Exhibit 3.1

 

ASHFORD HOSPITALITY PRIME, INC.

ARTICLES OF AMENDMENT AND RESTATEMENT

 

ASHFORD HOSPITALITY PRIME, INC., a Maryland corporation (the “ Corporation ”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:

 

FIRST: The Corporation desires to amend and restate its Charter (the “ Charter ”) as currently in effect and as hereinafter amended.

 

SECOND: The following provisions are all the provisions of the Charter currently in effect and as hereinafter amended:

 

ARTICLE I

FORMATION

 

The Corporation is a corporation under the Maryland General Corporation Law (“ MGCL ”).

 

ARTICLE II

NAME AND LIFE

 

Section 1. Name . The name of the Corporation is Ashford Hospitality Prime, Inc.

 

Section 2. Life . The Corporation shall have a perpetual existence.

 

ARTICLE III

PURPOSES

 

The purposes for which the Corporation is formed are to engage in any lawful act or activity (including, without limitation or obligation, engaging in business as a real estate investment trust (a “ REIT ”) under Section 856 through 860 of the Internal Revenue Code of 1986, as amended or any successor statute (the “ Code ”)) for which corporations may be organized under the MGCL as now or hereafter in force.

 

ARTICLE IV

PRINCIPAL OFFICE AND RESIDENT AGENT

 

The address of the principal office of the Corporation within the State of Maryland, is c/o CSC — Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202. The Corporation may have such other offices and places of business within or outside the State of Maryland as the Board of Directors of the Corporation (the “ Board of Directors ”) may from time to time determine. The name of the resident agent of the Corporation within the State of Maryland is CSC-Lawyers Incorporating Service Company, and the address of such agent is 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202.

 

 

ARTICLE V

STOCK

 

Section 1. Number of Authorized Shares. The Corporation is authorized to issue an aggregate of 250,000,000 shares of stock (“ Capital Stock ”) consisting of (a) 200,000,000 shares of common stock, $0.01 par value per share (the “ Common Stock ”) and (b) 50,000,000 shares of preferred stock, $0.01 par value per share (the “ Preferred Stock ”). The aggregate par value of all of the shares of all of the classes of stock of the Corporation is $2,500,000. Capital Stock of the Company may be issued for such consideration as the Directors determine, or if issued as a result of a stock dividend or stock split, without any consideration. The Board of Directors, with the approval of a majority of the entire Board and without action by the stockholders, may amend the Articles of Incorporation from time to time to increase or decrease the aggregate number of shares of Capital Stock of the Company or the number of shares of Capital Stock of any class or series that the Company has the authority to issue. The Board of Directors by resolution may also classify or reclassify any unissued shares of the Common Stock or Preferred Stock by setting or changing in any one or more respects, from time to time before issuance of such shares, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of such shares.

 

Section 2. Common Stock . Subject to the rights of the holders of the Preferred Stock, if any, and any other class of stock hereinafter created by the Corporation:

 

(a) the holders of the Common Stock shall have the exclusive right to vote for the election of directors and on all other matters requiring stockholder action, each share being entitled to one vote;

 

(b) distributions may be declared and paid or set apart for payment upon the Common Stock out of any assets or funds of the Corporation legally available for the payment of distributions, but only when, as, and if, authorized by the Board of Directors; and

 

(c) upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock.

 

Section 3. Preferred Stock . Prior to issuance of any shares of Preferred Stock, the Board of Directors by resolution shall:

 

(a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation;

 

(b) specify the number of shares to be included in the class or series;

 

(c) establish, subject to the provisions of Article VI and subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions (including, without limitation, restrictions on transferability), limitations as to distributions, qualifications and terms and conditions of redemption for each class or series; and

 

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(d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland containing a description of the stock as set or changed by the Board of Directors.

 

Section 4. Authorization by Board of Stock Issuance . Except as otherwise specifically provided herein, the Board of Directors may:

 

(a) authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend);

 

(b) classify or reclassify any unissued shares of stock from time to time in one or more classes or series of stock; and

 

(c) set or change the preferences, conversion or other rights, voting powers, restrictions (including without limitation, restrictions on transferability), limitations as to distributions, qualifications, or terms or conditions of redemption of any series of Preferred Stock, subject to such restrictions or limitations, if any, as may be set forth in the Charter, the Bylaws of the Corporation (the “Bylaws”) or as may otherwise be provided by contract or law.

 

Section 5. Fractional Shares of Stock . The Corporation may, without the consent or approval of any stockholder, issue fractional shares of Capital Stock.

 

Section 6. Charter and Bylaws . All persons who shall acquire Capital Stock of the Corporation shall acquire the same subject to the provisions of this Charter and the Bylaws, as this Charter and the Bylaws may be amended from time-to-time.

 

Section 7. Approval of Extraordinary Actions . Notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of the holders of shares entitled to cast a greater proportion of votes and except as specifically provided in Article VI, Section 9 and Article VII, Section 10, any such action shall be effective and valid if declared advisable by a majority of the Board of Directors and taken or approved by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter.

 

ARTICLE VI

RESTRICTION ON TRANSFER AND OWNERSHIP OF

SHARES OF CAPITAL STOCK

 

Section 1. Definitions . For the purpose of this Article VI, the following terms shall have the following meanings:

 

Beneficial Ownership . The term “ Beneficial Ownership ” shall mean ownership of shares of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include (in addition to direct ownership and

 

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indirect ownership through a nominee or similar arrangement) interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h) of the Code. The terms “ Beneficial Owner ,” “ Beneficially Owns ” and “ Beneficially Owned ” shall have the correlative meanings.

 

Benefit Plan Investor . The term “ Benefit Plan Investor ” shall have the meaning provided in 29 C.F.R. § 2510.3-101(f)(2), or any successor regulation thereto.

 

Business Day . The term “ Business Day ” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to close.

 

Charitable Beneficiary . The term “ Charitable Beneficiary ” shall mean one or more beneficiaries of the Charitable Trust as determined pursuant to Section 3.7 of this Article VI, provided that each such organization must be described in Sections 501(c)(3), 170(b)(1)(A) (other than clause (vii) or (viii) thereof) and 170(c)(2) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

 

Charitable Trust . The term “ Charitable Trust ” shall mean any trust provided for in Section 2.1(b)(i) and Section 3.1 of this Article VI.

 

Charitable Trustee . The term “ Charitable Trustee ” shall mean the Person, unaffiliated with the Corporation and a Prohibited Owner, that is appointed by the Corporation from time to time to serve as trustee of the Charitable Trust.

 

Closing Price . The “ Closing Price ” on any date shall mean the last sale price on such date for such shares of Capital Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such shares of Capital Stock, in either case as reported on the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if such shares of Capital Stock are not listed or admitted to trading on the NYSE, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such shares of Capital Stock are listed or admitted to trading or, if such shares of Capital Stock are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices, in the over-the-counter market, as reported by the NASDAQ Stock Market or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such shares of Capital Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such shares of Capital Stock selected by the Board of Directors or, in the event that no trading price is available for such shares of Capital Stock, the fair market value of such shares, as determined in good faith by the Board of Directors; provided, if the date for which such determination is to be made is a day that the NYSE is not open for trading, such determination shall be made for the most recent day for which the NYSE was open for trading.

 

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Constructive Ownership . The term “ Constructive Ownership ” shall mean ownership of shares of Capital Stock by a Person, whether the interest in shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include any interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms “ Constructive Owner ,” “ Constructively Owns ” and “ Constructively Owned ” shall have the correlative meanings.

 

ERISA Investor . The term “ ERISA Investor ” shall mean any holder of shares of Capital Stock that is (i) an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), (ii) a plan as defined in Section 4975(e) of the Code (any such employee benefit plan or “plan” described in clause (i) or this clause (ii) being referred to herein as a “ Plan ”), (iii) a trust which was established pursuant to a Plan, or a nominee for such trust or Plan, or (iv) an entity whose underlying assets include assets of a Plan by reason of such Plan’s investment in such entity.

 

Excepted Holder . The term “ Excepted Holder ” shall mean a stockholder of the Corporation for whom an Excepted Holder Limit is created by the Board of Directors pursuant to Section 2.7 of this Article VI.

 

Excepted Holder Limit . The term “ Excepted Holder Limit ” shall mean, provided that (and only so long as) the affected Excepted Holder complies with all of the requirements established by the Board of Directors pursuant to Section 2.7 of this Article VI, and subject to adjustment pursuant to Section 2.8 of this Article VI, the percentage limit established by the Board of Directors pursuant to Section 2.7 of this Article VI.

 

Initial Date . The date upon which Ashford Hospitality Trust, Inc. consummates the initial distribution of the Common Stock to the holders of common stock of Ashford Hospitality Trust, Inc., which is expected to occur on or about November 19, 2013.

 

Market Price . The term “ Market Price ” on any date shall mean, with respect to any class or series of outstanding shares of Capital Stock, the Closing Price for such shares of Capital Stock on such date.

 

NYSE . The term “NYSE” shall mean the New York Stock Exchange, Inc.

 

Ownership Limit . The term “ Ownership Limit ” shall mean (i) with respect to any class or series shares of Common Stock, 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding shares of such class or series of Common Stock; and (ii) with respect to any class or series of shares of Preferred Stock or other stock, 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding shares of such class or series of Preferred Stock or other stock of the Corporation.

 

Person . The term “ Person ” shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company, limited liability company, or other entity and also includes a

 

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group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

 

Prohibited Owner . The term “ Prohibited Owner ” shall mean any Person who, but for the provisions of Section 2.1 of this Article VI, would Beneficially Own or Constructively Own shares of Capital Stock, and if appropriate in the context, shall also mean any Person who would have been the record owner of shares of Capital Stock that the Prohibited Owner would have so owned.

 

Publicly Offered Securities . The term “ Publicly Offered Securities ” shall have the meaning provided in 29 C.F.R Section 2510.3-101(b)(2), or any successor regulation thereto.

 

Restriction Termination Date . The term “ Restriction Termination Date ” shall mean the first day after the Initial Date on which the Board of Directors determines that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no longer required in order for the Corporation to qualify as a REIT.

 

Transfer . The term “ Transfer ” shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event (or any agreement to take any such actions or cause any such events) that causes any Person to acquire Beneficial Ownership or Constructive Ownership of shares of Capital Stock or the right to vote or receive dividends on shares of Capital Stock, including without limitation, (a) a change in the capital structure of the Corporation, (b) a change in the relationship between two or more Persons which causes a change in ownership of shares of Capital Stock by application of either Section 544 of the Code, as modified by Section 856(h) of the Code or Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, (c) the grant or exercise of any option or warrant (or any disposition of any option or warrant, or any event that causes any option or warrant not theretofore exercisable to become exercisable), pledge, security interest or similar right to acquire shares of Capital Stock, (d) any disposition of any securities or rights convertible into or exchangeable for shares of Capital Stock or any interest in shares of Capital Stock or any exercise of any such conversion or exchange right, and (e) Transfers of interests in other entities that result in changes in Beneficial Ownership or Constructive Ownership of shares of Capital Stock. For purposes of this Article VI, the right of a limited partner in Ashford Hospitality Prime Limited Partnership (or any successor thereto), to require the partnership to redeem such limited partner’s units of limited partnership interest pursuant to Section 7.4 of the Agreement of Limited Partnership of Ashford Hospitality Prime Limited Partnership, as amended, shall not be considered to be an option or similar right to acquire shares of Capital Stock of the Corporation so long as such Section 7.4 is not amended in a manner that would grant to a limited partner a legal right to require that either Ashford Hospitality Prime Limited Partnership (or any successor thereto) or the Corporation issue to such limited partner shares of Capital Stock and so long as the restrictions in Section 7.4 of such Agreement apply to the exercise of the rights set forth in such Section 7.4. The terms “ Transferring ” and “ Transferred ” shall have the correlative meanings.

 

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Section 2. Restrictions on Ownership and Transfer of Shares.

 

Section 2.1 Ownership Limitations . During the period commencing on the Initial Date and ending at the close of business on the Restriction Termination Date:

 

(a) Basic Restrictions.

 

(i) (1) No Person, other than an Excepted Holder, shall Beneficially Own shares of Capital Stock in excess of the Ownership Limit, and (2) no Excepted Holder shall Beneficially Own shares of Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder.

 

(ii) No Person shall Beneficially Own or Constructively Own shares of Capital Stock to the extent that (1) such Beneficial Ownership of shares of Capital Stock would result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), (2) such Constructive Ownership would cause either the Corporation to be considered to constructively own after application of the constructive ownership rules of Section 856(d)(5) of the Code an interest in a tenant that is described in Section 856(d)(2)(B) of the Code for purposes of applying Section 856(c) of the Code or Ashford Hospitality Prime Limited Partnership (or any successor thereto) to be considered to constructively own after application of the constructive ownership rules of Section 856(d)(5) of the Code, as modified by the rules of Section 7704(d) of the Code, an interest in a tenant that is described in Section 856(d)(2)(B) of the Code for purposes of applying Section 7704(d) of the Code, or (3) such Beneficial Ownership or Constructive Ownership of shares of Capital Stock would result in the Corporation otherwise failing to qualify as a REIT or Ashford Hospitality Prime Limited Partnership (or any successor thereto) to fail to qualify as a partnership for federal income tax purposes.

 

(iii) No Person shall Transfer any shares of Capital Stock if, as a result of the Transfer, the outstanding shares of all classes and series of Capital Stock would be Beneficially Owned by less than 100 Persons (determined without reference to the rules of attribution under Section 544 of the Code). Subject to Section 5 of this Article VI and notwithstanding any other provisions contained herein, any Transfer of shares of Capital Stock (whether or not such Transfer is the result of a transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system) that, if effective, would result in outstanding shares of all classes and series of Capital Stock being Beneficially Owned by less than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio , and the intended transferee shall acquire no rights in such shares of Capital Stock.

 

(b)  Transfer in Trust . If any Transfer of shares of Capital Stock (whether or not such Transfer is the result of a transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system)

 

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occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning shares of Capital Stock in violation of Section 2.1(a)(i) or 2.1(a)(ii) of this Article VI, as applicable,

 

(i) then that number of shares of Capital Stock the Beneficial Ownership or Constructive Ownership of which otherwise would cause such Person to violate Section 2.1(a)(i) or 2.1(a)(ii) (rounded upward to the nearest whole share) shall be automatically transferred to a Charitable Trust for the benefit of a Charitable Beneficiary, as described in Section 3, effective as of the close of business on the Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such shares of Capital Stock; or

 

(ii) if the transfer to the Charitable Trust described in clause (i) of this sentence would not be effective for any reason to prevent the violation of Section 2.1(a)(i) or 2.1(a)(ii), as applicable, then the Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate Section 2.1(a)(i) or 2.1(a)(ii), as applicable, shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

 

Section 2.2 Remedies for Breach . If the Board of Directors or any duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 2.1 of this Article VI or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any shares of Capital Stock in violation of Section 2.1 (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Corporation to redeem shares of Capital Stock, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or other event; provided , however , that any Transfer or attempted Transfer or other event in violation of Section 2.1 shall automatically result in the transfer to the Charitable Trust described above, and, where applicable under Section 2.1(b)(ii), such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors or a committee thereof.

 

Section 2.3 Notice of Restricted Transfer . Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of shares of Capital Stock that will or may violate Section 2.1(a), or any Person who would have owned shares of Capital Stock that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 2.1(b), shall immediately give written notice to the Corporation of such event, or in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such acquisition or ownership on the Corporation’s status as a REIT.

 

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Section 2.4 Owners Required To Provide Information . During the period commencing on the Initial Date and ending at the close of business on the Restriction Termination Date:

 

(a) Every stockholder of record of more than five percent (or such lower percentage as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding shares of Capital Stock, within 30 days after the end of each taxable year, shall give written notice to the Corporation stating the name and address of such owner, the number of shares Beneficially Owned, and a description of the manner in which such shares of Capital Stock are held; provided that a stockholder of record who holds outstanding shares of Capital Stock as nominee for another Person, which other Person is required to include in gross income the dividends received on such shares (an “Actual Owner”), shall give written notice to the Corporation stating the name and address of such Actual Owner and the number of shares of Capital Stock of such Actual Owner with respect to which the stockholder of record is nominee. Each such stockholder of record and each Actual Owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such Beneficial Ownership on the Corporation’s status as a REIT and to ensure compliance with the Ownership Limit.

 

(b) Each Person who is a Beneficial Owner or Constructive Owner of shares of Capital Stock and each Person (including the stockholder of record) who is holding shares of Capital Stock for a Beneficial Owner or Constructive Owner shall provide to the Corporation such information as the Corporation may request, in good faith, in order to determine the Corporation’s status as a REIT and to comply with requirements of any taxing authority or governmental authority or to determine such compliance.

 

Section 2.5 Remedies Not Limited . Subject to Section 5 of this Article VI, nothing contained in this Section 2 shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders in preserving the Corporation’s status as a REIT.

 

Section 2.6 Ambiguity . In the case of an ambiguity in the application of any of the provisions of this Section 2, Section 3 or any definition contained in Section 1 of this Article VI, the Board of Directors shall have the power to determine the application of the provisions of this Section 2 or Section 3 with respect to any situation based upon the facts known to it. If Section 2 or 3 requires an action by the Board of Directors and the Charter of the Corporation fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Sections 1, 2 or 3 of this Article VI.

 

Section 2.7 Exceptions .

 

(a) The Board of Directors, in its sole and absolute discretion, may grant to any Person who makes a request therefor an exception to the Ownership Limit (or one or more elements thereof) with respect to the ownership of any series or class of Capital Stock of the Corporation, subject to the following conditions and limitations: (A) the

 

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Board of Directors shall have determined that (x) assuming such Person would Beneficially Own or Constructively Own the maximum amount of shares of Common Stock and stock of the Corporation (other than Common Stock) permitted as a result of the exception to be granted and (y) assuming that all other Persons who would be treated as “individuals” for purposes of Section 542(a)(2) of the Code (determined taking into account Section 856(h)(3)(A) of the Code) would Beneficially Own or Constructively Own the maximum amount of shares of Common Stock and stock of the Corporation (other than Common Stock) permitted under this Article VI (taking into account any exception, waiver or exemption granted under this Section 2.7 to (or with respect to) such Persons), the Corporation would not be “closely held” within the meaning of Section 856(h) of the Code (assuming that the ownership of shares of Capital Stock is determined during the second half of a taxable year) and would not otherwise fail to qualify as a REIT; and (B) such Person provides to the Board of Directors such representations and undertakings, if any, as the Board of Directors may, in its sole and absolute discretion, determine to be necessary in order for it to make the determination that the conditions set forth in clause (A) above of this Section 2.7(a) have been and/or will continue to be satisfied (including, without limitation, an agreement as to a reduced Ownership Limit or Excepted Holder Limit for such Person with respect to the Beneficial Ownership or Constructive Ownership of one or more other classes or series of shares of Capital Stock not subject to the exception), and such Person agrees that any violation of such representations and undertakings or any attempted violation thereof will result in the application of the remedies set forth in Section 2 of this Article VI with respect to shares of Capital Stock held in excess of the Ownership Limit or the Excepted Holder Limit (as may be applicable) with respect to such Person (determined without regard to the exception granted such Person under this subparagraph (a)). If a member of the Board of Directors requests that the Board of Directors grant an exception pursuant to this subparagraph (a) with respect to such member, or with respect to any other Person if such member would be considered to be the Beneficial Owner or Constructive Owner of shares of Capital Stock owned by such other Person, such member of the Board of Directors shall not participate in the decision of the Board of Directors as to whether to grant any such exception.

