<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE PARKWAY COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE PARKWAY COMPANY
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201-2195
NOTICE OF
1996 ANNUAL SHAREHOLDERS' MEETING
To the Shareholders:
Notice is hereby given that the 1996 Annual Meeting of Shareholders
(the "Meeting") of The Parkway Company (the "Company") will be held at the
Company's offices, 300 One Jackson Place, 188 East Capitol Street, Jackson,
Mississippi, at 1:30 p.m., Jackson time, on July 18, 1996 for the following
purposes:
1. To elect eight directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected and qualified;
2. To consider and vote on a proposal to reincorporate the Company as a
Maryland corporation by merger of the Company into a newly formed,
wholly-owned subsidiary of the Company incorporated in Maryland;
3. To consider and take action upon such other matters as may properly
come before the Meeting or any adjournment thereof.
Only shareholders of record at the close of business on June 4, 1996
are entitled to notice of and to vote at the Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Sarah P. Clark
Vice President, Chief
Financial Officer and Secretary
Date: __________, 1996
===============================================================================
SHAREHOLDERS ARE URGED TO VOTE BY SIGNING, DATING AND
RETURNING THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE TO
WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES
===============================================================================
<PAGE> 3
_______, 1996
THE PARKWAY COMPANY
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201-2195
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 18, 1996
The following information is furnished in connection with the Annual
Meeting of Shareholders (the "Meeting") of The Parkway Company (the "Company")
to be held on July 18, 1996 at 1:30 p.m., Jackson time, at the Company's
offices, 300 One Jackson Place, 188 East Capitol Street, Jackson, Mississippi. A
copy of the Company's Annual Report to Shareholders for the fiscal period ended
December 31, 1995 has been previously mailed to shareholders. Additional copies
of the Annual Report, Notice, Proxy Statement and form of proxy may be obtained
from the Company's Secretary, P.O. Box 22728, Jackson, Mississippi 39225-2728.
This Proxy Statement will first be sent to shareholders on or about
______________, 1996.
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy for the Meeting is being solicited by the directors of
the Company. The proxy may be revoked by a shareholder at any time prior to the
exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date. The proxy may also be
revoked by a shareholder attending the Meeting, withdrawing such proxy and
voting in person. The cost of soliciting the proxies on the enclosed form will
be paid by the Company. In addition to the use of the mails, proxies may be
solicited by the directors and their agents (who will receive no additional
compensation therefor) by means of personal interview, telephone or facsimile,
and it is anticipated that banks, brokerage houses and other institutions,
nominees or fiduciaries will be requested to forward the soliciting material to
their principals and to obtain authorization for the execution of proxies. The
Company may, upon request, reimburse banks, brokerage houses and other
institutions, nominees and fiduciaries for their expenses in forwarding proxy
material to their principals. The Company has retained Beacon Hill Partners,
Inc. ("Beacon Hill"), to assist with the solicitation of proxies and will pay
Beacon Hill a fee of $______________ (subject to increase for additional
services such as telephone solicitation) plus reimbursement for out-of-pocket
expenses for its services.
<PAGE> 4
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The record date for determining shares of common stock of the Company,
$1.00 par value per share ("Company Shares"), entitled to vote at the Meeting
has been fixed at the close of business on June 4, 1996. On such date there were
____________ Company Shares outstanding, entitled to one vote each. All Company
Share amounts and per Company Share data set forth in this proxy statement have
been adjusted for the Company's three-for-two stock split which was effected as
a stock dividend of one Company Share for every two Company Shares outstanding
(the "Stock Split"), which dividend was payable on April 30, 1996 to
shareholders of record on April 15, 1996.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- -----------------------------------------------
To the best of the Company's knowledge, no person or group (as those terms
are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
beneficially owned, as of March 31, 1996, more than five percent of the Company
Shares outstanding (as adjusted for the Stock Split), except as set forth in the
following table.
<TABLE>
<CAPTION>
Amount
Name and Address Beneficially Percent
of Beneficial Owner Owned of Class
- ------------------- ----- --------
<S> <C> <C>
Leland R. Speed and certain family members 251,200 (1) 8.3%
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201-2195
John D. Weil(2) 250,800 8.3%
509 Olive Street, Suite 705
St. Louis, Missouri 63101
<FN>
__________________
(1) Includes (i) 37,869 Company Shares owned by Mr. Speed's son Stewart;
(ii) 22,587 Company Shares owned by Mr. Speed's son Forrest; (iii) 10,554
Company Shares owned by Mr. Speed's son Warren; and (iv) 21,157 Company
Shares owned by Mr. Speed's wife, as to all of which Mr. Speed disclaims
beneficial ownership. Also includes 11,250 Company Shares Mr. Speed has the
right to acquire pursuant to options granted under the 1994 Stock Option Plan.
(2) Based upon an amended Statement on Schedule 13D filed with the Securities and
Exchange Commission ("SEC").
</TABLE>
2
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT
- --------------------------------
The following table sets forth the Company Shares beneficially
owned, as of January 4, 1996 (as adjusted for the Stock Split), by each director
and executive officer of the Company. Unless otherwise stated, each person has
sole voting and investment power with respect to the Company Shares set forth in
the table.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
---- ----- --------
<S> <C> <C>
Daniel C. Arnold 33,052 (1) 1.1%
H. C. Bailey, Jr. 63,160 (1) 2.1
George R. Farish 18,601 (2) *
Roger P. Friou 14,701 (3) *
B. Pat Green, Jr. 27,150 (1) *
Sidney W. Lassen 20,808 (1) *
C. Herbert Magruder 55,614 (1)(4) 1.8
W. Lincoln Mossop, Jr. 20,904 (1) *
Joe F. Lynch 59,367 (1) 2.0
Leland R. Speed 251,200 (5) 8.3
Steven G. Rogers 86,742 (6) 2.9
Sarah P. Clark 6,900 (7) *
----- ---
Directors and officers as a group 658,199 20.9
======= ====
</TABLE>
_______________
* Less than 1%.
(1) Includes 12,000 Company Shares the indicated person has the right to
acquire under the 1991 Directors Stock Option Plan.
3
<PAGE> 6
(2) Includes 4,500 Company Shares Mr. Farish has the right to acquire under the
1991 Directors Stock Option Plan.
(3) Includes 3,750 Company Shares Mr. Friou has the right to acquire under the
1991 Directors Stock Option Plan.
(4) Includes (i) 450 Company Shares beneficially owned by Dr. Magruder's wife,
as to which he disclaims beneficial ownership and (ii) 2,463 Company Shares
he holds as trustee.
(5) See Note (1) under "Security Ownership of Certain Beneficial Owners."
(6) Includes (i) 6,000 Company Shares beneficially owned by Mr. Rogers' wife
and (ii) 22,242 Company Shares Mr. Rogers has the option to purchase under
the 1994 Stock Option Plan.
(7) Includes 6,000 Company Shares Ms. Clark has the option to purchase under
the 1994 Stock Option Plan.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
- --------
In accordance with the Bylaws of the Company, the Board of Directors has by
resolution fixed the number of directors to be elected at the Meeting at eight.
All eight positions on the Board are to be filled by the vote of the
shareholders at the Meeting. In the event the proposal to reincorporate the
Company is approved (see "Proposal 2--Reincorporation of the Company from Texas
to Maryland"), the directors elected at the Meeting will be directors of the
Maryland corporation that is the surviving company in the Merger, as defined
below under "Proposal No. 2--Reincorporation of the Company from Texas to
Maryland." In the event the reincorporation is not approved, each person so
elected shall serve until the next Annual Meeting of Shareholders and until his
successor is elected and qualified.
The directors of the Company recommend a vote FOR the nominees listed
below. All nominees except Mr. Rogers, are currently serving as directors of the
Company and were elected at the 1995 Annual Meeting of Shareholders. H.C.
Bailey, Jr., B. Pat Green and Sidney W. Lassen, presently directors of the
Company, have decided not to stand for reelection.
Unless instructed otherwise, proxies will be voted FOR the nominees listed
below. Although the directors do not contemplate that any of the nominees will
be unable to
4
<PAGE> 7
serve prior to the Meeting, if such a situation arises, the enclosed proxy will
be voted in accordance with the best judgment of the person or persons voting
the proxy.
The table below sets forth certain information regarding the nominees for
election to the Company's Board of Directors.
<TABLE>
<CAPTION>
Name, Position and Principal Occupation and Business
Tenure with the Company Age Experience for Past Five Years (1)
- ----------------------- --- ----------------------------------
<S> <C> <C>
Daniel C. Arnold
Director since 1994 66 Private investor; Director of Farm & Home
Financial Corporation from 1989 to 1994 and its
Chairman of the Board, President and Chief
Executive Officer from 1989 to 1991.
George R. Farish
Director since 1981 43 Chief Executive Officer of Houston Savings
Association.
Roger P. Friou
Director since 1995 61 President since 1996, Vice Chairman since 1991,
and Chief Financial Officer and Executive Vice
President from 1984 to 1991 of Jitney Jungle
Stores of America, Inc. (a retail supermarket
chain).
Joe F. Lynch
Director since 1994 63 Consultant to the Company since 1994; Chairman
of the Board and Chief Executive Officer of First
Continental Corporation (a real estate company)
since 1994; Chairman of the Board and Chief
Executive Officer of First Continental Real Estate
Investment Trust from 1989 to 1994; Vice
Chairman of the Board of Farm & Home
Financial Corporation and of Farm & Home
Savings Association from 1991 to 1994.
C. Herbert Magruder
Director since 1988 63 Physician and a partner in the medical firm of
Carolina Pathology Associates.
W. Lincoln Mossop, Jr.
Director since 1986 61 General partner, President and Chief Executive
Officer of Barrett & Co. (securities brokers and
dealers and a member firm of the Boston Stock
Exchange, Inc.).
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
Name, Position and Principal Occupation and Business
Tenure with the Company Age Experience for Past Five Years (1)
- ----------------------- --- ----------------------------------
<S> <C> <C>
Steven G. Rogers President and Chief Operating Officer of the
New nominee; President and 41 Company since 1993 and Senior Vice President of
Chief Operating Officer the Company from 1988 to 1993; Senior Vice
since 1993 President of LNH REIT, Inc. since 1992; Senior
Vice President of Congress Street Properties, Inc.,
Eastover Corporation, EastGroup Properties and
Rockwood National Corporation until 1994 and
EB, Inc. until 1995.(2)
Leland R. Speed 63 Chief executive officer of the Company and
Chairman and Director EastGroup Properties; Chief Executive Officer of
since 1978, Chief Executive LNH REIT, Inc. since 1992; Chief Executive
Officer since 1980 Officer of Congress Street Properties, Inc.,
Eastover Corporation and Rockwood National
Corporation until 1994 and EB, Inc. until 1995.(2)
</TABLE>
- --------------------
(1) Unless otherwise stated, each nominee has held the position indicated for
at least the past five years.
(2) Each of these companies is primarily engaged in the real estate business.
See "Expense-Sharing Arrangements."
OTHER DIRECTORSHIPS AND TRUSTEESHIPS
- ------------------------------------
Members of the Board of Directors serve on the Boards of Directors or the
Boards of Trustees of the following publicly held companies:
Nominee Company
- ---------------------- ---------------------------
Daniel C. Arnold U.S. Physical Therapy Inc.
George R. Farish LNH REIT, Inc.
W. Lincoln Mossop, Jr. Boston Stock Exchange, Inc.
Citizens Growth Properties
6
<PAGE> 9
Nominee Company
- ---------------------- ---------------------------
Leland R. Speed EastGroup Properties
Farm Fish, Inc.
First Mississippi Corporation
KLLM Transport Services, Inc.
LNH REIT, Inc.
COMMITTEES AND MEETING DATA
- ---------------------------
The Audit Committee of the Board of Directors currently consists of
Messrs. Farish, Lynch and Mossop. The functions performed by this Committee
consist principally of conferring with and reviewing the reports of the
Company's independent accountants and bringing to the entire Board of Directors
for review those items relating to audits or accounting practices which the
Audit Committee believes merit such review. The Audit Committee met twice during
the year ended December 31, 1995.
The Compensation Committee of the Board, which currently consists of
Messrs. Friou, Green and Magruder, met twice during the year ended December 31,
1995. The Committee's function is to recommend compensation levels for officers
and review compensation levels for officers and administer the Company's 1994
Stock Option Plan.
The Company does not have a standing nominating committee or any
committee performing a similar function.
During the year ended December 31, 1995, the full Board of Directors
met on seven occasions. Each director, except Messrs. Arnold and Bailey,
attended at least 75% of the aggregate of the total number of meetings of the
Board and the total number of meetings held by all committees of the Board on
which he served.
SECTION 16 COMPLIANCE
- ---------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that directors, officers and more than 10 percent shareholders of the
Company file reports with the SEC within the first 10 days of the month
following any purchase or sale of Company Shares. During 1995, one director of
the Company, George R. Farish, was late in filing a report under Section 16(a)
with respect to a transaction in which he disposed of Company Shares.
7
<PAGE> 10
EXECUTIVE OFFICERS
- ------------------
The following is a list of the Company's executive officers:
<TABLE>
<CAPTION>
Name, Position and Principal Occupation and Business
Tenure with the Company Age Experience for Past Five Years (1)
- ----------------------- --- ----------------------------------
<S> <C> <C>
Leland R. Speed 63 See table under "Nominees."
Chief Executive Officer
since 1980
Steven G. Rogers 41 See table under "Nominees."
President and Chief
Operating Officer
since 1993
Sarah P. Clark 36 Vice President of the Company since 1992,
Vice President, Chief Chief Financial Officer and Secretary of the
Financial Officer and Company since 1994; Vice President and
Secretary Assistant Secretary of Congress Street
Properties, Inc., Eastover Corporation,
EastGroup Properties and Rockwood National
Corporation from 1992 to 1994 and of EB,
Inc. from 1992 to 1995; Vice President of
LNH REIT, Inc. since 1992; Controller of
Eastover Corporation from 1986 to 1992 and
EastGroup Properties from 1990 to 1992.
</TABLE>
_______________
(1) Unless otherwise stated, the indicated person has held the position
indicated for at least the past five years.
EXECUTIVE COMPENSATION
- ----------------------
The following table summarizes, for the fiscal years ended December 31,
1995, 1994 and 1993 the amount of the compensation paid by the Company to its
Chief Executive Officer and all other executive officers whose cash compensation
during the year ended December 31, 1995 exceeded $100,000 (the "Named
Officers").
