Attached files
file | filename |
---|---|
EX-2.01 - EXHIBIT 2.01 - Presidio Property Trust, Inc. | c04736exv2w01.htm |
EX-3.03 - EXHIBIT 3.03 - Presidio Property Trust, Inc. | c04736exv3w03.htm |
EX-3.02 - EXHIBIT 3.02 - Presidio Property Trust, Inc. | c04736exv3w02.htm |
8-K - FORM 8-K - Presidio Property Trust, Inc. | c04736e8vk.htm |
Exhibit 3.01
Appendix B
ARTICLES OF AMENDMENT AND RESTATEMENT
OF THE
ARTICLES OF INCORPORATION
OF
NetREIT, INC.
(a Maryland corporation)
OF THE
ARTICLES OF INCORPORATION
OF
NetREIT, INC.
(a Maryland corporation)
The undersigned, being authorized to execute and file these Articles of Amendment and
Restatement of the Articles of Incorporation of NetREIT, Inc., hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Corporation desires to amend and restate its charter as currently in
effect pursuant to these Articles of Amendment and Restatement. The provisions set forth in these
Articles of Amendment and Restatement are all the provisions of the charter of the Corporation as
currently in effect.
SECOND: The charter of the Corporation is hereby amended by striking in their
entirety Articles I through IX, inclusive, and by substituting the following in lieu thereof:
ARTICLE I
INCORPORATION
The undersigned, being at least eighteen (18) years of age and duly authorized to execute and
file these Articles of Incorporation does hereby form a corporation under and by virtue of the
general laws of the State of Maryland.
ARTICLE II
NAME
The name of the corporation (which is hereinafter called the Corporation) is:
NetREIT, Inc.
ARTICLE III
PURPOSE
The purposes for which the Corporation is formed are to engage in any lawful act or activity
(including, without limitation or obligation, engaging in business as a real estate investment
trust under the Internal Revenue Code of 1986, as amended, or any successor statute (the Code)) for which corporations may be organized under the general laws of the State of
Maryland as now or hereafter in force. For purposes of these Articles, REIT means a real estate
investment trust under Sections 856 through 860 of the Code.
ARTICLE IV
PRINCIPAL OFFICE; RESIDENT AGENT
The address of the principal office of the Corporation in the State of Maryland is 715 St.
Paul Street, Baltimore, Maryland 21202. The name and address of the resident agent of the
Corporation in the State of Maryland is HIQ Corporate Services, Inc., 715 St. Paul Street,
Baltimore, Maryland 21202. Said Resident Agent is a Maryland corporation duly authorized to act as
resident agent in the State of Maryland.
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS OF THE CORPORATION AND
OF ITS STOCKHOLDERS AND DIRECTORS
Section 5.1 NUMBER OF DIRECTORS. The business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. The number of directors of the Corporation initially
shall be eight (8), which number may be increased or decreased only by the Board of Directors
pursuant to the Bylaws of the Corporation, but shall never be less than the minimum number required
by the Maryland General Corporation Law (the MGCL). The names of the directors who shall serve
until their successors are duly elected and qualified are:
Jack K. Heilbron
|
Larry G. Dubose | |
David T. Bruen
|
Thomas Schwartz | |
Sumner J. Rollings
|
William Allen | |
Bruce A. Staller
|
Kenneth W. Elsberry |
Section 5.2 ACTIONS BY STOCKHOLDERS.
Section 5.2.1. Quorum. Except with respect to the election of directors provided for
in Section 5.2.2 by the holders of Common Stock, the presence in person or by proxy of the holders
of shares of stock of the Corporation entitled to cast a majority of the votes entitled to be cast
on a matter (without regard to class) shall constitute a quorum at any meeting of stockholders with
respect to such matter, except with respect to any such matter that, under applicable statutes or
regulatory requirements or the charter, requires approval by a separate vote of the holders of one
or more classes of stock, in which case the presence in person or by proxy of the holders of shares
entitled to cast a majority of the votes entitled to be cast by each such class on such a matter
shall constitute a quorum. Notwithstanding the foregoing, to the extent permitted by the MGCL, the Bylaws may provide for a greater or lesser quorum requirement, provided that such
requirement shall not be less than forty percent (40%) nor more than sixty-six and two-thirds
percent (66 2/3rds%) of the votes entitled to be cast (without regard to class) on matters
submitted for a vote of the stockholders.
2
Section 5.2.2 Election of Directors. Except as otherwise provided in Section 6.4(i)
with respect to the holders of the Corporations Preferred Stock or in the Bylaws of the
Corporation, directors shall be elected by the affirmative vote of holders of Common Stock entitled
to cast a majority of all the votes entitled to be cast at a meeting at which a quorum is present.
As provided in the Bylaws, stockholders shall have the right to cumulate votes for the election of
directors where the names of candidates are placed in nomination prior to commencement of the
voting and a stockholder gives notice prior to commencement of the voting of the stockholders
intention to cumulate votes. In that circumstance, every stockholder entitled to vote may cumulate
votes for candidates in nomination and give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which such stockholders shares are
entitled, or distribute votes on the same principle among any or all of the candidates standing for
election.
Section 5.3 AUTHORIZATION BY BOARD OF STOCK ISSUANCES. The Board of Directors may
authorize the issuance from time to time of shares of stock of the Corporation of any class or
series, whether now or hereafter authorized, or securities or rights convertible into shares of its
stock of any class or series, whether now or hereafter authorized, for such consideration as the
Board of Directors may deem advisable (or without consideration in the case of a stock split or
stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the
charter or the Bylaws.
Section 5.4 PREEMPTIVE RIGHTS. Except as may be provided by the Board of Directors in
setting the terms of classified shares of stock pursuant to Section 6.5 or as may be otherwise
agreed by contract, no holder of shares of stock of the Corporation shall, as such holder, have any
preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or
any other security of the Corporation which it may issue or sell.
Section 5.5 INDEMNIFICATION. The Corporation shall have the power, to the maximum
extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and
to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any
individual who is a present or former director or officer of the Corporation or (b) any individual
who, while a director of the Corporation and at the request of the Corporation, serves or has
served as a director, officer, managing member, partner or trustee of another corporation, real
estate investment trust, partnership, joint venture, trust, employee benefit plan or any other
enterprise, from and against any claim or liability to which such person may become subject or
which such person may incur by reason of his status as a present or former director or officer of
the Corporation. The Corporation shall have the power, with the approval of the Board of Directors,
to provide such indemnification and advancement of expenses to a person who served a predecessor of
the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent
of the Corporation or a predecessor of the Corporation.