 

(b) In addition to exceptions permitted under subparagraph (a) above, the Board of Directors, in its sole and absolute discretion, may grant to any Person who makes a request therefor (a “ Requesting Person ”) an exception from the Ownership Limit (or one or more elements thereof) if:

 

(i) such Person submits to the Board of Directors information satisfactory to the Board of Directors, in its reasonable discretion, demonstrating that such Requesting Person is not an individual for purposes of Section 542(a)(2) of the Code (determined taking into account Section 856(h)(3)(A) of the Code);

 

(ii) such Requesting Person submits to the Board of Directors information satisfactory to the Board of Directors, in its reasonable discretion, demonstrating that no Person who is an individual for purposes of Section 542(a)(2) of the Code (determined taking into account Section 856(h)(3)(A) of the Code) would be considered to Beneficially Own shares of Capital Stock in excess

 

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of the Ownership Limit by reason of the Requesting Person’s ownership of shares of Capital Stock in excess of the Ownership Limit pursuant to the exception granted under this subparagraph (b);

 

(iii) such Requesting Person submits to the Board of Directors information satisfactory to the Board of Directors, in its reasonable discretion, demonstrating that neither clause (2) nor clause (3) of subparagraph (a)(ii) of Section 2.1 will be violated by reason of the Requesting Person’s ownership of shares of Capital Stock in excess of the Ownership Limit pursuant to the exception granted under this subparagraph (b); and

 

(iv) such Requesting Person provides to the Board of Directors such representations and undertakings, if any, as the Board of Directors may, in its sole and absolute discretion, require to ensure that the conditions in clauses (i), (ii) and (iii) hereof are satisfied and will continue to be satisfied throughout the period during which such Requesting Person owns shares of Capital Stock in excess of the Ownership Limit pursuant to any exception thereto granted under this subparagraph (b), and such Requesting Person agrees that any violation of such representations and undertakings or any attempted violation thereof will result in the application of the remedies set forth in Section 2 of this Article VI with respect to shares of Capital Stock held in excess of the Ownership Limit with respect to such Requesting Person (determined without regard to the exception granted such Requesting Person under this subparagraph (b)).

 

(c) Prior to granting any exception or exemption pursuant to subparagraph (a) or (b), the Board of Directors may require a ruling from the IRS or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors, in its sole and absolute discretion as it may deem necessary or advisable in order to determine or ensure the Corporation’s status as a REIT; provided , however , that the Board of Directors shall not be obligated to require obtaining a favorable ruling or opinion in order to grant an exception hereunder. Any expense incurred in connection with obtaining such a ruling or opinion shall be the sole responsibility of the Requesting Person.

 

(d) Subject to Section 2.1(a)(ii), an underwriter that participates in a public offering or a private placement of shares of Capital Stock (or securities convertible into or exchangeable for shares of Capital Stock) may Beneficially Own or Constructively Own shares of Capital Stock (or securities convertible into or exchangeable for shares of Capital Stock) in excess of the Ownership Limit, but only to the extent necessary to facilitate such public offering or private placement; and provided, that the ownership of shares of Capital Stock by such underwriter would not result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code, or otherwise result in the Corporation’s failing to qualify as a REIT. In this regard, at no time may either (x) an underwriter, or (y) any Person who would Constructively Own shares of Capital Stock owned by an underwriter Constructively Own, concurrently, 10% or more of the outstanding securities of any class or series of (i) the Corporation and any tenant or lessee of the Corporation, or (ii) the Corporation and any Person that would be considered to

 

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Constructively Own or Beneficially Own 10% or more of any tenant or lessee of the Corporation.

 

(e) The Board of Directors may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Ownership Limit.

 

Section 2.8 Increase or Decrease in Ownership Limit . The Board of Directors may from time to time increase or decrease the Ownership Limit, subject to the limitations provided in this Section 2.8.

 

(a) Any decrease may be made only prospectively as to subsequent holders (other than a decrease as a result of a retroactive change in existing law, in which case such change shall be effective immediately); and further, any decrease may be made only to ensure the Corporation’s status as a REIT.

 

(b) The Ownership Limit may not be increased if, after giving effect to such increase, five Persons who are considered individuals pursuant to Section 542 of the Code, as modified by Section 856(h)(3) of the Code (taking into account all of the Excepted Holders), could Beneficially Own, in the aggregate, more than 49.5% of the value of the outstanding shares of Capital Stock.

 

(c) Prior to the modification of the Ownership Limit pursuant to this Section 2.8, the Board of Directors may require such opinions of counsel, affidavits, undertakings or agreements as it may deem necessary or advisable in order to determine or ensure the Corporation’s status as a REIT if the modification in the Ownership Limit were to be made.

 

Section 2.9 Legend . Each certificate for shares of Capital Stock (or securities exercisable for or convertible into shares of Capital Stock) shall bear substantially the following legend:

 

The shares of Capital Stock represented by this certificate are subject to restrictions on Beneficial Ownership, Constructive Ownership and Transfer primarily for the purpose of the Company’s maintenance of its status as a real estate investment trust (a “ REIT ”) under the Internal Revenue Code of 1986, as amended (the “ Code ”). Except as expressly provided in the Company’s Charter, (i) no Person may Beneficially Own or Constructively Own shares of Common Stock of the Company in excess of 9.8 percent (in value or number of shares, whichever is more restrictive) of the outstanding Common Stock of the Company unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (ii) with respect to any class or series of shares of Capital Stock other than Common Stock, no Person may Beneficially Own

 

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or Constructively Own more than 9.8 percent (in value or number of shares, whichever is more restrictive) of the outstanding shares of such class or series of such stock of the Company (collectively, (i) and (ii) are referred to herein as the “ Ownership Limit ”), unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially Own or Constructively Own shares of Capital Stock that would result in the Company being “closely held” under Section 856(h) of the Code, would cause either the Company to be considered to constructively own after application of the constructive ownership rules of Section 856(d)(5) of the Code an interest in a tenant that is described in Section 856(d)(2)(B) of the Code for purposes of applying Section 856(c) of the Code or Ashford Hospitality Prime Limited Partnership (or any successor thereto) to be considered to constructively own after application of the constructive ownership rules of Section 856(d)(5) of the Code, as modified by the rules of Section 7704(d) of the Code, an interest in a tenant that is described in Section 856(d)(2)(B) of the Code for purposes of applying Section 7704(d) of the Code, or otherwise would cause the Company to fail to qualify as a REIT under the Code; and (iv) no Person may Transfer shares of Capital Stock if such Transfer would result in shares of Capital Stock of the Company being owned by fewer than 100 Persons. Any Person who Beneficially Owns or Constructively Owns or attempts to Beneficially Own or Constructively Own shares of Capital Stock which cause or will cause a Person to Beneficially Own or Constructively Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the Company. If any of the restrictions on Transfer are violated, the shares of Capital Stock represented hereby will be automatically transferred to a Charitable Trustee of a Charitable Trust for the benefit (except as otherwise provided in the Company’s Charter) of one or more Charitable Beneficiaries. In addition, upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be void ab initio . A Person who attempts to Beneficially Own or Constructively Own shares of Capital Stock in violation of the Transfer restrictions described above shall have no claim, cause of action or any recourse whatsoever against a transferor of such shares of Capital Stock. All capitalized terms in this legend have the meanings defined in the Company’s Charter, as the same may be amended from time to time, a copy of which, including the restrictions on Transfer, will be furnished to each holder of shares of Capital Stock of the Company on request and without charge.

 

Instead of the foregoing legend, the certificate may state that the Corporation will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge.

 

Section 3. Transfer of Shares of Capital Stock in the Corporation.

 

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Section 3.1 Ownership in Trust . Upon any purported Transfer or other event described in Section 2.1(b) that would result in a transfer of shares of Capital Stock to a Charitable Trust, such shares of Capital Stock shall be deemed to have been transferred to the Charitable Trustee as trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries (except to the extent otherwise provided in Section 3.5). Such transfer to the Charitable Trustee shall be deemed to be effective as of the close of business on the Business Day prior to any purported Transfer or other event that otherwise results in the transfer to the Charitable Trust pursuant to Section 2.1(b). The Charitable Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with the Corporation and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Corporation as provided in Section 3.7.

 

Section 3.2 Status of Shares of Capital Stock Held by the Charitable Trustee . Shares of Capital Stock held by the Charitable Trustee shall be issued and outstanding shares of Capital Stock of the Corporation. The Prohibited Owner shall have no rights in the shares of Capital Stock held by the Charitable Trustee. The Prohibited Owner shall not benefit economically from ownership of any shares of Capital Stock held in trust by the Charitable Trustee (except to the extent otherwise provided in Section 3.5), shall have no rights to dividends or other distributions, and shall not possess any rights to vote or other rights attributable to the shares of Capital Stock held in the Charitable Trust. The Prohibited Owner shall have no claim, cause of action or other recourse whatsoever against the purported transferor of such shares of Capital Stock.

 

Section 3.3 Dividend and Voting Rights . The Charitable Trustee shall have all voting rights and rights to dividends or other distributions with respect to shares of Capital Stock held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary (except to the extent otherwise provided in Section 3.5). Any dividend or other distribution paid prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee shall be paid with respect to such shares of Capital Stock to the Charitable Trustee upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Charitable Trustee. Any dividends or distributions so paid over to the Charitable Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares of Capital Stock held in the Charitable Trust and, subject to Maryland law, effective as of the date that shares of Capital Stock have been transferred to the Charitable Trustee, the Charitable Trustee shall have the authority (at the Charitable Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee and (ii) to recast such vote in accordance with the desires of the Charitable Trustee acting for the benefit of the Charitable Beneficiary; provided , however , that if the Corporation has already taken irreversible action, then the Charitable Trustee shall not have the power to rescind and recast such vote. Notwithstanding the provisions of this Article VI, until the Corporation has received notification that shares of Capital Stock have been transferred into a Charitable Trust, the Corporation shall be entitled to rely on its share transfer and other shareholder records for purposes of preparing lists of stockholders entitled to vote at

 

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meetings, determining the validity and authority of proxies, and otherwise conducting votes of stockholders.

 

Section 3.4 Rights Upon Liquidation . Upon any voluntary or involuntary liquidation, dissolution or winding up of or any distribution of the assets of the Corporation, the Charitable Trustee shall be entitled to receive, ratably with each other holder of shares of Capital Stock of the class or series of shares of Capital Stock that is held in the Charitable Trust, that portion of the assets of the Corporation available for distribution to the holders of such class or series (determined based upon the ratio that the number of shares of such class or series of shares of Capital Stock held by the Charitable Trustee bears to the total number of shares of Capital Stock of such class or series of shares of Capital Stock then outstanding). The Charitable Trustee shall distribute any such assets received in respect of the shares of Capital Stock held in the Charitable Trust in any liquidation, dissolution or winding up or distribution of the assets of the Corporation, in accordance with Section 3.5.

 

Section 3.5 Sale of Shares by Charitable Trustee .

 

(a) Within 20 days of receiving notice from the Corporation that shares of Capital Stock have been transferred to the Charitable Trust, the Charitable Trustee of the Charitable Trust shall sell the shares of Capital Stock held in the Charitable Trust (together with the right to receive dividends or other distributions with respect to such shares of Capital Stock as to any shares of Capital Stock transferred to the Charitable Trustee as a result of the operation of Section 2.1(b)) to a person, designated by the Charitable Trustee, whose ownership of the shares of Capital Stock will not violate the ownership limitations set forth in Section 2.1(a). Upon such sale, the interest of the Charitable Beneficiary in the shares of Capital Stock sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 3.5.

 

(b) A Prohibited Owner shall receive the lesser of (1) the net price paid by the Prohibited Owner for the shares of Capital Stock or, if the Prohibited Owner did not give value for the shares of Capital Stock in connection with the event causing the shares of Capital Stock to be held in the Charitable Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price of the shares of Capital Stock on the day of the event causing the shares of Capital Stock to be held in the Charitable Trust, and (2) the net sales proceeds per share received by the Charitable Trustee from the sale or other disposition of the shares of Capital Stock held in the Charitable Trust. Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee, such shares of Capital Stock are sold by a Prohibited Owner, then (i) such shares of Capital Stock shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares of Capital Stock that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 3.5, such excess shall be paid to the Charitable Trustee upon demand.

 

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Section 3.6 Purchase Right in Shares of Capital Stock Transferred to the Charitable Trustee . Shares of Capital Stock transferred to the Charitable Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise, gift or other such transaction, the Market Price of the shares of Capital Stock on the day of the event causing the shares of Capital Stock to be held in the Charitable Trust) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer until the Charitable Trustee has sold the shares of Capital Stock held in the Charitable Trust pursuant to Section 3.5. Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in the shares of Capital Stock sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.

 

Section 3.7 Designation of Charitable Beneficiaries . By written notice to the Charitable Trustee, the Corporation shall designate from time to time one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) shares of Capital Stock held in the Charitable Trust would not violate the restrictions set forth in Section 2.1(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Sections 501(c)(3), 170(b)(1)(A) or 170(c)(2) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

 

Section 4. Restrictions on Ownership and Transfer of Shares of Capital Stock by Benefit Plans.

 

Section 4.1 Ownership Limitations . Notwithstanding any other provisions herein, if and to the extent that any class or series of shares of Capital Stock do not constitute Publicly Offered Securities, then Benefit Plan Investors may not, on any date, hold, individually or in the aggregate, 25 percent or more of the value of such class or series of shares of Capital Stock. For purposes of determining whether Benefit Plan Investors hold, individually or in the aggregate, 25 percent or more of the value of such class or series of shares of Capital Stock, the value of shares of Capital Stock of such class held by any director or officer of the Corporation, or any other Person who has discretionary authority or control with respect to the assets of the Corporation, or any Person who provides investment advice for a fee to the Corporation in connection with its assets, or an “affiliate” of such person, as defined in 29 C.F.R. Section 2510.3-101(f)(3), or any successor regulation thereto, shall be disregarded.

 

Section 4.2 Remedies for Violations by Benefit Plan Investors . If the Board of Directors or any duly authorized committee thereof shall at any time determine in good faith that (i) a Transfer or other event has taken place that results in a violation of Section 4.1 or will otherwise result in the underlying assets and property of the Corporation becoming assets of any ERISA Investor or (ii) that a Person intends to acquire or has attempted to acquire or hold shares of Capital Stock in a manner that will result in a violation of Section 4.1 or will otherwise result in the underlying assets and property of the Corporation becoming assets of any ERISA Investor, the Board of

 

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Directors or a committee thereof shall take such action as it deems advisable to mitigate, prevent or cure the consequences that might result to the Corporation from such Transfer or other event, including without limitation, refusing to give effect to or preventing such Transfer or event through redemption of such shares of Capital Stock or refusal to give effect to the Transfer or event on the books of the Corporation or instituting proceedings to enjoin such Transfer or other event.

 

Section 4.3 Information on Benefit Plan Status . Any Person who acquires or attempts or intends to acquire or hold shares of Capital Stock shall provide to the Corporation such information as the Corporation may request in order to determine whether such acquisition or holding has resulted or will result in a violation of Section 4.1 or otherwise has resulted or will result in the underlying assets and property of the Corporation becoming assets of any ERISA Investor, including the name and address of any Person for whom a nominee holds shares of Capital Stock and whether the underlying assets of such Person include assets of any Benefit Plan Investor.

 

Section 5. NYSE Transactions . Nothing in this Article VI shall preclude the settlement of any transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction takes place shall not negate the effect of any other provision of this Article VI and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VI.

 

Section 6. Enforcement . The Corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VI.

 

Section 7. Non-Waiver . No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.

 

Section 8. Enforceability . If any of the restrictions on transfer of shares of Capital Stock contained in this Article VI are determined to be void, invalid or unenforceable by any court of competent jurisdiction, then the Prohibited Owner may be deemed, at the option of the Corporation, to have acted as an agent of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation.

 

Section 9. Amendments . Notwithstanding any other provisions of the MGCL or the Charter of the Corporation to the contrary, the affirmative vote of stockholders holding at least two-thirds of all of the votes entitled to be cast thereon shall be required to amend, alter, change, repeal, or adopt any provisions inconsistent with, the provisions of this Article VI.

 

ARTICLE VII

DIRECTORS

 

Section 1. General . All powers of the Corporation shall be exercised by or under the direction of the Board of Directors except as otherwise provided herein or required by law.

 

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Section 2. Election of Directors . Directors of the Corporation shall be elected by a plurality of the votes cast at any meeting of stockholders at which directors are to be elected and at which a quorum is present. Election of directors need not be by written ballot.

 

Section 3. Number and Terms of Directors . The number of directors of the Corporation shall be fixed at seven (7), which number may be increased or decreased pursuant to the Bylaws, but shall never be less than the minimum number required by the MGCL. The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve for a term of one year and until his successor shall be elected and shall qualify or until his earlier resignation or removal. The names of the directors who currently serve and shall serve until the first annual meeting of stockholders or until their successors are duly elected and qualify are:

 

Monty J. Bennett;

Douglas A. Kessler;

Stefani D. Carter;

Curtis B. McWilliams;

W. Michael Murphy;

Matthew D. Rinaldi; and

Andrew L. Strong.

 

Section 4. Nominations of Director Candidates . Advance notice of nominations for the election of directors, other than by the Board of Directors or a committee thereof, shall be given in the manner provided in the Bylaws. For so long as Ashford Hospitality Advisors LLC, or its successor in interest (the “ Advisor ”), is acting in the capacity as the external advisor of the Corporation, the Corporation shall include two persons designated by the Advisor as candidates for election as director at any stockholders meeting at which directors are to be elected. Such nominees may be executive officers of the Advisor. If the size of the Board of Directors is increased at any time to more than seven directors, then the Advisor’s right to nominate shall be increased by such number of additional directors as shall be necessary to maintain the ratio of directors nominated by the Advisor to the directors otherwise nominated, as nearly as possible (rounding to the next larger whole number), equal to the ratio that would have existed if the Board of Directors consisted of seven members.

 

Section 5. Committees . Subject to the MGCL, the directors may establish such committees as they deem appropriate, in their discretion.

 

Section 6. Vacancies. The Corporation elects, at such time as it becomes eligible to make the election provided for under Section 3-804(c) of the MGCL, that, except as may be provided by the Board of Directors in setting the terms of any class or series of Capital Stock and subject to Section 8 of this Article VII, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors then in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is elected and qualifies. No decrease in the number of directors shall shorten the term of any incumbent director.

 

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Section 7. Resignation . Any director may resign by written notice to the Board of Directors, effective upon execution and delivery to the Corporation of such written notice or upon any future date specified in the notice.

 

Section 8. Removal . Any director may be removed only for cause and then only upon the affirmative vote of a majority of the shareholder votes entitled to be cast in the election of directors. For cause means, with respect to any particular director, conviction of a felony or a final judgment of court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active deliberate dishonesty.

 

Section 9. Voting. At all meetings of the Board of Directors or of any committee of the Board of Directors, except as otherwise provided for by law, this Charter or the Bylaws, any action required or permitted to be taken by the Board of Directors shall be by the affirmative vote of a majority of the directors then present; provided, however, that a majority of the disinterested directors shall approve any transaction or agreement involving the Corporation, its wholly-owned subsidiaries or Ashford Hospitality Prime Limited Partnership and a director or officer of the Corporation or an Affiliate or Associate of any director or officer of the Corporation. The proviso in the preceding sentence, however, shall not apply to the fixing by the Board of Directors of reasonable compensation for a director.

 

Section 10. Business Combination Statute . Notwithstanding any other provision of these Articles of Amendment and Restatement or any contrary provision of law, the Maryland Business Combination Statute, found in Title 3, subtitle 6 of the MGCL, as amended from time to time, or any successor statute thereto, shall not apply to any “business combination” (as defined in Section 3-601(e) of the MGCL, as amended from time to time, or any successor statute thereto) of the Corporation and any Person. Any amendment of this Section 10 shall be subject to Section 3-603(e)(iii) of the MGCL.

 

Section 11. Control Share Acquisition Statute . Notwithstanding any other provision of these Articles of Amendment and Restatement or any contrary provision of law, the Maryland Control Share Acquisition Statute, found in Title 3, subtitle 7 of the MGCL, as amended from time to time, or any successor statute thereto shall not apply to any acquisition of securities of the Corporation by any Person.

 

ARTICLE VIII

LIMITATION OF LIABILITY

 

Section 1. Limitation of Director Liability . To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. Neither the amendment nor repeal of this Article VIII, nor the adoption or amendment of any other provision of this Charter or the Bylaws inconsistent with this Article VIII shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

 

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ARTICLE IX

INDEMNIFICATION

 

The Corporation (a) shall indemnify its directors to the fullest extent provided by the general laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures provided by such laws and (b) may indemnify its officers to the extent it shall deem appropriate and as shall be authorized by the Board of Directors, consistent with law. The foregoing shall not limit the authority of the Corporation to indemnify other employees and agents consistent with law.

 

ARTICLE X

AMENDMENT OF BYLAWS

 

The Bylaws of the Corporation may be altered, amended or repealed, and new bylaws adopted, solely by the vote of a majority of the entire Board of Directors.