8
<PAGE> 11
<TABLE>
<CAPTION>
--------------------------------
Long Term
Annual Compensation (1)(2) Compensation Awards
------------------------------------- --------------------------------
LTIP
Name and Principal Other Annual Payouts All Other
Position Year Salary Bonus Compensation Options/SARs (5) $ (6) Compensation (7)
---------- ---- ------- ------ ------------- ---------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Leland R. Speed 1995 $130,000(3) $ 68,250 -- 9,187 $ 0 $ 6,930
Chief Executive Officer 1994 $ 58,673 $ 7,379 -- 22,500 $21,220 $ 1,581
1993 $ 66,927 -- -- -- $ 4,145 $ 3,867
Steven G. Rogers 1995 $145,000 $118,322(4) -- 6,891 $ 0 $13,860
President and Chief 1994 $ 30,761 $ 5,985 -- 67,500 $16,977 $ 1,581
Operating Officer 1993 $ 36,786 $ 8,870 -- -- $ 3,317 $ 2,912
Sarah P. Clark 1995 $ 72,600 $ 32,156 -- 5,743 $ 0 $ 8,148
Vice President, 1994 $ 15,607 $ 2,527 -- 12,000 $ 1,268 $ 1,054
Chief Financial Officer 1993 $ 16,229 $ 0 -- -- $ 61 $ 838
Secretary
</TABLE>
_______________
(1) Until December 31, 1994, the executive officers of the Company were paid by
Congress Street Properties, Inc. ("Congress Street") and those costs were
then allocated among the Expense-Sharing Participants (described below) in
accordance with the expense-sharing arrangements.
(2) For 1994 and 1993, all amounts are the Company's share of the particular
Named Officer's compensation as allocated under the expense-sharing
arrangement. See "--Expense-Sharing Arrangements."
(3) Mr. Speed's salary is paid one-half by the Company and one-half by
EastGroup Properties, of which he is also Chief Executive Officer. See
"--Expense-Sharing Arrangements." This amount is the Company's share of Mr.
Speed's compensation.
(4) Includes $57,072 paid pursuant to Mr. Rogers' agreement with Eastover
Realty Corporation. See "--Expense-Sharing Arrangements--Eastover Realty
Corporation."
(5) The options granted in 1994 were granted on September 23, 1994 under the
Company's 1994 Stock Option Plan and the options granted in 1995 were
granted on December 7, 1995 under the Company's 1994 Stock Option Plan. The
1994 and 1995 options vest one-half on the first anniversary date of grant
and one-half on the second anniversary date of grant.
(6) These payments were made under Incentive Compensation Units granted under
the Company's 1991 Incentive Plan (the "Incentive Plan"). The amount for
1994 includes a payment made in December 1994 in consideration of the
officer agreeing to cancel the remaining term of the option which payment
was made in Company Shares. An Incentive Compensation Unit was a right to
receive an amount equal to the dividend paid on a specified number of
Company Shares during a five year period beginning on the date of the grant
of the unit. The amount payable with respect to an Incentive Compensation
Unit was
9
<PAGE> 12
credited to an account for the holder of such unit. The grantee of the
Incentive Compensation Unit was entitled to a cash payment of 20% of the
amount in the account of the first anniversary date of its grant, 40% on
the second anniversary date, 60% on the third anniversary date, 80% on the
fourth anniversary date and 100% on the fifth anniversary date.
(7) For 1995, this is the Company's contribution to its 401(k) Plan for the
Named Officer's benefit and for 1993 and 1994 this amount is the Company's
share of Congress Street's discretionary contribution to a 401(k) plan for
the respective Named Officer's benefit.
Option Grants. The following table gives information with respect to
options granted to the Named Officers during the year ended December 31, 1995.
The "Potential Realizable Value" columns assume that the price of Company Shares
will appreciate at annual rates of 5% and 10%, respectively, during the term of
the options. The price of Company Shares on the date of grant was $13.33 (as
adjusted for the Stock Split). There can be no assurance that such appreciation
will take place.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
----------------------------------------------------------------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities
Underlying % of Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted Employees Price Expiration
Name (#) in Fiscal Year ($/Sh) Date 5%($) 10%($)
---- ----- -------------- -------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Leland R. Speed 9,187(1) 16.7% $20.00 12/07/05 $77,175 $194,775
Steven G. Rogers 6,891(1) 12.5% $20.00 12/07/05 $57,884 $146,089
Sarah P. Clark 5,743(1) 10.4% $20.00 12/07/05 $48,245 $121,762
</TABLE>
_______________
(1) These options were granted on December 7, 1995. They become exercisable
one-half on the first anniversary of the date of grant and one-half on
the second anniversary of the date of grant.
10
<PAGE> 13
Option Exercises and Year End Values. Mr. Speed and Ms. Clark did not
exercise any options during 1995. The following table shows the value realized
by Mr. Rogers upon the exercise of options, and the year end value of
unexercised in-the-money options held by the Named Officers. Year end values are
based upon the closing price of Company Shares on the NASDAQ National Market on
December 29, 1995 ($12.75, as adjusted for the Stock Split).
<TABLE>
<CAPTION>
Aggregated Options/SAR Exercises with Last Fiscal Year
and FY-End Option/SAR Values
----------------------------
Value of
Company Shares Value Number of Unexercised Unexercised In-The-Money
Name Acquired on Exercise Realized Options at FY-End (#) Options at FY-End($)
---- -------------------- -------- --------------------- --------------------
Exercisable/Unexercisable(1) Exercisable/Unexercisable
---------------------------- -------------------------
<S> <C> <C> <C> <C>
Leland R. Speed 0 $ 0 11,250/20,437 $26,435/$26,435
Chief Executive Officer
Steven G. Rogers 11,508 $45,792 22,242/40,641 $55,758/$79,305
President and Chief
Operating Officer
Sarah P. Clark 0 $ 0 6,000/11,743 $21,375/$21,375
Vice President,
Chief Financial Officer
and Secretary
</TABLE>
_______________
(1) These represent certain options granted to the Named Officer on September
23, 1994 and December 7, 1995 under the 1994 Stock Option Plan.
Directors' Fees. Under the Company's standard compensation arrangement with
directors (other than Mr. Speed, who is a salaried officer), directors are paid
a monthly stipend of $500, plus $1,000 and reimbursement of expenses for each
meeting of the Board of Directors and $750 and reimbursement of expenses for
each meeting of a committee established by the Board of Directors.
Directors Plan. The Company's 1991 Directors Stock Option Plan (the
"Directors Plan") authorizes the issuance of options for up to 150,000 Company
Shares to directors of the Company who are not, and have not been for at least
one year prior to the date of determination, employees of the Company
("Non-Employee Directors"). Under the Directors Plan, each Non-Employee Director
of the Company on September 13, 1991 was automatically granted an option to
purchase 7,500 Company Shares. Each person who first becomes a Non-Employee
Director after September 13, 1991 will automatically be granted an option to
purchase 7,500 Company Shares on the date the person becomes a Non-Employee
Director, if such Company Shares are
11
<PAGE> 14
available. Each Non-Employee Director will also be granted an option to purchase
an additional 2,250 Company Shares on the date of any annual meeting at which
such Non-Employee Director is reelected to the Board. The option exercise price
is the closing price of a Company Share if the Company Shares are listed on an
exchange or the average between the bid and the asked price for that date if the
Company Shares are traded over-the-counter (or, if no Company Shares were
publicly traded on that date, the next preceding date that such Company Shares
were so traded). Such options are exercisable in full on the date of grant and
expire ten years after the date of grant or, if earlier, six months after the
termination of the optionee's service as a Non-Employee Director, unless such
service is terminated by reason of death, in which case the optionee's legal
representative shall have one year in which to exercise the option.
Two directors exercised options under the Directors Plan during 1995.
On July 7, 1995, Mr. Farish exercised an option to purchase 7,500 Company Shares
at an exercise price of $10.42 (as adjusted for the Stock Split). On November
27, 1995, Mr. Friou exercised an option to purchase 6,000 Company Shares at an
exercise price of $13.17 (as adjusted for the Stock Split).
EXPENSE-SHARING ARRANGEMENTS
- ----------------------------
Description of Arrangements. Until December 31, 1994, the Company had an
expense-sharing agreement with Congress Street, EastGroup Properties
("EastGroup") and Eastover Corporation ("Eastover") (which are more fully
described below) pursuant to which the participants shared administrative
offices at the same location in Jackson, Mississippi and common officers and
other personnel, subject to the authority of the board of each member company to
elect or appoint and remove its officers in accordance with its certificate of
incorporation, declaration of trust or other charter documents and applicable
law. EB, Inc. ("EB") had a separate administrative agreement with Congress
Street which allowed EB to participate in the expense-sharing arrangement on the
same basis as the companies which were parties to the expense-sharing agreement.
LNH REIT, Inc. ("LNH") had a separate administration agreement with Congress
Street (and later EastGroup) which terminated effective March 31, 1995. Under
this arrangement, the participants shared the cost of the common officers and
other employees and of shared facilities and activities. These common costs were
initially paid by Congress Street, which served as the administrator of the
arrangement, and the other participants paid Congress Street an annual fee (on a
monthly basis) of one-half of one percent of their assets which were
publicly-traded securities, and Congress Street was paid a fixed annual fee in
equal monthly installments by LNH. After these fees and any profits of Eastover
Realty Corporation (see "Eastover Realty Corporation" below) were subtracted
from total common costs, the remaining common costs were allocated on a monthly
basis among EastGroup, the Company, Congress Street, Eastover and EB
(collectively, the "Expense-Sharing Participants") in proportion to their assets
other than publicly-traded securities, based on their balance sheets as
contained in their most recent SEC filings. Certain costs which the common
officers believed to be particularly attributable to each member company were
not shared. These non-allocable costs included but were not limited to
directors' and trustees' fees, legal, audit and
12
<PAGE> 15
stock transfer expenses, stationery and items of similar nature. Since the
allocation formula was not based upon actual costs incurred by each member
company, the allocation may have, from time to time, resulted in a greater or
lesser charge to each member company than would have resulted if actual costs to
each member company were allocated.
In connection with the business combinations involving the
Expense-Sharing Participants (i.e., Congress Street merged with a wholly-owned
subsidiary of the Company on November 29, 1994, EB combined with the Company on
April 27, 1995 and Eastover combined with EastGroup on December 22, 1994), the
above described expense-sharing arrangements terminated on December 31, 1994,
except that EastGroup had the responsibility for managing LNH under the prior
administration agreement between LNH and Congress Street. Since that date, the
Company and EastGroup each have their own respective officers and employees, who
do not serve as officers or employees of the other company, except for Leland R.
Speed, who continues to serve as the Chief Executive Officer of both companies,
and a small number of clerical and support staff employees. The officers of
EastGroup also continue to serve as officers of LNH; in addition, the President
of the Company, Steven G. Rogers, and the Vice President, Chief Financial
Officer and Secretary of the Company, Sarah P. Clark, continue to serve as
officers of LNH. David H. Hoster II and N. Keith McKey, who formerly served as
officers of all the Expense-Sharing Participants, now serve as officers of
EastGroup and LNH and not the Company. EastGroup, LNH and the Company continue
to share the same leased office space at One Jackson Place in Jackson,
Mississippi and share the services of Mr. Speed and certain clerical and support
staff employees and expenses related thereto are shared among the Company and
EastGroup (except for certain costs which can be attributed to either company
based on its actual use of the services involved).
Cost Sharing Arrangement with EastGroup. EastGroup and the Company
continue to share the same leased office space at One Jackson Place in Jackson,
Mississippi. EastGroup and the Company share the rent with respect to their
shared office space based upon the number of employees each has in such office
space divided by the total number of employees of both companies using the
office space. In addition, EastGroup and the Company share the services of Mr.
Speed and a limited number of clerical and support staff employees and expenses
related thereto are shared equally between EastGroup and the Company. The
Company and EastGroup also share the expenses of certain office supplies and
equipment, and EastGroup reimburses the Company for the services of certain
employees of the Company who perform services for EastGroup on an as requested
basis. During the year ended December 31, 1995, EastGroup paid the Company
$387,000 under this cost-sharing arrangement.
Eastover Realty Corporation. Eastover Realty Corporation ("Eastover
Realty"), currently an indirectly wholly-owned subsidiary of the Company and
prior to November 29, 1994, a wholly-owned subsidiary of Congress Street,
manages several commercial properties, for which it receives management fees.
Eastover Realty also performs leasing and brokerage services on a commission
basis. Pursuant to an understanding among the Expense-Sharing Participants, any
income derived from Eastover Realty was used to offset common costs under the
expense-sharing arrangements. In connection with the termination of the
expense-sharing arrangements
13
<PAGE> 16
and the combinations of various of the Expense-Sharing Participants, the sharing
of Eastover Realty's income has been terminated, so that the Company, as a
result of its business combination with Congress Street, receives all of that
income (or loss). Until January 1, 1996, Mr. Rogers had an agreement with
Eastover Realty pursuant to which he was paid 15% of the profits of Eastover
Realty. This payment was in addition to his annual salary and the amount paid
for 1995 is included in the bonus column of the compensation table above. See
"-Executive Compensation."
PROPOSAL NO. 2
REINCORPORATION OF THE COMPANY FROM TEXAS TO MARYLAND
GENERAL
- -------
The Board of Directors of the Company has approved and recommends that
the shareholders of the Company approve the Agreement and Articles of Merger
(the "Merger Agreement"), a copy of which is attached as Exhibit A to this Proxy
Statement, which provides for the Company's change of domicile from Texas to
Maryland (the "Reincorporation"). The reason for the Reincorporation is to allow
the Company to benefit from certain differences between the Business Corporation
Act of the State of Texas and the Maryland General Corporation Law. These
differences include certain provisions of Maryland law, which compared to Texas
law, may make it more difficult for a change in control of the Company to occur
without the consent of the Board of Directors, even if the holders of some, or a
majority, of the outstanding Shares believe such a change in control to be in
their best interests. See "--Anti-Takeover Provisions." The Board of Directors
believes that it is particularly important to change the Company's state of
incorporation because the Board has determined that the Company should qualify
as a real estate investment trust ("REIT") under the Internal Revenue Code of
1986, as amended (the "Code"). Many of the REITs which have become public
companies in the recent past have been organized as Maryland corporations, and
the Board of Directors believes that it will be easier for the Company to access
the capital markets in the future if the Company changes its state of
incorporation.
The Company presently pays virtually no federal income taxes because net
operating loss carryovers ("NOLs") shelter most of the Company's income from
such taxes. However, the increase in the number of outstanding Company Shares
resulting from the Company's recent mergers will cause the use of the Company's
NOLs to be limited in future years if the Company issues only a relatively small
number of Company Shares. Accordingly, the Company intends to elect to be taxed
as a REIT under the Code for the year beginning January 1, 1997, subject to the
Company and its advisors having completed their review of the Company's assets,
sources of income and historic operations to determine that the Company is
eligible to elect REIT status.
