SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) May 18, 1998
INNKEEPERS USA TRUST
(Exact name of registrant as specified in its charter)
Maryland 0-24568 65-0503831
(State or other (Commission (IRS Employer
jurisdiction File No.) Identification No.)
of incorporation)
306 Royal Poinciana Plaza
Palm Beach, Florida 33480
(Address of principal executive offices)
(561) 835-1800
(Registrant's telephone number, including area code)
N/A
(former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
ISSUANCE OF SERIES A PREFERRED SHARES
On May 18, 1998, Innkeepers USA Trust, a Maryland real
estate investment trust (the "Company"), issued 4,200,000 8.625%
Series A Cumulative Convertible Preferred Shares of Beneficial
Interest, par value $.01 per share (the "Series A Preferred
Shares"), pursuant to Rule 144A of the Securities Act of 1933
(the "Securities Act"). Also on May 18, 1998, the Company issued
50,000 shares of Series A Preferred Shares to executive officers
and members of the Board of Trustees of the Company and their
families pursuant to Regulation D of the Rules and Regulations
under the Securities Act. On May 28, 1998, the Company issued an
additional 380,000 Series A Preferred Shares pursuant to Rule
144A. The Series A Preferred Shares are the Company's only
outstanding series or class of preferred shares.
The terms of the Series A Preferred Shares are set forth in
the Articles Supplementary to the Company's Declaration of Trust
included as Exhibit 3.1 hereto. The Series A Preferred Shares
have a liquidation preference amount of $25.00 per share (the
"Liquidation Preference Value"). With respect to rights to
receive dividends and to participate in distributions or payments
in the event of liquidation, dissolution or winding up of the
Company, the Series A Preferred Shares rank senior to the
Company's Common Shares (defined below) and any other capital
shares of the Company which do not, by their terms, rank senior
to or pari passu with the Series A Preferred Shares. Dividends
on the Series A Preferred Shares are cumulative from July 28,
1998, and will be paid when, as and if declared by the Board of
Trustees of the Company in an amount per share equal to the
greater of (i) $0.53906 per quarter (or $2.15264 per annum, which
is equal to a rate of 8.625% of the Liquidation Preference Value
per annum) or (ii) the cash dividend (exclusive of non-regular
dividends such as a special capital gain distribution) declared
on the number of common shares of beneficial interest of the
Company, par value $.01 per share ("Common Shares") (or portions
thereof) into which one Series A Preferred Share is convertible.
Series A Preferred Shares are convertible, in whole or in part,
at any time, at the option of the holder, into Common Shares at a
price of $16.8794 per Common Share (equivalent to a conversion
rate of 1.4811 Common Shares for each Series A Preferred Share),
subject to adjustment under certain circumstances as described in
the Articles Supplementary. Accrued but unpaid distributions on
the Series A Preferred Shares do not bear interest and holders of
the Series A Preferred Shares are not entitled to any
distributions in excess of full cumulative distributions as
described above.
Except as indicated below, the holders of Series A Preferred
Shares have no voting rights. If and whenever six quarterly
dividends (whether or not consecutive) payable on the Series A
Preferred Shares or any other shares of beneficial interest that
rank in parity as to the payment of dividends or amounts upon
liquidation with the Series A Preferred Shares ("Parity Shares")
are in arrears, whether or not earned or declared, the number of
Trustees then constituting the Board of Trustees of the Company
will be increased by two and the holders of the Series A
Preferred Shares, voting together as a class with the holders of
any other series of Parity Shares (any other such series, the
"Voting Preferred Shares"), will have the right to elect two
additional Trustees to serve on the Company's Board of Trustees
at an annual meeting of shareholders or a properly called special
meeting of the holders of the Series A Preferred Shares and such
Voting Preferred Shares and at each subsequent annual meeting of
shareholders (or special meeting held in place thereof at which
Trustees are to be elected) until all such dividends and
dividends for the current quarterly period on the Series A
Preferred Shares have been paid or declared and set aside for
payment, at which time such two additional Trustees shall resign
from the Board of Trustees. Any proposed amendment to the
Declaration of Trust of the Company or the Articles Supplementary
which would create a class of preferred shares ranking senior to
the Series A Preferred Shares as to dividends and upon
liquidation will require the approval of the holders of 66 2/3%
of the outstanding Series A Preferred Shares.
Except as otherwise provided under the Declaration of Trust
or to protect the Company's status as a REIT or to prevent the
Company's assets from being deemed plan assets under the plan
asset regulation promulgated by the Department of Labor under
ERISA at 29 C.F.R. 2510:3-101, Series A Preferred Shares are not
redeemable by the Company prior to May 18, 2003. On or after May
19, 2003, the Company, at its option upon not less than 30 nor
more than 60 days' written notice, may redeem the Series A
Preferred Shares, in whole or in part, at any time or from time
to time at a price equal to the Liquidation Preference Value plus
accrued and unpaid dividends, payable at the Company's option in
(i) Common Shares equal in number to (A) the Liquidation
Preference Value plus accrued and unpaid dividends divided by (B)
the average closing price of the Common Shares on the NYSE for
the 10 days prior to the business day immediately preceding the
date of redemption or (ii) cash.
Upon liquidation, dissolution or winding up of the Company,
the holders of Series A Preferred Shares will receive an amount
equal to the Liquidation Preference Value per share plus all
accrued and unpaid dividends through the date of liquidation,
dissolution or winding up. Until the holders of the Series A
Preferred Shares have been paid the Liquidation Preference Value
and all accrued and unpaid dividends in full, no payment will be
made to any holder of shares of beneficial interest that rank
junior as to the payment of dividends or amounts upon liquidation
with the Series A Preferred Shares upon the liquidation,
dissolution or winding up of the Company.
The Series A Preferred Shares are eligible for trading on
the PORTAL Market of the National Association of Securities
Dealers, Inc. The Series A Preferred Shares and the Common
Shares issuable upon conversion thereof have not been registered
under the Securities Act and are subject to certain restrictions
on transfer.
Pursuant to an agreement between the Company and the initial
purchaser of the Series A Preferred Shares (the "Registration
Rights Agreement"), the Company has agreed, for the benefit of
the holders of Series A Preferred Shares and any Common Shares
issued upon conversion thereof, that no later than July 17, 1998,
the Company will file a shelf registration statement on Form S-3
with the Securities and Exchange Commission (the "Resale Shelf")
to register for resale the Series A Preferred Shares and the
Common Shares issued upon conversion thereof. If the Resale
Shelf (i) has not been filed by July 17, 1998, (ii) subject to
certain exceptions, has not been declared effective by September
15, 1998 or, (iii) after it has been declared effective, ceases
to be effective or usuable (subject to certain exceptions),
special additional distributions will be payable to holders of
Series A Preferred Shares or Common Shares entitled to such
registration under the Registration Rights Agreement until the
Resale Shelf becomes (or again becomes) effective and/or usable.
The Company raised $101,556,000 in the private placement
pursuant to Rule 144A completed May 18, 1998, net of the
underwriting discount of $3,444,000 paid to EVEREN Securities,
Inc., which acted as initial purchaser in the private placement
("Initial Purchaser"). The Company raised $1,209,000 in the
private placement pursuant to Regulation D completed May 18,
1998. The Company raised $9,188,400 in the private placement
completed May 28, 1998, net of the underwriting discount of
$311,600 paid to the Initial Purchaser.
<PAGE>
Exhibits Description
3.1 Articles Supplementary to the Declaration of Trust
99.1 Company's Press Release dated May 19, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on
behalf by the undersigned thereunto duly authorized.
