<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 7, 1996
------------------------------------------------
Date of Report (Date of Earliest Event Reported)
EQUITY INNS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Tennessee 34-O-23290 62-1550848
- ---------------------------- ------------------ ------------------
(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
4735 Spottswood
Suite 102
Memphis, Tennessee 38117
-------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(901) 761-9651
--------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
-----------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
The 1996 annual meeting of shareholders (the "Annual Meeting") of
Equity Inns, Inc. (the "Company") was held on Tuesday, May 7, 1996 for the
shareholders to take action on the following proposals: (i) to elect James A.
Thomas, III and William W. Deupree, Jr. as Class II directors, each to serve
until the 1999 annual meeting of shareholders or until his successor is duly
elected and qualified ("Proposal One"); (ii) to consider and vote upon a
proposal to amend Article 14 of the Company's Charter to conform certain of the
Company's existing share transfer restrictions with share transfer restrictions
approved recently by the Internal Revenue Service ("Proposal Two"); and (iii)
to consider and vote upon a proposal to amend the Company's 1994 Stock
Incentive Plan (the "1994 Plan") to increase the maximum aggregate number of
shares of Common Stock issuable under the 1994 Plan from 700,000 to 2,300,000
shares ("Proposal Three"). Each of the proposed amendments to Article 14 and to
the 1994 Plan was approved by the Board of Directors in March 1996. A copy of
the proposed amendment to Article 14 of the Company's Charter was filed with
the Securities and Exchange Commission (the "Commission") as an exhibit to the
Company's definitive proxy statement for the Annual Meeting, which was filed
with the Commission on March 29, 1996.
A total of 10,186,723 shares, or 67.5% of the Company's outstanding
common stock entitled to vote at the meeting, was present, in person or by
proxy, at the Annual Meeting. With respect to Proposal One, a plurality of the
votes cast in favor of each nominee was required for election of the nominees
as director. Messrs. Thomas and Deupree each received a plurality of the
votes, and each was elected as a Class II director. With respect to Proposal
Two and Proposal Three, approval of each proposal required the votes cast in
favor of such proposal to exceed the votes cast in opposition to such proposal.
Proposal Two and Proposal Three received the required approval of the
shareholders. The breakdown of the votes cast on each proposal was as follows:
<TABLE>
<CAPTION>
WITHHELD/
--------- BROKER
FOR AGAINST ABSTAIN NON-VOTES TOTAL
--- ------- ------- --------- -----
<S> <C> <C> <C> <C> <C>
Proposal One
(a) Mr. Thomas 10,164,078 22,645 N/A N/A 10,186,723
(b) Mr. Deupree 10,164,078 22,645 N/A N/A 10,186,723
Proposal Two 6,594,618 33,320 43,157 3,515,628 10,186,723
Proposal Three 5,476,229 1,126,992 60,216 3,523,286 10,186,723
</TABLE>
Following the Annual Meeting, on May 21, 1996, the Company filed
Articles of Amendment to its Charter, reflecting the adoption of Proposal Two.
A copy of the Articles of Amendment to the Charter of the Company as filed with
the Secretary of State of the State of Tennessee is attached hereto as Exhibit
3.1.
ITEM 7. EXHIBITS.
3.1* Articles of Amendment to the Charter of Equity Inns, Inc.
10.1** Equity Inns, Inc. 1994 Stock Incentive Plan
______________
* Filed herewith.
** Incorporated by reference to Exhibit 10.29(a) to the Company's
Registration Statement on Form S-11 (Registration No. 33-80318).
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUITY INNS, INC.
May 22, 1996 /s/ Howard A. Silver
-------------------------
Howard A. Silver
Vice President of Finance,
Secretary, Treasurer and
Chief Financial Officer
3
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EXHIBIT INDEX
3.1* Articles of Amendment to Charter of Equity Inns, Inc.
10.1** Equity Inns, Inc. 1994 Stock Incentive Plan
______________
* Filed herewith.
** Incorporated by reference to Exhibit 10.29(a) to the Company's
Registration Statement on Form S-11 (Registration No. 33-80318).
