-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U18LH91X2w+d3UcPQFdzZzStbDiKsHKapp6PTRyC5UThvNB4dyT6uoVQPoOa4lD0 RsipvRiy1FOP1IgOdVEyWA== 0000927016-96-001384.txt : 19961017 0000927016-96-001384.hdr.sgml : 19961017 ACCESSION NUMBER: 0000927016-96-001384 CONFORMED SUBMISSION TYPE: 8-A12B PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961016 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AVALON PROPERTIES INC CENTRAL INDEX KEY: 0000911536 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 061379111 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-A12B SEC ACT: 1934 Act SEC FILE NUMBER: 001-12452 FILM NUMBER: 96644393 BUSINESS ADDRESS: STREET 1: 15 RIVER ROAD STREET 2: SUITE 210 CITY: WILTON STATE: CT ZIP: 06897 BUSINESS PHONE: 2039724000 MAIL ADDRESS: STREET 1: 15 RIVER ROAD STREET 2: SUITE 210 CITY: WILTON STATE: CT ZIP: 06897 8-A12B 1 FORM 8-A 12B SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-A FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 Avalon Properties, Inc. ----------------------- (Exact name of registrant as specified in its charter) Maryland 06-1379111 - ---------------------------------------- ------------------------------- (State of incorporation or organization) (I.R.S. Employer Identification No.) 15 River Road, Wilton, Connecticut 06897 - ---------------------------------- ----------- (Address of principal executive offices) (Zip Code) Securities to be registered pursuant to Section 12(b) of the Act: Name of Exchange on Title of Class to be so Registered which Class is to be Registered - ---------------------------------- ------------------------------- [___%] Series B Cumulative Redeemable Preferred Stock, par value $.01 per share New York Stock Exchange Securities to be registered pursuant to Section 12(g) of the Act: Not Applicable INFORMATION REQUIRED IN REGISTRATION STATEMENT ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED A description of the [__%] Series B Cumulative Redeemable Preferred Stock, par value $.01 per share of the Registrant is contained in a Rule 424(b) Prospectus Supplement supplementing the Registrant's Registration Statement on Form S-3, No. 333-00766, which became effective on February 13, 1996, which Prospectus Supplement shall be deemed to be incorporated herein by reference for all purposes. ITEM 2. EXHIBITS The securities described herein are to be registered on the New York Stock Exchange, on which other securities of the Registrant are registered. Accordingly, the following exhibits, required in accordance with Part I to the Instructions as to Exhibits on Form 8-A, have been duly filed with the New York Stock Exchange: (1) Form of Articles Supplementary to Amended and Restated Articles of Incorporation Establishing and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock (_% Series B Cumulative Redeemable Preferred Stock, par value $.01 per share). (2) Articles Supplementary to Amended and Restated Articles of Incorporation Establishing and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock (9% Series A Cumulative Redeemable Preferred Stock, par value $.01 per share). (3) Amended and Restated Articles of Incorporation of Registrant. (4) Amended and Restated Bylaws of Registrant. 2 SIGNATURE Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized. Avalon Properties, Inc. By: /s/ Thomas J. Sargeant ------------------------- Thomas J. Sargeant Chief Financial Officer and Secretary October 16, 1996 3 EX-99.1 2 FORM OF ARTICLES OF SUPPLEMENTARY INCORP. EXHIBIT 99.1 ARTICLES OF AMENDMENT AND RESTATEMENT OF AVALON PROPERTIES, INC. THIS IS TO CERTIFY THAT: FIRST: Avalon Properties, Inc., a Maryland corporation, with its ----- principal office in Baltimore, Maryland, hereby certifies that it desires to amend and restate its Charter as currently in effect as set forth in these Articles of Amendment and Restatement. SECOND: The following provisions are all of the provisions of the ------ Charter currently in effect as hereinafter amended: ARTICLE I INCORPORATION, AMENDMENT AND RESTATEMENT ---------------------------------------- John O. Newell, whose post office address is 53 State Street, Boston, Massachusetts 02109, being at least eighteen (18) years of age formed the corporation (the "Corporation") under the General Laws of the State of Maryland. ARTICLE II NAME ---- The name of the Corporation is: Avalon Properties, Inc. ARTICLE III PURPOSES -------- 3.1 The purpose for which the Corporation is formed and the business or objects to be carried on and promoted by it, within the State of Maryland or elsewhere, is to engage in any lawful act or activity for which corporations may be formed under the Maryland General Corporation Law, as amended from time to time. 3.2 Without limiting the generality of the foregoing purpose, business and objects, at such time or times as the Board of Directors of the Corporation determines that it is in the interest of the Corporation and its stockholders that the Corporation engage in the business of, and conduct its business and affairs so as to qualify as, a real estate investment trust (as that phrase is defined in the Internal Revenue Code of 1986, as amended (the "Code")), the purpose of the Corporation shall include engaging in the business of a real estate investment trust ("REIT"). This reference to such purpose shall not make unlawful or unauthorized any otherwise lawful act or activity that the Corporation may take that is inconsistent with such purpose. ARTICLE IV PRINCIPAL OFFICE ADDRESS ------------------------ The post office address of the principal office of the Corporation is c/o The Corporation Trust, Inc., 32 South Street, Baltimore, Maryland 21202. ARTICLE V THE RESIDENT AGENT ------------------ The Resident Agent of the Corporation is The Corporation Trust, Inc., whose address is 32 South Street, Baltimore, Maryland 21202. Said Resident Agent is a Maryland corporation. ARTICLE VI BOARD OF DIRECTORS ------------------ 6.1 The Corporation shall have a Board of Directors initially consisting of two (2) Directors, which number may be increased or decreased in accordance with the Bylaws of the Corporation; provided that so long as there are fewer than three (3) stockholders, the number of directors may be fewer than three (3) but not fewer than the number of stockholders. The following individuals shall act as Directors until the first annual meeting of the stockholders of the Corporation or until their successors are duly elected to qualify: Charles H. Berman Richard L. Michaux 6.2 The initial term office of the Directors named in Section 6.1 hereof shall expire at the 1994 annual meeting of stockholders. Commencing with the 1994 annual meeting of stockholders, the Directors elected at each annual meeting of stockholders shall hold office for a term of one year. Vacancies occurring by resignation, enlargement of the Board of Directors or otherwise shall be filled as specified in the Bylaws. ARTICLE VII AUTHORIZED CAPITAL STOCK; RIGHTS AND PREFERENCES; ------------------------------------------------- ISSUANCE OF STOCK ----------------- 7.1 Authorized Capital Stock. The total number of shares of stock ------------------------ which the Corporation has authority to issue (the "Stock") is one hundred and fifty million (150,000,000) shares, consisting of (ii) twenty million (20,000,000) shares of preferred stock, par value $.01 per share ("Preferred Stock"); (ii) eighty million (80,000,000) shares of common stock, par value $.01 per share ("Common Stock"); and (iii) fifty million (50,000,000) shares of excess stock, par value $.01 per share ("Excess Stock"). The aggregate par value of all the shares of all classes of stock is $1,500,000. 7.2 Preferred Stock. The Board of Directors may issue the Preferred Stock in one or more series consisting of such numbers of shares and having such preferences, conversion and other rights, voting powers, restrictions and limitations as to dividends, qualifications and terms and conditions of redemption of stock as the Board of Directors may from time to time determine when designating such series. 7.3 Common Stock. ------------- 7.3.1 Dividend Rights. The holders of shares of Common Stock --------------- shall be entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor. 7.3.2 Rights Upon Liquidation. In the event of any voluntary or ----------------------- involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, each holder of shares of Common Stock shall be entitled to receive, ratably with each other holder of shares of Common Stock or Excess Stock resulting from the exchange of Common Stock ("Excess Common Stock"), that portion of the assets of the Corporation available for distribution to the holders of its Common Stock and Excess Common Stock as the number of shares of Common Stock held by such holder bears to the total number of shares of Common Stock and Excess Common Stock then outstanding. 7.3.3 Voting Rights. The holders of shares of Common Stock ------------- shall be entitled to vote on all matters submitted to the holders of Common Stock for a vote, at all meetings of the stockholders, and each holder of shares of Common Stock shall be entitled to one vote for each share of Common Stock held by such stockholder. 7.3.4 Exchange. Shares of Common Stock shall automatically and -------- without further action be exchanged for shares of Excess Stock, and shares of Excess Stock shall be exchanged for shares of Common Stock, at the times and in the manner provided in Section 9.5 hereof. Such exchanges shall not require the tender, cancellation or issuance of any certificate representing such shares of Excess Stock or Common Stock. 7.4 Excess Stock. The voting, distribution, redemption and certain ------------ other rights, qualifications and limitations of shares of Excess Stock are set forth in Section 9.5 hereof. 7.5 Classification of Stock. The Board of Directors may classify or ----------------------- reclassify any unissued shares of Stock from time to time by setting or changing the preferences, conversion and other rights, voting powers, restrictions and limitations as to dividends, qualifications, and terms and conditions of redemption of those shares of Stock, including, but not limited to, the reclassification of unissued shares of Common Stock to shares of Preferred Stock or unissued shares of Preferred Stock to shares of Common Stock or the issuance of any rights plan or similar plan. 7.6 Issuance of Stock. The Board of Directors may authorize the ----------------- issuance from time to time of shares of Stock of any class, whether now or hereafter authorized, or securities or rights convertible into shares of Stock, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a share split or dividend), subject to such restrictions or limitations, if any, as may be set forth in the Bylaws of the Corporation. ARTICLE VIII LIMITATION ON PREEMPTIVE RIGHTS ------------------------------- No stockholder shall have any preferential or preemptive right to acquire additional shares of Stock. ARTICLE IX LIMITATIONS ON TRANSFER AND OWNERSHIP ------------------------------------- 9.1 Limitations on Transfer. The shares of Stock (other than Excess ----------------------- Stock) shall be freely transferable by the record owner thereof, subject to the provisions of Section 9.2 and provided that any purported acquisition or transfer of Stock that would result in the disqualification of the Corporation as a REIT shall be void ab initio, except to the extent necessary to give effect -- ------ to Section 9.10 hereof. Any purported transfer of Stock that, if effective, would result in a violation of Section 9.2 (unless excepted from the application of Section 9.2 pursuant to Section 9.6) shall be void ab initio as to the -- ------ transfer of that number of shares of Stock that would otherwise be beneficially owned by a stockholder in violation of Section 9.2, the intended transferee of such shares shall acquire no rights therein and the transfer of such shares will not be reflected on the Corporation's stock record books. For purposes of this Article Ninth, a "transfer" of shares of Stock shall mean any sale, transfer, gift, hypothecation, pledge, assignment, or other disposition, whether voluntary or involuntary, by operation of law or otherwise. 9.2 Limitations on Ownership. Commencing on the date of the sale of ------------------------ shares of Common Stock pursuant to the Corporation's first effective registration statement for the Common Stock filed with the Securities and Exchange Commission under the Securities Act of 1933 (the "Initial Public Offering Date"), or such earlier time as the Board of Directors may determine, except as provided by Section 9.6, no person shall at any time directly or indirectly acquire or hold beneficial ownership of shares of any class or series of Stock with an aggregate value in excess of 9.8% of the aggregate value of all outstanding Stock of the Corporation (the "Ownership Limit"). For purposes of this Article Ninth, (a) the value of any share of Stock shall be determined in the manner established by the Board of Directors, and (b) a person (which includes natural persons, corporations, trusts, partnerships, and other entities) shall be deemed to be the beneficial owner of the Stock that such person (i) actually owns, (ii) constructively owns after applying the rules of Section 544 of the Code as modified in the case of a REIT by Section 856(h) of the Code, and (iii) has the right to acquire upon exercise of outstanding rights, options and warrants, and upon conversion of any securities convertible into Stock, if any. 9.3 Stockholder Information. Each stockholder shall, upon demand of ----------------------- the Corporation, disclose to the Corporation in writing such information with respect to his or its direct and indirect beneficial ownership of the Stock as the Board of Directors in its discretion deems necessary or appropriate in order that the Corporation may fully comply with all provisions of the Code relating to REITs and all regulations, rulings and cases promulgated or decided thereunder (the "REIT Provisions") and to comply with the requirements of any taxing authority or governmental agency. 9.4 Transferee Information. Whenever the Board of Directors deems it ---------------------- reasonably necessary to protect the tax status of the Corporation as a REIT under the REIT Provisions, the Board of Directors may require a statement or affidavit from each stockholder or proposed transferee of Stock setting forth the number of shares of Stock already beneficially owned by such proposed transferee and any related person specified by the Board of Directors. If, in the opinion of the Board of Directors, any proposed transfer may jeopardize the qualification of the Corporation as a REIT, the Board of Directors shall have the right, but not the duty, to refuse to permit the transfer of such Stock to the proposed transferee. All contracts for the sale or other transfer of Stock shall be subject to this Section 9.4. 9.5 Excess Stock. ------------ 9.5.1 Exchange for Excess Stock. If, notwithstanding the other ------------------------- provisions contained in this Article Ninth, at any time after the Initial Public Offering Date there is a purported transfer of Stock or a change in the capital structure of the Corporation (including any redemption of Excess Stock pursuant to Subsection 9.5.7) as a result of which any person would beneficially own Stock in excess of the Ownership Limit, then, except as otherwise provided in Section 9.6, such shares of Stock in excess of the Ownership Limit (rounded up to the nearest whole share) shall automatically and without further action be exchanged for an equal number of shares of Excess Stock. Such exchange shall be effective as of the close of business on the business day prior to the date of the purported transfer of Stock or the change in capital structure. The shares of Common Stock which were exchanged for shares of Excess Stock shall revert to the Corporation, subject to the provisions of Subsection 9.5.2. 9.5.2 Ownership in Trust. Upon any purported transfer of Stock that ------------------ results in an exchange for Excess Stock pursuant to Subsection 9.5.1, such shares of Excess Stock shall be deemed to have been transferred to the Corporation, as trustee of a separate trust for the exclusive benefit of the person or persons to whom such Excess Stock can ultimately be transferred without violating the Ownership Limit. Shares of Excess Stock so held in trust shall be issued and outstanding Stock of the Corporation under the Maryland General Corporation Law. The purported transferee of Excess Stock shall have no rights in such Excess Stock, except the right to designate a transferee of its interest in the trust created under this Subsection 9.5.2 upon the terms specified in Subsection 9.5.6. If any of the restrictions on transfer set forth in this Article Ninth are determined to be void, invalid or unenforceable by virtue of any legal decision, statute, rule or regulation, then the intended transferee of any Excess Stock may be deemed, at the option of the Corporation, to have acted as an agent on behalf of the Corporation in acquiring the Excess Stock and to hold the Excess Stock on behalf of the Corporation. 9.5.3 Dividend Rights. Excess Stock shall not be entitled to any dividends. Any dividend or distribution paid prior to the discovery by the Corporation that shares of Stock have been exchanged for Excess Stock shall be repaid to the Corporation upon demand, and any dividend or distribution declared but unpaid shall be rescinded as void ab initio with respect to such shares of Excess Stock. 9.5.4 Rights Upon Liquidation. In the event of any voluntary or ----------------------- involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, the trustee holding any shares of Excess Stock resulting from the exchange of Common Stock ("Excess Common Stock") shall be entitled to receive, ratably with each other holder of shares of Common Stock or Excess Common Stock, that portion of the assets of the Corporation available for distribution to the holders of Common Stock and Excess Common Stock as the number of shares of Excess Common Stock held by such holder bears to the total number of shares of Common Stock and Excess Common Stock then outstanding. In the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, the trustee holding any shares of Excess Stock resulting from the exchange of Preferred Stock ("Excess Preferred Stock") shall be entitled to receive the pro rata share of the assets of the Corporation available for distribution to the holders of Preferred Stock of the series from which such Excess Stock was exchanged which such holder of Excess Preferred Stock would be entitled to receive if such shares of Excess Preferred Stock were shares of Preferred Stock of the series from which such Excess Preferred Stock was exchanged. The Corporation, as the holder of all Excess Stock in one or more trusts, or, if the Corporation shall have been dissolved, any trustee appointed by the Corporation prior to its dissolution, shall distribute to each transferee of an interest in such a trust pursuant to Subsection 9.5.6 hereof, when determined, any assets received in any liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation in respect of the Excess Stock held in such trust and represented by the trust interest transferred to such transferee. 