Exhibit 2.01
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (this Agreement), dated as of July 30, 2010, is made and
entered into by and between
NETREIT, INC.
, a Maryland corporation (NetREIT-MD), and
NETREIT
, a
California corporation (the Company).
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WHEREAS, NetREIT-MD is a corporation duly organized and existing under the laws of the State
of Maryland, having been incorporated on June 1, 2010;
WHEREAS, the Company is a corporation duly organized and existing under the laws of the State
of California, having been incorporated on January 28, 1999; and
WHEREAS, the Boards of Directors and the shareholders representing at least a majority of the
outstanding shares of capital stock entitled to vote of NetREIT-MD and at least a majority of the
outstanding shares of Series AA Preferred Stock and Common Stock, Series A of the Company, each
voting as a separate class and on a combined basis, have approved this Agreement under which the
Company shall be merged with and into NetREIT-MD with NetREIT-MD being the surviving corporation
(such merger being hereinafter referred to as the Merger).
NOW, THEREFORE, in consideration of the premises, the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Company shall be merged with and into NetREIT-MD on
the terms and conditions hereinafter set forth.
ARTICLE I
MERGER
Effective the later to occur of (i) 12:01 a.m. Eastern Standard time, on or about August
4,
2010, or (ii) the time of effectiveness as provided in the Articles of Merger that are accepted for
filing in Maryland (the Effective Time), the Company shall be merged with and into NetREIT-MD in
accordance with the Maryland General Corporations Law and the California Corporations Code, and the
separate existence of the Company shall cease and NetREIT-MD (hereinafter sometimes referred to as
the Surviving Corporation) shall continue to exist under the name of NetREIT, Inc. by virtue of,
and shall be governed by, the laws of the State of Maryland. The address of the registered office
of the Surviving Corporation in the State of Maryland will be 715 St. Paul Street, Baltimore,
Maryland 21202. The name of the Surviving Corporations registered agent at such address is HIQ
Corporate Services, Inc.
ARTICLE II
ARTICLES OF INCORPORATION
OF THE SURVIVING CORPORATION
The Charter of the Surviving Corporation, as in effect immediately prior to the Effective
Time, shall be the Charter of NetREIT-MD without change unless and until thereafter amended as
provided by applicable law.
ARTICLE III
BYLAWS OF THE SURVIVING CORPORATION
The Bylaws of NetREIT-MD, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation without change, unless and until amended or repealed in
accordance with applicable law.
ARTICLE IV
EFFECT OF MERGER ON STOCK
OF CONSTITUENT CORPORATIONS
4.01 At the Effective Time, each authorized share of Series A Common Stock of the Company, no
par value per share (the Company Common Stock), then issued and outstanding shall be converted
into one (1) share of Series A Common Stock, $0.01 par value per share, of the Surviving
Corporation, par value $0.01 per share (the NetREIT-MD Common Stock). There are no shares of
Series B Common Stock of the Company, no par value per share, issued and outstanding as of the date
hereof.
4.02 At and after the Effective Time, each share of the Company Common Stock shall be
cancelled and retired and, by virtue of the Merger and without further action, shall cease to
exist.
4.03 At the Effective Time, each authorized share of Series AA Preferred Stock of the Company,
no par value per share (the Company Preferred Stock), then issued and outstanding shall be
converted into one (1) share of Series AA Preferred Stock of the Surviving Corporation, par value
$0.01 per share (the NetREIT-MD Preferred Stock). There are no shares of Series AA Preferred
Stock of the Company, no par value per share, issued and outstanding as of the date hereof.
4.04 At and after the Effective Time, each share of the Company Preferred Stock shall be
cancelled and retired and, by virtue of the Merger and without further action, shall cease to
exist.
4.05 At and after the Effective Time, all documentation which prior to that time evidenced and
represented the Company Common Stock or the Company Preferred Stock, as applicable, shall be deemed
for all purposes to evidence ownership of and to represent those shares of NetREIT-MD Common Stock
or NetREIT-MD Preferred Stock, as applicable, into which the Company Common Stock or the Company
Preferred Stock, as applicable, represented by such documentation has been converted as herein
provided and shall be so registered on the books and records of NetREIT-MD. The registered owner
of any outstanding stock certificate
evidencing the Company Common Stock or the Company Preferred Stock, as applicable, shall, until
such certificate shall have been surrendered for transfer or conversion or otherwise accounted for
to NetREIT-MD or its transfer agent, have and be entitled to exercise any voting and other rights
with respect to and to receive any dividend and other distributions upon the shares of NetREIT-MD
Common Stock or NetREIT-MD Preferred Stock, as applicable, evidenced by such outstanding
certificate as above provided.
4.06 At and after the Effective Time, (i) each of the Companys equity incentive plans,
including without limitation the Companys 1999 Flexible Incentive Plan (collectively, the Plan)
shall be assumed by NetREIT-MD and all options to purchase Company Common Stock issued under the
Plan (the Company Options) and all shares of Company Common Stock issued under the Plan (the
Company Grants), shall be deemed for all purposes to evidence options to purchase NetREIT-MD
Common Stock and shares of NetREIT-MD Common Stock and shall be subject to the same restrictions as
set forth in such Company Options and in such documentation pursuant to which such Company Grants
were issued, including without limitation any vesting provisions set forth therein; and (ii) all
other options, warrants and other securities and rights convertible into, or exercisable or
exchangeable for, shares of the Company Common Stock or the Company Preferred Stock shall be deemed
for all purposes to evidence options, warrants and other securities and rights to purchase
NetREIT-MD Common Stock or NetREIT-MD Preferred Stock, as applicable, and shall be subject to the
same restrictions as set forth in the documentation pursuant to which such options, warrants and
other securities and rights were issued, including without limitation any vesting and exercise
provisions set forth therein.
ARTICLE V
CORPORATE EXISTENCE, POWERS AND
LIABILITIES OF SURVIVING CORPORATION
5.01 At the Effective Time, the separate existence of the Company shall cease and the Company
shall be merged with and into the Surviving Corporation in accordance with the provisions of this
Agreement. Thereafter, the Surviving Corporation shall possess all of the rights, privileges,
powers and franchises as well of a public as of a private nature, and shall be subject to all the
restrictions, disabilities and duties of the Company; and all rights, privileges, powers and
franchises of the Company, and all property, real, personal and mixed, and all debts due to each of
them on whatever account, as well as stock subscriptions and all other things in action or
belonging to the Company shall be vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other interest shall be thereafter effectually
the property of the Surviving Corporation as they were of the Company, and the title to any real
estate, whether by deed or otherwise, vested in the Company shall not revert or be in any way
impaired by reason of the Merger; but all rights of creditors and all liens upon any property of
the Company shall be preserved unimpaired, and all debts, liabilities and duties shall thenceforth
attach to the Surviving Corporation and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by it.
5.02 The Company agrees that it will execute and deliver (or cause to be executed and
delivered) all such deeds, assignments and other instruments, and will take or cause to be taken
such further or other action as the Surviving Corporation may deem necessary or desirable in order
to vest in and confirm to the Surviving Corporation title to and possession of all the property,
rights, privileges, immunities, powers, purposes and franchises, and all and every other interest,
of the Company and otherwise to carry out the intent and purposes of this Agreement.
ARTICLE VI
OFFICERS AND DIRECTORS
OF SURVIVING CORPORATION
At the Effective Time, the officers and directors of the Company shall become the officers and
directors of the Surviving Corporation, and such persons shall hold office in accordance with the
Bylaws of the Surviving Corporation or until their respective successors shall have been appointed
or elected and qualified.
ARTICLE VII
APPROVAL BY SHAREHOLDERS;
AMENDMENT; EFFECTIVE TIME
7.01 This Agreement and the Merger contemplated hereby are subject to approval by the
requisite vote of the shareholders of the Company in accordance with California law. As promptly as
practicable after approval of this Agreement by such shareholders in accordance with applicable
law, duly authorized officers of NetREIT-MD and the Company shall make and execute Articles of
Merger or other applicable certificates or documentation effecting this Agreement and shall cause
such document or documents to be filed with the Department of Assessments and Taxation for the
State of Maryland and the Secretary of State for the State of California, respectively, in
accordance with the applicable Maryland and California law.
7.02 The respective Boards of Directors of NetREIT-MD and the Company may amend this Agreement
at any time prior to the Effective Time, provided that an amendment made subsequent to the approval
of the Merger by the shareholders of the Company shall not (1) alter or change the amount or kind
of shares, securities, cash, property or rights to be received in exchange for or on conversion of
all or any the Company Common Stock or the Company Preferred Stock; (2) alter or change any term of
the Charter of the Surviving Corporation; or (3) alter or change any of the terms and conditions of
this Agreement if such alteration or change would adversely affect the holders of any the Company
Common Stock or the Company Preferred Stock.
ARTICLE VIII
PAYMENT OF FEES AND FRANCHISE TAXES
The Surviving Corporation shall be responsible for the payment of all fees and franchise taxes
of the Company relating to or required to be paid in connection with the Merger.
ARTICLE IX
TERMINATION OF MERGER
This Agreement may be terminated and the Merger abandoned at any time prior to the Effective
Time, whether before or after shareholder approval of this Agreement, by the consent of the Board
of Directors of NetREIT-MD and the Board of Directors of the Company.
[Signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers, all as of the day and year first above written.
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NETREIT, INC.
a Maryland corporation
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By:
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/s/ Jack K. Heilbron
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Name:
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Jack K. Heilbron
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Title:
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President and CEO
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NETREIT
a California corporation
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By:
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/s/ Jack K. Heilbron
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Name:
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Jack K. Heilbron
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Title:
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President and CEO
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[Signature page to Plan and Agreement of Merger]
Exhibit 3.01
Appendix B
ARTICLES OF AMENDMENT AND RESTATEMENT
OF THE
ARTICLES OF INCORPORATION
OF
NetREIT, INC.
(a Maryland corporation)
The undersigned, being authorized to execute and file these Articles of Amendment and
Restatement of the Articles of Incorporation of NetREIT, Inc., hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST
: The Corporation desires to amend and restate its charter as currently in
effect pursuant to these Articles of Amendment and Restatement. The provisions set forth in these
Articles of Amendment and Restatement are all the provisions of the charter of the Corporation as
currently in effect.
SECOND
: The charter of the Corporation is hereby amended by striking in their
entirety Articles I through IX, inclusive, and by substituting the following in lieu thereof:
ARTICLE I
INCORPORATION
The undersigned, being at least eighteen (18) years of age and duly authorized to execute and
file these Articles of Incorporation does hereby form a corporation under and by virtue of the
general laws of the State of Maryland.
ARTICLE II
NAME
The name of the corporation (which is hereinafter called the
Corporation
) is:
NetREIT, Inc.
ARTICLE III
PURPOSE
The purposes for which the Corporation is formed are to engage in any lawful act or activity
(including, without limitation or obligation, engaging in business as a real estate investment
trust under the Internal Revenue Code of 1986, as amended, or any successor statute (the
Code
)) for which corporations may be organized under the general laws of the State of
Maryland as now or hereafter in force. For purposes of these Articles,
REIT
means a real estate
investment trust under Sections 856 through 860 of the Code.
ARTICLE IV
PRINCIPAL OFFICE; RESIDENT AGENT
The address of the principal office of the Corporation in the State of Maryland is 715 St.
Paul Street, Baltimore, Maryland 21202. The name and address of the resident agent of the
Corporation in the State of Maryland is HIQ Corporate Services, Inc., 715 St. Paul Street,
Baltimore, Maryland 21202. Said Resident Agent is a Maryland corporation duly authorized to act as
resident agent in the State of Maryland.
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS
OF THE CORPORATION AND
OF ITS STOCKHOLDERS AND DIRECTORS
Section 5.1 NUMBER OF DIRECTORS. The business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. The number of directors of the Corporation initially
shall be eight (8), which number may be increased or decreased only by the Board of Directors
pursuant to the Bylaws of the Corporation, but shall never be less than the minimum number required
by the Maryland General Corporation Law (the
MGCL
). The names of the directors who shall serve
until their successors are duly elected and qualified are:
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Jack K. Heilbron
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Larry G. Dubose
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David T. Bruen
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Thomas Schwartz
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Sumner J. Rollings
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William Allen
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Bruce A. Staller
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Kenneth W. Elsberry
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Section 5.2
ACTIONS BY STOCKHOLDERS
.
Section 5.2.1.
