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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 23, 1996
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of registrant as specified in charter)
MARYLAND 1-12592 75-2506197
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) Identification No.)
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (214) 788-0510
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ITEM 5. OTHER EVENTS
Walden Residential Properties, Inc. (the "Company") is filing this
Current Report on Form 8-K for purposes of incorporating by reference the
exhibits attached hereto into Part II of the Company's registration statement on
Form S-3 (Registration No. 33-92328).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(C) EXHIBITS.
4.1 Form of Articles Supplementary relating to ____% Series A
Convertible Preferred Stock
12.1 Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Walden Residential Properties, Inc.
Date: April 23, 1996 By: /s/ Mark S. Dillinger
-----------------------------------
Mark S. Dillinger
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page No.
- --------- ----------- --------
<S> <C>
4.1 Form of Articles Supplementary relating to ____%
Series A Convertible Preferred Stock
12.1 Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
</TABLE>
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% Series A Convertible Redeemable Preferred Stock
(Liquidation Preference $25.00 Per Share)
ARTICLES SUPPLEMENTARY
WALDEN RESIDENTIAL PROPERTIES, INC.
___________________________
Articles Supplementary Classifying and Designating a
Series of Preferred Stock as
___% Series A Cumulative Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series
___________________________
Dated as of _____________, 1996
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WALDEN RESIDENTIAL PROPERTIES, INC.
___________
Articles Supplementary Classifying and Designating a
Series of Preferred Stock as
___% Series A Convertible Redeemable Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series
___________
Walden Residential Properties, Inc., a Maryland corporation, having its
principal office in the State of Maryland in the City of Baltimore (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation, as amended (the "Articles"), and Bylaws of the
Corporation, the Board of Directors on February 7, 1996 adopted resolutions
authorizing the creation and issuance of up to 2,000,000 shares, at $25.00 per
share, of Series A Convertible Redeemable Preferred Stock and adopted
resolutions granting the Executive Committee of the Board of Directors with
full power and authority, subject to the foregoing resolution, to determine the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the shares of such series. Such preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption, number of shares and
dividend rate, as determined by such duly authorized committee are as follows:
Section 1. Number of Shares and Designation. This series of
Preferred Stock shall be designated as _____% Series A Convertible Redeemable
Preferred Stock (the "Convertible Preferred Stock") and the number of shares
which shall constitute such series shall not be more than ___________ shares,
par value $.01 per share, which number may be decreased (but not below the
number thereof then outstanding) from time to time by the Board of Directors.
Section 2. Dividend Rights.
(a) Subject to the preferential rights of any other series of
stock ranking senior as to dividends to the Convertible Preferred Stock
and to the provisions of the Articles relating to rights of holders of
shares of Excess Stock (as defined in the Articles), the record holders
of Convertible Preferred Stock shall be entitled to receive dividends,
when and as declared by the Board of Directors of the Corporation out of
funds legally available for payment of dividends. Such dividends shall
be payable by the Corporation in cash at the greater of (i) the rate of
$_________ per annum per share or (ii) the dividends (determined on each
of the quarterly Convertible Dividend Payment Dates referred to below)
payable on the number of shares of Common Stock (or fraction
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thereof), into which a share of Convertible Preferred Stock is then
convertible. The amount referred to in clause (ii) above will equal the
number of shares of Common Stock, or fraction thereof, into which a
share of Convertible Preferred Stock is then convertible, multiplied by
the most recent quarterly distribution declared or paid in respect of a
share of Common Stock on or before the applicable Convertible Dividend
Payment Date (defined below).
(b) Dividends on shares of Convertible Preferred Stock shall
accrue and be cumulative from the date that shares of Convertible
Preferred Stock are first issued by the Corporation (the "Initial Issue
Date"). Dividends shall be payable quarterly in arrears when and as
declared by the Board of Directors of the Corporation on March 1, June
1, September 1 and December 1 of each year (each, a "Convertible
Dividend Payment Date"), commencing on ___________, 1996. If any
Convertible Dividend Payment Date occurs on a day that is not a day,
other than a Saturday or Sunday, that is neither a legal holiday nor a
day on which banking institutions in New York City are authorized or
required by law, regulation or executive order to close (a "Business
Day"), any accrued dividends otherwise payable on such Convertible
Dividend Payment Date shall be paid on the next succeeding Business Day.
The amount of dividends payable on Convertible Preferred Stock for each
full quarterly period from, and including, any Convertible Dividend
Payment Date to, but not including, the next Convertible Dividend
Payment Date (the "Dividend Period") shall be computed by dividing by
four (4) the annual dividend rate set forth in Section 2(a). Dividends
payable in respect of any Dividend Period which is less than a full
Dividend Period in length will be computed from the immediately
preceding Dividend Payment Date (or the Initial Issue Date in the case
of the first Dividend Period) to, but not including, the date on which
dividends are paid (or ___________, 1996, in the case of the first
Dividend Period) on the basis of a 360-day year consisting of twelve
30-day months. Dividends shall be paid to the holders of record of the
Convertible Preferred Stock as their names shall appear on the stock
transfer records of the Corporation at the close of business on the date
designated by the Board of Directors of the Corporation at the time a
dividend is declared as the date for determining holders of record
entitled to such dividend (the "Record Date"). The dividend accruing
for the Dividend Period ending _____________, 1996 will be payable on
______________, 1996, together with the dividend accruing for the
Dividend Period ending on that date. Dividends in respect of any past
Dividend Period that is in arrears may be declared and paid at any time
to holders of record on the Record Date for such payment. Any dividend
payment made on shares of Convertible Preferred Stock shall be first
credited against the earliest accrued but unpaid dividend due which
remains payable. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the
Convertible Preferred Stock which may be in arrears.
