UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SIZELER PROPERTY INVESTORS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101
SEC 1913 (3-99)
SIZELER PROPERTY INVESTORS, INC.
2542 Williams Boulevard
Kenner, Louisiana 70062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2001
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Sizeler Property Investors, Inc. (the "Company") will be held at
the Breakers Palm Beach, One South County Road, Palm Beach, Florida, on Friday,
May 11, 2001, at 10:00 a.m., local time, for the following purposes:
1. To consider and vote on a proposal to reincorporate the Company as a
Maryland corporation by merger of the Company into a newly formed,
wholly-owned subsidiary of the Company incorporated in Maryland.
2. To elect three directors to serve until the Annual Meeting of
Stockholders in 2004 or until their successors are duly elected and
qualified.
3. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 22, 2001 are
entitled to receive notice of and to vote at the Meeting or any adjournments
thereof. A complete list of stockholders entitled to vote at the Meeting will
be open for inspection by any stockholder for any purposes germane to the
Meeting for ten days prior to the Meeting during ordinary business hours at the
principal office of the Company, 2542 Williams Boulevard, Kenner, Louisiana
70062.
The Company's Board of Directors would like to have as many stockholders as
possible present or represented at the Meeting. If you are unable to attend in
person, please vote, sign, date and return your enclosed proxy card promptly or
use the convenience of telephone or Internet
voting so that your shares may be voted. Postage is not required for mailing
proxy cards in the United States. The Company will reimburse stockholders
mailing proxy cards from outside the United States for the cost of mailing.
By Order of the Board of Directors
THOMAS A. MASILLA, JR.
President
DATED: April 4, 2001
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STOCKHOLDERS ARE URGED TO VOTE BY USING TELEPHONE OR INTERNET VOTING OR BY
SIGNING, DATING AND RETURNING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO
WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
================================================================================
April 4, 2001
SIZELER PROPERTY INVESTORS, INC.
2542 Williams Boulevard
Kenner, Louisiana 70062
__________
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2001
The following information is furnished in connection with the Annual
Meeting of Stockholders of Sizeler Property Investors, Inc. (the "Company") to
be held on Friday, May 11, 2001, at 10:00 a.m., local time, at the Breakers Palm
Beach, One South County Road, Palm Beach, Florida (the "Meeting"). A copy of the
Company's Annual Report to Stockholders for the fiscal year ended December 31,
2000 accompanies this Proxy Statement. Additional copies of the Annual Report,
Notice, Proxy Statement and form of proxy may be obtained from the Company's
Secretary, 2542 Williams Boulevard, Kenner, Louisiana 70062. This Proxy
Statement and the form of proxy will first be sent to stockholders on or about
April 4, 2001.
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy for the Meeting is being solicited by the directors of
the Company. Any person giving a proxy may revoke it any time prior to its
exercise by filing with the Secretary of the Company a written revocation or
duly executed proxy bearing a later date. The proxy may also be revoked by a
stockholder attending the Meeting, withdrawing the proxy and voting in person.
The cost of soliciting the proxies on the enclosed form will be paid by the
Company. In addition to the use of the mails, proxies may be solicited by the
directors and their agents (who will receive no additional compensation
therefor) by means of personal interview, telephone or facsimile, and it is
anticipated that banks, brokerage houses and other institutions, nominees or
fiduciaries will be requested to forward the soliciting material to their
principals and to obtain authorization for the execution of proxies. The Company
may, upon request, reimburse banks, brokerage houses and other institutions,
nominees and fiduciaries for their expenses in forwarding proxy material to
their principals. The Company has retained Beacon Hill Partners, Inc. ("Beacon
Hill") to assist with the solicitation of proxies and will pay Beacon Hill a fee
of $7,000 plus reimbursement of out-of-pocket expenses for its services.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The record date for determining shares of common stock, $.01 par value per
share ("Shares"), entitled to vote at the Meeting has been fixed at the close of
business on March 22, 2001. On that date there were 8,142,079 Shares
outstanding, entitled to one vote each.
The presence, in person or by properly executed proxy, of the holders of
Shares entitled to cast a majority of the votes entitled to be cast by the
holders of all outstanding Shares is necessary to constitute a quorum. Shares
represented by a properly signed, dated and returned proxy card and those Shares
voted via telephone or the Internet will be treated as present at the Meeting
for purposes of determining a quorum. Proxies relating to "street name" Shares
that are voted by brokers will be counted as Shares present for purposes of
determining the presence of a quorum, but will not be treated as Shares having
voted at the Meeting as to any proposal as to which the broker does not vote.
Security Ownership of Certain Beneficial Owners
-----------------------------------------------
To the best of the Company's knowledge, no person or group (as those terms
are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) owned beneficially, as of February 8, 2001, more than five
percent of the outstanding Shares except as described in the following table:
-2-
Percentage
Name and Address Amount and Nature of Shares
of Beneficial Owner of Beneficial Ownership Outstanding (1)
------------------- ----------------------- ---------------
Sidney W. Lassen
2542 Williams Boulevard
Kenner, LA 70062..................................... 683,595 (2) 8.4%
Deer Isle Partners, L.P.
Deer Isle Management, L.L.C.
David M. Brown
860 Fifth Avenue
Suite 18A
New York, NY 10021................................... 741,300 (3) 9.1
Loomis, Sayles & Co., L.P.
One Financial Center
Boston, MA 02111..................................... 480,385 (4) 5.9
Merrill Lynch & Co., Inc.
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381................................... 539,040 (5) 6.6
Palisade Capital Management, L.L.C.
One Bridge Plaza
Suite 695
Fort Lee, NJ 07024................................... 428,000 (6) 5.3
Ryback Management Corporation
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105.................................. 569,938 (7) 7.0
_______________________
(1) Based on the number of Shares outstanding on February 8, 2001 which
was 8,108,365 Shares.
(2) These Shares include (i) 7,000 Shares owned by the Company and
credited to the Company's deferred compensation account for the
benefit of Mr. Lassen; (ii) 192,500 Shares Mr. Lassen has the right to
acquire pursuant to exercisable options granted under
-3-
the Company's 1986 Stock Option Plan (the "1986 Option Plan") and the
Company's 1996 Stock Option Plan (the "1996 Stock Option Plan"); (iii)
77,500 Shares owned directly by Sizeler Realty Co., Inc. ("Sizeler
Realty"), in which a beneficial minority interest is owned by Mr. Lassen
and the balance is owned by the families of Mr. Lassen's wife and her
parents' estates; (iv) 57,000 Shares owned by a limited liability company
of which Mr. Lassen is manager and Mr. Lassen's wife owns an approximately
26% interest; and (v) 15,000 Shares owned by a Lassen family partnership.
These Shares do not include (i) 11,800 Shares with respect to which Mr.
Lassen's daughter, Jill L. Botnick, has voting and investment power; (ii)
5,000 Shares held by Mr. Lassen's wife; and (iii) 30,000 Shares owned by I.
William Sizeler, brother of Mr. Lassen's wife. Mr. Lassen disclaims
beneficial interest in, and voting or investment power over, the Shares
described in the preceding sentence; and he disclaims beneficial interest
in all the Shares held by the limited liability company and in all but 1.9%
of the Shares held by the Lassen family partnership, respectively items
(iv) and (v) in the first sentence of this note.
(3) Based upon a Schedule 13G dated April 13, 2000 filed with the Securities
and Exchange Commission ("SEC") which indicates that Mr. Brown has sole
voting and dispositive power with respect to 18,000 Shares and shared
voting and dispositive power with respect to 723,300 Shares, 666,200 Shares
of which is shared with Deer Isle Management, L.L.C. and Deer Isle
Partners, L.P. Mr. Brown is the managing member of Deer Isle Management,
L.L.C., which is the general partner of Deer Isle Partners, L.P.
(4) Based upon a Schedule 13G dated February 9, 2001 filed with the SEC which
indicates that Loomis, Sayles & Co., L.P. beneficially owns a total of
480,385 Shares, with respect to 338,077 Shares it has sole voting power and
480,385 Shares it has shared dispositive power.
(5) Based upon a Schedule 13G dated February 5, 2001 filed with the SEC by
Merrill Lynch & Co., Inc. which indicated that Merrill Lynch & Co., Inc.
(on behalf of Merrill Lynch Investment Managers, L.P.) shares voting and
dispositive power with respect to 539,040 Shares. Merrill Lynch Investment
Managers, L.P. is an operating division of Merrill Lynch & Co., Inc.
consisting of Merrill Lynch & Co., Inc.'s indirectly-owned asset management
subsidiaries.
(6) Based upon a Schedule 13G dated February 1, 2001 filed with the SEC by
Palisade Capital Management, L.L.C. ("Palisade"), which indicates that
Palisade has sole voting power with respect to 425,000 shares and sole
dispositive power with respect to 428,000 Shares.
(7) Based upon a Schedule 13G dated January 29, 1999 filed with the SEC by
Ryback Management Corporation ("Ryback"), which indicates that Ryback has
sole voting and dispositive power with respect to 569,938 Shares, 561,538
of which are issuable upon the conversion of the Company's Convertible
Subordinated Debentures due 2003 ("Debentures"). Lindner Dividend Fund has
the economic interest in the Shares issuable
-4-
upon conversion of the Debentures. Lindner Dividend Fund is a separate
series of the Lindner Investment Series Trust.
Security Ownership of Management
--------------------------------
The following table sets forth the Shares beneficially owned as of February
8, 2001 by each director, nominee for director, executive officer, and by the
directors and executive officers of the Company as a group. Unless otherwise
stated, each person has sole voting and investment power with respect to the
Shares set forth in the table.
Percentage
Amount and Nature of Shares
Name of Beneficial Ownership Outstanding (1)
---- ----------------------- ---------------
J. Terrell Brown............... 34,250 (2) *
James W. Brodie................ 49,564 (3) *
Francis L. Fraenkel............ 209,184 (4) 2.6 %
Harold B. Judell............... 60,533 (5) *
Sidney W. Lassen............... 683,595 (6) 8.4
Thomas A. Masilla, Jr.......... 181,126 (7) 2.2
James W. McFarland ............ 34,000 (8) *
Richard L. Pearlsto............ 60,348 (9) *
Theodore H. Strauss............ 64,100 (10) *
Robert A. Whelan.............. 10,421 (11) *
All directors and 1,387,121 (12)
executive officers as a group 17.1
____________________
* Indicates ownership of less than 1%.
(1) Based on the number of Shares outstanding on February 8, 2001 which was
8,108,365 Shares.
(2) Includes 23,000 Shares Mr. Brown has the right to purchase pursuant to
exercisable options granted under the 1986 Option Plan and the 1996 Stock
Option Plan.
-5-
(3) Includes 46,250 Shares Mr. Brodie has the right to purchase pursuant to
options granted under the 1986 Option Plan and the 1996 Stock Option Plan.
(4) Mr. Fraenkel has sole voting power with respect to 17,500 Shares and sole
dispositive power with respect to 146,685 Shares. Includes 20,000 Shares
Mr. Fraenkel has the right to purchase pursuant to exercisable options
granted under the 1986 Option Plan and the 1996 Option Plan and 24,999
Shares he has the right to acquire beneficial ownership of pursuant to the
conversion of Debentures.
(5) Includes 22,693 Shares Mr. Judell has the right to purchase pursuant to
exercisable options granted under the 1986 Option Plan, the Company's 1989
Stock Option Plan and the 1996 Stock Option Plan.
(6) See note (2) to table under "Security Ownership of Certain Beneficial
Owners."
(7) Includes (i) 18,710 Shares owned by the Company and credited to the
Company's deferred compensation account for the benefit of Mr. Masilla and
(ii) 150,500 Shares Mr. Masilla has the right to purchase pursuant to
exercisable options granted under the 1986 Option Plan and the 1996 Stock
Option Plan.
(8) Includes 24,000 Shares Mr. McFarland has the right to purchase pursuant to
exercisable options granted under the 1986 Option Plan and the 1996 Stock
Option Plan.
(9) Mr. Pearlstone shares voting and investment power over 12,000 of these
Shares as co-trustee of certain trusts and has an economic interest in
another 12,000 of these Shares as the beneficiary of certain trusts.
Includes 22,000 Shares Mr. Pearlstone has the right to purchase pursuant to
exercisable options granted under the 1986 Option Plan and 1996 Stock
Option Plan.
(10) Includes 25,000 Shares Mr. Strauss has the right to purchase pursuant to
exercisable options granted under the 1986 Option Plan and 1996 Stock
Option Plan.
(11) Includes (i) 1,921 Shares owned by the Company and credited to the
Company's deferred compensation account for the benefit of Mr. Whelan and
(ii) 7,500 shares Mr. Whelan has the right to purchase pursuant to
exercisable options granted under the 1996 Stock Option Plan. Mr. Whelan
joined the Company as Chief Financial Officer in May 1999.
(12) See notes (2) through (11) above.
-6-
1. PROPOSAL TO REINCORPORATE THE COMPANY IN MARYLAND
General
The Company's Board of Directors recommends that the stockholders
approve a proposal for the Company to change its state of incorporation from
Delaware to Maryland (the "Reincorporation"). If approved by the Company's
stockholders, the Reincorporation will be accomplished by the merger (the
"Merger") of the Company with and into its wholly-owned subsidiary, Sizeler
Property Investors, Inc., a Maryland corporation ("Sizeler Maryland"). As a
result of the Merger, the Company's legal domicile will be changed from Delaware
to Maryland but its name will remain the same.
Upon the terms and subject to the conditions of the Agreement and Plan
of Merger ("Merger Agreement") between the Company and Sizeler Maryland, at the
effective time of the Merger (the "Effective Time"), each outstanding share of
the Company's Shares will be converted into one share of common stock, $.0001
par value, of Sizeler Maryland (the "Maryland Common Stock"). In addition, at
the Effective Time, each outstanding option or warrant to purchase Shares will
continue outstanding as a right to purchase shares of the Maryland Common Stock
upon the same terms and conditions as immediately prior to the Effective Time.
All rights pursuant to the Rights Agreement between the Company and the Bank of
New York dated August 6, 1998, as amended, (the "Rights Plan") in relation to
the Shares will continue to be in effect in relation to the Maryland Common
Stock, and the Rights Plan will remain unaffected by the Reincorporation.
Stockholders will not need to exchange their current certificates in connection
with the Merger. The outstanding certificates of the Company's stock will
evidence ownership of the equivalent number of shares of Sizeler Maryland
following the Merger and stockholders should hold on to their existing
certificates. Any share transfer occurring after the Reincorporation will result
in the issuance of Sizeler Maryland certificates to the participants.
The Company's Shares became listed for trading on the New York Stock
Exchange on January 30, 1987 and trade under the symbol "SIZ." At the Effective
Time, this symbol will, without interruption, represent the Maryland Common
Stock.
Also at the Effective Time, the Company will be governed by the
Maryland General Corporation Law (the "Maryland Code"), by the Articles of
Incorporation of Sizeler Maryland (the "Maryland Charter") and by the Bylaws of
Sizeler Maryland (the "Maryland Bylaws"), which will result in certain changes
in the rights of stockholders and other matters related to the Company. The most
significant changes, which include changes in the availability of appraisal
rights and a significant decrease in the annual fees and taxes payable by the
Company to the state of incorporation, are discussed in this Proxy Statement
under "Comparison of the Delaware Code, Delaware Charter and Delaware Bylaws to
the Maryland Code, Maryland Charter and Maryland Bylaws." For additional details
and complete information relating to these and other changes in the rights of
stockholders, review the Merger Agreement which is attached to this proxy
statement as Appendix A, the Maryland Charter attached to this proxy statement
-7-
as Appendix B and the Maryland Bylaws attached to this proxy statement as
Appendix C. In addition, any stockholder wishing to inspect copies of the
Company's Restated Certificate of Incorporation, as amended (the "Delaware
Certificate") and the Company's current Bylaws, as amended (the "Delaware
Bylaws"), may request copies of these documents. Such requests should be sent to
the Chairman or President of the Company at 2542 Williams Boulevard, Kenner,
Louisiana 70062.
We anticipate that the Merger will become effective as soon as reasonably
practicable after stockholder approval. However, the Merger Agreement provides
that the Merger may be abandoned or deferred prior to the Effective Time, either
before or after stockholder approval, if circumstances arise which, in the
opinion of the Board of Directors, make the Merger inadvisable or its deferral
advisable. In addition, the Merger Agreement may be amended at any time prior
to the Effective Time, subject to certain conditions.
The Board of Directors recommends that the Company become a Maryland
corporation subject to the statutes of Maryland rather than Delaware primarily
because this will eliminate the Company's annual Delaware franchise tax
expenses. The State of Delaware imposes franchise taxes on Delaware corporations
based on alternative formulas involving either (i) the corporation's aggregate
number of shares of authorized stock; or (ii) the corporation's capital
structure as compared to its assets. A Delaware corporation may elect to be
treated under the formula alternative that results in the lesser amount of
franchise tax imposed on the corporation. The Company has always elected to be
considered under the formula which results in the lower franchise tax burden,
however, that burden is still substantial relative to the state tax in Maryland.
For the fiscal years ended December 31, 2000, and 1999, the Company's
Delaware franchise taxes were $119,950 and $122,600, respectively. Unlike
Delaware, Maryland does not impose a franchise tax on a corporation
incorporated under its laws. If the Company is reincorporated in Maryland, the
only amount payable annually to Maryland as a result of being incorporated under
its laws currently would be $100 to be paid in conjunction with Maryland's
annual reporting requirements. This would result in the Company saving the
entire amount paid for Delaware franchise taxes which historically has been in
excess of $100,000. Some of the savings anticipated during 2001 by the
Reincorporation may initially be offset by expenses associated with
Reincorporation, such as filing, legal, printing and similar expenses.
The Board of Directors has concluded that the potential benefits of the
Reincorporation outweigh any possible disadvantages. Accordingly, the Board of
Directors unanimously recommends that the stockholders vote FOR the
Reincorporation. Unless instructed otherwise, proxies will be voted FOR the
Reincorporation.
-8-
Comparison of the Delaware Code, Delaware Certificate and Delaware Bylaws to the
Maryland Code, Maryland Charter and Maryland Bylaws
Although there are several differences between the Delaware General
Corporation Law (the "Delaware Code") and the Maryland Code, the Board of
Directors does not believe that these differences will have a significant impact
on the Company's operations. A summary of certain differences between
provisions affecting holders of Shares under the Delaware Code, the Delaware
Certificate and the Delaware Bylaws and those affecting holders of Maryland
Common Stock under the Maryland Code, the Maryland Charter and the Maryland
Bylaws is set forth below. This summary does not purport to be complete and is
qualified in its entirety by reference to the Maryland Charter and Maryland
Bylaws, copies of which are attached to this proxy statement as Appendix B and
Appendix C, respectively, and to the Delaware Code and the Maryland Code. In
the following discussion, the Company, a Delaware corporation, is referred to
also as "Sizeler Delaware."
Authorized Capital Stock
The authorized capital stock of Sizeler Delaware consists of 30,000,000
shares of common stock and 6,000,000 shares of preferred stock, par value $0.01
per share, of which 40,000 shares have been designated as Series A Preferred
Stock. In 1998, the stockholders of Sizeler Delaware approved an increase in
the number of authorized shares of common stock from 30,000,000 to 45,000,000
shares and an increase in the number of authorized shares of preferred stock
from 6,000,000 to 9,000,000 shares, provided that such increases in authorized
shares be made effective in the discretion of the Board of Directors within a 10
year period after the stockholders' approval. The Delaware franchise tax would
not account for these increases in authorized shares until the amendment
effecting such increases is filed with the Secretary of State of the State of
Delaware. As of the date hereof, the Board of Directors of the Company has not
effectuated this increase in shares. The Delaware Certificate provides that the
board of directors of Sizeler Delaware has the power to provide for the issuance
of preferred stock in series and, by filing a certificate in accordance with
Delaware law, to establish the number of shares to be included in each such
series and to fix the designations, powers, preferences and rights of each such
series and the qualifications, limitations and restrictions thereof.
The authorized capital stock of Sizeler Maryland consists of 70,000,000
shares, initially classified as 53,960,000 shares of Maryland Common Stock,
40,000 shares of Series A Preferred Stock, par value $0.0001 per share
("Maryland Series A Preferred Stock"), and 16,000,000 shares of excess stock,
par value $0.0001 per share ("Maryland Excess Stock"). The Maryland Charter
provides that the board of directors of Sizeler Maryland has the power, without
action by the stockholders, to amend the Maryland Charter to increase or
decrease the aggregate number of shares of stock or the number of shares of
stock of any class that Sizeler Maryland has authority to issue. The board of
directors of Sizeler Maryland also has the power to classify or reclassify any
unissued capital stock including classification into a class or classes of
preferred stock, preference stock, special stock or other stock and to divide or
classify shares into one or more
-9-
series of such class. The Maryland Series A Preferred Stock has the same
designations, powers, preferences and rights as the Series A Preferred Stock of
Sizeler Delaware. The Maryland Excess Stock is designed to protect Sizeler
Maryland's status as a real estate investment trust ("REIT") under the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"). See " -- REIT-
Related Restrictions."
Stockholder Meetings
The Delaware Bylaws provide that an annual meeting of stockholders will be
held on a date and at a time and place determined by Sizeler Delaware's board of
directors. The Maryland Bylaws provide that the annual meeting of stockholders
of Sizeler Maryland will be held on the date and at the time set by the
Chairman or Board of Directors of Sizeler Maryland. Both the Delaware Bylaws
and the Maryland Bylaws provide that the presence in person or by proxy of a
majority of all votes entitled to be cast constitutes a quorum at stockholder
meetings.
Under the Delaware Code, special meetings of stockholders may be called by
the board of directors of a Delaware corporation or by such other person or
persons as may be authorized by its certificate of incorporation or bylaws.
Stockholders of a Delaware corporation may not force a special meeting unless
specifically provided for in the corporation's certificate of incorporation or
bylaws. Neither the Delaware Certificate nor the Delaware Bylaws provides its
stockholders with the right to call a special meeting. Under the Delaware
Bylaws, only the board of directors may call a special meeting of stockholders.
Under the Maryland Code, special meetings may be called by a corporation's
board of directors, its president, such other persons as the charter or bylaws
provide, and the holders of shares entitled to cast 25% of the votes at the
special meeting (or such other percentage not greater than a majority as is
specified in the charter or bylaws). The Maryland Bylaws provide that special
meetings may be called by the chairman of the board or president of Sizeler
Maryland, by a majority of its board of directors, or by its secretary upon the
written request of holders of shares entitled to cast at least a majority of all
votes entitled to be cast at such special meeting. A request by stockholders
must state the purpose of the meeting and the matters proposed to be acted upon
at the meeting. The board of directors has the sole power to fix the date, place
and time of the meeting.
Stockholder Action by Written Consent
The Delaware Code provides that a corporation can take action with respect
to a matter if written consents are executed by those stockholders owning that
number of shares that would be required to take the same action at a meeting of
stockholders at which all stockholders were present. The Delaware Certificate,
however, provides that no action may be taken by written consent without a
meeting except upon the signing of a written consent by the holders of all
stockholders entitled to vote thereon. Under the Maryland Code, stockholder
action may be taken
-10-
without a meeting only if all stockholders entitled to vote on the matter
consent in writing to the action proposed to be taken. In addition, unless the
Maryland Charter requires otherwise, the holders of any class of stock, other
than Maryland Common Stock, entitled to vote generally in the election of
directors, may take action or consent to any action by the written consent of
stockholders entitled to cast not less than the minimum number of votes
necessary to authorize or take the action at a stockholders meeting if Sizeler
Maryland gives notice of the action to each stockholder not later than ten days
after the effective time of the action.
Advance Notice Provisions; Nominations by Stockholders for the Election of
Directors
Under both the Delaware Bylaws and the Maryland Bylaws, nominations of
persons for election to the board of directors and the proposal of business at
an annual meeting of stockholders may be made (i) pursuant to the company's
notice of meeting; (ii) by or at the direction of the company's board of
directors; or (iii) by a stockholder entitled to vote at the meeting who
complies with the advance notice requirements of the relevant bylaws.
Pursuant to the Delaware Bylaws, a stockholder seeking to nominate
directors or propose other business before an annual meeting must deliver to the
chairman of the board or president the requisite notice, generally not less than
60 nor more than 90 days prior to the first anniversary of the date on which
Sizeler Delaware first mailed its proxy materials for the preceding year's
annual meeting. The notice must set forth (i) as to each nominee all
information that would be required to be disclosed in solicitations for proxies
under Regulation 14A of the Exchange Act; (ii) as to any other business, a brief
description of such business, the reasons for conducting it at the annual
meeting and any material interest of such stockholder; and (iii) as to the
stockholder, the stockholder's name, class and number of Shares, whether the
stockholder intends to deliver a proxy statement and form of proxy to holders of
Shares sufficient to carry the proposal or elect the nominee, as the case may
be. In the case of a special meeting, only such business may be conducted as
set forth in Sizeler Delaware's notice of meeting. Nominations of persons for
election to Sizeler Delaware's board at a special meeting may be made by or at
the direction of the Sizeler Delaware's board of directors or by any stockholder
giving notice described above not later than the later of (i) the 90/th/ day
prior to such special meeting or (ii) the 10/th/ day following the public
announcement thereof.
Pursuant to the Maryland Bylaws, a stockholder seeking to nominate persons
for election to the board of directors or propose other business to be conducted
at an annual meeting of stockholders or to nominate persons for election of
directors at any special meeting of stockholders called for the purpose of
electing directors must provide the required notice to the chairman of the board
of Sizeler Maryland (i) in the case of an annual meeting, generally not
less than 90 days nor more than 120 days prior to the first anniversary of the
date of mailing of the notice for the preceding year's annual meeting and (ii)
in the case of a special meeting, not later than the earlier of the 10/th/ day
following the day on which notice of the special meeting was mailed or public
disclosure of the date of the special meeting. The notice must contain (i)(a) in
respect of proposed nominees for election to the board of directors, all
information required to be disclosed in connection with solicitations of proxies
pursuant to Regulation 14A of the Exchange Act as to each proposed nominee and
(b) in respect of proposed other business at an annual meeting of stockholders,
a description of the proposed business and the reasons for conducting it at an
annual meeting and (ii) as to the stockholder providing the notice, (a) the
stockholder's name and address, class and number of shares; (b) in the case of a
nomination for election to the board, a description of all
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arrangements or understandings between the stockholder and the proposed nominee;
(c) in the case of proposed other business, a description of arrangements or
understandings between the stockholder and any other persons in connection with
the proposed other business; (d) a representation that the stockholder intends
to appear in person or proxy; and (e) any other information concerning the
stockholder as would be required to be included in a proxy statement pursuant to
Regulation 14A of the Exchange Act. In the case of a proposed nominee for
election to the board, such notice shall also be accompanied by a written
consent of each proposed nominee to be named as a nominee and to serve as a
director if elected. Under the Maryland Bylaws, any request by a stockholder of
a special meeting must state the purpose of such meeting and the matters
proposed to be acted on at such meeting. See " -- Stockholder Meetings."
