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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 29, 1996
AMBASSADOR APARTMENTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
MARYLAND 0-24704 36-3948161
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NUMBER)
77 WEST WACKER DRIVE, SUITE 4040
CHICAGO, ILLINOIS 60601
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (312) 917-1600
PRIME RESIDENTIAL, INC.
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 5. Other Events.
On May 29, 1996, the Registrant amended its articles of incorporation as
set forth in Exhibit 3.3 attached hereto (i) to change its name from "Prime
Residential, Inc." to "Ambassador Apartments, Inc." and (ii) to eliminate the
Registrant's right to cancel certain transactions in the Registrant's Common
Stock that are in violation of the ownership limitation rules necessary for the
Registant to qualify as a real estate investment trust ("REIT") so that it was
in compliance with the policy of the New York Stock Exchange that prohibits the
cancellation of trades which have occurred on the exchange.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMBASSADOR APARTMENTS, INC.
Date: June 7, 1996 By: /s/ Adam D. Peterson
-------------------------
Adam D. Peterson
Senior Vice President and
Chief Financial Officer
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INDEX OF EXHIBITS
3.3 Articles of Amendment to Amended and Restated Charter of the
Registrant............................................................
3.4 Complied Charter of the Registrant as of June 1, 1996.................
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EXHIBIT 3.3
PRIME RESIDENTIAL, INC.
ARTICLES OF AMENDMENT
Prime Residential, Inc., a Maryland corporation, its principal office
in the State of Maryland is c/o United Corporate Service, 20 South Charles
Street, Suite 1200, Baltimore, Maryland 21201 (hereinafter called the
"corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the corporation is hereby amended by deleting
Article I in its entirety and inserting in lieu thereof the following:
ARTICLE I
Name
The name of the corporation (the "Corporation") is Ambassador
Apartments, Inc.
SECOND: The charter of the corporation is hereby amended by deleting
paragraph (e) of Section 4.5.5 of Article IV and inserting a new paragraph (e)
of Section 4.5.5 of Article IV as follows:
(e) Subject to Section 5.2, notwithstanding
any other provisions contained in this Article IV
or Section 5.3 during the period commencing on the
Initial Issue Date and prior to the Restriction
Termination Date, any Transfer or Acquisition of
shares of
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Common Stock (whether or not such Transfer or
Acquisition is the result of a transaction entered
into through the facilities of the New York Stock
Exchange or any other national securities exchange
or automated inter-dealer quotation system) that,
if effective, would result in the Capital Stock
being beneficially owned by less than 100 Persons
(determined without reference to any rules of
attribution) shall be void ab initio, and the
intended transferee shall acquire no rights in
such shares of Common Stock.
THIRD: The charter of the corporation is hereby amended by deleting
Section 4.5.9 in its entirety and inserting in lieu thereof the following:
Section 4.5.9. Remedies Not Limited. Subject
to Sections 5.1 and 5.2, nothing contained in this
Section 4.5 shall limit the authority of the Board
of Directors to take such other action as it deems
necessary or advisable to protect the Corporation
and the interest of its stockholders in preserving
the Corporation's status as a REIT,; and
FOURTH: The charter of the corporation is hereby amended by deleting
Section 5.2 of Article V in its entirety and inserting in lieu thereof the
following:
Section 5.2 Exchange or Market Transactions.
Nothing in Article IV or this Article V shall
preclude the settlement of any transaction entered
into through the facilities of the New York Stock
Exchange or any other national securities exchange
or automated inter-dealer quotation system.
However, as set forth in Article IV or this
Article V certain transactions may be settled by
providing Excess Common Stock.
FIFTH: The amendment of the charter of the corporation as hereinabove
set forth has been duly advised by the board of directors and approved by the
stockholders of the corporation.
* * *
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IN WITNESS WHEREOF, Prime Residential, Inc., has caused these presents
to be signed in its name and on its behalf by its President or one of its Vice
Presidents and attested by its Secretary as of the 6th day of May, 1996.
PRIME RESIDENTIAL, INC.
By: /s/ Richand F. Cavenaugh
----------------------------
Richard F. Cavenaugh
Its: President
ATTEST:
By: /s/ Adam D. Peterson
--------------------------
Adam D. Peterson
Its: Secretary
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EXHIBIT 3.4
ARTICLES OF INCORPORATION
OF
AMBASSADOR APARTMENTS, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
Name ................................................................ 1
ARTICLE II
Principal Office, Registered Office, and Agent....................... 1
ARTICLE III
Purpose.............................................................. 1
ARTICLE IV
Capitalization....................................................... 1
4.1 CAPITAL STOCK.................................................. 1
Section 4.1.1. Authority to Issue Stock...................... 1
Section 4.1.2. Shares and Par Value.......................... 2
Section 4.1.3. Determination of Funds Legally
Available for Distribution................................ 2
Section 4.1.4. Preemptive Rights............................. 3
Section 4.1.5. Control Shares................................ 3
Section 4.1.6. Business Combinations......................... 3
4.2 CERTAIN DEFINITIONS............................................ 3
4.3 PREFERRED STOCK................................................ 9
4.4 EXCESS STOCK................................................... 10
4.5 COMMON STOCK................................................... 10
Section 4.5.1. Dividends..................................... 10
Section 4.5.2. Distribution Upon Liquidation,
Dissolution or Winding Up................................. 10
Section 4.5.3. Voting Rights................................. 11
Section 4.5.4. Exclusion of Other Rights..................... 11
Section 4.5.5. Common Stock Ownership Limitations............ 11
Section 4.5.6. Remedies for Breach........................... 15
Section 4.5.7. Notice of Restricted Transfer................. 15
Section 4.5.8. Owners Required to Provide
Information............................................... 16
Section 4.5.9. Remedies Not Limited.......................... 16
Section 4.5.10. Ambiguity..................................... 16
Section 4.5.11. Exceptions.................................... 17
Section 4.5.12. Legend........................................ 18
4.6 EXCESS COMMON STOCK............................................ 20
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Page
Section 4.6.1. Ownership in Trust............................ 20
Section 4.6.2. Dividend Rights............................... 20
Section 4.6.3. Rights Upon Liquidation....................... 20
Section 4.6.4. Voting Rights................................. 21
Section 4.6.5. Restrictions On Transfer; Designation
of Beneficiary........................................... 21
Section 4.6.6. Purchase Right in Excess Common
Stock.................................................... 21
ARTICLE V
General REIT Provisions............................................. 22
Section 5.1. Termination of REIT Status............................ 22
Section 5.2. Exchange or Market Transactions....................... 22
Section 5.3. Kemper Corporation Limitations........................ 22
Section 5.4. Severability.......................................... 23
Section 5.5. Waiver................................................ 23
ARTICLE VI
Board of Directors.................................................. 23
Section 6.1. Management............................................ 23
Section 6.2. Number................................................ 23
Section 6.3. Classification........................................ 24
Section 6.4. Removal............................................... 24
Section 6.5. By-laws............................................... 24
Section 6.6. Powers................................................ 25
ARTICLE VII
Stockholders........................................................ 25
ARTICLE VIII
Liability........................................................... 25
ARTICLE IX
Indemnification..................................................... 26
ARTICLE X
Written Consent of Stockholders..................................... 26
ARTICLE XI
Amendment........................................................... 27
ii
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Page
ARTICLE XII
Existence .......................................................... 27
iii
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ARTICLES OF INCORPORATION
OF
AMBASSADOR APARTMENTS, INC.