(c) Notwithstanding anything contained herein to the contrary,
no dividends on shares of Convertible Preferred Stock shall be declared
by the Board of Directors of the Corporation or paid or set apart for
payment by the Corporation at such time as, and
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to the extent that, the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness, or
any provisions of the Articles relating to any series of preferred
stock, par value $.01 per share, of the Corporation (the "Preferred
Stock") ranking senior to the Convertible Preferred Stock, prohibits
such declaration, payment or setting apart for payment or provides that
such declaration, payment or setting apart for payment would constitute
a breach thereof or a default thereunder, or if such declaration or
payment shall be restricted or prohibited by law.
(d) If any shares of Convertible Preferred Stock are
outstanding, no full dividends shall be declared or paid or set apart
for payment on any series of capital stock of the Company ranking junior
to or on a parity with the Convertible Preferred Stock as to dividends
for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Convertible
Preferred Stock for all past Dividend Periods and the then current
Dividend Period. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the shares of
Convertible Preferred Stock and the shares of any series of Preferred
Stock ranking on a parity as to dividends with the Convertible Preferred
Stock, all dividends declared upon the shares of Convertible Preferred
Stock and any other such series of Preferred Stock ranking on a parity
as to dividends with the Convertible Preferred Stock shall be declared
pro rata so that the amount of dividends declared per share on the
Convertible Preferred Stock and such other series of Preferred Stock
shall in all cases bear to each other the same ratio that accrued and
unpaid dividends per share on the shares of Convertible Preferred Stock
and such other series of Preferred Stock bear to each other.
(e) Except as provided in Section 2.1(d), unless full
cumulative dividends on the Convertible Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for all past Dividend
Periods and the then current Dividend Period, no dividends (other than
dividends payable in common stock, par value $.01 per share, of the
Corporation (the "Common Stock") or other capital stock of the
Corporation ranking junior to the Convertible Preferred Stock as to
dividends and upon liquidation, dissolution and winding up) shall be
declared or paid or set aside for payment or other distribution shall be
declared or made upon any series of capital stock of the Corporation
ranking junior to or on a parity with the Convertible Preferred Stock as
to dividends nor, subject to the Corporation's right to purchase Excess
Stock as set forth in the Articles, shall shares of any series of
capital stock of the Corporation ranking junior to or on a parity with
the Convertible Preferred Stock upon liquidation, dissolution or winding
up 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 shares of any series of capital stock of the
Corporation ranking junior to or on a parity with the Convertible
Preferred Stock) by the Corporation (except by conversion into or
exchange for other capital stock of the Corporation ranking junior to
the Convertible Preferred Stock as to dividends and upon liquidation,
dissolution and winding up).
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(f) Notwithstanding anything contained herein to the contrary,
dividends on the Convertible Preferred Stock, if not paid on a
Convertible Dividend Payment Date, will accrue whether or not dividends
are declared for such Convertible Dividend Payment Date, whether or not
the Corporation has earnings and whether or not there are funds legally
available for the payment of such dividends. Any dividend payment made
on shares of Convertible Preferred Stock shall first be credited against
the earliest accrued but unpaid dividend due with respect to shares of
such Convertible Preferred Stock which remains payable.
Section 3. Distribution Upon Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation, subject to the prior
preferences and other rights of any series of capital stock of the
Corporation ranking senior to the Convertible Preferred Stock upon
liquidation, dissolution or winding up, but before any distribution or
payment shall be made to the holders of capital stock of the Corporation
ranking junior to the Convertible Preferred Stock in the distribution of
assets upon liquidation, dissolution or winding up of the Corporation,
the holders of Convertible Preferred Stock shall be entitled to receive
out of the assets of the Corporation legally available for distribution
to its stockholders liquidating distributions in cash or property at its
fair market value as determined by the Board of Directors of the
Corporation in the amount of $25.00 per share, plus an amount equal to
any accrued or unpaid dividends on any such share of Convertible
Preferred Stock to the date of liquidation (the "Liquidation
Preference"). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Convertible
Preferred Stock will have no right or claim to any of the remaining
assets of the Corporation and shall not be entitled to any other
distribution in the event of liquidation, dissolution or winding up of
the affairs of the Corporation.
(b) In the event that, upon any such voluntary or involuntary
liquidation, dissolution or other winding up, the legally available
assets of the Corporation are insufficient to pay the amount of the
Liquidation Preference per share and the corresponding amounts payable
on all shares of capital stock of the Corporation ranking on a parity
with the Convertible Preferred Stock in the distribution of assets upon
liquidation, dissolution or winding up, then the holders of the
Convertible Preferred Stock and all such other capital stock shall share
ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
(c) Neither the consolidation or merger of the Corporation
into or with another corporation or any other entity nor the sale,
lease, transfer or conveyance of all or substantially all of the assets
of the Corporation to another corporation or any other entity shall be
deemed to constitute a liquidation, dissolution or winding up of the
affairs of the Corporation within the meaning of this Section 3.
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Section 4. Redemption by the Corporation.
