<PAGE>
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
October 15, 1997
------------------------------------------------
Date of Report (Date of Earliest Event Reported)
EQUITY INNS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
Tennessee O-23290 62-1550848
- ---------------------------- --------------------- -------------------
(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
</TABLE>
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)
1
<PAGE>
ITEM 5. OTHER EVENTS.
Approval of Second Amended and Restated Charter of Equity Inns, Inc.
On October 15, 1997, the Board of Directors of Equity Inns, Inc. (the
"Company") approved and adopted the Company's Second Amended and Restated
Charter (the "Second Restated Charter"). The Second Restated Charter restates in
full the Company's Amended and Restated Charter dated February 17, 1994 as such
charter was previously amended by action of the Company's shareholders at its
Annual Meetings of Shareholders held on April 18, 1995, May 7, 1996 and April
29, 1997. The Second Restated Charter also contains certain conforming
amendments as to which shareholder approval is not required under the Tennessee
Business Corporation Act.
A copy of the Second Restated 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.
(c) Exhibits. The following exhibit required by Item 601 of Regulation
S-K is listed below:
<TABLE>
<S> <C>
3.1 Second Amended and Restated Charter of Equity Inns, Inc. dated October
15, 1997
</TABLE>
2
<PAGE>
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.
(Registrant)
Date: October 20, 1997 By: /s/ Howard A. Silver
---------------------------
Howard A. Silver, Executive Vice
President, Secretary, Treasurer and
Chief Financial Officer
3
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
Item Number Description
- ----------- -----------
<S> <C>
3.1 Second Amended and Restated Charter of Equity Inns, Inc. dated
October 15, 1997
</TABLE>
4
<PAGE>
SECOND AMENDED AND RESTATED CHARTER
OF
EQUITY INNS, INC.
1. Name. The name of the corporation (which is hereinafter called
the "Corporation") is Equity Inns, Inc.
2. For Profit. The Corporation is for profit.
3. Principal and Registered Office. The address of the Corporation's
registered office and its principal office is 4735 Spottswood, Suite 102,
Memphis, Shelby County, Tennessee 38117.
4. Registered Agent. The name of the Corporation's registered agent at
that office is Phillip H. McNeill, Sr.
5. Authorized Capital Stock. The total number of shares of stock which
the Corporation has authority to issue is fifty million (50,000,000) shares of
Common Stock, $.01 par value per share, and ten million (10,000,000) shares of
Preferred Stock, $.01 par value per share.
The Preferred Stock may be issued from time to time by the Board of
Directors of the Corporation, in such series and with such preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or other provisions as may be fixed by the Board of
Directors.
6. Directors. (a) The Corporation shall have a Board of Directors
consisting of not less than three (3) nor more than nine (9) members unless
otherwise determined from time to time by resolution adopted by the affirmative
vote of at least 80% of the members of the Board of Directors. However, the
number of directors shall never be less than the minimum number
5
<PAGE>
required by the Tennessee Business Corporation Act. A director need not be a
shareholder. Directors shall be divided into three (3) classes as nearly equal
in number as possible. The initial term of Class I directors shall expire at the
annual shareholder meeting in 1995. The initial term of Class II directors shall
expire at the annual shareholder meeting in 1996 and the initial term of the
Class III director shall expire at the annual shareholder meeting in 1997. At
each annual shareholder meeting, the shareholders shall elect one or more
directors to serve a three-year term of the class of directors whose term is
expiring at such annual meeting and until their successors are elected and
qualify.
(b) Initial Directors. The following persons are the initial directors
of the Corporation, to serve until their successors are elected and qualified:
<TABLE>
<CAPTION>
Name Class Term Expires
---- ----- ------------
<S> <C> <C>
Phillip H. McNeill Class I 1995
D. Anthony Maness Class I 1995
William W. Deupree Class II 1996
James A. Thomas III Class II 1996
Joseph W. McLeary Class III 1997
</TABLE>
(c) Independent Directors. Notwithstanding anything herein to the
contrary, at all times (except during a period not to exceed sixty (60) days
following the death, resignation, incapacity or removal from office of a
director prior to expiration of the director's term of office), a majority of
the Board of Directors shall be comprised of persons who are not officers or
employees of the Corporation or "Affiliates" of (i) any advisor to the
Corporation under an advisory agreement, (ii) any lessee of any property of the
Corporation, (iii) any subsidiary of the Corporation or (iv) any partnership
which is an Affiliate of the Corporation.
6
<PAGE>
(d) Definition of Affiliate. For purposes of the foregoing subsection,
"Affiliate" of a person shall mean (i) any person that, directly or indirectly,
controls or is controlled by or is under common control with such person, (ii)
any other person that owns, beneficially, directly or indirectly, five percent
(5%) or more of the outstanding capital stock, shares or equity interests of
such person, or (iii) any officer, director, employee, partner or trustee of
such person or any person controlling, controlled by or under common control
with such person (excluding trustees and persons serving in similar capacities
who are not otherwise an Affiliate of such person). The term "person" means and
includes individuals, corporations, general and limited partnerships, stock
companies or associations, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts, or other entities and
governments and agencies and political subdivisions thereof. For the purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests.