ARTICLE I
NAME
The name of the corporation (the "Corporation") is Ambassador
Apartments, Inc.
ARTICLE II
PRINCIPAL OFFICE, REGISTERED OFFICE, AND AGENT
The post office address of the Corporation's principal office in the
State of Maryland is c/o United Corporate Services, Inc., 20 South Charles
Street - Suite 1200, Baltimore, Maryland 21201. The name and address of the
Corporation's resident agent in the State of Maryland is United Corporate
Services, Inc., 20 South Charles Street - Suite 1200, Baltimore, Maryland 21201.
The registered agent is a corporation located in the State of Maryland.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Maryland General
Corporation Law as now or hereafter in force (the "MGCL").
ARTICLE IV
CAPITALIZATION
4.1 CAPITAL STOCK
Section 4.1.1. AUTHORITY TO ISSUE STOCK. The Board of Directors of
the Corporation (the "Board of Directors") is hereby empowered to authorize the
issuance from time to time of shares of Capital Stock (as defined in Section
4.2), whether now or
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hereafter authorized, for such consideration as the Board of Directors may deem
advisable, subject to such limitations as may be set forth in these Articles of
Incorporation, in the Amended and Restated By-Laws of the Corporation as they
may be amended from time to time (the "By-laws") or in the MGCL.
Section 4.1.2. SHARES AND PAR VALUE. The total number of shares of
all classes of Capital Stock that the Corporation shall have authority to issue
is 240,000,000 shares consisting of (i) 100,000,000 shares of common stock
having a par value of one cent ($.01) per share (the "Common Stock"), amounting
to an aggregate par value of $1,000,000; (ii) 20,000,000 shares of preferred
stock having a par value of one cent ($.01) per share (the "Preferred Stock"),
amounting to an aggregate par value of $200,000; and (iii) 120,000,000 shares
of excess stock having a par value of one cent ($.01) per share (the "Excess
Stock"), amounting to an aggregate par value of $1,200,000, of which
100,000,000 shares shall be designated Excess Common Stock (the "Excess Common
Stock") and 20,000,000 shares shall be designated Excess Preferred Stock (the
"Excess Preferred Stock"). The aggregate par value of all the shares of all
classes of Capital Stock that the Corporation shall have authority to issue is
$2,400,000. Unissued shares of the Common Stock and Preferred Stock may be
issued, from time to time, in one or more classes or series as authorized by
the Board of Directors. Prior to issuance of shares of each series, the Board
of Directors by resolution shall designate that series to distinguish it from
all other series and classes of Capital Stock, shall specify the number of
shares to be included in the series and, subject to the provisions of this
Article IV regarding Excess Stock, shall set the terms, preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends or
other distributions, qualifications and terms or conditions of redemption.
Subject to the express terms of any other classes of Common Stock or of any
series of Preferred Stock outstanding at the time and notwithstanding any other
provision of the Charter, the Board of Directors may increase or decrease the
number of shares of, or alter the designation or classify or reclassify, any
unissued shares of any classes or series of Common Stock or Preferred Stock by
setting, or changing in any one or more respects, from time to time before
issuing the shares, subject to the provisions of this Article IV regarding
Excess Stock, the
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terms, preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications or terms or
conditions of redemption of the shares of any classes of Common Stock or series
of Preferred Stock.
Section 4.1.3. DETERMINATION OF FUNDS LEGALLY AVAILABLE FOR
DISTRIBUTION. In determining whether a distribution (other than upon voluntary
or involuntary liquidation) by dividend, redemption or other acquisition of
shares of Capital Stock is permitted under the MGCL, no effect shall be given to
amounts that would be needed, if the Corporation were to be dissolved at the
time of the distribution, to satisfy the preferential rights upon dissolution of
holders of shares of Capital Stock whose preferential rights upon dissolution
are superior to those receiving the distribution.
Section 4.1.4. PREEMPTIVE RIGHTS. No holder of shares of Capital
Stock shall, as such holder, have any preemptive or other right to purchase or
subscribe for any shares of Common Stock or any other class of Capital Stock
which the Corporation may issue or sell.
Section 4.1.5. CONTROL SHARES. Pursuant to Section 3-702(b) of the
MGCL, the terms of Subtitle 7 of Title 3 of such law shall be inapplicable to
any acquisition of a Control Share (as determined in Section 3-701(d) of the
MGCL) that is not prohibited by the terms of this Article IV or Article V of
these Articles of Incorporation.
Section 4.1.6. BUSINESS COMBINATIONS. Pursuant to Section 3-603(e)
of the MGCL, the provisions of Section 3-602 of the MGCL shall be inapplicable
to any Business Combinations (as defined in Section 3-601(e) of the MGCL).
4.2 CERTAIN DEFINITIONS
Unless the context otherwise requires, the terms defined in this
Section 4.2 shall have, for all purposes of these Articles of Incorporation, the
meanings herein specified (with terms defined in the singular having comparable
meanings when used in the plural).
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"ACQUIRE" shall mean the acquisition of Beneficial Ownership or
Constructive Ownership of shares of Capital Stock by any means including,
without limitation, the exercise of any rights under any option, warrant,
convertible security, pledge or other security interest or similar right to
acquire shares, but shall not include the acquisition of any such rights unless,
as a result, the acquiror would be considered a Beneficial Owner or Constructive
Owner, as defined below. The term "Acquisition" shall have the correlative
meaning.
"AFFILIATE" shall have the meaning set forth in Rule 405 under the
Securities Act of 1933, as amended.
"AGGREGATE STOCK OWNERSHIP LIMIT" shall mean 9.9% (in value) of the
aggregate of the outstanding shares of Capital Stock. The number and value of
shares of the outstanding shares of Capital Stock shall be determined by the
Board of Directors in good faith, which determination shall be conclusive for
all purposes hereof.
"BENEFICIAL OWNERSHIP" shall mean ownership of Capital Stock by a
Person who is or would be treated as an actual owner of such shares of Capital
Stock either directly or constructively through the application of Section 544
of the Code, as modified by Section 856(h)(1)(B) of the Code (except where
expressly provided otherwise). The terms "Beneficial Owner," "Beneficially
Owns" and "Beneficially Owned" shall have the correlative meanings.
"BENEFICIARY" shall mean a beneficiary of the Trust as determined
pursuant to Section 4.6.5.
"BUSINESS DAY" shall mean any 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.
"CAPITAL STOCK" shall mean all classes or series of capital stock of
the Corporation including, without limitation, Common Stock, Preferred Stock and
Excess Stock.
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"CLOSING PRICE" with respect to any class or series of Capital Stock
on any date shall mean the last sale price for such Capital Stock, regular way,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, for such Capital Stock 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
such Capital Stock is 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 such Capital Stock is listed or admitted to trading or, if such Capital
Stock is 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 such Capital Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker selected by the Board of Directors and making a market
in such Capital Stock.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMMON STOCK" shall have the meaning set forth in Section 4.1.2.
"COMMON STOCK AFFECTED PERSONS" shall have the meaning set forth in
Section 4.5.5(c).
"COMMON STOCK CONSTRUCTIVE OWNERSHIP EVENT" shall have the meaning set
forth in Section 4.5.5(c).
"COMMON STOCK OWNERSHIP LIMIT" shall mean 9.9% (in value or in number
of shares, whichever is more restrictive) of the aggregate of the outstanding
shares of Common Stock and the outstanding shares of Excess Common Stock. The
number and value of outstanding shares of Common Stock and Excess Common Stock
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shall be determined by the Board of Directors in good faith, which determination
shall be conclusive for all purposes hereof.