4
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EXHIBIT 3.1
ARTICLES OF AMENDMENT TO THE CHARTER
OF
EQUITY INNS, INC
________________________________________________________________________________
To the Secretary of State of the State of Tennessee:
Pursuant to the provisions of Section 48-20-106 of the Tennessee
Business Corporation Act, the undersigned Tennessee corporation adopts the
following amendment to its charter.
1. The name of the corporation is Equity Inns, Inc.
2. The text of the amendment adopted is in the form attached
hereto as Exhibit A.
3. The amendments do not provide for the exchange,
reclassification or cancellation of existing shares.
4. The amendment was duly adopted by the board of directors of
the corporation on March 11, 1996 and by the shareholders of the corporation on
May 7, 1996.
5. The amendment is to be effective when these articles of
amendment are filed by the Secretary of State of the State of Tennessee.
Dated this the 8th day of May, 1996
EQUITY INNS, INC.
By: /s/ Howard A. Silver
----------------------------
Howard A. Silver
Title: Vice President of Finance,
Secretary, Treasurer and
Chief Financial Officer
5
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EXHIBIT A
AMENDMENTS TO ARTICLE 14
OF THE CHARTER OF
EQUITY INNS, INC. (THE "COMPANY")
The Charter of the Company shall be amended in the following manner:
(1) By deleting sections (a) through (h) of Article 14 and by
inserting in lieu thereof the following:
(a) Restrictions on Transfer.
(1) Definitions. The following terms shall have the
following meanings:
"Beneficial Ownership" shall mean ownership
of shares of Equity Stock by a Person who would be
treated as an owner of such shares of Equity Stock
either directly or indirectly through the application
of Section 544 of the Code, as modified by Section
856(h)(1)(B) of the Code. The terms "Beneficial
Owner," "Beneficially Owns," and "Beneficially Owned"
shall have correlative meanings.
"Beneficiary" shall mean, with respect to any
Trust, one or more organizations described in each of
Section 170(b)(1)(A) (other than clauses (vii) or
(viii) thereof) and Section 170(c)(2) of the Code
that are named by the Corporation as the beneficiary
or beneficiaries of such Trust, in accordance with
the provisions of Section 14(b)(1) hereof.
"Board of Directors" shall mean the Board of
Directors of the Corporation.
"Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"Constructive Ownership" shall mean ownership
of shares of Equity Stock by a Person who would be
treated as an owner of such shares of Equity Stock
either directly or indirectly through the application
of Section 318 of the Code, as modified by Section
856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns," and "Constructively
Owned" shall have correlative meanings.
"Equity Stock" shall mean Preferred Stock and
Common Stock of the Corporation. The term "Equity
Stock" shall include all shares of Preferred Stock
and Common Stock of the Corporation that are held as
Shares-in-Trust in accordance with the provisions of
Section 14(b) hereof.
"Market Price" on any date shall mean the
average of the Closing Price for the five consecutive
Trading Days ending on such date. The "Closing
Price" on any date shall mean the
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last sale price, regular way, or, in case no such
sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either
case as reported in the principal consolidated
transaction reporting system with respect to
securities listed or admitted to trading on the New
York Stock Exchange or, if the shares of Equity Stock
are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal
consolidated transaction reporting system with
respect to securities listed on the principal
national securities exchange on which the shares of
Equity Stock are listed or admitted to trading or, if
the shares of Equity Stock are not listed or admitted
to trading on any national securities exchange, the
last quoted price, or if not so quoted, the average
of the high bid and low asked prices in the
over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated
Quotation System or, if such system is no longer in
use, the principal other automated quotations system
that may then be in use or, if the shares of Equity
Stock are not quoted by any such organization, the
average of the closing bid and asked prices as
furnished by a professional market maker making a
market in the shares of Equity Stock and selected by
the Board of Directors.
"Non-Transfer Event" shall mean an event
other than a purported Transfer that would cause any
Person to Beneficially Own or Constructively Own
shares of Equity Stock in excess of the Ownership
Limit, including, but not limited to, the granting of
any option or entering into any agreement for the
sale, transfer or other disposition of shares of
Equity Stock or the sale, transfer, assignment or
other disposition of any securities or rights
convertible into or exchangeable for shares of Equity
Stock.