14
<PAGE> 17
To effect the Reincorporation, the Company will be merged (the "Merger")
into a new Maryland corporation, initially named The Parkway Company, Inc. (the
"SUB"). When the Merger becomes effective, (i) the Company will cease to exist;
(ii) SUB will succeed to all of the business, assets and liabilities of the
Company; (iii) the name of SUB will be changed to The Parkway Company; (iv) each
Company Share will be automatically converted into a corresponding share of the
common stock of SUB (the "SUB Shares"); and (v) the 1994 Stock Option Plan, the
1991 Directors Stock Option Plan and any employee benefit plan to which the
Company is a party will be assumed by SUB and, to the extent any such plan
provides for the issuance or purchase of Company Shares, will be deemed to
provide for the issuance or purchase of SUB Shares. In accordance with the
Company's decision to qualify as a REIT, some of the provisions in the
organizational documents of SUB (the Company following the Merger), contain
provisions designed to protect the Company's REIT status and provide that at
various times during its existence, SUB may elect not to qualify and elect to
re-qualify as a REIT.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO SURRENDER OR
EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR NEW STOCK CERTIFICATES OF SUB
SHARES. Following the Reincorporation and as a condition of the Merger, the
existing Company Shares will be quoted on the NASDAQ National Market and
delivery of certificates representing Company Shares will constitute "good
delivery" for subsequent transactions.
As a result of the Merger, the Company and the rights of its
shareholders, directors and officers will be governed by Maryland law and by the
Charter of SUB (the "Maryland Charter") and Bylaws (the "Maryland Bylaws"),
rather than by Texas law and the Company's existing Articles of Incorporation,
as amended (the "Texas Charter") and Bylaws (the "Texas Bylaws"). A copy of the
Maryland Charter is attached hereto as Exhibit B and a copy of the Maryland
Bylaws is attached hereto as Exhibit C. The Texas Charter and the Texas Bylaws
are available for inspection at the principal executive offices of the Company
and will be sent to shareholders upon request.
A discussion of the material similarities and differences to the Company
and its shareholders, directors and officers resulting from the Reincorporation
appears below. This discussion is not intended to be complete and is qualified
in its entirety by reference to Exhibit B and Exhibit C attached hereto and to
the Business Corporation Act of the State of Texas and the General Corporation
Law of the State of Maryland.
THE ENCLOSED PROXY, IF PROPERLY SIGNED AND RETURNED, AND UNLESS
AUTHORITY TO VOTE IS WITHHELD, WILL BE VOTED FOR THE APPROVAL OF THE PROPOSAL TO
CHANGE THE COMPANY'S STATE OF INCORPORATION FROM TEXAS TO MARYLAND.
CAPITAL STOCK
- -------------
Authorized Capital. The Texas Charter authorizes 15,000,000 shares of
capital stock and specifically designates 10,000,000 shares of capital stock as
common stock and 5,000,000 shares
15
<PAGE> 18
of capital stock as preferred stock. The Maryland Charter authorizes an
aggregate of 100,000,000 shares of capital stock and initially designates
70,000,000 shares of capital stock as common stock and 30,000,000 shares of
capital stock as excess stock. The Texas Charter permits the Board of Directors
to issue preferred stock from time to time in one or more classes or series, to
specify the number of shares of such series and to determine the applicable
designations, preferences, conversion and other rights, voting powers,
restrictions, rights and limitations as to dividends and redemption privileges
within the limits established by law from time to time. However, the Texas
Charter contains certain limitations concerning the shares of preferred stock
and the issuance of dividends and redemption privileges. See "--Redemption and
Retirement" and "--Dividends" below. The Maryland Charter provides that any
unissued shares of capital stock can be reclassified as either preferred stock,
preference stock, special stock or other stock by the Board of Directors without
further stockholder action. Consequently, the Maryland Charter is more flexible.
For additional information concerning the excess stock see "--Status of Real
Estate Investment Trust--Ownership Limitations/Other Restrictions on Transfer of
Shares" below.
Redemption and Retirement. Under Texas law, a corporation may not make a
distribution involving a purchase or redemption of its own shares if such
distribution would cause the corporation to be insolvent or the distribution
exceeds the surplus of the corporation. Notwithstanding such limitation, Texas
law provides that a corporation may make a distribution involving a purchase or
redemption of any of its own shares if such purchase or redemption is made by
the corporation to (i) eliminate fractional shares; (ii) collect or compromise
indebtedness owed by or to the corporation; (iii) pay dissenting shareholders
entitled to such payment; or (iv) effect the purchase or redemption of
redeemable shares in accordance with the Texas Business Corporation Act. Under
Maryland law, a corporation is permitted to purchase or redeem shares of its own
stock, unless the corporation would not be able to pay its debts as they become
due in the usual course of business or the corporation's total assets would be
less than the sum of the corporation's total liabilities plus, unless the
charter permits otherwise, the amount that would be needed, if the corporation
were to be dissolved at the time of such purchase or redemption, to satisfy the
preferential rights upon dissolution of stockholders whose preferential rights
on dissolution are superior to those whose shares are purchased or redeemed. The
Texas Charter further provides that shares of preferred stock may be redeemed,
subject to any additional terms and conditions imposed by the Board of Directors
of the Company; however, if full cumulative dividends with respect to all
outstanding shares of preferred stock have not been paid, the corporation will
not call for redemption any shares of preferred stock unless all shares of all
series of preferred stock then outstanding are called for simultaneous
redemption.
Dividends. Under Texas law, a corporation may not pay dividends if,
after giving effect to such dividend, the corporation would be insolvent or the
dividend exceeds the surplus of the corporation. The Texas Charter provides that
to the extent shares of preferred stock are outstanding, the corporation will
not pay any dividends on any shares of junior stock unless all dividends on the
preferred stock for previous and current quarterly dividend periods have been
paid. The Maryland Charter does not contain similar provisions. Maryland law
permits the
16
<PAGE> 19
payment of dividends unless the corporation would not be able to pay its debts
as they become due in the usual course of business or the corporation's total
assets would be less than the sum of the corporation's total liabilities plus,
unless the charter permits otherwise, the amount that would be needed, if the
corporation were to be dissolved at the time of payment of such dividends, to
satisfy the preferential rights upon dissolution of stockholders whose
preferential rights on dissolution are superior to those receiving the
dividends.
SHAREHOLDERS
- ------------
Shareholders' Inspection Rights. Texas law allows any person who has
been a shareholder for at least six months immediately preceding said
shareholder's demand, or who holds at least five percent of all outstanding
shares of a corporation, upon written demand stating the purpose thereof, to
examine at any reasonable time for any proper purpose, the corporation's books
and records of account, minutes and share transfer records, and to make extracts
therefrom. Additionally, Texas law allows any shareholder to inspect the
shareholders' list during usual business hours during the ten days preceding a
shareholders' meeting and during the whole time of the meeting. Under Maryland
law, any stockholder has the right to inspect and copy the bylaws, minutes of
the proceedings of stockholders, the annual statement of affairs of the
corporation and voting trust agreements on file at the corporation's principal
office. In addition, any stockholder or stockholders who together are, and for
at least six months have been, holders of record of at least five percent of the
outstanding stock of any class of the corporation may inspect and copy the
corporation's books of account, stock ledger or stockholders' list and may
require the corporation to produce a verified statement of affairs.
Special Meetings of the Shareholders. Pursuant to the Texas Bylaws, a
special meeting of the shareholders of the Company may be called by a majority
of the Board of Directors, the Chairman of the Board of Directors, the President
or by a majority of the executive committee, if any, and shall be called by the
Chairman of the Board, the President or the Secretary upon the written request
therefor by the holder or holders of at least ten percent of the issued and
outstanding shares entitled to vote at such meeting. Under the Maryland Bylaws,
a special meeting of the stockholders of SUB may be called by the President, the
Chief Executive Officer, the Board of Directors, the Executive Committee of the
Board of Directors or the Chairman of the Board. Additionally, under Maryland
law, special meetings of the stockholders may be called by the secretary on the
written request of stockholders holding at least 25 percent of all votes
entitled to be cast at such meeting. However, the Maryland statute provides that
a special meeting need not be called to consider any matter which is
substantially the same as a matter voted on at any special meeting of
stockholders held during the preceding twelve months unless the meeting is
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting.
Shareholder Action Without a Meeting. Under Texas law, shareholders have
the right to take any action without a meeting which may be taken at any annual
or special meeting provided that a written consent has been signed by the
holders of all the shares entitled to vote with
17
<PAGE> 20
respect to the action that is the subject of the consent. Under Maryland law,
any action required or permitted to be taken at a meeting of stockholders may be
taken without a meeting provided that a unanimous written consent setting forth
the action to be taken is signed by each stockholder entitled to vote on the
matter and filed with the records of stockholders' meetings and, if applicable,
a written waiver of any right to dissent is signed by each stockholder entitled
to notice of the meeting but not entitled to vote on the matter.
Shareholder Nominations and Shareholder Business. The Maryland Bylaws
provide that nominations of persons for election to the Board of Directors and
the proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (i) pursuant to the corporation's notice of
meeting; (ii) by or at the direction of the Board of Directors; or (iii) by any
stockholder who was a stockholder of record at the time notice of the meeting
was given and who complied with all notice requirements. The Texas Bylaws
provide that the election of directors and such other business as may properly
come before the meeting shall be considered at the annual meeting of
shareholders.
Preemptive Rights. Shareholders of the Company do not have any
preemptive right to subscribe for any newly issued stock or other securities of
the Company. No holder of any shares of the capital stock of SUB has any
preemptive right to purchase or subscribe for any additional shares or any other
security of SUB which it may issue or sell.
Shareholder Vote for Reorganizations. Under the Texas Business
Corporation Act, a plan of merger or exchange must be approved by the holders of
at least two-thirds of the outstanding shares of the corporation entitled to
vote thereon and the affirmative vote of the holders of at least two-thirds of
the outstanding shares within each class or series of shares entitled to vote
thereon as a class, unless the Board of Directors conditions its submission to
shareholders of a plan of merger or exchange by requiring a greater vote or a
vote by class or series. The Texas Charter and Texas Bylaws do not provide
otherwise. Maryland law also requires that any merger, consolidation, share
exchange or transfer be approved by the affirmative vote of two-thirds of all
the votes entitled to be cast on the matter. In addition, Maryland law provides
that if a foreign corporation is party to the transaction then such corporation
shall have the transaction authorized and approved in the manner and by the vote
required by its charter and the laws of the jurisdiction in which it is
organized.
BOARD OF DIRECTORS
- ------------------
The Texas Bylaws provide that the number of directors which shall
constitute the entire Board of Directors shall be determined from time to time
by resolution of the Board of Directors. The Company currently has ten directors
who are all elected yearly at the Annual Meeting of Shareholders. The Maryland
Charter provides that the initial number of the Board of Directors shall be
eight but such number may be increased or decreased pursuant to the Maryland
Bylaws, all of which also will be elected yearly.
18
<PAGE> 21
The Texas Charter provides that to the extent dividends payable on any
series of preferred stock are in arrears in an aggregate amount equivalent as to
such series to six full quarterly dividends, the holders of preferred stock
shall be entitled to elect two directors of the Company thereby increasing the
number of authorized directors of the Company by two. Pursuant to the Texas
Charter, this right of the holders of preferred stock will continue until such
arrearage has been paid. The Texas Charter expressly prohibits cumulative voting
in the election of directors. Under Maryland General Corporation Law,
stockholders do not have cumulative voting rights unless the charter provides
otherwise. The Maryland Charter contains no such provisions.
Removal and Vacancies. The Texas Bylaws provide that at any meeting of
shareholders at which a quorum is present and called expressly for that purpose,
a director may be removed, with or without cause, by the affirmative vote of the
holders of a majority of the shares then entitled to vote at an election of
directors. The Maryland Charter and Maryland Bylaws provide that a director may
be removed only with cause and only by the affirmative vote of the holders of at
least a majority of the combined voting power of all shares of capital stock
entitled to be cast in the election of directors voting together as a single
class. Thus, the Maryland Charter makes it more difficult for stockholders of
SUB to remove a director from office. The Texas Bylaws provide that vacancies on
the Board of Directors may be filled by a majority of the directors then in
office, whether or not a quorum is present. The Maryland Charter, however,
requires the affirmative vote of a majority of the remaining directors, even
though less than a quorum, to fill a vacancy on the Board of Directors. Under
the Texas Bylaws, any vacancy occurring by reason of an increase in the number
of directors may be filled by the Board of Directors for a term continuing only
until the next Annual Meeting of Shareholders and, in no event, shall the board
fill more than two directorships during the period between any two successive
annual meetings of shareholders. Under the Maryland Charter, any vacancy on the
Board of Directors resulting from an increase in the number of directors will be
filled by the affirmative vote of a majority of the entire Board of Directors.
The Maryland Charter further provides that the provision concerning the removal
of directors shall not be amended unless approved by the affirmative vote of the
holders of not less than eighty percent of all of the votes entitled to be cast
on the matter. See "--Anti-Takeover Provisions--Supermajority Votes." The Texas
Charter and Texas Bylaws, however, provide that the power to alter, amend or
repeal the Texas Bylaws is vested with the Board of Directors although the
shareholders may repeal or change any bylaws made by the board.
BOARD OF DIRECTORS AND OFFICERS
- -------------------------------
Limitations on Liability. The Texas Charter and Maryland Charter each
protect directors from liability to the fullest extent permissible under Texas
and Maryland law, respectively. Both the Company and SUB protect their directors
against claims for monetary damages by the corporation and its shareholders or
stockholders, respectively, for certain breaches of their duty of care. Several
other similarities regarding the limitation of directors' liability exist in
Texas law and Maryland law. First, neither charter protects directors against
claims for equitable relief, such as an injunction or rescission based upon a
breach of the duty of care. Second, the limitation of liability afforded
19
<PAGE> 22
by the Texas and Maryland statutes affects only actions brought by the
corporation or its shareholders or stockholders and does not preclude or
limit recovery of damages by third parties, such as creditors of the
corporation. Third, the Texas Charter and Maryland Charter do not protect
directors against claims arising out of their responsibilities under the
federal securities laws. The Maryland Charter allows only for the amendment of
these charter provisions by the affirmative vote of eighty percent of all the
votes entitled to be cast on the matter. Under Texas law, these charter
provisions may not be amended without the approval of two-thirds of the holders
of the outstanding shares entitled to vote thereon and the approval of
two-thirds of the holders of any class of shares outstanding entitled to vote
as a class thereon. No subsequent amendment of either corporation's charter or
subsequent repeal of any of its provisions shall limit or eliminate the
benefits provided to directors or officers with respect to any act or omission
which occurred prior to such subsequent amendment or repeal.
Nevertheless, the Maryland Charter and Maryland law provide greater
protection against liability than the Texas Charter and Texas law. The Maryland
Charter provides directors additional protection against claims for monetary
damages. Under Maryland law, SUB and its stockholders will be able to recover
monetary damages against a director of SUB only (i) to the extent it or they are
able to prove that the director actually received an improper benefit in money,
property or services (in which case recovery is limited to the actual amount of
such improper benefit) or (ii) to the extent it is found in a judgment that the
action or failure to act by the director was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding.
As of the date of this proxy statement, the Company is not aware of (i)
any proposed or anticipated changes to Maryland law that would authorize the
further or lesser limitation of the personal liability of directors or officers
of SUB or (ii) any pending or threatened claims in respect of any acts or
omissions or any litigation which would have been affected by this provision of
the Maryland Charter.