These provisions should not be confused with the rules governing the right
of a stockholder to submit a proposal for inclusion in management's proxy
statement. Those rules are set forth in the SEC's proxy rules, Regulation 14A
of the Exchange Act, and are applicable to all corporations (including the
Company), wherever chartered, that are subject to the proxy rules.
Size of the Board
Under the Delaware Code, the number of directors shall be fixed by, or in
the manner provided in, a corporation's bylaws unless its certificate of
incorporation fixes the number of directors, in which case any change in the
number of directors must be made by amendment to the certificate. A corporation
must have at least one director. The Delaware Certificate provides that the
number of directors be no less than 5 and no more than 15 directors, as
determined by Sizeler Delaware's board. The Sizeler Delaware board is currently
comprised of 8 directors.
Under the Maryland Code, a corporation must have at least one director at
all times. Subject to this provision, a corporation's bylaws may alter the
number of directors and authorize a majority of the entire board of directors to
alter within specified limits the number of directors set by the corporation's
charter or bylaws. The Sizeler Maryland board is currently comprised of eight
directors. The Maryland Bylaws provide that Sizeler Maryland's board of
directors may alter the number of directors to a number not exceeding 15 nor
below the minimum permitted in the Maryland Bylaws.
Classified Board of Directors
Both the Delaware Certificate and Maryland Charter provide that the members
of the board of directors shall be divided, as evenly as possible, into three
classes, with approximately one-third of the directors elected by the
stockholders annually. Each director is to serve for a three year term or until
his or her successor is duly elected and has qualified. Consequently, members
of the boards of directors of both Sizeler Maryland and Sizeler Delaware serve
staggered three-year terms.
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Cumulative Voting
Both the Delaware Code and the Maryland Code permit a corporation to
provide for cumulative voting in its certificate of incorporation or charter.
Neither the Delaware Certificate nor the Maryland Charter provides for
cumulative voting.
Removal of Directors
In the case of a corporation whose board is classified, both the Delaware
Code and the Maryland Code provide that directors may be removed only for cause
unless the organizational documents provide otherwise. The Delaware Certificate
provides that directors may be removed only for cause by a vote of 75% of the
outstanding Shares then entitled to vote at a meeting of stockholders called
expressly for that purpose. The Maryland Charter contains a similar requirement:
directors of Sizeler Maryland may be removed only for cause by the affirmative
vote of 75% of the combined voting power of all shares of capital stock entitled
to be voted for the election of directors at a meeting of stockholders called
expressly for that purpose.
Filling Vacancies
Under the Delaware Certificate, vacancies in the board of directors are
filled by the remaining directors. The Delaware Code also provides that in
cases where a director is elected by the board of directors, rather than the
stockholders, in order to fill a vacancy on the board, the newly elected
director will serve until the term of that directorship normally expires. The
Maryland Bylaws contain an election, permitted under the Maryland Code, that
provides that all vacancies on the board of directors are to be filled by the
remaining directors then in office and that newly appointed directors shall
serve until the term of that directorship normally expires.
Standard of Conduct for Directors
The standards of conduct for directors of a Delaware corporation have
developed through written opinions of the Delaware courts in cases decided by
them. Generally, directors of Delaware corporations are subject to a duty of
loyalty, a duty of care and a duty of candor to the stockholders. The duty of
loyalty requires directors to refrain from self-dealing. According to the
Delaware Supreme Court, the duty of care requires "directors ... in managing the
corporate affairs ... to use that amount of care which ordinarily careful and
prudent men would use in similar circumstances" and the duty of candor requires
directors "to disclose fully and fairly all material information within the
board's control when it seeks stockholder action."
Under Maryland law the standard of conduct for directors is set forth in
Section 2-405.1(a) of the Maryland Code, which requires a director of a Maryland
corporation to perform his or her duties in "good faith" in a manner that he or
she "reasonably believes to be in the best interests of the corporation" and
with the care of an "ordinarily prudent person in a like position ... under
similar circumstances."
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Limitation of Personal Liability of Directors and Officers
Both the Delaware Code and Maryland Code permit the governing documents of
a corporation to contain provisions limiting personal liability of directors to
the corporation or its stockholders for money damages. In addition, the
Maryland Code permits the charter to limit officers' personal liability as well.
The Delaware Code does not permit limitation of officers' personal liability.
The Delaware Certificate limits the personal liability of each director to
the full extent permitted by Delaware law except that, as required by the
Delaware Code, liability of directors is not limited (i) for any breach of a
director's duty of loyalty to Sizeler Delaware or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of law; (iii) under Section 174 of the Delaware Code (dealing
with willful or negligent violation of certain statutory provisions concerning
dividends and stock purchases or redemptions); and (iv) for any transaction from
which the director derived an improper personal benefit.
The Maryland Charter also contains provisions which limit the personal
liability of directors to the full extent permitted by Maryland law. In
addition, as permitted by Maryland law, the Maryland Charter also limits the
personal liability of officers to the same extent as that afforded directors.
The Maryland Code, however, does not permit limitation of personal liability of
directors or officers (i) for the amount of any improper benefit they actually
receive or (ii) to the extent active and deliberate dishonesty on the part of
the director or officer is established by a final judgment as being material to
such cause of action.
Indemnification of Directors and Officers
The Delaware Code and the Maryland Code each specify certain circumstances
when a corporation must, and other circumstances when it may, indemnify its
officers, directors, employees and agents against legal expenses and
liabilities.
The Delaware Code provides that a corporation may indemnify any person made
a party or threatened to be made a party to any type of proceeding, other than
an action by or in the right of the corporation, because he or she is or was an
officer, director, employee or agent of the corporation or was serving at the
request of the corporation as a director, officer, employee or agent of the
corporation or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation or entity, against expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such proceeding: (i) if he or she acted in good faith and in
a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation; and (ii) in the case of a criminal proceeding he
or she had no reasonable cause to believe that his or her conduct was unlawful.
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A Delaware corporation may indemnify any person made a party or threatened
to be made a party to any threatened, pending or completed action or suit
brought by or in the right of the corporation because he or she is or was an
officer, director, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or other entity, against expenses actually and reasonably
incurred in connection with such action or suit (i) if he or she acted in good
faith and (ii) in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification shall
be made if the person is found liable to the corporation unless, in such a case,
the court determines the person is entitled to such indemnification.
A Delaware corporation may indemnify a director, officer, employee or agent
against expenses actually and reasonably incurred by him or her, who
successfully defends himself or herself in a proceeding to which he or she was a
party by reason of the person's service in that capacity. Expenses incurred by
an officer or director, or other employee or agent as deemed appropriate by the
board of directors, in defending a civil or criminal proceeding may be paid by
the corporation in advance of the final disposition of such proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it is ultimately determined that he or she is not entitled to be
indemnified by the corporation.
The Delaware Bylaws provide that each director, officer, employee and agent
of Sizeler Delaware shall be indemnified by Sizeler Delaware to the fullest
extend permitted by Delaware law. The Delaware Bylaws also provide that Sizeler
Delaware may maintain insurance to protect itself and any director, officer,
employee or agent against expense, liability or loss, whether or not Sizeler
Delaware would have the power to indemnify such person against such expense,
liability or loss under the Delaware Code.
The Maryland Code requires a corporation, unless its charter provides
otherwise, which the Maryland Charter does not, to indemnify a director or
officer who has been successful, on the merits or otherwise, in the defense of
any proceeding to which the person is made a party by reason of his or her
service in that capacity. The Maryland Code permits a corporation to indemnify
its present and former directors and officers, among others, in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that: (i) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the director or officer actually received an
improper personal benefit in money, property or services; or (iii) in the case
of any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful.
The indemnity may include judgments, penalties, fines, settlements and
reasonable expenses actually incurred by the director or officer in connection
with the proceeding; provided, however, that if the proceeding is one by or in
the right of the Maryland corporation, indemnification is not permitted with
respect to any proceeding in which the director or officer has been adjudged to
be liable to the corporation.
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In addition, a director or officer of a Maryland corporation may not be
indemnified with respect to any proceeding charging improper personal benefit to
the director or officer in which the director or officer was adjudged to be
liable on the basis that personal benefit was improperly received. The
termination of any proceeding by conviction or upon a plea of nolo contendere or
its equivalent or an entry of an order of probation prior to judgment creates a
rebuttal presumption that the director or officer did not meet the requisite
standard of conduct required for permitted indemnification. The termination of
any proceeding by judgment, order or settlement, however, does not create a
presumption that the director or officer did not meet the requisite standard of
conduct for permitted indemnification.
As a condition to advancing expenses to a director who is a party to a
proceeding, Maryland law requires Sizeler Maryland to obtain a written
affirmation from the director or officer of his or her good faith belief that he
or she has met the standard of conduct necessary for indemnification by Sizeler
Maryland and a written statement by or on his or her behalf to repay the amount
paid or reimbursed by Sizeler Maryland if it is ultimately determined that the
standard of conduct was not met.
The Maryland Charter provides that, to the fullest extent permitted by
Maryland law, Sizeler Maryland will indemnify and advance expenses to a director
or officer of Sizeler Maryland. The Maryland Charter also provides that Sizeler
Maryland will indemnify other employees and agents to the extent authorized by
Sizeler Maryland's board of directors or the Maryland Bylaws. The Maryland
Bylaws do not authorize any such indemnification for non-director, non-officer
employees or agents. The Maryland Code permits a corporation to maintain
insurance on behalf of any director, officer, employee or agent whether or not
the corporation has the power to indemnify.
Dividends
The Delaware Code permits the payment of dividends out of a corporation's
surplus or, if there is no surplus, out of net profits for the current or
preceding fiscal year. No dividends may be declared, however, if the capital of
the corporation has been diminished to an amount less than the aggregate amount
of capital represented by issued and outstanding stock having a preference in
distribution. The Delaware Code also provides that the directors of a
corporation may set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose or may abolish any
such reserve.
The Maryland Code provides that a corporation may pay dividends to its
stockholders from time to time as authorized by the board of directors. However,
no dividend or other distribution may be made if, after giving effect to the
distribution, (i) the corporation would not be able to pay its debts as they
become due in the usual course of business or (ii) the corporation's total
assets would be less than the sum of the corporation's total liabilities plus,
unless the corporation's charter provides otherwise, the amounts payable to
stockholders having preferential rights to assets in the event of dissolution of
the corporation. The Maryland Bylaws provide that, before payment
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of any dividends, there may be set aside out of any funds of the corporation
available for dividends such sum or sums as the board of directors may from time
to time, in its discretion, think proper as a reserve fund for contingencies,
for equalizing dividends, for repairing or maintaining any property of the
corporation or for any other purpose as the board shall determine to be in the
best interest of the corporation, and the board of directors may modify or
abolish any such reserve.
Charter Amendments
The Delaware Code provides that an amendment to a certificate of
incorporation may be adopted by a resolution of the board of directors and
approved by the stockholders. Unless a higher vote is required by the
certificate of incorporation, an amendment to a certificate of incorporation may
be approved by a majority with the votes of each class entitled to vote. The
Delaware Certificate provides that the Company reserves the right to amend or
repeal any provision in the Delaware Certificate in the manner provided by
Delaware law, except that, provisions governing the classification and removal
of members of the board, provisions establishing limitations to protect the
Company's status as a REIT and provisions regarding business combinations may
not be amended, repealed or rescinded except by a vote of stockholders of not
less than 75% of the votes entitled to be cast on the matter.
Under the Maryland Code, certain charter amendments may be effected solely
by the board of directors, such as an amendment changing the name of a
corporation or, if the charter so provides, an amendment increasing or
decreasing the number of authorized shares of stock (see "-- Authorized Capital
Stock"). For certain charter amendments, namely, amendments to the sections
dealing with REIT-related restrictions, the Series A Preferred Stock, the board
of directors, business combinations, indemnification of directors and officers,
and the amendments section of the charter, the Maryland Charter provides that a
vote of at least 75% of the board of directors is required. As permitted by the
Maryland Code, the Maryland Charter reduces the stockholder vote required to
approve charter amendments from two-thirds to a majority vote, except that (i)
amendments regarding the classification and removal of directors, amending the
bylaws, business combinations, indemnification, and personal liability of
directors and officers, and the charter provisions regarding amendments and (ii)
amendments seeking to impose cumulative voting for the election of directors
require, in addition to any vote required by the terms of any outstanding
preferred stock, the affirmative vote of 75% of the votes entitled to be cast on
the matter at a meeting of stockholders.
Amendments to Bylaws
The Delaware Bylaws provide that, pursuant to the Delaware Code, Sizeler
Delaware's board has the power to amend, adopt or repeal the Delaware Bylaws so
long as any amendment is not inconsistent with the Delaware Certificate.
Pursuant to the Delaware Code, the fact that the Delaware Bylaws give the board
such power does not divest or limit the stockholders' power to adopt, amend or
rescind the Delaware Bylaws. The Maryland Charter and the Maryland Bylaws
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provide that the Maryland Bylaws may be amended or repealed, and new bylaws
adopted, by the board of directors of Sizeler Maryland or by the affirmative
vote of not less than 75% of the aggregate votes entitled to be cast on the
matter at a meeting of stockholders.
Inspection of Books and Records
Under the Delaware Code, any stockholder may submit a written demand to
inspect and copy a corporation's stock ledger, a list of its stockholders and
its other books and records. The written demand must state the purpose for
inspection which is reasonably related to the demanding stockholder's interest
as a stockholder.
Under the Maryland Code, any person who has been a stockholder of record
for a minimum of six months and who owns at least 5% of a corporation's
outstanding shares has a right to (i) inspect the corporation's books of account
and stock ledger; (ii) present to any officer or resident agent of the
corporation a written request for a statement of its affairs; and (iii) in the
case of any corporation that does not maintain the original or a duplicate stock
ledger at its principal office, present to any officer or resident agent of the
corporation a written request for a list of its stockholders. Additionally,
under the Maryland Code, any stockholder may inspect and copy, during usual
business hours, the corporation's bylaws, minutes of the proceedings of
stockholders, annual statements of affairs and any voting trust agreements on
file at the corporation's principal office.
Appraisal Rights
Under both Delaware and Maryland law, stockholders in certain circumstances
have the right to dissent from certain corporate transactions, provided that
statutory procedures are followed. The Reincorporation does not trigger any
appraisal rights. See "-- Dissenting Stockholders' Rights of Appraisal."
In cases where appraisal rights are available, both the Delaware Code and
the Maryland Code provide that a stockholder exercising his or her right to
dissent may demand payment in cash for his or her shares equal to their fair
value, excluding any appreciation or depreciation in anticipation of the
transaction (although under the Maryland Code such appreciation or depreciation
may be included in determining fair value if its exclusion would be
inequitable). Under the Delaware Code, fair value is determined by the Court of
Chancery. Under the Maryland Code, fair value is determined by agreement with
the corporation or, if an agreement cannot be reached, by an appropriate court
upon the petition of the surviving corporation or the dissenting stockholder.
Under the Delaware Code, appraisal rights to stockholders are available
only in a merger or consolidation and only to stockholders who have not voted in
favor of the merger or consolidation. The stockholder must also file a written
demand for appraisal prior to the stockholder vote on the merger or
consolidation. Under the Delaware Code, dissenters appraisal
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rights are not available in respect to transactions involving the sale, lease,
exchange or other disposition of all or substantially all of a corporation's
assets nor amendments to the certificate of incorporation. The Maryland Code
provides that stockholders are entitled to appraisal rights in connection with
(i) a merger or consolidation; (ii) a share exchange; (iii) a transfer of assets
requiring stockholder approvals; (iv) a business combination governed by Section
3-602 of the Maryland Code (see "-- Business Combination Statutes"); (v) an
amendment to the charter that alters the contract rights of any outstanding
stock and substantially adversely affects stockholder rights if the right to do
so is not reserved in the charter. These rights are available only when the
stockholder files a timely written objection to the transaction, does not vote
in favor of the transaction and makes demand on the successor within 20 days for
payment for his or her stock.
Under the Delaware Code, there are no appraisal rights for shares which, at
the record date for the meeting at which a merger or consolidation is to be
approved, are listed on a national securities exchange or are held of record by
more than 2,000 stockholders, except that appraisal rights are available if the
merger or consolidation agreement requires that stockholders receive anything
other than (i) shares of stock of the corporation surviving or resulting from
such merger or consolidation; (ii) shares of stock of any other corporation that
at the effective date of the merger or consolidation will be either listed on a
national securities exchange or held of record by more than 2,000 stockholders;
(iii) cash in lieu of fractional shares of the corporations described in the
foregoing clauses (i) and (ii); or (iv) any combination of (i), (ii) and (iii).
Additionally, appraisal rights are not generally available in respect of mergers
effected pursuant to Section 253 of the Delaware Code (concerning mergers with a
subsidiary, at least 90% of which is owned by the parent). See "-- Dissenting
Stockholders' Rights of Appraisal."
Under the Maryland Code, there are no appraisal rights if (i) the stock is
listed on a national securities exchange or is designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. (a) with respect to the merger of a subsidiary
corporation, 90 % or more of which is owned by the acquiring corporation, on the
date notice is given to or waived by the dissenting stockholder, or (b) with
respect to any other transaction, on the record date for determining
stockholders entitled to vote on the transaction objected to; (ii) the stock in
question is that of the successor in the merger, unless the merger alters the
contract rights of the stock as expressly set forth in the charter and the
charter does not reserve the right to do so, or the stock is to be changed or
converted in whole or in part in the merger into something other than either
stock in the successor, cash, scrip or other rights or interests arising out of
provisions for the treatment of fractional shares of stock in the successor; or
(iii) the stock is that of an open-end investment company registered under the
Investment Company Act of 1940, as amended, and the value placed on the stock in
the transaction is its net asset value.
Extraordinary Transactions
Under the Delaware Code, unless otherwise provided in a corporation's
certificate of incorporation and except for certain business combinations with
interested stockholders which are
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prohibited and subjected to certain super majority voting requirements (see "--
Business Combination Statutes"), a sale or disposition of all or substantially
all of a corporation's assets, a merger or consolidation of the corporation with
another corporation or a dissolution of the corporation generally requires the
affirmative vote of the board of directors plus, with certain exceptions, the
affirmative vote of a majority of the outstanding stock entitled to vote
thereon. Additionally, the Delaware Certificate provides that the affirmative
vote of 75% of the Shares is required for certain business combinations with
certain related persons unless (i) the business combination was approved by 75%
of the directors who are not related persons or affiliated with related persons
or (ii) certain conditions are met with respect to the consideration paid in the
transaction.
Under the Maryland Code, unless the charter provides otherwise, a sale,
lease, transfer or exchange of all or substantially all of a corporation's
assets not in the ordinary course of business or a merger, consolidation or
share exchange involving the corporation generally requires approval by a two-
thirds vote of the shares of the corporation entitled to vote thereon. The
Maryland Charter reduces the percentage shareholder vote generally required for
such transactions to a majority of all votes entitled to be cast on the matter,
but imposes a requirement that no such transaction will be valid and effective
unless advised by a vote of 75% of the board of directors. In addition,
Subtitle 6 of the Maryland Code prohibits certain business combinations with
interested stockholders and imposes certain super majority voting requirements
in respect of certain business combinations with interested stockholders. See
"-- Business Combination Statutes."
Business Combination Statutes
Both the Delaware Code and the Maryland Code contain business combination
statutes that contain certain prohibitions and super majority voting
requirements for certain business combinations with interested stockholders.
Both statutes have anti-takeover effects; however, the Maryland statute is more
restrictive than the Delaware statute in terms of its anti-takeover effects.
Both are discussed below.
Under the Delaware Code, an "interested stockholder" (defined generally as
a person owning 15% or more of a corporation's outstanding voting stock) is
prohibited from engaging in a "business combination" with a Delaware corporation
for three years following the date such person became an interested stockholder.
The term "business combination" includes among other things, a merger,
consolidation, sale of assets or share exchange. The three-year moratorium may
be avoided if: (i) before such person became an interested stockholder, the
board of directors of the corporation approved either the business combination
or the transaction in which the interested stockholder became an interested
stockholder; (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding shares held by directors who are also officers
of the corporation and by employee stock ownership plans that do not provide
employees with the right to determine confidentially whether
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shares held subject to the plan will be tendered in a tender or exchange offer;
or (iii) on or following the date on which such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation and authorized at an annual or special meeting of stockholders
(not by written consent) by the affirmative vote of the stockholders of at least
66 2/3% of the outstanding voting stock of the corporation not owned by the
interested stockholder.
The business combination restrictions described above will not apply to a
Delaware corporation if, among other things, (i) the corporation's original
certificate of incorporation contains a provision expressly electing not to be
governed by the statute; (ii) the corporation by action of the holders of a
majority of the voting stock of the corporation approves an amendment to its
certificate of incorporation or bylaws expressly electing not to be governed by
the statute, which amendment will not be applicable to any business combination
with a person who was an interested stockholder at or prior to the time of the
amendment; or (iii) the corporation does not have a class of voting stock that
is (a) listed on a national securities exchange, (b) authorized for quotation on
an interdealer quotation system of the National Association of Securities
Dealers, Inc. or a similar quotation system; or (c) held of record by more than
2,000 stockholders (unless an interested stockholder transaction prompted any of
the foregoing results). These provisions of the Delaware Code also do not apply
to business combinations with an interested stockholder when such combination is
proposed after the public announcement of, and before the consummation or
abandonment of a merger or consolidation, a sale of 50% or more of the aggregate
market value of the assets of the corporation on a consolidated basis or the
aggregate market value of all outstanding shares of the corporation, or a tender
offer for 50% or more of the outstanding voting shares of the corporation, if
the triggering transaction is with or by a person who either was not an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of the board, and if the transaction is
approved or not opposed by a majority of the current directors who were also
directors prior to any person becoming an interested stockholder during the
previous three years.
The Maryland Code prohibits certain "business combinations" (including a
merger, consolidation, share exchange or, in certain circumstances, an asset
transfer or issuance or reclassification of equity securities) between a
Maryland corporation and an "interested stockholder." Interested stockholders
are persons (i) who beneficially own 10% or more of the voting power of the
corporation's shares or (ii) are affiliates or associates of the corporation
who, at any time within the two-year period prior to the date in question, was
the beneficial owner of 10% or more of the voting power of the corporation's
shares. Such business combinations are prohibited for 5 years after the most
recent date on which the interested stockholder became an interested
stockholder. Thereafter, any such business combination must be recommended by
the board of directors of the corporation and approved by the affirmative vote
of at least (i) 80% of the votes entitled to be cast by holders of outstanding
voting shares of the corporation and (ii) 66 2/3% of the votes entitled to be
cast by holders of outstanding voting shares of the corporation other than
shares held by the interested stockholder or an affiliate or associate of the
interested stockholder with whom the business combination is to be effected,
unless, among other things, the corporation's stockholders
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receive a minimum price for their shares and the consideration is received in
cash or in the same form as previously paid by the interested stockholder for
its shares. These provisions of the Maryland Code do not apply, however, to
business combinations that are approved or exempted by the board of directors of
the corporation prior to the time that the interested stockholder becomes an
interested stockholder. The Maryland Charter expressly incorporates the business
combination provisions of the Maryland Code.
Control Share Statute
The Maryland Code provides that, with certain exceptions, "control shares"
of a corporation acquired in a "control share acquisition" have no voting rights
except to the extent approved by the stockholders by the affirmative vote of
two-thirds, excluding shares of stock owned by the acquiring person or by
officers or directors who are employees of the corporation. "Control shares" are
shares of voting stock which, if aggregated with all other such shares
previously acquired by such a person, would entitle the acquiring person to
exercise voting power in electing directors within one of the following ranges
of voting power: (i) 20% or more but less than 33 1/3%, (ii) 33 1/3% or more but
less than a majority, or (iii) a majority or more of all voting power. Control
shares do not include shares the acquiring person is then entitled to vote as a
result of having previously obtained stockholder approval. A "control share
acquisition" means, subject to certain exceptions, the acquisition of, ownership
of or the power to direct the exercise of voting power with respect to, control
shares.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of various conditions (including an undertaking to pay expenses),
may compel the board of directors of the corporation to call a special meeting
of stockholders to be held within 50 days of demand therefore to consider the
voting rights of the shares. If no request for a meeting is made, the
corporation may itself present the question at any stockholders' meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to voting rights, as of
the date of the last control share acquisition or of any meeting of stockholders
at which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a stockholders' meeting and the
acquiring person becomes entitled to vote a majority of the shares entitled to
vote, all other stockholders may exercise appraisal rights. The fair value of
the shares as determined for purposes of such appraisal rights may not be less
than the highest price per share paid in the control share acquisition, and
certain limitations and restrictions otherwise applicable to the exercise of
dissenters' appraisal rights do not apply in the context of a control share
acquisition.
The Maryland control share acquisition statute does not apply to stock
acquired in a merger, consolidation or stock exchange if the corporation is a
party to the transaction, or to
-22-
acquisitions previously approved or exempted by a provision in the charter or
bylaws of the corporation adopted before the acquisition of stock.
As permitted under the Maryland Code, the Maryland Bylaws contain a
provision opting out of the Maryland control share acquisition statute.
The Delaware Code contains no similar provisions regarding control shares.
REIT Related Restrictions
Both the Delaware Certificate and the Maryland Charter contain provisions,
including stock transfer limitations, designated to protect the Company's status
as a REIT. The Delaware Certificate provides the Company with the power to
redeem voting shares that have been transferred pursuant to a transfer which, in
the opinion of the directors, would jeopardize the Company's status as a REIT.
This includes the power, if direct or indirect ownership of at least 9.9% of
voting shares has or may become concentrated in the hands of one owner, (i) to
purchase a number of voting shares sufficient to maintain or bring the direct or
indirect ownership of voting shares to no more than 9.9% and (ii) to refuse to
transfer or issue voting shares to any transferee who would directly or
indirectly own more than 9.9% of outstanding voting shares.
The Maryland Charter likewise contains limitations to protect Sizeler
Maryland's status as a REIT. Under the Maryland Charter, if a transfer of the
capital stock of Sizeler Maryland or a change in the capital structure of
Sizeler Maryland would result in (i) any person (as defined in the Maryland
Charter) directly or indirectly acquiring beneficial ownership of more than 9.9%
of the capital stock of Sizeler Maryland; (ii) the outstanding capital stock of
Sizeler Maryland being constructively or beneficially owned by fewer than 100
persons; or (iii) Sizeler Maryland being "closely held" within the meaning of
Section 856 of the Internal Revenue Code, then: (a) any proposed transfer will
be void ab initio and will not be recognized by Sizeler Maryland; (b) Sizeler
Maryland will have the right to redeem the shares proposed to be transferred;
and (c) the shares proposed to be transferred will be automatically converted
into and exchanged for shares of a separate class of stock, the Maryland Excess
Stock, having no voting rights. Holders of Maryland Excess Stock do have certain
rights in the event of any liquidation, dissolution or winding up of the
corporation. The Maryland Charter further provides that the Maryland Excess
Stock will be held by a trustee appointed by Sizeler Maryland in trust (i) for
the person or persons to whom the shares are ultimately transferred, until such
time as the shares are re-transferred to a person or persons in whose hands the
shares would not be Maryland Excess Stock and certain price-related restrictions
are satisfied and (ii) with respect to dividend rights (and rights to funds in
excess of the amounts paid to the holder) for the benefit of a charitable
beneficiary appointed by Sizeler Maryland.
