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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO
SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
_______________________________
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Maryland 75-2506197
(State of incorporation or organization) (I.R.S. Employer Identification No.)
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
(Address of principal executive offices) (Zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class to be so registered each class is to be registered
- --------------------------------------- ------------------------------
9.16% Series B Convertible New York Stock Exchange
Redeemable Preferred Stock,
$0.01 par value
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
Under its Articles of Incorporation (the "Articles"), Walden
Residential Properties, Inc., a Maryland corporation (the "Company"), has
authority to issue 10,000,000 shares of preferred stock, par value $.01 per
share. The Company has authorized the issuance of 1,800,000 shares of
preferred stock as the 9.16% Series B Convertible Redeemable Preferred Stock
(the "Series B Preferred Stock"). The Company has applied for listing of the
Series B Preferred Stock on the New York Stock Exchange.
Dividends. Subject to the preferential rights of any other series of
preferred stock of the Company (the "Preferred Stock") ranking senior as to
dividends to the Series B Preferred Stock and to the Company's Amended and
Restated Articles of Incorporation (the "Articles") regarding Excess Stock (as
defined in the Articles), holders of shares of the Series B Preferred Stock
will be entitled to receive, when and as declared by the Board of Directors,
out of funds legally available for the payment of dividends, cumulative
preferential cash dividends in an amount per share of Series B Preferred Stock
equal to the greater of (i) $2.29 per annum or (ii) the dividends (determined
on each of the quarterly Series B Preferred Dividend Payment Dates referred to
below) on the number of shares of Common Stock (or fraction thereof) into which
a share of Series B Preferred Stock is 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 Series B Preferred Stock is then convertible,
multiplied by the quarterly dividend declared or paid with respect to a share
of Common Stock on or most recently prior to the applicable Series B Preferred
Dividend Payment Date.
Dividends with respect to the Series B Preferred Stock will be
cumulative from the date on which the last dividend payment was made on the
Series A Preferred Stock and will be payable quarterly in arrears in March,
June, September and December (on the same dates as dividends on shares of
Common Stock), beginning with the dividend payment in September 1996 (each, a
"Series B Preferred Dividend Payment Date"). Any dividend payable on the
Series B Preferred Stock for any partial dividend period after the initial
dividend period will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Dividends payable on the Series B Preferred Stock for
each full dividend period will be computed by dividing the annual dividend rate
by four. Dividends will be payable to holders of record as they appear in the
stock records of the Company at the close of business on the applicable record
date, which will be the first day of the calendar month in which the applicable
Series B Preferred Dividend Payment Date falls or such other date designated by
the Board of Directors of the Company for the payment of dividends that is no
more than thirty (30) nor less than ten (10) days prior to such Series B
Preferred Dividend Payment Date (each, a "Series B Preferred Dividend Record
Date").
No dividends on shares of Series B Preferred Stock will be declared by
the Board of Directors of the Company or paid or set apart for payment by the
Company at such time as, and to the extent that, the terms and provisions of
any agreement of the Company, including any agreement relating to its
indebtedness, or any provisions of the Articles relating to any series of
Preferred Stock ranking senior to the Series B Preferred Stock as to dividends,
prohibit such declaration, payment or setting apart for payment or provide that
such declaration, payment or setting apart for payment would constitute a
breach thereof or a default thereunder, or if such
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declaration or payment will be restricted or prohibited by law.
Notwithstanding the foregoing, dividends on the Series B Preferred Stock will
accrue whether or not the Company has earnings, whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are declared. Holders of the Series B Preferred Stock will not be
entitled to any dividends in excess of full cumulative dividends as described
above.
If any shares of Series B Preferred Stock are outstanding, no full
dividends will be declared or paid or set apart for payment on the capital
stock of the Company of any other series ranking, as to dividends, on a parity
(including any shares of Series A Preferred Stock which remains outstanding
following the Exchange Offer) with or junior to the Series B Preferred Stock
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 Series B 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 the Series B Preferred Stock and the shares of any other
series of Preferred Stock ranking on a parity as to dividends with the Series B
Preferred Stock, all dividends declared upon shares of Series B Preferred Stock
and any other series of Preferred Stock ranking on a parity as to dividends
with the Series B Preferred Stock will be declared pro rata so that the amount
of dividends declared per share on the Series B Preferred Stock and such other
series of Preferred Stock will in all cases bear to each other the same ratio
that accrued and unpaid dividends per share on the shares of Series B Preferred
Stock and such other series of Preferred Stock bear to each other. No
interest, or sum of money in lieu of interest, will be payable in respect of
any dividend payment or payments on Series B Preferred Stock which may be in
arrears.
Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Series B 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 distributions payable in
Common Stock or other capital stock ranking junior to the Series B Preferred
Stock as to dividends and upon liquidation, dissolution or winding up) will be
declared or paid or set aside for payment, and no other distribution will be
declared or made, upon the Common Stock or any other capital stock of the
Company ranking junior to or on a parity with the Series B Preferred Stock as
to dividends, nor will any Common Stock or any other capital stock of the
Company ranking junior to or on a parity with the Series B Preferred Stock as
to dividends or 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
such stock) by the Company (except by conversion into or exchange for other
capital stock of the Company ranking junior to the Series B Preferred Stock as
to dividends and upon liquidation, dissolution and winding up).
Any dividend payment made on shares of Series B Preferred Stock will
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such Series B Preferred Stock which remains payable.
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Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the Company, subject to the prior rights of any series of capital
stock ranking senior to the Series B Preferred Stock, the holders of shares of
Series B Preferred Stock will be entitled to be paid out of the assets of the
Company legally available for distribution to its stockholders a liquidation
preference equal to the sum of $25.00 per share plus an amount equal to any
accrued and unpaid dividends thereon (whether or not earned or declared) to the
date of payment (the "Series B Preferred Liquidation Preference Amount"),
before any distribution of assets is made to holders of Common Stock or any
other capital stock that ranks junior to the Series B Preferred Stock as to
liquidation rights. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series B Preferred
Stock will have no right or claim to any of the remaining assets of the
Company.
In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the legally available assets of the Company are
insufficient to pay the Series B Preferred Liquidation Preference Amount on all
outstanding shares of Series B Preferred Stock and the corresponding amounts
payable on all shares of other classes or series of capital stock of the
Company ranking on a parity with the Series B Preferred Stock in the
distribution of assets upon liquidation, dissolution or winding up, then the
holders of the Series B Preferred Stock and all other such classes or series of
capital stock will share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
If liquidating distributions have been made in full to all holders of
shares of Series B Preferred Stock, the remaining assets of the Company will be
distributed among the holders of any other classes or series of capital stock
ranking junior to the Series B Preferred Stock upon liquidation, dissolution or
winding up, according to their respective rights and preferences and in each
case according to their respective number of shares.
The consolidation or merger of the Company with or into any other
corporation, or the sale, lease, transfer or conveyance of all or substantially
all of the property or business of the Company, will not be deemed to
constitute a liquidation, dissolution or winding up of the Company for these
purposes.
Redemption. The Series B Preferred Stock will not be redeemable prior
to April 30, 2006, except under certain limited circumstances to preserve the
Company's status as a REIT. See "Restrictions on Transfer." On and after
April 30, 2006, the Company, at its option (to the extent the Company has funds
legally available therefor) upon not less than 30 nor more than 60 days'
written notice, may redeem shares of Series B Preferred Stock, in whole or in
part, at any time or from time to time, for cash at the redemption price per
share of $25.00, plus all accrued and unpaid dividends, if any, thereon
(whether or not earned or declared) to the date fixed for redemption.
Notwithstanding the foregoing, unless full cumulative dividends on all
shares of Series B 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
shares of Series B Preferred Stock will be redeemed unless all
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outstanding shares of Series B Preferred Stock are simultaneously redeemed;
provided, however, that the foregoing will not prevent the purchase or
acquisition of shares of the Series B Preferred Stock pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Series B Preferred Stock, and unless full cumulative dividends on all
outstanding shares of Series B 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 Company will not purchase or otherwise acquire directly or
indirectly through a subsidiary or otherwise, any shares of Series B Preferred
Stock (except by conversion into or exchange for capital stock of the Company
ranking junior to the Series B Preferred Stock as to dividends and upon
liquidation, dissolution and winding up).
If fewer than all of the outstanding shares of Series B Preferred
Stock are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares
held by such holders (as nearly as may be practicable without creating
fractional shares of Series B Preferred Stock) or any other equitable method
determined by the Company.
