-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LkAuHOk6BeE3aVDm/ljJAOYxRB7KDJe+9MRcoLbXpfGVOMoIYunblYE7it7YsE8T rmsfhCLHFFzD35qPndZ/7A== 0000923118-99-000021.txt : 19991206 0000923118-99-000021.hdr.sgml : 19991206 ACCESSION NUMBER: 0000923118-99-000021 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19991203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOME PROPERTIES OF NEW YORK INC CENTRAL INDEX KEY: 0000923118 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 161455126 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-92023 FILM NUMBER: 99768255 BUSINESS ADDRESS: STREET 1: 850 CLINTON SQ CITY: ROCHESTER STATE: NY ZIP: 14604 BUSINESS PHONE: 7162464105 MAIL ADDRESS: STREET 1: 850 CLINTON SQUARE CITY: ROCHESTER STATE: NY ZIP: 14604 S-3 1 As filed with the Securities and Exchange Commission on December 3, 1999 Registration No. 333- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- Form S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ---------------------- HOME PROPERTIES OF NEW YORK, INC. (Exact name of registrant as specified in charter) ------------------------ Maryland 16-1455126 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 850 Clinton Square Rochester, New York 14604 (716) 546-4900 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------- Ann M. McCormick, Esq. Vice President, Secretary and General Counsel Home Properties of New York, Inc. 850 Clinton Square Rochester, New York 14604 (716) 246-4105 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------- Copies to: Deborah McLean Quinn, Esq. Nixon Peabody LLP 900 Clinton Square Rochester, New York 14604 (716) 263-1307 ---------------- Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective. If only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /x/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE Title of Each Proposed Proposed Amount Class of Amount to Maximum Maximum of Securities to be Offering Price Aggregate Registra- Registered Registered Per Share (1) Offering Price tion Fee Common Stock par value $.01 5,832,174 sh. $ 25.0625 $146,168,861 $38,589 (1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933 and based upon the prices reported on the New York Stock Exchange on November 26, 1999 of $25.0625. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. PROSPECTUS 5,832,174 Shares HOME PROPERTIES OF NEW YORK, INC. COMMON STOCK ($.01 par value) ------------------- All of the shares of the common stock, par value $.01 per share of Home Properties of New York, Inc. offered hereby are being offered by the Selling Shareholders of Home Properties. See "Selling Shareholders." We will not receive any proceeds from the sale of the shares offered hereby. The Common Stock is listed on the New York Stock Exchange under the symbol "HME". On November 26, 1999, the closing price of the common stock on the New York Stock Exchange was $25.0625 per share. --------------- An investment in the common stock involves risk. See the "Risk Factors" referred to on page 1. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------- The date of this Prospectus is December __, 1999 TABLE OF CONTENTS SECTION PAGE Where you can find more information i Special Note regarding forward looking information i The Company 1 Use of Proceeds 1 Risk Factors 1 Description of Capital Stock 2 Federal Income Tax Considerations 7 ERISA Considerations 23 Selling Shareholders 24 Plan of Distribution 27 Legal Matters 27 Experts 27 WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy reports, statements or other information at the SEC's public reference rooms in Washington D.C., New York, New York or Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from commercial document retrieval services and at the web site maintained by the SEC at HTTP://www.SEC.GOV. You can also review copies of our SEC filings at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. We have filed with the SEC a registration statement on Form S-3 to register the securities. This prospectus is part of that registration statement and, as permitted by the SEC's rules, does not contain all the information set forth in the registration statement. For further information you may refer to the registration statement and to the exhibits and schedules filed as part of the registration statement. You can review and copy the registration statement and its exhibits and schedules at the public reference facilities maintained by the SEC as described above. The registration statement, including its exhibits and schedules, is also available on the SEC's web site. The SEC allows us to "incorporate by reference" the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus and the information that we file with the SEC later will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934: - - Annual Report on Form 10-K for the fiscal year ended December 31, 1998; - - Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 1999, June 30, 1999 and September 30, 1999; - - Current Reports on Form 8-K and Form 8-K/A dated July 2, 1999, July 29, 1999, July 30, 1999, October 5, 1999 and November 12, 1999; and - - The description of the common stock contained in our registration statement on Form 8-A filed under Section 12 of the Securities Exchange Act, including all amendments and reports filed for the purpose of updating that description. You may request a copy of these filings, at no cost, by writing or telephoning us at: Home Properties of New York, Inc., Attention: Ann M. McCormick, Secretary, 850 Clinton Square, Rochester, New York 14604; telephone number (716) 546-4900. YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHERTHAN THE DATE ON THE FRONT OF THOSE DOCUMENTS. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain of the matters discussed in this prospectus or in the information incorporated by reference may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such information may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. THE COMPANY Home Properties is a fully integrated, self-managed real estate investment trust which operates 292 communities containing 45,475 apartment units. Of these, 33,807 units in 126 communities are wholly owned directly or indirectly by the Company, 7,710 units are partially owned and managed by the Company as general partner, and 3,958 units are managed for other owners. The communities are located throughout the Northeastern quadrant of the United States, including New York, Michigan, New Jersey, Pennsylvania, Maryland, Illinois, Maine, Virginia, Connecticut, Indiana, Delaware and Ohio. Home Properties also manages 1.7 million square feet of commercial space. Home Properties conducts substantially all of its business and owns all of its properties through Home Properties of New York, L.P. (the "Operating Partnership"), of which the Company is the general partner. The Company is also the sole shareholder of Home Properties Trust (the "QRS"), a Maryland real estate trust, which is a limited partner of the Operating Partnership, and various affilites of the Company and the Operating Partnership. To comply with certain technical requirements of the Internal Revenue Code, the Operating Partnership carries out portions of its property management and development activities through management companies beneficially owned by the Operating Partnership or controlled by one or more officers of Home Properties (the "Management Companies") The Company's executive offices are located at 850 Clinton Square, Rochester, New York 14604. Its telephone number is (716) 546-4900. USE OF PROCEEDS The Company will not receive any cash proceeds as a result of this offering. The Company will, however, acquire additional partnership units in the Operating Partnership in exchange for the shares of Common Stock issued to the Selling Shareholders which are being sold hereunder. See "Selling Shareholders" below. RISK FACTORS An investment in the Common Stock involves certain risks. You should review the information set forth under the heading "Risk Factors" in the Prospectus Supplement, dated June 16, 1998, filed as part of our Registration Statement on Form S-3 (No. 333-52601), filed with the Securities and Exchange Commission on May 14, 1998. 1 DESCRIPTION OF CAPITAL STOCK GENERAL The authorized capital stock of Home Properties consists of 80 million shares of Common Stock, par value $.01 per share ("Common Stock"), 10 million shares of excess stock ("Excess Stock"), par value $.01 per share, and 10 million shares of preferred stock ("Preferred Stock"), par value $.01 per share. The following summary description of the Common Stock and the Preferred Stock sets forth certain general terms and conditions of the capital stock of Home Properties. The descriptions below do not purport to be complete and are qualified entirely by reference to Home Properties' Articles of Amendment and Restatement of Articles of Incorporation, as amended ("Articles of Incorporation"). COMMON STOCK All shares of Common Stock offered will be duly authorized, fully paid, and nonassessable. Holders of the Common Stock will have no conversion, redemption, sinking fund or preemptive rights; however, shares of Common Stock will automatically convert into shares of Excess Stock as described below. Under the Maryland General Corporation Law ("MGCL"), stockholders are generally not liable for Home Properties' debts or obligations, and the holders of shares will not be liable for further calls or assessments by Home Properties. Subject to the provisions of Home Properties' Articles of Incorporation regarding Excess Stock described below, all shares of Common Stock have equal dividend, distribution, liquidation and other rights and will have no preference or exchange rights. Subject to the right of any holders of Preferred Stock to receive preferential distributions, the holders of the shares of Common Stock will be entitled to receive distributions in the form of dividends if and when declared by the Board of Directors of Home Properties out of funds legally available therefor, and, upon liquidation of Home Properties, each outstanding share of Common Stock will be entitled to participate pro rata in the assets remaining after payment of, or adequate provision for, all known debts and liabilities of Home Properties, including debts and liabilities arising out of its status as general partner of the Operating Partnership, and any liquidation preference of issued and outstanding Preferred Stock. Home Properties intends to continue paying quarterly distributions. The holder of each outstanding share of Common Stock will be entitled to one vote on all matters presented to stockholders for a vote, subject to the provisions of Home Properties' Articles of Incorporation regarding Excess Stock described below. As described below, the Board of Directors of Home Properties may, in the future, grant holders of one or more series of Preferred Stock the right to vote with respect to certain matters when it fixes the attributes of such series of Preferred Stock. Pursuant to the MGCL, Home Properties cannot dissolve, amend its charter, merge another entity, sell all or substantially all its assets, engage in a share exchange or engage in similar transactions unless such action is approved by stockholders holding a majority of the outstanding shares entitled to vote on such matter. In addition, the Second Amended and Restated Partnership Agreement of the Operating Partnership, as amended (the "Partnership Agreement") requires that any merger or sale of all or substantially all of the assets of Operating Partnership be approved by partners holding a majority of the outstanding Units, excluding Operating Partnership Units held by Home Properties. Home Properties' Articles of Incorporation provide that its Bylaws may be amended by its Board of Directors. The holder of each outstanding share of Common Stock will be entitled to one vote in the election of directors who serve for terms of one year. Holders of the shares of Common Stock will have no right to cumulative voting for the election of directors. Consequently, at each annual meeting of stockholders, the holders of a majority of the shares entitled to vote in the election of directors will be able to elect all of the directors. Directors may be removed only for cause and only with the affirmative vote of the holders of a majority of the shares entitled to vote in the election of directors. The State Treasurer of the State of Michigan, as custodian of various public employee retirement systems (the "Michigan Retirement System") owns the Class A interest in the Operating Partnership which is, under certain circumstances, convertible into 1,666,667 shares of Common Stock (subject to adjustment). Under the purchase agreement with respect to that Class A interest, the Michigan Retirement System has the right to nominate one person to stand for election to the Home Properties' Board of Directors. If the preferred return on the Class A interest is not paid by the Operating Partnership, the Michigan Retirement System may nominate additional directors. The Michigan Retirement System also owns a substantial number of shares of Common Stock. PREFERRED STOCK Preferred Stock may be issued from time to time, in one or more series, as authorized by the Board of Directors of Home Properties. The Board of Directors will fix the attributes of any Preferred Stock that it authorizes for issuance. Because the Board of Directors has the power to establish the preferences and rights of each series of Preferred Stock, it may afford the holders of any series of Preferred Stock preferences, powers and rights, voting or otherwise, senior to the rights of holders of shares of Common Stock. The issuance of Preferred Stock could have the effect of delaying or preventing a change in control of Home Properties. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of Home Properties, then, before any distribution or payment shall be made to the holders of any shares of Common Stock, any Excess Shares or any other class or series of capital stock of Home Properties ranking junior to any outstanding Preferred Stock in the distribution of assets upon any liquidation, dissolution or winding up of Home Properties, the holders of shares of each series of Preferred Stock shall be entitled to receive out of assets of Home Properties legally available for distribution to shareholders liquidating distributions in the amount of the liquidation preference per share, plus an amount equal to all dividends accrued and unpaid thereon (which shall not include any accumulation in respect of unpaid dividends for prior dividend periods if such shares of Preferred Stock do not have cumulative dividend). After payment of the full amount of the liquidating distributions to which they are entitled, the holders of shares of Preferred Stock will have no right or claim to any of the remaining assets of Home Properties. In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of Home Properties are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Preferred Stock and the corresponding amounts payable on all shares of other classes or series of capital stock of Home Properties ranking on a parity with such shares of Preferred Stock in the distribution of assets, then the holders of such shares of Preferred Stock and all other such classes or series of capital 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. Home Properties expects to file Articles Supplementary to its Articles of Incorporation to create a series of preferred stock designated as "Series A Convertible Preferred Stock" which is expected to have substantially the same rights, privileges and preferences as the Class A limited partnership interest in the Operating Partnership currently held by the State of Michigan Retirement System. Once the Series A Convertible Preferred Stock is created, Home Properties expects that the State of Michigan Retirement System will exchange its Class A Limited Partnership interest for 1,666,667 shares of the Series A Convertible Preferred Stock. On September 30, 1999, Home Properties issued 2,000,000 shares of its newly authorized Series B Convertible Cumulative Preferred Stock in a private placement. The Articles Supplementary to the Articles of Incorporation establishing the Series B Convertible Cumulative Preferred Stock sets forth the rights, privileges and preferences of that stock. The Series B Stock is junior to the right of payment to the Series A Convertible Preferred Stock, is entitled to a liquidation preference of $25.00 per shares and dividends equal to the greater of the dividends payable on the Common Stock, or 8.36% of the liquidation preference (or $2.09 per share) each year. Upon the occurrence of certain events, the dividends on the Series B Convertible Cumulative Preferred Stock increase, the stock may be subject to a mandatory offer of redemption by Home Properties at a premium and the holders may be entitled to elect two directors to the Board of Directors of Home Properties. The Series B Preferred Stock is convertible into Common Stock on a one-for-one basis, subject to adjustment. RESTRICTIONS ON TRANSFER OWNERSHIP LIMITS. Home Properties' Articles of Incorporation contain certain restrictions on the number of shares of capital stock that stockholders may own. For Home Properties to qualify as a REIT under the Code, no more than 50% in value of its outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year or during a proportionate part of a shorter taxable year. The capital stock must also be beneficially owned by 100 or more persons during at least 335 days of a taxable year or during a proportionate part of a shorter taxable year. Because Home Properties expects to continue to qualify as a REIT, its Articles of Incorporation contain restrictions on the ownership and transfer of shares of its capital stock intended to ensure compliance with these requirements. Subject to certain exceptions specified in the Articles of Incorporation, no holder may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 8.0% (the "Ownership Limit") of the value of the issued and outstanding shares of capital stock of Home Properties. Certain entities, such as qualified pension plans, are treated as if their beneficial owners were the holders of the Common Stock held by such entities. Stockholders ("Existing Holders") whose holdings exceeded the Ownership Limit immediately after Home Properties' initial public offering of its Common Stock, assuming that all Units of the Operating Partnership are counted as shares of Common Stock, are permitted to continue to hold the number of shares they held on such date and may acquire additional shares of capital stock upon (i) the exchange of Units for Shares, (ii) the exercise of stock options or receipt of grants of shares of capital stock pursuant to a stock benefit plan, (iii) the acquisition of shares of capital stock pursuant to a dividend reinvestment plan, (iv) the transfer of shares of capital stock from another Existing Holder or the estate of an Existing Holder by devise, gift or otherwise, or (v) the foreclosure on a pledge of shares of capital stock; provided, no such acquisition may cause any Existing Holder to own, directly or by attribution, more than 17.5% (the "Existing Holder Limit") of the issued and outstanding Shares, subject to certain additional restrictions. The Board of Directors of Home Properties may increase or decrease the Ownership Limit and Existing Holder Limit from time to time, but may not do so to the extent that after giving effect to such increase or decrease (i) five beneficial owners of Shares could beneficially own in the aggregate more than 49.5% of the aggregate value of the outstanding capital stock of Home Properties or (ii) any beneficial owner of capital stock would violate the Ownership Limit or Existing Holder Limit as a result of a decrease. The Board of Directors may waive the Ownership Limit or the Existing Holder Limit with respect to a holder if such holder provides evidence acceptable to the Board of Directors that such holder's ownership will not jeopardize Home Properties' status as a REIT. Any transfer of outstanding capital stock of Home Properties ("Outstanding Stock") that would (i) cause any holder, directly or by attribution, to own capital stock having a value in excess of the Ownership Limit or Existing Holder Limit, (ii) result in shares of capital stock other than Excess Stock, if any, to be owned by fewer than 100 persons, (iii) result in Home Properties being closely held within the meaning of section 856(h) of the Code, or (iv) otherwise prevent Home Properties from satisfying any criteria necessary for it to qualify as a REIT, is null and void, and the purported transferee acquires no rights to such Outstanding Stock. Outstanding Stock owned by or attributable to a stockholder or shares of Outstanding Stock purportedly transferred to a stockholder which cause such stockholder or any other stockholder to own shares of capital stock in excess of the Ownership Limit or Existing Holder Limit will automatically convert into shares of Excess Stock. Such Excess Stock will be transferred by operation of law to a separate trust, with Home Properties acting as trustee, for the exclusive benefit of the person or persons to whom such Outstanding Stock may be ultimately transferred without violating the Ownership Limit or Existing Holder Limit. Excess Stock is not treasury stock, but rather constitutes a separate class of issued and outstanding stock of Home Properties. While the Excess Stock is held in trust, it will not be entitled to vote, will not be considered for purposes of any stockholder vote or the determination of a quorum for such vote and will not be entitled to participate in dividends or other distributions. Any record owner or purported transferee of Outstanding Stock which has converted into Excess Stock (the "Excess Holder") who receives a dividend or distribution prior to the discovery by Home Properties that such Outstanding Stock has been converted into Excess Stock must repay such dividend or distribution upon demand. While Excess Stock is held in trust, Home Properties will have the right to purchase it from the trust for the lesser of (i) the price paid for the Outstanding Stock which converted into Excess Stock by the Excess Holder (or the market value of the Outstanding Stock on the date of conversion if no consideration was given for the Outstanding Stock)or (ii) the market price of shares of capital stock equivalent to the Outstanding Stock which converted into Excess Stock (as determined in the manner set forth in the Articles of Incorporation) on the date Home Properties exercises its option to purchase. Home Properties must exercise this right within the 90-day period beginning on the date on which it receives written notice of the transfer or other event resulting in the conversion of Outstanding Stock into Excess Stock. Upon the liquidation of Home Properties, distributions will be made with respect to such Excess Stock as if it consisted of the Outstanding Stock from which it was converted. Any Excess Holder, with respect to each trust created upon the conversion of Outstanding Stock into Excess Stock, may designate any individual as a beneficiary of such trust; provided, such person would be permitted to own the Outstanding Stock which converted into the Excess Stock held by the trust under the Ownership Limit or Existing Holder Limit and the consideration paid to such Excess Holder in exchange for designating such person as the beneficiary is not in excess of the price paid for the Outstanding Stock which converted into Excess Stock by the Excess Holder (or the market value of the Outstanding Stock on the date of conversion if no consideration was given for the Outstanding Stock). Home Properties' redemption right must have expired or been waived prior to such designation. Immediately upon the designation of a permitted beneficiary, the Excess Stock, if any, will automatically convert into shares of the Outstanding Stock from which it was converted and Home Properties as trustee of the trust will transfer such shares, if any, and any proceeds from redemption or liquidation to the beneficiary. If the restrictions on ownership and transfer, conversion provisions or trust arrangements in Home Properties' Articles of Incorporation are determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the Excess Holder of any Outstanding Stock that would have converted into shares of Excess Stock if the conversion provisions of the Articles of Incorporation were enforceable and valid shall be deemed to have acted as an agent on behalf of Home Properties in acquiring such Outstanding Stock and to hold such Outstanding Stock on behalf of Home Properties unless Home Properties waives its right to this remedy. The foregoing ownership and transfer limitations may have the effect of precluding acquisition of control of Home Properties without the consent of its Board of Directors. All certificates representing shares of capital stock will bear a legend referring to the restrictions described above. The foregoing restrictions on transferability and ownership will not apply if the Board of Directors determines, and the stockholders concur, that it is no longer in the best interests of Home Properties to attempt to qualify, or to continue to qualify, as a REIT. Approval of the limited partners of the Operating Partnership to terminate REIT status is also required. OWNERSHIP REPORTS. Every owner of more than 5% of the issued and outstanding shares of capital stock of Home Properties must file a written notice with Home Properties containing the information specified in the Articles of Incorporation no later than January 31 of each year. In addition, each stockholder shall, upon demand, be required to disclose to Home Properties in writing such information as Home Properties may request in order to determine the effect of such stockholder's direct, indirect and attributed ownership of shares of capital stock on Home Properties' status as a REIT or to comply with any requirements of any taxing authority or other governmental agency. CERTAIN OTHER PROVISIONS OF MARYLAND LAW AND CHARTER DOCUMENTS The following discussion summarizes certain provisions of MGCL and Home Properties' Articles of Incorporation and Bylaws. This summary does not purport to be complete and is subject to and qualified in its entirety by reference to the Articles of Incorporation and Bylaws, copies of which are filed as exhibits to the Registration Statement of which this Prospectus constitutes a part. See "Additional Information." LIMITATION OF LIABILITY AND INDEMNIFICATION. The Articles of Incorporation and Bylaws limit the liability of directors and officers to Home Properties and its stockholders to the fullest extent permitted from time to time by the MGCL and require Home Properties to indemnify its directors, officers and certain other parties to the fullest extent permitted from time to time by the MGCL. BUSINESS COMBINATIONS. Under the MGCL, certain "business combinations" (including a merger, consolidation, share exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and any person who beneficially owns 10% or more of the voting power of the outstanding voting stock of the corporation or an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then-outstanding voting stock of the corporation (an "Interested Stockholder") or an affiliate thereof, are prohibited for five years after the most recent date on which the Interested Stockholder became an Interested Stockholder. Thereafter, in addition to any other required vote, any such business combination must be recommended by the board of directors of such corporation and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation, voting together as a single voting group, and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation (other than voting stock held by the Interested Stockholder who will, or whose affiliate will, be a party to the business combination or by an affiliate or associate of the Interested Stockholder) voting together as a single voting group. The extraordinary voting provisions do not apply if, among other things, the corporation's stockholders receive a price for their shares determined in accordance with the MGCL and the consideration is received in cash or in the same form as previously paid by the Interested Stockholder for its shares. These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the board of directors of the corporation prior to the time that the Interested Stockholder becomes an Interested Stockholder. The Articles of Incorporation of Home Properties contain a provision exempting from these provisions of the MGCL any business combination involving the Leenhoutses (or their affiliates) or any other person acting in concert or as a group with any of the foregoing persons. In addition, as a condition to its investments in the Company and the Operating Partnership, the State of Michigan requested, and was granted, an exemption from the applicability of the "business combination" provisions of the MGCL. CONTROL SHARE ACQUISITIONS. The MGCL provides that "control shares" of a Maryland corporation acquired in a "control share acquisition" have no voting rights except to the extent approved by the affirmative vote of two-thirds of the votes entitled to be cast on the matter other than "interested shares" (shares of stock in respect of which any of the following persons is entitled to exercise or direct the exercise of the voting power of shares of stock of the corporation in the election of directors: an "acquiring person," an officer of the corporation or an employee of the corporation who is also a director). "Control shares" are shares of stock which, if aggregated with all other such shares of stock owned by the acquiring person, or in respect of which such person is entitled to exercise or direct the exercise of voting power of shares of stock of the corporation in electing directors within one of the following ranges of voting power: (i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority of more of all voting power. Control shares do not