9.5.5 Voting Rights. No stockholder may vote any shares of Excess Stock. ------------- The shares of Excess Stock will not be considered to be issued or outstanding for purposes of any stockholder vote or for purposes of determining a quorum for such a vote. 9.5.6 Restrictions on Transfer. Excess Stock shall not be transferable. ------------------------ The purported transferee of any shares of Stock that are exchanged for Excess Stock pursuant to Section 9.5.1 may freely designate a transferee of the interest in the trust that represents such shares of Excess Stock, if (a) the shares of Excess Stock held in the trust and represented by the trust interest to be transferred would not be Excess Stock in the hands of the transferee of the trust interest and (b) the transferor of the trust interest does not receive a price for the trust interest in excess of (i) the price such transferor paid for the Stock in the purported transfer of Stock that resulted in the Excess Stock represented by the trust interest, or (ii) if such transferor did not give value for such Stock (e.g., the shares were received through a gift, devise or ---- other transaction), a price equal to the aggregate Market Price (as defined in Subsection 9.5.7) for all shares of the Stock that were exchanged for Excess Stock on the date of the purported transfer that resulted in the Excess Stock. No interest in a trust may be transferred unless the transferor of such interest has given advance notice to the Corporation of the intended transferee and the Corporation has agreed in writing to waive its redemption rights under Subsection 9.5.7. Upon the transfer of an interest in a trust in compliance with this Subsection 9.5.6, the corresponding shares of Excess Stock that are represented by the transferred interest in the trust shall be automatically exchanged for an equal number of shares of Stock of the same class and series from which they were originally exchanged and such shares of Stock shall be transferred of record to the transferee of the interest in the trust. Upon any exchange of Excess Stock for Stock of another class, the interest in the trust representing such Excess Stock shall automatically terminate. 9.5.7 Corporation's Redemption Right. All shares of Excess ------------------------------ Stock 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 (a) the price per share of Stock in the transaction that created such Excess Stock (or, in the case of devise or gift, the Market Price per share of such Stock at the time of such devise or gift) or (b) the Market Price per share of Stock of the class of Stock from which such Excess Stock was converted on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer at any time until the date ninety (90) days after the date on which the purported owner or transferee gives written notice to the Corporation of any event (including without limitation redemptions or repurchases of Stock by the Corporation) or any purported transfer that results in the exchange of Stock for Excess Stock and the nature and amount of all ownership interests, direct or indirect, of record or beneficial, of such purported owner or transferee. For purposes of this Article Ninth, "Market Price" means for any share of Stock, the average daily per share closing sales price of a share of such Stock if shares of such Stock are listed on a national securities exchange or quoted on the National Association of Securities Dealers Automated Quotation National Market System (the "NASDAQ NMS"), and if such shares are not so listed or quoted, the Market Price shall be the mean between the average per share closing bid prices and the average per share closing asked prices, in each case during the 30-day period ending on the business day prior to the redemption date, or if there have been no sales on a national securities exchange or on the NASDAQ NMS and no published bid and asked quotations with respect to shares of such Stock during such 30-day period, the Market Price shall be the price determined by the Board of Directors in good faith. Unless the Board of Directors determines that it is in the interest of Corporation to make earlier payment of all of the amount determined as the redemption payment for Stock redeemed in accordance with this Subsection 9.5.7, the redemption payment shall be paid to the transferee of the trust interest representing the redeemed Excess Stock only upon the liquidation of the Corporation and shall not exceed an amount equal to the lesser of the price determined pursuant to the first sentence of this Subsection 9.5.7 or the product of (x) the number of Excess Shares redeemed, multiplied by (y) the sum of the per share distributions designated as liquidating distributions and return of capital distributions declared subsequent to the redemption date with respect to unredeemed shares of Stock of the class from which the redeemed Excess Stock was converted. No interest shall accrue on any redemption payment with respect to the period subsequent to the redemption date to the date of the redemption payment. 9.6 Exceptions to Certain Ownership and Transfer Limitations. The -------------------------------------------------------- Ownership Limit set forth in Section 9.2 shall not apply to the following shares of Stock and such shares shall not be deemed to be Excess Stock at the times and subject to the terms and conditions set forth in this Section 9.6: 9.6.1 Subject to the provisions of Section 9.7, shares of Stock which the Board of Directors in its sole discretion may exempt from the Ownership Limit while owned by a person who has provided the Corporation with evidence and assurances acceptable to the Board of Directors that the qualification of the Corporation as a REIT would not be jeopardized thereby. 9.6.2 Subject to the provisions of Section 9.7, shares of Stock acquired and held by an underwriter in a public offering of Stock, or in any transaction involving the issuance of Stock by the Corporation in which the Board of Directors determines that the underwriter or other person or party initially acquiring such Stock will make a timely distribution of such Stock to or among other holders such that, following such distribution, the Corporation will continue to be in compliance with the REIT Provisions. 9.6.3 Shares of Stock acquired pursuant to an all cash tender offer made for all outstanding shares of Stock of the Corporation in conformity with applicable federal and state securities laws where not less than two-thirds of the outstanding Stock (not including Stock or securities convertible into Stock held by the tender offeror and/or any "affiliates" or "associates" thereof within the meaning of the Securities Exchange Act of 1934) are duly tendered and accepted pursuant to the cash tender offer and where the tender offeror commits in such tender offer, if the tender offer is so accepted by the holders of such two-thirds of the outstanding Stock, as promptly as practicable thereafter to give any holders who did not accept such tender offer a reasonable opportunity to put their Stock to the tender offeror at a price not less than the price per share paid for Stock tendered pursuant to the tender offer. 9.7 Authority to Revoke Exceptions to Limitations. The Board of --------------------------------------------- Directors, in its sole discretion, may at any time revoke any exception pursuant to Subsections 9.6.1 or 9.6.2 in the case of any stockholder, and upon such revocation, the provisions of Sections 9.2 and 9.5 shall immediately become applicable to such stockholder and all Stock of which such stockholder may be the beneficial owner. A decision to exempt or refuse to exempt from the Ownership Limit the ownership of certain designated shares of Stock, or to revoke an exemption previously granted, shall be made by the Board of Directors in its sole discretion, based on any reason whatsoever, including, but not limited to, the preservation of the Corporation's qualification as a REIT. 9.8 Severability. If any provision of this Article Ninth or any ------------ application of any such provision is determined to be invalid by any federal or state court having jurisdiction, the validity of the remaining provisions of this Article Ninth shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. To the extent this Article Ninth may be inconsistent with any other provision of these Articles of Incorporation, this Article Ninth shall be controlling. 9.9 Authority of the Board of Directors. Subject to Section 9.10 ----------------------------------- hereof, nothing else contained in this Article Ninth or in any other provision of these Articles of Incorporation shall limit the authority of the Board of Directors to take such action as it deems necessary or advisable to protect the Corporation and the interests of the stockholders by preservation of the Corporation's qualification as a REIT under the REIT Provisions. In applying the provisions of this Article Ninth, the Board of Directors may take into account the lack of certainty in the REIT Provisions relating to the ownership of stock that may prevent a corporation from qualifying as a REIT and may make interpretations concerning the Ownership Limit, Excess Stock, beneficial ownership and related matters on as conservative basis as the Board of Directors deems advisable to minimize or eliminate uncertainty as to the Corporation's continued qualification as a REIT. Notwithstanding any other provision of these Articles of Incorporation, if the Board of Directors determines that it is no longer in the best interests of the Corporation and the stockholders to continue to have the Corporation qualify as a REIT, the Board of Directors may revoke or otherwise terminate the Corporation's REIT election pursuant to Section 856(g) of the Code. 9.10 New York Stock Exchange. Nothing in these Articles of ----------------------- Incorporation shall preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange. ARTICLE X RIGHTS AND POWERS OF CORPORATION, --------------------------------- BOARD OF DIRECTORS AND OFFICERS ------------------------------- In carrying on its business, or for the purpose of attaining or furthering any of its objects, the Corporation shall have all of the rights, powers and privileges granted to corporations by the laws of the State of Maryland, as well as the power to do any and all acts and things that a natural person or partnership could do as now or hereafter authorized by law, either alone or in partnership or conjunction with others. In furtherance and not in limitation of the powers conferred by statute, the powers of the Corporation and of the Directors and stockholders shall include the following: 10.1 Any Director or officer individually, or any firm of which any Director or officer may be a member, or any corporation or association of which any Director or officer may be a director or officer or in which any Director or officer may be interested as the holder of any amount of its capital stock or otherwise, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation, and, in the absence of fraud, no contract or other transaction shall be thereby affected or invalidated; provided, - -------- however, that (a) such fact shall have been disclosed or shall have been known - ------- to the Board of Directors or the committee thereof that approved such contract or transaction and such contract or transaction shall have been approved or satisfied by the affirmative vote of a majority of the disinterested Directors, or (b) such fact shall have been disclosed or shall have been known to the stockholders entitled to vote, and such contract or transaction shall have been approved or ratified by a majority of the votes cast by the stockholders entitled to vote, other than the votes of shares owned of record or beneficially by the interested Director or corporation, firm or other entity, or (c) the contract or transaction is fair and reasonable to the Corporation. Any Director of the Corporation who is also a director or officer of or interested in such other corporation or association, or who, or the firm of which he is a member, is so interested, may be counted in determining the existence of a quorum at any meeting of the Board of Directors of the Corporation which shall authorize any such contract or transaction, with like force and effect as if he were not such director or officer of such other corporation or association or were not so interested or were not a member of a firm so interested. 10.2 The Corporation reserves the right, from time to time, to make any amendment of its Articles of Incorporation, now or hereafter authorized by law, including any amendment which alters the contract rights, as expressly set forth in its Articles of Incorporation, of any outstanding Stock. 10.3 Except as otherwise provided in the Articles of Incorporation or the Bylaws of the Corporation, as amended from time to time, the business of the Corporation shall be managed by its Board of Directors. The Board of Directors shall have and may exercise all the rights, powers and privileges of the Corporation except only for those that are by law, these Articles of Incorporation or the Bylaws of the Corporation, conferred upon or reserved to the stockholders. Additionally, the Board of Directors is hereby specifically authorized and empowered from time to time in its discretion: 10.3.1 To borrow and raise money, without limit and upon any terms, for any corporate purposes; and, subject to applicable law, to authorize the creation, issuance, assumption, or guaranty of bonds, debentures, notes, or other evidences of indebtedness for money so borrowed, to include therein such provisions as to redeemability, convertibility, or otherwise, as the Board of Directors, in its sole discretion, determines, and to secure the payment of principal, interest, or sinking fund in respect thereof by mortgage upon, or the pledge of, or the conveyance or assignment in trust of, all or any part of the properties, assets, and goodwill of the Corporation then owned or thereafter acquired. 10.3.2 To make, alter, amend, change, add to or repeal the Bylaws of the Corporation in accordance with the terms of the Bylaws adopted by the Board of Directors pursuant to Section 2-109 of the Maryland General Corporation Law; and 10.3.3 To the extent permitted by law, to declare and pay dividends or other distributions to the stockholders from time to time out of the earnings, earned surplus, paid-in surplus or capital of the Corporation, notwithstanding that such declaration may result in the reduction of the capital of the Corporation. In connection with any dividends or other distributions upon the Stock, the Corporation need not reserve any amount from such dividend or other distributions to satisfy any preferential rights of any stockholder. ARTICLE XI INDEMNIFICATION --------------- The Corporation shall have the power to indemnify, by express provision in its Bylaws, by agreement, or by majority vote of either its stockholders or disinterested Directors, any one or more of the following classes of individuals: (1) present or former Directors of the Corporation, (2) present or former officers of the Corporation, (3) present or former agents and/or employees of the Corporation, (4) present or former administrators, trustees or other fiduciaries under any pension, profit sharing, deferred compensation, or other employee benefit plan maintained by the Corporation, and (5) persons serving or who have served at the request of the Corporation in any of these capacities for any other corporation, partnership, joint venture, trust or other enterprise; provided, however, that the Corporation shall not be obligated to indemnify or advance expenses to a member of the foregoing classes of individuals ( an "Indemnitee") with respect to proceedings or claims initiated or brought voluntarily by an Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under these Articles of Incorporation or any other statute or law or otherwise as provided by Maryland General Corporation Law Section 2-418, but such indemnification or advancement of expenses may be provided by the Corporation in specific cases if the Board of Directors has approved the initiation or bringing of such suit. However, the Corporation shall not have the power to indemnify any person to the extent such indemnification would be contrary to Section 2-418 of the Maryland General Corporation Law or any successor provision of Maryland law or any other applicable statute, rule or regulation. The Company hereby agrees to indemnify Indemnitee's spouse (whether by statute or at common law and without regard to the location of the governing jurisdiction) to the same extent and subject to the same limitations applicable to Indemnitee hereunder for claims arising solely out of the status of such person as a spouse of Indemnitee, including claims seeking damages from marital property (including community property) or property held by the Indemnitee and such spouse or transferred to such spouse, but such indemnity shall not otherwise extend to protect the spouse against liabilities caused by the spouse's own acts. ARTICLE XII LIMITATION OF LIABILITY ----------------------- To the full extent permitted under the Maryland General Corporation Law as in effect on the date of filing these Articles of Incorporation or as the Maryland General Corporation Law is thereafter amended from time to time, no Director or officer shall be liable to the Corporation for money damages for any breach of any duty owed by such Director or officer to the Corporation. Neither the amendment or the repeal of this Article, nor the adoption of any other provision in the Corporation's Articles of Incorporation inconsistent with this Article, shall eliminate or reduce the protection afforded by this Article to a Director or officer of the Corporation with respect to any matter which occurred, or any cause of action, suit or claim which but for this Article would have accrued or arisen, prior to such amendment, repeal or adoption. ARTICLE XIII SPECIAL VOTING REQUIREMENTS --------------------------- Pursuant to Section 3-603(e)(1)(iii) of the Maryland General Corporation Law, the Corporation expressly elects not to be governed by the provisions of Section 3-602 of the Maryland General Corporation Law with respect to any business combination (as defined in Section 3-601 of the Maryland General Corporation Law) involving Richard L. Michaux or Charles H. Berman or any present or future affiliates associated or other person acting in concert or as a group with either or both of them or any present or future affiliates or associates (as such terms are defined in Section 3-601 of the Maryland General Corporation Law) of the either Richard L. Michaux or Charles H. Berman, or any other person acting in concert or as a group with either or both of them. THIRD: The amendment to and restatement of the Charter of the Corporation ----- as hereinabove set forth has been duly advised by the Board of Directors and has been unanimously approved by the Board of Directors and the stockholders of the Corporation. FOURTH: The number of Directors of the Corporation and the names of those ------ currently in office are as set forth in Article VI of the foregoing amendment and restatement of the Charter of the Corporation. FIFTH: The capital stock of the Corporation is not altered hereby. ----- IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment and Restatement to be signed in its name and on its behalf by its President and attested to by its Secretary on this 2nd day of November, 1993 and its said President acknowledges under the penalties of perjury that these Articles of Amendment and Restatement are the corporate act of said Corporation and that, to the best of his knowledge, information and belief, the matters and facts set forth herein are true in all material respects. Avalon Properties, Inc. By:_______________________________________ Charles H. Berman President Attest: ___________________________________ Patrick B. Patterson Secretary EX-99.2 3 ARTICLES OF SUPPLEMENTRY INCORPORTION EXHIBIT 99.2 AVALON PROPERTIES, INC. ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF A SERIES OF SHARES OF PREFERRED STOCK Avalon Properties, Inc., a Maryland corporation (the "Corporation"), certifies to the Secretary of State of Maryland that: FIRST: Pursuant to the authority expressly vested in the Board of Directors of - ----- the Corporation by Article VII of its Articles of Amendment and Restatement, as heretofore amended (which, as hereafter restated or amended from time to time, are together with these Articles Supplementary herein called the "Articles"), the Board of Directors has, by resolution, duly divided and classified 4,600,000 shares of the Preferred Stock of the Corporation into a series designated 9% Series A Cumulative Redeemable Preferred Stock and has provided for the issuance of such series. SECOND: The preferences, rights, voting powers, restrictions, limitations as to - ------ dividends, qualifications and terms and conditions of redemption of the shares of such series of Preferred Stock are as follows: (1) Designation and Number. A series of Preferred Stock, designated the "9% ---------------------- Series A Cumulative Redeemable Preferred Stock" (the "Series A Preferred"), is hereby established. The number of shares of the Series A Preferred shall 4,600,000. (2) Rank. The Series A Preferred shall, with respect to dividend rights and ---- rights upon liquidation, dissolution or winding up of the Corporation, rank (i) senior to all classes or series of Common Stock of the Corporation, and to all equity securities ranking junior to such Series A Preferred; (ii) on a parity with all equity securities issued by the Corporation the terms of which specifically provide that such equity securities rank on a parity with the Series A Preferred; and (iii) junior to all equity securities issued by the Corporation the terms of which specifically provide that such equity securities rank senior to the Series A Preferred. The term "equity securities" shall not include convertible debt securities. (3) Dividends. --------- (a) Holders of the then outstanding shares of Series A Preferred shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for the payment of dividends, cumulative preferential cash dividends at the rate of 9% of the $25.00 liquidation preference per annum (equivalent to a fixed annual amount of $2.25 per share). Such dividends shall be cumulative from the date of original issue and shall be payable quarterly in arrears on or about the fifteenth day of February, May, August and November or, if not a business day, the next succeeding business day (each, a "Dividend Payment Date"). The first dividend, which will be paid on May 15, 1996, will be for less than a full quarter. Such dividend and any dividend payable on the Series A Preferred for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Dividend Payment Date falls on or such other date designated by the Board of Directors of the Corporation for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a "Dividend Record Date"). (b) No dividends on shares of Series A Preferred shall be declared by the Board of Directors of the Corporation or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. (c) Notwithstanding the foregoing, dividends on the Series A Preferred shall accrue whether or not the terms and provisions set forth in Section 3(b) hereof at any time prohibit the current payment of dividends, whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. (d) No dividends will be declared or paid or set apart for payment on any capital stock of the Corporation or any other series ranking, as to dividends, on a parity with or junior to the Series A Preferred for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series A Preferred for all past dividend periods and the then current dividend period. (e) When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series A Preferred and the shares of any other series of Preferred Stock ranking on a parity as to dividends with the Series A Preferred, all dividends declared upon the Series A Preferred and any other series of Preferred Stock ranking on a parity as to dividends with the Series A Preferred shall be declared pro rata so that the amount of dividends declared per share of Series A Preferred and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series A Preferred and such other series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on Series A Preferred which may be in arrears. (f) Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series A Preferred have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in shares of Common Stock or other shares of capital stock ranking junior to the Series A Preferred as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other capital shares of the Corporation ranking junior to or on a parity with the Series A Preferred as to dividends or upon liquidation, nor shall any shares of Common Stock, or any other shares of capital stock of the Corporation ranking junior to or on a parity with the Series A Preferred as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for other capital shares of the Corporation ranking junior to the Series A Preferred as to dividends and upon liquidation). (g) Any dividend payment made on shares of the Series A Preferred shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable. Holders of the Series A Preferred shall not be entitled to any dividend, whether payable in cash, property or stock in excess of full cumulative dividends on the Series A Preferred as described above. (4) Liquidation Preference. ---------------------- (a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of shares of Series A Preferred then outstanding are entitled to be paid out of the assets of the Corporation legally available for distribution to its stockholders a liquidation preference of $25.00 per share, plus an amount equal to any accrued and unpaid dividends to the date of payment, before any distribution of assets is made to holders of Common Stock or any other class or series of capital stock of the Corporation that ranks junior to the Series A Preferred as to liquidation rights. (b) In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Corporation are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series A Preferred and the corresponding amounts payable on all shares of other classes or series of capital stock of the Corporation ranking on a parity with the Series A Preferred in the distribution of assets, then the holders of the Series A Preferred and all other such classes or series of capital stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. (c) After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series A Preferred will have no right or claim to any of the remaining assets of the Corporation. (d) The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation with or into the Corporation, or the sale, lease or conveyance of all or substantially all of the property or business of the Corporation, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation. (5) Redemption. ---------- (a) Right of Optional Redemption. The Series A Preferred is not redeemable prior to February 15, 2001. However, in order to ensure that the Corporation remains a qualified REIT for Federal income tax purposes, Series A Preferred owned by a stockholder in excess of the Ownership Limit will automatically be exchanged for shares of Excess Stock, and the Corporation will have the right to Purchase Excess Stock from the holder. On and after February 15, 2001, the Corporation, at its option upon not less than 30 nor more than 60- days' written notice, may redeem shares of the Series A Preferred, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends thereon to the date fixed for redemption (except as provided below), without interest. If less than all of the outstanding Series A Preferred is to be redeemed, the Series A Preferred to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Corporation. (b) Limitations on Redemption. (i) The redemption price of the Series A Preferred (other than the portion thereof consisting of accrued and unpaid dividends) is payable solely out of the sale proceeds of other capital stock of the Corporation, which may include other series of Preferred Stock, and from no other source. For purposes of the preceding sentence, "capital stock" means any equity securities (including Common Stock and Preferred Stock), shares, interest, participation or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable for equity securities) or options to purchase any of the foregoing. (ii) Unless full cumulative dividends on all shares of Series A Preferred shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series A Preferred shall be redeemed unless all outstanding shares of Series A Preferred are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares of Series A Preferred, (except by exchange for capital stock of the Corporation ranking junior to the Series A Preferred as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase by the Corporation of shares of Excess Stock in order to ensure that the Corporation remains qualified as a REIT for Federal income tax purposes or the purchase or acquisition of shares of Series A Preferred pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred. (c) Rights to Dividends on Shares Called for Redemption. The holders of Series A Preferred at the close of business on a Dividend Record Date will be entitled to receive the dividend payable with respect to such Series A Preferred on the corresponding Dividend Payment Date notwithstanding the redemption thereof between such Dividend Record Date and the corresponding Dividend Payment Date or the Corporation's default in the payment of the dividend due. Except as provided above, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on called Series A Preferred. (d) Procedures for Redemption. (i) Notice of redemption will be (a) given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the redemption date, and (b) mailed by the Corporation, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series A Preferred to be redeemed at their respective addresses as they appear on the stock transfer records of the Corporation. No failure to give such notice or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series A Preferred except as to the holder to whom notice was defective or not given. (ii) In addition to any information required by law or by the applicable rules of any exchange upon which Series A Preferred may be listed or admitted to trading, such notice shall state: (i) the redemption date; (ii) the redemption price; (iii) the number of shares of Series A Preferred to be redeemed; (iv) the place or places where the Series A Preferred is to be surrendered for payments of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If less than all of the Series A Preferred held by any holder is to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series A Preferred held by such holder to be redeemed. (iii) If notice of redemption of any shares of Series A Preferred has been given and if the funds necessary for such redemption have been set aside by the Corporation in trust for the benefit of the holders of any shares of Series A Preferred so called for redemption, then from and after the redemption date dividends will cease to accrue on such shares of Series A Preferred, such shares of Series A Preferred shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. Holders of Series A Preferred to be redeemed shall surrender such Series A Preferred at the place designated in such notice and, upon surrender in accordance with said notice of the certificates for shares of Series A Preferred so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such shares of Series A Preferred shall be redeemed by the Corporation at the redemption price plus any accrued and unpaid dividends payable upon such redemption. In case less than all the shares of Series A Preferred represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares of Series A Preferred without cost to the holder thereof. (iv) The deposit of funds with a bank or trust corporation for the purpose of redeeming Series A Preferred shall be irrevocable except that: (A) the Corporation shall be entitled to receive from such bank or trust corporation the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (B) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series A Preferred entitled thereto at the expiration of two years from the applicable redemption dates shall be repaid, together with an interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings. (6) Voting Rights. ------------- (a) Holders of the Series A Preferred will not have any voting rights, except as set forth below or as otherwise from time to time required by law. (b) Whenever dividends on any shares of Series A Preferred shall be in arrears for six or more quarterly periods (a "Preferred Dividend Default"), the Board of Directors shall take such action as may be required to increase number of directors of the Corporation by two and the holders of such shares of Series A Preferred (voting separately as a class with all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote for the election of two additional directors of the Corporation (the "Preferred Stock Directors") at a special meeting called by the holders of record of at least 10% of the Series A Preferred or the holders of any other series of Preferred Stock so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders) or at the next annual meeting of stockholders, and at each subsequent annual meeting until all dividends accrued on such shares of Series A Preferred for the past dividend periods and the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. (c) If and when all accumulated dividends on the Series A Preferred shall have been paid in full or set aside for payment in full, the holders of shares of Series A Preferred shall be divested of the voting rights set forth in Section 6(b) hereof (subject to revesting in the event of each and every Preferred Dividend Default) and the term of office of each Preferred Stock Director so elected shall terminate and the Board of Directors shall take such action as may be necessary to reduce the number of directors of the Corporation by two (subject to the increase in the number of directors pursuant to the foregoing provisions in the case of a future Preferred Dividend Default). Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of the holders of record of a majority of the outstanding shares of the Series A Preferred (voting separately as a class with all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series A Preferred (voting separately as a class with all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall each be entitled to one vote per director on any matter. (d) So long as any shares of Series A Preferred remain outstanding, the Corporation shall not, without the affirmative vote of the holders of at least two thirds of the shares of the Series A Preferred outstanding at the time, (i) authorize or create, or increase the authorized or issued amount of, any class or series of capital stock ranking prior to the Series A Preferred with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or reclassify any authorized capital stock of the Corporation into any such shares, or create, authorize or issue any obligations or security convertible into or evidencing the right to purchase any such shares; or (ii) amend, alter or repeal the provisions of the Articles, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series A Preferred or the holders thereof; provided, however, that any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or any increase in the amount of authorized shares of such series, in each case ranking on a parity with or junior to the Series A Preferred with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers. (e) The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series A Preferred shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption. (7) Conversion. The Series A Preferred is not convertible into or exchangeable ---------- for any other property or securities of the Corporation, except that the shares of Series A Preferred may be exchanged by the Corporation for shares of Excess Stock in order to ensure that the Corporation remains qualified as a REIT for Federal income tax purposes. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] THIRD: These Articles Supplementary shall be effective at the later of the time - ----- the State Department of Assessments and Taxation of Maryland accepts the Articles for record or 2:00 p.m. Eastern Standard Time on February 16, 1996. IN WITNESS WHEREOF, AVALON PROPERTIES, INC. has caused these presents to be signed in its name and on its behalf by its President, and its corporate seal to be hereunto affixed and attested by its Secretary, and the said officers of the Corporation further acknowledge said instrument to be the corporate act of the Corporation, and state under the penalties of perjury that to the best of their knowledge, information and belief the matters and facts therein set forth with respect to approval are true in all material respects. AVALON PROPERTIES, INC. By:_______________________________ Charles H. Berman, President [SEAL] ATTEST: __________________________________ Thomas J. Sargeant, Secretary IN WITNESS WHEREOF, AVALON PROPERTIES, INC. has caused these presents to be signed in its name and on its behalf by its President, and its corporate seal to be hereunto affixed and attested by its Secretary, and the said officers of the Corporation further acknowledge said instrument to be the corporate act of the Corporation, and state under the penalties of perjury that to the best of their knowledge, information and belief the matters and facts therein set forth with respect to approval are true in all material respects. AVALON PROPERTIES, INC. By:_______________________________ Charles H. Berman, President [SEAL] ATTEST: _________________________________ Thomas J. Sargeant, Secretary EX-99.3 4 AMENDED AND RESTATED ARTICLES OF INCORP. EXHIBIT 99.3 AVALON PROPERTIES, INC. FORM OF ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF A SERIES OF SHARES OF PREFERRED STOCK Avalon Properties, Inc., a Maryland corporation (the "Corporation"), certifies to the Secretary of State of Maryland that: FIRST: Pursuant to the authority expressly vested in the Board of Directors of - ----- the Corporation by Article VII of its Articles of Amendment and Restatement, as heretofore amended (which, as hereafter restated or amended from time to time, are together with these Articles Supplementary herein called the "Articles"), the Board of Directors has, by resolution, duly divided and classified 4,600,000 shares of the Preferred Stock of the Corporation, par value $.01 per share, into a series designated __% Series B Cumulative Redeemable Preferred Stock and has provided for the issuance of such series. SECOND: The preferences, rights, voting powers, restrictions, limitations as to - ------ dividends, qualifications and terms and conditions of redemption of the shares of such series of Preferred Stock are as follows: (1) Designation and Number. A series of Preferred Stock, designated the "__% ---------------------- Series B Cumulative Redeemable Preferred Stock" (the "Series B Preferred"), is hereby established. The number of shares of the Series B Preferred shall be 4,600,000. (2) Rank. The Series B Preferred shall, with respect to dividend rights and ---- rights upon liquidation, dissolution or winding up of the Corporation, rank (i) senior to all classes or series of Common Stock of the Corporation, and to all equity securities ranking junior to such Series B