which were
outstanding on November 12, 1996, (b) for which no
adjustment pursuant to this Subparagraph (D)(6) was required
at the time of issuance or the time of any amendment or
change thereto or (c) for which an adjustment is provided
for in another provision of this Paragraph (D)(6); (3) up to
an aggregate of 250,000 shares of Common Equity and shares
of Common Equity into which Common Share Equivalents are
exercisable, exchangeable or convertible, in each case
issued to Affiliates of the Company from and after November
12, 1996, at a price per share less than the Current Market
Price per Common Share then in effect on the date of such
issuance, including, without limitation, shares of Common
Equity or Common Share Equivalents issued to directors,
officers, employees, or trustees of the Company or any
Subsidiary of the Company and those issued pursuant to stock
option, stock purchase, performance or other remuneration
plans adopted by the Board of Trustees from time to time
(including, without limitation, the Company's 1992 Employee
Share Option Plan, 1992 Trustee Share Option Plan and 1995
Management Incentive Plan; (4) the issuance of shares of
Common Equity under any circumstances for which an
adjustment is provided in Subparagraph (D)(6)(i); or (5)
Common Equity issued pursuant to a dividend reinvestment
plan or stock purchase plan available to all holders of
Common Equity.
"Company Affiliate" shall mean, with respect to any issuance
of Additional Common Equity, (i) any trustee, director,
officer or employee of the Company or of any subsidiary of
the Company, (ii) any Person that is the direct or indirect
owner of more than five percent of the issued and
outstanding Common Equity of the Company, (iii) any Person
that controls, is controlled by or is under common control
with, the Company, (iv) any trustee, director, officer,
employee or family member of any Person listed in clauses
(i), (ii) or (iii) of this definition or (v) any Person with
respect to which any Person listed in clauses (i) through
(iv) of this definition is a director, officer or the direct
or indirect owner of more than ten percent of the issued and
outstanding equity securities of such Person immediately
prior to any such issuance.
"Common Share Equivalent" shall mean any evidence of
indebtedness, shares of stock or beneficial interest (other
than Series B-1 Preferred Shares) or other securities which
are or may be convertible into or exchangeable for
Additional Common Equity ("Convertible Securities"), or any
warrant, option or other right to subscribe for any
Convertible Securities or for any Additional Common Equity.
For purposes of this Subparagraph (D)(6)(ii), the number of
Common Equity at any time outstanding shall not include
Common Equity held in the treasury of the Company.
(iii) Issuance of Common Share Equivalents. (A) If the
Company shall issue to a Person who is not a Company
Affiliate at the time of issuance any Common Share
Equivalent and the aggregate of the price per Common Share
Equivalent and the price per share for which shares of
Additional Common Equity may be issuable thereafter pursuant
to such Common Share Equivalent shall be below an amount
equal to 85% of the Current Market Price per Common Share on
the record date for determination of the holders of the
Common Shares entitled to receive such issue, or, if, after
any such issuance, the price per share for which shares of
Additional Common Equity may be issuable thereafter is
amended or changed and the aggregate of such price, as so
amended or changed, and the price per Common Share
Equivalent, shall be below an amount equal to 85% of the
Current Market Price per Common Share at the effective time
of such amendment or change, then the number of Common
Shares into which each Series B-1 Preferred Share shall be
convertible shall be adjusted so that the same shall be
equal to the number determined by multiplying the number of
Common Shares into which such Series B-1 Preferred Share was
convertible immediately prior to such record date by a
fraction of which the numerator shall be the number of
Common Shares outstanding on such record date plus the
number of Common Shares into which, or for which, the Common
Share Equivalents so offered are convertible or exercisable,
and of which the denominator shall be the number of Common
Shares outstanding on such record date plus the number of
Common Shares which the aggregate offering price of the
Common Shares into which, or for which, the Common Share
Equivalents so offered are convertible or exercisable would
purchase at such Current Market Price per Common Share.
Such adjustments shall become effective immediately after
such record date.
(B) If the Company shall issue to a Person who is a
Company Affiliate at the time of issuance, in any one or a
series of related transactions, any Common Share Equivalents
and the aggregate of the price per Common Share Equivalent
and the price per share for which shares of Additional
Common Equity may be issuable thereafter pursuant to such
Common Share Equivalent shall be below an amount equal to
the Current Market Price per Common Share on the date of
issue, or, if, after any such issuance, the price per share
for which shares of Additional Common Equity may be issuable
thereafter is amended or changed and the aggregate of such
price, as so amended or changed, and the price per Common
Share Equivalent, shall be below an amount equal to the
Current Market Price per Common Share at the effective time
of such amendment or change, then the number of Common
Shares into which each Series B-1 Preferred Share shall be
convertible shall be adjusted so that the same shall be
equal to the number determined by multiplying the number of
Common Shares into which such Series B-1 Preferred Share was
convertible immediately prior to such record date by a
fraction of which the numerator shall be the number of
Common Shares outstanding on such record date plus the
number of Common Shares into which, or for which, the Common
Share Equivalents so offered are convertible or exercisable,
and of which the denominator shall be the number of Common
Shares outstanding on such record date plus the number of
Common Shares which the aggregate offering price of the
Common Shares into which, or for which, the Common Share
Equivalents so offered are convertible or exercisable would
purchase at such Current Market Price per Common Share.
Such adjustments shall become effective immediately after
such issuance.
(iv) Conversion of Series A Preferred Shares or Series
A-1 Preferred Shares. Notwithstanding anything to the
contrary contained in this Subparagraph (D)(6), if the
aggregate number of Common Shares into which the Series A
Preferred Shares or Series A-1 Preferred Shares are
converted exceeds 500,000 Common Shares, subject to
adjustment pursuant to Subparagraph (D)(6)(i) (the "Series A
Conversion Limit"), then the number of Common Shares into
which each Series B-1 Preferred Share shall be convertible
shall be adjusted so that the holder of any Series B-1
Preferred Shares thereafter surrendered for conversion shall
be entitled to receive such number of Common Shares as would
have been received by such holder of Series B-1 Preferred
Shares having the same percentage of the then outstanding
Common Shares upon such conversion as such holder would have
received upon conversion if the aggregate number of Common
Shares into which the Series A Preferred Shares or Series A-
1 Preferred Shares were converted equalled the Series A
Conversion Limit at the time of conversion of such Series B-
1 Preferred Shares.
(v) Additional Adjustments. In the event that the
Company shall issue to Affiliates of the Company in excess
of an aggregate of 250,000 shares of Common Equity and
shares of Common Equity into which Common Share Equivalents
are exercisable, exchangeable or convertible, in each case
which are issued from and after November 12, 1996, at a
price per share less than the Current Market Price per
Common Share then in effect on the date of such issuance,
then the calculation of the number of Common Shares into
which each Series B-1 Preferred Share is convertible shall
be adjusted pursuant to the provisions of this Subparagraph
(D)(6) for each such shares of Common Equity and Common
Share Equivalents to Affiliates of the Company at a price
per share less than the Current Market Price per Common
Share then in effect on the date of such issuance.
