AMENDMENTS TO ARTICLES OF INCORPORATION
Published on July 11, 2008
Exhibit
3.1
Effective
July 9, 2008
RESTATED
ARTICLES
OF INCORPORATION
OF
DYNEX
CAPITAL, INC.
I. NAME
The name of the corporation is DYNEX
CAPITAL, INC. (the “Corporation”).
II. PURPOSE
The purpose for which the Corporation
is formed is to transact any or all lawful business, not required to be
specifically stated in these Articles, for which corporations may be
incorporated under the Virginia Stock Corporation Act as amended from time to
time.
III. CAPITAL
STOCK
Common
Stock
The number of shares of Common Stock
that the Corporation shall have the authority to issue shall be 100,000,000
shares of Common Stock with the par value of $.01 each. Effective at
the close of business on the effective date of this amendment (the “Effective
Time”), the filing of this amendment shall effect a reverse stock split (the
“Reverse Stock Split”) pursuant to which each four (4) issued and outstanding
shares of Common Stock of the Corporation, par value of $.01 per share, shall be
combined into one (1) validly issued, fully paid and nonassessable share of
Common Stock of the Corporation, par value of $.01 per share. Each
stock certificate that prior to the Effective Time represented shares of Common
Stock shall, following the Effective Time, represent the number of shares into
which the shares of Common Stock represented by such certificate shall be
combined.
No
fractional shares or scrip for fractional shares shall be issued by reason of
this Reverse Stock Split. In cases in which the Reverse Stock Split
shall result in any shareholder holding a fractional share, the Corporation
shall issue one share for each fractional share of Common Stock equal to or
greater than one-half and no shares for each fractional share of Common Stock
less than one-half.
After the
Effective Time, each holder of record of shares of Common Stock shall be
entitled to receive, upon the surrender of the certificate or certificates
representing the shares of Common Stock held by such holder immediately prior to
the Effective Time at the office of the transfer agent of the Corporation in
such form and accompanied by such documents, if any, as may be prescribed by the
transfer agent of the Corporation, a new certificate or
certificates
representing
the number of shares of Common Stock of which such record owner is entitled
after giving effect to the Reserve Stock Split. The Reverse Stock
Split will be deemed to occur at the Effective Time, regardless of when the
certificates are surrendered.
No holder
of shares of any class of the Common Stock of the Corporation shall have any
preemptive or preferential right to purchase or subscribe to (i) any shares of
any class of the Corporation, whether now or hereafter authorized; (ii) any
warrants, rights, or options to purchase any such shares; or (iii) any
securities or obligations convertible into any such shares or into warrants,
rights, or options to purchase any such shares.
Preferred
Stock
The number of shares of Preferred Stock
that the Corporation shall have authority to issue shall be 50,000,000 shares of
Preferred Stock with the par value of $0.01 each. The Preferred Stock
may be issued from time to time in one or more classes or series, with such
distinctive designations, rights and preferences as shall be stated and
expressed herein or in the resolution or resolutions providing for the issue of
shares of a particular series, and in such resolution or resolutions providing
for the issue of shares of such series, the Board of Directors is expressly
authorized to fix:
The
annual or other periodic dividend rate for such series, the dividend payment
dates, the date from which dividends on all shares of such series issued shall
be cumulative, and the extent of participation rights, if any;
The
redemption price or prices, if any for such series and other terms and
conditions on which such series may be retired and redeemed;
The
obligation, if any, of the Corporation to purchase and retire or redeem shares
of such series as a sinking fund or otherwise, and the terms and conditions of
any such redemption;
The
option or obligation of holders of one or more series of preferred stock to
participate in a dividend reinvestment program;
The
designation and maximum number of shares of such series issuable;
The right
to vote, if any, with holders of shares of any other class or series and any
right to vote as a separate voting group, either generally or as a condition to
specified corporate action;
The
amount payable upon shares in event of involuntary liquidation;
The
amount payable upon shares in event of voluntary liquidation;
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The
rights, if any, of the holders of shares of such series to convert such shares
into other classes of stock of the Corporation and the terms and conditions of
any such conversion; and
Such
other rights as may be specified by the Board of Directors and not prohibited by
law.
All shares of Preferred Stock of any
one series shall be identical with each other in all respects except, if so
determined by the Board of Directors, as to the dates from which dividends
thereon shall be cumulative; and all shares of Preferred Stock shall be of equal
rank with each other, regardless of series, and shall be identical with each
other in all respects except as provided herein or in the resolution or
resolutions providing for the issue of a particular series. In case
dividends on all shares of Preferred Stock for any quarterly dividend period are
not paid in full, all such shares shall participate ratably in any partial
payment of dividends for such period in proportion to the full amounts of
dividends for such period to which they are respectively entitled.
IIID. SERIES D
PREFERRED
Section
1. Number of Shares and
Designation.
(a) This series
of Preferred Stock shall be designated as Series D 9.50% Cumulative Convertible
Preferred Stock (the “Series D Preferred Stock”) and up to five million seven
hundred thirteen thousand four hundred thirty (5,713,430) shall be the number of
shares of such Preferred Stock constituting this series.
(b) Upon
the effectiveness of this Article IIID:
(i) Each
share of the Corporation’s Series A Preferred Stock shall be deemed to have been
converted into 2.784 shares of Series D Preferred Stock and 0.6373
shares of Common Stock. Each holder of Series A Preferred Stock shall
also receive a cash payment equal to any fractional shares of Series D Preferred
Stock and Common Stock that it would otherwise be entitled to receive on a basis
that values each share of Series D Preferred Stock at $10.00 and each share of
Common Stock at $5.6484.
(ii) Each
share of the Corporation’s Series B Preferred Stock shall be deemed to have been
converted into 2.842 shares of Series D Preferred Stock and 0.6506 shares of
Common Stock. Each holder of Series B Preferred Stock shall also
receive a cash payment equal to any fractional shares of Series D Preferred
Stock and Common Stock that it would otherwise be entitled to receive on a basis
that values each share of Series D Preferred Stock at $10.00 and each share of
Common Stock at $5.6484.
(iii) Each
share of the Corporation’s Series C Preferred Stock shall be deemed to have been
converted into 3.480 shares of Series D Preferred Stock and 0.7967 shares of
Common Stock. Each holder of Series C Preferred Stock shall also
receive a cash payment equal to any fractional shares of Series D Preferred
Stock and Common Stock that it would
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otherwise
be entitled to receive on a basis that values each share of Series D Preferred
Stock at $10.00 and each share of Common Stock at $5.6484.
Section
2. Definitions. For
purposes of the Series D Preferred Stock, the following terms shall have the
meanings indicated:
“Act” shall mean the
Securities Act of 1933, as amended.
“Affiliate” of a
person means a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified.
“Board of Directors”
shall mean the Board of Directors of the Corporation or any committee authorized
by such Board of Directors to perform any of its responsibilities with respect
to the Series D Preferred Stock.
“Business Day” shall
mean any day other than a Saturday, Sunday or a day on which state or federally
chartered banking institutions in New York, New York are not required to be
open.
“Call Date” shall have
the meaning set forth in paragraph (b) of Section 5 hereof.
“Common Stock” shall
mean the common stock, $.01 par value per share, of the Corporation or such
shares of the Corporation’s capital stock into which such Common Stock shall be
reclassified.
“Conversion Ratio”
shall mean the conversion ratio per share of Common Stock for which each share
of Series D Preferred Stock is convertible, as such Conversion Ratio may be
adjusted pursuant to Section 7. The initial Conversion Ratio shall be
one share of Common Stock for each share of Series D Preferred
Stock.
“Current Market Price”
of publicly traded shares of Common Stock or any other class or series of
capital stock or other security of the Corporation or of any similar security of
any other issuer for any day shall mean the closing 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 regular way on such day, 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 National Market of the
National Association of Securities Dealers, Inc. Automated Quotations System
(“NASDAQ”) or, if such security is not quoted on NASDAQ, 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 or National Association of
Securities Dealers, Inc. member firm regularly making a market in such security
selected for such purpose by the Chief Executive Officer or the Board of
Directors or if any class or series of securities are not publicly traded,
the
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fair
value of the shares of such class as determined reasonably and in good faith by
the Board of Directors of the Corporation.
“Dividend Payment
Date” shall mean, with respect to each Dividend Period, the last day of
January, April, July and October, in each year, commencing on July 31, 2004 with
respect to the period commencing on April 7, 2004 and ending June 30, 2004;
provided, however, that if any Dividend Payment Date falls on any day other than
a Business Day, the dividend payment due on such Dividend Payment Date shall be
paid on the Business Day immediately following such Dividend Payment
Date.