-23-
Certain Anti-Takeover Effects
The Delaware Certificate currently contains provisions which may be viewed
as having anti-takeover effects. For example, stockholders of the Company do not
have cumulative voting rights in the election of directors and the Delaware
Certificate provides for a classified board of directors. The Delaware
Certificate also provides for a 75% stockholder vote to amend certain provisions
of the Delaware Certificate. The Company currently has authorized but unissued
shares of its common stock and preferred stock that could also be issued in such
a way as to have anti-takeover effects.
The Maryland Charter also contains provisions that may be deemed to have
anti-takeover effects because they (i) do not allow for cumulative voting by
stockholders; (ii) provide for a classified board of directors; (iii) require
that mergers, consolidations, share exchanges and certain other extraordinary
transactions be advised by a 75% vote of directors; and (iv) provide for a 75%
stockholder vote to amend certain provisions of the Maryland Charter and to
amend the Maryland Bylaws. Additionally, the Maryland Charter provide for
additional shares of authorized common stock and the creation of authorized
preferred stock that may be issued by the board of directors of Sizeler Maryland
without further stockholder action. Such stock could be issued in such a way as
to have anti-takeover effects.
Anti-takeover provisions in the Delaware and Maryland statutes and in the
corporate governance structure of both Sizeler Delaware and Sizeler Maryland can
impede a hostile takeover and give the corporation's board of directors a
stronger bargaining position and additional time to negotiate a better price or
a better alternative transaction for shareholders, as opposed to either
accepting or permitting by inaction a transaction based on the takeover terms
proposed by the offeror. Such anti-takeover provisions may have the effect,
however, of discouraging or frustrating offers that a number of shareholders
would be willing to accept.
Sizeler Delaware has adopted a shareholder rights plan to the extent
permitted by Delaware law, including Delaware court decisions referred to below.
Sizeler Maryland will assume the rights and obligations under this plan upon
Reincorporation. Although no changes to the plan are currently anticipated,
Sizeler Maryland reserves the right to amend the plan from time to time as
Sizeler Maryland deems necessary. Delaware and Maryland laws permit shareholder
rights plans. Shareholder rights plans have anti-takeover effects. These plans
authorize the issuance of valuable rights to shareholders to acquire additional
securities (the "Rights") either in the company adopting the plan ("flip-in") or
in the company resulting from a takeover transaction, such as a successor by
merger ("flip-over"), but they withhold Rights from the shareholder or
shareholders who are identified as the hostile acquirors under the provisions of
the shareholder rights plan. The Delaware courts have generally upheld
stockholder rights plans, but in recent decisions successively invalidated
provisions of shareholder rights plans which would permit the Rights issued
under plans to be redeemed (before they can be exercised to acquire additional
shares) only by a board of directors controlled by the continuing directors who
adopted the plan or by their chosen successors (a) at any time during the entire
term of the plan (the "dead hand" provision) or (b) for a period not to exceed
180 days (the "slow hand" provision). Maryland statutorily
-24-
permits a slow hand provision, which provides a stronger bargaining position to
a management opposing a hostile take-over than would a shareholder rights plan
without such a provision.
Federal Income Tax Consequences of the Reincorporation
Sizeler Delaware has been advised by Jaeckle Fleischmann & Mugel, LLP,
general counsel to Sizeler Delaware, that, for federal income tax purposes, the
Merger will constitute a reorganization under Section 368 of the Internal
Revenue Code, no gain or loss will be recognized by the holders of the Shares as
a result of the Merger, no gain or loss will be recognized by Sizeler Delaware
or by Sizeler Maryland as a result of the Merger, and Sizeler Maryland will
succeed, without adjustment, to the tax attributes of Sizeler Delaware. Each
stockholder will have the same basis in the stock of Sizeler Maryland received
in the Merger as in the Shares held immediately prior to the time the Merger
becomes effective and the holding period of the stock of Sizeler Maryland will
include the period during which the corresponding Shares were held; provided,
however, that such corresponding Shares were held as a capital asset at the time
of the effectiveness of the Merger.
Stockholders should consult their own tax advisors as to the effect of the
Merger under applicable state or local tax laws.
Dissenting Stockholders' Rights of Appraisal
Pursuant to Section 253 of the Delaware Code, appraisal rights are
generally not available to stockholders when two corporations merge if one of
them owns at least 90% of the other's outstanding shares of each class of stock.
Because the Company owns 100% of all outstanding shares of Sizeler Maryland, no
appraisal rights are available in connection with the Merger, the Merger
Agreement or the Reincorporation.
2. ELECTION OF DIRECTORS
Information Concerning Directors
--------------------------------
The Company's Restated Certificate of Incorporation, as amended, provides
that the number of directors will be not less than five and not more than
fifteen and that the directors will be divided into three classes containing as
nearly equal a number of directors as possible, with one class standing for
election each year. The board has set the number of directors at eight effective
at the Meeting, and three of those directors are to stand for election at the
Meeting. Each person so elected will serve until the Annual Meeting of
Stockholders in 2004 or until his successor is duly elected and qualified. The
affirmative vote of a plurality of the Shares present at the Meeting is
necessary for election of a director.
-25-
The directors recommend a vote FOR the directors standing for election
listed below. Unless instructed otherwise, proxies will be voted FOR these
nominees. Although the directors do not contemplate that any of the nominees
listed below will be unable to serve, if such a situation arises prior to the
Meeting, the proxy will be voted in accordance with the best judgment of the
person or persons voting the proxy.
The following table sets forth information regarding the directors standing
for election and directors whose terms continue beyond the Meeting.
Name, Tenure and Position(s) Principal Occupation and Business
with the Company Age Experience for Past Five Years (1)
----------------------------- --- ----------------------------------
Directors Standing for Election
-------------------------------
J. Terrell Brown................. 61 Chairman of GMFS, LLC (mortgage lending) since
Director since 1995 May 1999. Prior to May 1999, Chairman and Chief
Executive Officer of United Companies Financial
Corporation (financial services). (2)
Harold B. Judell................. 86 Senior partner in the law firm of Foley & Judell, LLP;
Director since 1986 Chairman of the Board of Dauphine Orleans Hotel
Corporation.
Richard L. Pearlstone............ 53 President of The Pearlstone Group, Inc. (investments)
Director since 1986 since 1995; Chief Executive Officer of Cross Keys
Asset Management, Inc. (investment advisors) since
November 1986; and Chief Executive Officer of SNP
Management LLC (management company) since
November 1999.
Directors Whose Terms Expire in 2002
------------------------------------
Francis L. Fraenkel.............. 68 Managing Director of Neuberger Berman since
Director since 1993 December 2000; Prior to December 2000, Managing
Director of Delta Capital Management, LLC
(investment management) since April 1999; Chairman
of Delta Capital Management, Inc. prior to April 1999.
(3)
Sidney W. Lassen................. 66 Chairman of the Board and Chief Executive Officer of
Chairman of the Board and the Company; Chairman of the Board and Chief
Chief Executive Officer Executive Officer of Sizeler Realty.
since 1986
-26-
Name, Tenure and Position(s) Principal Occupation and Business
with the Company Age Experience for Past Five Years (1)
----------------------------- --- ----------------------------------
Directors Whose Terms Expire in 2003
------------------------------------
Thomas A. Masilla, Jr............ 54 Vice Chairman of the Board since 1994, President and
Vice Chairman of the Board Principal Operating Officer since 1995 and Chief
since 1994, President and Financial Officer from 1996 through May 1999.
Principal Operating Officer
since 1995, Director since
1986
James W. McFarland............... 55 Dean of A.B. Freeman School of Business, Tulane
Director since 1994 University.
Theodore H. Strauss.............. 76 Senior Managing Director with Bear Stearns & Co. Inc.
Director since 1994
___________________________
(1) Unless otherwise stated, each director has held the position indicated for
at least the past five years.
(2) On March 1, 1999, United Companies Financial Corporation announced that it
was reorganizing under Chapter 11 of the United States Bankruptcy Code.
(3) On April 1, 1999, Delta Capital Management, Inc. reorganized into a limited
liability company and changed its name to Delta Capital Management, LLC.
Other Trusteeships and Directorships
------------------------------------
The directors of the Company serve on the Boards of Directors or the Boards
of Trustees of the following publicly held companies:
Name Company
---- -------
Francis L. Fraenkel Battery Park High Yield Fund
Sidney W. Lassen Hibernia Corporation
James W. McFarland Petroleum Helicopters, Inc.
Stewart Enterprises, Inc.
-27-
Name Company
---- -------
Theodore H. Strauss Clear Channel Communications, Inc.
Hollywood Casino Corporation
Texas Capital Bankshares
Committees and Meeting Data
---------------------------
The Executive Committee of the Board of Directors consists of Messrs.
Judell, Lassen, Masilla, McFarland, Pearlstone and Strauss. It has all the
authority of the Board of Directors (except for action relating to certain
fundamental corporate changes) between board meetings, including the authority
to declare a dividend and to authorize the issuance of stock. The Executive
Committee did not meet in 2000.
The Audit Committee of the Board of Directors consists of Messrs. Brown,
Fraenkel, Judell and McFarland. The Audit Committee met once during 2000. Its
functions have been to recommend the appointment of independent accountants;
review the arrangements for and scope of the audit by independent accountants;
review the independence of the independent accountants; consider the adequacy of
the system of internal accounting controls and review any proposed corrective
action; review and monitor the Company's policies regarding business ethics and
conflicts of interests; discuss with management and the independent accountants
the Company's draft annual financial statements and key accounting and/or
reporting matters; and review the activities and recommendations of the
Company's financial staff. See "-- Audit Committee Report" below.
During 2000, the Compensation Committee consisted of Messrs. Judell,
McFarland and Strauss. The Compensation Committee met once during 2000. The
function of the Compensation Committee is to review the compensation program for
executive officers and to administer the 1986 Option Plan and the 1996 Stock
Option Plan.
The Company does not have a separate nominating committee or any committee
performing a similar function. The Board handles all nomination matters.
During 2000 the full Board of Directors met on four occasions. All
directors attended at least 75% of the aggregate total number of meetings held
by the Board of Directors and all committees of the Board on which such director
served.
Audit Committee Report. The Audit Committee of the Board of Directors is
responsible for providing independent, objective oversight of the Company's
accounting functions and internal controls. The Audit Committee is composed of
four directors, Messrs. Brown, Fraenkel, Judell and McFarland, each of whom is
independent as defined by the New York Stock Exchange listing
-28-
standards. The Audit Committee operates under a written charter approved by the
Board of Directors. A copy of the charter is attached to this Proxy Statement as
Appendix D.
Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated financial statements with
management and the independent accountants. The Audit Committee also discussed
with the independent accountants the matters required by Statement on Auditing
Standards No. 61 (Communication with Audit Committees). The Audit Committee
received written disclosures from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with the independent accountants
that firm's independence.
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000, to be filed with the Securities
and Exchange Commission.
THE AUDIT COMMITTEE
J. TERRELL BROWN, Chair
FRANCIS L. FRAENKEL
HAROLD B. JUDELL
JAMES W. McFARLAND
Executive Officers
------------------
The following is a listing of the Company's executive officers. The day-to-
day operational management of the Company's properties is performed by Sizeler
Real Estate Management Co., Inc. pursuant to a management agreement which is
described under the heading "Management Agreement."
-29-
Name, Tenure and Position(s) Principal Occupation and Business
with the Company Age Experience for Past Five Years
---------------------------- --- ---------------------------------
Sidney W. Lassen....................... 66 See table under "Information Concerning
Chairman of the Board and Directors."
Chief Executive Officer since
1986
Thomas A. Masilla, Jr.................. 54 See table under "Information Concerning
Vice Chairman of the Board Directors."
since 1994, President and
Principal Operating Officer
since 1995 and Director since
1986
Robert A. Whelan....................... 33 Chief Financial Officer of the Company since
Chief Financial Officer May 1999. Real Estate Consultant for Ernst
& Young/Kenneth Leventhal Real Estate Group
prior to joining the Company.
James W. Brodie........................ 32 Vice President of the Company since 1991;
Vice President since 1991 and Secretary of the Company since 1999; Assistant
Secretary since 1999 Secretary from 1997 to 1999; joined the Company
in 1989.
Executive Compensation
----------------------
Summary Compensation Table. The following table contains information
with respect to the annual and long-term compensation for the years ended
December 31, 2000, 1999 and 1998 for the Company's chief executive officer and
each other person who was an executive officer of the Company on December 31,
2000 who received cash compensation in excess of $100,000 during 2000 (the
"Named Officers").
-30-
Long Term
Annual Compensation All Other
Compensation Awards Compensation (1)
---------------------------- ------------------- ----------------
Name and Principal Position Year Salary Bonus (2) Options/SARs (3)
--------------------------- -------- -------- --------- -------------------
Sidney W. Lassen................. 2000 $325,000 $51,850 35,000 shs $32,500
Chairman of the Board and 1999 305,000 53,100 30,000 shs 30,500
Chief Executive Officer 1998 288,000 45,000 35,000 shs 28,800
Thomas A. Masilla, Jr............ 2000 $250,000 $39,950 25,000 shs $25,000
Vice Chairman of the Board, 1999 235,000 41,000 20,000 shs 23,500
President, and Principal 1998 222,000 35,000 30,000 shs 22,000
Operating Officer
Robert A. Whelan................. 2000 (4) $135,000 $ 6,417 15,000 shs $13,500
Chief Financial Officer
James W. Brodie.................. 2000 (5) 165,000 $ 19,575 15,000 shs $16,500
Secretary and Vice President
Acquisitions and
Development
___________________________
(1) These amounts were paid under a nonelective deferred compensation agreement
with each Named Officer, pursuant to which an amount of deferred
compensation was credited annually to a bookkeeping account maintained for
them. Upon the Named Officer's election to retire at age 65, earlier
termination of employment or death, the Company will pay him his vested
interest in his account.
(2) This amount was paid one-half in Shares and one-half in cash.
(3) These options were granted under the 1996 Stock Option Plan.
(4) Mr. Whelan joined the Company as Chief Financial Officer in May 1999 and
his compensation for 1999 did not exceed $100,000.
(5) Mr. Brodie became an executive officer of the Company effective January 1,
2000.
-31-
Option Grants. The following table gives information with respect to
option grants made to the Named Officers during 2000. The information regarding
potential realizable value assumes that the Shares will appreciate at the
compounded percentage rate set forth in the table during the entire term of the
option. There can be no assurance that such appreciation will occur.
% of Total Potential Relizable
Options/ Value at Assumed
Number of SARs Annual Rates of Stock
Securities Granted to Price Appreciation
Underlying Employees Expira- for Option Term
Options/SARs in Exercise or Base tion ----------------------
Name Granted Fiscal Year Price ($/SH) Date 5%($) 10%($)
---- ------------- ------------- ---------------- ------- ---- -----
Sidney W. Lassen....... 35,000 (1) 35% $8.00 2/2/10 $176,090 $446,248
Thomas A. Masilla, Jr.. 25,000 (2) 25% $8.00 2/2/10 $125,779 $318,748
Robert A. Whelan....... 15,000 (3) 15% $8.00 2/2/10 $ 75,467 $191,249
James W. Brodie........ 15,000 (3) 15% $8.00 2/2/10 $ 75,467 $191,249
_________________
(1) Becomes exercisable with respect to 17,500 Shares on February 3, 2001, and
17,500 Shares on February 3, 2002.
(2) Becomes exercisable with respect to 12,500 Shares on February 3, 2001, and
12,500 Shares on February 3, 2002.
(3) Becomes exercisable with respect to 7,500 Shares on February 3, 2001, and
7,500 Shares on February 3, 2002.
Option Exercises and Fiscal Year End Values. The following table shows
information with respect to the value of unexercised options held by the Named
Officers as of December 31, 2000. Valuation calculations for unexercised options
are based on the closing price ($6.94) of a Share on the New York Stock Exchange
on December 31, 2000. No Named Officer exercised options during 2000.
-32-
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs at Options/SARs at
December 31, 2000 December 31, 2000
----------------- -----------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- --------------------------
Sidney W. Lassen......... 170,000/50,000 $0/$0
Thomas A. Masilla, Jr.... 132,000/35,000 $0/$0
Robert A. Whelan......... 0/15,000 $0/$0
James W. Brodie.......... 33,750/20,000 $0/$0
Agreements with Executive Officers. The Company has entered into an
agreement with each of its executive officers. Each agreement has a two-year
term that is extended automatically each month so that the remaining term of the
agreement is 24 months. Each such officer is entitled to a minimum base salary
under his agreement ($325,000 for Mr. Lassen; $260,000 for Mr. Masilla; $142,000
for Mr. Whelan; and $180,000 for Mr. Brodie). The board may terminate an
agreement at any time with no further obligation upon a finding that an officer
has breached or neglected his duties, and an officer may resign at any time upon
30 days' notice. The board may also terminate an agreement at any time without
cause; in that event, or upon death or disability, the officer is entitled to 24
months continued salary and (except in the case of death or disability)
benefits. Provisions for termination of employment upon a change in control
supersede the agreements' regular termination provisions. "Change in control" is
defined, subject to various qualifications, as the acquisition by a person or
group of beneficial ownership of 25% or more of the Shares; or the election of a
member of the Board whose nomination or election was not approved by a majority
of the members of the Board who were members of the Board on the date of the
agreement or whose election to the Board was previously so approved; or a merger
or similar transaction after which the Company's stockholders hold 50% or less
of the voting securities in the resulting entity. If, within 24 months of a
change in control, either the Company terminates an officer's employment for
reasons other than a willful breach of duty that is demonstrably and materially
injurious to the Company or disability, or the officer resigns because of
certain changes in the circumstances of his employment (including the assignment
to the officer of duties inconsistent with his prior position; reduction in
salary; and relocation), the officer is entitled to three times the sum of (i)
his annual salary, (ii) one-half the amount of the bonuses and nonelective
deferred compensation paid or credited to him in the past 24 months, and (iii)
the amount the Company would have contributed for the officer for a year under
its defined contribution plan. In addition, the officer is entitled to a portion
of the incentive bonus he would have earned for the year of termination
(proportionate to the part of the year elapsed by termination), continuation of
life and health insurance benefits for up to 36 months, and reimbursement for
out-placement expenses not in excess of $20,000. The agreements provide that if
the receipt of benefits in connection with a change in control would subject an
officer to excise
-33-
tax under section 280G of the Internal Revenue Code, then the officer will also
receive a cash gross-up payment so that he will realize the same amount net
after-tax that he would have realized had the excise tax not been applicable.
Compensation Committee Report. During 2000, the members of the Company's
Compensation Committee were Messrs. McFarland (Chairman), Judell and Strauss.
The Compensation Committee believes that the primary goals of the Company's
compensation policies should be as follows:
. To provide total compensation opportunities for executive officers
which are competitive with those provided to persons in similar
positions in companies with which the Company competes for employees.
. To strengthen the mutuality of interest between management and
stockholders through the use of incentive compensation directly
related to corporate performance and through the use of stock-based
incentives that result in increased Share ownership by executive
officers.
In furtherance of these policies the Company adopted the agreements with
officers and non-elective deferred compensation agreements which are described
elsewhere in this Proxy Statement. The Company also adopted an Incentive Award
Plan. The Compensation Committee believes that the employment agreements provide
the Company's executive officers with sufficient compensation and security in
their present positions. The non-elective deferred compensation agreements
provide future benefits to the executive officers for retirement. The
Compensation Committee believes that the Incentive Award Plan will align the
interests of the executive officers with those of the stockholders by (i) basing
incentive awards on funds from operations ("FFO") per share, which the Company
and the REIT industry believe to be an important measure of the financial
performance of a REIT, and (ii) paying 50% of each incentive award in Shares.
The Incentive Award Plan also grants the Compensation Committee discretion to
make awards less than those indicated by the Incentive Award Plan's targets if
the Compensation Committee believes that reduction is appropriate. The
Compensation Committee will continue to evaluate the Company's compensation
program to determine whether it is providing the incentives for which it is
intended.
The Compensation Committee believes that the main purpose of base
compensation is to provide sufficient compensation to the executive officers of
the Company relative to salary levels for other REITs and the officer's level of
responsibility. With respect to Mr. Lassen, the Company's chief executive
officer, the Committee considered a number of factors in setting the
compensation set forth in the agreement with him, the most important of which
were the level of compensation paid to chief executive officers of other REITs
the same relative size as the Company and the success of the Company's program
instituting operating efficiencies, controlling costs and increasing rental
rates and percentages leased, which was developed under Mr. Lassen's direction.
-34-
In determining compensation to be paid to the executive officers of the
Company other than Mr. Lassen in 2000, the Compensation Committee designed its
compensation policies to align the interests of the executive officers of the
Company with the Company's business strategies. These policies are intended to
reward executives for putting into effect the Company's long-term business
strategies and for enhancing stockholder value, while at the same time providing
sufficient compensation to executives so that the Company can retain the
services of executives whose abilities are critical to the Company's long-term
success.
The Compensation Committee believes that long term stock-based incentive
compensation encourages senior management to operate in a manner consistent with
the interests of the Company's stockholders. In 2000, the Company granted Mr.
Lassen an option to purchase 35,000 Shares, Mr. Masilla an option to purchase
25,000 Shares and each of Messrs. Whelan and Brodie an option to purchase 15,000
Shares.
The Compensation Committee administers an Incentive Award Plan adopted by
the Company in 1994. The purpose of the Plan is to reward eligible officers of
the Company on the basis of their contribution to the Company, and in particular
on the basis of their contribution to the Company's achievement of planned
growth in funds from operations per share. During 2000, a number of factors
affected the Company's growth in funds from operations, including the completion
of new development projects, increases in property occupancy levels, leasing and
re-leasing properties at higher rents and the containment of operating expenses
partially offset by higher interest expense due to an escalating interest rate
environment as well as increased insurance and utility costs and real estate
taxes. Interest rates, in particular, adversely affected the Company's funds
from operations in the amount of $832,000 or $0.10 per share in 2000. In order
to mitigate future exposure to interest rate volatility on the Company's funds
from operations, Management acted aggressively early in 2000 to convert a
substantial amount of the Company's outstanding variable rate debt to
additional long-term, fixed rate mortgage financing. Reflective of Management's
efforts, the Company's funds from operations increased to $1.62 per share in
2000 from $1.60 in 1999. Considering all of the above factors among others, the
Compensation Committee granted bonuses to executive officers totalling $121,000
(paid one-half in cash and one-half in shares of the Company).
JAMES W. McFARLAND
HAROLD B. JUDELL
THEODORE H. STRAUSS
Members of the Compensation Committee
This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement and any portion thereof into any filing under the Securities Act or
under the Exchange Act and shall not otherwise be deemed filed under such acts.
-35-
Performance Comparison
----------------------
Set forth below is a line graph comparing the percentage change in the
cumulative total return to stockholders on the Shares over the five years ended
December 31, 2000 and over the one month periods ended January 31, 2001 and
February 28, 2001 against the cumulative total return of a Peer Group of
diversified REITs, the Standard & Poor's 500, the Wilshire REIT Index and the
Wilshire RE Securities Index. The companies contained in the Peer Group are
listed in the footnote below.
[Performance Graph appears here]
====================================================================================================
January 31 February 28
1995 1996 1997 1998 1999 2000 2001 2001
----------------------------------------------------------------------------------------------------
The Company 100.00 119.71 142.15 129.82 133.47 127.87 146.31 158.69
-----------------------------------------------------------------------------------------------------
Sizeler Property Investors
Peer Group (1) 100.00 133.01 160.35 158.79 148.04 200.57 202.52 196.16
-----------------------------------------------------------------------------------------------------
Wilshire REIT Index 100.00 137.04 163.99 136.11 132.61 173.77 173.74 170.87
-----------------------------------------------------------------------------------------------------
Wilshire RE Securities
Index 100.00 136.87 163.97 135.40 131.08 171.37 173.09 169.47
-----------------------------------------------------------------------------------------------------
S&P 500 100.00 122.86 163.86 210.64 254.97 231.74 139.99 117.57
=====================================================================================================
(1) The Peer Group consists of the following companies in addition to the
Company: Boddie-Noell Properties, BRT Realty Trust, Colonial Properties
Trust, Cousins Properties Incorporated, CV REIT, Inc., Duke-Weeks Realty
Corporation, EastGroup Properties, Inc., EQK Realty Investors I,
Glenborough Realty Trust, Inc., HMG/Courtland Properties, Inc., Income
Opportunity Realty Investors, Inc., Lexington Corporate Properties Trust,
MGI Properties, Property Capital Trust (until liquidated on June 7, 1999),
Presidential Realty Corporation, Pennsylvania Real Estate Investment Trust,
Pittsburgh & West Virginia Railroad, Transcontinental Realty Investors, and
Washington Real Estate Investment Trust.
Directors' Fees
---------------
Directors who are also executive officers of the Company are not separately
compensated for their services as directors. Directors who are not executive
officers are compensated in accordance with the Company's 1994 Directors' Stock
Ownership Plan (the "Directors' Plan"). The Directors' Plan provides for a
stock award of 1,500 Shares to be made to each director annually on the first
business day following January 15. A director may elect to be paid a cash
substitute rather than all or part of an annual stock award. The cash
substitute will equal 90% of the value of the Shares for which the director
elects the cash substitute. Directors are also paid a meeting fee of $1,000 per
board meeting and $500 per committee meeting. In addition, directors
-36-
who are not also employees of the Company received an option to purchase 5,000
Shares on February 3, 2000 for a purchase price of $8.00 per Share.
Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
Based solely on its review of reports filed pursuant to Section 16(a) of
the Exchange Act or written representations from directors and executive
officers required to file such reports, the Company believes that all such
filings required of its officers and directors were timely made.
Management Agreement
--------------------
Subsidiaries of the Company have contracts (the "Management Agreements")
with Sizeler Real Estate Management Co., Inc. (the "Management Company"). The
Management Company is a wholly-owned subsidiary of Sizeler Realty in which a
beneficial minority interest is directly owned by Sidney W. Lassen and the
balance is owned by members of the family of Mr. Lassen's wife and her parents'
estates. Mr. Lassen serves as an officer of Sizeler Realty.
Under the Management Agreements, the Management Company performs leasing
and management services with respect to the operation of all of the Company's
properties, including accounting and data processing services, collecting rents,
making repairs, cleaning and maintenance, etc. Upon request of the Company, the
Management Company performs or causes to be performed advertising, promotion,
market research and management information services.
Under the Management Agreements, the annual management fee is paid ratably
on a monthly basis and is calculated based upon .65% of the Company's gross
investment in real estate at the beginning of each year (as shown on the
Company's audited financial statements for the previous year), and is adjusted
for acquisitions or dispositions of property during a year effective upon the
acquisition or disposition. At the end of each year, the management fee for
that year is adjusted (either upward or downward) by the percentage increase or
decrease in the Company's FFO per Share compared to the previous year.