(vi) Limitation of Adjustments. For purposes of this
Subparagraph (D)(6), the number of Common Shares or Common
Equity at any time outstanding shall not include Common
Shares or Common Equity held in the treasury of the Company.
No adjustment of the Series B-1 Conversion Price shall be
made under Subparagraph (D)(6)(iii), (1) upon the issuance
of any Convertible Security which is issued pursuant to the
exercise of any warrants or rights, if any adjustment shall
previously have been made in the Series B-1 Conversion Price
then in effect upon the issuance of such warrants or other
rights pursuant to Subparagraph (D)(6)(iii) or otherwise
pursuant to this Subparagraph (D)(6) or (2) upon the
issuance of the Series A-1 Preferred Shares in exchange for
all or any of the issued and outstanding Series A Preferred
Shares.
(vii) Additional Distributions. If the Company shall
make a dividend or distribution of securities (other than
Common Shares or Common Share Equivalents) or other property
to the holders of Junior Shares and not to the holders of
the Series B-1 Preferred Shares, then, unless the holders of
the Series B-1 Preferred Shares are entitled to receive such
distribution at a later time upon conversion of the Series
B-1 Preferred Shares and such distribution has been set
aside for such later distribution, each holder of Series B-1
Preferred Shares shall receive at the time of payment or
issuance of such dividend or distribution, without payment
or any consideration therefor, such securities or other
property which he would have owned immediately following
such dividend or distribution had such holder's Series B-1
Preferred Shares been converted immediately prior thereto;
and an appropriate provision therefor shall be made a part
of any such dividend or distribution.
(viii) Computation of Consideration. In making
adjustments to the Series B-1 Conversion Price pursuant to
this Subparagraph (D)(6), the consideration received by the
Company shall be deemed to be the following: to the extent
that any Additional Common Equity, any Common Share
Equivalents or rights shall be issued for a cash
consideration, the consideration received by the Company
therefor, or, if such Additional Common Equity or Common
Share Equivalents are offered by the Company for
subscription, the subscription price paid to and received by
the Company, or, if such Additional Common Equity or Common
Share Equivalents are sold to underwriters or dealers for
public offering without a subscription offering, the initial
public offering price, in each such case excluding any
amounts paid or receivable for accrued interest or accrued
dividends and without deduction of any compensation,
discounts, commissions or expenses paid or incurred by the
Company for and in the underwriting of, or otherwise in
connection with, the issue thereof; to the extent that such
issuance shall be for a consideration other than cash, then,
except as herein otherwise expressly provided, the
consideration received by the Company shall be the fair
market value of such consideration at the time of such
issuance as determined in good faith by the Board of
Trustees. The consideration for any Additional Common
Equity issuable pursuant to any Common Share Equivalents
shall be the consideration received by the Company for
issuing such Common Share Equivalents, plus the additional
consideration payable to the Company upon the exercise,
conversion or exchange of such Common Share Equivalents. In
the case of the issuance at any time of any Additional
Common Equity or Common Share Equivalents in payment or
satisfaction of any dividend upon any class of stock other
than Common Shares, the Company shall be deemed to have
received for such Additional Common Equity or Common Share
Equivalents a consideration equal to the amount of such
dividend so paid or satisfied. In any case in which the
consideration to be received or paid shall be other than
cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value
of such consideration as determined in good faith by the
Board of Trustees, without deduction of any expenses
incurred or any underwriting commissions or concessions paid
or allowed by the Company in connection therewith.
7. No adjustment in the conversion rate shall be required
until cumulative adjustments result in a change of 1% or more of
the conversion price as in effect prior to the last adjustment of
the conversion rate; provided, that any adjustment which by
reason of this Subparagraph (D)(7) is not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Paragraph (D) shall be
rounded up to the nearest cent ($.01) or to the nearest one-
thousandth (1/1000) of a share, as the case may be. No
adjustment to the conversion rate shall be made for cash
dividends.
8. In the event that, as a result of an adjustment made
pursuant to Subparagraph (D)(6), the holder of any Series B-1
Preferred Shares thereafter surrendered for conversion shall
become entitled to receive any Shares other than Common Shares,
thereafter the number of such Shares so receivable upon
conversion of any Series B-1 Preferred Shares shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Common Shares contained in this Paragraph (D).
9. The Company may make such increases in the number of
Common Shares to be received upon the conversion of Series B-1
Preferred Shares, in addition to those required by Subparagraph
(D)(6), as is considered to be advisable by the Board of Trustees
in order that any event treated for Federal income tax purposes
as a distribution of shares or share rights shall not be taxable
to the recipients thereof.
10. Whenever the conversion rate is adjusted, the Company
shall, in addition to any notice required to be delivered
pursuant to Subparagraphs (D)(1) or (D)(11), promptly, but in no
event later than ten days following such adjustment, send notice
to all holders of Series B-1 Preferred Shares of the adjustment
and shall cause to be prepared a certificate signed by the
principal financial officer of the Company setting forth, in
reasonable detail, the adjusted conversion rate and a brief
statement of the facts requiring such adjustment and the
computation thereof (including a description of the basis on
which the Board of Trustees made any determination relating to
such adjustment); such certificate shall forthwith be filed with
each transfer agent for the Series B-1 Preferred Shares.
11. Each holder of Series B-1 Preferred Shares shall be
entitled to all notices, including notice of the record dates for
any votes with respect to the Common Shares, delivered to holders
of Common Shares. In addition, in the event that:
(i) the Company resolves to take any action which, if
it were to occur, would require an adjustment in the
conversion rate, or takes such action, or
(ii) the Company resolves to take any action which, if
it were to occur, would constitute a Special Conversion
Event, or a Special Conversion Event occurs,
a holder of Series B-1 Preferred Shares, if it has a right to
convert, may wish to convert, at the applicable conversion ratio,
some or all of such shares into Common Shares prior to the record
date for, or the effective date of, the transaction so that it
may receive the rights, warrants, securities or assets which a
holder of Common Shares on that date may receive. Therefore, the
Company shall, in addition to any notice required to be delivered
pursuant to Subparagraphs (D)(1) or (D)(10), send notice to all
holders of Series B-1 Preferred Shares stating the proposed
record or effective date of the transaction described in clauses
(ii) or (iii) of the definition of Special Conversion Event at
least 30 days before such date.