"CONSTRUCTIVE OWNERSHIP" shall mean ownership of Capital Stock by a
Person who is or would be treated as an actual owner of Capital Stock either
directly or constructively through the application of Section 544 of the Code,
as modified by Section 856(h)(1)(B) of the Code (except where expressly provided
otherwise). The terms "Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have the correlative meanings.
"CONVERSION" shall mean a conversion of shares of Preferred Stock into
Common Stock.
"CONVERSION HOLDER" shall mean any Person who becomes the Beneficial
Owner or Constructive Owner of Common Stock in excess of the Common Stock
Ownership Limit by reason of the Conversion of shares of any series of Preferred
Stock which are convertible into Common Stock.
"EXCESS COMMON STOCK" shall have the meaning set forth in Section
4.1.2.
"EXCESS COMMON STOCK DESIGNATION PERIOD" shall have the meaning set
forth in Section 4.6.5.
"EXCESS COMMON STOCK LIMITATION PRICE" shall mean the lesser of (A) in
the case of Excess Common Stock resulting from a Transfer or Acquisition for
value, the price per share that the Purported Beneficial Transferee paid for the
Common Stock in the purported Transfer or Acquisition that resulted in the
issuance of the Excess Common Stock, or, in the case of Excess Common Stock
resulting from (1) a Transfer or Acquisition other than for value (such as a
gift, devise or similar Transfer) or (2) an event other than a Transfer or
Acquisition, a price per share equal to the Market Price of the Common Stock
that was exchanged for such Excess Common Stock on the date of the purported
Transfer, Acquisition or other event that resulted in the issuance of the Excess
Common Stock, or (B) a price per share equal to the Market Price of the Common
Stock on the date on which (i) the Corporation designates a Beneficiary pursuant
to
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Section 4.6.5(a), or (ii) the Corporation, or its designee, accepts the offer to
sell pursuant to Section 4.6.6.
"EXCESS STOCK" shall have the meaning set forth in Section 4.1.2.
"EXCHANGE RIGHTS AGREEMENT" shall mean the Exchange Rights Agreement,
dated as of the Initial Issue Date, among the Corporation and all existing
limited partners of the Operating Partnership, as such agreement may be amended
from time to time, including but not limited to any amendment to make a limited
partner of the Operating Partnership a party to such agreement.
"INITIAL ISSUE DATE" (i) with respect to the Common Stock, shall mean
the date that shares of Common Stock are first issued by the Corporation or (ii)
with respect to any series of Preferred Stock, shall mean the date that shares
of such series of Preferred Stock are first issued by the Corporation.
"INITIAL PUBLIC OFFERING" shall mean the closing of the sale of shares
of Common Stock pursuant to the Corporation's first effective registration
statement for such Common Stock filed under the Securities Act of 1933, as
amended.
"MARKET PRICE" on any date shall mean, with respect to any class or
series of outstanding Capital Stock, the average of the Closing Price for such
Capital Stock for the five consecutive Trading Days ending on such date.
"MGCL" shall have the meaning set forth in Article III.
"OPERATING PARTNERSHIP" shall mean Prime Residential, L.P., a Delaware
limited partnership.
"PARTNERSHIP AGREEMENT" shall mean the Amended and Restated Agreement
of Limited Partnership of Prime Residential, L.P., of which the Corporation is
the sole general partner, dated as of the Initial Issue Date, as such agreement
may be amended from time to time.
"PERSON" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under
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Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set
aside for or to be used exclusively for the purposes described in Section 642(c)
of the Code, association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity and also incudes a group
as that term is used for purposes of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended.
"PREFERRED STOCK" shall have the meaning set forth in Section 4.1.2.
"PURPORTED BENEFICIAL HOLDER" shall mean, with respect to any event
other than a purported Transfer or Acquisition which results in Excess Stock,
the person for whom the applicable Purported Record Holder held the shares of
Capital Stock that were, pursuant to Section 4.5.5, automatically exchanged for
shares of Excess Stock upon the occurrence of such event. The Purported
Beneficial Holder and the Purported Record Holder may be the same Person.
"PURPORTED BENEFICIAL TRANSFEREE" shall mean, with respect to any
purported Transfer or Acquisition which results in Excess Stock, the purported
beneficial transferee for whom the Purported Record Transferee would have
acquired shares of Capital Stock if such Transfer or Acquisition had not
violated the provisions of Section 4.5.5. The Purported Beneficial Transferee
and the Purported Record Transferee may be the same Person.
"PURPORTED RECORD HOLDER" shall mean, with respect to any event other
than a purported Transfer or Acquisition which results in Excess Stock, the
record holder of the shares of Capital Stock that were, pursuant to Section
4.5.5, automatically exchanged for shares of Excess Stock upon the occurrence of
such event. The Purported Record Holder and the Purported Beneficial Holder may
be the same Person.
"PURPORTED RECORD TRANSFEREE" shall mean, with respect to any
purported Transfer or Acquisition which results in Excess Stock, the Person who
would have been the record holder of the Capital Stock if such Transfer or
Acquisition had not violated the provisions of Section 4.5.5. The Purported
Beneficial Transferee and the Purported Record Transferee may be the same
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Person.
"REIT" shall mean a real estate investment trust within the meaning of
Section 856 of the Code.
"RESTRICTION TERMINATION DATE" shall mean the first day after the date
of the Initial Public Offering on which the Corporation determines pursuant to
Section 5.1 of these Articles of Incorporation that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify as a REIT or
that compliance with the restrictions and limitations on Beneficial Ownership,
Constructive Ownership and the Transfer or Acquisition of shares of Capital
Stock set forth herein is no longer required in order for the Corporation to
qualify as a REIT.
"SPECIAL TRIGGERING EVENT" shall mean either (i) the election by one
or more holders of any series of Preferred Stock convertible into Common Stock
to convert all or a portion of such Preferred Stock into shares of Common Stock,
(ii) the redemption or purchase by the Corporation of all or a portion of the
outstanding shares of Capital Stock or (iii) a change in the relative values of
classes of Capital Stock.
"TRADING DAY" with respect to any class or series of Capital Stock
shall mean a day on which the principal national securities exchange on which
the applicable Capital Stock is listed or admitted to trading is open for the
transaction of business or, if such Capital Stock is not listed or admitted to
trading on any national securities exchange, shall mean any Business Day.
"TRANSFER" shall mean any sale, transfer, gift, assignment, devise or
other disposition of Capital Stock or the right to vote or receive dividends on
Capital Stock (including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Capital Stock or the
right to vote or receive dividends on Capital Stock or (ii) the sale, transfer,
assignment or other disposition of any securities or rights convertible into or
exchangeable for Capital Stock), in each case whether voluntary or involuntary,
whether of record or Beneficially Owned or Constructively Owned (including,
without
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limitation, Transfers of interests in other entities which result in
changes in Beneficial Ownership or Constructive Ownership of Capital Stock),
and whether by operation of law or otherwise. The term "Transfer" shall also
include an Acquisition. The terms "Transferring" and "Transferred" shall have
the correlative meanings.
"TRUST" shall mean each of the trusts provided for in Section 4.6.1.
"TRUSTEE" shall mean the Corporation, acting as trustee for any of the
Trusts, or any successor trustee appointed by the Corporation.