Indemnification. Both the Texas Bylaws and the Maryland Charter provide
indemnification to the fullest extent authorized by applicable law. However, the
Maryland Charter and Maryland law are generally more favorable to directors,
officers, employees and agents of a corporation than are the Texas Bylaws and
Texas law.
Under the Texas Business Corporation Act, a corporation is empowered to
indemnify its directors if it is determined that the director has conducted
himself in good faith and reasonably believed (i) in the case of conduct in his
official capacity, that his conduct was in the corporation's best interests or
(ii) in all other cases, that his conduct was not opposed to the corporation's
best interests; furthermore, in the case of a criminal proceeding, the director
must have had no reasonable cause to believe his conduct was unlawful. The
determination as to whether a director is entitled to indemnification must be
made (i) by the board, by a majority vote of a quorum of disinterested
directors, or (ii) if such quorum cannot be obtained, by a majority vote of a
committee of the board consisting of two or more disinterested directors,
designated to act in the matter by a majority vote of all directors, or (iii) by
special legal counsel
20
<PAGE> 23
selected by the board or a board committee as set forth in (i) or (ii) or, if
such a quorum cannot be obtained and committee established, by a majority vote
of all directors, or (iv) by shareholder vote that excludes the shares of
interested directors. A director cannot be indemnified under the Texas Business
Corporation Act if the person is found liable on the basis that a personal
benefit was improperly received or if the person is found liable to the
corporation, except that a director may be indemnified for reasonable expenses
actually incurred in connection with a legal proceeding if the director has not
been found liable for willful or intentional misconduct in the performance of
his duty to the corporation.
The Texas Business Corporation Act authorizes Texas corporations to
indemnify officers, but contains no specific provisions comparable to those
described above with respect to directors regarding the circumstances under
which officers are entitled to indemnification. Each director and officer of the
Company has a written agreement with the Company which requires, among other
things, that the Company shall indemnify him to the fullest extent permitted
under the Texas Business Corporation Act as currently existing or later amended
(but in the case of such amendment, only to the extent that it permits broader
indemnification rights than permitted prior to such amendment).
Under Texas law, directors and officers, as well as other employees and
individuals, may be indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative and in a manner they reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe their conduct was
unlawful. A similar standard of care is applicable in the case of derivative
actions, except that indemnification extends only to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such an
action.
In contrast, Maryland law provides that a director, officer, employee or
agent of a corporation may be indemnified against judgments, penalties, fines,
settlements and reasonable expenses actually incurred in connection with a
proceeding, unless it is established that: (i) the act or omission was material
to the matter giving rise to the proceeding and either was committed in bad
faith or was the result of active and deliberate dishonesty; (ii) the person
actually received an improper personal benefit in money, property or services;
or (iii) in the case of any criminal proceeding, the person had reasonable cause
to believe that the act or omission was unlawful. Maryland law also permits a
corporation to indemnify officers, employees and agents (who are not directors)
to such further extent not inconsistent with law and the charter, bylaws, board
actions or contract.
Both the Texas Charter and the Maryland Charter provide that no
subsequent amendment of the charters or subsequent repeal of any of their
provisions shall limit or eliminate the benefits provided to directors and
officers under such provision with respect to any act or omission which occurred
prior to such subsequent amendment or repeal.
21
<PAGE> 24
Under both Maryland and Texas law, the corporation may pay, prior to
final disposition, the reasonable expenses, including attorneys' fees, actually
incurred by a director or officer in defending a proceeding. Under Texas and
Maryland law, expenses may be advanced only when a director or officer gives an
undertaking to the corporation indicating that it is such director's or
officers' good faith belief that the standard of conduct necessary for
indemnification has been met and that such director or officer will repay such
advances if it is ultimately determined that he is not entitled to
indemnification.
Texas law on indemnification, however, is more favorable to a director,
officer or agent than is Maryland law in two respects. First, under Texas law,
the termination of any proceeding by conviction or on a plea of nolo contendere
or its equivalent shall not, of itself, be determinative that the person is
prohibited from being indemnified. Under Maryland law, such a termination
creates a rebuttal presumption that such person is not entitled to
indemnification. Second, the Texas statute limits indemnification for any person
found liable to the corporation to reasonable expenses actually incurred by the
person in connection with the proceeding and provides that indemnification will
not be made in respect of any proceeding in which the person shall have been
found liable for willful or intentional misconduct in the performance of his or
her duty to the corporation. Under the Maryland statute, however,
indemnification may not be made when the proceeding was by, or in the right of,
the corporation and the person seeking it has been found liable to the
corporation.
Related Party Transactions. The Maryland Charter provides that SUB may
enter into agreements or other transactions in which one or more of the officers
or directors of SUB may be a party or be an officer, director, stockholder or
member of a party, and such an agreement or transaction will not be void solely
because of the officer or director's conflict of interest if (i) the
relationship is disclosed or known to the Board of Directors of SUB and the
agreement or transaction is authorized, approved or ratified by the affirmative
vote of a majority of the disinterested directors; (ii) the relationship is
disclosed to the stockholders of SUB entitled to vote and the agreement or
transaction is authorized, approved or ratified by the affirmative vote of a
majority of the stockholders entitled to vote, other than the shares held by the
interested officers or directors; or (iii) the agreement or transaction is fair
and reasonable to SUB. Texas law requires similar approval of transactions with
officers, directors or entities in which officers or directors have an interest.
ANTI-TAKEOVER PROVISIONS
- ------------------------
Special Voting Requirements for Certain Business Combinations. Pursuant
to Maryland law, SUB is governed by special procedures that apply to certain
business combinations between a corporation and interested stockholders. The
purpose of such provisions is to protect the corporation and its stockholders
against hostile takeovers by requiring that certain criteria are satisfied.
These criteria include prior approval by the board of directors, prior approval
by a majority or supermajority vote of disinterested stockholders and
requirements that a "fair price" be paid to the disinterested stockholders. The
Company is not subject to any similar provisions.
22
<PAGE> 25
Maryland law provides that a Maryland corporation may not engage in any
"business combination" with any "interested stockholder." An "interested
stockholder" is defined, in essence, as any person owning beneficially, directly
or indirectly, ten percent or more of the outstanding voting stock of a Maryland
corporation. Unless an exemption applies, SUB may not engage in any business
combination with an interested stockholder for a period of five years after the
interested stockholder became an interested stockholder, and thereafter may not
engage in a business combination unless it is recommended by the Board of
Directors and approved by the affirmative vote of at least (i) eighty percent of
the votes entitled to be cast by the holders of all outstanding voting stock of
SUB, voting together as a single voting group and (ii) two-thirds of the votes
entitled to be cast by all holders of outstanding shares of voting stock other
than voting stock held by the interested stockholder. The voting requirements do
not apply at any time to business combinations with an interested stockholder or
its affiliates if approved by the board of directors of the corporation prior to
the time the interested stockholder first became an interested stockholder.
Additionally, if the business combination involves the receipt of consideration
by the stockholders in exchange for the corporation's stock, the voting
requirements do not apply if certain "fair price" conditions are met.
Control Share Acquisitions. Maryland law, but not Texas law, provides
for the elimination of the voting rights of shares held by any person who makes
a "control share acquisition" except to the extent that such acquisition is
exempt or is approved by at least two-thirds of all votes entitled to be cast on
the matter, excluding shares of capital stock owned by the acquirer or by
officers or directors who are employees of the corporation whose shares were
acquired. A "control share acquisition" is the direct or indirect acquisition by
any person of ownership of, or the power to direct the exercise of voting power
with respect to, shares of voting stock ("control shares") that would, if
aggregated with all other voting stock owned by such person, entitle such person
to exercise voting power in electing directors within one of the following
ranges of voting power: (i) one-fifth or more but less than one-third; (ii)
one-third or more but less than a majority; or (iii) a majority or more of
voting power.
A person who has made or proposes to make a control share acquisition,
upon the satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the Board of Directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders meeting. If voting rights are not
approved at the meeting or if the acquiring person does not deliver an acquiring
person statement as permitted by the statute, then, subject to certain
conditions and limitations, the corporation may redeem any or all of the control
shares (except those for which voting rights have previously been approved) for
fair value determined, without regard to voting rights, as of the date of the
last control share acquisition or as of the date of any meeting of stockholders
at which the voting rights of such shares are considered and not approved.
If voting rights for control shares are approved at a stockholders
meeting and the acquirer becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The fair
value of the stock as determined for purposes of such
23
<PAGE> 26
appraisal rights may not be less than the highest price per share paid in the
control share acquisition, and certain limitations and restrictions otherwise
applicable to the exercise of dissenters' rights do not apply in the context of
a control share acquisition. The control share acquisition statute does not
apply to stock acquired in a merger, consolidation or stock exchange if the
corporation is a party to the transaction. Thus, Maryland law makes it more
difficult than Texas law for a change in control to occur, even though such
change in control may be the best interests of the corporation's stockholders.
Supermajority Votes. The Maryland Charter provides that certain
specified provisions of the charter may not be repealed or amended except upon
the affirmative vote of the holders of not less than eighty percent of all the
votes entitled to be cast on the matter. The Maryland Charter provisions to
which this supermajority vote applies include the following: (i) certain
provisions the amendment or repeal of which would threaten SUB's status as a
REIT; (ii) the removal of directors; (iii) the provision giving the Board of
Directors the authority to adopt, amend or repeal the Maryland Bylaws; (iv) the
provision regarding indemnification of agents and limitation of liability of
officers and directors; (v) the provision concerning cumulative voting in the
election of directors; and (vi) the vote required to amend that part of the
Maryland Charter requiring a supermajority vote for the above provisions. Under
Texas law, the Texas Charter may be repealed or amended by the affirmative vote
of the holders of at least two-thirds of the outstanding shares entitled to vote
thereon and the affirmative vote of two-thirds of the outstanding shares within
each class or series of shares entitled to vote thereon as a class. However, the
Texas Bylaws may be repealed or amended by the majority vote of the Board of
Directors.
STATUS OF REAL ESTATE INVESTMENT TRUST
- --------------------------------------
Qualification. The Company presently pays virtually no federal income
taxes because NOLs shelter most of the Company's income from such taxes.
However, the increase in the number of outstanding Company Shares resulting from
the Company's recent mergers will cause the use of the Company's NOLs to be
limited in future years if the Company issues only a relatively small number of
Company Shares. While the Company estimates that existing NOLs will be
sufficient to shelter substantially all of the Company's income from federal
income taxes through at least 1998, the Company intends to elect to be taxed as
a REIT under the Code for the year beginning January 1, 1997, subject to the
Company and its advisors having completed their review of the Company's assets,
sources of income and historic operations to determine that the Company is
eligible to elect REIT status. The Maryland Charter provides that at various
times during its existence, SUB may elect not to qualify and elect to re-qualify
as a REIT. The Company is currently not qualified as a REIT.
Under Sections 856 through 860 of the Code, if a corporation qualifies
for taxation as a REIT and distributes to its stockholders at least 95% of its
REIT taxable income, it generally will not be subject to federal corporate
income tax on that portion of its ordinary income or capital gain that is timely
distributed to its stockholders.
24
<PAGE> 27
The requirements for qualification as a REIT, which SUB must satisfy,
include the following: (i) the corporation is managed by one or more directors;
(ii) the beneficial ownership of the corporation is evidenced by transferable
certificates of common stock; (iii) the corporation would be taxable as a
domestic corporation but for Sections 856 through 860 of the Code; (iv) the
corporation is neither a financial institution nor an insurance company subject
to certain provisions of the Code; (v) the corporation has the calendar year as
it taxable year; (vi) the beneficial ownership of the corporation is held by 100
or more persons; (vii) during the last half of each taxable year not more than
50% in value of the outstanding common stock of the corporation is owned,
directly or indirectly, by five or fewer individuals (as defined in the Code);
and (viii) the corporation meets specific income and asset tests.
If SUB were to fail in its attempt to qualify as a REIT or lose its
qualification after being qualified, it would be taxed at rates applicable to
corporations on all of its income, whether or not distributed to stockholders,
and would be ineligible for qualification as a REIT for four years following the
year during which qualification was denied or lost, unless entitled to relief
under certain statutory provisions.
Ownership Limitations/Other Restrictions on Transfers of Shares. To
protect the qualification of SUB as a REIT, the Maryland Charter provides that
if, at any time in which SUB is qualified as a REIT, a transfer of the capital
stock of SUB or a change in the capital structure of SUB would result in: (i)
any person (as defined in the Maryland Charter) directly or indirectly acquiring
beneficial ownership of more than 9.8% of the capital stock of SUB; (ii) the
outstanding capital stock of SUB being constructively or beneficially owned by
fewer than 100 persons; or (iii) SUB being "closely held" within the meaning of
Section 856 of the Code, then: (A) any proposed transfer will be void ab initio
and will not be recognized by SUB; (B) SUB will have the right to redeem the
shares proposed to be transferred; and (C) the shares proposed to be transferred
will be automatically converted into and exchanged for shares of a separate
class of stock, the excess stock, having no dividend or voting rights. Holders
of excess stock do have certain rights in the event of any liquidation,
dissolution or winding up of the corporation. The Maryland Charter further
provides that the excess stock will be held by SUB as trustee for the person or
persons to whom the shares are ultimately transferred, until such time as the
shares are re-transferred to a person or persons in whose hands the shares would
not be excess stock and certain price-related restrictions are satisfied. The
Texas Charter contains no such ownership limitation and no such restrictions on
the transfers of shares of the capital stock of the Company. Thus, during those
periods for which SUB is qualified as a REIT, the accumulation of the capital
stock by a single stockholder and the right to transfer the capital stock are
both subject to additional restrictions under the Maryland Charter than under
the Texas Charter.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
- ------------------------------------------------------
The Company has been advised by Jaeckle, Fleischmann & Mugel, general
counsel to the Company, that, for federal income tax purposes, the Merger will
constitute a reorganization
25
<PAGE> 28
under Section 368 of the Code, no gain or loss will be recognized by the holders
of Company Shares as a result of the Merger, no gain or loss will be recognized
by the Company or by SUB as a result of the Merger, and SUB will succeed,
without adjustment, to the tax attributes of the Company. Each shareholder will
have the same basis in the SUB Shares received in the Merger as in the Company
Shares held immediately prior to the time the Merger becomes effective and the
holding period of the SUB Shares will include the period during which the
corresponding Company Shares were held; provided, however, that such
corresponding shares were held as a capital asset at the time of the
effectiveness of the Merger.
Shareholders should consult their own tax advisors as to the effect of
the Merger under applicable state or local tax laws.