Notice of 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 redemption data. A similar notice will be mailed by the
Company, postage prepaid, not less than 30 nor more than 60 days' prior to the
redemption date, addressed to the respective holders of record of Series B
Preferred Stock to be redeemed at their respective addresses as they appear on
the stock transfer records of the Company. No failure to give such notice or
any defect therein or in the mailing thereof will affect the validity of the
proceeding for the redemption of any shares of Series B Preferred Stock except
as to the holder to whom notice was defective or not given. Each notice will
state: (i) the redemption date; (ii) the redemption price; (iii) the number of
shares of Series B Preferred Stock to be redeemed; (iv) the place or places
where the Series B Preferred Stock is to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; and (vi) that any conversion rights will
terminate at the close of business on the third business day immediately
preceding the redemption date. If fewer than all the shares of Series B
Preferred Stock held by any holder are to be redeemed, the notice mailed to
such holder will also specify the number of shares of Series B Preferred Stock
to be redeemed from such holder. If notice of redemption of any shares of
Series B Preferred Stock has been properly given and if funds necessary for
such redemption have been irrevocably set aside by the Company in trust for the
benefit of the holders of any of the shares of Series B Preferred Stock so
called for redemption, then from and after the redemption date dividends will
cease to accrue on such shares of Series B Preferred Stock, such shares of
Series B Preferred Stock will no longer be deemed to be outstanding and all
rights of the holders of such shares will terminate except for the right to
receive the applicable redemption price and other amounts payable in respect of
such shares.
The holders of Series B Preferred Stock at the close of business on a
Series B Preferred Dividend Record Date will be entitled to receive the
dividend payable with respect to such Series B Preferred Stock on the
corresponding Series B Preferred Dividend Payment Date
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notwithstanding the redemption thereof between such Series B Preferred Dividend
Record Date and the corresponding Series B Preferred Dividend Payment Date or
the Company's default in the payment of the dividend due. Except as provided
above, the Company will make no payment or allowance for unpaid dividends,
whether or not in arrears, on shares of Series B Preferred Stock called for
redemption.
The Series B Preferred Stock has no stated maturity and will not be
subject to any sinking fund.
Voting Rights. Holders of the Series B Preferred Stock will not have
any voting rights, except as set forth below or as otherwise from time to time
required by law. Subject to the provisions in the Articles regarding Excess
Stock, in any matter in which the Series B Preferred Stock may vote, including
any action by written consent, each share of Series B Preferred Stock will be
entitled to one vote. The holders of each share of Series B Preferred Stock
may separately designate a proxy for the vote to which that share of Series B
Preferred Stock is entitled.
Whenever dividends on any shares of Series B Preferred Stock have been
in arrears for six or more quarterly periods, the holders of such shares of
Series B Preferred Stock (voting separately as a class with all other series of
Preferred Stock upon which rights to vote on such matter with the Series B
Preferred Stock have been conferred and are then exercisable) will be entitled
to vote for the election of two additional directors of the Company at a
special meeting called by the holders of record of at least 10% of the Series B
Preferred Stock and such other Preferred Stock, if any (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of the stockholders), or at the next annual meeting of stockholders,
and at each subsequent annual meeting until all dividends accumulated on such
shares of Series B Preferred Stock for the past dividend periods and the then
current dividend period have been fully paid or declared and a sum sufficient
for the payment thereof set aside for payment. In such event, the entire Board
of Directors of the Company will be increased by two directors. Each of such
two directors will be elected to serve until the earlier of (i) the election
and qualification of such director's successor or (ii) payment of the dividend
arrearage for the Series B Preferred Stock.
So long as any shares of Series B Preferred Stock remain outstanding,
the Company will not (i) without the affirmative vote or consent of the holders
of at least a majority of the shares of Series B Preferred Stock outstanding at
the time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), authorize or create, or increase the
authorized or issued amount of, any class or series of capital stock ranking
senior to the Series B Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) without the
affirmative vote or consent of the holders of at least two-thirds of the shares
of Series B Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting (such series voting separately as a
class), amend, alter or repeal the provisions of the Articles, whether by
merger, consolidation or otherwise, so as to materially and adversely affect
any right, preference, privilege or voting power of the Series B Preferred
Stock or the holders
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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 increase in the amount of authorized shares of Series B Preferred
Stock or any other series of Preferred Stock, in each case ranking on a parity
with or junior to the Series B Preferred Stock with respect to payment of
dividends or the distribution of assets upon liquidation, dissolution or
winding up, will not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
is effected, all outstanding shares of Series B Preferred Stock have been
redeemed or called for redemption upon proper notice and sufficient funds have
been deposited in trust to effect such redemption.