include shares the acquiring person is entitled to vote as a result of having previously obtained stockholder approval. The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or to acquisitions approved or exempted by the charter or bylaws of the corporation. A person who has made or proposes to make a control share acquisition, under certain conditions (including an undertaking to pay expenses), may compel the board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the control shares upon delivery of an acquiring person statement containing certain information required by the MGCL, including a representation that the acquiring person has the financial capacity to make the proposed control share acquisition, and a written undertaking to pay the corporation's expenses of the special meeting (other than the expenses of those opposing approval of the voting rights). If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting. If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the MGCL, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value, determined without regard to the absence of voting rights for control shares, as of the date of the last control share acquisition or, if a stockholder meeting is held, as of the date of the meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders' meeting before the control share acquisition and the acquiring person becomes entitled to exercise or direct the exercise of a majority or more of all voting power, all other stockholders may exercise rights of objecting shareholders under Maryland law to receive the fair value of their Shares. The fair value of the Shares for such purposes may not be less than the highest price per share paid by the acquiring person in the control share acquisition. Certain limitations and restrictions otherwise applicable to the exercise of objecting shareholders' rights do not apply in the context of a control share acquisition. The Articles of Incorporation contain a provision exempting from the control share acquisition statute any and all acquisitions to the extent that such acquisitions would not violate the Ownership Limit or Existing Owner Limit. There can be no assurance that such provision will not be amended or eliminated at any point in the future. In addition, as a condition to its investment in the Company and the Operating Partnership, the State of Michigan requested, and was granted, an exemption from the control share acquisition statute. FEDERAL INCOME TAX CONSIDERATIONS An investment in the common stock involves certain income tax considerations. You should review the information set forth under "Federal Income Tax Considerations" in the Prospectus Supplement dated June 16, 1998, filed as part of our Registration Statement on Form S-3 (No. 333-52601), filed with Securities and Exchange Commission on May 14, 1998. SELLING SHAREHOLDERS The partners of the Operating Partnership may from time to time tender their Units of limited partnership interest to the Operating Partnership. The Company may give notice to such partners that the Company will acquire such Units in exchange for shares of Common Stock (the "LP Purchase Right"). All of the shares being offered hereby are being sold by the partners in the Operating Partnership who may acquire shares of Common Stock in exchange for their Units pursuant to the LP Purchase Right (all of such persons being collectively referred to as the "Selling Shareholders"). Although none of the Selling Shareholders has indicated a present intent to tender their Units which would trigger the Company's right to issue shares of Common Stock to them under the LP Purchase Right, the Company is required, pursuant to the terms of various registration rights agreements, to file the registration statement of which this Prospectus forms a part registering such shares for resale under the Securities Act. The Company is bearing all costs of this registration. The Company will not receive any proceeds from the sale of the shares offered hereby. The following table sets forth certain information regarding the Selling Shareholders' ownership of Units and the number of shares of Common Stock which may be issued pursuant to the LP Purchase Right which are registered for resale. Because the Selling Shareholders may sell all, some or none of the shares registered for resale, no estimate can be made concerning the number shares of Common Stock issued in exchange for Units that will be offered hereby or the number of shares or Units that each Selling Shareholder will own upon completion of the offering contemplated by this Prospectus. Number of Shares Units Owned Registered for Sale Name Prior to Offering in Offering - ------------------------------- ----------------- -------------------- C.O.F., INC. 21,280 21,280 C. TERRANCE BUTWID 1,970 1,970 TIMOTHY FOURNIER 2,000 2,000 JOHN OSTER 1,419 1,419 THE ENID BARDEN TRUST OF JUNE 28, 1995 11,758 11,758 FAIRWAY PROPERTY COMPANY 5,324 5,324 DAVID A. GUMENICK 7,454 7,454 DAVID HERSKOVITZ 2,130 2,130 CONSTANCE W. JACOB 2,662 2,662 THE HOWARD J. LESHMAN REVOCABLE 7,839 7,839 TRUST DATED MAY 20, 1983 AS AMENDED AND RESTATED ON MARCH 4, 1998 LYLE PROPERTIES LIMITED PARTNERSHIP 11,758 11,758 MARVIN NOVICK 331 331 DAVID K. PAGE 7,986 7,986 KEITH J. POMEROY TRUST OF 12/13/76 22,406 22,406 AS AMENDED AND RESTATED 6/28/95 DAVID SILLMAN 31,965 31,965 LIONEL J. STOBER TRUST 5,324 5,324 RUTH STOBER 5,324 5,324 ARI STUTZ 2,662 2,662 JONAH L. STUTZ 5,324 5,324 LEAH STUTZ 2,662 2,662 STEVEN I. VICTOR TRUST 5,324 5,324 WOODRIDGE PROPERTIES LIMITED 15,972 15,972 PARTNERSHIP RICHARD BACAS 2,136 2,136 JULIE BELINKIE 7,854 7,854 DAVID BENDER 7,854 7,854 JAY BENDER 6,283 6,283 LISA BENDER-FELDMAN 6,283 6,283 SCOTT BENDER 6,283 6,283 BARBARA BENDER-LASKOW 7,854 7,854 CAPLIN FAMILY INVESTMENTS, LLC 111,705 111,705 MICHAEL A. CAPLIN 26,284 26,284 JEREMY O. CAPLIN 39,425 39,425 CATHERINE CAPLIN 32,854 32,854 THE CAPLIN FAMILY TRUST 32,854 32,854 YETTA K. COHEN 150,991 150,991 COMMUNITY REALTY COMPANY, INC. 160,360 160,360 BENEDICT C. COSIMANO 2,136 2,136 SAMUEL DIENER, JR. REVOCABLE TRUST 16,758 16,758 CLARENCE DODGE, JR. REVOCABLE TRUST 154,036 154,036 DATED 1/10/92 MARCIA ESTERMAN LIVING TRUST 7,900 7,900 LYDIA FUNGER MCCLAIN 21,807 21,807 WILLIAM S. FUNGER 21,807 21,807 KEITH P. FUNGER 21,807 21,807 MORTON FUNGER 150,898 150,898 BERNARD S. GEWIRZ 66,219 66,219 CARL S. GEWIRZ 23,071 23,071 STEVEN B. GEWIRZ 7,150 7,150 MICHAEL AK GEWIRZ 9,534 9,534 DIANE GOLDBLATT 5,713 5,713 HERBERT GOLDBLATT 5,713 5,713 BARBARA GOLDMAN 7,900 7,900 THEODORE L. GRAY 1,971 1,971 EILEEN GREENBERG 7,854 7,854 HERMEN GREENBERG 1,006,836 1,006,836 WILLIAM KAPLAN 83,779 83,779 HERMAN KRAFT 2,628 2,628 PATRICIA A. MANCUSO 493 493 CHARLES AND LUPE MANCUSO, T.B.T.E. 493 493 MELANIE F. NICHOLS 21,801 21,801 JEFFREY W. OCHSMAN 21,807 21,807 BRUCE D. OCHSMAN 21,807 21,807 RALPH OCHSMAN 150,898 150,898 MICHAEL P. & ESTHER K. OCHSMAN 21,807 21,807 SHARON LYNN OCHSMAN 21,807 21,807 WENDY A. OCHSMAN 21,807 21,807 RALMOR CORPORATION 392,503 392,503 JEROME SHAPIRO 7,903 7,903 SOPHIE B. SHAPIRO FAMILY TRUST 62,369 62,369 ALBERT H. SMALL 1,006,836 1,006,836 DAVID STEARMAN 83,779 83,779 JUANITA H. WEST TRUST 19,255 19,255 MARTIN R. WEST, III 5,776 5,776 ARTHUR BAITCH 14,785 14,785 STUART BRAGER 4,290 4,290 DAVID C. BROWNE 77,222 77,222 C. COLEMAN BUNTING, JR. 15,369 15,369 GENINE MACKS FIDLER 101,126 101,126 JOSH E. FIDLER 72,539 72,539 THOMAS O'R. FRECH 9,473 9,473 MELVIN FRIEDMAN, M.D. 10,738 10,738 GEORGE H. GREENSTEIN 9,771 9,771 MILDRED HEMSTETTER 2,123 2,123 SANFORD G. JACOBSON 17,620 17,620 JAMES C. JOHNSON AND 2,145 2,145 SANDRA J. JOHNSON WILLIAM R. KAHN 8,279 8,279 KANODE PARTNERSHIP 77,222 77,222 ALLAN KRUMHOLZ AND 4,290 4,290 FRANCINE KRUMHOLZ BURTON H. LEVINSON 22,947 22,947 EUGENE K. LEWIS/SUZANNE D. LEWIS 3,600 3,600 ARTHUR M. LOPATIN REVOCABLE TRUST 4,931 4,931 LAWRENCE MACKS 173,664 173,664 MARTHA MACKS 90,886 90,886 MORTON J. MACKS 343,442 343,442 JOSEPH M. MOSMILLER 4,290 4,290 N & C PARTNERSHIP 9,982 9,982 ORLINSKY FAMILY LIMITED PARTNERSHIP 2,145 2,145 ALBERT PERLOW 4,290 4,290 ANNE LOUISE PERLOW 6,435 6,435 ALLECK A. RESNICK 4,290 4,290 HARRIET RESNICK STANLEY SAFIER 4,290 4,290 ARNOLD SAGNER 11,065 11,065 DONALD I. SALTZMAN 5,434 5,434 MURRAY SALTZMAN 2,145 2,145 WILLIAM G. SCAGGS 8,579 8,579 EARLE K. SHAWE 29,645 29,645 STEVEN D. SHAWE 5,014 5,014 KAROLYN SOLOMON 4,991 4,991 WILLIAM B. WARREN 2,145 2,145 ROBERT M. WERTHEIMER 2,145 2,145 LEONARD KLORFINE 170,312 170,312 GREENACRES ASSOCIATES 59,896 59,896 RIDLEY BROOK ASSOCIATES 97,917 97,917 COMMUNITY INVESTMENT STRATEGIES, INC. 64,150 64,150 -------- -------- Total 5,832,174 5,832,174 PLAN OF DISTRIBUTION The shares offered hereby may be offered and sold from time to time as market conditions permit on the New York Stock Exchange, or otherwise, at prices and terms then prevailing, at prices related to the then-current market price, or in negotiated transactions by the holders thereof, which may include donees and pledgees. The shares may be sold by one or more of the following methods, without limitation: (a) a block trade in which a broker or dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate a transaction; (b) purchases by a broker or a dealer as principal and resale by such broker or dealer for its account pursuant to this Prospectus; (c) ordinary brokerage transactions and transactions in which the broker solicits purchasers; and (d) face-to-face transactions between sellers and purchasers without a broker or dealer. In effecting sales, brokers or dealers engaged by one or more of the Selling Shareholders may arrange for other brokers or dealers to participate. The Selling Shareholders and such brokers or dealers may receive commissions or discounts from Selling Shareholders in amounts to be negotiated. Such brokers and dealers and any other participating brokers or dealers may be deemed "underwriters" under the Securities Act. LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for the Company by Nixon Peabody LLP. In addition, Nixon Peabody LLP will provide an opinion with respect to certain tax matters which form the basis of the discussion under "Federal Income Tax Considerations". EXPERTS The financial statements incorporated by reference in this Prospectus or elsewhere in the Registration Statement have been incorporated herein in reliance on the reports of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in accounting and auditing. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The following table is an itemized listing of expenses to be incurred by the Company in connection with the issuance and distribution of the shares of Common Stock being registered hereby, other than discounts and commissions: SEC Registration Fee .................................. $ 38,589.00 NYSE Listing Fee ...................................... 2,000.00* Legal Fees and Expenses ............................... 2,000.00* Accounting Fees and Expenses .......................... 1,000.00* Miscellaneous ......................................... 2,000.00* ---------- Total ......................................... $ 45,589.00* *Estimate Item 15. Indemnification of Directors and Officers The Company's officers and directors are and will be indemnified under Maryland law, the Articles of Incorporation of Home Properties and the Partnership Agreement ("Operating Partnership Agreement") of Home Properties of New York, L.P., a New York limited partnership of which the Company is the general partner, against certain liabilities. The Articles of Incorporation require the Company to indemnify its directors and officers to the fullest extent permitted from time to time by the laws of Maryland. The Bylaws contain provisions which implement the indemnification provisions of the Articles of Incorporation. The Maryland General Corporation Law ("MGCL") permits a corporation to indemnify its directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that the act or omission of the director or officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, or the director or officer actually received an improper personal benefit in money, property or services, or in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. No amendment of the Articles of Incorporation of Home Properties shall limit or eliminate the right to indemnification provided with respect to acts or omissions occurring prior to such amendment or repeal. Maryland law permits Home Properties to provide indemnification to an officer to the same extent as a director, although additional indemnification may be provided if such officer is not also a director. The MGCL permits the articles of incorporation of a Maryland corporation to include a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages, subject to specified restrictions. The MGCL does not, however, permit the liability of directors and officers to the corporation or its stockholders to be limited to the extent that (1) it is proved that the person actually received an improper benefit or profit in money, property or services (to the extent such benefit or profit was received) or (2) a judgment or other final adjudication adverse to such person is entered in a proceeding based on a finding that the person's action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. The Articles of Incorporation of Home Properties contain a provision consistent with the MGCL. No amendment of the Articles of Incorporation shall limit or eliminate the limitation of liability with respect to acts or omissions occurring prior to such amendment or repeal. The Operating Partnership Agreement also provides for indemnification of Home Properties and its officers and directors to the same extent indemnification is provided to officers and directors of the Company in its Articles of Incorporation, and limits the liability of Home Properties and its officers and directors to the Operating Partnership and its partners to the same extent liability of officers and directors of the Company to Home Properties and its stockholders is limited under Home Properties' Articles of Incorporation. Home Properties has entered into indemnification agreements with each of Home Properties' directors and certain of its officers. The indemnification agreements require, among other things, that Home Properties indemnify its directors and those officers to the fullest extent permitted by law, and advance to the directors and officers all related expenses, subject to reimbursement if it is subsequently determined that indemnification is not permitted. Home Properties also must indemnify and advance all expenses incurred by directors and officers seeking to enforce their rights under the indemnification agreements, and cover directors and officers under Home Properties' directors' and officers' liability insurance. Although the form of indemnification agreement offers substantially the same scope of coverage afforded by provisions in the Articles of Incorporation and the Bylaws and the Operating Partnership Agreement of the Operating Partnership, it provides greater assurance to directors and officers that indemnification will be available, because, as a contract, it cannot be modified unilaterally in the future by the Board of Directors or by the stockholders to eliminate the rights it provides. Home Properties has purchased insurance under a policy that insures both Home Properties and its officers and directors against exposure and liability normally insured against under such policies, including exposure on the indemnities described above. Item 16. Exhibits 3.1 Articles Supplementary to the Amended and Restated Articles of Incorporation* 5.1 Opinion of Nixon Peabody LLP as to legality of common stock* 23.1 Consent of Nixon Peabody LLP (included as part of Exhibit 5.1) 23.2 PricewaterhouseCoopers LLP* 25 Power of Attorney (included on signature page) * Included with this filing. Item 17. Undertakings Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) For purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (4) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rochester, New York, on the 30th day of November, 1999. HOME PROPERTIES OF NEW YORK, INC. By: /s/ Amy L. Tait Amy L. Tait Executive Vice President KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints Norman P. Leenhouts, Nelson B. Leenhouts, Richard J. Crossed and Amy L. Tait, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post- effective amendments) to the Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorney-in-fact and agents, and each of them, full power and authority to do and person each and every act and thing requisite or necessary that he might do in person. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /S/NORMAN P. LEENHOUTS Director, Chairman November 30, 1999 Norman P. Leenhouts and Co-Chief Executive Officer (Principal Executive Officer) /S/ NELSON B. LEENHOUTS Director, President November 30, 1999 Nelson B. Leenhouts and Co-Chief Executive Officer (Principal Executive Officer) /S/ RICHARD J. CROSSED Director, Executive Vice November 30, 1999 Richard J. Crossed President /S/ AMY L. TAIT Director, Executive Vice November 30, 1999 Amy L. Tait President and Chief Operating Officer /S/ DAVID P. GARDNER Vice President,Chief November 30, 1999 David P. Gardner Financial Officer and Treasurer (Principal Financial and Accounting Officer) /S/ BURTON S. AUGUST, SR Director November 30, 1999 Burton S. August, Sr /S/ WILLIAM BALDERSTON, III Director November 30, 1999 William Balderston, III /S/ LEONARD F. HELBIG, III Director November 30, 1999 Leonard F. Helbig, III /S/ ALAN L. GOSULE Director November 30, 1999 Alan L. Gosule /S/ ROGER W. KOBER Director November 30, 1999 Roger W. Kober Director November 30, 1999 Albert Small /S/ CLIFFORD W. SMITH, JR Director November 30, 1999 Clifford W. Smith, Jr /S/ PAUL L. SMITH Director November 30, 1999 Paul L. Smith EXHIBIT INDEX Home Properties of New York, Inc. (the "Company") Registration Statement on Form S-3 No. 333-______ NUMBER DESCRIPTION LOCATION 3.1 Articles Supplementary to the Amended and * Restated Articles of Incorporation 5.1 Opinion of Nixon Peabody LLP * regarding the legality of the Common Stock being registered 23.1 Consent of Nixon Peabody LLP Included with Exhibit 5.1 23.2 Consent of PricewaterhouseCoopers LLP * 23 Power of Attorney Included on signature page * Filed herewith EX-3 2 Exhibit 3.1 Series B Convertible Cumulative Preferred Stock ARTICLES SUPPLEMENTARY HOME PROPERTIES OF NEW YORK, INC. Articles Supplementary of Board of Directors Classifying and Designating a Series of Preferred Stock as Series B Convertible Cumulative Preferred Stock and Fixing Distribution and Other Preferences and Rights of Such Series Dated as of September 29, 1999 HOME PROPERTIES OF NEW YORK, INC. Articles Supplementary of Board of Directors Classifying and Designating a Series of Preferred Stock as Series B Convertible Cumulative Preferred Stock and Fixing Distribution and Other Preferences and Rights of Such Series Home Properties of New York, Inc., a Maryland corporation (the "CORPORATION"), hereby certifies to the State Department of Assessments and Taxation of Maryland pursuant to section 2-602(b) of the Annotated Code of Maryland that: FIRST: Pursuant to authority granted by the Amended and Restated Articles of Incorporation of the Corporation, the Board of Directors adopted a resolution at a meeting held on September 28, 1999 designating and classifying 2,000,000 unissued and undesignated shares of preferred stock as Series B Convertible Cumulative Preferred Stock. SECOND: The following is a description of the Series B Convertible Cumulative Preferred Stock, including the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption thereof: Section . NUMBER OF SHARES AND DESIGNATION. This class of preferred stock shall be designated as Series B Convertible Cumulative Preferred Stock and the number of shares which shall constitute such series shall not be more than 2,000,000 shares, par value $0.01 per share, which number may be decreased (but not below the number thereof then outstanding) from time to time by the Board of Directors. Section . DEFINITIONS. For purposes of the Series B Preferred Stock, the following terms shall have the meanings indicated: "BOARD OF DIRECTORS" shall mean the Board of Directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the Series B Preferred Stock. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York City, New York are not required to be open. "CALL DATE" shall mean the date specified in the notice to holders required under Section 5(e) as the Call Date. "CHANGE OF CONTROL" shall mean each occurrence of any of the following: (i) the acquisition, directly or indirectly, by any individual or entity or group (as such term is used in Section 13(d)(3) of the Exchange Act) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, except that such individual or entity shall be deemed to have beneficial ownership of all shares that any such individual or entity has the right to acquire, whether such right is exercisable immediately or only after passage of time) of more than 25% of the Corporation's outstanding capital stock or more than 25% of the voting power, under ordinary circumstances, to elect directors of the Corporation or more than 25% of the equity interests in the Operating Partnership; or (ii)(A) the Corporation consolidates with or merges into another entity or conveys, transfers, or leases outside the ordinary course of business all or substantially all of its assets (including, but not limited to, real property investments) to any individual or entity, or (B) any entity consolidates with or merges into the Corporation which, in the case of a merger or consolidation under (A) or (B) is pursuant to a transaction in which the outstanding Common Stock is reclassified or changed into or exchanged for cash, securities or other property; PROVIDED, HOWEVER, that the events described in this clause (ii) shall not be deemed to be a Change of Control if the sole purpose of such event is that the Corporation is seeking to change its domicile or to change its form of organization from a corporation to a statutory business trust. "CHANGE OF CONTROL PRICE" shall mean: (i) from the Issue Date through the day preceding the fifth anniversary of the Issue Date, an amount per share of Series B Preferred Stock equal to the Stated Value plus an amount equal to a 15% annual return thereon from the Issue Date until the date of redemption of such share of Series B Preferred Stock, compounded annually, less an amount equal to the sum of the aggregate amount of cash dividends theretofore paid or payable concurrently with such redemption on such share of Series B Preferred Stock, plus an amount equal to a 15% annual return on such cash dividends from the date of payment until the date of redemption of such share of Series B Preferred Stock and (ii) beginning on the fifth anniversary of the Issue Date, an amount equal to 100% of the Liquidation Preference, plus all accumulated, accrued and unpaid dividends to the date of repurchase. "CLASS A INTERESTS" shall mean Class A Limited Partnership Units as that term is defined in the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership. "COMMON STOCK" shall mean the shares of Common Stock, par value $0.01 per share, of the Corporation. "CONSTITUENT PERSON" shall have the meaning set forth in Section 7(e). "CONVERSION PRICE" shall mean the conversion price per share of Common Stock into which the shares of Series B Preferred Stock are convertible, as such Conversion Price may be adjusted pursuant to Section 7. The initial conversion price shall be $ 29.77 (equivalent to a conversion rate of 0.8398 shares of Common Stock for each share of Series B Preferred Stock). "CURRENT MARKET PRICE" of publicly traded shares of Common Stock or any other class of shares of capital stock or other security of the Corporation or any other issuer for any day shall mean the last reported sales price, regular way on such day, or, if no sale takes place on such day, the average of the reported closing bid and asked prices on such day, regular way, in either case as reported on the New York Stock Exchange ("NYSE") or, if such security is not listed or admitted for trading on the NYSE, on the principal national securities exchange on which such security is listed or admitted for trading or, if not listed or admitted for trading on any national securities exchange, on the Nasdaq Stock Market ("NASDAQ") National Market System or, if such security is not quoted on such National Market System, the average of the closing bid and asked prices on such day in the over-the-counter market as reported by NASDAQ or, if bid and asked prices for such security on such day shall not have been reported through NASDAQ, the average of the bid and asked prices on such day as furnished by any NYSE member firm regularly making a market in such security selected for such purpose by the Board of Directors. "DIVIDEND PAYMENT DATE" shall mean (i) for any Dividend Period with respect to which the Corporation pays a dividend on the Common Stock, the date on which such dividend is paid, or (ii) for any Dividend Period with respect to which the Corporation does not pay a dividend on the Common Stock, the 25{th} day of February, May, August and November or, if such date is not a Business Day, the next succeeding Business Day. "DIVIDEND PERIODS" shall mean quarterly dividend periods commencing on January 1, April 1, July 1 and October 1 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period, which shall commence on the Issue Date and end on and include the last calendar day of the calendar quarter containing the Issue Date, and other than the Dividend Period during which any shares of Series B Preferred Stock shall be redeemed pursuant to Section 5 or repurchased pursuant to Section 6, which shall end on and include the Call Date with respect to the shares of Series B Preferred Stock being redeemed or the Repurchase Date for the shares being repurchased, as the case may be). "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "EXPIRATION TIME" shall have the meaning set forth in Section 7(d)(iv). "FAIR MARKET VALUE" shall mean the average of the daily Current Market Prices of a share of Common Stock on the five (5) consecutive Trading Days selected by the Corporation commencing not more than 20 Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex date" with respect to the issuance or distribution requiring such computation. The term "ex date," when used with respect to any issuance or distribution, means the first day on which the shares of Common Stock trade regular way, without the right to receive such issuance or distribution, on the exchange or in the market, as the case may be, used to determine that day's Current Market Price. "FULLY JUNIOR STOCK" shall mean the Common Stock and any other class or series of shares of capital stock of the Corporation now or hereafter issued and outstanding over which the Series B Preferred Stock has preference or priority in both (i) the payment of dividends and (ii) the distribution of assets on any liquidation, dissolution or winding up of the Corporation. "FUNDAMENTAL CHANGE" shall mean each occurrence of any of the following: (i) the acquisition, directly or indirectly, by any individual or entity or group (as such term is used in Section 13(d)(3) of the Exchange Act) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, except that such individual or entity shall be deemed to have beneficial ownership of all shares that any such individual or entity has the right to acquire, whether such right is exercisable immediately or only after passage of time) of more than 25% of the Corporation's outstanding capital stock or more than 25% of the voting power, under ordinary circumstances, to elect directors of the Corporation or more than 25% of the equity interests in the Operating Partnership; (ii) other than with respect to the election, resignation or replacement of any director designated, appointed or elected by the holders of the Series A Preferred Stock or any other series of preferred stock of the Corporation (each a "PREFERRED DIRECTOR"), during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Corporation (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Corporation was approved by a vote of a majority of the directors of the Corporation (excluding Preferred Directors) then still in office who were either directors at the beginning of such period, or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; (iii) the Corporation or one of its Subsidiaries is not the sole general partner of the Operating Partnership; (iv) (A) the Corporation consolidates with or merges into another entity or the Corporation conveys, transfers or leases outside the ordinary course of business all or substantially all of its assets (including, but not limited to, real property investments) to any individual or entity, or (B) any entity consolidates with or merges into the Corporation, which in the case of a merger or consolidation under either (A) or (B) is pursuant to a transaction in which the outstanding common stock of the Corporation is reclassified or changed into or exchanged for cash, securities or other property; PROVIDED, HOWEVER, that the events described in clause (iv) shall not be deemed to be a Fundamental Change if the sole purpose of such event is that the Corporation is seeking to change its domicile or to change its form of organization from a Corporation to a statutory business trust; (v) the Corporation or any direct or indirect subsidiary of the Corporation, in one transaction or a series of related transactions, acquires from any individual or entity, whether by way of merger, consolidation, purchase of stock or assets, lease or other form of business combination, any entity, assets or business (x) for aggregate consideration payable in cash, securities, other property or any combination of the foregoing, with a fair market value (as determined in good faith by the Board of Directors of the Corporation) exceeding 50% of Total Market Capitalization determined prior to giving effect to the