(a) The Convertible Preferred Stock may be redeemed, in whole
or from time to time in part, at any time on and after ____________,
2006 at the option of the Corporation at the price of $25.00 per share
(the "Convertible Redemption Price"), plus all accrued and unpaid
dividends thereon to the Convertible Redemption Date (defined below),
except as may be provided below, without interest.
(b) Each date fixed for redemption pursuant to Section 4(d)
below is called a "Convertible Redemption Date." If the Convertible
Redemption Date is after a Record Date and before the related
Convertible Dividend Payment Date, the dividend payable on such
Convertible Dividend Payment Date shall be paid to the holder in whose
name the Convertible Preferred Stock to be redeemed is registered at the
close of business on such Record Date notwithstanding the redemption
thereof between such Record Date and the related Convertible Dividend
Payment Date or the Corporation's default in the payment of the dividend
due.
(c) In case of redemption of less than all shares of
Convertible Preferred Stock at the time outstanding, the shares to be
redeemed shall be selected pro rata from the holders of record of such
shares in proportion to the number of shares held by such holders (with
adjustments to avoid redemption of fractional shares) or by any other
equitable method determined by the Corporation, to the extent
practicable, that will not result in a violation of the Ownership Limit
(as defined in the Articles).
(d) Notice of any redemption will be given by publication in a
newspaper of general circulation in the City of New York, such
publication to be made once a week for two successive weeks commencing
not less than 30 nor more than 60 days prior to the Convertible
Redemption Date. A similar notice will be mailed by the Corporation,
postage prepaid, not less than 30 nor more than 60 days prior to the
Convertible Redemption Date, addressed to the respective holders of
record of the Convertible Preferred Stock to be redeemed at their
respective addresses as they appear on the stock transfer records of the
Corporation. No failure to give such notice or any defect therein or in
the mailing thereof shall affect the validity of the proceedings for the
redemption of any shares of Convertible Preferred Stock except as to the
holder to whom the Corporation has failed to give notice or except as to
the holder to whom notice was defective. In addition to any information
required by law or by the applicable rules of any exchange upon which
Convertible Preferred Stock may be listed or admitted to trading, such
notice shall state: (i) the Convertible Redemption Date; (ii) the
Convertible Redemption Price; (iii) the aggregate number of shares of
Convertible Preferred Stock to be redeemed and, if less than all shares
held by such holder are to be redeemed, the number of such shares to be
redeemed; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the Convertible Redemption Price;
(v) that dividends on the shares to be redeemed will cease to accrue on
the Convertible Redemption Date; and (vi) that any conversion rights
with respect to such shares shall
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terminate at the close of business on the third business day immediately
preceding the Convertible Redemption Date.
(e) If notice has been mailed in accordance with Section 4(d)
above and provided that on or before the Convertible Redemption Date
specified in such notice all funds necessary for such redemption shall
have been set aside by the Corporation, separate and apart from its
other funds in trust for the pro rata benefit of the holders of the
shares so called for redemption, so as to be and to continue to be
available therefor, then, from and after the Convertible Redemption
Date, dividends on the shares of the Convertible Preferred Stock so
called for redemption shall cease to accrue, and such shares shall no
longer be deemed to be outstanding and shall not have the status of
shares of Convertible Preferred Stock, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive
from the Corporation the Convertible Redemption Price) shall cease.
Notwithstanding the foregoing, upon the Corporation's default in the
payment of the dividend due, the holders of Convertible Preferred Stock
at the close of business on any Record Date will be entitled to receive
the dividend payable with respect to such Convertible Preferred Stock on
the corresponding Convertible Dividend Payment Date, although such
Convertible Preferred Stock shall have been redeemed between such Record
Date and such corresponding Convertible Dividend Payment Date. Upon
surrender, in accordance with the redemption notice, of the certificates
for any shares of Convertible Preferred Stock so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so require
and the notice shall so state), such shares shall be redeemed by the
Corporation at the Convertible Redemption Price. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate or certificates shall be issued representing the unredeemed
shares without cost to the holder thereof.
(f) Any deposit of funds with a bank or trust company for the
purpose of redeeming Convertible Preferred Stock shall be irrevocable
except that:
(i) the Corporation shall be entitled to receive from
such bank or trust company the interest or other earnings, if
any, earned on any money so deposited in trust, and the holders
of any shares redeemed shall have no claim to such interest or
other earnings; and
(ii) any balance of monies so deposited by the
Corporation and unclaimed by the holders of the Convertible
Preferred Stock entitled thereto at the expiration of two (2)
years after the applicable Convertible Redemption Date shall be
repaid, together with any interest or other earnings earned
thereon, to the Corporation, and after such repayment, the
holders of the shares entitled to the funds so repaid to the
Corporation shall look only to the Corporation for payment
without interest or other earnings.
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(g) No Convertible Preferred Stock may be redeemed except with
funds legally available for the payment of the Convertible Redemption
Price.
(h) Unless full cumulative dividends on all shares of
Convertible Preferred Stock shall have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment
thereof set apart for payment for all past Dividend Periods and the then
current Dividend Period, no shares of any Convertible Preferred Stock
shall be redeemed unless all outstanding shares of Preferred Stock are
simultaneously redeemed; provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of Convertible Preferred
Stock pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of Convertible Preferred Stock; and,
unless full cumulative dividends on all outstanding shares of
Convertible Preferred Stock have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past Dividend Periods and the then current
Dividend Period, the Corporation shall not purchase or otherwise acquire
directly or indirectly, through a subsidiary or otherwise, any shares of
Convertible Preferred Stock (except by conversion into or exchange for
capital stock of the Corporation ranking junior to the Convertible
Preferred Stock as to dividends and upon liquidation, dissolution and
winding up).