“Dividend Periods”
shall mean quarterly dividend periods commencing on January 1, April 1, July 1
and October 1 of each year and ending on and including the day preceding the
first day of the next succeeding Dividend Period (other than the initial
Dividend Period, which shall commence on April 7, 2004 and end on and include
June 30, 2004).
“Fair Market Value”
shall mean the average of the daily Current Market Prices of a share of Common
Stock during five (5) consecutive Trading Days selected by the Corporation
commencing not more than twenty (20) Trading Days before, and ending not later
than, the earlier of the day in question and the day before the “ex date” with
respect to the issuance or distribution requiring such
computation. The term “ex date,” when used with respect to any
issuance or distribution, means the first day on which the share of Common Stock
trades regular way, without the right to receive such issuance or distribution,
on the exchange or in the market, as the case may be, used to determine that
day’s Current Market Price.
“Issue Date” shall
mean April 7, 2004 or the earlier date of issue of the Series D Preferred
Stock.
“Issue Price” shall
mean the amount of $10.00.
“Junior Stock” shall
mean the Common Stock and any other class or series of capital stock of the
Corporation over which the shares of Series D Preferred Stock have preference or
priority in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
“Person” shall mean
any individual, firm, partnership, corporation or other entity and shall include
any successor (by merger or otherwise) of such entity.
“Press Release” shall
have the meaning set forth in paragraph (a)(i) of Section 5 hereof.
“Series A
Preferred Stock” shall mean the Series A Cumulative
Convertible Preferred Stock formerly authorized by Article IIIA of these
Articles of Incorporation.
“Series B Preferred
Stock” shall mean the Series B Cumulative Convertible Preferred Stock
formerly authorized by Article IIIB of these Articles of
Incorporation.
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“Series C Preferred
Stock” shall mean the Series C Cumulative Convertible Preferred Stock
formerly authorized by Article IIIC of these Articles of
Incorporation.
“Series D
Preferred Stock” shall have the meaning set forth in Section 1
hereof.
“Set apart
for payment” shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be paid on any series or class of capital stock of the
Corporation; provided, however, that if any
funds for any class or series of Junior Stock are placed in a separate account
of the Corporation or delivered to a disbursing, paying or other similar agent,
then “set apart for payment” with respect to the Series D Preferred Stock shall
mean placing such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.
“Trading Day” as to
any securities, shall mean any day on which such securities 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 such securities are not listed or admitted for trading
on any national securities exchange, on NASDAQ or, if such securities are not
quoted on NASDAQ, in the securities market in which such securities are
traded.
“Transaction” shall
have the meaning set forth in paragraph (e) of Section 7 hereof.
“Transfer Agent” means
Wachovia Bank Shareholder Services or such other transfer agent as may be
designated by the Board of Directors or their designee as the transfer agent for
the Series D Preferred Stock.
Section
3. Dividends.
(a) The
holders of Series D Preferred Stock shall be entitled to receive, when and as
declared by the Board of Directors out of funds legally available for that
purpose, cumulative dividends payable in cash in an amount per share of Series D
Preferred Stock equal to the greater of (i) the base dividend of $0.2375 per
quarter (the “Base Rate”) or (ii) the aggregate quarterly dividends declared on
the shares of the Common Stock (or portion thereof) into which each share of the
Series D Preferred Stock is convertible. The initial Dividend Period
shall commence on the Issue Date and end on June 30, 2004. The
dividends payable with respect to the portion of the initial Dividend Period
commencing on the Issue Date and ending on June 30, 2004 shall be prorated from
the Issue Date and determined by reference to the Base Rate. The
amount referred to in clause (ii) of this paragraph (a) with respect to each
Dividend Period shall be determined by multiplying each share of Common Stock,
or portion thereof calculated to the fourth decimal point, into which a share of
Series D Preferred Stock would be convertible at the close of business on the
record date for the payment of dividends on the Series D Preferred Stock (based
on the Conversion Ratio then in effect) by the quarterly cash dividend payable
or paid for such Dividend Period in respect of a share of Common Stock
outstanding as of the record date for the payment of dividends on the Common
Stock with respect to such
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Dividend
Period or, if different, with respect to the most recent quarterly period for
which dividends with respect to the Common Stock have been
declared. Such dividends shall be cumulative from the Issue Date,
whether or not in any Dividend Period or Periods such dividends shall be
declared or there shall be funds of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly in arrears on the
Dividend Payment Dates, commencing on the first Dividend Payment Date after the
Issue Date. Each such dividend shall be payable in arrears to the
holders of record of the Series D Preferred Stock, as they appear on the stock
records of the Corporation at the close of business on a record date which shall
be not more than sixty (60) days prior to the applicable Dividend Payment Date
and shall be fixed by the Board of Directors to coincide with the record date
for the regular quarterly dividends, if any, payable with respect to the Common
Stock; provided, however, that the
record dates for the Dividend Period ending December 31, may be separated so
that the record date for the Common Stock dividend is December 31 and the record
date for the Series D Preferred Stock dividend is January 1 and vice
versa. Accumulated, accrued and unpaid dividends for any past
Dividend Periods may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to holders of record on such date, which date,
shall precede by not more than forty-five (45) days the payment date thereof, as
may be fixed by the Board of Directors.
(b) The
amount of dividends payable per share of Series D Preferred Stock for the
portion at the initial Dividend Period commencing on the Issue Date and ending
and including June 30, 2004, or any other period shorter than a full Dividend
Period, shall be computed ratably on the basis of twelve (12) thirty (30)-day
months and a three hundred sixty (360)-day year. Holders of Series D
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of cumulative dividends, as herein provided, on the
Series D Preferred Stock. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on the
Series D Preferred Stock that may be in arrears.
(c) So
long as any of the shares of Series D Preferred Stock are outstanding, no
dividends shall be declared or paid or set apart for payment by the Corporation
and no other distribution of cash or other property shall be declared or made
directly or indirectly by the Corporation unless dividends equal to the full
amount of accumulated, accrued and unpaid dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof has been or contemporaneously is set apart for such
payment on the Series D Preferred Stock for all Dividend Periods terminating on
or prior to the Dividend Payment Date.
(d) So
long as any of the shares of Series D Preferred Stock are outstanding, no
dividends (other than dividends or distributions paid in shares of or options,
warrants or rights to subscribe for or purchase shares of Junior Stock) shall be
declared or paid or set apart for payment by the Corporation and no other
distribution of cash or other property shall be declared or made directly or
indirectly by the Corporation with respect to any shares of Junior Stock, nor
shall any shares of Junior Stock be redeemed, purchased or otherwise acquired
(other than by a redemption, purchase or other acquisition of Common Stock made
for purposes of an employee incentive or benefit plan of the Corporation or any
subsidiary) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any
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such
stock) directly or indirectly by the Corporation (except by conversion into or
exchange for Junior Stock), nor shall any other cash or other property otherwise
be paid or distributed to or for the benefit of any holder of shares of Junior
Stock in respect thereof, directly or indirectly, by the Corporation unless in
each case (i) the full cumulative dividends (including all accumulated, accrued
and unpaid dividends) on all outstanding shares of Series D Preferred Stock
shall have been paid or such dividends have been declared and set apart for
payment for all past Dividend Periods with respect to the Series D Preferred
Stock and (ii) sufficient funds shall have been paid or set apart for the
payment of the full dividend for the current Dividend Period with respect to the
Series D Preferred Stock.
Section
4. Liquidation
Preference.
(a) In
the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, before any payment or distribution of the
assets of the Corporation (whether capital or surplus) shall be made to or set
apart for the holders of Junior Stock, the holders of shares of Series D
Preferred Stock shall be entitled to receive an amount in cash per share of
Series D Preferred Stock (“Liquidation Preference”) equal to the Issue Price,
plus an amount in cash equal to all dividends (whether or not earned or
declared) accumulated, accrued and unpaid thereon to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment. Until the holders of the Series D Preferred Stock
have been paid the Liquidation Preference in full, plus an amount equal to all
dividends (whether or not earned or declared) accumulated, accrued and unpaid
thereon to the date of final distribution to such holders, no payment will be
made to any holder of Junior Stock upon the liquidation, dissolution or winding
up of the Corporation. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of Series D Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid, then such assets,
or the proceeds thereof, shall be distributed among the holders of Series D
Preferred Stock ratably in the same proportion as the respective amounts that
would be payable on such Series D Preferred Stock if all amounts payable thereon
were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more corporations, (ii) a
sale or transfer of all or substantially all of the Corporation’s assets, or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Upon
any liquidation, dissolution or winding up of the Corporation, after payment
shall have been made in full to the holders of Series D Preferred Stock, as
provided in this Section 4, any other series or class or classes of Junior Stock
shall, subject to the respective terms thereof, be entitled to receive any and
all assets remaining to be paid or distributed, and the holders of the Series D
Preferred Stock shall not be entitled to share therein.