Quorum
. Except with respect to the election of directors provided for
in Section 5.2.2 by the holders of Common Stock, the presence in person or by proxy of the holders
of shares of stock of the Corporation entitled to cast a majority of the votes entitled to be cast
on a matter (without regard to class) shall constitute a quorum at any meeting of stockholders with
respect to such matter, except with respect to any such matter that, under applicable statutes or
regulatory requirements or the charter, requires approval by a separate vote of the holders of one
or more classes of stock, in which case the presence in person or by proxy of the holders of shares
entitled to cast a majority of the votes entitled to be cast by each such class on such a matter
shall constitute a quorum. Notwithstanding the foregoing, to the extent permitted by the MGCL, the Bylaws may provide for a greater or lesser quorum requirement, provided that such
requirement shall not be less than forty percent (40%) nor more than sixty-six and two-thirds
percent (66 2/3rds%) of the votes entitled to be cast (without regard to class) on matters
submitted for a vote of the stockholders.
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Section 5.2.2
Election of Directors
. Except as otherwise provided in Section 6.4(i)
with respect to the holders of the Corporations Preferred Stock or in the Bylaws of the
Corporation, directors shall be elected by the affirmative vote of holders of Common Stock entitled
to cast a majority of all the votes entitled to be cast at a meeting at which a quorum is present.
As provided in the Bylaws, stockholders shall have the right to cumulate votes for the election of
directors where the names of candidates are placed in nomination prior to commencement of the
voting and a stockholder gives notice prior to commencement of the voting of the stockholders
intention to cumulate votes. In that circumstance, every stockholder entitled to vote may cumulate
votes for candidates in nomination and give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which such stockholders shares are
entitled, or distribute votes on the same principle among any or all of the candidates standing for
election.
Section 5.3
AUTHORIZATION BY BOARD OF STOCK ISSUANCES
. The Board of Directors may
authorize the issuance from time to time of shares of stock of the Corporation of any class or
series, whether now or hereafter authorized, or securities or rights convertible into shares of its
stock of any class or series, whether now or hereafter authorized, for such consideration as the
Board of Directors may deem advisable (or without consideration in the case of a stock split or
stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the
charter or the Bylaws.
Section 5.4
PREEMPTIVE RIGHTS
. Except as may be provided by the Board of Directors in
setting the terms of classified shares of stock pursuant to Section 6.5 or as may be otherwise
agreed by contract, no holder of shares of stock of the Corporation shall, as such holder, have any
preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or
any other security of the Corporation which it may issue or sell.
Section 5.5
INDEMNIFICATION
. The Corporation shall have the power, to the maximum
extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and
to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any
individual who is a present or former director or officer of the Corporation or (b) any individual
who, while a director of the Corporation and at the request of the Corporation, serves or has
served as a director, officer, managing member, partner or trustee of another corporation, real
estate investment trust, partnership, joint venture, trust, employee benefit plan or any other
enterprise, from and against any claim or liability to which such person may become subject or
which such person may incur by reason of his status as a present or former director or officer of
the Corporation. The Corporation shall have the power, with the approval of the Board of Directors,
to provide such indemnification and advancement of expenses to a person who served a predecessor of
the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent
of the Corporation or a predecessor of the Corporation.
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Section 5.6
DETERMINATIONS BY BOARD
. The determination as to any of the following
matters, made in good faith by or pursuant to the direction of the Board of Directors consistent
with the charter and in the absence of actual receipt of an improper benefit in money, property or
services or active and deliberate dishonesty established by a court, shall be final and conclusive
and shall be binding upon the Corporation and every holder of shares of its stock: the amount of
the net income of the Corporation for any period and the amount of assets at any time legally
available for the payment of dividends, redemption of its stock or the payment of other
distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or
other net profit, net assets in excess of capital, undivided profits or excess of profits over
losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration
or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation
or liability for which such reserves or charges shall have been created shall have been paid or
discharged); the fair value, or any sale, bid or asked price to be applied in determining the fair
value, of any asset owned or held by the Corporation; any matter relating to the acquisition,
holding or disposition of any assets by the Corporation; or any other matter relating to the
business and affairs of the Corporation or required or permitted by applicable law, the charter or
Bylaws or otherwise to be determined by the Board of Directors.
Section 5.7
REIT QUALIFICATION
. The Corporation has elected to qualify for federal
income tax treatment as a REIT. The Board of Directors shall use its reasonable best efforts to
take such actions as are necessary or appropriate to preserve the status of the Corporation as a
REIT; however, if the Board of Directors determines that it is no longer in the best interests of
the Corporation to continue to be qualified as a REIT, then upon receipt of a recommendation to
such effect from the Board of Directors, the holders of Common Stock, by a vote of such
stockholders as are entitled to cast a majority of all the votes entitled to be cast on the matter,
may cause the Corporation to revoke or otherwise terminate the Corporations REIT election pursuant
to Section 856(g) of the Code. The holders of Common Stock, upon receipt of a recommendation from
the Board of Directors, may determine that compliance with any restriction or limitation on stock
ownership and transfers set forth in Article VII is no longer required for REIT qualification and
cause the Corporation to amend the charter to remove such restriction or limitation.
Section 5.8
VACANCIES ON THE BOARD
. A majority of the Board of Directors shall have
the power to fill any and all vacancies on the Board of Directors, even if the remaining directors
do not constitute a quorum, except that a vacancy with respect to any Series AA Director shall be
filled by the holders of the Series AA Preferred Stock and any vacancy created by the removal of a
director other than a Series AA Director may be filled only by the vote of holders of a majority of
the Common Stock. Any director elected to fill a vacancy shall serve until the next annual meeting
of the stockholders and until a successor is elected and qualifies.
Section 5.9
REMOVAL OF DIRECTORS
. Any director (other than a Series AA Preferred
Director, who may be removed from office only by vote of the Series AA Preferred Stock as provided
in Section 6.4(i)), or the entire Board of Directors, may be removed from office at any time, with
or without cause, by the affirmative vote or the written consent of a majority of the shares of
Common Stock outstanding or by vote at a special meeting of the stockholders called in the manner provided for in the Bylaws, provided, however, that no director
may be removed when the votes cast against such removal, or not consenting in writing to such
removal, would be sufficient to elect such director if voted cumulatively in accordance with the
provisions of the Bylaws.
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Section 5.10
ADVISOR AGREEMENTS
. Subject to such approval of stockholders and other
conditions, if any, as may be required by any applicable statute, rule or regulation, the Board of
Directors may authorize the execution and performance by the Corporation of one or
more agreements with any person, corporation, association, company, trust, partnership (limited or
general) or other organization whereby, subject to the supervision and control of the Board of
Directors, any such other person, corporation, association, company, trust, partnership (limited or
general) or other organization shall render or make available to the Corporation managerial,
investment, advisory and/or related services, office space and other services and facilities
(including, if deemed advisable by the Board of Directors, the management or supervision of the
investments of the Corporation) upon such terms and conditions as may be provided in such agreement
or agreements (including, if deemed fair and equitable by the Board of Directors, the compensation
payable thereunder by the Corporation).
Section 5.11
ACTION BY WRITTEN CONSENT
. Subject to compliance with the notice and
other requirements of Section 2-505 of the MGCL and any procedures adopted by the Board of
Directors from time to time, the holders of Common Stock entitled to vote generally in the election
of directors may take action or consent to any action by delivering a consent, in writing or by
electronic transmission, of the stockholders entitled to cast not less than the minimum number of
votes that would be necessary to authorize or take the action at a stockholders meeting.
ARTICLE VI
STOCK
Section 6.1
AUTHORIZED SHARES
. The Corporation shall have the authority to issue one
hundred ten million one thousand (110,001,000) shares of stock, consisting of one hundred million
one thousand (100,001,000) shares of Common Stock, par value $0.01 per share (
Common Stock
), and
ten million (10,000,000) shares of Preferred Stock, par value $0.01 per share (
Preferred Stock
).
The aggregate par value of all authorized shares of stock having par value is $1,100,010.
Section 6.2
COMMON STOCK
. The one hundred million one thousand (100,001,000) shares
of Common Stock shall be divided into two (2) classes: (i) one hundred million (100,000,000)
shares of Series A Common Stock (
Series A Common
), and (ii) one thousand (1,000) shares of Series
B Common Stock (
Series B Common
). Subject to the provisions of Article VII, each share of Common
Stock shall entitle the holder thereof to one vote. The Corporations Series A Common and Series B
Common shall be identical with respect to all preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions, qualifications and terms
and conditions of redemption, except that the Series A Common shall enjoy a liquidation preference to the exclusion of Series B Common, which preference
shall be junior to the Liquidation Preference enjoyed by the Series AA Preferred Stock, but which
shall entitle the holders of Series A Common Stock, on liquidation, dissolution or winding up of
the Corporation, to share ratably in all of the Corporations assets that are legally available for
distribution after all debts and other liabilities of the Corporation are retired and the
Liquidation Preference, including accrued dividends, if any, enjoyed by the Series AA Preferred
Stock paid to the holders of the Series AA Preferred Stock.
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Section 6.3
PREFERRED STOCK
. The Board of Directors may classify any unissued shares
of Preferred Stock from time to time, in one or more classes or series of stock having such
preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption as determined by the Board of Directors. One
million (1,000,000) shares of the Corporations authorized Preferred Stock shall be designated as
Series AA Preferred Stock (
Series AA Preferred Stock
). The rights, preferences and privileges
and other terms and conditions of the Series AA Preferred Stock shall be as set forth in Section
6.4 below.
Section 6.4
SERIES AA PREFERRED STOCK
. The Series AA Preferred Stock shall have the
following rights, preferences and privileges:
(a)
Liquidation Preference
. The Liquidation Preference of the Series AA
Preferred Stock is twenty-five dollars ($25.00) per share (
Liquidation Preference
).
(b)
Dividends
. Each share of the Series AA Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds at the time legally
available therefore, an annual cash dividend equal to seven percent (7%) of the Liquidation
Preference, which dividends shall be declared in equal monthly installments in arrears on the 25th
day of each month. Dividends duly declared shall be paid on March 31, June 30, September 30 and
December 31 of each year, provided that if any such day shall be a Saturday, Sunday or a or a legal
holiday (any of the foregoing a
Non-Business Day
), then such dividend shall be payable on the
next succeeding day which is not a Non-Business Day. Dividends shall be cumulative and accrue for
each share of the Series AA Preferred Stock from the date of its first issuance and shall be
payable to holders of record as they appear on the stock books of the Corporation on such record
dates as they are fixed by the Board of Directors. No interest shall be payable with respect to
any dividend payment on the Series AA Preferred Stock which may be in arrears.
(c)
Preference to Dividends
. The Series AA Preferred Stock shall have
priority as to dividends over the Corporations Common Stock and any series or class of the
Corporations stock hereafter issued (referred to as
junior dividend stock
), except such
Preferred Stock which the Corporation may issue which is, by its express terms, senior to the
Series AA Preferred Stock
senior dividend stock
) or on parity with the Series AA Preferred Stock
(
parity dividend stock
), provided, however, the issuance of such senior dividend stock or parity
dividend stock shall first be approved by the affirmative vote of a majority of the outstanding
shares of the Series AA Preferred Stock (a
Majority Vote
). No dividend (other than dividends
payable solely in Common Stock or any series or class of junior
dividend stock) shall be declared, paid or set apart for payment on, and no
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purchase or other acquisition shall be
made by the Corporation of any Common Stock or junior dividend stock, unless all accrued and unpaid
dividends on the Series AA Preferred Stock shall have been declared and paid or set apart for
payment. No dividend shall be paid on any parity dividend stock unless the Corporation shall have
declared and paid or set aside for payment, or shall have contemporaneously declared and paid or
set apart for payment, all accrued and unpaid dividends for all prior periods on the Series AA
Preferred Stock. The Corporation shall not pay dividends on the Series AA Preferred Stock unless
it shall have declared and paid or set aside for payment or shall have contemporaneously declared
and paid or set apart for payment all accrued and unpaid dividends for all prior periods on the
parity dividend stock. Whenever all accrued dividends are not paid in full on the Series AA
Preferred Stock, or any parity dividend stock, all dividends declared on the Series AA Preferred
Stock and such parity dividend stock shall be declared and made pro rata so that the amount of
dividends declared per share on the Series AA Preferred Stock and such parity dividend stock shall
bear the same ratio that accrued and unpaid dividends per share on the Series AA Preferred Stock
and such parity dividend stock bear to each other.