In the event (a) that the Company shall authorize the
granting to holders of Common Shares of rights to subscribe for
or purchase any shares of beneficial interest of any class or of
any other rights or (b) of any capital reorganization or
reclassification of the shares of beneficial interest of the
Company, then the Company shall provide to the holders of the
Series B-1 Preferred Shares prompt notice stating (i) the date on
which a record is to be taken for the purpose of such
distribution or subscription rights, or, if a record is not to be
taken, the date as of which the holders of Common Shares of
record would be entitled to such distribution or subscription
rights or (ii) the date on which a capital reorganization or
reclassification is expected to become effective.
12. In case of (i) any reclassification of outstanding
Common Shares issuable upon conversion of Series B-1 Preferred
Shares, or (ii) any consolidation or merger of the Company with
or into another corporation (other than a merger with another
corporation in which the Company is the surviving corporation and
which does not result in any reclassification of outstanding
Common Shares issuable upon such conversion), the rights of the
holders of the outstanding Series B-1 Preferred Shares shall be
adjusted in the manner described below:
(i) In the event that the Company is the surviving
corporation, each Series B-1 Preferred Share shall, without
payment of additional consideration therefor, be deemed
modified so as to provide that upon conversion of each
Series B-1 Preferred Share, the holder thereof shall
receive, in lieu of each Common Share theretofore issuable
upon such conversion, the kind and amount of shares of
stock, other securities, money and property receivable upon
such reclassification, consolidation or merger by the holder
of one Common Share issuable upon such conversion had such
conversion occurred immediately prior to such
reclassification, consolidation or merger. Such Series B-1
Preferred Share shall be deemed to provide for adjustments
which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Subparagraph (D)(12).
The provisions of this Subparagraph (D)(12)(i) shall
similarly apply to successive reclassifications,
consolidations and mergers.
(ii) In the event that the Company is not the surviving
corporation, (A) effective provision shall be made in the
charter documents of the surviving Person or otherwise for
the recognition, preservation and protection of the
preferences, conversion and other rights, voting powers,
restrictions and limitations as to dividends or other
distributions of the Series B-1 Preferred Shares or (B) the
surviving corporation shall, without payment of any
additional consideration therefor, issue new Series B-1
Preferred Shares providing that, upon conversion thereof,
the holder thereof shall receive, in lieu of each Common
Share theretofore issuable upon conversion of the Series B-1
Preferred Shares, the kind and amount of shares of stock,
other securities, money and property receivable upon such
reclassification, consolidation or merger by the holder of
one Common Share issuable upon conversion of the Series B-1
Preferred Shares had such conversion occurred immediately
prior to such reclassification, consolidation or merger.
Such new Series B-1 Preferred Shares shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this
Subparagraph (D)(12)(ii). The provisions of this
Subparagraph (D)(12)(ii) shall similarly apply to successive
reclassifications, consolidations and mergers.
A change in par value, or from par value to no par value, or
from no par value to par value, or a change as a result of a
subdivision or combination, shall not be deemed a
reclassification for purposes of these Paragraphs (A) through
(N).
E. Voting Rights.
1. The holders of Series B-1 Preferred Shares shall not be
entitled to vote at, or participate in, any meeting of
shareholders of the Company, and shall have no other right to
vote, except (i) as provided in Paragraph (L), (ii) as provided
in Subparagraph (E)(2), or (iii) as required by law.
2. (i) (A) If (x) the Company shall have failed to pay the
distributions on the outstanding Series B Preferred Shares for
any two quarterly Distribution Periods (whether or not
consecutive) or (y) a Special Conversion Event shall have
occurred (notwithstanding that such Special Conversion Event at
any time thereafter no longer continues), the holders of the
Series B Preferred Shares shall immediately and at all times
thereafter vote together with the holders of the Common Shares as
a single class on all actions to be taken by the holders of the
Common Shares. Each holder of Series B Preferred Shares shall be
entitled to such number of votes as shall equal the number of
Common Shares into which his Series B Preferred Shares are then
convertible, and be entitled to notice of all shareholder
meetings with respect to which the holders of Common Shares are
then entitled.
(B) If the Company resolves to take any action that would
constitute a Special Conversion Event under clauses (ii) or (iii)
of the definition thereof, and if the holders of the Common
Shares are entitled to vote on such Special Conversion Event,
then the holders of the Series B Preferred Shares shall be
entitled to vote together with the holders of the Common Shares
as a single class on such Special Conversion Event. Each holder
of Series B Preferred Shares shall be entitled to such number of
votes as shall equal the number of Common Shares into which his
Series B Preferred Shares are then convertible, and be entitled
to notice of all shareholder meetings with respect to which the
holders of Common Shares are then entitled with respect to such
resolution.
(ii) If the Company shall have failed to authorize and pay
or declare and set apart for payment the distributions
accumulated on the outstanding Series B Preferred Shares (A) for
any four quarterly Distribution Periods (a "Four Quarter
Preferential Distribution Non-Payment"), the number of trustees
of the Board of Trustees shall be increased by one and the
holders of the outstanding Series B Preferred Shares, voting
together as a separate class, shall be entitled to elect one
additional trustee to the Board of Trustees (a "Preferred Shares
Trustee") and (B) for any six quarterly Distribution Periods (a
"Six Quarter Preferential Distribution Non-Payment"; each of a
Six Quarter Preferential Distribution Non-Payment and a Four
Quarter Preferential Distribution Non-Payment shall be referred
to herein as a "Preferential Distribution Non-Payment"), the
number of trustees of the Board of Trustees shall be increased by
one additional trustee and the holders of the outstanding Series
B Preferred Shares, voting together as a separate class, shall be
entitled to elect a second Preferred Shares Trustee, until the
full distributions accumulated on all outstanding Series B
Preferred Shares for such four or six, as the case may be,
quarterly Distribution Periods have been authorized and paid or
declared and set apart for payment.
