ARTICLES SUPPLEMENTARY
Published on March 11, 1998
EXHIBIT 3.1
ARTICLES SUPPLEMENTARY
CLASSIFYING AND DESIGNATING A SERIES OF PREFERRED STOCK
AS
SERIES E JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
OF
BAY APARTMENT COMMUNITIES, INC.
We, Gilbert M. Meyer and Jeffrey B. Van Horn, being the President and
the Secretary, respectively, of BAY APARTMENT COMMUNITIES, INC., a corporation
organized and existing under the General Corporation Law of the State of
Maryland (the "Corporation"), in accordance with the provisions of Section 1-301
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the Corporation, on March 13, 1995, the Board
of Directors adopted the following resolution creating a series of 1,000,000
shares of Preferred Stock designated as "Series E Junior Participating
Cumulative Preferred Stock":
"RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Corporation in accordance with
the provisions of its Articles of Incorporation, a series of
Preferred Stock, par value $.01 per share, of the Corporation
be, and it hereby is, created, with such voting powers,
preferences and relative, participating, optional or other
special rights, and such qualifications, limitations or
restrictions thereof, as follows:
Section 1. DESIGNATION AND AMOUNT. There shall be a series of Preferred
Stock of the Corporation which shall be designated as "Series E Junior
Participating Cumulative Preferred Stock," par value $.01 per share (hereinafter
called "Series E Preferred Stock"), and the number of shares constituting such
series shall be 1,000,000. Such number of shares may be increased or decreased
by resolution of the Board of Directors and by the filing of articles of
amendment pursuant to the provisions of the General Corporation Law of the State
of Maryland stating that such increase or reduction has been so authorized;
PROVIDED, HOWEVER, that no decrease shall reduce the number of shares of Series
E Preferred Stock to a number less than that of the shares
then outstanding plus the number of shares of Series E Preferred Stock issuable
upon exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) (i) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and superior to
the Series E Preferred Stock with respect to dividends, the holders of shares of
Series E Preferred Stock, in preference to the holders of shares of common stock
and of any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series E Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provisions for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of common stock or a subdivision of the outstanding shares of
common stock (by reclassification or otherwise), declared on the shares of
common stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series E Preferred Stock. The
multiple of cash and non-cash dividends declared on the common stock to which
holders of the Series E Preferred Stock are entitled, which shall be 1,000
initially but which shall be adjusted from time to time as hereinafter provided,
is hereinafter referred to as the "Dividend Multiple." In the event the
Corporation shall at any time after March 9, 1998 (the "Rights Declaration
Date") (i) declare or pay any dividend on the shares of common stock payable in
shares of common stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of common stock (by reclassification or
otherwise than by payment of a dividend in shares of common stock) into a
greater or lesser number of shares of common stock, then in each such case the
Dividend Multiple thereafter applicable to the determination of the amount of
dividends which holders of shares of Series E Preferred Stock shall be entitled
to receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction, the numerator of which is the number of shares
of common stock outstanding immediately after such event and the denominator of
which is the number of shares of common stock that were outstanding immediately
prior to such event.
(ii) Notwithstanding anything else contained in this paragraph
(A), the Corporation shall, out of funds legally available for that purpose,
declare a dividend or distribution on the Series E Preferred Stock as provided
in this paragraph (A) immediately after it declares a dividend or distribution
on the shares of common stock (other than a dividend payable in shares of common
stock); provided that, in the event no dividend or distribution shall have been
declared on the shares of common stock during the period between any Quarterly
Dividend
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Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1.00 per share on the Series E Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series E Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series E Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series E Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series E Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix in
accordance with applicable law a record date for the determination of holders of
shares of Series E Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than such
number of days prior to the date fixed for the payment thereof as may be allowed
by applicable law.