transaction or series of related transactions described in this clause (v) or in exchange for a number of shares of Common Stock or common equity interests of the Operating Partnership (or securities convertible into, exercisable for or exchangeable for such securities) representing, in the aggregate, more than 40% of the combined sum of the shares outstanding immediately prior to such transaction or series of related transactions of Common Stock and the common equity interests in the Operating Partnership not held by the Corporation or any direct or indirect subsidiary immediately prior to such transaction or series of related transactions. (vi) the Corporation effects any recapitalization or restructuring as a result of which more than 25% of the Common Stock is reclassified into shares of preferred stock or changed into or exchanged for cash, preferred stock, evidences of indebtedness, other property (other than Common Stock of the Corporation) or any combination of the foregoing. (vii) the Corporation shall have incurred or suffered to exist Indebtedness (as defined in the Purchase Agreement) exceeding 70% of Total Market Capitalization and such condition continues to exist 30 days after notice in writing by any holder of Series B Preferred Stock to the Corporation. "FUNDS FROM OPERATIONS" shall mean net income (loss) (computed in accordance with generally accepted accounting principles) excluding gains (or losses) from debt restructuring, and distributions in excess of earnings allocated to other Operating Partnership interests or minority interests (as reflected in the financial statements of the Corporation) plus depreciation/amortization of assets unique to the real estate industry, all computed in a manner consistent with the revised definition of Funds From Operations adopted by the National Association of Real Estate Investment Trusts (NAREIT), in its White Paper dated March 1995, as such definitions may be modified from time to time, as determined by the Corporation in good faith. "ISSUE DATE" shall mean the date on which the shares of Series B Preferred Stock are issued. "JUNIOR STOCK" shall mean the Common Stock and any other class or series of capital stock of the Corporation now or hereafter issued and outstanding over which the Series B Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. "LIQUIDATION PREFERENCE" shall have the meaning set forth in Section 4(a). "NON-ELECTING SHARE" shall have the meaning set forth in Section 7(e). "OPERATING PARTNERSHIP" shall mean Home Properties of New York, L.P., a New York limited partnership. "PARITY STOCK" shall have the meaning set forth in Section 9(b). "PERSON" shall mean any individual, firm, partnership, corporation, limited liability company or other entity, and shall include any successor (by merger or otherwise) of such entity. "PURCHASED SHARES" shall have the meaning set forth in Section 7(d)(iv). "PURCHASE AGREEMENT" shall mean the Purchase Agreement dated as of September 29, 1999 by and among the Corporation, the Operating Partnership and GE Equity Investments, Inc. "REIT TERMINATION EVENT" shall mean the earliest to occur of: (i) the filing of a federal income tax return by the Corporation for any taxable year on which the Corporation does not elect to be taxed as a real estate investment trust; (ii) the approval by the stockholders of the Corporation of a proposal for the Corporation to cease to qualify as a real estate investment trust; (iii) the public announcement by the Corporation that it has ceased to qualify as a real estate investment trust; (iv) a determination by the Board of Directors of the Corporation, based on the advice of counsel, that the Corporation has ceased to qualify as a real estate investment trust; or (v) the Corporation or its duly authorized representatives shall receive a determination or conclusion, whether in proposed or final form, from the Internal Revenue Service or one of its representatives that the Corporation has failed to meet the requirements for REIT qualification and taxation as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended, for one or more taxable years, occurring from and after January 1, 1994, including, without limitation, a statutory notice of deficiency, a notice of proposed deficiency, a proposed or final revenue agent's report, a Field Service Advice, Technical Advice Memorandum, or similar conclusion; PROVIDED, HOWEVER, that if the determination or conclusion is in proposed or draft form, such receipt shall not constitute a "REIT Termination Event" unless such determination or conclusion is not withdrawn or otherwise terminated within 270 days following such receipt, or if the Company receives an opinion of its independent counsel or accountants that the Company's REIT status should be upheld. "REPURCHASE DATE" shall mean the date of repurchase of the shares of Series B Preferred Stock or the date such payment is made available as provided in Section 6(a)(iii). "REPURCHASE OFFER" shall have the meaning set forth in Section 6(a)(ii). "REPURCHASE PRICE" shall have the meaning set forth in Section 6(a)(i). "SECURITIES" and "SECURITY" shall have the meanings set forth in Section 7(d)(iii). "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SENIOR STOCK" shall mean any class or series of capital stock of the Corporation hereafter issued and outstanding which has preference or priority over the Series B Preferred Stock in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Corporation. "SERIES B PREFERRED STOCK" shall mean the shares of Series B Convertible Cumulative Preferred Stock. "SET APART FOR PAYMENT" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of shares of capital stock of the Corporation; PROVIDED, HOWEVER, that if any funds for any class or series of Junior Stock or any class or series of shares of capital stock ranking on a parity with the Series B Preferred Stock as to the payment of dividends are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the Series B Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "STATED VALUE" shall mean $25.00 per share of Series B Preferred Stock. "TOTAL MARKET CAPITALIZATION" shall have the meaning set forth in the Purchase Agreement. "TRADING DAY" shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading on any national securities exchange, on the National Market System of NASDAQ, or if such securities are not quoted on such National Market System, in the securities market in which the securities are traded. "TRANSACTION" shall have the meaning set forth in Section 7(e). "TRANSFER AGENT" shall mean Chase Manhattan Shareholder Services or such other agent or agents of the Corporation as may be designated by the Board of Directors or their designee as the transfer agent, registrar and dividend disbursing agent for the Series B Preferred Stock. "UNITS" shall mean Partnership Units as that term is defined in the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as amended. "VOTING PREFERRED STOCK" shall have the meaning set forth in Section 10. Section 3. DIVIDENDS. (a) The holders of shares of Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends accrued, cumulative preferential dividends payable in arrears in cash in an amount per share equal to the greater of: (i) 8.36% of the Liquidation Preference per annum (equivalent to $ 2.09 per share of Series B Preferred Stock), or (ii) the ordinary cash dividends (determined on each Dividend Payment Date) on the shares of Common Stock, or portion thereof, into which a share of Series B Preferred Stock is convertible. The dividends referred to in clause (ii) of the preceding sentence shall equal the number of shares of Common Stock, or portion thereof, into which a share of Series B Preferred Stock is convertible, multiplied by the most current quarterly dividend on a share of Common Stock declared on or before the applicable Dividend Payment Date. If the Corporation declares and pays an ordinary cash dividend on the Common Stock with respect to a Dividend Period after a Dividend Payment Date is determined pursuant to clause (ii) of the definition of Dividend Payment Date and the dividend calculated pursuant to clause (ii) of this paragraph (a) with respect to such Dividend Period is greater than the dividend previously declared on the Series B Preferred Stock with respect to such Dividend Period, the Corporation shall pay an additional dividend to the holders of the Series B Preferred Stock on the date on which the dividend on the Common Stock is paid, in an amount equal to the difference between (y) the dividend calculated pursuant to clause (ii) of this paragraph (a) and (z) the amount of dividends previously declared on the Series B Preferred Stock with respect to such Dividend Period. The dividends shall begin to accrue and shall be fully cumulative from the first day of the applicable Dividend Period, whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends, and shall be payable quarterly in arrears, when, as and if declared by the Board of Directors, on Dividend Payment Dates. Each such dividend shall be payable in arrears to the holders of record of shares of Series B Preferred Stock as they appear in the records of the Corporation at the close of business on such record dates, not fewer than 5 nor more than 50 days preceding such Dividend Payment Dates thereof, as shall be fixed by the Board of Directors. Accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time and for such interim periods, without reference to any regular Dividend Payment Date, to holders of record on such date, not fewer than 5 nor more than 50 days preceding the payment date thereof, as may be fixed by the Board of Directors. Any dividend payment made on Series B Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to Series B Preferred Stock which remains payable. (b) The amount of dividends referred to in clause (i) of Section 3(a) payable for each full Dividend Period on the Series B Preferred Stock shall be computed by dividing the annual dividend rate by four. The initial Dividend Period will include a partial dividend for the period from the Issue Date until the last calendar day of the calendar quarter containing the Issue Date. The amount of dividends payable either under clause (i) or clause (ii) for such period, or any other period shorter than a full Dividend Period, on the Series B Preferred Stock shall be computed on the basis of a 360-day year of twelve 30-day months and the amount of such dividend shall equal the dividend payable with respect to the Dividend Period multiplied by a fraction (x) the numerator of which is (i) the number of days from the Issue Date to the end of the Dividend Period, or (ii) the number of days from the beginning of the Dividend Period to the Call Date or the Repurchase Date, as the case may be, and (y) the denominator of which is 90. Holders of shares of Series B Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or shares, in excess of cumulative dividends, as herein provided, on the Series B Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series B Preferred Stock which may be in arrears. (c) If at any time the Corporation shall have breached the covenant set forth in Section 5.9 of the Purchase Agreement and such breach continues thirty (30) days after notice in writing by any holder of Series B Preferred Stock to the Corporation, the dividend rate payable upon the shares of Series B Preferred Stock pursuant to paragraph (a) of this Section 3 shall be increased by 1.00% per annum, from the date of such breach until the date such breach shall have been cured and shall no longer be continuing, subject to revesting in the event of any subsequent breach of such covenant which continues as aforesaid. (d) So long as any shares of Series B Preferred Stock are outstanding, no dividends, except as described in the immediately following sentence, shall be declared or paid or set apart for payment on any class or series of Parity Stock for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series B Preferred Stock for all Dividend Periods terminating on or prior to the dividend payment date on such class or series of Parity Stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon Series B Preferred Stock and all dividends declared upon any other class or series of Parity Stock shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Series B Preferred Stock and accumulated and unpaid on such Parity Stock. (e) So long as any shares of Series B Preferred Stock are outstanding, no dividends (other than dividends or distributions paid solely in shares of, or options, warrants or rights to subscribe for or purchase shares of, Fully Junior Stock) shall be declared or paid or set apart for payment or other distribution shall be declared or made or set apart for payment upon Junior Stock, nor shall any Junior Stock be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any Junior Stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Fully Junior Stock), unless in each case (i) the full cumulative dividends on all outstanding Senior Stock, Series B Preferred Stock and any other Parity Stock of the Corporation shall have been or contemporaneously are declared and paid or declared and set apart for payment for all dividend periods with respect to the Senior Stock, all past Dividend Periods with respect to the Series B Preferred Stock and all past dividend periods with respect to such Parity Stock, (ii) sufficient funds shall have been or contemporaneously are set apart for the payment in full of the dividend for the current dividend period with respect to the Senior Stock, the current Dividend Period with respect to the Series B Preferred Stock and the current dividend period with respect to such Parity Stock and (iii) sufficient funds shall have been or contemporaneously are set apart for payment in full of any obligations of the Corporation in respect of Series B Preferred Stock called for redemption by the Corporation pursuant to Section 5 or required to be repurchased by any Holder pursuant to Section 6. (f) No distributions on Series B Preferred Stock shall be declared by the Board of Directors or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. Section 4. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Stock, the holders of shares of the Series B Preferred Stock shall be entitled to receive Twenty Five Dollars ($25.00) (the "LIQUIDATION PREFERENCE") per share of Series B Preferred Stock plus an amount equal to all dividends (whether or not declared) accumulated, accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment; PROVIDED, that the dividend payable with respect to the Dividend Period containing the date of final distribution shall be equal to the greater of (i) the dividend provided in Section 3(a)(i) or (ii) the dividend determined pursuant to Section 3(a)(ii) for the preceding Dividend Period. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Series B Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Series B Preferred Stock and any such other Parity Stock ratably in accordance with the respective amounts that would be payable on such Series B Preferred Stock and any such other Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 4, (i) a consolidation or merger of the Corporation with one or more corporations, real estate investment trusts or other entities, (ii) a sale, lease or conveyance of all or substantially all of the Corporation's property or business, or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Subject to the rights of the holders of shares of any series or class or classes of shares of capital stock ranking on a parity with or prior to the Series B Preferred Stock upon liquidation, dissolution or winding up, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of the Series B Preferred Stock, as provided in this Section 4, any other series or class or classes of Junior Stock shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series B Preferred Stock shall not be entitled to share therein. Section 5. REDEMPTION AT THE OPTION OF THE CORPORATION. (a) Except as provided in paragraph (b) below, the Series B Preferred Stock shall not be redeemable by the Corporation prior to the fifth anniversary of the Issue Date. The Series B Preferred Stock may be redeemed, in whole or in part, at the option of the Corporation at any time on or after the fifth anniversary of the Issue Date out of funds legally available therefor at a redemption price payable in cash equal to the Liquidation Preference per share of Series B Preferred Stock (plus all accumulated, accrued and unpaid dividends as provided below). (b) If a Change of Control shall occur, the Corporation shall have the right, to the extent that the Corporation shall have funds legally available therefor, to redeem, in whole, but not in part, the outstanding shares of Series B Preferred Stock at a redemption price payable in cash in an amount equal to the Change of Control Price, by notice in writing to the holders of Series B Preferred Stock no later than 30 days following the occurrence of such Change of Control. (c) Upon any redemption of shares of Series B Preferred Stock pursuant to this Section 5, and except for dividends paid pursuant to the next sentence, the Corporation shall pay all accrued and unpaid dividends, if any, thereon to the Call Date, without interest. If the Call Date falls after a dividend payment record date and prior to the corresponding Dividend Payment Date, then each holder of shares of Series B Preferred Stock at the close of business on such dividend payment record date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding any redemption of such shares before such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on shares of Series B Preferred Stock called for redemption. (d) If full cumulative dividends on the Series B Preferred Stock and any other class or series of Parity Stock of the Corporation have not been declared and paid or declared and set apart for payment, the Series B Preferred Stock may not be redeemed under paragraph (a) of this Section 5 in part and the Corporation may not purchase or acquire shares of Series B Preferred Stock, otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of Series B Preferred Stock. (e) Notice of the redemption of any shares of Series B Preferred Stock under this Section 5 shall be mailed by first-class mail to each holder of record of shares of Series B Preferred Stock to be redeemed at the address of each such holder as shown on the Corporation's records, not fewer than 20 nor more than 60 days prior to the Call Date. Neither the failure to mail any notice required by this paragraph (e), nor any defect therein or in the mailing thereof, to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such mailed notice shall state, as appropriate: (1) the Call Date; (2) the number of shares of Series B Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price; (4) the place or places at which certificates for such shares are to be surrendered; (5) the then- current Conversion Price; and (6) that dividends on the shares to be redeemed shall cease to accrue on such Call Date except as otherwise provided herein. Notice having been mailed as aforesaid, from and after the Call Date (unless the Corporation shall fail to make available an amount of cash necessary to effect such redemption), (i) except as otherwise provided herein, dividends on the shares of Series B Preferred Stock so called for redemption shall cease to accrue, (ii) such shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of shares of Series B Preferred Stock of the Corporation shall cease (except the rights to convert and to receive the redemption price, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends accrued and payable thereon to the Call Date). The Corporation's obligation to provide cash in accordance with the preceding sentence shall be deemed fulfilled if, on or before the Call Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has an office in the Borough of Manhattan, City of New York, and that has, or is an affiliate of a bank or trust company that has, capital and surplus of at least $500,000,000, the funds in cash necessary for such redemption, in trust, with irrevocable instructions that such cash be applied to the redemption of the shares of Series B Preferred Stock so called for redemption. No interest shall accrue for the benefit of the holders of shares of Series B Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of 6 months from the Call Date shall revert to the general funds of the Corporation, after which reversion the holders of such shares so called for redemption shall look only to the general funds of the Corporation for the payment of such cash. As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and if the notice shall so state), such shares shall be exchanged for the redemption price (without interest thereon) for which such shares have been redeemed. In the case of a redemption pursuant to paragraph (a) of this Section 5, if fewer than all the outstanding shares of Series B Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of Series B Preferred Stock not previously called for redemption pro rata (as nearly as may be), by lot or by any other method determined by the Corporation in its sole discretion. In the case of a redemption pursuant to paragraph (a) of this Section 5, if fewer than all the shares of Series B Preferred Stock represented by any certificate are redeemed, then new certificates representing the unredeemed shares shall be issued without cost to the holder thereof. Section 6. REPURCHASE UPON FUNDAMENTAL CHANGE OR REIT TERMINATION EVENT. (a) If a Fundamental Change or REIT Termination Event shall occur: (i) Each holder of shares of Series B Preferred Stock shall have the right to require the Corporation, to the extent that the Corporation shall have funds legally available therefor, to repurchase, in whole or in part, such holder's shares of Series B Preferred Stock held on the date that such holder receives the notice described in subsection 6(a)(ii) at a repurchase price (the "REPURCHASE PRICE") payable in cash in an amount equal to (x) in the case of a Fundamental Change, 100% of the Liquidation Preference or (y) in the case of a REIT Termination Event, 105% of the Liquidation Preference (plus, in the case of each of (x) and (y), all accumulated, accrued and unpaid dividends to the date of repurchase) in each case as described below; PROVIDED, HOWEVER, that if a REIT Termination Event occurs subsequent to five (5) years following the Issue Date, the Repurchase Price shall equal 100% of the Liquidation Preference plus all accumulated, accrued and unpaid dividends to the date of repurchase. (ii) Within 15 days following the Corporation becoming aware that a Fundamental Change or REIT Termination Event has occurred, the Corporation shall mail by first class mail or overnight courier a notice (the "REPURCHASE OFFER") to each holder of shares of Series B Preferred Stock stating (A) that a Fundamental Change or REIT Termination Event has occurred, describing in general terms the nature of such event, and that such holder has the right to require the Corporation to repurchase all shares of Series B Preferred Stock then held by such holder in cash; (B) the Repurchase Date (which shall be a Business Day, no earlier than 20 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 the Exchange Act); (C) the Repurchase Price; (D) the place or places at which certificates for such shares are to be surrendered; (E) that dividends on the shares to be repurchased shall cease to accrue on such Repurchase Date except as otherwise provided herein; and (F) the instructions determined by the Corporation, consistent with this subsection, that such holder must follow in connection with the repurchase of its shares of Series B Preferred Stock. (iii) On the Repurchase Date, the Corporation shall, to the extent lawful (and to the extent any payment is unlawful, promptly after the date on which such payment thereafter becomes lawful), accept for payment the shares of Series B Preferred Stock tendered pursuant to the Repurchase Offer described in Subsection 6(a)(ii). The Corporation's obligation to provide cash in accordance with Subsection 6(a)(ii) shall be deemed fulfilled if, on or before the Repurchase Date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation) that has an office in the Borough of Manhattan, City of New York, and that has, or is an affiliate of a bank or trust company that has, capital and surplus of at least $500,000,000, the funds in cash necessary for such repurchase of all shares of Series B Preferred Stock so tendered, in trust, with irrevocable instructions that such cash be applied to the repurchase of the shares of Series B Preferred Stock so tendered for repurchase. No interest shall accrue for the benefit of the holders of shares of Series B Preferred Stock to be repurchased on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of six months from the Repurchase Date shall revert to the general funds of the Corporation, after which reversion the holders of such shares so called for repurchase shall look only to the general funds of the Corporation for the payment of such cash. (iv) As promptly as practicable after the surrender in accordance with such notice of the certificates for any such shares so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and if the notice shall so state), such shares shall be exchanged for any cash (without interest thereon) for which such shares have been repurchased. (b) Notwithstanding anything else herein, to the extent they are applicable to any such repurchase, the Corporation will comply with any federal and state securities laws, rules and regulations and all time periods and requirements shall be adjusted accordingly. (c) The Corporation may, upon ten (10) Business Days' advance notice to the holders of the Series B Preferred Stock of a Fundamental Change, request a waiver of such holders' rights under this Section 6; PROVIDED, HOWEVER, that the failure of such holders to respond to or otherwise act upon such request shall not be deemed to create or imply a waiver or otherwise affect such holders' rights under this Section 6. Section 7. CONVERSION. Holders of shares of Series B Preferred Stock shall have the right to convert all or a portion of such shares into shares of Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section 7 and the provisions of Article VII of the Corporation's Articles of Incorporation, a holder of shares of Series B Preferred Stock shall have the right, at any time, at his or her option, to convert such shares into the number of fully paid and non-assessable shares of Common Stock obtained by dividing the aggregate Liquidation Preference of such shares (exclusive of accrued but unpaid dividends) by the Conversion Price (as in effect at the time and on the date provided for in the last paragraph of paragraph (b) of this Section 7); PROVIDED, HOWEVER, that the right to convert shares called for redemption pursuant to Section 5 or to be repurchased pursuant to Section 6 shall terminate at the close of business on the fifth Business Day prior to the date fixed for such redemption or repurchase, unless the Corporation shall default in making payment of the cash payable upon such redemption or repurchase under Section 5 or Section 6, as the case may be. (b) In order to exercise the conversion right, the holder of each share of Series B Preferred Stock to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office of the Transfer Agent, accompanied by written notice to the Corporation that the holder thereof elects to convert such share of Series B Preferred Stock. Unless the shares issuable on conversion are to be issued in the same name as the name in which such Series B Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid). Holders of shares of Series B Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof following such dividend payment record date and prior to such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends on converted shares or for dividends on the shares of Common Stock issued upon such conversion. As promptly as practicable after the surrender of certificates for shares of Series B Preferred Stock as aforesaid (and in any event within three business days following such surrender), the Corporation shall issue and shall deliver at such office to such holder, or on his or her written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares in accordance with provisions of this Section 7, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in paragraph (c) of this Section 7. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for the shares of Series B Preferred Stock to be converted shall have been surrendered and such notice shall have been received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time on such date unless the share transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such share transfer books are open, but such conversion shall be at the Conversion Price in effect on the date on which such surrendered shares shall have been surrendered and such notice is received by the Corporation. (c) No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the shares of Series B Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of Series B Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of the Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of Series B Preferred Stock so surrendered. (d) The Conversion Price shall be adjusted from time to time as follows: (i) If the Corporation shall, after the Issue Date: (A) pay a dividend or make a distribution on its capital shares in shares of Common Stock, (B) subdivide its outstanding shares of Common Stock into a greater number of shares, (C) combine its outstanding shares of Common Stock into a smaller number of shares or (D) issue any shares of capital stock by reclassification of its shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or distribution or at the opening of business on the Business Day next following the day on which such subdivision, combination or reclassification becomes effective, as the case may be, shall be adjusted so that the holder of any shares of Series B Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock that such holder would have owned or have been entitled to receive after the happening of any of the events described above as if such shares of Series B Preferred Stock had been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this subparagraph (i) shall become effective immediately after the opening of business on the Business Day next following the record date (except as provided in paragraph (h) below) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the Business Day next following the effective date in the case of a subdivision, combination or reclassification. (ii) If the Corporation shall issue after the Issue Date rights, options or warrants to all holders of Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than of the Fair Market Value per share of Common Stock on the record date for the determination of stockholders entitled to receive such rights, options or warrants, then the Conversion Price in effect at the opening of business on the Business Day next following such record date shall be adjusted to equal the price determined by multiplying (A) the Conversion Price in effect immediately prior to the opening of business on the Business Day next following the date fixed for such determination by (B) a fraction, the numerator of which shall be the sum of (x) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (y) the number of shares that the aggregate proceeds to the Corporation from the exercise of such rights, options or warrants for shares of Common Stock would purchase at Fair Market Value, and the denominator of which shall be the sum of (x) the number of shares of Common Stock outstanding on the close of business on the date fixed for such determination and (y) the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights, options or warrants. Such adjustment shall become effective immediately after the opening of business on the day next following such record date (except as provided in paragraph (h) below). In determining whether any rights, options or warrants entitle the holders of shares of Common Stock to subscribe for or purchase shares of Common Stock at less than Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights, options or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors. (iii) If the Corporation shall distribute to all holders of Common Stock any securities of the Corporation (other than shares of Common Stock) or evidence of its indebtedness or assets (excluding cumulative cash dividends or distributions paid with respect to the shares of Common Stock after December 31, 1998 which are not in excess of the following: the sum of (A) the Corporation's cumulative undistributed Funds from Operations at December 31, 1998, plus (B) the cumulative amount of Funds from Operations, as determined by the Board of Directors, after December 31, 1998, minus (C) the cumulative amount of dividends accrued or paid in respect of the Series B Preferred Stock or any other class or series of preferred stock of the Corporation after the Issue Date) or rights, options or warrants to subscribe for or purchase any of its securities (excluding those rights, options and warrants issued to all holders of shares of Common Stock entitling them for a period expiring within 45 days after the record date referred to in subparagraph (ii) above to subscribe for or shares of purchase Common Stock, which rights and warrants are referred to in and treated under subparagraph (ii) above) (any of the foregoing being hereinafter in this subparagraph (iii) collectively called the "SECURITIES" and individually a "SECURITY"), then in each such case the Conversion Price shall be adjusted so that it shall equal the price determined by multiplying (x) the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by (y) a fraction, the numerator of which shall be the Fair Market Value per share of Common Stock on the record date for the determination of stockholders entitled to receive such distribution less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive), of the portion of the Securities or assets or evidences of indebtedness so distributed or of such rights, options or warrants applicable to one share of Common Stock, and the denominator of which shall be the Fair Market Value per share of Common Stock on the record date for the determination of stockholders entitled to receive such distribution. Such adjustment shall become effective immediately at the opening of business on the Business Day next following (except as provided in paragraph (h) below) the record date for the determination of stockholders entitled to receive such distribution. For the purposes of this subparagraph (iii), the distribution of a Security, which is distributed not only to the holders of the shares of Common Stock on the date fixed for the determination of stockholders entitled to such distribution of such Security, but also is distributed with each share of Common Stock delivered to a Person converting a share of Series B Preferred Stock after such determination date, shall not require an adjustment of the Conversion Price pursuant to this subparagraph (iii); PROVIDED that on the date, if any, on which a person converting a share of Series B Preferred Stock would no longer be entitled to receive such Security with a share of Common Stock (other than as a result of the termination of all such Securities), a distribution of such Securities shall be deemed to have occurred and the Conversion Price shall be adjusted as provided in this subparagraph (iii) (and such day shall be deemed to be "the date fixed for the determination of the stockholders entitled to receive such distribution" and "the record date" within the meaning of the two preceding sentences). (iv) In case a tender or exchange offer (which term shall not include open market repurchases by the Corporation) is made by the Corporation or any subsidiary of the Corporation for all or any portion of the shares of Common Stock shall expire and such tender or exchange offer shall involve the payment by the Corporation or such subsidiary of consideration per share of Common Stock having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors), at the last time (the "EXPIRATION TIME") tenders or exchanges may be made pursuant to such tender or exchange offer, that exceeds the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Price shall be reduced to equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subparagraph, by a fraction of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time, multiplied by the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator shall be the sum of (A) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based upon the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any maximum, being referred to as the "PURCHASED SHARES") and (B) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Time. (v) No adjustment in the Conversion Price shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in such price; PROVIDED, HOWEVER, that any adjustments that by reason of this subparagraph (v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and PROVIDED, FURTHER, that any adjustment shall be required and made in accordance with the provisions of this Section 7 (other than this subparagraph (v)) not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of shares of Common Stock. Notwithstanding any other provisions of this Section 7, the Corporation shall not be required to make any adjustment of the Conversion Price for the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts of cash in shares of Common Stock under such plan. All calculations under this Section 7 shall be made to the nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of a share being rounded upward), as the case may be. Anything in this paragraph (d) to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such reductions in the Conversion Price, in addition to those required by this paragraph (d), as it in its discretion shall determine to be advisable in order that any share dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase shares or securities, or distribution of other assets (other than cash dividends) hereafter made by the Corporation to its stockholders shall not be taxable. (e) If the Corporation shall be a party to any transaction (including without limitation a merger, consolidation, statutory share exchange, self tender offer for all or substantially all of its Common Stock, sale of all or substantially all of the Corporation's assets or recapitalization of the shares of Common Stock and excluding any transaction as to which subparagraph (d)(i) of this Section 7 applies) (each of the foregoing being referred to herein as a "TRANSACTION"), in each case as a result of which all or substantially all of the shares of Common Stock are converted into the right to receive shares, securities or other property (including cash or any combination thereof), each share of Series B Preferred Stock which is not redeemed or converted into the right to receive shares, securities or other property prior to such Transaction shall thereafter be convertible into the kind and amount of shares, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of shares of Common Stock into which one share of Series B Preferred Stock was convertible immediately prior to such Transaction, assuming such holder of Common Stock (i) is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such sale or transfer was made, as the case may be ("CONSTITUENT PERSON"), or an affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of shares, securities and other property (including cash) receivable upon such Transaction (provided that if the kind or amount of shares, securities and other property (including cash) receivable upon such Transaction is not the same for each share of Common Stock held immediately prior to such Transaction by other than a Constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then for the purpose of this paragraph (e) the kind and amount of shares, securities and other property (including cash) receivable upon such Transaction by each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). The Corporation shall not be a party to any Transaction unless the terms of such Transaction are consistent with the provisions of this paragraph (e), and it shall not consent or agree to the occurrence of any Transaction until the Corporation has entered into an agreement with the successor or purchasing entity, as the case may be, for the benefit of the holders of the shares of Series B Preferred Stock that will contain provisions enabling the holders of the shares of Series B Preferred Stock that remain outstanding after such Transaction to convert into the consideration received by holders of shares of Common Stock at the Conversion Price in effect immediately prior to such Transaction. The provisions of this paragraph (e) shall similarly apply to successive Transactions. (f) If: (i) the Corporation shall declare a dividend (or any other distribution) on its Common Stock (other than cash dividends or distributions paid with respect to the shares of Common Stock after December 31, 1998 not in excess of the sum of the Corporation's cumulative undistributed Funds from Operations at December 31, 1998, plus the cumulative amount of Funds from Operations, as determined by the Board of Directors, after December 31, 1998, minus the cumulative amount of dividends accrued or paid in respect of the shares of Series B Preferred Stock or any other class or series of preferred stock of the Corporation after the Issue Date); or (ii) the Corporation shall authorize the granting to all holders of shares of Common Stock of rights, options or warrants to subscribe for or purchase any shares of any class or any other rights, options or warrants; or (iii) there shall be any reclassification of the shares of Common Stock (other than an event to which subparagraph (d)(i) of this Section 7 applies) or any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or a statutory share exchange, or a self tender offer by the Corporation for all or substantially all of its outstanding shares of Common Stock or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or (iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed to the holders of shares of Series B Preferred Stock at their addresses as shown on the records of the Corporation a notice stating (A) the date on which a record is to be taken the "RECORD DATE") for the purpose of such dividend, distribution or granting of rights, options or warrants, or, if a record is not to be taken, the date as of which the holders of shares of Common Stock of record to be entitled to such dividend, distribution or rights, options or warrants are to be determined or (B) the date on which such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up is expected to become effective (the "EFFECTIVE DATE"), and the date as of which it is expected that holders of shares of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, statutory share exchange, sale, transfer, liquidation, dissolution or winding up. Such notice shall be given to the holders of shares of Series B Preferred Stock as promptly as possible, but in all cases at least 10 days prior to the Record Date for purposes of clause (A) above and the Effective Date for purposes of clause (B) above, as the case may be. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the proceedings described in this Section 7. (g) Whenever the Conversion Price is adjusted as herein provided, the Corporation shall promptly file with the Transfer Agent an officer's certificate setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after delivery of such certificate, the Corporation shall prepare a notice of such adjustment of the Conversion Price setting forth the adjusted Conversion Price and the effective date of such adjustment and shall mail such notice of such adjustment of the Conversion Price to the holder of each share of Series B Preferred Stock at such holder's last address as shown on the records of the Corporation. (h) In any case in which paragraph (d)of this Section 7 provides that an adjustment shall become effective on the day next following the record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Series B Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the shares of Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of this Section 7. (i) There shall be no adjustment of the Conversion Price in case of the issuance of any shares of capital stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this Section 7. If any action or transaction would require adjustment of the Conversion Price pursuant to more than one paragraph of this Section 7, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value. (j) If the Corporation shall take any action affecting the shares of Common Stock, other than actions described in this Section 7, that in the opinion of the Board of Directors would materially and adversely affect the conversion rights of the holders of the shares of Series B Preferred Stock, the Conversion Price for the shares of Series B Preferred Stock may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors, in its sole discretion, may determine to be equitable in the circumstances. (k) The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock, for the purpose of effecting conversion of the shares of Series B Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Series B Preferred Stock not theretofore converted. For purposes of this paragraph (k), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Series B Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder. The Corporation covenants that any shares of Common Stock issued upon conversion of the shares of Series B Preferred Stock shall be validly issued, fully paid and non-assessable. Before taking any action that would cause an adjustment reducing the Conversion Price below the then-par value of the shares of Common Stock deliverable upon conversion of the shares of Series B Preferred Stock, the Corporation will take any action that, in the opinion of its counsel, may be necessary in order that the Corporation may validly and legally issue fully paid and (subject to any customary qualification based upon the nature of a real estate investment trust) non-assessable shares of Common Stock at such adjusted Conversion Price. The Corporation shall endeavor to list the shares of Common Stock required to be delivered upon conversion of the shares of Series B Preferred Stock, prior to such delivery, upon each national securities exchange, if any, upon which the outstanding shares of Common Stock are listed at the time of such delivery. The Corporation shall endeavor to comply with all federal and state securities laws and regulations thereunder in connection with the issuance of any securities that the Corporation shall be obligated to deliver upon conversion of the shares of Series B Preferred Stock. The certificates evidencing such securities shall bear such legends restricting transfer thereof in the absence of registration under applicable securities laws or an exemption therefrom as the Corporation may in good faith deem appropriate. (l) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion of the shares of Series B Preferred Stock pursuant hereto; PROVIDED, HOWEVER, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the shares of Series B Preferred Stock to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the reasonable satisfaction of the Corporation, that such tax has been paid. Section 8. SHARES TO BE RETIRED. All shares of Series B Preferred Stock which shall have been issued and reacquired in any manner by the Corporation shall be restored to the status of authorized but unissued shares of capital stock of the Corporation, without designation as to class or series. Section 9. RANKING. Any class or series of shares of capital stock of the Corporation shall be deemed to rank: (a) prior to the shares of Series B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of Series B Preferred Stock; (b) on a parity with the shares of Series B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof shall be different from those of the shares of Series B Preferred Stock, if the holders of such class or series and the shares of Series B Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other ("PARITY STOCK"); (c) junior to the shares of Series B Preferred Stock, as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such class or series shall be Junior Stock; and (d) junior to the shares of Series B Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if such class or series shall be Fully Junior Stock. Section 10. VOTING. If and whenever six quarterly dividends (whether or not consecutive) payable on the shares of Series B Preferred Stock or any series or class of Parity Stock shall be in arrears (which shall, with respect to any such quarterly dividend, mean that any such dividend has not been paid in full), whether or not declared, the number of directors then constituting the Board of Directors shall be increased by two and the holders of Series B Preferred Stock, together with the holders of shares of every other series of Parity Stock (any such other series, the "VOTING PREFERRED STOCK"), voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the shares of Series B Preferred Stock and the Voting Preferred Stock called ashereinafter provided. Whenever all arrears in dividends on the shares of Series B Preferred Stock and the Voting Preferred Stock then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, then the right of the holders of the shares of Series B Preferred Stock and the Voting Preferred Stock to elect such additional two directors shall cease (but subject always to the same provision for the vesting of such voting rights in the case of any similar future arrearage in quarterly dividends), and the terms of office of all persons elected as directors by the holders of the shares of Series B Preferred Stock and the Voting Preferred Stock shall forthwith terminate and the number of the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of shares of Series B Preferred Stock and the Voting Preferred Stock, the Secretary of the Corporation may, and upon the written request of any holder of shares of Series B Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the shares of Series B Preferred Stock and of the Voting Preferred Stock for the election of the directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 20 days after receipt of any such request, then any holder of shares of Series B Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the records of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the shares of Series B Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the shares of Series B Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. So long as any shares of Series B Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Corporation's Articles of Incorporation, the affirmative vote of at least 66- 2/3% of the votes entitled to be cast by the holders of the shares of Series B Preferred Stock given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating: (a) Any amendment, alteration or repeal of any of the provisions of the Corporation's Articles of Incorporation, the Corporation's By-Laws or these Articles Supplementary that materially and adversely affects the voting powers, rights or preferences of the holders of the shares of Series B Preferred Stock; PROVIDED, HOWEVER, that the amendment of the provisions of the Corporation's Articles of Incorporation so as to authorize or create shares of a series of preferred stock of the Corporation in exchange for the Class A Interests having an aggregate stated value of $35,000,000 and having rights, privileges and designations comparable to those of the Class A Interests ("SERIES A PREFERRED STOCK") or to authorize or create or increase the authorized amount of any shares of Fully Junior Stock, any shares of Junior Stock that are not senior in any respect to the Series B Preferred Stock, or any shares of Parity Stock shall not be deemed to materially adversely affect the voting powers, rights or preferences of the holders of shares of Series B Preferred Stock; or (b) A share exchange that affects the shares of Series B Preferred Stock, a consolidation with or merger of the Corporation into another entity, or a consolidation with or merger of another entity into the Corporation, unless in each such case each share of Series B Preferred Stock (i) shall remain outstanding without a material and adverse change to its terms and rights or (ii) shall be converted into or exchanged for convertible preferred stock of the surviving entity having preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms or conditions of redemption thereof identical to that of a share of Series B Preferred Stock (except for changes that do not materially and adversely affect the holders of the shares of Series B Preferred Stock); or (c) Except for the authorization or creation of the Series A Preferred Stock in exchange for the Class A Interests, the authorization, reclassification or creation of, or the increase in the authorized amount of, any shares of any class or series or any security convertible into shares of any class ranking prior to the shares of Series B Preferred Stock in the distribution of assets on any liquidation, dissolution or winding up of the Corporation or in the payment of dividends; or (d) Any increase in the authorized amount of shares of Series B Preferred Stock or decrease in the authorized amount of shares of Series B Preferred Stock below the number of shares then issued and outstanding; PROVIDED, HOWEVER, that no such vote of the holders of shares of Series B Preferred Stock shall be required if, at or prior to the time when such amendment, alteration or repeal is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, provision is made for the redemption or repurchase of all shares of Series B Preferred Stock at the time outstanding to the extent such redemption or repurchase is authorized by Sections 5 or 6 of these Articles Supplementary. For purposes of the foregoing provisions of this Section 10, each share of Series B Preferred Stock shall have one (1) vote per share, except that when any other series of Preferred Stock shall have the right to vote with the shares of Series B Preferred Stock as a single class on any matter, then the shares of Series B Preferred Stock and such other series shall have with respect to such matters one (1) vote per $25.00 of stated Liquidation Preference. Except as otherwise required by applicable law or as set forth herein, the shares of Series B Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any Corporation action. Section 11. RECORD HOLDERS. The Corporation and the Transfer Agent may deem and treat the record holder of any shares of Series B Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed its name and on its behalf by its authorized officers who acknowledge that these Articles Supplementary are the act of the Corporation, that to the best of their knowledge, information and belief, all matters and facts set forth herein relating to the authorization and approval of this document are true in all material respects and this statement is made under penalties of perjury. September 29, 1999. HOME PROPERTIES OF NEW YORK, INC. By: /s/ David P. Gardner Name: David P. Gardner Its: Vice President I, Ann M. McCormick, Secretary, hereby acknowledge on behalf of Home Properties of New York, Inc. that the foregoing Articles Supplementary are the corporate act of said corporation under penalties of perjury. Attest: /s/ Ann M. McCormick NAME Ann M. McCormick Secretary EX-23 3 EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated January 30, 1999 relating to the consolidated financial statements, which appears in Home Properties of New York, Inc.'s Annual Report on Form 10-K as of December 31, 1998. We also consent to the incorporation by reference of our report dated January 30, 1999 relating to the financial statement schedule, which appears in such Annual Report on Form 10-K. We also consent to the incorporation by reference of our reports (1) dated June 18, 1999 on our audit of the CRC Portfolio for the year ended December 31, 1998, which report is included in Form 8-K/A Amendment No. 1 dated July 1, 1999 and filed on July 29, 1999, (2) dated July 1, 1999 on our audit of the Mid-Atlantic Portfolio for the year ended December 31, 1998, which report is included in Form 8-K dated July 15, 1999 and filed on July 30, 1999, and (3) dated October 26, 1999 and November 2, 1999 on our audits of the Ridley Portfolio and Colony Apartments, respectively, for the year ended December 31, 1998, which are included in Form 8-K/A Amendment No. 1 dated February 18, 1999 and filed on November 12, 1999. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /s/ PricewaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP Rochester, New York December 2, 1999 EX-5 4 Exhibit 5.1 Nixon, Hargrave, Devans & Doyle LLP Attorneys and Counselors at Law Clinton Square Post Office Box 1051 Rochester, New York 14603-1051 (716) 263-1000 Fax: (716) 263-1600 December 2, 1999 Home Properties of New York, Inc. 850 Clinton Square Rochester, New York 14604 Ladies and Gentlemen: We have acted as counsel to Home Properties of New York, Inc.(the "Company") in connection with the Registration Statement on Form S-3, filed today, by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended, relating to the offer and sale of up to 5,832,174 of shares of common stock, par value $0.01 per share (the "Common Stock"), which may be issued from time to time to the "Selling Shareholders" named in the prospectus ("Prospectus") forming a portion of the Registration Statement. This opinion is being provided to you in connection with the filing of the Registration Statement. We have examined the originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and all such agreements, certificates of public officials, certificates of officers o other representatives of the Company, and such other documents, certificates and corporate or other records as we have deemed necessary or appropriate as a basis for the opinions set forth herein, including (i) the Articles of Amendment and Restatement of the Articles of Incorporation of the Company, as amended to the date hereof (the "Articles of Incorporation"), (ii) the Amended and Restated By-Laws of the Company, as amended to the date hereof (the "By-Laws"), (iii) certified copies of certain resolutions duly adopted by the Board of Directors of the Company, and (iv) the Second Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement") of Home Properties of New York, L.P. (the "Operating Partnership"). As to factual matters material to the opinions set forth below we have relied, without investigation, upon the representations and statements of the Company in the Registration Statement and in such certificates of government officials and officers of the Company as we have deemed necessary for the purposed of the opinions expressed herein. The opinions stated herein are limited to the federal laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Maryland. Based upon and subject to the conditions and limitations set forth herein, we are of the opinion that: When the Registration Statement has become effective under the Act and the shares of Common Stock have been issued in exchange for Units as described in the Partnership Agreement, and the certificates representing such shares of Common Stock are authenticated and delivered, such shares of Common Stock issued will be duly authorized, validly issued, fully paid and non- assessable by the Company. We hereby consent to the filing of this opinion as an exhibit to the above-referenced Registration Statement and to the use of our name as it appears under the caption "Legal Matters" in the Prospectus contained in such Registration Statement. Very truly yours, /s/ Nixon Peabody LLP -----END PRIVACY-ENHANCED MESSAGE-----