INNKEEPERS USA TRUST
By: /s/ Mark A. Murphy
Mark A. Murphy
Secretary and General Counsel
Date: June 17, 1998
<PAGE>
EXHIBIT INDEX
Exhibits Description
3.1 Articles Supplementary to the Declaration of Trust
99.1 Company's Press Release dated May 19, 1998.
Exhibit 3.1
INNKEEPERS USA TRUST
ARTICLES SUPPLEMENTARY
8.625% SERIES A CUMULATIVE CONVERTIBLE PREFERRED SHARES
(liquidation preference $25.00 per share)
Innkeepers USA Trust, a Maryland real estate investment
trust (the "Company"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
Under a power contained in Article VI of the Amended and
Restated Declaration of Trust of the Company (the "Declaration of
Trust"), the Board of Trustees of the Company (the "Board of
Trustees"), by resolution duly adopted at a meeting duly called
and held on May 6, 1998, classified and designated 4,880,000
Preferred Shares (as defined in the Declaration of Trust) as
8.625% Series A Cumulative Convertible Preferred Shares of
Beneficial Interest, $.01 par value per share, with the following
preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of
redemption, which, upon any restatement of the Declaration of
Trust, shall be deemed to be part of Article VI of the
Declaration of Trust:
8.625% SERIES A CUMULATIVE CONVERTIBLE PREFERRED SHARES
A. CERTAIN DEFINITIONS.
Unless the context otherwise requires, the terms defined in
this Paragraph A shall have, for all purposes of these Articles
Supplementary, the meanings herein specified (with terms defined
in the singular having comparable meanings when used in the
plural).
"Benefit Plan Investor" means (i) an employee benefit plan
(as defined by Section 3(3) of ERISA), whether or not it is
subject to Title I of ERISA; (ii) a plan as described in Section
4975 of the Code; (iii) an entity whose underlying assets include
the assets of any plan described in clause (i) or (ii) by reason
of the plan's investment in such entity (including but not
limited to an insurance company general account); or (iv) an
entity that otherwise constitutes a "benefit plan investor"
within the meaning of the Plan Asset Regulation.
"Board of Trustees" shall mean the Board of Trustees of the
Company or any committee authorized by such Board of Trustees to
perform any of its responsibilities with respect to the Series A
Preferred Shares.
"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, New York are authorized or
required by law, regulation or executive order to close.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Shares" shall mean the common shares of beneficial
interest, $.01 par value per share, of the Company.
"Constituent Person" shall have the meaning set forth in
subsection (e) of subparagraph (7) of paragraph B.
"Conversion Price" shall mean the conversion price per
Common Share at which the Series A Preferred Shares are
convertible into Common Shares, as such Conversion Price may be
adjusted pursuant to subparagraph (7) of paragraph B. The initial
Conversion Price shall be $16.8794 (equivalent to a conversion
rate of 1.4811 Common Shares for each Series A Preferred Share).
"Current Market Price" of publicly traded Common Shares or
any other class of shares of beneficial interest or other
security of the Company or any other issuer for any day shall
mean the last reported sales price, regular way, on such day or,
if no sale takes place on such day, the average of the reported
closing bid and asked prices on such day, regular way, in either
case as reported on the New York Stock Exchange ("NYSE") or, if
such security is not listed or admitted for trading on the NYSE,
on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or
admitted for trading on any national securities exchange, on the
Nasdaq National Market or, if such security is not quoted on the
Nasdaq National Market, the average of the closing bid and asked
prices on such day in the over-the-counter market as reported by
Nasdaq or, if bid and asked prices for such security on such day
shall not have been reported through Nasdaq, the average of the
bid and asked prices on such day as furnished by any NYSE member
firm regularly making a market in such security and selected for
such purpose by the Chief Executive Officer of the Company or the
Board of Trustees or, if such security is not so listed or
quoted, as determined in good faith at the sole discretion of the
Chief Executive Officer of the Company or the Board of Trustees,
which determination shall be final, conclusive and binding.
"Distribution Payment Date" shall have the meaning set forth
in subparagraph (3) of paragraph B.
"Distribution Period" shall have the meaning set forth in
subparagraph (3) of paragraph B.
"Dividend Ratchet Amount" shall mean for any calendar
quarter, the cash distribution (exclusive of non-regular
dividends such as a special capital gain distribution) payable on
the number of Common Shares (or portions thereof) into which each
Series A Preferred Share is then convertible (i.e., an amount
equal to the number of Common Shares (or portions thereof) into
which one Series A Preferred Share is convertible multiplied by
the cash distribution (exclusive of non-regular dividends)
declared per Common Share for such quarter).
"Fair Market Value" shall mean the fair market value as
determined in good faith at the sole discretion of the Chief
Executive Officer or the Board of Trustees, which determination
shall be final, conclusive and binding.
"Issue Date" shall mean the first date on which Series A
Preferred Shares are issued and sold.
"Junior Shares" shall have the meaning set forth in
subparagraph (2) of paragraph B.
"Non-Electing Share" shall have the meaning set forth in
subsection (e) of subparagraph (7) of paragraph B.
"Ownership Limitation" means the limitation on ownership of
the Company's shares of beneficial interest (or deemed ownership
by virtue of the attribution provisions of the Code) set forth in
Article VII of the Declaration of Trust.
"Parity Shares" shall have the meaning set forth in
subparagraph (2) of paragraph B.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under 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 includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended; but does not include EVEREN
Securities, Inc. in its capacity as initial purchaser of the
Series A Preferred Shares provided that the ownership of Series A
Preferred Shares by EVEREN Securities, Inc. would not result in
the Company being "closely held" within the meaning of Section
856(h) of the Code or otherwise result in the Company failing to
qualify as a REIT or result in the Company's assets being deemed
"plan assets" as defined under the Plan Asset Regulation.
"Plan Asset Regulation" means the plan asset regulation
promulgated by the Department of Labor under ERISA at 29 C.F.R.
2510.3-101.
"Plan Assets" means "plan assets" as defined in the Plan
Asset Regulation.
"Preferred Shares" shall mean preferred shares of beneficial
interest, $.01 par value per share, of the Company.
"Record Date" shall have the meaning set forth in
subparagraph (3) of paragraph B.
"Redemption Price" shall equal $25.00 per share, plus
dividends accrued and unpaid to the redemption date (whether or
not declared) without interest, or such other amount referred to
in subparagraph (5)(d) of paragraph B.
"REIT" shall mean a real estate investment trust under
Section 856 of the Code.
"Securities" shall have the meaning set forth in subsection
(d)(iii) of subparagraph (7) of paragraph B.
"Series A Preferred Shares" shall mean the Company's 8.625%
Series A Cumulative Convertible Preferred Shares of beneficial
interest, $.01 par value per share, liquidation preference $25.00
per share.
"Series A Preferred Shares Redemption Date" shall have the
meaning set forth in subsection (e) of subparagraph (5) of
paragraph B hereof.
"Set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Company
in its accounting ledgers of any accounting or bookkeeping entry
which indicates, pursuant to a declaration of distributions by
the Board of Trustees, the allocation of funds to be paid on any
class or series of shares of beneficial interest; provided,
however, that if any funds for any class or series of Junior
Shares or any Parity Shares are placed in a separate account of
the Company or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Series A
Preferred Shares shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other
similar agent.
"Shares-in-Trust" means the designation placed upon shares
of beneficial interest of the Company as set forth in Article VII
of the Declaration of Trust.
"Trading Day" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not
listed or admitted for trading on the NYSE, on the principal
national securities exchange on which such securities are listed
or admitted, or if not listed or admitted for trading on any
national securities exchange, on the Nasdaq National Market, or
if such securities are not quoted on such Nasdaq National Market,
in the applicable securities market in which the securities are
traded.
"Transaction" shall have the meaning set forth in subsection
(e) of subparagraph (7) of paragraph B hereof.
"Transfer Agent" means Harris Trust and Savings Bank,
Chicago, Illinois or such other agent or agents of the Company as
may be designated by the Board of Trustees or their designee as
the transfer agent for the Series A Preferred Shares.
"25% Threshold" means ownership by Benefit Plan Investors,
in the aggregate, of 25% or more of the value of any class of
equity interest in the Company (calculated by excluding the value
of any interest held by any person, other than a Benefit Plan
Investor, who has discretionary authority or control with respect
to the assets of the Company or any person who provides
investment advice to the Company for a fee (direct or indirect)
with respect to such assets, or any affiliate of such person).
B. SERIES A PREFERRED SHARES
(1) Number.
The maximum number of shares of the Series A Preferred
Shares shall be 4,880,000.
(2) Relative Seniority.
In respect of rights to receive distributions and to
participate in distributions or payments in the event of any
liquidation, dissolution or winding up of the Company, the Series
A Preferred Shares shall rank pari passu with any other preferred
shares of beneficial interest of the Company (the "Parity
Shares"), and will rank senior to the Common Shares and any other
class or series of shares of beneficial interest of the Company
ranking, as to distributions and upon liquidation, junior to the
Parity Shares (collectively, the "Junior Shares").