 

ARTICLE XI

AMENDMENT OF ARTICLES OF INCORPORATION

 

The Corporation reserves the right from time to time to make any amendment of this Charter, now or hereafter authorized by law, including any amendment which alters the contract rights, as expressly set forth in the Charter, of any of its outstanding stock.

 

ARTICLE XII

DISSOLUTION

 

In order to voluntarily dissolve the Corporation, the Board of Directors must declare the action advisable and stockholders holding at least a majority of all of the votes entitled to be cast thereon shall be required to cast an affirmative vote.

 

ARTICLE XIII

DEFINITIONS

 

Except as otherwise defined in Article VI, for purposes of this Charter, the following terms shall have the following meanings:

 

“ Affiliate” and “ Associate ” shall have the respective meanings set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, or any subsequent provisions replacing such Act, rules and regulations.

 

“ Business Day ” shall mean each day, other than a Saturday or Sunday, which is not a day on which banking institutions in New York, New York are authorized or required by law, regulation or executive order to close.

 

“ Group Acting in Concert ” shall mean Persons seeking to combine or pool their voting or other interests in the securities of the Corporation for a common purpose, pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written, oral or otherwise, or any group of Persons as described under Section 13(d)(3) of the Securities

 

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---

 

Exchange Act of 1934, as amended (or any subsequent provisions replacing such Act or the rules and regulations promulgated thereunder). When Persons act together for any such purpose, their group is deemed to have acquired their stock as a “ Group Acting in Concert ”.

 

“ Person ” shall mean an individual or Group Acting in Concert, a corporation, a partnership, an association, a joint stock company, a trust, a business trust, a government or political subdivision, any unincorporated organization, or any other association or entity.

 

THIRD: The foregoing amendment and restatement of the Charter was duly advised by the Board of Directors, and approved by the stockholders of the Corporation as required by law. The stockholders approved these Articles of Amendment and Restatement by the unanimous written consent of the stockholders, including the unanimous written consent of all stockholders, if any, who are not interested stockholders or affiliates or associates of interested stockholders (as defined in Title 3, Subtle 6 of the MGCL).

 

FOURTH:

 

(a) Immediately prior to the amendment and restatement of the Charter, the Corporation had authorized 1,000 shares of Common Stock, par value $0.01 per share.

 

(b) Immediately following the amendment and restatement of the Charter, the corporation had authorized 250,000,000 shares of Capital Stock, consisting of 200,000,000 shares of Common Stock, par value $0.01 per share, and 50,000,000 shares of Preferred Stock (subject to classification and reclassification in the future), par value $0.01 per share.

 

(c) Prior to the amendment and restatement, the aggregate par value of all classes of Capital Stock was $10. Following the amendment, the aggregate par value of all classes of Capital Stock was $2,500,000.

 

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IN WITNESS WHEREOF, on this 8th day of November , 2013, the Corporation has caused these Articles of Amendment and Restatement to be executed and acknowledged in its name and on its behalf by its Chief Executive Officer and attested to by its Secretary; and the Chief Executive Officer acknowledges that these Articles of Amendment and Restatement are the act of the Corporation, and the Chief Executive Officer further acknowledges that, as to all matters or facts set forth herein that are required to be verified under oath, such matters and facts are true in all material respects to the best of his knowledge, information and belief, and that this statement is made under the penalties for perjury.

 

	ASHFORD HOSPITALITY PRIME, INC.
	By:		/s/ David A. Brooks
			David A. Brooks,
			Chief Operating Officer, Secretary and General Counsel

 

ATTEST:
By:	/s/ David J. Kimichik
	David J. Kimichik,
	Chief Financial Officer

 

EXHIBIT 3.2

 

ASHFORD HOSPITALITY PRIME, INC.

ARTICLES OF AMENDMENT

 

ASHFORD HOSPITALITY PRIME, INC., a Maryland corporation having its principal office in Baltimore City , Maryland (the “Corporation”) hereby certifies to the Maryland State Department of Assessments and Taxation that:

 

FIRST: The charter of the Corporation is hereby amended     by deleting in its entirety Article VII, Section 6 as currently in effect.

 

SECOND:     (a)    The directors of the Corporation declared advisable and approved the foregoing amendment by unanimous written consent.

 

(b)    The stockholders of the Corporation approved the foregoing amendment at an annual meeting of stockholders duly called by the vote required under Maryland law and the charter and bylaws of the Corporation.

 

THIRD:    The undersigned Chief Operating Officer acknowledges these Articles of Amendment to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned Chief Operating Officer acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and this statement is made under the penalties of perjury.

 

IN WITNESS WHEREOF, the Corporation has caused these presents to be signed in its name and on its behalf by its Chief Operating Officer this 18th day of May, 2015.

 

 

ATTEST:			ASHFORD HOSPITALITY PRIME, INC.
By:	/s/ Deric S. Eubanks
	Deric S. Eubanks,		By /s/ David A. Brooks
	Chief Financial Officer		David A. Brooks,
			Chief Operating Officer, Secretary and General Counsel

 

EXHIBIT 3.3

 

ASHFORD HOSPITALITY PRIME, INC.

ARTICLES SUPPLEMENTARY

 

Ashford Hospitality Prime, Inc., a Maryland corporation (the “Company”), hereby certifies to the State Department of Assessments and Taxation of Maryland (the “SDAT”), that:

 

FIRST:  Pursuant to Section 3-802(c) of the Maryland General Corporation Law (the “MGCL”), the Company, by resolutions of its Board of Directors (the “Board of Directors”) duly adopted at a meeting duly called and held, prohibited the Company from electing to be subject to any or all of the provisions of Title 3, Subtitle 8 of the MGCL (the “Unsolicited Takeover Act”), unless such election is first approved by the affirmative vote of a majority of the votes cast on the matter by stockholders entitled to vote.

 

SECOND:  The Board of Directors has also declared advisable and recommended to stockholders for their approval at the 2015 annual meeting of stockholders an amendment to the charter of the Company deleting Article VII, Section 6 of the charter, which provides for a partial election into Section 3-804(c) of the Unsolicited Takeover Act providing directors with the exclusive power to fill all vacancies on the Board of Directors. The stockholders have approved the amendment by the vote required under Maryland law and the charter and by-laws of the Company to effect this amendment. Articles of Amendment effecting this amendment are being filed concurrently with the filing of these Articles Supplementary.

 

THIRD:  The foregoing resolutions have been approved by the Board of Directors in the manner and by the vote required by law.

 

FOURTH:  The undersigned officer acknowledges these Articles Supplementary to be the act of the Company and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the Company has caused these Articles Supplementary to be executed under seal in its name and on its behalf by its Chief Executive Officer and attested by its Secretary on this 18th day of May, 2015.

 

 

	ASHFORD HOSPITALITY PRIME, INC.
	By:	/s/ David A. Brooks
		David A. Brooks,
		Chief Operating Officer, Secretary and General Counsel

 

		ATTEST:
		By:	/s/ Deric S. Eubanks
			Deric S. Eubanks
			Chief Financial Officer

 

Exhibit 3.4

 

ASHFORD HOSPITALITY PRIME, INC.

 

ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF A SERIES OF PREFERRED STOCK(1)

 

Ashford Hospitality Prime, Inc., a Maryland corporation (the “Company”), having its principal office in Dallas, Texas certifies to the State Department of Assessments and Taxation of Maryland that:

 

FIRST : Under a power contained in Section 2-208 of the Maryland General Corporation Law and Article V of the Company’s Articles of Amendment and Restatement (as the same may be amended or supplemented) (the “Charter”), the Board of Directors of the Company (the “Board”) and a duly authorized committee thereof, classified 2,600,000 shares of the unissued preferred stock, par value $0.01 per share, of the Company (“Preferred Stock”) as 5.50% Series A Cumulative Convertible Preferred Stock, with the following preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Charter.

 

1.                                       Designation and Number.   A series of Preferred Stock of the Company, designated the “5.50% Series A Cumulative Convertible Preferred Stock” (the “Series A Preferred Stock”) is hereby established.  The par value of the Series A Preferred Stock is $0.01 per share, and the liquidation preference is $25.00 per share.  The number of shares of Series A Preferred Stock shall be 2,600,000.

 

2.                                       Rank.   The Series A Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution of the Company, ranks: (i) senior to all classes or series of our Common Stock and to all other equity securities issued by us other than equity securities referred to in clauses (ii) and (iii); (ii) junior to all equity securities whose terms specifically provide that those equity securities rank senior to the Series A Preferred Stock with respect to rights to the payment of dividends and the distribution of our assets upon liquidation, dissolution or winding up; (iii) on parity with all other equity securities issued by us whose terms provide that those equity securities rank on parity with the Series A Preferred Stock with respect to rights to the payment of dividends and the distribution of our assets upon liquidation, dissolution or winding up; and (iv) effectively junior to all of our existing and future indebtedness. The term “equity securities” does not include convertible debt securities, which will rank senior to the Series A Preferred Stock.

 

(1)                                  Gives effect to a Certificate of Correction filed for record in Maryland on June 11, 2015 to correct two transcription errors.

 

 

3.                                       Definitions.   The following terms, used but not otherwise defined herein, have the following meanings:

 

(a)                                       “Business day” means any day other than a Saturday or Sunday or other day on which commercial banks in New York City are generally authorized or required by law or executive order to close. If a dividend payment date is not a business day, payment will be made on the next succeeding business day, without any interest or other payment in lieu of interest accruing with respect to this delay.

 

(b)                                       “Change of Control” is deemed to occur when, after the original issuance of the Series A Preferred Stock, the following have occurred and are continuing:

 

·                                                 the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of our stock entitling that person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in the election of our directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

 

·                                                 following the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity has a class of common securities (or American depositary receipts representing such securities) listed on a National Exchange.

 

(c)                                        “Change of Control Conversion Date” is the date the Series A Preferred Stock is to be converted, which will be a business day selected by us that is no fewer than five days nor more than 10 days after the notice period described in Section 9(b)(vii) to the holders of Series A Preferred Stock.

 

(d)                                       “Closing Bid Price” means, (i) if the Common Stock is listed on a National Exchange, the last sale price quoted for the sale of a share of the Common Stock on such National Exchange on each trading day, or, if such National Exchange begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such security at or immediately prior to 4:00 p.m., New York City time, or (ii) if the Common Stock is not then listed for trading on a National Exchange, the average of the last quoted bid prices for a share of Common Stock in the over-the-counter market as reported by Pink OTC Markets Inc. or similar organization. If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as determined in the business judgment by the board of directors of the Company.

 

(e)                                        “Common Stock Price” is (i) if the consideration to be received in the Change of Control by the holders of our Common Stock is solely cash, the amount of cash consideration per share of our Common Stock or (ii) if the consideration to be received in the Change of Control

 

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by holders of our Common Stock is other than solely cash (x) the average of the closing sale prices per share of our Common Stock (or, if no closing sale price is reported, the average of the closing bid and ask prices per share or, if more than one in either case, the average of the average closing bid and the average closing ask prices per share) for the ten consecutive trading days immediately preceding, but not including, the date on which such Change of Control occurred as reported on the National Exchange on which our Common Stock is then traded, or (y) the average of the last quoted bid prices for our Common Stock in the over-the-counter market as reported by Pink OTC Markets Inc. or similar organization for the ten consecutive trading days immediately preceding, but not including, the date on which such Change of Control occurred, if our Common Stock is not then listed for trading on a National Exchange.

 

(f)                                           “Correction Event” means the payment in full of all dividends accumulated on the Series A Preferred Stock for all past dividend periods and the then current dividend period (or the declaration of such dividends provided that a sum sufficient for the payment thereof is set aside for such payment).

 

(g)                                        “REIT” means real estate investment trust.

 

(h)                                       “REIT Termination Event” shall mean the earliest to occur of: (i) the filing of a federal income tax return by the Company for any taxable year on which the Company does not compute its income as a real estate investment trust; (ii) the approval by the stockholders of the Company of a proposal for the Company to cease to qualify as a real estate investment trust; (iii) the approval by the board of directors of the Company of a proposal for the Company to cease to qualify as a real estate investment trust;  (iv) a determination by the board of directors of the Company, based on the advice of counsel, that the Company has ceased to qualify as a real estate investment trust; or (v) a “determination” within the meaning of Section 1313(a) of the Internal Revenue Code of 1986, as amended, that the Company has ceased to qualify as a real estate investment trust.

 

4.                                       Maturity.   The Series A Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption. Shares of the Series A Preferred Stock will remain outstanding indefinitely unless we decide to redeem or otherwise repurchase them. We are not required to set aside funds to redeem the Series A Preferred Stock.

 

5.                                       Dividends.

 

(a)                                  Holders of shares of the Series A Preferred Stock are entitled to receive, when, as and if authorized and declared by our board of directors, out of funds legally available for the payment of dividends, cumulative cash dividends at the rate of 5.50% per annum on the $25.00 per share liquidation preference (equivalent to $1.375 per annum per share). Dividends on the Series A Preferred Stock shall be cumulative from the date of original issuance and shall be payable quarterly on the 1st day of each January, April, July, October (each, a “dividend payment date”), starting July 1, 2015; provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day, and no interest, additional dividends or other sums will accrue on the amount so payable for the period from and after that dividend payment date to that next succeeding business day. Any dividend payable on the Series

 

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A Preferred Stock, including dividends payable for any partial dividend period, will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in our stock records for the Series A Preferred Stock at the close of business on the applicable record date, which shall be, whether or not a business day, the 15th calendar day of the month preceding the next applicable dividend payment date (each, a “dividend record date”); provided that the record date for the first dividend payment date scheduled for July 1, 2015 shall be June 15, 2015.

 

(b)                                  No dividends on shares of Series A Preferred Stock shall be authorized by our board of directors or paid or set apart for payment by us at any time when the declaration or payment thereof would be unlawful.

 

(c)                                   Notwithstanding the foregoing, dividends on the Series A Preferred Stock will accrue whether or not there are funds legally available for the payment of those dividends and whether or not those dividends are declared. No interest, or sum in lieu of interest, will be payable in respect of any dividend payment or payments on the Series A Preferred Stock which may be in arrears, and holders of the Series A Preferred Stock will not be entitled to any dividends in excess of full cumulative dividends described above. Any dividend payment made on the Series A Preferred Stock shall first be credited against the earliest accumulated, accrued but unpaid dividend due with respect to those shares.

 

(d)                                  When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series A Preferred Stock and the shares of any other series of Preferred Stock that we may issue ranking on parity as to dividends with the Series A Preferred Stock, all dividends declared upon the Series A Preferred Stock and any other series of Preferred Stock ranking on parity that we may issue as to dividends with the Series A Preferred Stock shall be declared pro rata in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Series A Preferred Stock and accumulated, accrued and unpaid on such parity stock. Except as set forth in the preceding sentence, unless dividends on the Series A Preferred Stock 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 set apart for such payment for all past dividend periods, no dividends shall be declared or paid or set aside for payment by us with respect to any class or series of parity stock. Unless full cumulative dividends on the Series A Preferred Stock have been paid or declared and set apart for payment for all past dividend periods, no dividends (other than dividends paid in shares junior in rank to the Series A Preferred Stock or options, warrants or rights to subscribe for or purchase such junior stock) shall be declared or paid or set apart for payment by us with respect to any junior stock, nor shall any junior stock or parity stock be redeemed, purchased or otherwise acquired (except for purposes of an employee benefit plan) for any consideration, or any monies be paid to or made available for a sinking fund for the redemption of any junior stock or parity stock (except by conversion or exchange for junior stock, or options, warrants or rights to subscribe for or purchase junior stock), nor shall any other cash or property be paid or distributed to or for the benefit of holders of junior stock. Notwithstanding the foregoing, we shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any parity or junior stock or (ii) redeeming, purchasing or otherwise acquiring any parity or junior stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary to maintain our qualification as a REIT.

 

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(e)                                   No interest shall be payable in respect of any dividend payment or payments on the Series A Preferred Stock which may be in arrears.

 

(g)                                   Whenever dividends on any shares of Series A Preferred Stock are in arrears for four or more quarterly dividend periods, whether or not consecutive (a “Penalty Event”), the dividend rate shall be increased by 200 basis points per annum (equivalent to $1.875 per annum per share) (as increased, the “Penalty Rate”). This Penalty Rate shall remain in effect until all accumulated, accrued but unpaid dividends on the Series A Preferred Stock have been paid in full, at which time the dividend rate shall revert to the rate of 5.50% of the $25.00 per share stated liquidation preference per annum.

 

6.                                       Liquidation Preference.

 

(a)                                  In the event of our voluntary or involuntary liquidation, dissolution or winding up, the holders of shares of Series A Preferred Stock will be entitled to be paid out of the assets we have legally available for distribution to our stockholders, subject to the preferential rights of any class or series of our equity securities we may issue ranking senior to the Series A Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up, a liquidation preference of $25.00 per share, plus an amount equal to any accumulated, accrued and unpaid dividends to, but not including, the date of final distribution to such holders. Until the holders of the Series A Preferred Stock have been paid the liquidation preference in full, plus an amount equal to all accumulated, accrued and unpaid dividends to, but not including, the date of final distribution to such holders, no payment shall be made to any holder of our Common Stock or any other class or series of our stock we may issue that ranks junior to the Series A Preferred Stock upon the liquidation, dissolution or winding up of the Company.

 

(b)                                  In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, our available assets, or proceeds thereof, distributable among the holders of Series A Preferred Stock are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series A Preferred Stock and the corresponding amounts payable on all shares of other classes or series of our equity securities that we may issue ranking on parity with the Series A Preferred Stock upon the liquidation, dissolution or winding up of the Company, then the holders of the Series A Preferred Stock and all other such classes or series of equity securities shall share ratably in any such distribution of assets or the proceeds thereof in proportion to the full liquidating distributions or amounts to which they would otherwise be respectively entitled.

 

(c)                                   Holders of Series A Preferred Stock will be entitled to written notice of any such liquidation no fewer than 30 days and no more than 60 days prior to the payment date. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series A Preferred Stock will have no right or claim to any of our remaining assets.  Our voluntary or involuntary liquidation, dissolution or winding up shall not include our consolidation or merger with or into one or more entities, a sale or transfer of all or substantially all of our assets or a statutory stock exchange (although such events may give rise to the other rights as described herein).

 

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7.                                       Redemption.

 

(a)                                  On and after June 11, 2020, we may, at our option, upon not less than 30 nor more than 60 days’ written notice, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends thereon to, but not including, the date fixed for redemption. If we elect to redeem any shares of Series A Preferred Stock as described in this paragraph, we may use any available cash to pay the redemption price, and we will not be required to pay the redemption price only out of the proceeds from the issuance of other equity securities or any other specific source.

 

(b)                                  On or prior to the occurrence of a Change of Control, we may, at our option, redeem any then outstanding Series A Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends thereon to, but not including, the date of redemption. In the event that the Company shall have received notice of a holder’s intent to convert the Series A Preferred Stock into our Common Stock in accordance with the Change of Control Conversion Right or the General Conversion Right (as defined below) prior to the date fixed for redemption, then such Change of Control Conversion Right or the General Conversion Right shall be exercised first in lieu of our right to redeem the Series A Preferred Stock in accordance with this paragraph. If we elect to redeem any shares of the Series A Preferred Stock as described in this paragraph, we may use any cash lawfully available to pay the redemption price. In the event a Change of Control has not occurred on or prior to the date fixed for redemption, without the necessity of further action by our Board of Directors, the notice of redemption shall be deemed to have been withdrawn and no redemption of the Series A Preferred Stock shall be made.

 

(c)                                   In the event we elect to redeem Series A Preferred Stock, the notice of redemption will be mailed to each holder of record of Series A Preferred Stock called for redemption at such holder’s address as it appear on our stock transfer records, not less than 30 nor more than 60 days’ prior to the date fixed for redemption, and will state the following:

 

·                                           the redemption date;

 

·                                           the number of shares of Series A Preferred Stock to be redeemed;

 

·                                           the redemption price;

 

·                                           the place or places where certificates (if any) for the Series A Preferred Stock are to be surrendered for payment of the redemption price;

 

·                                           that dividends on the shares to be redeemed will cease to accumulate on the redemption date;

 

·                                           whether such redemption is being made pursuant to the provisions described in clauses (a) or (b), above;

 

·                                           if applicable, that such redemption is being made in connection with a Change of Control and, in that case, a brief description of the transaction or transactions constituting such Change of Control.