(d)
Preference Upon Liquidation
. In the event of any liquidation, dissolution or
winding up of the Corporation, each share of Series AA Preferred Stock shall be entitled to
receive, out of legally available assets, an amount equal to the Liquidation Preference, plus an
amount equal to any accrued and unpaid dividends on such share to the date such liquidation payment
is made, and no more, before payment or distribution is made to the holders of the Corporations
Common Stock or any series or class of the Corporations stock hereafter issued that ranks junior
as to the liquidation rights of the Series AA Preferred Stock. The holders of the Series AA
Preferred Stock shall not be entitled to receive the Liquidation Preference on shares of the Series
AA Preferred Stock until the liquidation preferences of any other series or class of the
Corporations stock hereinafter issued that ranks senior as to liquidation rights of the Series AA
Preferred Stock (
senior liquidation stock
) has been paid in full. The holders of the Series AA
Preferred Stock and all other series or classes of the Corporations stock hereafter issued that
rank on a parity as to liquidation rights with the Series AA Preferred Stock shall share ratably,
in accordance with the respective preferential amounts payable on such stock, in any distribution
(after payment of the liquidation preferences of the senior liquidation stock) which is not
sufficient to pay in full the aggregate of the amounts payable thereon. After payment in full of
the Liquidation Preference of the shares of Series AA Preferred Stock (and the payment of dividends
thereon as provided above), the holders of the Series AA Preferred Stock shall not receive any
further participation in any distribution of the Corporations assets. Neither a consolidation,
merger or other business combination of the Corporation with or into another corporation or other
entity, nor a sale or transfer of all or part of the Corporations assets for cash, securities or
other property shall be considered a liquidation, dissolution or winding up of the Corporation.
For purposes of the Series AA Preferred Stock liquidation rights, a consolidation or a merger
of the Corporation into any other corporation or corporations or a sale of all or substantially all
of the assets of the Corporation shall be deemed not to be a liquidation, dissolution or winding up
of the Corporation.
7
(e)
Corporations Optional Redemption Rights
. The Series AA Preferred Stock shall be redeemable at the election of the Corporation in whole, or in part, at any time or
from time to time, by giving written notice to the holders of the Series AA Preferred Stock not
less than thirty (30) days nor more than sixty (60) days prior to the date set for such redemption
(the
Redemption Date
). The Series AA Preferred Stock shall be redeemable for the sum equal to
the Liquidation Preference per share, plus a cash payment equal to all accrued but unpaid dividends
(the
Call Price
). Dividends shall cease to accrue on the Redemption Date for the Series AA
Preferred Stock so called for redemption. If fewer than all outstanding shares of Series AA
Preferred Stock shall be called for redemption, the Series AA Preferred Stock redeemed shall be
selected by the Corporation by lot or pro rata (as nearly as may be possible) or by and other
method determined by the Board of Directors in its sole discretion, to be equitable.
(f)
Holders Optional Conversion
. At any time prior to any Redemption Date,
each share of the Series AA Preferred Stock shall be convertible, in whole or part only, at the
election of the holder thereof, into two (2) shares of the Corporations Series A Common Stock (the
Conversion Rate
). This right of optional conversion shall terminate immediately before the close
of business on any Redemption Date. Any such conversion shall be effected by delivery of the
certificate evidencing such Series AA Preferred Stock, together with written notice of conversion
and a proper assignment of such certificate to the Corporation or in blank (and, if applicable,
cash payment of an amount equal to the dividend attributable to the current quarterly dividend
period payable on such shares), to the office of the transfer agent, if any, for the Series AA
Preferred Stock (or to any other office or agency maintained by the Corporation) for that purpose
and otherwise in accordance with conversion procedures established by the Corporation. Any such
conversion shall be deemed to have been effected immediately before the close of business on the
date on which the foregoing requirements have been satisfied.
(g)
Adjustments
. The Conversion Rate shall be adjusted in accordance with
the following provisions:
(1)
Mandatory Adjustments
. In the event the Corporation (A) pays a stock
dividend or makes a distribution with respect to its Common Stock in shares of Common Stock; (B)
subdivides or splits its outstanding Common Stock; (C) combines its outstanding Common Stock into a
smaller number of shares; (D) issues any shares of Common Stock by reclassification of its shares
of Common Stock; or (E) pays a dividend or distributes to all holders of its Common Stock evidences
of its indebtedness, cash or other assets (including capital stock of the Corporation but excluding
any Permitted Cash Dividends (as defined below) or distributions and dividends referred to in
Section 6.4(g)(1) above), the Conversion Rate shall be adjusted as of the date such event first
becomes effective.
(2)
Discretionary Adjustments
. The Corporation will be entitled (but will not be
required) to make upward adjustments in the Conversion Rate as the Corporation, in its discretion,
shall determine to be advisable in order that any stock dividend, subdivisions of shares,
distribution of rights to purchase stock or securities, or distribution of securities convertible
into or exchangeable for stock (or any transaction which could be treated as any of the events
described in Section 6.4(g)(1) above under Section 305 of the Internal Revenue Code of 1986, as
amended) hereafter made by the Corporation to its stockholders will not be taxable.
8
(3)
Permitted Cash Dividends
.
Permitted Cash Dividends
shall mean, with respect
to any consecutive 12-month period, all cash dividends and cash distributions on the Common Stock
(other than cash dividends and cash distributions for which an adjustment to the Conversion Rate
was previously made) not in excess of an amount equal to ten percent (10%) per annum on the Share
Price of the Corporations Common Stock, excepting any dividends paid with funds from capital gains
within the meaning of federal income tax law.
The Share Price shall be the average of the closing share price of the Common Stock in any public
market as reported over such period, or if the Corporations Common Stock was not traded in a
public market during such period, the price at which the Common Stock was last sold by the
Corporation to any unaffiliated person during such period, or if no such sale occurred, the value
of the Common Stock determined by the Corporations Board of Directors, in which event, the Board
of Directors decision will be final.
(4)
Reclassification, Consolidation or Merger
. Unless sooner redeemed or
converted, in case of any reclassification of the Common Stock, any consolidation of the
Corporation with, or merger of the Corporation into, any other entity, any merger of any entity
into the Corporation (other than a consolidation or merger that does not result in a
reclassification, conversion, exchange or cancellation of the outstanding shares of Common Stock),
any sale or transfer of all or substantially all of the assets of the Corporation or any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or other property
(a
Transaction
), each share of Series AA Preferred Stock shall, after consummation of such
Transaction, be entitled to be converted (A) on the Conversion Date into the kind and amounts of
securities, cash or other property receivable upon consummation of such Transaction by a holder of
the number of shares of Common Stock into which such Series AA Preferred Stock would have been
converted if the conversion on the Conversion Date had occurred immediately before the date of
consummation of such Transaction, plus the right to receive cash in an amount equal to all accrued
and unpaid dividends on such Series AA Preferred Stock (other than previously declared dividends
payable to a holder of record as of a prior date); or (B) at the option of the holder, into the
kinds and amount of securities, cash or other property receivable upon consummation of such
Transaction by a holder of the number of shares of Common Stock into which such Series AA Preferred
Stock might have been converted immediately before consummation of such Transaction. The kind and
amount of securities into or for which the Series AA Preferred Stock will be convertible or
redeemable after consummation of such Transaction will be subject to adjustment as described above
in Section 6.4(g), following the date of consummation of such Transaction. No fractional shares of
Common Stock will be issued upon redemption or conversion of Series AA Preferred Stock. In lieu of
any fractional share otherwise issuable in respect of the aggregate number of shares of Series AA
Preferred Stock of any holder that are redeemed or converted, such holder will be entitled to
receive an amount in cash equal to the same fraction of the share value of the Common Stock,
determined as of the Conversion Date in the case of a mandatory conversion, or the effective date
of the conversion in the case of an optional conversion by a holder.
9
(h)
Calculation and Documentation of Adjustments
. All adjustments to the Conversion
Rate shall be calculated to the nearest 1/100th of a share of Common Stock. No adjustment in the
Conversion Rate shall be required unless such adjustment would require any increase or decrease of at least one percent (1%) therein;
provided, however
, that any adjustments
which, by reason of this Section 6.4(h), shall not be required to be made will be carried forward
and taken into account in any subsequent adjustment. All adjustments shall be made successively.
Whenever the Conversion Rate shall be so adjusted, the Corporation shall file with its transfer
agent, if any, for the Series AA Preferred Stock a certificate with respect to such adjustment, and
shall make a prompt public announcement of such adjustment on its web site or by such other means
as the Board of Directors may determine.
(i)
Voting Rights
. The Series AA Preferred Stock shall have only the voting
rights set forth in this Section 6.4(i), except as may otherwise be required by law. So long as
any Series AA Preferred Stock is outstanding, the Corporation shall not, without the Majority Vote
of the holders of record of the Series AA Preferred Stock then outstanding, voting separately as a
class:
(1) amend, alter or repeal any provision of the charter or the Bylaws of the
Corporation so as to affect adversely the relative rights, preferences,
qualifications, limitations or restrictions of the Series AA Preferred
Stock;
(2) authorize or issue, or increase the authorized amount of, any additional
class or series of stock, or any security convertible into any senior
dividend stock, senior liquidation stock, parity dividend stock or parity
liquidation stock;
(3) affect any reclassification of the Series AA Preferred Stock; or
(4) effect the merger of the Corporation with another corporation, exchange of
shares or sale of all or substantially all of the assets of the Corporation if the
stockholders of the Corporation prior to such merger, share exchange or sale will
own less than fifty percent (50%) of the shares of the surviving (in case of a
merger) or acquiring (in the case of an exchange of shares or sale of assets)
corporation immediately following such merger, share exchange or sale.
Except as provided below in this Section 6.4(i), holders of Series AA Preferred Stock shall
not have the right to vote for the election of directors. If dividends on the Series AA Preferred
Stock have accrued and remain unpaid for a period of one year, the Board of Directors shall call
and hold a meeting of the Board of Directors within thirty (30) days to consider and adopt a
resolution to increase the number of directors of the Corporation by two (2) (such additional
directors, the
Series AA Preferred Directors
), name nominees for positions as Series AA Preferred
Directors and call a special meeting of the holders of the Series AA Preferred Stock for the sole
purpose of electing Series AA Preferred Directors. Series AA Preferred Directors elected by the
holders of the Series AA Preferred Stock pursuant to this Section 6.4(i) shall serve until the
earlier of (1) the date the Corporation pays a dividend sufficient to retire all accrued and unpaid
dividends on the Series AA Preferred Stock, (2) their resignation or removal by a vote of the
majority of the Series AA Preferred Stock, or (3) the date their respective successors are duly
elected and qualify. If any Series AA Preferred Director shall resign or be removed from office, the holders of the Series AA Preferred Stock shall
have the right to elect such Series AA Preferred Directors as are required to fill any such
vacancy(ies) until such time that the director election rights of the holders of Series AA
Preferred Stock terminate.
10
(j)
Notice of Corporate Action
. The Corporation shall give the holders of
record of the Series AA Preferred Stock at least twenty (20) days prior written notice of: (1) the
granting by the Corporation to all holders of its Common Stock of rights to purchase any shares of
capital stock or other rights; (2) any reclassification of Common Stock, or consolidation of the
Corporation with, or merger of the Corporation into, any other persons, any merger of any person
into the Corporation (other than a merger that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock); or (3) any sale or transfer of all
or substantially all of the assets of the Corporation.
Section 6.5
CLASSIFIED SHARES
. Prior to issuance of shares of any class or series, the
Board of Directors by resolution shall: (a) designate that particular class or series to
distinguish it from all other classes and series of stock of the Corporation; (b) specify the
number of shares to be included in the class or series; (c) set, subject to the provisions of
Article VII and subject to the express terms of any class or series of stock of the Corporation
outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms and conditions of
redemption for each class or series; and (d) cause the Corporation to file articles supplementary
with the State Department of Assessments and Taxation of Maryland (
SDAT
). Any of the terms of any
class or series of stock set or changed pursuant to clause (c) of this Section 6.5 may be made
dependent upon facts or events ascertainable outside the charter (including determinations by the
Board of Directors or other facts or events within the control of the Corporation) and may vary
among holders thereof, provided that the manner in which such facts, events or variations shall
operate upon the terms of such class or series of stock is clearly and expressly set forth in the
articles supplementary filed with the SDAT.
Section 6.6
CHARTER AND BYLAWS
. All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of the charter and the Bylaws.
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 7.1
DEFINITIONS
. For the purpose of this Article VII, (i) terms defined
elsewhere in these Articles of Incorporation are incorporated by reference, and (ii) the following
terms shall have the following meanings:
AGGREGATE STOCK OWNERSHIP LIMIT
. The term
Aggregate Stock Ownership Limit
shall mean
not more than nine and 8/10ths percent (9.8%) in value of the aggregate outstanding shares of
Capital Stock. The value of the outstanding shares of Capital Stock shall be determined by the
Board of Directors of the Corporation in good faith, which determination shall be conclusive for all purposes hereof.