(3) Distributions.
The holders of the then outstanding Series A Preferred
Shares shall be entitled to receive, when, and as authorized and
declared by the Board of Trustees out of any funds legally
available therefor, cumulative cash distributions in an amount
per share equal to the greater of (i) $0.53906 per quarter (equal
to a rate of 8.625% of the $25.00 liquidation preference (the
"Liquidation Preference") per annum) or (ii) the Dividend Ratchet
Amount. Quarterly dividends on the Series A Preferred Shares are
payable as authorized by the Board of Trustees, or if not
authorized, on the fourth Tuesday of January, April, July and
October of each year, commencing on or about July 28, 1998 (each
such day being hereinafter called a "Distribution Payment Date"
and each period ending on a Distribution Payment Date being
hereinafter called a "Distribution Period"), with respect to each
Distribution Period, to shareholders of record as they appear on
the share transfer records of the Company at the close of
business on the dividend record dates authorized by the Board of
Trustees, or if none are authorized, on the last Friday of
December, March, June and September (each, a "Record Date"). The
amount of any distribution payable for the initial Distribution
Period and for any other Distribution Period greater or less than
a full calendar quarter shall be prorated and computed on the
basis of a 360-day year of twelve 30-day months. Distributions on
each Series A Preferred Share shall accrue and be cumulative from
and including the date of original issue thereof, whether or not
(i) distributions on such shares are earned or declared or (ii)
on any Distribution Payment Date there shall be funds legally
available for the payment of distributions. Distributions paid on
the Series A Preferred Shares in an amount less than the total
amount of such distributions at the time accrued and payable on
such shares shall be allocated pro rata on a per share basis
among all such shares at the time outstanding. Distributions on
account of any arrearage for any past Distribution Periods may be
declared and paid at any time, without reference to any regular
distribution, as may be fixed by the Board of Trustees.
The amount of any distributions accrued on any Series A
Preferred Shares at any Distribution Payment Date shall be the
amount of any unpaid distributions accumulated thereon through
and during such Distribution Period, to and including such
Distribution Payment Date, whether or not earned or declared, and
the amount of distributions accrued on any Series A Preferred
Shares at any date other than a Distribution Payment Date shall
be equal to the sum of the amount of any unpaid distributions
accumulated thereon, to and including the last preceding
Distribution Payment Date, whether or not earned or declared.
Accrued but unpaid distributions will not bear interest and the
holders of the Series A Preferred Shares will not be entitled to
any distributions in excess of full cumulative distributions as
described herein.
If any Series A Preferred Shares are outstanding, no full
distributions shall be declared or paid or set apart for payment
on any other class or series of Parity Shares or Junior Shares
for any period unless full cumulative distributions have been
declared and paid or declared and a sum sufficient for the
payment thereof has been set apart for payment on the Series A
Preferred Shares for all past distribution periods and the then
current distribution period. If distributions are not paid in
full, or not declared in full and a sum sufficient for such full
payment is not set apart for payment thereof, upon the Series A
Preferred Shares and any class or series of Parity Shares, no
distributions may be paid on Junior Shares and all distributions
declared upon Series A Preferred Shares and upon any other class
or series of Parity Shares shall be paid or declared pro rata so
that in all cases the amount of distributions paid or declared
per share on the Series A Preferred Shares and Parity Shares
shall bear to each other the same ratio that accumulated
distributions per share, including distributions accrued or in
arrears, if any, on the Series A Preferred Shares and Parity
Shares bear to each other. Except as provided in the preceding
sentence, unless full cumulative distributions on the Series A
Preferred Shares have been paid or declared and a sum sufficient
for such full payment set apart for payment for all past
distribution periods and the then current distribution period, no
distributions (other than distributions in shares of Common
Shares or in any other Junior Shares) shall be declared or paid
or set apart for payment or other distribution upon the Company's
Common Shares, or, except as provided above, on any other Junior
Shares or Parity Shares, nor shall any Common Shares or any other
Junior Shares or Parity Shares be redeemed, purchased or
otherwise acquired for any consideration (or any payment made to
or available for a sinking fund for the redemption of any such
shares) by the Company or any subsidiary of the Company (except
by conversion into or exchange for Junior Shares and except in
connection with any redemption of units of partnership interest
of subsidiary partnerships which units are redeemable for Common
Shares, cash, or other securities of the Company). Holders of the
Series A Preferred Shares shall not be entitled to any
distributions, whether payable in cash, property or shares of
beneficial interest, in excess of full accrued and cumulative
distributions as herein provided. No interest or sum of money in
lieu of interest shall be payable in respect of any distribution
payment or payments on the Series A Preferred Shares that may be
in arrears.
Except as provided in these Articles Supplementary, the
Series A Preferred Shares shall not be entitled to participate in
the earnings or assets of the Company.
(4) Liquidation Preference.
(a) Upon the voluntary or involuntary dissolution,
liquidation or winding up of the Company, the holders
of the Series A Preferred Shares then outstanding shall
be entitled to receive and to be paid out of the assets
of the Company legally available for distribution to
its shareholders, before any payment or distribution
shall be made on any Junior Shares, the amount of
$25.00 per Series A Preferred Share, plus accrued and
unpaid distributions thereon.
(b) After the payment to the holders of the Series A
Preferred Shares of the full preferential amounts
provided for in this paragraph B, the holders of the
Series A Preferred Shares as such shall have no right
or claim to any of the remaining assets of the Company.
(c) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Company, the
preference amounts payable with respect to the Series A
Preferred Shares and any Parity Shares are not paid in
full, no payment will be made to any holder of Junior
Shares and the holders of the Series A Preferred Shares
and of such Parity Shares will share ratably in any
such distribution of assets of the Company in
proportion to the full respective preferential amounts
provided for in this paragraph B to which they are
entitled.
(d) Neither (i) the sale or transfer of all or
substantially all the property or business of the
Company; (ii) a statutory share exchange by the
Company; (iii) nor the merger or consolidation of
the Company into or with any other entity or the merger
or consolidation of any other entity into or with the
Company, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary,
for the purposes of this paragraph B.
(e) In determining whether a distribution (other than upon
voluntary or involuntary liquidation), by dividend,
redemption or other acquisition of shares of beneficial
interest of the Company or otherwise, is permitted
under Maryland law, amounts that would be needed, if
the Company were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon
dissolution of holders of Series A Preferred Shares
will not be added to the Company's total liabilities.
(5) Redemption at the Option of the Company.
(a) Subject to paragraph (c), and except as the Board of
Trustees deems necessary to protect the Company's
status as a REIT or to prevent the Company's assets
from being deemed "plan assets" under the Plan Asset
Regulation, pursuant to paragraph B(9), the Series A
Preferred Shares shall not be redeemable by the Company
prior to May 18, 2003. On and after May 18, 2003, the
Company, at its option, may redeem the Series A
Preferred Shares, in whole or in part, as set forth
herein, subject to the provisions described below.
(b) On and after May 18, 2003 and upon giving of notice as
provided below, the Series A Preferred Shares may be
redeemed at the option of the Company, in whole or from
time to time in part, at the Redemption Price, payable
at the Company's option in (i) Common Shares, equal in
number to the Redemption Price divided by the average
of the closing prices of the Common Shares on the
NYSE for the ten (10) Trading Days prior to the
business day that immediately precedes the date fixed
for redemption, or (ii) cash. Fractional shares will
not be issued upon redemption of the Series A Preferred
Shares, but, in lieu thereof, the Company will pay a
cash adjustment based on the average of the closing
prices of the Common Shares on the ten (10) Trading
Days prior to the business day immediately preceding
the date fixed for redemption.
(c) If fewer than all of the outstanding Series A Preferred
Shares are to be redeemed, the shares to be redeemed
will be determined pro rata or by lot or in such other
manner as prescribed by the Company's Board of Trustees
in its sole discretion. In the event that such
redemption is to be by lot, if as a result of such
redemption any holder of Series A Preferred Shares
would own shares of beneficial interest in excess of
the Ownership Limitation, because such holder's Series
A Preferred Shares were not redeemed, or were only
redeemed in part, then, except in certain instances,
the Company will redeem the requisite number of Series
A Preferred Shares of such holder such that he will not
own shares of beneficial interest in excess of the
Ownership Limitation subsequent to such redemption. A
new certificate shall be issued representing any
unredeemed Series A Preferred Shares without cost to
the holder thereof.