3
Section 5.6 DETERMINATIONS BY BOARD. The determination as to any of the following
matters, made in good faith by or pursuant to the direction of the Board of Directors consistent
with the charter and in the absence of actual receipt of an improper benefit in money, property or
services or active and deliberate dishonesty established by a court, shall be final and conclusive
and shall be binding upon the Corporation and every holder of shares of its stock: the amount of
the net income of the Corporation for any period and the amount of assets at any time legally
available for the payment of dividends, redemption of its stock or the payment of other
distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or
other net profit, net assets in excess of capital, undivided profits or excess of profits over
losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration
or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation
or liability for which such reserves or charges shall have been created shall have been paid or
discharged); the fair value, or any sale, bid or asked price to be applied in determining the fair
value, of any asset owned or held by the Corporation; any matter relating to the acquisition,
holding or disposition of any assets by the Corporation; or any other matter relating to the
business and affairs of the Corporation or required or permitted by applicable law, the charter or
Bylaws or otherwise to be determined by the Board of Directors.
Section 5.7 REIT QUALIFICATION. The Corporation has elected to qualify for federal
income tax treatment as a REIT. The Board of Directors shall use its reasonable best efforts to
take such actions as are necessary or appropriate to preserve the status of the Corporation as a
REIT; however, if the Board of Directors determines that it is no longer in the best interests of
the Corporation to continue to be qualified as a REIT, then upon receipt of a recommendation to
such effect from the Board of Directors, the holders of Common Stock, by a vote of such
stockholders as are entitled to cast a majority of all the votes entitled to be cast on the matter,
may cause the Corporation to revoke or otherwise terminate the Corporations REIT election pursuant
to Section 856(g) of the Code. The holders of Common Stock, upon receipt of a recommendation from
the Board of Directors, may determine that compliance with any restriction or limitation on stock
ownership and transfers set forth in Article VII is no longer required for REIT qualification and
cause the Corporation to amend the charter to remove such restriction or limitation.
Section 5.8 VACANCIES ON THE BOARD. A majority of the Board of Directors shall have
the power to fill any and all vacancies on the Board of Directors, even if the remaining directors
do not constitute a quorum, except that a vacancy with respect to any Series AA Director shall be
filled by the holders of the Series AA Preferred Stock and any vacancy created by the removal of a
director other than a Series AA Director may be filled only by the vote of holders of a majority of
the Common Stock. Any director elected to fill a vacancy shall serve until the next annual meeting
of the stockholders and until a successor is elected and qualifies.
Section 5.9 REMOVAL OF DIRECTORS. Any director (other than a Series AA Preferred
Director, who may be removed from office only by vote of the Series AA Preferred Stock as provided
in Section 6.4(i)), or the entire Board of Directors, may be removed from office at any time, with
or without cause, by the affirmative vote or the written consent of a majority of the shares of
Common Stock outstanding or by vote at a special meeting of the stockholders called in the manner provided for in the Bylaws, provided, however, that no director
may be removed when the votes cast against such removal, or not consenting in writing to such
removal, would be sufficient to elect such director if voted cumulatively in accordance with the
provisions of the Bylaws.
4
Section 5.10 ADVISOR AGREEMENTS. Subject to such approval of stockholders and other
conditions, if any, as may be required by any applicable statute, rule or regulation, the Board of
Directors may authorize the execution and performance by the Corporation of one or
more agreements with any person, corporation, association, company, trust, partnership (limited or
general) or other organization whereby, subject to the supervision and control of the Board of
Directors, any such other person, corporation, association, company, trust, partnership (limited or
general) or other organization shall render or make available to the Corporation managerial,
investment, advisory and/or related services, office space and other services and facilities
(including, if deemed advisable by the Board of Directors, the management or supervision of the
investments of the Corporation) upon such terms and conditions as may be provided in such agreement
or agreements (including, if deemed fair and equitable by the Board of Directors, the compensation
payable thereunder by the Corporation).
Section 5.11 ACTION BY WRITTEN CONSENT. Subject to compliance with the notice and
other requirements of Section 2-505 of the MGCL and any procedures adopted by the Board of
Directors from time to time, the holders of Common Stock entitled to vote generally in the election
of directors may take action or consent to any action by delivering a consent, in writing or by
electronic transmission, of the stockholders entitled to cast not less than the minimum number of
votes that would be necessary to authorize or take the action at a stockholders meeting.
ARTICLE VI
STOCK
Section 6.1 AUTHORIZED SHARES. The Corporation shall have the authority to issue one
hundred ten million one thousand (110,001,000) shares of stock, consisting of one hundred million
one thousand (100,001,000) shares of Common Stock, par value $0.01 per share (Common Stock), and
ten million (10,000,000) shares of Preferred Stock, par value $0.01 per share (Preferred Stock).
The aggregate par value of all authorized shares of stock having par value is $1,100,010.
Section 6.2 COMMON STOCK. The one hundred million one thousand (100,001,000) shares
of Common Stock shall be divided into two (2) classes: (i) one hundred million (100,000,000)
shares of Series A Common Stock (Series A Common), and (ii) one thousand (1,000) shares of Series
B Common Stock (Series B Common). Subject to the provisions of Article VII, each share of Common
Stock shall entitle the holder thereof to one vote. The Corporations Series A Common and Series B
Common shall be identical with respect to all preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions, qualifications and terms
and conditions of redemption, except that the Series A Common shall enjoy a liquidation preference to the exclusion of Series B Common, which preference
shall be junior to the Liquidation Preference enjoyed by the Series AA Preferred Stock, but which
shall entitle the holders of Series A Common Stock, on liquidation, dissolution or winding up of
the Corporation, to share ratably in all of the Corporations assets that are legally available for
distribution after all debts and other liabilities of the Corporation are retired and the
Liquidation Preference, including accrued dividends, if any, enjoyed by the Series AA Preferred
Stock paid to the holders of the Series AA Preferred Stock.
5
Section 6.3 PREFERRED STOCK. The Board of Directors may classify any unissued shares
of Preferred Stock from time to time, in one or more classes or series of stock having such
preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption as determined by the Board of Directors. One
million (1,000,000) shares of the Corporations authorized Preferred Stock shall be designated as
Series AA Preferred Stock (Series AA Preferred Stock). The rights, preferences and privileges
and other terms and conditions of the Series AA Preferred Stock shall be as set forth in Section
6.4 below.
Section 6.4 SERIES AA PREFERRED STOCK. The Series AA Preferred Stock shall have the
following rights, preferences and privileges:
(a) Liquidation Preference. The Liquidation Preference of the Series AA
Preferred Stock is twenty-five dollars ($25.00) per share (Liquidation Preference).
(b) Dividends. Each share of the Series AA Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds at the time legally
available therefore, an annual cash dividend equal to seven percent (7%) of the Liquidation
Preference, which dividends shall be declared in equal monthly installments in arrears on the 25th
day of each month. Dividends duly declared shall be paid on March 31, June 30, September 30 and
December 31 of each year, provided that if any such day shall be a Saturday, Sunday or a or a legal
holiday (any of the foregoing a Non-Business Day), then such dividend shall be payable on the
next succeeding day which is not a Non-Business Day. Dividends shall be cumulative and accrue for
each share of the Series AA Preferred Stock from the date of its first issuance and shall be
payable to holders of record as they appear on the stock books of the Corporation on such record
dates as they are fixed by the Board of Directors. No interest shall be payable with respect to
any dividend payment on the Series AA Preferred Stock which may be in arrears.