"UNITS" shall mean units of partnership interest (including, without
limitation, units of preferred partnership interests and units of common
partnership interests) in the Operating Partnership.
4.3 PREFERRED STOCK
Subject to the rights of any other class of Capital Stock having
voting rights with respect thereto, Preferred Stock may be issued from time to
time in one or more series, and the Board of Directors may, by resolution
providing for the issuance of such Preferred Stock, designate with respect to
such shares: (a) their voting powers; (b) their rights of redemption; (c) their
right to receive dividends (which may be cumulative or noncumulative), including
the dividend rate or rates, the conditions to payment, and the relative
preferences in relation to the dividends payable on any other class or classes
or series of Capital Stock; (d) their rights upon the dissolution of, or upon
any distribution of the assets of, the Corporation; (e) their rights to convert
into, or exchange for, shares of any other class or classes of Capital Stock,
including the price or prices or the rates of exchange; (f) restrictions on the
transfer and ownership of such Preferred Stock, including, without limitation,
restrictions to preserve REIT status, and any mechanisms necessary or
appropriate for enforcing such restrictions; and (g) other relative,
participating, optional or special rights, qualifications, limitations or
restrictions.
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4.4 EXCESS STOCK
Subject to the rights of any other class of Capital Stock having
voting rights with respect thereto, Excess Stock may be issued from time to time
in one or more series, and the Board of Directors may, by resolution providing
for the issuance of such Excess Stock, designate with respect to such shares:
(a) their voting powers; (b) their rights of redemption; (c) their right to
receive dividends (which may be cumulative or noncumulative), including the
dividend rate or rates, the conditions to payment, and the relative preferences
in relation to the dividends payable on any other class or classes or series of
Capital Stock; (d) their rights upon the dissolution of, or upon any
distribution of the assets of, the Corporation; (e) their rights to convert
into, or exchange for, shares of any other class or classes of Capital Stock,
including the price or prices or the rates of exchange; (f) restrictions on
transfer and ownership to preserve REIT status; (g) designation of
Beneficiaries; (h) purchase right in Excess Stock; and (i) other relative,
participating, optional or special rights, qualifications, limitations or
restrictions.
4.5 COMMON STOCK
Section 4.5.1. DIVIDENDS. Subject to the preferential rights of any
class or series within any such class of Capital Stock ranking senior as to
dividends to the Common Stock, and subject to the provisions of Section 4.6 of
these Articles of Incorporation, the record holder of shares of Common Stock
shall be entitled to receive, out of the assets of the Corporation which are
legally available therefor, such dividends as from time to time may be declared
by the Board of Directors. All such holders shall share ratably, in accordance
with the number of shares of Common Stock held by each such holder, in all
dividends paid on the Common Stock.
Section 4.5.2 DISTRIBUTION UPON LIQUIDATION, DISSOLUTION OR WINDING
UP. In the event of any dissolution, liquidation or winding up of the
Corporation, after payment or provision for payment of the debts and other
liabilities of the Corporation and subject to the preferential rights of any
class of Capital Stock ranking senior to the Common Stock as to
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preferences for distributions of assets upon liquidation, dissolution or winding
up of the Corporation and subject to the provisions of this Article IV and
Article V (including all classes or series of Preferred Stock and Excess
Preferred Stock), the holders of shares of Common Stock shall be entitled to
receive, ratably with each other holder of shares of Common Stock and Excess
Common Stock which results from the ownership of Common Stock in excess of the
applicable limits specified in this Article IV and Article V, a portion of the
assets of the Corporation available for distribution to the holders of Common
Stock and Excess Common Stock calculated by dividing the number of shares of
Common Stock held by such holder by the total number of shares of Common Stock
and Excess Common Stock then outstanding.
Section 4.5.3. VOTING RIGHTS. Except as otherwise provided in these
Articles of Incorporation or required by applicable law, each holder of shares
of Common Stock shall be entitled to notice of, and the right to vote at, any
meeting of the stockholders of Common Stock. Each holder of shares of Common
Stock shall be entitled to one vote for each share of Common Stock held by such
holder. Without limiting the foregoing, the holders of record of shares of
Common Stock shall be entitled to vote, together with any other class or series
of Capital Stock entitled to vote, then outstanding, on any resolution presented
by the Board of Directors pursuant to Section 5.1.
Section 4.5.4. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be
required by law, the shares of Common Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in these Articles of Incorporation.
Section 4.5.5. COMMON STOCK OWNERSHIP LIMITATIONS.
(a) During the period commencing on the Initial Issue Date and prior
to the Restriction Termination Date:
(i) Except as provided in Section 4.5.11, no Person shall
Acquire or Beneficially or Constructively Own any shares of Common Stock,
if, as the result of such
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Acquisition or Beneficial or Constructive Ownership, such Person shall
Beneficially or Constructively Own shares of Common Stock in excess of the
Common Stock Ownership Limit;
(ii) No Person shall Acquire or Beneficially or Constructively Own
shares of Capital Stock to the extent that such Acquisition or Beneficial or
Constructive Ownership of Capital Stock would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code, or otherwise
failing to qualify as a REIT (including, but not limited to, an Acquisition or
Beneficial or Con structive Ownership that would result in the Corporation
owning (actually or Constructively) an interest in a tenant that is described in
Section 856(d)(2)(B) of the Code if the income derived by the Corporation from
such tenant would cause the Corporation to fail to satisfy any of the gross
income requirements of Section 856(c) of the Code); and
(iii) In the event that the Corporation issues convertible Preferred
Stock, the Board of Directors may, by resolution providing for the issuance of
such Preferred Stock, adopt the following provision to be applicable to Common
Stock, in lieu of the provision of subsection (i) above:
(x) Except as provided in Section 4.5.11, no Person, other than a
Conversion Holder, shall Acquire or Beneficially or Constructively Own any
shares of Common Stock if, as the result of such acquisition or Beneficial
or Constructive Ownership, such Person shall Beneficially or Constructively
Own shares of Common Stock in excess of the Common Stock Ownership Limit;
provided, however, a Conversion Holder shall only be permitted to Acquire
or Beneficially Own or Constructively Own shares of Common Stock in excess
of the limitation provided herein to the extent that such excess Beneficial
or Constructive Ownership was caused by a Conversion of Preferred Stock
into Common Stock;
(y) Except as provided in Section 4.5.11, no Person, including but not
limited to a Conversion
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Holder, shall Acquire or Beneficially or Constructively Own any shares
of Preferred Stock or Common Stock in excess of the Aggregate Stock
Ownership Limit;
(b) If, during the period commencing on the Initial Issue Date and
prior to the Restriction Termination Date, any Transfer or Acquisition of shares
of Common Stock (other than a Transfer or Acquisition to which Section 4.5.5(c)
applies) (whether or not such Transfer or Acquisition is the result of a
transaction entered into through the facilities of the New York Stock Exchange
or any other national securities exchange or automated inter-dealer quotation
system), occurs which, if effective, would result in any Person Acquiring shares
of Common Stock in violation of Section 4.5.5(a), (i) then that number of shares
of the Common Stock being Transferred or Acquired that otherwise would cause
such Person to violate Section 4.5.5(a) (rounded up to the nearest whole share)
shall be automatically converted into and exchanged for an equal number of
shares of Excess Common Stock, effective as of the close of business on the
Business Day prior to the date of such Transfer or Acquisition, and such Person
shall acquire no rights in such shares or (ii) if the conversion to, and
exchange for, shares of Excess Common Stock described in clause (i) of this
sentence would not be effective for any reason to prevent any Person from
Acquiring or Transferring Common Stock in violation of Section 4.5.5(a), then
the Transfer or Acquisition of that number of shares of Common Stock that
otherwise would cause any Person to violate Section 4.5.5(a) shall be void ab
initio, and the intended transferee shall acquire no rights in such shares of
Common Stock.