The right of the holders of Series B Preferred Shares to
elect a Preferred Shares Trustee may be exercised at any annual
meeting of shareholders, or, within the limitations hereinafter
provided, at a special meeting of holders of Series B Preferred
Shares held for such purpose. At any time after such voting
power shall have so vested in the holders of Series B Preferred
Shares, the Board of Trustees shall, at the request of holders of
record of at least 25% of the Series B Preferred Shares then
outstanding, call a special meeting of the holders of Series B
Preferred Shares for the election of the Preferred Shares Trustee
to be elected by the holders of Series B Preferred Shares, to be
held within 90 days after such call and at the place and upon the
notice provided by law and in the By-laws for the holding of
meetings of shareholders; provided, however, that the Board of
Trustees shall not be required to call such special meeting in
the case of any such request received less than 90 days before
the date fixed for any annual meeting of shareholders. At any
meeting so called or at any annual meeting, (a) holders of a
majority of the outstanding Series B Preferred Shares, voting
together as a separate class, in person or by proxy, shall be
sufficient to constitute a quorum for the election of a Preferred
Shares Trustee as provided in this Subparagraph (E)(2)(ii), and
(b) holders of a plurality of the outstanding Series B Preferred
Shares, voting together as a separate class, shall have the power
to elect a Preferred Shares Trustee. If any such special meeting
required to be called as above provided shall not be called by
the Board of Trustees within 90 days of a request pursuant to
this Subparagraph (E)(2)(ii), then the holders of record of at
least 25% of the Series B Preferred Shares then outstanding may
designate in writing one of their number to call such meeting,
and the person so designated may, at the Company's expense, call
such meeting to be held at the place and upon the notice above
provided. No such special meeting and no adjournment thereof
shall be held on a date later than 30 days before the annual
meeting of the shareholders or a special meeting held in place
thereof next succeeding the time when the holders of Series B
Preferred Shares become entitled to elect a Preferred Shares
Trustee as above provided. No Preferred Shares Trustee elected
by the holders of the Series B Preferred Shares may be removed
except by the vote of the holders of a majority of the
outstanding Series B Preferred Shares, voting together as a
separate class, in person or by proxy, at a meeting called for
such purpose. So long as a Preferential Distribution Non-Payment
shall continue, if a Preferred Shares Trustee who has been
elected by the holders of Series B Preferred Shares to serve on
the Board of Trustees shall no longer serve on the Board of
Trustees by reason of resignation, death or removal, such vacancy
shall be filled by holders of a plurality of the outstanding
Series B Preferred Shares, voting together as a separate class,
at a meeting called in accordance with the provisions of this
Subparagraph (E)(2)(ii).
If and when all accumulated distributions on the Series B
Preferred Shares have been authorized and paid or declared and
set apart for payment, the holders of the Series B Preferred
Shares shall be divested of the special voting rights provided by
this Subparagraph (E)(2), subject to revesting in the event of
each and every subsequent Four Quarter Preferential Distribution
Non-Payment or Six Quarter Preferential Distribution Non-Payment,
as the case may be. Upon termination of such special voting
rights attributable to all holders of the Series B Preferred
Shares, the term of office of the Preferred Shares Trustee or
Trustees shall forthwith terminate and the number of trustees
constituting the entire Board of Trustees shall be reduced by one
or two, as the case may be.
3. So long as any Series B Preferred Shares are
outstanding, the number of trustees constituting the entire Board
of Trustees shall at all times be such that the exercise, by the
holders of the Series B Preferred Shares of the right to elect a
Preferred Shares Trustee under the circumstances provided for in
Subparagraph (E)(2) will not contravene any provision of the
Declaration of Trust restricting the number of trustees which may
constitute the entire Board of Trustees.
4. A Preferred Shares Trustee elected pursuant to
Subparagraph (E)(2) shall serve until the earlier of (x) the next
annual meeting of the shareholders of the Company and the
election (by the holders of the Series B Preferred Shares) and
qualification of his successor or (y) the termination of the
special voting rights as provided for in Subparagraph (E)(2).
F. Trustees' Right to Refuse to Transfer Series B-1 Preferred
Shares; Limitation on Holdings.
1. The terms and provisions of this Paragraph (F) shall
apply in addition to, and not in limitation of, the terms and
provisions of Section 6.6 of the Declaration of Trust.
2. Each Person who owns directly or indirectly more than
five percent in number or value of the total Shares outstanding
shall, by January 30 of each year, give written notice to the
Company stating the Person's name and address, the number of
Shares directly or indirectly owned by such Person, and a
description of the capacity in which such Shares are held. For
purposes of this Paragraph (F), the number and value of the total
Shares outstanding shall be determined by the Board of Trustees
in good faith, which determination shall be conclusive for all
purposes hereunder. In addition, each direct or indirect holder
of Shares, irrespective of such shareholder's percentage
"ownership" of outstanding Shares, shall upon demand disclose to
the Company in writing such information with respect to the
direct or indirect ownership of Shares as the Board of Trustees
deems reasonably necessary from time to time to enable the Board
of Trustees to determine whether the Company complies with the
REIT Provisions of the Code (as defined in Section 1.5 of the
Declaration of Trust), to comply with the requirements of any
taxing authority or governmental agency or to ensure or ascertain
compliance with this Paragraph (F). For purposes of this
Paragraph (F), "ownership" shall be as defined in Subparagraph
(F)(11).
3. If, in the opinion of the Board of Trustees, which shall
be binding upon any prospective acquiror of Series B-1 Preferred
Shares, any proposed transfer or issuance would jeopardize the
status of the Company as a REIT under the REIT Provisions of the
Code, the Board of Trustees shall have the right, but not the
duty, to refuse to permit such transfer or issuance or refuse to
give effect to such transfer or issuance and to take any action
to cause any such transfer not to occur or to void any such
issuance.
4. As a condition to any transfer and/or registration of
transfer on the books of the Company of any Series B-1 Preferred
Shares which could result in direct or indirect ownership of
Shares exceeding 9.8% of the lesser of the number or the value of
the total Shares (such excess shares, the "Excess Shares") by a
Person other than a Series B-1 Excepted Person, such prospective
transferee shall give written notice to the Company of the
proposed transfer and shall furnish such opinions of counsel,
affidavits, undertakings, agreements and information as may be
required by the Board of Trustees no later than the 15th day
prior to any transfer which, if consummated, would result in such
ownership. On each date of determination, the calculation of the
number of the total Shares outstanding on such date shall be made
assuming the conversion or exercise of all Series B-1 Preferred
Shares, Common Share Equivalents and Convertible Securities of
such transferee on the date of determination in accordance with
the terms of these Paragraphs (A) through (N).