(d) At any time prior to such time, if ever, as the Series
A Preferred Shares qualify as a "publicly offered
security" under the Plan Asset Regulation, or qualify
for another exception from the "look-through" rule
(i.e., the provisions of paragraph (a)(2) of the Plan
Asset Regulation), if the Company determines that, as
a result of transfers, conversions or otherwise,
Benefit Plan Investors own 20% of the aggregate number
of outstanding Series A Preferred Shares (excluding for
this purpose any shares held by persons exercising
investment management authority over the assets of the
Company or providing investment advice for a fee with
respect to such assets and any affiliates of such
persons), the Company will have the right to cause any
number of Series A Preferred Shares that are held by
Benefit Plan Investors to be redeemed so that following
such redemption Benefit Plan Investors own less than
25% of the outstanding Series A Preferred Shares (but
in no event may such redemptions reduce Benefit Plan
Investor ownership to less than 20% of the Series A
Preferred Shares) (excluding for this purpose any
shares held by persons exercising investment management
authority over the assets of the Company or providing
investment advice for a fee with respect to such assets
and any affiliates of such persons). Any such
redemption will follow the redemption procedures set
forth herein, except that the Redemption Date may be
fewer than 30 days after the first notice of redemption
to the extent necessary to prevent the Company's assets
from being deemed Plan Assets and the Redemption Price
shall be the Fair Market Value of such Series A
Preferred Shares. If fewer than all the outstanding
Series A Preferred Shares that are held by Benefit Plan
Investors are to be redeemed, the number of Series A
Preferred Shares to be redeemed will be determined by
the Board of Trustees and such shares will be redeemed
on a pro-rata basis from the holders of such shares
that are Benefit Plan Investors in proportion to the
number of Series A Preferred Shares held by such
holders or by any other method as may be determined by
the Board of Trustees in its sole discretion.
(e) Notice of redemption will be given by publication in a
newspaper of general circulation in the City of New
York, such publication to be made once a week for two
successive weeks commencing not less than 30 nor more
than 60 days prior to the date fixed for redemption. A
similar notice will be mailed by the Company, postage
prepaid, not less than 30 nor more than 60 days prior
to the redemption date, addressed to the respective
holders of record of the Series A Preferred Shares to
be redeemed at their respective addresses as they
appear on the share transfer records of the Company.
The notice provided shall state the Company's election
to redeem such shares, stating (i) the date fixed for
redemption thereof (the "Series A Preferred Shares
Redemption Date"), (ii) the redemption price, (iii) the
number of shares to be redeemed (and, if fewer than all
the Series A Preferred Shares are to be redeemed, the
number of shares to be redeemed from such holder), (iv)
the place(s) where the Series A Preferred Share
certificates are to be surrendered for payment, (v)
that distributions on the Series A Preferred Shares
will cease to accrue on the specified redemption date
and (vi) the date on which such holder's conversion
rights as to the Series A Preferred Shares shall
terminate.
(f) On or after the Series A Preferred Shares Redemption
Date, each holder of Series A Preferred Shares to be
redeemed must present and surrender his Series A
Preferred Share certificate(s) to the Company at the
place designated in such notice and thereupon the
redemption price of such shares will be paid to or
on the order of the person whose name appears on such
Series A Preferred Share certificate(s) as the owner
thereof and each such Series A Preferred Share
certificate(s) surrendered will be canceled. From and
after the Series A Preferred Shares Redemption Date
(unless the Company defaults in payment of the
redemption price), all distributions on the Series A
Preferred Shares designated for redemption in such
notice will cease to accrue and all rights of the
holders thereof (including conversion rights),
except the right to receive the redemption price
thereof (including all accrued and unpaid distributions
up to the Series A Preferred Shares Redemption Date),
will cease and terminate and such shares will not
thereafter be transferred (except with the consent of
the Company) in the share transfer records of the
Company, and such shares shall not be deemed to be
outstanding for any purpose whatsoever. At its
election, the Company, prior to the Series A Preferred
Shares Redemption Date, may irrevocably deposit the
Redemption Price of the Series A Preferred Shares so
called for redemption in trust for the holders thereof
with a bank or trust company, in which case such notice
to holders of the Series A Preferred Shares to be
redeemed will (i) state the date of such deposit, (ii)
specify the office of such bank or trust company as the
place of payment of the Redemption Price and (iii) call
upon such holders to surrender the Series A Preferred
Share certificates representing such shares at such
place on or about the date fixed in such redemption
notice (which may not be later than the Series A
Preferred Shares Redemption Date) against payment of
the Redemption Price. Any monies so deposited which
remain unclaimed by the holders of the Series A
Preferred Shares at the end of two years after the
Series A Preferred Shares Redemption Date will be
returned by such bank or trust company to the Company.
(g) Notwithstanding the foregoing, unless full cumulative
distributions on all outstanding Series A Preferred
Shares for all past Distribution Periods and the then
current Distribution Period have been paid, or declared
and a sum sufficient for the payment thereof set apart
for payment, (i) no Series A Preferred Shares shall be
redeemed unless all outstanding Series A Preferred
Shares are simultaneously redeemed; provided, however,
that the foregoing shall not prevent the purchase or
acquisition of Series A Preferred Shares (A) pursuant
to subparagraphs (5)(d) and (9) of paragraph B or (B)
pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding Series
A Preferred Shares, and, (ii) the Company shall not
purchase or otherwise acquire directly or indirectly
any Series A Preferred Shares (except by conversion
into or exchange for shares of beneficial interest of
the Company ranking junior to the Series A Preferred
Shares as to distribution rights and liquidation
preference).
(h) The holders of Series A Preferred Shares at the close
of business on a Record Date will be entitled to
receive the distribution payable with respect to such
Series A Preferred Shares on the corresponding
Distribution Payment Date notwithstanding the
redemption thereof between such Record Date and the
corresponding Distribution Payment Date or the
Company's default in the payment of the distribution
due. Except as provided above, the Company will make no
payment or allowance for unpaid distributions, whether
or not in arrears, on Series A Preferred Shares which
have been called for redemption.
(i) The Company covenants that any Common Shares issued
upon redemption of the Series A Preferred Shares shall
be validly issued, fully paid and nonassessable. The
Company shall use its reasonable best efforts to list
the Common Shares required to be delivered upon
redemption of the Series A Preferred Shares, prior
to such delivery, upon each national securities
exchange, if any, upon which the outstanding Common
Shares are listed at the time of such delivery.
(j) The Series A Preferred Shares have no stated maturity
date and are not subject to any sinking fund or
mandatory redemption provisions.
(6) Reclassification of Converted Shares; Shares to be Retired.
(a) All Series A Preferred Shares which shall have been
converted pursuant to paragraph B(7) herein shall
automatically be reclassified as Common Shares. The
number of Common Shares issuable upon conversion shall
be determined in accordance with paragraph B(7) hereof.
(b) All Series A Preferred Shares which shall have been
issued and reacquired in any manner by the Company
shall be restored to the status of authorized but
unissued Preferred Shares, without designation as to
series.
(7) Conversion.
Holders of Series A Preferred Shares shall have the
right to convert all or a portion of such shares into
Common Shares, as follows:
(a) Subject to and upon compliance with the provisions of
this subparagraph (7), a holder of Series A Preferred
Shares shall have the right, at his option, at any time
to convert such shares into the number of fully paid
and nonassessable Common Shares obtained by dividing
the aggregate Liquidation Preference of such shares by
the Conversion Price (as in effect at the time and on
the date provided for in the last paragraph of
subsection (b) of this subparagraph (7)) by
surrendering such shares to be converted, such
surrender to be made in the manner provided in
subsection (b) of this subparagraph (7); provided,
however, that the right to convert shares called
for redemption pursuant to subparagraph (5) shall
terminate at the close of business on the Series A
Preferred Shares Redemption Date fixed for such
redemption, unless the Company shall default in making
payment of any amounts payable upon such redemption
under subparagraph (5) hereof.