"Ownership Limit" shall mean, with respect to
the Common Stock, 9.9% of the number of outstanding
shares of Common Stock and, with respect to any
series of Preferred Stock, 9.9% of the number of
outstanding shares of such series of Preferred Stock.
"Partnership" shall mean Equity Inns
Partnership, L.P., a Tennessee limited partnership.
"Partnership Agreement" shall mean the
agreement of limited partnership of the Partnership,
as amended and restated.
"Permitted Transferee" shall mean any Person
designated as a Permitted Transferee in accordance
with the provisions of Section 14(b)(5) hereof.
"Person" shall mean an individual,
corporation, partnership, estate, trust, a portion of
a trust permanently set aside for or to be used
exclusively for the purposes described
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in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of
the Code, joint stock company or other entity and
also includes two or more persons acting as a
partnership, limited partnership, syndicate of other
group for the purpose of acquiring, holding, or
disposing of the Corporation's securities, in
accordance with Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
"Prohibited Owner" shall mean, with respect
to any purported Transfer or Non-Transfer Event, any
Person who, but for the provisions of Section
14(a)(3) hereof, would own record title to shares of
Equity Stock.
"REIT" shall mean a real estate investment
trust under Section 856 of the Code.
"Restriction Termination Date" shall mean the
day on which the Corporation's REIT status is revoked
or otherwise terminated in accordance with Article 13
hereof.
"Shares-in-Trust" shall mean any shares of
Equity Stock designated as Shares-in-Trust pursuant
to Section 14(a)(3) hereof.
"Trading Day" shall mean a day on which the
principal national securities exchange on which the
shares of Equity Stock are listed or admitted to
trading is open for the transaction of business or,
if the shares of Equity Stock are not listed or
admitted to trading on any national securities
exchange, shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law
or executive order to close.
"Transfer" shall mean any sale, transfer,
gift, assignment, devise or other disposition of
shares of Equity Stock, whether voluntary or
involuntary, whether of record, constructively or
beneficially and whether by operation of law or
otherwise.
"Trust" shall mean any separate trust created
pursuant to Section 14(a)(3) hereof and administered
in accordance with the terms of Section 14(b) hereof,
for the exclusive benefit of any Beneficiary.
"Trustee" shall mean any Person or entity
unaffiliated with both the Corporation and any
Prohibited Owner, such Trustee to be designated by
the Corporation to act as trustee of any Trust, or
any successor trustee thereof.
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(2) Restriction on Transfers.
(A) Except as provided in Section
14(a)(7) hereof, prior to the Restriction Termination
Date, (i) no Person shall Beneficially Own or
Constructively Own outstanding shares of Equity Stock
in excess of the Ownership Limit and (ii) any
Transfer that, if effective, would result in any
Person Beneficially Owning or Constructively Owning
shares of Equity Stock in excess of the Ownership
Limit shall be void ab initio as to the Transfer of
that number of shares of Equity Stock which would be
otherwise Beneficially Owned or Constructively Owned
by such Person in excess of the Ownership Limit, and
the intended transferee shall acquire no rights in
such excess shares of Equity Stock.
(B) Except as provided in Section
14(a)(7) hereof, prior to the Restriction Termination
Date, any Transfer that, if effective, would result
in shares of Equity Stock being beneficially owned by
fewer than 100 Persons (determined without reference
to any rules of attribution) shall be void ab initio
as to the Transfer of that number of shares which
would be otherwise beneficially owned (determined
without reference to any rules of attribution) by the
transferee, and the intended transferee shall acquire
no rights in such excess shares of Equity Stock.
(C) Prior to the Restriction Termination
Date, any Transfer of shares of Equity Stock that, if
effective, would result in the Corporation being
"closely held" within the meaning of Section 856(h)
of the Code shall be void ab initio as to the
Transfer of that number of shares of Equity Stock
which would cause the Corporation to be "closely
held" within the meaning of Section 856(h) of the
Code, and the intended transferee shall acquire no
rights in such excess shares of Equity Stock.