RIGHTS OF DISSENTING SHAREHOLDERS
- ---------------------------------
Section 5.11 of the Texas Business Corporation Act provides that
shareholders of a Texas corporation do not have appraisal rights when a Texas
corporation seeking to merge (i) is listed on a national securities exchange or
has more than 2,000 shareholders of record, and (ii) the consideration given in
the merger are shares of a corporation which are listed on a national securities
exchange or are held of record by not less than 2,000 holders, and cash is paid
in lieu of fractional shares. Consequently, dissenters' rights are not available
to shareholders of the Company with respect to the Reincorporation.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS
VOTE IN FAVOR OF THE PROPOSAL TO CHANGE THE CORPORATION'S STATE OF INCORPORATION
FROM TEXAS TO MARYLAND. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
VOTED IN FAVOR OF THE PROPOSAL UNLESS SHAREHOLDERS SPECIFY OTHERWISE.
PROPOSAL NO. 3
OTHER MATTERS
So far as the Management is aware, no matters other than those outlined
in this Proxy Statement will be presented to the Meeting for action on the part
of the shareholders. If any other matters are properly brought before the
Meeting, it is the intention of the persons named in the accompanying proxy to
vote thereon the Shares to which the proxy relates in accordance with their best
judgment.
26
<PAGE> 29
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP, independent
public accountants, to act as auditors for the fiscal year ending December 31,
1996. Ernst & Young LLP has audited the accounts of the Company since 1986. A
representative of Ernst & Young LLP is expected to be present at the Meeting and
will have an opportunity to make a statement, if he so desires, and will be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received at the Company's offices no later
than ______________, 1996 in order to be considered for inclusion in the
Company's proxy materials for the 1997 Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Sarah P. Clark
Vice President, Chief Financial Officer and Secretary
Jackson, Mississippi
27
<PAGE> 30
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Merger Agreement") dated as of ,
1996, is entered into by and between THE PARKWAY COMPANY, INC., a Maryland
corporation (the "Sub") and THE PARKWAY COMPANY, a Texas corporation (the
"Company").
RECITALS
1. The Sub is a corporation duly organized on , 1996, and existing
under the laws of the State of Maryland. The principal office of the Sub in
Maryland is c/o The Corporation Company Incorporated, 32 South Street,
Baltimore, Baltimore City County, Maryland 21202.
2. The Company is a corporation duly organized on August 22, 1980 and
existing under the general laws of the State of Texas. The Company is not
registered or qualified to do business in Maryland. The Company has no
principal office in Maryland. The Company does not own an interest in land in
Maryland.
3. On the date of this Merger Agreement, the Company has authority to
issue 15,000,000 shares consisting of 5,000,000 shares of preferred stock,
$10.00 par value per share, and 10,000,000 shares of common stock, $1.00 par
value per share (the "Shares").
4. On the date of this Merger Agreement, the Sub has authority to
issue 100,000,000 shares consisting of 70,000,000 shares of common stock, $.001
par value per share ("Common Stock"), and 30,000,000 shares of excess stock,
$.001 par value per share ("Excess Stock").
5. Sub and the Company agree to merge. The Boards of Directors of
the Sub and the Company have determined that it is advisable and in the best
interests of the stockholders that the Company merge with and into the Sub upon
the terms and subject to the conditions of this Merger Agreement for the
purpose of effecting the reincorporation of the Company in the State of
Maryland.
6. The Boards of Directors of the Sub and the Company have, by
resolutions duly adopted by unanimous written consent pursuant to the Maryland
Corporations and Associations Code Section 2-408(c) and pursuant to the Texas
Business Corporation Act Section 9.10(B), respectively, approved this Merger
Agreement. The Company has approved this Merger Agreement as the sole
stockholder of the Sub by unanimous written consent pursuant to the Maryland
Corporations and Associations Code Section 2-505. The Company's Board of
Directors has directed that this Merger Agreement be submitted to a vote of its
shareholders, 66 3% of whom must approve this Merger Agreement for it to
become effective.
7. The parties intend by this Merger Agreement to effect a
"reorganization" under Section 368 of the Internal Revenue Code of 1986, as
amended.
<PAGE> 31
AGREEMENT
In consideration of the promises and agreements set forth herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. MERGER. The Company shall be merged with and into the Sub (the
"Merger"), and the Sub shall be the surviving corporation (hereinafter sometimes
referred to as the "Surviving Corporation"). The name of the Surviving
Corporation shall be The Parkway Company, Inc., which is the name currently set
forth in the Articles of Incorporation (the "Charter") of the Sub. The Merger
shall become effective at 5:00 p.m. on ____, 1996 (the "Effective Time").
2. GOVERNING DOCUMENTS.
(a) The Charter of the Sub, as it may be amended or restated, and as in
effect immediately prior to the Effective Time, shall be the Charter of the
Surviving Corporation without further change or amendment until thereafter
amended in accordance with the provisions thereof and applicable law.
(b) The Bylaws of the Sub as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation without change or
amendment until thereafter amended in accordance with the provisions thereof and
applicable law.
3. OFFICERS AND DIRECTORS. The persons who are executive officers of
the Sub immediately prior to the Effective Time shall, after the Effective Time,
be the executive officers of the Surviving Corporation, without change until
their successors have been duly elected and qualified. The directors named in
the Sub's Charter will serve as directors of the Surviving Corporation.
4. SUCCESSION. At the Effective Time, the separate corporate existence
of the Company shall cease, and the Surviving Corporation shall possess all the
rights, privileges, powers and franchise of a public and private nature and be
subject to all the restrictions, disabilities and duties of the Company; and all
rights, privileges, powers and franchises of the Company, and all property,
real, personal and mixed, and all debts due to the Company on whatever account,
as well as for Share subscriptions and all other things in action, shall be
vested in the Surviving Corporation; and all property, rights, privileges,
powers and franchises, and all and every other interest shall be thereafter the
property of the Surviving Corporation as they were of the Company, and the title
to any real estate vested by deed or otherwise shall not revert or be in any way
impaired by reason of the Merger; but all rights of creditors and all liens upon
any property of the Company shall be preserved
2
<PAGE> 32
unimpaired, and all debts, liabilities and duties of the Company shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if such debts, liabilities and duties had been incurred or
contracted by it. The employees and agents of the Company shall become the
employees and agents of the Surviving Corporation and shall continue to be
entitled to the same rights and benefits which they enjoyed as employees and
agents of the Company.
5. FURTHER ASSURANCES. From time to time, as and when required by the
Surviving Corporation or by its successors and assigns, there shall be executed
and delivered on behalf of the Company such deeds, assignments and other
instruments, and there shall be taken or caused to be taken by it all such
further and other action, as shall be appropriate or necessary in order to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation the
title to and possession of all property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of the Company and otherwise to
carry out the purposes of this Merger Agreement, and the officers and directors
of the Surviving Corporation are fully authorized in the name and on behalf of
the Company or otherwise, to take any and all such action and to execute and
deliver any and all such deeds, assignments and other instruments.
6. CAPITAL STOCK. The total number of shares of stock of all classes
which the Sub has authority to issue is 100,000,000 shares, 70,000,000 of which
are initially classified as Common Stock, par value $0.001 per share, and
30,000,000 of which are initially classified as Excess Stock, par value $0.001
per share, with authority in the Board of Directors to classify and reclassify
any unissued shares. The aggregate par value of all the shares of stock of all
classes of the Sub is $1,000,000. The total number of shares of stock of all
classes which the Company has authority to issue is 15,000,000 shares,
5,000,000 of which are classified as preferred stock, par value $10.00 per
share, and 10,000,000 of which are classified as common stock, par value $1.00
per share. The aggregate par value of all the shares of stock of all classes of
the Company is $60,000,000.
7. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without, any action on the part of the holder thereof:
(a) Each Share outstanding immediately prior to the Effective Time
shall be changed and converted into and shall be one fully paid and
nonassessable share of Common Stock.
(b) The 100 shares of Common Stock issued and outstanding in the name
of the Company shall be cancelled and retired and resume the status of
authorized and unissued shares of Common Stock.
8. STOCK CERTIFICATES. At and after the Effective Time, all of the
outstanding certificates which immediately prior to the Effective Time
represented Shares shall be deemed for all purposes to evidence ownership of,
and to represent shares of, Common Stock into which the Shares formerly
represented by such certificates have been converted as herein provided. The
registered owner on the books and records of the Company or its transfer agent
of any such outstanding stock certificate shall, until such certificate shall
have been surrendered for transfer or otherwise accounted for to the Surviving
Corporation or its transfer agent, have and be entitled to exercise any voting
and other rights with respect to and to receive any dividends and other
distributions upon the shares of Common Stock evidenced by such outstanding
certificate as provided above.
9. CONDITIONS. Consummation of the Merger and related transactions is
subject to satisfaction of the following conditions prior to the Effective Time:
3
<PAGE> 33
(a) The Merger shall have been approved by the requisite number of
holders of Shares and the Common Stock and all necessary action shall have been
taken to authorize the execution, delivery and performance of this Merger
Agreement by the Company and the Sub.
(b) All regulatory approvals necessary in connection with the
consummation of the Merger and the transactions contemplated thereby shall have
been obtained.
(c) No suit, action, proceeding or other litigation shall have been
commenced or threatened to be commenced which, in the opinion of the Company or
the Sub would pose a material restriction on or impair consummation of the
Merger, performance of this Merger Agreement or the conduct of the business of
the Sub after the Effective Time, or create a risk of subjecting the Company or
the Sub, or their respective shareholders, officers, or directors, to material
damages, costs, liability or other relief in connection with the Merger or this
Merger Agreement.
(d) The shares of Common Stock to be issued or reserved for issuance
shall, if required, have been approved for listing on the New York Stock
Exchange or such other national securities exchange or national market system as
the Board of Directors of the Sub may designate, upon official notice of
issuance by such exchange.
10. GOVERNING LAW. This Merger Agreement was negotiated in and is
performable in the State of Texas and shall be governed by and construed in
accordance with the laws of the State of Texas applicable to contracts entered
into and to be performed within the State of Texas, except to the extent that
the laws of the State of Maryland are mandatorily applicable to the Merger.
11. AMENDMENT. Subject to applicable law and subject to the rights of
the shareholders further to approve any amendment which would have a material
adverse effect on the shareholders, this Merger Agreement may be amended,
modified or supplemented by written agreement of the parties hereto at any time
prior to the Effective Time with respect to any of the terms contained herein.
12. DEFERRAL OR ABANDONMENT. At any time prior to the Effective Time
and in accordance with the provisions of Maryland and Texas law, this Merger
Agreement may be terminated and the Merger may be abandoned or the time of
consummation of the Merger may be deferred for a reasonable time by the Board of
Directors of the Sub or the Board of Directors of the Company or both,
notwithstanding approval of this Merger Agreement by the shareholders of the
Company or of the Sub, or both, if circumstances arise which, in the opinion of
the Board of Directors of the Sub or the Board of Directors of the Company, make
the Merger inadvisable or such deferral of the time of consummation advisable.
4
<PAGE> 34
13. COUNTERPARTS. This Merger Agreement may be executed in any number
of counterparts each of which when taken alone shall constitute an original
instrument and when taken together shall constitute but one and the same
Agreement.
14. ASSURANCES. The Company and the Sub agree to execute any and all
documents, 4nd to perform such other acts, which may be necessary or expedient
to further the purposes of this Merger Agreement.
IN WITNESS WHEREOF, the Company and the Sub have caused this Merger
Agreement to be signed by their respective duly authorized officers and
delivered this day of , 1996.
THE PARKWAY COMPANY
By:
-------------------------------------------
Steven G. Rogers, President
THE PARKWAY COMPANY, INC.
By:
-------------------------------------------
Steven G. Rogers, President
THE UNDERSIGNED, President of THE PARKWAY COMPANY, INC., a Maryland
corporation, who executed on behalf of the Corporation the foregoing Agreement
and Plan of Merger of which this certificate is made a part, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Agreement and Plan of Merger to be the corporate act of said Corporation and
hereby certifies that to the best of his knowledge, information and belief the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
BY:
---------------------------
Steven G. Rogers, President
THE UNDERSIGNED, President of THE PARKWAY COMPANY, a Texas corporation,
who executed on behalf of the Corporation the foregoing Agreement and Plan of
Merger of which this certificate is made a part, hereby acknowledges in the
name and on behalf of said Corporation the foregoing Agreement and Plan of
Merger to be the corporate act of said Corporation and hereby certifies that to
the best of his knowledge, information and belief the matters and facts set
forth therein with respect to the authorization and approval thereof are true
in all material respects under the penalties of perjury.
By:
----------------------
Steven G. Rogers, President
5
<PAGE> 35
EXHIBIT B
ARTICLES OF INCORPORATION
-------------------------
OF
--
THE PARKWAY COMPANY, INC.
-------------------------
The undersigned, being a natural person and acting as incorporator,
does hereby form a business corporation in the State of Maryland, pursuant to
the provisions of the Maryland General Corporation Law.
ARTICLE I
INCORPORATOR
The name of the incorporator is Richard C. Leska.
The incorporator's address, including the street and number, if any,
including the county or municipal area, and including the state or county, is:
800 Fleet Bank Building, Twelve Fountain Plaza, Buffalo, New York 14202.
The incorporator is at least eighteen years of age.
The incorporator is forming the corporation named in this Charter
under the general laws of the State of Maryland, to wit, the Maryland General
Corporation Law.
ARTICLE II
NAME
The name of the corporation (hereinafter, the "Corporation") is
THE PARKWAY COMPANY, INC.
<PAGE> 36
ARTICLE III
PURPOSES
The purpose for which the Corporation is formed is to engage in any
lawful act or activity for which corporations may be organized under the general
laws of the State of Maryland now or hereafter in force. Subject to, and not in
limitation of the authority of the preceding sentence, the Corporation intends
to qualify as a real estate investment trust (a "REIT") under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended, or any successor
statute (the "Code") not later than the taxable year that begins January 1,
1998, and intends to remain so qualified unless and until the Board of Directors
shall have determined that it is no longer in the best interests of the
Corporation to engage in such business, and shall have taken the action
contemplated in such event by Section 3 of Article VII hereof.
ARTICLE IV
PRINCIPAL OFFICE IN MARYLAND
AND RESIDENT AGENT
The address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Incorporated, 32 South Street, 2nd Floor,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
the State of Maryland is The Corporation Trust Incorporated, a Maryland
corporation, 32 South Street, 2nd Floor, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
SECTION 1. AUTHORIZED CAPITAL STOCK.
(a) Authorized Shares. The total number of shares of capital stock of all
classes that the Corporation has authority to issue is 100,000,000, initially
classified as
(i) 70,000,000 shares of Common Stock, par value $.001 per share (the
"Common Stock"); and
(ii) 30,000,000 shares of Excess Stock, par value $.001 per share (the
"Excess Stock").
The Common Stock and the Excess Stock shall each constitute a separate
class of capital stock of the Corporation.
2
<PAGE> 37
(b) Terminology and Aggregate Par Value. All classes of capital stock
(except Excess Stock) are referred to herein as "Equity Stock"; all classes of
capital stock (including Excess Stock) are referred to herein as "Stock". The
aggregate par value of all of the Corporation's authorized Stock is $100,000.
SECTION 2. REIT-RELATED RESTRICTIONS AND LIMITATIONS ON THE EQUITY STOCK.
