MacKenzie Realty Capital, Inc 8-K/A, filed Jan 10, 2025
MacKenzie Realty Capital, Inc. (MKZR)
8-K/A
2025-01-10
For: 2025-01-06
View Original
Added on
April 12, 2026
About this 8-K/A
MacKenzie Realty Capital, Inc filed this 8-K/A on January 10, 2025, reporting on events of January 6, 2025.
Items reported
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 5.07: Shareholder vote results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1 )
Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 6, 2025
(Exact Name of Registrant as Specified in Its Charter)
(Commission File Number)
|
|
|
|
(State or Other Jurisdiction of Incorporation)
|
(I.R.S. Employer Identification No.)
|
(Address of principal executive offices, including zip code)
(925 ) 631-9100
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act
of 1934 (§240.12b-2 of this chapter):
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
This Amendment No 1 to the Current Report on Form 8-K (the “Original Filing”) that was originally filed with the Securities and Exchange Commission on January 10, 2025 is being filed in order to include Exhibit
3.2(a). All other information in the Original Filing remains the same and has not been changed.
|
ITEM 5.03
|
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
|
As described under Item 5.07 below, the stockholders of MacKenzie
Realty Capital, Inc., a Maryland corporation (the “Company”), approved, pursuant to the prior approval and recommendation of the Board of Directors, amendments to the
Company’s Articles of Amendment and Restatement (as amended and restated, the “Second A&R Charter”) at the 2024 Special Meeting of Stockholders held on January 6, 2025 (the “Special Meeting”). Following shareholder approval, the second
A&R Charter was filed with the State Department of Assessments and Taxation of Maryland and effective as of January 10, 2025. The Second A&R Charter is described in the Company’s definitive proxy statement filed with the Securities and
Exchange Commission on Schedule 14A in connection with the 2024 Special Meeting. The foregoing description of the Second A&R Charter does not purport to be complete and is subject to and qualified in its entirety by reference to the Second
A&R Charter, which is attached to this Current Report on Form 8-K as Exhibit 3.1 and incorporated by reference herein.
On January 8, 2025, the Board of Directors of the Company approved, effective
January 8, 2025, a Third Amended and Restated Bylaws (the “Third A&R Bylaws”). The following is a summary of changes effected by the adoption of the Third A&R Bylaws, which is qualified in its entirety by reference to the Third
A&R Bylaws filed as Exhibit 3.2(a) hereto and incorporated by reference herein. A redlined copy is attached hereto as Exhibit 3.2(b) which highlights all changes made
in the Third Amended and Restated Bylaws as compared to the Company’s current Second Amended and Restated Bylaws).
General
In addition to the amendments described below, the Third A&R Bylaws include certain changes to (a) reflect amendments to the Maryland
General Corporation Law (the “MGCL”), (b) conform to proposed changes to the Second A&R Charter, including changes made to reflect that the Company is no longer subject to the Statement of Policy Regarding Real Estate Investment Trusts
promulgated by the North American Securities Administrators Association, Inc., (c) reflect recent developments in public company governance, (d) clarify certain corporate procedures, (e) conform language and style, and (f) bring the bylaws more in
line with those of publicly listed companies.
Article II. Meetings of Stockholders
Annual Meetings. The former Bylaws required that an annual meeting of stockholders be held during the month of October or such other date thereafter. The Third A&R Bylaws delete the
requirement that the annual meeting of stockholders must be held during a specific time of the year.
Special Meetings. The former Bylaws required
that a special meeting of stockholders be called by the secretary of the Company to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast at least 10% of all the
votes entitled to be cast on such matter at such meeting. The Third A&R Bylaws require the written request of stockholders entitled to cast at least a majority of all the votes entitled to be cast on such matter at such meeting.
Quorum. The former Bylaws provided that the
presence in person or by proxy of stockholders entitled to cast at least 50% of all the votes entitled to be cast at a meeting of stockholders on any matter constituted a quorum. The Third A&R Bylaws provide that the presence in person or by
proxy of stockholders entitled to cast at least one-third of all the votes entitled to be cast at a meeting of stockholders on any matter constitutes a quorum.
Voting. The former Bylaws contained
provisions inconsistent with the MGCL and Second A&R Charter, including that the majority of outstanding shares, without the approval of the Board of Directors, could vote to amend the articles of incorporation or the former Bylaws, terminate
the Company or remove a director. The Third A&R Bylaws remove such provisions.
Advance Notice of Stockholder Nominees for Director and
Other Stockholder Proposals. The Third A&R Bylaws include more fully developed advance notice provisions for stockholder nominations for director and stockholder business proposals, including provisions addressing compliance
with SEC Rule 14a-19 in connection with any stockholder solicitation of proxies for a contested election of directors.
Article III. Directors
Number. The former Bylaws required the number
of directors to be at least three, but no more than five. The Third A&R Bylaws require that the number of directors never be less than the minimum number required by the MGCL, which is one, but no more than fifteen.
Qualifications. The former Bylaws contained
provisions regarding certain qualifications to serve on the Board of Directors. The Third A&R Bylaws remove such qualifications, allowing the stockholders to exercise their judgment in selecting directors.
Voting. The Third A&R Bylaws remove
provisions that restrict the Board of Directors ability to amend the articles of incorporation or the bylaws, sell all or substantially all of the Company’s assets, cause the merger or other reorganization of the Company, or dissolve or liquidate
the Company. Such provisions are either inconsistent with the Second A&R Charter or duplicative with current Maryland law that already requires stockholder approval for such matters.
Vacancies. The Third A&R Bylaws delete
the requirement contained in the former Bylaws that independent directors nominate replacements for vacancies among independent directors.
Article IV. Committees
Composition. The Third A&R Bylaws delete
the requirement contained in the former Bylaws that a majority of the members of each committee of the Board of Directors be independent directors.
Article XIII. Exclusive Forum for Certain Litigation
Exclusive Forum for Certain Litigation. The
Third A&R Bylaws require that, unless the Company consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for
the District of Maryland, Northern Division, will be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, (b) any derivative action or proceeding brought on behalf of the Company, other than
actions arising under federal securities laws, (c) any action asserting a claim of breach of any duty owed by any director or officer or other employee to the Company or to the stockholders of the Company, (d) any action asserting a claim against
the Company or any director or officer or other employee arising pursuant to any provision of the MGCL or the Company’s charter or bylaws, or (e) any other action asserting a claim against the Company or any director or officer or other employee
that is governed by the internal affairs doctrine.
Article XIV. Amendment of Bylaws
Amendment of Bylaws. Consistent with the
Second A&R Charter, the Third A&R Bylaws provide that the Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of the Bylaws and to make new Bylaws.
Miscellaneous Deletions
The Third A&R Bylaws delete certain provisions related to (i) the delivery of annual reports, quarterly reports and tax information
and (ii) stockholder inspection rights.
The foregoing description of the Third A&R Bylaws does not purport to be complete and is subject to and qualified in its entirety by reference to the
Third A&R Bylaws, which are attached to this Current Report on Form 8-K as Exhibit 3.2 and incorporated by reference herein.
|
ITEM 5.07
|
Submission of Matters to a Vote of Security Holders.
|
On January 6, 2025, the Company held its Special Meeting. Three proposals were on the agenda for the Special Meeting relating to the
approval of the proposal to amend and restate the charter: Proposal 1.A, the removal of certain limitations required by the North American Securities Administrators Association and other conforming and ministerial changes; Proposal 1.B, amendments
to bring our charter more in line with those of publicly listed companies, and Proposal 1.C, relating to removal of provisions relating to the Investment Company Act.
Proposal 1.A was approved. The voting results were as follows:
|
Votes For
|
|
Votes Against
|
|
Abstentions
|
|
7,021,768.8
|
|
535,973
|
|
294,250
|
A total of 7,851,991.80 shares were present at the meeting, or 58.44% of shares outstanding and eligible to vote, so a quorum was
reached. Over 89.2% of all shares present at the meeting voted for proposal 1.A, and 52.26% of all outstanding shares voted in favor.
Proposal 1.B was approved. The voting results were as follows:
|
Votes For
|
|
Votes Against
|
|
Abstentions
|
|
7,185,674.8
|
|
432,722
|
|
233,595
|
A total of 7,851,991.80 shares were present at the meeting, or 58.44% of shares outstanding and eligible to vote, so a quorum was
reached. Over 91.52% of all shares present at the meeting voted for proposal 1.B, and 53.48% of all outstanding shares voted in favor.
Proposal 1.C was approved. The voting results were as follows:
|
Votes For
|
|
Votes Against
|
|
Abstentions
|
|
7,094,538.8
|
|
459,777
|
|
297,676
|
A total of 7,851,991.80 shares were present at the meeting, or 58.44% of shares outstanding and eligible to vote, so a quorum was
reached. Over 90.35% of all shares present at the meeting voted for proposal 1.C, and 52.8% of all outstanding shares voted in favor.
|
ITEM 9.01
|
Financial Statements and Exhibits.
|
|
(d)
|
|
Exhibits
|
|
|
|
|
|
3.1
|
|
Articles of Amendment and Restatement of Mackenzie Realty Capital, Inc., effective as of January 10, 2025
|
|
3.2(a)
|
|
Third Amended and Restated Bylaws of Mackenzie Realty Capital, Inc., effective as of January 8, 2025
|
|
3.2(b)
|
Third Amended and Restated Bylaws of Mackenzie Realty Capital, Inc., effective as of January 8, 2025 (marked to show changes against the prior
version)
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
|
MACKENZIE REALTY CAPITAL, INC.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
Date: January 10, 2025
|
By:
|
/s/ Robert Dixon
|
|
|
|
|
Robert Dixon
|
|
|
|
|
President
|
|
MACKENZIE REALTY CAPITAL, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
FIRST: MacKenzie Realty Capital, Inc., a
Maryland corporation (the “Corporation”), desires to amend and restate its charter as currently in effect and as hereinafter amended.
SECOND: The following provisions are all the
provisions of the charter currently in effect and as hereinafter amended:
ARTICLE I
INCORPORATOR
Charles Patterson, whose address is 1640 School Street, Moraga, California 94556, being at least 18 years of age, formed a corporation
under the general laws of the State of Maryland on January 27, 2012.
ARTICLE II
NAME
The name of the corporation (the “Corporation”) is:
MacKenzie Realty Capital, 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 the charter of the Corporation (the “Charter”), “REIT” means a real estate investment trust under Sections 856 through 860 of the Code or any successor provisions.
ARTICLE IV
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State of Maryland is c/o Cogency Global Inc., 1519 York Road, Lutherville, MD
21093. The name of the resident agent of the Corporation in the State of Maryland is Cogency Global Inc., 1519 York Road, Lutherville, MD 21093. The resident agent is a Maryland corporation.
1
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE 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 four, which number may be increased or decreased only by the Board of Directors pursuant to
the Bylaws of the Corporation (the “Bylaws”), 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
qualify are:
Charles Patterson
Tim Dozois
Tom Frame
Kjerstin Hatch
Any vacancy on the Board of Directors may be filled in the manner provided in the Bylaws.
Section 5.2 Extraordinary Actions.
Notwithstanding any provision of law requiring any action to be taken or approved by the affirmative vote of stockholders entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable by the Board of
Directors and taken or approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter.
Section 5.3 Authorization by Board of Stock Issuance.
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 or for the purpose of qualifying as a REIT under the Code),
subject to such restrictions or limitations, if any, as may be set forth in the Charter or the Bylaws.
Section 5.4 Preemptive and Appraisal Rights.
Except as may be provided by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to Section 6.4 or as may otherwise be provided by a contract approved by the Board of Directors, 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. Holders of shares of stock
shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors upon such terms and conditions as may be specified by the Board of
Directors, determines that such rights apply, with respect to all or any shares of all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would
otherwise be entitled to exercise such rights.
2
Section 5.5 Indemnification and Advance of Expenses.
The Corporation shall, to the maximum extent permitted by Maryland law in effect from time to time, indemnify, and 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 and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director or officer of the Corporation and
at the request of the Corporation, serves or has served as a director, officer, member, manager, partner or trustee of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit
plan or any other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity. The Corporation shall have the power, with the approval of the Board of Directors, to
provide such indemnification and advance 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.
Section 5.6 Determinations by Board. The
determination as to any of the following matters, made by or pursuant to the direction of the Board of Directors, 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, acquisition of its stock or the payment of other distributions on its stock; the amount of paid‑in surplus, net assets,
other surplus, cash flow, funds from operations, adjusted funds from operations, 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 set aside, paid or discharged); any
interpretation or resolution of any ambiguity with respect to any provision of the Charter (including any of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or other
distributions, qualifications or terms or conditions of redemption of any shares of any class or series of stock of the Corporation) or of the Bylaws; the number of shares of stock of any class or series of the Corporation; 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 or of any shares of stock of the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the
Corporation; any interpretation of the terms and conditions of one or more agreements with any person, corporation, association, company, trust, partnership (limited or general) or other entity; the compensation of directors, officers, employees or
agents of 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. If the
Corporation elects 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 attempt to, or continue to, 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. The Board of Directors, in its sole and absolute discretion, also may (a) 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 (b) make any other determination or take any other action pursuant to Article VII.
3
Section 5.8 Removal of Directors. Subject to
the rights of holders of shares of one or more classes or series of Preferred Stock (as defined below) to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time, but only for
cause, and then only by the affirmative vote of at least a majority of the votes entitled to be cast generally in the election of directors. For the purpose of this paragraph, “cause” shall mean, with respect to any particular director, conviction
of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.
Section 5.9 Corporate Opportunities. The
Corporation shall have the power, by resolution of the Board of Directors, to renounce any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, business opportunities or classes or categories of business
opportunities that are presented to the Corporation or developed by or presented to one or more directors or officers of the Corporation.