(D) Prior to the Restriction Termination
Date, any Transfer of shares of Equity Stock that, if
effective, would cause the Corporation to
Constructively Own 10% or more of the ownership
interests in a tenant of the real property of the
Corporation, the Partnership, or any direct or
indirect subsidiary of the Corporation or the
Partnership, within the meaning of Section
856(d)(2)(B) of the Code, shall be void ab initio as
to the Transfer of that number of shares of Equity
Stock which would cause the Corporation to
Constructively Own 10% or more of the ownership
interests in a tenant of the real property of the
Corporation, the Partnership, or any direct or
indirect subsidiary of the Corporation or the
Partnership, within the meaning of Section
856(d)(2)(B) of the Code, and the intended transferee
shall acquire no rights in such excess shares of
Equity Stock.
(3) Transfer to Trust.
(A) If, notwithstanding the other
provisions contained in this Section 14(a), at any
time prior to the Restriction Termination Date, there
is a purported Transfer or Non-Transfer Event such
that any Person would either Beneficially Own or
Constructively Own shares of Equity Stock in excess
of the Ownership Limit, then (i) except as otherwise
provided in Section 14(a)(7) hereof, the purported
transferee shall acquire no right or interest (or, in
the case of a Non-Transfer Event, the Person holding
record title to the shares of Equity Stock
Beneficially Owned or Constructively Owned by such
Beneficial Owner or Constructive Owner, shall cease
to own any right or interest) in such number of
shares of Equity Stock which would cause such
Beneficial Owner or Constructive Owner to
Beneficially Own or Constructively Own shares of
Equity Stock in excess of the Ownership Limit, (ii)
such number of shares of Equity Stock in excess of
the Ownership Limit (rounded up to the nearest whole
share) shall be designated Shares-in-Trust and, in
accordance with the provisions of Section 14(b)
hereof, transferred automatically and by operation of
law to a Trust to be held in accordance with that
Section 14(b), and (iii) the
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Prohibited Owner shall submit such number of shares
of Equity Stock to the Corporation for registration
in the name of the Trustee. Such transfer to a Trust
and the designation of shares as Shares-in-Trust
shall be effective as of the close of business on the
business day prior to the date of the Transfer or
Non-Transfer Event, as the case may be.
(B) If, notwithstanding the other
provisions contained in this Section 14(a), at any
time prior to the Restriction Termination Date, there
is a purported Transfer or Non-Transfer Event that,
if effective, would (i) result in the shares of
Equity Stock being beneficially owned by fewer than
100 Persons (determined without reference to any
rules of attribution), (ii) result in the Corporation
being "closely held" within the meaning of Section
856(h) of the Code, or (iii) cause the Corporation to
Constructively Own 10% or more of the ownership
interests in a tenant of the real property of the
Corporation, the Partnership, or any direct or
indirect subsidiary of the Corporation or the
Partnership, within the meaning of Section
856(d)(2)(B) of the Code, then (x) the purported
transferee shall not acquire any right or interest
(or, in the case of a Non-Transfer Event, the person
holding record title of the shares of Equity Stock
with respect to which such Non-Transfer Event
occurred, shall cease to own any right or interest)
in such number of shares of Equity Stock, the
ownership of which by such purported transferee or
record holder would (A) result in the shares of
Equity Stock being beneficially owned by fewer than
100 Persons (determined without reference to any
rules of attribution), (B) result in the Corporation
being "closely held" within the meaning of Section
856(h) of the Code, or (C) cause the Corporation to
Constructively Own 10% or more of the ownership
interests in a tenant of the real property of the
Corporation, the Partnership, or a direct or indirect
subsidiary of the Corporation or the Partnership,
within the meaning of Section 856(d)(2)(B) of the
Code, (y) such number of shares of Equity Stock
(rounded up to the nearest whole share) shall be
designated Shares-in-Trust and, in accordance with
the provisions of Section 14(b) hereof, transferred
automatically and by operation of law to a Trust to
be held in accordance with that Section 14(b), and
(z) the Prohibited Owner shall submit such number of
shares of Equity Stock to the Corporation for
registration in the name of the Trustee. Such
transfer to a Trust and the designation of shares as
Shares-in-Trust shall be effective as of the close of
business on the business day prior to the date of the
Transfer or Non-Transfer Event, as the case may be.