Preferred; (ii) on a parity with the Series A Preferred Stock of the Corporation (the "Series A Preferred"), and with all equity securities issued by the Corporation the terms of which specifically provide that such equity securities rank on a parity with the Series B Preferred; and (iii) junior to all equity securities issued by the Corporation the terms of which specifically provide that such equity securities rank senior to the Series B Preferred. The term "equity securities" shall not include convertible debt securities. (3) Dividends. --------- (a) Holders of the then outstanding shares of Series B Preferred shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for the payment of dividends, cumulative preferential cash dividends at the rate of __% of the $25.00 liquidation preference per annum (equivalent to a fixed annual amount of $____ per share). Such dividends shall be cumulative from the date of original issue and shall be payable quarterly in arrears on or about the fifteenth day of February, May, August and November or, if not a business day, the next succeeding business day (each, a "Dividend Payment Date"). The first dividend, which will be paid on November 15, 1996, will be for less than a full quarter. Such dividend and any dividend payable on the Series B Preferred for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date, which shall be the first day of the calendar month in which the applicable Dividend Payment Date falls on or such other date designated by the Board of Directors of the Corporation for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a "Dividend Record Date"). (b) No dividends on shares of Series B Preferred shall be declared by the Board of Directors of the Corporation or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law. (c) Notwithstanding the foregoing, dividends on the Series B Preferred shall accrue whether or not the terms and provisions set forth in Section 3(b) hereof at any time prohibit the current payment of dividends, whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. (d) No dividends will be declared or paid or set apart for payment on any capital stock of the Corporation or any other series ranking, as to dividends, on a parity with or junior to the Series B Preferred for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series B Preferred for all past dividend periods and the then current dividend period. (e) When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series B Preferred and the shares of any other series of Preferred Stock ranking on a parity as to dividends with the Series B Preferred, all dividends declared upon the Series B Preferred and any other series of Preferred Stock ranking on a parity as to dividends with the Series B Preferred shall be declared pro rata so that the amount of dividends declared per share of Series B Preferred and such other series of Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Series B Preferred and such other series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on Series B Preferred which may be in arrears. (f) Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series B Preferred have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in shares of Common Stock or other shares of capital stock ranking junior to the Series B Preferred as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other capital shares of the Corporation ranking junior to or on a parity with the Series B Preferred as to dividends or upon liquidation, nor shall any shares of Common Stock, or any other shares of capital stock of the Corporation ranking junior to or on a parity with the Series B Preferred as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for other capital shares of the Corporation ranking junior to the Series B Preferred as to dividends and upon liquidation). (g) Any dividend payment made on shares of the Series B Preferred shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable. Holders of the Series B Preferred shall not be entitled to any dividend, whether payable in cash, property or stock in excess of full cumulative dividends on the Series B Preferred as described above. (4) Liquidation Preference. ---------------------- (a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of shares of Series B Preferred then outstanding are entitled to be paid out of the assets of the Corporation legally available for distribution to its stockholders a liquidation preference of $25.00 per share, plus an amount equal to any accrued and unpaid dividends to the date of payment, before any distribution of assets is made to holders of Common Stock or any other class or series of capital stock of the Corporation that ranks junior to the Series B Preferred as to liquidation rights. (b) In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Corporation are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series B Preferred and the corresponding amounts payable on all shares of other classes or series of capital stock of the Corporation ranking on a parity with the Series B Preferred in the distribution of assets, then the holders of the Series B Preferred and all other such classes or series of capital stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. (c) After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series B Preferred will have no right or claim to any of the remaining assets of the Corporation. (d) The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation with or into the Corporation, or the sale, lease or conveyance of all or substantially all of the property or business of the Corporation, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation. (5) Redemption. ---------- (a) Right of Optional Redemption. The Series B Preferred is not redeemable prior to [___________, 2001]. However, in order to ensure that the Corporation remains a qualified REIT for Federal income tax purposes, Series B Preferred owned by a stockholder in excess of the Ownership Limit will automatically be exchanged for shares of Excess Stock, and the Corporation will have the right to Purchase Excess Stock from the holder. On and after [___________, 2001], the Corporation, at its option upon not less than 30 nor more than 60-days' written notice, may redeem shares of the Series B Preferred, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends thereon to the date fixed for redemption (except as provided below), without interest. If less than all of the outstanding Series B Preferred is to be redeemed, the Series B Preferred to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Corporation. (b) Limitations on Redemption. (i) The redemption price of the Series B Preferred (other than the portion thereof consisting of accrued and unpaid dividends) is payable solely out of the sale proceeds of other capital stock of the Corporation, which may include other series of Preferred Stock, and from no other source. For purposes of the preceding sentence, "capital stock" means any equity securities (including Common Stock and Preferred Stock), shares, interest, participation or other ownership interests (however designated) and any rights (other than debt securities convertible into or exchangeable for equity securities) or options to purchase any of the foregoing. (ii) Unless full cumulative dividends on all shares of Series B Preferred shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series B Preferred shall be redeemed unless all outstanding shares of Series B Preferred are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares of Series B Preferred, (except by exchange for capital stock of the Corporation ranking junior to the Series B Preferred as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase by the Corporation of shares of Excess Stock in order to ensure that the Corporation remains qualified as a REIT for Federal income tax purposes or the purchase or acquisition of shares of Series B Preferred pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series B Preferred. (c) Rights to Dividends on Shares Called for Redemption. The holders of Series B Preferred at the close of business on a Dividend Record Date will be entitled to receive the dividend payable with respect to such Series B Preferred on the corresponding Dividend Payment Date notwithstanding the redemption thereof between such Dividend Record Date and the corresponding Dividend Payment Date or the Corporation's default in the payment of the dividend due. Except as provided above, the Corporation will make no payment or allowance for unpaid dividends, whether or not in arrears, on called Series B Preferred. (d) Procedures for Redemption. (i) Notice of redemption will be (A) given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the redemption date, and (B) mailed by the Corporation, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series B Preferred to be redeemed at their respective addresses as they appear on the stock transfer records of the Corporation. No failure to give such notice or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series B Preferred except as to the holder to whom notice was defective or not given. (ii) In addition to any information required by law or by the applicable rules of any exchange upon which Series B Preferred may be listed or admitted to trading, such notice shall state: (A) the redemption date; (B) the redemption price; (C) the number of shares of Series B Preferred to be redeemed; (D) the place or places where the Series B Preferred is to be surrendered for payments of the redemption price; and (E) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If less than all of the Series B Preferred held by any holder is to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series B Preferred held by such holder to be redeemed. (iii) If notice of redemption of any shares of Series B Preferred has been given and if the funds necessary for such redemption have been set aside by the Corporation in trust for the benefit of the holders of any shares of Series B Preferred so called for redemption, then from and after the redemption date dividends will cease to accrue on such shares of Series B Preferred, such shares of Series B Preferred shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. Holders of Series B Preferred to be redeemed shall surrender such Series B Preferred at the place designated in such notice and, upon surrender in accordance with said notice of the certificates for shares of Series B Preferred so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such shares of Series B Preferred shall be redeemed by the Corporation at the redemption price plus any accrued and unpaid dividends payable upon such redemption. In case less than all the shares of Series B Preferred represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares of Series B Preferred without cost to the holder thereof. (iv) The deposit of funds with a bank or trust corporation for the purpose of redeeming Series B Preferred shall be irrevocable except that: (A) the Corporation shall be entitled to receive from such bank or trust corporation the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (B) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series B Preferred entitled thereto at the expiration of two years from the applicable redemption dates shall be repaid, together with interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings. (6) Voting Rights. ------------- (a) Holders of the Series B Preferred will not have any voting rights, except as set forth below or as otherwise from time to time required by law. (b) Whenever dividends on any shares of Series B Preferred shall be in arrears for six or more quarterly periods (a "Preferred Dividend Default"), the Board of Directors shall take such action as may be required to increase number of directors of the Corporation by two and the holders of such shares of Series B Preferred (voting separately as a class with holders of shares of Series A Preferred and all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote for the election of two additional directors of the Corporation (the "Preferred Stock Directors") at a special meeting called by the holders of record of at least 10% of the Series B Preferred or the holders of any other series of Preferred Stock so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the stockholders) or at the next annual meeting of stockholders, and at each subsequent annual meeting until all dividends accrued on such shares of Series B Preferred for the past dividend periods and the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. (c) If and when all accumulated dividends on the Series B Preferred shall have been paid in full or set aside for payment in full, the holders of shares of Series B Preferred shall be divested of the voting rights set forth in Section 6(b) hereof (subject to revesting in the event of each and every Preferred Dividend Default) and, provided that no Preferred Dividend Default exists for any series of Preferred Stock upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate and the Board of Directors shall take such action as may be necessary to reduce the number of directors of the Corporation by two (subject to the increase in the number of directors pursuant to the foregoing provisions in the case of a future Preferred Dividend Default). Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of the holders of record of a majority of the outstanding shares of the Series B Preferred (voting separately as a class with holders of shares of Series A Preferred and all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series B Preferred (voting separately as a class with holders of shares of Series A Preferred and all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall each be entitled to one vote per director on any matter. (d) So long as any shares of Series B Preferred remain outstanding, the Corporation shall not, without the affirmative vote of the holders of at least two thirds of the shares of the Series B Preferred outstanding at the time, (i) authorize or create, or increase the authorized or issued amount of, any class or series of capital stock ranking prior to the Series B Preferred with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or reclassify any authorized capital stock of the Corporation into any such shares, or create, authorize or issue any obligations or securities convertible into or evidencing the right to purchase any such shares; or (ii) amend, alter or repeal the provisions of the Articles, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of the Series B Preferred or the holders thereof; provided, however, that any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other series of Preferred Stock, or any increase in the amount of authorized shares of such series, in each case ranking on a parity with or junior to the Series B Preferred with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers. (e) The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series B Preferred shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption. (7) Conversion. The Series B Preferred is not convertible into or exchangeable ---------- for any other property or securities of the Corporation, except that the shares of Series B Preferred may be exchanged by the Corporation for shares of Excess Stock in order to ensure that the Corporation remains qualified as a REIT for Federal income tax purposes. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] THIRD: These Articles Supplementary shall be effective at the later of the time - ----- the State Department of Assessments and Taxation of Maryland accepts the Articles for record or __:00 _.m. [Eastern Standard] Time on __________, 1996. IN WITNESS WHEREOF, AVALON PROPERTIES, INC. has caused these presents to be signed in its name and on its behalf by its President, and its corporate seal to be hereunto affixed and attested by its Secretary, and the said officers of the Corporation further acknowledge said instrument to be the corporate act of the Corporation, and state under the penalties of perjury that to the best of their knowledge, information and belief the matters and facts therein set forth with respect to approval are true in all material respects. AVALON PROPERTIES, INC. By: ---------------------------- Charles H. Berman, President [SEAL] ATTEST: - ----------------------------- Thomas J. Sargeant, Secretary IN WITNESS WHEREOF, AVALON PROPERTIES, INC. has caused these presents to be signed in its name and on its behalf by its President, and its corporate seal to be hereunto affixed and attested by its Secretary, and the said officers of the Corporation further acknowledge said instrument to be the corporate act of the Corporation, and state under the penalties of perjury that to the best of their knowledge, information and belief the matters and facts therein set forth with respect to approval are true in all material respects. AVALON PROPERTIES, INC. By: ---------------------------- Charles H. Berman, President [SEAL] ATTEST: - ----------------------------- Thomas J. Sargeant, Secretary 319928.c1 EX-99.4 5 AMENDED AND RESTATED BY-LAWS EXHIBIT 99.4 AMENDED AND RESTATED BYLAWS OF AVALON PROPERTIES, INC. As Amended and Restated February 15, 1995 AMENDED AND RESTATED BYLAWS OF AVALON PROPERTIES, INC. TABLE OF CONTENTS
Page - ---------- ARTICLE I MEETINGS OF STOCKHOLDERS.................................. 1 ------------------------ 1.01 PLACE............................................... 1 ----- 1.02 ORGANIZATIONAL MEETING; ANNUAL MEETING.............. 1 -------------------------------------- 1.03 MATTERS TO BE CONSIDERED AT ANNUAL MEETING.......... 1 ------------------------------------------ 1.04 SPECIAL MEETINGS.................................... 3 ---------------- 1.05 NOTICE.............................................. 3 ------ 1.06 SCOPE OF NOTICE..................................... 3 --------------- 1.07 QUORUM.............................................. 3 ------ 1.08 VOTING.............................................. 4 ------ 1.09 PROXIES............................................. 4 ------- 1.10 CONDUCT OF MEETINGS................................. 4 ------------------- 1.11 TABULATION OF VOTES................................. 4 ------------------- 1.12 INFORMAL ACTION BY STOCKHOLDERS..................... 5 ------------------------------- 1.13 VOTING BY BALLOT.................................... 5 ---------------- ARTICLE II DIRECTORS................................................. 5 --------- 2.01 GENERAL POWERS...................................... 5 -------------- 2.02 OUTSIDE ACTIVITIES.................................. 5 ------------------ 2.03 NUMBER, TENURE AND QUALIFICATION.................... 6 -------------------------------- 2.04 NOMINATION OF DIRECTORS............................. 6 ----------------------- 2.05 ANNUAL AND REGULAR MEETINGS......................... 8 --------------------------- 2.06 SPECIAL MEETINGS.................................... 8 ---------------- 2.07 NOTICE.............................................. 8 ------ 2.08 QUORUM.............................................. 8 ------ 2.09 VOTING.............................................. 9 ------ 2.10 CONDUCT OF MEETINGS................................. 9 ------------------- 2.11 RESIGNATIONS........................................ 9 ------------ 2.12 REMOVAL OF DIRECTORS................................ 9 -------------------- 2.13 VACANCIES........................................... 9 ---------