5. Any transfer or issuance of Series B-1 Preferred Shares
that would (i) create a direct or indirect owner of Excess Shares
other than a Series B-1 Excepted Person; or (ii) result in the
Company being "closely held" within the meaning of Section 856(h)
of the Code, shall be void ab initio and the prospective acquiror
shall not be entitled to any rights afforded to owners of Series
B-1 Preferred Shares hereunder and shall be deemed never to have
had an interest therein.
"Series B-1 Excepted Person" shall mean (i) any Person
defined as an "Excepted Person" pursuant to the Declaration of
Trust, (ii) any Person approved prior to the Initial Issue Date
by the Board of Trustees, (iii) any Person approved after the
Initial Issue Date by the Board of Trustees, at its option and in
its sole discretion, and (iv) each Person listed below, for so
long as its direct or indirect ownership of Shares, individually
or in the aggregate, in any combination, with those of any or all
other Persons listed below, do not and could not exceed, the
number of Shares or the percentage set forth below of the lesser
of the number or the value of the Shares outstanding.
Notwithstanding anything contained in these Paragraphs (A)
through (N) to the contrary, the Board of Trustees shall not
grant approval to any Person, and no Person shall be or be deemed
a Series B-1 Excepted Person, if such Person's direct or indirect
ownership of Series B-1 Excess Shares would or could result,
directly, indirectly or as a result of attribution of ownership,
in termination of the status of the Company as a REIT under the
REIT provisions of the Code.
Names of Series B-1 Aggregate Number of Shares
Excepted Persons or Percentage For All Such
Excepted Persons Combined
- - -------------------- -------------------------
Robert A. Mandor, Leonard S. The maximum number of shares
Mandor, Mill Neck Associates, of beneficial interest of the
B.&L. Associates, L.L.C. and/or Company, into which such
Mountain View Mall, Inc. and/or holders' Series B-1 Preferred
their affiliates. Shares and Series B-2
Preferred Shares are then
convertible, plus 33,200
Common Shares, less any shares
of benefical interest of the
Company transferred by any
such holders to any Person who
is not one of the Series B-2
Excepted Persons listed
herein, but in no event less
than 9.8%.<PAGE>
6. The Company, by notice to the holder, transferor or
transferee thereof, as the case may be, may purchase any or all
Excess Shares (i) that are or proposed to be transferred in
violation of any of the provisions hereof or (ii) that are or
proposed to be transferred pursuant to a transfer which, in the
opinion of the Board of Trustees (which shall be binding upon any
proposed transferor or transferee of Series B-1 Preferred
Shares), would result in any Person acquiring Series B-1 Excess
Shares, or would otherwise jeopardize the status of the Company
as a real estate investment trust under the REIT Provisions of
the Code. The Company shall have the power, by lot or other
means deemed equitable by the Board of Trustees in its sole
discretion, to purchase such Series B-1 Excess Shares. The
purchase price for each Series B-1 Excess Share shall be equal to
the greatest of (i) the average of the closing prices for a
Series B-1 Preferred Share for the thirty trading days preceding
the day on which notice of such proposed transfer is sent, (ii)
the product of (x) the average of the closing prices for a Common
Share for the thirty trading days preceding the day on which
notice of such proposed transfer is sent and (y) the number
(including fractions) of Common Shares into which such Series B-1
Preferred Share may be converted on such day and (iii) the sum of
(x) the Liquidation Preference for such Series B-1 Preferred
Share and (y) the accrued and unpaid distributions on such Series
B-1 Preferred Share. The closing price for such days shall be
the last reported sale price regular way or, in case no such
reported sale takes place on such date, the average of the
reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange, Inc., or if the Series B-1
Preferred Shares or Common Shares, as the case may be, are not
listed or admitted to trading on the New York Stock Exchange,
Inc., on the principal national securities exchange on which the
Series B-1 Preferred Shares or Common Shares, as the case may be,
are listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the closing sale
price of the Series B-1 Preferred Shares or Common Shares, as the
case may be, or in case no reported sale takes place, the average
of the closing bid and asked prices, on NASDAQ or any comparable
system. If the Series B-1 Preferred Shares or Common Shares, as
the case may be, are not quoted on NASDAQ or any comparable
system, the Board of Trustees shall in good faith determine the
current market price on such basis as it considers appropriate.
Prompt payment of the purchase price shall be made in cash by the
Company in such manner as may be determined by the Board of
Trustees, but in no event later than twenty Business Days after
the Board of Trustees elects to make such purchase. From and
after the date fixed for purchase by the Board of Trustees, and
so long as payment of the purchase price for the Series B-1
Preferred Shares to be so purchased shall have been made or duly
provided for, the holder of any Series B-1 Excess Shares so
called for purchase shall cease to be entitled to dividends,
distributions, voting rights and other benefits with respect to
such Series B-1 Preferred Shares, excepting only the right to
payment of the purchase price fixed as aforesaid. Any dividend
or distribution paid to a proposed transferee of Series B-1
Excess Shares prior to the discovery by the Company that the
Series B-1 Preferred Shares have been transferred in violation of
this Paragraph (F) shall be repaid to the Company upon demand.
The Series B-1 Preferred Shares purchased pursuant to the
provisions of this Subparagraph (F)(6) shall thereupon be retired
and may not be reissued as Series B-1 Preferred Shares but shall
thereafter have the status of authorized but unissued Shares.
7. If Subparagraph (F)(5), (6), (7) or (8) is determined to
be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the acquiror of Series B-1 Preferred Shares
in violation of such subparagraphs shall be deemed, at the option
of the Company, to have acted as agent on behalf of the Company
in acquiring such Series B-1 Preferred Shares on behalf of the
Company. The Company, by notice to the acquiror thereof, may
purchase any or all Series B-1 Preferred Shares so acquired in
the manner designated by Subparagraph (F)(6).
8. Subject to Subparagraph (F)(12), notwithstanding any
other provision in these Paragraphs (A) through (N) to the
contrary, any purported transfer, sale or acquisition of Series
B-1 Preferred Shares (whether such purported transfer, sale or
acquisition results from the direct or indirect ownership, or
attribution of ownership, of Series B-1 Preferred Shares) which
would result in the termination of the status of the Company as a
REIT under the REIT Provisions of the Code shall be null and void
ab initio. Any such Series B-1 Preferred Shares may be treated
by the Board of Trustees in the manner prescribed for Series B-1
Excess Shares in Subparagraph (F)(6).
9. Subject to Subparagraph (F)(12), nothing contained in
this Paragraph (F) or in any other provision of these Paragraphs
(A) through (N) shall limit the authority of the Board of
Trustees to take such other action as it deems necessary or
advisable to protect the Company and the interests of the
Shareholders by preservation of the Company's status as a REIT
under the REIT Provisions of the Code.