(c) If, during the period commencing on the Initial Issue Date and
prior to the Restriction Termination Date, a change in the relationship between
two or more Persons ("Common Stock Affected Persons") results in any of such
Common Stock Affected Persons Beneficially or Constructively Owning Shares of
Common Stock in violation of Section 4.5.5(a) because of the application of
Section 318(a) of the Code (as modified by Section 856(d)(5) of the Code) or
Section 544 of the Code (as modified by Section 856(h)(1)(B) of the Code) (a
"Common Stock Constructive Ownership Event"), then that number of shares of
Common Stock Beneficially or Constructively Owned by the Common Stock Affected
Persons (rounded up to the nearest whole share) that would
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otherwise cause a violation of Section 4.5.5(a), shall be automatically
converted into and exchanged for an equal number of shares of Excess Common
Stock, effective as of the close of business on the Business Day prior to such
Common Stock Constructive Ownership Event, and such Person or Persons shall
acquire no rights in such shares.
(d) If, during the period commencing on the Initial Issue Date and
prior to the Restriction Termination Date, a Special Triggering Event (if
effective) or other event or occurrence (if effective), other than a Transfer or
Acquisition described in Section 4.5.5(b) or a Common Stock Constructive
Ownership Event described in Section 4.5.5(c), would result in any violate
Section 4.5.5(a), then (i) the number of shares of Common Stock (rounded up to
the nearest whole share) that would (but for this Section 4.5.5(d)) cause any
Person to Beneficially or Constructively Own Common Stock in violation of
Section 4.5.5(a) shall be automatically repurchased by the Corporation from the
actual owner of such shares of Common Stock, effective as of the close of
business on the Business Day prior to the date of such Special Triggering Event
or other event or occurrence; (ii) if the automatic repurchase described in
clause (i) of this Section 4.5.5(d) would not be effective for any reason to
prevent any Person from Beneficially or Constructively Owning shares of Common
Stock in violation of Section 4.5.5(a), then the number of shares of Common
Stock (rounded up to the nearest whole share) that otherwise would cause any
Person to violate Section 4.5.5(a) shall be automatically converted into and
exchanged for an equal number of shares of Excess Common Stock effective as of
the close of business on the Business Day prior to the date of such Special
Triggering Event or other event or occurrence, and the actual owner shall retain
no rights in the shares of Common Stock so converted; or (iii) if the conversion
to, and exchange for shares of Excess Common Stock described in clause (ii)
would not be effective for any reason to prevent any Person from Beneficially or
Constructively Owning Common Stock in violation of Section 4.5.5(a), then the
Special Triggering Event or other event or occurrence that otherwise would cause
such Person to violate Section 4.5.5(a) shall be void ab initio. The repurchase
price of each share of Common Stock automatically repurchased pursuant to clause
(i) of this Section 4.5.5(d) shall be a price per share equal to the Market
Price on the date of the Special Triggering
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Event or other event or occurrence that resulted in the automatic repurchase.
Dividends which were accrued but unpaid with respect to the repurchased shares
of Common Stock as of the date of the Special Triggering Event or other event or
occurrence that resulted in the repurchase shall be paid to the actual owner of
the shares of Common Stock prior to the repurchase. Any dividend or other
distribution paid after the Special Triggering Event or other event or
occurrence that resulted in the repurchase, but prior to the discovery of the
Corporation that shares of Common Stock have been automatically repurchased by
the Corporation shall be repaid to the Corporation upon demand and any dividend
declared but unpaid shall be rescinded as void ab initio with respect to such
shares of Common Stock.
(e) Subject to Section 5.2, notwithstanding any other provisions
contained in this Article IV or Section 5.3 during the period commencing on the
Initial Issue Date and prior to the Restriction Termination Date, any Transfer
or Acquisition of shares of Common Stock (whether or not such Transfer or
Acquisition is the result of a transaction entered into through the facilities
of the New York Stock Exchange or any other national securities exchange or
automated inter-dealer quotation system) that, if effective, would result in the
Capital Stock being beneficially owned by less than 100 Persons (determined
without reference to any rules of attribution) shall be void ab initio, and the
intended transferee shall acquire no rights in such shares of Common Stock.
(f) It is expressly intended that the restrictions on ownership and
transfer described in this Section 4.5.5 shall apply to the exchange rights
provided in the Exchange Rights Agreement. Notwithstanding any of the
provisions of the Exchange Rights Agreement to the contrary, no party to the
Exchange Rights Agreement shall be entitled to effect an exchange of Units into
shares of Common Stock if the Beneficial or Constructive Ownership of such
shares of Common Stock would be prohibited under the provisions of this Section
4.5.5.
Section 4.5.6. REMEDIES FOR BREACH. If the Board of Directors or any
duly authorized committee thereof shall at any time determine in good faith that
a Transfer or other event has taken place that results in a violation of Section
4.5.5 or that
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<PAGE> 21
a Person intends to Acquire or has attempted to Acquire Beneficial or
Constructive Ownership of any shares of Common Stock in violation of Section
4.5.5 (whether or not such violation is intended), the Board of Directors or a
committee thereof shall take such action as it or they deem advisable, subject
to Section 5.2 hereof, to refuse to give effect to or to prevent such Transfer
or other event, including, without limitation, causing the Corporation to redeem
shares, refusing to give effect to such Transfer on the books of the Corporation
or instituting proceedings to enjoin such Transfer; provided, however, that any
Transfers or attempted Transfers or, in the case of an event other than a
Transfer, Beneficial or Constructive Ownership, in violation of Section 4.5.5
shall automatically result in the exchange for Excess Common Stock described in
Section 4.5.5 or the automatic repurchase described in Section 4.5.5(d), as
applicable, and, where applicable, such Transfer (or other event) shall be void
ab initio as provided above irrespective of any action (or non-action) by the
Board of Directors or a committee thereof.
Section 4.5.7. NOTICE OF RESTRICTED TRANSFER. Any Person who
Acquires or attempts or intends to Acquire shares of Common Stock in violation
of Section 4.5.5, or any Person who is a transferee in a Transfer or is
otherwise affected by an event other than a Transfer that results in a violation
of Section 4.5.5, shall immediately give written notice to the Corporation of
such Acquisition or Transfer or other 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 Acquisition, Transfer or attempted, intended or
purported Acquisition, Transfer or other event on the Corporation's status as a
REIT.
Section 4.5.8. OWNERS REQUIRED TO PROVIDE INFORMATION. From the
Initial Issue Date to the Restriction Termination Date:
(a) every Beneficial Owner of more than 5% (or such lower percentage
as required by the Code or the Treasury Regulations promulgated thereunder) of
the outstanding Common Stock of the Corporation shall, within 30 days after
December 31 of each year, give written notice to the Corporation stating the
name and address of such Beneficial Owner, the number of shares
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<PAGE> 22
of Common Stock and other shares of the Capital Stock of the Corporation
Beneficially or Constructively Owned, and a description of the manner in which
such shares are held. Each such Beneficial 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 or Constructive Ownership on
the Corporation's status as a REIT and to ensure compliance with the Common
Stock Ownership Limit; and
(b) each Person who is a Beneficial or Constructive Owner of Common
Stock and each Person (including the stockholder of record) who is holding
Common Stock for a Beneficial or Constructive Owner shall provide to the
Corporation such information that the Corporation may request, in good faith, in
order to determine the Corporation's status as a REIT and to comply with
requirements of any taxing authority or governmental authority or to determine
such compliance.