11
BENEFICIAL OWNERSHIP
. The term
Beneficial Ownership
shall mean ownership of Capital
Stock by a Person, whether the interest in the shares of Capital Stock is held directly or
indirectly (including by a nominee), and shall include interests that would be treated as owned
through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the
Code. The terms
Beneficial Owner
,
Beneficially Owns
and
Beneficially Owned
shall have the
correlative meanings.
BUSINESS DAY
. The term
Business Day
shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions in California are
authorized or required by law, regulation or executive order to close.
CAPITAL STOCK
. The term
Capital Stock
shall mean all classes or series of stock of
the Corporation, including, without limitation, Common Stock and Preferred Stock.
CHARITABLE BENEFICIARY
. The term
Charitable Beneficiary
shall mean one or more
beneficiaries of the Charitable Trust as determined pursuant to Section 7.3.6, provided that each
such organization must be described in Section 501(c)(3) of the Code and contributions to each such
organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of
the Code.
CHARITABLE TRUST
. The term
Charitable Trust
shall mean any trust provided for in
Section 7.3.1.
CHARTER
. The term
charter
shall mean the charter of the Corporation, as that term is
defined in the MGCL.
CODE
. The term
Code
shall mean the Internal Revenue Code of 1986, as amended from
time to time.
COMMON STOCK OWNERSHIP LIMIT
. The term
Common Stock Ownership Limit
shall mean not
more than nine and 8/10ths percent (9.8%) (in value or in number of shares, whichever is more
restrictive) of the aggregate outstanding shares of Common Stock of the Corporation. The number and
value of outstanding shares of Common Stock of the Corporation shall be determined by the Board of
Directors of the Corporation in good faith, which determination shall be conclusive for all
purposes hereof.
CONSTRUCTIVE OWNERSHIP
. The term
Constructive Ownership
shall mean ownership of
Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or
indirectly (including by a nominee), and shall include interests that would be treated as owned
through the application of Section 318(a) of the Code, as modified by
Section 856(d)(5) of the Code. The terms
Constructive Owner
,
Constructively Owns
and
Constructively Owned
shall have the correlative meanings.
12
EXCEPTED HOLDER
. The term
Excepted Holder
shall mean a stockholder of the Corporation for whom an Excepted Holder Limit is created by the charter or by the Board of
Directors pursuant to Section 7.2.7.
EXCEPTED HOLDER LIMIT
. The term
Excepted Holder Limit
shall mean, provided that the
affected Excepted Holder agrees to comply with the requirements established by the Board of
Directors pursuant to Section 7.2.7, and subject to adjustment pursuant to Section 7.2.8, the
percentage limit established by the Board of Directors pursuant to Section 7.2.7.
INITIAL DATE
. The term
Initial Date
shall mean the date upon which the Articles of
Amendment and Restatement of the Articles of Incorporation containing this Article VII are filed
with the SDAT.
MARKET PRICE
. The term
Market Price
on any date shall mean, with respect to any
class or series of outstanding shares of Capital Stock, the Closing Price for such Capital Stock on
such date. The Closing Price on any date shall mean the last sale price for such Capital Stock,
regular way, or, in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, for such Capital Stock, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or admitted to trading
on the NYSE or, if such Capital Stock is not listed or admitted to trading on the NYSE, as reported
on the principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which such Capital Stock is listed or admitted to trading
or, if such Capital Stock is not listed or admitted to trading on any national securities exchange,
the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or, if such system is no longer in use, the principal other automated
quotation system that may then be in use or, if such Capital Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in such Capital Stock selected by the Board of Directors of the Corporation
or, in the event that no trading price is available for such Capital Stock, the fair market value
of the Capital Stock, as determined in good faith by the Board of Directors of the Corporation.
NYSE
. The term
NYSE
shall mean the New York Stock Exchange.
PERSON
. The term
Person
shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a
trust permanently set aside for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that term s used for
purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and a group to
which an Excepted Holder Limit applies.
PROHIBITED OWNER
. The term
Prohibited Owner
shall mean, with respect to any
purported Transfer, any Person who, but for the provisions of Section 7.2.1, would Beneficially Own
or Constructively Own shares of Capital Stock, and if appropriate in the context, shall also mean any Person who would have been the record owner of the shares that the
Prohibited Owner would have so owned.
13
REIT
. The term
REIT
shall mean a real estate investment trust within the meaning of
Section 856 of the Code.
RESTRICTION TERMINATION DATE
. The term
Restriction Termination Date
shall mean the
first day after the Initial Date on which pursuant to Section 5.7 of the charter the Board of
Directors determines that it is no longer in the best interests of the Corporation to continue to
be qualified as a REIT and the holders of Common Stock, by a vote of such stockholders as are
entitled to cast a majority of all the votes entitled to be cast on the matter, causes the
Corporation to revoke or otherwise terminate the Corporations REIT election pursuant to Section
856(g) of the Code or that compliance with the restrictions and limitations on Beneficial
Ownership, Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no
longer required in order for the Corporation to qualify as a REIT.
TENANT
. The term
Tenant
shall mean a tenant, subtenant or any other Person that is a
subtenant through a chain of subtenancies of a property owned by the Corporation.
TRANSFER
. The term
Transfer
shall mean any issuance, sale, transfer, gift,
assignment, devise or other disposition, as well as any other event that causes any Person to
acquire Beneficial Ownership or Constructive Ownership, or any agreement to take any such actions
or cause any such events, of Capital Stock or the right to vote or receive dividends on Capital
Stock, including (a) the granting or exercise of any option (or any disposition of any option), (b)
any disposition of any securities or rights convertible into or exchangeable for Capital Stock or
any interest in Capital Stock or any exercise of any such conversion or exchange right and (c)
Transfers of interests in other entities that result in changes in Beneficial or Constructive
Ownership of Capital Stock; in each case, whether voluntary or involuntary, whether owned of
record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise.
The terms
Transferring
and
Transferred
shall have the correlative meanings.
TRUSTEE.
The term
Trustee
shall mean a Person unaffiliated with the Corporation and
Prohibited Owner that is appointed by the Corporation to serve as trustee of a Charitable Trust.
Section 7.2
CAPITAL STOCK
.
Section 7.2.1
OWNERSHIP LIMITATIONS
. During the period commencing on the Initial Date
and prior to the Restriction Termination Date:
(a)
BASIC RESTRICTIONS
.
(i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own
shares of Capital Stock in excess of the Aggregate Stock Ownership Limit, (2) no Person, other than
an Excepted Holder, shall Beneficially Own or Constructively
Own shares of Common Stock in excess of the Common Stock Ownership Limit and (3) no Excepted Holder
shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Excepted
Holder Limit for such Excepted Holder.
14
(ii) No Person shall Beneficially or Constructively Own shares of Capital Stock to the extent
that such Beneficial or Constructive Ownership of Capital Stock would result in the Corporation
being closely held within the meaning of Section 856(h) of the Code (without regard to whether
the ownership interest is held during the last half of a taxable year), or otherwise failing to
qualify as a REIT (including, but not limited to, Beneficial or Constructive Ownership that would
result in the Corporation owning (actually or Constructively (substituting, solely for purposes of
this determination, Section 856(d)(5) for Section 897(c)(6)(C) in the definition of Constructive
Ownership)) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the
income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code).
(iii) Subject to Section 7.4 of the charter, any Transfer of shares of Capital Stock (whether
or not such Transfer is the result of a transaction entered into through the facilities of the NYSE
or any other national securities exchange or automated inter-dealer quotation system) that, if
effective, would result in the Capital Stock being beneficially owned by fewer than one hundred
(100) Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab
initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.
(b)
TRANSFER IN TRUST
. Subject to Section 7.4 of the charter, if any Transfer of
shares of Capital Stock (whether or not such Transfer is the result of a transaction entered into
through the facilities of the NYSE or any other national securities exchange or automated
inter-dealer quotation system) occurs which, if effective, would result in any Person Beneficially
Owning or Constructively Owning shares of Capital Stock in violation of Section 7.2.1(a)(i) or
(ii),
(i) then that number of shares of the Capital Stock the Beneficial or Constructive Ownership
of which otherwise would cause such Person to violate Section 7.2.1(a)(i) or (ii) (rounded to the
nearest whole share) shall be automatically transferred to a Charitable Trust for the benefit of a
Charitable Beneficiary, as described in Section 7.3, effective as of the close of business on the
Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such
shares; or
(ii) if the transfer to the Charitable Trust described in clause (i) of this sentence would
not be effective for any reason to prevent the violation of Section 7.2.1(a)(i) or (ii), then the
Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate
Section 7.2.1(a)(i) or (ii) shall be void
ab
initio
, and the intended transferee
shall acquire no rights in such shares of Capital Stock.
15
Section 7.2.2
REMEDIES FOR BREACH
. If the Board of Directors of the Corporation or any
duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 7.2.1 or that
a Person intends to acquire or has attempted to acquire Beneficial or Constructive Ownership of
any shares of Capital Stock in violation of Section 7.2.1 (whether or not such violation is
intended), the Board of Directors or a committee thereof shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or other event, including,
without limitation, causing the Corporation to redeem shares, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or
other event;
provided
,
however
, that any Transfer or attempted Transfer or other
event in violation of Section 7.2.1 shall automatically result in the transfer to the Charitable
Trust described above, and, where applicable, such Transfer (or other event) shall be void
ab
initio
as provided above irrespective of any action (or non-action) by the Board
of Directors or a committee thereof.
Section 7.2.3
NOTICE OF RESTRICTED TRANSFER
. Any Person who acquires or attempts or
intends to acquire Beneficial Ownership or Constructive Ownership of shares of Capital Stock that
will or may violate Section 7.2.1(a) or any Person who would have owned shares of Capital Stock
that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 7.2.1(b)
shall immediately give written notice to the Corporation of such event, or in the case of such a
proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall
provide to the Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer on the Corporations status as a REIT.
Section 7.2.4
OWNERS REQUIRED TO PROVIDE INFORMATION
. From the Initial Date and prior
to the Restriction Termination Date:
(a) every Person who Beneficially Owns more than five percent (5%) (or such lower percentage
as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding
shares of Capital Stock, within 30 days after the end of each taxable year, shall give written
notice to the Corporation stating the name and address of such owner, the number of shares of
Capital Stock Beneficially Owned and a description of the manner in which such shares are held.
Each such Person shall provide to the Corporation such additional information as the Corporation
may request in order to determine the effect, if any, of such Beneficial Ownership on the
Corporations status as a REIT and to ensure compliance with the Aggregate Stock Ownership Limit;
and
(b) each Person who is a Beneficial or Constructive Owner of Capital Stock and each Person
(including the stockholder of record) who is holding Capital Stock for a Beneficial or Constructive
Owner shall provide to the Corporation such information as the Corporation may request, in good
faith, in order to determine the Corporations status as a REIT and to comply with requirements of
any taxing authority or governmental authority or to determine such compliance and ensure
compliance with Aggregate Stock Ownership Limit.
Section 7.2.5
REMEDIES NOT LIMITED
. Subject to Section 5.7 of the charter, nothing
contained in this Section 7.2 shall limit the authority of the Board of Directors of the
Corporation to take such other action as it deems necessary or advisable to protect the Corporation
and the interests of its stockholders in preserving the Corporations status as a REIT.
16
Section 7.2.6
AMBIGUITY
. In the case of an ambiguity in the application of any of the
provisions of this Article VII, including any definition contained in Section 7.1, the Board of
Directors of the Corporation shall have the power to determine the application of the provisions of
this Article VII with respect to any situation based on the facts known to it. In the event
Article VII requires an action by the Board of Directors and the charter fails to provide specific
guidance with respect to such action, the Board of Directors shall have the power to determine the
action to be taken so long as such action is not contrary to the provisions of this Article VII.
Section 7.2.7
EXCEPTIONS
.