(c) Preference to Dividends. The Series AA Preferred Stock shall have
priority as to dividends over the Corporations Common Stock and any series or class of the
Corporations stock hereafter issued (referred to as junior dividend stock), except such
Preferred Stock which the Corporation may issue which is, by its express terms, senior to the
Series AA Preferred Stock senior dividend stock) or on parity with the Series AA Preferred Stock
(parity dividend stock), provided, however, the issuance of such senior dividend stock or parity
dividend stock shall first be approved by the affirmative vote of a majority of the outstanding
shares of the Series AA Preferred Stock (a Majority Vote). No dividend (other than dividends
payable solely in Common Stock or any series or class of junior
dividend stock) shall be declared, paid or set apart for payment on, and no
6
purchase or other acquisition shall be
made by the Corporation of any Common Stock or junior dividend stock, unless all accrued and unpaid
dividends on the Series AA Preferred Stock shall have been declared and paid or set apart for
payment. No dividend shall be paid on any parity dividend stock unless the Corporation shall have
declared and paid or set aside for payment, or shall have contemporaneously declared and paid or
set apart for payment, all accrued and unpaid dividends for all prior periods on the Series AA
Preferred Stock. The Corporation shall not pay dividends on the Series AA Preferred Stock unless
it shall have declared and paid or set aside for payment or shall have contemporaneously declared
and paid or set apart for payment all accrued and unpaid dividends for all prior periods on the
parity dividend stock. Whenever all accrued dividends are not paid in full on the Series AA
Preferred Stock, or any parity dividend stock, all dividends declared on the Series AA Preferred
Stock and such parity dividend stock shall be declared and made pro rata so that the amount of
dividends declared per share on the Series AA Preferred Stock and such parity dividend stock shall
bear the same ratio that accrued and unpaid dividends per share on the Series AA Preferred Stock
and such parity dividend stock bear to each other.
(d) Preference Upon Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, each share of Series AA Preferred Stock shall be entitled to
receive, out of legally available assets, an amount equal to the Liquidation Preference, plus an
amount equal to any accrued and unpaid dividends on such share to the date such liquidation payment
is made, and no more, before payment or distribution is made to the holders of the Corporations
Common Stock or any series or class of the Corporations stock hereafter issued that ranks junior
as to the liquidation rights of the Series AA Preferred Stock. The holders of the Series AA
Preferred Stock shall not be entitled to receive the Liquidation Preference on shares of the Series
AA Preferred Stock until the liquidation preferences of any other series or class of the
Corporations stock hereinafter issued that ranks senior as to liquidation rights of the Series AA
Preferred Stock (senior liquidation stock) has been paid in full. The holders of the Series AA
Preferred Stock and all other series or classes of the Corporations stock hereafter issued that
rank on a parity as to liquidation rights with the Series AA Preferred Stock shall share ratably,
in accordance with the respective preferential amounts payable on such stock, in any distribution
(after payment of the liquidation preferences of the senior liquidation stock) which is not
sufficient to pay in full the aggregate of the amounts payable thereon. After payment in full of
the Liquidation Preference of the shares of Series AA Preferred Stock (and the payment of dividends
thereon as provided above), the holders of the Series AA Preferred Stock shall not receive any
further participation in any distribution of the Corporations assets. Neither a consolidation,
merger or other business combination of the Corporation with or into another corporation or other
entity, nor a sale or transfer of all or part of the Corporations assets for cash, securities or
other property shall be considered a liquidation, dissolution or winding up of the Corporation.
For purposes of the Series AA Preferred Stock liquidation rights, a consolidation or a merger
of the Corporation into any other corporation or corporations or a sale of all or substantially all
of the assets of the Corporation shall be deemed not to be a liquidation, dissolution or winding up
of the Corporation.
7
(e) Corporations Optional Redemption Rights. The Series AA Preferred Stock shall be redeemable at the election of the Corporation in whole, or in part, at any time or
from time to time, by giving written notice to the holders of the Series AA Preferred Stock not
less than thirty (30) days nor more than sixty (60) days prior to the date set for such redemption
(the Redemption Date). The Series AA Preferred Stock shall be redeemable for the sum equal to
the Liquidation Preference per share, plus a cash payment equal to all accrued but unpaid dividends
(the Call Price). Dividends shall cease to accrue on the Redemption Date for the Series AA
Preferred Stock so called for redemption. If fewer than all outstanding shares of Series AA
Preferred Stock shall be called for redemption, the Series AA Preferred Stock redeemed shall be
selected by the Corporation by lot or pro rata (as nearly as may be possible) or by and other
method determined by the Board of Directors in its sole discretion, to be equitable.
(f) Holders Optional Conversion. At any time prior to any Redemption Date,
each share of the Series AA Preferred Stock shall be convertible, in whole or part only, at the
election of the holder thereof, into two (2) shares of the Corporations Series A Common Stock (the
Conversion Rate). This right of optional conversion shall terminate immediately before the close
of business on any Redemption Date. Any such conversion shall be effected by delivery of the
certificate evidencing such Series AA Preferred Stock, together with written notice of conversion
and a proper assignment of such certificate to the Corporation or in blank (and, if applicable,
cash payment of an amount equal to the dividend attributable to the current quarterly dividend
period payable on such shares), to the office of the transfer agent, if any, for the Series AA
Preferred Stock (or to any other office or agency maintained by the Corporation) for that purpose
and otherwise in accordance with conversion procedures established by the Corporation. Any such
conversion shall be deemed to have been effected immediately before the close of business on the
date on which the foregoing requirements have been satisfied.
(g) Adjustments. The Conversion Rate shall be adjusted in accordance with
the following provisions:
(1) Mandatory Adjustments. In the event the Corporation (A) pays a stock
dividend or makes a distribution with respect to its Common Stock in shares of Common Stock; (B)
subdivides or splits its outstanding Common Stock; (C) combines its outstanding Common Stock into a
smaller number of shares; (D) issues any shares of Common Stock by reclassification of its shares
of Common Stock; or (E) pays a dividend or distributes to all holders of its Common Stock evidences
of its indebtedness, cash or other assets (including capital stock of the Corporation but excluding
any Permitted Cash Dividends (as defined below) or distributions and dividends referred to in
Section 6.4(g)(1) above), the Conversion Rate shall be adjusted as of the date such event first
becomes effective.
(2) Discretionary Adjustments. The Corporation will be entitled (but will not be
required) to make upward adjustments in the Conversion Rate as the Corporation, in its discretion,
shall determine to be advisable in order that any stock dividend, subdivisions of shares,
distribution of rights to purchase stock or securities, or distribution of securities convertible
into or exchangeable for stock (or any transaction which could be treated as any of the events
described in Section 6.4(g)(1) above under Section 305 of the Internal Revenue Code of 1986, as
amended) hereafter made by the Corporation to its stockholders will not be taxable.