(4) Remedies For Breach. If the
Corporation, or its designees, shall at any time
determine in good faith that a Transfer has taken
place in violation of Section 14(a)(2) hereof or that
a Person intends to acquire or has attempted to
acquire Beneficial Ownership or Constructive
Ownership of any shares of Equity Stock in violation
of Section 14(a)(2) hereof, the Corporation shall
take such action as it deems advisable to refuse to
give effect to or to prevent such Transfer or
acquisition, including, but not limited to, refusing
to give effect to such Transfer on the books of the
Corporation or instituting proceedings to enjoin such
Transfer or acquisition.
(5) Notice of Restricted Transfer. Any
Person who acquires or attempts to acquire shares of
Equity Stock in violation of Section 14(a)(2) hereof,
or any Person who owned shares of Equity Stock that
were transferred to the Trust pursuant to the
provisions of Section 14(a)(3) hereof, shall
immediately give written notice to the Corporation of
such event and shall provide to the Corporation such
other information as the Corporation may request in
order to determine the effect, if any, of such
Transfer or Non-Transfer Event, as the case may be,
on the Corporation's status as a REIT.
(6) Owners Required To Provide
Information. Prior to the Restriction Termination
Date:
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(A) Every Beneficial Owner or
Constructive Owner of more than 5%, or such
lower percentages as required pursuant to the
Treasury regulations under the Code, of the
outstanding shares of Equity Stock of the
Corporation shall, within 30 days after
January 1 of each year, provide to the
Corporation a written statement or affidavit
stating the name and address of such
Beneficial Owner or Constructive Owner, the
number of shares of Equity Stock Beneficially
Owned or Constructively Owned, and a
description of how such shares are held.
Each such Beneficial Owner or Constructive
Owner shall provide to the Corporation such
additional information as the Corporation may
request in order to determine the effect, if
any, of such Beneficial Ownership or
Constructive Ownership on the Corporation's
status as a REIT and to ensure compliance
with the Ownership Limit.
(B) Each Person who is a Beneficial
Owner or Constructive Owner of shares of
Equity Stock and each Person (including the
stockholder of record) who is holding shares
of Equity Stock for a Beneficial Owner or
Constructive Owner shall provide to the
Corporation a written statement or affidavit
stating such information as the Corporation
may request in order to determine the
Corporation's status as a REIT and to ensure
compliance with the Ownership Limit.
(7) Exception. The Ownership Limit
shall not apply to the acquisition of shares of
Equity Stock by an underwriter that participates in a
public offering of such shares for a period of 90
days following the purchase by such underwriter of
such shares provided that the restrictions contained
in Section 14(a)(2) hereof will not be violated
following the distribution by such underwriter of
such shares. In addition, the Board of Directors,
upon receipt of a ruling from the Internal Revenue
Service or an opinion of counsel in each case to the
effect that the restrictions contained in Section
14(a)(2)(B), Section 14(a)(2)(C), and/or Section
14(a)(2)(D) hereof will not be violated, may exempt a
Person from the Ownership Limit provided that (i) the
Board of Directors obtains such representations and
undertakings from such Person as are reasonably
necessary to ascertain that no individual's
Beneficial Ownership or Constructive Ownership of
shares of Equity Stock will violate the Ownership
Limit and (ii) such Person agrees in writing that any
violation or attempted violation will result in a
transfer to the Trust of the shares of Equity Stock
pursuant to Section 14(a)(3) hereof.
(8) New York Stock Exchange
Transactions. Notwithstanding any provision
contained herein to the contrary, nothing in this
Charter shall preclude the settlement of any
transaction entered into through the facilities of
the New York Stock Exchange.
(b) Shares-in-Trust.
(1) Trust. Any shares of Equity
Stock transferred to a Trust and designated
Shares-in-Trust pursuant to Section 14(a)(3)
hereof shall be held for the exclusive
benefit of the Beneficiary. The Corporation
shall name a Beneficiary for each Trust
within five days after discovery of the
existence thereof. Any transfer to a Trust,
and subsequent designation of shares of
Equity Stock as Shares-in-Trust, pursuant to
Section 14(a)(3) hereof shall be effective as
of the close of business on the business day
prior to the date of the Transfer or
Non-Transfer Event that results in the
transfer to the Trust. Shares-in-Trust shall
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remain issued and outstanding shares of
Equity Stock of the Corporation and shall be
entitled to the same rights and privileges on
identical terms and conditions as are all
other issued and outstanding shares of Equity
Stock of the same class and series. When
transferred to a Permitted Transferee in
accordance with the provisions of Section
14(b)(5) hereof, such Shares-in-Trust shall
cease to be designated as Shares-in-Trust.