(b) In order to exercise the conversion right, the holder
of each Series A Preferred Share to be converted shall
surrender the certificate evidencing such share, duly
endorsed or assigned to the Company or in blank, at the
office of the Transfer Agent, accompanied by written
notice to the Company that the holder thereof elects to
convert such Series A Preferred Share. Unless the
shares issuable on conversion are to be issued in the
same name as the name in which such Series A Preferred
Share is registered, each share surrendered for
conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Company, duly
executed by the holder or such holder's duly authorized
agent and an amount sufficient to pay any transfer or
similar tax (or evidence reasonably satisfactory to the
Company demonstrating that such taxes have been paid).
Holders of Series A Preferred Shares at the close of
business on a Record Date shall be entitled to receive
the distribution payable on such shares on the
corresponding Distribution Payment Date notwithstanding
the conversion thereof following such Record Date and
prior to such Distribution Payment Date. However,
Series A Preferred Shares surrendered for conversion
during the period between the close of business on any
Record Date and the opening of business on the
corresponding Distribution Payment Date (except shares
converted after the issuance of a notice of redemption
with respect to a Series A Preferred Shares Redemption
Date during such period or coinciding with such
Distribution Payment Date, such Series A Preferred
Shares being entitled to such distribution on the
Distribution Payment Date) must be accompanied by
payment of an amount equal to the distribution payable
on such shares on such Distribution Payment Date. A
holder of Series A Preferred Shares on a Record Date
who (or whose transferee) tenders any such shares for
conversion into Common Shares on such Distribution
Payment Date will receive the distribution payable by
the Company on such Series A Preferred Shares on such
date, and the converting holder need not include
payment of the amount of such distribution upon
surrender of Series A Preferred Shares for conversion.
The Company shall make further payment or allowance
for, and a converting holder shall be entitled to,
unpaid distributions in arrears (excluding the then-
current quarter) on converted shares and for
distributions on the Common Shares issued upon such
conversion.
As promptly as practicable after the surrender of
certificates for Series A Preferred Shares as
aforesaid, the Company shall issue and shall deliver at
such office to such holder, or on his written order, a
certificate or certificates for the number of full
Common Shares issuable upon the conversion of such
shares in accordance with the provisions of this
subparagraph (7), and any fractional interest in
respect of a Common Share arising upon such conversion
shall be settled as provided in subsection (c) of this
subparagraph (7). Each conversion shall be deemed to
have been effected immediately prior to the close of
business on the date on which the certificates for
Series A Preferred Shares shall have been surrendered
and such notice (and if applicable, payment of an
amount equal to the distribution payable on such
shares) received by the Company as aforesaid, and
the person or persons in whose name or names any
certificate or certificates for Common Shares shall be
issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares
represented thereby at such time on such date, and such
conversion shall be at the Conversion Price in effect
at such time and on such date, unless the share
transfer books of the Company shall be closed on that
date, in which event such person or persons shall be
deemed to have become such holder or holders of record
at the opening of business on the next succeeding day
on which such share transfer books are open, but such
conversion shall be at the Conversion Price in effect
on the date on which such certificates for Series A
Preferred Shares have been surrendered and such notice
received by the Company.
(c) No fractional shares or scrip representing fractions of
Common Shares shall be issued upon conversion of the
Series A Preferred Shares. Instead of any fractional
interest in a Common Share that would otherwise be
deliverable upon the conversion of a share of Series A
Preferred Shares, the Company shall pay to the holder
of such share an amount in cash based upon the Current
Market Price of Common Shares on the Trading Day
immediately preceding the date of conversion. If more
than one Series A Preferred Share shall be surrendered
for conversion at one time by the same holder, the
number of full Common Shares issuable upon conversion
thereof shall be computed on the basis of the aggregate
number of Series A Preferred Shares so surrendered.
(d) The Conversion Price shall be adjusted from time to
time as follows:
(i) If the Company shall after the Issue Date (A) make
a distribution to holders of any class of shares of
beneficial interest of the Company in Common
Shares, (B) subdivide its outstanding Common Shares
into a greater number of shares, (C) combine its
outstanding Common Shares into a smaller number of
shares or (D) issue any shares of beneficial
interest by reclassification of its Common Shares,
the Conversion Price shall be adjusted so that the
holder of any Series A Preferred Shares thereafter
surrendered for conversion shall be entitled to
receive the number of Common Shares that such
holder would have owned or have been entitled to
receive after the happening of any of the events
described above had such shares been converted
immediately prior to the record date in the case of
a distribution or the effective date in the case of
a subdivision, combination or reclassification. An
adjustment made pursuant to this subsection (i)
shall become effective immediately after the
opening of business on the day next following the
record date (except as provided in paragraph (h)
below) in the case of a distribution and shall
become effective immediately after the opening of
business on the day next following the effective
date in the case of a subdivision, combination or
reclassification. Such adjustment(s) shall be made
successively whenever any of the events listed
above shall occur.
(ii) If the Company shall issue after the Issue Date
rights, options or warrants to all holders of
Common Shares entitling them (for a period expiring
within 45 days after the record date fixed for such
issuance) to subscribe for or purchase Common
Shares (or securities convertible into or
exchangeable for Common Shares) at a price per
share less than the Fair Market Value per Common
Share on the record date for the determination of
shareholders entitled to receive such rights,
options or warrants, then the Conversion Price
shall be adjusted to equal the price determined by
multiplying (A) the Conversion Price in effect
immediately prior to the opening of business on the
Business Day next following the date fixed for such
determination by (B) a fraction, the numerator of
which shall be the sum of (I) the number of Common
Shares outstanding on the close of business on the
date fixed for such determination and (II) the
number of Common Shares that could be purchased at
the Current Market Price on the date fixed for such
determination with the aggregate proceeds to the
Company from the exercise of such rights, options
or warrants, and the denominator of which shall
be the sum of (x) the number of Common Shares
outstanding on the close of business on the date
fixed for such determination and (y) the number of
additional Common Shares offered for subscription
or purchase pursuant to such rights, options or
warrants. Such adjustment shall be made
successively whenever any such rights, options or
warrants are issued, and shall become effective
immediately after the opening of business on the
day next following the record date for any such
rights, options, or warrants issued (except as
provided in subsection (h) below). In determining
whether any rights, options or warrants entitle the
holders of Common Shares to subscribe for or
purchase Common Shares at less than the Current
Market Price, there shall be taken into account any
consideration received by the Company upon issuance
and upon exercise of such rights, options or
warrants, the value of such consideration, if other
than cash, to be determined by the Chief Executive
Officer of the Company or the Board of Trustees
whose decision is final, conclusive, and binding.
Any adjustment(s) made pursuant to this subsection
(ii) shall become effective immediately after the
opening of business on the Business Day next
following such record date. Such adjustment(s)
shall be made successively whenever any of the
events listed above shall occur.
(iii) If the Company shall distribute to all holders of
its Common Shares any shares of beneficial interest
of the Company (other than Common Shares) or
evidence of its indebtedness or assets (including
securities or cash, but excluding cash
distributions paid out of the total equity
applicable to Common Shares, less the amount of
stated capital attributable to Common Shares,
determined on the basis of the most recent annual
or quarterly consolidated cost basis and current
value basis and consolidated balance sheets of the
Company and its consolidated subsidiaries available
at the time of the declaration of the distribution)
or rights or warrants to subscribe for or purchase
any of its securities (excluding those rights and
warrants issued to all holders of Common Shares
entitling them for a period expiring within 45 days
after the record date referred to in subsection
(ii) above to subscribe for or purchase Common
Shares, which rights and warrants are referred to
in and treated under subsection (ii) above) (any of
the foregoing being hereinafter in this subsection
(iii) called the "Securities"), then in each case
the Conversion Price shall be adjusted so that it
shall equal the price determined by multiplying (A)
the Conversion Price in effect immediately prior to
the close of business on the date fixed for the
determination of shareholders entitled to receive
such distribution by (B) a fraction, the numerator
of which shall be the Current Market Price per
Common Share on the record date described in the
immediately following paragraph less the then
Fair Market Value of the shares of beneficial
interest or assets or evidences of indebtedness so
distributed or of such rights or warrants
applicable to one Common Share, and the denominator
of which shall be the Current Market Price per
Common Share on the record date described in the
immediately following paragraph.