2.14 INFORMAL ACTION BY DIRECTORS........................ 10 ---------------------------- 2.15 COMPENSATION........................................ 10 ------------ ARTICLE III COMMITTEES................................................ 10 ---------- 3.01 NUMBER, TENURE AND QUALIFICATION.................... 10 -------------------------------- 3.02 DELEGATION OF POWER................................. 10 ------------------- 3.03 QUORUM AND VOTING................................... 10 ----------------- 3.04 CONDUCT OF MEETINGS................................. 10 ------------------- 3.05 INFORMAL ACTION BY COMMITTEES....................... 11 ----------------------------- ARTICLE IV OFFICERS.................................................. 11 -------- 4.01 POWERS AND DUTIES................................... 11 ----------------- 4.02 REMOVAL............................................. 11 ------- 4.03 VACANCIES........................................... 12 --------- 4.04 CHAIRMAN OF THE BOARD............................... 12 --------------------- 4.05 PRESIDENT........................................... 12 --------- 4.06 VICE PRESIDENTS..................................... 12 --------------- 4.07 SECRETARY........................................... 12 --------- 4.08 TREASURER........................................... 13 --------- 4.09 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS...... 13 ---------------------------------------------- 4.10 SUBORDINATE OFFICERS................................ 13 -------------------- 4.11 SALARIES............................................ 13 -------- ARTICLE V SHARES OF STOCK........................................... 14 --------------- 5.01 NO CERTIFICATES FOR STOCK........................... 14 ------------------------- 5.02 ELECTION TO ISSUE CERTIFICATES...................... 14 ------------------------------ 5.03 STOCK LEDGER........................................ 14 ------------ 5.04 RECORDING TRANSFERS OF STOCK........................ 14 ---------------------------- 5.05 LOST CERTIFICATE.................................... 15 ---------------- 5.06 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.. 15 -------------------------------------------------- ARTICLE VI DIVIDENDS AND DISTRIBUTIONS............................... 16 --------------------------- 6.01 DECLARATION......................................... 16 ----------- 6.02 CONTINGENCIES....................................... 16 ------------- ARTICLE VII INDEMNIFICATION........................................... 16 --------------- 7.01 INDEMNIFICATION..................................... 16 --------------- 7.02 EXPENSES; INDEMNIFICATION PROCEDURE................. 17 ----------------------------------- 7.03 NONEXCLUSIVITY OF INDEMNIFICATION RIGHTS............ 19 ---------------------------------------- 7.04 PARTIAL INDEMNIFICATION............................. 20 ----------------------- 7.05 MUTUAL ACKNOWLEDGMENT............................... 20 --------------------- 7.06 INSURANCE........................................... 20 --------- 7.07 SEVERABILITY........................................ 20 ------------ 7.08 EXCEPTIONS.......................................... 20 ---------- 7.09 CONSTRUCTION OF CERTAIN PHRASES..................... 21 ------------------------------- 7.10 SUCCESSORS AND ASSIGNS.............................. 22 ---------------------- 7.11 ATTORNEYS' FEES..................................... 22 --------------- ARTICLE VIII NOTICES................................................... 22 ------- 8.01 NOTICES............................................. 22 ------- 8.02 SECRETARY TO GIVE NOTICE............................ 23 ------------------------ 8.03 WAIVER OF NOTICE.................................... 23 ---------------- ARTICLE IX MISCELLANEOUS............................................. 23 ------------- 9.01 BOOKS AND RECORDS................................... 23 ----------------- 9.02 INSPECTION OF BYLAWS AND CORPORATE RECORDS.......... 23 ------------------------------------------ 9.03 CONTRACTS........................................... 23 --------- 9.04 CHECKS, DRAFTS, ETC................................. 24 ------------------- 9.05 LOANS............................................... 24 ----- 9.06 FISCAL YEAR......................................... 24 ----------- 9.07 ANNUAL REPORT....................................... 24 ------------- 9.08 INTERIM REPORTS..................................... 25 --------------- 9.09 OTHER REPORTS....................................... 25 ------------- 9.10 BYLAWS SEVERABLE.................................... 25 ---------------- ARTICLE X AMENDMENT OF BYLAWS....................................... 25 ------------------- 10.1 BY DIRECTORS.................................. 25 ------------ 10.2 BY STOCKHOLDERS............................... 25 --------------- APPENDIX A...................................................... 26 ARTICLE I MEETINGS OF STOCKHOLDERS ------------------------ 1.01 PLACE. All meetings of the holders of the issued and outstanding ----- common stock and preferred stock of the Corporation (the "Stockholders") shall be held at the principal executive office of the Corporation or such other place within the United States as shall be stated in the notice of the meeting. 1.02 ORGANIZATIONAL MEETING; ANNUAL MEETING. An annual meeting of the -------------------------------------- Stockholders for the election of Directors and the transaction of such other business as properly may be brought before the meeting shall be held on the second Wednesday in May of each year or at such other date and time as may be fixed by the Board of Directors. If the date fixed for the annual meeting shall be a legal holiday, such meeting shall be held on the next succeeding business day. Any and all references hereafter in these Bylaws to an annual meeting or to annual meetings shall be deemed to refer also to any special meeting(s) in lieu thereof. 1.03 MATTERS TO BE CONSIDERED AT ANNUAL MEETING. ------------------------------------------ (a) At an annual meeting of Stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before the annual meeting (i) by, or at the direction of, a majority of the Board of Directors, or (ii) by any holder of record (both as of the time notice of such proposal is given by the Stockholder as set forth below and as of the record date for the annual meeting in question) of any shares of the Corporation's capital stock entitled to vote at such annual meeting who complies with the procedures set forth in this Section 1.03. For a proposal to be properly brought before an annual meeting by a Stockholder, other than a stockholder proposal included in the Corporation's proxy statement pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended, the Stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, and such Stockholder or his representative must be present in person at the annual meeting. For the first annual meeting following the initial public offering of common stock of the Corporation, a Stockholder's notice shall be timely if delivered to, or mailed and received at, the principal executive office of the Corporation not later than the close of business on the 20th calendar day (or if that day is not a business day for the Corporation, on the next business day) following the date on which notice of the date of the first annual meeting is mailed or otherwise transmitted to Stockholders. For all subsequent annual meetings, a Stockholder's notice shall be timely if delivered to, or mailed and received at, the principal executive offices of the corporation (A) not less than 75 days nor more than 180 days prior to the anniversary date of the immediately preceding annual meeting of Stockholders or special meeting in lieu thereof (the "Anniversary Date") or (B) in the event that the annual meeting of Stockholders is called for a date more than 7 calendar days prior to the Anniversary Date, not later than the close of business on (1) the 20th calendar day (or if that day is not a business day for the Corporation, on the next succeeding business day) following the earlier of (x) the date on which notice of the date of such meeting was mailed to Stockholders, or (y) the date on which the date of such meeting was publicly disclosed, or (2) if such date of notice or public disclosure occurs more than 75 calendar days prior to the scheduled date of such meeting, then the later of (x) the 20th calendar day (or if that day is not a business day for the Corporation, on the next succeeding business day) following the date of the first to occur of such notice or public disclosure or (y) the 75th calendar day prior to such scheduled date of such meeting (or if that day is not a business day for the Corporation, on the next succeeding business day). (b) A Stockholder's notice to the Secretary shall set forth as to each matter the Stockholder proposes to bring before the annual meeting (i) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's stock transfer books, of the Stockholder proposing such business and of the beneficial owners (if any) of the stock registered in such Stockholder's name and the name and address of other Stockholders known by such Stockholder to be supporting such proposal on the date of such Stockholder's notice, (iii) the class and number of shares of the Corporation's capital stock which are beneficially owned by the Stockholder and such beneficial owners (if any) on the date of such Stockholder's notice and by any other Stockholders known by such Stockholder to be supporting such proposal on the date of such Stockholder's notice, and (iv) any financial interest of the Stockholder or of any such beneficial owner in such proposal. (c) If the Board of Directors, or a designated committee thereof, determines that any Stockholder proposal was not timely made in accordance with the terms of this Section 1.03, such proposal shall not be presented for action at the annual meeting in question. If the Board of Directors, or a designated committee thereof, determines that the information provided in a Stockholder's notice does not satisfy the informational requirements of this section in any material respect, the Secretary of the Corporation shall promptly notify such Stockholder of the deficiency in the notice. Such Stockholder shall have an opportunity to cure the deficiency by providing additional information to the Secretary within the period of time, not to exceed five (5) days from the date such deficiency notice is given to the Stockholder, determined by the Board of Directors or such committee. If the deficiency is not cured within such period, or if the Board of Directors or such committee determines that the additional information provided by the Stockholder, together with the information previously provided, does not satisfy the requirements of this Section 1.03 in any material respect, then such proposal shall not be presented for action at the annual meeting in question. (d) Notwithstanding the procedure set forth in the preceding paragraph, if neither the Board of Directors nor such committee makes a determination as to the validity of any Stockholder proposal as set forth above, the presiding Officer of the annual meeting shall determine and declare at the annual meeting whether the Stockholder proposal was made in accordance with the terms of this Section 1.03. If the presiding Officer determines that a Stockholder proposal was made in accordance with the terms of this Section 1.03, the presiding Officer shall so declare at the annual meeting. If the presiding Officer determines that a Stockholder proposal was not made in accordance with the provisions of this Section 1.03, the presiding Officer shall so declare at the annual meeting and such proposal shall not be acted upon at the annual meeting. (e) This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of Officers, Directors and committees of the Board of Directors, but in connection with such reports, no new business shall be acted upon at such annual meeting except in accordance with the provisions of this Section 1.03. 1.04 SPECIAL MEETINGS. The Chairman of the Board, the President or a ---------------- majority of the Board of Directors may call special meetings of the Stockholders. Special meetings of Stockholders shall also be called by the Secretary upon the written request of the holders of shares entitled to cast 25% or more of the votes entitled to be cast at such meeting. Such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on thereat. The date, time, place and record date for any special meeting, including a special meeting called at the request of Stockholders, shall be established by the Board of Directors or Officer calling the same. 1.05 NOTICE. Not less than ten (10) nor more than ninety (90) days ------ before the date of every meeting of Stockholders, written or printed notice of such meeting shall be given, in accordance with Article 8, to each Stockholder entitled to vote or entitled to notice by statute, stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by statute, the purpose or purposes for which the meeting is called. 1.06 SCOPE OF NOTICE. No business shall be transacted at a special --------------- meeting of Stockholders except that specifically designated in the notice of the meeting. Any business of the Corporation may be transacted at the annual meeting without being specifically designated in the notice, except such business as is required by statute to be stated in such notice. 1.07 QUORUM. At any meeting of Stockholders, the presence in person or ------ by proxy of Stockholders entitled to cast a majority of the votes shall constitute a quorum; but this Section shall not affect any requirement under any statute or the Articles of Incorporation of the Corporation, as amended (the "Charter"), for the vote necessary for the adoption of any measure. If, however, a quorum is not present at any meeting of the Stockholders, the Stockholders present in person or by proxy shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum is present and the meeting so adjourned may be reconvened without further notice. At any adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally notified. The Stockholders present at a meeting which has been duly called and convened and at which a quorum is present at the time counted may continue to transact business until adjournment, notwithstanding the withdrawal of enough Stockholders to leave less than a quorum. 1.08. VOTING. A majority of the votes cast at a meeting of Stockholders ------ duly called and at which a quorum is present shall be sufficient to take or authorize action upon any matter which may properly come before the meeting, unless more than a majority of the votes cast is specifically required by statute, the Charter or these Bylaws. Unless otherwise provided by statute, the Charter or these Bylaws, each outstanding share (a "Share") of capital stock of the Corporation (the "Stock"), regardless of class, shall be entitled to one vote upon each matter submitted to a vote at a meeting of Stockholders. Pursuant to Section 3-702 of the Maryland General Corporation Law, any and all acquisitions of Shares of Stock are hereby exempted from the provisions of Title 3, Subtitle 7 of the Maryland General Corporation Law, which relates to voting rights of certain control shares. Shares of its own Stock directly or indirectly owned by the Corporation shall not be voted in any meeting and shall not be counted in determining the total number of outstanding Shares entitled to vote at any given time, but Shares of its own voting Stock held by it in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding Shares at any given time. Notwithstanding anything else contained in these Bylaws, the rights of Excess Stock and the holders of Excess Stock shall be limited to the rights provided in the Corporation's Amended and Restated Articles of Incorporation, as amended from time to time. Notwithstanding the foregoing, a plurality of the votes cast at a meeting of Stockholders duly called and at which a quorum is present shall be sufficient to elect a Director. 1.09 PROXIES. A Stockholder may vote the Shares owned of record by him ------- or her, either in person or by proxy executed in writing by the Stockholder or by his or her duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. 1.10 CONDUCT OF MEETINGS. The Chairman of the Board or, in the absence ------------------- of the Chairman, the President, or, in the absence of the Chairman, President and Vice Presidents, a presiding Officer elected at the meeting, shall preside over meetings of the Stockholders. The Secretary of the Corporation, or, in the absence of the Secretary and Assistant Secretaries, the person appointed by the presiding Officer of the meeting shall act as secretary of such meeting. 1.11 TABULATION OF VOTES. At any annual or special meeting of ------------------- Stockholders, the presiding Officer shall be authorized to appoint a teller for such meeting ("the Teller"). The Teller may, but need not, be an Officer or employee of the Corporation. The Teller shall be responsible for tabulating or causing to be tabulated shares voted at the meeting and reviewing or causing to be reviewed all proxies. In tabulating votes, the Teller shall be entitled to rely in whole or in part on tabulations and analyses made by personnel of the Corporation, its counsel, its transfer agent, its registrar or such other organizations that are customarily employed to provide such services. The Teller shall be authorized to determine the legality and sufficiency of all votes cast and proxies delivered under the Corporation's Charter, Bylaws and applicable law. The presiding Officer may review all determinations made by the Teller hereunder, and in doing so the presiding Officer shall be entitled to exercise his or her sole judgment and discretion and he or she shall not be bound by any determinations made by the Teller. 1.12 INFORMAL ACTION BY STOCKHOLDERS. An action required or permitted to ------------------------------- be taken at a meeting of Stockholders may be taken without a meeting if a consent in writing, setting forth such action, is signed by all the Stockholders entitled to vote on the subject matter thereof and any other Stockholders entitled to notice of a meeting of Stockholders (but not to vote thereat) have waived in writing any rights which they may have to dissent from such action, and such consents and waivers are filed with the minutes of proceedings of the Stockholders. Such consents and waivers may be signed by different Stockholders on separate counterparts. 1.13 VOTING BY BALLOT. Voting on any question or in any election may be ---------------- viva vice unless the presiding Officer shall order or any Stockholder shall - ---- ---- demand that voting be by ballot. ARTICLE II DIRECTORS --------- 2.01 GENERAL POWERS. The business and affairs of the Corporation shall -------------- be managed by its Board of Directors. 2.02 OUTSIDE ACTIVITIES. The Board of Directors and its members are ------------------ required to spend only such time managing the business and affairs of the Corporation as is necessary to carry out their duties in accordance with Section 2-405.1 of the Maryland General Corporation Law. The Board of Directors, each Director, and the agents, Officers and employees of the Corporation or of the Board of Directors or of any Director may engage with or for others in business activities of the types conducted by the Corporation. Except as set forth in the Charter or by separate agreement, none of such individuals has an obligation to notify or present to the Corporation or each other any investment opportunity that may come to such person's attention even though such investment might be within the scope of the Corporation's purposes or various investment objectives. Any interest (including any interest as defined in Section 2-419(a) of the Maryland General Corporation Law) that a Director has in any investment opportunity presented to the Corporation must be disclosed by such Director to the Board of Directors (and, if voting thereon, to the Stockholders or to any committee of the Board of Directors) within ten (10) days after the later of the date upon which such Director becomes aware of such interest or the date upon which such Director becomes aware that the Corporation is considering such investment opportunity. If such interest comes to the interested Director's attention after a vote to take such investment opportunity, the voting body shall be notified of such interest and shall reconsider such investment opportunity if not already consummated or implemented. 