(i) All shares of Convertible Preferred Stock redeemed
pursuant to this Section 4(i) shall be retired and shall be restored to
the status of authorized and unissued shares of Preferred Stock, without
designation as to series, and subject to the applicable limitations set
forth herein may thereafter be reissued as shares of any series of
Preferred Stock.
Section 5. Voting Rights.
(a) The holders of record of shares of Convertible Preferred
Stock shall not be entitled to any voting rights except as hereinafter
provided in this Section 5 or as otherwise provided by law. The
Corporation shall not, without the affirmative vote or consent of the
holders of at least a majority of the shares of the Convertible
Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting (such Convertible Preferred Stock
voting separately as a class), (i) authorize, create or increase the
authorized or issued amount of any class or series of capital stock
ranking senior to the Convertible Preferred Stock as to dividends or
upon liquidation, dissolution or winding up or reclassify any authorized
capital stock of the Corporation into any such senior stock, or create,
authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such capital stock; or (ii) amend,
alter or repeal the provisions of the Articles (including these Articles
Supplementary), whether by merger, consolidation or otherwise, so as to
materially and adversely affect any right, preference, privilege or
voting power of the Convertible Preferred Stock or the holders thereof;
provided, however, that any increase in the amount of the authorized
Preferred Stock or the creation or issuance of any other series of
Preferred Stock, or any
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increase in the amount of authorized shares of the Convertible Preferred
Stock or any other series of Preferred Stock, in each case ranking on a
parity with or junior to the Convertible Preferred Stock with respect to
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
(b) If and whenever dividends payable on the Convertible
Preferred Stock shall be in arrears for six (6) or more consecutive
quarterly periods, then the holders of Convertible Preferred Stock,
voting separately as a class (with any such other series as provided in
Section 5(f) below), shall be entitled at the next annual meeting of the
stockholders or at any special meeting called as hereinafter provided to
elect two (2) additional directors. Upon election, such directors shall
become additional directors of the Corporation and the authorized number
of directors of the Corporation shall thereupon be automatically
increased by such number of directors.
(c) Whenever the voting right described under Section 5(b)
above shall become exercisable, such right may be exercised initially
either at a special meeting of the holders of Convertible Preferred
Stock, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter
at such annual meetings or by the written consent of holders of
Convertible Preferred Stock. Such right of the holders of Convertible
Preferred Stock to elect directors may be exercised until all dividends
to which the holders of Convertible Preferred Stock shall have been
entitled for all previous Dividend Periods and the current Dividend
Period shall have been paid in full or declared and a sum of money
sufficient for the payment thereof set aside for payment, at which time
the right of the holders of Convertible Preferred Stock to elect such
number of directors shall cease, the term of such directors previously
elected shall thereupon terminate, and the authorized number of
directors of the Corporation shall thereupon return to the number of
authorized directors otherwise in effect, but subject always to the same
provisions for the renewal and divestment of such special voting rights
in the case of any such future dividend default or defaults and subject
to the rights of any other series of Preferred Stock to vote for the
election of directors, together with the Convertible Preferred Stock, as
described in Section 5(f) that shall not have then expired.
(d) At any time when the voting right described under Section
5(b) shall become exercisable in the holders of Convertible Preferred
Stock and if such right shall not already have been initially exercised,
a proper officer of the Corporation shall, upon the written request of
holders of record of at least ten percent (10%) of the shares of
Convertible Preferred Stock, and of any other series of Preferred Stock
entitled to vote on such matter as described in Section 5(f), then
outstanding, addressed to the Secretary of the Corporation, call a
special meeting of holders of Convertible Preferred Stock. Such meeting
shall be held at the earliest practicable date upon the notice required
for annual meetings of stockholders at the place for holding annual
meetings of stockholders of the Corporation or, if none, at a place
designated by the Secretary of the Corporation. If such meeting shall
not be called by the proper officers of the Corporation within thirty
(30)
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days after the personal service of such written request upon the
Secretary of the Corporation, or within thirty (30) days after mailing
the same within the United States, by registered mail, addressed to the
Secretary of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities),
then the holders of record of at least ten percent (10%) of the shares
of Convertible Preferred Stock, and of other Preferred Stock entitled to
vote on such matter as described in Section 5(f), then outstanding may
designate in writing a holder of Convertible Preferred Stock or such
other Preferred Stock to call such meeting at the expense of the
Corporation, and such meeting may be called by such person so designated
upon the notice required for annual meetings of stockholders and shall
be held at the place of holding annual meetings of the Corporation or,
if none, at a place designated by such holder. Any holder of
Convertible Preferred Stock that would be entitled to vote at such
meeting shall have access to the stock books of the Corporation for the
purpose of causing a meeting of stockholders to be called pursuant to
the provisions of this Section 5(d). Notwithstanding the provisions of
this Section 5(d), however, no such special meeting shall be called if
any such request is received less than 90 days before the date fixed
for the next ensuing annual or special meeting of stockholders.