Until the "Restriction Termination Date," as defined below, all Equity
Stock shall be subject to the following restrictions and limitations intended to
preserve the Corporation's status as a REIT:
(a) Definitions. As used in this Article V, the following terms shall have
the indicated meanings:
"Beneficial Ownership" shall mean ownership of Equity Stock by a
Person who would be treated as an owner of such Equity Stock under Section
542(a)(2) of the Code either directly or constructively through the
application of Section 544 of the Code, as modified by Section 856(h)(1)(B)
of the Code. The terms "Beneficially Own" and "Beneficially Owned" and
"Beneficial Owner" shall have the correlative meanings.
"Beneficiary" shall mean the beneficiary of the Trust as determined
pursuant to Section 5(b) of this Article V.
"Constructive Ownership" shall mean ownership of Equity Stock by a
Person who would be treated as an owner of such Equity Stock either
directly or constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructively Own," "Constructively Owned" and "Constructive Owner" shall
have the correlative meanings.
"Market Price" shall mean the last reported sales price reported on
the NASDAQ National Market of Equity Stock on the trading day immediately
preceding the relevant date, or if not then traded on the NASDAQ National
Market, the last reported sales price of Equity Stock on the trading day
immediately preceding the relevant date as reported on any exchange or
quotation system over which Equity Stock may be traded, or if not then
traded over any exchange or quotation system, then the Market Price of
Equity Stock on the relevant date as determined in good faith by the Board
of Directors of the Corporation.
3
<PAGE> 38
"Ownership Limit" shall mean 9.8% in value or in number of the
outstanding Equity Stock, whichever is more restrictive. The number and
value of the Equity Stock of the Corporation shall be determined by the
Board of Directors in good faith, which determination shall be
conclusive for all purposes.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for
or to be used exclusively for the purposes described in Section 642(c)
of the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity; but
does not include an underwriter that participated in a public offering
of any Equity Stock for a period of 25 days following the purchase by
such underwriter of such Equity Stock.
"Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer that results in Excess Stock as defined below in
Section 5 of this Article V, the purported beneficial transferee for
whom the Purported Record Transferee would have acquired Equity Stock
if such Transfer had been valid under Section 2(b) of this Article V.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Stock, the Person who would
have been the record holder of Equity Stock if such Transfer had been
valid under Section 2(b) of this Article V.
"Restriction Termination Date" shall mean the effective date,
if any, for revocation or termination of the Corporation's REIT
election pursuant to Section 856(g) of the Code, as specified in a
resolution of the Board of Directors of the Corporation determining
that it is no longer in the best interests of the Corporation to
attempt to, or continue to, qualify as a REIT. If no such effective
date is specified in such resolution, the Restriction Termination Date
shall be the date such revocation or termination otherwise becomes
effective. The Restriction Termination Date shall also be deemed to
have occurred if the Corporation has not elected to qualify as REIT
under the Code effective for the taxable year that begins January 1,
1998.
"Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Equity Stock
4
<PAGE> 39
(including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Equity Stock
or (ii) the sale, transfer, assignment or other disposition of any
securities or rights convertible into or exchangeable for Equity
Stock), whether voluntary or involuntary, whether of record of
Beneficially or Constructively (including but not limited to transfers
of interests in other entities that result in changes in Beneficial
Ownership or Constructive Ownership of Equity Stock), and whether by
operation of law or otherwise. The terms "Transfers" and "Transferred"
shall have the correlative meanings.
"Trust" shall mean the trust created pursuant to
Section 5(b) of this Article V.
"Trustee" shall mean the Corporation as trustee of the Trust,
and any successor trustee appointed by the Corporation.
(b) Ownership Limitation and Transfer Restrictions with
Respect to Equity Stock.
(i) Except as provided in Section 2(f) of this Article V,
prior to the Restriction Termination Date, no Person shall Beneficially
Own or Constructively Own Equity Stock in excess of the Ownership
Limit.
(ii) Except as provided in Section 2(f) of this Article V,
prior to the Restriction Termination Date, any Transfer that, if
effective would result in any Person Beneficially Owning or
Constructively Owning Equity Stock in excess of the Ownership Limit
shall be void ab initio as to the Transfer of such Equity Stock that
would be otherwise Beneficial Owned or Constructively Owned (as the
case may be) by such Person in excess of the Ownership Limit; and the
Purported Record Transferee (and the Purported Beneficial Transferee,
if different) shall acquire no rights in such Equity Stock.
(iii) Except as provided in Section 2(f) of this Article V,
prior to the Restriction Termination Date, any Transfer that, if
effective, would result in the outstanding Equity Stock being
Beneficially Owned by less than 100 Persons (determined without
reference to any rules of attribution) shall be void ab initio as to
the Transfer of such Equity Stock which would be otherwise Beneficially
Owned by the transferee; and the Purported Record Transferee (and the
Purported Beneficial Transferee, if different) shall acquire no rights
in such Equity Stock.
5
<PAGE> 40
(iv) Prior to the Restriction Termination Date, any Transfer
that, if effective, would result in the Corporation being "closely
held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Corporation failing to qualify as a REIT, shall
be void ab initio as to the Transfer of the Equity Stock that would
cause the Corporation to be "closely held" within the meaning of
Section 856(h) of the Code or otherwise to fail to qualify as a REIT,
as the case may be; and the Purported Record Transferee (and the
Purported Beneficial Transferee, if different) shall acquire no rights
in such Equity Stock.
(v) If the Board of Directors or its designee shall at any
time determine in good faith that a Transfer of Equity Stock has taken
place in violation of this Section 2(b) or that a Person intends to
acquire or has attempted to acquire beneficial ownership (determined
without reference to any rules of attribution), Beneficial Ownership or
Constructive Ownership of any Equity Stock of the Corporation in
violation of this Section 2(b), the Board of Directors or its designee
shall take such action as it deems advisable to refuse to give effect
to or to prevent such Transfer, including but not limited to, refusing
to give effect to such Transfer on the books of the Corporation or
instituting proceedings to enjoin such Transfer; provided, however;
that any Transfers or attempted Transfers in violation of Section
2(b)(ii), Section 2(b)(iii) or Section 2(b)(iv) of this Article V shall
automatically result in the conversion and exchange described in
Section 2(c), irrespective of any action (or non-action) by the Board
of Directors, except as provided in Section 2(f) of this Article V.
(c) Automatic Conversion of Equity Stock into Excess Stock.
Subject to Section 5(a) below,
(i) If, notwithstanding the other provisions contained in this
Article V, at any time prior to the Restriction Termination Date there
is a purported Transfer or other change in the capital structure of the
Corporation such that any Person would Beneficially Own or
Constructively Own Equity Stock in excess of the Ownership Limit, then,
except as otherwise provided in Section 2(f) of this Article V, such
Equity Stock in excess of the Ownership Limit (rounded up to the
nearest whole share) shall automatically (and without action, by the
Corporation or by any purported Transferor, Purported Record Transferee
or Purported Beneficial Transferee of such Equity Stock, in the case
6
<PAGE> 41
of a Transfer) be converted into and exchanged for an equal number of
Excess Stock. Such conversion and exchange shall be effective as of the
close of business on the business day prior to the date of the
purported Transfer or change in capital structure.
(ii) If, notwithstanding the other provisions in this Article
V, at any time prior to the Restriction Termination Date there is a
purported Transfer or other change in the capital structure of the
Corporation that, if effective, would cause the Corporation to become
"closely held" within the meaning of Section 856(h) of the Code or
otherwise to fail to qualify as a REIT, then the Equity Stock being
Transferred, or resulting from any other change in the capital
structure of the Corporation, that would cause the Corporation to be
"closely held" within the meaning of Section 856(h) of the Code or
otherwise to fail to qualify as a REIT, as the case may be, (rounded up
to the nearest whole share) shall automatically (and without any action
by the Corporation or by any purported Transferor, Purported Record
Transferee or Purported Beneficial Transferee of such Equity Stock, in
the case of a Transfer) be converted into and exchanged for an equal
number of shares of Excess Stock. Such conversion and exchange shall be
effective as of the close of business on the business day prior to the
date of the purported Transfer or change in capital structure.
(d) The Corporation's Right to Redeem Stock. The Corporation shall have
the right to redeem any Stock that is Transferred, or are attempted to be
Transferred, in violation of Section 2(b) of this Article V, at a price per
share equal to the lesser of (i) the price per share in the transaction that
created such violation or attempted violation (or, in the case of a devise or
gift, the Market Price at the time of such devise or gift) and (ii) the Market
Price of the class of Equity Stock to which such Stock relate on the date the
Corporation, or its designee, gives notice of such redemption. The Corporation
shall have the right to redeem any Stock described in this Section for a period
of 90 days after the later of (i) the date of the Transfer or attempted Transfer
and (ii) the date the Board of Directors determines in good faith that a
Transfer has occurred, if the Corporation does not receive a notice of such
Transfer pursuant to Section 2(e) of this Article V.
7
<PAGE> 42
(e) Notice Requirements and General Authority of the Board
of Directors to Implement REIT-Related Restrictions and
Limitations.
(i) Any Person who acquires or attempts to acquire Equity
Stock in violation of Section 2(b) of this Article V, and any Person
who is a Purported Record Transferee or a Purported Beneficial
Transferee such that the Equity Stock proposed to be acquired are
converted into Excess Stock under Section 2(c) of this Article V, shall
immediately give written notice or, in the event of a proposed or
attempted Transfer, give at least 15 days' prior written notice to the
Corporation of such event and shall provide to the Corporation such
other information as the Corporation may request in order to determine
the effect, if any, of such Transfer or attempted Transfer on the
Corporation's status as a REIT.
(ii) Prior to the Restriction Termination Date every
Beneficial Owner or Constructive Owner of more than 5.0% (or such other
percentage, between 0.5% and 5.0%, as provided in the income tax
regulations promulgated under the Code) of the number or value of
outstanding Equity Stock of the Corporation shall, within 30 days after
January 1 of each year, give written notice to the Corporation stating
the name and address of such Beneficial Owner or Constructive Owner,
the number of Equity Stock Beneficially or Constructively Owned, and a
description of how such Stock are held. Each such Beneficial Owner or
Constructive Owner shall provide to the Corporation such additional
information that the Corporation may reasonably request in order to
determine the effect, if any, of such Beneficial or Constructive
Ownership on the Corporation's status as a REIT; and
(iii) Prior to the Restriction Termination Date each Person
who is a Beneficial Owner or Constructive Owner of Equity Stock and
each Person (including the stockholder of record) who is holding Equity
Stock for a Beneficial Owner or Constructive Owner shall provide to the
Corporation such information that the Corporation may reasonably
request in order to determine the Corporation's status as a REIT, to
comply with the requirements of any taxing authority or governmental
agency or to determine any such compliance.
(iv) Each certificate for Equity Stock shall bear
substantially the following legends:
8
<PAGE> 43
"The Corporation will furnish to any stockholder on
request and without charge a full statement of the
designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the
stock of each class which the Corporation is authorized to
issue, of the differences in the relative rights and
preferences between the shares of each series of a preferred
or special class in series which the Corporation is authorized
to issue, to the extent they have been set, and of the
authority of the Board of Directors to set the relative rights
and preferences of subsequent series of a preferred or special
class of stock. Such request may be made to the secretary of
the Corporation or to its transfer agent."
"Keep this certificate in a safe place. If it is
lost, stolen, or destroyed, the Corporation will
require a bond of indemnity as a condition to the
issuance of a replacement certificate."
"The securities represented by this certificate are
subject to restrictions on ownership and transfer for the
purpose of the Corporation's maintenance of its status as a
"real estate investment trust" under the Internal Revenue Code
of 1986, as amended. Except as otherwise provided pursuant to
the Charter of the Corporation, no Person may Beneficially Own
or Constructively Own Equity Stock in excess of 9.8%, (in
value or in number of shares of Equity Stock, whichever is
more restrictive) of the outstanding Equity Stock of the
Corporation, with further restrictions and exceptions set
forth in the Charter of the Corporation. Any Person who
attempts or proposes to own, Beneficially Own or
Constructively Own Equity Stock in excess of the above
limitation must notify the Corporation in writing at least 15
days prior to such proposed or attempted Transfer to such
Person. If attempt is made to violate these restrictions on
Transfers, (i) any purported Transfer will be void and will
not be recognized by the Corporation, (ii) the Corporation
will have the right to redeem the Stock proposed to be
Transferred, and (iii) the Stock represented hereby will be
automatically converted into and exchanged for Excess Stock
(having no dividend or voting rights), which will be held in
trust by the Corporation. All
9
<PAGE> 44
capitalized terms in this legend have the meanings defined in
the Charter of the Corporation, a copy of which, including the
restrictions on ownership and transfer, will be sent without
charge to each stockholder who directs a request to the
address above."
(v) Nothing contained in this Article V shall limit the
authority of the Board of Directors to take such other action as it
deems necessary or advisable to protect the Corporation and the
interests of its stockholders by preservation of the Corporation's
status as a REIT.
(f) Exemptions.
(i) The Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel or other evidence
satisfactory to the Board of Directors and upon at least 15 days'
written notice from a Transferee prior to a proposed Transfer that, if
consummated, would result in the intended Transferee Beneficially
Owning Equity Stock in excess of the Ownership Limit, and upon such
other conditions as the Board of Directors may direct, may in its sole
and absolute discretion exempt a Person from the Ownership Limit.
(ii) The Board of Directors, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel or other evidence
satisfactory to the Board of Directors, may in its sole and absolute
discretion exempt a Person from the limitation on a Person
Constructively Owning Equity Stock in excess of the Ownership Limit, if
(x) such Person does not and represents that it will not own, directly
or Constructively, more than a 9.8% interest (as set forth in Section
856(d)(2)(B) of the Code) in a tenant of the Corporation, (y) the
Corporation obtains such representations and undertakings from such
Person as are reasonably necessary to ascertain this fact and (z) such
Person agrees that any violation or attempted violation of such
representations, undertakings and agreement will result in such Equity
Stock in excess of the Ownership Limit being converted into and
exchanged for Excess Stock in accordance with Section 2(c) of this
Article V.
(iii) Nothing in this Article V shall preclude the settlement
of a transaction entered into through the facilities of any interdealer
quotation system for national securities exchange upon which Equity
Stock
10
<PAGE> 45
are traded, provided that certain transactions may be settled by
providing Excess Stock as set forth in this Article V.
(iv) The ownership restrictions set forth in this Section 2 of
this Article V shall not apply until the effective date of the merger
between the Corporation and The Parkway Company, a Texas corporation.
SECTION 3. CLASSIFICATION AND RECLASSIFICATION OF STOCK.