 

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If less than all of the shares of Series A Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series A Preferred Stock held by such holder to be redeemed. No failure to give such notice or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock except as to the holder to whom notice was defective or not given.

 

Holders of Series A Preferred Stock to be redeemed shall surrender the Series A Preferred Stock at the place designated in the notice of redemption and shall be entitled to the redemption price and any accumulated, accrued and unpaid dividends payable upon the redemption following the surrender. If notice of redemption of any shares of Series A Preferred Stock has been given and if we have irrevocably set aside the funds necessary for redemption in trust for the benefit of the holders of the shares of Series A Preferred Stock so called for redemption, then from and after the redemption date, dividends will cease to accumulate on those shares of Series A Preferred Stock, those shares of Series A Preferred Stock shall no longer be deemed outstanding and all rights of the holders of those shares will terminate, except the right to receive the redemption price plus accumulated, accrued and unpaid dividends, if any, payable upon redemption (except, in the case of a Special Optional Redemption, should a Change of Control not occur, then no holder shall be entitled to receive the redemption price or any accumulated, accrued and unpaid dividends). If any redemption date is not a business day, then the redemption price and accumulated and unpaid dividends, if any, payable upon redemption may be paid on the next business day and no interest, additional dividends or other sums will accumulate on the amount payable for the period from and after that redemption date to that next business day. If less than all of the outstanding Series A Preferred Stock is to be redeemed, the Series A Preferred Stock to be redeemed shall be selected pro rata or by lot (as nearly as may be practicable without creating fractional shares).

 

If a redemption date falls after a dividend record date and prior to the corresponding dividend payment date, each holder of Series A Preferred Stock at the close of business on such dividend record date shall be entitled to the dividend payable on such shares on the corresponding dividend payment date notwithstanding the redemption of such shares before such dividend payment date. Except as provided above, we will make no payment or allowance for unpaid dividends, whether or not in arrears, on shares of the Series A Preferred Stock to be redeemed.

 

Unless full cumulative dividends on all shares of Series A Preferred Stock shall 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 payment, no shares of Series A Preferred Stock shall be redeemed unless all outstanding shares of Series A Preferred Stock are simultaneously redeemed, and we shall not purchase or otherwise acquire directly or indirectly any shares of Series A Preferred Stock (except by exchanging it for our capital stock ranking junior to the Series A Preferred Stock as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase or acquisition by us of shares of Series A Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred Stock or pursuant to our Charter or otherwise in order to ensure that we remain qualified as a REIT for federal income tax purposes.

 

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Subject to applicable law and the terms of these articles supplementary, we may purchase shares of Series A Preferred Stock in the open market, by tender or by private agreement. Any shares of Series A Preferred Stock that we acquire shall revert to the status of authorized but unissued shares of Preferred Stock, without designation as to class or series, and may thereafter be reissued as any class or series of Preferred Stock.

 

(d)                                  If at any time (i) a REIT Termination Event occurs or (ii) after our Common Stock shall fail to or cease to be listed on the NYSE, NYSE MKT, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each a “National Exchange”; and each of (i) and (ii) above being a “Repurchase Event”), then the holders of Series A Preferred Stock shall have the right to require the Company, to the extent the Company shall have funds legally available therefor, to redeem any or all of the Series A Preferred Stock held by such holder at a repurchase price payable in cash (the “Repurchase Payment”) in an amount equal to 103% of the liquidation preference per share of Series A Preferred Stock (plus all accumulated, accrued and unpaid dividends, on the date of redemption (the “Repurchase Date”) pursuant to the offer described in the immediately following paragraph (the “Repurchase Offer”); provided, however , that in the event a Repurchase Event occurs as the result of, or is otherwise related to, a Change of Control, then the respective rights of the Company and the holders of Series A Preferred Stock shall be governed by the provisions described under sections 7(b) and 9(b) herein, and not this paragraph. If funds are not legally available to make the full Repurchase Payment as described in this paragraph, then the Company shall make the Repurchase Payment to the extent such funds are legally available.

 

(e)                                   Subject to the requirements of applicable law, within ten (10) business days following the Company becoming aware that a Repurchase Event has occurred, the Company shall mail by recognized overnight courier a notice to each holder of Series A Preferred Stock stating (i) that a Repurchase Event has occurred and that such holder has the right to require the Company to repurchase any or all of the Series A Preferred Stock then held by such holder for cash, (ii) the Repurchase Date (which shall be a business day, no earlier than 30 days and no later than 60 days from the date such notice is mailed, or such later date as may be necessary to comply with the requirements of applicable law or the exchange, if any, upon which the Series A Preferred Stock may then be listed; provided, however , that if the Repurchase Event is the result of a transaction giving rise to a Change of Control consisting of an exchange of the Common Stock for cash or other securities, the date of repurchase, if any, shall be no later than the consummation of such exchange), (iii) the amount of the Repurchase Payment with respect to such holder and (iv) the instructions determined by the Company, consistent with this subsection, that such holder must follow in order to have its Series A Preferred Stock repurchased.

 

(f)                                      On the Repurchase Date, the Company, to the extent lawful, shall accept for payment Series A Preferred Stock or portions thereof tendered by each holder of Series A Preferred Stock pursuant to the Repurchase Offer and promptly by wire transfer of immediately available funds to such holder, as directed by such holder, send an amount equal to the Repurchase Payment in respect of all Series A Preferred Stock or portions thereof so tendered.

 

(g)                                   Notwithstanding anything else herein, to the extent they are applicable to any Repurchase Offer, the Company will comply with any federal and state securities laws, rules and

 

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regulations applicable to it or its securities, and all time periods and requirements set forth above shall be adjusted accordingly to conform to such requirements.

 

(h)                                  Shares of Series A Preferred Stock that are redeemed, purchased or otherwise acquired by the Company, or converted into shares of Common Stock, shall be cancelled and shall revert to authorized but unissued shares of Preferred Stock.

 

8.                                       Mandatory Conversion.

 

(a)                                  Commencing June 11, 2016, we at our option, may cause the Series A Preferred Stock to be converted in whole or in part, on a pro rata basis, into fully paid and nonassessable shares of our Common Stock at the Conversion Price (defined in section 9(a)(i) below), provided that the Closing Bid Price of the Common Stock shall have equaled or exceeded 110% of the Conversion Price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion (such event, the “Market Trigger”; the exercise of the Company’s conversion right upon the occurrence of a Market Trigger, the “Mandatory Conversion”). Any shares of Series A Preferred Stock so converted shall be treated as having been surrendered by the holder thereof for conversion on the date of such Mandatory Conversion (unless previously converted at the option of the holder).

 

(b)                                  In the event of a Mandatory Conversion (unless shares of Series A Preferred Stock have been previously converted at the option of the holder), we shall pay holders of the Series A Preferred Stock an additional dividend payment to make the holders whole on dividends expected to be received through June 11, 2019 on the Series A Preferred Stock in an amount equal to the net present value, where the discount rate is the dividend rate on the Series A Preferred Stock, of the difference between (i) the annual dividend payments the holders of Series A Preferred Stock would have received in cash from the date of the Mandatory Conversion to June 11, 2019, and (ii) the Common Stock quarterly dividend payments the holders of Series A Preferred Stock would have received over the same time period had such holders held Common Stock (such latter amount calculated by annualizing the quarterly dividends paid by the Company on its Common Stock in or for the last full calendar quarter immediately preceding such Mandatory Conversion).

 

(c)                                   In the event of a Mandatory Conversion, notice (the “Notice of Mandatory Conversion”) by first class mail, postage prepaid, shall be given to the holders of record of the Series A Preferred Stock subject to such Mandatory Conversion at such holder’s address as it appears on our stock transfer records, not less than 30 nor more than 60 days prior to the date fixed for such Mandatory Conversion, and such notice will state the following: (i) the business day selected for the Mandatory Conversion (the “Mandatory Conversion Date”), (ii) the aggregate number of shares of Series A Preferred Stock subject to Mandatory Conversion, and (iii) the number of shares of Common Stock to be issued to such holder on the Mandatory Conversion Date.

 

(d)                                  Notwithstanding any other provision of the Series A Preferred Stock, no holder of Series A Preferred Stock will be entitled to convert such Series A Preferred Stock for shares of our Common Stock to the extent that receipt of such Common Stock would cause such holder (or

 

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any other person) to exceed the applicable ownership limits contained in our Charter, unless we provide an exemption from this limitation for such holder.

 

(e)                                   Except as provided above, the Series A Preferred Stock is not convertible into or exchangeable for any other securities or property.

 

9.                                       Conversion Rights.

 

(a)                                  General Conversion Right.

 

(i)                                      Each outstanding share of Series A Preferred Stock shall be convertible at any time at the option of the holder (the “General Conversion Right”) into that number of whole shares of our Common Stock at an initial conversion price equal to $18.90, which represents an initial conversion rate of 1.3228 shares of our Common Stock; provided, however, that the Conversion Price shall under no circumstances be less than 110% of the closing price of the Common Stock on the New York Stock Exchange on June 9, 2015. The conversion price, which shall be adjusted for any Stock Splits (as defined herein) is referred to as the “Conversion Price”. A share of Series A Preferred Stock called by the Company for redemption shall be convertible into shares of our Common Stock up to and including, but not after, the close of business on the date fixed for redemption unless we default in the payment of the amount payable upon redemption.

 

(ii)                                   To exercise the General Conversion Right, the holder of each share of Series A Preferred Stock to be converted shall surrender the certificate representing such share, if certificated, duly endorsed or assigned to us or in blank, at the office of the transfer agent, together with written notice of the election to convert executed by the holder (the “Conversion Notice”) specifying the number of shares of Series A Preferred Stock to be converted, the name in which the share of the Common Stock deliverable upon conversion shall be registered, and the address of the named person. If the shares of Series A Preferred Stock are not certificated, the holder must deliver evidence of ownership satisfactory to us and the transfer agent. Unless the shares of Common Stock deliverable upon conversion are to be issued in the same name as the name in which the shares of Series A Preferred Stock to be converted are registered, the holder must also deliver to the transfer agent an instrument of transfer, in form satisfactory to us, duly executed by the holder or the holder’s duly authorized attorney, together with an amount sufficient to pay any transfer or similar tax in connection with the issuance and delivery of such shares of Common Stock in such name (or evidence reasonably satisfactory to us demonstrating that such taxes have been paid).

 

(b)                                  Change of Control Conversion Rights.

 

(i)                                      On or prior to the occurrence of a Change of Control, each holder of Series A Preferred Stock will have the right to convert some or all of the Series A Preferred Stock held by such holder (the “Change of Control Conversion Right”) on the Change of Control Conversion Date into a number of shares of our Common Stock per share of Series A Preferred Stock (the “Common Stock Conversion Consideration”) equal to the lesser of:

 

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·                   the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of Series A Preferred Stock plus the amount of any accumulated, accrued and unpaid dividends thereon to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a dividend record date and prior to the corresponding dividend payment date for the Series A Preferred Stock, in which case no additional amount for accumulated, accrued and unpaid dividends will be included in this sum) by (ii) the Common Stock Price; and

 

·                   1.6057 (the “Share Cap”), subject to certain adjustments as described below, provided, however , that in the event that the Company effects a registered public offering for cash of further shares of Series A Preferred Stock the Share Cap shall automatically, and without further action, be reset to 3.2216 (the “Amended Share Cap”), provided further that the Amended Share Cap as set forth herein shall be subject to the adjustments for Stock Splits (as defined below) occurring at any time following the date of original issuance of the Series A Preferred Stock created hereby.

 

(ii)                                   Notwithstanding the foregoing, holders shall always have the right, up to the close of business on the applicable redemption date, to convert the Series A Preferred Stock in accordance with the General Conversion Right.

 

(iii)                                Notwithstanding anything in our Charter or the articles supplementary to the contrary and except as otherwise required by law, the persons who are the holders of record of shares of Series A Preferred Stock at the close of business on a dividend record date will be entitled to receive the dividend payable on the corresponding dividend payment date notwithstanding the conversion of those shares after such dividend record date and on or prior to such dividend payment date and, in such case, the full amount of such dividend shall be paid on such dividend payment date to the persons who were the holders of record at the close of business on such dividend record date. Except as provided above, we will make no allowance for unpaid dividends that are not in arrears on the shares of Series A Preferred Stock to be converted.

 

(iv)                               The Share Cap is subject to pro rata adjustments for any stock splits (including those effected pursuant to a distribution of our Common Stock to existing holders of our Common Stock), subdivisions or combinations (in each case, a “Stock Split”) with respect to our Common Stock as follows: the adjusted Share Cap as the result of a Stock Split will be the number of shares of our Common Stock that is equivalent to the product obtained by multiplying (i) the Share Cap in effect immediately prior to such Stock Split by (ii) a fraction, the numerator of which is the number of shares of our Common Stock outstanding immediately after giving effect to such Stock Split and the denominator of which is the number of shares of our Common Stock outstanding immediately prior to such Stock Split.

 

(v)                                  For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of shares of our Common Stock (or equivalent Alternative Conversion Consideration (as defined below), as applicable) issuable or

 

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deliverable, as applicable, in connection with the exercise of the Change of Control Conversion Right will not exceed the product of the Share Cap and number of shares of Series A Preferred Stock issued and outstanding on the Change of Control Conversion Date, such product being subject to pro rata adjustments for any Share Splits on the same basis as the corresponding adjustment to the Share Cap.

 

In the case of a Change of Control pursuant to which our Common Stock is or will be converted into cash, securities or other property or assets (including any combination thereof) (the “Alternative Form Consideration”), a holder of shares of Series A Preferred Stock will receive upon conversion of such shares of Series A Preferred Stock, if not previously redeemed, the kind and amount of Alternative Form Consideration which such holder would have owned or been entitled to receive upon the Change of Control had such holder held a number of shares of our Common Stock equal to the Common Stock Conversion Consideration immediately prior to the effective time of the Change of Control (the “Alternative Conversion Consideration,” with the Common Stock Conversion Consideration or the Alternative Conversion Consideration, whichever shall be applicable to a Change of Control, being referred to as the “Conversion Consideration”).

 

(vi)                               If the holders of our Common Stock have the opportunity to elect the form of consideration to be received in the Change of Control, the Conversion Consideration in respect of such Change of Control will be deemed to be the kind and amount of consideration actually received by holders of our Common Stock that made or voted for such an election (if electing between two types of consideration) or holders of a plurality of the outstanding shares of our Common Stock that made or voted for such an election (if electing between more than two types of consideration), as the case may be, and will be subject to any limitations to which all holders of our Common Stock are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in connection with such Change of Control.

 

(vii)                            We will provide to holders of Series A Preferred Stock a notice of occurrence of the Change of Control that describes the resulting Change of Control Conversion Right, not less than 30 nor more than 60 days prior to the date on which the Change of Control is expected to occur in accordance with section 7(b) herein, and will state the following:

 

·                                           the events constituting the Change of Control;

 

·                                           the date of the Change of Control;

 

·                                           the last date on which the holders of Series A Preferred Stock may exercise their Change of Control Conversion Right;

 

·                                           the method and period for calculating the Common Stock Price;

 

·                                           the Change of Control Conversion Date;

 

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·                                           if applicable, the type and amount of Alternative Conversion Consideration entitled to be received per share of Series A Preferred Stock;

 

·                                           the name and address of the paying agent, transfer agent and conversion agent for the Series A Preferred Stock;

 

·                                           the procedures that the holders of Series A Preferred Stock must follow to exercise the Change of Control Conversion Right (including procedures for surrendering shares for conversion through the facilities of a Depositary (as defined below)), including the form of conversion notice to be delivered by such holders as described below; and

 

·                                           the last date on which holders of Series A Preferred Stock may withdraw shares surrendered for conversion and the procedures that such holders must follow to effect such a withdrawal.

 

(ix)                               To exercise the Change of Control Conversion Right, the holders of Series A Preferred Stock will be required to deliver, on or before the close of business on the Change of Control Conversion Date, the certificates (if any) representing the shares of Series A Preferred Stock to be converted, duly endorsed for transfer (or, in the case of any shares of Series A Preferred Stock held in book-entry form through a Depositary, to deliver, on or before the close of business on the Change of Control Conversion Date, the shares of Series A Preferred Stock to be converted through the facilities of such Depositary), together with a written conversion notice in the form provided by us, duly completed, to our transfer agent. In the event a Change of Control has not occurred on or prior to the date fixed for redemption, without the necessity of further action by our Board of Directors, the notice of redemption shall be deemed to have been withdrawn and no redemption of the Series A Preferred Stock shall be made.  The conversion notice must state:

 

·                   the relevant Change of Control Conversion Date;

 

·                   the number of shares of Series A Preferred Stock to be converted; and

 

·                   that the Series A Preferred Stock is to be converted pursuant to the applicable provisions of the Series A Preferred Stock.

 

(x)                                  Holders of Series A Preferred Stock may withdraw any notice of exercise of a Change of Control Conversion Right (in whole or in part) by a written notice of withdrawal delivered to our transfer agent prior to the close of business on the business day prior to the Change of Control Conversion Date. The notice of withdrawal delivered by any holder must state:

 

·                                           the number of withdrawn shares of Series A Preferred Stock;

 

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·                                           if certificated Series A Preferred Stock has been surrendered for conversion, the certificate numbers of the withdrawn shares of Series A Preferred Stock; and

 

·                                           the number of shares of Series A Preferred Stock, if any, which remain subject to the holder’s conversion notice.

 

Notwithstanding the foregoing, if any shares of Series A Preferred Stock are held in book-entry form through The Depository Trust Company (“DTC”) or a similar depositary (each, a “Depositary”), the conversion notice and/or the notice of withdrawal, as applicable, must comply with applicable procedures, if any, of the applicable Depositary.

 

(xi)                               Series A Preferred Stock as to which the Change of Control Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable Conversion Consideration in accordance with the Change of Control Conversion Right on the Change of Control Conversion Date.

 

(xii)                            We will deliver all securities, cash and any other property owing upon conversion no later than the third business day following the Change of Control Conversion Date. Notwithstanding the foregoing, the persons entitled to receive any shares of our Common Stock or other securities delivered on conversion will be deemed to have become the holders of record thereof as of the Change of Control Conversion Date.

 

(xiii)                         In connection with the exercise of any Change of Control Conversion Right, we will comply with all federal and state securities laws and stock exchange rules in connection with any conversion of Series A Preferred Stock into shares of our Common Stock or other property.

 

10.                                Make-Whole Premium.   In the event a Change of Control occurs prior to June 11, 2019 and either (i) the Company exercises its Special Optional Redemption Right or (ii) the holder elects to convert such holder’s shares of Series A Preferred Stock by exercising the Change of Control Conversion Right, then we will pay to such holder in cash, to the extent we are legally permitted to do so, the present value, computed using a discount rate of 5.50% per annum compounded quarterly, of all dividend payments on the Series A Preferred Stock for all remaining dividend periods (excluding any accumulated dividend amount) from the date of such exercise up to but excluding June 11, 2019.

 

11.                                No Fractional Shares.   No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred Stock, whether voluntary or mandatory.  Instead, the Company shall pay the cash value to each holder that would otherwise be entitled to a fractional share.

 

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12.                                Voting Rights.

 

(a)                                  Holders of the Series A Preferred Stock generally have no voting rights, except as set forth below:

 

(i)                                         Whenever a Penalty Event has occurred, the number of directors constituting our board of directors will be increased by two (if not already increased by two by reason of the election of directors by the holders of any other classes or series of our equity securities we may issue upon which similar voting rights have been conferred) and the holders of Series A Preferred Stock (voting separately as a class with all other classes or series of equity securities we may issue upon which similar voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Stock in the election of those two directors) will be entitled to vote for the election of those two additional directors at a special meeting called by us at the request of the holders of record of at least 25% of the outstanding shares of Series A Preferred Stock or by the holders of any other classes or series of equity securities upon which similar voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Stock in the election of those two directors (unless the request is received less than 90 days before the date fixed for the next annual or special meeting of stockholders, in which case, such vote will be held at the earlier of the next annual or special meeting of stockholders), and at each subsequent annual meeting until a Correction Event has occurred with respect to each Penalty Event then continuing. In that case, the right of holders of the Series A Preferred Stock to elect any directors will cease and, any directors elected by holders of the Series A Preferred Stock shall immediately resign and the number of directors constituting the board of directors shall be reduced accordingly. In no event shall the holders of Series A Preferred Stock be entitled pursuant to these voting rights to elect a director that would cause us to fail to satisfy a requirement relating to director independence of any National Exchange on which any class or series of our stock is listed or quoted. For the avoidance of doubt, in no event shall the total number of directors elected by holders of the Series A Preferred Stock (voting separately as a class with all other classes or series of equity securities we may issue upon which similar voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Stock in the election of such directors) pursuant to these voting rights exceed two.