(e) If any director so elected by the holders of Convertible
Preferred Stock shall cease to serve as a director before such
director's term shall expire, the holders of Convertible Preferred Stock
(and any other series of Preferred Stock, if any, entitled to vote on
such matter, as described in Section 5(f)) then outstanding may, at a
special meeting of the holders called as provided above, elect a
successor to hold office for the unexpired term of the director whose
place shall be vacant.
(f) If, at any time when the holders of Convertible Preferred
Stock are entitled to elect directors pursuant to the provisions of
Section 5(b) above, the holders of any one or more additional series of
Preferred Stock are entitled to elect directors by reason of any default
or event specified in the Articles (or any articles supplementary
thereto), as in effect at the time, or the articles supplementary for
such series, and if the terms for such other additional series so
permit, then the voting rights of the two or more series then entitled
to vote shall be combined (with each series having a number of votes
proportional to the aggregate liquidation preference of its outstanding
shares). In such case, the holders of Convertible Preferred Stock and
of all such other series then entitled so to vote, voting as a class,
shall elect such directors. If the holders of any such other series
have elected such directors prior to the happening of the default or
event permitting the holders of Convertible Preferred Stock to elect
directors, or prior to a written request for the holding of a special
meeting being received by the Secretary of the Corporation as elsewhere
required in Section 5(d) above, then a new election shall be held with
all such other series of Preferred Stock and the Convertible Preferred
Stock voting together as a single class for such directors, resulting in
the termination of the term of such previously elected directors upon
the election of such new directors. If the holders of any such other
series are entitled to elect in excess of two directors, the Convertible
Preferred Stock shall not participate in the election of more than two
such directors, and those directors whose
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terms first expire shall be deemed to be the directors elected by the
holders of Convertible Preferred Stock; provided that, if at the
expiration of such terms, the holders of Convertible Preferred Stock are
entitled to vote in the election of directors pursuant to the provisions
of this Section 5, then the Secretary of Corporation shall call a
meeting (which meeting may be the annual meeting or special meeting of
stockholders referred to in Section 5(c) above) of holders of
Convertible Preferred Stock for the purpose of electing replacement
directors (in accordance with the provisions of this Section 5) to be
held at or prior to the time of expiration of the expiring terms
referred to above.
(g) Subject to Section 5(a) hereof and the provisions of the
Articles relating to the rights of holders of Excess Stock, in any
matter in which the Convertible Preferred Stock may vote, including any
action by written consent, each share of Convertible Preferred Stock
shall be entitled to one (1) vote (except as expressly provided herein
or as may be required by law).
(h) Except as required by law, the foregoing voting provisions
shall not apply if, at or prior to the time when the act with respect to
which such vote would otherwise be required shall be effected, all
outstanding shares of the Convertible Preferred Stock shall have been
redeemed or shall have been called for redemption upon proper notice and
sufficient funds shall have been deposited in trust to effect such
redemption.
Section 6. Ranking.
The Convertible Preferred Stock shall, with respect to dividend rights
and distributions upon liquidation, dissolution and winding up, rank (i) senior
to the Common Stock, any shares of Excess Stock (except as provided in the last
sentence of this Section 6) and shares of all other capital stock issued from
time to time by the Corporation the terms of which specifically provide that
the capital stock of such series rank junior to the Convertible Preferred Stock
with respect to dividend rights or distributions upon liquidation, dissolution,
or winding up of the Corporation; (ii) on a parity with the shares of all other
capital stock issued by the Corporation the terms of which specifically provide
that the shares rank on a parity with the Convertible Preferred Stock with
respect to dividends and distributions upon liquidation, dissolution, or
winding up of the Corporation or make no specific provisions as to their
ranking; and (iii) junior to all other capital stock issued by the Corporation
the terms of which specifically provide that the shares rank senior to the
Convertible Preferred Stock with respect to dividends and distributions upon
liquidation, dissolution or winding up of the Corporation (the issuance of
which must have been approved by a vote of at least a majority of the
outstanding shares of Convertible Preferred Stock). The Convertible Preferred
Stock ranks on a parity with the shares of Convertible Preferred Stock that are
Excess Stock with respect to distributions upon liquidation, dissolution or
winding up.
-10-
<PAGE> 12
Section 7. Conversion Rights.
Subject to any other provisions of these Articles Supplementary, the
holders of shares of Convertible Preferred Stock shall have the right, at their
option, to convert such shares into shares of Common Stock on the following
terms and conditions:
(a) Shares of Convertible Preferred Stock shall be convertible
at any time and from time to time on or after the date of original
issuance thereof into fully paid and nonassessable shares of Common
Stock at a conversion price of $________ per share of Common Stock (as
such price may be adjusted from time to time, the "Conversion Price").
For purposes of this Section 7, references to shares of Convertible
Preferred Stock shall apply equally to fractional shares thereof. The
Conversion Price shall be subject to adjustment from time to time as
hereinafter provided. For purposes of such conversion, each share of
Convertible Preferred Stock will be valued at $25.00 plus an amount
equal to any accrued and unpaid dividends on such share to the date of
conversion. No payment or adjustment shall be made on account of any
accrued and unpaid dividends on shares of Convertible Preferred Stock
surrendered for conversion prior to the Record Date for the
determination of stockholders entitled to such dividends or on account
of any dividends on the shares of Common Stock issued upon such
conversion subsequent to the Record Date for the determination of
stockholders entitled to such dividends. If any shares of Convertible
Preferred Stock shall be called for redemption, the right to convert the
shares designated for redemption shall terminate at the close of
business on the third business day immediately preceding the date fixed
for redemption unless default is made in the payment of the Convertible
Redemption Price. In the event of default in the payment of the
Convertible Redemption Price, the right to convert the shares designated
for redemption shall terminate at the close of business on the business
day immediately preceding the date that such default is cured.