Section
5. Redemption at the Option of
the Corporation.
(a) Shares
of Series D Preferred Stock will be redeemable by the Corporation, in whole or
in part, at the option of the Corporation as set forth herein, subject to the
provisions described below:
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(i) Provided
that for twenty (20) Trading Days within any period of thirty (30) consecutive
Trading Days, including the last Trading Day of such period, the closing price
of the Common Stock on the NYSE equals or exceeds $10.00, shares of Series D
Preferred Stock may be redeemed, in whole or in part, at the option of the
Corporation by issuing and delivering to each holder for each share of Series D
Preferred Stock to be redeemed one share of authorized but previously unissued
Common Stock, subject to adjustment of the Conversion Ratio as provided in
Section 7 plus accumulated, accrued and unpaid dividends (as provided below),
which are to be paid in cash through the end of the prior Dividend Period;
however, no dividend will be payable for the Dividend Period in which such a
redemption occurs if such redemption occurs before the record date for the
dividend on the Common Stock, in which event, the dividend will be payable
through the redemption date, provided, however, if no dividend on the Common
Stock has been declared for such period, a dividend shall be paid on the
redeemed Series D Preferred Stock in cash and on a pro rata basis for the period
in which such redemption occurs). In order to exercise its redemption
option pursuant to this paragraph (a)(i), the Corporation must issue a press
release announcing the redemption (the “Press Release”) prior to the opening of
business on the second Trading Day after the condition upon which
this redemption is based has been satisfied. The Press
Release shall announce the redemption and set forth the number of shares of
Series D Preferred Stock that the Corporation intends to redeem; or
(ii) Shares
of Series D Preferred Stock may be redeemed, in whole or in part, at the option
of the Corporation out of funds legally available therefore for cash at the
Issue Price per share, plus any accumulated, accrued and unpaid dividends (as
provided in Section 5(b) below), plus the pro-rated dividend accrued from the
beginning of the current Dividend Period to the date of redemption determined by
reference solely to the Base Rate.
(b) Shares
of Series D Preferred Stock shall be redeemed by the Corporation on the date
specified in the notice to holders required under paragraph (d) of this Section
5 (the “Call Date”). The Call Date shall be selected by the
Corporation, shall be specified in the notice of redemption and shall be not
less than thirty (30) days nor more than 60 days after (i) the date on which the
Corporation issues the Press Release, if such redemption is pursuant to
paragraph (a)(i) of this Section 5, or (ii) the date notice of redemption is
sent by the Corporation, if such redemption is pursuant to paragraph (a)(ii) of
this Section 5. In the event of a redemption pursuant to Section
5(a)(i) or 5(a)(ii), if the Call Date falls after a dividend payment record date
and prior to the corresponding Dividend Payment Date, then (i) in the event of a
redemption pursuant to Section 5(a)(i) each holder of Series D Preferred Stock
at the close of business on such dividend payment record date shall be entitled
to the dividend payable on such shares on the corresponding Dividend Payment
Date notwithstanding the redemption of such shares prior to such Dividend
Payment Date and (ii) in the event of a redemption pursuant to Section 5(a)(ii),
each holder of Series D Preferred Stock at the close of business on such
dividend payment record date shall be entitled to the portion of the dividend
accrued from the beginning of the Dividend Period in which the redemption occurs
and ending on the Call Date notwithstanding the redemption of such shares prior
to such Dividend Payment Date. Except as provided above, the
Corporation shall make no payment or allowance for accumulated or accrued
dividends on shares of Series D Preferred Stock called for redemption or on the
shares of Common Stock issued upon such redemption.
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If the
dividend payment record date for the Series D Preferred Stock and Common Stock
do not coincide, and the preceding sentence does not operate to ensure that a
holder of shares of Series D Preferred Stock whose shares are redeemed for
Common Stock does not receive dividends on both the shares of Series D Preferred
Stock and the Common Stock for which such shares are redeemed for the same
Dividend Period, then notwithstanding anything herein to the contrary, it is the
intent, and the Transfer Agent is authorized to ensure that no redemption after
the earlier of such record dates will be accepted until after the latter of such
record dates.
(c) If
full cumulative dividends on all outstanding shares of Series D Preferred Stock
of the Corporation have not been paid or declared and set apart for payment, no
shares of Series D Preferred Stock may be redeemed unless all outstanding shares
of Series D Preferred Stock are simultaneously redeemed, and neither the
Corporation nor any affiliate of the Corporation may purchase or acquire shares
of Series D Preferred Stock, otherwise than pursuant to a purchase or exchange
offer made on the same terms to all holders of shares of Series D Preferred
Stock.
(d) If
the Corporation shall redeem shares of Series D Preferred Stock pursuant to
paragraph (a) of this Section 5, notice of such redemption shall be given to
each holder of record of the shares to be redeemed and, if such redemption is
pursuant to paragraph (a)(i) of this Section 5, such notice shall be given not
more than ten (10) Business Days after the date on which the Corporation issues
the Press Release; if the Corporation shall redeem shares of Series D Preferred
Stock pursuant to paragraph (a)(ii) of this Section 5, notice of such redemption
shall be given not less than thirty (30) nor more than sixty (60) days prior to
the Call Date. Such notice shall be provided by first class mail,
postage prepaid, at such holder’s address as the same appears on the stock
records of the Corporation, or by publication in The Wall Street
Journal or The
New York Times or if neither such newspaper is then being published, any
other daily newspaper of national circulation not less than thirty (30) nor more
than sixty (60) days prior to the Call Date. If the Corporation
elects to provide such notice by publication, it shall also promptly mail notice
of such redemption to the holders of the shares of Series D Preferred Stock to
be redeemed. Neither the failure to mail any notice required by this
paragraph (d), nor any defect therein or in the mailing thereof, to any
particular holder, shall affect the sufficiency of the notice or the validity of
the proceedings for redemption with respect to the other holders. Any
notice which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given on the date mailed whether or not the holder
receives the notice. Each such mailed or published notice shall
state, as appropriate: (1) the Call Date; (2) the number of shares of Series D
Preferred Stock to be redeemed and, if fewer than all such shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) whether redemption will be for shares of Common Stock pursuant to
paragraph (a)(i) of this Section 5 or for cash pursuant to paragraph (a)(ii) of
this Section 5, and, if redemption will be for Common Stock, the number of
shares of Common Stock to be issued with respect to each share of Series D
Preferred Stock to be redeemed; (4) the place or places at which certificates
for such shares are to be surrendered for certificates representing shares of
Common Stock and (5) the then-current Conversion Ratio. Notice having
been published or mailed as aforesaid, from and after the Call Date (unless the
Corporation shall fail to issue and make available the number of shares of
Common Stock and/or amount of cash necessary to effect such redemption), (i)
except as otherwise provided herein, dividends on the shares of Series D
Preferred Stock so called for
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redemption
shall cease to accumulate or accrue on the shares of Series D Preferred Stock
called for redemption (except that, in the case of a Call Date after a dividend
record date and prior to the related Dividend Payment Date, holders of Series D
Preferred Stock on the dividend record date will be entitled on such Dividend
Payment Date to receive the dividend payable on such shares), (ii) said shares
shall no longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Series D Preferred Stock of the Corporation shall cease
(except the rights to receive the shares of Common Stock and/or cash payable
upon such redemption, without interest thereon, upon surrender and endorsement
of their certificates if so required and to receive any dividends payable
thereon). The Corporation’s obligation to provide shares of Common
Stock and/or cash in accordance with the preceding sentence shall be deemed
fulfilled if on or before the Call Date, the Corporation shall deposit with a
bank or trust company (which may be an affiliate of the Corporation) that has,
or is an affiliate of, a bank or trust company that has a capital and surplus of
at least $50,000,000, such number or shares of Common Stock and such amount of
cash as is necessary for such redemption, in trust, with irrevocable
instructions that such shares of Common Stock and/or cash be applied to the
redemption of the shares of Series D Preferred Stock so called for
redemption. In the case of any redemption pursuant to paragraph
(a)(i) of this Section 5, at the close of business on the Call Date, each holder
of shares of Series D Preferred Stock to be redeemed (unless the Corporation
defaults in the delivery of the shares of Common Stock or cash payable on such
Call Date) shall be deemed to be the record holder of the number of shares of
Common Stock into which such shares of Series D Preferred Stock are to be
converted at redemption, regardless of whether such holder has surrendered the
certificates representing the shares of Series D Preferred Stock to be so
redeemed. No interest shall accrue for the benefit of the holders of
shares of Series D Preferred Stock to be redeemed on any cash so set aside by
the Corporation. Subject to applicable escheat laws, any such cash
unclaimed at the end of two years from the Call Date shall revert to the general
funds of the Corporation after which reversion the holders of shares of Series D
Preferred Stock so called for redemption shall look only to the general funds of
the Corporation for the payment of such cash.