Such adjustment shall become effective immediately
at the opening of business on the Business Day next
following (except as provided in subsection (h)
below) the record date for the determination of
shareholders entitled to receive such distribution.
For the purposes of this subsection (iii), the
distribution of a Security which is distributed not
only to the holders of the Common Shares on the
date fixed for the determination of shareholders
entitled to such distribution of such Security, but
also is distributed with each Common Share
delivered to a Person converting a Series A
Preferred Share after such determination
date, shall not require an adjustment of the
Conversion Price pursuant to this subsection (iii);
provided that on the date, if any, on which a
Person converting a Series A Preferred Share would
no longer be entitled to receive such Security with
a Common Share (other than as a result of the
termination of all such Securities), a distribution
of such Securities shall be deemed to have
occurred, and the Conversion Price shall be
adjusted as provided in this subsection (iii) (and
such day shall be deemed to be "the date fixed for
the determination of the shareholders entitled to
receive such distribution" and "the record date"
within the meaning of the two preceding sentences).
Such adjustment(s) shall be made successively
whenever any of the events listed above shall
occur.
(iv) No adjustment in the Conversion Price shall be
required unless such adjustment would require a
cumulative increase or decrease of at least 1% in
such price; provided, however, that any adjustments
that by reason of this subsection (iv) are not
required to be made shall be carried forward and
taken into account in any subsequent adjustment
until made; and provided, further, that any
adjustment shall be required and made in accordance
with the provisions of this subparagraph (7) (other
than this subsection (iv)) not later than such time
as may be required in order to preserve the tax-
free nature of a distribution to the holders of
Common Shares. Notwithstanding any other provisions
of this subparagraph (7), the Company shall not
be required to make any adjustment to the
Conversion Price for the issuance of any Common
Shares pursuant to any plan providing for the
reinvestment of distributions or interest payable
on securities of the Company and the investment of
additional optional amounts in Common Shares under
such plan. All calculations under this subparagraph
(7) shall be made to the nearest cent (with $.005
being rounded upward) or to the nearest one-tenth
of a share (with .05 of a share being rounded
upward), as the case may be.
(e) If the Company shall be a party to any transaction
(including without limitation a merger, consolidation,
statutory share exchange, self tender offer for all or
substantially all of the Common Shares, sale of all or
substantially all of the Company's assets or
recapitalization of the Common Shares and
excluding any transaction as to which subsection (d)(i)
of this subparagraph (7) applies (each of the foregoing
being referred to herein as a "Transaction"), in each
case as a result of which Common Shares shall be
converted into the right to receive shares, stock,
securities or other property (including cash or
any combination thereof), each Series A Preferred Share
which is not converted into the right to receive
shares, stock, securities or other property in
connection with such Transaction shall thereafter be
convertible into the kind and amount of shares, stock,
securities and other property (including cash or any
combination thereof) receivable upon the consummation
of such Transaction by a holder of that number of
Common Shares into which one Series A Preferred Share
was convertible immediately prior to such Transaction,
assuming such holder of Common Shares (i) is not a
Person with which the Company consolidated or into
which the Company merged or which merged into the
Company or to which such sale or transfer was made, as
the case may be (a "Constituent Person"), or an
affiliate of a Constituent Person and (ii) failed to
exercise his or her rights of election, if any, as to
the kind or amount of shares, stock, securities and
other property (including cash) receivable upon
consummation of such Transaction (each a "Non-Electing
Share") (provided that if the kind or amount of shares,
stock, securities and other property (including cash)
receivable upon consummation of such Transaction by
each Non-Electing Share is not the same for each
Non-Electing Share, then the kind and amount of shares,
stock, securities and other property (including cash)
receivable upon consummation of such Transaction for
each Non-Electing Share shall be deemed to be the kind
and amount so receivable per share by a plurality of
the Non-Electing Shares). The Company shall not be a
party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this
subsection (e), and it shall not consent or agree to
the occurrence of any Transaction until the Company has
entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit
of the holders of the Series A Preferred Shares, that
will require such successor or purchasing entity, as
the case may be, to make provision in its certificate
or articles of incorporation or other constituent
documents to the end that the provisions of this
subsection (e) shall thereafter correspondingly be made
applicable as nearly as may reasonably be, in relation
to any shares of stock or other securities or property
thereafter deliverable upon conversion of the Series A
Preferred Shares. The provisions of this subsection (e)
shall similarly apply to successive Transactions.
(f) If:
(i) the Company shall declare a distribution on the
Common Shares other than in cash out of the total
equity applicable to Common Shares, less the amount
of stated capital attributable to Common Shares,
determined on the basis of the most recent annual
or quarterly consolidated cost basis and current
value basis and consolidated balance sheets of the
Company and its consolidated subsidiaries available
at the time of the declaration of the distribution;
or
(ii) the Company shall authorize the granting to the
holders of the Common Shares of rights or warrants
to subscribe for or purchase any shares of any
class or any other rights or warrants; or
(iii) there shall be any reclassifications of the Common
Shares (other than an event to which subsection
(d)(i) of this subparagraph (7) applied) or any
consolidation or merger to which the Company is a
party and for which approval of any shareholders
of the Company is required, or a statutory share
exchange involving the conversion or exchange of
Common Shares into securities or other property, or
a self tender offer by the Company for all or
substantially all of its outstanding Common
Shares, or the sale or transfer of all or
substantially all of the assets of the Company as
an entity and for which approval of any shareholder
of the Company is required; or
(iv) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the
Company;
then the Company shall cause to be filed with the
Transfer Agent and shall cause to be mailed to the
holders of the Series A Preferred Shares at their
addresses as shown on the share records of the Company,
as promptly as possible, but at least 15 days prior to
the applicable date hereinafter specified, a notice
stating (A) the record date as of which the holders of
Common Shares of record to be entitled to such
distribution or grant of rights or warrants are to be
determined, provided, however, that no such
notification need be made in respect of a record date
for a distribution or grant of rights unless the
corresponding adjustment in the Conversion Price would
be an increase or decrease of at least 1%, or (B) the
date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer,
liquidation, dissolution or winding up is expected to
become effective, and the date as of which it is
expected that holders of Common Shares of record shall
be entitled to exchange their Common Shares for
securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, statutory
share exchange, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the
legality or validity of the proceedings described in
this subparagraph (7).
(g) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the
Transfer Agent an officer's certificate setting forth
the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive
evidence of the correctness of such adjustment absent
manifest error. Promptly after delivery of such
certificate, the Company shall prepare a notice of such
adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the effective date on
which such adjustment becomes effective and shall mail
such notice of such adjustment of the Conversion Price
to the holder of each Series A Preferred Share at such
holder's last address as shown on the share records of
the Company.
(h) In any case in which subsection (d) of this
subparagraph (7) provides that an adjustment shall
become effective on the date next following the record
date for an event, the Company may defer until the
occurrence of such event (I) issuing to the holder of
any Series A Preferred Shares converted after such
record date and before the occurrence of such event the
additional Common Shares issuable upon such conversion
by reason of the adjustment required by such event over
and above the Common Shares issuable upon such
conversion before giving effect to such adjustment and
(II) fractionalizing any Series A Preferred Share
and/or paying to such holder any amount of cash in lieu
of any fraction pursuant to subsection (c) of this
subparagraph (7).
(i) There shall be no adjustment of the Conversion Price in
case of the issuance of any shares of beneficial
interest of the Company in a reorganization,
acquisition or other similar transaction except as
specifically set forth in this subparagraph (7). If any
action or transaction would require adjustment of the
Conversion Price pursuant to more than one subsection
of this subparagraph (7), only one adjustment shall be
made, and such adjustment shall be the amount of
adjustment that has the highest absolute value.
(j) If the Company shall take any action affecting the
Common Shares, other than an action described in this
subparagraph (7), that in the opinion of the Board of
Trustees would materially and adversely affect the
conversion rights of the holders of the Series A
Preferred Shares, the Conversion Price for the Series A
Preferred Shares may be adjusted, to the extent
permitted by law, in such manner, if any, and at such
time, as the Board of Trustees, in its sole discretion,
may determine to be equitable in the circumstances.