(b) In order to convert shares of Convertible Preferred Stock
into Common Stock, the holder thereof shall surrender the certificates
therefor, duly endorsed if the Corporation shall so require, or
accompanied by appropriate instruments of transfer satisfactory to the
Corporation, at the office of the transfer agent for the Convertible
Preferred Stock or at such other office as may be designated by the
Corporation, together with written notice that such holder irrevocably
elects to convert such shares. Such notice shall also state the name
and address in which such holder wishes the certificate for the shares
of Common Stock issuable upon conversion to be issued. As soon as
practicable after receipt of the certificates representing the shares of
Convertible Preferred Stock to be converted and the notice of election
to convert the same, the Corporation shall issue and deliver at said
office a certificate for the number of whole shares of Common Stock
issuable upon conversion of the shares of Convertible Preferred Stock
surrendered for conversion, together with a cash payment in lieu of any
fraction of a share, as hereinafter provided, to the person entitled to
receive the same. If more than one stock certificate for Convertible
Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock issuable upon
conversion
-11-
<PAGE> 13
thereof shall be computed on the basis of the aggregate number of shares
represented by all the certificates so surrendered. Shares of
Convertible Preferred Stock shall be deemed to have been converted
immediately prior to the close of business on the date such shares are
surrendered for conversion and notice of election to convert the same is
received by the Corporation in accordance with the foregoing provision,
and the person entitled to receive the Common Stock issuable upon such
conversion shall be deemed for all purposes as the record holder of such
Common Stock as of such date.
(c) In the case of any share of Convertible Preferred Stock
which is converted after any Record Date with respect to the payment of
a dividend on the Convertible Preferred Stock and on or prior to the
corresponding Convertible Dividend Payment Date, the dividend due on
such Convertible Dividend Payment Date shall be payable on such
Convertible Dividend Payment Date to the holder of record of such shares
on such preceding Record Date notwithstanding such conversion. Shares
of Convertible Preferred Stock surrendered for conversion during the
period from the close of business on any Record Date with respect to the
payment of a dividend on the Convertible Preferred Stock next preceding
any Convertible Dividend Payment Date to the opening of business on such
Convertible Dividend Payment Date shall (except in the case of shares of
Convertible Preferred Stock which have been called for redemption on a
Convertible Redemption Date within such period) be accompanied by
payment in New York Clearing House funds or other funds acceptable to
the Corporation of an amount equal to the dividend payable on such
Convertible Dividend Payment Date on the shares of Convertible Preferred
Stock being surrendered for conversion. The dividend with respect to a
share of Convertible Preferred Stock called for redemption on a
Convertible Redemption Date during the period from the close of business
on any Record Date with respect to the payment of a dividend on the
Convertible Preferred Stock next preceding any dividend payment to the
opening of business on such Convertible Dividend Payment Date shall be
payable on such Convertible Dividend Payment Date to the holder of
record of such share on such Record Date, notwithstanding the conversion
of such share of Convertible Preferred Stock after such Record Date and
prior to such Convertible Dividend Payment Date, and the holder
converting such share of Convertible Preferred Stock called for
redemption need not include a payment of such dividend amount upon
surrender of such share of Convertible Preferred Stock for conversion.
(d) No fractional shares of Common Stock shall be issued upon
conversion of any shares of Convertible Preferred Stock. If more than
one share of Convertible Preferred Stock is surrendered at one time by
the same holder, the number of full shares issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares
so surrendered. If the conversion of any shares of Convertible
Preferred Stock results in a fractional share of Common Stock, the
Corporation shall pay cash in lieu thereof in an amount equal to such
fraction multiplied by the current market price of the Common Stock,
determined as provided in Section 7(e)(vi) below, on the date on which
the shares of Convertible Preferred Stock are duly surrendered for
conversion, or if such date is not a trading date, on the next
succeeding trading date.
-12-
<PAGE> 14
(e) The Conversion Price shall be adjusted from time to time
as follows:
(i) In case the Corporation shall pay or make a
dividend or other distribution on shares of Common Stock in
Common Stock, the Conversion Price in effect at the opening of
business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend
or other distribution shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the
denominator of which shall be the sum of such number of shares
and the total number of shares constituting such dividend or
other distribution, such reduction to become effective
immediately after the opening of business on the day following
the date fixed for such determination. For purposes of this
Section 7(e)(i), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Corporation but shall include shares issuable in respect to scrip
certificates issued in lieu of fractions of shares of Common
Stock. The Corporation will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of
the Corporation.