As
promptly as practicable after the surrender in accordance with said notice of
the certificates for any such shares so redeemed (properly endorsed or assigned
for transfer, if the Corporation shall so require and if the notice shall so
state), such certificates shall be exchanged for certificates representing
shares of Common Stock and/or any cash (without interest thereon) for which such
shares have been redeemed in accordance with such notice. If fewer
than all the outstanding shares of Series D Preferred Stock are to be redeemed,
shares to be redeemed shall be selected by the Corporation from outstanding
shares of Series D Preferred Stock not previously called for redemption by lot
or, with respect to the number of shares of Series D Preferred Stock held of
record by each holder of such shares, pro rata (as nearly as may be) or by any
other method as may be determined by the Board of Directors in its discretion to
be equitable. If fewer than all the shares of Series D Preferred
Stock represented by any certificate are redeemed, then a new certificate
representing the unredeemed shares shall be issued without cost to the holders
thereof.
(e) In
the case of any redemption pursuant to paragraph (a)(i) of this Section 5, no
fractional shares of Common Stock or scrip representing fractions of shares of
Common Stock shall be issued upon redemption of the shares of Series D Preferred
Stock. Instead of any
11
fractional
interest in a share of Common Stock that would otherwise be deliverable upon
redemption of shares of Series D Preferred Stock, the Corporation shall pay to
the holder of such share an amount in cash (computed to the nearest cent) based
upon the Current Market Price of the Common Stock on the Trading Day immediately
preceding the Call Date. If more than one share shall be surrendered
for redemption at one time by the same holder, the number of full shares of
Common Stock issuable upon redemption thereof shall be computed on the basis of
the aggregate number of shares of Series D Preferred Stock so
surrendered.
(f) In
the case of any redemption pursuant to paragraph (a)(i) of this Section 5, the
Corporation covenants that any shares of Common Stock issued upon redemption of
shares of Series D Preferred Stock shall be validly issued, fully paid and
non-assessable. The Corporation shall use its best efforts to list,
subject to official notice of issuance, the shares of Common Stock required to
be delivered upon any such redemption of shares of Series D Preferred Stock,
prior to such redemption, on a national securities exchange, if any, on which
the outstanding shares of Common Stock are listed at the time of such
delivery.
The
Corporation shall take any action necessary to ensure that any shares of Common
Stock issued upon the redemption of Series D Preferred Stock are freely
transferable and not subject to any resale restrictions under the Act or any
applicable state securities or blue sky laws (other than any shares of Common
Stock issued upon redemption of any Series D Preferred Stock which are held by
an “affiliate” (as defined in Rule 144 under the Act) of the
Corporation).
Section
6. Stock To Be
Retired. All shares of Series D Preferred Stock which shall
have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued shares of Preferred Stock,
without designation as to series. The Corporation may also retire any
unissued shares of Series D Preferred Stock, and such shares shall then be
restored to the status of authorized but unissued shares of Preferred Stock,
without designation as to series.
Section
7. Conversion into Common
Stock. Holders of shares of Series D Preferred Stock shall
have the right to convert all or a portion of such shares into shares of Common
Stock, as follows:
(a) Subject
to and upon compliance with the provisions of this Section 7, a holder of shares
of Series D Preferred Stock shall have the right, at such holder’s option at any
time to convert such shares, in whole or in part, into one share, subject to
adjustment as provided in this Section 7, of fully paid and non-assessable,
authorized but previously unissued Common Stock per each share of Series D
Preferred Stock by surrendering such shares to be converted, such surrender made
in the manner provided in paragraph (b) of this Section 7; provided, however, that the
right to convert shares of Series D Preferred Stock called for redemption
pursuant to Section 5 shall terminate at the close of business on the Call Date
fixed for such redemption, unless the Corporation shall default in making
payment of shares of Common Stock and/or cash payable upon such redemption under
Section 5 hereof.
(b) In
order to exercise the conversion right, the holder of each share of Series D
Preferred Stock to be converted shall surrender the certificate representing
such share, duly
12
endorsed
or assigned to the Corporation or in blank, at the office of the Transfer Agent,
accompanied by written notice to the Corporation that the holder thereof elects
to convert such share of Series D Preferred Stock. Unless the shares
issuable on conversion are to be issued in the same name as the name in which
such share of Series D Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such holder’s duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
Holders
of shares of Series D Preferred Stock at the close of business on a dividend
payment record date shall be entitled to receive the dividend payable on such
shares on the corresponding Dividend Payment Date notwithstanding the conversion
thereof following such dividend payment record date and prior to such Dividend
Payment Date. Except as provided above, the Corporation shall make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of Common Stock issued upon such
conversion.
As
promptly as practicable after the surrender of certificates for shares of Series
D Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at
such office to such holder, or send on such holder’s written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares of Series D Preferred Stock in
accordance with provisions of this Section 7, and any fractional interest in
respect of a share of Common Stock arising upon such conversion shall be settled
as provided in paragraph (c) of this Section 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 shares of Series D
Preferred Stock shall have been surrendered and such notice received by the
Corporation as aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock 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 Ratio in effect at such time on such date unless the
stock transfer books of the Corporation 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 close of business on the next succeeding day on which
such stock transfer books are open, but such conversion shall be at the
Conversion Ratio in effect on the date on which such shares shall have been
surrendered and such notice received by the Corporation. If the
dividend payment record date for the Series D Preferred Stock and Common Stock
do not coincide, and the preceding sentence does not operate to ensure that a
holder of shares of Series D Preferred Stock whose shares are converted into
Common Stock does not receive dividends on both the shares of Series D Preferred
Stock arid the Common Stock into which such shares are converted for the same
Dividend Period, then notwithstanding anything herein to the contrary, it is the
intent, and the Transfer Agent is authorized to ensure that no conversion after
the earlier of such record dates will be accepted until after the latter of such
record dates.
13
(c) No
fractional share of Common Stock or scrip representing fractions of a share of
Common Stock shall be issued upon conversion of the shares of Series D Preferred
Stock. Instead of any fractional interest in a share of Common Stock
that would otherwise be deliverable upon the conversion of shares of Series D
Preferred Stock, the Corporation shall pay to the holder of such share an amount
in cash based upon the Current Market Price of the Common Stock on the Trading
Day immediately preceding the date of conversion. If more than one
share shall be surrendered for conversion at one time by the same holder, the
number of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series D Preferred
Stock so surrendered.
(d) The
Conversion Ratio shall be adjusted from time to time as follows:
(i) If
the Corporation shall after the Issue Date (A) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (B) subdivide its
outstanding Common Stock into a greater number of shares, (C) combine its
outstanding Common Stock into a smaller number of shares or (D) issue any shares
of capital stock by reclassification of its Common Stock, the Conversion Ratio
in effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or distribution
or at the opening of business on the day following the day on which such
subdivision, combination or reclassification becomes effective, as the case may
be, shall be adjusted so that the holder of any share of Series D Preferred
Stock thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock (or fraction of a share of Common Stock) that
such holder would have owned or have been entitled to receive after the
happening of any of the events described above had such share of Series D
Preferred Stock been converted immediately prior to the record date in the case
of a dividend or distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made
pursuant to this paragraph (d)(i) of this Section 7 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 dividend or
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.
(ii) If
the Corporation shall issue after the Issue Date rights, options or warrants to
all holders of Common Stock entitling them (for a period expiring within 45 days
after the record date described below in this paragraph (d)(ii) of this Section
7) to subscribe for or purchase Common Stock at a price per share less than the
Fair Market Value per share of the Common Stock on the record date for the
determination of stockholders entitled to receive such rights, options or
warrants, then the Conversion Ratio in effect at the opening of business on the
day next following such record date shall be adjusted to equal the ratio
determined by multiplying the Conversion Ratio in effect immediately prior to
the opening of business on the day following the date fixed for such
determination by a fraction, the numerator of which shall be the sum of (X) the
number of shares of Common Stock outstanding on the close of business on the
date fixed for such determination and (Y) the number of shares that the
aggregate proceeds to the Corporation from the exercise of such rights, options
or warrants for Common Stock would purchase at such Fair Market Value, and the
denominator of which shall be the sum of (XX) the number of shares of Common
Stock outstanding on the close of business on the date
14
fixed for
such determination and (YY) the number of additional shares of Common Stock
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall become effective immediately after
the opening of business on the day next following such record date (except as
provided in paragraph (h) below). In determining whether any rights,
options or warrants entitle the holders of Common Stock to subscribe for or
purchase Common Stock at less than such Fair Market Value, there shall be taken
into account any consideration received by the Corporation upon issuance and
upon exercise of such rights, options or warrants, the value of such
consideration, if other than cash, to be determined in good faith by the Board
of Directors.