 

(ii)                                   If a special meeting is not called by us within 30 days after request from the holders of Series A Preferred Stock as described above, then the holders of record of at least 25% of the outstanding Series A Preferred Stock may designate a holder to call the meeting at our expense.

 

(iii)                                If, at any time when the voting rights conferred upon the Series A Preferred Stock are exercisable as a result of a Penalty Event, as described above, any vacancy in the office of a director elected pursuant to those special voting rights shall occur, then such vacancy may be filled only by the remaining such director or by vote of the holders of record of the outstanding Series A Preferred Stock and any other classes or series of equity securities upon which similar voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Stock in the election of directors. Any director elected or appointed may be removed only by the affirmative vote of holders of the outstanding Series A Preferred Stock and any other classes or series of equity securities upon which similar voting rights have been conferred and are exercisable and which classes or series of equity securities are entitled to vote as a class with the Series A Preferred Stock in the election of directors, such

 

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removal to be effected by the affirmative vote of a majority of the votes entitled to be cast by the holders of the outstanding Series A Preferred Stock and any such other classes or series of equity securities, and may not be removed by the holders of the Common Stock.

 

(iv)                               On each matter on which holders of Series A Preferred Stock are entitled to vote, each share of Series A Preferred Stock will be entitled to one vote, except that when shares of any other class or series of our equity securities have the right to vote with the Series A Preferred Stock as a single class on any matter, the Series A Preferred Stock and the shares of each such other class or series will have one vote for each $25.00 of stated liquidation preference (excluding accumulated dividends).

 

(v)                                  So long as any shares of the Series A Preferred Stock remain outstanding, we will not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding shares of the Series A Preferred Stock and all other series of voting preferred stock entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing or at an annual or special meeting of such stockholders, in addition to any other vote required by our Charter or Maryland law:

 

·                   amend, alter the provisions of the Charter, including the articles supplementary so as to authorize or create, or increase the authorized amount of, any class or series of senior stock; or

 

·                   amend, alter or repeal the provisions of the Charter, including the articles supplementary so as to adversely affect the special rights, preferences, privileges or voting powers of the Series A Preferred Stock; or

 

·                   consummate a binding share exchange or reclassification involving the shares of the Series A Preferred Stock or a merger or consolidation of us with another entity, unless in each case: (i) the shares of the Series A Preferred Stock remain outstanding or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity (or the Series A Preferred Stock is otherwise exchanged or reclassified), are converted or reclassified into or exchanged for preferred stock of the surviving or resulting entity or its ultimate parent; and (ii) such shares of the Series A Preferred Stock that remain outstanding or such shares of Preferred Stock, as the case may be, have rights, preferences, privileges and voting powers that, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, taken as a whole, of the Series A Preferred Stock immediately prior to the consummation of such transaction; provided, however , that the following will be deemed not to adversely affect (or to otherwise cause to be materially less favorable the rights, preferences, privileges or voting powers of the Series A Preferred Stock and shall not require the affirmative vote of holders of the Series A Preferred Stock: (1) any increase in the amount of the Company’s authorized but unissued shares of the Company’s Preferred Stock, (2) any increase in the amount of our authorized Series A Preferred Stock or the issuance of any additional shares of the Series A Preferred Stock, (3) the authorization or creation of any class or series of

 

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parity or junior stock, any increase in the amount of authorized but unissued shares of such class or series of parity or junior stock or the issuance of additional shares of such class or series of parity or junior stock or (4) the adoption or inclusion (by amendment, alteration, share exchange, reclassification, merger, consolidation or similar means) of charter provisions (whether in the Charter or a successor entity certificate of incorporation or other equivalent governing document) applicable to capital stock (including Series A Preferred Stock or any successor Preferred Stock) relating to the ownership limitations and transfer restrictions that are customary, in the sole determination of our board of directors, for the protection of our or any successor entity’s status as a REIT and a “domestically controlled qualified investment entity” for tax purposes; provided, further, in each case that no vote of the holders of Series A Preferred Stock shall be required if provision is made to redeem and all Series A Preferred Stock is redeemed at or prior to the time such amendment, alteration, repeal, share exchange, reclassification, merger or consolidation is to take effect or when the issuance of any such shares or convertible securities is to be made, as the case may be, which provision shall include, for the avoidance of doubt, any Special Optional Redemption as described above.

 

(vi)                               If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation described above would adversely affect one or more but not all series of voting Preferred Stock, then only the series of voting Preferred Stock adversely affected and entitled to vote shall vote as a class in lieu of all other series of voting Preferred Stock. Except as expressly stated in the articles supplementary or as may be required by applicable law, the Series A Preferred Stock will not have any relative, participating, optional or other special voting rights or powers and the consent of the holders thereof shall not be required for the taking of any corporate action.

 

13.                                Information Rights . During any period in which we are not subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act and any shares of Series A Preferred Stock are outstanding, we will (i) transmit by mail (or other permissible means under the Exchange Act) to all holders of Series A Preferred Stock, as their names and addresses appear in our record books and without cost to such holders, copies of the annual reports on Form 10-K and quarterly reports on Form 10- Q that we would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we were subject thereto (other than any exhibits that would have been required) and (ii) promptly, upon written request, supply copies of such reports to any holders or prospective holder of Series A Preferred Stock. We will mail (or otherwise provide) the reports to the holders of the Series A Preferred Stock within 15 days after the respective dates by which we would have been required to file such reports with the SEC, if we were subject to Section 13 or Section 15(d) of the Exchange Act, in each case, based on the dates on which we would be required to file such periodic reports if we were a “non-accelerated filer” as such term is understood in the context of the Exchange Act.

 

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14.                                The Series A Preferred Stock Ownership Limit .

 

The ownership limits set forth in Article VI of the Charter shall fully apply to the Series A Preferred Stock. Notwithstanding any other provision of the Series A Preferred Stock, no holder of shares of the Series A Preferred Stock will be entitled to convert any shares of Series A Preferred Stock into shares of our Common Stock to the extent that receipt of our Common Stock would cause such holder or any other person to exceed the applicable ownership limit contained in our Charter.

 

SECOND :  The Series A Preferred Stock has been classified by the Board under the authority contained in the Charter.

 

THIRD :  These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

 

FOURTH :  These Articles Supplementary shall be effective at the time the State Department of Assessments and Taxation of Maryland accepts these Articles Supplementary for record.

 

FIFTH :  The undersigned President of the Company acknowledges these Articles Supplementary to be the act of the Company and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

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IN WITNESS WHEREOF, the Company has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary of this 11th day of June, 2015.

 

	ASHFORD HOSPITALITY PRIME, INC.
	By:	/s/ Douglas A. Kessler
		Name: Douglas A. Kessler
		Title: President
	ATTEST:
	By:	/s/ David Brooks
		Name: David Brooks
		Title: Secretary

 

EXHIBIT 3.5

 

ASHFORD HOSPITALITY PRIME, INC.

ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF A SERIES OF PREFERRED STOCK

 

Ashford Hospitality Prime, Inc., a Maryland corporation (the “Company”), having its principal office in Baltimore City, Maryland certifies to the State Department of Assessments and Taxation of Maryland that:

 

FIRST : Under a power contained in Section 2-208 of the Maryland General Corporation Law and Article V of the Company’s Articles of Amendment and Restatement (as amended or supplemented through the date hereof) (the “Charter”), the Board of Directors of the Company (the “Board”) and a duly authorized committee thereof, classified 2,600,000 shares of the unissued preferred stock, par value $0.01 per share, of the Company (“Preferred Stock”) as 5.50% Series B Cumulative Convertible Preferred Stock, with the following preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Charter.

 

1. Designation and Number. A series of Preferred Stock of the Company, designated the “5.50% Series B Cumulative Convertible Preferred Stock” (the “Series B Preferred Stock”) is hereby established. The par value of the Series B Preferred Stock is $0.01 per share, and the liquidation preference is $25.00 per share. The number of shares of Series B Preferred Stock shall be 2,600,000.

 

2.      Rank. The Series B Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution of the Company, ranks: (i) senior to all classes or series of our Common Stock and to all other equity securities issued by us other than equity securities referred to in clauses (ii) and (iii); (ii) junior to all equity securities whose terms specifically provide that those equity securities rank senior to the Series B Preferred Stock with respect to rights to the payment of dividends or the distribution of our assets upon liquidation, dissolution or winding up; and (iii) on parity with all other equity securities issued by us whose terms provide that those equity securities rank on parity with the Series B Preferred Stock with respect to rights to the payment of dividends or the distribution of our assets upon liquidation, dissolution or winding up. The term “equity securities” does not include convertible debt securities, which will rank senior to the Series B Preferred Stock.

 

3.      Definitions. The following terms, used but not otherwise defined herein, have the following meanings:

 

(a)    “Business day” means any day other than a Saturday or Sunday or other day on which commercial banks in New York City are generally authorized or required by law or executive order to close. If a dividend payment date is not a business day, payment will be made on the next succeeding business day, without any interest or other payment in lieu of interest accruing with respect to this delay.

 

 

(b)    “Change of Control” is deemed to occur when, after the original issuance of the Series B Preferred Stock, the following have occurred and are continuing:

 

·                                                                                           the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of our stock entitling that person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in the election of our directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and

 

·                                                                                           following the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity has a class of common securities (or American depositary receipts representing such securities) listed on a National Exchange.

 

(c)    “Change of Control Conversion Date” is the date the Series B Preferred Stock is to be converted, which will be a business day selected by us that is no fewer than five days nor more than 10 days after the notice period described in Section 9(b)(vii) to the holders of Series B Preferred Stock.

 

(d)    “Closing Bid Price” means, for purposes of Section 8, (i) if the Common Stock is listed on a National Exchange, the last sale price quoted for the sale of a share of the Common Stock on such National Exchange on each trading day, or, if such National Exchange begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such security at or immediately prior to 4:00 p.m., New York City time, or (ii) if the Common Stock is not then listed for trading on a National Exchange, the average of the last quoted bid prices for a share of Common Stock in the over-the-counter market as reported by Pink OTC Markets Inc. or similar organization. If the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as determined in the business judgment of the Board.

 

(e)    “Common Stock Price” is (i) if the consideration to be received in the Change of Control by the holders of our Common Stock is solely cash, the amount of cash consideration per share of our Common Stock or (ii) if the consideration to be received in the Change of Control by holders of our Common Stock is other than solely cash (x) the average of the closing sale prices per share of our Common Stock (or, if no closing sale price is reported, the average of the closing bid and ask prices per share or, if more than one in either case, the average of the average closing bid and the average closing ask prices per share) for the ten consecutive trading days immediately preceding, but not including, the date on which such Change of Control occurred as reported on the National Exchange on which our Common Stock is then traded, or (y) the average of the last quoted bid prices for our Common Stock in the over-the-counter market as reported by Pink OTC Markets Inc. or similar organization for the ten consecutive trading days immediately preceding,

 

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but not including, the date on which such Change of Control occurred, if our Common Stock is not then listed for trading on a National Exchange.

 

(f)    “Correction Event” means the payment in full of all dividends accumulated on the Series B Preferred Stock for all past dividend periods and the then current dividend period (or the declaration of such dividends provided that a sum sufficient for the payment thereof is set aside for such payment).

 

(g)    “REIT” means real estate investment trust under the Internal Revenue Code of 1986, as amended.

 

(h)    “REIT Termination Event” shall mean the earliest to occur of: (i) the filing of a federal income tax return by the Company for any taxable year on which the Company does not compute its income as a real estate investment trust; (ii) the approval by the stockholders of the Company of a proposal for the Company to cease to qualify as a real estate investment trust; (iii) the approval by the Board of a proposal for the Company to cease to qualify as a real estate investment trust; (iv) a determination by the Board, based on the advice of counsel, that the Company has ceased to qualify as a real estate investment trust; or (v) a “determination” within the meaning of Section 1313(a) of the Internal Revenue Code of 1986, as amended, that the Company has ceased to qualify as a real estate investment trust.

 

4.      Maturity. The Series B Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption. Shares of the Series B Preferred Stock will remain outstanding indefinitely unless we decide to redeem or otherwise repurchase them. We are not required to set aside funds to redeem the Series B Preferred Stock.

 

5.                                       Dividends.

 

(a)      Holders of shares of the Series B Preferred Stock are entitled to receive, when, as and if authorized and declared by the Board, out of funds legally available for the payment of dividends, cumulative cash dividends at the rate of 5.50% per annum on the $25.00 per share liquidation preference (equivalent to $1.375 per annum per share). Dividends on the Series B Preferred Stock shall be cumulative from the date of original issuance and shall be payable quarterly on the 15th day of each January, April, July, October (each, a “dividend payment date”), starting January 15, 2016; provided that if any dividend payment date is not a business day, then the dividend which would otherwise have been payable on that dividend payment date may be paid on the next succeeding business day, and no interest, additional dividends or other sums will accrue on the amount so payable for the period from and after that dividend payment date to that next succeeding business day. Any dividend payable on the Series B Preferred Stock, including dividends payable for any partial dividend period, will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in our stock records for the Series B Preferred Stock at the close of business on the applicable record date, which shall be, whether or not a business day, the 30th calendar day of the month preceding the next applicable dividend payment date (each, a “dividend record date”); provided that the record date for the first dividend payment date scheduled for January 15, 2016 shall be January 1, 2016.

 

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(b)      No dividends on shares of Series B Preferred Stock shall be authorized by the Board or paid or set apart for payment by us at any time when the declaration or payment thereof would be unlawful.

 

(c)      Notwithstanding the foregoing, dividends on the Series B Preferred Stock will accrue whether or not there are funds legally available for the payment of those dividends and whether or not those dividends are declared. No interest, or sum in lieu of interest, will be payable in respect of any dividend payment or payments on the Series B Preferred Stock which may be in arrears, and holders of the Series B Preferred Stock will not be entitled to any dividends in excess of full cumulative dividends described above. Any dividend payment made on the Series B Preferred Stock shall first be credited against the earliest accumulated, accrued but unpaid dividend due with respect to those shares.

 

(d)      When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series B Preferred Stock and the shares of any other series of Preferred Stock that we may issue ranking on parity as to dividends with the Series B Preferred Stock, all dividends declared upon the Series B Preferred Stock and any other series of Preferred Stock ranking on parity that we may issue as to dividends with the Series B Preferred Stock shall be declared pro rata in proportion to the respective amounts of dividends accumulated, accrued and unpaid on the Series B Preferred Stock and accumulated, accrued and unpaid on such parity stock. Except as set forth in the preceding sentence, unless dividends on the Series B Preferred Stock 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 set apart for such payment for all past dividend periods, no dividends shall be declared or paid or set aside for payment by us with respect to any class or series of parity stock. Unless full cumulative dividends on the Series B Preferred Stock have been paid or declared and set apart for payment for all past dividend periods, no dividends (other than dividends paid in shares junior in rank to the Series B Preferred Stock or options, warrants or rights to subscribe for or purchase such junior stock) shall be declared or paid or set apart for payment by us with respect to any junior stock, nor shall any junior stock or parity stock be redeemed, purchased or otherwise acquired (except for purposes of an employee benefit plan) for any consideration, or any monies be paid to or made available for a sinking fund for the redemption of any junior stock or parity stock (except by conversion or exchange for junior stock, or options, warrants or rights to subscribe for or purchase junior stock), nor shall any other cash or property be paid or distributed to or for the benefit of holders of junior stock. Notwithstanding the foregoing, we shall not be prohibited from (i) declaring or paying or setting apart for payment any dividend or distribution on any parity or junior stock or (ii) redeeming, purchasing or otherwise acquiring any parity or junior stock, in each case, if such declaration, payment, redemption, purchase or other acquisition is necessary to maintain our qualification as a REIT.

 

(e)      No interest shall be payable in respect of any dividend payment or payments on the Series B Preferred Stock which may be in arrears.

 

(g)    Whenever dividends on any shares of Series B Preferred Stock are in arrears for six or more quarterly dividend periods, whether or not consecutive (a “Penalty Event”), the dividend rate shall be increased by 200 basis points per annum (equivalent to $1.875 per annum per share)

 

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(as increased, the “Penalty Rate”). This Penalty Rate shall remain in effect until all accumulated, accrued but unpaid dividends on the Series B Preferred Stock have been paid in full, at which time the dividend rate shall revert to the rate of 5.50% of the $25.00 per share stated liquidation preference per annum.

 

6.                                       Liquidation Preference.

 

(a)      In the event of our voluntary or involuntary liquidation, dissolution or winding up, the holders of shares of Series B Preferred Stock will be entitled to be paid out of the assets we have legally available for distribution to our stockholders, subject to the preferential rights of any class or series of our equity securities we may issue ranking senior to the Series B Preferred Stock with respect to the distribution of assets upon liquidation, dissolution or winding up, a liquidation preference of $25.00 per share, plus an amount equal to any accumulated, accrued and unpaid dividends to, but not including, the date of final distribution to such holders. Until the holders of the Series B Preferred Stock have been paid the liquidation preference in full, plus an amount equal to all accumulated, accrued and unpaid dividends to, but not including, the date of final distribution to such holders, no payment shall be made to any holder of our Common Stock or any other class or series of our stock we may issue that ranks junior to the Series B Preferred Stock upon the liquidation, dissolution or winding up of the Company.

 

(b)      In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, our available assets, or proceeds thereof, distributable among the holders of Series B Preferred Stock are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series B Preferred Stock and the corresponding amounts payable on all shares of other classes or series of our equity securities that we may issue ranking on parity with the Series B Preferred Stock upon the liquidation, dissolution or winding up of the Company, then the holders of the Series B Preferred Stock and all other such classes or series of equity securities shall share ratably in any such distribution of assets or the proceeds thereof in proportion to the full liquidating distributions or amounts to which they would otherwise be respectively entitled.

 

(c)      Holders of Series B Preferred Stock will be entitled to written notice of any such liquidation no fewer than 30 days and no more than 60 days prior to the payment date. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series B Preferred Stock will have no right or claim to any of our remaining assets. Our voluntary or involuntary liquidation, dissolution or winding up shall not include our consolidation or merger with or into one or more entities, a sale or transfer of all or substantially all of our assets or a statutory stock exchange (although such events may give rise to the other rights as described herein).

 

7.                                       Redemption.

 

(a)    On and after June 11, 2020, we may, at our option, upon not less than 30 nor more than 60 days’ written notice, redeem the Series B Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends thereon to, but not including, the date fixed for redemption. If we elect to redeem any shares of Series B Preferred Stock as described in this paragraph, we may use any available cash to pay the redemption price, and we will not be required to pay the redemption

 

5

 

price only out of the proceeds from the issuance of other equity securities or any other specific source.

 

(b)    On or prior to the occurrence of a Change of Control, we may, at our option, redeem any then outstanding Series B Preferred Stock, in whole or in part, for cash at a redemption price of $25.00 per share, plus any accumulated, accrued and unpaid dividends thereon to, but not including, the date of redemption. In the event that the Company shall have received notice of a holder’s intent to convert the Series B Preferred Stock into our Common Stock in accordance with the Change of Control Conversion Right or the General Conversion Right (as defined below) prior to the date fixed for redemption, then such Change of Control Conversion Right or the General Conversion Right shall be exercised first in lieu of our right to redeem the Series B Preferred Stock in accordance with this paragraph. If we elect to redeem any shares of the Series B Preferred Stock as described in this paragraph, we may use any cash lawfully available to pay the redemption price. In the event a Change of Control has not occurred on or prior to the date fixed for redemption, without the necessity of further action by the Board, the notice of redemption shall be deemed to have been withdrawn and no redemption of the Series B Preferred Stock shall be made.