(a) Subject to Section 7.2.1(a)(ii), the Board of Directors of the Corporation, in its sole
discretion, may exempt (prospectively or retroactively) a Person from the Aggregate Stock Ownership
Limit and the Common Stock Ownership Limit, as the case may be, and may establish or increase an
Excepted Holder Limit for such Person if:
(i) the Board of Directors obtains such representations and undertakings from such Person as
are reasonably necessary to ascertain that no individuals Beneficial or Constructive Ownership of
such shares of Capital Stock will violate Section 7.2.1(a)(ii);
(ii) such Person does not and represents that it will not own, actually or Constructively, an
interest in a Tenant of the Corporation (or a Tenant of any entity owned or controlled by the
Corporation) that would cause the Corporation to own, actually or Constructively, more than a nine
and 8/10ths percent (9.8%) interest in such Tenant and the Board of Directors obtains such
representations and undertakings from such Person as are reasonably necessary to ascertain this
fact (for this purpose, a Tenant from whom the Corporation (or an entity owned or controlled by the
Corporation) derives (and is expected to continue to derive) a sufficiently small amount of revenue
such that, in the opinion of the Board of Directors of the Corporation, rent from such Tenant would
not adversely affect the Corporations ability to qualify as a REIT need not be treated as a Tenant
of the Corporation); and
(iii) such Person agrees that any violation or attempted violation of such representations or
undertakings (or other action which is contrary to the restrictions contained in Sections 7.2.1
through 7.2.6) will result in such shares of Capital Stock being automatically transferred to a
Charitable Trust in accordance with Sections 7.2.1(b) and 7.3.
(b) Prior to granting any exception pursuant to Section 7.2.7(a), the Board of Directors of
the Corporation may require a ruling from the Internal Revenue Service, or an opinion of counsel,
in either case in form and substance satisfactory to the Board of Directors in its sole discretion,
as it may deem necessary or advisable in order to determine or ensure the Corporations status as a
REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Directors may impose such
conditions or restrictions as it deems appropriate in connection with granting such exception.
17
(c) Subject to Section 7.2.1(a)(ii), an underwriter or placement agent that participates in a
public offering or a private placement of Capital Stock (or securities convertible into or
exchangeable for Capital Stock) may Beneficially Own or Constructively Own shares of Capital Stock
(or securities convertible into or exchangeable for Capital Stock) in excess of the Aggregate Stock
Ownership Limit, the Common Stock Ownership Limit, or both such limits, but only to the extent
necessary to facilitate such public offering or private placement and provided that the
restrictions contained in Section 7.2.1(a) will not be violated following the distribution of such
underwriter or placement agent of such shares of Capital Stock.
(d) The Board of Directors may only reduce the Excepted Holder Limit for an Excepted Holder:
(1) with the written consent of such Excepted Holder at any time, or (2) pursuant to
the terms and conditions of the agreements and undertakings entered into with such Excepted Holder
in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No
Excepted Holder Limit shall be reduced to a percentage that is less than the Common Stock Ownership
Limit.
Section 7.2.8
INCREASE IN AGGREGATE STOCK OWNERSHIP AND COMMON STOCK OWNERSHIP LIMITS
.
The Board of Directors may from time to time increase the Common Stock Ownership Limit and the
Aggregate Stock Ownership Limit.
Section 7.2.9
LEGEND
. Each certificate for shares of Capital Stock shall bear
substantially the following legend:
The shares represented by this certificate are subject to restrictions on
Beneficial and Constructive Ownership and Transfer for the purpose of the
Corporations maintenance of its status as a Real Estate Investment Trust
under the Internal Revenue Code of 1986, as amended (the
Code
). Subject to
certain further restrictions and except as expressly provided in the
Corporations charter, (i) no Person may Beneficially or Constructively Own
shares of the Corporations Common Stock in excess of nine and 8/10ths
percent (9.8%) (in value or number of shares) of the outstanding shares of
Common Stock of the Corporation unless such Person is an Excepted Holder (in
which case the Excepted Holder Limit shall be applicable); (ii) no Person
may Beneficially or Constructively Own shares of Capital Stock of the
Corporation in excess of nine and 8/10ths percent (9.8%) of the value of the
total outstanding shares of Capital Stock of the Corporation, unless such
Person is an Excepted Holder (in which case the Excepted Holder Limit shall
be applicable); (iii) no Person may Beneficially or Constructively Own
Capital Stock that would result in the Corporation being closely held
under Section 856(h) of the Code or otherwise cause the Corporation to fail
to qualify as a REIT; and (iv) no Person may Transfer shares of Capital
Stock if such Transfer would result in the Capital Stock of the Corporation
being owned by fewer than 100 Persons. Any Person who Beneficially or
Constructively Owns or attempts to Beneficially or Constructively Own shares
of Capital Stock which causes or will cause a Person to Beneficially or
Constructively Own shares of Capital Stock in excess or in violation
of the above limitations must
18
immediately notify the Corporation. If any of the restrictions on transfer
or ownership are violated, the shares of Capital Stock represented hereby
will be automatically transferred to a Trustee of a Charitable Trust for the
benefit of one or more Charitable Beneficiaries. In addition, upon the
occurrence of certain events, attempted Transfers in violation of the
restrictions described above may be void
ab
initio
. All
capitalized terms in this legend have the meanings defined in the charter,
as the same may be amended from time to time, a copy of which, including the
restrictions on transfer and ownership, will be furnished to each holder of
Capital Stock of the Corporation on request and without charge.
Instead of the foregoing legend, the certificate may state that the Corporation will furnish a
full statement about certain restrictions on transferability to each holder of Capital Stock of the
Corporation on request and without charge.
Section 7.3
TRANSFER OF CAPITAL STOCK IN TRUST
.
Section 7.3.1
OWNERSHIP IN TRUST
. Upon any purported Transfer or other event described
in Section 7.2.1(b) that would result in a transfer of shares of Capital Stock to a Charitable
Trust, such shares of Capital Stock shall be deemed to have been transferred to the Trustee as
trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries.
Such transfer to the Trustee shall be deemed to be effective as of the close of business on the
Business Day prior to the purported Transfer or other event that results in the transfer to the
Charitable Trust pursuant to Section 7.2.1(b). The Trustee shall be appointed by the Corporation
and shall be a Person unaffiliated with the Corporation and any Prohibited Owner. Each Charitable
Beneficiary shall be designated by the Corporation as provided in Section 7.3.6.
Section 7.3.2
STATUS OF SHARES HELD BY THE TRUSTEE
. Shares of Capital Stock held by
the Trustee shall be issued and outstanding shares of Capital Stock of the Company. The Prohibited
Owner shall have no rights in the shares held by the Trustee. The Prohibited Owner shall not
benefit economically from ownership of any shares held in trust by the Trustee, shall have no
rights to dividends or other distributions and shall not possess any rights to vote or other rights
attributable to the shares held in the Charitable Trust.
Section 7.3.3
DIVIDEND AND VOTING RIGHTS
. The Trustee shall have all voting rights and
rights to dividends or other distributions with respect to shares of Capital Stock held in the
Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable
Beneficiary. Any dividend or other distribution paid prior to the discovery by the Corporation that
the shares of Capital Stock have been transferred to the Trustee shall be paid by the recipient of
such dividend or distribution to the Trustee upon demand and any dividend or other distribution
authorized but unpaid shall be paid when due to the Trustee. Any dividend or distribution so paid
to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall
have no voting rights with respect to shares held in the Charitable Trust and, subject to Maryland
law, effective as of the date that the shares of Capital Stock have
been transferred to the Trustee, the Trustee shall have the authority
(at the Trustees
19
sole discretion)
(i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the
Corporation that the shares of Capital Stock have been transferred to the Trustee and (ii) to
recast such vote in accordance with the desires of the Trustee acting for the benefit of the
Charitable Beneficiary; provided, however, that if the Corporation has already taken irreversible
corporate action, then the Trustee shall not have the authority to rescind and recast such vote.
Notwithstanding the provisions of this Article VII, until the Corporation has received notification
that shares of Capital Stock have been transferred into a Charitable Trust, the Corporation shall
be entitled to rely on its share transfer and other stockholder records for purposes of preparing
lists of stockholders entitled to vote at meetings, determining the validity and authority of
proxies and otherwise conducting votes of stockholders.
Section 7.3.4
SALE OF SHARES BY TRUSTEE
. Within twenty (20) days of receiving notice
from the Corporation that shares of Capital Stock have been transferred to the Charitable Trust,
the Trustee of the Charitable Trust shall sell the shares held in the Charitable Trust to a person,
designated by the Trustee, whose ownership of the shares will not violate the ownership limitations
set forth in Section 7.2.1(a). Upon such sale, the interest of the Charitable Beneficiary in the
shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the
Prohibited Owner and to the Charitable Beneficiary as provided in this Section 7.3.4. The
Prohibited Owner shall receive the lesser of (1) the price paid by the Prohibited Owner for the
shares or, if the Prohibited Owner did not give value for the shares in connection with the event
causing the shares to be held in the Charitable Trust (e.g., in the case of a gift, devise or other
such transaction), the Market Price of the shares on the day of the event causing the shares to be
held in the Charitable Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Charitable Trust. Any net sales proceeds in excess of
the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.
If, prior to the discovery by the Corporation that shares of Capital Stock have been transferred to
the Trustee, such shares are sold by a Prohibited Owner, then (i) such shares shall be deemed
to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited
Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was
entitled to receive pursuant to this Section 7.3.4, such excess shall be paid to the Trustee upon
demand.
Section 7.3.5
PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE
. Shares of Capital
Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation,
or its designee, at a price per share equal to the lesser of (i) the price per share in the
transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise or
gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have the right to
accept such offer until the Trustee has sold the shares held in the Charitable Trust pursuant to
Section 7.3.4. Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in
the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to
the Prohibited Owner.
20
Section 7.3.6
DESIGNATION OF CHARITABLE BENEFICIARIES
. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) the shares of
Capital Stock held in the Charitable Trust would not violate the restrictions set forth in Section
7.2.1(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be
described in Section 501(c)(3) of the Code and contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
Section 7.4
NYSE TRANSACTIONS
. Nothing in this Article VII shall preclude the
settlement of any transaction entered into through the facilities of the NYSE or any other national
securities exchange or automated inter-dealer quotation system. The fact that the settlement of any
transaction occurs shall not negate the effect of any other provision of this Article VII and any
transferee in such a transaction shall be subject to all of the provisions and limitations set
forth in this Article VII.
Section 7.5
ENFORCEMENT
. The Corporation is authorized specifically to seek equitable
relief, including injunctive relief, to enforce the provisions of this Article VII.
Section 7.6
NON-WAIVER
. No delay or failure on the part of the Corporation or the
Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the
Corporation or the Board of Directors, as the case may be, except to the extent specifically waived
in writing.
ARTICLE VIII
AMENDMENTS TO CHARTER; APPROVAL OF CERTAIN EXTRAORDINARY ACTIONS
Section 8.1
AMENDMENTS TO CHARTER
. The Corporation reserves the right from time to
time to make any amendment to its charter now or hereafter authorized by law, including any
amendment altering the terms or contract rights, as expressly set forth in this charter, of any
shares of outstanding stock, other than the outstanding shares of Series AA Preferred Stock which
shall have and retain all of the rights provided for in Section 6.4(i). All rights and powers
conferred by the charter on stockholders, directors and officers are granted subject to the
reservation set forth in the previous sentence. Except as otherwise provided in the charter and
except for those amendments permitted to be made without stockholder approval under Maryland law,
any amendment to the charter shall be valid only if approved by the stockholders of the Corporation
by the affirmative vote of a majority of all the votes entitled to be cast on the matter.
Section 8.2
APPROVAL OF CERTAIN EXTRAORDINARY ACTIONS
. The affirmative vote of the
holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter
shall be required to authorize a merger, consolidation, share exchange, dissolution or sale of
substantially all of the assets of the Corporation.
21
ARTICLE IX
LIMITATION OF LIABILITY
To the maximum extent that Maryland law in effect from time to time permits limitation of the
liability of directors and officers of a corporation, no director or officer of the Corporation
shall be liable to the Corporation or its stockholders for money damages. Neither the amendment nor
repeal of this Article IX, nor the adoption or amendment of any other provision of the charter or
Bylaws inconsistent with this Article IX, shall apply to or affect in any respect the applicability
of the preceding sentence with respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption.
THIRD:
The foregoing amendment and restatement to the charter does not increase the
authorized capital stock of the Corporation. The preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and conditions for
redemption of the classes of capital stock are not changed by the foregoing amendment and
restatement
FOURTH:
The Corporation was originally incorporated in the State of Maryland on
May 21, 2010, and foregoing amendment and restatement to the charter of the Corporation shall
amend, restate and supersede in their entirety any and all prior Articles of Incorporation and any
and all amendments and restatements thereto filed with the State Department of Assessments and
Taxation of Maryland from the date of the Corporations original incorporation through the date
hereof.
FIFTH:
The foregoing amendment and restatement to the charter of the Corporation has
been advised by resolution adopted by the Board of Directors of the Corporation and approved by the
stockholders of the Corporation.
[
Signatures Appear On The Following Page
.]