(iii) No
adjustment in the Conversion Ratio shall be required unless such adjustment
would require a cumulative increase or decrease of at least 1%, in such ratio,
provided, however, that any
adjustments that by reason of this paragraph (d)(iii) 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
Section 7 (other than this paragraph (d)(iii)) not later than such time as may
be required in order to preserve the tax-free nature of a distribution to the
holders of shares of Common Stock. Notwithstanding any other
provisions of this Section 7, the Corporation shall not be required to make any
adjustment of the Conversion Ratio for the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under such
plan. All calculations under this Section 7 shall be made to the
nearest one-tenth of a share (with .05 of a share being rounded
upward). Anything in this paragraph (d) of this Section 7 to the
contrary notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Ratio, in addition
to those required by this paragraph (d), as it in its discretion shall determine
to be advisable in order that any stock dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or warrants to
purchase stock or securities, or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its stockholders shall not be
taxable, or if that is not possible, to diminish any income taxes that are
otherwise payable because of such event.
(e) If
the Corporation shall be a party to any transaction (including without
limitation a merger, consolidation, statutory share exchange, issuer or self
tender offer for all or a substantial portion of the shares of Common Stock
outstanding, sale of all or substantially all of the Corporation’s assets or
recapitalization of the Common Stock, but excluding any transaction as to which
paragraph (d)(i) of this Section 7 applies (each of the foregoing being referred
to herein as a “Transaction”), in each case as a result of which shares of
Common Stock shall be converted into the right to receive stock, securities or
other property (including cash or any combination thereof), each share of Series
D Preferred Stock which is not converted into the right to receive stock,
securities or other property in connection with such Transaction shall thereupon
be convertible into the kind and amount of shares of stock, securities and other
property (including cash or any combination thereof) receivable upon such
consummation by a holder of that number of shares of Common Stock into which one
share of Series D Preferred Stock was convertible immediately prior to such
Transaction. The Corporation shall not be a party to any Transaction
unless the terms of such Transaction are consistent with the
provisions
15
of this
paragraph (e), and it shall not consent or agree to the occurrence of any
Transaction until the Corporation 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 D Preferred Stock that will contain provisions enabling
the holders of the Series D Preferred Stock that remain outstanding after such
Transaction to convert into the consideration received by holders of Common
Stock at the Conversion Ratio in effect immediately prior to such
Transaction. The provisions of this paragraph (e) shall similarly
apply to successive Transactions.
(f) If,
(i) the
Corporation shall declare a dividend (or any other distribution) on the Common
Stock (other than cash dividends and cash distributions); or
(ii) the
Corporation shall authorize the granting to all holders of the Common Stock of
rights or warrants to subscribe for or purchase any shares of any class or
series of capital stock or any other rights or warrants; or
(iii) there
shall be any reclassification of the Common Stock or any consolidation or merger
to which the Corporation is a party and for which approval of any stockholders
of the Corporation is required, or a statutory share exchange, or an issuer or
self tender offer by the Corporation for all or a substantial portion of its
outstanding shares of Common Stock (or an amendment thereto changing the maximum
number of shares sought or the amount or type of consideration being offered
therefor or the sale or transfer of all or substantially all of the assets of
the Corporation as an entirety; or
(iv) there
shall occur the voluntary or involuntary liquidation, dissolution or winding up
of the Corporation,
then the
Corporation shall cause to be filed with the Transfer Agent and shall cause to
be mailed to each holder of shares of Series D Preferred Stock at such holder’s
address as shown on the stock records of the Corporation, as promptly as
possible, but at least fifteen (15) day prior to the applicable date hereinafter
specified, a notice stating (A) the record date for the payment of such
dividend, distribution or rights or warrants, or, if a record date is not
established, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights or warrants are to be
determined 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 Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up or (C) the date
on which such tender offer commenced, the date on which such tender offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment
thereto). Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 7.
16
(g) Whenever
the Conversion Ratio is adjusted as herein provided, the Corporation shall
promptly file with the Transfer Agent an officer’s certificate setting forth the
Conversion Ratio 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 Corporation
shall prepare a notice of such adjustment of the Conversion Ratio setting forth
the adjusted Conversion Ratio and the effective date such adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Ratio
to each holder of shares of Series D Preferred Stock at such holder’s last
address as shown on the stock records of the Corporation.
(h) In
any case in which paragraph (d) of this Section 7 provides that an adjustment
shall become effective on the day next following the record date for an event,
the Corporation may defer until the occurrence of such event (A) issuing to the
holder of any share of Series D Preferred Stock converted after such record date
and before the occurrence of such event the additional Common Stock issuable
upon such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (B) paying to such holder any amount of cash in lieu of any
fraction pursuant to paragraph (c) of this Section 7.
(i) There
shall be no adjustment of the Conversion Ratio in case of the issuance of any
capital stock of the Corporation in a reorganization, acquisition or other
similar transaction except as specifically set forth in this Section
7.
(j) If
the Corporation shall take any action affecting the Common Stock other than
action described in this Section 7, that in the opinion of the Board of
Directors would materially adversely affect the conversion rights of the holders
of Series D Preferred Stock, the Conversion Ratio for the Series D Preferred
Stock may be adjusted, to the extent permitted by law, in such manner, if any,
and at such time as the Board of Directors, in its sole discretion may determine
to be equitable under the circumstances.
(k) The
Corporation shall at all times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued Common Stock solely
for the purpose of effecting conversion of the Series D Preferred Stock, the
full number of shares of Common Stock deliverable upon the conversion of all
outstanding shares of Series D Preferred Stock not theretofore converted into
Common Stock. For purposes of this paragraph (k), the number of
shares of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of Series D Preferred Stock shall be computed as if at the
time of computation all such outstanding shares were held by a single
holder.
The
Corporation covenants that any shares of Common Stock issued upon conversion of
the shares of Series D Preferred Stock shall be validly issued, fully paid and
non-assessable.
The
Corporation shall use its best efforts to list the shares of Common Stock
required to be delivered upon conversion of the shares of Series D Preferred
Stock, prior to such delivery, on a national securities exchange, if any, on
which the outstanding shares of Common Stock are listed at the time of such
delivery.
17
The
Corporation shall take any action necessary to ensure that any shares of Common
Stock issued upon conversion of shares of Series D Preferred Stock are freely
transferable and not subject to any resale restrictions under the Act, or any
applicable state securities or blue sky laws (other than any shares of Common
Stock which are held by an “affiliate” (as defined in Rule 144 under the
Act).
(l) The
Corporation will pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock or
other securities or property on conversion or redemption of shares of Series D
Preferred Stock pursuant hereto; provided, however, that the Corporation shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock or other securities
or property in a name other than that of the holder of the shares of Series D
Preferred Stock to be converted or redeemed, and no such issue or delivery shall
be made unless and until the person requesting such issue or delivery has paid
to the Corporation the amount of any such tax or established, to the reasonable
satisfaction of the Corporation, that such tax has been paid.
Section
8. Conversion into Senior
Notes.
(a) If
at any time the Corporation:
(i) falls
in arrears in the payment of dividends on the Series D Preferred Stock in an
aggregate amount equal to the full accrued dividends for two quarterly Dividend
Periods; or
(ii) fails
to maintain consolidated shareholders’ equity determined in accordance with
generally accepted accounting principles of at least 200% of the aggregate Issue
Price of the then outstanding Series D Preferred Stock,
then the
Series D Preferred Stock will automatically convert into 9.50% Senior Notes (the
“Conversion Notes”), which will be in substantially the following
form:
18
[Date] ,
DYNEX
CAPITAL, INC.
9.50%
Senior Note
DYNEX
CAPITAL, INC., a corporation duly organized and validly existing under the laws
of the Commonwealth of Virginia (the “Company”), for value received hereby
promises to pay to the order of _____________________ (the “Noteholder”) the
principal sum of __________________________ Dollars ($ ______________) with
interest thereon at the rate of 9.50% per annum, payable as
follows:
a. Interest
in quarterly installments payable only on the last day of the months of _______
, _______ , _______ , and _______ commencing from the date of issuance of this
Note (the “Issue Date”); and
b. Principal
in arrears, together with associated interest, commencing the third year after
the Issue Date over eight quarterly periods payable on the last day of the
months of _______ _______ _______ , and _______; provided, however, that such
quarterly payments will not begin until after the Company tenders its last
payment on the Company’s 9.50% Senior Notes due 2007.
The
principal and interest payable on this Note will be paid to the person in whose
name this Note is registered at the close of business on the record date, which
shall be ________ _______ _______ , and _______ (whether or not a business
day). Interest shall be paid by cheek mailed to the Noteholder at the
registered address of such person unless other arrangements are made by the
Noteholder with the Company.
Interest
on this Note shall be computed on the basis of a 360-day year composed of twelve
30-day months.