2.03 NUMBER, TENURE AND QUALIFICATION. The number of Directors of the -------------------------------- Corporation shall be that number set forth in the Charter or such other number as may be designated from time to time by resolution of a majority of the entire Board of Directors; provided, however, that the number of Directors shall never -------- ------- be more than nine (9) nor less than the number required by Section 2-402 of the Maryland General Corporation Law, as amended from time to time, and further provided that the tenure of office of a Director shall not be affected by any decrease in the number of Directors. Each Director shall serve for the term set forth in the Charter and until his or her successor is elected and qualified. 2.04 NOMINATION OF DIRECTORS. ----------------------- (a) Nominations of candidates for election as Directors of the Corporation at any annual meeting of Stockholders may be made (i) by, or at the direction of, a majority of the Board of Directors or (ii) by any holder of record (both as of the time notice of such nomination is given by the Stockholder as set forth below and as of the record date for the annual meeting in question) of any shares of the Corporation's capital stock entitled to vote at such meeting who complies with the procedures set forth in this Section 2.04. Any Stockholder who seeks to make such a nomination, or his representative, must be present in person at the annual meeting. Only persons nominated in accordance with the procedures set forth in this Section 2.04 shall be eligible for election as Directors at an annual meeting of Stockholders. (b) Nominations, other than those made by, or at the direction of, the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation as set forth in this Section 2.04. For the first annual meeting of the Corporation following the initial public offering of common stock of the Corporation, notice shall be timely if delivered to, or mailed and received at, the principal executive office of the Corporation not later than the close of business on the 20th calendar day (or if that day is not a business day for the Corporation, the next business day) following the date on which notice of the first annual meeting is mailed or otherwise transmitted to Stockholders. For all subsequent annual meetings of the Corporation, a Stockholder's notice shall be timely if delivered to, or mailed and received at, the principal executive offices of the corporation (i) not less than 75 days nor more than 180 days prior to the Anniversary Date or (ii) in the event that the annual meeting of Stockholders is called for a date more than 7 calendar days prior to the Anniversary Date, not later than the close of business on (A) the 20th calendar day (or if that day is not a business day for the Corporation, on the next succeeding business day) following the earlier of (1) the date on which notice of the date of such meeting was mailed to Stockholders, or (2) the date on which the date of such meeting was publicly disclosed, or (B) if such date of notice or public disclosure occurs more than 75 calendar days prior to the scheduled date of such meeting, then the later of (1) the 20th calendar day (or if that day is not a business day for the Corporation, on the next succeeding business day) following the date of the first to occur of such notice or public disclosure or (2) the 75th calendar day prior to such scheduled date of such meeting (or if that day is not a business day for the Corporation, on the next succeeding business day). (c) A Stockholder's notice of nomination shall set forth as to each person the Stockholder proposes to nominate for election as a Director (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person for the past five years; (iii) the class and number of shares of the Corporation's capital stock which are beneficially owned by such person on the date of such notice; (iv) such nominee's written consent to be named in the proxy statement as a nominee and to serve as a Director if elected, and (v) any other information relating to such person that is required to be disclosed in solicitations of proxies with respect to nominees for election as may be deemed necessary or desirable by the Corporation's counsel, in the exercise of his or her discretion. Notice by a Stockholder shall, in addition to the above-referenced information, set forth as to the Stockholder giving the notice (A) the name and address, as they appear on the Corporation's stock transfer books, of such Stockholder and of the beneficial owners (if any) of the stock registered in such Stockholder's name; (B) the name and address of other Stockholders known by such Stockholder to be supporting such nominees on the date of such Stockholder's notice; (C) the class and number of shares of the Corporation's capital stock which are beneficially owned by such Stockholder and such beneficial owners (if any) on the date of such Stockholder notice; and (D) the class and number of shares of the Corporation's capital stock which are beneficially owned by any other Stockholders known by such Stockholder to be supporting such nominees on the date of such Stockholder notice. At the request of the Board of Directors, any person nominated by or at the direction of the Board of Directors for election as a Director at an annual meeting shall furnish to the Secretary of the Corporation that information which would be required to be set forth in a Stockholder's notice of nomination of such nominee. (d) No person shall be elected by the Stockholders as a Director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.04. If the Board of Directors, or a designated committee thereof, determines that a nomination made by any Stockholder was not timely made in accordance with the terms of this Section, such nomination shall not be considered at the annual meeting in question. If the Board of Directors, or a designated committee thereof, determines that the information provided in a Stockholder's notice does not satisfy the informational requirements of this Section 2.04 in any material respect, the Secretary of the Corporation shall promptly notify such Stockholder of the deficiency in the notice. Such Stockholder shall have an opportunity to cure the deficiency by providing additional information to the Secretary within the period of time, not to exceed 5 days from the date such deficiency notice is given to such Stockholder, determined by the Board of Directors or such committee. If the deficiency is not cured within such period, or if the Board of Directors or such committee determines that the additional information provided by such Stockholder, together with the information previously provided, does not satisfy the requirements of this Section 2.04 in any material respect, such nomination shall not be considered at the annual meeting in question. (e) Notwithstanding the procedures set forth in the preceding paragraph, if neither the Board of Directors nor a designated committee thereof makes a determination as to the validity of any nominations by any Stockholder as set forth above, the presiding Officer of the Stockholders meeting shall determine and declare at the Stockholders meeting whether a nomination was made in accordance with the terms of this Section 2.04. If the presiding Officer determines that a nomination was not made in accordance with the terms of this Section 2.04, and such nomination shall be disregarded, and the Board of Directors shall make all Director nominations on behalf of the Corporation. 2.05 ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of --------------------------- Directors may be held immediately after and at the same place as the annual meeting of Stockholders, or at such other time and place, either within or without the State of Maryland, as is selected by resolution of the Board of Directors, and no notice other than this Bylaw or such resolution shall be 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 resolutions. 2.06 SPECIAL MEETINGS. Special meetings of the Board of Directors may be ---------------- called by or at the request of the Chairman of the Board, the President or 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. 2.07 NOTICE. Notice of any special meeting to be provided herein shall ------ be given by telephone or by written notice delivered personally, telegraphed or telecopied at least twenty-four (24) hours prior to the meeting, or by mail at least five (5) days prior to the meeting, to each Director at his or her business or residence. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be specified in the notice, unless specifically required by statute, the Charter or these Bylaws. 2.08 QUORUM. A majority of the Board of Directors then in office shall ------ constitute a quorum for the transaction of business at any meeting of the Board of Directors; provided, however, that a quorum for the transaction of business with respect to any matter in which any Director (or affiliate of such Director) who is not an independent Director has any interest shall consist of a majority of the Directors that includes a majority of the independent Directors then in office. If less than a majority of the Board of Directors is present at said meeting, a majority of the Directors present may adjourn the meeting from time to time without further notice. 2.09 VOTING. The act of a majority of the Directors present at a meeting ------ at which a quorum is present shall be the act of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute, the Charter or these Bylaws; provided, however, that no act -------- ------- relating to any matter in which a Director (or affiliate of such Director) who is not an independent Director has any interest shall be the act of the Board of Directors unless such act has been approved by a majority of the Board of Directors that includes a majority of the independent Directors. 2.10 CONDUCT OF MEETINGS. All meetings of the Board of Directors shall ------------------- be called to order and presided over by the Chairman of the Board, or in the absence of the Chairman of the Board, by the President (if a member of the Board of Directors) or, in the absence of the Chairman of the Board and the President, by a member of the Board of Directors selected by the members present. The Secretary of the Corporation, or in the absence of the Secretary, any Assistant Secretary, shall act as secretary at all meetings of the Board of Directors, and in the absence of the Secretary and Assistant Secretaries, the presiding Officer of the meeting shall designate any person to act as secretary of the meeting. Members of the Board of Directors may participate in meetings of the Board of Directors by conference telephone or similar communications equipment by means of which all Directors participating in the meeting can hear each other at the same time, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for all purposes of these Bylaws. 2.11 RESIGNATIONS. Any Director may resign from the Board of Directors ------------ or any committee thereof at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of the receipt of notice of such resignation by the President or the Secretary. 2.12 REMOVAL OF DIRECTORS. Consistent with the Charter, the Stockholders -------------------- may, at any time, remove any Director, with or without cause, by the affirmative vote of a majority of all the votes entitled to be cast on the matter, and may elect a successor to fill any resulting vacancy for the balance of the term of the removed Director. 2.13 VACANCIES. The Stockholders may elect a successor to fill a vacancy --------- on the Board of Directors which results from the removal of a Director. Furthermore, any vacancy occurring in the Board of Directors for any cause other than by reason of an increase in the number of directors may be filled by a majority vote of the remaining Directors, although such majority is less than a quorum. Any vacancy occurring in the Board of Directors by reason of an increase in the number of directors may be filled by a majority vote of the entire Board of Directors. A Director elected by the Board of Directors to fill a vacancy shall hold office until the next annual meeting of Stockholders at which the term of the class of Directors to which such Director is elected expires or until his or her successor is elected and qualified. 2.14 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 all of the Directors and such written consent is filed with the minutes of the Board of Directors. Consents may be signed by different Directors on separate counterparts. 2.15 COMPENSATION. An annual fee for services and payment for expenses ------------- of attendance at each meeting of the Board of Directors, or of any committee thereof, may be allowed to any Director by resolution of the Board of Directors. ARTICLE III COMMITTEES ---------- 3.01 NUMBER, TENURE AND QUALIFICATION. The Board of Directors may -------------------------------- appoint from among its members an Executive Committee and other committees, composed of two or more Directors, to serve at the pleasure of the Board of Directors. If any committee may take or authorize any act as to any matter in which any Director (or affiliate of such Director) who is not an independent Director has or may have any interest, a majority of the members of such committee shall be independent Directors, except that any such committee consisting of only two Directors may have one independent Director and one Director who is not an independent Director. 3.02 DELEGATION OF POWER. The Board of Directors may delegate to these ------------------- committees in the intervals between meetings of the Board of Directors any of the powers of the Board of Directors to manage the business and affairs of the Corporation, except those powers which the Board of Directors is specifically prohibited from delegating pursuant to Section 2-411 of the Maryland General Corporation Law. 3.03 QUORUM AND VOTING. A majority of the members of any committee shall ----------------- constitute a quorum for the transaction of business by such committee, and the act of a majority of the quorum shall constitute the act of the committee, except that no act relating to any matter in which any Director (or affiliate of such Director) who is not an independent Director has any interest shall be the act of any committee unless a majority of the independent Directors on the committee vote for such act. 3.04 CONDUCT OF MEETINGS. Each committee shall designate a presiding ------------------- Officer of such committee, and if not present at a particular meeting, the committee shall select a presiding Officer for such meeting. Members of any committee may participate in meetings of such committee by conference telephone or similar communications equipment by means of which all Directors participating in the meeting can hear each other at the same time, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for all purposes of these Bylaws. Each committee shall keep minutes of its meetings, and report the results of any proceedings at the next succeeding annual or regular meeting of the Board of Directors. 3.05 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 written consent to such action is signed by all members of the committee and such written consent is filed with the minutes of proceedings of such committee. Consents may be signed by different members on separate counterparts. ARTICLE IV OFFICERS -------- 4.01 POWERS AND DUTIES ------------------ (a) 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 duly elected and qualifies 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. Election or appointment of an Officer or agent shall not of itself create contract rights between the Corporation and such Officer or agent. (b) The officers of the Corporation shall have the powers and duties provided in these Bylaws and by the laws of the State of Maryland and such further powers as may be incidental thereto or necessary in connection therewith. In addition to and not in limitation of the foregoing powers, the officers of the Corporation named in Appendix A hereto shall have the powers set forth therein. A certificate executed and delivered by the Secretary or any Assistant Secretary of the Corporation stating that a true and correct copy of the Bylaws as in effect on the date thereof is attached thereto and that a named individual is a duly elected officer of the Corporation shall be conclusive evidence of the authority of such officer to perform the acts designated as authorized for such officer to perform in Appendix A. 4.02 REMOVAL. Any Officer or agent elected or appointed by the Board of ------- Directors may be removed by the Board of Directors whenever 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. The fact that a person is elected to an office, whether or not for a specified term, shall not by itself constitute any undertaking or evidence of any employment obligation of the Corporation to that person. 4.03 VACANCIES. A vacancy in any office may be filled by the Board of --------- Directors for the unexpired portion of the term. 4.04 CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at --------------------- all meetings of the Stockholders and of the Board of Directors. Unless the Board of Directors shall otherwise determine, the Chairman of the Board shall be the Chief Executive Officer and general manager of the Corporation and shall in general supervise and control all of the business and affairs of the Corporation. The Chairman of the Board may sign and execute all deeds, mortgages, bonds, contracts or other obligations or instruments on behalf of the Corporation, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other Officer or agent of the Corporation or shall be required by law to be otherwise signed or executed. In general, the Chairman of the Board shall perform all duties incident to the office of Chairman of the Board and such other duties as may be prescribed by the Board of Directors from time to time. 4.05 PRESIDENT. Unless the Board of Directors shall otherwise determine, --------- the President shall be the Chief Operating Officer of the Corporation. In the absence of the Chairman of the Board, the President shall preside at all meetings of the Stockholders and of the Board of Directors (if a member of the Board of Directors). The President may sign any deeds, mortgages, bonds, contracts or other obligations or instruments on behalf of the Corporation except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other Officer or agent of the Corporation or shall be required by law to be otherwise signed or executed. In general, the President shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. 4.06 VICE PRESIDENTS. The Board of Directors may appoint one or more --------------- 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. Every Vice President shall perform such other duties as from time to time may be assigned to him or her by the President or the Board of Directors. 