Section 4.5.9. REMEDIES NOT LIMITED. Subject to Sections 5.1 and
5.2, nothing contained in this Section 4.5 shall limit the authority of the
Board of Directors to take such other action as it deems necessary or advisable
to protect the Corporation and the interest of its stockholders in preserving
the Corporation's status as a REIT.
Section 4.5.10. AMBIGUITY. In the case of an ambiguity in the
application of any of the provisions of this Section 4.5, Section 4.6 or any
definition contained in Section 4.2, the Board of Directors shall have the power
to determine the application of the provisions of this Section 4.5 or Section
4.6 with respect to any situation based on the facts known to it. In the event
Section 4.5 or 4.6 requires an action by the Board of Directors and this Charter
fails to provide specific guidance with respect to such action, the Board of
Directors shall have the power to determine the action to be taken so long as
such action is not contrary to the provisions of Sections 4.5 or 4.6. Absent a
decision to the contrary by the Board of Directors (which the Board may make in
its sole and absolute discretion), the shares to be affected by the remedies set
forth in Sections 4.5.5(b), (c), and (d) shall be as follows: (1) if a Person
would have (but for the remedies set forth in Section 4.5.5(b),(c), and (d) as
applicable) Acquired shares of
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Common Stock in violation of Section 4.5.5(a), such remedies (as applicable)
shall apply first to the shares which, but for such remedies, would have been
Acquired and actually owned by such Person, second to shares which, but for such
remedies, would have been Acquired by such Person and which would have been
Beneficially Owned or Constructively Owned (but not actually owned) by such
Person, pro rata among the Persons who actually own such shares based upon the
relative value of the shares held by each such Person; and (2) if a Person is in
violation of Section 4.5.5(a) as a result of an event other than an Acquisition
of shares of Common Stock by such Person, the remedies set forth in Section
4.5.5(b), (c), or (d) (as applicable) shall apply first to shares which are
actually owned by such Person and second to shares which are Beneficially or
Constructively Owned (but not actually owned) by such Person, pro rata among the
Persons who actually own such shares based upon the relative value of the shares
held by each such Person.
Section 4.5.11. EXCEPTIONS.
(a) The Board of Directors, in its sole discretion, may exempt a
Person from the Common Stock Ownership Limit or the Aggregate Stock Ownership
Limit (but not from the limitations set forth in Section 4.5.5(a)(ii)), if (i)
such Person is not (A) an individual for purposes of Section 542(a)(2) of the
Code as modified by Section 856(h) of the Code, or (B) treated as the owner of
such stock for purposes of Section 542(a)(2) of the Code as modified by Section
856(h) of the Code, and the Board of Directors obtains such representations and
undertakings from such Person as are reasonably necessary to ascertain that no
individual's Beneficial or Constructive Ownership of such shares of Common Stock
will violate Section 4.5.5, (ii) such Person does not and represents that it
will not own, actually or Constructively, shares of Capital Stock to the extent
that such Actual or Constructive Ownership of Capital Stock would result in the
Corporation being "closely-held" within the meaning of Section 856(h) of the
Code, or otherwise failing to qualify as a REIT (including, but not limited to,
an Acquisition or Beneficial or Constructive Ownership that would result in the
Corporation owning (actually or Constructively) an interest in a tenant of the
Corporation (or a tenant of any entity owned or controlled by the Corporation)
that would cause the Corporation to own,
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actually or Constructively, more than a 9.9% interest (as set forth in
Section 856(d)(2)(B) of the Code) in such tenant) and the Board of Directors
obtains such representations and undertakings from such Person as are
reasonably necessary to ascertain this fact, and (iii) such Person agrees that
any violation or attempted violation of such representations or undertakings
(or other action which is contrary to the restrictions contained in Section
4.5.5 through 4.5.10 of this Article IV) will result in such shares of Common
Stock being exchanged for Excess Common Stock or automatically repurchased in
accordance with Section 4.5.5.
(b) Prior to granting any exception pursuant to Section 4.5.11(a), the
Board of Directors shall require a ruling from the Internal Revenue Service, or
an opinion of counsel, in either case in form and substance satisfactory to the
Board of Directors in its sole discretion, as it may deem necessary or
advisable in order to determine or ensure the Corporation's status as a REIT.
Notwithstanding the receipt of any ruling or opinion, the Board of Directors
may impose such conditions or restrictions as it deems appropriate in
connection with granting such exception.
(c) Subject to Section 4.5.5(a)(iii), an underwriter which participates in
a public offering or a private placement of Capital Stock (or securities
convertible into or exchangeable for Capital Stock) may Acquire or Beneficially
Own or Constructively Own shares of Capital Stock (or securities convertible
into or exchangeable for Capital Stock) in excess of the Common Stock Ownership
Limit or the Aggregate Stock Ownership Limit, but only to the extent necessary
to facilitate such public offering or private placement and for a period not
exceeding 90 days.
Section 4.5.12. LEGEND. Each certificate for Common Stock shall bear the
following legend:
"The shares represented by this certificate are
subject to restrictions on Beneficial and Constructive
Ownership and Transfer for the purpose of the
Corporation's maintenance of its status as a Real
Estate Investment Trust under the Internal Revenue
Code of 1986, as
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amended (the "Code"). Subject to certain further restrictions
and except as expressly provided in the Articles of Incorporation,
no Person may (i) Beneficially or Constructively Own shares of Common
Stock in excess of 9.9% of the outstanding Common Stock; (ii)
Beneficially or Constructively Own shares of Capital Stock which have
an aggregate value greater than 9.9% of the total outstanding Capital
Stock; (iii) Beneficially or Constructively Own shares of Common Stock
that would result in the Corporation being "closely held" under
Section 856(h) of the Code or otherwise cause the Corporation to fail
to qualify as a REIT; or (iv) Transfer or Acquire shares of Common
Stock if such Transfer or Acquisition would result in the Capital
Stock of the Corporation being owned by fewer than 100 Persons. Any
Person who Beneficially or Constructively Owns or attempts to
Beneficially or Constructively Own shares of Common Stock which cause
or will cause a Person to Beneficially or Constructively Own shares of
Common Stock in violation of the above restrictions must immediately
notify the Corporation. If any of the restrictions on Transfer or
ownership applicable to Common Stock are violated, the shares of
Common Stock represented hereby will be automatically exchanged for
shares of Excess Common Stock which will be held in trust by the
Corporation or in certain circumstances will be automatically
repurchased by the Corporation. Excess Common Stock has no dividend
rights and no voting rights, and the Corporation has a right to
acquire Excess Common Stock under certain circumstances. In addition,
the Corporation may repurchase shares upon the terms and conditions
specified by the Board of Directors in its sole discretion if the
Board of Directors determines that ownership
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or a Transfer or other event may violate the
restrictions described above. In addition, upon the
occurrence of certain events, attempted Transfers in
violation of the restrictions set forth in the
Articles of Incorporation shall be void ab initio.
The Corporation will furnish to the holder hereof upon
request and without charge a complete written
statement of the terms and conditions of each class of
Capital Stock. All capitalized terms in this legend
have the meanings defined in the Articles of
Incorporation, as the same may be amended from time to
time, a copy of which, including the restrictions on
transfer, will be sent without charge to each holder
of Common Stock who so requests."