Section 3. VOTING RIGHTS. In addition to any other voting rights
required by law, the holders of shares of Series E Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series E Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
The number of votes which a holder of a share of Series E Preferred Stock is
entitled to cast, which shall initially be 1,000 but which may be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the "Vote
Multiple." In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on shares of common stock
payable in shares of common stock, or (ii) effect a subdivision or combination
or consolidation of the outstanding shares of common stock (by reclassification
or otherwise than by payment of a dividend in shares of common stock) into a
greater or lesser number of shares of common stock, then in each such case the
Vote Multiple thereafter applicable to the determination of the number of votes
per share to which holders of shares of Series E Preferred Stock shall be
entitled shall be the Vote Multiple immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of common stock
outstanding immediately after such event and the denominator of which is the
number of shares of common stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series E Preferred Stock and the holders of shares of common stock and
the holders of shares of any other capital stock of this Corporation having
general voting rights, shall vote together as one class on
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all matters submitted to a vote of stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any
shares of Series E Preferred Stock shall be in arrears in an amount equal to at
least two full quarter dividends (whether or not declared and whether or not
consecutive), the holders of record of the outstanding shares of Series E
Preferred Stock shall have the exclusive right, voting separately as a single
class, to elect two directors of the Corporation at a special meeting of
shareholders of the Corporation or at the Corporation's next annual meeting of
shareholders, and at each subsequent annual meeting of shareholders, as provided
below. At elections for such directors, each share of Series E Preferred Stock
shall entitle the holder thereof to 1,000 votes in such elections.
(ii) Upon the vesting of such right of the holders of shares
of Series E Preferred Stock, the maximum authorized number of members
of the Board of Directors shall automatically be increased by two and
the two vacancies so created shall be filled by vote of the holders of
the outstanding shares of Series E Preferred Stock as hereinafter set
forth. A special meeting of the shareholders of the Corporation then
entitled to vote shall be called by the Chairman of the Board of
Directors or the President or the Secretary of the Corporation, if
requested in writing by the holders of record of not less than 10% of
the shares of Series E Preferred Stock then outstanding. At such
special meeting, or, if no such special meeting shall have been called,
then at the next annual meeting of shareholders of the Corporation, the
holders of the shares of Series E Preferred Stock shall elect, voting
as above provided, two directors of the Corporation to fill the
aforesaid vacancies created by the automatic increase in the number of
members of the Board of Directors. At any and all such meetings for
such election, the holders of a majority of the outstanding shares of
Series E Preferred Stock shall be necessary to constitute a quorum for
such election, whether present in person or proxy, and such two
directors shall be elected by the vote of at least a majority of the
shares of Series E Preferred Stock held by such shareholders present or
represented at the meeting. Any director elected by holders of shares
of Series E Preferred Stock pursuant to this Section may be removed at
any annual or special meeting, by vote of a majority of the
shareholders voting as a class who elected such director, with or
without cause. In case any vacancy shall occur among the directors
elected by the holders of shares of Series E Preferred Stock pursuant
to this Section, such vacancy may be filled by the remaining director
so elected, or his successor then in office, and the director so
elected to fill such vacancy shall serve until the next meeting of
shareholders for the election of directors. After the holders of shares
of Series E Preferred Stock shall have exercised their right to elect
directors in any default period and during the continuance of such
period, the number of directors shall not be further increased or
decreased except by vote of the holders of shares of Series E Preferred
Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series E Preferred
Stock.
(iii) The right of the holders of shares of Series E Preferred
Stock, voting separately as a class, to elect two members of the Board
of Directors of the Corporation
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as aforesaid shall continue until, and only until, such time as all
arrears in dividends (whether or not declared) on the Series E
Preferred Stock shall have been paid or declared and set apart for
payment, at which time such right shall terminate, except as herein or
by law expressly provided subject to revesting in the event of each and
every subsequent default of the character above-mentioned. Upon any
termination of the right of the holders of the Series E Preferred Stock
as a class to vote for directors as herein provided, the term of office
of all directors then in office elected by the holders of shares of
Series E Preferred Stock pursuant to this Section shall terminate
immediately. Whenever the term of office of the directors elected by
the holders of shares of Series E Preferred Stock pursuant to this
Section shall terminate and the special voting powers vested in the
holders of the Series E Preferred Stock pursuant to this Section shall
have expired, the maximum number of members of this Board of Directors
of the Corporation shall be such number as may be provided for in the
By-laws of the Corporation, irrespective of any increase made pursuant
to the provisions of this Section.