8
(3) Permitted Cash Dividends. Permitted Cash Dividends shall mean, with respect
to any consecutive 12-month period, all cash dividends and cash distributions on the Common Stock
(other than cash dividends and cash distributions for which an adjustment to the Conversion Rate
was previously made) not in excess of an amount equal to ten percent (10%) per annum on the Share
Price of the Corporations Common Stock, excepting any dividends paid with funds from capital gains
within the meaning of federal income tax law.
The Share Price shall be the average of the closing share price of the Common Stock in any public
market as reported over such period, or if the Corporations Common Stock was not traded in a
public market during such period, the price at which the Common Stock was last sold by the
Corporation to any unaffiliated person during such period, or if no such sale occurred, the value
of the Common Stock determined by the Corporations Board of Directors, in which event, the Board
of Directors decision will be final.
(4) Reclassification, Consolidation or Merger. Unless sooner redeemed or
converted, in case of any reclassification of the Common Stock, any consolidation of the
Corporation with, or merger of the Corporation into, any other entity, any merger of any entity
into the Corporation (other than a consolidation or merger that does not result in a
reclassification, conversion, exchange or cancellation of the outstanding shares of Common Stock),
any sale or transfer of all or substantially all of the assets of the Corporation or any compulsory
share exchange whereby the Common Stock is converted into other securities, cash or other property
(a Transaction), each share of Series AA Preferred Stock shall, after consummation of such
Transaction, be entitled to be converted (A) on the Conversion Date into the kind and amounts of
securities, cash or other property receivable upon consummation of such Transaction by a holder of
the number of shares of Common Stock into which such Series AA Preferred Stock would have been
converted if the conversion on the Conversion Date had occurred immediately before the date of
consummation of such Transaction, plus the right to receive cash in an amount equal to all accrued
and unpaid dividends on such Series AA Preferred Stock (other than previously declared dividends
payable to a holder of record as of a prior date); or (B) at the option of the holder, into the
kinds and amount of securities, cash or other property receivable upon consummation of such
Transaction by a holder of the number of shares of Common Stock into which such Series AA Preferred
Stock might have been converted immediately before consummation of such Transaction. The kind and
amount of securities into or for which the Series AA Preferred Stock will be convertible or
redeemable after consummation of such Transaction will be subject to adjustment as described above
in Section 6.4(g), following the date of consummation of such Transaction. No fractional shares of
Common Stock will be issued upon redemption or conversion of Series AA Preferred Stock. In lieu of
any fractional share otherwise issuable in respect of the aggregate number of shares of Series AA
Preferred Stock of any holder that are redeemed or converted, such holder will be entitled to
receive an amount in cash equal to the same fraction of the share value of the Common Stock,
determined as of the Conversion Date in the case of a mandatory conversion, or the effective date
of the conversion in the case of an optional conversion by a holder.
9
(h) Calculation and Documentation of Adjustments. All adjustments to the Conversion
Rate shall be calculated to the nearest 1/100th of a share of Common Stock. No adjustment in the
Conversion Rate shall be required unless such adjustment would require any increase or decrease of at least one percent (1%) therein; provided, however, that any adjustments
which, by reason of this Section 6.4(h), shall not be required to be made will be carried forward
and taken into account in any subsequent adjustment. All adjustments shall be made successively.
Whenever the Conversion Rate shall be so adjusted, the Corporation shall file with its transfer
agent, if any, for the Series AA Preferred Stock a certificate with respect to such adjustment, and
shall make a prompt public announcement of such adjustment on its web site or by such other means
as the Board of Directors may determine.
(i) Voting Rights. The Series AA Preferred Stock shall have only the voting
rights set forth in this Section 6.4(i), except as may otherwise be required by law. So long as
any Series AA Preferred Stock is outstanding, the Corporation shall not, without the Majority Vote
of the holders of record of the Series AA Preferred Stock then outstanding, voting separately as a
class:
(1) amend, alter or repeal any provision of the charter or the Bylaws of the
Corporation so as to affect adversely the relative rights, preferences,
qualifications, limitations or restrictions of the Series AA Preferred
Stock;
(2) authorize or issue, or increase the authorized amount of, any additional
class or series of stock, or any security convertible into any senior
dividend stock, senior liquidation stock, parity dividend stock or parity
liquidation stock;
(3) affect any reclassification of the Series AA Preferred Stock; or
(4) effect the merger of the Corporation with another corporation, exchange of
shares or sale of all or substantially all of the assets of the Corporation if the
stockholders of the Corporation prior to such merger, share exchange or sale will
own less than fifty percent (50%) of the shares of the surviving (in case of a
merger) or acquiring (in the case of an exchange of shares or sale of assets)
corporation immediately following such merger, share exchange or sale.
Except as provided below in this Section 6.4(i), holders of Series AA Preferred Stock shall
not have the right to vote for the election of directors. If dividends on the Series AA Preferred
Stock have accrued and remain unpaid for a period of one year, the Board of Directors shall call
and hold a meeting of the Board of Directors within thirty (30) days to consider and adopt a
resolution to increase the number of directors of the Corporation by two (2) (such additional
directors, the Series AA Preferred Directors), name nominees for positions as Series AA Preferred
Directors and call a special meeting of the holders of the Series AA Preferred Stock for the sole
purpose of electing Series AA Preferred Directors. Series AA Preferred Directors elected by the
holders of the Series AA Preferred Stock pursuant to this Section 6.4(i) shall serve until the
earlier of (1) the date the Corporation pays a dividend sufficient to retire all accrued and unpaid
dividends on the Series AA Preferred Stock, (2) their resignation or removal by a vote of the
majority of the Series AA Preferred Stock, or (3) the date their respective successors are duly
elected and qualify. If any Series AA Preferred Director shall resign or be removed from office, the holders of the Series AA Preferred Stock shall
have the right to elect such Series AA Preferred Directors as are required to fill any such
vacancy(ies) until such time that the director election rights of the holders of Series AA
Preferred Stock terminate.
10
(j) Notice of Corporate Action. The Corporation shall give the holders of
record of the Series AA Preferred Stock at least twenty (20) days prior written notice of: (1) the
granting by the Corporation to all holders of its Common Stock of rights to purchase any shares of
capital stock or other rights; (2) any reclassification of Common Stock, or consolidation of the
Corporation with, or merger of the Corporation into, any other persons, any merger of any person
into the Corporation (other than a merger that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock); or (3) any sale or transfer of all
or substantially all of the assets of the Corporation.