Conversion. Subject to the exceptions described under "Restrictions
on Transfer," holders of the Series B Preferred Stock will have the right,
except in the case of Series B Preferred Stock called for redemption, to
convert all or any of the Series B Preferred Stock (based upon the Series B
Preferred Liquidation Preference Amount determined immediately following the
most recent Series B Preferred Dividend Payment Date) into shares of Common
Stock at the conversion price of $21.92 per share of Common Stock, subject to
adjustment upon the occurrence of certain events, as described below (the
"Conversion Price"). In the case of Series B Preferred Stock called for
redemption, conversion rights will expire at the close of business on the third
business day immediately preceding the date fixed for redemption.
Shares of Series B Preferred Stock will 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 Company. Upon conversion, no adjustment or prepayment will be
made for dividends, but if any holder surrenders Series B Preferred Stock for
conversion after the close of business on a Series B Preferred Dividend Record
Date and prior to the opening of business on the related Series B Preferred
Dividend Payment Date, then, notwithstanding such conversion, the dividend
payable on such Series B Preferred Dividend Payment Date will be paid on such
Series B Preferred Dividend Payment Date to the registered holder of such
shares on such Series B Preferred Dividend Record Date. Shares of Series B
Preferred Stock surrendered for conversion during the period from the close of
business on a Series B Preferred Dividend Record Date to the Series B Preferred
Dividend Payment Date must also pay the amount of the dividend which is
payable. No fractional shares of Common Stock will be issued upon conversion
and, if the conversion results in a fractional interest, an amount will be paid
in cash equal to the value of such fractional interest based on the market
price of the Common Stock on the last trading day prior to the date of
conversion.
The number of shares of Common Stock or other assets issuable upon
conversion and the Conversion Price are subject to adjustment upon the
occurrence of the following events:
(i) the issuance of Common Stock as a dividend or
distribution on shares of Common Stock;
(ii) the subdivision, combination or reclassification of
the outstanding shares of Common Stock;
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(iii) the issuance to all holders of Common Stock of rights
or warrants to subscribe for or purchase Common Stock (or securities
convertible into Common Stock) at a price per share less than the then
current market price per share;
(iv) the distribution to all holders of Common Stock of
evidences of indebtedness or assets (including securities, but
excluding Ordinary Cash Distributions, as defined below, and those
dividends, distributions, rights or warrants referred to above); and
(v) the distribution to all holders of Common Stock of
rights or warrants to subscribe for securities (other than those
referred to in clause (iii) above).
The adjustments to be made in each such event are set forth in the Articles.
In the event of a distribution of evidence of indebtedness or other assets (as
described in clause (iv)) or a dividend to all holders of Common Stock of
rights to subscribe for additional shares of the Company's capital stock (other
than those referred to in clause (iii) above), the Company 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. No
adjustment will be made for Ordinary Cash Distributions (defined as
distributions to holders of Common Stock in an amount not exceeding the
Company's accumulated funds from operations since its formation, after
deducting dividends or other distributions (i) paid in respect of all classes
of capital stock of the Company or (ii) accrued in respect of the Series B
Preferred Stock, and any other shares of Preferred Stock ranking on a parity
with or senior to the Series B Preferred Stock as to dividends). In addition,
no adjustment of the Conversion Price will be made until cumulative adjustments
amount to one percent or more of the Conversion Price as last adjusted. Any
adjustments not so required to be made will be carried forward and taken into
account in subsequent adjustments.
Whenever the number of shares of Common Stock or other assets issuable
upon conversion and the Conversion Price are adjusted as herein provided, the
Company (i) will promptly make available at the office of the transfer agent a
statement describing in reasonable detail such adjustment, and (ii) will cause
to be mailed by first class mail, postage prepaid, as soon as practicable, to
each holder of record of shares of Series B Preferred Stock, a notice stating
that certain adjustments have been made and stating the adjusted conversion
price.