(2) Dividend Rights. The Trust, as
record holder of Shares-in-Trust, shall be
entitled to receive all dividends and
distributions as may be declared by the Board
of Directors on such shares of Equity Stock
and shall hold such dividends or
distributions in trust for the benefit of the
Beneficiary. The Prohibited Owner with
respect to Shares-in-Trust shall repay to the
Trust the amount of any dividends or
distributions received by it (i) that are
attributable to any shares of Equity Stock
designated Shares-in-Trust and (ii) the
record date of which was on or after the date
that such shares became Shares-in-Trust. The
Corporation shall take all measures that it
determines reasonably necessary to recover
the amount of any such dividend or
distribution paid to a Prohibited Owner,
including, if necessary, withholding any
portion of future dividends or distributions
payable on shares of Equity Stock
Beneficially Owned or Constructively Owned by
the Person who, but for the provisions of
Section 14(a)(3) hereof, would Constructively
Own or Beneficially Own the Shares-in-Trust;
and, as soon as reasonably practicable
following the Corporation's receipt or
withholding thereof, shall pay over to the
Trust for the benefit of the Beneficiary the
dividends so received or withheld, as the
case may be.
(3) Rights Upon Liquidation. In
the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or
any distribution of the assets of, the
Corporation, each holder of Shares-in-Trust
shall be entitled to receive, ratably with
each other holder of shares of Equity Stock
of the same class or series, that portion of
the assets of the Corporation which is
available for distribution to the holders of
such class and series of shares of Equity
Stock. The Trust shall distribute to the
Prohibited Owner the amounts received upon
such liquidation, dissolution, or winding up,
or distribution; provided, however, that the
Prohibited Owner shall not be entitled to
receive amounts pursuant to this Section
14(b)(3) in excess of, in the case of a
purported Transfer in which the Prohibited
Owner gave value for shares of Equity Stock
and which Transfer resulted in the transfer
of the shares to the Trust, the price per
share, if any, such Prohibited Owner paid for
the shares of Equity Stock and, in the case
of a Non-Transfer Event or Transfer in which
the Prohibited Owner did not give value for
such shares (e.g., if the shares were
received through a gift or devise) and which
Non-Transfer Event or Transfer, as the case
may be, resulted in the transfer of shares to
the Trust, the price per share equal to the
Market Price on the date of such Non-Transfer
Event or Transfer. Any remaining amount in
such Trust shall be distributed to the
Beneficiary.
(4) Voting Rights. The Trustee
shall be entitled to vote all Shares-in-
Trust. Any vote by a Prohibited Owner as a
holder of shares of Equity Stock prior to the
discovery by the Corporation that the shares
of Equity Stock are Shares-in-Trust shall,
subject to applicable law, be rescinded and
shall be void ab initio with respect to such
Shares-in-Trust. The Prohibited Owner shall
be deemed to have given, as of the close of
business on the business day prior to the
date of the purported Transfer or
Non-Transfer Event that results in the
transfer to the Trust of shares of Equity
Stock under Section 14(a)(3) hereof, an
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irrevocable proxy to the Trustee to vote the
Shares-in-Trust in the manner in which the
Trustee, in its sole and absolute discretion,
desires.
(5) Designation of Permitted
Transferee. The Trustee shall have the
exclusive and absolute right to designate a
Permitted Transferee of any and all
Shares-in-Trust. In an orderly fashion so as
not to materially adversely affect the Market
Price of the Shares-in-Trust, the Trustee
shall designate any Person as Permitted
Transferee, provided, however, that (i) the
Permitted Transferee so designated purchases
for valuable consideration (whether in a
public or private sale), at a price as set
forth in Section 14(b)(7) hereof, the
Shares-in-Trust and (ii) the Permitted
Transferee so designated may acquire such
Shares-in-Trust without such acquisition
resulting int in accordance with Section
14(b)(5) hereof. Any amounts received by the
Trustee in respect of such Shares-in-Trust
and in excess of such amounts to be paid the
Prohibited Owner pursuant to this Section
14(b)(6) shall be distributed to the
Beneficiary in accordance with the provisions
of Section 14(b)(5) hereof. Each Beneficiary
and Prohibited Owner waive any and all claims
that they may have against the Trustee and
the Trust arising out of the disposition of
Shares-in-Trust, except for claims arising
out of the gross negligence or willful
misconduct of, or any failure to make
payments in accordance with this Section
14(b) by such Trustee or the Corporation.