Section 6.5 CLASSIFIED SHARES. Prior to issuance of shares of any class or series, the
Board of Directors by resolution shall: (a) designate that particular class or series to
distinguish it from all other classes and series of stock of the Corporation; (b) specify the
number of shares to be included in the class or series; (c) set, subject to the provisions of
Article VII and subject to the express terms of any class or series of stock of the Corporation
outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms and conditions of
redemption for each class or series; and (d) cause the Corporation to file articles supplementary
with the State Department of Assessments and Taxation of Maryland (SDAT). Any of the terms of any
class or series of stock set or changed pursuant to clause (c) of this Section 6.5 may be made
dependent upon facts or events ascertainable outside the charter (including determinations by the
Board of Directors or other facts or events within the control of the Corporation) and may vary
among holders thereof, provided that the manner in which such facts, events or variations shall
operate upon the terms of such class or series of stock is clearly and expressly set forth in the
articles supplementary filed with the SDAT.
Section 6.6 CHARTER AND BYLAWS. All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of the charter and the Bylaws.
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 7.1 DEFINITIONS. For the purpose of this Article VII, (i) terms defined
elsewhere in these Articles of Incorporation are incorporated by reference, and (ii) the following
terms shall have the following meanings:
AGGREGATE STOCK OWNERSHIP LIMIT. The term Aggregate Stock Ownership Limit shall mean
not more than nine and 8/10ths percent (9.8%) in value of the aggregate outstanding shares of
Capital Stock. The value of the outstanding shares of Capital Stock shall be determined by the
Board of Directors of the Corporation in good faith, which determination shall be conclusive for all purposes hereof.
11
BENEFICIAL OWNERSHIP. The term Beneficial Ownership shall mean ownership of Capital
Stock by a Person, whether the interest in the shares of Capital Stock is held directly or
indirectly (including by a nominee), and shall include interests that would be treated as owned
through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the
Code. The terms Beneficial Owner, Beneficially Owns and Beneficially Owned shall have the
correlative meanings.
BUSINESS DAY. The term Business Day shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions in California are
authorized or required by law, regulation or executive order to close.
CAPITAL STOCK. The term Capital Stock shall mean all classes or series of stock of
the Corporation, including, without limitation, Common Stock and Preferred Stock.
CHARITABLE BENEFICIARY. The term Charitable Beneficiary shall mean one or more
beneficiaries of the Charitable Trust as determined pursuant to Section 7.3.6, provided that each
such organization must be described in Section 501(c)(3) of the Code and contributions to each such
organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of
the Code.
CHARITABLE TRUST. The term Charitable Trust shall mean any trust provided for in
Section 7.3.1.
CHARTER. The term charter shall mean the charter of the Corporation, as that term is
defined in the MGCL.
CODE. The term Code shall mean the Internal Revenue Code of 1986, as amended from
time to time.
COMMON STOCK OWNERSHIP LIMIT. The term Common Stock Ownership Limit shall mean not
more than nine and 8/10ths percent (9.8%) (in value or in number of shares, whichever is more
restrictive) of the aggregate outstanding shares of Common Stock of the Corporation. The number and
value of outstanding shares of Common Stock of the Corporation shall be determined by the Board of
Directors of the Corporation in good faith, which determination shall be conclusive for all
purposes hereof.
CONSTRUCTIVE OWNERSHIP. The term Constructive Ownership shall mean ownership of
Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or
indirectly (including by a nominee), and shall include interests that would be treated as owned
through the application of Section 318(a) of the Code, as modified by
Section 856(d)(5) of the Code. The terms Constructive Owner, Constructively Owns and
Constructively Owned shall have the correlative meanings.
12
EXCEPTED HOLDER. The term Excepted Holder shall mean a stockholder of the Corporation for whom an Excepted Holder Limit is created by the charter or by the Board of
Directors pursuant to Section 7.2.7.
EXCEPTED HOLDER LIMIT. The term Excepted Holder Limit shall mean, provided that the
affected Excepted Holder agrees to comply with the requirements established by the Board of
Directors pursuant to Section 7.2.7, and subject to adjustment pursuant to Section 7.2.8, the
percentage limit established by the Board of Directors pursuant to Section 7.2.7.
INITIAL DATE. The term Initial Date shall mean the date upon which the Articles of
Amendment and Restatement of the Articles of Incorporation containing this Article VII are filed
with the SDAT.
MARKET PRICE. The term Market Price on any date shall mean, with respect to any
class or series of outstanding shares of Capital Stock, the Closing Price for such Capital Stock on
such date. The Closing Price on any date shall mean the last sale price for such Capital Stock,
regular way, or, in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, for such Capital Stock, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or admitted to trading
on the NYSE or, if such Capital Stock is not listed or admitted to trading on the NYSE, as reported
on the principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which such Capital Stock is listed or admitted to trading
or, if such Capital Stock is not listed or admitted to trading on any national securities exchange,
the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or, if such system is no longer in use, the principal other automated
quotation system that may then be in use or, if such Capital Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in such Capital Stock selected by the Board of Directors of the Corporation
or, in the event that no trading price is available for such Capital Stock, the fair market value
of the Capital Stock, as determined in good faith by the Board of Directors of the Corporation.
NYSE. The term NYSE shall mean the New York Stock Exchange.
PERSON. The term Person shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a
trust permanently set aside for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that term s used for
purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and a group to
which an Excepted Holder Limit applies.
PROHIBITED OWNER. The term Prohibited Owner shall mean, with respect to any
purported Transfer, any Person who, but for the provisions of Section 7.2.1, would Beneficially Own
or Constructively Own shares of Capital Stock, and if appropriate in the context, shall also mean any Person who would have been the record owner of the shares that the
Prohibited Owner would have so owned.
13
REIT. The term REIT shall mean a real estate investment trust within the meaning of
Section 856 of the Code.
RESTRICTION TERMINATION DATE. The term Restriction Termination Date shall mean the
first day after the Initial Date on which pursuant to Section 5.7 of the charter the Board of
Directors determines that it is no longer in the best interests of the Corporation to continue to
be qualified as a REIT and the holders of Common Stock, by a vote of such stockholders as are
entitled to cast a majority of all the votes entitled to be cast on the matter, causes the
Corporation to revoke or otherwise terminate the Corporations REIT election pursuant to Section
856(g) of the Code or that compliance with the restrictions and limitations on Beneficial
Ownership, Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no
longer required in order for the Corporation to qualify as a REIT.
TENANT. The term Tenant shall mean a tenant, subtenant or any other Person that is a
subtenant through a chain of subtenancies of a property owned by the Corporation.
TRANSFER. The term Transfer shall mean any issuance, sale, transfer, gift,
assignment, devise or other disposition, as well as any other event that causes any Person to
acquire Beneficial Ownership or Constructive Ownership, or any agreement to take any such actions
or cause any such events, of Capital Stock or the right to vote or receive dividends on Capital
Stock, including (a) the granting or exercise of any option (or any disposition of any option), (b)
any disposition of any securities or rights convertible into or exchangeable for Capital Stock or
any interest in Capital Stock or any exercise of any such conversion or exchange right and (c)
Transfers of interests in other entities that result in changes in Beneficial or Constructive
Ownership of Capital Stock; in each case, whether voluntary or involuntary, whether owned of
record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise.