4.6 EXCESS COMMON STOCK
Section 4.6.1. OWNERSHIP IN TRUST. Upon any purported Transfer or other
event that results in an exchange of Common Stock for Excess Common Stock
pursuant to Section 4.5.5, such Excess Common Stock shall be deemed to have
been Transferred to the Corporation, as Trustee of a Trust for the exclusive
benefit of the Beneficiary or Beneficiaries to whom an interest in such Trust
may later be transferred pursuant to Section 4.6.5. Shares of Excess Common
Stock so held in trust shall be issued and outstanding stock of the Corporation
but shall not be considered issued and outstanding for purposes of any
stockholder vote. The Purported Record Transferee or, in the case of Excess
Common Stock resulting from an event other than a Transfer or Acquisition, the
Purported Record Holder, shall have no rights in such Excess Common Stock. The
Purported Beneficial Transferee or, in the case of Excess Common Stock
resulting from an event other than a Transfer or Acquisition, the Purported
Beneficial Holder, shall have no rights in such Excess Common Stock except as
provided in Section 4.6.5.
Section 4.6.2. DIVIDEND RIGHTS. Excess Common Stock shall not be
entitled to any dividends or periodic distributions.
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Any dividend or distribution paid with respect to shares of Common Stock which
have been automatically exchanged for shares of Excess Common Stock prior to
the discovery by the Corporation that such shares of Common Stock have been
exchanged for Excess Common Stock shall be repaid to the Corporation upon
demand, and any dividend or distribution declared but unpaid with respect to
such shares of Common Stock shall be rescinded as void ab initio.
Section 4.6.3. 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, the Corporation, as holder of
shares of Excess Common Stock in trust, shall be entitled to receive,
subject to the preferential rights of holders of Preferred Stock or Excess
Preferred Stock, ratably with each other holder of Common Stock and Excess
Common Stock, that portion of the assets of the Corporation available for
distribution to the holders of its Common Stock and Excess Common Stock as the
number of shares of the Excess Common Stock held by the Corporation in trust
bears to the total number of shares of Common Stock and Excess Common Stock
then outstanding. The Corporation, as holder of the Excess Common Stock in
trust, or if the Corporation shall have been dissolved, any trustee appointed
by the Corporation prior to its dissolution, shall distribute ratably to the
Beneficiaries of the Trust, when and if determined in accordance with Section
4.6.5, any such assets received in respect of the Excess Common Stock in any
liquidation, dissolution or winding up of, or any distribution of the assets,
of the Corporation.
Section 4.6.4. VOTING RIGHTS. The holders of shares of Excess Common
Stock shall not be entitled to vote on any matters (except as required by the
MGCL).
Section 4.6.5. RESTRICTIONS ON TRANSFER; DESIGNATION OF BENEFICIARY.
Excess Common Stock shall not be transferrable. Unless the Corporation
exercises its purchase rights under Section 4.6.6, the Corporation, as Trustee,
must, within 15 days of its receipt of Excess Common Stock (the "Excess Common
Stock Designation Period") designate a Beneficiary of the Trust (which holds
the number of shares of Excess Common Stock attributable to the purported
Transfer or other event that resulted in the issuance of such Excess Common
Stock), which designation must
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satisfy the following conditions: (i) the shares of Excess Common Stock
held in the Trust would not result in a violation of Section 4.5.5(a) in the
hands of the Beneficiary and (ii) the consideration received by the Purported
Beneficial Transferee, or, in the case of Excess Common Stock resulting from an
event other than a Transfer or Acquisition, the Purported Beneficial Holder,
does not exceed the Excess Common Stock Limitation Price. Upon a permitted
transfer of an interest in the Trust, the corresponding shares of Excess Common
Stock in the Trust shall be automatically exchanged for an equal number of
shares of Common Stock and such shares of Common Stock shall be transferred of
record to the Beneficiary of the interest in the Trust designated by the
Corporation in accordance with the requirements set forth in this Section
4.6.5.
Section 4.6.6. PURCHASE RIGHT IN EXCESS COMMON STOCK. Notwithstanding
Section 4.6.5, shares of Excess Common Stock shall be deemed to have been
offered for sale to the Corporation, or its designee, at a price per share
equal to the Excess Common Stock Limitation Price. The Corporation shall
have the right to accept such offer up to the end of the Excess Common Stock
Designation Period, with payment of the Excess Common Stock Limitation Price
due no later than 75 days after the end of the Excess Common Stock Designation
Period.
ARTICLE V
GENERAL REIT PROVISIONS
Section 5.1. TERMINATION OF REIT STATUS. The Board of Directors shall
take no action to terminate the Corporation's status as a REIT until such time
as (a) the Board of Directors adopts a resolution recommending that the
Corporation terminate its status as a REIT, (b) the Board of Directors presents
the resolution at an annual or special meeting of the stockholders and (c) such
resolution is approved by the vote of a majority of the shares entitled to be
cast on the resolution.
Section 5.2. EXCHANGE OR MARKET TRANSACTIONS. Nothing in Article IV or
this Article V shall preclude the settlement of any transaction entered into
through the facilities of the New York Stock Exchange or any other national
securities exchange or
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automated inter-dealer quotation system. However, as set forth in Article IV
or this Article V certain transactions may be settled by providing Excess
Common Stock.
Section 5.3. KEMPER CORPORATION LIMITATIONS. Notwithstanding anything in
these Articles of Incorporation to the contrary, Kemper Corporation, KILICO
Realty Corporation, Kemper Investors Life Insurance Company, KFC Portfolio
Corp. Federal Kemper Life Assurance Company, Kemper Portfolio Corp. or any
Affiliate of any such entity, or any of their successors or permitted assigns,
shall not be subject to the Common Stock Ownership Limit with respect to the
Acquisition of any shares of Common Stock at or above the Common Stock
Ownership Limit pursuant to the pledge by The Prime Group, Inc. or any of its
Affiliates of Units or Common Stock if, prior to such Acquisition, such entity
shall have (a) delivered to the Corporation either a ruling from the Internal
Revenue Service or an opinion of nationally recognized tax counsel which, in
either case, concludes that such Acquisition of Common Stock will not
jeopardize the Company's status as a REIT because no "individual" (within the
meaning of Section 542(a)(2) of the Code) will Beneficially Own or
Constructively Own in excess of 9.9% of the outstanding Common Stock, (b)
represented to the Corporation that it does not and will not own, actually or
Constructively, shares of Capital Stock to the extent that such actual or
Constructive Ownership of Capital Stock would result in the Corporation being
"closely-held" within the meaning of Section 856(h) of the Code, or otherwise
failing to qualify as a REIT (including, but not limited to, an Acquisition or
Beneficial or Constructive Ownership that would result in the Corporation
owning (actually or Constructively) more than a 9.9% interest (as set forth in
Section 856(d)(2)(B) of the Code) in a tenant of the Corporation (or a tenant
of an entity owned or controlled by the Corporation) (or, if a tenant is not a
corporation, more than a 9.9% interest in the assets or net profits of such
tenant)), (c) undertaken not to take any action which would cause the ownership
of any "individual" (within the meaning of Section 542(a)(2) of the Code) to
exceed the Common Stock Ownership Limit or Aggregate Stock Ownership Limit and
(d) agreed that any violation of the foregoing representation and undertaking
will result in its shares of Common Stock being exchanged for Excess Common
Stock in accordance with Section 4.5.5.