During 2000, the subsidiaries of the Company paid the Management Company
$2,988,000 consisting of management and leasing fees and reimbursement for
certain administrative expenses. FFO per Share was $1.62 in 2000 and $1.60 in
1999. Accordingly, an upward adjustment of the management fee from .65% of the
Company's gross investment in real estate to .658% was made by mutual agreement
of the Company and the Management Company for the year ended December 31, 2000
and paid in 2001.
The Company's Bylaws require that the directors of the Company not
affiliated with Sizeler Realty or the Management Company (the "Unaffiliated
Directors") determine at least annually that the compensation the Company
contracts to pay for management services is reasonable in relation
-37-
to the nature and quality of services performed and that such compensation is
within the limits prescribed in the Management Agreements. The determination is
to be based upon such factors as the Unaffiliated Directors deem appropriate,
including the size of the fee in relation to the size, composition and
profitability of the Company's real property interests under management, the
rates charged to other real estate investment trusts and to investors other than
real estate investment trusts by firms performing similar services, the amount
of additional revenues realized by such firm and its affiliates for other
services performed for the Company's properties under management (including
income, conservation or appreciation of capital) and the quality of those
properties.
The Management Agreements are renewable annually by the parties, subject to
a determination by a majority of the Unaffiliated Directors that the Management
Company's performance has been satisfactory, and subject to the termination
rights of the parties. The Management Agreements may be terminated for any
reason by either party upon 180 days' written notice. During 2000, the
Unaffiliated Directors determined that the compensation the subsidiaries of the
Company contracted to pay for management services was reasonable.
Certain Transactions and Relationships
--------------------------------------
The Company holds its interest in the Westland Shopping Center pursuant to
a long term ground lease with Westland Shopping Center LLC (the "LLC"), expiring
on December 31, 2046. The LLC is owned by an entity of which an officer and
director and his wife and her brother and brother's wife own interests. The
Company was charged ground rent of $55,000 in 2000, $56,000 in 1999 and $45,000
in 1998.
The Company leases approximately 14,000 square feet at the Westland
Shopping Center to Sizeler Realty. Under this lease, Sizeler Realty paid annual
rent, including expense reimbursements, of $103,000 in 2000, $104,000 in 1999
and $101,000 in 1998. The primary term of the lease expires January 31, 2002
and the lease provides for two five-year renewal options.
In March 1991, the Company purchased a one-half interest in the Southwood
Shopping Center, a 40,000 square foot community shopping center in Gretna,
Louisiana, from Sizeler Realty Co.(LaPalco), Inc. ("LaPalco"), a wholly owned
subsidiary of Sizeler Realty, for $900,000. The Southwood Shopping Center is
subject to a ground lease from an entity in which Sidney W. Lassen and his wife,
and I. William Sizeler, Mr. Lassen's brother-in-law, and his wife own interests.
The ground lease's term runs through March 31, 2031. The rent under the ground
lease is 50% of cash flow (after debt service and certain other adjustments
described below) up to a maximum of $225,000 and in the event the rental payment
shall reach $225,000 in any year, it shall remain fixed at $225,000 for each
year thereafter. For 2000, payments of $24,000 were made under the ground
lease. The Company and LaPalco each contributed their one-half interests in the
Southwood Shopping Center to a partnership. Under the terms of the partnership
agreement, the
-38-
Company is to receive a preferential return equal to 11.25% of (i) its initial
contributions to the partnership (valued at $900,000) plus (ii) any subsequent
contributions less (iii) any distributions to the Company from sums available
from sale or refinancing. Profit and loss allocations after this preferential
allocation and the distribution of a like sum to LaPalco will be based on
respective ownership interests. Payments of rent under the ground lease are
subordinate to payment of the Company's preferential return. LaPalco is the
primary obligor on a mortgage note payable with a principal balance of
approximately $1,090,000 on December 31, 2000 and maturing in September 2004,
secured by the Southwood Shopping Center guaranteed by Sizeler Realty, which
LaPalco was obligated to satisfy out of its partnership distributions or other
sources. In the event of a sale of the Southwood Shopping Center, proceeds would
be distributed as follows: first, to the Company in the amount of any unpaid
preferential return plus the amount of its contributions; second, to LaPalco in
an amount equal to the greater of the amount distributed to the Company or the
amount of financing still outstanding; and finally, to the partners in
accordance with their respective interests.
The Company through wholly-owned subsidiaries, owns its interests in
Southland Mall, North Shore Square Mall, Gonzales Plaza, Hammond Square Mall,
Westgate Shopping Center, Westland Shopping Center, Airline Park Shopping
Center, Azalea Gardens Shopping Center, Colonial Shopping Center, Steeplechase
Apartments, Garden Lane Apartments, Georgian Apartments, Colonial Manor
Apartments, Magnolia Place Apartments, Governors Gate Apartments and developable
land through limited liability companies or partnerships in which the Company
has a 99% interest and its partner has a 1% interest. In each case, its partner
is a wholly-owned subsidiary of Sizeler Realty.
See "Management Agreements" for information concerning the compensation by
the Company of the Management Company pursuant to the Management Agreements and
the affiliation of a Company director and officer with the Management Company
and its parent company, Sizeler Realty.
3. OTHER MATTERS
The directors know of no business to be brought before the Meeting other
than as set forth above. If, however, any other business should properly come
before the Meeting, it is the intention of the persons named in the enclosed
form of proxy to vote such proxies in accordance with their best judgment on
such matters.
-39-
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
KPMG LLP, independent accountants, has audited the books of the Company
since 1995. The Board of Directors has not yet appointed a firm to act as
auditors for the fiscal year ending December 31, 2001. A representative of
KPMG LLP is expected to be present at the Meeting and will have an opportunity
to make a statement, if he so desires, and will be available to respond to
appropriate questions.
During the fiscal year ending December 31, 2000, KPMG LLP provided various
audit and non-audit services to the Company as follows:
Audit Fees. The aggregate fees billed to the Company by KPMG LLP during
the fiscal year 2000 for review of the Company's annual financial statements and
those financial statements in the Company's quarterly reports on Form 10-Q
totaled $84,000.
Financial Information Systems Design and Implementation Fees. Our
independent auditors did not render information technology services to us during
the fiscal year ending December 31, 2000.
All Other Fees. The aggregate fees billed by our independent auditors for
professional services rendered to us during fiscal year 2000, other than the
audit services referred to above, were approximately $68,000 and primarily
included services rendered to us in connection with tax preparation and tax
consulting services.
The Audit Committee of the Board of Directors has considered whether
provision of the services described above is compatible with maintaining the
independent accountants' independence and has determined that such services have
not adversely affected KPMG LLP's independence.
STOCKHOLDER PROPOSALS FOR THE 2001
ANNUAL MEETING OF STOCKHOLDERS
Proposals in Company's Proxy Statement
--------------------------------------
Stockholder proposals submitted for inclusion as a stockholder proposal in
the Company's proxy materials for the 2002 Annual Meeting of Stockholders must
be received by the Company at its office at 2542 Williams Boulevard, Kenner,
Louisiana 70062 no later than December 5, 2001.
-40-
Proposals to be Introduced at the Annual Meeting but not Intended to be Included
--------------------------------------------------------------------------------
in the Company's Proxy Statement
--------------------------------
In order to be considered at the 2002 Annual Meeting of Stockholders,
stockholder proposals must comply with the advance notice and eligibility
requirements contained in the Company's Delaware Bylaws or, if the
Reincorporation is approved and the Company reincorporates in Maryland, the
Maryland Bylaws. Both the Delaware Bylaws and the Maryland Bylaws provide that
stockholders are required to give advance notice to the Company of any
nomination by a stockholder of nominees for election as directors and of any
business to be brought by a stockholder before a stockholders' meeting. The
stockholder providing such notice must be a stockholder of record of the Company
who was a stockholder of record at the time of the giving of the notice provided
for in the relevant bylaws, who was entitled to vote at the meeting and who has
complied with the notice procedures set forth in the relevant bylaws. The
advanced notice and eligibility requirements of the Delaware Bylaws and the
Maryland Bylaws are described above in the section of this Proxy Statement
captioned "Proposal to Reincorporate in Maryland -- Comparison of the Delaware
Code, Delaware Certificate and Delaware Bylaws to Maryland Code, Maryland
Charter and Maryland Bylaws -- Advance Notice Provisions; Nominations by
Stockholders for the Election of Directors."
Under the Delaware Bylaws, based upon an initial mailing date of April 4,
2001, for this Proxy Statement, a qualified stockholder intending to introduce a
proposal or nominate a director at the 2002 Annual Meeting of Stockholders but
not intending the proposal to be included in the Company's proxy materials
should give written notice to the Company's Chairman or President not later than
February 3, 2002 and not earlier than January 4, 2002. If the Reincorporation is
approved and the Company reincorporates in Maryland, written notice must be sent
to the Chairman of the Board not later than January 4, 2002 and not earlier than
December 5, 2001.
The specific requirements of the advance notice and eligibility provisions
with respect to the Company, are set forth in Article I, Section 7 of the
Delaware Bylaws, a copy of which is available upon request. In the event that
the Company reincorporates in Maryland, the advanced notice and eligibility
requirements of Sizeler Maryland are set forth in Article II, Section 9, 11 and
12 of the Maryland Bylaws. Copies of the Maryland Bylaws are attached to this
Proxy Statement as Appendix C and are also available upon request. Such
requests and any stockholder proposals should be sent to the Chairman or the
President of the Company at 2542 Williams Boulevard, Kenner, Louisiana 70062 or,
in the event that the Company reincorporates in Maryland, to the Chairman of the
Board of the Company at the same address.
By Order of the Board of Directors
THOMAS A. MASILLA, JR.
President
-41-
APPENDIX A
----------
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER ("Merger Agreement") dated as of
________, 2001, is entered into by and between SIZELER PROPERTY INVESTORS, INC.,
a Maryland corporation ("Sizeler Maryland"), and SIZELER PROPERTY INVESTORS,
INC., a Delaware corporation ("Sizeler Delaware").
A. Sizeler Maryland was formed as a wholly-owned subsidiary of
Sizeler Delaware in connection with a proposal for the reorganization of Sizeler
Delaware approved by the board of directors of Sizeler Delaware.
B. The reorganization of Sizeler Delaware is to be effected by
merging Sizeler Delaware with and into Sizeler Maryland and causing the
stockholders of Sizeler Delaware to become the stockholders of Sizeler Maryland,
with each outstanding share of common stock of Sizeler Delaware being deemed at
the effective time of the merger to be one share of common stock of Sizeler
Maryland.
C. The Maryland General Corporation Law (the "Maryland Code") and
the Delaware General Corporation Law (the "Delaware Code") permit the
reorganization of Sizeler Delaware into Sizeler Maryland provided that Sizeler
Delaware and Sizeler Maryland each adopts a plan of merger which sets forth the
terms and conditions of the proposed merger, the mode of carrying the merger
into effect, the manner and basis of converting the shares of each corporation
into shares or other securities or obligations of the surviving corporation and
other applicable provisions.
D. The boards of directors of Sizeler Delaware and Sizeler Maryland
have determined that it is advisable and in the best interests of the
stockholders that Sizeler Delaware merge with and into Sizeler Maryland upon the
terms and subject to the conditions of this Merger Agreement for the purpose of
effecting the reincorporation of Sizeler Delaware in the State of Maryland, and
have approved this Merger Agreement.
E. The parties intend by this Merger Agreement to effect a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended.
In consideration of the premises and the agreements set forth herein,
the receipt and sufficiency of which are hereby acknowledged, Sizeler Maryland
and Sizeler Delaware hereby agree as follows:
1. Merger. Sizeler Delaware shall merge with and into its wholly-
------
owned subsidiary, Sizeler Maryland and Sizeler Maryland shall be the surviving
corporation (the "Merger"). Sizeler Maryland is hereinafter sometimes referred
to as the "Surviving Corporation". Provided the conditions set forth in
paragraph 7 have been met, the Merger shall
become effective as of the date of the later to occur of the filing of a
Certificate of Merger with the Secretary of State of Delaware in accordance with
the Delaware Code and the date of filing Articles of Merger with the State of
Maryland Department of Assessments and Taxation in accordance with the Maryland
Code.
2. Manner and Basis of Converting Shares. Sizeler Maryland has
-------------------------------------
authority to issue 70,000,000 shares of capital stock, initially classified as
53,960,000 shares of common stock, par value of $.0001 per share, 40,000 shares
of Series A preferred stock, par value $.0001 per share, and 16,000,000 shares
of excess stock, par value $.0001 per share. Sizeler Maryland has 100 shares of
common stock issued and outstanding, all of which are owned by Sizeler Delaware.
Sizeler Maryland does not have any preferred stock issued and outstanding.
Sizeler Delaware has authority to issue 45,000,000 shares of common stock, par
value $.01 per share, of which 8,142,079 shares were issued and outstanding
as of March 22, 2001, and 9,000,000 shares of preferred stock, par value $.01
per share, none of which are outstanding. Upon the Merger becoming effective,
(a) each outstanding share of common stock of Sizeler Delaware shall immediately
be deemed to be one share of common stock of Sizeler Maryland without an
exchange of certificates or any action on the part of the stockholders thereof
and (b) the 100 shares of common stock of Sizeler Maryland owned by Sizeler
Delaware, that shall then be owned by Sizeler Maryland by virtue of the Merger,
shall be retired and resume the status of authorized and unissued shares and any
capital represented by such shares shall be eliminated.
3. Articles of Incorporation and Bylaws. The Articles of
------------------------------------
Incorporation and Bylaws of Sizeler Maryland in effect on the effective date of
the Merger shall be the Articles of Incorporation and Bylaws of Sizeler Maryland
as the Surviving Corporation until further amended in accordance with the
Maryland Code.
4. Officers and Directors. The persons who are executive officers
----------------------
of Sizeler Maryland immediately prior to the effective time of the Merger shall
be the executive officers of the Surviving Corporation thereafter, without
change, until their successors have been elected and qualified. The directors of
Sizeler Maryland at the effective time of the Merger shall be the directors of
the Surviving Corporation, in accordance with the Articles of Incorporation of
Sizeler Maryland until their successors have been elected and qualified.
5. Succession. Upon the Merger becoming effective, Sizeler Delaware
----------
shall merge with and into Sizeler Maryland, the Surviving Corporation, and
Sizeler Delaware shall cease to exist. The Surviving Corporation shall possess
all the rights, privileges, powers and franchises of a public as well as of a
private nature, and shall be subject to all the restrictions, disabilities and
duties of Sizeler Delaware; and all the rights, privileges, powers and
franchises of Sizeler Delaware, and all property, real, personal and mixed, and
all debts due to Sizeler Delaware on whatever account, as well as for stock
subscriptions and all other things in action, shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest shall be thereafter the property of the Surviving
-2-
Corporation as they were of Sizeler Delaware, and the title to any real estate
vested by deed or otherwise shall not revert or be in any way impaired by reason
of the Merger; but all rights of creditors and all liens upon any property of
Sizeler Delaware shall be preserved unimpaired, and all debts, liabilities and
duties of Sizeler Delaware shall thenceforth attach to the Surviving Corporation
and may be enforced against it to the same extent as if such debts, liabilities
and duties had been incurred or contracted by it. The employees and agents of
Sizeler Delaware shall become the employees and agents of the Surviving
Corporation and shall be entitled to the same rights and benefits which they
enjoyed as employees and agents of Sizeler Delaware.
6. Further Assurances. Each of Sizeler Maryland and Sizeler
------------------
Delaware shall execute or cause to be executed all documents and shall take or
cause to be taken all actions and do or cause to be done all things necessary,
proper or advisable under the laws of the states of Delaware and Maryland to
consummate and effect the Merger and further the purpose of this Merger
Agreement.
7. Conditions. Consummation of the Merger and related
-----------
transactions is subject to satisfaction of the following conditions prior to the
effective time of the merger:
(a) The Merger shall have been approved by the requisite vote of
stockholders of Sizeler Delaware and Sizeler Maryland, and all necessary action
shall have taken place to authorize the execution, delivery and performance of
this Merger Agreement by Sizeler Delaware and Sizeler Maryland.
(b) All regulatory approvals necessary in connection with the
consummation of the Merger and the transactions contemplated thereby shall have
been obtained.
(c) No suit, action, proceeding or other litigation shall have been
commenced or threatened to be commenced which, in the opinion of Sizeler
Delaware or Sizeler Maryland would pose a material restriction on or impair
consummation of the Merger, performance of this Merger Agreement or the conduct
of the business of Sizeler Maryland after the effective time, or create a risk
of subjecting Sizeler Delaware or Sizeler Maryland, or their respective
stockholders, officers, or directors, to material damages, costs, liability or
other relief in connection with the Merger or this Merger Agreement.
8. Termination; Amendment. This Merger Agreement may be terminated
----------------------
and the Merger abandoned or deferred by either Sizeler Maryland or Sizeler
Delaware by appropriate resolution of the board of directors of either Sizeler
Maryland or Sizeler Delaware at any time prior to the merger becoming effective
notwithstanding approval of this Merger Agreement by the stockholders of Sizeler
Delaware or Sizeler Maryland, or both, if circumstances arise which, in the
opinion of the board of directors of Sizeler Delaware or Sizeler Maryland make
the Merger inadvisable or such deferral of the time of consummation of the
Merger advisable. Subject to applicable law and subject to the rights of the
stockholders to approve any amendment that would have a material adverse effect
on the stockholders, this
-3-
Merger Agreement may be amended, modified or supplemented by written agreement
of the parties hereto at any time prior to the effective time of the Merger with
respect to any of the terms contained herein.
IN WITNESS WHEREOF this Agreement and Plan of Merger has been executed
and attested to by the persons indicated below as of _______________, 2001.
SIZELER PROPERTY INVESTORS, INC.,
a Maryland Corporation
ATTEST:
By: ___________________________________________
__________________________ Thomas A. Masilla, Jr., President
James W. Brodie, Secretary
SIZELER PROPERTY INVESTORS, INC.
a Delaware Corporation
ATTEST:
By: ___________________________________________
__________________________ Thomas A. Masilla, Jr., President
James W. Brodie, Secretary
596974
-4-
Appendix B
ARTICLES OF INCORPORATION
-------------------------
OF
--
SIZELER PROPERTY INVESTORS, INC.
--------------------------------
The undersigned, being a natural person and acting as incorporator,
does hereby form a business corporation in the State of Maryland, pursuant to
the provisions of the Maryland General Corporation Law.
ARTICLE I
INCORPORATOR
The name of the incorporator is Kayla E. Klos.
The incorporator's address, including the street and number, if any,
including the county or municipal area, and including the state or county, is:
800 Fleet Bank Building, Twelve Fountain Plaza, Buffalo, New York 14202.
The incorporator is at least eighteen years of age.
The incorporator is forming the corporation named in this Charter
under the general laws of the State of Maryland, to wit, the Maryland General
Corporation Law.
ARTICLE II
NAME AND DURATION
The name of the corporation is Sizeler Property Investors, Inc. (the
"Corporation"). The duration of the Corporation shall be perpetual.
ARTICLE III
PURPOSES
(a) The purposes for which the Corporation is formed are:
(1) To engage in the business of a real estate investment trust
("REIT") as that term is defined in the Internal Revenue Code of 1986, as
amended, or any successor statute (the "Code") at any time prior to the
occurrence of the Restriction Termination Date, if any, as defined in Article V,
Section 2 and to engage in any lawful act or activity for which corporations may
be organized under the general laws of the State of Maryland now or hereafter in
force including the Maryland General Corporation Law; and
(2) To engage in any one or more businesses or transactions, or
to acquire all or any portion of any entity engaged in any one or more
businesses or transactions which the Board of Directors may from time to time
authorize or approve, whether or not related to the business described elsewhere
in this Article III or to any other business at the time or theretofore engaged
in by the Corporation.
(b) The foregoing enumerated purposes and objects shall be in no
way limited or restricted by reference to, or inference from, the terms of any
other clause of this or any other Article of the Charter of the Corporation, and
each shall be regarded as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the Corporation and shall
be in addition to and not in limitation of the general powers of corporations
under the general laws of the State of Maryland including the Maryland General
Corporation Law.
ARTICLE IV
PRINCIPAL OFFICE IN MARYLAND
AND RESIDENT AGENT
The present address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, 300 East
Lombard Street, Baltimore, Maryland 21202. The name and address of the resident
agent of the Corporation in the State of Maryland is The Corporation Trust
Incorporated, a Maryland corporation, 300 East Lombard Street, Baltimore,
Maryland 21202.
ARTICLE V
CAPITAL STOCK
Section 1. Authorized Capital Stock.
(a) Authorized Shares. The total number of shares of capital stock
of all classes that the Corporation has authority to issue is 70,000,000,
initially classified as 53,960,000 shares of common stock, par value $0.0001 per
share (the "Common Stock"), 40,000 shares
-2-
of Series A Preferred Stock, par value $0.0001 per share (the "Series A
Preferred Stock") and 16,000,000 shares of excess stock, par value $0.0001 per
share (the "Excess Stock"). A majority of the entire Board of Directors, without
action by the stockholders, may amend the Charter to increase or decrease the
aggregate number of shares of stock or the number of shares of stock of any
class that the Corporation has authority to issue.
The Common Stock, the Series A Preferred Stock and the
Excess Stock shall each constitute separate classes of capital stock of the
Corporation.
(b) Terminology and Aggregate Par Value. All classes of capital
stock (except Excess Stock) are referred to herein as "Equity Stock;" all
classes of capital stock (including Excess Stock) are referred to herein as
"Stock." The aggregate par value of all of the Corporation's authorized Stock is
$7,000.
Section 2. REIT-Related Restrictions and Limitations on the Equity Stock.
Until the "Restriction Termination Date," as defined below, all
Equity Stock shall be subject to the following restrictions and limitations
intended to preserve the Corporation's status as a REIT.
(a) Definitions. As used in this Article V, the following terms
shall have the indicated meanings:
"Beneficial Ownership" or "Beneficially Own" shall mean
ownership of Equity Stock by a Person who would be treated as an
owner of such Equity Stock either directly or constructively
through the application of Section 544 of the Code, as modified
by Section 856(h)(1)(B) of the Code. The terms "Beneficially Own"
and "Beneficially Owned" and "Beneficial Owner" shall have the
correlative meanings.
"Beneficiary" shall mean a beneficiary of the Trust as
determined pursuant to Section 5(f) of this Article V.
"Charitable Beneficiary" shall mean one or more
beneficiaries of the Trust as determined pursuant to Section
5(b)(ii) of this Article V, provided that each such organization
must be described in Section 501(c)(3) of the Code and
contributions to each such organization must be eligible for
deduction under each Sections 170(b)(1)(A), 2055 and 2522 of the
Code.
"Constructive Ownership" or "Constructively Own" shall mean
ownership of Equity Stock by a Person who would be treated as an
owner of such Equity Stock either directly or indirectly through
the application of Section 318 of the Code, as modified by
Section 856(d)(5) of the Code. The terms "Constructively
-3-
Own," "Constructively Owned" and "Constructive Owner" shall have
the correlative meanings.
"Market Price" shall mean the last reported sales price reported
on the New York Stock Exchange, Inc. (the "NYSE"), of Equity Stock on
the trading day immediately preceding the relevant date, or if not
then traded on the NYSE, the last reported sales price of Equity Stock
on the trading day immediately preceding the relevant date as reported
on any exchange or quotation system over which Equity Stock may be
traded, or if not then traded over any exchange or quotation system,
then the market price of Equity Stock on the relevant date as
determined in good faith by the Board of Directors of the Corporation.
"Ownership Limit" shall mean 9.9% in value or in number of the
outstanding Equity Stock, whichever is more restrictive. The number
and value of the Equity Stock of the Corporation shall be determined
by the Board of Directors in good faith, which determination shall be
conclusive for all purposes.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside
for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the meaning
of Section 509(a) of the Code, joint stock company or other entity and
also includes a group as that term is used for purposes of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer that results in Excess Stock as defined below in
Section 5 of this Article V, the purported beneficial transferee for
whom the Purported Record Transferee would have acquired Equity Stock
if such Transfer had been valid under Section 2(b) of this Article V.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Stock, the Person who would
have been the record holder of Equity Stock if such Transfer had been
valid under Section 2(b) of this Article V.
"Restriction Termination Date" shall mean the effective date, if
any, for revocation or termination of the Corporation's REIT election
pursuant to Section 856(g) of the Code, as specified in a resolution
of the Board of Directors of the Corporation determining that it is no
longer in the best interests of the Corporation to attempt to, or
continue to, qualify as a REIT. If no such effective date is
specified in such resolution, the Restriction Termination Date shall
be the date such revocation or termination otherwise becomes
effective.
-4-
"Transfer" shall mean any sale, transfer, gift, assignment,
devise or other disposition of Equity Stock (including (i) the
granting of any option or entering into any agreement for the sale,
transfer or other disposition of Equity Stock or (ii) the sale,
transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Equity Stock), whether voluntary
or involuntary, whether of record beneficially or constructively
(including but not limited to transfers of interests in other entities
that result in changes in Beneficial Ownership or Constructive
Ownership of Equity Stock), and whether by operation of law or
otherwise. The terms "Transfers" and "Transferred" shall have the
correlative meanings.
"Trust" shall mean the trust created pursuant to Section 5(b) of
this Article V.
"Trustee" shall mean the Person unaffiliated with the Corporation
and a Prohibited Owner, that is appointed by the Corporation to serve
as trustee of the Trust.
(b) Ownership Limitation and Transfer Restrictions with Respect to
Equity Stock.
(i) Except as provided in Section 2(f) of this Article V, prior
to the Restriction Termination Date, no Person shall Beneficially Own
or Constructively Own shares of Equity Stock in excess of the
Ownership Limit.
(ii) Except as provided in Section 2(f) of this Article V, prior
to the Restriction Termination Date, any Transfer that, if effective,
would result in any Person Beneficially Owning or Constructively
Owning Equity Stock in excess of the Ownership Limit shall be void ab
--
initio as to the Transfer of such Equity Stock that would be otherwise
------
Beneficially Owned or Constructively Owned (as the case may be) by
such Person in excess of the Ownership Limit; and the Purported Record
Transferee (and the Purported Beneficial Transferee, if different)
shall acquire no rights in such excess shares of Equity Stock.
(iii) Except as provided in Section 2(f) of this Article V,
prior to the Restriction Termination Date, any Transfer that, if
effective, would result in the outstanding Equity Stock being
Beneficially Owned by less than 100 Persons (determined under the
principles of Section 856(a)(5) of the Code) shall be void ab initio
-- ------
as to the Transfer ofsuch Equity Stock which would be otherwise
Beneficially Owned by the transferee; and the Purported Record
Transferee (and the Purported Beneficial Transferee, if different)
shall acquire no rights in such shares of Equity Stock.
-5-
(iv) Prior to the Restriction Termination Date, any Transfer
that, if effective, would result in the Corporation being "closely
held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT,
shall be void ab initio as to the Transfer of the shares of Equity
-- ------
Stock that would cause the Corporation to be "closely held" within the
meaning of Section 856(h) of the Code or otherwise to fail to qualify
as a REIT, as the case may be; and the Purported Record Transferee
(and the Purported Beneficial Transferee, if different) shall acquire
no rights in such shares of Equity Stock.