 

(c)    In the event we elect to redeem Series B Preferred Stock, the notice of redemption will be mailed to each holder of record of Series B Preferred Stock called for redemption at such holder’s address as it appear on our stock transfer records, not less than 30 nor more than 60 days’ prior to the date fixed for redemption, and will state the following:

 

•     the redemption date;

 

•     the number of shares of Series B Preferred Stock to be redeemed;

 

•     the redemption price;

 

•                                                                                         the place or places where certificates (if any) for the Series B Preferred Stock are to be surrendered for payment of the redemption price;

 

•                                                                                         that dividends on the shares to be redeemed will cease to accumulate on the redemption date;

 

•                                                                                         whether such redemption is being made pursuant to the provisions described in clauses (a) or (b), above;

 

•                                                                                         if applicable, that such redemption is being made in connection with a Change of Control and, in that case, a brief description of the transaction or transactions constituting such Change of Control.

 

If less than all of the shares of Series B Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series B Preferred Stock held by such holder to be redeemed. No failure to give such notice or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series B Preferred Stock except as to the holder to whom notice was defective or not given.

 

6

 

Holders of Series B Preferred Stock to be redeemed shall surrender the Series B Preferred Stock at the place designated in the notice of redemption and shall be entitled to the redemption price and any accumulated, accrued and unpaid dividends payable upon the redemption following the surrender. If notice of redemption of any shares of Series B Preferred Stock has been given and if we have irrevocably set aside the funds necessary for redemption in trust for the benefit of the holders of the shares of Series B Preferred Stock so called for redemption, then from and after the redemption date, dividends will cease to accumulate on those shares of Series B Preferred Stock, those shares of Series B Preferred Stock shall no longer be deemed outstanding and all rights of the holders of those shares will terminate, except the right to receive the redemption price plus accumulated, accrued and unpaid dividends, if any, payable upon redemption (except, in the case of a Special Optional Redemption, should a Change of Control not occur, then no holder shall be entitled to receive the redemption price or any accumulated, accrued and unpaid dividends). If any redemption date is not a business day, then the redemption price and accumulated and unpaid dividends, if any, payable upon redemption may be paid on the next business day and no interest, additional dividends or other sums will accumulate on the amount payable for the period from and after that redemption date to that next business day. If less than all of the outstanding Series B Preferred Stock is to be redeemed, the Series B Preferred Stock to be redeemed shall be selected pro rata or by lot (as nearly as may be practicable without creating fractional shares).

 

If a redemption date falls after a dividend record date and prior to the corresponding dividend payment date, each holder of Series B Preferred Stock at the close of business on such dividend record date shall be entitled to the dividend payable on such shares on the corresponding dividend payment date notwithstanding the redemption of such shares before such dividend payment date. Except as provided above, we will make no payment or allowance for unpaid dividends, whether or not in arrears, on shares of the Series B Preferred Stock to be redeemed.

 

Unless full cumulative dividends on all shares of Series B Preferred Stock shall 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 payment, no shares of Series B Preferred Stock shall be redeemed unless all outstanding shares of Series B Preferred Stock are simultaneously redeemed, and we shall not purchase or otherwise acquire directly or indirectly any shares of Series B Preferred Stock (except by exchanging it for our capital stock ranking junior to the Series B Preferred Stock as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase or acquisition by us of shares of Series B Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series B Preferred Stock or pursuant to our Charter or otherwise in order to ensure that we remain qualified as a REIT for federal income tax purposes.

 

Subject to applicable law and the terms of these articles supplementary, we may purchase shares of Series B Preferred Stock in the open market, by tender or by private agreement. Any shares of Series B Preferred Stock that we acquire shall revert to the status of authorized but unissued shares of Preferred Stock, without designation as to class or series, and may thereafter be reissued as any class or series of Preferred Stock.

 

7

 

(d)    If at any time (i) a REIT Termination Event occurs or (ii) after our Common Stock shall fail to or cease to be listed on the NYSE, NYSE MKT, or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor thereto (each a “National Exchange”; and each of (i) and (ii) above being a “Repurchase Event”), then the holders of Series B Preferred Stock shall have the right to require the Company, to the extent the Company shall have funds legally available therefor, to redeem any or all of the Series B Preferred Stock held by such holder at a repurchase price payable in cash (the “Repurchase Payment”) in an amount equal to 103% of the liquidation preference per share of Series B Preferred Stock (plus all accumulated, accrued and unpaid dividends, on the date of redemption (the “Repurchase Date”) pursuant to the offer described in the immediately following paragraph (the “Repurchase Offer”); provided, however , that in the event a Repurchase Event occurs as the result of, or is otherwise related to, a Change of Control, then the respective rights of the Company and the holders of Series B Preferred Stock shall be governed by the provisions described under sections 7(b) and 9(b) herein, and not this paragraph. If funds are not legally available to make the full Repurchase Payment as described in this paragraph, then the Company shall make the Repurchase Payment to the extent such funds are legally available.

 

(e)    Subject to the requirements of applicable law, within ten (10) business days following the Company becoming aware that a Repurchase Event has occurred, the Company shall mail by recognized overnight courier a notice to each holder of Series B Preferred Stock stating (i) that a Repurchase Event has occurred and that such holder has the right to require the Company to repurchase any or all of the Series B Preferred Stock then held by such holder for cash, (ii) the Repurchase Date (which shall be a business day, no earlier than 30 days and no later than 60 days from the date such notice is mailed, or such later date as may be necessary to comply with the requirements of applicable law or the exchange, if any, upon which the Series B Preferred Stock may then be listed; provided, however , that if the Repurchase Event is the result of a transaction giving rise to a Change of Control consisting of an exchange of the Common Stock for cash or other securities, the date of repurchase, if any, shall be no later than the consummation of such exchange), (iii) the amount of the Repurchase Payment with respect to such holder and (iv) the instructions determined by the Company, consistent with this subsection, that such holder must follow in order to have its Series B Preferred Stock repurchased.

 

(f)    On the Repurchase Date, the Company, to the extent lawful, shall accept for payment Series B Preferred Stock or portions thereof tendered by each holder of Series B Preferred Stock pursuant to the Repurchase Offer and promptly by wire transfer of immediately available funds to such holder, as directed by such holder, send an amount equal to the Repurchase Payment in respect of all Series B Preferred Stock or portions thereof so tendered.

 

(g)    Notwithstanding anything else herein, to the extent they are applicable to any Repurchase Offer, the Company will comply with any federal and state securities laws, rules and regulations applicable to it or its securities, and all time periods and requirements set forth above shall be adjusted accordingly to conform to such requirements.

 

(h)    Shares of Series B Preferred Stock that are redeemed, purchased or otherwise acquired by the Company, or converted into shares of Common Stock, shall be cancelled and shall

 

8

 

revert to authorized but unissued shares of Preferred Stock and shall be available for further classification and reclassification.

 

8.             Mandatory Conversion.

 

(a)      Commencing June 11, 2016, we at our option, may cause the Series B Preferred Stock to be converted in whole or in part, on a pro rata basis, into fully paid and nonassessable shares of our Common Stock at the applicable Conversion Rate (defined in section 9(a)(i) below), provided that the Closing Bid Price of the Common Stock shall have equaled or exceeded 110% of the Conversion Price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion (such event, the “Market Trigger”; the exercise of the Company’s conversion right upon the occurrence of a Market Trigger, the “Mandatory Conversion”). Any shares of Series B Preferred Stock so converted shall be treated as having been surrendered by the holder thereof for conversion on the date of such Mandatory Conversion (unless previously converted at the option of the holder).

 

(b)      In the event of a Mandatory Conversion (unless shares of Series B Preferred Stock have been previously converted at the option of the holder), we shall pay holders of the Series B Preferred Stock an additional dividend payment to make the holders whole on dividends expected to be received through June 11, 2019 on the Series B Preferred Stock in an amount equal to the net present value, where the discount rate is the dividend rate on the Series B Preferred Stock, of the difference between (i) the annual dividend payments the holders of Series B Preferred Stock would have received in cash from the date of the Mandatory Conversion to June 11, 2019, and (ii) the Common Stock quarterly dividend payments the holders of Series B Preferred Stock would have received over the same time period had such holders held Common Stock (such latter amount calculated by annualizing the quarterly dividends paid by the Company on its Common Stock in or for the last full calendar quarter immediately preceding such Mandatory Conversion).

 

(c)    In the event of a Mandatory Conversion, notice (the “Notice of Mandatory Conversion”) by first class mail, postage prepaid, shall be given to the holders of record of the Series B Preferred Stock subject to such Mandatory Conversion at such holder’s address as it appears on our stock transfer records, not less than 30 nor more than 60 days prior to the date fixed for such Mandatory Conversion, and such notice will state the following: (i) the business day selected for the Mandatory Conversion (the “Mandatory Conversion Date”), (ii) the aggregate number of shares of Series B Preferred Stock subject to Mandatory Conversion, and (iii) the number of shares of Common Stock to be issued to such holder on the Mandatory Conversion Date.

 

(d)    Notwithstanding any other provision of the Series B Preferred Stock, no holder of Series B Preferred Stock will be entitled to convert such Series B Preferred Stock for shares of our Common Stock to the extent that receipt of such Common Stock would cause such holder (or any other person) to exceed the applicable ownership limits contained in our Charter, unless we provide an exemption from this limitation for such holder.

 

(e)    Except as provided above, the Series B Preferred Stock is not convertible into or exchangeable for any other securities or property.

 

9

 

9.             Conversion Rights.

 

(a)      General Conversion Right.

 

(i)      Each outstanding share of Series B Preferred Stock shall be convertible at any time at the option of the holder (the “General Conversion Right”) into that number of whole shares of our Common Stock at an initial conversion price equal to $18.90 (the “Conversion Price”), which represents an initial conversion rate of 1.3228 shares of our Common Stock (as may be subject to adjustment as provided herein, the “Conversion Rate”). A share of Series B Preferred Stock called by the Company for redemption shall be convertible into shares of our Common Stock up to and including, but not after, the close of business on the date fixed for redemption unless we default in the payment of the amount payable upon redemption.

 

(ii)      To exercise the General Conversion Right, the holder of each share of Series B Preferred Stock to be converted shall surrender the certificate representing such share, if certificated, duly endorsed or assigned to us or in blank, at the office of the transfer agent, together with written notice of the election to convert executed by the holder (the “Conversion Notice”) specifying the number of shares of Series B Preferred Stock to be converted, the name in which the share of the Common Stock deliverable upon conversion shall be registered, and the address of the named person. If the shares of Series B Preferred Stock are not certificated, the holder must deliver evidence of ownership satisfactory to us and the transfer agent. Unless the shares of Common Stock deliverable upon conversion are to be issued in the same name as the name in which the shares of Series B Preferred Stock to be converted are registered, the holder must also deliver to the transfer agent an instrument of transfer, in form satisfactory to us, duly executed by the holder or the holder’s duly authorized attorney, together with an amount sufficient to pay any transfer or similar tax in connection with the issuance and delivery of such shares of Common Stock in such name (or evidence reasonably satisfactory to us demonstrating that such taxes have been paid).

 

(b)      Change of Control Conversion Rights.

 

(i)      On or prior to the occurrence of a Change of Control, each holder of Series B Preferred Stock will have the right to convert some or all of the Series B Preferred Stock held by such holder (the “Change of Control Conversion Right”) on the Change of Control Conversion Date into a number of shares of our Common Stock per share of Series B Preferred Stock (the “Common Stock Conversion Consideration”) equal to the lesser of:

 

·                                                                                                                   the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of Series B Preferred Stock plus the amount of any accumulated, accrued and unpaid dividends thereon to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a dividend record date and prior to the corresponding dividend payment date for the Series B Preferred Stock, in which case no additional amount for accumulated, accrued and unpaid dividends will be included in this sum) by (ii) the Common Stock Price; and

 

10

 

·                                                                                                                   1.6057 (the “Share Cap”), subject to certain adjustments as described below, provided, however , that in the event that the Company effects a registered public offering for cash of further shares of Series B Preferred Stock the share Cap shall automatically, and without further action, be reset to 3.2216 (the “Amended Share Cap”), provided further that the Amended Share Cap as set forth herein shall be subject to the adjustments as provided under Section 12 occurring at any time following the date of original issuance of the Series B Preferred Stock created hereby.

 

(ii)    Notwithstanding the foregoing, holders shall always have the right, up to the close of business on the applicable redemption date, to convert the Series B Preferred Stock in accordance with the General Conversion Right.

 

(iii)    Notwithstanding anything in our Charter or the articles supplementary to the contrary and except as otherwise required by law, the persons who are the holders of record of shares of Series B Preferred Stock at the close of business on a dividend record date will be entitled to receive the dividend payable on the corresponding dividend payment date notwithstanding the conversion of those shares after such dividend record date and on or prior to such dividend payment date and, in such case, the full amount of such dividend shall be paid on such dividend payment date to the persons who were the holders of record at the close of business on such dividend record date. Except as provided above, we will make no allowance for unpaid dividends that are not in arrears on the shares of Series B Preferred Stock to be converted.

 

(iv)    We will provide to holders of Series B Preferred Stock a notice of occurrence of the Change of Control that describes the resulting Change of Control Conversion Right, not less than 30 nor more than 60 days prior to the date on which the Change of Control is expected to occur in accordance with section 7(b) herein, and will state the following:

 

· the events constituting the Change of Control;

 

· the date of the Change of Control;

 

·                                                                                                               the last date on which the holders of Series B Preferred Stock may exercise their Change of Control Conversion Right;

 

· the method and period for calculating the Common Stock Price;

· the Change of Control Conversion Date;

 

·                                                                                                               if applicable, the type and amount of exchange property entitled to be received per share of Series B Preferred Stock;

 

·                                                                                                               the name and address of the paying agent, transfer agent and conversion agent for the Series B Preferred Stock;

 

11

 

·                                                                                                               the procedures that the holders of Series B Preferred Stock must follow to exercise the Change of Control Conversion Right (including procedures for surrendering shares for conversion through the facilities of a Depositary (as defined below)), including the form of conversion notice to be delivered by such holders as described below; and

 

·                                                                                                               the last date on which holders of Series B Preferred Stock may withdraw shares surrendered for conversion and the procedures that such holders must follow to effect such a withdrawal.

 

(v)    To exercise the Change of Control Conversion Right, the holders of Series B Preferred Stock will be required to deliver, on or before the close of business on the Change of Control Conversion Date, the certificates (if any) representing the shares of Series B Preferred Stock to be converted, duly endorsed for transfer (or, in the case of any shares of Series B Preferred Stock held in book-entry form through a Depositary, to deliver, on or before the close of business on the Change of Control Conversion Date, the shares of Series B Preferred Stock to be converted through the facilities of such Depositary), together with a written conversion notice in the form provided by us, duly completed, to our transfer agent. In the event a Change of Control has not occurred on or prior to the date fixed for redemption, without the necessity of further action by the Board, the notice of redemption shall be deemed to have been withdrawn and no redemption of the Series B Preferred Stock shall be made. The conversion notice must state:

 

·                                                                                                               the relevant Change of Control Conversion Date;

 

·                                                                                                               the number of shares of Series B Preferred Stock to be converted; and

 

·                                                                                                               that the Series B Preferred Stock is to be converted pursuant to the applicable provisions of the Series B Preferred Stock.

 

(vi)    Holders of Series B Preferred Stock may withdraw any notice of exercise of a Change of Control Conversion Right (in whole or in part) by a written notice of withdrawal delivered to our transfer agent prior to the close of business on the business day prior to the Change of Control Conversion Date. The notice of withdrawal delivered by any holder must state:

 

·     the number of withdrawn shares of Series B Preferred Stock;

 

·                                                                                           if certificated Series B Preferred Stock has been surrendered for conversion, the certificate numbers of the withdrawn shares of Series B Preferred Stock; and

 

·                                                                                           the number of shares of Series B Preferred Stock, if any, which remain subject to the holder’s conversion notice.

 

12

 

Notwithstanding the foregoing, if any shares of Series B Preferred Stock are held in book-entry form through The Depository Trust Company (“DTC”) or a similar depositary (each, a “Depositary”), the conversion notice and/or the notice of withdrawal, as applicable, must comply with applicable procedures, if any, of the applicable Depositary.

 

(vii)    Series B Preferred Stock as to which the Change of Control Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable Conversion Consideration in accordance with the Change of Control Conversion Right on the Change of Control Conversion Date.

 

(viii)    We will deliver all securities, cash and any other property owing upon conversion no later than the third business day following the Change of Control Conversion Date. Notwithstanding the foregoing, the persons entitled to receive any shares of our Common Stock or other securities delivered on conversion will be deemed to have become the holders of record thereof as of the Change of Control Conversion Date.

 

(ix)    In connection with the exercise of any Change of Control Conversion Right, we will comply with all federal and state securities laws and stock exchange rules in connection with any conversion of Series B Preferred Stock into shares of our Common Stock or other property.

 

10.      Make-Whole Premium. In the event a Change of Control occurs prior to June 11, 2019 and either (i) the Company exercises its Special Optional Redemption Right or (ii) the holder elects to convert such holder’s shares of Series B Preferred Stock by exercising the Change of Control Conversion Right, then we will pay to such holder in cash, to the extent we are legally permitted to do so, the present value, computed using a discount rate of 5.50% per annum compounded quarterly, of all dividend payments on the Series B Preferred Stock for all remaining dividend periods (excluding any accumulated dividend amount) from the date of such exercise up to but excluding June 11, 2019.

 

11.      No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series B Preferred Stock, whether voluntary or mandatory. Instead, the Company shall pay the cash value to each holder that would otherwise be entitled to a fractional share.

 

12.      Anti-Dilution Adjustments. The applicable Conversion Rate will be adjusted, without duplication, upon the occurrence of any of the following events:

 

(a)    We issue common stock to all holders of our common stock as a dividend or other distribution, or if we effect a share split, share combination or reverse share split, in which event the applicable Conversion Rate will be adjusted based on the following formula:

 

 

13

 

where,

 

CR 0		=		the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for such dividend or distribution, or the open of business on the effective date of such share split or share combination, as the case may be;
CR 1		=		the Conversion Rate in effect immediately after the open of business on the Ex-Date for such dividend or distribution, or the open of business on the effective date of such share split or share combination, as the case may be;
OS 0		=		the number of shares of our common stock outstanding immediately prior to the open of business on the Ex-Date for such dividend or distribution, or the open of business on the effective date of such share split or share combination, as the case may be; and
OS 1		=		the number of shares of our common stock outstanding immediately after such dividend or distribution, or such share split, share combination or reverse share split, as the case may be.

 

Any adjustment made pursuant to this clause (a) will become effective immediately after the open of business on the Ex-Date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination. If any dividend or distribution of the type described in this clause (a) is declared but not so paid or made, or any share split or combination of the type described in this clause (a) is announced but the outstanding shares of our common stock are not split or combined, as the case may be, the Conversion Rate shall immediately be readjusted, effective as of the date our Board of Directors publicly announces its decision not to make such dividend or distribution, or not to split, combine or reverse split the outstanding shares of our common stock, as the case may be, to such Conversion Rate that would be in effect if such dividend, distribution, share split, reverse share split or share combination had not been declared or announced.

 

(b)    We issue to all holders of our common stock rights or warrants (other than as provided herein) entitling them, for a period of up to 45 calendar days from the record date of such distribution, to subscribe for or purchase our common stock at less than the “current market price” (as defined below) of our common stock, in which case the applicable Conversion Rate will be increased based on the following formula:

 

 

14

 

CR 0		=		the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for such distribution;
CR 1		=		the Conversion Rate in effect immediately after the open of business on the Ex-Date for such distribution;
OS 0		=		the number of shares of our common stock outstanding immediately prior to the open of business on the Ex-Date for such distribution;
X		=		the total number of shares of our common stock issuable pursuant to such rights or warrants; and
Y		=		the number of shares of our common stock equal to the aggregate price payable to exercise such rights or warrants divided by the current market price of our common stock.

 

Any adjustment made pursuant to this clause (b) will become effective immediately after the open of business on the Ex-Date for such distribution. In the event that such rights or warrants described in this clause (b) are not so issued, the applicable Conversion Rate shall be readjusted, effective as of the date our Board of Directors publicly announces its decision not to issue such rights or warrants, to the Conversion Rate that would then be in effect if such Ex-Date for such distribution had not occurred. To the extent that such rights or warrants are not exercised prior to their expiration or our common stock are otherwise not delivered pursuant to such rights or warrants upon the exercise of such rights or warrants, the applicable Conversion Rate shall be readjusted to such Conversion Rate that would then be in effect had the adjustment made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of our common stock actually delivered. In determining whether any rights or warrants entitle the holders thereof to subscribe for or purchase common stock at less than the current market price, and in determining the aggregate offering price payable for such common stock, there shall be taken into account any consideration received for such rights or warrants and the value of such consideration and any amount payable on exercise or conversion thereof (if other than cash, to be determined in good faith by our Board of Directors, which determination shall be final).