In the event of any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale, transfer or lease of all or substantially all
of its assets to another corporation, is affected in such a way that holders of
Common Stock will be entitled to receive stock, securities or other assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or
lease, the holder of each share of Series B Preferred Stock shall have the
right immediately to convert such share into the kind and amount of stock,
securities or other assets which the holders of such shares would have owned or
been entitled to receive immediately after the transaction if such holders had
converted such
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shares immediately before the effective date of the transaction, subject to
further adjustment upon the occurrence of the events described above.
Rank. The Series B Preferred Stock will, with respect to dividend
rights and distributions upon liquidation, dissolution, and winding up, rank
(i) senior to the Common Stock, all other shares of common stock of the Company
of all classes and series, all classes of Excess Stock (other than Excess
Series B Preferred Stock, as to which the Series B Preferred Stock is senior
only as to dividends) and shares of all other series of capital stock issued by
the Company other than any series of capital stock the terms of which
specifically provide that the capital stock of such series rank senior to or on
a parity with such Series B Preferred Stock with respect to dividend rights or
distributions upon liquidation, dissolution or winding up of the Company; (ii)
on a parity with the Excess Series B Preferred Stock upon liquidation,
dissolution and winding up) and the shares of all other capital stock issued by
the Company the terms of which specifically provide that the shares rank on a
parity with the Series B Preferred Stock with respect to dividends and
distributions upon liquidation, dissolution or winding up of the Company
(including the Series A Preferred Stock) or make no specific provision as to
their ranking; and (iii) junior to all other capital stock issued by the
Company 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 Company (the issuance of
which must have been approved by a vote of at least a majority of the
outstanding shares of Series B Preferred Stock).
Restrictions on Transfer. The shares of Series B Preferred Stock are
generally transferable. The Articles, however, contain certain restrictions on
the number of shares of Stock, defined to include all classes of capital stock
that the Company shall have authority to issue, including Series B Preferred
Stock, other series of preferred stock and Common Stock, that shareholders may
own. For the Company to qualify as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"), shares of Stock must be beneficially owned by
100 or more persons during at least 365 days of a taxable year of twelve months
or during a proportionate part of a shorter taxable year. Further, not more
than 50% of the value of the issued and outstanding shares of Stock (including
the Series B Preferred Stock) may be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include, except in limited
circumstances, certain entities such as qualified private pension plans) during
the last half of a taxable year or during a proportionate part of a shorter
taxable year.
Since the Board of Directors of the Company believes it is essential
for the Company to maintain its status as a REIT under the Code, the Articles
provide that no person, except Mr. Don R. Daseke, Chairman of the Board of
Directors and Chief Executive Officer of the Company, may own or be deemed to
own by virtue of the attribution provisions of the Code, more than 9.0% (the
"Ownership Limit") of the aggregate value of all outstanding shares of Stock
(including the Series B Preferred Stock); provided, however, that Mr. Daseke
may not own, directly or indirectly, more than 13.0% of the aggregate value of
all outstanding shares of Stock (the "Existing Holder Limit"). The Board of
Directors, upon receipt of evidence and assurances satisfactory to the Board of
Directors, may also exempt a proposed transferee from the Ownership Limit or
Existing Holder Limit. In connection therewith, the Board of Directors may
require opinions of counsel, affidavits, undertakings or agreements as it may
deem necessary or advisable
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in order to determine or ensure the Company's status as a REIT. Any
acquisition or transfer of shares of Stock that would: (i) result in the
shares of Stock being owned by fewer than 100 persons or (ii) result in the
Company being "closely-held" within the meaning of Section 856(h) of the Code,
shall be null and void, and the intended transferee will acquire no rights to
the shares of Stock (including the Series B Preferred Stock). The foregoing
restrictions on transferability and ownership will not apply if the Board of
Directors determines that it is no longer in the best interests of the Company
to attempt to qualify, or to continue to qualify, as a REIT and the Articles
are amended accordingly.
Any purported transfer of shares of Stock (including the Series B
Preferred Stock) that would result in a person owning shares of Stock in excess
of the Ownership Limit or Existing Holder Limit will result in the shares
subject to such purported transfer being automatically exchanged for an equal
number of shares of Excess Stock. Under the Articles, Excess Stock shall be
deemed to have been transferred to the Company, as trustee of a separate trust
(the "Trust"), for the exclusive benefit of the person or persons to whom the
interest in the Trust can ultimately be transferred.