22
IN WITNESS WHEREOF, NetREIT, Inc. has caused these Articles of Amendment and Restatement to be
signed and acknowledged in its name and on its behalf by its President and attested to by its
Secretary on this 4th day of August, 2010, and its President acknowledges that these Articles
of Amendment and Restatement are the act of NetREIT, Inc. and he further acknowledges that, as to
all matters or facts set forth herein which are required to be verified under oath, such matters
and facts are true in all material respects to the best of his knowledge, information and belief,
and that this statement is made under the penalties for perjury.
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ATTEST:
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NetREIT, INC.
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/s/ Kenneth W. Elsberry
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By:
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/s/ Jack K. Heilbron
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Name: Kenneth W. Elsberry
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Name: Jack K. Heilbron
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Title: Chief Financial Officer
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Title: President and CEO
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CONSENT TO SERVE AS RESIDENT AGENT
Having been named as registered agent and to accept service of process for NetREIT, Inc. at
the place designated in these Articles of Incorporation, the undersigned, a Maryland corporation
duly authorized to act as a resident agent in the state of Maryland, hereby accepts the appointment
as registered agent and agrees to act in this capacity.
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HIQ CORPORATE SERVICES, INC.
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By:
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Name:
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Title:
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Date: __________ __, 2010
24
Exhibit 3.02
Appendix C
NetREIT, Inc.
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation shall be located at such
place or places as the Board of Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices at such places as
the Board of Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at the principal office of the
Corporation or at such other place within the United States as shall be stated in the notice of the
meeting.
Section 2. ANNUAL MEETING. Regular meetings of the stockholders for the election of directors
and the transaction of any other business that is proper for stockholder action under the charter
of the Corporation, these bylaws and applicable law and as may properly come before the meeting
shall be held once each calendar year (each such meeting an annual meeting). Annual meetings may
only be called by the Board of Directors. The Board of Directors shall determine the date, time
and place for any annual meeting, which place may be within or without the State of Maryland, or
any adjournments or postponements thereof. Any annual meeting so called may be postponed by the
Board of Directors prior to the meeting with notice to the stockholders entitled to vote at that
meeting.
Section 3. SPECIAL MEETINGS. The chairman of the board, chief executive officer, president or
the Board of Directors may call special meetings of the stockholders. Special meetings of
stockholders may also be called by the secretary of the Corporation upon the written request of
holders of shares constituting at least ten percent (10%) of the votes entitled to be cast at such
meeting. Such request shall state the purpose of such meeting and the matters proposed to be acted
on at such meeting. A special meeting may be called only for the purpose of transacting of such
business that is proper for stockholder action under the charter of the Corporation, these bylaws
and applicable law and as may properly come before such meeting. The secretary shall inform such
requesting stockholders of the reasonably estimated cost of preparing and mailing notice of the
meeting and, upon payment to the Corporation by such stockholders of such costs, the secretary
shall give notice to each stockholder entitled to receive notice of the meeting.
Section 4. NOTICE. Not less than ten (10) nor more than sixty (60) days before each meeting
of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and
to each stockholder not entitled to vote who is entitled to notice of the meeting, written or
printed notice stating the time and place of the meeting and, in the case of a special meeting or
as otherwise may be required by any applicable statute, the purpose for which the meeting is
called, either by mail or by presenting it to such stockholder personally or by leaving it at his
residence or usual place of business. If mailed, such notice shall be deemed to be given when
deposited in the United States mail addressed to the stockholder at his post office address as it
appears on the records of the Corporation, with postage thereon prepaid. The notice of any meeting
of stockholders may be accompanied by a form of proxy approved by the Board of Directors in favor
of the actions or persons as the Board of Directors may select. Notice of any meeting of
stockholders shall be deemed waived by any stockholder who attends the meeting in person or by
proxy or who before or after the meeting submits a signed waiver of notice that is filed with the
records of the meeting.
Section 5. SCOPE OF NOTICE. Except for action on (i) a contract or transaction in which a
director has a direct or indirect financial interest, (ii) an amendment to the charter, (iii) a
reorganization of the Corporation, (iv) a voluntary dissolution of the Corporation, or (v) a
distribution in dissolution other than in accordance with the rights of outstanding shares of
preferred stock, as to any of which such notice shall state the general nature of any proposed
action, any business of the Corporation may be transacted at an annual meeting of stockholders
without being specifically designated in the notice, except such business as is required by any
statute to be stated in such notice. No business shall be transacted at a special meeting of
stockholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of stockholders, the chairman of the board, if
there be one, shall conduct the meeting or, in the case of vacancy in office or absence of the
chairman of the board, one of the following officers present shall conduct the meeting in the order
stated: the vice chairman of the board, if there be one, the chief executive officer, the
president, the vice presidents in their order of rank and seniority, or a chairman chosen by the
stockholders entitled to cast a majority of the votes which all stockholders present in person or
by proxy are entitled to cast, shall act as chairman, and the secretary, or, in his absence, an
assistant secretary, or in the absence of both the secretary and assistant secretaries, a person
appointed by the chairman shall act as secretary.
Section 7. QUORUM. At any meeting of stockholders, the presence in person or by proxy of
stockholders entitled to cast entitled to cast a majority of the votes entitled to be cast on a
matter (without regard to class) shall constitute a quorum; but this section shall not affect any
requirement under any statute or the charter of the Corporation for the vote necessary for the
adoption of any measure. If, however, such quorum shall not be present at any meeting of the
stockholders, the stockholders entitled to vote at such meeting, present in person or by proxy,
shall have the power to adjourn the meeting from time to time to a date not more than sixty (60)
days after the original record date without notice other than announcement at the meeting. At such
adjourned meeting at which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally notified.
2
Section 8. VOTING. Directors shall be elected (1) by the affirmative vote of the holders of
a majority of the shares of common stock outstanding and entitled to vote thereon, or (2) in the
case of directors elected by the holders of preferred stock voting separately as a class, by the
affirmative vote of the holders of a majority of the shares of preferred stock outstanding and
entitled to vote thereon, unless otherwise set forth in these bylaws or the Corporations charter.
Each outstanding share of the Corporations common stock entitles the holder thereof to one
vote on all matters presented to the holders of common stock for a vote with the exception that the
holders of common stock have cumulative voting rights with respect to the election of the Board of
Directors as described in the following paragraph of this Section 8. The stockholders vote may be
by voice vote or by ballot; provided, however, that any election for directors must be by ballot if
demanded by any stockholder before the voting has begun. If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting and entitled to vote on any matter
(other than the election of directors) shall be the act of the stockholders, unless otherwise set
forth in these bylaws or the Corporations charter.
At a stockholders meeting at which directors are to be elected, no stockholder shall be
entitled to cumulate votes (i.e., cast for any one or more candidates a number of votes greater
than the number of the stockholders shares), unless the candidates names have been placed in
nomination prior to commencement of the voting and a stockholder has given notice prior to
commencement of the voting of the stockholders intention to cumulate votes. If any stockholder
has given such a notice, then every stockholder entitled to vote may cumulate votes for candidates
in nomination and give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which that stockholders shares are entitled, or
distribute the stockholders votes on the same principle among any or all of the candidates, as the
stockholder thinks fit. The candidates receiving the highest number of votes, up to the number of
directors to be elected, shall be elected.
Section 9. PROXIES. A stockholder may cast the votes entitled to be cast by the shares of
the stock owned of record by him either in person or by proxy executed in writing by the
stockholder or by his duly authorized agent. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. A proxy shall be deemed signed if the
stockholders name is placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the stockholder or the stockholders attorney-in-fact. A validly
executed proxy which does not state that it is irrevocable shall continue in full force and effect
unless (a) revoked by the person executing it, or by a subsequent proxy executed by, or attendance
at the meeting and voting in person by, the person executing the proxy; or (b) written notice of
the death or incapacity of the maker of the proxy is received by the Corporation before the vote
pursuant to that proxy is counted; provided, however, that no proxy shall be valid after the
expiration of eleven (11) months from the date of the proxy unless otherwise provided in the proxy.
The revocability of a proxy that states on its face that it is revocable shall be governed by the
provisions of Section 2-507 of the Maryland General Corporation Law (
MGCL
).
3
Section 10. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the
name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by
the president or a vice president, a general partner or trustee thereof, as the case
may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has
been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such
corporation or other entity or agreement of the partners of a partnership presents a certified copy
of such bylaw, resolution or agreement, in which case such person may vote such stock. Any
director or other fiduciary may vote stock registered in his name as such fiduciary, either in
person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at
any meeting and shall not be counted in determining the total number of outstanding shares entitled
to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case
they may be voted and shall be counted in determining the total number of outstanding shares at any
given time.
The Board of Directors may adopt by resolution a procedure by which a stockholder may certify
in writing to the Corporation that any shares of stock registered in the name of the stockholder
are held for the account of a specified person other than the stockholder. The resolution shall
set forth the class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be contained in it; if
the certification is with respect to a record date or closing of the stock transfer books, the time
after the record date or closing of the stock transfer books within which the certification must be
received by the Corporation; and any other provisions with respect to the procedure which the Board
of Directors considers necessary or desirable. On receipt of such certification, the person
specified in the certification shall be regarded as, for the purposes set forth in the
certification, the stockholder of record of the specified stock in place of the stockholder who
makes the certification.
Section 11. INSPECTORS. At any meeting of stockholders, the chairman of the meeting may
appoint one or more persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting based upon their determination of the
validity and effect of proxies, count all votes, report the results and perform such other acts as
are proper to conduct the election and voting with impartiality and fairness to all the
stockholders.
Each report of an inspector shall be in writing and signed by him or by a majority of them if
there is more than one inspector acting at such meeting. If there is more than one inspector, the
report of a majority shall be the report of the inspectors. The report of the inspector or
inspectors on the number of shares represented at the meeting and the results of the voting shall
be PRIMA FACIE evidence thereof.
4
Section 12. NOMINATIONS AND PROPOSALS BY STOCKHOLDERS.
(a) ANNUAL MEETINGS OF STOCKHOLDERS.
(1) Except as otherwise provided for in the charter of the Corporation with respect to Series
AA Preferred Directors, nominations of persons for election to the Board of Directors and the
proposal of business to be considered by the stockholders may be made at an annual meeting of
stockholders (i) pursuant to the Corporations notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a
stockholder of record both at the time of giving of notice provided for in this Section 12(a) and
at the time of the annual meeting, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 12(a).
(2) For nominations or other business to be properly brought before an annual meeting by a
stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 12, the stockholder must
have given timely notice thereof in writing to the secretary of the Corporation and such other
business must otherwise be a proper matter for action by stockholders. To be timely, a
stockholders notice shall be delivered to the secretary at the principal executive offices of the
Corporation not later than the close of business on the 60th day nor earlier than the close of
business on the 90th day prior to the first anniversary of the preceding years annual meeting;
provided, however, that in the event that the date of the annual meeting is advanced by more than
thirty (30) days or delayed by more than sixty (60) days from such anniversary date or if the
Corporation has not previously held an annual meeting, notice by the stockholder to be timely must
be so delivered not earlier than the close of business on the 90th day prior to such annual meeting
and not later than the close of business on the later of the 60th day prior to such annual meeting
or the tenth day following the day on which public announcement of the date of such meeting is
first made by the Corporation. In no event shall the public announcement of a postponement or
adjournment of an annual meeting to a later date or time commence a new time period for the giving
of a stockholders notice as described above. Such stockholders notice shall set forth (i) as to
each person whom the stockholder proposes to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in solicitations of proxies
for election of directors in an election contest, or is otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as amended (the
Exchange Act
)
(including such persons written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (ii) as to any other business that the stockholder proposes to
bring before the meeting, a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any material interest in such
business of such stockholder and of the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, (x) the name and address of such stockholder, as they
appear on the Corporations books, and of such beneficial owner and (y) the number of shares of
each class of stock of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 12 to
the contrary, in the event that the number of directors to be elected to the Board of Directors is
increased and there is no public announcement by the Corporation naming all of the nominees for
director or specifying the size of the increased Board of Directors at least 50 days prior to the
first anniversary of the preceding years annual meeting, a stockholders notice required by this
Section 12(a) shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the secretary at the principal
executive offices of the Corporation no later than the close of business on the tenth day following
the day on which such public announcement is first made by the Corporation.