(v) If the Board of Directors or its designee shall at any time
determine in good faith that a Transfer of Equity Stock has taken
place in violation of this Section 2(b) or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership (determined
without reference to any rules of attribution) or Constructive
Ownership of any Equity Stock of the Corporation in violation of this
Section 2(b), the Board of Directors or its designee shall take such
action as it deems advisable to refuse to give effect to or to prevent
such Transfer, including but not limited to, refusing to give effect
to such Transfer on the books of the Corporation or instituting
proceedings to enjoin such Transfer; provided, however, that any
Transfers or attempted Transfers in violation of Section 2(b)(ii),
Section 2(b)(iii) or Section 2(b)(iv) of this Article V shall
automatically result in the conversion and exchange described in
Section 2(c), irrespective of any action (or non-action) by the Board
of Directors, except as provided in Section 2(f) of this Article V.
(c) Automatic Conversion of Equity Stock into Excess Stock.
Subject to Section 5(a) of this Article V below,
(i) If, notwithstanding the other provisions contained in this
Article V, at any time prior to the Restriction Termination Date there
is a purported Transfer or other change in the capital structure of
the Corporation such that any Person would Beneficially Own or
Constructively Own Equity Stock in excess of the Ownership Limit,
then, except as otherwise provided in Section 2(f) of this Article V,
such shares of Equity Stock in excess of the Ownership Limit (rounded
up to the nearest whole share) shall automatically (and without action
by the Corporation or by any purported Transferor, Purported Record
Transferee or Purported Beneficial Transferee of such Equity Stock, in
the case of a Transfer) be converted into and exchanged for an equal
number of shares of Excess Stock. Such conversion and exchange shall
be effective as of the close of business on the business day prior to
the date of the purported Transfer or change in capital structure.
-6-
(ii) If, notwithstanding the other provisions contained in this
Article V, at any time prior to the Restriction Termination Date there
is a purported Transfer or other change in the capital structure of
the Corporation that, if effective, would cause the Corporation to
become "closely held" within the meaning of Section 856(h) of the Code
or otherwise to fail to qualify as a REIT, then the shares of Equity
Stock being Transferred, or resulting from any other change in the
capital structure of the Corporation, that would cause the Corporation
to be "closely held" within the meaning of Section 856(h) of the Code
or otherwise to fail to qualify as a REIT, as the case may be,
(rounded up to the nearest whole share) shall automatically (and
without any action by the Corporation or by any purported Transferor,
Purported Record Transferee or Purported Beneficial Transferee of such
Equity Stock, in the case of a Transfer) be converted into and
exchanged for an equal number of shares of Excess Stock. Such
conversion and exchange shall be effective as of the close of business
on the business day prior to the date of the purported Transfer or
change in capital structure.
(d) The Corporation's Right to Redeem Stock. The Corporation shall
have the right to redeem any Stock that is Transferred, or is attempted to be
Transferred, in violation of Section 2(b) of this Article V, or which has become
shares of Excess Stock as provided in Section 2(c) of this Article V, at a price
per share equal to the lesser of (i) the price per share in the transaction that
created such violation or attempted violation (or, in the case of a devise or
gift, the Market Price at the time of such devise or gift) and (ii) the Market
Price of the class of Equity Stock to which such shares of Excess Stock relate
on the date the Corporation, or its designee, gives notice of such redemption.
The Corporation shall have the right to redeem any Stock described in this
Section for a period of 90 days after the later of (i) the date of the Transfer
or attempted Transfer or (ii) the date the Board of Directors determines in good
faith that a Transfer has occurred, if the Corporation does not receive a notice
of such Transfer pursuant to Section 2(e) of this Article V.
(e) Notice Requirements and General Authority of the Board of
Directors to Implement REIT-Related Restrictions and Limitations.
(i) Any Person who acquires or attempts to acquire shares of
Equity Stock in violation of Section 2(b) of this Article V, and any
Person who is a Purported Record Transferee or a Purported Beneficial
Transferee such that Equity Stock proposed to be acquired is converted
into Excess Stock under Section 2(c) of this Article V, shall
immediately give written notice or in the event of a proposed or
attempted Transfer, give at least 15 days' prior written notice to the
Corporation of such event and shall provide to the Corporation such
other information as the Corporation may request in order to determine
the effect, if any, of such Transfer or attempted Transfer on the
Corporation's status as a REIT.
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(ii) Prior to the Restriction Termination Date, every Beneficial
Owner or Constructive Owner of more than 5.0% (or such other
percentage, between 0.5% and 5.0%, as provided in the income tax
regulations promulgated under the Code) of the number or value of
outstanding Equity Stock of the Corporation shall, within 30 days
after January 1 of each year, give written notice to the Corporation
stating the name and address of such Beneficial Owner or Constructive
Owner, the number of shares of Equity Stock Beneficially Owned or
Constructively Owned, and a description of how such shares are held.
Each such Beneficial Owner or Constructive Owner shall provide to the
Corporation such additional information that the Corporation may
reasonably request in order to determine the effect, if any, of such
Beneficial Ownership or Constructive Ownership on the Corporation's
status as a REIT; and
(iii) Prior to the Restriction Termination Date, each Person who
is a Beneficial Owner or Constructive Owner of Equity Stock and each
Person (including the stockholder of record) who is holding Equity
Stock for a Beneficial Owner or Constructive Owner shall provide to
the Corporation such information that the Corporation may reasonably
request, in good faith, in order to determine the Corporation's
status as a REIT, to comply with the requirements of any taxing
authority or governmental agency or to determine any such compliance.
(iv) Each certificate for Equity Stock to be issued by the
Corporation hereafter shall bear substantially the following legend:
"The securities represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the
Corporation's maintenance of its status as a "real estate investment
trust" under the Internal Revenue Code of 1986, as amended. Except as
otherwise provided pursuant to the Charter of the Corporation, no
Person may Beneficially Own or Constructively Own Equity Stock in
excess of 9.9% (in value or in number of shares of Equity Stock,
whichever is more restrictive) of the outstanding Equity Stock of the
Corporation, with further restrictions and exceptions set forth in the
Charter of the Corporation. There shall be no Transfer that would
cause a violation of the Ownership Limit, that would result in Equity
Stock of the Corporation being Beneficially Owned by fewer than 100
persons or that would result in the Corporation's being "closely held"
under section 856(h) of the Code. Any Person who attempts or proposes
to own, Beneficially Own or Constructively Own Equity Stock in excess
of the above limitation must notify the Corporation in writing at
least 15 days prior to such proposed or attempted Transfer to such
Person. If attempt is made to violate these restrictions on
Transfers, (i) any purported Transfer will be void and will not be
recognized by the Corporation, (ii) the Corporation will have the
right to redeem the Stock proposed to be Transferred, and (iii) the
Stock represented hereby generally will be automatically converted
into and exchanged for Excess
-8-
Stock, which will be held in trust by the Trustee in part for the
benefit of a Charitable Beneficiary. All capitalized terms in this
legend have the meanings defined in the Charter of the Corporation, a
copy of which, including the restrictions on ownership and transfer,
will be sent without charge to each stockholder who directs a request
to the Chairman of the Board of the Corporation."
(v) Subject to Section 2(f)(iii) of this Article V, nothing
contained in this Article V shall limit the authority of the Board of
Directors to take such other action as it deems necessary or advisable
to protect the Corporation and the interests of its stockholders by
preservation of the Corporation's status as a REIT.
(f) Exemptions.
(i) The Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel or other evidence
satisfactory to the Board of Directors and upon at least 15 days'
written notice from a Transferee prior to a proposed Transfer that, if
consummated, would result in the intended Transferee Beneficially
Owning Equity Stock in excess of the Ownership Limit, and upon such
other conditions as the Board of Directors may direct, may in its sole
and absolute discretion exempt a Person from the Ownership Limit.
(ii) The Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel or other evidence
satisfactory to the Board of Directors, may in its sole and absolute
discretion exempt a Person from the limitation on a Person
Constructively Owning Equity Stock in excess of the Ownership Limit,
if (x) such Person does not and represents that it will not directly
own or Constructively Own more than a 9.9% interest (as set forth in
Section 856(d)(2)(B) of the Code) in a tenant of the Corporation; (y)
the Corporation obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain this fact; and
(z) such Person agrees that any violation or attempted violation of
such representations, undertakings and agreement will result in such
Equity Stock in excess of the Ownership Limit being converted into and
exchanged for Excess Stock in accordance with Section 2(c) of this
Article V.
(iii) Nothing in this Article V shall preclude the settlement of
a transaction entered into through the facilities of any interdealer
quotation system or national securities exchange upon which Equity
Stock is traded. Notwithstanding the previous sentence, certain
transactions may be settled by providing Excess Stock as set forth in
this Article V.
(iv) Subject to sub-paragraph (b) (iv) of this Article V,
Section 2, an underwriter which participates in a public offering or a
private placement of
-9-
Equity Stock (or securities convertible into or exchangeable for
Equity Stock) may Beneficially Own or Constructively Own shares of
Equity Stock (or securities convertible into or exchangeable for
Equity Stock) in excess of the Ownership Limit but only to the extent
necessary to facilitate such public offering or private placement or
to support such offering or placement in the aftermarket.
(v) The Board of Directors may from time to time increase
or decrease the Ownership Limit; provided however,
(A) Any decrease may be made only prospectively as to
subsequent holders (other than a decrease as a result of a
retroactive change in existing law, in which case such decrease
shall be effective immediately);
(B) The Ownership Limit may be increased if, after giving
effect to such increase, five Persons could Beneficially Own or
Constructively Own in the aggregate, of more than 50.0% in value of
the shares of Equity Stock then outstanding; and
(C) Prior to the modification of Ownership Limit, the Board
of Directors of the Corporation may require such opinions of
counsel, affidavits, undertakings or agreements as it may deem
necessary or advisable in order to determine or ensure the
Corporation's status as a REIT.
(g) Savings Provision. If any of the restrictions on transfer of
stock contained in this Article are determined to be void, invalid or
unenforceable by any court of competent jurisdiction, then the Purported Record
Transferee may be deemed, at the option of the Corporation, to have acted as an
agent of the Corporation in acquiring such stock and to hold such stock on
behalf of the Corporation.
Section 3. Classification and Reclassification of Stock.
(a) Power of Board to Classify or Reclassify Stock. The Board of
Directors shall have the power, in its sole discretion and without limitation,
to classify or reclassify any unissued Stock, whether now or hereafter
authorized, by setting, altering or eliminating in any one or more respects,
from time to time, before the issuance of such Stock, any feature of such Stock,
including, but not limited to, the designation, preferences, conversion or other
rights, voting powers, qualifications and terms and conditions of redemption of,
and limitations as to dividends and any other restrictions on, such Stock. The
power of the Board of Directors to classify and reclassify any of the shares of
capital stock shall include, without limitation, subject to the provisions of
the Charter, authority to classify or reclassify any unissued shares of such
stock into a class or classes of preferred stock, preference stock, special
stock or other stock, and to divide and classify shares of any class into one or
more series of such class, by determining, fixing or altering one or more of the
following:
-10-
(i) The distinctive designation of such class or series and the
number of shares which constitute such class or series; provided that,
unless otherwise prohibited by the terms of such or any other class or
series, the number of shares of any class or series may be decreased
by the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of such
class or series may be increased by the Board of Directors in
connection with any such classification or reclassification, and any
shares of any class or series which have been redeemed, purchased,
otherwise acquired or converted into shares of Common Stock or any
other class or series shall become part of the authorized capital
stock and be subject to classification and reclassification as
provided in this subparagraph.
(ii) Whether or not and, if so, the rates, amounts and times at
which, and the conditions under which, dividends shall be payable on
shares of such class or series, whether any such dividends shall rank
senior or junior to or on a parity with the dividends payable on any
other class or series of stock, and the status of any such dividends
as cumulative, cumulative to a limited extent or non-cumulative and as
participating or non-participating.
(iii) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law and,
if so, the terms of such voting rights.
(iv) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and conditions
thereof, including provision for adjustment of the conversion or
exchange rate in such events or at such times as the Board of
Directors shall determine.
(v) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall
be redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates; and whether or not there shall be any sinking fund
or purchase account in respect thereof, and if so, the terms thereof.
(vi) The rights of the holders of shares of such class or series
upon the liquidation, dissolution or winding up of the affairs of, or
upon any distribution of the assets of, the Corporation, which rights
may vary depending upon whether such liquidations dissolution or
winding up is voluntary or involuntary and, if voluntary, may vary at
different dates, and whether such rights shall rank senior or junior
to or on a parity with such rights of any other class or series of
stock.
-11-
(vi) Whether or not there shall be any limitations
applicable, while shares of such class or series are outstanding,
upon the payment of dividends or making of distributions on, or
the acquisition of, or the use of moneys for purchase or
redemption of, any stock of the Corporation, or upon any other
action of the Corporation, including action under this
subparagraph, and, if so, the terms and conditions thereof.
(viii) Any other preferences, rights, restrictions,
including restrictions on transferability, and qualifications of
shares of such class or series, not inconsistent with law and the
Charter of the Corporation.
(b) Ranking of Stock. For the purposes hereof and of any
articles supplementary to the Charter providing for the classification or
reclassification of any shares of capital stock or of any other charter document
of the Corporation (unless otherwise provided in any such articles or document),
any class or series of stock of the Corporation shall be deemed to rank:
(i) Prior to another class or series either as to
dividends or upon liquidation, if the holders of such class or
series shall be entitled to the receipt of dividends or of
amounts distributable on liquidation, dissolution or winding up,
as the case may be, in preference or priority to holders of such
other class or series.
(ii) On a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per
share thereof be different from those of such others, if the
holders of such class or series of stock shall be entitled to
receipt of dividends or amounts distributable upon liquidation,
dissolution or winding up, as the case may be, in proportion to
their respective dividend rates or redemption or liquidation
prices, without preference or priority over the holders of such
other class or series.
(iii) Junior to another class or series either as to
dividends or upon liquidation, if the rights of the holders of
such class or series shall be subject or subordinate to the
rights of the holders of such other class or series in respect of
the receipt of dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case may be.
Section 4. Common Stock.
Subject to the provisions of Sections 2 and 5 of this Article V,
the Common Stock shall have the following designation, preferences, conversion
or other rights, voting powers, qualifications and terms and conditions of
redemption, limitations as to dividends and any other restrictions, and such
others as may be afforded by law:
-12-
(a) Voting Rights. Subject to action, if any, by the Board of
Directors, pursuant to Section 3 of this Article V, each share of Common Stock
shall have one vote, and, except as otherwise provided in respect of the Series
A Preferred Stock or any class of stock hereafter classified or reclassified,
the exclusive voting power for all purposes shall be vested in the holders of
the Common Stock. Shares of Common Stock shall not have cumulative voting
rights.
(b) Dividend Rights. After provision(s) with respect to
preferential dividends on any then outstanding classes of preferred stock, if
any, fixed by the Board of Directors pursuant to Section 3 of this Article V or
provided for in Article VI shall have been satisfied, and after satisfaction of
any other requirements, if any, including with respect to redemption rights and
preferences, of any such classes of preferred stock, then and thereafter the
holders of Common Stock shall be entitled to receive, pro rata in relation to
the number of shares of Common Stock held by them, such dividends or other
distributions as may be declared from time to time by the Board of Directors out
of funds legally available therefor.
(c) Liquidation Rights. In the event of the voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, after
distribution in full of the preferential amounts, if any, fixed pursuant to
Section 3 of this Article V or provided for in Article VI, to be distributed to
the holders of any then outstanding preferred stock, and subject to the right,
if any, of the holders of any outstanding preferred stock to participate further
in any liquidating distributions, all of the assets of the Corporation, if any,
remaining, of whatever kind available for distribution to stockholders after the
foregoing distributions have been made shall be distributed to the holders of
the Common Stock, ratably in proportion to the number of shares of Common Stock
held by them. For purposes of making liquidating distributions pursuant to this
Section 4(c) of this Article V, Excess Stock shall be included as part of the
preferred stock and the Common Stock to the extent provided in Section 5(e) of
this Article V below.
(d) Conversion Rights. Each share of Common Stock is convertible
into Excess Stock as provided in Section 2(c) of this Article V.
Section 5. Excess Stock.
(a) Condition to Issuance. The provisions of this Article V to
the contrary notwithstanding, the automatic conversion and exchange of certain
Equity Stock into Excess Stock in the circumstances provided for in Section 2(c)
of this Article V shall be deemed not to have occurred, nunc pro tunc, if the
Corporation shall have determined, in the sole and absolute discretion of the
Board of Directors, that the issuance by the Corporation of Excess Stock would
cause the Corporation to fail to satisfy the organizational and operational
requirements that must be met for the Corporation to qualify for treatment as a
REIT.
-13-
(b) Ownership of Excess Stock in Trust.
(i) Upon any purported Transfer that results in Excess Stock
pursuant to Section 2(c) of this Article V, such Excess Stock shall be
held, in book entry form, in the name of the Trustee in Trust for the
exclusive benefit of (i) one or more Charitable Beneficiaries and (ii)
such Beneficiary or Beneficiaries to whom an interest in such Excess
Stock may later be transferred pursuant to Section 5(f) of this
Article V. Excess Stock so held in Trust shall be issued and
outstanding Stock of the Corporation. The Purported Record Transferee
shall have no rights in such Excess Stock except the right to
designate a transferee of such Excess Stock upon the terms specified
in Section 5(f) of this Article V. The Purported Beneficial
Transferee shall have no rights in such Excess Stock except as
provided in Section 5(f) of this Article V.
(ii) By written notice to the Trustee, the Corporation shall
designate one or more nonprofit organizations to be the Charitable
Beneficiary of the interest in the Trust such that (i) the shares of
Excess Stock held in the Trust would not violate the restrictions set
forth in Section 2(b) of this Article V in the hands of such
Charitable Beneficiary and (ii) each such organization must be
described in Section 501(c)(3) of the Code and contributions to each
such organization must be eligible for deduction under each of
Sections 170(b)(1)(A), 2055 and 2522 of the Code.
(c) No Voting Rights. Except as required by law, Excess Stock shall
not be entitled to vote on any matters. Any vote cast by the Purported Record
Transferee in respect of shares of Excess Stock prior to the discovery that
shares of Equity Stock had been converted into Excess Stock, shall be void ab
--
initio.
------
(d) Dividend Rights. Subject to the provisions of this Section 5(d)
of this Article V, Excess Stock shall be entitled to receive dividends equal to
the dividends declared on any class of Equity Stock from which the Excess Stock
had been converted, and a declaration of dividends on such class of Equity Stock
shall also constitute a declaration of dividends on the Equity Stock. The
Trustee shall have all rights to dividends or other distributions with respect
to shares of Excess Stock held in the Trust, which rights shall be exercised for
the exclusive benefit of the Charitable Beneficiary. Any dividend or other
distribution paid prior to the discovery by the Corporation that the shares of
Equity Stock had been converted into Excess Stock and transferred to the Trustee
shall be paid with respect to such shares of Excess Stock to the Trustee upon
demand and any dividend or other distribution authorized but unpaid shall be
paid when due to the Trustee. Any dividends or distributions so paid over to
the Trustee shall be held in trust for the Charitable Beneficiary.
Notwithstanding the provisions of this Article V, until the Corporation has
received notification that shares of Equity Stock have been converted to Excess
Stock and transferred into a Trust, the Corporation shall be entitled to rely on
its share transfer and other stockholder records for purposes of preparing lists
of stockholders entitled to vote at
-14-
meetings, determining the validity and authority of proxies and otherwise
conducting votes of stockholders.
(e) Liquidation Rights. 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 share(s) of Excess Stock shall be entitled to
receive that portion of the assets of the Corporation that would have been
distributed to the Equity Stock in respect of which the Excess Stock was issued.
The Trustee, as holder of the Excess Stock in Trust, shall distribute ratably to
the Beneficiaries of the Trust, when determined, any such assets received in
respect of the Excess Stock in any liquidation, dissolution or winding up of, or
any distribution of the assets of, the Corporation, provided that any amounts
per share in excess of (i) the price per share paid by the Purported Record
Transferee for the Equity Stock that resulted in Excess Stock or (ii) if the
Purported Record Transferee did not give value for such Excess Stock (through
gift, devise or other transaction), the price per share equal to the Market
Price on the date of the purported Transfer that resulted in the Excess Stock,
shall be paid to the Charitable Beneficiary.
(f) Restrictions on Transfer; Designation of Beneficiary.
(i) Excess Stock shall not be transferable. The Purported Record
Transferee may freely designate a Beneficiary of an interest in the
Trust (representing the number of shares of Excess Stock held by the
Trust attributable to a purported Transfer that resulted in Excess
Stock), if the Excess Stock held in the Trust would not be Excess
Stock in the hands of such Beneficiary and the Purported Record
Transferee does not receive a price for designating such Beneficiary
that reflects a price per share of Excess Stock that exceeds (x) the
price per share that such Purported Record Transferee paid for the
Equity Stock in the purported Transfer that resulted in the Excess
Stock; or (y) if the Purported Record Transferee did not give value
for such Excess Stock (through a gift, devise or other transaction),
the price per share equal to the Market Price on the date of the
purported Transfer that resulted in the Excess Stock. Upon such
transfer of an interest in the Trust, the corresponding shares of
Excess Stock in the Trust shall automatically be exchanged for an
equal number of shares of Equity Stock of the same class as such stock
had been previously immediately prior to it becoming Excess Stock, and
such shares of Equity Stock shall be transferred of record to the
transferee of the interest in the Trust if such Equity Stock would not
be Excess Stock in the hands of such Beneficiary. Prior to any
transfer of any interest in the Trust, the Purported Record Transferee
must give advance notice to the Corporation of the intended transfer
and the Corporation must have waived in writing its redemption rights
under Section 2(d) of this Article V.
(ii) Notwithstanding the foregoing, if a Purported Record
Transferee receives a price for designating a Beneficiary of an
interest in the Trust that exceeds the amounts allowable under Section
5(f)(i) of this Article V, such
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Purported Record Transferee shall pay, or cause such Beneficiary
to pay, such excess to the Charitable Beneficiary. If, prior to
the discovery by the Corporation that shares of Equity Stock have
been converted into Excess Stock and transferred to the Trustee,
such shares are sold by a Purported Record Transferee, then (i)
such shares shall be deemed to have been sold on behalf of the
Trust and (ii) to the extent that the Purported Record Transferee
received an amount for such shares that exceeds the amount
allowable under Section 5(f)(i) of this Section V, such excess
shall be paid to the Trustee upon demand.
(iii) Each Purported Record Transferee and Charitable
Beneficiary waive any and all claims that they may have against
the Trustee and the Trust arising out of the disposition of any
shares of Excess Stock transferred to the Trust, except for
claims arising out of the gross negligence or willful misconduct
of, or any failure to make payments in accordance with this
Section 5(f)(iii) of this Article V by, the Trustee or the
Corporation.
Section 6. General Provisions.
(a) Interpretation and Ambiguities. The Board of Directors shall
have the power to interpret and to construe the provisions of this Article V,
including any definition contained in Section 1, and the Board of Directors
shall have the power to determine the application of the provisions of this
Article V with respect to any situation based on the facts known to it, and any
such interpretation, construction and determination shall be final and binding
on all interested parties, including the stockholders.
(b) Severability. If any provision of this Article V or any
application of any such provision is determined to be void, invalid or
unenforceable by any court having jurisdiction over the issue, the validity and
enforceability of the remaining provisions shall not be affected and other
applications of such provision shall be affected only to the extent necessary to
comply with the determination of such court.
ARTICLE VI
SERIES A PREFERRED STOCK
Section 1. Designation and Amount.
There is hereby designated 40,000 shares of Equity Stock, par
value $0.0001 per share, as Series A Preferred Stock.
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Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any class or series of Preferred Stock ranking prior and
superior to the shares of Series A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors (as used in this Article VI
the "Board") out of funds legally available for that purpose, quarterly
dividends payable in cash on a day (specified by the Board) in each quarterly
period of each year commencing on or after the initial date of issuance of the
shares of Series A Preferred Stock with respect to which dividends have been
declared, but in no event later than the 20th day of December, March, June and
September or, if any such day is not a business day, on the next succeeding
business day (each such date being referred to in this Article VI as a
"Quarterly Dividend Payment Date") commencing after the first issuance of a
share or fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $0.01 or (b) subject
to the provision for adjustment hereinafter set forth, one thousand (1,000)
times the aggregate per share amount of all cash dividends, and one thousand
(1,000) times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of the
Common Stock, or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time the effective date of this Charter (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is
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prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than thirty
(30) days prior to the date fixed for the payment thereof.
Section 3. Voting Rights.
The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to one thousand (1,000) votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event shall
be adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation. Except as otherwise provided herein or by
law, the holders of the shares of Series A Preferred Stock shall not be entitled
to vote as a separate class on any matters submitted to a vote of the
stockholders.
(C) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
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Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
of this Article VI are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to, the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock and
all such junior stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
of any shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board) to all
holders of such shares upon such terms as the Board, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation should, under paragraph (A) of
this Section 4 of Article VI, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares.
Any shares of Series A Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall become authorized but
unissued shares of Series A
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Preferred Stock and may be reclassified and reissued by resolution of the Board,
subject to the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $.01 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Notwithstanding any provision of this
Charter to the contrary, following the payment of the full amount of the Series
A Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Preferred Stock unless, prior thereto, the holders
of shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) one thousand (1,000) (as appropriately adjusted
as set forth in paragraph (C) of this Section to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii) immediately above being referred to as the "Adjusted
Number"). Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Preferred Stock and Common Stock, respectively, holders of Series A
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series A Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
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Section 7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock, securities, cash or any other
property, then in any such case the shares of Series A Preferred Stock shall at
the same time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to one thousand
(1,000) times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock, or (ii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. Redemption.
The outstanding shares of Series A Preferred Stock, at the option
of the Board, may be redeemed as a whole, but not in part, at any time, or from
time to time, at a cash price per share equal to one hundred five percent (105%)
of (i) the product of the Adjustment Number times the Average Market Value (as
such term is hereinafter defined) of the Common Stock, plus (ii) all dividends
which on the redemption date have accrued on the shares to be redeemed and have
not been paid, or declared and a sum sufficient for the payment thereof set
apart, without interest. The "Average Market Value" is the average of the
closing sale prices of the Common Stock during the thirty (30) day period
immediately preceding the date before the redemption date on the Composite Tape
for New York Stock Exchange Listed Stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended, on which such
stock is listed, or, if such stock is not listed on any such exchange, the
average of the closing sale prices with respect to a share of Common Stock
during such thirty (30) day period, as quoted on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in use,
or if no such quotations are available, the fair market value of the Common
Stock as determined by the Board of Directors in good faith.
Section 9. Ranking.
The Series A Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.
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Section 10. Amendment.
Except as otherwise provided by law, the Charter of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series A Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares.