10. If any provision of this Paragraph (F) or any
application of any such provision is determined to be invalid by
any federal or state court having jurisdiction over the issues,
the validity of the remaining provisions shall not be affected
and other applications of such provision shall be affected only
to the extent necessary to comply with the determination of such
court. To the extent this Paragraph (F) may be inconsistent with
any other provision in these Paragraphs (A) through (N), this
Paragraph (F) shall be controlling.
11. For purposes of these Paragraphs (A) through (N),
Series B-1 Preferred Shares not owned directly shall be deemed to
be owned indirectly by a Person if that Person or a group of
which he is a member would be the beneficial owner of such Series
B-1 Preferred Shares, as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and/or would be
considered to own such Series B-1 Preferred Shares by reason of
the REIT Provisions of the Code.
12. Notwithstanding any other provision of Paragraph (F),
nothing in these Paragraphs (A) through (N) shall preclude the
settlement of transactions entered into through the facilities of
the New York Stock Exchange, Inc. The fact that the settlement of
any transaction is permitted shall not negate the effect of any
other provision of this Paragraph (F) and any transferee in such
a transaction shall be subject to all of the provisions and
limitations set forth in this Paragraph (F).
G. Redemption at the Option of the Board of Trustees.
1. After the fifth anniversary of the Initial Issue Date,
if the aggregate Liquidation Preferences of all of the
outstanding Series B-1 Preferred Shares shall at any time be less
than $3,000,000, the Board of Trustees may, at its option and in
its sole discretion, redeem the Series B-1 Preferred Shares in
whole, subject to the limitations set forth below, at a
redemption price equal to $25.00 per share (the "Call Price"),
plus (i) all distributions accrued and unpaid on such Series B-1
Preferred Shares for past Distribution Periods and (ii) the pro
rata portion of the distributions on such Series B-1 Preferred
Shares for the current Distribution Period through the Redemption
Date (together, the "Redemption Distributions"), upon giving
notice as provided below.
2. At least 30 days but not more than 90 days prior to the
date fixed for the redemption of the Series B-1 Preferred Shares
(the "Redemption Date"), the Company shall mail a written notice
(a "Notice of Redemption") to each holder of record of the Series
B-1 Preferred Shares in a postage prepaid envelope addressed to
such holder at his address as shown on the records of the
Company, notifying such holder of the election of the Company to
redeem such Series B-1 Preferred Shares, stating the Redemption
Date, the Call Price, the number of Series B-1 Preferred Shares
then outstanding and to be redeemed and the place(s) where the
certificate(s) representing such Series B-1 Preferred Shares are
to be surrendered for payment.
3. On or after the Redemption Date each holder of the
Series B-1 Preferred Shares shall present and surrender his
certificate or certificates for such Series B-1 Preferred Shares
to the Company at the place designated in such notice for
redemption and thereupon the Call Price and the Redemption
Distributions for such Series B-1 Preferred Shares shall be paid
to or on the order of the person whose name appears on such
certificate or certificates as the owner thereof and each
surrendered certificate shall be cancelled. From and after the
Redemption Date (unless default shall be made by the Company in
payment of the Call Price or the Redemption Distributions), (i)
all distributions on the Series B-1 Preferred Shares shall cease
to accrue, and all rights of the holders thereof as shareholders
of the Company shall cease and terminate, except for the right
(x) to surrender their Series B-1 Preferred Shares for conversion
into Common Shares as provided for, and in accordance with, the
provisions of these Paragraphs (A) through (N) (including,
without limitation, Paragraph (D) hereof) at any time prior to
the Redemption Date or (y) to receive the Call Price and the
Redemption Distributions with respect to such Series B-1
Preferred Shares upon the surrender of certificates representing
the same, (ii) the Series B-1 Preferred Shares shall no longer be
deemed to be outstanding for any purpose whatsoever and (iii) the
Series B-1 Preferred Shares redeemed pursuant to the provisions
of this Paragraph (G) shall thereupon be retired and may not be
reissued as Series B-1 Preferred Shares but shall thereafter have
the status of authorized but unissued Shares.
4. If a Notice of Redemption has been given pursuant to
Subparagraph (G)(2) above and any holder of Series B-1 Preferred
Shares shall, prior to the close of business on the last Business
Day preceding the Redemption Date, give written notice to the
Company pursuant to Paragraph (D) of the conversion of any or all
of the Series B-1 Preferred Shares to be redeemed held by such
holder (accompanied by a certificate or certificates for such
shares, duly endorsed or assigned to the Company), then such
redemption shall not become effective as to such Series B-1
Preferred Shares to be converted, such conversion shall become
effective as provided in Paragraph (D).
H. Exclusion of Other Rights.
Except as may otherwise be required by law, the Series B-1
Preferred Shares shall not have any preferences, conversion or
other rights, voting powers, restrictions or limitations as to
dividends or other distributions other than as specifically set
forth in the Declaration of Trust.
I. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
J. Severability of Provisions.
If any of the preferences, conversion or other rights,
voting powers, restrictions, or limitations as to dividends or
other distributions of the Series B-1 Preferred Shares set forth
in the Declaration of Trust is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all
other preferences, conversion or other rights, voting powers,
restrictions, or limitations as to distributions of Series B-1
Preferred Shares set forth in the Declaration of Trust which can
be given effect without the invalid, unlawful or unenforceable
provision thereof shall, nevertheless, remain in full force and
effect and no preferences, conversion or other rights, voting
powers, restrictions, or limitations as to dividends or other
distributions of the Series B-1 Preferred Shares herein set forth
shall be deemed dependent upon any other provision thereof unless
so expressed therein.
K. Ranking.
With regard to rights to receive distributions and amounts
payable upon liquidation, dissolution or winding up of the
Company, the Series B-1 Preferred Shares shall rank senior to any
Junior Shares, the Common Shares and any Common Share Equivalent
and on a parity with any other preferred shares issued by the
Company, unless the terms of such other preferred shares provide
otherwise and, if applicable, the requirements of Paragraph (L)
hereof have been complied with. However, the Company may
authorize or increase any class or series of Parity Shares or
Junior Shares, or both, without the vote or consent of the
holders of the Series B-1 Preferred Shares.