(ii) In case the Corporation shall issue additional
rights or warrants to all holders of its Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a
price per share less than the then current market price per share
(determined as provided in Section 7(e)(vi) below) of the Common
Stock on the date fixed for the determination of stockholders
entitled to receive such rights or warrants (other than pursuant
to a dividend reinvestment plan), the Conversion Price in effect
at the opening of business on the day following the date fixed
for such determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be
the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number
of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered
for subscription or purchase would purchase at such current
market price (determined as provided in Section 7(e)(vi) below)
and the denominator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock so offered for subscription or purchase, such reduction to
become effective immediately after the opening of business on the
day following the date fixed for such determination. For the
purposes of this Section 7(e)(ii), the number of shares of Common
Stock at any time outstanding shall not include shares held in
the treasury of the Corporation but shall include shares issuable
in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Corporation will not issue any
rights or warrants in respect of shares of Common Stock held in
the treasury of the Corporation during the period so held.
-13-
<PAGE> 15
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the date
following the day upon which such subdivision becomes effective
shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day
upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision
or combination becomes effective.
(iv) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock evidence
of its indebtedness or assets (including securities, but
excluding (A) any rights or warrants referred to in Section
7(e)(ii) above, (B) any dividend described in Section 7(e)(ix)
below, and (C) any dividend or distribution referred to in
Section 7(e)(i) above), the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of stockholders
entitled to receive such distributions by a fraction of which the
numerator shall be the current market price per share (determined
as provided in Section 7(e)(vi) below) of the Common Stock on the
date fixed for such determination less the fair market value (as
determined by the Board of Directors, whose determination shall
be conclusive and shall be described in a statement filed with
the transfer agent for the Convertible Preferred Stock) of the
portion of the evidences of the indebtedness or assets so
distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of
Common Stock, such adjustment to become effective immediately
prior to the opening of business on the day following the date
fixed for the determination of stockholders entitled to receive
such distribution.
(v) For the purposes of this Section 7, the
reclassification of Common Stock into securities including
securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section
7(g) below applies) shall be deemed to involve (A) a distribution
of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification
shall be deemed to be "the date fixed for the determination of
stockholders entitled to receive such distribution" and the "date
fixed for such determination" within the meaning of Section
7(e)(iv) above), and (B) a subdivision or combination, as the
case may be, of the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such
subdivision became effective" and "the day upon which such
subdivision or combination
-14-
<PAGE> 16
becomes effective," as the case may be) within the meaning of
Section 7(e)(iii) above.
(vi) For the purpose of any computation under Sections
7(e)(ii) and (iv) above, the "current market price per share" of
Common Stock on any day shall be deemed to be the average of the
daily closing prices for the 30 consecutive trading days
commencing 45 trading days before the day in question. The
closing price for each day shall be the reported last sale price
or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asking prices, in either
case on the New York Stock Exchange, or, if the Common Stock is
not quoted on such exchange, on the principal national securities
exchange on which the Common Stock is then listed or admitted to
trading or, if the Common Stock is not quoted on any national
securities exchange, the average of the closing bid and asked
prices in the Nasdaq Stock Market, or in the over-the-counter
market as furnished by a New York Stock Exchange member firm
selected from time to time by the Board of Directors for that
purpose.
(vii) Notwithstanding the foregoing, no adjustment in the
Conversion Price for the Convertible Preferred Stock shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that
any adjustment which by reason of this Section 7(e)(vii) is not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 7 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
(viii) In the event of a distribution of evidences of
indebtedness or other assets (as described in Section 7(e)(iv))
or a dividend to all holders of Common Stock of rights to
subscribe for additional shares of the Corporation's Capital
Stock (other than those referred to in Section 7(e)(ii) above),
the Corporation may, instead of making an adjustment of the
Conversion Price, make proper provision so that each holder who
converts such shares will be entitled to receive upon such
conversion, in addition to shares of Common Stock, an appropriate
number of such rights, warrants, evidences of indebtedness or
other assets.
(ix) No adjustment will be made for Ordinary Cash
Dividends (defined as dividends or other distributions to holders
of Common Stock in an amount not exceeding the accumulated Funds
from Operations of the Corporation since its formation, after
deducting cumulative dividends or other distributions (A) paid in
respect of all classes of capital stock of the Corporation or (B)
accrued in respect of Convertible Preferred Stock and any other
shares of Preferred Stock ranking on a parity with or senior to
the Convertible Preferred Stock as to dividends, in each case
since the Initial Issue Date). For this purpose, "Funds from
Operations of the Corporation" shall mean net income (loss)
(computed in accordance with generally accepted accounting
principles consistently applied), excluding gains (or losses)
-15-
<PAGE> 17
from debt restructuring and sales of property, plus depreciation
and amortization and other non-cash items.
(f) Whenever the Conversion Price shall be adjusted as herein
provided (i) the Corporation shall forthwith make available at the
office of the transfer agent for the Convertible Preferred Stock a
statement describing in reasonable detail the adjustment, the facts
requiring such adjustment and the method of calculation used; and (ii)
the Corporation shall cause to be mailed by first class mail, postage
prepaid, as soon as practicable to each holder of record of shares of
Convertible Preferred Stock a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted Conversion Price.
(g) In the event of any consolidation of the Corporation with
or merger of the Corporation into any other corporation (other than a
merger in which the Corporation is the surviving corporation), or a
sale, lease (other than in the ordinary course of business) or
conveyance of the assets of the Corporation as an entirety or
substantially as an entirety or any statutory exchange of securities
with another corporation, the holder of each share of Convertible
Preferred Stock shall, notwithstanding anything in this Section 7 to the
contrary, have the right, after such consolidation, merger, sale, lease
(other than in the ordinary course of business), conveyance or exchange,
to convert such share into the number and kind of shares of stock or
other securities and the amount and kind of property which such holder
would have been entitled to receive immediately upon such consolidation,
merger, sale, lease (other than in the ordinary course of business),
conveyance or exchange for the number of shares of Common Stock that
would have been issued to such holder had such shares of Convertible
Preferred Stock been converted immediately prior to such consolidation,
merger, sale, lease (other than in the ordinary course of business),
conveyance or exchange. The provisions of this Section 7(g) shall
similarly apply to successive consolidations, mergers, sales, leases
(other than in the ordinary course of business), conveyances or
exchanges.