The terms Transferring and Transferred shall have the correlative meanings.
TRUSTEE. The term Trustee shall mean a Person unaffiliated with the Corporation and
Prohibited Owner that is appointed by the Corporation to serve as trustee of a Charitable Trust.
Section 7.2 CAPITAL STOCK.
Section 7.2.1 OWNERSHIP LIMITATIONS. During the period commencing on the Initial Date
and prior to the Restriction Termination Date:
(a) BASIC RESTRICTIONS.
(i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own
shares of Capital Stock in excess of the Aggregate Stock Ownership Limit, (2) no Person, other than
an Excepted Holder, shall Beneficially Own or Constructively
Own shares of Common Stock in excess of the Common Stock Ownership Limit and (3) no Excepted Holder
shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Excepted
Holder Limit for such Excepted Holder.
14
(ii) No Person shall Beneficially or Constructively Own shares of Capital Stock to the extent
that such Beneficial or Constructive Ownership of Capital Stock would result in the Corporation
being closely held within the meaning of Section 856(h) of the Code (without regard to whether
the ownership interest is held during the last half of a taxable year), or otherwise failing to
qualify as a REIT (including, but not limited to, Beneficial or Constructive Ownership that would
result in the Corporation owning (actually or Constructively (substituting, solely for purposes of
this determination, Section 856(d)(5) for Section 897(c)(6)(C) in the definition of Constructive
Ownership)) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the
income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code).
(iii) Subject to Section 7.4 of the charter, any Transfer of shares of Capital Stock (whether
or not such Transfer is the result of a transaction entered into through the facilities of the NYSE
or any other national securities exchange or automated inter-dealer quotation system) that, if
effective, would result in the Capital Stock being beneficially owned by fewer than one hundred
(100) Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab
initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.
(b) TRANSFER IN TRUST. Subject to Section 7.4 of the charter, if any Transfer of
shares of Capital Stock (whether or not such Transfer is the result of a transaction entered into
through the facilities of the NYSE or any other national securities exchange or automated
inter-dealer quotation system) occurs which, if effective, would result in any Person Beneficially
Owning or Constructively Owning shares of Capital Stock in violation of Section 7.2.1(a)(i) or
(ii),
(i) then that number of shares of the Capital Stock the Beneficial or Constructive Ownership
of which otherwise would cause such Person to violate Section 7.2.1(a)(i) or (ii) (rounded to the
nearest whole share) shall be automatically transferred to a Charitable Trust for the benefit of a
Charitable Beneficiary, as described in Section 7.3, effective as of the close of business on the
Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such
shares; or
(ii) if the transfer to the Charitable Trust described in clause (i) of this sentence would
not be effective for any reason to prevent the violation of Section 7.2.1(a)(i) or (ii), then the
Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate
Section 7.2.1(a)(i) or (ii) shall be void ab initio, and the intended transferee
shall acquire no rights in such shares of Capital Stock.
15
Section 7.2.2 REMEDIES FOR BREACH. If the Board of Directors of the Corporation or any
duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 7.2.1 or that
a Person intends to acquire or has attempted to acquire Beneficial or Constructive Ownership of
any shares of Capital Stock in violation of Section 7.2.1 (whether or not such violation is
intended), the Board of Directors or a committee thereof shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or other event, including,
without limitation, causing the Corporation to redeem shares, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or
other event; provided, however, that any Transfer or attempted Transfer or other
event in violation of Section 7.2.1 shall automatically result in the transfer to the Charitable
Trust described above, and, where applicable, such Transfer (or other event) shall be void
ab initio as provided above irrespective of any action (or non-action) by the Board
of Directors or a committee thereof.
Section 7.2.3 NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or attempts or
intends to acquire Beneficial Ownership or Constructive Ownership of shares of Capital Stock that
will or may violate Section 7.2.1(a) or any Person who would have owned shares of Capital Stock
that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 7.2.1(b)
shall immediately give written notice to the Corporation of such event, or in the case of such a
proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall
provide to the Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer on the Corporations status as a REIT.
Section 7.2.4 OWNERS REQUIRED TO PROVIDE INFORMATION. From the Initial Date and prior
to the Restriction Termination Date:
(a) every Person who Beneficially Owns more than five percent (5%) (or such lower percentage
as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding
shares of Capital Stock, within 30 days after the end of each taxable year, shall give written
notice to the Corporation stating the name and address of such owner, the number of shares of
Capital Stock Beneficially Owned and a description of the manner in which such shares are held.
Each such Person shall provide to the Corporation such additional information as the Corporation
may request in order to determine the effect, if any, of such Beneficial Ownership on the
Corporations status as a REIT and to ensure compliance with the Aggregate Stock Ownership Limit;
and
(b) each Person who is a Beneficial or Constructive Owner of Capital Stock and each Person
(including the stockholder of record) who is holding Capital Stock for a Beneficial or Constructive
Owner shall provide to the Corporation such information as the Corporation may request, in good
faith, in order to determine the Corporations status as a REIT and to comply with requirements of
any taxing authority or governmental authority or to determine such compliance and ensure
compliance with Aggregate Stock Ownership Limit.
Section 7.2.5 REMEDIES NOT LIMITED. Subject to Section 5.7 of the charter, nothing
contained in this Section 7.2 shall limit the authority of the Board of Directors of the
Corporation to take such other action as it deems necessary or advisable to protect the Corporation
and the interests of its stockholders in preserving the Corporations status as a REIT.
16
Section 7.2.6 AMBIGUITY. In the case of an ambiguity in the application of any of the
provisions of this Article VII, including any definition contained in Section 7.1, the Board of
Directors of the Corporation shall have the power to determine the application of the provisions of
this Article VII with respect to any situation based on the facts known to it. In the event
Article VII requires an action by the Board of Directors and the charter fails to provide specific
guidance with respect to such action, the Board of Directors shall have the power to determine the
action to be taken so long as such action is not contrary to the provisions of this Article VII.
Section 7.2.7 EXCEPTIONS.
(a) Subject to Section 7.2.1(a)(ii), the Board of Directors of the Corporation, in its sole
discretion, may exempt (prospectively or retroactively) a Person from the Aggregate Stock Ownership
Limit and the Common Stock Ownership Limit, as the case may be, and may establish or increase an
Excepted Holder Limit for such Person if:
(i) the Board of Directors obtains such representations and undertakings from such Person as
are reasonably necessary to ascertain that no individuals Beneficial or Constructive Ownership of
such shares of Capital Stock will violate Section 7.2.1(a)(ii);
(ii) such Person does not and represents that it will not own, actually or Constructively, an
interest in a Tenant of the Corporation (or a Tenant of any entity owned or controlled by the
Corporation) that would cause the Corporation to own, actually or Constructively, more than a nine
and 8/10ths percent (9.8%) interest in such Tenant and the Board of Directors obtains such
representations and undertakings from such Person as are reasonably necessary to ascertain this
fact (for this purpose, a Tenant from whom the Corporation (or an entity owned or controlled by the
Corporation) derives (and is expected to continue to derive) a sufficiently small amount of revenue
such that, in the opinion of the Board of Directors of the Corporation, rent from such Tenant would
not adversely affect the Corporations ability to qualify as a REIT need not be treated as a Tenant
of the Corporation); and
(iii) such Person agrees that any violation or attempted violation of such representations or
undertakings (or other action which is contrary to the restrictions contained in Sections 7.2.1
through 7.2.6) will result in such shares of Capital Stock being automatically transferred to a
Charitable Trust in accordance with Sections 7.2.1(b) and 7.3.