Section 5.10 Adviser Agreements. 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).
ARTICLE VI
STOCK
Section 6.1 Authorized Shares. The
Corporation has authority to issue 100,000,000 shares of stock, consisting of 80,000,000 shares of Common Stock, $0.0001 par value per share (“Common Stock”), and 20,000,000 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”).
The aggregate par value of all authorized shares of stock having par value is $10,000.00. If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to Section 6.2, 6.3 or 6.4 of this Article VI,
the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the
aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph. The Board of Directors, with the approval of
a majority of the entire Board and without any action by the stockholders of the Corporation, may amend the Charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or
series that the Corporation has authority to issue.
4
Section 6.2 Common Stock. Subject to the
provisions of Article VII and except as may otherwise be specified in the Charter, each share of Common Stock shall entitle the holder thereof to one vote. The Board of Directors may reclassify any unissued shares of Common Stock from time to time
into one or more classes or series of stock.
Section 6.3 Preferred Stock. The Board of
Directors may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any class or series from time to time into one or more classes or series of stock.
Section 6.3.1 Series A Preferred Stock. 2,000,000 shares of Preferred Stock are classified as Series A Preferred Stock of the
Corporation with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption set forth on Annex A hereto.
Section 6.3.2 Series B Preferred Stock. 2,000,000 shares of Preferred Stock are classified as Series B Preferred Stock of the
Corporation with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption set forth on Annex B hereto.
Section 6.4 Classified or Reclassified Shares.
Prior to the issuance of classified or reclassified shares of any class or series of stock, the Board of Directors by resolution shall: (a) designate that 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 or change, 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 (the “SDAT”). Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 6.4 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 or other Charter document.
Section 6.5 Action by Stockholders. Any
action required or permitted to be taken at any meeting of the holders of Common Stock entitled to vote generally in the election of directors may be taken without a meeting by consent, in writing or by electronic transmission, in any manner and by
any vote permitted by the MGCL and set forth in the Bylaws.
5
Section 6.6 Charter and Bylaws. The rights of
all stockholders and the terms of all stock of the Corporation are subject to the provisions of the Charter and the Bylaws. The Board of
Directors shall have the exclusive power to amend or repeal the Bylaws and to make new Bylaws.
Section 6.7 Distributions. Except as may
otherwise be provided in the terms of any class or series of Preferred Stock, in determining whether a distribution (other than upon liquidation, dissolution or winding up) is permitted under Maryland law, amounts that would be needed, if the
Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights upon dissolution are superior to those receiving the distribution, shall not be added to
the Corporation’s total liabilities.
Section 6.8 Quorum. Unless the Board has
provided otherwise in the Bylaws, the presence in person or by proxy of the holders of shares entitled to cast one-third of the votes entitled to be cast shall constitute a quorum at any meeting of the stockholders, except with respect to any matter
which, under applicable statutes, regulatory requirements or the Charter, requires approval by a separate vote of one or more series or classes of stock, in which case the presence in person or by proxy of the holders of shares entitled to cast
one-third of the votes entitled to be cast by holders of shares of each series or class entitled to vote as a series or class on the matter shall constitute a quorum.
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 7.1 Definitions.
For the purpose of this Article VII, the following terms shall have the following meanings:
Aggregate Stock Ownership Limit.
The term “Aggregate Stock Ownership Limit” shall mean 9.8% in value of the aggregate of the outstanding shares of Capital Stock, or such other percentage determined by the Board of Directors in accordance with Section 7.2.8 of the Charter.
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 New York City are authorized or required by law, regulation or executive order to close.
6
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 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.
Common Stock Ownership Limit.
The term “Common Stock Ownership Limit” shall mean 9.8% (in value or in number of shares, whichever is more restrictive) of the aggregate of the outstanding shares of Common Stock of the Corporation, or such other percentage determined by the Board
of Directors in accordance with Section 7.2.8 of the Charter.
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.
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 7.2.7, the
percentage limit established by the Board of Directors pursuant to Section 7.2.7.
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 Nasdaq or, if such Capital Stock is not listed or admitted to trading on the Nasdaq, 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 principal automated quotation system that may then be in use or, if such Capital Stock is not quoted by any such system, 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 or, in the event that no trading price is available for such Capital Stock, the fair market value of the
Capital Stock, as determined by the Board of Directors.
7
Nasdaq. The term “Nasdaq”
shall mean the Nasdaq Capital Market.
Person. The term “Person”
shall mean an individual, corporation, partnership, limited liability company, 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 is 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 this Article VII, would Beneficially Own or Constructively Own shares of Capital Stock in violation of Section 7.2.1, 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.
Restriction Termination Date.
The term “Restriction Termination Date” shall mean the first day on which the Board of Directors determines pursuant to Section 5.7 of the Charter that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as
a REIT 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.
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 action
or cause any such event, 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 Ownership 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.
Trust. The term “Trust”
shall mean any trust provided for in Section 7.3.1.
Trustee. The term
“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.
Section 7.2 Capital Stock.
Section 7.2.1 Ownership Limitations.
Prior to the Restriction Termination Date, but subject to Section 7.4:
8
(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.
(ii) No Person shall Beneficially Own or Constructively Own shares of Capital Stock to the extent that such
Beneficial Ownership 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, without limitation, Beneficial Ownership or Constructive Ownership that would result in the Corporation owning (actually or Constructively) 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) Any Transfer of shares of Capital Stock that, if effective, would result in the Capital 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, and the intended transferee shall acquire no rights in such shares of Capital Stock.
(b) Transfer in Trust. If any Transfer of shares of
Capital Stock 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 Ownership or Constructive Ownership of which
otherwise would cause such Person to violate Section 7.2.1(a)(i) or (ii)(rounded up to the nearest whole share) shall be automatically transferred to a 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 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.
(iii) To the extent that, upon a transfer of shares of Capital Stock pursuant to this Section 7.2.1(b), a violation of any provision of this Article
VII would nonetheless be continuing (for example where the ownership of shares of Capital Stock by a single Trust would violate the 100 stockholder requirement applicable to REITs), then shares of Capital Stock shall be transferred to that number
of Trusts, each having a distinct Trustee and a Charitable Beneficiary or Charitable Beneficiaries that are distinct from those of each other Trust, such that there is no violation of any provision of this Article VII.
9
Section 7.2.2 Remedies for Breach.
If the Board of Directors shall at any time determine 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 Ownership 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 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 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.
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 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 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 Corporation’s status as a REIT.
Section 7.2.4 Owners Required To
Provide Information. Prior to the Restriction Termination Date:
(a) every owner of five percent or more (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 owner 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
Corporation’s status as a REIT and to ensure compliance with the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit; and
(b) each Person who is a Beneficial Owner or Constructive Owner of Capital Stock and each Person (including the stockholder of record) who is holding
Capital Stock for a Beneficial Owner or Constructive Owner shall provide to the Corporation such information as the Corporation may request, in order to determine the Corporation’s status as a REIT and to comply with the requirements of any taxing
authority or governmental authority or to determine such compliance.
10
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 to take such other action as it deems necessary or advisable to protect the Corporation in preserving the Corporation’s
status as a REIT.
Section 7.2.6 Ambiguity.
In the case of an ambiguity in the application of any of the provisions of this Section 7.2, Section 7.3 or any definition contained in Section 7.1, the Board of Directors may determine the application of the provisions of this Section 7.2 or Section
7.3 or any such definition with respect to any situation based on the facts known to it. In the event Section 7.2 or Section 7.3 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 may determine the action to be taken so long as such action is not contrary to the provisions of Sections 7.1, 7.2 or 7.3. Absent a decision to the contrary by the Board of Directors, if a Person would have (but for
the remedies set forth in Section 7.2.2) acquired Beneficial Ownership or Constructive Ownership of Capital Stock in violation of Section 7.2.1, such remedies (as applicable) shall apply first to the shares of Capital Stock which, but for such
remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such shares of Capital Stock based upon the relative number of the shares of Capital Stock held
by each such Person.
Section 7.2.7 Exceptions.
(a) Subject to Section 7.2.1(a)(ii) and upon receipt of such representations and agreements as the Board of Directors may require, the Board of
Directors, 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.
(b) Prior to granting any exception pursuant to Section 7.2.7(a), the Board of Directors 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, as it may deem necessary or advisable in order to determine or ensure the Corporation’s 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.
(c) Subject to Section 7.2.1(a)(ii), an underwriter which participates in a public offering, forward sale 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, forward sale or private placement.
(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, (2) unless 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 provide otherwise, at any time after
the Excepted Holder no longer Beneficially Owns or Constructively Owns shares of Capital Stock in excess of the Common Stock Ownership Limit or the Aggregate Stock Ownership Limit or (3) 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 or the Aggregate Stock Ownership Limit.
11
Section 7.2.8 Increase or Decrease
in Common Stock Ownership or Aggregate Stock Ownership Limits. Subject to Section 7.2.1(a)(ii) and this Section 7.2.8, the Board of Directors may from time to time increase or decrease the Common Stock Ownership Limit and the
Aggregate Stock Ownership Limit for one or more Persons and increase or decrease the Common Stock Ownership Limit and the Aggregate Stock Ownership Limit for all other Persons. No decreased Common Stock Ownership Limit or Aggregate Stock Ownership
Limit will be effective for any Person whose percentage of ownership of Capital Stock is in excess of such decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable, until such time as such Person’s percentage of
ownership of Capital Stock equals or falls below the decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable; provided, however, any further acquisition of Capital Stock by any such Person (other than a Person for
whom an exemption has been granted pursuant to Section 7.2.7(a) or an Excepted Holder) in excess of the Capital Stock owned by such person on the date the decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable,
became effective will be in violation of the Common Stock Ownership Limit or Aggregate Stock Ownership Limit. No increase to the Common Stock Ownership Limit or Aggregate Stock Ownership Limit may be approved if the new Common Stock Ownership Limit
and/or Aggregate Stock Ownership Limit would allow five or fewer Persons to Beneficially Own, in the aggregate more than 49.9% in value of the outstanding Capital Stock.
Section 7.2.9 Legend.
Each certificate for shares of Capital Stock, if certificated, shall bear substantially the following legend:
The shares represented by this certificate are subject to restrictions on
Beneficial Ownership and Constructive Ownership and Transfer for the purpose, among others, of the Corporation’s 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 Corporation’s Charter, (i) no Person may Beneficially Own or Constructively Own shares of the Corporation’s Common Stock in excess of the Common Stock Ownership Limit unless such
Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially Own or Constructively Own shares of Capital Stock of the Corporation in excess of the Aggregate Stock Ownership Limit, unless
such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially Own 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 Owns or Constructively Owns or attempts or intends to Beneficially Own or Constructively Own shares of Capital Stock which cause or will cause a Person to Beneficially Own or Constructively Own shares of Capital Stock in
excess or in violation of the above limitations must immediately notify the Corporation. If any of the restrictions on transfer or ownership provided in (i), (ii) or (iii) above are violated, the shares of Capital Stock in excess or in violation of
the above limitations will be automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries. In addition, the Corporation may redeem shares upon the terms and conditions specified by the Board of Directors
in its sole and absolute discretion if the Board of Directors determines that ownership or a Transfer or other event may violate the restrictions described above. Furthermore, if the ownership restrictions provided in (iv) above would be violated or
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 of the Corporation, 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 shares of Capital Stock of the Corporation on request and without charge. Requests for such a copy may be directed to the Secretary of the Corporation at its Principal
Office.
12
Instead of the foregoing legend, the certificate or any notice in lieu of a certificate may state that the
Corporation will furnish a full statement about certain restrictions on ownership and transfer of the shares to a stockholder 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 Trust, such shares of Capital Stock shall be deemed to have been transferred to the Trustee as trustee of a 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 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 Corporation. 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
Trust.
13
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 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 other 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 other 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 of Capital Stock held in the Trust and, subject to Maryland law, effective as of the date that the shares of Capital Stock have been transferred to the Trust, the Trustee shall have the authority (at
the Trustee’s sole and absolute 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 Trust and (ii) to recast such vote;
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 Trust, the Corporation shall be entitled to rely on its stock 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 and determining the other rights of stockholders.
Section 7.3.4 Sale of Shares by
Trustee. Within 20 days of receiving notice from the Corporation that shares of Capital Stock have been transferred to the Trust, the Trustee of the Trust shall sell the shares held in the 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 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 Trust and (2) the price per share received by the Trustee (net of any commissions and other expenses of sale) from the sale or other
disposition of the shares held in the Trust. The Trustee may reduce the amount payable to the Prohibited Owner by the amount of dividends and distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the
Trustee pursuant to Section 7.3.3 of this Article VII. 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 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.
14
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 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 may reduce the amount payable to the Prohibited Owner by the amount of dividends and distributions which has been paid to the Prohibited Owner and is owed by the Prohibited Owner to the Trustee pursuant to Section 7.3.3 of
this Article VII. The Corporation may pay the amount of such reduction to the Trustee for the benefit of the Charitable Beneficiary. The Corporation shall have the right to accept such offer until the Trustee has sold the shares held in the 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.
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 or Charitable Beneficiaries of the interest in the Trust such that (i)
the shares of Capital Stock held in the Trust would not violate the restrictions set forth in Section 7.2.1(a) in the hands of such Charitable Beneficiary or Charitable Beneficiaries 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. Neither the failure of the Corporation to make such designation nor the failure of the
Corporation to appoint the Trustee before the automatic transfer provided in Section 7.2.1(b) shall make such transfer ineffective, provided that the Corporation thereafter makes such designation and appointment.
Section 7.4 Nasdaq Transactions. Nothing in this
Article VII shall preclude the settlement of any transaction entered into through the facilities of the Nasdaq 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.