L. Limitations.
In addition to any other rights provided to the holders of
the Series B-1 Preferred Shares by applicable law, so long as any
Series B-1 Preferred Shares are outstanding, the Company shall
not, without the affirmative vote of the holders of at least a
majority of the total number of outstanding Series B Preferred
Shares, voting together as a separate class,
(i) authorize, create or issue, or increase the par
value or authorized or issued amount of, any class or series
of Senior Shares, or rights to subscribe to or acquire, any
security convertible into, any class or series of Senior
Shares, or reclassify any shares of beneficial interest into
any such Senior Shares or reclassify any Junior Shares into
Parity Shares;
(ii) amend, alter or repeal, whether by merger,
consolidation or otherwise, any of the provisions of the
Declaration of Trust (including these Paragraphs (A) through
(N)) so as to adversely affect the preferences, right to
convert, conversion price adjustments, notice rights, special
conversion rights, distribution and liquidation rights,
preferences, restrictions or limitations, redemption rights or
privileges, or voting powers or rights of the Series B-1
Preferred Shares; or
(iii) modify an express contract right of the Series B-1
Preferred Shares; but (except as otherwise provided in these
Paragraphs (A) through (N) or required by applicable law)
nothing herein contained shall require such a vote or consent
(i) in connection with any increase in the total number of
authorized Common Shares, or (ii) in connection with the
authorization or increase of any class or series of Parity
Shares or Junior Shares. The Company with the written consent
or affirmative vote of the holders of a majority of the Series
B Preferred Shares shall have the right to amend, alter or
repeal any of the provisions of these Paragraphs (A) through
(N) without the approval, consent or vote of any other class
of shares of beneficial interest of the Company.
M. No Preemptive Rights.
No holder of Series B-1 Preferred Shares shall be entitled to
any preemptive rights to subscribe for or acquire any unissued
Shares (whether now or hereafter authorized) or securities of the
Company convertible, including securities into or carrying a right
to subscribe to or acquire Shares.
N. Notices.
Except as may otherwise be provided in the Declaration of
Trust, all notices to holders of Series B-1 Preferred Shares shall
be written, and delivered by first class mail, postage prepaid,
addressed to record holders of the Series B-1 Preferred Shares as
their names shall appear on the share records of the Company on the
applicable record date, or, if no record date has been set, then on
the date of delivery of such notice.
SECOND: The Series B-1 Preferred Shares have been classified
by the Board of Trustees under a power contained in the Declaration
of Trust.
THIRD: These Articles Supplementary have been approved by the
Board of Trustees in the manner and by the vote required by law.
FOURTH: Each of the undersigned acknowledges these Articles
Supplementary to be the act of the Company and as to all matters or
facts required to be verified under oath, the undersigned
acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects
and that this statement is made under the penalties for perjury.
FIFTH: These Articles Supplementary and all documents,
agreements, understandings and arrangements relating hereto have
been entered into or executed on behalf of the Company by the
undersigned in his capacity as a trustee of the Company, which has
been formed as a Maryland real estate investment trust pursuant to
a declaration of trust of the Company dated July 20, 1992, as
amended and restated, and not individually, and neither the
trustees, officers nor shareholders of the Company shall be bound
or have any personal liability hereunder or thereunder. Holders of
the Series B-1 Preferred Shares shall look solely to the assets of
the Company for satisfaction of any liability of the Company in
respect of these Articles Supplementary and all documents,
agreements, understandings and arrangements relating hereto and
will not seek recourse or commence any action against any of the
trustees, officers or shareholders of the Company or any of their
personal assets for the performance or payment of any obligation
hereunder or thereunder. The foregoing shall also apply to any
future documents, agreements, understandings, arrangements or
transactions between the Company and holders of the Series B-1
Preferred Shares. These Articles Supplementary are executed
on behalf of the Company by its Board of Trustees this 18th day
of February, 1997.
KRANZCO REALTY TRUST
/s/ Norman M. Kranzdorf
___________________________________
Norman M. Kranzdorf
/s/ Robert H. Dennis
___________________________________
Robert H. Dennis
/s/ Dr. Peter D. Linneman
___________________________________
Dr. Peter D. Linneman
___________________________________
James B. Selonick
/s/ E. Donald Shapiro
___________________________________
E. Donald Shapiro
/s/ Edmund Barrett
___________________________________
Edmund Barrett
General
The Kranzco Board at a meeting held on November 7, 1996 and by
unanimous written consent dated December 18, 1996, adopted
resolutions authorizing, creating and classifying, out of the
100,000,000 authorized Kranzco Shares, two separate classes of
preferred shares of beneficial interest consisting of preferred
shares of beneficial interest known as the "Series B-1 Cumulative
Convertible Preferred Shares of Beneficial Interest", having a par
value of $.01 per share, and preferred shares of beneficial
interest known as the "Series B-2 Cumulative Convertible Preferred
Shares of Beneficial Interest, having a par value of $.01 per
share, respectively. In the Merger, each share of UPI Common Stock
will be convertible into the right to receive, at the election of
the holder thereof and subject to certain adjustments, either 0.298
of one share of Kranzco Series B-1 Preferred Shares and cash in
lieu of fractional shares of 0.298 of one share of Kranzco Series
B-2 Preferred Shares and cash in lieu of fractional shares.
Ranking
The Kranzco Series B Preferred Shares will rank on a parity as
to all distributions, including as to the distribution of assets
upon any liquidation, dissolution or winding up of the affairs of
Kranzco, with the Kranzco Series A-1 Preferred Shares and the
Kranzco Series C Preferred Shares, and senior to the Kranzco Common
Shares.
Distributions
The record holders of Kranzco Series B Preferred Shares will
be entitled to receive from the Initial Issue Date, when, as and if
authorized by the Kranzco Board, out of assets legally available
for payment of distributions, cumulative cash distributions at a
rate of 9.75% per annum of the Series B Liquidation Preference
(defined below) computed on the basis of a 360-day year consisting
of twelve 30-day months. Distributions on the Kranzco Series B
Preferred Shares shall accrue and be cumulative from the date of
the consummation of the Merger ("Initial Issue Date").
Distributions will be quartrly in arrears for each Series B
Distribution Period (defined below) when, as and if authorized by
the Kranzco Board, on January 20, April 20, July 20 and October 20
of each year (each, a "Distribution Payment Date"), commencing on
the first Distribution Payment Date following the Initial Issue
Date. The amount of distributions payable on Kranzco Series B
Preferred Shares for each calendar quarter (each a "Series B
Distribution Period") will be computed by dividing by four the
annual distribution rate set forth above. Distributions payable in
respect of any period which is less than a full Series B
Distribution Period in length will be computed on the basis of a
360-day year consisting of twelve 30-day months.