At the Corporation's sole discretion, Series A Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Stock.
ARTICLE VII
THE BOARD OF DIRECTORS
Section 1. Authorized Number and Initial Directors.
The business and affairs of the Corporation shall be managed by a
Board of Directors. The authorized number of directors of the Corporation
initially shall be eight, which number may be increased or decreased pursuant to
the Bylaws of the Corporation, but shall never be less than the minimum number
permitted by the General Laws of the State of Maryland now or hereafter in
force. The persons who shall serve as directors effectively immediately and
until their successors are duly elected and qualify are as follows:
J. Terrell Brown
Harold B. Judell
Richard L. Pearlstone
Francis L. Fraenkel
Sidney W. Lassen
Thomas A. Masilla, Jr.
James W. McFarland
Theodore H. Strauss
At least three of the directors of the Corporation shall be Independent
Directors (as defined in Section 10 of this Article VII). No decrease in the
number of directors shall shorten the term of any incumbent director.
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Section 2. Directors Elected by Preferred Stockholders.
Whenever the holders of any one or more series of preferred stock
of the Corporation shall have the right, voting separately as a class, to elect
one or more directors of the Corporation, the Board of Directors shall consist
of said directors so elected in addition to the number of directors fixed as
provided in Section 1 of this Article VII or in the Bylaws. Notwithstanding the
foregoing, and except as otherwise may be required by law, whenever the holders
of any one or more series of preferred stock of the Corporation shall have the
right, voting separately as a class, to elect one or more directors of the
Corporation, the terms of the director of directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.
Section 3. General Term of Office; Classes of Directors.
The directors of the Corporation (except for the directors
elected by the holders of any one or more series of preferred stock of the
Corporation as provided in Section 2 of this Article VII) shall be divided into
three classes, Class I, Class II and Class III, as follows:
(1) The term of office of Class I shall be until the 2002
annual meeting of stockholders and until their successors shall
be elected and have qualified and thereafter shall be for three
years and until their successors shall be elected and have
qualified;
(2) the term of office of Class II shall be until the 2003
annual meeting of stockholders and until their successors shall
be elected and have qualified and thereafter shall be for three
years and until their successors shall be elected and have
qualified; and
(3) the term of office of Class III shall be until the 2004
annual meeting of stockholders and until their successors shall
be elected and have qualified and thereafter shall be for three
years and until their successors shall be elected and have
qualified.
The number of directors in each class shall be as nearly equal in
number as possible. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain or attain, if
possible, the equality of the number of directors in each class. If such
equality is not possible, the increase or decrease shall be apportioned among
the classes in such a way that the difference in the number of directors in any
two classes shall not exceed one. The names of the individuals who will serve
as initial directors until their successors are elected and qualified are as
follows:
Class I: Francis L. Fraenkel
Sidney W. Lassen
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Class II: Thomas A. Masilla, Jr.
James A. McFarland
Theodore H. Strauss
Class III: J. Terrell Brown
Harold B. Judell
Richard L. Pearlstone
Section 4. Removal of Directors.
Subject to the rights of holders of any class separately entitled
to elect one or more directors, a director may be removed from office but only
for cause and only by the affirmative vote of the holders of at least 75% of the
combined voting power of all shares of capital stock entitled to be cast in the
election of directors voting together as a single class, at a meeting of
stockholders called expressly for that purpose.
Section 5. Filling Vacancies.
Subject to the rights of the holder of any class of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies on the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office, or other cause shall be filled by the affirmative vote of a majority of
the remaining directors then in office (whether or not constituting a quorum)
or, unless the Corporation has elected to be subject to the provisions of
Section 3-804(c) of the Maryland General Corporation Law, the required vote of
the stockholders of the Corporation. A director so chosen by the stockholders
shall hold office for the balance of the term then remaining. Unless the
Corporation has elected to be subject to the provisions of Section 3-804(c) of
the Maryland General Corporation Law, a director so chosen by the remaining
directors shall hold office until the next annual meeting of stockholders, at
which time the stockholders shall elect a director to hold office for the
balance of the term then remaining. No decrease in the number of directors
constituting the Board of Directors shall affect the tenure of office of any
director.
Section 6. Board Authorization of Share Issuances.
The Board of Directors of the Corporation may authorize the
issuance from time to time of Stock of any class, whether now or hereafter
authorized, or securities convertible into Stock of any class, whether now or
hereafter authorized, for such consideration as the Board of Directors may deem
advisable, subject to such restrictions or limitations, if any, as may be set
forth in the Charter or the Bylaws of the Corporation.
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Section 7. Preemptive Rights.
No holder of any Stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any preemptive
right to subscribe for or purchase any Stock or any other securities of the
Corporation other than such, if any, as the Board of Directors, in its sole
discretion, may determine and at such price or prices and upon such other terms
as the Board of Directors, in its sole discretion, may fix; and any Stock or
other securities which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion shall
determine, be offered to the holders of any class, series or type of Stock or
other securities at the time outstanding to the exclusion of the holders of any
or all other classes, series or types of stock or other securities at the time
outstanding.
Section 8. Amendments to the Bylaws.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, repeal, alter, amend and rescind the Bylaws of the Corporation.
Notwithstanding any other provision of the Charter or the Bylaws of the
Corporation (and notwithstanding the fact that some lesser percentage may be
specified by law), the Bylaws shall not be made, repealed, altered, amended or
rescinded by the stockholders of the Corporation except by (1) the affirmative
vote of not less than 75% of the aggregate votes entitled to be cast (considered
for this purpose as one class) at a meeting of the stockholders called for that
purpose (provided that notice of such proposed adoption, repeal, alteration,
amendment or recission is included in the notice of such meeting) or (2) as set
forth above, by the Board of Directors.
Section 9. Certain Other Determinations by the Board of Directors.
The determination as to any of the following matters, made in
good faith by or pursuant to the direction of the Board of Directors consistent
with the Charter and in the absence of actual receipt of an improper benefit in
money, property or services or active and deliberate dishonesty established by a
court, shall be final and conclusive and shall be binding upon the Corporation
and every holder of Stock: the manner in which distributions are to be made to
stockholders; the amount of the net income of the Corporation for any period and
the amount of assets at any time legally available for the payment of dividends,
redemption of Stock or the payment of other distributions on Stock; the amount
of paid-in surplus, net assets, annual or other net profit, net assets in excess
of capital, undivided profits or excess of profits over losses on sales of
assets; the amount, purpose, time of creation, increase or decrease, alteration
or cancellation of any reserves or charges and the propriety thereof (whether or
not any obligation nor liability for which such reserves or charges shall have
been created shall have been paid or discharged); the fair value, or any sale,
bid or asked price to be applied in determining the fair value, of any asset
owned or held by the Corporation; and any matters relating to the acquisition,
holding and disposition of any assets of the Corporation.
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Section 10. Reserved Powers of the Board of Directors.
The enumeration and definition of particular powers of the Board
of Directors included in this Article VII shall in no way be limited or
restricted by reference to or inference from the terms of any other clause of
this or any other provision of the charter of the Corporation, or construed or
deemed by inference or otherwise in any manner to exclude or limit the powers
conferred upon the Board of Directors under the general laws of the State of
Maryland as now or hereafter in force.
Section 11. Certain Definitions.
For purposes of Articles VII and VIII:
(a) The term "Advisor" shall mean an entity responsible for
directing or performing the day-to-day business affairs of the Corporation
including a person or entity to which an Advisor subcontracts substantially all
of such functions.
(b) The term "Independent Directors" shall mean the Directors of
the Corporation who are not affiliated, directly or indirectly, with an Advisor
of the Corporation whether by ownership of, ownership interest in, employment
by, any material business or professional relationship with, or serves as an
officer or director of such Advisor of an affiliated business entity of such
Advisor. A Director shall not be considered independent if he is serving as a
Director for more than three real estate investment trusts organized by the same
Sponsor. Independent Directors shall also mean those who perform no other
services for the Corporation, except as Directors. An indirect relationship
shall include circumstances in which a member of the immediate family of a
Director has one of the foregoing relationships with an Advisor of the
Corporation or entity for which he serves as Director.
(c) The term "Unimproved Real Property" shall mean property of
the Corporation which has the following three characteristics: (1) an equity
interest in property which was not acquired for the purpose of producing rental
or other operating income, (2) has no development or construction in process on
such property, and (3) no development or construction on such property is
planned in good faith to commence on such land within one year.
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ARTICLE VIII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF THE
STOCKHOLDERS AND DIRECTORS
Section 1. Prohibited Transactions.
The Corporation shall not:
(a) Invest more than 10% of its assets in Unimproved Real
Property or mortgage loans on Unimproved Real Property;
(b) Invest in commodities or commodity future contracts, other
than interest rate futures used solely for hedging purposes;
(c) Issue equity securities redeemable at the option of the
holder thereof;
(d) Issue options or warrants to purchase Common Stock of the
Corporation at an exercise price of less than the fair market value of the
Common Stock or which are for more than 10% of the shares of Common Stock on the
date such option or warrant is granted, provided, however, that the Corporation
may issue options to Directors of the Corporation with an exercise price less
than the fair market value of Common Stock on the date the option is granted
pursuant to a plan under which (1) a Director waives the right to all or part of
the annual Director's fee in return for the granting of such option and (2) the
sum of (A) the exercise price per share of Common Stock pursuant to the plan and
(B) the per share amount of Director's fee waived in connection with the
granting of the option is equal to the fair market value of a share of Common
Stock on the date the option is granted;
(e) Invest in real estate contracts for sale, unless such real
estate contracts are in recordable form and appropriately recorded in the chain
of title;
(f) Invest in mortgage loans unless an appraisal is obtained for
the underlying property; or
(g) Allow the aggregate borrowing of the Corporation to exceed
300% of the Net Assets of the Corporation, unless the Independent Directors
determine that a higher level of borrowing is appropriate.
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Section 2. Related Party Transactions.
Without limiting any other procedure available by law or
otherwise to the Corporation, the Board of Directors may authorize any agreement
or other transaction with any person, corporation, association, company, trust,
partnership (limited or general) or other organization, although one or more of
the directors or officers of the Corporation may be a party to any such
agreement or any officer, director, stockholder or member of such other party
(an "Interested Officer/Director"), and no such agreement or transaction shall
be invalidated or rendered void or voidable solely by reason of the existence of
any such relationship if: ii) the existence is disclosed or known to the Board
of Directors, and the contract or transaction is authorized, approved or
ratified by the affirmative vote of a majority of the disinterested directors,
even if they constitute less than a quorum of the Board of Directors; or (ii)
the existence is disclosed to the stockholders entitled to vote, and the
contract or transaction is authorized, approved or ratified by a majority of the
votes cast by the stockholders entitled to vote, other than the votes of the
stock held of record by the Interested Officers/Directors; or (iii) the contract
or transaction is fair and reasonable to the Corporation. Any Interested
Officer/Director of the Corporation or the stock owned by them or by a
corporation, association, company, trust, partnership (limited or general) or
other organization in which an Interested Officer/Director may have an interest,
may be counted in determining the presence of a quorum at a meeting of the Board
of Directors or a committee of the Board of Directors or at a meeting of the
stockholders, as the case may be, at which the contract or transaction is
authorized, approved or ratified.
Section 3. REIT Qualification.
After the Corporation has initially elected to qualify as a REIT
under the Code, the Board of Directors shall use its reasonable best efforts to
cause the Corporation and its stockholders to qualify for U.S. federal income
tax treatment in accordance with the provision of the Code applicable to a REIT.
In furtherance of the foregoing, the Board of Directors shall use its reasonable
best efforts to take such actions as are necessary, and may take such actions as
in its sole judgment and discretion are desirable, to preserve the status of the
Corporation as a REIT, provided, however, that if the Board of Directors
determines in its discretion, that it is no longer in the best interests of the
Corporation 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. Nothing contained in the Charter shall
limit the authority of the Board of Directors to take such action as it in its
sole discretion deems necessary or advisable to protect the Corporation and the
interests of the stockholders by maintaining the Corporation's eligibility to
be, and preserving the Corporation's status as, a qualified REIT under the Code.
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Section 4. Other Considerations.
The Board of Directors shall, in connection with the exercise of
its business judgment involving a Business Combination (as defined in Section 3-
601 of the Maryland General Corporation Law) or any actual or proposed
transaction which would or may involve a change in control of the Corporation
(whether by purchases of shares of stock or any other securities of the
Corporation in the open market, or otherwise, tender offer, merger,
consolidation, dissolution, liquidation, sale of all or substantially all of the
assets of the Corporation, proxy solicitation or otherwise), in determining what
is in the best interests of the Corporation and its stockholders and in making
any recommendation to its stockholders, give due consideration to all relevant
factors, including but not limited to (a) the economic effect, both immediate
and long-term, upon the Corporation's stockholders, including stockholders, if
any, who do not participate in the transaction; (b) the social and economic
effect on the employees, customers of, and others dealing with, the Corporation
and its subsidiaries and on the communities in which the Corporation and its
subsidiaries operate or are located; (c) whether the proposal is acceptable
based on the historical and current operating results or financial condition of
the Corporation; (d) whether a more favorable price could be obtained for the
Corporation's stock or other securities in the future; (e) the reputation and
business practices of the offeror and its management and affiliates as they
would affect the employees of the Corporation and its subsidiaries; (f) the
future value of the stock or any other securities of the Corporation; (g) any
antitrust or other legal and regulatory issues that are raised by the proposal;
and (h) the business and financial condition and earnings prospects of the
acquiring person or entity, including but not limited to debt service and other
existing financial obligations, financial obligations to be incurred in
connection with the acquisition, and other likely financial obligations of the
acquiring person or entity. If the Board of Directors determines that any
proposed Business Combination (as defined in Section 3-601 of the Maryland
General Corporation Law) or actual or proposed transaction which would or may
involve a change in control of the Corporation should be rejected, it may take
any lawful action to defeat such transaction, including but not limited to any
or all of the following: advising stockholders not to accept the proposal;
instituting litigation against the party making the proposal; filing complaints
with governmental and regulatory authorities; acquiring the stock or any of the
securities of the Corporation; selling or otherwise issuing authorized but
unissued stock, other securities or granting options or rights with respect
thereto; acquiring a company or assets which would create an antitrust or other
regulatory problem for the party making the proposal; and obtaining a more
favorable offer from another individual or entity.
Section 5. Stockholder Proposals.
For any stockholder proposal to be presented in connection with
an annual meeting of stockholders of the Corporation, including any proposal
relating to the nomination of a director to be elected to the Board of Directors
of the Corporation, the stockholders must have given timely written notice
thereof in writing to the Chairman of the Board of the Corporation in the
manner and containing the information required by the Bylaws. Stockholder
proposals to be presented in
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connection with a special meeting of stockholders will be presented by the
Corporation only to the extent required by Section 2-502 of the Maryland General
Corporation Law.
Section 6. Voting Requirements.
Notwithstanding any provision of law requiring the authorization
of any action by a greater proportion than a majority of the total number of
shares of all classes of capital stock or the total number of shares of any
class of capital stock, such action shall be valid and effective if authorized
by the affirmative vote of the holders of a majority of the total number of
shares of all classes and entitled to vote thereon, except as otherwise provided
in the Charter of the Corporation. All mergers, consolidations, share exchanges,
recapitalization or dissolutions to which the Corporation is a party and all
sales of all or substantially all the assets of the Corporation shall not be
valid and effective unless advised by at least 75% of the Board of Directors.
ARTICLE IX
BUSINESS COMBINATIONS
The Corporation has elected to incorporate in the State of
Maryland with the intention to rely on the provisions of Subtitle 6, Special
Voting Requirements, (Sections 3-601 through Sections 3-603 at the date of
incorporation) of the Maryland General Corporation Law ("Subtitle 6") as it may
be amended or renumbered from time to time; provided, however, that in the event
the provisions of Subtitle 6 are effectively repealed or otherwise deleted from
the Maryland General Corporation Law or any other Maryland statute governing the
Corporation, the Corporation hereby incorporates by reference in this Article IX
of this Charter the provisions of Subtitle 6 as in effect on the date of the
Company's incorporation in Maryland with the same effect as if such provisions
had been set forth in full text in this Article IX.
ARTICLE X
INDEMNIFICATION
AND LIMITATION OF LIABILITY
Section 1. Indemnification.
The Corporation shall provide any indemnification permitted by
the laws of Maryland and shall indemnify directors, officers, agents and
employees as follows: (a) the Corporation shall indemnify its directors and
officers, whether serving the Corporation or at its request any other entity, to
the full extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of expenses under the
procedures
-30-
and to the full extent permitted by law and (b) the Corporation shall indemnify
other employees and agents, whether serving the Corporation or at its request
any other entity, to such extent as shall be authorized by the Board of
Directors or the Corporation's Bylaws and be permitted by law. The foregoing
rights of indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of Directors may take
such action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such bylaws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of the
Charter of the Corporation or repeal of any of its provisions shall limit or
eliminate the right to indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal or shall limit or
eliminate the rights granted under indemnification agreements entered into by
the corporation and its directors, officers, agents and employees.
Section 2. Limitation of Liability.
To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer of the
Corporation shall be liable to the Corporation or its stockholders for money
damages. No amendment of the Charter of the Corporation or repeal any of its
provisions shall apply to or affect in any respect the applicability of the
preceding sentence with respect to any act or omission which occurred prior to
such amendment or repeal.
ARTICLE XI
AMENDMENTS
(a) Right to Amend Charter. The Corporation reserves the right
to amend, alter, change or repeal any provision contained in the Charter,
including any amendments changing the terms or contract rights, as expressly set
forth in the Charter, of any of its outstanding stock by classification,
reclassification or otherwise.
(b) Certain Amendments Requiring Special Director Approval. Any
amendment to, repeal of or adoption of any provision inconsistent with Article
V, Section 2 (REIT related restrictions), Article VI, Article VII, Article IX,
Article X or this Article XI will be effective only if it is also advised by at
least 75% of the Board of Directors.
(c) Certain Amendments Requiring Special Stockholder Vote. Any
provision of the Charter of the Corporation to the contrary notwithstanding:
(i) Article VII, Section 3 (classification of directors),
Section 4 (removal of directors) and Section 8 (amendments of
Bylaws); Article IX
-31-
(business combinations); Article X (indemnification and
limitation of liability); and this Article XI shall not be
amended, altered, rescinded or repealed; and
(ii) no provision imposing cumulative voting in the election
of directors may be added to the Charter of the Corporation;
unless in each such case, in addition to any vote required by the terms of then
outstanding Preferred Stock, such action is approved by the affirmative vote of
the holders of not less than 75% of all of the votes entitled to be cast on the
matter.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated: ________________, 2001
________________________________________
Kayla E. Klos, Incorporator
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Consent of Resident Agent
THE UNDERSIGNED, hereby consents to act as resident agent in Maryland
for the entity named in the attached instrument.
[___________________________________________
Signature
Printed Name: _______________________________]
[The Corporate Resident Agent
By: ________________________________________
Printed Name: _______________________________]
-33-
Appendix C
BYLAWS
OF
SIZELER PROPERTY INVESTORS, INC.
A MARYLAND CORPORATION
SIZELER PROPERTY INVESTORS, INC.
BYLAWS
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I..................................................................... 1
OFFICES............................................................ 1
Section 1. PRINCIPAL OFFICE................................ 1
Section 2. ADDITIONAL OFFICES.............................. 1
ARTICLE II.................................................................... 1
STOCKHOLDERS....................................................... 1
Section 1. ANNUAL MEETING.................................. 1
Section 2. SPECIAL MEETING................................. 2
Section 3. PLACE OF MEETINGS............................... 2
Section 4. NOTICE.......................................... 2
Section 5. QUORUM; ADJOURNMENTS............................ 2
Section 6. VOTING.......................................... 3
Section 7. PROXIES......................................... 3
Section 8. ORGANIZATION.................................... 4
Section 9. CONDUCT OF BUSINESS............................. 4
Section 10. CONDUCT OF VOTING............................... 5
Section 11. ADVANCE NOTICE PROVISIONS FOR ELECTION
OF DIRECTORS.................................... 5
Section 12. ADVANCE NOTICE PROVISIONS FOR BUSINESS
TO BE TRANSACTED AT ANNUAL MEETING.............. 6
Section 13. LIST OF STOCKHOLDERS............................ 7
Section 14. VOTING OF STOCK BY CERTAIN HOLDERS.............. 8
Section 15. INFORMAL ACTION BY STOCKHOLDERS................. 8
Section 16. MEETING BY TELEPHONE CONFERENCE................. 8
ARTICLE III................................................................... 9
DIRECTORS.......................................................... 9
Section 1. GENERAL POWERS; QUALIFICATIONS.................. 9
Section 2. NUMBER AND TENURE............................... 9
Section 3. VACANCIES....................................... 9
Section 4. REGULAR MEETINGS................................ 9
Section 5. SPECIAL MEETINGS................................ 10
Section 6. NOTICE.......................................... 10
Section 7. QUORUM.......................................... 10
Section 8. VOTING.......................................... 11
Section 9. TELEPHONE MEETINGS.............................. 11
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PAGE
----
Section 10. INFORMAL ACTION BY DIRECTORS.................... 11
Section 11. COMPENSATION.................................... 11
Section 12. REMOVAL OF DIRECTORS............................ 11
Section 13. LOSS OF DEPOSIT................................. 12
Section 14. SURETY BONDS.................................... 12
Section 15. RELIANCE........................................ 12
Section 16. CERTAIN RIGHTS OF DIRECTORS..................... 12
Section 17. RESIGNATION..................................... 12
Section 18. PRESUMPTION OF ASSENT........................... 13
Section 19. ADVISORY DIRECTORS
ARTICLE IV................................................................... 13
COMMITTEES........................................................ 13
Section 1. NUMBER, TENURE AND QUALIFICATIONS.............. 13
Section 2. POWERS......................................... 14
Section 3. CONDUCT OF BUSINESS
ARTICLE V.................................................................... 14
OFFICERS.......................................................... 14
Section 1. GENERAL PROVISIONS............................. 14
Section 2. ELECTION, TENURE AND REMOVAL OF
OFFICERS....................................... 14
Section 3. CHAIRMAN OF THE BOARD.......................... 15
Section 4. VICE-CHAIRMAN.................................. 15
Section 5. PRESIDENT...................................... 15
Section 6. VICE-PRESIDENTS................................ 15
Section 7. CHIEF FINANCIAL OFFICER, TREASURER
AND CONTROLLER................................. 16
Section 8. SECRETARY...................................... 16
Section 9. ASSISTANT AND SUBORDINATE OFFICERS............. 16
Section 10. SALARIES....................................... 16
Section 11. DELEGATION OF AUTHORITY........................ 17
ARTICLE VI................................................................... 17
INDEMNIFICATION................................................... 17
Section 1. PROCEDURE...................................... 17
Section 2. EXCLUSIVITY, ETC............................... 17
Section 3. SEVERABILITY; DEFINITIONS...................... 18
ARTICLE VII.................................................................. 18
STOCK............................................................. 18
Section 1. CERTIFICATES................................... 18
Section 2. TRANSFERS...................................... 19
Section 3. LOST CERTIFICATE............................... 19
ii
PAGE
----
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.................. 20
Section 5. STOCK LEDGER........................................................ 20
ARTICLE VIII.................................................................................... 21
SPECIAL REIT PROVISIONS............................................................... 21
Section 1. DEFINITIONS......................................................... 21
Section 2. CONFLICTS OF INTEREST............................................... 22
Section 3. ANNUAL REPORTS...................................................... 22
Section 4. ADVISORY CONTRACT................................................... 23
Section 5. ADVISOR COMPENSATION................................................ 23
Section 6. REAL ESTATE BROKERAGE COMMISSIONS ON RESALE OF PROPERTY............. 24
ARTICLE IX...................................................................................... 24
FISCAL YEAR........................................................................... 24
ARTICLE X....................................................................................... 24
DIVIDENDS............................................................................. 24
Section 1. DECLARATION......................................................... 24
Section 2. CONTINGENCIES....................................................... 24
ARTICLE XI...................................................................................... 25
INVESTMENT POLICY..................................................................... 25
ARTICLE XII..................................................................................... 25
SEAL.................................................................................. 25
Section 1. SEAL................................................................ 25
Section 2. AFFIXING SEAL....................................................... 25
ARTICLE XIII.................................................................................... 25
WAIVER OF NOTICE...................................................................... 25
ARTICLE XIV..................................................................................... 26
FINANCE............................................................................... 26
Section 1. CONTRACTS........................................................... 26
Section 2. CHECKS AND DRAFTS................................................... 26
Section 3. DEPOSITS............................................................ 26
Section 4. ANNUAL STATEMENT OF AFFAIRS......................................... 26
ARTICLE XV...................................................................................... 27
CERTAIN ELECTIONS..................................................................... 27
Section 1. ELECTION OF SUBTITLE 8 PROVISIONS REGARDING UNSOLICITED TAKEOVERS... 27
iii
PAGE
----
Section 2. EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE............. 27
ARTICLE XVI.............................................................................. 27
SUNDRY PROVISIONS.............................................................. 27
Section 1. BOOKS AND RECORDS............................................ 27
Section 2. BONDS........................................................ 27
Section 3. VOTING UPON SHARES IN OTHER CORPORATIONS..................... 28
Section 4. MAIL......................................................... 28
Section 5. CONTRACTS AND AGREEMENTS..................................... 28
Section 6. FACSIMILE SIGNATURES......................................... 28
Section 7. RELIANCE UPON BOOKS, REPORTS AND RECORDS..................... 28
Section 8. TIME PERIODS................................................. 29
ARTICLE XVII............................................................................. 29
AMENDMENT OF BYLAWS............................................................ 29
iv
MARYLAND BYLAWS
OF
SIZELER PROPERTY INVESTORS, INC.
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE
The principal office of the Corporation shall be located in
Maryland at such place as the Board of Directors may designate.
Section 2. ADDITIONAL OFFICES
The Corporation may have its principal executive offices and
additional offices at such places as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. ANNUAL MEETING
The Corporation shall hold an annual meeting of its stockholders
to elect directors and transact any other business within its powers at such
time and on such date as the Chairman or Board of Directors shall set. Except as
the Charter or statute provides otherwise, any business may be considered at an
annual meeting without the purpose of the meeting having been specified in the
notice. Failure to hold an annual meeting does not invalidate the Corporation's
existence or affect any otherwise valid corporate acts.
Section 2. SPECIAL MEETING
At any time in the interval between annual meetings, a special
meeting of the stockholders may be called by the Chairman of the Board, the
President, or by a majority of the Board of Directors by a vote at a meeting or
in writing (addressed to the Chairman of the Board of the Corporation) with or
without a meeting. Subject to the procedures set forth in Section 11 of this
Article II and this Section, special meetings of the stockholders shall be
called by the Secretary at the request of stockholders only on the written
request of stockholders entitled to cast at least a majority of all the votes
entitled to be cast at the meeting. A request for a special meeting shall state
the purpose of such meeting and the matters proposed to be acted on at such
meeting. The Secretary shall inform the stockholders making such request of the
reasonably estimated costs of preparing and mailing a notice of the meeting and,
upon such stockholders' payment to the Corporation of such costs, the Secretary
shall give notice to each stockholder entitled to notice of the meeting. The
Board of Directors shall have sole power to fix the date and time of the special
meeting.