15
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right from time to time to make any amendment to the Charter, now or hereafter authorized
by law, including any amendment altering the terms or contract rights, as expressly set forth in the Charter, of any shares of outstanding stock. All rights and powers conferred by the Charter on stockholders, directors and officers are granted
subject to this reservation. Except for those amendments permitted to be made without stockholder approval under Maryland law or by specific provision in the Charter, any amendment to the Charter shall be valid only if declared advisable by the
Board of Directors and approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter.
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 present or former 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 amendment to
and restatement of the charter as hereinabove set forth have been duly advised by the Board of Directors and approved by the stockholders of the Corporation as required by law. The total number of shares of stock that the Corporation has authority
to issue has not been changed by the foregoing amendment and restatement of the charter.
FOURTH: The current
address of the principal office of the Corporation is as set forth in Article IV of the foregoing amendment and restatement of the charter.
FIFTH: The name and
address of the Corporation’s current resident agent are as set forth in Article IV of the foregoing amendment and restatement of the charter.
SIXTH: The number of
directors of the Corporation and the names of those currently in office are as set forth in Article V of the foregoing amendment and restatement of the charter.
SEVENTH: The undersigned
officer acknowledges these Articles of Amendment and Restatement to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that, to the best of such officer’s
knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
16
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment and Restatement to be signed in its name
and on its behalf by its President and attested to by its Secretary on this 9th day of January, 2025.
ATTEST: MACKENZIE REALTY CAPITAL, INC.
/s/ Chip Patterson By: /s/ Robert Dixon
Chip Patterson, Secretary Robert Dixon, President
17
ANNEX A
SERIES A PREFERRED STOCK
(1) Designation and
Number. A series of Preferred Stock, designated as the “Series A Preferred Stock” (the “Series A Preferred Stock”), is hereby established. The par value of the Series A Preferred Stock is $0.0001 per share. The number of shares of Series
A Preferred Stock is 2,000,000. The designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions, of the Series A Preferred Stock shall be subject in all cases
to the provisions of Article VII of the Charter regarding limitations on ownership and transfer of the Corporation’s equity securities.
(2) Definitions.
For purposes of the Series A Preferred Stock, the following terms shall have the respective meanings indicated below.
(a) Acquisition
Date. The term “Acquisition Date” shall have the meaning as provided in Section 9 herein.
(b) Business Day.
The term “Business Day” shall mean each day, other than a Saturday or Sunday, which is not a day on which banks in the State of Maryland are required to close.
(c) Common Stock.
The term “Common Stock” shall mean the common stock, par value $0.0001 per share, of the Corporation.
(d) Conversion
Amount. The term “Conversion Amount” shall have the meaning as provided in Section 8 herein.
(e) Conversion Date.
The term “Conversion Date” shall have the meaning as provided in Section 8 herein.
(f) Conversion
Notice. The term “Conversion Notice” shall have the meaning as provided in Section 8 herein.
(g) Conversion
Right. The term “Conversion Right” shall have the meaning as provided in Section 8 herein.
(h) Dividend
Payment Date. The term “Dividend Payment Date” shall have the meaning as provided in Section 4 herein.
(i) Dividend Period.
The term “Dividend Period” shall mean the respective period commencing on and including the first day of each fiscal quarter of the Corporation and ending on and including the day preceding the first day of the next succeeding Dividend Period (other
than the initial Dividend Period and the Dividend Period during which any shares of Series A Preferred Stock shall be redeemed or otherwise acquired by the Corporation).
(j) Dividend Record
Date. The term “Dividend Record Date” shall have the meaning as provided in Section 4 herein.
18
(k) Early
Redemption Period. The term “Early Redemption Period” shall mean any time on or after January 1, 2023.
(l) Junior Stock.
The term “Junior Stock” shall have the meaning as provided in Section 3 herein.
(m) Parity Stock.
The term “Parity Stock” shall have the meaning as provided in Section 3 herein.
(n) Purchase Price.
The term “Purchase Price” shall have the meaning as provided in Section 5 herein.
(o) Special
Redemption Event. The term “Special Redemption Event” shall mean the date upon which the shares of Common Stock are listed for trading on a national securities exchange with at least three market makers or a New York Stock Exchange
specialist.
(p) Senior Stock.
The term “Senior Stock” shall have the meaning as provided in Section 3 herein.
(q) Series A
Preferred Stock. The term “Series A Preferred Stock” shall have the meaning as provided in Section 1 herein.
(3) Ranking.
The Series A Preferred Stock shall, with respect to priority of payment of dividends and other distributions and rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation, rank: (a) senior to all classes or
series of Common Stock and to any other class or series of stock of the Corporation issued in the future, unless the terms of such stock expressly provide that it ranks senior to, or on parity with, the Series A Preferred Stock with respect to
priority of payment of dividends and other distributions or rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation (together with the Common Stock, the “Junior Stock”); (b) on a parity with any class or series
of stock of the Corporation, the terms of which expressly provide that it ranks on a parity with the Series A Preferred Stock with respect to priority of payment of dividends and other distributions and rights upon voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (the “Parity Stock”); and (c) junior to any class or series of stock of the Corporation which rank senior to the Series A Preferred Stock with respect to priority of payment of dividends and
other distributions or rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation (the “Senior Stock”).
(4) Dividends.
(a) Subject to the preferential rights of the holders of Senior Stock to the Series A Preferred Stock as to
dividends, holders of the then outstanding shares of Series A Preferred Stock shall be entitled to receive, when and as authorized by the Board of Directors and declared by the Corporation, out of funds legally available for the payment of dividends,
cash dividends at the rate of 6.0% per annum of $25.00 per share (equivalent to a fixed annual rate of $1.50 per share). The dividends on each share of Series A Preferred Stock shall be cumulative from the first date on which such share of Series A
Preferred Stock is issued or the end of the most recent Dividend Period for which dividends on the Series A Preferred Stock (including such share) have been aggregated and paid and shall be payable quarterly in arrears on or before the fifteenth day
of the month following the last day of the applicable quarter, or, if not a Business Day, the next succeeding Business Day (each, a “Dividend Payment Date”). Dividends shall be payable to holders of record as they appear in the stock records of the
Corporation at the close of business on the applicable record date or dates, which shall be the 15th day of each calendar month in the quarter preceding the applicable Dividend Payment Date or such other date or dates designated by the Board of
Directors for the determination of the holders of Series A Preferred Stock entitled to receive dividends (each, a “Dividend Record Date”).
19
(b) No dividends on the Series A Preferred Stock shall be authorized by the Board of Directors or declared and paid
or declared and set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for
payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.
(c) Notwithstanding the foregoing Section 4(b), dividends on the Series A Preferred Stock shall accrue whether or not
the Corporation has earnings, whether there are funds legally available for the payment of such dividends and whether or not such dividends are authorized by the Board of Directors or declared by the Corporation. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or payments on the Series A Preferred Stock which may be in arrears. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series
A Preferred Stock and the shares of any class or series of Parity Stock, all dividends declared upon the Series A Preferred Stock and any class or series of Parity Stock shall be declared pro rata so that the amount of dividends declared per share of
Series A Preferred Stock and such class or series of Parity Stock shall in all cases bear to each other the same ratio that accumulated dividends per share on the Series A Preferred Stock and such class or series of Parity Stock (which shall not
include any accrual in respect of unpaid dividends for prior dividend periods if such Parity Stock does not have a cumulative dividend) bear to each other.
(d) Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series A
Preferred Stock have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment (for purposes of these terms of the Series A Preferred Stock, “set apart for payment” shall
mean the Corporation has determined it has sufficient cash available to pay such declared dividends) for all past Dividend Periods that have ended, no dividends (other than a dividend in shares of Junior Stock or in options, warrants or rights to
subscribe for or purchase any such shares of Junior Stock) shall be declared and paid or declared and set apart for payment nor shall any other distribution be declared and made upon the Junior Stock or the Parity Stock, nor shall any shares of
Junior Stock or Parity Stock be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except (i) by conversion into or
exchange for Junior Stock, (ii) the purchase of shares of Junior Stock or Parity Stock pursuant to the Charter to the extent necessary to preserve the Corporation’s qualification as a REIT for federal income tax purposes or (iii) the purchase or
other acquisition of shares of Parity Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred Stock). Holders of shares of the Series A Preferred Stock shall not be entitled to
any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series A Preferred Stock as provided above. Any dividend payment made on shares of the Series A Preferred Stock shall first be credited against
the earliest accrued but unpaid dividend due with respect to such shares which remains payable. Accrued but unpaid dividends on the Series A Preferred Stock shall accrue as of the Dividend Payment Date on which they first become payable.
20
(5) Liquidation
Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series A Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for
distribution to its stockholders, after payment of or provision for the Corporation’s debts and other liabilities and subject to the preferential rights of the holders of any class or series of stock of the Corporation ranking senior to the Series A
Preferred Stock with respect to rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation, a liquidation preference of $25.00 per share (the “Purchase Price”), plus an amount equal to any accrued and unpaid
dividends (whether or not authorized or declared) thereon to and including the date of payment, but without interest, before any distribution of assets is made to holders of Junior Stock. If the assets of the Corporation legally available for
distribution to stockholders are insufficient to pay in full the liquidation preference on the Series A Preferred Stock and the liquidation preference on the shares of any class or series of Parity Stock, all assets distributed to the holders of the
Series A Preferred Stock and any class or series of Parity Stock shall be distributed pro rata so that the amount of assets distributed per share of Series A Preferred Stock and such class or series of Parity Stock shall in all cases bear to each
other the same ratio that the liquidation preference per share on the Series A Preferred Stock and such class or series of Parity Stock bear to each other. After payment of the full amount of the liquidation distributions to which they are entitled,
the holders of Series A Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation. The consolidation or merger of the Corporation with or into another entity, a merger of another entity with or into the
Corporation, a statutory share exchange by the Corporation or a sale, lease, transfer or conveyance of all or substantially all of the Corporation’s property or business shall not be deemed to constitute a liquidation, dissolution or winding up of
the Corporation. In determining whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation) by dividend, redemption or other acquisition of shares of stock of the Corporation or
otherwise is permitted under the Maryland General Corporation Law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution
of holders of the Series A Preferred Stock.
(6) Optional
Redemption.
(a) The Corporation may, at its option during the Early Redemption Period, redeem shares of Series A Preferred Stock,
in whole or from time to time in part, for cash at a redemption price per share equal to the Purchase Price plus an amount equal to all accrued and unpaid dividends thereon to, and including, the redemption date. Notwithstanding the foregoing, in the
event of a redemption of shares of Series A Preferred Stock after a Dividend Record Date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be
payable on such Dividend Payment Date to the holders of record at the close of business on such Dividend Record Date and shall not be payable as part of the redemption price for such shares.
21
(b) The Early Redemption Date shall be selected by the Corporation and shall be not less than 15 nor more than 60
days after the date on which the Corporation sends notice of the redemption. Such notice shall be sent by first class mail, postage pre-paid, to each record holder of the Series A Preferred Stock at the respective mailing addresses of such holders
as the same shall appear on the stock transfer records of the Corporation and shall state: (i) the redemption date; (ii) the redemption price payable on the redemption date, including, without limitation, a statement as to whether or not accrued and
unpaid dividends shall be payable as part of the redemption price or payable on the next Dividend Payment Date to the record holder at the close of business on the relevant Dividend Record Date as described above; and (iii) that dividends on the
shares to be redeemed shall cease to accrue on such redemption date. If less than all of the shares of Series A Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series
A Preferred Stock held by such holder to be redeemed. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock except as
to the holder to whom notice was defective or not given.
(c) If fewer than all of the outstanding shares of Series A Preferred Stock are to be redeemed, the Corporation shall
redeem those shares pro rata unless the Board of Directors elects to provide the holders of such shares a “first come, first serve” redemption option.
(d) If notice of redemption of any shares of Series A Preferred Stock has been given and if the funds necessary for
such redemption have been set apart by the Corporation for the benefit of the holders of any shares of Series A Preferred Stock so called for redemption, then, from and after the redemption date, dividends shall cease to accrue on such shares of
Series A Preferred Stock, such shares of Series A Preferred Stock shall be redeemed in accordance with the notice and shall no longer be deemed outstanding and all rights of the holders of such shares of Series A Preferred Stock shall terminate,
except the right to receive the redemption price payable upon such redemption without interest thereon. No further action on the part of the holders of such shares shall be required.
(e) Unless full cumulative dividends on the Series A Preferred Stock for all past Dividend Periods that have ended
shall have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment, no shares of Series A Preferred Stock shall be redeemed unless all outstanding shares of Series A
Preferred Stock are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares of Series A Preferred Stock (except (i) by conversion into or exchange for Junior Stock, (ii) the purchase of
shares of Series A Preferred Stock pursuant to the Charter to the extent necessary to preserve the Corporation’s qualification as a REIT for federal income tax purposes or (iii) the purchase or other acquisition of shares of Series A Preferred Stock
pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred Stock).
22
(7) Redemption Upon
Special Redemption Event.
(a) In connection with a Special Redemption Event, the Corporation may, at its option, elect to redeem the Series A
Preferred Stock for cash at a redemption price per share equal to the Purchase Price plus an amount equal to all accrued and unpaid dividends thereon to, and including, the redemption date.
(b) If the funds necessary for the redemption of Series A Preferred Stock pursuant to this Section 7 have been set
apart by the Corporation for the benefit of the holders of any shares of Series A Preferred Stock to be redeemed, then, from and after the redemption date, dividends shall cease to accrue on such shares of Series A Preferred Stock, such shares of
Series A Preferred Stock shall be redeemed in accordance with the notice and shall no longer be deemed outstanding and all rights of the holders of such shares of Series A Preferred Stock shall terminate, except the right to receive the redemption
price payable upon such redemption without interest thereon. No further action on the part of the holders of such shares shall be required. Notwithstanding anything to the contrary set forth above, in the event of a redemption of shares of Series A
Preferred Stock pursuant to this Section 7 after a Dividend Record Date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares to be redeemed shall be payable on such
Dividend Payment Date to the holders of record at the close of business on such Dividend Record Date and shall not be payable as part of the redemption price for such shares.