 

(c)    We distribute to all holders of our common stock evidences of our indebtedness, share capital, securities, cash or other assets, excluding:

 

·                                                                   any dividend or distribution covered by clauses (a) or (b) above;

 

·                                                                   any rights or warrants covered by clause (b) above;

 

·                                                                   any dividend or distribution covered by clause (d) below; and

 

·                                                                   any spin-off to which the provisions set forth below in this clause (c) shall apply,

 

then the Conversion Rate will be increased based on the following formula:

 

15

 

CR 1

=

CR 0

x

SP 0 SP 0  - FMV

 

where,

 

CR 0		=		the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for such distribution;
CR 1		=		the Conversion Rate in effect immediately after the open of business on the Ex-Date for such distribution;
SP 0		=		the current market price of our common stock; and
FMV		=		the fair market value (as determined by our Board of Directors in its good faith judgment) of our indebtedness, share capital, securities, cash or other assets distributable with respect to each outstanding share of our common stock on the Ex-Date for such distribution.

 

Any adjustment under this above portion of this clause (c) will become effective immediately after the open of business on the Ex-Date for such distribution.

 

In the event that we make a distribution to all holders of our common stock consisting of share capital of, or similar equity interests in, or relating to a subsidiary or other business unit of ours that is listed or quoted (or will be listed or quoted upon consummation of the spin-off (as defined below)) on a national securities exchange (herein referred to as a “spin-off”), the applicable Conversion Rate in effect immediately before 5:00 p.m., New York City time, on the tenth trading day immediately following, and including, the Ex-Date for the spin-off will be increased based on the following formula:

 

 

16

 

where,

 

CR 0		=		the Conversion Rate in effect immediately prior to the close of business on the tenth trading day immediately following, and including, the Ex-Date for the spin-off;
CR 1		=		the Conversion Rate in effect immediately after the close of business on the tenth trading day immediately following, and including, the Ex-Date for the spin-off;
FMV		=		fair market value, as determined by our Board of Directors in its good faith judgment, of the portion of those shares of share capital or similar equity interests so distributed applicable to one share of common stock over the ten consecutive trading day period immediately following, and including, the Ex-Date for the spin-off (or, if such shares of share capital or equity interests are listed on a U.S. national or regional securities exchange, the current market price of such securities); and
MP 0		=		the current market price of our common stock.

 

Any adjustment made pursuant to this clause (c) shall become effective at the close of business on the 10 th  trading day immediately following, and including, the Ex-Date for the spin-off; provided that, for purposes of determining the Conversion Rate, in respect of any conversion during the 10 trading days following, and including, the effective date of any spin-off, references within the portion of this clause (c) related to “spin-offs” to 10 consecutive trading days shall be deemed replaced with such lesser number of consecutive trading days as have elapsed between the effective date of such spin-off and the relevant conversion date. In the event that such distribution described in this clause (c) is not so made, the applicable Conversion Rate shall be readjusted, effective as of the date our Board of Directors publicly announces his decision not to make such distribution, to such Conversion Rate that would then be in effect if such distribution had not been declared.

 

(d)    We make a distribution consisting exclusively of cash to all holders of our common stock, excluding:

 

(1) any regularly scheduled quarterly cash dividend in the ordinary course of business;

 

(2) any cash that is distributed in a reorganization event (as described below);

 

(3) any dividend or distribution in connection with our liquidation, dissolution or winding up; and

 

(4) any consideration payable as part of a tender or exchange offer;

 

in which event, the applicable Conversion Rate will be increased based on the following formula:

 

 

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where,

 

CR 0		=		the Conversion Rate in effect immediately prior to the open of business on the Ex-Date for such dividend or distribution;
CR 1		=		the Conversion Rate in effect immediately after the open of business on the Ex-Date for such dividend or distribution;
SP 0		=		the current market price of our common stock; and
C		=		the amount in cash per share of our common stock so distributed (excluding any amounts set forth under (d)(1)-(4) above).

 

Such increase shall become effective immediately after the open of business on the Ex-Date for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

(e)    We or any of our subsidiaries successfully complete a tender or exchange offer pursuant to a Schedule TO or registration statement on Form S-4 for our common stock (excluding any securities convertible or exchangeable for our common stock), where the cash and the fair market value of any other consideration included in the payment per share of common stock exceeds the current market price of our common stock, in which event the applicable Conversion Rate in effect at 5:00 p.m., New York City time, on the date of expiration of the tender or exchange offer (the “expiration date”) will be increased based on the following formula:

 

 

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CR 0		=		the Conversion Rate in effect immediately prior to the close of business on the last trading day of the 10 consecutive trading-day period commencing on, and including, the trading day next succeeding the date such tender or exchange offer expires;
CR 1		=		the Conversion Rate in effect immediately after the close of business on the last trading day of the 10 consecutive trading-day period commencing on, and including, the trading day next succeeding the date such tender or exchange offer expires;
AC		=		the aggregate value of all cash and the fair market vaue of any other consideration (as determined by our Board of Directors in its good faith judgment) paid or payable for shares purchased in such tender or exchange offer;
OS 0		=		the number of shares of our common stock outstanding immediately prior to the date such tender or exchange offer expires;
OS 1		=		the number of shares of our common stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to such tender offer or exchange offer and excluding fractional shares); and
SP 1		=		the current market price of our common stock.

 

Any adjustment made pursuant to this clause (e) shall become effective immediately after 5:00 p.m., New York City time, on the 10th trading day immediately following the expiration date but will be given effect as of the open of business on the expiration date for the tender or exchange offer; provided that, for purposes of determining the Conversion Rate, in respect of any conversion during the 10 trading days immediately following, but excluding, the date that any such tender or exchange offer expires, references within this clause (e) to 10 consecutive trading days shall be deemed replaced with such lesser number of consecutive trading days as have elapsed between the date such tender or exchange offer expires and the relevant conversion date. In the event that we are, or one of our subsidiaries is, obligated to purchase our common stock pursuant to any such tender offer or exchange offer, but we are, or such subsidiary is, permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the applicable Conversion Rate shall be readjusted to be such Conversion Rate that would then be in effect if such tender offer or exchange offer had not been made.

 

Notwithstanding the foregoing, if (i) a Conversion Rate adjustment pursuant to any of the foregoing becomes effective on any Ex-Date as described above and (ii) a holder converting its Series B Preferred Stock on or after such Ex-Date and on or prior to the related record date would be treated as the record holder of shares of our common stock as of the related conversion date based on an adjusted Conversion Rate for such Ex-Date, then, notwithstanding the foregoing Conversion Rate adjustment provisions, the Conversion Rate adjustment relating to such Ex-Date will not be made for any holder converting Series B Preferred Stock on or after such Ex-Date and on or prior to the related record date. Instead, such holder will be treated as if such holder were the record owner of the shares of our common stock on an un-adjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.

 

We are not required to adjust the Conversion Rate for any of the transactions described in the clauses above (other than for share splits, share combinations or reverse share splits) if we make

 

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provision for each holder of a share of Series B Preferred Stock to participate in the transaction, at the same time as holders of our common stock participate, without conversion, as if such holder held a number of shares of our common stock in respect of each share of Series B Preferred Stock equal to the Conversion Rate in effect on the “Ex-Date” or effective date of such transaction.

 

If we issue rights, options or warrants that are only exercisable upon the occurrence of certain triggering events, then the Conversion Rate will not be adjusted pursuant to clauses (b) and (c) above, as applicable, until the earliest of these triggering events occurs and the Conversion Rate shall be readjusted to the extent any of these rights, options or warrants are not exercised before they expire.

 

To the extent that we have a rights plan in effect with respect to our common stock on any conversion date, upon conversion of any Series B Preferred Stock, you will receive, in addition to common stock, the rights under the rights plan, unless, prior to such conversion, the rights have expired, terminated or been redeemed or unless the rights have been separated from our common stock, in which case the applicable Conversion Rate will be adjusted at the time of separation as if we made a distribution to all holders of our common stock as described in clause (c) above, subject to readjustment in the event of the expiration, termination or redemption of such rights. Any distribution of rights or warrants pursuant to a rights plan that would allow you to receive upon conversion, in addition to any common stock, the rights described therein (unless such rights or warrants have separated from our common stock) shall not constitute a distribution of rights or warrants that would entitle you to an adjustment to the Conversion Rate.

 

We will not adjust the Conversion Rate pursuant to the clauses above unless the adjustment would result in a change of at least 1% in the then effective Conversion Rate. However, we will carry forward any adjustment that is less than 1% of the Conversion Rate and make such carryforward adjustment in any subsequent adjustment and, regardless of whether the aggregate adjustment is less than 1%, on the conversion date for any Series B Preferred Stock. In addition, at the end of each fiscal year, beginning with the fiscal year ending December 31, 2015, we will give effect to any adjustments that we have otherwise deferred pursuant to this provision, and those adjustments will no longer be carried forward and taken into account in any subsequent adjustment. Adjustments to the Conversion Rate will be calculated to the nearest 1/10,000 of a share.

 

To the extent permitted by law and the continued listing requirements of NYSE (or any stock exchange on which our common stock may then be listed), we may, from time to time, increase the Conversion Rate by any amount for a period of at least 20 business days or any longer period permitted or required by law, so long as the increase is irrevocable during that period and our Board of Directors determines that the increase is in our best interests. We will mail a notice of the increase to registered holders at least 15 calendar days before the day the increase commences. In addition, we may, but are not obligated to, increase the Conversion Rate as we determine to be advisable in order to avoid or diminish taxes to recipients of certain distributions.

 

For the purposes of determining the adjustment to the applicable Conversion Rate for the purposes of:

 

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·                                           clauses (b), (c) in the event of an adjustment not relating to a spin-off and (d) above, the “current market price” of our common stock is the average of the per share volume-weighted average prices of our common stock for each day over the 10 consecutive trading day period ending on the trading day before the Ex-Date (as defined below) with respect to the issuance or distribution requiring such computation;

 

·                                           clause (c) above in the event of an adjustment relating to a spin-off, the “current market price” of our common stock, share capital or equity interest, as applicable, is the average of the per share volume-weighted average prices of our common stock for each day over the first ten consecutive trading days immediately following, and including, the Ex-Date for the spin-off; and

 

·                   clause (e) above, the “current market price” of our common stock is the average of the per share volume-weighted average prices of our common stock for each day over the 10 consecutive trading day period commencing on, and including, the trading day next succeeding the expiration date of the tender or exchange offer.

 

In the event of:

 

·                   any consolidation or merger of us with or into another person (other than a merger or consolidation in which we are the continuing corporation and in which the common stock outstanding immediately prior to the merger or consolidation are not exchanged for cash, securities or other property of us or another person);

 

·                   any sale, transfer, lease or conveyance to another person of all or substantially all of our property and assets;

 

·                   any recapitalization, reclassification or change of our common stock into securities, including securities other than our common stock; or

 

·                   any statutory exchange of our securities with another person (other than in connection with a merger or acquisition),

 

in each case, as a result of which our common stock would be converted into, or exchanged for, securities, cash or property (each, a “reorganization event”), each share of Series B Preferred Stock outstanding immediately prior to such reorganization event shall, without the consent of the holders of the Series B Preferred Stock, become convertible into the kind of securities, cash and other property that such holder would have been entitled to receive if such holder had converted its Series B Preferred Stock into common stock immediately prior to such reorganization event (such securities, cash and other property, the “exchange property,” with each “unit of exchange property” meaning the kind and amount of exchange property that a holder of one share of common stock is

 

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entitled to receive). For purposes of the foregoing, the type and amount of exchange property in the case of any reorganization event that causes our common stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of shareholder election) will be deemed to be the weighted average of the types and amounts of consideration received by the holders of our common stock that affirmatively make such an election (or of all holders of our common stock if none makes an election). We will notify holders of the Series B Preferred Stock of the weighted average as soon as practicable after such determination is made. The number of units of exchange property for each share of Series B Preferred Stock converted following the effective date of such reorganization event will be determined as if references to our common stock in the description of the conversion rate applicable upon mandatory conversion and conversion at the option of the holder were to units of exchange property (without interest thereon and without any right to dividends or distributions thereon which have a record date prior to the date such Series B Preferred Stock are actually converted).

 

In addition, we may make such increases in the Conversion Rate as we deem advisable in order to avoid or diminish any income tax to holders of our common stock resulting from any dividend or distribution of our common stock (or issuance of rights or warrants to acquire our common stock) or from any event treated as such for income tax purposes or for any other reason. We may only make such a discretionary adjustment if we make the same proportionate adjustment to the applicable Conversion Rate.

 

The term “Ex-Date” as used herein is the first date on which our common stock trades on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question from us or, if applicable, from the seller of our common stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.

 

Upon each adjustment to the Conversion Rate, a corresponding adjustment shall be made to the Conversion Price, calculated by dividing the liquidation preference by the adjusted Conversion Rate. Any adjustment pursuant to the foregoing provisions shall also result in a corresponding adjustment to the Share Cap.

 

13.                                Events That Will Not Result in Adjustment.

 

The Conversion Rate will not be adjusted:

 

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·              upon the issuance of any shares of our common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on our securities;

 

·              upon the issuance of any shares of our common stock, restricted stock or restricted stock units, nonqualified stock options, incentive stock options or any other options or rights (including stock appreciation rights) to purchase shares of our common stock pursuant to any present or future employee, director or consultant benefit plan or program of, or assumed by, us or any of our subsidiaries;

 

·              upon the issuance of any shares of our common stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in the preceding bullet point and outstanding as of the date the Series B Preferred Stock was first issued;

 

·              for unpaid accrued and accumulated dividends, if any;

 

·              upon the repurchase of any shares of our common stock pursuant to an open-market share repurchase program or other buy-back transaction that is not a tender offer or exchange offer; or

 

·              for a change in the par value of shares of our common stock.

 

We shall not take any action that would require an adjustment to the Conversion Rate such that the Conversion Price, as adjusted to give effect to such action, would be less than the then-applicable par value per share of our common stock, except we may undertake a share split or similar event if such share split results in a corresponding reduction in the par value per share of our common stock such that the as-adjusted new effective Conversion Price per share would not be below the new as-adjusted par value per share of our common stock following such share split or similar transaction and the Conversion Rate is adjusted as provided under clause (a) (and/or any such other clause(s) as may be applicable) under Section 12 of these Articles Supplementary. In addition, the articles supplementary provide that we may not take any action that would result in an adjustment to the Conversion Rate without complying with any applicable stockholder approval rules of the NYSE or any other stock exchange on which our common stock may be listed at the relevant time.

 

Except as otherwise provided for in these Articles Supplementary, we will not adjust the Conversion Rate for any issuance of shares of our common stock or any securities convertible into or exchangeable or exercisable for shares of our common stock or rights to purchase shares of our common stock or such convertible, exchangeable or exercisable securities.

 

14.                                Notice of Adjustment.

 

Whenever a Conversion Rate is to be adjusted, the Company shall:

 

(a) compute such adjusted Conversion Rate and prepare and transmit to the Transfer Agent an notice setting forth such adjusted Conversion Rate, the method of calculation thereof in

 

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reasonable detail and the facts requiring such adjustment and upon which such adjustment is based;

 

(b) not more than 10 calendar days prior to the occurrence of an event that requires an adjustment to the Conversion Rate, provide, or cause to be provided, a written notice to the registered holders (which, for the avoidance of doubt, shall be DTC in the event that the Series B Preferred Stock are represented by global certificates) of the occurrence of such event; and

 

(c) as soon as practicable following the determination of such adjusted Conversion Rate provide, or cause to be provided, to the registered holders a statement setting forth in reasonable detail the method by which the adjustment to the Conversion Rate was determined and setting forth such adjusted Conversion Rate.

 

15.                                Voting Rights.

 

(a)      Holders of the Series B Preferred Stock generally have no voting rights, except as set forth below:

 

(i)      Whenever a Penalty Event has occurred, the number of directors constituting the Board will be increased by two (if not already increased by two by reason of the election of directors by the holders of any other classes or series of our equity securities we may issue upon which similar voting rights have been conferred) and the holders of Series B Preferred Stock (voting separately as a class with all other classes or series of equity securities we may issue upon which similar voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series B Preferred Stock in the election of those two directors) will be entitled to vote for the election of those two additional directors at a special meeting called by us at the request of the holders of record of at least 25% of the outstanding shares of Series B Preferred Stock or by the holders of any other classes or series of equity securities upon which similar voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series B Preferred Stock in the election of those two directors (unless the request is received less than 90 days before the date fixed for the next annual or special meeting of stockholders, in which case, such vote will be held at the earlier of the next annual or special meeting of stockholders), and at each subsequent annual meeting until a Correction Event has occurred with respect to each Penalty Event then continuing. In that case, the right of holders of the Series B Preferred Stock to elect any directors will cease and, any directors elected by holders of the Series B Preferred Stock shall immediately resign and the number of directors constituting the Board shall be reduced accordingly. In no event shall the holders of Series B Preferred Stock be entitled pursuant to these voting rights to elect a director that would cause us to fail to satisfy a requirement relating to director independence of any National Exchange on which any class or series of our stock is listed or quoted. For the avoidance of doubt, in no event shall the total number of directors elected by holders of the Series B Preferred Stock (voting separately as a class with all other classes or series of equity securities we may issue upon which similar voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series B Preferred Stock in the election of such directors) pursuant to these voting rights exceed two.

 

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(ii)      If a special meeting is not called by us within 30 days after request from the holders of Series B Preferred Stock as described above, then the holders of record of at least 25% of the outstanding Series B Preferred Stock may designate a holder to call the meeting at our expense.

 

(iii)      If, at any time when the voting rights conferred upon the Series B Preferred Stock are exercisable as a result of a Penalty Event, as described above, any vacancy in the office of a director elected pursuant to those special voting rights shall occur, then such vacancy may be filled only by the remaining such director or by vote of the holders of record of the outstanding Series B Preferred Stock and any other classes or series of equity securities upon which similar voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series B Preferred Stock in the election of directors. Any director elected or appointed may be removed only by the affirmative vote of holders of the outstanding Series B Preferred Stock and any other classes or series of equity securities upon which similar voting rights have been conferred and are exercisable and which classes or series of equity securities are entitled to vote as a class with the Series B Preferred Stock in the election of directors, such removal to be effected by the affirmative vote of a majority of the votes entitled to be cast by the holders of the outstanding Series B Preferred Stock and any such other classes or series of equity securities, and may not be removed by the holders of the Common Stock.

 

(iv)      On each matter on which holders of Series B Preferred Stock are entitled to vote, each share of Series B Preferred Stock will be entitled to one vote, except that when shares of any other class or series of our equity securities have the right to vote with the Series B Preferred Stock as a single class on any matter, the Series B Preferred Stock and the shares of each such other class or series will have one vote for each $25.00 of stated liquidation preference (excluding accumulated dividends).