The
Company will have the right to prepay or redeem this Note in part or in its
entirety, including all accrued interest due hereon, at its option, anytime
prior to maturity without penalty.
The
Company covenants that, until it satisfies its obligations pursuant to the terms
of this Note, it will not (i) repurchase outstanding capital stock of the
Company or (ii) make distributions to shareholders of the Company other than
such distributions necessary to maintain the Company’s status as a real estate
investment trust pursuant to the Internal Revenue Code of 1986, as
amended.
Any of
the following shall constitute an “Event of Default” hereunder: (i) the failure
to pay any sum due hereunder within ten (10) days after a notice of default is
delivered to Company by Noteholder following the date such sum is due, (ii)
Company’s admission in writing that it is unable to pay its debts as they become
due, (iii) any assignment by the Company for the benefit of its creditors, or
(iv) Company’s filing or having filed against it a petition in
bankruptcy. Upon the occurrence of an Event of Default, interest
shall begin to accrue at a rate of ___% per annum from the date of said
occurrence until this Note is paid in full. Upon the occurrence of an
Event
19
of
Default, the outstanding principal balance hereof and all interest accrued
thereon shall become due and payable immediately at the election of Noteholder,
without notice. Failure to exercise this option upon any such Event
of Default shall not constitute or be construed as a waiver of the right to
exercise such option subsequently.
This Note
has been executed and delivered in the Commonwealth of Virginia, and shall be
construed and governed by the laws of the Commonwealth of Virginia.
The
provisions of this Note shall be binding upon the successors and assigns of the
Company and shall inure to the benefit of the Noteholder.
(b) The
Conversion Notes shall be subordinate only to the Corporation’s 9.50% Senior
Notes due April 2007 (the “2007 Senior Notes”). The principal
payments under the Conversion Notes will not begin until after the Corporation
tenders its last payment on the 2007 Senior Notes.
(c) If
the Series D Preferred Stock converts into Conversion Notes, then the aggregate
amount of accrued and unpaid dividends payable to holders of the Series D
Preferred Stock, including pro-rata dividends, will be added to the principal
balance of the Conversion Notes.
(d) The
Conversion Notes shall be issued pursuant to an indenture substantially similar
to the indenture that governs the Corporation’s 9.50% Senior Notes due 2007 and
that complies with the requirements of the Trust Indenture Act of
1939.
Section
9. Ranking. The
Series D Preferred Stock will rank senior to the Common Stock with respect to
the payment of dividends and amounts payable upon liquidation, dissolution or
winding up of the Corporation. The Corporation is not permitted to
issue any stock ranking senior to the Series D Preferred Stock as to the payment
of dividends or amounts upon liquidation, without the approval of the holders of
two-thirds (2/3) of the Series D Preferred Stock.
Section
10. Voting.
(a) The
holders of the Series D Preferred Stock voting as a single class, will have the
right to elect two representatives to the Board of Directors of the Corporation
so long as there remains outstanding greater than or equal to 50% of the number
of shares of Series D Preferred Stock issued in accordance with Section
1(b). If the amount of Series D Preferred Stock at any time
outstanding is less than 50% of the number of shares of Series D Preferred Stock
issued in accordance with Section 1(b), then the holders of the Series D
Preferred Stock will have the right to elect one representative to the Board of
Directors of the Corporation. In this event, unless one of the two
directors delivers notice of his resignation to the Corporation within ten days
after receiving notice of the change in the right of the holders of the Series D
Preferred Stock to elect representatives to the Board of Directors, the term of
the board representative of the holders of the Series D Preferred Stock who
received the fewest number of votes in the most recent election of directors
shall terminate effective as of the date on which the
20
amount of
Series D Preferred Stock outstanding ceased to be greater than or equal to 50%
of the number of shares of the Series D Preferred Stock issued in accordance
with Section 1(b). If no Series D Preferred Stock remains
outstanding, the holders of the Series D Preferred Stock shall no longer have
the right to elect any representatives to the Board of Directors of the
Corporation, and the term of the board representatives of the holders of the
Series D Preferred Stock shall terminate effective as of the date on which the
Series D Preferred Stock ceased to be outstanding. However, if the
reason that the Series D Preferred Stock ceased to be outstanding is the
conversion of the Series D Preferred Stock pursuant to Section 8, then any
representatives to the Board of Directors of the Corporation elected by the
holders of the Series D Preferred Stock will continue in office until the next
succeeding meeting of the shareholders of the Corporation.
(b) So
long as any shares of Series D Preferred Stock are outstanding, in addition to
any other vote or consent of stockholders required by law or by the Articles of
Incorporation, as amended, and subject to Section 11 below, the affirmative vote
of at least 66-2/3% of the votes entitled to be cast by the holders of the
Series D Preferred Stock, given in person or by proxy, either in writing without
a meeting or by vote at any meeting called for the purpose, shall be necessary
for effecting or validating:
(i) Any
amendment, alteration or repeal of any of the provisions of this amendment to
the Articles of Incorporation, the Articles of Incorporation or the Bylaws of
the Corporation that materially adversely affects the voting powers, rights or
preferences of the holders of the Series D Preferred Stock; provided, however, that the
amendment of the provisions of the Articles of Incorporation so as to authorize
or create, or to increase the authorized amount of, any Junior Stock or any
shares of any class ranking on a parity with the Series D Preferred Stock shall
not be deemed to materially adversely affect the voting powers, rights or
preferences of the holders of Series D Preferred Stock; or
(ii) The
authorization or creation of, or the increase in the authorized amount of, any
shares of any class or any security convertible into shares of any class ranking
prior or senior to the Series D Preferred Stock in the distribution of assets on
any liquidation, dissolution or winding up of the Corporation or in the payment
of dividends; provided, however, that no such
vote of the holders of Series D Preferred Stock shall be required if, at or
prior to the time when such amendment, alteration or repeal is to take effect,
or when the issuance of any such prior shares or convertible security is to be
made, as the case may be, provision is made for the redemption of all shares of
Series D Preferred Stock at the time outstanding.
For
purposes of the foregoing provisions of this Section 10, each share of Series D
Preferred Stock shall have one (1) vote per share, except that when any other
series of preferred stock shall have the right to vote with the Series D
Preferred Stock as a single class on any matters then the Series D Preferred
Stock and such other series shall have with respect to such matters one (1) vote
per $10.00 of stated liquidation preference. Except as otherwise
required by applicable law or as set forth herein, the Series D Preferred Stock
shall not have any relative participating, optional or other special voting
rights and powers other than as set forth herein, and the consent of the holders
thereof shall not be required for the taking of any corporate
action.
21
Section
11.
Restriction on
Payments. The Corporation will not make any payments for (a)
repurchases, tender offers, and other retirements of Common Stock of the
Corporation or (b) dividends on Common Stock in excess of the amount of payment
required to maintain the status of the Corporation as a real estate investment
trust unless, after taking into account such payment, consolidated shareholders
equity of the Corporation, as determined in accordance with generally accepted
accounting principles, exceeds 300% of the aggregate Issue Price of the then
outstanding Series D Preferred Stock unless approved by the holders of at least
75% of the Series D Preferred Stock.
Section
12. Record
Holders. The Corporation and the Transfer Agent may deem and
treat the record holder of any share of Series D Preferred Stock as the true and
lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
IV.
[Intentionally omitted.]
V. INDEMNIFICATION
(1) In
this Article:
“applicant”
means the person seeking indemnification pursuant to this Article.
“expenses”
includes counsel fees and disbursements.
“liability”
means the obligation to pay a judgment, settlement, penalty, fine, including any
excise tax assessed with respect an employee benefit plan, or reasonable
expenses incurred with respect to a proceeding.
“party”
includes an individual who was, is, or is threatened to be made a named
defendant or respondent in a proceeding.
“proceeding”
means any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative or investigative and whether formal or
informal.
(2) In
any proceeding brought by a shareholder of the Corporation in the right of the
Corporation or brought by or on behalf of shareholders of the Corporation, no
director or officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages in excess of $0.00 with respect to any
transaction, occurrence or course of conduct, whether prior or subsequent to the
effective date of this Article, except for liability resulting from such
person’s having engaged in willful misconduct or a knowing violation of the
criminal lay or any federal or state securities law.
(3) The
Corporation shall indemnify (i) any person who was or is a party to any
proceeding, including a proceeding brought by a shareholder in the right of the
Corporation or brought by or on behalf of shareholders of the Corporation, by
reason of the fact that he is or was a director, or officer of the Corporation,
or (ii) any director or officer who is or was serving at the request of the
Corporation as a director, trustee, partner or officer of another
corporation
22
partnership,
joint venture, trust, employee benefit plan or other enterprise, against any
liability incurred by him in connection with such proceeding unless he engaged
in willful misconduct or a knowing violation of the criminal law. A
person is considered to be serving an employee benefit plan at the Corporation’s
request if his duties to the Corporation also impose duties on, or otherwise
involve services by, him to the plan or to participants in or beneficiaries of
the plan. The Board of Directors is hereby empowered, by a majority
vote of a quorum of disinterested Directors, to enter into a contract to
indemnify any Director or officer in respect of any proceedings arising from any
act or omission, whether occurring before or after the execution of such
contract.