(k) The Company covenants that it will at all times reserve
and keep available, free from preemptive rights, out of
the aggregate of its authorized but unissued Common
Shares, for the purpose of effecting conversion of the
Series A Preferred Shares, the full number of Common
Shares deliverable upon the conversion of all
outstanding Series A Preferred Shares not theretofore
converted. For purposes of this subsection (k), the
number of Common Shares that shall be deliverable upon
the conversion of all outstanding Series A Preferred
Shares shall be computed as if at the time of
computation all such outstanding shares were held by a
single holder.
The Company covenants that any Common Shares issued
upon conversion of the Series A Preferred Shares shall
be validly issued, fully paid and nonassessable. Before
taking any action that would cause an adjustment
reducing the Conversion Price below the then par value
of the Common Shares deliverable upon conversion of the
Series A Preferred Shares, the Company will take any
action that, in the opinion of its counsel, may be
necessary in order that the Company may validly and
legally issue fully paid and nonassessable Common
Shares at such adjusted Conversion Price.
The Company shall use its reasonable best efforts to
list the Common Shares required to be delivered upon
conversion of the Series A Preferred Shares, prior to
such delivery, upon each national securities exchange,
if any, upon which the outstanding Common Shares are
listed at the time of such delivery.
Prior to the delivery of any securities that the
Company shall be obligated to deliver upon conversion
of the Series A Preferred Shares, the Company shall
endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of
such securities with, or any approval of or consent to
the delivery thereof by, any governmental authority.
(l) The Company will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of
the issue or delivery of Common Shares or other
securities or property on conversion of the Series A
Preferred Shares pursuant hereto; provided, however,
that the Company shall not be required to pay
any tax that may be payable in respect of any transfer
involved in the issue or delivery of Common Shares or
other securities or property in a name other than that
of the holder of the Series A Preferred Shares to be
converted, and no such issue or delivery shall be made
unless and until the person requesting such issue
or delivery has paid to the Company the amount of any
such tax or has established, to the reasonable
satisfaction of the Company, that such tax has been
paid.
In addition to the foregoing adjustments, the Company
shall be entitled to make such reductions in the
Conversion Price, in addition to those required herein,
as it in its discretion considers to be advisable in
order that any share distributions, subdivisions of
shares, reclassification or combination of shares,
distribution of rights, options, warrants to purchase
shares or securities, or a distribution of other assets
(other than cash distributions) will not be
taxable or, if that is not possible, to diminish any
income taxes that are otherwise payable because of such
event.
(8) Voting Rights.
Except as provided below, the holders of the Series A
Preferred Shares shall not be entitled to vote at any meeting
of the shareholders for election of trustees or for any other
purpose or otherwise to participate in any action taken by
the Company or the shareholders thereof, or to receive notice
of any meeting of shareholders.
(a) In any matter in which the Series A Preferred Shares
are entitled to vote (as expressly provided herein),
including any action by written consent, each Series A
Preferred Share shall be entitled to one vote.
(b) Whenever distributions on any Series A Preferred Shares
or any other Parity Shares shall be in arrears, whether
or not earned or declared, for six or more quarterly
periods, the holders of the Series A Preferred Shares,
voting separately as a class with all other series of
Parity Shares upon which like voting rights have been
conferred and are exercisable, will be entitled to vote
for the election of two additional Trustees of the
Company at a special meeting called by the holders of
record of at least ten percent (10%) of any series of
Parity Shares, or ten percent (10%) of the outstanding
Series A Preferred Shares, so in arrears (unless such
request is received less than 90 days before the date
fixed for the next annual or special meeting of the
shareholders) or at the next annual or special meeting
of shareholders. In such case, the entire Board of
Trustees of the Company will be increased by two
Trustees. Voting rights of the holders of the Series A
Preferred Shares shall continue at each subsequent
annual meeting until all distributions accumulated on
such Series A Preferred Shares for the past
Distribution Periods and the then current Distribution
Period shall have been fully paid or declared and a sum
sufficient for the payment thereof set aside for
payment, at which time the term of the two Trustees
elected pursuant to this paragraph shall terminate.
(c) As long as any Series A Preferred Shares remain
outstanding, the Company will not, without the
affirmative vote or consent of the holders of at least
two-thirds of the Series A Preferred Shares outstanding
at the time, given in person or by proxy, either in
writing or at a meeting (such series voting separately
as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of
shares of beneficial interest ranking prior to the
Series A Preferred Shares with respect to the payment
of distributions or the distribution of assets upon
liquidation, dissolution or winding up or reclassify
any authorized shares of beneficial interest of the
Company into such shares, or create, authorize or issue
any obligation or security convertible into or
evidencing the right to purchase any such shares; or
(ii) amend, alter or repeal the provisions of the
Company's Declaration of Trust or these Articles
Supplementary for the Series A Preferred Shares whether
by merger, consolidation or otherwise (an "Event"), so
as to materially and adversely affect any right,
preference, privilege or voting power of the Series A
Preferred Shares (as determined by the Board of
Trustees); provided, however, with respect to the
occurrence of any of the Events set forth in (ii)
above, so long as the Series A Preferred Shares (or
shares into which the Series A Preferred Shares have
been converted in any successor entity to the Company)
remain outstanding or, if the Company is not the
surviving entity, are converted into a security with
substantially identical rights, preferences, privileges
and voting power, then the occurrence of any such Event
shall not be deemed to materially and adversely affect
such rights, preferences, privileges or voting power of
the Series A Preferred Shares; and provided further
that (x) any increase in the amount of the authorized
Preferred Shares or the designation or issuance
of any additional Series A Preferred Shares or Parity
Shares, or (y) any increase in the amount of authorized
Series A Preferred Shares or any other Preferred
Shares, in each case ranking on a parity with or junior
to the Series A Preferred Shares with respect to
payment of distributions or the distribution of assets
upon liquidation, dissolution or winding up, shall not
be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at
or prior to the time when the act with respect to which
such vote would otherwise be required shall be
effected, all outstanding Series A Preferred Shares
shall have been redeemed or called for redemption and
sufficient funds to effect such redemption shall have
been deposited in accordance with paragraph 5.
(9) Ownership and Transfer Limitations
(a) REIT-Related Restrictions. The Ownership and transfer
of the Series A Preferred Shares shall be restricted as
provided in the Declaration of Trust.
(b) ERISA-Related Restrictions. No Benefit Plan Investor
may acquire Series A Preferred Shares without the
Company's prior written consent (which consent may be
withheld in the Company's sole and absolute
discretion). Prior to the Series A Preferred Shares
qualifying as a "publicly-offered security" or the
availability of another exception to the "look-through"
rule (i.e., the provisions of paragraph (a)(2) of the
Plan Asset Regulation), transfers of Series A
Preferred Shares to Benefit Plan Investors that would
increase aggregate Benefit Plan Investor ownership of
the Series A Preferred Shares above the 25% Threshold
will be void ab initio. In addition, in the event that
the aggregate number of Series A Preferred Shares owned
by Benefit Plan Investors, but for the operation of
this sentence, would meet or exceed the 25% Threshold,
(i) the Series A Preferred Shares held by Benefit Plan
Investors shall be deemed to be Shares-in-Trust,
pro-rata, to the extent necessary to reduce aggregate
Benefit Plan Investor ownership of the Series A
Preferred Shares below the 25% Threshold, and (ii) such
number of Series A Preferred Shares (rounded up, in the
case of each holder, to the nearest whole share) shall
be transferred automatically and by operation of law to
the Share Trust (as described in Article VII of the
Declaration of Trust) to be held in accordance with
this subparagraph (9)(b) and otherwise in accordance
with Article VII, Section 2 of the Declaration of Trust
and (iii) the Benefit Plan Investors previously owning
such Shares-in-Trust shall submit such number of Series
A Preferred Shares for registration in the name of the
Share Trust. Such transfer to a Share Trust and the
designation of Series A Preferred Shares as Shares-in-
Trust shall be effective as of the close of business on
the business day prior to the date of the event that
otherwise would have caused aggregate Benefit Plan
Investor ownership of Series A Preferred Shares to meet
or exceed the 25% Threshold.