(8) Conversion.
(a) Subject to and upon receipt of a notice of redemption from the Corporation that it intends to redeem the Series A
Preferred Stock pursuant to Section 6, a holder of any share or shares of Series A Preferred Stock shall have the right, at its option, to convert all or any portion of such holder’s outstanding Series A Preferred Stock (the “Conversion Right”),
subject to the conditions described below, into the number of fully paid and non-assessable shares of Common Stock as follows: each holder of Series A Preferred Stock shall be entitled to elect to receive in lieu of the Purchase Price plus all
accrued and unpaid dividends (the “Conversion Amount”), the number of shares of common stock equal to the Conversion Amount divided by $10.25. Such holder shall surrender to the Corporation such shares of Series A Preferred Stock to be converted in
accordance with the provisions in paragraph (b) of this Section 8.
(b) (i) To exercise the Conversion Right as set forth in Section 8(a), a holder of the Series A Preferred Stock must
surrender to the Corporation at its principal office or at the office of the transfer agent of the Corporation, as may be designated by the Board of Directors, the certificate or certificates for the shares of Series A Preferred Stock to be converted
accompanied by a written notice stating that the holder of Series A Preferred Stock elects to convert all or a specified whole number of those shares in accordance with this Section 8(b) and specifying the name or names in which the holder wishes the
certificate or certificates for the shares of Common Stock to be issued (“Conversion Notice”). Such Conversion Notice must be received by the Corporation no later than one Business Day prior to the redemption date to be effective. In case the
notice specifies that the shares of Common Stock are to be issued in a name or names other than that of the holder of Series A Preferred Stock, the notice shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of
Common Stock in that name or names. Other than those transfer taxes payable pursuant to the preceding sentence, the Corporation shall pay any documentary, stamp or similar issue or transfer taxes that may be payable in respect of any issuance or
delivery of shares of Common Stock upon conversion of the shares of Series A Preferred Stock.
23
(ii) As promptly as practicable after the surrender of the certificate or certificates for the shares of Series A
Preferred Stock in accordance with Section 8(b)(i), the receipt of the Conversion Notice and payment of all required transfer taxes, if any, or the demonstration to the Corporation’s satisfaction that those taxes have been paid, the Corporation shall
issue and shall deliver or cause to be issued and delivered to such holder, or to such other person on such holder’s written order, (a) the certificates representing the number of validly issued, fully paid and non-assessable full shares of Common
Stock to which the holder of the Series A Preferred Stock being converted, or the holder’s transferee, shall be entitled and (b) any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled in cash.
(iii) Each conversion shall be deemed to have been made at the close of business on the date of giving the notice and
of surrendering the certificate or certificates representing the shares of the Series A Preferred Stock to be converted (the “Conversion Date”) so that the rights of the holder thereof as to the Series A Preferred Stock being converted shall cease
except for the right to receive the number of fully paid and non-assessable shares of Common Stock at the Conversion Rate, and, if applicable, the person entitled to receive shares of Common Stock shall be treated for all purposes as having become
the record holder of those shares of Common Stock at that time.
(9) Repurchase.
(a) Upon the written request of a holder of shares of Series A Preferred Stock, the Corporation may, at the sole
discretion of the Board of Directors, repurchase the Series A Preferred Shares held by such stockholder as follows:
(i) Beginning on the day a holder acquires their shares of Series A Preferred Stock (the “Acquisition Date”) and
continuing for a one-year period, the purchase price for any shares repurchased pursuant to this Section 9(i) will be equal to 88% of the Purchase Price for the Series A Preferred Stock (or $22 per share);
(ii) Beginning on the first anniversary of the Acquisition Date and continuing for a one-year period, the purchase
price for any shares repurchased pursuant to this Section 9(ii) will be equal to 91% of the Purchase Price for the Series A Preferred Stock (or $22.75 per share);
(iii) Beginning on the second anniversary of the Acquisition Date and continuing for a one-year period, the purchase
price for any shares repurchased pursuant to this Section 9(iii) will be equal to 94% of the Purchase Price for the Series A Preferred Stock (or $23.50 per share);
(iv) Beginning on the third anniversary of the Acquisition Date and continuing for a one-year period, the purchase
price for any shares repurchased pursuant to this Section 9(iv) will be equal to 97% of the Purchase Price for the Series A Preferred Stock (or $24.25 per share); and
(v) Beginning on the fourth anniversary of the Acquisition Date and thereafter, the purchase price for any shares
repurchased pursuant to this Section 9(v) will be equal to 100% of the Purchase Price for the Series A Preferred Stock (or $25.00 per share).
24
(b) Notwithstanding the above and subject to the sole discretion of the Board of Directors, in the case of the death
or complete disability of a holder of Series A Preferred (but not for general redemption requests), for the period beginning on the second anniversary of the Acquisition Date and thereafter, the purchase price for any shares of Series A Preferred
Stock repurchased pursuant to this Section 9(b) will be equal to 100% of the Purchase Price for the Series A Preferred Stock (or $25.00 per share).
(c) Further, a holder of Series A Preferred Stock may request that any repurchase be funded with shares of Common
Stock pursuant to the terms of the Conversion Right. That is, if pursuant to the above, the holder requests repurchase, such repurchase may be paid, at the holder’s request, in shares of Common Stock at a price of $10.25 per share, subject to
availability of an exemption from registration under the Securities Act of 1933, as amended, or an effective registration statement.
(d) Notwithstanding the above, if at the time a holder requests repurchase pursuant to Section 9(a) the Corporation
is listed on a national securities exchange or an over-the-counter market as reported by OTC Markets Group, Inc. or another similar organization, the Corporation may, in its sole discretion, elect to pay such repurchase (i) in cash pursuant to
Section 9(a)(i)-(v) or (ii) in shares of Common Stock based on the volume weighted average price per share of Common Stock for the twenty (20) trading days prior to the repurchase date.
(10) Voting Rights.
(a) Holders of Series A Preferred Stock will not have any voting rights, except as set forth in this Section 10.
(b) So long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall not, without, in
addition to any other vote or consent of stockholders required by the Charter, the affirmative vote of the holders of at least a majority of the outstanding shares of Series A Preferred Stock: (i) authorize or create, or increase the authorized or
issued amount of, any class or series of shares of Shares expressly designated ranking senior to the Series A Preferred Stock with respect to payment of dividends or the distribution of assets upon voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, or reclassify any authorized shares of Shares into any such shares, or create, authorize or issue any obligations or security exchangeable or convertible into or evidencing the right to purchase any such
shares; or (ii) amend, alter or repeal the provisions of the Charter (including these terms of the Series A Preferred Stock), whether by merger, consolidation, transfer or conveyance of substantially all of the Corporation’s assets or otherwise, in
each case in such a way that would materially and adversely affect any right, preference, privilege or voting power of the Series A Preferred Stock (provided that if the amendment does not affect equally the rights, preferences, privileges or voting
powers of the Series A Preferred Stock, the consent of the holders of at least two-thirds of the outstanding shares of each such series so affected is required); provided, however, that with respect to the occurrence of a merger, consolidation,
transfer or conveyance of substantially all our assets, so long as (a) the Series A Preferred Stock remain outstanding with the terms thereof materially unchanged (taking into account that the Corporation may not be the surviving entity), or (b) the
holders of the Series A Preferred Stock receive equity securities with rights, preferences, privileges and voting powers substantially the same as those of the Series A Preferred Stock, then the occurrence of any such event shall not be deemed to
materially and adversely affect the rights, privileges or voting powers of the holders of the Series A Preferred Stock.
25
(11) Status of
Redeemed Series A Preferred Stock. All shares of Series A Preferred Stock redeemed or otherwise acquired in any manner by the Corporation shall be retired and shall be restored to the status of authorized but unissued Preferred Stock,
without designation as to class or series.
(12) Assignability.
The Corporation shall have the right, at any time, to assign the obligations of the Series A Preferred Stock to a separate corporation provided that such corporation becomes the successor in interest to the Corporation.
26
ANNEX B
SERIES B PREFERRED STOCK
(1) Designation and Number. A
series of Preferred Stock, designated as the “Series B Preferred Stock” (the “Series B Preferred Stock”), is hereby established. The par value of the Series B Preferred Stock is $0.0001 per share. The number of shares of Series B Preferred Stock is
2,000,000. The designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions, of the Series B Preferred Stock shall be subject in all cases to the provisions of
Article VII of the Charter regarding limitations on ownership and transfer of the Corporation’s equity securities.
(2) Definitions. For purposes of
the Series B Preferred Stock, the following terms shall have the respective meanings indicated below.
(a) Accrued Dividend. The term
“Accrued Dividend” shall have the meaning as provided in Section 4 herein.
(b) Accrued Dividend Payment Date.
The term “Accrued Dividend Payment Date” shall have the meaning as provided in Section 4 herein.
(c) Accrued Dividend Period. The
term “Accrued Dividend Period” shall mean the respective period commencing on and including the first day of each fiscal quarter of the Corporation following the fiscal quarter with respect to which the most recent Accrued Dividend Payment Date has
occurred and ending on and including the day preceding the first day of the next succeeding Accrued Dividend Period (other than the initial Accrued Dividend Period and the Accrued Dividend Period during which any shares of Series B Preferred Stock
shall be redeemed or otherwise acquired by the Corporation).
(d) Accrued Dividend Record Date.
The term “Accrued Dividend Record Date” shall have the meaning as provided in Section 4 herein.
(e) Accrued Preference Value.
The term “Accrued Preference Value” shall mean, for each outstanding share of Series B Preferred Stock, the sum of (i) $25.00 per share of Series B Preferred Stock plus (ii) an amount equal to the sum of any accrued and unpaid Current Dividends and
Accrued Dividends per Series B Preferred Share (whether or not authorized or declared) thereon to and including the date of payment of such amount, but without interest.
(f) Acquisition Date. The term
“Acquisition Date” shall have the meaning as provided in Section 9 herein.
(g) Business Day. The term
“Business Day” shall mean each day, other than a Saturday or Sunday, which is not a day on which banks in the State of Maryland are required to close.
(h) Common Dividend Threshold.
The term “Common Dividend Threshold” shall have the meaning as provided in Section 4 herein.
27
(i) Common Stock. The term
“Common Stock” shall mean the common stock, par value $0.0001 per share, of the Corporation.
(j) Conversion Amount. The term
“Conversion Amount” shall have the meaning as provided in Section 8 herein.
(k) Conversion Date. The term
“Conversion Date” shall have the meaning as provided in Section 8 herein.
(l) Conversion Notice. The term
“Conversion Notice” shall have the meaning as provided in Section 8 herein.
(m) Conversion Right. The term
“Conversion Right” shall have the meaning as provided in Section 8 herein.
(n) Coordinated Common Dividend.
The term “Coordinated Common Dividend” shall have the meaning as provided in Section 4 herein.
(o) Current Dividend. The term
“Current Dividend” shall have the meaning as provided in Section 4 herein.
(p) Current Dividend Payment Date.
The term “Current Dividend Payment Date” shall have the meaning as provided in Section 4 herein.
(q) Current Dividend Period. The
term “Current Dividend Period” shall mean the respective period commencing on and including the first day of each month and ending on and including the day preceding the first day of the next succeeding Current Dividend Period (other than the initial
Current Dividend Period and the Current Dividend Period during which any shares of Series B Preferred Stock shall be redeemed or otherwise acquired by the Corporation).
(r) Current Dividend Record Date.
The term “Current Dividend Record Date” shall have the meaning as provided in Section 4 herein.
(s) Dividend Payment Date. The
term “Dividend Payment Date” shall mean and include (i) each Current Dividend Payment Date with respect to the Current Dividend and (ii) each Accrued Dividend Payment Date with respect to the Accrued Dividend.
(t) Early Redemption Date. The
term “Early Redemption Date” shall have the meaning as provided in Section 6 herein.
(u) Early Redemption Period. The
term “Early Redemption Period” shall mean any time on or after January 1, 2025.
28
(v) Junior Stock. The term
“Junior Stock” shall have the meaning as provided in Section 3 herein.
(w) Last Reported Sale Price.
The term “Last Reported Sale Price” as applicable to the Common Stock, at any time that the Common Stock is listed on a national securities exchange or an over-the-counter market as reported by OTC Markets Group, Inc., shall mean the closing sale
price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the
principal U.S. national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “Last Reported Sale Price” shall
be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization.
(x) Liquidation Preference. The term “Liquidation Preference” shall mean (i) from the Acquisition Date of each share of Series B
Preferred Stock until the third anniversary of such date, the dollar value of the Accrued Preference Value per share as of the date such Liquidation Preference is calculated and (ii) from and after the third anniversary of the Acquisition Date
applicable to each share of Series B Preferred Stock, an amount equal to the greater of (A) the dollar value of the Accrued Preference Value per share as of the date such Liquidation Preference is calculated or (B) an amount equal to the dollar value
of the amount of Common Stock the holder of each such share of Series B Preferred Stock would be entitled to receive pursuant to the terms of Section 9(b) hereof, assuming that such holder had requested a conversion to Common Stock as of the
effective date of any liquidation, and ignoring (but solely for purposes of calculating such value) the subordinated priority of payments to any holder of such Common Stock prescribed by Section 5 hereof in the event of such a liquidation.