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(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of the stockholders as shall have been brought before the meeting
pursuant to the Corporations notice of meeting. Nominations of persons for election to the Board
of Directors may be made at a special meeting of stockholders at which directors are to be elected
(i) pursuant to the Corporations notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) provided that the Board of Directors has determined that directors shall be
elected at such special meeting, by any stockholder of the Corporation who is a stockholder of
record both at the time of giving of notice provided for in this Section 12(b) and at the time of
the special meeting, who is entitled to vote at the meeting and who complied with the notice
procedures set forth in this Section 12(b). In the event the Corporation calls a special meeting
of stockholders for the purpose of electing one or more directors to the Board of Directors, any
such stockholder entitled to vote at the meeting may nominate a person or persons (as the case may
be) for election to such position as specified in the Corporations notice of meeting, if the
stockholders notice containing the information required by paragraph (a)(2) of this Section 12
shall be delivered to the secretary at the principal executive offices of the Corporation not
earlier than the close of business on the 90th day prior to such special meeting and not later than
the close of business on the later of the 60th day prior to such special meeting or the tenth day
following the day on which public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at such meeting. Only holders of
Series AA Preferred Stock shall be entitled to vote at a special meeting called for the purpose of
electing one or more Series AA Preferred Directors, as provided in Section 6.4(i) of the charter of
the Corporation. In no event shall the public announcement of a postponement or adjournment of a
special meeting to a later date or time commence a new time period for the giving of a
stockholders notice as described above.
(c) GENERAL.
(1) Only such persons who are nominated in accordance with the procedures set forth in this
Section 12 or, in the case of Series AA Preferred Directors, Section 6.4(i) of the charter of the
Corporation, shall be eligible to serve as directors and only such business shall be conducted at a
meeting of stockholders as shall have been brought before the meeting in accordance with the
procedures set forth in this Section 12. The chairman of the meeting shall have the power and duty
to determine whether a nomination or any business proposed to be brought before the meeting was
made or proposed, as the case may be, in accordance with the procedures set forth in this Section
12 and, if any proposed nomination or proposed business is not in compliance with this Section 12,
to declare that such nomination or proposal shall be disregarded.
(2) For purposes of this Section 12, public announcement shall mean disclosure in a press
release reported by the Dow Jones News Service, Associated Press or comparable news service or in a
document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 12, a stockholder shall also
comply with all applicable requirements of state law and of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in this Section 12. Nothing in this
Section 12 shall be deemed to affect any rights of stockholders to request inclusion of proposals
in, or the right of the Corporation to omit a proposal from, the Corporations proxy statement pursuant to Rule 14a-8 under the Exchange Act.
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Section 13. VOTING BY BALLOT. Voting on any question or in any election may be viva voce
unless the presiding officer shall order or any stockholder shall demand that voting be by ballot.
Section 14. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action which may be
taken at any annual or special meeting of stockholders may be taken without a meeting and without
prior notice if a consent, in writing, setting forth the action so taken is signed by the holders
of outstanding shares having not less than the minimum number of votes that would be necessary to
authorize or to take that action at a meeting at which all the shares entitled to vote on that
action were present and voted. In the case of election of directors, such a consent shall be
effective only if signed by the holders of all outstanding shares entitled to vote for the election
of directors. All such consents shall be delivered to the Corporation by delivery to the secretary
of the Corporation and shall be maintained among the corporate records. No written consent of any
stockholder, or the stockholders proxy holders, or a transferee of the shares, or a personal
representative of the stockholder or their respective proxy holders shall take effect unless
written consents signed by a sufficient number of stockholders to take the proposed action are
delivered to the secretary of the Corporation within sixty (60) days after the date on which the
earliest consent is dated.
If the consents of all stockholders entitled to vote have not been solicited in writing and if
the unanimous written consent of all stockholders shall not have been received, the secretary shall
give prompt notice of the corporate action approved by the stockholders without a meeting. This
notice shall be given in the manner specified in Section 4 of this Article, the notice shall be
given not later than ten (10) days after the effective date of such action to each holder of common
stock and to each stockholder who, if the action had been taken at a meeting, would have been
entitled to notice of the meeting.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under
the direction of its Board of Directors.
Section 2. NUMBER AND TENURE. The Corporation shall have eight (8) directors, which number
may be increased or decreased from time to time by the Board of Directors pursuant to a resolution
adopted by a majority of the entire Board of Directors, but the number of directors shall never be
less than six (6) nor more than eleven (11), unless otherwise approved by the majority vote of the
stockholders entitled to cast a majority of all the votes entitled to be cast on the matter. No
reduction in the number of directors by resolution of the Board of Directors shall have the effect
of removing any director from office prior to the expiration of his or her term.
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Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be
held immediately after and at the same place as the annual meeting of stockholders, no notice other
than this Bylaw being necessary. The Board of Directors may provide, by resolution, the time and
place, either within or without the State of Maryland, for the holding of regular meetings of the
Board of Directors without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or
at the request of the chairman of the board, president or by a majority of the directors then in
office. The person or persons authorized to call special meetings of the Board of Directors may
fix any place, either within or without the State of Maryland, as the place for holding any special
meeting of the Board of Directors called by them.
Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered
personally or by telephone, facsimile transmission, United States mail or courier to each director
at his business or residence address. Notice by personal delivery, by telephone or a facsimile
transmission shall be given at least two (2) days prior to the meeting. Notice by mail shall be
given at least five (5) days prior to the meeting and shall be deemed to be given when deposited in
the United States mail properly addressed, with postage thereon prepaid. Telephone notice shall be
deemed to be given when the director is personally given such notice in a telephone call to which
he is a party. Facsimile transmission notice shall be deemed to be given upon completion of the
transmission of the message to the number given to the Corporation by the director and receipt of a
completed answer-back indicating receipt. Neither the business to be transacted at, nor the
purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the
notice, unless specifically required by statute or these bylaws.
Section 6. QUORUM. A majority of the authorized directors shall constitute a quorum for
transaction of business at any meeting of the Board of Directors, provided that, if less than a
majority of such directors are present at said meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice, and provided further that if,
pursuant to the charter of the Corporation or these bylaws, the vote of a majority of a particular
group of directors is required for action, a quorum must also include a majority of such group.
The directors present at a meeting which has been duly called and convened may continue to
transact business until adjournment, notwithstanding the withdrawal of enough directors to leave
less than a quorum.
Section 7. VOTING. The action of the majority of the directors present at a meeting at which
a quorum is present shall be the action of the Board of Directors, unless the concurrence of a
greater proportion is required for such action by the Companys charter, these bylaws or applicable
statute.
Section 8. TELEPHONE MEETINGS. Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
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Section 9. INFORMAL ACTION BY DIRECTORS. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in
writing to such action is signed by each director and such written consent is filed with the
minutes of proceedings of the Board of Directors.
Section 10. COMPENSATION. Directors shall not receive any stated salary for their services as
directors but, by resolution of the Board of Directors, may receive compensation per year and/or
per meeting and/or per visit to real property or other facilities owned or leased by the
Corporation and for any service or activity they performed or engaged in as directors. Directors
may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of
the Board of Directors or of any committee thereof and for their expenses, if any, in connection
with each property visit and any other service or activity they performed or engaged in as
directors; but nothing herein contained shall be construed to preclude any directors from serving
the Corporation in any other capacity and receiving compensation therefor.
Section 11. LOSS OF DEPOSITS. No director shall be liable for any loss which may occur by
reason of the failure of a bank, trust company, savings and loan association, or other institution
with whom moneys or stock of the Corporation have been deposited.
Section 12. SURETY BONDS. Unless required by law, no director shall be obligated to give any
bond or surety or other security for the performance of any of his duties.
Section 13. RELIANCE. Each director, officer, employee and agent of the Corporation shall, in
the performance of his duties with respect to the Corporation, be fully justified and protected
with regard to any act or failure to act in reliance in good faith upon the books of account or
other records of the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants, appraisers or other
experts or consultants selected by the Board of Directors or officers of the Corporation,
regardless of whether such counsel or expert may also be a director.
Section 14. CERTAIN DUTIES OF THE DIRECTORS. The directors shall have a fiduciary duty to
the Corporation and the stockholders to supervise the relationship between the Corporation and any
Advisor. The Board of Directors, by a majority vote (including a majority vote of the Independent
Directors), shall approve the form and content of any reports provided to the Corporations
stockholders as required by these bylaws or the Corporations charter and shall take reasonable
steps to insure that the requirements regarding such reports and the calling of the annual meeting
of the stockholders, as provided for in Article II, Section 2 of these bylaws, are met. For
purposes of these bylaws, the term Advisor shall mean a person or firm providing real estate
investment advisory services to the Corporation on an ongoing basis. For purposes of these bylaws,
the term Independent Director shall mean a director of the Corporation who is not affiliated,
directly or indirectly, with an Advisor (other than in his capacity as a trustee or a director of
another real estate investment entity being advised by an Advisor), whether by ownership of,
ownership interest in, employment by, any business or professional relationship with or service as
an officer or director of such Advisor or any of its Affiliates, and who performs no other services
for the Corporation at the time his or her independence is being determined. A director, however,
will not be considered independent if he or she is serving as a director for more than three real
estate investment entities organized by or affiliated with an Advisor of the Corporation, or any
director who is not an Independent Director. The term Independent Director shall also mean an individual who performs no other service for the
Corporation, except service as a director. For purposes of these bylaws, the term Affiliate
shall mean (i) any person directly or indirectly controlling, controlled by or under common control
with another person, (ii) any person owning or controlling ten percent (10%) or more of the
outstanding voting securities of such other person, (iii) any officer, director, trustee, or
general partner of such person, and (iv) if such person is an officer, director, trustee or general
partner of another entity, then the entity for which that person acts in any capacity.
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Section 15. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. The directors shall
have no responsibility to devote their full time to the affairs of the Corporation. Any director
or officer, employee or agent of the Corporation, in his personal capacity or in a capacity as an
affiliate, employee, or agent of any other person, or otherwise, may have business interests and
engage in business activities similar to or in addition to or in competition with those of or
relating to the Corporation.
Section 16. INDEPENDENT DIRECTORS. A majority of the directors of the Corporation shall be
Independent Directors.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among
its members an Executive Committee, an Audit and Review Committee, a Compensation Committee and
other committees, composed of one or more directors, to serve at the pleasure of the Board of
Directors.
Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section
1 of this Article any of the powers of the Board of Directors, except as prohibited by law.
Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice
for special meetings of the Board of Directors. A majority of the members of the committee shall
constitute a quorum for the transaction of business at any meeting of the committee. The act of a
majority of the members present at a meeting shall be the act of such committee. The Board of
Directors may designate a chairman of any committee, and such chairman or any two members of any
committee (if there are at least two members of the committee) may fix the time and place of its
meeting unless the Board of Directors shall otherwise provide. In the absence of any member of any
such committee, the members thereof present at any meeting, whether or not they constitute a
quorum, may appoint another director to act in the place of such absent member. Each committee
shall keep minutes of its proceedings.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may
participate in a meeting by means of a conference telephone, video conference or similar
communications equipment if all persons participating in the meeting can hear each other at the
same time. Participation in a meeting by these means shall constitute presence in person at the
meeting.
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Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or permitted to be taken at any
meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in
writing to such action is signed by each member of the committee and such written consent is filed
with the minutes of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the
power at any time to change the membership of any committee, to fill all vacancies, to designate
alternate members to replace any absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a chairman of
the board, a chief executive officer, a president, a secretary and a treasurer and may include a
vice chairman of the board, one or more vice presidents, a chief operating officer, a chief
financial officer, one or more assistant secretaries and one or more assistant treasurers. In
addition, the Board of Directors may from time to time appoint such other officers with such powers
and duties as they shall deem necessary or desirable. The officers of the Corporation shall be
elected annually by the Board of Directors at the first meeting of the Board of Directors held
after each annual meeting of stockholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall
hold office until his successor is elected and qualified or until his death, resignation or removal
in the manner hereinafter provided. Any two or more offices except president and vice president
may be held by the same person. In its discretion, the Board of Directors may leave unfilled any
office except that of president, treasurer and secretary. Election of an officer or agent shall
not of itself create contract rights between the Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed by
the Board of Directors if in its judgment the best interests of the Corporation would be served
thereby, but such removal shall be without prejudice to the contract rights, if any, of the person
so removed. Any officer of the Corporation may resign at any time by giving written notice of his
resignation to the Board of Directors, the chairman of the board, the chief executive officer, the
president or the secretary. Any resignation shall take effect at any time subsequent to the time
specified therein or, if the time when it shall become effective is not specified therein,
immediately upon its receipt. The acceptance of a resignation shall not be necessary to make it
effective unless otherwise stated in the resignation. Such resignation shall be without prejudice
to the contract rights, if any, of the Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the
balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive
officer. In the absence of such designation, the chairman of the board shall be the chief
executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of
Directors, and for the management of the business and affairs of the Corporation.