Prior to the discovery of the existence of the Share
Trust, any transfer of Series A Preferred Shares by a
Benefit Plan Investor to a non-Benefit Plan Investor
shall reduce the number of Shares-in-Trust on a one-
for-one basis, and to that extent such shares shall
cease to be designated as Shares-in-Trust and shall be
returned, effective at exactly the time of the transfer
to the non-Benefit Plan Investor, automatically and
without further action by the Company or the Benefit
Plan Investor, to all Benefit Plan Investors (or the
transferee, if applicable) pro rata in accordance with
the Benefit Plan Investors' prior holdings. After the
discovery of the existence of the Share Trust, but
prior to the redemption of all discovered Shares-in-
Trust and/or the submission of all discovered Shares-
in-Trust for registration in the name of the Share
Trust, any transfer of Series A Preferred Shares by a
Benefit Plan Investor to a non-Benefit Plan Investor
shall reduce the number of Shares-in-Trust on a
one-for-one basis, and to that extent such shares shall
cease to be designated as Shares-in-Trust and shall be
returned, automatically without further action by the
Company or the Benefit Plan Investor, to the
transferring Benefit Plan Investor (or its transferee,
if applicable).
In the event that any Series A Preferred Shares are
deemed "Shares-in-Trust" pursuant to this subparagraph
(9)(b), the holder shall cease to own any right or
interest with respect to such shares and the Company
will have the right to redeem such Shares-in-Trust for
an amount equal to their Fair Market Value, which
proceeds shall be payable to the purported owner. This
subparagraph (9)(b) shall cease to apply and all
Shares-in-Trust shall cease to be designated as Shares-
in-Trust and shall be returned, automatically and
by operation of law, to their purported owners, all of
which shall occur at such time as the Series A
Preferred Shares qualify as a publicly offered security
or if another exception to the "look-through" rule
under the Plan Asset Regulation applies.
C. EXCLUSION OF OTHER RIGHTS.
Except as may otherwise be required by law, the Series A
Preferred Shares shall not have any voting powers, preferences or
relative, participating, optional or other special rights, other
than those specifically set forth in these Articles Supplementary
(as such Articles Supplementary may be amended from time to time)
and in the Declaration of Trust. The Series A Preferred Shares
shall have no preemptive or subscription rights.
D. HEADINGS OF SUBDIVISIONS.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
E. SEVERABILITY OF PROVISIONS.
If any voting powers, preferences or relative,
participating, optional and other special rights of the Series A
Preferred Shares or qualifications, limitations or restrictions
thereof set forth in these Articles Supplementary (as such
Articles Supplementary may be amended from time to time) is
invalid, unlawful or incapable of being enforced by reason of any
rule of law or public policy, all other voting powers,
preferences and relative, participating, optional and other
special rights of Series A Preferred Shares and qualifications,
limitations and restrictions thereof set forth in these Articles
Supplementary (as so amended) which can be given effect without
the invalid, unlawful or unenforceable voting powers, preferences
or relative, participating, optional or other special rights of
Series A Preferred Shares or qualifications, limitations and
restrictions thereof shall be given such effect. None of the
voting powers, preferences or relative participating, optional or
other special rights of the Series A Preferred Shares or
qualifications, limitations or restrictions thereof herein set
forth shall be deemed dependent upon any other such voting
powers, preferences or relative, participating, optional or other
special right of Series A Preferred Shares or qualifications,
limitations or restrictions thereof unless so expressed herein.
F. ADOPTION.
These Articles Supplementary were duly adopted by the Board
of Trustees of the Company in the manner and by the vote required
by law.
* * * * * * * * *
IN WITNESS WHEREOF, I hereby certify that I, Jeffrey H.
Fisher, am the Chairman of the Board and President of Innkeepers
USA Trust (the "Company") and that as such, I am authorized to
execute and file with the State Department of Assessments and
Taxation of Maryland Articles Supplementary (the "Articles
Supplementary") on behalf of the Company and I further certify on
behalf of the Company that these Articles Supplementary were
authorized by the Board of Trustees at a meeting held by such
Board of Trustees on May 6, 1998 and are still in full force and
effect as of the date hereof. I further certify that my signature
to this document is my free act and deed, that to the best of my
knowledge, information and belief, the matters and facts set
forth herein are true in all material respects and that this
statement is made under penalty for perjury.
INNKEEPERS USA TRUST
/s/ Jeffrey H. Fisher
Name: Jeffrey H. Fisher
Title: Chairman of the Board
and President
The undersigned, Mark A. Murphy, the General Counsel and
Secretary of the Company, hereby certifies that Jeffrey H. Fisher
is the Chairman of the Board and President of the Company and
that the signature set forth above is his genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 15th day of May, 1998.
/s/ Mark A. Murphy
Name: Mark A. Murphy
Title: General Counsel and
Secretary
IN WITNESS WHEREOF, I hereby certify that I, Frederic M.
Shaw, am the Executive Vice President of Innkeepers USA Trust
(the "Company") and that as such, I am authorized to execute and
file with the State Department of Assessments and Taxation of
Maryland Articles Supplementary (the "Articles Supplementary") on
behalf of the Company and I further certify on behalf of the
Company that these Articles Supplementary were authorized by the
Board of Trustees at a meeting held by such Board of Trustees on
May 6, 1998 and are still in full force and effect as of the date
hereof. I further certify that my signature to this document is
my free act and deed, that to the best of my knowledge,
information and belief, the matters and facts set forth herein
are true in all material respects and that this statement is made
under penalty for perjury.
INNKEEPERS USA TRUST
/s/ Frederic M. Shaw
Name: Frederic M. Shaw
Title: Executive Vice President
The undersigned, Mark A. Murphy, the General Counsel and
Secretary of the Company, hereby certifies that Frederic M. Shaw
is the Executive Vice President of the Company and that the
signature set forth above is his genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand this 15th day of May, 1998.
/s/ Mark A. Murphy
Name: Mark A. Murphy
Title: General Counsel and
Secretary
Exhibit 99.1
INNKEEPERS USA TRUST COMPLETES 8.625% CUMULATIVE CONVERTIBLE
PREFERRED SHARE OFFERING:
PALM BEACH, Fla. - (BUSINESS WIRE)-May 19, 1998 - INNKEEPERS USA
TRUST (NYSE:KPA), a hotel real estate investment trust (REIT),
today announced the completion of a Rule 144A private placement
of 4.2 million 8.625 percent cumulative convertible preferred
shares, raising gross proceeds of approximately $105 million.
Each convertible preferred share has a stated value of $25 and is
convertible immediately into 1.4811 common shares, representing a
conversion price of $16.8794 per share (a premium of 13 percent
over the common share closing price on the pricing date, May 12,
1998). Preferred shareholders will participate in common share
dividend increases above $1.46. Currently, the annualized
dividend on the common shares is $1.12. The convertible
preferred shares are redeemable by the company beginning in May
2003.
Net proceeds of the offering will be used to repay outstanding
indebtedness on the company's $250 million acquisition line of
credit. The company will have approximately $365 million for
future acquisitions under its charter debt limitation after
application of the net proceeds of the offering.
The convertible preferred shares have not been registered under
the Securities Act of 1933 and may not be offered or resold
absent registration or an applicable exemption from registration
requirements. This announcement is neither an offer to sell nor
solicitation of an offer to buy the convertible preferred shares.
Innkeepers Trust USA is a hotel real estate investment trust and
the nation's leading owner and acquirer of upscale, extended-stay
hotel properties throughout the U.S. The company owns 62 hotels
with a total of 7,439 suites or rooms in 24 states and focuses on
acquiring Residence Inns and other upscale extended-stay hotels
in markets with high barriers to entry.
Certain matters within this press release are discussed using
forward-looking language as specified in the 1995 Private
Securities Litigation Reform Law, and, as such, may involve known
and unknown risks, uncertainties and other factors that may cause
the actual results or performance to differ from those projected
in the forward-looking statement. From time to time, these risks
are discussed in the company's filings with the Securities and
Exchange Commission.
CONTACT: David Bulger (Company)
Chief Financial Officer
(561) 835-1800 x302
or
Jerry Daly or Carol McCune
Daly Gray (Media)
(609) 383-1414
or
Paula Schwartz
Financial Relations Board (Analyst Info)
(212) 661-8030