 

(v)      So long as any shares of the Series B Preferred Stock remain outstanding, we will not, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding shares of the Series B Preferred Stock and all other series of voting preferred stock entitled to vote thereon, voting together as a single class, given in person or by proxy, either in writing or at an annual or special meeting of such stockholders, in addition to any other vote required by our Charter or Maryland law:

 

·                                                                                                                   amend, alter the provisions of the Charter, including the articles supplementary so as to authorize or create, or increase the authorized amount of, any class or series of senior stock; or

 

·                                                                                                                   amend, alter or repeal the provisions of the Charter, including the articles supplementary so as to adversely affect the special rights, preferences, privileges or voting powers of the Series B Preferred Stock; or

 

·                                                                                                                   consummate a binding share exchange or reclassification involving the shares of the Series B Preferred Stock or a merger or consolidation of us with another entity, unless in each case: (i) the shares of the Series B Preferred Stock remain outstanding or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity (or the Series B Preferred Stock

 

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is otherwise exchanged or reclassified), are converted or reclassified into or exchanged for preferred stock of the surviving or resulting entity or its ultimate parent; and (ii) such shares of the Series B Preferred Stock that remain outstanding or such shares of Preferred Stock, as the case may be, have rights, preferences, privileges and voting powers that, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, taken as a whole, of the Series B Preferred Stock immediately prior to the consummation of such transaction; provided, however , that the following will be deemed not to adversely affect (or to otherwise cause to be materially less favorable the rights, preferences, privileges or voting powers of the Series B Preferred Stock and shall not require the affirmative vote of holders of the Series B Preferred Stock but may be effected by due action of the Board and any required approval of the holders of the Company’s common stock: (1) any increase in the amount of the Company’s authorized but unissued shares of the Company’s Preferred Stock, (2) any increase in the amount of our authorized Series B Preferred Stock or the issuance of any additional shares of the Series B Preferred Stock, (3) the authorization or creation of any class or series of parity or junior stock, any increase in the amount of authorized but unissued shares of such class or series of parity or junior stock or the issuance of additional shares of such class or series of parity or junior stock or (4) the adoption or inclusion (by amendment, alteration, share exchange, reclassification, merger, consolidation or similar means) of charter provisions (whether in the Charter or a successor entity certificate of incorporation or other equivalent governing document) applicable to capital stock (including Series B Preferred Stock or any successor Preferred Stock) relating to the ownership limitations and transfer restrictions that are customary, in the sole determination of the Board, for the protection of our or any successor entity’s status as a REIT and a “domestically controlled qualified investment entity” for tax purposes; provided, further, in each case that no vote of the holders of Series B Preferred Stock shall be required if provision is made to redeem and all Series B Preferred Stock is redeemed at or prior to the time such amendment, alteration, repeal, share exchange, reclassification, merger or consolidation is to take effect or when the issuance of any such shares or convertible securities is to be made, as the case may be, which provision shall include, for the avoidance of doubt, any Special Optional Redemption as described above.

 

(vi)      If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation described above would adversely affect one or more but not all series of voting Preferred Stock, then only the series of voting Preferred Stock adversely affected and entitled to vote shall vote as a class in lieu of all other series of voting Preferred Stock. Except as expressly stated in the Articles Supplementary or as may be required by applicable law, the Series B Preferred Stock will not have any relative, participating, optional or other special voting rights or powers and the consent of the holders thereof shall not be required for the taking of any corporate action.

 

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16.     Information Rights.

 

During any period in which the Company is not subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act and any shares of Series B Preferred Stock are outstanding, the Company will (i) transmit by mail (or other permissible means under the Exchange Act) to all holders of Series B Preferred Stock, as their names and addresses appear in our record books and without cost to such holders, copies of the annual reports on Form 10-K and quarterly reports on Form 10- Q that the Company would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if the Company were subject thereto (other than any exhibits that would have been required) and (ii) promptly, upon written request, supply copies of such reports to any holders or prospective holder of Series B Preferred Stock. The Company will mail (or otherwise provide) the reports to the holders of the Series B Preferred Stock within 15 days after the respective dates by which we would have been required to file such reports with the SEC, if the Company were subject to Section 13 or Section 15(d) of the Exchange Act, in each case, based on the dates on which the Company would be required to file such periodic reports if the Company were a “non-accelerated filer” as such term is understood in the context of the Exchange Act.

 

17.     The Series B Preferred Stock Ownership Limit .

 

The ownership limits set forth in Article VI of the Charter shall fully apply to the Series B Preferred Stock. Notwithstanding any other provision of the Series B Preferred Stock, no holder of shares of the Series B Preferred Stock will be entitled to convert any shares of Series B Preferred Stock into shares of our Common Stock to the extent that receipt of our Common Stock would cause such holder or any other person to exceed the applicable ownership limit contained in our Charter.

 

SECOND : The Series B Preferred Stock has been classified by the Board under the authority contained in the Charter.

 

THIRD : These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

 

FOURTH : These Articles Supplementary shall be effective at the time the State Department of Assessments and Taxation of Maryland accepts these Articles Supplementary for record.

 

FIFTH : The undersigned President of the Company acknowledges these Articles Supplementary to be the act of the Company and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

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IN WITNESS WHEREOF, the Company has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary of this 4th day of December, 2015.

 

 

	ASHFORD HOSPITALITY PRIME, INC.
	By:	/s/ Douglas A. Kessler
		Name: Douglas A. Kessler
		Title: President
	ATTEST:
	By:	/s/ David Brooks
		Name: David Brooks
		Title: Secretary

 

EXHIBIT 3.6

 

ASHFORD HOSPITALITY PRIME, INC.

ARTICLES SUPPLEMENTARY

SERIES C PREFERRED STOCK

 

Ashford Hospitality Prime, Inc., a Maryland corporation (the “ Corporation ”), having its principal office in Baltimore, Maryland, hereby certifies to the State Department of Assessments and Taxation of Maryland that:

 

FIRST:         Under a power contained in Section 2-208 of the Maryland General Corporation Law and Article V of the Corporation’s Articles of Amendment and Restatement (as the same may be amended or supplemented through the date hereof) (the “ Charter ”), the Board of Directors of the Corporation (the “ Board ”) classified ten million (10,000,000) authorized but unissued shares of preferred stock, par value $0.01 per share, of the Corporation (the “ Preferred Stock ”) as Series C Preferred Stock, with the following preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption, which, upon any restatement of the Charter, shall become part of Article V of the Charter, with any necessary or appropriate renumbering or relettering of the sections or subsections hereof. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Charter.

 

(1)      Designation and Number . A series of Preferred Stock, designated the “Series C Preferred Stock” (the “ Series C Preferred Stock ”), is hereby established. The par value of the Series C Preferred Stock is $0.01 per share, and the liquidation preference is $0.01 per share. The number of authorized shares of Series C Preferred Stock is ten million (10,000,000) shares. Such number of shares may be increased or decreased by resolution of the Board and by the filing of Articles Supplementary in accordance with the Maryland General Corporation Law and the acceptance for record thereof by the State Department of Assessments and Taxation of Maryland; provided, that no decrease shall reduce the number of shares of Series C Preferred Stock to a number less than the number of shares then outstanding.

 

(2)      Rank . The Series C Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution of the Corporation, ranks: (i) senior to the common stock, par value $0.01 per share (the “ Common Stock ”), of the Corporation; (ii) junior to the 5.50% Series B Cumulative Convertible Preferred Stock of the Corporation, par value $0.01 per share and all other equity securities issued by the Corporation other than equity securities referred to in clause (iii); and (iii) on parity with all other equity securities issued by the Corporation whose terms provide that those equity securities rank on parity with the Series C Preferred Stock with respect to rights to the payment of dividends or the distribution of the assets of the Corporation upon liquidation, dissolution or winding up. The term “equity securities” does not include convertible debt securities, which will rank senior to the Series C Preferred Stock.

 

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(3)      Dividends .

 

(A)      The holders of outstanding shares of Series C Preferred Stock shall not be entitled to any regular or special dividends or other distributions from the Corporation.

 

(B)      The holders of outstanding shares of Series C Preferred Stock shall not be entitled to participate in the earnings or assets of the Corporation.

 

(4)      Liquidation Rights . Upon the voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the holders of shares of the Series C Preferred Stock then outstanding shall be entitled to receive, or to be paid out of, the assets of the Corporation legally available for distribution to its stockholders $0.01 per share of Series C Preferred Stock. If, upon any such voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the available assets of the Corporation are insufficient to pay the full amount of the liquidating distributions on all outstanding shares of Series C Preferred Stock and the corresponding amounts payable on all outstanding shares of other classes or series of equity securities of the Corporation ranking, as to liquidation rights, on a parity with the Series C Preferred Stock in the distribution of assets, the holders of the Series C Preferred Stock and each such other class or series of equity securities ranking, as to liquidation rights, on a parity with the Series C Preferred Stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series C Preferred Stock will have no right or claim to any of the remaining assets of the Corporation.  The consolidation, conversion or merger of the Corporation with or into any other person, corporation, trust or entity, or the sale, lease, transfer or conveyance of all or substantially all of the property or business of the Corporation, shall not be deemed to constitute a dissolution, liquidation or winding up of the affairs of the Corporation.

 

In determining whether any distribution (other than upon voluntary or involuntary dissolution) by dividend, redemption or other acquisition of shares of stock or otherwise is permitted under the Maryland General Corporation Law, amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of the holders of the Series C Preferred Stock will not be added to the Corporation’s total liabilities.

 

(5)      Voting Rights .

 

(A)      Except as otherwise required by applicable law or the Charter and subject to the express terms of any other class or series of Preferred Stock, each share of Series C Preferred Stock shall entitle the holder thereof to one (1) vote for each share of Series C Preferred Stock held by such holder on each matter submitted to a vote of the stockholders of the Corporation, whether at a meeting of stockholders or by written consent, upon which holders of the Common Stock are entitled to vote, and the holders of Series C Preferred Stock and the holders of Common Stock shall

 

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vote together as a single class on all matters submitted to a vote of the stockholders of the Corporation upon which holders of Common Stock are entitled to vote, whether at a meeting of stockholders or by written consent.

 

(B)      The holders of Series C Preferred Stock shall be entitled to receive notice of all annual or special meetings of the stockholders of the Corporation in the same manner in which the holders of Common Stock are entitled to such notice.

 

(C)      Except as set forth herein, or as otherwise required by applicable law, holders of Series C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

 

(6)      Conversion . The Series C Preferred Stock shall not be convertible into or exchangeable for any other property or securities of the Corporation.

 

(7)      Maturity and Redemption . The Series C Preferred Stock has no stated maturity. Shares of the Series C Preferred Stock shall remain outstanding indefinitely; provided , however , that, notwithstanding the foregoing, in the event that (i) a holder of a Partnership Unit (as defined in that certain Second Amended and Restated Agreement of Limited Partnership of Ashford Hospitality Prime Limited Partnership, dated as of February 1, 2016 (as amended, the “ Partnership Agreement ”)) shall exercise its Redemption Right (as defined in the Partnership Agreement) with respect to any Partnership Units, (ii) the Partnership shall exercise its rights to repurchase or forfeiture with respect to any LTIP Units (as defined in the Partnership Agreement) or (iii) a holder of a Partnership Unit shall otherwise dispose of or cease to hold a Partnership Unit (other than pursuant to a Transfer (as defined in the Partnership Agreement) approved by the General Partner (as defined in the Partnership Agreement) in accordance with Article IX of the Partnership Agreement), then the shares of Series C Preferred Stock held by such holder shall in each case be automatically redeemed by the Corporation for no consideration without notice to such holder and without further action by the Corporation, but only if and to the extent that, after giving effect to any of (i), (ii) or (iii) above, the aggregate number of outstanding shares of Series C Preferred Stock held by such holder would exceed the product of (x) the aggregate number of Partnership Units then held by such holder multiplied by (y) the Conversion Factor (as defined in the Partnership Agreement) in effect on the date thereof.

 

(8)      Certain Adjustments . In the event the Corporation shall at any time (i) declare or pay a dividend on its outstanding Common Stock in shares of Common Stock or make a distribution to all holders of its outstanding Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock such that the Conversion Factor (as defined in the Partnership Agreement) shall be adjusted, then in each such case each share of Series C Preferred Stock outstanding immediately prior to such event shall be automatically and proportionally adjusted to equal the number of shares of Series C Preferred Stock equal to the product of one multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock issued and outstanding on the

 

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record date for such dividend, distribution, subdivision or combination (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time) and the denominator of which shall be the actual number of shares of Common Stock (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, subdivision or combination. Any adjustment pursuant to this Section 8 shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

 

(9)      Reacquired Shares . All shares of Series C Preferred Stock purchased, redeemed or otherwise acquired by the Corporation in any manner whatsoever shall constitute authorized but unissued shares of Preferred Stock, without designation as to class or series.

 

(10)      Amendment . At any time that any shares of Series C Preferred Stock are outstanding, the Charter shall not be amended in any manner, including in a merger, conversion, consolidation or otherwise, which would adversely alter, change or repeal the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications or terms and conditions of redemption of the Series C Preferred Stock without the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of Series C Preferred Stock, voting separately as a single class.

 

(11)      Ownership and Transfer Limitations; Legends .

 

(A)      The ownership and transfer limitations set forth in Article VI of the Charter shall fully apply to the Series C Preferred Stock.

 

(B)      The Series C Preferred Stock shall be subject to the restrictions on transfer set forth in Article IX of the Partnership Agreement.

 

(C)      Each stock certificate representing Series C Preferred Stock shall bear substantially the following legends (and a comparable notation or other arrangement will be made with respect to any uncertificated shares of Series C Preferred Stock):

 

THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER, ON REQUEST AND WITHOUT CHARGE, A FULL STATEMENT OF THE INFORMATION REQUIRED BY SECTION 2-211(B) OF THE CORPORATIONS AND ASSOCIATIONS ARTICLE OF THE ANNOTATED CODE OF MARYLAND WITH RESPECT TO THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS AND OTHER DISTRIBUTIONS, QUALIFICATIONS, AND TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE CORPORATION HAS AUTHORITY TO ISSUE AND, IF THE CORPORATION IS AUTHORIZED TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN SERIES, (I) THE DIFFERENCES IN THE RELATIVE RIGHTS AND

 

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PREFERENCES BETWEEN THE SHARES OF EACH SERIES TO THE EXTENT SET, AND (II) THE AUTHORITY OF THE BOARD OF DIRECTORS TO SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. THE FOREGOING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE CHARTER, A COPY OF WHICH WILL BE SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS. SUCH REQUEST MUST BE MADE TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.

 

THE SHARES OF CAPITAL STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL OWNERSHIP, CONSTRUCTIVE OWNERSHIP AND TRANSFER PRIMARILY FOR THE PURPOSE OF THE CORPORATION’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST (A “ REIT ”) UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “ CODE ”). EXCEPT AS EXPRESSLY PROVIDED IN THE CORPORATION’S CHARTER, (I) NO PERSON MAY BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF COMMON STOCK OF THE CORPORATION IN EXCESS OF 9.8 PERCENT (IN VALUE OR NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING COMMON STOCK OF THE CORPORATION UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) WITH RESPECT TO ANY CLASS OR SERIES OF SHARES OF CAPITAL STOCK OTHER THAN COMMON STOCK, NO PERSON MAY BENEFICIALLY OWN OR CONSTRUCTIVELY OWN MORE THAN 9.8 PERCENT (IN VALUE OR NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING SHARES OF SUCH CLASS OR SERIES OF SUCH STOCK OF THE CORPORATION (COLLECTIVELY, (I) AND (II) ARE REFERRED TO HEREIN AS THE “ OWNERSHIP LIMIT ”), UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK THAT WOULD RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(h) OF THE CODE, WOULD CAUSE EITHER THE CORPORATION TO BE CONSIDERED TO CONSTRUCTIVELY OWN AFTER APPLICATION OF THE CONSTRUCTIVE OWNERSHIP RULES OF SECTION 856(d)(5) OF THE CODE AN INTEREST IN A TENANT THAT IS DESCRIBED IN SECTION 856(d)(2)(B) OF THE CODE FOR PURPOSES OF APPLYING SECTION 856(c) OF THE CODE OR ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP (OR ANY SUCCESSOR THERETO) TO BE CONSIDERED TO CONSTRUCTIVELY OWN AFTER APPLICATION OF THE CONSTRUCTIVE OWNERSHIP RULES OF SECTION 856(d)(5) OF THE CODE, AS MODIFIED BY THE RULES OF SECTION 7704(d) OF THE CODE, AN INTEREST IN A TENANT THAT IS DESCRIBED IN SECTION 856(d)(2)

 

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(B) OF THE CODE FOR PURPOSES OF APPLYING SECTION 7704(d) OF THE CODE, OR OTHERWISE WOULD CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT UNDER THE CODE; AND (IV) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK IF SUCH TRANSFER WOULD RESULT IN SHARES OF CAPITAL STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OWNS OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSE OR WILL CAUSE A PERSON TO BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO A CHARITABLE TRUSTEE OF A CHARITABLE TRUST FOR THE BENEFIT (EXCEPT AS OTHERWISE PROVIDED IN THE CORPORATION’S CHARTER) OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID  AB INITIO . A PERSON WHO ATTEMPTS TO BENEFICIALLY OWN OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN VIOLATION OF THE TRANSFER RESTRICTIONS DESCRIBED ABOVE SHALL HAVE NO CLAIM, CAUSE OF ACTION OR ANY RECOURSE WHATSOEVER AGAINST A TRANSFEROR OF SUCH SHARES OF CAPITAL STOCK. ALL TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE CORPORATION’S CHARTER, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER, WILL BE FURNISHED TO EACH HOLDER OF SHARES OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND WITHOUT CHARGE. THE SHARES OF SERIES C PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”) OR ANY SECURITIES LAWS OF ANY OTHER JURISDICTION, AND ARE “RESTRICTED SECURITIES” AS DEFINED IN RULE 144 PROMULGATED UNDER THE SECURITIES ACT. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, HYPOTHECATED, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT DECLARED OR ORDERED EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT, OR (II) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT, AND IN THE CASE OF ANY SALE, OFFER FOR SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE OR

 

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OTHER TRANSFER OR DISPOSITION EFFECTED PURSUANT TO CLAUSE (II) ABOVE, PURSUANT TO AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ASHFORD HOSPITALITY PRIME, INC. THAT SUCH SALE, OFFER FOR SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE OR OTHER TRANSFER OR DISTRIBUTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT.

 

THE SHARES OF SERIES C PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH IN THE SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP, DATED AS OF FEBRUARY 1, 2016 (AS AMENDED FROM TIME TO TIME, THE “ PARTNERSHIP AGREEMENT ”), AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, HYPOTHECATED, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE GENERAL PARTNER (AS DEFINED IN THE PARTNERSHIP AGREEMENT) OF ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP AND ASHFORD HOSPITALITY PRIME, INC.

 

SECOND:     The shares of Series C Preferred Stock have been classified and designated by the Board under the authority contained in the Charter.

 

THIRD:     These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

 

FOURTH:     These Articles Supplementary shall be effective at the time the State Department of Assessments and Taxation of Maryland accepts them for record.

 

FIFTH:     The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

[ Remainder of page intentionally left blank ]

 

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IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary of this 1st day of February, 2016.

 

ASHFORD HOSPITALITY PRIME, INC.
By:	/s/ Douglas A. Kessler
	Name: Douglas A. Kessler
	Title: President
ATTEST:
	/s/ David A. Brooks
	Name: David A. Brooks
	Title: Secretary

 

Exhibit 3.7

 

ASHFORD HOSPITALITY PRIME, INC.

 

ARTICLES SUPPLEMENTARY ESTABLISHING ADDITIONAL SHARES
OF SERIES B PREFERRED STOCK

 

Ashford Hospitality Prime, Inc., a Maryland corporation (the “ Corporation ”), having its principal office in Baltimore City, Maryland and its corporate office in Dallas, Texas certifies to the State Department of Assessments and Taxation of Maryland that:

 

FIRST :  Under a power contained in Section 2-208 of the Maryland General Corporation Law and Article V of the Corporation’s charter (“ Charter ”), the Board of Directors (the “ Board ”) previously classified and designated 2,600,000 shares of the unissued preferred stock, par value $.01 per share, of the Corporation as 5.50% Series B Cumulative Convertible Preferred Stock (the “ Series B Preferred Stock ”), having the preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as set forth in the “Articles Supplementary Establishing and Fixing the Rights and Preferences of a Series of Preferred Stock” filed by the Corporation with the State Department of Assessments and Taxation of Maryland on December 4, 2015 (the “ Series B Articles Supplementary ”).

 

SECOND:                                          Under a power contained in Section 2-208 of the Maryland General Corporation Law and Article V of the Corporation’s Charter, the Board of Directors on April 22, 2016, classified an additional 400,000 shares of preferred stock as Series B Preferred Stock, par value $.01 per share, having all of the preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as set forth in the Series B Articles Supplementary, with the result that the Corporation shall, upon the filing and acceptance for record of these Articles Supplementary have authorized an aggregate of 3,000,000 shares of Series B Preferred Stock, all of which shall constitute a single series of preferred stock.

 

THIRD :  These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

 

FOURTH :  These Articles Supplementary shall be effective at the time the State Department of Assessments and Taxation of Maryland accepts these Articles Supplementary for record.

 

The undersigned President of the Corporation acknowledges these Articles Supplementary to be the act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

 

 

IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary as of this 27th day of April 2016.

 

	ASHFORD HOSPITALITY PRIME, INC.
	By:	/s/ Douglas A. Kessler
		President
	ATTEST:
	By:	/s/ David A. Brooks
		Secretary

 

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