Excess Stock is not transferable. The purported transferee of any
shares of Stock (including Series B Preferred Stock) that are exchanged for
Excess Stock may designate a transferee of the interest in the Trust if the
Excess Stock held in the Trust and represented by such Trust interest to be
transferred would not be Excess Stock in the hands of the designated transferee
at a price not to exceed the price paid by the purported transferee (or, if no
consideration was paid, the market price at the time of the original attempted
transfer) at which point such Excess Stock will automatically be exchanged for
the shares of Stock (including Series B Preferred Stock) to which the Excess
Stock is attributable. In addition, Excess Stock is subject to purchase by the
Company at a purchase price equal to the lesser of: (i) the price paid for the
shares of Stock (including Series B Preferred Stock) by the intended transferee
(or, if no consideration was paid, the market price of the shares of Stock
(including the Series B Preferred Stock) the attempted transfer of which
resulted in Excess Stock, measured on the date of the transfer); or (ii) the
market price of the shares of Stock (including Series B Preferred Stock) the
attempted transfer of which resulted in Excess Stock measured on the date on
which the Company elects to purchase the Excess Stock. "Market Price" means
the average daily per share closing sales price of a share of Stock (including
Series B Preferred Stock) if shares of Stock (including Series B Preferred
Stock) are listed on a national securities exchange or quoted on Nasdaq
National Market or if not then traded on any exchange or quotation systems, the
mean between the average per share closing bid prices and the average per share
closing bid prices and the average per share closing asked prices, in each
case, during the 30 calendar day period ending on the business day prior to the
redemption date, or if there have been no sales on a national securities
exchange or Nasdaq National Market and no published bid and asked quotations
with respect to shares of such stock during such 30 calendar day period, then
the market price of the shares of Stock (including Series B Preferred Stock) on
the relevant date shall be as determined in good faith by the Board of
Directors.
From and after the intended transfer to the purported transferee of
the Excess Stock, the purported transferee shall cease to be entitled to
distributions (except upon liquidation), voting rights and other benefits with
respect to the Excess Stock except the right to payment of the
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purchase price for the shares of Stock (including Series B Preferred Stock).
Any dividend or distribution paid to a purported transferee on Excess Stock
prior to the discovery by the Company that the shares have been transferred in
violation of the Articles shall be repaid to the Company upon demand. If the
foregoing transfer restrictions are determined to be void or invalid by virtue
of any legal decision, statute, rule or regulation, then the intended
transferee of any Excess Stock may be deemed, at the option of the Company, to
have acted as an agent on behalf of the Company in acquiring the Excess Stock
and to hold the Excess Stock on behalf of the Company. All certificates
representing shares of Stock (including Series B Preferred Stock) will bear a
legend referring to the restrictions described above.
In addition, each stockholder shall, upon demand, be required to
disclose to the Company in writing, all information regarding the direct and
indirect beneficial ownership of shares of Stock (including Series B Preferred
Stock) as the Board of Directors deems reasonably necessary to comply with the
provisions of the Code applicable to a REIT, to comply with the requirements of
any taxing authority or governmental agency or to determine any such
compliance.
These ownership limitations could have the effect of discouraging a
takeover or other transaction in which holders of some, or a majority, of
shares of Stock (including Series B Preferred Stock) might receive a premium
for their shares over the then-prevailing market price or which these holders
might believe to be otherwise in their best interest.
General. The transfer agent and registrar for the Series B Preferred
Stock is The First National Bank of Boston.
The Series B Preferred Stock will be, when issued, duly authorized,
fully paid and nonassessable and will have no preemptive rights.
10
<PAGE> 12
<TABLE>
<CAPTION>
ITEM 2. EXHIBITS.
--------
<S> <C>
1.1 Specimen Series B Preferred Stock Certificate.
1.2 Specimen Common Stock Certificate (previously filed as Exhibit 1.1 to the Company's Registration
Statement on Form S-11 (Registration No. 33-70132) and incorporated herein by reference).
2.1 Articles of Amendment and Restatement of the Company (previously filed as Exhibit 3.1 to this Company's
Registration statement on Form S-11 (Registration No. 33-70132) and incorporated herein by reference).