Section 3. PLACE OF MEETINGS
Meetings of stockholders shall be held at such place as is set
from time to time by the Board of Directors.
Section 4. NOTICE
Not less than ten nor more than 90 days before each meeting of
stockholders, the Secretary shall give written notice of the meeting to each
stockholder entitled to vote at such meeting and to each stockholder not
entitled to vote who is entitled to notice of the meeting. The notice shall
state the time and place of the meeting and, if a special meeting or notice of
the purpose is required by statute, the purpose of the meeting. Notice is given
to a stockholder when it is personally delivered to the stockholder, left at the
stockholder's residence or usual place of business, mailed to him or her at his
or her address as it appears on the records of the Corporation or transmitted to
the stockholder by electronic mail to any electronic mail address of the
stockholder or by any other electronic means. Notwithstanding the foregoing
provisions, each person who is entitled to notice waives notice if he or she
before or after the meeting signs a waiver of the notice which is filed with the
records of the stockholders' meetings or is present at the meeting in person or
by proxy.
Section 5. QUORUM; ADJOURNMENTS
Unless the statute or the Charter provides otherwise, at a
meeting of stockholders, the presence in person or by proxy of stockholders
entitled to cast a majority of all the votes entitled to be cast at such meeting
shall constitute a quorum; but this section shall not affect any
2
requirement under any statute or the Charter of the Corporation for the vote
necessary for the adoption of any measure.
Whether or not a quorum is present at any meeting of the
stockholders, a majority of the stockholders entitled to vote at such meeting,
present in person or by proxy, shall have power to adjourn the meeting from time
to time to a date not more than 120 days after the original record date without
notice other than announcement at the meeting. At such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 6. VOTING
A plurality of all the votes cast at a meeting of stockholders
duly called and at which a quorum is present shall be sufficient to elect a
director. In all elections for directors, each share may be voted for as many
individuals as there are directors to be elected and for whose election the
share is entitled to be voted. A majority of the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient to
approve any other matter which may properly come before the meeting, unless more
than a majority of the votes cast is required by statute or by the Charter of
the Corporation. Unless otherwise provided in the Charter or with respect to a
particular class or series of stock and other than Excess Stock of the
Corporation, each outstanding share of stock, regardless of class, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
stockholders; however, a share is not entitled to be voted if any installment
payable on it is overdue and unpaid.
Section 7. PROXIES
A stockholder may vote the stock the stockholder owns of record
either in person or by proxy. A stockholder may sign a writing authorizing
another person to act as proxy. Signing may be accomplished by the stockholder
or the stockholder's authorized agent signing the writing or causing the
stockholder's signature to be affixed to the writing by any reasonable means,
including facsimile signature. A stockholder may authorize another person to act
as proxy by transmitting, or authorizing the transmission of, an authorization
by a telegram, cablegram, datagram, electronic mail or any other electronic or
telephonic means to the person authorized to act as proxy or to any other person
authorized to receive the proxy authorization on behalf of the person authorized
to act as the proxy, including a proxy solicitation firm, proxy support service
organization, or other person authorized by the person who will act as proxy to
receive the transmission. Unless a proxy provides otherwise, it is not valid
more than 11 months after its date. A proxy is revocable by a stockholder at any
time without condition or qualification unless the proxy states that it is
irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the
3
proxy or another general interest in the Corporation or its assets or
liabilities. Before or at the time of the meeting, a proxy shall be filed with
the Secretary of the Corporation or with any person authorized by the Secretary
to receive proxy authorizations and who shall promptly submit such proxy
authorizations to the Secretary.
Section 8. ORGANIZATION
The Chairman or, if the Board of Directors has designated another
person, such other person, or, in the absence of such other person, the highest
ranking officer of the Corporation who is present shall call to order any
meeting of the stockholders and act as chairman of the meeting. In the absence
of the Secretary of the Corporation, the secretary of the meeting shall be such
person as the chairman of the meeting appoints. The chairman of the meeting
shall have the power, in his sole discretion, to adjourn, recess, delay or
otherwise postpone the date or time of any annual or special meeting of
stockholders.
Section 9. CONDUCT OF BUSINESS
Nominations of persons for election to the Board of Directors and
the proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation (i) who was a stockholder of record at the time
of giving notice(s) provided for in Section 11 and Section 12 of this Article
II, (ii) who is entitled to vote at the meeting and (iii) who complied with the
notice(s) procedures set forth in Section 11 and Section 12 of this Article II.
Nominations of persons for election to the Board of Directors and the proposal
of business to be considered by the stockholders may be made at a special
meeting of stockholders (a) only pursuant to the Corporation's notice of meeting
and (b), in the case of nominations of persons for election to the Board of
Directors, (i) by or at the direction of the Board of Directors or (ii) by any
stockholder of the Corporation (A) who was a stockholder of record at the time
of giving notice provided for in Section 11, (B) who is entitled to vote at the
meeting and (C) who complied with the notice procedures set forth in Section 11
of this Article II. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in Section 11 and
Section 12 of this Article II and this Section and, if any proposed nomination
or business is not in compliance with Section 11 and Section 12 of this Article
II and this Section, to declare that such defective nomination or proposal be
disregarded.
4
Section 10. CONDUCT OF VOTING
At all meetings of stockholders, unless the voting is conducted
by inspectors, the proxies and ballots shall be received, and all questions
touching the qualification of voters and the validity of proxies, the acceptance
or rejection of votes and procedures for the conduct of business not otherwise
specified by these Bylaws, the Charter or law, shall be decided or determined by
the chairman of the meeting. If demanded by stockholders, present in person or
by proxy, entitled to cast 10% in number of votes entitled to be cast, or if
ordered by the chairman of the meeting, the vote upon any election or question
shall be taken by ballot. Before any meeting of the stockholders, the Board of
Directors may appoint persons to act as inspectors of election at the meeting
and any adjournment thereof. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of stockholders, present in
person or by proxy, entitled to cast 10% in number of votes entitled to be cast,
shall appoint inspectors of election at the meeting. The number of inspectors
shall be either one or three. If inspectors are appointed at a meeting on the
request of stockholders, the holders of a majority of shares present in person
or by proxy shall determine whether one or three inspectors are to be appointed.
No candidate for election as a director at a meeting shall serve as an inspector
thereat. If any person appointed as inspector fails to appear or fails or
refuses to act, the chairman of the meeting may, and upon the request of any
stockholder shall, appoint a person to fill that vacancy. The inspectors shall
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting the existence of a quorum, and the
authenticity, validity and effect of proxies; receive votes, ballots or
consents; hear and determine all challenges and questions in any way arising in
connection with the right to vote; count and tabulate all votes or consents;
determine when polls shall close; determine the result; and do any other acts
that may be proper to conduct the election or vote with fairness to all
stockholders. Unless so demanded or ordered, no vote need be by ballot and
voting need not be conducted by inspectors.
Section 11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors of the Corporation.
Nominations of persons for election to the Board of Directors may be made at any
annual meeting of stockholders, or at any special meeting of stockholders called
for the purpose of electing directors, (a) by or at the direction of the Board
of Directors (or any duly authorized committee thereof) or (b) by any
stockholder of the Corporation (i) who is a stockholder of record on the date of
the giving of the notice provided for in this Section and on the record date for
the determination of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this Section. A stockholder's
notice must be delivered to or mailed and received by the Chairman of the Board
at the principal executive offices of the Corporation (a) in the case of
an annual meeting, not less than 90 days nor more than 120 days prior to the
first anniversary of the date of mailing of the notice for the preceding year's
annual meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such
5
anniversary date, notice by the stockholder must be so delivered not earlier
than the 120/th/ day prior to the date of mailing of the notice for such annual
meeting and not later than the close of business on the later of the 90/th/ day
prior to the date of mailing of the notice for such annual meeting or the tenth
day following the day on which public announcement of the date of mailing of the
notice for such meeting is first made; and (b) in the case of a special meeting
of stockholders called for the purpose of electing directors, not later than the
close of business on the tenth day following the day on which notice of the date
of the special meeting was mailed or public disclosure of the date of the
special meeting was made, whichever first occurs. A stockholder's notice to the
Chairman of the Board must be in writing and set forth (a) as to each person
whom the stockholder proposes to nominate for election as a director, all
information relating to such person that is required to be disclosed in
connection with solicitations of proxies for election of directors pursuant to
Regulation 14A of the Exchange Act, and the rules and regulations promulgated
thereunder; and (b) as to the stockholder giving the notice (i) the name and
address of such stockholder as they appear on the Corporation's books and of the
beneficial owner, if any, on whose behalf the nomination is made, (ii) the class
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder and such beneficial owner,
(iii) a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made by such
stockholder, (iv) a representation that such stockholder intends to appear in
person or by proxy at the meeting to nominate the persons named in its notice
and (v) any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Regulation 14A of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each proposed nominee to be named as a nominee and to serve as a director if
elected. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section. If the chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the chairman of the meeting
shall declare to the meeting that the nomination was defective and such
defective nomination shall be disregarded. No adjournment or postponement of a
meeting of stockholders shall commence a new period for the giving of notice of
a stockholder proposal hereunder.
Section 12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE
TRANSACTED AT ANNUAL MEETING
No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (b) otherwise properly
brought before the annual meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (c) otherwise properly
brought before the annual meeting by any stockholder of the Corporation (i) who
is stockholder of record on the
6
date of the giving of the notice provided for in this Section and on the record
date for the determination of stockholders entitled to vote at such annual
meeting and (ii) who complies with the notice procedures set forth in this
Section. A stockholder's notice must be delivered to or mailed and received by
the Chairman of the Board at the principal executive offices of the
Corporation not less than 90 days nor more than 120 days prior to the first
anniversary of the date of mailing of the notice for the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder must be so delivered not
earlier than the 120/th/ day prior to the date of mailing of the notice for such
annual meeting and not later than the close of business on the later of the
90/th/ day prior to the date of mailing of the notice for such annual meeting or
the tenth day following the day on which public announcement of the date of
mailing of the notice for such meeting is first made. A stockholder's notice to
the Chairman of the Board must in writing set forth as to each matter such
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address of
such stockholder as they appear on the Corporation's books and of the beneficial
owner, if any, on whose behalf the proposal is made, (iii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder and such beneficial owner, (iv) a
description of all arrangements or understandings between such stockholder and
any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of such
stockholder in such business and (v) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting. No business shall be conducted at the annual
meeting of stockholders except business brought before the annual meeting in
accordance with the procedures set forth in Section 11 of this Article II or in
this Section, provided, however, that once business has been properly brought
before the annual meeting in accordance with such procedures, nothing in Section
11 of this Article II nor in this Section shall be deemed to preclude discussion
by any stockholder of any such business. If the chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the chairman of the meeting shall
declare to the meeting that the business was not properly brought before the
meeting and such business shall not be transacted. No adjournment or
postponement of a meeting of stockholders shall commence a new period for the
giving of notice of a stockholder proposal hereunder.
Section 13. LIST OF STOCKHOLDERS
At each meeting of stockholders, a full, true and complete list
of all stockholders entitled to vote at such meeting, showing the number and
class of shares held by each and certified by the transfer agent for such class
or by the Secretary, shall be furnished by the Secretary.
7
Section 14. VOTING OF STOCK BY CERTAIN HOLDERS
Stock registered in the name of a corporation, partnership, trust
or other entity, if entitled to be voted, may be voted by the president or a
vice president, a general partner or trustee thereof, as the case may be, or a
proxy appointed by any of the foregoing individuals, unless some other person
who has been appointed to vote such stock pursuant to a bylaw or a resolution of
the board of directors of such corporation or other entity presents a certified
copy of such bylaw or resolution, in which case such person may vote such stock.
Any director or other fiduciary may vote stock registered in his or her name as
such fiduciary, either in person or by proxy.
The Board of Directors may adopt by resolution a procedure by
which a stockholder may certify in writing to the Corporation that any shares of
stock registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date of
closing of the stock transfer books, the time after the record date of closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.
Section 15. INFORMAL ACTION BY STOCKHOLDERS
Except as provided below, any action required or permitted to be
taken at a meeting of stockholders may be taken without a meeting if a unanimous
written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter is filed with the records of stockholders
meetings. Unless the Charter requires otherwise, the holders of any class of
stock other than Common Stock, entitled to vote generally in the election of
directors, may take action or consent to any action by the written consent of
stockholders entitled to cast not less than the minimum number of votes that
would be necessary to authorize or take the action at a stockholders meeting if
the Corporation gives notice of the action to each stockholder not later than 10
days after the effective time of the action.
Section 16. MEETING BY TELEPHONE CONFERENCE
If permitted in the sole discretion of the chairman of the
meeting, stockholders may participate in meetings by means of a conference
telephone or similar communications
8
equipment if all persons participating in the meeting can hear each other at the
same time. Participation in a meeting by these means constitutes presence in
person at such meeting.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS; QUALIFICATIONS
The business and affairs of the Corporation shall be managed
under the direction of its Board of Directors. All powers of the Corporation may
be exercised by or under authority of the Board of Directors, except as
conferred on or reserved to the stockholders by statute or by the Charter or
Bylaws.
Section 2. NUMBER AND TENURE
The Corporation shall have at least one director. The Corporation
shall have the number of directors provided in the Charter until changed as
herein provided. The Board of Directors shall be divided into three classes as
and in the manner provided in the Charter. Except as the Charter provides
otherwise, a majority of the entire Board of Directors may alter the number of
directors set by the Charter to not exceeding 15 nor less than the minimum
number then permitted herein, but the action may not affect the tenure of office
of any director. Each director shall hold office for such term as is specified
in the Charter and until his or her successor is elected and qualified, or until
his or her resignation, removal (in accordance with the Charter), retirement or
death.
Section 3. VACANCIES
Vacancies on the Board of Directors shall be filled as provided
in the Charter of the Corporation.
Section 4. REGULAR MEETINGS
After each meeting of stockholders at which directors shall have
been elected, the Board of Directors shall meet as soon thereafter as
practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board of Directors or announced by the Chairman of the Board at such
stockholders meeting, the Board of Directors shall meet immediately following
the close
9
of, and at the place of, such stockholders meeting. Any other regular meeting of
the Board of Directors shall be held on such date and time and at such place as
may be designated from time to time by the Board of Directors. No notice of such
meeting following a stockholders meeting or any other regular meeting shall be
necessary if held as hereinabove provided.
Section 5. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by a
majority of the Directors then in office or at the request of the Chairman. A
special meeting of the Board of Directors shall be held on such date and at any
place as may be designated from time to time by the Board of Directors. In the
absence of designation such meeting shall be held at such place as may be
designated in the call.
Section 6. NOTICE
Except as provided in Article III, Section 4, the Chairman of the
Board or the Chairman of the Board's designee shall give notice to each director
of each regular and special meeting of the Board of Directors. The notice shall
state the time and place of the meeting. Notice is given to a director when it
is delivered personally to him or her, left at his or her residence or usual
place of business, or sent by telegraph, facsimile transmission or telephone, at
least 24 hours before the time of the meeting or, in the alternative by mail to
his or her address as it shall appear on the records of the Corporation, at
least 72 hours before the time of the meeting. Unless these Bylaws or a
resolution of the Board of Directors provides otherwise, the notice need not
state the business to be transacted at or the purposes of any regular or special
meeting of the Board of Directors. No notice of any meeting of the Board of
Directors need be given to any director who attends except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened, or to any
director who, in writing executed and filed with the records of the meeting
either before or after the holding thereof, waives such notice. Any meeting of
the Board of Directors, regular or special, may adjourn from time to time to
reconvene at the same or some other place, and no notice need be given of any
such adjourned meeting other than by announcement.
Section 7. QUORUM
A majority of the entire Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
provided that, if less than a majority of such directors are present at said
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice, and provided further that if, pursuant to the
Charter of the Corporation or these Bylaws, the vote of a majority of a
particular group of directors is required for action, a quorum must also include
a majority of such group.
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Section 8. VOTING
The action of a majority of the directors present at a meeting at
which a quorum is present shall be the action of the Board of Directors, unless
the concurrence of a greater or lesser proportion is required for such action by
the Charter, these Bylaws or applicable statute.
Section 9. TELEPHONE MEETINGS
Directors may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation in a meeting by
these means constitutes presence in person at a meeting.
Section 10. INFORMAL ACTION BY DIRECTORS
Any action required or permitted to be taken at a meeting of the
Board of Directors may be taken without a meeting, if an unanimous consent in
writing to such action is signed by each director and such written consent is
filed with the minutes of proceedings of the Board of Directors.
Section 11. COMPENSATION OF DIRECTORS
Unless restricted by the Charter, the Board of Directors shall
have the authority to fix the fees and other compensation of directors for their
service as directors, including, without limitation, their services as members
of committees of the Board of Directors.
Section 12. REMOVAL OF DIRECTORS
The stockholders may remove any director or the entire Board of
Directors in the manner provided in the Charter of the Corporation.
Section 13. LOSS OF DEPOSIT
No director shall be liable for any loss which may occur by
reason of the failure of the bank, trust company, savings and loan association
or other institution with whom moneys or stock have been deposited.
11
Section 14. SURETY BONDS
Unless required by law, no director shall be obligated to give
any bond or surety or other security for the performance of any of his or her
duties.
Section 15. RELIANCE
Each director, officer, employee and agent of the Corporation
shall, in the performance of his duties with respect to the Corporation, be
fully justified and protected with regard to any act or failure to act in
reliance in good faith upon the books of account or other records of the
Corporation, upon an opinion of counsel or upon reports made to the Corporation
by any of its officers or employees or by the advisers, accountants, appraisers
or other experts or consultants selected by the Board of Directors or officers
of the Corporation, regardless of whether such counsel or expert may also be a
director.
Section 16. CERTAIN RIGHTS OF DIRECTORS
The directors shall have no responsibility to devote their full
time to the affairs of the Corporation. Any director, officer, employee or agent
of the Corporation, in his or her personal capacity or in a capacity as an
affiliate, employee, or agent of any other person, or otherwise, may have
business interests and engage in business activities similar to or in addition
to those of or relating to the Corporation.
Section 17. RESIGNATION
Any director may resign at any time by sending a written notice
of such resignation to the home office of the Corporation addressed to the
Chairman of the Board. Unless otherwise specified therein such resignation shall
take effect upon receipt thereof by the Chairman of the Board.
Section 18. PRESUMPTION OF ASSENT
A director of the Corporation who is present at a meeting of the
Board of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his or dissent or
abstention shall be entered in the minutes of the meeting or unless he or she
shall file his or her written dissent to such action with the person acting as
the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of the Corporation immediately
after the adjournment of the
12
meeting. Such right to dissent shall not apply to a director who votes in favor
of such action or fails to make his dissent known at the meeting.
Section 19. ADVISORY DIRECTORS
The Board of Directors may by resolution appoint advisory
directors to the Board of Directors, who may also serve as directors emeriti,
and shall have such authority and receive such compensation and reimbursement as
the Board of Directors shall provide. Advisory directors or directors emeriti
shall not have the authority to participate by vote in the transaction of
business.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS
The Board of Directors may appoint from among its members an
executive committee and other committees, composed of one or more directors, to
serve at the pleasure of the Board of Directors. The Board of Directors may
designate, if it desires, other Directors as alternative members who may replace
any absent or disqualified member at any meeting of the committee. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at the
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may by unanimous vote appoint another member of the Board of Directors
to act at the meeting in the place of the absent or disqualified member.
Section 2. POWERS
The Board of Directors may delegate to committees appointed under
Section 1 of this Article IV any of the powers of the Board of Directors, except
the power to authorize dividends on stock, elect directors, issue stock other
than as provided below, recommend to the stockholders any action which requires
stockholder approval, amend these Bylaws, or approve any merger or share
exchange which does not require stockholder approval. If the Board of Directors
has given general authorization for the issuance of stock providing for or
establishing a method or procedure for determining the maximum number of shares
to be issued, a committee of the Board, in accordance with that general
authorization or any stock option or other plan or program adopted by the Board
of Directors, may authorize or fix the terms of stock subject to classification
or reclassification and the terms on which any stock may be issued, including
all
13
terms and conditions required or permitted to be established or authorized by
the Board of Directors.
Section 3. CONDUCT OF BUSINESS
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provisions shall be made
for notice to members of all meetings; a majority of the members shall
constitute a quorum, and all matters shall be determined by a majority vote of
the members present. Action may be taken by any committee without a meeting if
all members thereof consent thereto in writing, and the writing or writings are
filed with the minutes of the proceedings of such committee.
Members of a committee of the Board of Directors may participate
in a meeting by means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear each other at the
same time. Participation in a meeting by these means constitutes presence in
person at a meeting.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS
The officers of the Corporation shall include a chairman of the
board, a vice-chairman, a president, one or more vice-presidents, a secretary, a
treasurer and such other subordinate officers as may from time to time be
appointed by the Board of Directors. The Board of Directors, in its discretion,
may establish for such period of time as it deems advisable the offices of vice
chairman and of principal operating officer, respectively.
Section 2. ELECTION, TENURE AND REMOVAL OF OFFICERS
Officers shall be elected by the Board of Directors, which shall
consider that subject at its first meeting after every annual meeting of
stockholders and at other meetings as may be appropriate to fill a vacancy in an
office. The Board of Directors may from time to time authorize any committee or
officer to appoint assistant and subordinate officers. Election or appointment
of an officer, employee or agent shall not of itself create contract rights.
Each officer shall hold his office until his successor is elected and qualified
or until his earlier resignation or removal. Any two or more offices except
president and vice president may be
14
held by the same person. The Board of Directors (or, as to any assistant or
subordinate officer, any committee or officer authorized by the Board) may
remove an officer at any time, with or without cause. The removal of an officer
does not prejudice any of his or her contract rights. The Board of Directors
(or, as to any assistant or subordinate officer, any committee or officer
authorized by the Board) may fill a vacancy which occurs in any office for the
unexpired portion of the term.
Section 3. CHAIRMAN OF THE BOARD
The Chairman of the Board shall be the Chief Executive Officer of
the Corporation. Subject to the provisions of these Bylaws and to the direction
of the Board of Directors, he shall have the responsibility for the general
management and control of the affairs and business of the Corporation and shall
perform all duties and have all powers which are commonly incident to the office
of chief executive or which are delegated to him by the Board of Directors. The
term "Chairman" in these Bylaws shall mean the Chairman of the Board unless the
context clearly indicates that it is intended to mean the chairman of a
specified committee or meeting.
Section 4. VICE-CHAIRMAN
The Vice-Chairman, if any, shall exercise such duties as are
delegated to him by the Chairman, and he shall report primarily to the Chairman.
In the absence or disability of the Chairman, the Vice-Chairman shall perform
the duties of the Chairman, subject to the right of the Board of Directors to
designate another officer to perform some or all of these duties.
Section 5. PRESIDENT
The President shall be the Chief Operating Officer of the
Corporation and, except as set forth in the following sentence, shall perform
all duties incident to the Office of the Chief Operating Officer and such other
duties as from time to time may be assigned to him by the Board of Directors or,
to the extent not inconsistent with any assignment by the Board of Directors, by
the Chairman.
Section 6. VICE-PRESIDENTS
Each vice-president shall perform such duties as the Board of
Directors shall prescribe. In the absence or disability of the President, the
vice-president who is designated by the Board of Directors shall perform the
duties and exercise the powers of the President.
15
Section 7. CHIEF FINANCIAL OFFICER, TREASURER AND CONTROLLER
The Chief Financial Officer (CFO) shall have general supervision
of all the accounts and books of account of the Corporation and of all
accounting personnel and shall supervise all controls with respect to the monies
and securities of the Corporation. The CFO shall advise and report to the
Chairman and the President of the Corporation with respect to corporate
financial and accounting policy, compliance with contractual restrictions
affecting the Corporation's finances, negotiations with the Corporation's
lenders and prospective lenders and investors and such general financial and
accounting matters as may be requested by the Chairman or President. When
requested by the Chairman or the Board of Directors or the Audit Committee or
its chairman, the CFO shall report to the Board of Directors or Audit Committee
on financial and accounting matters. The Treasurer and Controller shall report
to the CFO. The Treasurer shall have direct responsibility for handling of the
monies and securities of the Corporation, and the Controller shall be directly
responsible for corporate accounting; provided, however, that the Board of
Directors may, in its discretion from time to time, specify additional duties
for the Treasurer or Controller or, in the absence of such specification by the
Board of Directors, the Chairman, President or CFO may assign additional duties.
In the absence of a Treasurer or Controller, the Board shall so designate
another individual or individuals to perform the functions of each such office.
Section 8. SECRETARY
The Secretary shall issue all authorized notices for, and shall
keep minutes of, all meetings of the stockholders and the Board of Directors.
The Secretary shall have charge of the corporate books.
Section 9. ASSISTANT AND SUBORDINATE OFFICERS
The assistant and subordinate officers of the Corporation are all
officers below the office of Vice-President, Secretary, or Treasurer. The
assistant or subordinate officers shall have such duties as are from time to
time assigned to them by the Board of Directors, the chairman, or the President.
Section 10. SALARIES
The salaries and other compensation or remuneration, of whatever
kind, of the officers shall be fixed from time to time by the Board of Directors
and no officer shall be prevented from receiving such salary and other
compensation or remuneration by reason of the fact that he or she is also a
director of the Corporation.
16
Section 11. DELEGATION OF AUTHORITY
The Board of Directors may from time to time delegate the powers
or duties of any officer to any other officers or agent, notwithstanding any
provision hereof.
ARTICLE VI
INDEMNIFICATION
Section 1. PROCEDURE
Any indemnification, or payment of expenses in advance of the
final disposition of any proceeding, shall be made promptly, and in any event
within 60 days, upon the written request of the director or officer entitled to
seek indemnification (the "Indemnified Party"). The right to indemnification and
advances hereunder shall be enforceable by the Indemnified Party in any court of
competent jurisdiction, if (i) the Corporation denies such request, in whole or
in part; or (ii) no disposition thereof is made within 60 days. The Indemnified
Party's costs and expenses incurred in connection with successfully establishing
his or her right to indemnification, in whole or in part, in any such action
shall also be reimbursed by the Corporation. It shall be a defense to any action
for advance for expenses that (a) a determination has been made that the facts
then known to those making the determination would preclude indemnification or
(b) the Corporation has not received both (i) an undertaking as required by law
to repay such advances in the event it shall ultimately be determined that the
standard of conduct has not been met and (ii) a written affirmation by the
Indemnified Party of such Indemnified Party's good faith belief that the
standard of conduct necessary for indemnification by the Corporation has been
met.
Section 2. EXCLUSIVITY, ETC.