(b) Prior to granting any exception pursuant to Section 7.2.7(a), the Board of Directors of
the Corporation may require a ruling from the Internal Revenue Service, or an opinion of counsel,
in either case in form and substance satisfactory to the Board of Directors in its sole discretion,
as it may deem necessary or advisable in order to determine or ensure the Corporations status as a
REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Directors may impose such
conditions or restrictions as it deems appropriate in connection with granting such exception.
17
(c) Subject to Section 7.2.1(a)(ii), an underwriter or placement agent that participates in a
public offering or a private placement of Capital Stock (or securities convertible into or
exchangeable for Capital Stock) may Beneficially Own or Constructively Own shares of Capital Stock
(or securities convertible into or exchangeable for Capital Stock) in excess of the Aggregate Stock
Ownership Limit, the Common Stock Ownership Limit, or both such limits, but only to the extent
necessary to facilitate such public offering or private placement and provided that the
restrictions contained in Section 7.2.1(a) will not be violated following the distribution of such
underwriter or placement agent of such shares of Capital Stock.
(d) The Board of Directors may only reduce the Excepted Holder Limit for an Excepted Holder:
(1) with the written consent of such Excepted Holder at any time, or (2) pursuant to
the terms and conditions of the agreements and undertakings entered into with such Excepted Holder
in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No
Excepted Holder Limit shall be reduced to a percentage that is less than the Common Stock Ownership
Limit.
Section 7.2.8 INCREASE IN AGGREGATE STOCK OWNERSHIP AND COMMON STOCK OWNERSHIP LIMITS.
The Board of Directors may from time to time increase the Common Stock Ownership Limit and the
Aggregate Stock Ownership Limit.
Section 7.2.9 LEGEND. Each certificate for shares of Capital Stock shall bear
substantially the following legend:
The shares represented by this certificate are subject to restrictions on
Beneficial and Constructive Ownership and Transfer for the purpose of the
Corporations maintenance of its status as a Real Estate Investment Trust
under the Internal Revenue Code of 1986, as amended (the Code). Subject to
certain further restrictions and except as expressly provided in the
Corporations charter, (i) no Person may Beneficially or Constructively Own
shares of the Corporations Common Stock in excess of nine and 8/10ths
percent (9.8%) (in value or number of shares) of the outstanding shares of
Common Stock of the Corporation unless such Person is an Excepted Holder (in
which case the Excepted Holder Limit shall be applicable); (ii) no Person
may Beneficially or Constructively Own shares of Capital Stock of the
Corporation in excess of nine and 8/10ths percent (9.8%) of the value of the
total outstanding shares of Capital Stock of the Corporation, unless such
Person is an Excepted Holder (in which case the Excepted Holder Limit shall
be applicable); (iii) no Person may Beneficially or Constructively Own
Capital Stock that would result in the Corporation being closely held
under Section 856(h) of the Code or otherwise cause the Corporation to fail
to qualify as a REIT; and (iv) no Person may Transfer shares of Capital
Stock if such Transfer would result in the Capital Stock of the Corporation
being owned by fewer than 100 Persons. Any Person who Beneficially or
Constructively Owns or attempts to Beneficially or Constructively Own shares
of Capital Stock which causes or will cause a Person to Beneficially or
Constructively Own shares of Capital Stock in excess or in violation
of the above limitations must
18
immediately notify the Corporation. If any of the restrictions on transfer
or ownership are violated, the shares of Capital Stock represented hereby
will be automatically transferred to a Trustee of a Charitable Trust for the
benefit of one or more Charitable Beneficiaries. In addition, upon the
occurrence of certain events, attempted Transfers in violation of the
restrictions described above may be void ab initio. All
capitalized terms in this legend have the meanings defined in the charter,
as the same may be amended from time to time, a copy of which, including the
restrictions on transfer and ownership, will be furnished to each holder of
Capital Stock of the Corporation on request and without charge.
Instead of the foregoing legend, the certificate may state that the Corporation will furnish a
full statement about certain restrictions on transferability to each holder of Capital Stock of the
Corporation on request and without charge.
Section 7.3 TRANSFER OF CAPITAL STOCK IN TRUST.
Section 7.3.1 OWNERSHIP IN TRUST. Upon any purported Transfer or other event described
in Section 7.2.1(b) that would result in a transfer of shares of Capital Stock to a Charitable
Trust, such shares of Capital Stock shall be deemed to have been transferred to the Trustee as
trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries.
Such transfer to the Trustee shall be deemed to be effective as of the close of business on the
Business Day prior to the purported Transfer or other event that results in the transfer to the
Charitable Trust pursuant to Section 7.2.1(b). The Trustee shall be appointed by the Corporation
and shall be a Person unaffiliated with the Corporation and any Prohibited Owner. Each Charitable
Beneficiary shall be designated by the Corporation as provided in Section 7.3.6.
Section 7.3.2 STATUS OF SHARES HELD BY THE TRUSTEE. Shares of Capital Stock held by
the Trustee shall be issued and outstanding shares of Capital Stock of the Company. The Prohibited
Owner shall have no rights in the shares held by the Trustee. The Prohibited Owner shall not
benefit economically from ownership of any shares held in trust by the Trustee, shall have no
rights to dividends or other distributions and shall not possess any rights to vote or other rights
attributable to the shares held in the Charitable Trust.
Section 7.3.3 DIVIDEND AND VOTING RIGHTS. The Trustee shall have all voting rights and
rights to dividends or other distributions with respect to shares of Capital Stock held in the
Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable
Beneficiary. Any dividend or other distribution paid prior to the discovery by the Corporation that
the shares of Capital Stock have been transferred to the Trustee shall be paid by the recipient of
such dividend or distribution to the Trustee upon demand and any dividend or other distribution
authorized but unpaid shall be paid when due to the Trustee. Any dividend or distribution so paid
to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall
have no voting rights with respect to shares held in the Charitable Trust and, subject to Maryland
law, effective as of the date that the shares of Capital Stock have
been transferred to the Trustee, the Trustee shall have the authority
(at the Trustees
19
sole discretion)
(i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the
Corporation that the shares of Capital Stock have been transferred to the Trustee and (ii) to
recast such vote in accordance with the desires of the Trustee acting for the benefit of the
Charitable Beneficiary; provided, however, that if the Corporation has already taken irreversible
corporate action, then the Trustee shall not have the authority to rescind and recast such vote.