(y) Parity Stock. The term
“Parity Stock” shall have the meaning as provided in Section 3 herein.
(z) Senior Stock. The term
“Senior Stock” shall have the meaning as provided in Section 3 herein.
(aa) Series B Preferred Stock.
The term “Series B Preferred Stock” shall have the meaning as provided in Section 1 herein.
(bb) Special Redemption Event.
The term “Special Redemption Event” shall mean the date upon which the shares of Common Stock are listed for trading on a national securities exchange with at least three market makers or a New York Stock Exchange specialist.
(cc) Stated Value. The term
“Stated Value” shall be $25.00 per share.
(3) Ranking. The Series B
Preferred Stock shall, with respect to priority of payment of dividends and other distributions and rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation, rank: (a), except as set forth in these terms of the
Series B Preferred Stock, senior to all classes or series of Common Stock and to any other class or series of stock of the Corporation issued in the future, unless the terms of such stock expressly provide that it ranks senior to, or on parity with,
the Series B Preferred Stock with respect to priority of payment of dividends and other distributions or rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation (together with the Common Stock, the “Junior
Stock”); (b), except as set forth in these terms of the Series B Preferred Stock, on a parity with the Series A Preferred Stock and any class or series of stock of the Corporation, the terms of which expressly provide that it ranks on a parity with
the Series B Preferred Stock with respect to priority of payment of dividends and other distributions and rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation (the “Parity Stock”); and (c) junior to any class
or series of stock of the Corporation for which the terms of such stock expressly provide that it ranks senior to the Series B Preferred Stock with respect to priority of payment of dividends and other distributions or rights upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation (the “Senior Stock”).
29
(4) Dividends.
(a) Subject to the preferential rights of the holders of Senior Stock to the Series B Preferred Stock as to dividends, holders of the then
outstanding shares of Series B Preferred Stock shall be entitled to receive, when and as authorized by the Board of Directors and declared by the Corporation, out of funds legally available for the payment of dividends, cash dividends at the rate of
12.0% per annum of $25.00 per share, of which 3% is intended to be paid on the applicable Current Dividend Payment Date (the “Current Dividend,” equivalent to a fixed annual rate of $0.75 per share), and 9% shall accrue (the “Accrued Dividend,”
equivalent to a fixed annual rate of $2.25 per share) until the first date after December 31, 2022 on which the holders of Common Stock have received aggregate distributions equal to 10% per annum on the $7.38 per share NAV of the Common Stock as of
December 31, 2022 (the “Common Dividend Threshold”), and after the Common Dividend Threshold has been met the Accrued Dividend shall be payable from time to time, at the same time and in the same amounts per share with distributions paid to the
holders of Common Stock (with each such subsequent distribution that is made to holders of Common Stock after the Common Dividend Threshold has been met being referred to herein as a “Coordinated Common Dividend”). The Current Dividends on each
share of Series B Preferred Stock shall accrue and be cumulative from the first date on which such share of Series B Preferred Stock is issued or the end of the most recent Current Dividend Period for which dividends on the Series B Preferred Stock
(including such share) have been aggregated and paid in full, and the Accrued Dividend on each share of Series B Preferred Stock shall accrue and be cumulative from the first date on which such share of Series B Preferred Stock is issued or the end
of the most recent Accrued Dividend Period for which dividends on the Series B Preferred Stock (including such share) have been aggregated and paid in full. Current Dividends shall be payable quarterly in arrears on or before the fifteenth day of
the month following the last day of the applicable quarter, or, if not a Business Day, the next succeeding Business Day (each, a “Current Dividend Payment Date”). Current Dividends shall be payable to holders of record as they appear in the stock
records of the Corporation at the close of business on the applicable record date or dates, which shall be the 15th day of each calendar month, or such other date or dates designated by the Board of Directors (each, a “Current Dividend Record
Date”). Accrued Dividends shall be payable quarterly in arrears on the same date as a related Coordinated Common Dividend is paid to the holders of Common Stock (each, an “Accrued Dividend Payment Date”). Accrued Dividends shall be payable to
holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date or dates, which shall be the same record date as the record date established by the Board of Directors for the Coordinated
Common Dividend related to each such Accrued Dividend payment, or such other date or dates designated by the Board of Directors (each, an “Accrued Dividend Record Date”).
30
(b) No dividends on the Series B Preferred Stock shall be authorized by the Board of Directors or declared and paid or declared and set
apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that
such declaration, payment or setting apart for payment would constitute a breach thereof, or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.
(c) Notwithstanding the foregoing Section 4(b), dividends on the Series B Preferred Stock shall accrue whether or not the Corporation has
earnings, whether there are funds legally available for the payment of such dividends and whether or not such dividends are authorized by the Board of Directors or declared by the Corporation. No interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments on the Series B Preferred Stock which may be in arrears. When the Current Dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series B
Preferred Stock and the dividends on shares of any class or series of Parity Stock, all Current Dividends declared upon the Series B Preferred Stock and the dividends on any class or series of Parity Stock shall be declared pro rata so that the
amount of Current Dividends declared per share of Series B Preferred Stock and such class or series of Parity Stock shall in all cases bear to each other the same ratio that accumulated Current Dividends per share on the Series B Preferred Stock and
the accumulated dividends on such class or series of Parity Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Parity Stock does not have a cumulative dividend) bear to each other.
(d) Except as provided in the immediately preceding paragraph, unless full cumulative Current Dividends on the Series B Preferred Stock
have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment (for purposes of these terms of the Series B Preferred Stock, “set apart for payment” shall mean the
Corporation has determined it has sufficient cash available to pay such declared dividends) for all past Current Dividend Periods that have ended, no dividends (other than a dividend in shares of Junior Stock or in options, warrants or rights to
subscribe for or purchase any such shares of Junior Stock) shall be declared and paid or declared and set apart for payment nor shall any other distribution be declared and made upon the Junior Stock or the Parity Stock, nor shall any shares of
Junior Stock or Parity Stock be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except (i) by conversion into or
exchange for Junior Stock, (ii) the purchase of shares of Junior Stock or Parity Stock pursuant to the Charter to the extent necessary to preserve the Corporation’s qualification as a REIT for federal income tax purposes or (iii) the purchase or
other acquisition of shares of Parity Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series B Preferred Stock). Holders of shares of the Series B Preferred Stock shall not be entitled to
any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series B Preferred Stock as provided above. Any dividend payment made on shares of the Series B Preferred Stock shall first be credited against
the earliest accrued but unpaid Current Dividend due with respect to such shares which remains payable and pro rata, to the extent then payable, against the earliest accrued but unpaid Accrued Dividends then due with respect to such shares which have
become and remain payable. Accrued but unpaid dividends on the Series B Preferred Stock shall accrue as of the applicable Dividend Payment Date on which they first become payable.
31
(5) Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of
shares of Series B Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for distribution to its stockholders, after payment of or provision for the Corporation’s debts and other liabilities and subject to the
preferential rights of the holders of any class or series of stock of the Corporation ranking senior to the Series B Preferred Stock with respect to rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation, a
liquidation preference equal to the Liquidation Preference per share for the Series B Preferred Stock, before any distribution of assets is made to holders of Junior Stock. If the assets of the Corporation legally available for distribution to
stockholders are insufficient to pay in full the liquidation preference on the Series B Preferred Stock and the liquidation preference on the shares of any class or series of Parity Stock, all assets distributed to the holders of the Series B
Preferred Stock and any class or series of Parity Stock shall be distributed pro rata so that the amount of assets distributed per share of Series B Preferred Stock and such class or series of Parity Stock shall in all cases bear to each other the
same ratio that the liquidation preference per share on the Series B Preferred Stock and such class or series of Parity Stock bear to each other. After payment of the full amount of the liquidation distributions to which they are entitled, the
holders of Series B Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation. The consolidation or merger of the Corporation with or into another entity, a merger of another entity with or into the Corporation,
a statutory share exchange by the Corporation or a sale, lease, transfer or conveyance of all or substantially all of the Corporation’s property or business shall not be deemed to constitute a liquidation, dissolution or winding up of the
Corporation. In determining whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation) by dividend, redemption or other acquisition of shares of stock of the Corporation or otherwise is
permitted under the Maryland General Corporation Law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of holders of
the Series B Preferred Stock.
(6) Optional Redemption.
(a) The Corporation may, at its option during the Early Redemption Period applicable to each share of Series B Preferred Stock, redeem any
shares of Series B Preferred Stock to which such Early Redemption Period applies, in whole or from time to time in part, for cash at a redemption price per share equal to the Accrued Preference Value on the redemption date selected by the Corporation
for such purpose (the “Early Redemption Date”). Notwithstanding the foregoing, in the event of a redemption of shares of Series B Preferred Stock (i) after a Current Dividend Record Date and on or prior to the related Current Dividend Payment Date,
the dividend payable on such Current Dividend Payment Date in respect of such shares called for redemption shall be payable on such Current Dividend Payment Date to the holders of record at the close of business on such Current Dividend Record Date
and shall not be payable as part of the redemption price for such shares, and (ii) after an Accrued Dividend Record Date and on or prior to the related Accrued Dividend Payment Date, the dividend payable on such Accrued Dividend Payment Date in
respect of such shares called for redemption shall be payable on such Accrued Dividend Payment Date to the holders of record at the close of business on such Accrued Dividend Record Date and shall not be payable as part of the redemption price for
such shares. For the avoidance of doubt, the provisions of this Section 6 shall in no way modify or limit the terms of any purchase of shares of Series B Preferred Stock pursuant to the Corporation’s Charter to the extent necessary to preserve the
Corporation’s qualification as a REIT for federal income tax purposes.
32
(b) The Early Redemption Date shall be selected by the Corporation and shall be not less than 15 nor more than 60 days after the date on
which the Corporation sends notice of the redemption. Such notice shall be sent by first class mail, postage pre-paid, to each record holder of the Series B Preferred Stock at the respective mailing addresses of such holders as the same shall appear
on the stock transfer records of the Corporation and shall state: (i) the redemption date; (ii) the redemption price payable on the redemption date, including, without limitation, a statement as to whether or not accrued and unpaid dividends shall be
payable as part of the redemption price or payable on the next applicable Current Dividend Payment Date or Accrued Dividend Payment Date to the record holder at the close of business on the relevant Current Dividend Record Date or Accrued Dividend
Record Date as described above; and (iii) that dividends on the shares to be redeemed shall cease to accrue on such redemption date. If less than all of the shares of Series B Preferred Stock held by any holder are to be redeemed, the notice mailed
to such holder shall also specify the number of shares of Series B Preferred Stock held by such holder to be redeemed. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the
redemption of any shares of Series B Preferred Stock except as to the holder to whom notice was defective or not given.
(c) If fewer than all of the outstanding shares of Series B Preferred Stock are to be redeemed, the Corporation shall redeem those shares
pro rata unless the Board of Directors elects to provide the holders of such shares a “first come, first served” redemption option.
(d) If notice of redemption of any shares of Series B Preferred Stock has been given and if the funds necessary for such redemption have
been set apart by the Corporation for the benefit of the holders of any shares of Series B Preferred Stock so called for redemption, then, from and after the Early Redemption Date selected for such redemption, all dividends shall cease to accrue on
such shares of Series B Preferred Stock, such shares of Series B Preferred Stock shall be redeemed in accordance with the notice and shall no longer be deemed outstanding and all rights of the holders of such shares of Series B Preferred Stock shall
terminate, except the right to receive the redemption price payable upon such redemption without interest thereon. No further action on the part of the holders of such shares shall be required.
33
(e) Unless full cumulative Current Dividends on the Series B Preferred Stock for all past Dividend Periods that have ended shall have been
or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment, no shares of Series B Preferred Stock shall be redeemed unless all outstanding shares of Series B Preferred Stock
are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares of Series B Preferred Stock (except (i) by conversion into or exchange for Junior Stock, (ii) the purchase of shares of Series
B Preferred Stock pursuant to the Charter to the extent necessary to preserve the Corporation’s qualification as a REIT for federal income tax purposes or (iii) the purchase or other acquisition of shares of Series B Preferred Stock pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding shares of Series B Preferred Stock).
(7) Redemption Upon Special Redemption
Event.
(a) In connection with a Special Redemption Event, the Corporation may, at its option, elect to redeem the outstanding shares of Series B
Preferred Stock, in whole or from time to time in part, for cash at a redemption price per share equal to the Accrued Preference Value as of the redemption date, in accordance with the procedures set forth in Section 6(b) through Section 6(e) above.
For the avoidance of doubt, the provisions of this Section 7 shall in no way modify or limit the terms of any purchase of shares of Series B Preferred Stock pursuant to the Corporation’s Charter to the extent necessary to preserve the Corporation’s
qualification as a REIT for federal income tax purposes.
(b) If the funds necessary for the redemption of Series B Preferred Stock pursuant to this Section 7 have been set apart by the
Corporation for the benefit of the holders of any shares of Series B Preferred Stock to be redeemed, then, from and after the redemption date, all dividends shall cease to accrue on such shares of Series B Preferred Stock, such shares of Series B
Preferred Stock shall be redeemed in accordance with the notice and shall no longer be deemed outstanding and all rights of the holders of such shares of Series B Preferred Stock shall terminate, except the right to receive the redemption price
payable upon such redemption without interest thereon. No further action on the part of the holders of such shares shall be required. Notwithstanding anything to the contrary set forth above, (i) in the event of a redemption of shares of Series B
Preferred Stock pursuant to this Section 7 after a Current Dividend Record Date and on or prior to the related Current Dividend Payment Date, the dividend payable on such Current Dividend Payment Date in respect of such shares to be redeemed shall be
payable on such Current Dividend Payment Date to the holders of record at the close of business on such Current Dividend Record Date and shall not be payable as part of the redemption price for such shares and (ii) in the event of a redemption of
shares of Series B Preferred Stock pursuant to this Section 7 after an Accrued Dividend Record Date and on or prior to the related Accrued Dividend Payment Date, the dividend payable on such Accrued Dividend Payment Date in respect of such shares to
be redeemed shall be payable on such Accrued Dividend Payment Date to the holders of record at the close of business on such Accrued Dividend Record Date and shall not be payable as part of the redemption price for such shares.