(D) Except as otherwise required by applicable law or as set forth
herein, holders of Series E Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are entitled
to vote with holders of shares of common stock as set forth herein) for taking
any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever dividends or distributions payable on the Series E
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series E Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series E Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series E
Preferred Stock, except dividends paid ratably on the Series E
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) except as permitted in subsection 4(A)(iv) below, redeem,
purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series E
Preferred Stock, provided that the Corporation may at any time
redeem, purchase
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or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (either
as to dividends or upon dissolution, liquidation or winding up)
to the Series E Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series E Preferred Stock, or any shares of any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series E Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under subsection (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. REACQUIRED SHARES. Any shares of Series E Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made (x) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series E Preferred Stock unless, prior thereto, the holders of Series E
Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (1) $1,000.00 per share or
(2) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of common stock, or (y) to the
holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series E Preferred Stock,
except distributions made ratably on the Series E Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare or pay any dividend on shares of common stock payable in shares of
common stock, or (ii) effect a subdivision or combination or consolidation of
the outstanding shares of common stock (by reclassification or otherwise than by
payment of a dividend in shares of common stock) into a greater or lesser number
of shares of
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common stock, then in each such case the aggregate amount per share to which
holders of shares of Series E Preferred Stock were entitled immediately prior to
such event under clause (x) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of common stock outstanding immediately after such event and the
denominator of which is the number of shares of common stock that were
outstanding immediately prior to such event.
Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 6.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of common stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series E Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of common stock is changed or exchanged,
plus accrued and unpaid dividends, if any, payable with respect to the Series E
Preferred Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on shares of common stock
payable in shares of common stock, or (ii) effect a subdivision or combination
or consolidation of the outstanding shares of common stock (by reclassification
or otherwise than by payment of a dividend in shares of common stock) into a
greater or lesser number of shares of common stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series E Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
common stock outstanding immediately after such event and the denominator of
which is the number of shares of common stock that were outstanding immediately
prior to such event.
Section 8. REDEMPTION. The shares of Series E Preferred Stock shall not
be redeemable; PROVIDED, HOWEVER, that the foregoing shall not limit the ability
of the Corporation to purchase or otherwise deal in such shares to the extent
otherwise permitted hereby and by law.
Section 9. RANKING. Unless otherwise expressly provided in the Articles
of Incorporation or Articles Supplementary relating to any other series of
preferred stock of the Corporation, the Series E Preferred Stock shall rank
junior to every other series of the Corporation's preferred stock previously or
hereafter authorized, as to the payment of dividends and the distribution of
assets on liquidation, dissolution or winding up and shall rank senior to the
common stock.
Section 10. AMENDMENT. Neither these Articles Supplementary nor the
Articles of
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Incorporation of the Corporation may be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series E Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of a majority or more of the outstanding shares of Series E
Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Shares of Series E Preferred Stock may
be issued in whole shares or in any fraction of a share that is one
ten-thousandth (1/1,000th) of a share or any integral multiple of such fraction,
which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of shares
of Series E Preferred Stock. In lieu of fractional shares, the Corporation may
elect to make a cash payment as provided in the Rights Agreement for fractions
of a share other than one ten-thousandth (1/1,000th) of a share or any integral
multiple thereof."
The Corporation has caused these Articles Supplementary to be executed
in its name and on its behalf by the President of the Corporation who
acknowledges that these Articles Supplementary are the act of the Corporation
and that to the best of his knowledge, information and belief and under
penalties for perjury, all matters and facts contained in these Articles
Supplementary are true in all material respects.
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IN WITNESS WHEREOF, these Articles Supplementary have been executed on
behalf of the Corporation by its President and attested by its Secretary this
9th day of March, 1998.
BAY APARTMENT COMMUNITIES, INC.
By: /s/ Gilber M. Meyer
---------------------------
Gilbert M. Meyer
President
(SEAL)
ATTEST:
By: /s/ Jeffrey B. Van Horn
---------------------------
Jeffrey B. Van Horn
Secretary
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