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Section 5.4. SEVERABILITY. If any provision of Article IV or this
Article V 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.
Section 5.5. WAIVER. The Corporation shall have authority at any
time to waive the requirements that Excess Stock be issued or be deemed
outstanding or that the Corporation repurchase shares of Common Stock in
accordance with the provisions of Article IV if the Corporation determines,
based on an opinion of nationally recognized tax counsel, that the issuance of
such Excess Stock or the fact that such Excess Stock is deemed to be
outstanding, or any such repurchase, would not jeopardize the status of the
Corporation as a REIT for federal income tax purposes.
ARTICLE VI
BOARD OF DIRECTORS
Section 6.1. MANAGEMENT. The management of the business and the
conduct of the affairs of the Corporation shall be vested in its Board of
Directors.
Section 6.2. NUMBER. The number of directors which will constitute
the entire Board of Directors shall be fixed by, or in the manner provided in,
the By-laws but shall in no event be less than three. Any increases or
decreases in the size of the Board of Directors shall be apportioned equally
among the classes of directors to prevent stacking in any one class of
directors. There are currently three directors in office whose names are as
follows:
Michael W. Reschke
David M. Glickman
Richard F. Cavenaugh
Section 6.3. CLASSIFICATION. The directors shall be classified, with
respect to the time for which they severally
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hold office, into three classes, as nearly equal in number as possible. As
shall be provided in the By-laws, one class shall originally be elected for a
term expiring at the annual meeting of stockholders to be held in 1995, another
class shall originally be elected for a term expiring at the annual meeting of
stockholders to be held in 1996, and another class shall originally be elected
for a term expiring at the annual meeting of stockholders to be held in 1997,
with each class to hold office until its successors are elected and qualify. At
each annual meeting of the stockholders of the Corporation, the date of which
shall be fixed by or pursuant to the By-laws, the successors of the class of
directors whose terms expire at that meeting shall be elected to hold office for
a term expiring at the annual meeting of stockholders held in the third year
following the year of their election. No election of directors need be by
written ballot. No decrease in the number of directors constituting the Board
of Directors shall shorten the term of any incumbent director.
Section 6.4. REMOVAL. Any director may be removed from office only
for cause and only by the affirmative vote of two-thirds of the aggregate number
of votes then entitled to be cast generally in the election of directors. For
purposes of this Section 6.5, "cause" shall mean the willful and continuous
failure of a director to substantially perform the duties to the Corporation of
such director (other than any such failure resulting from temporary incapacity
due to physical or mental illness) or the willful engaging by a director in
gross misconduct materially and demonstrably injurious to the Corporation.
Section 6.5. BY-LAWS. Except as otherwise provided in the MGCL, the
Board of Directors shall have power to adopt, amend, alter, change and repeal
any By-laws of the Corporation by vote of the majority of the Board of Directors
then in office. Any adoption, amendment, alteration, change or repeal of any
By-laws by the stockholders of the Corporation shall require the affirmative
vote of a majority of the aggregate number of votes then entitled to be cast
generally in the election of directors. Notwithstanding anything in this
Section 6.5 to the contrary, no amendment, alteration, change or repeal of any
provision of the By-laws (a) relating to the classification or removal of
directors, (b) relating to the vote of the stockholders required
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for the amendment or repeal of the By-laws or (c) adopted by the stockholders
which is subject to the condition that it may only be amended or repealed by
vote of the stockholders, shall be effected without the vote of two-thirds of
the aggregate number of votes entitled to be cast generally in the election of
Directors.
Section 6.6. POWERS. The enumeration and definition of particular
powers of the Board of Directors included elsewhere in these Articles of
Incorporation shall in no way be limited or restricted by reference to or
inference from the terms of any other clause or provision of these Articles of
Incorporation, or construed as excluding or limiting, or deemed by inference or
otherwise in any manner to exclude or limit, the powers conferred upon the Board
of Directors under the MGCL as now or hereafter in force.
ARTICLE VII
STOCKHOLDERS
If a quorum is present when a stockholder meeting convenes, a quorum
is deemed to be present for the entire meeting despite the subsequent withdrawal
of holders of any shares necessary to establish a quorum.
ARTICLE VIII
LIABILITY
To the fullest extent permitted by Maryland law, as applicable from
time to time, no person who at any time was or is a director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for money damages. No amendment of these Articles of Incorporation of the
Corporation or repeal of any of its provisions shall limit or eliminate any of
the benefits provided to directors and officers under this Article VIII in
respect of any act or omission that occurred prior to such amendment or repeal.
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ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by
Maryland law, as applicable from time to time, any person who at any time was or
is, or is the personal representative of a deceased person who was, a director
or officer of the Corporation against any judgments, penalties, fines,
settlements and reasonable expenses and any other liabilities arising in
connection with any action, suit, or proceeding (whether civil, criminal,
administrative or investigative) in which such person is or was made a party to,
or is threatened to be made a party to, or is or was involved in because of any
action alleged to have been taken or omitted in such capacity as a director or
an officer. The Corporation shall pay or reimburse all reasonable expenses
incurred by a present or former director or officer of the Corporation or
personal representative of a deceased person who was a director or officer of
the Corporation in connection with any threatened, pending or completed action,
suit or proceeding (whether civil, criminal, administrative or investigative) in
which the present or former director or officer, or personal representative of a
deceased person who was a director or officer, of the Corporation is a party
because of any action alleged to have been taken or omitted in such capacity as
a director or officer, in advance of the final disposition of the proceeding, to
the fullest extent permitted by, and in accordance with the applicable
requirements of, Maryland law, as applicable from time to time. The Corporation
may indemnify any other persons permitted but not required to be indemnified by
Maryland law, as applicable from time to time, if and to the extent
indemnification is authorized and determined to be appropriate, in each case in
accordance with applicable law. No amendment of these Articles of Incorporation
or repeal of any of its provisions shall limit or eliminate any of the benefits
provided to directors and officers under this Article VIII in respect of any act
or omission that occurred prior to such amendment or repeal.
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ARTICLE X
WRITTEN CONSENT OF STOCKHOLDERS
Any corporate action upon which a vote of stockholders is required or
permitted may be taken without a meeting or vote of stockholders with the
unanimous written consent of stockholders entitled to vote thereon.
ARTICLE XI
AMENDMENT
The Corporation reserves the right to amend, alter or repeal any
provision contained in these Articles of Incorporation, including any amendment
altering the terms or contract rights, as expressly set forth in these Articles
of Incorporation, of any outstanding shares of Capital Stock, upon (a) adoption
by the Board of Directors of a resolution recommending such amendment,
alteration or repeal, (b) presentation by the Board of Directors to the
stockholders of a resolution at an annual or special meeting of the stockholders
and (c) approval of such resolution by the affirmative vote of the holders of a
majority of the aggregate number of votes entitled to be cast generally in the
election of directors; provided, however, that (a) the affirmative vote of the
holders of two-thirds of the aggregate number of votes then entitled to be cast
generally in the election of directors shall be required to amend Sections
4.5.3, 6.3 and 6.4 and Article XI hereof and (b) the unanimous approval of the
holders of the outstanding stock entitled to vote generally in the election of
directors shall be required to amend Sections 4.1.6 and 5.3. All rights
conferred upon stockholders herein are subject to this reservation.
ARTICLE XII
EXISTENCE
The Corporation is to have a perpetual existence.
* * * * * *
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