(e) Amendment of this Section. Notwithstanding any other provisions of
this Charter or the Bylaws of the Corporation (and notwithstanding that some
lesser percentage may be specified by law, this Charter or the Bylaws of the
Corporation), the provisions of this Article 6 shall not be amended, altered,
changed or repealed without the affirmative vote of at least 80% of the members
of the Board of Directors or the affirmative vote of the holders of not less
than 75% of the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors, voting separately as a class.
7
<PAGE>
7. Limitation on Indebtedness. The Corporation may not incur or allow
to exist as of the end of any month Indebtedness (as defined below) in an amount
in excess of forty five percent (45%) of the Corporation's investment in hotel
properties, at its cost, which cost includes the fair market value of any equity
securities issued in connection with the acquisition of hotel properties, after
giving effect to the Corporation's use of proceeds from any indebtedness.
"Indebtedness" of the Corporation shall mean all obligations of the Corporation,
its subsidiaries or any partnership in which the Corporation serves as general
partner, for borrowed money (including all notes payable and drafts accepted
representing extensions of credit) and all obligations evidenced by bonds,
debentures, notes or other similar instruments on which interest charges are
customarily paid, including obligations under capital leases.
8. Dividends. All shares of Common Stock will participate equally in
dividends payable to holders of shares of Common Stock when and as declared by
the Board of Directors and in net assets available for distribution to holders
of shares of Common Stock upon liquidation or dissolution.
9. Preemptive Rights. No holder of shares of capital stock of the
Corporation shall have any preemptive or preferential right to subscribe to or
purchase (i) any shares of any class of the Corporation, whether now or
hereafter authorized; (ii) any warrants, rights, or options to purchase any such
shares; or (iii) any securities or obligations convertible into any such shares
or into warrants, rights, or options to purchase any such shares.
10. Limitation on Liability to Shareholders. To the maximum extent that
Tennessee law in effect from time to time permits limitation of the liability of
directors and officers, no director or officer of the Corporation shall be
liable to the Corporation or its shareholders for money damages. Neither the
8
<PAGE>
the amendment nor repeal of this provision, nor the adoption or amendment
of any other provision of this Charter or Bylaws inconsistent with this
provision, shall apply to or affect in any respect the applicability of the
preceding sentence with respect to any act or failure to act which occurred
prior to such amendment, repeal or adoption.
11. Indemnification. Any word or words defined in Part 5 of Chapter 18
of Title 48 of the Tennessee Code Annotated, as amended from time to time, or
any successor provision thereof (the "Indemnification Section") used in this
Article 11, shall have the same meaning as provided in the Indemnification
Section.
The Corporation shall indemnify and advance expenses to a director,
officer, employee or agent of the Corporation in connection with a proceeding to
the fullest extent permitted by and in accordance with the Indemnification
Section.
12. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation or who, while a director, officer, employee or agent of the
Corporation is or was serving at the request of the Corporation as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against liability asserted against or incurred by such person in
that capacity or arising from such person's status as a director, officer,
employee or agent, whether or not the Corporation would have power to indemnify
such person against the same liability under the Indemnification Section.
13. REIT Status. The Corporation shall seek to elect and maintain
status as a real estate investment trust ("REIT") under Sections 856-860 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"). It
shall be the duty of the Board of Directors to ensure that the Corporation
9
<PAGE>
satisfies the requirements for qualification as a REIT under the Code,
including, but not limited to, the ownership of its outstanding stock,
the nature of its assets, the sources of its income, and the amount and timing
of its distributions to its shareholders. The Board of Directors shall
take no action to disqualify the Corporation as a REIT or to otherwise
revoke the Corporation's election to be taxed as a REIT without the
affirmative vote of two-thirds (2/3) of the number of shares of Common Stock
entitled to vote on such matter at a special meeting of the Shareholders.
14. (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.
10
<PAGE>
"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
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
11
<PAGE>
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
12
<PAGE>
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 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,
13
<PAGE>
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.
14
<PAGE>
"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.
(2) Restriction on Transfers.
(A) Except as provided in Section 14(a)(7) and
Section 14(g) 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 Equitiy
Stock.
15
<PAGE>
(B) Except as provided in Section 14(a)(7) and
Section 14(g) 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
16
<PAGE>
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 Prohibited Owner shall
submit such number of shares of Equity Stock to the
17
<PAGE>
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
18
<PAGE>
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.
19
<PAGE>
(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:
(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
20
<PAGE>
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
21
<PAGE>
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 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.
22
<PAGE>
(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
23
<PAGE>
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 irrevocable proxy to
24
<PAGE>
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.
(6) 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
25
<PAGE>
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
26
<PAGE>
status as a real estate investment trust under the 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."
27
<PAGE>
(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.
(g) Securities Exchange Transactions. Nothing in this Article 14 or
this Charter shall prohibit the settlement of any transaction entered into
through the facilities of any national securities exchange registered under the
Securities Exchange Act of 1934 (the "Exchange Act") or of the national market
system of a national securities association registered under the Exchange Act.
The immediately preceding sentence shall not limit the authority of the Board of
Directors to take any and all actions it deems necessary or advisable to protect
the corporation and the interests of its shareholders in preserving the
Corporation's status as a REIT, so long as such actions do not prohibit the
settlement of any transactions entered into through the facilities of any
national securities exchange registered under the Exchange Act or of the
national market system of a national securities association registered under the
Exchange Act.
Dated: October 15, 1997.
28