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Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating
officer. The chief operating officer shall have the responsibilities and duties as set forth by
the Board of Directors and the chief executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial
officer. The chief financial officer shall have the responsibilities and duties as set forth by
the Board of Directors and the chief executive officer.
Section 7. CHAIRMAN OF THE BOARD. The Board of Directors shall designate a chairman of the
board. The chairman of the board shall preside over the meetings of the Board of Directors and of
the stockholders at which he shall be present. The chairman of the board shall perform such other
duties as may be assigned to him or them by the Board of Directors.
Section 8. PRESIDENT. The president shall have the responsibilities and duties as set forth
by the Board of Directors and the chief executive officer. In the absence of a designation of a
chief operating officer by the Board of Directors, the president shall be the chief operating
officer.
Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in
such office, the vice president (or in the event there be more than one vice president, the vice
presidents in the order designated at the time of their election or, in the absence of any
designation, then in the order of their election) shall perform the duties of the president and
when so acting shall have all the powers of and be subject to all the restrictions upon the
president; and shall perform such other duties as from time to time may be assigned to him by the
president or by the Board of Directors. The Board of Directors may designate one or more vice
presidents as executive vice president or as vice president for particular areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep the minutes of the proceedings of the
stockholders, the Board of Directors and committees of the Board of Directors in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (c) be custodian of the corporate records and of
the seal of the Corporation; (d) keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder; (e) have general charge of the share
transfer books of the Corporation; and (f) in general perform such other duties as from time to
time may be assigned to him by the chief executive officer, the president or by the Board of
Directors.
Section 11. TREASURER. The treasurer shall have the custody of the funds and securities of
the Corporation and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated by the Board of
Directors. In the absence of a designation of a chief financial officer by the Board of Directors,
the treasurer shall be the chief financial officer of the Corporation.
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The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to the president and
Board of Directors, at the regular meetings of the Board of Directors or whenever it may so
require, an account of all his transactions as treasurer and of the financial condition of the
Corporation.
If required by the Board of Directors, the treasurer shall give the Corporation a bond in such
sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the
faithful performance of the duties of his office and for the restoration to the Corporation, in
case of his death, resignation, retirement or removal from office, of all books, papers, vouchers,
moneys and other property of whatever kind in his possession or under his control belonging to the
Corporation.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and
assistant treasurers, in general, shall perform such duties as shall be assigned to them by the
secretary or treasurer, respectively, or by the president or the Board of Directors. The assistant
treasurers shall, if required by the Board of Directors, give bonds for the faithful performance of
their duties in such sums and with such surety or sureties as shall be satisfactory to the Board of
Directors.
Section 13. SALARIES. The salaries and other compensation of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from receiving such salary
or other compensation by reason of the fact that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into
any contract or to execute and deliver any instrument in the name of and on behalf of the
Corporation and such authority may be general or confined to specific instances. Any agreement,
deed, mortgage, lease or other document executed by one or more of the directors or by an
authorized person shall be valid and binding upon the Board of Directors and upon the Corporation
when authorized or ratified by action of the Board of Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by
such officer or agent of the Corporation in such manner as shall from time to time be determined by
the Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust companies or other
depositories as the Board of Directors may designate.
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ARTICLE VII
STOCK CERTIFICATES, RECORDS AND REPORTS
Section 1. CERTIFICATES. Each stockholder shall be entitled to a certificate or certificates
which shall represent and certify the number of shares of each class of stock held by him in the
Corporation. Each certificate shall be signed by the chief executive officer, the president or a
vice president and countersigned by the secretary or an assistant secretary or the treasurer or an
assistant treasurer and may be sealed with the seal, if any, of the Corporation. The signatures
may be either manual or facsimile. Certificates shall be consecutively numbered; and if the
Corporation shall, from time to time, issue several classes of stock, each class may have its own
number series. A certificate is valid and may be issued whether or not an officer who signed it is
still an officer when it is issued. Each certificate representing shares which are restricted as
to their transferability or voting powers, which are preferred or limited as to their dividends or
as to their allocable portion of the assets upon liquidation or which are redeemable at the option
of the Corporation, shall have a statement of such restriction, limitation, preference or
redemption provision, or a summary thereof, plainly stated on the certificate. If the Corporation
has authority to issue stock of more than one class, the certificate shall contain on the face or
back a full statement or summary of the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of each class of stock and, if the
Corporation is authorized to issue any preferred or special class in series, the differences in the
relative rights and preferences between the shares of each series to the extent they have been set
and the authority of the Board of Directors to set the relative rights and preferences of
subsequent series. In lieu of such statement or summary, the certificate may state that the
Corporation will furnish a full statement of such information to any stockholder upon request and
without charge. If any class of stock is restricted by the Corporation as to transferability, the
certificate shall contain a full statement of the restriction or state that the Corporation will
furnish information about the restrictions to the stockholder on request and without charge.
Section 2. TRANSFERS. Upon surrender to the Corporation or the transfer agent of the
Corporation of a stock certificate duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, the Corporation shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its books.
The Corporation shall be entitled to treat the holder of record of any share of stock as the
holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of the State of Maryland.
Notwithstanding the foregoing, transfers of shares of any class of stock will be subject in
all respects to the charter of the Corporation and all of the terms and conditions contained
therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Board of Directors may
direct a new certificate to be issued in place of any certificate previously issued by the
Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that
fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing the
issuance of a new certificate, an officer designated by the Board of Directors may, in his discretion and as a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or the owners legal representative to advertise the same in such
manner as he shall require and/or to give bond, with sufficient surety, to the Corporation to
indemnify it against any loss or claim which may arise as a result of the issuance of a new
certificate.
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Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of Directors may
set, in advance, a record date for the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders or determining stockholders entitled to receive payment of
any dividend or the allotment of any other rights, or in order to make a determination of
stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close
of business on the day the record date is fixed and shall be not more than ninety (90) days and, in
the case of a meeting of stockholders, not less than ten days, before the date on which the meeting
or particular action requiring such determination of stockholders of record is to be held or taken.
In lieu of fixing a record date, the Board of Directors may provide that the stock transfer
books shall be closed for a stated period but not longer than twenty (20) days. If the stock
transfer books are closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for at least ten days before the date
of such meeting.
If no record date is fixed and the stock transfer books are not closed for the determination
of stockholders, (a) the record date for the determination of stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the day on which the
notice of meeting is mailed or the 30th day before the meeting, whichever is the closer date to the
meeting; and (b) the record date for the determination of stockholders entitled to receive payment
of a dividend or an allotment of any other rights shall be the close of business on the day on
which the resolution of the directors, declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any meeting of stockholders has been
made as provided in this section, such determination shall apply to any adjournment thereof, except
when (i) the determination has been made through the closing of the transfer books and the stated
period of closing has expired or (ii) the meeting is adjourned to a date more than one hundred
twenty (120) days after the record date fixed for the original meeting, in either of which case a
new record date shall be determined as set forth herein.
Section 5. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may issue fractional
stock or provide for the issuance of scrip, all on such terms and under such conditions as they may
determine. Notwithstanding any other provision of the charter or these bylaws, the Board of
Directors may issue units consisting of different securities of the Corporation. Any security
issued in a unit shall have the same characteristics as any identical securities issued by the
Corporation, except that the Board of Directors may provide that for a specified period securities
of the Corporation issued in such unit may be transferred on the books of the Corporation only in
such unit.
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Section 6. STOCK LEDGER. The Corporation shall maintain at its principal office or at the
office of its counsel, accountants or transfer agent, an original or duplicate share ledger
containing the name and address of each stockholder and the number of shares of each class held by
such stockholder.
Section 7. ANNUAL REPORT TO STOCKHOLDERS. The Board of Directors shall cause an annual
report to be sent to the stockholders not later than one hundred twenty (120) days after the close
of each fiscal year. This report shall be sent at least fifteen (15) days before the annual
meeting of stockholders to be held during the next fiscal year and in the manner specified in
Article II, Section 4 of these bylaws. The annual report shall contain financial statements
(balance sheet, statement of income, statement of changes of financial position) prepared in
accordance with generally accepted accounting principles and accompanied by an auditors report
containing the opinion of an independent certified public accountant or independent public
accountant or, if there is no such report, the certificate of an authorized officer of the
Corporation that the statements were prepared without audit from the Corporations books and
records. The foregoing requirement of an annual report shall be waived so long as the shares of
common stock of the Corporation are held by fewer than one hundred (100) holders of record.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix the fiscal year of the
Corporation by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation
may be authorized and declared by the Board of Directors, subject to the provisions of law and the
charter of the Corporation. Dividends and other distributions may be paid in cash, property or
stock of the Corporation, subject to the provisions of law and the charter.
Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may
be set aside out of any assets of the Corporation available for dividends or other distributions
such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think
proper as a reserve fund for contingencies, for equalizing dividends or other distributions, for
repairing or maintaining any property of the Corporation or for such other purpose as the Board of
Directors shall determine to be in the best interest of the Corporation, and the Board of Directors
may modify or abolish any such reserve in the manner in which it was created.
Section 3. DISCLOSURE ON DISTRIBUTION. Any distribution of income or capital assets of the
Corporation to holders of securities of the Corporation other than its promissory notes shall be
accompanied by a written statement disclosing the source of the funds distributed. If, at the time
of distribution, this information is not available, a written explanation of the relevant circumstances shall accompany the distribution and the written statement disclosing the
sources of the funds distributed shall be sent to such holders not later than sixty (60) days after
the close of the year in which the distribution was made.
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ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the charter of the Corporation, the Board of Directors may from
time to time adopt, amend, revise or terminate any policy or policies with respect to investments
by the Corporation as it shall deem appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the
Corporation. The seal shall contain the name of the Corporation and the year of its incorporation
and the words Incorporated Maryland. The Board of Directors may authorize one or more duplicate
seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal
to a document, it shall be sufficient to meet the requirements of any law, rule or regulation
relating to a seal to place the word (SEAL) adjacent to the signature of the person authorized to
execute the document on behalf of the Corporation.
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the charter of the Corporation or
these bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose
of any meeting need be set forth in the waiver of notice, unless specifically required by statute.
The attendance of any person at any meeting shall constitute a waiver of notice of such meeting,
except where such person attends a meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting is not lawfully called or convened.
ARTICLE XIII
AMENDMENT OF BYLAWS
Section 1. POWER OF DIRECTORS TO AMEND. The Board of Directors shall have the power to
adopt, alter or repeal these bylaws not inconsistent with the Corporations charter or applicable
law for the regulation and management of the affairs of the Corporation; provided, however, that
the Board of Directors may adopt a bylaw or an amendment to a bylaw changing the authorized number of directors only for the purpose of fixing the exact number of
directors of the Corporation as provided in Article III, Section 2 of these bylaws; and, provided,
further, that no amendment that would change any rights with respect to any outstanding class of
common stock by reducing the amount payable thereon upon liquidation of the Corporation, or
diminishing or eliminating any voting rights pertaining thereto, may be made unless also approved
by sixty-six and two-thirds percent (66-2/3rds%) of the outstanding shares of such class.
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Section 2. POWER OF STOCKHOLDERS TO AMEND. The holders of the Corporations common stock, at
any annual meeting or at a special meeting called for the purpose, may adopt, alter or repeal the
bylaws of the Corporation; provided, however, that the holders of the Series AA Preferred Stock
shall have the right, pursuant to Section 6.4(i)(1) of the charter, to approve an amendment,
alteration or repeal of any provision of these bylaws that affects adversely the relative rights,
preferences, qualifications, limitations or restrictions of the Series AA Preferred Stock. Any
change to the bylaws made by the stockholders may not be altered in any manner by the directors
prior to the next annual meeting of stockholders.
ARTICLE XIV
MARYLAND BUSINESS COMBINATION STATUTE
The Corporation elects to be governed by the provisions of Sections 3-601 through 3-604 of the
MGCL (the
Maryland Business Combination Act
) as in effect on the date these bylaws are adopted
(
Effective Date
). The Corporation elects not to be governed by any amendment to the Maryland
Business Combination Act after the Effective Date unless the Board of Directors, pursuant to a
resolution approved by a majority of the directors then in office, determines that such amendment
shall apply to the Corporation. In the event that the Maryland Business Combination Act is
repealed or, in the sole discretion of the Board of Directors, amended or substantially altered to
the detriment of the Corporation, the Corporation shall continue to be governed by the provisions
of the Maryland Business Combination Act in effect on the Effective Date, together with any
amendments to the Maryland Business Combination Act that the Board of Directors has determined
shall apply to the Corporation.
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