(h) The Corporation shall pay any taxes that may be payable in
respect of the issuance of shares of Common Stock upon conversion of
shares of Convertible Preferred Stock, but the Corporation shall not be
required to pay any taxes which may be payable in respect of any
transfer involved in the issuance of shares of Common Stock in a name
other than that in which the shares of Convertible Preferred Stock so
converted are registered, and the Corporation shall not be required to
issue or deliver any such shares unless and until the person requesting
such issuance shall have paid to the Corporation the amount of any such
taxes, or shall have established to the satisfaction of the Corporation
that such taxes have been paid.
(i) The Corporation may (but shall not be required to) make
such reductions in the Conversion Price, in addition to those required
by Sections 7(e)(i) through (iv) above, as it considers to be advisable
in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights shall not be taxable to the
recipients.
-16-
<PAGE> 18
(j) The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full
number of shares of Common Stock issuable upon the conversion of all
shares of Convertible Preferred Stock then outstanding.
(k) In the event that:
(i) the Corporation shall declare a dividend or any
other distribution on its Common Stock, other than an Ordinary
Cash Dividend; or
(ii) the Corporation shall authorize the granting to the
holders of its Common Stock of rights to subscribe for or
purchase any shares of capital stock of any class or of any other
rights; or
(iii) any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation,
consolidation or merger of the Corporation with or into another
corporation (other than a merger in which the Corporation is the
surviving corporation), or sale, lease (other than in the
ordinary course of business) or conveyance of the assets of the
Corporation as an entirety or substantially as an entirety to
another corporation occurs; or
(iv) the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation shall occur;
the Corporation shall cause to be mailed to the holders of record of
Convertible Preferred Stock at least 15 days prior to the applicable
date hereinafter specified a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution or
grant of rights or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution or grant of rights are to be determined or (B) the date on
which such reorganization, reclassification, consolidation, merger,
sale, lease (other than in the ordinary course of business), conveyance,
dissolution, liquidation or winding up is expected to take place, and
the date, if any is to be fixed, as of which holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, lease (other than in the
ordinary course of business), conveyance, dissolution, liquidation or
winding up. Failure to give such notice, or any defect therein, shall
not affect the legality of such dividend, distribution, grant,
reorganization, reclassification, consolidation, merger, sale, lease
(other than in the ordinary course of business), conveyance,
dissolution, liquidation or winding up.
-17-
<PAGE> 19
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
attested to by its Secretary on this _____ day of _____________, 1996 and its
said President acknowledges under the penalties of perjury that these Articles
Supplementary are the corporate act of said Corporation and that to the best of
his knowledge, information and belief, the matters and facts set forth herein
are true in all material respects.
WALDEN RESIDENTIAL PROPERTIES, INC.
By:
-----------------------------------
Name: Marshall B. Edwards
Title: President
Attest:
- -----------------------------------
Name: Edward H. Hatzenbuehler
Title: Secretary
-18-
<PAGE> 1
WALDEN RESIDENTIAL PROPERTIES, INC.
and Walden Predecessors
Computation of Ratio of Earnings and
Funds From Operations to
Combined Fixed Charges and Preferred Stock Dividends
(Dollars in Thousands)
<TABLE>
<CAPTION>
(The Company) (Walden Predecessors)
---------------------------- ----------------------------------------------------------
Year February 9, January 1, Year Year Year
Ended 1994 to 1994 to Ended Ended Ended
December 31, December 31, February 8, December 31, December 31, December 31,
1995 (1) 1994 1994 1993 1992 1991
------------ ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Income/(Loss) before Extraordinary Item $10,685 $5,356 ($45) ($4,795) ($5,209) ($6,352)
Add:
Interest on indebtedness 17,111 6,288 1,075 11,456 11,751 12,234
Amortization and financing costs 900 371 20 1,417 418 200
------------ ------------ ----------- ----------- ------------ ------------
Earnings $28,696 $12,015 $1,050 $8,078 $6,960 $6,082
============ ============ =========== =========== ============ ============
Fixed Charges
Interest on indebtedness $17,111 $ 6,288 $1,075 $11,456 $11,751 $12,234
Amortization and financing costs 900 371 20 1,417 418 200
------------ ------------ ----------- ----------- ------------ ------------
Fixed Charges $18,011 $ 6,659 $1,095 $12,873 $12,169 $12,434
============ ============ =========== =========== ============ ============
Earnings Coverage Deficiency N/A N/A $45 $4,795 $5,209 $6,352
============ ============ =========== =========== ============ ============
Ratio of earnings to fixed charges 1.59 1.80 0.96 0.63 0.57 0.49
</TABLE>
(1) The Pro forma ratio of earnings to fixed charges and Preferred Stock
dividends for the year ended December 31, 1995 is not presented because the
pro forma ratio would not materially change the historical ratio for the
period.