(4) The
provisions of this Article shall be applicable to all proceedings commenced
after the adoption hereof by the shareholders of the Corporation, arising from
any act or omission, whether occurring before or after such
adoption. No amendment or repeal of this Article shall have any
effect on the rights provided under this Article with respect to any act or
omission occurring prior to such amendment or repeal. The Corporation
shall promptly take all such actions, and make all such determinations, as shall
be necessary or appropriate to comply with its obligation to make any indemnity
under this Article and shall promptly pay or reimburse all reasonable expenses,
including attorneys’ fees, incurred by any such director or officer in
connection with such actions and determinations or proceedings of any kind
arising therefrom.
(5) The
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the applicant did not
meet the standard of conduct described in Section (2) or (3) of this
Article.
(6) Any
indemnification under section (3) of this Article (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the applicant is proper in the
circumstances because he has met the applicable standard of conduct set forth in
section (3).
The
determination shall be made:
(a) By
the Board of Directors by a majority vote of a quorum consisting of Directors
not at the time parties to the proceeding;
(b) If
a quorum cannot be obtained under subsection (a) of this section, by majority
vote of a committee duly designated by the Board of Directors (in which
designation Directors who are parties may participate), consisting solely of two
or more Directors not at the time parties to the proceeding;
(c) By
special legal counsel:
(i) Selected
by the Board of Directors or its committee in the manner prescribed in
subsection (a) or (b) of this section; or
(ii) If
a quorum of the Board of Directors cannot be obtained under subsection (a) of
this section and a committee cannot be designated under subsection (b) of
this
23
section,
selected by majority vote of the full Board of Directors in which selection
Directors who are parties may participate; or
(d) By
the shareholders, but shares owned by or voted under the control of Directors
who are at the time parties to the proceeding may not be voted on the
determination.
Any
evaluation as to reasonableness of expenses shall be made in the same manner as
the determination that indemnification is appropriate, except that if the
determination is made by special legal counsel, such evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (c)
of this section (6) to select counsel.
Notwithstanding
the foregoing, in the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to this Article shall be made by special legal
counsel agreed upon by the Board of Directors and the applicant. If
the Board of Directors and the applicant are unable to agree upon such special
legal counsel the Board of Directors and the applicant each shall select a
nominee, and the nominees shall select such special legal counsel.
(7) (a) The
Corporation shall pay for or reimburse the reasonable expenses incurred by any
applicant who is a party to a proceeding in advance of final disposition of the
proceeding or the making of any determination under section (3) if the applicant
furnishes the Corporation:
(i) a
written statement of his good faith belief that he has met the standard of
conduct described in section (3); and
(ii) a
written undertaking, executed personally or on his behalf, to repay the advance
if it is ultimately determined that he did not meet such standard of
conduct.
(b) The
undertaking required by paragraph (ii) of subsection (a) of this section shall
be an unlimited general obligation of the applicant but need not be secured and
may be accepted without reference to financial ability to make
repayment.
(c) Authorizations
of payments under this section shall be made by the persons specified In Section
(6).
(8) The
Board of Directors is hereby empowered, by majority vote of a quorum consisting
of disinterested Directors, to cause the Corporation to indemnify or contract to
indemnify any person not specified in section (2) or (3) of this Article who
was, is or may become a party to any proceeding, by reason of the fact that he
is or was an employee or agent of the Corporation, or is or was serving at the
request of the Corporation as director, officer, employee or agent of another
corporation, partner ship, joint venture, trust, employee benefit plan or other
enterprise, to the same extent as if such person were specified as one to whom
indemnification is granted in section (3). The provisions of sections
(4) through (7) of this Article shall be applicable to any indemnification
provided hereafter pursuant to this section (8).
24
(9) The
Corporation may purchase and maintain insurance to indemnify it against the
whole or any portion of the liability assumed by it in accordance with this
Article and may also procure insurance, in such amounts as the Board of
Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture trust, employee benefit plan or other
enterprise, against any liability asserted against or incurred by him in any
such capacity or arising front his status as such, whether or not the
Corporation would have power to indemnify him against such liability under the
provisions of this Article.
(10) Every
reference herein to directors, officers, employees or agents shall include
former directors, officers, employees and agents and their respective heirs,
executors and administrators. The indemnification hereby provided and
provided hereafter pursuant to the power hereby conferred by this Article on the
Board of Directors shall not be exclusive of any other rights to which any
person may be entitled, including any right under policies of insurance that may
be purchased and maintained by the Corporation or others, with respect to
claims, issues or matters in relation to which the Corporation would not have
the power to indemnify such person under the provisions of this
Article. Such rights shall not prevent or restrict the power of the
Corporation to make or provide for any further indemnity, or provisions for
determining entitlement to indemnity, pursuant to one or more indemnification
agreements, bylaws, or other arrangements (including, without limitation,
creation of trust funds or security interests funded by letters of credit or
other means) approved by the Board of Directors (whether or not any of the
directors of the Corporation shall be a party to or beneficiary of any such
agreements, bylaws or arrangements); provided, however, that any
provision of such agreements, bylaws or other arrangements shall not be
effective if and to the extent that it is determined to be contrary to this
Article or applicable laws of the Commonwealth of Virginia.
(11) Each
provision of this Article shall be severable, and an adverse determination as to
any such provision shall in no way affect the validity of any other
provision.
VI. EXCESS
SHARES
(1) Affidavits of
Transferees. Whenever it is deemed by the Board of Directors
to be prudent in protecting the tax status of the Corporation, the Board of
Directors may require to be filed with the Corporation a statement or affidavit
from each proposed transferee of shares of capital stock of the Corporation
setting forth the number of such shares already owned by the transferee and any
related person(s) specified in the form prescribed by the Board of Directors for
that purpose. Any contract for the sale or other transfer of shares
of capital stock of the Corporation shall be subject to this
provision.
(2) Affidavits of
Shareholders. Prior to any transfer or transaction which would
cause a shareholder to own, directly or indirectly, shares in excess of the
“Limit” as defined in Section (4) of this Article, and in any event upon demand
of the Board of Directors, such shareholder shall file with the Corporation an
affidavit setting forth the number of shares of capital stock of the Corporation
(a) owned directly and (b) owned indirectly (for purposes of
this
25
Section
(2), shares of capital stock not owned directly shall be deemed to be owned
indirectly by a person if that person would be the beneficial owner of such
shares for purposes of Rule 13d-3, or any successor rule thereto, promulgated
under the Securities Exchange Act of 1934, as amended or any successor statute
thereto (the “Exchange Act”), and/or would be considered to own such shares by
reason of the attribution rules in Section 544 of the Internal Revenue Code of
1986, as amended from time to time (the “Code”) or the regulation issued
thereunder), by the person filing the affidavit. The affidavit to be
filed with the Corporation shall set forth all information required to be
reported in returns filed by shareholders under Treasury Regulation
§ 1.857-9 issued under the Code or similar provisions of any successor
regulation, and in reports to be filed under Section 13(d), or any successor
rule thereto, of the Exchange Act. The affidavit, or an amendment
thereto, shall be filed with the Corporation within ten (10) days after demand
therefor and at least fifteen (15) days prior to any transfer or transaction
which, if consummated, would cause the filing person to hold a number of shares
of capital stock of the Corporation in excess of the a “Limit” as defined in
Section (4) of this Article. The Board of Directors shall have the
right, but shall not be required, to refuse to transfer any shares of capital
stock of the Corporation purportedly transferred other than in compliance with
the provisions of this Section (2).
(3) Void
Transfers. Any acquisition of shares of capital stock of the
corporation that could or would result in the disqualification of the
Corporation as a real estate investment trust under the Code shall be void ab initio to the fullest
extent permitted under applicable Law and the intended transferee of those
shares shall be deemed never to have had an interest therein. If the
foregoing provision is determined to be void or invalid by virtue of any legal
decision, statute, rule or regulation, then the transferee of those shares shall
be deemed, at the option of the Corporation, to have acted as agent on behalf of
the Corporation in acquiring those shares and to hold those shares on behalf of
the Corporation.