2.2 Restated Bylaws of the Company (previously filed as Exhibit 3.2 to the Company's Registration Statement
on Form S-11 (Registration No. 33-70132) and incorporated herein by reference).
2.3 Form of Articles Supplementary designating the rights of the holders of Series B Preferred Stock.
</TABLE>
11
<PAGE> 13
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.
WALDEN RESIDENTIAL PROPERTIES, INC.
Date: July 5, 1996
By: /s/ Mark S. Dillinger
------------------------------------
Mark S. Dillinger
Executive Vice President and
Chief Financial Officer
12
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
1.1 Specimen Series B Preferred Stock Certificate.
1.2 Specimen Common Stock Certificate (previously filed as Exhibit 1.1 to the Company's Registration
Statement on Form S-11 (Registration No. 33-70132) and incorporated herein by reference).
2.1 Articles of Amendment and Restatement of the Company (previously filed as Exhibit 3.1 to this Company's
Registration statement on Form S-11 (Registration No. 33-70132) and incorporated herein by reference).
2.2 Restated Bylaws of the Company (previously filed as Exhibit 3.2 to the Company's Registration Statement
on Form S-11 (Registration No. 33-70132) and incorporated herein by reference).
2.3 Form of Articles Supplementary designating the rights of the holders of Series B Preferred Stock.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
[FRONT OF STOCK CERTIFICATE]
SHARES OF 9.16% SERIES B
SHARES OF 9.16% SERIES B
CONVERTIBLE REDEEMABLE
CONVERTIBLE REDEEMABLE
PREFERRED STOCK PAR VALUE $.01
PREFERRED STOCK PAR VALUE $.01
FORMED UNDER THE
SHARES
LAWS OF THE STATE
OF MARYLAND
WALDEN RESIDENTIAL
PROPERTIES, INC.
THIS CERTIFICATE IS
TRANSFERABLE IN BOSTON
MASS. AND NEW YORK, N.Y.
CUSIP 931210 30 6
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF 9.16% SERIES B CONVERTIBLE REDEEMABLE
PREFERRED STOCK OF
Walden Residential Properties, Inc. (the "Company"), transferable only on the
books of the Company by the holder hereof in person, or by duly authorized
attorney, upon the surrender of this Certificate is properly endorsed. This
Certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar.
WITNESS the facsimile seal of the Company and the facsimile signatures
of its duly authorized representatives.
Dated:
WALDEN RESIDENTIAL PROPERTIES, INC.
CORPORATE
SEAL
MARYLAND
SECRETARY PRESIDENT Counter signed and Registered:
THE FIRST NATIONAL BANK OF
BOSTON, Transfer Agent and
Registrar
By:
Authorized Signature
THERE ARE RESTRICTIONS ON THE TRANSFER
OF THE SHARES EVIDENCED BY THIS CERTIFICATE
AS MORE FULLY SET FORTH ON THE REVERSE HEREOF.
<PAGE> 2
[BACK OF STOCK CERTIFICATE]
WALDEN RESIDENTIAL PROPERTIES, INC.
THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER ON REQUEST AND WITHOUT CHARGE A
FULL STATEMENT OF THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER
RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS,
QUALIFICATIONS AND TERMS, AND CONDITIONS OF REDEMPTION OF THE STOCK OF EACH
CLASS WHICH THE CORPORATION IS AUTHORIZED TO ISSUE, OR THE DIFFERENCES IN THE
RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES OF A CLASS IN
SERIES WHICH THE CORPORATION IS AUTHORIZED TO ISSUE. TO THE EXTENT THEY HAVE
BEEN SET, AND OF THE AUTHORITY OF THE BOARD OF DIRECTORS TO SET THE RELATIVE
RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES OR CLASSES, SUCH REQUEST MAY BE
MADE TO THE SECRETARY OF THE CORPORATION OR TO ITS TRANSFER AGENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS
STATUS AS A REAL STATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"). EXCEPT AS OTHERWISE PROVIDED PURSUANT TO THE
CHARTER OF THE CORPORATION, NO PERSON MAY (1) BENEFICIALLY OWN SHARES OF STOCK
IN EXCESS OF 9.0% (OR SUCH OTHER PERCENTAGE AS MAY BE PROVIDED IN THE CHARTER
OF THE CORPORATION) OF THE AGGREGATE VALUE OF ALL OUTSTANDING STOCK (UNLESS
SUCH PERSON IS THE EXISTING HOLDER), OR (2) BENEFICIALLY OWN STOCK THAT WOULD
RESULT IN THE CORPORATION BEING "CLOSELY HELD" UNDER SECTION 856(h) OF THE
CODE. ANY PERSON WHO ATTEMPTS TO BENEFICIALLY OWN SHARES OF STOCK IN EXCESS OF
THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF THE
RESTRICTIONS ON OWNERSHIP OR TRANSFER ARE VIOLATED, THE SHARES OF STOCK
REPRESENTED HEREBY WILL BE AUTOMATICALLY CONVERTED INTO SHARES OF EXCESS STOCK
WHICH WILL BE HELD IN TRUST BY THE CORPORATION. THE CORPORATION HAS THE OPTION
TO REDEEM SHARES OF EXCESS STOCK UNDER CERTAIN CIRCUMSTANCES. ALL TERMS IN
THIS LEGEND NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS ASCRIBED THERETO IN
THE CORPORATION'S CHARTER, AS THE SAME MAY BE FURTHER AMENDED FROM TIME TO
TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON OWNERSHIP OR TRANSFER,
WILL BE SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS.
The following abbreviations, when used in the inscription of the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM -- as tenants in common UNIF TRAN MIN ACT -- ______ Custodian ________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as tenants in common under Uniform Transfers to Minors
Act ___________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received, _____________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
___________________________________________ shares of 9.16% Series B Convertible
Redeemable Preferred Stock represented by the within certificate, and do hereby
irrevocably constitute and appoint ____________________________________________
_____________________________________Attorney to transfer the said shares on the
books of the within-named Company with full power of substitution in the
premises.
Dated, ________________
________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed by:
__________________________
<PAGE> 1
EXHIBIT 2.3
9.16% Series B 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
9.16% Series B Cumulative Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series
___________________________
Dated as of June ___, 1996
<PAGE> 2
WALDEN RESIDENTIAL PROPERTIES, INC.
___________
Articles Supplementary Classifying and Designating a
Series of Preferred Stock as
9.16% Series B 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 adopted resolutions authorizing the
creation and issuance of up to 1,800,000 shares, with a liquidation preference
of $25.00 per share, of Series B 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 9.16% Series B Convertible Redeemable
Preferred Stock (the "Convertible Preferred Stock") and the number of shares
which shall constitute such series shall not be more than 1,800,000 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 $2.29 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 the Corporation's common stock, par value
<PAGE> 3
$.01 per share (the "Common Stock") (or fraction 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 on which the last
dividend payment was made n the 9.16% Series A Convertible Redeemable
Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"). Dividends shall be payable quarterly in arrears when and as
declared by the Board of Directors of the Corporation in March, June,
September and December of each year (on the same dates as dividends
are paid on shares of Common Stock) (each, a "Convertible Dividend
Payment Date"), commencing in September 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 (other than the
initial Dividend Period) which is less than a full Dividend Period in
length will be computed from the immediately preceding Dividend
Payment Date to, but not including, the date on which dividends are
paid 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"). 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 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
-2-
<PAGE> 4
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 (including the Series A Preferred Stock) 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).
-3-
<PAGE> 5
(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.
-4-
<PAGE> 6
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 April 30,
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
-5-
<PAGE> 7
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.
-6-
<PAGE> 8
(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 (i) 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), 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) without the affirmative vote or consent of at least
two-thirds 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 or as a class), 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,
-7-
<PAGE> 9
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 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 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
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<PAGE> 10
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) 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
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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 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 (including the Series A Preferred Stock) 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.
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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 $21.92 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
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<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.
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<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.
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<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
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<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)
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<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.
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<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.
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<PAGE> 19
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its Chairman of the
Board and Chief Executive Officer and attested to by its Secretary on this ____
day of June, 1996 and its said Chairman of the Board and Chief Executive
Officer 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: Don R. Daseke
Title: Chairman of the Board
and Chief Executive Officer
Attest:
__________________________________
Name: Edward H. Hatzenbuehler
Title: Secretary
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