4.07 SECRETARY. The Secretary shall (i) keep the minutes of the --------- proceedings of the Stockholders and Board of Directors in one or more books provided for that purpose; (ii) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (iii) be custodian of the corporate records of the Corporation; (iv) unless a transfer agent is appointed, keep a register of the post office address of each Stockholder that shall be furnished to the Secretary by such Stockholder and have general charge of the Stock Ledger of the Corporation; (v) when authorized by the Board of Directors or the President, attest to or witness all documents requiring the same; (vi) perform all duties as from time to time may be assigned to him or her by the President or by the Board of Directors; and (vii) perform all the duties generally incident to the office of secretary of a corporation. 4.08 TREASURER. The Treasurer shall have the custody of the corporate --------- funds and securities 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 depositaries as may be designated by the Board of Directors. 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 the Board of Directors, at the regular meetings of the Board of Directors or whenever they may require it, an account of all his or her transactions as Treasurer and of the financial condition of the Corporation. The Board of Directors may engage a Custodian to perform some or all of the duties of the Treasurer, and if a Custodian is so engaged then the Treasurer shall be relieved of the responsibilities set forth herein to the extent delegated to such Custodian and, unless the Board of Directors otherwise determines, shall have general supervision over the activities of such Custodian. The Custodian shall not be an Officer of the Corporation. 4.09 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Board of ---------------------------------------------- Directors may appoint one or more Assistant Secretaries or Assistant Treasurers. The Assistant Secretaries and Assistant Treasurers (i) shall have the power to perform and shall perform all the duties of the Secretary and the Treasurer, respectively, in such respective Officer's absence and (ii) shall perform such duties as shall be assigned to him or her by the Secretary or Treasurer, respectively, or by the President or the Board of Directors. 4.10 SUBORDINATE OFFICERS. The Corporation shall have such subordinate -------------------- Officers as the Board of Directors may from time to time elect. Each such Officer shall hold office for such period and perform such duties as the Board of Directors, the President or any designated committee or Officer may prescribe. 4.11 SALARIES. The salaries, if any, of the Officers shall be fixed from -------- time to time by the Board of Directors. No Officer shall be prevented from receiving such salary, if any, by reason of the fact that he or she is also a Director of the Corporation. ARTICLE V SHARES OF STOCK --------------- 5.01 NO CERTIFICATES FOR STOCK. Unless the Board of Directors authorizes ------------------------- the issuance of certificates pursuant to Section 5.02, none of the Stock shall be represented by certificates. 5.02 ELECTION TO ISSUE CERTIFICATES. The Board of Directors may ------------------------------ authorize the issuance of certificates representing some or all of the Shares of any or all of the classes or series of Stock. If the Board of Directors so authorizes certificates, such certificates shall be of such form, not inconsistent with the Charter, as shall be approved by the Board of Directors. All certificates, if issued, shall be signed by the Chairman of the Board, the President, or a Vice President and countersigned by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary. Any signature or countersignature may be either a manual or facsimile signature. All certificates, if issued, for each class of Stock shall be consecutively numbered. 5.03 STOCK LEDGER. The Corporation shall maintain at its principal ------------ executive office, at the office of its counsel, accountants or transfer agent or at such other place designated by the Board of Directors an original or duplicate Stock Ledger containing the names and addresses of all the Stockholders and the number of shares of each class held by each Stockholder. The Stock Ledger shall be maintained pursuant to a system that the Corporation shall adopt allowing for the issuance, recordation and transfer of its Stock by electronic or other means that can be readily converted into written form for visual inspection and not involving any issuance of certificates. Such system shall include provisions for notice to acquirors of Stock (whether upon issuance or transfer of Stock) in accordance with Sections 2-210 and 2-211 of the Maryland General Corporation Law, and Section 8-408 of the Commercial Law Article of the State of Maryland. The Corporation shall be entitled to treat the holder of record of any Share or Shares 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 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. Until a transfer is duly effected on the Stock Ledger, the Corporation shall not be affected by any notice of such transfer, either actual or constructive. Nothing herein shall impose upon the Corporation, the Board of Directors or Officers or their agents and representatives a duty or limit their rights to inquire as to the actual ownership of Shares. 5.04 RECORDING TRANSFERS OF STOCK. If transferred in accordance with any ---------------------------- restrictions on transfer contained in the Charter, these Bylaws or otherwise, Shares shall be recorded as transferred in the Stock Ledger upon provision to the Corporation or the transfer agent of the Corporation of an executed stock power duly guaranteed and any other documents reasonably requested by the Corporation, and the surrender of the certificate or certificates, if any, representing such Shares. Upon receipt of such documents, the Corporation shall issue the statements required by Sections 2-210 and 2-211 of the Maryland General Corporation Law and Section 8-408 of the Commercial Law Article of the State of Maryland, issue as needed a new certificate or certificates (if the transferred Shares were certificated) to the persons entitled thereto, cancel any old certificates and record the transaction upon its books. 5.05 LOST CERTIFICATE. The Board of Directors may direct a new ---------------- certificate to be issued in the place of any certificate theretofore issued by the Corporation alleged to have been stolen, lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of Stock to be stolen, lost or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such stolen, lost or destroyed certificate or his legal representative to advertise the same in such manner as it shall require and/or to give bond, with sufficient surety, to the Corporation to indemnify it against any loss or claim which may arise by reason of the issuance of a new certificate. 5.06 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. -------------------------------------------------- 5.6.1. The Board of Directors may fix, in advance, a date as the record date for the purpose of determining Stockholders entitled to notice of, or to vote at, any meeting of Stockholders, or Stockholders entitled to receive payment of any dividend or the allotment of any 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 sixty (60) days, and in case of a meeting of Stockholders not less than ten (10) days, prior to the date on which the meeting or particular action requiring such determination of Stockholders is to be held or taken. 5.6.2. In lieu of fixing a record date, the stock transfer books may be closed by the Board of Directors in accordance with Section 2-511 of the Maryland General Corporation Law for the purpose of determining Stockholders entitled to notice of or to vote at a meeting of Stockholders. 5.6.3. 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 rights shall be at the close of business on the day on which the resolution of the Board of Directors, declaring the dividend or allotment of rights, is adopted. 5.6.4. 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 where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. ARTICLE VI DIVIDENDS AND DISTRIBUTIONS --------------------------- 6.01 DECLARATION. Dividends and other distributions upon the Stock may ----------- be declared by the Board of Directors as set forth in the applicable provisions of the Charter and any applicable law, at any meeting, limited only to the extent of Section 2-311 of the Maryland General Corporation Law. Dividends and other distributions upon the Stock may be paid in cash, property or Stock of the Corporation, subject to the provisions of law and of the Charter. 6.02 CONTINGENCIES. Before payment of any dividends or other ------------- distributions upon the Stock, there may be set aside (but there is no duty to set aside) out of any funds 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 to meet contingencies, 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 interests of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE VII INDEMNIFICATION --------------- 7.01 INDEMNIFICATION. Unless the Board of Directors otherwise determines --------------- prospectively in the case of any one or more specified individuals, the Corporation shall indemnify any person who is or was a Director or Officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust, or other enterprise (each an "Indemnitee") on the terms and conditions set forth below; provided, however, that no indemnification shall be provided for expenses relating to any willful or grossly negligent failure to make the disclosures required by the next to last sentence of Section 2.02 hereof. (a) Third Party Proceedings. The Corporation shall indemnify the ----------------------- Indemnitee to the full extent permitted now or hereafter by the Maryland General Corporation Law, as from time to time amended, subject to the exceptions provided in this Article VII. Without limiting the foregoing but subject to the provisions of these Bylaws, the Corporation shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of Indemnitee's past, present or future service as a director of the Corporation, or, at the Corporation's request, of another enterprise or entity in which the Corporation had, directly or indirectly, an interest at the time of such service, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Corporation, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with investigating, preparing for, defending or settling such action or proceeding. The Corporation hereby agrees to indemnify Indemnitee's spouse (whether by statute or at common law and without regard to the location of the governing jurisdiction) and children as express third-party beneficiaries hereunder to the same extent and subject to the same limitations applicable to Indemnitee hereunder for claims arising out of the status of such person as a spouse or child of Indemnitee, including claims seeking damages from marital property (including community property) or property held by the Indemnitee and such spouse or property transferred to such spouse or child. (b) Proceedings By or in the Right of the Corporation. Subject to the ------------------------------------------------- provisions of these Bylaws, the Corporation shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding by or in the right of the Corporation or any subsidiary of the Corporation to procure a judgment in its favor by reason of Indemnitee's past, present or future service as a Director of the Corporation, or, at the Corporation's request, of another enterprise or entity in which the Corporation had, directly or indirectly, an interest at the time of such service, against expenses (including attorneys' fees) and, to the fullest extent permitted by law, amounts paid in settlement, in each case to the extent actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or proceeding. 7.02 EXPENSES; INDEMNIFICATION PROCEDURE. ----------------------------------- (a) Advancement of Expenses. The Corporation shall advance all ----------------------- expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or criminal action or proceeding referenced in Section 7.01(a) or (b) hereof (but not amounts actually paid in settlement of any such action or proceeding). Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Corporation as authorized hereby. The advances to be made hereunder shall be paid by the Corporation to Indemnitee within twenty (20) days following delivery of a written request therefor by Indemnitee to the Corporation. (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition -------------------------------- precedent to his right to be indemnified under these Bylaws, give the Corporation notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under these Bylaws. Such notice shall contain the written affirmation of the Indemnitee that the standard of conduct necessary for indemnification hereunder has been satisfied. Notice to the Corporation shall be directed to the Chief Executive Officer of the Corporation in the manner set forth below. Indemnitee shall give the Corporation such information and cooperation as it may reasonably require and as shall be within Indemnitee's power. A delay in giving notice under this Section 7.02(b) shall not invalidate the Indemnitee's right to indemnity under these Bylaws unless such delay prejudices the defense of the claim or the availability to the Corporation of insurance coverage for such claim. All notices, requests, demands and other communications under these Bylaws shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressed, on the date of such receipt or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked. Addresses for notice to either party are as shown on the signature page of these Bylaws, or as subsequently modified by written notice. (c) Procedure. Any indemnification provided for in Section 7.01 shall be --------- made no later than forty-five (45) days after receipt of the written request of Indemnitee. If a claim under any statute, or under any provision of the Corporation's Articles of Incorporation or these Bylaws providing for indemnification, is not paid in full by the Corporation within forty-five (45) days after a written request for payment thereof that complies with the requirements of these Bylaws has first been received by the Corporation, Indemnitee may, but need not, at any time thereafter bring an action against the Corporation to recover the unpaid amount of the claim and, subject to Section 7.11 of these Bylaws, Indemnitee shall also be entitled to be paid for the expenses (including attorneys' fees) of bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct that made it permissible under applicable law for the Corporation to indemnify Indemnitee for the amount claimed, but Indemnitee shall be entitled to receive interim payments of expenses pursuant to Subsection 7.02(a) unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. It is the parties' intention that if the Corporation contests Indemnitee's right to indemnification, the question of Indemnitee's right to indemnification shall be for the court to decide, and neither the failure of the Corporation (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its shareholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Corporation (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its shareholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct. (d) Notice to Insurers. If, at the time of the receipt of a notice of a ------------------ claim pursuant to Section 7.02(a) hereof, the Corporation has director and officer liability insurance in effect, the Corporation shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies. (e) Selection of Counsel. In the event the Corporation shall be obligated -------------------- under Section 7.02(a) hereof to pay the expenses of any proceeding against Indemnitee, the Corporation, unless the Indemnitee determines that a conflict of interest exists between the Indemnitee and the Corporation with respect to a particular claim, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Corporation, the Corporation will be not be liable to Indemnitee under these Bylaws for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ his own separate counsel in any such proceeding in addition to or in place of any counsel retained by the Corporation on behalf of Indemnitee at Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Corporation, (B) Indemnitee shall have concluded that there may be a conflict of interest between the Corporation and Indemnitee in the conduct of any such defense or (C) the Corporation shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Corporation. 7.03 NONEXCLUSIVITY OF INDEMNIFICATION RIGHTS. The indemnification ---------------------------------------- provided by these Bylaws shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Corporation's Articles of Incorporation, any agreement, any vote of stockholders or disinterested directors, the Maryland General Corporation Law, or otherwise, both as to action in Indemnitee's official capacity and as to action in another capacity while holding such office. The provisions of this Article VII shall constitute a contract with each Indemnitee who serves at any time while these provisions are in effect and may be modified adversely only as provided in Article X hereof, and each Indemnitee shall be deemed to be serving as such in reliance on these provisions. 7.04 PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any ----------------------- provision of these Bylaws to indemnification by the Corporation for some or a portion of the expenses, judgments, fines or penalties actually or reasonably incurred by him in the investigation, defense, appeal or settlement of any civil or criminal action or proceeding, but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled. 7.05 MUTUAL ACKNOWLEDGMENT. By accepting any potential benefits under --------------------- this Article VII, each Indemnitee acknowledges that in certain instances, Federal law or applicable public policy may prohibit the Corporation from indemnifying its directors and officers under these Bylaws or otherwise. Indemnitee understands and acknowledges that the Corporation has undertaken and may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Corporation's right under public policy to indemnify Indemnitee. 7.06 INSURANCE. The Corporation shall have the power to purchase and --------- maintain insurance on behalf of any Indemnified Person against any liability, whether or not the Corporation would have the power to indemnify him or her against such liability. 7.07 SEVERABILITY. Nothing in this Agreement is intended to require or ------------ shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as provided in this Section 7.07. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms. 7.08 EXCEPTIONS. Any other provision herein to the contrary ---------- notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify the Indemnitee in the following circumstances: (a) Excluded Acts. The Company shall not be obligated to indemnify ------------- Indemnitee for any acts or omissions or transactions from which a director may not be relieved of liability under the Maryland General Corporation Law. (b) Claims Initiated by Indemnitee. The Company shall not be obligated to ------------------------------ indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as provided by Maryland General Corporation Law Section 2-418 in accordance with Section 1(b) hereof, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit; or (c) Insured Claims. The Company shall not be obligated to indemnify -------------- Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) to the extent that Indemnitee has otherwise actually received payment, or payments have been made on behalf of Indemnitee, with respect to such expense or liability (under any insurance policy, provision of the Company's Articles of Incorporation or Bylaws, or otherwise) of amounts otherwise indemnifiable hereunder; or (d) Claims Under Section 16(b). The Company shall not be obligated to -------------------------- indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute. 7.09 CONSTRUCTION OF CERTAIN PHRASES -------------------------------- (a) For purposes of this Article VII, references to the "Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued. (b) For purposes of this Article VII, references to "another enterprise" or "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries. 7.10 SUCCESSORS AND ASSIGNS. These Bylaws shall be binding upon the ---------------------- Company and its successors and assigns, and shall inure to the benefit of Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns. 7.11 ATTORNEYS' FEES. In the event that any action is instituted by --------------- Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys' fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys' fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee's counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee's material defenses to such action were made in bad faith or were frivolous. ARTICLE VIII NOTICES ------- 8.01 NOTICES. Except as provided in Section 1.05 and Section 2.07, ------- whenever notice is required to be given pursuant to these Bylaws, it shall be construed to mean either written notice personally served against written receipt, or notice in writing transmitted by mail, by depositing the same in a post office or letter box, in a post-paid sealed wrapper, addressed, if to the Corporation, 11 Burtis Avenue, New Canaan, Connecticut 06840 (or any subsequent address selected by the Board of Directors), attention President, or if to a Stockholder, Director or Officer, at the address of such person as it appears on the books of the Corporation or in default of any other address at the general post office situated in the city or county of his or her residence. Unless otherwise specified, notice sent by mail shall be deemed to be given at the time mailed. 8.02 SECRETARY TO GIVE NOTICE. All notices required by law or these ------------------------ Bylaws to be given by the Corporation shall be given by the Secretary or any other officer of the Corporation designated by the President. If the Secretary and Assistant Secretary are absent or refuse or neglect to act, the notice may be given by any person directed to do so by the President or, with respect to any meeting called pursuant to these Bylaws upon the request of any Stockholders or Directors, by any person directed to do so by the Stockholders or Directors upon whose request the meeting is called. 8.03 WAIVER OF NOTICE. Whenever any notice is required to be given ---------------- pursuant to the Charter 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 IX MISCELLANEOUS ------------- 9.01 BOOKS AND RECORDS. The Corporation shall keep correct and complete ----------------- books and records of its accounts and transactions and minutes of the proceedings of its Stockholders and Board of Directors meetings and of its executive or other committees when exercising any of the powers or authority of the Board of Directors. The books and records of the Corporation may be in written form or in any other form that be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form, but may be maintained in the form of a reproduction. 9.02 INSPECTION OF BYLAWS AND CORPORATE RECORDS. Stockholders of the ------------------------------------------ Corporation may, upon written request at any reasonable time during usual business hours and for a purpose reasonably related to such holder's interests as a Stockholder, inspect such books and records of the Corporation as are consistent with, and in each case to the extent permitted by, the Maryland General Corporation Law, as from time to time amended. The Corporation may require, as a condition to such inspection, that such Stockholder enter into a written confidentiality agreement reasonably satisfactory to the Corporation with respect to any information not publicly available. 9.03 CONTRACTS. The Board of Directors may authorize any Officer(s) or --------- agent(s) 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. 9.04 CHECKS, DRAFTS, ETC. 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 Officers or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. 9.05 LOANS. ----- 9.5.1. Such Officers or agents of the Corporation as from time to time have been designated by the Board of Directors shall have authority (i) to effect loans, advances, or other forms of credit at any time or times for the Corporation, from such banks, trust companies, institutions, corporations, firms, or persons, in such amounts and subject to such terms and conditions, as the Board of Directors from time to time has designated; (ii) as security for the repayment of any loans, advances, or other forms of credit so authorized, to assign, transfer, endorse, and deliver, either originally or in addition or substitution, any or all personal property, real property, stocks, bonds, deposits, accounts, documents, bills, accounts receivable, and other commercial paper and evidences of debt or other securities, or any rights or interests at any time held by the Corporation; (iii) in connection with any loans, advances, or other forms of credit so authorized, to make, execute, and deliver one or more notes, mortgages, deeds of trust, financing statements, security agreements, acceptances, or written obligations of the Corporation, on such terms and with such provisions as to the security or sale or disposition of them as those Officers or agents deem proper; and (iv) to sell to, or discount or rediscount with, the banks, trust companies, institutions, corporations, firms or persons making those loans, advances, or other forms of credit, any and all commercial paper, bills, accounts receivable, acceptances, and other instruments and evidences of debt at any time held by the Corporation, and, to that end, to endorse, transfer, and deliver the same. 9.5.2. From time to time the Corporation shall certify to each bank, trust company, institution, corporation, firm or person so designated, the signatures of the Officers or agents so authorized. Each bank, trust company, institution, corporation, firm or person so designated is authorized to rely upon such certification until it has received written notice that the Board of Directors has revoked the authority of those Officers or agents. 9.06 FISCAL 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, and, in the absence of such resolution, the fiscal year shall be the period ending December 31. 9.07 ANNUAL REPORT. Not later than 120 days after the close of each ------------- fiscal year, the Board of Directors of the Corporation shall cause to be sent to the Stockholders an Annual Report in such form as may be deemed appropriate by the Board of Directors. The Annual Report shall include audited financial statements and shall be accompanied by the report thereon of an independent certified public accountant. 9.08 INTERIM REPORTS. The Corporation may send interim reports to the --------------- Stockholders having such form and content as the Board of Directors deem proper. 9.09 OTHER REPORTS. Any distributions to Stockholders of income or ------------- capital assets shall be accompanied by a written statement disclosing the source of the funds distributed unless at the time of distribution they are accompanied by a written explanation of the relevant circumstances. The statement as to such source shall be sent to the Stockholders not later than sixty (60) days after the close of the fiscal year in which the distributions were made. 9.10 BYLAWS SEVERABLE. The provisions of these Bylaws are severable, and ---------------- if any provision shall be held invalid or unenforceable, that invalidity or unenforceability shall attach only to that provision and shall not in any manner affect or render invalid or unenforceable any other provision of these Bylaws, and these Bylaws shall be carried out as if the invalid or unenforceable provision were not contained herein. ARTICLE X AMENDMENT OF BYLAWS ------------------- 10.1 BY DIRECTORS. The Board of Directors shall have the power, at any ------------ annual or regular meeting, or at any special meeting if notice thereof is included in the notice of such special meeting, to alter or repeal any Bylaws of the Corporation and to make new Bylaws, except that the Board of Directors shall not alter or repeal (i) Section 7.01 without the consent of any Indemnified Persons whose rights to indemnification, based on conduct prior to such amendment, would be adversely affected by such proposed alteration or repeal; (ii) this Section 10.1; or (iii) Section 10.2. 10.2 BY STOCKHOLDERS. The Stockholders, by affirmative vote of a --------------- majority of the shares of common stock of the Corporation, shall have the power, at any annual meeting (subject to the requirements of Section 1.03), or at any special meeting if notice thereof is included in the notice of such special meeting, to alter or repeal any Bylaws of the Corporation and to make new Bylaws except that the Stockholders shall not alter or repeal Section 7.01 without the consent of any Indemnified Persons adversely affected by such proposed alteration or repeal. APPENDIX A - CORPORATE AUTHORITY OF OFFICERS OF AVALON PROPERTIES, INC. ACTION: (1) Any agreement, deed, lease, filing, instrument or other document that is necessary or proper for the ordinary course of business of the Corporation, including but not limited to (i) documents relating to the leasing of apartments and other spaces; (ii) the removal of tenants; the initiation and defense of civil lawsuits against tenants, former tenants, suppliers and former suppliers; (iii) the ordinary renovation and replacement of the assets of the Corporation; (iv) the commencement of construction or renovation that has been authorized by the Board of Directors; (v) the acquisition or disposition of fee, leasehold or other interests in apartment communities or other real property and the development of apartment communities (including without limitation the acquisition of interests in land) which has been authorized by the Board of Directors and not exceeding $50,000,000, provided, however, that, in the absence of any additional authority expressly granted by these Bylaws or the Articles of Incorporation, in each case as amended from time to time, or resolution of the Board of Directors, only the Chief Executive Officer and President, and each of them acting singly, may execute documents relating to transactions described in this clause (vii) on behalf of the Corporation involving more than $50,000,000. (2) Any nonbinding letter of intent or other instrument, certificate or other document that by its terms does not contractually obligate the Corporation to acquire or assume any liabilities in respect of any real property, whether improved or unimproved. (3) Any agreement relating to the management of property owned by third parties. (1) (2) (3) OFFICER TITLE: - -------------------------------------------------------------------------------- CHAIRMAN OF THE BOARD Yes Yes Yes - -------------------------------------------------------------------------------- PRESIDENT Yes Yes Yes - -------------------------------------------------------------------------------- CHIEF FINANCIAL OFFICER Yes Yes Yes - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT OF DEVELOPMENT Yes Yes - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT FOR CONSTRUCTION - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT FOR PROPERTY OPERATIONS Yes - -------------------------------------------------------------------------------- SECRETARY Yes Yes Yes - -------------------------------------------------------------------------------- TREASURER Yes Yes - -------------------------------------------------------------------------------- VICE PRESIDENT Yes - -------------------------------------------------------------------------------- VICE PRESIDENT OF FINANCE Yes - -------------------------------------------------------------------------------- VICE PRESIDENT OF DEVELOPMENT Yes Yes Yes - -------------------------------------------------------------------------------- CONSTRUCTION VICE PRESIDENT - -------------------------------------------------------------------------------- RESIDENTIAL SERVICE VICE PRESIDENT - -------------------------------------------------------------------------------- REGIONAL MANAGER - -------------------------------------------------------------------------------- PROJECT MANAGER - -------------------------------------------------------------------------------- PROPERTY MANAGER - -------------------------------------------------------------------------------- DEVELOPMENT DIRECTOR - -------------------------------------------------------------------------------- ACQUISITION DIRECTOR - -------------------------------------------------------------------------------- DEVELOPMENT DIRECTOR - -------------------------------------------------------------------------------- ACTION: (1) Any agreement relating to the development, construction or rehabilitation of real estate, including but not limited to vendor credit arrangements, local jurisdiction agreements, agreements with subcontractors and bonding agreements. (2) Any document or filing relating to the Corporation's audit and accounting practices, provided, however, that no authority is hereby granted for actions that are otherwise the responsibilities of Audit Committee of the Board of Directors. (3) Any agreement relating to (A) the Corporation's finances, including but not limited to the borrowing and repayment of debt and management of interest rate exposure, (B) after approval of the Board of Directors, any contract or instrument relating to tax exempt financing or construction financing with respect to communities or properties acquired, owned or operated by the Corporation and (C) any lease of property or equipment necessary or proper in connection with the conduct of the business affairs of the Corporation; provided, however, that the approval of the Board of Directors shall be required for borrowings of or assumed by the Corporation that exceed $1,000,000. (1) (2) (3) OFFICER TITLE: - -------------------------------------------------------------------------------- CHAIRMAN OF THE BOARD Yes Yes Yes - -------------------------------------------------------------------------------- PRESIDENT Yes Yes Yes - -------------------------------------------------------------------------------- CHIEF FINANCIAL OFFICER Yes Yes Yes - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT OF DEVELOPMENT Yes Yes - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT FOR CONSTRUCTION Yes - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT FOR PROPERTY OPERATIONS Yes - -------------------------------------------------------------------------------- SECRETARY Yes Yes Yes - -------------------------------------------------------------------------------- TREASURER Yes Yes Yes - -------------------------------------------------------------------------------- VICE PRESIDENT Yes - -------------------------------------------------------------------------------- VICE PRESIDENT OF FINANCE Yes Yes - -------------------------------------------------------------------------------- VICE PRESIDENT OF DEVELOPMENT Yes Yes - -------------------------------------------------------------------------------- CONSTRUCTION VICE PRESIDENT Yes - -------------------------------------------------------------------------------- RESIDENTIAL SERVICE VICE PRESIDENT Yes - -------------------------------------------------------------------------------- REGIONAL MANAGER - -------------------------------------------------------------------------------- PROJECT MANAGER - -------------------------------------------------------------------------------- PROPERTY MANAGER - -------------------------------------------------------------------------------- DEVELOPMENT DIRECTOR - -------------------------------------------------------------------------------- ACQUISITION DIRECTOR - -------------------------------------------------------------------------------- DEVELOPMENT DIRECTOR - -------------------------------------------------------------------------------- ACTION: (1) (A) leases, contracts and purchase agreements in the ordinary course of business involving amounts not exceeding $100,000 and (B) documents relating to the leasing of apartments and other spaces, the removal of tenants, the initiation and defense of civil lawsuits against tenants, former tenants, suppliers and former suppliers and commencement of tax appeals and related proceedings and the settlement of such proceedings. (2) (A) agreements and contracts with independent service providers and subcontractors for services relating to the business and assets of the Corporation not involving amounts in excess of $10,000 and (B) applications for ordinary and customary governmental approvals and permits relating to communities acquired or developed or to be acquired or developed by the Corporation. (1) (2) OFFICER TITLE: - -------------------------------------------------------------------------------- CHAIRMAN OF THE BOARD Yes Yes - -------------------------------------------------------------------------------- PRESIDENT Yes Yes - -------------------------------------------------------------------------------- CHIEF FINANCIAL OFFICER Yes Yes - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT OF DEVELOPMENT Yes Yes - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT FOR CONSTRUCTION Yes - -------------------------------------------------------------------------------- SENIOR VICE PRESIDENT FOR PROPERTY OPERATIONS Yes - -------------------------------------------------------------------------------- SECRETARY Yes Yes - -------------------------------------------------------------------------------- TREASURER Yes Yes - -------------------------------------------------------------------------------- VICE PRESIDENT Yes - -------------------------------------------------------------------------------- VICE PRESIDENT OF FINANCE Yes Yes - -------------------------------------------------------------------------------- VICE PRESIDENT OF DEVELOPMENT Yes Yes - -------------------------------------------------------------------------------- CONSTRUCTION VICE PRESIDENT Yes - -------------------------------------------------------------------------------- RESIDENTIAL SERVICE VICE PRESIDENT Yes - -------------------------------------------------------------------------------- REGIONAL MANAGER Yes - -------------------------------------------------------------------------------- PROJECT MANAGER - -------------------------------------------------------------------------------- PROPERTY MANAGER - -------------------------------------------------------------------------------- DEVELOPMENT DIRECTOR Yes - -------------------------------------------------------------------------------- ACQUISITION DIRECTOR Yes - -------------------------------------------------------------------------------- DEVELOPMENT DIRECTOR Yes - -------------------------------------------------------------------------------- The foregoing are certified as the Bylaws of the Corporation adopted by the Board of Directors as of February 15, 1995. ----------------------------- Thomas J. Sargeant, Secretary 111749.c5 -----END PRIVACY-ENHANCED MESSAGE-----