Notwithstanding the provisions of this Article VII, until the Corporation has received notification
that shares of Capital Stock have been transferred into a Charitable Trust, the Corporation shall
be entitled to rely on its share transfer and other stockholder records for purposes of preparing
lists of stockholders entitled to vote at meetings, determining the validity and authority of
proxies and otherwise conducting votes of stockholders.
Section 7.3.4 SALE OF SHARES BY TRUSTEE. Within twenty (20) days of receiving notice
from the Corporation that shares of Capital Stock have been transferred to the Charitable Trust,
the Trustee of the Charitable Trust shall sell the shares held in the Charitable Trust to a person,
designated by the Trustee, whose ownership of the shares will not violate the ownership limitations
set forth in Section 7.2.1(a). Upon such sale, the interest of the Charitable Beneficiary in the
shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the
Prohibited Owner and to the Charitable Beneficiary as provided in this Section 7.3.4. The
Prohibited Owner shall receive the lesser of (1) the price paid by the Prohibited Owner for the
shares or, if the Prohibited Owner did not give value for the shares in connection with the event
causing the shares to be held in the Charitable Trust (e.g., in the case of a gift, devise or other
such transaction), the Market Price of the shares on the day of the event causing the shares to be
held in the Charitable Trust and (2) the price per share received by the Trustee from the sale or
other disposition of the shares held in the Charitable Trust. Any net sales proceeds in excess of
the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.
If, prior to the discovery by the Corporation that shares of Capital Stock have been transferred to
the Trustee, such shares are sold by a Prohibited Owner, then (i) such shares shall be deemed
to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited
Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was
entitled to receive pursuant to this Section 7.3.4, such excess shall be paid to the Trustee upon
demand.
Section 7.3.5 PURCHASE RIGHT IN STOCK TRANSFERRED TO THE TRUSTEE. Shares of Capital
Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation,
or its designee, at a price per share equal to the lesser of (i) the price per share in the
transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise or
gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date
the Corporation, or its designee, accepts such offer. The Corporation shall have the right to
accept such offer until the Trustee has sold the shares held in the Charitable Trust pursuant to
Section 7.3.4. Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in
the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to
the Prohibited Owner.
20
Section 7.3.6 DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) the shares of
Capital Stock held in the Charitable Trust would not violate the restrictions set forth in Section
7.2.1(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be
described in Section 501(c)(3) of the Code and contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
Section 7.4 NYSE TRANSACTIONS. Nothing in this Article VII shall preclude the
settlement of any transaction entered into through the facilities of the NYSE or any other national
securities exchange or automated inter-dealer quotation system. The fact that the settlement of any
transaction occurs shall not negate the effect of any other provision of this Article VII and any
transferee in such a transaction shall be subject to all of the provisions and limitations set
forth in this Article VII.
Section 7.5 ENFORCEMENT. The Corporation is authorized specifically to seek equitable
relief, including injunctive relief, to enforce the provisions of this Article VII.
Section 7.6 NON-WAIVER. No delay or failure on the part of the Corporation or the
Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the
Corporation or the Board of Directors, as the case may be, except to the extent specifically waived
in writing.
ARTICLE VIII
AMENDMENTS TO CHARTER; APPROVAL OF CERTAIN EXTRAORDINARY ACTIONS
Section 8.1 AMENDMENTS TO CHARTER. The Corporation reserves the right from time to
time to make any amendment to its charter now or hereafter authorized by law, including any
amendment altering the terms or contract rights, as expressly set forth in this charter, of any
shares of outstanding stock, other than the outstanding shares of Series AA Preferred Stock which
shall have and retain all of the rights provided for in Section 6.4(i). All rights and powers
conferred by the charter on stockholders, directors and officers are granted subject to the
reservation set forth in the previous sentence. Except as otherwise provided in the charter and
except for those amendments permitted to be made without stockholder approval under Maryland law,
any amendment to the charter shall be valid only if approved by the stockholders of the Corporation
by the affirmative vote of a majority of all the votes entitled to be cast on the matter.
Section 8.2 APPROVAL OF CERTAIN EXTRAORDINARY ACTIONS. The affirmative vote of the
holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter
shall be required to authorize a merger, consolidation, share exchange, dissolution or sale of
substantially all of the assets of the Corporation.
21
ARTICLE IX
LIMITATION OF LIABILITY
To the maximum extent that Maryland law in effect from time to time permits limitation of the
liability of directors and officers of a corporation, no director or officer of the Corporation
shall be liable to the Corporation or its stockholders for money damages. Neither the amendment nor
repeal of this Article IX, nor the adoption or amendment of any other provision of the charter or
Bylaws inconsistent with this Article IX, shall apply to or affect in any respect the applicability
of the preceding sentence with respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption.
THIRD: The foregoing amendment and restatement to the charter does not increase the
authorized capital stock of the Corporation. The preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and conditions for
redemption of the classes of capital stock are not changed by the foregoing amendment and
restatement
FOURTH: The Corporation was originally incorporated in the State of Maryland on
May 21, 2010, and foregoing amendment and restatement to the charter of the Corporation shall
amend, restate and supersede in their entirety any and all prior Articles of Incorporation and any
and all amendments and restatements thereto filed with the State Department of Assessments and
Taxation of Maryland from the date of the Corporations original incorporation through the date
hereof.
FIFTH: The foregoing amendment and restatement to the charter of the Corporation has
been advised by resolution adopted by the Board of Directors of the Corporation and approved by the
stockholders of the Corporation.
[Signatures Appear On The Following Page.]
22
IN WITNESS WHEREOF, NetREIT, Inc. has caused these Articles of Amendment and Restatement to be
signed and acknowledged in its name and on its behalf by its President and attested to by its
Secretary on this 4th day of August, 2010, and its President acknowledges that these Articles
of Amendment and Restatement are the act of NetREIT, Inc. and he further acknowledges that, as to
all matters or facts set forth herein which are required to be verified under oath, such matters
and facts are true in all material respects to the best of his knowledge, information and belief,
and that this statement is made under the penalties for perjury.
ATTEST:
|
NetREIT, INC. | |||||
/s/ Kenneth W. Elsberry
|
By: | /s/ Jack K. Heilbron | ||||
Title: Chief Financial Officer
|
Title: President and CEO |
23
CONSENT TO SERVE AS RESIDENT AGENT
Having been named as registered agent and to accept service of process for NetREIT, Inc. at
the place designated in these Articles of Incorporation, the undersigned, a Maryland corporation
duly authorized to act as a resident agent in the state of Maryland, hereby accepts the appointment
as registered agent and agrees to act in this capacity.
HIQ CORPORATE SERVICES, INC. | ||||||
By: | ||||||
Name: | ||||||
Title: | ||||||
Date: __________ __, 2010
24