(a) Power of Board to Classify or Reclassify Stock. The Board of
Directors shall have the power, in its sole discretion and without limitation,
to classify or reclassify any unissued Stock, whether now or hereafter
authorized, by setting, altering or eliminating in any one or more respects,
from time to time, before the issuance of such Stock, any feature of such Stock,
including, but not limited to, the designation, preferences, conversion or other
rights, voting powers, qualifications and terms and conditions of redemption of,
and limitations as to dividends and any other restrictions on, such Stock. The
power of the Board of Directors to classify and reclassify any of the shares of
capital stock shall include, without limitation, subject to the provisions of
the Charter, authority to classify or reclassify any unissued shares of such
stock into a class or classes of preferred stock, preference stock, special
stock or other stock, and to divide and classify shares of any class into one or
more series of such class, by determining, fixing, or altering one or more of
the following:
(i) The distinctive designation of such class or series and
the number os shares to constitute such class or series; provided that,
unless otherwise prohibited by the terms of such or any other class or
series, the number of shares of any class or series may be decreased by
the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of such
class or series may be increased by the Board of Directors in
connection with any such classification or reclassification, and any
shares of any class or series which have been redeemed, purchased,
otherwise acquired or converted into shares of Common stock or any
other class or series shall become part of the authorized capital stock
and be subject to classification and reclassification as provided in
this subparagraph.
(ii) Whether or not and, if so, the rates, amounts and times
at which, and the conditions under which, dividends shall be payable on
shares of such class or series, whether any such dividends shall rank
senior or junior to or on a parity which the dividends payable on any
other class or series of stock, and the status of any such dividends as
11
<PAGE> 46
cumulative, cumulative to a limited extent or non-cumulative
and as participating or non-participating.
(iii) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law and, if
so, the terms of such voting rights.
(iv) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and conditions
thereof, including provision for adjustment of the conversion or
exchange rate in such events or at such times as the Board of Directors
shall determine.
(v) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall
be redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates; and whether or not there shall be any sinking fund or
purchase account in respect thereof, and if so, the terms thereof.
(vi) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the affairs
of, or upon any distribution of the assets of, the Corporation, which
rights may vary depending upon whether such liquidation, dissolution or
winding up is voluntary or involuntary and, if voluntary, may vary at
different dates, and whether such rights shall rank senior or junior to
or on a parity with such rights of any other class or series of stock.
(vii) Whether or not there shall be any limitations
applicable, while shares of such class or series are outstanding, upon
the payment of dividends or making of distributions on, or the
acquisition of, or the use of moneys for purchase or redemption of, any
stock of the Corporation, or upon any other action of the Corporation,
including action under this subparagraph, and, if so, the terms and
conditions thereof.
(viii) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of such
class or series, not inconsistent with law and the Charter of the
Corporation.
(b) Ranking of Stock. For the purposes hereof and of any
articles supplementary to the Charter providing for the classification or
reclassification of any shares of capital stock or of any other charter document
of the Corporation (unless otherwise provided in any such articles or document),
any class
12
<PAGE> 47
or series of stock of the Corporation shall be deemed to rank:
(i) Prior to another class or series either as to dividends or
upon liquidation, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case may be, in
preference or priority to holders of such other class or series.
(ii) On a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per share
thereof be different from those of such others, if the holders of such
class or series of stock shall be entitled to receipt of dividends or
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective dividend rates or
redemption or liquidation prices, without preference or priority over
the holders of such other class or series.
(iii) Junior to another class or series either as to dividends
or upon liquidation, if the rights of the holders of such class or
series shall be subject or subordinate to the rights of the holders of
such other class or series in respect of the receipt of dividends or
the amounts distributable upon liquidation, dissolution or winding up,
as the case may be.
SECTION 4. COMMON STOCK.
Subject to the provisions of Sections 2 and 5 of this Article V, the
Common Stock shall have the following preferences, rights, powers, restrictions,
limitations and qualifications, and such others are may be afforded by law:
(a) Voting Rights. Except as may otherwise be required by law, and
subject to action, if any, by the Board of Directors, pursuant to Section 3 of
this Article V, each holder of Common Stock shall have one vote in respect of
each Common Share held of record on all matters to be voted upon by the
stockholders.
(b) Dividend Rights. After provision(s) with respect to preferential
dividends on any then outstanding classes of preferred stock, if any, fixed by
the Board of Directors pursuant to Section 3 of this Article V, shall have been
satisfied, and after satisfaction of any other requirements, if any, including
with respect to redemption rights and preferences, in any such classes of
preferred stock, then and thereafter the holders of Common Stock shall be
entitled to receive, pro rata in relation to the number of Common Stock held by
them, such dividends as may be declared from time to time by the Board of
Directors out of
13
<PAGE> 48
funds legally available therefor.
(c) Liquidation Rights. In the event of the voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, after distribution in
full of the preferential amounts, if any, fixed pursuant to Section 3 of this
Article V, to be distributed to the holders of any then outstanding preferred
stock, and subject to the right, if any, of the holders of any outstanding
preferred stock to participate further in any liquidating distributions, all of
the assets of the Corporation; if any, remaining, of whatever kind available for
distribution to stockholders after the foregoing distributions have been made
shall be distributed to the holders of the Common Stock, ratably in proportion
to the number of Common Stock held by them. For purposes of making liquidating
distributions pursuant to this Section 4(c), Excess Stock shall be included as
part of the preferred stock and the Common Stock to the extent provided in
Section 5(e) below.
(d) Conversion Rights. Each share of Common Stock is
convertible into Excess Stock as provided in Section 2(c) of this
Article V.
SECTION 5. EXCESS STOCK.
(a) Condition to Issuance. The provisions of this Article V to the
contrary notwithstanding, and the automatic conversion and exchange of certain
Equity Stock into Excess Stock in the circumstances provided for in Section 2(c)
of this Article V shall be deemed not to have occurred, nunc pro tunc, if the
Corporation shall have determined, in the sole and absolute discretion of the
Board of Directors, that the issuance by the Corporation of Excess Stock would
cause the Corporation to fail to satisfy the organizational and operational
requirements that must be met to qualify for treatment as a REIT.
(b) Ownership of Excess Stock in Trust. Upon any purported Transfer
that results in Excess Stock pursuant to Section 2(c) of this Article V, such
Excess Stock shall not be issued in certificated form but shall be held by the
Corporation, in book entry form, as Trustee in trust (herein, the "Trust") for
the exclusive benefit of such Beneficiary or Beneficiaries to whom an interest
in such Excess Stock may later be transferred pursuant to Section 5(f) of this
Article V. Excess Stock so held in trust shall be issued and outstanding Stock
of the Corporation. The Purported Record Transferee shall have no rights in such
Excess Stock except the right to designate a transferee of such Excess Stock
upon the terms specified in Section 5(f) of this Article V. The Purported
Beneficial Transferee shall have no rights in such Excess Stock except as
provided in Section 5(f) of this Article V.
14
<PAGE> 49
(c) No Voting Rights. Except as required by law, Excess
Stock shall not be entitled to vote on any matters.
(d) No Dividend Rights. Excess Stock shall not be entitled to any
dividends. Any dividend or distribution paid prior to the discovery by the
Corporation that Equity Stock have been converted into Excess Stock shall be
repaid to the Corporation upon demand.
(e) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of,
the Corporation, each holder of shares of Excess Stock shall be entitled to
receive that portion of the assets of the Corporation that would have been
distributed to the Equity Stock in respect of which the Excess Stock was issued.
The Corporation, as holder of the Excess Stock in trust or, if the Corporation
has been dissolved, any trustee appointed by the Corporation prior to its
dissolution, shall distribute ratably to the Beneficiaries of the Trust, when
determined, any such assets received in respect of the Excess Stock in any
liquidation, dissolution or winding up of, or any distribution of the assets of,
the Corporation.
(f) Restrictions on Transfer; Designation of Beneficiary.
(i) Excess Stock shall not be transferable. The Purported
Record Transferee may freely designate a Beneficiary of an interest in
the Trust (representing the number of Excess Stock held by the Trust
attributable to a purported Transfer that resulted in Excess Stock), if
the Excess Stock held in the Trust would not be Excess Stock in the
hands of such Beneficiary and the Purported Record Transferee does not
receive a price for designating such Beneficiary that reflects a price
per Excess Share that exceeds (x) the price per share such Purported
Record Transferee paid for the Equity Stock in the purported Transfer
that resulted in the Excess Stock, or (y) if the Purported Record
Transferee did not give value for such Excess Stock (through a gift,
devise or other transaction), a price per share equal to the Market
Price on the date of the purported Transfer that resulted in the Excess
Stock. Upon such transfer of an interest in the Trust, the
corresponding Excess Stock in the Trust shall automatically be
exchanged for an equal number of Equity Stock, and such Equity Stock
shall be transferred of record to the transferee of the interest in the
Trust if such Equity Stock would not be Excess Stock in the hands of
such transferee. Prior to any transfer of any interest in the Trust,
the Purported Record Transferee must give advance notice to the
Corporation of the intended transfer and the Corporation must have
waived in writing its redemption rights under Section 2(d) of this
Article V.
15
<PAGE> 50
(ii) Notwithstanding the foregoing, if a Purported Record
Transferee receives a price for designating a Beneficiary of an
interest in the Trust that exceeds the amounts allowable under Section
5(f)(i) of this Article V, such Purported Record Transferee shall pay,
or cause such Beneficiary to pay, such excess to the Corporation.
(g) Conversion Right. Each share of Excess Stock is convertible into
Equity Stock as provided in Section 2(c) of this Article V.
SECTION 6. GENERAL PROVISIONS.
(a) Interpretation and Ambiguities. The Board of Directors shall have
the power to interpret and to construe the provisions of this Article V,
including any definition contained in Section 1, the Board of Directors shall
have the power to determine the application of the provisions of this Article V
with respect to any situation based on the facts known to it, and any such
interpretation, construction and determination shall be final and binding on all
interested parties, including the stockholders.
(b) Severability. If any provision of this Article V or any application
of any such provision is determined to be void, invalid or enforceable by any
court having jurisdiction over the issue, the validity and enforceability of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
ARTICLE VI
THE BOARD OF DIRECTORS
SECTION 1. AUTHORIZED NUMBER AND INITIAL DIRECTORS.
The business and affairs of the Corporation shall be managed by a Board
of Directors. The authorized number of directors of the Corporation initially
shall be ten, which number may be increased or decreased pursuant to the Bylaws
of the Corporation. The persons who shall serve as directors effectively
immediately and until the first annual meeting of stockholders and until their
successors are duly elected and qualify are as follows:
16
<PAGE> 51
Daniel C. Arnold
George R. Farish
Roger P. Friou
Joe F. Lynch
C. Herbert Magruder
W. Lincoln Mossop, Jr.
Steven G. Rogers
Leland R. Speed
SECTION 2. GENERAL TERM OF OFFICE.
Each director shall serve for a term of one year and until such
director's successor is elected and qualified or until such director's death,
retirement, resignation or removal.
SECTION 3. REMOVAL OF DIRECTORS.
A director may be removed from office but only for cause and only by
the affirmative vote of the holders of at least a majority of the combined
voting power of all shares of capital stock entitled to be cast in the election
of directors voting together as a single class.
SECTION 4. FILLING VACANCIES.
Except as may otherwise be provided with respect to any rights of
holders of preferred stock to elect additional directors, or in any agreement
relating to the right to designate nominees for election to the Board of
Directors, should a vacancy on the Board of Directors occur or be created
(whether arising through death, retirement, resignation or removal), other than
through an increase but not a decrease, in the number of authorized directors,
such vacancy shall be filled by the affirmative vote of a majority of the
remaining directors, even though less than a quorum of the Board of Directors. A
vacancy on the Board of Directors resulting from an increase in the number of
directors shall be filled by the affirmative vote of a majority of the entire
Board of Directors. By the vote required to elect a director, the stockholders
may fill any vacancy on the Board of Directors resulting from the removal of a
director.
SECTION 5. BOARD AUTHORIZATION OF SHARE ISSUANCES.
The Board of Directors of the Corporation may authorize the issuance
from time to time of Stock of any class, whether now or hereafter authorized, or
securities convertible into Stock of any class, whether now or hereafter
authorized, for such consideration as the Board of Directors may deem advisable,
subject to such restrictions or limitations, if any, as may be set forth in the
Charter or the Bylaws of the Corporation.
17
<PAGE> 52
SECTION 6. AMENDMENTS TO THE BYLAWS.
In furtherance and not in limitation of the power conferred by statute,
the Board of Directors is expressly authorized to adopt, alter or repeal Bylaws
of the Corporation. The stockholders may adopt, alter and repeal Bylaws of the
Corporation only by the affirmative vote of 80% of the aggregate votes entitled
to be cast with respect thereto.
SECTION 7. CERTAIN OTHER DETERMINATIONS BY THE BOARD OF
DIRECTORS.
The determination as to any of the following matters, made in good
faith by or pursuant to the direction of the Board of Directors consistent with
the Charter and in the absence of actual receipt of an improper benefit in
money, property or services or active and deliberate dishonesty established by a
court, shall be final and conclusive and shall be binding upon the Corporation
and every holder of Stock: the amount of the net income of the Corporation for
any period and the amount of assets at any time legally available for the
payment of dividends, redemption of Stock or the payment of other distributions
on Stock; the amount of paid-in surplus, net assets, annual or other net profit,
net assets in excess of capital, undivided profits or excess of profits over
losses on sales of assets; the amount, purpose, time of creation, increase or
decrease, alteration or cancellation of any reserves or charges and the
propriety thereof (whether or not any obligation nor liability for which such
reserves or charges shall have been created shall have been paid or discharged);
the fair value, or any sale, bid or asked price to be applied in determining the
fair value, of any asset owned or held by the Corporation; and any matters
relating to the acquisition, holding and disposition of any assets of the
Corporation.
SECTION 8. RESERVED POWERS OF THE BOARD OF DIRECTORS.
The enumeration and definition of particular powers of the Board of
Directors included in this Article VI shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other provision of the charter of the Corporation, or construed or deemed by
inference or otherwise in any manner to exclude or limit the powers conferred
upon the Board of Directors under the general laws of the State of Maryland as
now or hereafter in force.
18
<PAGE> 53
ARTICLE VII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF THE
STOCKHOLDERS AND DIRECTORS
SECTION 1. RELATED PARTY TRANSACTIONS.
Without limiting any other procedure available by law or otherwise to
the Corporation, the Board of Directors may authorize any agreement or other
transaction with any person, corporation, association, company, trust,
partnership (limited or general) or other organization, although one or more of
the directors or officers of the Corporation may be a party to any such
agreement or any officer, director, stockholder or member of such other party
(an "Interested Officer/Director"), and no such agreement or transaction shall
be invalidated or rendered void or voidable solely by reason of the existence of
any such relationship if: (i) the existence is disclosed or known to the Board
of Directors, and the contract or transaction is authorized, approved or
ratified by the affirmative vote of a majority of the disinterested directors,
even if they constitute less than a quorum of the Board of Directors; or (ii)
the existence is disclosed to the stockholders entitled to vote, and the
contract or transaction is authorized, approved or ratified by a majority of the
votes cast by the stockholders entitled to vote, other than the votes of the
stock held of record by the Interested Officers/Directors; or (iii) the contract
or transaction is fair and reasonable to the Corporation. Any Interested
Officer/Director of the Corporation or the stock owned by them or by a
corporation, association, company, trust, partnership (limited or general) or
other organization in which an Interested Officer/Director may have an interest,
may be counted in determining the presence of a quorum at a meeting of the Board
of Directors or a committee of the Board of Directors or at a meeting of the
stockholders, as the case may be, at which the contract or transaction is
authorized, approved or ratified.