34
(8) Conversion.
(a) Subject to and upon receipt of a notice of redemption from the Corporation that it intends to redeem shares of the Series B Preferred
Stock pursuant to Section 6 or Section 7, a holder of any share or shares of Series B Preferred Stock to be redeemed shall have the right, at its option, to convert all or any portion of such holder’s outstanding Series B Preferred Stock (the
“Conversion Right”), subject to the conditions described below, into the number of fully paid and non-assessable shares of Common Stock as follows: each holder of Series B Preferred Stock shall be entitled to elect to receive in lieu of the Accrued
Preference Value applicable to such shares (the “Conversion Amount”), the number of shares of Common Stock equal to the Conversion Amount divided by (i) the lower of $10.25 per share of Common Stock or the Board’s most recent estimated net asset
value per share of Common Stock, if the Common Stock is not then listed on a national securities exchange or an over-the-counter market as reported by OTC Markets Group, Inc. or another similar organization or (ii) if the Common Stock is then listed
on a national securities exchange or an over-the-counter market as reported by OTC Markets Group, Inc. or another similar organization, the lower of $10.25 per share of Common Stock or the volume weighted average of the Last Reported Sale Price per
share of Common Stock as reported on such market for the twenty (20) trading days prior to the Conversion Date (as defined below). Such holder shall surrender to the Corporation such shares of Series B Preferred Stock to be converted in accordance
with the provisions in paragraph (b) of this Section 8.
(b) (i) To exercise the Conversion Right as set forth in Section 8(a), a holder of the Series B Preferred Stock must provide to the
Corporation at its principal office or at the office of the transfer agent of the Corporation, as may be designated by the Board of Directors, a written notice stating that the holder of Series B Preferred Stock elects to convert all or a specified
whole number of those shares in accordance with this Section 8(b) and specifying the name or names in which the holder wishes the shares of Common Stock to be issued (“Conversion Notice”). Such Conversion Notice must be received by the Corporation
no later than one Business Day prior to the applicable Early Redemption Date to be effective. In case the notice specifies that the shares of Common Stock are to be issued in a name or names other than that of the holder of Series B Preferred Stock,
the notice shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of Common Stock in that name or names. Other than those transfer taxes payable pursuant to the preceding sentence, the Corporation shall pay any
documentary, stamp or similar issue or transfer taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of the shares of Series B Preferred Stock.
(ii) As promptly as practicable after the receipt of the Conversion Notice in accordance with Section 8(b)(i) and payment of all required
transfer taxes, if any, or the demonstration to the Corporation’s satisfaction that those taxes have been paid, the Corporation shall issue and shall deliver or cause to be issued and delivered to such holder, or to such other person on such holder’s
written order, (a) confirmation of the issuance of the number of validly issued, fully paid and non-assessable full shares of Common Stock to which the holder of the Series B Preferred Stock being converted, or the holder’s transferee, shall be
entitled and (b) cash in lieu of any fractional interest in respect of a share of Common Stock arising upon such conversion.
35
(iii) Each conversion shall be deemed to have been made at the close of business on the date of giving the Conversion Notice in accordance
with Section 8(b)(i) regarding the shares of the Series B Preferred Stock to be converted (the “Conversion Date”) so that the rights of the holder thereof as to the Series B Preferred Stock being converted shall cease except for the right to receive
the number of fully paid and non-assessable shares of Common Stock at the Conversion Rate, and, if applicable, the person entitled to receive shares of Common Stock shall be treated for all purposes as having become the record holder of those shares
of Common Stock at that time.
(9) Additional Repurchase and Conversion
Rights.
(a) Upon the written request of a holder of shares of Series B Preferred Stock, the Corporation may, at the sole discretion of the Board
of Directors, repurchase the Series B Preferred Shares held by such stockholder for cash as follows:
(i) Beginning on the day on which the Corporation issues each share of Series B Preferred Stock to the initial holder of such share (the
“Acquisition Date”) and until the third anniversary of the Acquisition Date, no repurchase requests will be considered by the Corporation; from and after the third anniversary of the Acquisition Date and continuing for a one-year period, the purchase
price for any shares repurchased pursuant to this Section 9(i) will be equal to 97% of the Accrued Preference Value for the Series B Preferred Stock; and
(ii) Beginning on the fourth anniversary of the Acquisition Date and thereafter, the purchase price for any shares repurchased pursuant to
this Section 9(ii) will be equal to 100% of the Accrued Preference Value for the Series B Preferred Stock.
(b) Further, a holder of Series B Preferred Stock (i) may request that any repurchase approved by the Board of Directors be funded with
shares of Common Stock pursuant to the terms of the Conversion Right and (ii) also shall have the right to require that its shares of Series B Preferred Stock be exchanged for Common Stock, in accordance with the timing and valuation criteria set
forth in paragraph (a) of this Section 9, in the event that the Board of Directors declines such a request for cash redemption. That is, if pursuant to either clause (i) or clause (ii) of the preceding sentence, the holder requests repurchase (or a
required conversion), such repurchase (or required conversion) may be paid at the holder’s request (in the case of clause (i)) or shall be paid (in the case of clause (ii)), in shares of Common Stock valued for such purpose (A) at the lower of a
price of $10.25 per share or at the Board’s most recent estimated net asset value per share of Common Stock, if the Common Stock is not then listed on a national securities exchange or an over-the-counter market as reported by OTC Markets Group, Inc.
or another similar organization, or (B) if the Common Stock is then listed on a national securities exchange or an over-the-counter market as reported by OTC Markets Group, Inc. or another similar organization, the lower of $10.25 per share of Common
Stock or the volume weighted average of the Last Reported Sale Price per share of Common Stock as reported on such market for the twenty (20) trading days prior to the repurchase date in either such case subject to availability of an exemption from
registration under the Securities Act of 1933, as amended, or an effective registration statement.
36
(c) If at the time a holder requests repurchase pursuant to Section 9(a) the Common Stock is listed on a national securities exchange or
an over-the-counter market as reported by OTC Markets Group, Inc. or another similar organization, the Corporation may, in its sole discretion, elect to pay such repurchase (i) in cash pursuant to Section 9(a)(i)-(ii) (but subject to a holder’s right
to request a repurchase funded with Common Stock pursuant to Section 9(b)(i)) or (ii) in shares of Common Stock based on the lower of $10.25 per share of Common Stock or the volume weighted average of the Last Reported Sale Price per share of Common
Stock as reported on such market for the twenty (20) trading days prior to the close of business on the date of receipt by the Corporation of the repurchase request, with the payment of Common Stock in consideration for such repurchase to be
completed in accordance with the procedures set forth in Section 8(b) above. For the avoidance of doubt, this Section 9(c) shall in no way limit the right of a holder of Series B Preferred Stock to require the Corporation to exchange such holder’s
shares of Series B Preferred Stock for shares of Common Stock in accordance with Section 9(b)(ii) in the event that the Board of Directors declines such holder’s request for cash redemption of shares of Series B Preferred Stock.
(10) Voting Rights.
(a) Holders of Series B Preferred Stock will not have any voting rights, except as set forth in this Section 10.
(b) So long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without, in addition to any other
vote or consent of stockholders required by the Charter, the affirmative vote of the holders of at least a majority of the outstanding shares of Series B Preferred Stock: (i) authorize or create, or increase the authorized or issued amount of, any
class or series of shares of Shares (other than the shares of Series A Preferred Stock and any other class or series of stock of the Corporation, the terms of which expressly provide that it ranks on a parity with the Series A Preferred Stock with
respect to priority of payment of dividends and other distributions and rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation) expressly designated ranking senior to the Series B Preferred Stock with respect
to payment of dividends or the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, or reclassify any authorized shares of Shares into any such shares, or create, authorize or
issue any obligations or security exchangeable or convertible into or evidencing the right to purchase any such shares; or (ii) amend, alter or repeal the provisions of the Charter (including these terms of the Series B Preferred Stock), whether by
merger, consolidation, transfer or conveyance of substantially all of the Corporation’s assets or otherwise, in each case in such a way that would materially and adversely affect any right, preference, privilege or voting power of the Series B
Preferred Stock provided, however, that with respect to the occurrence of a merger, consolidation, transfer or conveyance of substantially all our assets, so long as (a) the Series B Preferred Stock remains outstanding with the terms thereof
materially unchanged (taking into account that the Corporation may not be the surviving entity), or (b) the holders of the Series B Preferred Stock receive equity securities with rights, preferences, privileges and voting powers substantially the
same as those of the Series B Preferred Stock, then the occurrence of any such event shall not be deemed to materially and adversely affect the rights, privileges or voting powers of the holders of the Series B Preferred Stock. The holders of Series
B Preferred Stock shall have exclusive voting rights on any Charter amendment that would alter the contract rights, as expressly set forth in the Charter, of only the Series B Preferred Stock.
37
(11) Status of Redeemed Series B
Preferred Stock. All shares of Series B Preferred Stock redeemed or otherwise acquired in any manner by the Corporation shall be retired and shall be restored to the status of authorized but unissued Preferred Stock, without designation as
to class or series.
(12) Assignability. The
Corporation shall have the right, at any time, to assign the obligations of the Series B Preferred Stock to a separate corporation provided that such corporation becomes the successor in interest to the Corporation.
38
MACKENZIE REALTY CAPITAL, INC.
THIRD AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of
the Corporation in the State of Maryland shall be located at such place as the Board of Directors may from time to time designate.
Section 2. ADDITIONAL OFFICES. The Corporation may
have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall
be held at the principal executive office of the Corporation or at such other place as shall be set in accordance with these Bylaws and stated in the notice of the meeting. The Board of Directors may determine that a meeting not be held at any
place, but instead may be held partially or solely by means of remote communication. In accordance with these Bylaws and subject to any guidelines and procedures adopted by the Board of Directors, stockholders and proxy holders may participate in
any meeting of stockholders held by means of remote communication and may vote at such meeting as permitted by Maryland law. Participation in a meeting by these means constitutes presence in person at the meeting.
Section 2. ANNUAL MEETING. An annual meeting of
stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time and place set by the Board of Directors.
Section 3. SPECIAL MEETINGS.
(a) General. Each of the chair of the board, chief executive
officer, president and Board of Directors may call a special meeting of stockholders. Except as provided in subsection (b)(4) of this Section 3, a special meeting of stockholders shall be held on the date and at the time and place set by the chair
of the board, chief executive officer, president or Board of Directors, whoever has called the meeting. Subject to subsection (b) of this Section 3, a special meeting of stockholders shall also be called by the secretary of the Corporation to act
on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting (the “Special Meeting
Percentage”).
1
(b) Stockholder-Requested Special Meetings. (1) Any
stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a
record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed
by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set
forth all information relating to each such stockholder, each individual whom the stockholder proposes to nominate for election or reelection as a director and each matter proposed to be acted on at the meeting that would be required to be
disclosed in connection with the solicitation of proxies for the election of directors or the election of each such individual, as applicable, in an election contest (even if an election contest is not involved), or would otherwise be required in
connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”). Upon
receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing
the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the
Request Record Date shall be the close of business on the tenth day after the first date on which a Record Date Request Notice is received by the secretary.
(2) In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one
or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not
less than the Special Meeting Percentage shall be delivered to the secretary. In addition, the Special Meeting Request shall (i) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those
lawful matters set forth in the Record Date Request Notice received by the secretary), (ii) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (iii) set forth (A) the name and address, as they
appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (B) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of
record) by each such stockholder and (C) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by such stockholder, (iv) be sent to the secretary by registered mail, return receipt requested,
and (v) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation of the Special Meeting Request) may revoke such stockholder’s request
for a special meeting at any time by written revocation delivered to the secretary.
(3) The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and mailing or delivering the notice of the
meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by paragraph (2) of this
Section 3(b), the secretary receives on behalf of the Corporation payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.
2
(4) In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder-Requested Meeting”), such meeting
shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any
Stockholder-Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further
that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such
meeting shall be held at 2:00 p.m., local time, on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that if the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten days after the Delivery Date, then such
meeting shall be held at the principal executive office of the Corporation. In fixing a date for a Stockholder-Requested Meeting, the Board of Directors may consider such factors as it deems relevant, including, without limitation, the nature of
the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder-Requested Meeting, if the Board
of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may
revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of paragraph (3) of this Section 3(b).
(5) If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or
their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting on the matter to the secretary: (i) if the notice of
meeting has not already been delivered, the secretary shall refrain from delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special
meeting on the matter, or (ii) if the notice of meeting has been delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a
request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting or for the chair of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of
the meeting at any time before ten days before the commencement of the meeting or (B) the chair of the meeting may call the meeting to order and adjourn the meeting without acting on the matter. Any request for a special meeting received after a
revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.
3
(6) The chair of the board, chief executive officer, president or Board of Directors may appoint regionally or nationally recognized independent
inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the
inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been received by the secretary until the earlier of (i) five Business Days after actual receipt by the secretary of such purported request and (ii)
such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage.
Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period,
or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).
(7) For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the
State of California are authorized or obligated by law or executive order to close.
Section 4. NOTICE. Not less than ten nor more than 90
days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic
transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by
leaving it at the stockholder’s residence or usual place of business, by electronic transmission or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed
to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an
electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The Corporation may give a single notice to all stockholders who share an address, which single notice shall be
effective as to any stockholder at such address, unless such stockholder objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any
irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.
Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of
stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated
in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 11(c)(4) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time
and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this Section 4.
4
Section 5. ORGANIZATION AND CONDUCT. Every meeting of
stockholders shall be conducted by an individual appointed by the Board of Directors to be chair of the meeting or, in the absence of such appointment or appointed individual, by the chair of the board or, in the case of a vacancy in the office or
absence of the chair of the board, by one of the following individuals present at the meeting in the following order: the lead independent director, if there is one, the chief executive officer, the president, the vice presidents in their order of
rank and, within each rank, in their order of seniority, the secretary, or, in the absence of such officers, a chair chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The
secretary or, in the case of a vacancy in the office or absence of the secretary, an assistant secretary or an individual appointed by the Board of Directors or the chair of the meeting shall act as secretary. In the event that the secretary
presides at a meeting of stockholders, an assistant secretary, or, in the absence of all assistant secretaries, an individual appointed by the Board of Directors or the chair of the meeting, shall record the minutes of the meeting. Even if present
at the meeting, the person holding the office named herein may delegate to another person the power to act as chair or secretary of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be
determined by the chair of the meeting. The chair of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chair and without any action by the stockholders, are appropriate for the
proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance or participation at the meeting to stockholders of record of the Corporation, their
duly authorized proxies and such other individuals as the chair of the meeting may determine; (c) recognizing speakers at the meeting and determining when and for how long speakers and any individual speaker may address the meeting; (d) determining
when and for how long the polls should be opened and when the polls should be closed and when announcement of the results should be made; (e) maintaining order and security at the meeting; (f) removing any stockholder or any other individual who
refuses to comply with meeting procedures, rules or guidelines as set forth by the chair of the meeting; (g) concluding a meeting or recessing or adjourning the meeting, whether or not a quorum is present, to a later date and time and at a place
either (i) announced at the meeting or (ii) provided at a future time through means announced at the meeting; and (h) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chair
of the meeting, meetings of stockholders shall not be required to be held in accordance with any rules of parliamentary procedure.
Section 6. QUORUM. At any meeting of stockholders,
the presence in person or by proxy of stockholders entitled to cast one-third of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum, except with respect to any matter which, under applicable statutes,
regulatory requirements or the charter of the Corporation (the “Charter”), requires approval by a separate vote of one or more series or classes of stock, in which case the presence in person or by proxy of the holders of shares entitled to cast
one-third of the votes entitled to be cast by holders of shares of each series or class entitled to vote as a series or class on the matter shall constitute a quorum. This section shall not affect any requirement under any statute or the Charter
for the vote necessary for the approval of any matter. If such quorum is not established at any meeting of the stockholders, the chair of the meeting may 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. The date, time and place of the meeting, as reconvened, shall be either (a) announced at the meeting or (b) provided at a future time through means announced at the meeting.
5
The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum
has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum.
Section 7. 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. Each share entitles the holder thereof to vote for as many individuals as there are directors to be elected and for whose election
the holder is entitled to vote. 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, by the Charter. Unless otherwise provided by statute or by the Charter, each outstanding share of stock, regardless of class, entitles the holder thereof to cast one vote on each matter submitted
to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chair of the meeting shall order
that voting be by ballot or otherwise.
Section 8. PROXIES. A holder of record of shares of
stock of the Corporation may cast votes in person or by proxy that is (a) executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by applicable law, (b) compliant with Maryland law and these Bylaws and (c)
filed in accordance with the procedures established by the Corporation. Such proxy or evidence of authorization of such proxy shall be filed with the record of the proceedings of the meeting. No proxy shall be valid more than eleven months after
its date unless otherwise provided in the proxy.
Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other
than white, which shall be reserved for the exclusive use by the Board of Directors.
Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, limited liability company, partnership, joint venture, trust or other entity, if entitled to be
voted, may be voted by the president or a vice president, managing member, manager, general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to
vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person
may vote such stock. Any trustee or fiduciary, in such capacity, may vote stock registered in such trustee’s or fiduciary’s name, either in person or by proxy.
6
Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not
be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of
outstanding shares at any given time.
The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the
Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the
purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date 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 appropriate. On receipt by the secretary of the Corporation of such certification, the person specified in the
certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.
Section 10. INSPECTORS. The Board of Directors or the
chair of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor to the inspector. Except as otherwise provided by the chair of the meeting, the inspectors, if any, shall (a) determine the number
of shares of stock represented at the meeting, in person or by proxy, and the validity and effect of proxies, (b) receive and tabulate all votes, ballots or consents, (c) report such tabulation to the chair of the meeting, (d) hear and determine
all challenges and questions arising in connection with the right to vote, and (e) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by the inspector or by a majority of them if
there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the
meeting and the results of the voting shall be prima facie evidence thereof.
Section 11. ADVANCE NOTICE OF
STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.
(a) Annual Meetings of Stockholders. (1) Nominations of
individuals for election to the Board of Directors and proposals of other business to be considered at an annual meeting of stockholders by the stockholders may only be made (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the
direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record at the record date set by the Board of Directors for the purpose of determining stockholders entitled to vote at the annual meeting,
at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting (and any postponement or adjournment thereof), who is entitled to vote at the meeting in the election of each individual
so nominated or on any such other business and who has complied with this Section 11(a).
7
(2) For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph
(a)(1) of this Section 11, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and any such other business must otherwise be a proper matter for action by the stockholders. To be timely, a
stockholder’s notice shall set forth all information and representations required under this Section 11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later
than 5:00 p.m., Pacific Time, on the 120th day prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(4) of this Article II) for the preceding year’s annual meeting; provided, however, that in the
event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in order for notice by the stockholder to be timely, such notice must be so
delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Pacific Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or
the tenth day following the day on which public announcement of the date of such meeting is first made. The postponement or adjournment of an annual meeting (or the public announcement thereof) shall not commence a new time period (or extend any
time period) for the giving of a stockholder’s notice as described above.
(3) Such stockholder’s notice shall set forth:
(i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all
information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not
involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act;
(ii) as to any other business that the stockholder proposes to bring before the meeting, (A) a description of such business (including the text of any
proposal), the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any
anticipated benefit to the stockholder or the Stockholder Associated Person therefrom and (B) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in
connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Regulation 14A (or any successor provision) of the Exchange Act;
(iii) as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,
(A) the class, series and number of all shares of stock or other securities of the Corporation (collectively, the “Company Securities”), if any,
which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest
(including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,
8
(B) the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or
Stockholder Associated Person, and
(C) whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers,
nominees or otherwise), is subject to or during the previous six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short
interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (I) manage risk or benefit of changes in the price of (x) Company Securities or (y) any security of any entity that was listed in the Peer Group in the Stock Performance Graph in the most recent annual report to security holders of the Corporation (a “Peer Group
Company”) for such stockholder, Proposed Nominee or Stockholder Associated Person or (II) increase or decrease the voting power of such
stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation (or, as applicable, in any Peer Group Company)
disproportionately to such person’s economic interest in the Company Securities (or, as applicable, in any Peer Group Company);and
(D) any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual
relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation, other than an interest arising from the ownership of Company Securities where such
stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other
holders of the same class or series;
(iv) as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of
this paragraph (3) of this Section 11(a) and any Proposed Nominee,
(A) the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and address, if different, of each such Stockholder Associated Person and any Proposed Nominee and
(B) the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person that is not an individual and a
copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person;
9
(v) the name and address of any person who contacted or was contacted by the stockholder giving the notice or any Stockholder Associated Person about
the Proposed Nominee or other business proposal;
(vi) to the extent known by the stockholder giving the notice, the name and address of any other person financially supporting the nominee for
election or reelection as a director or the proposal of other business;
(vii) if the stockholder is proposing one or more
Proposed Nominees, a representation that such stockholder, Proposed Nominee or Stockholder Associated Person intends or is part of a group which intends to solicit the holders of shares representing at least 67% of the voting power of shares
entitled to vote on the election of directors in support of Proposed Nominees in accordance with Rule 14a-19 of the Exchange Act; and
(viii) all other information regarding the stockholder giving the notice and each Stockholder Associated Person that would be required to be disclosed
by the stockholder in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each
case pursuant to Regulation 14A (or any successor provision) under the Exchange Act.
(4) Such stockholder’s notice shall, with respect to
any Proposed Nominee, be accompanied by a:
(i) written representation executed by the Proposed Nominee:
(A) that such Proposed Nominee (I) is not, and will not become, a party to any agreement, arrangement or
understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation, (II) consents to be named in a proxy statement as a nominee, (III) consents to serve
as a director of the Corporation if elected, (IV) will notify the Corporation simultaneously with the notification to the stockholder of the Proposed Nominee’s actual or potential unwillingness or inability to serve as a director and (V) does not
need any permission or consent from any third party to serve as a director of the Corporation, if elected, that has not been obtained, including any employer or any other board or governing body on which such Proposed Nominee serves;
(B) attaching copies of any and all requisite permissions or consents; and
(C) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation,
upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as
a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act, or
would be required pursuant to the rules of any national securities exchange on which any securities of the Corporation are listed or over-the-counter market on which any securities of the Corporation are traded); and
10
(ii)
written representation executed by the stockholder that such stockholder will:
(A) comply with Rule 14a-19 promulgated under the Exchange Act in connection with such stockholder’s solicitation of
proxies in support of any Proposed Nominee;
(B) notify the Corporation as promptly as practicable of any determination by the stockholder to no longer solicit
proxies for the election of any Proposed Nominee as a director at the annual meeting;
(C)
furnish such other or additional information as the Corporation may request for the purpose of determining whether the requirements of this Section 11 have been complied with and of evaluating any nomination or other business described in the
stockholder’s notice; and
(D) appear in person or by proxy at the meeting to nominate any Proposed Nominees or to bring such business before
the meeting, as applicable, and acknowledges that if the stockholder does not so appear in person or by proxy at the meeting to nominate such Proposed Nominees or bring such business before the meeting, as applicable, the Corporation need not bring
such Proposed Nominee or such business for a vote at such meeting and any proxies or votes cast in favor of the election of any such Proposed Nominee or of any proposal related to such other business need not be counted or considered.
(5) Notwithstanding anything in this subsection (a)
of this Section 11 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of
the proxy statement (as defined in Section 11(c)(4) of this Article II) for the preceding year’s annual meeting, a stockholder’s notice required by clause (iii) of paragraph (a)(1) of this Section 11 shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Pacific Time, on the tenth day following the day on which
such public announcement is first made by the Corporation.
(6) For purposes of this Section 11, “Stockholder Associated Person” of any stockholder shall mean (i) any person who is a member, with such
stockholder, of any “group,” as that term is used for purposes of Section 13(d)(3) of the Exchange Act or who is otherwise a participant (as defined in Instruction 3 to Item 4 of Schedule 14A under the Exchange Act) in the solicitation, (ii) any
beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such stockholder.
11
(b) Special Meetings of Stockholders. Only such business shall
be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. No stockholder may make a proposal of other business to be considered at a special meeting or, except
as contemplated by and in accordance with the next two sentences of this Section 11(b), nominate an individual for election to the Board of Directors at a special meeting. Nominations of individuals for election to the Board of Directors may be
made at a special meeting of stockholders at which directors are to be elected only (1) by or at the direction of the Board of Directors or (2) provided
that the special meeting has been called in accordance with Section 3(a) of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record at the record date set by the Board of Directors
for the purpose of determining stockholders entitled to vote at the special meeting, at the time of giving of notice provided for in this Section 11 and at the time of the special meeting (and any postponement or adjournment thereof), who is
entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of
electing one or more individuals to the Board of Directors, any stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice,
containing the information and representations required by paragraphs (a)(3) and (4) of this Section 11, is delivered to the secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such
special meeting and not later than 5:00 p.m., Pacific Time, on the later of the 90th day prior to such special meeting or the tenth
day following the day on which public announcement is first made of the date of the special meeting. The postponement or adjournment of a special meeting (or public announcement thereof) shall not commence a new time period (or extend any time
period) for the giving of a stockholder’s notice as described above.
(c) General. (1) If any information or representation
submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders, including any information or representation from a Proposed Nominee, shall be
inaccurate in any material respect, such information or representation may be deemed not to have been provided in accordance with this Section 11. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business
Days of becoming aware of such inaccuracy or change) in any such information or representation. Upon written request by the secretary or the Board of Directors, any such stockholder or Proposed Nominee shall provide, within five Business Days of
delivery of such request (or such other period as may be specified in such request), (i) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of
any information submitted by the stockholder pursuant to this Section 11, (ii) a written update of any information (including, if requested by the Corporation, written confirmation by such stockholder that it continues to intend to bring such
nomination or other business proposal before the meeting and, if applicable, satisfy the requirements of Rule 14a-19(a)(3)) submitted by the stockholder pursuant to this Section 11 as of an earlier date and (iii) an updated representation by each
Proposed Nominee that such individual will serve as a director of the Corporation if elected. If a stockholder or Proposed Nominee fails to provide such written verification, update or representation within such period, the information as to which
such written verification, update or representation was requested may be deemed not to have been provided in accordance with this Section 11.
12
(2) Only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only
such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. A stockholder proposing a Proposed Nominee shall have no right to (i) nominate a number of Proposed
Nominees that exceed the number of directors to be elected at the meeting or (ii) substitute or replace any Proposed Nominee unless such substitute or replacement is nominated in accordance with this Section 11 (including the timely provision of
all information and representations with respect to such substitute or replacement Proposed Nominee in accordance with the deadlines set forth in this Section 11). If the Corporation provides notice to a stockholder that the number of Proposed
Nominees proposed by such stockholder exceeds the number of directors to be elected at a meeting, the stockholder must provide written notice to the Corporation within five Business Days stating the names of the Proposed Nominees that have been
withdrawn so that the number of Proposed Nominees proposed by such stockholder no longer exceeds the number of directors to be elected at a meeting. If any individual who is nominated in accordance with this Section 11 becomes unwilling or unable
to serve on the Board of Directors, then the nomination with respect to such individual shall no longer be valid and no votes may validly be cast for such individual. The chair of the meeting shall have the power to determine whether a nomination
or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11.