(7) Purchase Right in
Shares-in-Trust. Shares-in-Trust shall be
deemed to have been offered for sale to the
Corporation, or its designee, at a price per
share equal to the lesser of (i) the price
per share in the transaction that created
such Shares-in-Trust (or, in the case of a
devise, gift or Non-Transfer Event, the
Market Price at the time of such devise, gift
or Non-Transfer Event) and (ii) the Market
Price on the date the Corporation, or its
designee, accepts such offer. The
Corporation shall have the right to accept
such offer for a period of ninety days after
the later of (i) the date of the Non-Transfer
Event or purported Transfer which resulted in
the creation of such Shares-in-Trust and (ii)
the date the Corporation determines in good
faith that a Transfer or Non-Transfer Event
resulting in Shares-in-Trust has occurred,
if the Corporation does not receive a notice
of such Transfer or Non-Transfer Event
pursuant to Section 14(a)(5) hereof.
(c) Remedies Not Limited. Nothing
contained in this Article 14 shall limit the
authority of the Corporation to take such
other action as it deems necessary or
advisable to protect the Corporation and the
interests of its shareholders by preservation
of the Corporation's status as a REIT and to
ensure compliance with the Ownership Limit.
(d) Ambiguity. In the case of an
ambiguity in the application of any of the
provisions of this Article 14, including any
definition contained in Section 14(a)(1)
hereof, the Board of Directors shall have the
power to determine the application of the
provisions of this Article 14 with respect to
any situation based on the facts known to it.
(e) Legend. Each certificate for shares
of Equity Stock shall bear the following
legend:
"The shares of [Common or Preferred]
Stock represented by this certificate are
subject to restrictions on transfer for the
purpose of the Corporation's maintenance of
its status as a real estate investment trust
under the
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Internal Revenue Code of 1986, as amended
(the "Code"). No Person may (i) Beneficially
Own or Constructively Own shares of Common
Stock in excess of 9.9% of the number of
outstanding shares of Common Stock, (ii)
Beneficially Own or Constructively Own shares
of any series of Preferred Stock in excess of
9.9% of the number of outstanding shares of
such series of Preferred Stock, (iii)
beneficially own shares of Equity Stock that
would result in the shares of Equity Stock
being beneficially owned by fewer than 100
Persons (determined without reference to any
rules of attribution), (iv) Beneficially Own
shares of Equity Stock that would result in
the Corporation being "closely held" under
Section 856(h) of the Code, or (v)
Constructively Own shares of Equity Stock
that would cause the Corporation to
Constructively Own 10% or more of the
ownership interests in a tenant of the real
property of the Corporation, the Partnership,
or a subsidiary of the Corporation or the
Partnership, within the meaning of Section
856(d)(2)(B) of the Code. Any Person who
attempts to Beneficially Own or
Constructively Own shares of Equity Stock in
excess of the above limitations must
immediately notify the Corporation in
writing. If the restrictions above are
violated, the shares of Equity Stock
represented hereby will be transferred
automatically and by operation of law to a
Trust and shall be designated Shares-in-
Trust. All capitalized terms in this legend
have the meanings defined in the
Corporation's Second Amended and Restated
Charter of the Corporation, as the same may
be further amended from time to time, a copy
of which, including the restrictions on
transfer, will be sent without charge to each
shareholder who so requests."
(f) Severability. If any provision of
this Article 14 or any application of any
such provision is determined to be invalid by
any federal or state court having
jurisdiction over the issues, the validity of
the remaining provisions shall not be
affected and other applications of such
provision shall be affected only to the
extent necessary to comply with the
determination of such court.
(2) By redesignating Section (i) of Article 14 as Section (g); and
(3) By deleting in its entirety Section (j) of Article 14.
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