The indemnification and advance of expenses provided by the
Charter and these Bylaws shall not be deemed exclusive of any other rights to
which a person seeking indemnification or advance of expenses may be entitled
under any law (common or statutory), or any agreement, vote of stockholders or
disinterested directors or other provision that is consistent with law, both as
to action in his or her official capacity and as to action in another capacity
while holding office or while employed by or acting as agent for the
Corporation, shall continue in respect of all events occurring while a person
was a director or officer after such person has ceased to be a director or
officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. The Corporation shall not be liable for any
payment under this Bylaw in connection with a claim made by a director or
officer to the extent such director or officer has otherwise actually received
payment under an insurance policy, agreement, vote or
17
otherwise, of the amounts otherwise indemnifiable hereunder. All rights to
indemnification and advance of expenses under the Charter of the Corporation and
hereunder shall be deemed to be a contract between the Corporation and each
director or officer of the Corporation who serves or served in such capacity at
any time while this Bylaw is in effect. Nothing herein shall prevent the
amendment of this Bylaw, provided that no such amendment shall diminish the
rights of any person hereunder with respect to events occurring or claims made
before its adoption or as to claims made after its adoption in respect of events
occurring before its adoption. Any repeal or modification of this Bylaw shall
not in any way diminish any rights to indemnification or advance of expenses of
such director or officer or the obligations of the Corporation arising hereunder
with respect to events occurring, or claims made, while this Bylaw or any
provision hereof is in force, nor shall such repeal or modification diminish any
person's rights to indemnification or advances of expenses or performance of
other obligations of the Corporation under any agreement of indemnification
between the Corporation and such person.
Section 3. SEVERABILITY; DEFINITIONS
The invalidity or unenforceability of any provision of this
Article VI shall not affect the validity or enforceability of any other
provision hereof. The phrase "this Bylaw" in this Article VI means this Article
VI in its entirety.
ARTICLE VII
STOCK
Section 1. CERTIFICATES
The Corporation's Excess Stock (the "Excess Stock"), shall be
issued in book entry form only, and without certificates. For that purpose, the
Corporation shall cause appropriate records to be maintained of all registered
holders of the Excess Stock and the number of shares of Excess Stock,
respectively, held by each, from time to time.
Except as provided above with respect to the Excess Stock, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number of shares of each class of stock held by him or
her in the Corporation. Each certificate shall be signed by the Chairman of the
Board, the President or a Vice President and countersigned by the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer and may be
sealed with the actual seal or a facsimile thereof, if any, of the Corporation.
The signatures may be either manual or facsimile. Certificates shall be
consecutively numbered; and if the Corporation shall, from time to time, issue
several classes or series of stock, each class or series may have its own number
sequence. A certificate is valid and may be issued whether or not an officer who
signed
18
it is still an officer when it is issued. Each stock certificate shall include
on its face the name of the Corporation, the name of the stockholder or other
person to whom it is issued, and the class of stock and number of shares it
represents. Each certificate shall also include on its face or back (a) a
statement of any restrictions on transferability and a statement of the
designations and any preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the stock of each class which the Corporation is
authorized to issue, of the differences in the relative rights and preferences
between the shares of each series of a preferred or special class in series
which the Corporation is authorized to issue, to the extent they have been set,
and of the authority of the Board of Directors to set the relative rights and
preferences of subsequent series of a preferred or special class of stock or (b)
a statement which provides in substance that the Corporation will furnish a full
statement of such information to any stockholder on request and without charge.
Such request may be made to the Chairman of the Board. Except as provided in the
Maryland Uniform Commercial Code - Investment Securities, the fact that a stock
certificate does not contain or refer to a restriction on transferability that
is adopted after the date of issuance does not mean that the restriction is
invalid or unenforceable. A certificate is valid and may be issued whether or
not an officer who signed it is still an officer when it is issued. A
certificate may not be issued until the stock represented by it is fully paid. A
certificate representing stock validly issued by a constituent corporation in a
merger in which the Corporation is the surviving corporation shall be valid to
the extent provided in the Agreement or Articles of Merger notwithstanding that
the form of the certificate does not comply with the requirements for a
certificate issued by the Corporation.
Section 2. TRANSFERS
The Board of Directors shall have the power and authority to make
such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates of stock; and may appoint transfer
agents and registrars thereof. The duties of the transfer agent and registrar
may be combined.
Section 3. LOST CERTIFICATE
The Board of Directors of the Corporation may determine the
conditions for issuing a new stock certificate in place of one which is alleged
to have been lost, stolen or destroyed, or the Board of Directors may delegate
such power to any officer or officers of the Corporation. In their discretion,
the Board of Directors or such officer or officers may require the owner of the
certificate to give a bond, with sufficient surety, to indemnify the Corporation
against any loss or claim arising as a result of the issuance of a new
certificate. In their discretion, the Board of Directors or such officer or
officers may refuse to issue such new certificate save upon the order of some
court having jurisdiction in the premises.
19
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE
The Board of Directors may, and shall have the sole power to, set
a record date or direct that the stock transfer books be closed for a stated
period for the purpose of making any proper determination with respect to
stockholders, including which stockholders are entitled to request a special
meeting of stockholders, notice of a meeting of stockholders, vote at a meeting
of stockholders, receive a dividend, or be allotted other rights. The record
date may not be prior to the close of business on the day the record date is
fixed nor, subject to Article II, Section 5, more than 90 days before the date
on which the action requiring the determination will be taken; the transfer
books may not be closed for a period longer than 20 days; and, in the case of a
meeting of stockholders, the record date or the closing of the transfer books
shall be at least ten days before the date of the meeting. Any shares of the
Corporation's own stock acquired by the Corporation between the record sate for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders and the time of the meeting may be voted at the meeting by the
holder of record as of the record date and shall be counted in determining the
total number of outstanding shares entitled to be voted at the meeting.
If no record date is fixed and the stock transfer books are not
closed for the determination of stockholders, (a) the record date for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day on which the notice of
meeting is mailed; and (b) the record date for the determination of stockholders
entitled to receive payment of a dividend or an allotment of any other rights
shall be the close of business on the day on which the resolution of the
directors, declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except where the
determination has been made through the closing of the transfer books and the
stated period of closing has expired.
Section 5. STOCK LEDGER
The Corporation shall maintain at its principal office or at the
office of its transfer agent, an original or duplicate share ledger containing
the name and address of each stockholder and the number of shares of each class
held by such stockholder. The stock ledger may be in written form or in any
other form which can be converted within a reasonable time into written form for
visual inspection.
20
ARTICLE VIII
SPECIAL REIT PROVISIONS
Section 1. DEFINITIONS
The following definitions of terms apply to the provisions
contained in this Article VIII:
(1) "Advisor" means the person(s) or entity responsible for
directing or performing the day-to-day business affairs of the Corporation,
including a person or entity to which an Advisor subcontracts substantially all
such functions. To the extent the provisions of this Article VIII are germane,
they shall apply to an independent contractor the Corporation has engaged to
manage the Corporation's properties.
(2) "Affiliate" means (i) any person directly or indirectly
controlling, controlled by or under common control with another person, (ii) any
person owning or controlling 10% or more of the outstanding voting securities or
beneficial interests of such other person, (iii) any officer, director or
trustee of, or general partner in, of such person and (iv) if such other person
is an officer, director or trustee of, or general partner in, another entity,
then the entity for which that person acts in any such capacity.
(3) "Competitive Real Estate Commission" means that real estate
or brokerage commission paid for the purchase or sale of a property which is
reasonable, customary and competitive in light of the size, type and location of
such property.
(4) "Unaffiliated Director(s)" means the Directors of the
Corporation who are not affiliated, directly or indirectly, with an Advisor of
the Corporation, whether by ownership of, ownership interest in, employment by,
any material business or professional relationship with, or service as an
officer or director of, such Advisor or an affiliated business entity of such
Advisor. Unaffiliated Directors shall also mean those Directors who perform no
other services for the Corporation, except as Director(s). An indirect
relationship shall include circumstances in which a member of the immediate
family of a Director (which shall include such person's spouse, parents,
children, siblings, mothers and fathers-in-law, sons and daughters-in-law and
brothers and sisters-in-law) has one of the foregoing relationships with an
Advisor of the Corporation or the Corporation.
(5) "REIT" is a corporation, trust or association (other than a
real estate syndication) which is engaged primarily in investing in equity
interests in real estate (including fee ownership and leasehold interests) or in
loans secured by real estate or both.
21
Section 2. CONFLICTS OF INTEREST
(1) The Corporation shall not purchase property from an Advisor,
a Director or Affiliate thereof, unless a majority of directors (including a
majority of Unaffiliated Directors) not otherwise interested in such transaction
approve the transaction as being fair and reasonable to the Corporation and at a
price to the Corporation no greater than the cost of the asset to such Advisor,
Director or Affiliate thereof, or, if the price to the Corporation is in excess
of such cost, that substantial justification for such excess exists and such
excess is not unreasonable. In no event shall the cost of such asset to the
Corporation exceed its current appraised value.
(2) The Corporation shall not sell property to an Advisor, a
Director or Affiliates thereof, unless a majority of Directors (including a
majority of Unaffiliated Directors) not otherwise interested in such transaction
approve the transaction as being fair and reasonable to the Corporation. In no
event shall the price of an interest in real property to be sold by the
Corporation to the Advisor, a Director or any Affiliate thereof be less than its
current appraised value.
(3) The Corporation may not make loans to or borrow money from
an Advisor, a Director or Affiliate thereof, unless a majority of Directors
(including a majority of Unaffiliated Directors) not otherwise interested in
such transaction approve the transaction as being fair, competitive, and
commercially reasonable and no less favorable to the Corporation than loans
between unaffiliated lenders and borrowers under the same circumstances.
(4) The Corporation shall not invest in any joint venture with
an Advisor, a Director or Affiliates thereof, unless a majority of Directors
(including a majority of Unaffiliated Directors) not otherwise interested in
such transaction approve the transaction as being fair and reasonable to the
Corporation and the participation of the Corporation is on substantially the
same terms and conditions as that of the other joint venturers.
(5) All other transactions between the Corporation and an
Advisor, a Director or Affiliates thereof shall require approval by a majority
of the Directors (including a majority of Unaffiliated Directors) not otherwise
interested in such transactions as being fair and reasonable to the Corporation
and on terms and conditions not less favorable to the Corporation than those
available from unaffiliated third parties.
Section 3. ANNUAL REPORTS
(1) The Corporation shall prepare an annual report concerning
its operations for each fiscal year containing financial statements prepared in
accordance with generally accepted accounting principles which are audited and
reported on by independent certified public accountants.
22
(2) Annual reports shall be mailed or delivered to each
stockholder of the Corporation as of a record date after the end of such fiscal
year within 120 days after the end of the fiscal year to which it relates.
Section 4. ADVISORY CONTRACT
The Board of Directors shall determine, in its sole discretion,
whether the Corporation shall be self-advised or shall enter into an Advisory
Contract with an Advisor. The Directors shall have the duty to evaluate the
performance of the Advisor before entering into or renewing an Advisory
Contract. The criteria used in such evaluation shall be reflected in the
minutes of such meeting. Each contract for the services of an Advisor shall
have a term of no more than one year.
Section 5. ADVISOR COMPENSATION
The Unaffiliated Directors shall determine from time to time and
at least annually that the compensation which the Corporation contracts to pay
to the Advisor is reasonable in relation to the nature and quality of services
performed. The Unaffiliated Directors shall also supervise the performance of
the Advisor and the compensation paid to it by the Corporation to determine that
the provisions of such contract are being carried out. Each such determination
shall be based on the factors set forth below and all other factors such
Unaffiliated Directors may deem relevant, and the findings of such Directors on
each of such factors shall be recorded in the minutes of the Directors:
(1) The size of the advisory fee in relation to the size,
composition and profitability of the portfolio of the Corporation;
(2) The rates charged to other REITs and to investors other than
REITs by advisors performing similar services;
(3) Additional revenues realized by the Advisor and its
Affiliates through their relationship with the Corporation, including loan
administration, underwriting or broker commissions, servicing, engineering,
inspection and other fees, whether paid by the Corporation or by others with
whom the Corporation does business;
(4) The quality and extent of service and advice furnished by
the Advisor; and
(5) The performance of the investment portfolio of the
Corporation, including income, conservation or appreciation of capital,
frequency of problem investments and competence in dealing with distress
situations.
23
Section 6. REAL ESTATE BROKERAGE COMMISSIONS ON RESALE OF PROPERTY
If an Advisor, Director or Affiliate provides a substantial
amount of the services in the effort to sell any property of the Corporation,
then such person may receive all or a portion of a brokerage commission paid,
but in no event shall the amount so paid, when added to the sums paid to
unaffiliated parties in such a capacity, exceed a Competitive Real Estate
Commission.
ARTICLE IX
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.
ARTICLE X
DIVIDENDS
Section 1. DECLARATION
Dividends upon the stock of the Corporation may be declared by
the Board of Directors, subject to the provisions of law and the Charter of the
Corporation. Dividends may be paid in cash, property or stock of the
Corporation, subject to the provisions of law and the Charter.
Section 2. CONTINGENCIES
Before payment of any dividends, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
Board of Directors may from time to time, in its absolute discretion, think
proper as a reserve fund for contingencies, for equalizing dividends, for
repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall determine to be in the best interest of
the Corporation, and the Board of Directors may modify or abolish any such
reserve in the manner in which it was created.
24
ARTICLE XI
INVESTMENT POLICY
Subject to the provisions of the Charter of the Corporation, the
Board of Directors may from time to time adopt, amend, revise or terminate any
policy or policies with respect to investments by the Corporation as it shall
deem appropriate in its sole discretion.
ARTICLE XII
SEAL
Section 1. SEAL
The Board of Directors may authorize the adoption of a seal by
the Corporation. The seal shall have inscribed thereon the name of the
Corporation and the year of its organization. The Board of Directors or a
committee thereof may authorize one or more duplicate seals and provide for the
custody thereof.
Section 2. AFFIXING SEAL
Whenever the Corporation is required to place its seal to a
document, it shall be sufficient to meet the requirements of any law, rule or
regulation relating to a seal to place the word "(seal)" adjacent to the
signature of the person authorized to execute the document on behalf of the
Corporation.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the
Charter of the Corporation or these Bylaws or pursuant to applicable law, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein, 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
25
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 XIV
FINANCE
Section 1. CONTRACTS
To the extend permitted by applicable law, and except as
otherwise prescribed by the Charter of the Corporation or these Bylaws, the
Board of Directors may authorize any officer, employee or agent to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the Corporation. Such authority may be general or confined to specific
instances. Any agreement, deed, mortgage, lease or other document executed by
one or more of the directors or by an authorized person shall be valid and
binding upon the Board of Directors and upon the Corporation when authorized or
ratified by action of the Board of Directors.
Section 2. CHECKS AND DRAFTS
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness, in the name of the Corporation shall
be signed by such officer or officers, agent or agents of the Corporation and in
such manner as shall from time to time be determined by the Board of Directors.
Section 3. DEPOSITS
All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may designate.
Section 4. ANNUAL STATEMENT OF AFFAIRS
The President or Chief Financial Officer shall prepare annually a
full and correct statement of the affairs of the Corporation, to include a
balance sheet and a financial statement of operations for the preceding fiscal
year. The statement of affairs shall be submitted at the annual meeting of the
stockholders and, within 20 days after the meeting, placed on file at the
Corporation's principal office.
26
ARTICLE XV
CERTAIN ELECTIONS
Section 1. ELECTION OF SUBTITLE 8 PROVISIONS REGARDING UNSOLICITED TAKEOVERS
The Corporation hereby elects to be subject to the following
provisions of Title 3, Subtitle 8 of the Maryland General Corporation Law:
Section 3-804(c).
Section 2. EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE
The provisions of Sections 3-701 to 3-709 of the Maryland General
Corporation Law shall not apply to any share of the capital stock of the
Corporation. Such shares of capital stock are exempted from such Sections to
the fullest extent permitted by Maryland law.
ARTICLE XVI
SUNDRY PROVISIONS
Section 1. 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 and of any executive or other committee when
exercising any of the powers of the Board of Directors. The books and records of
the Corporation may be in written form or in any other form which can 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. The original or a certified copy of these Bylaws shall be kept at
the principal office of the Corporation.
Section 2. BONDS
The Board of Directors may require any officer, agent or employee
of the Corporation to give a bond to the Corporation, conditioned upon the
faithful discharge of his or her duties, with one or more sureties and in such
amount as may be satisfactory to the Board of Directors.
27
Section 3. VOTING UPON SHARES IN OTHER CORPORATIONS
Stock of other corporations, associations or trusts, registered
in the name of the Corporation, may be voted by the Chairman, President, a Vice-
President or a proxy appointed by any of them. The Board of Directors, however,
may by resolution appoint some other person to vote such shares, in which case
such person shall be entitled to vote such shares upon the production of a
certified copy of such resolution.
Section 4. MAIL
Any notice or other document which is required by these Bylaws to
be mailed shall be deposited in the United States mails, postage prepaid.
Section 5. CONTRACTS AND AGREEMENTS
To the extent permitted by applicable law, and except as
otherwise prescribed by the Charter or these Bylaws, the Board of Directors may
authorize any officer, employee or agent of the Corporation to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the Corporation. Such authority may be general or confined to specific instances
or transactions. A person who hold more than one office in the Corporation may
not act in more than one capacity to execute, acknowledge, or verify an
instrument required by law to be executed, acknowledged, or verified by more
than one officer.
Section 6. FACSIMILE SIGNATURES
In addition to the provisions for the use of facsimile signatures
elsewhere specifically authorized in these Bylaws, facsimile signatures of any
officer or officers of the Corporation may be used whenever and as authorized by
the Board of Directors or a committee thereof.
Section 7. RELIANCE UPON BOOKS, REPORTS AND RECORDS
Each director and officer of the Corporation shall, in the
performance of his or her duties with respect to the Corporation, be entitled to
rely on any information, opinion report or statement, including financial
statement or other financial data, prepared or presented by an officer or
employee of the Corporation whom the director or officer reasonably believes to
be reliable and competent in the matters presented, by a lawyer, certified
public accountant or other person as to a matter which the director or officer
reasonably believes to be within the person's professional or expert competence
or by a committee of the Board of Directors on which the
28
director does not serve, as to a matter within its designated authority, if the
director believes the committee to merit confidence.
Section 8. TIME PERIODS
In applying any provision of these Bylaws which require that an
act be done or not done a specified number of days prior to an event or that an
act be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded
and the day of the event shall be included.
ARTICLE XVII
AMENDMENT OF BYLAWS
In accordance with the Charter, these Bylaws may be repealed,
altered, amended or rescinded (a) by the stockholders of the Corporation
(considered for this purpose as one class) by the affirmative vote of not less
than 75% of all of the votes entitled to be cast at any meeting of stockholders
called for that purpose (provided that notice of such proposed repeal,
alteration, amendment or rescission is included in the notice of such meeting)
or (b) by vote of a majority of the Board of Directors at a meeting held in
accordance with the provisions of these Bylaws.
29
Appendix D
SIZELER PROPERTY INVESTORS, INC.
(the "Company")
AUDIT COMMITTEE CHARTER
Organization
------------
A committee of the Board of Directors is designated as the audit committee. The
audit committee shall be composed of three or more directors, as determined from
time to time by the Board of Directors. Each member of the audit committee
("Member") shall be independent of the management of the Company and shall have
no relationship to the Company that, in the judgment of the Board of Directors,
may interfere with the exercise of that Member's independence from management
and the Company. In determining whether any Member is independent, the Board of
Directors will be guided by the definition of "Independent" contained in the
Corporate Responsibility provisions of the New York Stock Exchange Listed
Company Manual ("Listed Company Manual"), including the specific restrictions
applicable to each Member with respect to certain relationships between a Member
and the Company as set forth in the Listed Company Manual.
Each Member shall be "financially literate" (or shall become so within a
reasonable period of time after his or her appointment to the audit committee)
and at least one Member shall have "accounting or related financial management
expertise". The Board of Directors, in its business judgment, shall interpret
the italicized qualifications set forth in the preceding sentence. The Board of
Directors shall designate one Member as Chairman of the audit committee.
Statement of Policy
-------------------
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibilities to the shareholders and investment community
relating to corporate accounting, reporting practices of the Company and the
quality and integrity of the financial reports of the Company. In so doing, it
is the responsibility of the audit committee to
maintain free and open means of communication among the Members, the independent
auditors, and the financial management of the Company.
Responsibilities
----------------
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to achieve and maintain a standard that the corporate accounting
and reporting practices of the Company are not only in accordance with generally
accepted accounting principles, but also are of the highest quality.
In carrying out these responsibilities, the audit committee will:
. Review and recommend to the Board of Directors the independent auditors to
be engaged to audit the financial statements of the Company. The
independent auditors are ultimately accountable to the Board of Directors
and audit committee; and the audit committee and the Board of Directors
have the ultimate authority and responsibility to select, evaluate and,
where appropriate, replace the independent auditors.
. Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit for the current year and the
audit procedures to be utilized, and at the conclusion of the audit conduct
a review as set forth below.
. Review with the independent auditors and Company financial and accounting
personnel the adequacy and effectiveness of the accounting and financial
controls of the Company, and elicit any recommendations for the improvement
of such internal control procedures or particular areas where new or more
detailed controls or procedures are desirable. Particular emphasis should
be given to the adequacy of such internal controls to expose any payments,
transactions, or procedures that might be deemed illegal or otherwise
improper.
. Review with management and the independent auditors the financial
statements proposed to be contained in the annual report to shareholders
and the Company's Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission ("Form 10-K") to determine that the
independent auditors are satisfied with the quality of the disclosure and
content of the financial statements to be presented to the shareholders.
Any changes in accounting principles should be reviewed; and the
independent auditors shall disclose and present for discussion the matters
required by the Statement on Auditing Standards No. 61 (as amended from
time to time).
. Provide sufficient opportunity for the independent auditors to meet with
the members of the audit committee without Company management and employee
personnel present. Among the items to be discussed in these meetings are
the independent auditors' evaluation of the Company's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
. Review and discuss with the independent auditors matters appropriate to
determination of their independence, including the disclosures made by the
auditors pursuant to Independence Standards Board Standard No. 1.
. Establish a procedure whereby the audit committee or its Chairman or a
Member, on behalf of the audit committee, may review quarterly financial
statements or other financial presentations of the Company and have an
opportunity to discuss them with Company financial management personnel and
the independent auditors before public release or public filing of the
financial statements or presentations.
. Review accounting and financial human resources and succession planning
within the Company.
. Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the Board of
Directors. Recommend to the Board of Directors whether the audited annual
financial statements of the Company,
after review by the audit committee as described above, should be included
in the Form 10-K.
. Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
Meetings
--------
The audit committee shall hold a meeting at each quarterly meeting of the Board
of Directors (unless the Chairman or a majority of the Members determines that a
particular quarterly meeting need not be held because no matters need be
considered by the audit committee at that time). The audit committee shall also
meet at such additional or other times as the Chairman of the audit committee or
a majority of the Members shall deem necessary or appropriate to carry out the
responsibilities of the audit committee. At any meeting of the audit committee,
the Chairman may invite non-members to attend the meeting or a portion of the
meeting. Such invitees may include, without limitation, Company management and
employees, directors, the Company's independent auditors, Company counsel or
outside counsel and others whose presence or participation may, in the
Chairman's opinion, be helpful to the audit committee; provided, however, that
the broad discretion conferred by this sentence with respect to such invitees
shall be subject to the provisions of this Charter set forth under the heading
"Responsibilities" which require the audit committee, in performing some
responsibilities specified in those provisions, to meet with certain non-members
or to meet without the presence of certain non-members.
PROXY
SIZELER PROPERTY INVESTORS, INC.
2542 Williams Boulevard
Kenner, Louisiana 70062
VOTE BY TELEPHONE/INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
Dear Sizeler stockholder(s):
In connection with our 2001 Annual Meeting of Stockholders, we are offering
you the convenience of telephone or internet voting. Your telephone or internet
vote authorizes the named proxies to vote your shares in the same manner as if
you marked, signed and returned your proxy card.
VOTE BY PHONE: You will be asked to enter the number located in the box marked
"Control Number."
OPTION A: To vote as the Board of Directors recommends on ALL items, press
1.
OPTION B: If you choose to vote on each item separately, press 0.
Item 1: To vote FOR the proposal to reincorporate the Company as a
Maryland corporation by merger of the Company into a newly
formed, wholly-owned subsidiary of the Company incorporated in
Maryland, press 1; to vote AGAINST, press 9; to ABSTAIN, press
0.
Item 2: To vote FOR ALL nominees for director, press 1; to WITHHOLD
FOR ALL nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL
nominee, Press 0 and listen to the instructions.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
VOTE BY INTERNET: The Web Address is: http://proxy.shareholder.com/siz
--------------------------------
Call Toll-Free On a Touch-Tone Telephone
1-800-___-____
There is NO CHARGE to you for this call OR go to the Internet Site
------------------------------------------
________
CONTROL NUMBER
FOR TELEPHONE/INTERNET VOTING
------------------------------------------
------------------------------------------
If you have submitted your proxy by
telephone or the internet there is no
need for you to mail back your proxy.
THANK YOU FOR VOTING!
------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints SIDNEY W. LASSEN and THOMAS A. MASILLA, JR. and
each or either of them, Proxies for the undersigned, with full power of
substitution, to vote all shares of common stock, par value $.01 per share, of
Sizeler Property Investors, Inc. (the "Company") which the undersigned would be
entitled to vote at the Annual Meeting of Stockholders to be held at the
Breakers Palm Beach, One South County Road, Palm Beach, Florida on Friday, May
11, 2001 at 10:00 a.m., local time, or any adjournment thereof, and directs that
the shares represented by this Proxy shall be voted as indicated below:
1. REINCORPORATION: Proposal to reincorporate the Company as a Maryland
corporation by merger of the Company into a newly formed, wholly-owned
subsidiary of the Company incorporated in Maryland.
[_] FOR [_] AGAINST [_] ABSTAIN
2. ELECTION OF DIRECTORS: Election of the three nominees listed below to
serve until the annual meeting of stockholders in 2004 and until their
successors are duly elected and qualified.
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to
(except as marked to the contrary vote for all nominees
--------------------------------
below) listed below
-----
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through his name in the list below.
J. Terrell Brown; Harold B. Judell; Richard L. Pearlstone
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
(FRONT)
The shares represented by this Proxy will be voted as directed by the
stockholder. The Board of Directors favors a vote FOR Proposals 1 and 2
above. If no direction is made, the Proxy will be voted FOR Proposals 1 and
2 and will be voted in the discretion of the proxies named herein with
respect to any matter referred to in 3 above. You are encouraged to specify
your choices by marking the appropriate boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The proxies cannot
vote your shares unless you sign and return this card.
Please date and sign your name exactly as it appears below and return this Proxy
promptly in the enclosed envelope, which requires no postage if mailed in the
United States.
Dated: _____________________, 2001
___________________________________________
Signature
___________________________________________
Signature
PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON STOCK
CERTIFICATE(S). A corporation is requested to
sign its name by its President or other
authorized officer, with the office held so
designated. A partnership should sign in the
partnership name by an authorized person.
Executors, trustees, administrators, etc. are
requested to indicate the capacity in which
they are signing. JOINT TENANTS SHOULD BOTH
SIGN.
(BACK)