(4) Excess
Shares. Notwithstanding any other provision hereof to the
contrary and subject to the provisions of Section (5) of this Article, no person
or persons acting as a group shall at any time directly or indirectly own in the
aggregate more than 9.8% of the outstanding shares of capital stock of the
Corporation (the “Limit”). Shares which but for this Article would be
owned by a person or persons acting as a group and would, at any time, be in
excess of the Limit shall be deemed “Excess Shares.” For the purpose
of determining ownership of Excess Shares, “ownership” of shares shall be deemed
to include shares constructively owned by a person under the provisions of
Section 544 of the Code and also shall include shares beneficially owned under
the provisions of Rule 13d-3 or any successor rule, under the Exchange
Act. For purposes of determining persons acting as a group, “group”
shall have the same meaning as such term has for purposes of Section 13(d)(3),
or any successor rule, of the Exchange Act. All shares of capital
stock of the Corporation which any person or persons acting as a group have the
right to acquire upon exercise of outstanding rights, options and warrants, and
upon conversion of any securities convertible into those shares, if any, shall
be considered outstanding for purposes of determining the applicable Limit if
such inclusion will cause such person or persons acting as a group to own more
than the Limit. The Board of Directors shall have the right, but
shall not be required, to refuse to transfer shares of capital stock on the
books of the Corporation if, as a result of the proposed transfer, for any
person or persons acting as a group would hold or be deemed to hold Excess
Shares.
26
(5) Exemptions. The
Limit set forth in Section (4) of this Article shall not apply to the
acquisition of shares of capital stock of the Corporation by an underwriter in a
public offering of those shares or in any transaction involving the issuance of
shares of capital stock by the Corporation in which the Board of Directors
determines that the underwriter or other person or party initially acquiring
those shares will timely distribute those shares to or among others so that,
following such distribution, none of those shares will be deemed to be Excess
Shares. The Board of Directors in its discretion may exempt from the
Limit and from the filing requirements of Section (2) of this Article ownership
or transfers of certain designated shares of capital stock of the Corporation
while owned by or transferred to a person who has provided the Board of
Directors with evidence and assurances acceptable to the Board of Directors that
the qualification of the Corporation as a real estate investment trust under the
Code and the regulations issued under the Code would not be jeopardized
thereby.
(6) Redemption of Excess
Shares. At the discretion of the Board of Directors, all
Excess Shares may be redeemed by the Corporation. Written notice of
redemption shall be provided to the holder of the Excess Share not less than one
week prior to the redemption date (the “Redemption Date”) determined by the
Board of Directors and included in the notice of redemption. The
redemption price to be paid for Excess Shares will be equal to (a) the closing
price of those shares on the principal national securities exchange on which the
shares are listed or admitted to trading on the last business day prior to the
Redemption Date, or (b) if the shares are not so listed or admitted to trading,
the closing bid price on the last business day prior to the Redemption Date as
reported on the NASD System, if quoted thereon, or (c) if the redemption price
is not determinable in accordance with either clause (a) or (b) of this
sentence, the net asset value of the shares determined in good faith by the
Board of Directors and in accordance with the Virginia Stock Corporation Act
(the “Net Asset Value”). The redemption price for any shares of
capital stock of the Corporation so redeemed shall be paid on the Redemption
Date. From and after the Redemption Date, the holder of any shares of
capital stock of the Corporation called for redemption shall cease to be
entitled to any distributions and other benefits with respect to those shares,
except the right to payment of the redemption price fixed as
aforesaid.
(7) Application of
Article. Nothing contained in this Article or in an other
provision hereof shall limit the authority of the Board Directors to take any
and all other action as it in its sole discretion deems necessary or advisable
to protect this Corporation and the interests of it shareholders by maintaining
the Corporation’s eligibility to be, and preserving the Corporation’s status as
a qualified real estate investment trust under the Code, provided, however, that
nothing in this Article VI or elsewhere in these Articles shall preclude
settlement of any transaction entered into or through the facilities of New York
Stock Exchange or any other exchange on which the Corporation’s common shares
may be listed from time to time.
(8) Definition of
“Person”. For purposes of this Article only, the term “person”
shall include individuals, corporations, limited partnerships, general
partnerships, joint stock companies or associations, joint ventures,
associations, consortia, companies, trusts, banks, trust companies, land trusts,
common law trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof.
27
(9) Severability. If
any provision of this Article or any application of any such provision is
determined to be invalid by any federal or state court having jurisdiction over
the issue, the validity of the remaining provisions shall not be affected and
other applications of such provision shall be affected only to the extent
necessary to comply with the determination of that court.
VII. ACQUISITION OF SHARES BY
CERTAIN TAX-EXEMPT ORGANIZATIONS
(1) Affidavits of Shareholders
and Transferees. Whenever it is deemed by the Board of
Directors to be prudent in avoiding (a) the direct or indirect imposition of a
penalty tax on the Corporation (including the imposition of an entity-level tax
on one or more real estate mortgage investment conduits (“REMICs”) in which the
Corporation has acquired or plans to acquire an interest) or (b) the
endangerment of the tax status of one or more REMICs in which the Corporation
has acquired or plans to acquire an interest, the Board of Directors may require
to be filed with the Corporation a statement or affidavit from any holder or
proposed transferee of capital stock of the Corporation stating whether the
holder or proposed transferee is (i) the United States, any state or political
subdivision thereof, any possession of the United States, any agency or
instrumentality of the foregoing, or any other organization that is exempt from
federal income taxation (including taxation under the unrelated business taxable
income provisions of the Code) (a “Tax-Exempt Organization”) or (ii) a
partnership, trust, real estate investment trust, regulated investment company,
or other pass-through entity in which a Tax-Exempt Organization holds or is
permitted to hold a direct or indirect beneficial interest (a “Pass-Through
Entity”). Any contract for the sale or other transfer of shares of
capital stock of the Corporation shall be subject to this
provision. Furthermore, the Board of Directors shall have the right,
but shall not be required, to refuse to transfer any shares of capital stock of
the Corporation purportedly transferred, if either (a) a statement or affidavit
requested pursuant to this Section (1) has not been received, or (b) the
proposed transferee is a Tax-Exempt Organization or Pass-Through
Entity.
(2) Void
Transfers. Any acquisition of shares of capital stock of the
Corporation that could or would (a) result in the direct or indirect imposition
of a penalty tax on the Corporation (including the imposition of an entity-level
tax on one or more REMICs in which the Corporation has acquired or plans to
acquire an interest) or (b) endanger the tax status of one or more REMICs in
which the Corporation has acquired or plans to acquire an interest shall be void
ab initio to the fullest
extent permitted under applicable law and the intended transferee of the subject
shares shall be deemed never to have had an interest therein. If the
foregoing provision is determined to be void or invalid by virtue of any legal
decision, statute, rule or regulation, then the transferee of those shares shall
be deemed, at the option of the Corporation, to have acted as agent on behalf of
the Corporation in acquiring those shares and to hold those shares on behalf of
the Corporation.
(3) Redemption of
Shares. Whenever it is deemed by the Board of Directors to be
prudent in avoiding (a) the direct or indirect imposition of a penalty tax on
the Corporation (including the imposition of an entity-level tax on one or more
REMICs in which the Corporation has acquired or plans to acquire an interest) or
(b) the endangerment of the tax status of one or more REMICs in which the
Corporation has acquired or plans to acquire an interest,
28
the
Corporation may redeem shares of its capital stock. Any such
redemption shall be conducted in accordance with the procedures set forth in
Section (6) of Article VI.
(4) Application of
Article. Nothing contained in this Article or in any other
provision hereof shall limit the authority of the Board of Directors to take any
and all other action as it in its sole discretion deems necessary or advisable
to protect the Corporation or the interests of its shareholders by avoiding (a)
the direct or indirect imposition of a penalty tax on the Corporation (including
the imposition of an entity-level tax on one or more REMICs in which the
Corporation has acquired or plans to acquire an interest) or (b) the
endangerment of the tax status of one or more REMICs in which the Corporation
has acquired or plans to acquire an interest.
(5) Severability. If
any provision of this Article or any application of any such provision is
determined to be invalid by any federal or state court having jurisdiction over
the issue, the validity of the remaining provisions shall not be affected and
other applications of such provision shall be affected only to the extent
necessary to comply with the determination of that court.
VIII. AMENDMENTS.
Except as
otherwise required by the Virginia Stock Corporation Act, by these Articles of
Incorporation, or by the board of directors acting pursuant to Subsection C of
Section 13.1-707 of the Virginia Stock Corporation Act, or any successor
provision, the vote required to approve an amendment or restatement of these
Articles of Incorporation, other than an amendment or restatement that amends or
affects (1) the shareholder vote required by the Virginia Stock Corporation Act
to approve a merger, share exchange, sale of all or substantially all of the
corporations assets or the dissolution of the corporation or (ii) Article VI of
these Articles of Incorporation, shall be a majority of all votes entitled to be
cast by each voting group entitled to vote on the
amendment.