Except as provided in the next sentience, so long as any
Kranzco Series B Preferred Shares are outstanding, no distributions
(other than in Kranzco Common Shares or other Kranzco Shares
ranking junior to the Kranzco Series B Preferred Shares ("Junior
Shares")) may be authorized, declared, set apart for payment or
paid on any class or series of Kranzco Shares ranking junior to or
on a parity with the Kranzco Series B Preferred Shares ("Parity
Shares") unless all accrued Distributions on the Kranzco Series B
Preferred Shares for all prior Series B Distribution Periods and
the then current Series B distribution Period have been or
contemporaneously are authorized, declared, set apart for payment
or paid. If distributions on the Kranzco Series B Preferred Shares
are not so paid in full, all distributions authorized or declared
upon the Kranzco Series B Preferred Shares will be authorized or
declared pro rata with all Parity Shares.
Unless all accrued distributions on the Kranzco Series B
Preferred Shares have been or contemporaneously are authorized,
declared, set apart for payment or paid for all Series B
Distribution Periods, no Junior Shares or Parity Shares may 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 Kranzco (except by conversion
into or exchange for Junior Shares). Holders of the Kranzco Series
B Preferred Shares shall not be entitled to any distributions,
whether payable in cash, property or Kranzco Shares, in excess of
accrued and cumulative distributions. No interest or sum of money
in lieu of interest will be payable in respect of any distribution
payment or payments on the Kranzco Series B Preferred Shares that
may be in arrears.
Distributions Upon Liquidation, Dissolution or Winding Up
Upon any voluntary of involuntary liquidation, dissolution or
winding up of the affairs of Kranzco, before any distribution may
be made to the holders of any Junior Shares, and subject to the
payment or provision or reserve for payment of the debts and
liabilities (whether absolute, accrued, asserted or unasserted,
contingent or otherwise) and the preferences of Kranzco Shares
ranking senior to the Kranzco Series B Preferred Shares ("Senior
Shares"), if any, the holders of Kranzco Series B Preferred Shares
shall be entitled to receive, out of the assets of Kranzco legally
available for payment of distributions, liquidating distributions
in cash (or property at its fair market value as determined in good
faith by the Kranzco Board (or a combination thereof)) in the
amount of $25.00 per share ("the Series B Liquidation Preference")
for each Kranzco Series B Preferred Share plus an amount equal to
all accrued and unpaid distributions (whether or not authorized or
declared, and whether or not there would be assets legally
available for the payment of such distributions) to the date of
such liquidation, dissolution or winding up. After payment of the
full amount of the liquidating distributions to which they are
entitled, the holders of Kranzco Series B Preferred Shares shall
have no right or claim to any of the remaining assets of Kranzco
and will not be entitled to any other distribution.
Notwithstanding the foregoing, in the event that, upon any
such voluntary or involuntary liquidation, dissolution or winding
up of the affairs of Kranzco, the assets legally available for
payment of distributions are insufficient to pay (i) the full
amount of the liquidating distributions to which holders of Kranzco
Series B Preferred Shares would otherwise be entitled and (ii) the
corresponding amounts of the liquidating distributions to which
holders of Parity Shares would be entitled upon liquidation,
dissolution or winding up of the affairs of Kranzco, then the
holders of the Kranzco Series B Preferred Shares and the holders of
the Parity Shares will share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which
they otherwise would be respectively entitled.
Kranzco Series B-1 Preferred Shares Conversion Rate; Right of
Conversion
Holders of Kranzco Series B-1 Preferred Shares shall have the
right, exercisable after the first anniversary of the Initial Issue
Date (unless exercisable earlier as described below), at any time
and from time to time, to convert all or any Kranzco Series B-1
Preferred Shares (except that upon any dissolution, liquidation or
winding up of the affairs of Kranzco the right of conversion shall
terminate at the close of business on the business day fixed for
payment of the liquidating distributions to which holders of
Kranzco Series B-1 Preferred Shares are entitled) into such number
of fully paid Kranzco Common Shares as is obtained by: (i)
multiplying the number of Kranzco Series B-1 Preferred Shares to be
converted by $25.00 and (ii) dividing the result by the conversion
price listed below that will be in effect during the corresponding
date of conversion listed below:
Conversion
Date of Conversion Price
- - ------------------ -----------
Prior to the occurrence of a Special
Conversion Event:
The day after the first anniversary of the
Initial issue Date to and including the
second anniversary of the Initial Issue Date ...... $19.175
The day after the second anniversary of the
Initial Issue Date to and including the third
anniversary of the Initial Issue Date ............. $18.6875
The day after the third anniversary of the
Initial Issue Date to and including the fourth
anniversary of the Initial Issue Date............. $18.20
From and after the day after the fourth
anniversary of the Initial Issue Date............. $17.7125
At any time after a Special Conversion Event
(defined below) shall have occurred................. $17.7125
At any time after a notice of a Preferred
Redemption (defined below)......................... $16.25
A "Special Conversion Event" shall mean (i) Norman M.
Kranzdorf ceasing to be Chief Executive Officer, Chief Operating
Officer or any other senior executive officer of Kranzco having an
active role in management of the business of Kranzco, (ii) the
merger or consolidation of Kranzco with or into any person unless
the holders of Kranzco Common Shares own more than 50% of the
voting securities of the surviving corporation and effective
provisions are made by the surviving corporation to protect the
preferences and other rights of the Kranzco Series B Preferred
Shares, (iii) the sale, lease, transfer, spin-off or other disposal
or distribution of all or substantially all of the assets of
Kranzco, (iv) a successful tender offer or similar offer for at
least a majority of the voting shares of Kranzco is commenced and
completed, (v) certain defaults on indebtedness of Kranzco or any
of its subsidiaries for borrowed money in excess of $10,000,000 or
capital lease obligations of Kranzco or any of its subsidiaries in
excess of $25,000,000, (vi) the commencement by or against Kranzco
of any insolvency, bankruptcy, dissolution, liquidation or
receivership proceedings with respect to Kranzco, (vii) Kranzco
losing its status as a REIT or (viii) Kranzco failing to pay a
distribution on the Kranzco Series B Preferred Shares for any
Series B Distribution Period within five days of the Distribution
Payment Date therefor.
In connection with a Special Conversion Event described in
clauses (ii) and (iii) above, a holder of Kranzco Series B
Preferred Shares shall have the right to convert such shares into
Kranzco Common Shares immediately prior to such event, and the
conversion ratio for such event shall be based on the conversion
price applicable to any Special Conversion Event.