(3) Notwithstanding the foregoing provisions of this Section 11, the Corporation shall disregard any proxy authority granted in favor of, or votes
for, director nominees other than the Corporation’s nominees if the stockholder or Stockholder Associated Person (each, a “Soliciting Stockholder”) soliciting proxies in support of such director nominees abandons the solicitation or does not (i)
comply with Rule 14a-19 promulgated under the Exchange Act, including any failure by the Soliciting Stockholder to (A) provide the Corporation with any notices required thereunder in a timely manner or (B) comply with the requirements of Rule
14a-19(a)(2) and Rule 14a-19(a)(3) promulgated under the Exchange Act or (ii) timely provide sufficient evidence in the determination of the Board of Directors sufficient to satisfy the Corporation that such Soliciting Stockholder has met the
requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act in accordance with the following sentence. Upon request by the Corporation, such Soliciting Stockholder shall deliver to the Corporation, no later than five Business Days prior to
the applicable meeting, sufficient evidence in the judgment of the Board of Directors that it has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act.
(4) For purposes of this Section 11, “the date of the proxy statement” shall have the same meaning as “the date of the company’s proxy statement
released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities and Exchange Commission from time to time. “Public announcement” shall mean disclosure (i) in a press release reported by the
Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.
13
(5) Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of state law and of
the Exchange Act with respect to the matters set forth in this Section 11. Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the Corporation to omit a proposal
from, any proxy statement filed by the Corporation with the Securities and Exchange Commission pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 11 shall require disclosure of revocable proxies
received by, or routine solicitation contacts made by or on behalf of, the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of a definitive proxy statement on Schedule 14A by such stockholder or
Stockholder Associated Person.
(6) Notwithstanding anything in these Bylaws to the contrary, except as otherwise determined by the chair of the meeting, if the stockholder giving
notice as provided for in this Section 11 does not appear in person or by proxy at such annual or special meeting to present each nominee for election as a director or the proposed business, as applicable, such matter shall not be considered at the
meeting.
Section 12. CONTROL SHARE ACQUISITION ACT.
Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the “MGCL”), shall not apply to any acquisition by any person of shares of stock of the
Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent
control share acquisition.
Section 13. STOCKHOLDERS’ CONSENT IN LIEU OF MEETING.
Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting (a) if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on
the matter and filed with the minutes of proceedings of the stockholders or (b) if the action is advised, and submitted to the stockholders for approval, by the Board of Directors and a consent in writing or by electronic transmission 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 meeting of stockholders at which all stockholders entitled to vote on the matter are present and all eligible
shares are voted is delivered to the Corporation in accordance with the MGCL. The Corporation shall give notice of any action taken by less than unanimous consent to each stockholder not later than ten days after the effective time of such action.
14
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs
of the Corporation shall be managed under the direction of the Board of Directors.
Section 2. NUMBER, TENURE AND RESIGNATION. A majority
of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the MGCL, nor more than 15, and further provided that the tenure
of office of a director shall not be affected by any decrease in the number of directors. Any director of the Corporation may resign at any time by delivering a resignation to the Board of Directors, the chair of the board or the secretary. Any
resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual
meeting of the Board of Directors may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and
place of regular meetings of the Board of Directors without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the
Board of Directors may be called by or at the request of the chair of the board, the chief executive officer, the president or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of
Directors may fix the time and place of any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place of special meetings of the Board of Directors without other notice than
such resolution.
Section 5. NOTICE. Notice of any special meeting of
the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, courier or United States mail to each director at such director’s business or residence address. Notice by personal delivery, telephone,
electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the
meeting. Telephone notice shall be deemed to be given when the director or such director’s agent is personally given such notice in a telephone call to which the director or such director’s agent is a party. Electronic mail notice shall be deemed
to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given
to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid.
Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be
stated in the notice, unless specifically required by statute or these Bylaws.
15
Section 6. QUORUM. A majority of the 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 is present at such 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 applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a specified group of directors is required for action, a quorum must also include a
majority or such other percentage of such group.
The directors present at a meeting which has been duly called and at which a quorum has been established may continue
to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.
Section 7. 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 proportion is required for such action by applicable law, the Charter or these Bylaws. If enough
directors have withdrawn from a meeting to leave fewer than required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the
action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.
Section 8. ORGANIZATION. At each meeting of the Board
of Directors, the chair of the board or, in the absence of the chair, the chief executive officer shall act as chair of the meeting. Even if present at the meeting, such director may designate another director to act as chair of the meeting. In
the absence of both the chair of the board and chief executive officer, the lead independent director, if one, or, in the absence of all such individuals, the president or, in the absence of the president, a director chosen by a majority of the
directors present, shall act as chair of the meeting. The secretary or, in the secretary’s absence, an assistant secretary of the Corporation, or, in the absence of the secretary and all assistant secretaries, an individual appointed by the chair
of the meeting, shall act as secretary of the meeting.
Section 9. MEETINGS BY REMOTE COMMUNICATION. Directors
may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence
in person at the meeting.
Section 10. CONSENT BY DIRECTORS WITHOUT A MEETING.
Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of
proceedings of the Board of Directors.
16
Section 11. VACANCIES. If for any reason any or all of
the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Any vacancy on the Board of Directors for any cause other than an increase in the number
of directors may be filled by a majority of the remaining directors, even if such majority is less than a quorum. Any vacancy in the number of directors created by an increase in the number of directors may be filled by a majority of the entire
Board of Directors. Any individual so elected as director shall serve until the next annual meeting of stockholders and until such director’s successor is duly elected and qualifies.
Section 12. COMPENSATION. Directors shall not receive
any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for
any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their
expenses, if any, in connection with each property visit and any other service or activity they perform or engage in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 13. RELIANCE. Each director and officer of the
Corporation shall, in the performance of such director’s or officer’s duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any 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, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated
authority, if the director reasonably believes the committee to merit confidence.
Section 14. RATIFICATION. The Board of Directors or
the stockholders may ratify any act, omission, failure to act or determination made not to act (an “Act”) by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the Act and,
if so ratified, such Act shall have the same force and effect as if originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders. Any Act questioned in any proceeding on the ground of lack of
authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting or otherwise, may be ratified, before or after
judgment, by the Board of Directors or by the stockholders, and such ratification shall constitute a bar to any claim or execution of any judgment in respect of such questioned Act.
Section 15. CERTAIN RIGHTS OF DIRECTORS AND OFFICERS.
Any director or officer, in such director’s or officer’s 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, in addition
to or in competition with those of or relating to the Corporation.
17
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The
Board of Directors may appoint from among its members an Audit Committee, a Nominating Committee and one or more other committees, composed of
one or more directors, to serve at the pleasure of the Board of Directors. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act
in the place of such absent member.
Section 2. POWERS. The Board of Directors may
delegate to any committee appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law. Except as may be otherwise provided by the Board of Directors, any committee may delegate some or all of
its power and authority to one or more subcommittees, composed of one or more directors, as the committee deems appropriate in its sole discretion.
Section 3. MEETINGS. Notice of committee meetings
shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a
majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors, or in the absence of such designation, the applicable committee, may designate a chair of any committee, and such chair or, in the
absence of a chair, any two members of any committee (if there are at least two members of the committee) may fix the time and place of its meeting unless the Board shall otherwise provide.
Section 4. MEETINGS BY REMOTE COMMUNICATION. Members
of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting
by these means shall constitute presence in person at the meeting.
Section 5. CONSENT BY COMMITTEES WITHOUT A MEETING.
Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and
is filed with the minutes of proceedings of such committee.
Section 6. CHANGES. Subject to the provisions hereof,
the Board of Directors shall have the power at any time to change the membership of any committee, to appoint the chair of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member, to
dissolve any such committee or to withdraw or add to any powers previously delegated to a committee.
18
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the
Corporation shall include a president, a secretary and a treasurer and may include a chair of the board, a vice chair of the board, a chief
executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such
other officers with such powers and duties as it shall deem necessary or appropriate. The officers of the Corporation shall be elected by the Board of Directors, except that the chief executive officer or president may from time to time appoint
one or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until such officer’s successor is elected and qualifies or until such officer’s death, resignation or removal in the manner
hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or
agent of the Corporation may be removed, with or without cause, by the Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time
by delivering a resignation to the Board of Directors, the chair of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the
resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.
Section 3. VACANCIES. A vacancy in any office may be
filled by the Board of Directors for the balance of the term.
Section 4. CHAIR OF THE BOARD. The Board of Directors
may designate from among its members a chair of the board, who shall not, solely by reason of these Bylaws, be an officer of the Corporation. The Board of
Directors may designate the chair of the board as an executive or non-executive chair. The chair of the board shall preside over the meetings of the Board of Directors. The chair of the board shall perform such other duties as may be assigned to
the chair of the board by these Bylaws or the Board of Directors.
Section 5. CHIEF EXECUTIVE OFFICER. The Board of
Directors may designate a chief executive officer. In the absence of such designation, the chair of the board shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for
implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. The chief executive officer may execute any deed, mortgage, bond, contract or other
instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general
shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.
19
Section 6. CHIEF OPERATING OFFICER. The Board of
Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.
Section 7. CHIEF FINANCIAL OFFICER. The Board of
Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.
Section 8. PRESIDENT. In the absence of a chief
executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief
operating officer. The president may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.
Section 9. VICE PRESIDENTS. In the absence of the
president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then
in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be
assigned to such vice president by the chief executive officer, the president or the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president, senior vice president, or vice president for
particular areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep
the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these
Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general
charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to the secretary by the chief executive officer, the president or the Board of Directors.
Section 11. TREASURER. The treasurer shall have the
custody of the funds and securities of the Corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, shall deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of Directors and in general perform such other duties as from time to time may be assigned to the treasurer by the chief executive officer, the president or the Board of
Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.
20
The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all the transactions as treasurer and of the financial condition
of the Corporation.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chief executive officer, the president or the Board of Directors.
Section 13. COMPENSATION. The compensation of the
officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that such officer is also a director.
ARTICLE VI
CONTRACTS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors or any manager of the Corporation approved by the Board of Directors and acting within the scope of its authority pursuant to a management or advisory agreement with the
Corporation may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any
agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the Board of Directors or a manager or adviser acting within the scope of its authority pursuant to a
management or advisory agreement and executed by the chief executive officer, the president or any other person authorized by the Board of Directors or such a manager or adviser.
Section 2. CHECKS AND DRAFTS. All checks, drafts or
other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board
of Directors.
Section 3. DEPOSITS. All funds of the Corporation not
otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the president, the chief financial officer, or any other officer designated by the Board of
Directors may determine.
21
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Except as may be otherwise
provided by the Board of Directors or any officer of the Corporation, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock
represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the
Corporation in any manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL the Corporation shall provide to the record holders of such shares a written
statement of the information required by the MGCL to be included on stock certificates. There shall be no difference in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.
Section 2. TRANSFERS. All transfers of shares of
stock shall be made on the books of the Corporation in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new
certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors or an officer of the Corporation that such shares shall no longer be represented by certificates. Upon the transfer of any
uncertificated shares, the Corporation shall provide to the record holders of such shares, to the extent then required by the MGCL, a written statement of the information required by the MGCL to be included on stock certificates.
The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by
the laws of the State of Maryland.
Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to
the Charter and all of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer of
the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit
of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and
the Board of Directors or an officer of the Corporation has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or
certificates, or such owner’s legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that
may be made against the Corporation.
22
Section 4. FIXING OF RECORD DATE. The Board of
Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any
other rights, or in order to make a determination of stockholders for any other proper purpose. Such record date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and,
in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.
When a record date for the determination of stockholders entitled to notice of or to vote at any meeting of
stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if postponed or adjourned, except if the meeting is postponed or adjourned to a date more than 120 days after the record date originally
fixed for the meeting, in which case a new record date for such meeting shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall
maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such
stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The
Board of Directors may authorize the Corporation to issue fractional shares of stock or authorize the issuance of scrip, all on such terms and under such conditions as it may determine. Notwithstanding any other provision of the Charter or these
Bylaws, the Board of Directors may authorize the issuance of units consisting of different securities of the Corporation.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly
adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other
distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to
the provisions of law and the Charter.
23
Section 2. CONTINGENCIES. Before payment of any
dividend or other distribution, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its sole 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, and the Board of Directors may modify or abolish any such
reserve.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Charter, the Board of Directors may from time to time adopt, amend, revise or
terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize
the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide
for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is
permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the
document on behalf of the Corporation.
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to
applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice of such meeting, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such
meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.
24
ARTICLE XIII
EXCLUSIVE FORUM FOR CERTAIN LITIGATION
Unless the Corporation consents in
writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, shall be the sole and
exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, or any successor provision thereof, (b) any derivative action or proceeding brought on behalf of the Corporation, other than actions arising under federal
securities laws, (c) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Corporation to the Corporation or to the stockholders of the Corporation, (d) any action asserting a claim against the
Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the MGCL or the Charter or these Bylaws, or (e)
any other action asserting a claim against the Corporation or any director or officer or other employee of the Corporation that is governed by the internal affairs doctrine of Maryland law. None of the foregoing actions, claims or proceedings may
be brought in any court sitting outside the State of Maryland unless the Corporation consents in writing to such court.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to
make new Bylaws.
25