19
<PAGE> 54
SECTION 2. REIT QUALIFICATION.
After the Corporation has initially elected to qualify as a REIT under
the Code, the Board of Directors shall use its reasonable best efforts to cause
the Corporation and its stockholders to qualify for U.S. federal income tax
treatment in accordance with the provision of the Code applicable to a REIT. In
furtherance of the foregoing, the Board of Directors shall use its reasonable
best efforts to take such actions as are necessary, and may take such actions as
in its sole judgment and discretion are desirable, to preserve the status of the
Corporation as a REIT, provided, however, that if the Board of Directors
determines in its discretion, that it is no longer in the best interests of the
Corporation to continue to have the Corporation qualify as a REIT, the Board of
Directors may revoke or otherwise terminate the Corporation's REIT election
pursuant to Section 856(g) of the Code. Nothing contained in the Charter shall
limit the authority of the Board of Directors to take such action as it in its
sole discretion deems necessary or advisable to protect the Corporation and the
interests of the stockholders by maintaining the Corporation's eligibility to
be, and preserving the Corporation's status as, a qualified REIT under the Code.
SECTION 3. STOCKHOLDER ACTIONS.
(a) Stockholder Meetings. Action shall be taken by the stockholders
only at annual or special meetings of stockholders, or by unanimous written
consent of the holders of all Equity Stock entitled to vote on such action at a
meeting of stockholders, if such written consent is accompanied by a written
waiver of any right to dissent signed by each stockholder entitled to notice of
the meeting but not entitled to vote at such meeting.
(b) Special Meetings of the Stockholders. Special meetings of the
stockholders of the Corporation for any purpose or purposes may be called at any
time by the Chairman of the Board of Directors; or by a majority of the members
of the Board of Directors; or by a committee of the Board of Directors which has
been duly designated by the Board of Directors and whose powers and authority,
as provided in a resolution of the Board of Directors or in the Bylaws of the
Corporation, include the power to call such meetings. Special meetings of
stockholders of the Corporation shall be called at the request of stockholders
only as required by law.
SECTION 4. OTHER CONSIDERATIONS.
The Board of Directors shall, in connection with the exercise of its
business judgment involving a Business Combination (as defined in Section 3-601
of the Corporations and
20
<PAGE> 55
Associations Article of the Annotated Code of Maryland) or any actual or
proposed transaction which would or may involve a change in control of the
Corporation (whether by purchases of shares of stock or any other securities of
the Corporation in the open market, or otherwise, tender offer, merger,
consolidation, dissolution, liquidation, sale of all or substantially all of the
assets of the Corporation, proxy solicitation or otherwise), in determining what
is in the best interests of the Corporation and its stockholders and in making
any recommendation to its stockholders, give due consideration to all relevant
factors, including, but not limited to (a) the economic effect, both immediate
and long-term, upon the Corporation's stockholders, including stockholders, if
any, who do not participate in the transaction; (b) the social and economic
effect on the employees, customers of, and others dealing with, the Corporation
and its subsidiaries and on the communities in which the Corporation and its
subsidiaries operate or are located; (c) whether the proposal is acceptable
based on the historical and current operating results or financial condition of
the Corporation; (d) whether a more favorable price could be obtained for the
Corporation's stock or other securities in the future; (e) the reputation and
business practices of the offeror and its management and affiliates as they
would affect the employees of the Corporation and its subsidiaries; (f) the
future value of the stock or any other securities of the Corporation; (g) any
antitrust or other legal and regulatory issues that are raised by the proposal;
and (h) the business and financial condition and earnings prospects of the
acquiring person or entity, including, but not limited to, debt service and
other existing financial obligations, financial obligations to be incurred in
connection with the acquisition, and other likely financial obligations of the
acquiring person or entity. If the Board of Directors determines that any
proposed Business Combination (as defined in Section 3-601 of the Corporations
and Associations Article of the Annotated Code of Maryland) or actual or
proposed transaction which would or may involve a change in control of the
Corporation should be rejected, it may take any lawful action to defeat such
transaction, including, but not limited to, any or all of the following:
advising stockholders not to accept the proposal; instituting litigation against
the party making the proposal; filing complaints with governmental and
regulatory authorities; acquiring the stock or any of the securities of the
Corporation; selling or otherwise issuing authorized but unissued stock, other
securities or granting options or rights with respect thereto; acquiring a
company to create an antitrust or other regulatory problem for the party making
the proposal; and obtaining a more favorable offer from another individual or
entity.
21
<PAGE> 56
SECTION 5. STOCKHOLDER PROPOSALS.
For any stockholder proposal to be presented in connection with an
annual meeting of stockholders of the Corporation, including any proposal
relating to the nomination of a director to be elected to the Board of Directors
of the Corporation, the stockholders must have given timely written notice
thereof in writing to the Secretary of the Corporation in the manner and
containing the information required by the By-Laws. Stockholder proposals to be
presented in connection with a special meeting of stockholders will be presented
by the Corporation only to the extent required by Section 2-502 of the
Corporations and Associations Article of the Annotated Code of Maryland.
SECTION 6. VOTING REQUIREMENTS.
Notwithstanding any provision of law requiring the authorization of any
action by a greater proportion than a majority of the total number of shares of
all classes of capital stock or the total number of shares of any class of
capital stock, such action shall be valid and effective if authorized by the
affirmative vote of the holders of a majority of the total number of shares of
all classes and entitled to vote thereon, except as otherwise provided in the
Charter of the Corporation.
ARTICLE VIII
INDEMNIFICATION OF AGENTS
AND LIMITATION OF LIABILITY OF OFFICERS AND DIRECTORS
SECTION 1. INDEMNIFICATION.
The Corporation shall provide any indemnification permitted by the laws
of Maryland and shall indemnify directors, officers, agents and employees as
follows: (a) the Corporation shall indemnify its directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of expenses under the procedures and
to the full extent permitted by law and (b) the Corporation shall indemnify
other employees and agents, whether serving the Corporation or at its request
any other entity, to such extent as shall be authorized by the Board of
Directors or the Corporation's By-Laws and be permitted by law. The foregoing
rights of indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of Directors may take
such action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of the
22
<PAGE> 57
Charter of the Corporation or repeal of any of its provisions shall limit or
eliminate the right to indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal or shall limit or
eliminate the rights granted under indemnification agreements entered into by
the Corporation and its directors, officers, agents and employees.
SECTION 2. LIMITATION OF LIABILITY.
To the fullest extent permitted by Maryland statutory or decisional
law, as amended or interpreted, no director or officer of the Corporation shall
be liable to the Corporation or its stockholders for money damages. No amendment
of the Charter of the Corporation or repeal any of its provisions shall apply to
or affect in any respect the applicability of the preceding sentence with
respect to any act or omission which occurred prior to such amendment or repeal.
ARTICLE IX
AMENDMENTS
(a) Right to Amend Articles. Subject to the provisions hereof, the
Corporation reserves the right at any time, and from time to time, to amend,
alter, repeal, or rescind any provision contained herein, in the manner now or
hereafter prescribed by law, or other provisions authorized by the laws of the
State of Maryland at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all contract or other rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors, officers, employees or any other persons whomsoever by and pursuant
to the Charter of the Corporation, in its present form or as hereafter amended,
are granted subject to this reservation.
(b) Certain Amendments Requiring Special Stockholder Vote.
Any provision of the Charter of the Corporation to the contrary
notwithstanding:
(i) no term or provision of the Charter of the Corporation may
be added, amended or repealed in any respect that would, in the
determination of the Board of Directors, cause the Corporation not to
qualify as a REIT under the Code;
(ii) Article VI, Section 3 (removal of directors) and Section
6 (amendments of Bylaws); Article VIII (indemnification of agents and
limitation of liability of officers and directors); and this Article IX
shall not be amended or repealed; and
23
<PAGE> 58
(iii) no provision imposing cumulative voting in the
election of directors may be added to the Charter of the
Corporation;
unless in each such case, in addition to any vote required by the terms of then
outstanding preferred stock, such action is approved by the affirmative vote of
the holders of not less than eighty percent (80%) of all of the votes entitled
to be cast on the matter.
IN WITNESS WHEREOF, I have adopted and signed these Articles
of Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated: May____, 1996
-------------------------------
Richard C. Leska, Incorporator
24
<PAGE> 59
EXHIBIT C
BYLAWS
OF
THE PARKWAY COMPANY, INC.
A Maryland Corporation
<PAGE> 60
THE PARKWAY COMPANY, INC.
BYLAWS
<TABLE>
<CAPTION>
Table of Contents
-----------------
<S> <C> <C>
ARTICLE I OFFICES..................................................................... 1
Section 1. PRINCIPAL OFFICE............................................................ 1
Section 2. ADDITIONAL OFFICES.......................................................... 1
ARTICLE II MEETINGS OF STOCKHOLDERS.................................................... 1
Section 1. ANNUAL MEETING.............................................................. 1
Section 2. SPECIAL MEETINGS............................................................ 1
Section 3. PLACE OF MEETINGS........................................................... 2
Section 4. NOTICE...................................................................... 2
Section 5. SCOPE OF NOTICE............................................................. 2
Section 6. QUORUM...................................................................... 2
Section 7. VOTING...................................................................... 3
Section 8. PROXIES..................................................................... 3
Section 9. VOTING OF STOCK BY CERTAIN HOLDERS.......................................... 3
Section 10. INSPECTORS.................................................................. 4
Section 11. NOMINATIONS AND STOCKHOLDER
BUSINESS............................................................ 4
Section 12. INFORMAL ACTION BY STOCKHOLDERS............................................. 7
Section 13. VOTING BY BALLOT............................................................ 8
ARTICLE III DIRECTORS................................................................... 8
Section 1. GENERAL POWERS; QUALIFICATIONS.............................................. 8
Section 2. NUMBER AND TENURE........................................................... 8
Section 3. REGULAR MEETINGS............................................................ 9
Section 4. SPECIAL MEETINGS............................................................ 9
Section 5. NOTICE...................................................................... 9
Section 6. QUORUM...................................................................... 9
Section 7. VOTING...................................................................... 9
Section 8. TELEPHONE MEETINGS.......................................................... 10
Section 9. INFORMAL ACTION BY DIRECTORS................................................ 10
Section 10. COMPENSATION................................................................ 10
Section 11. REMOVAL OF DIRECTORS........................................................ 10
Section 12. LOSS OF DEPOSIT............................................................. 10
Section 13. SURETY BONDS................................................................ 10
Section 14. RELIANCE.................................................................... 11
Section 15. CERTAIN RIGHTS OF DIRECTORS................................................. 11
ARTICLE IV COMMITTEES.................................................................. 11
Section 1. NUMBER, TENURE AND QUALIFICATIONS........................................... 11
Section 2. POWERS...................................................................... 11
Section 3. MEETINGS.................................................................... 12
Section 4. TELEPHONE MEETINGS.......................................................... 12
Section 5. INFORMAL ACTION BY COMMITTEES............................................... 12
</TABLE>
i
<PAGE> 61
<TABLE>
<S> <C> <C>
ARTICLE V OFFICERS.................................................................... 12
Section 1. GENERAL PROVISIONS.......................................................... 12
Section 2. ELECTION, TENURE AND REMOVAL OF
OFFICERS............................................................ 13
Section 3. CHIEF EXECUTIVE OFFICER..................................................... 13
Section 4. CHIEF OPERATING OFFICER..................................................... 13
Section 5. CHIEF FINANCIAL OFFICER..................................................... 13
Section 6. CHAIRMAN OF THE BOARD....................................................... 14
Section 7. PRESIDENT................................................................... 14
Section 8. VICE PRESIDENTS............................................................. 14
Section 9. SECRETARY................................................................... 14
Section 10. TREASURER................................................................... 15
Section 11. ASSISTANT SECRETARIES AND ASSISTANT
TREASURERS.......................................................... 15
Section 12. SALARIES.................................................................... 15
ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS 15
Section 1. CONTRACTS................................................................... 15
Section 2. CHECKS AND DRAFTS........................................................... 15
Section 3. DEPOSITS.................................................................... 16
ARTICLE VII STOCK........................................................................16
Section 1. CERTIFICATES................................................................ 16
Section 2. TRANSFERS................................................................... 17
Section 3. LOST CERTIFICATE............................................................ 17
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING
OF RECORD DATE.............................................................. 17
Section 5. STOCK LEDGER................................................................ 18
Section 6. FRACTIONAL STOCK; ISSUANCE OF
UNITS............................................................... 19
ARTICLE VIII ACCOUNTING YEAR..............................................................19
ARTICLE IX DIVIDENDS................................................................... 19
Section 1. DECLARATION................................................................. 19
Section 2. CONTINGENCIES............................................................... 19
ARTICLE X INVESTMENT POLICY........................................................... 20
ARTICLE XI SEAL .................................................................... 20
Section 1. SEAL........................................................................ 20
Section 2. AFFIXING SEAL............................................................... 20
ARTICLE XII INDEMNIFICATION............................................................. 20
Section 1. PROCEDURE................................................................... 20
Section 2. EXCLUSIVITY, ETC............................................................ 21
Section 3. SEVERABILITY; DEFINITIONS................................................... 21
ARTICLE XIII WAIVER OF NOTICE............................................................ 22
ARTICLE XIV AMENDMENT OF BYLAWS......................................................... 22
</TABLE>
ii
<PAGE> 62
MARYLAND BYLAWS
OF
THE PARKWAY COMPANY, INC.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE.
The principal office of the Corporation shall be located at such place
as the Board of Directors may designate.
SECTION 2. ADDITIONAL OFFICES.
The Corporation may have additional offices at such places as the
Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING.
The Corporation shall hold an annual meeting of its stockholders to
elect directors and transact any other business within its powers, either at
9:00 a.m. on the first Thursday of June in each year if not a legal holiday, or
at such other time on such other day falling on or before the 30th day
thereafter as shall be set by the Board of Directors. Except as the Charter or
statute provides otherwise, any business may be considered at an annual meeting
without the purpose of the meeting having been specified in the notice. Failure
to hold an annual meeting does not invalidate the Corporation's existence or
affect any otherwise valid corporate acts.
SECTION 2. SPECIAL MEETINGS.
The president, chief executive officer, Board of Directors, Executive
Committee of the Board of Directors, or the chairman of the Board of Directors
may call special meetings of the stockholders. Such request shall state the
purpose of such meeting and the matters proposed to be acted on at such meeting.
The secretary shall inform such stockholders of the reasonably
1
<PAGE> 63
estimated cost of preparing and mailing notice of the meeting and, upon such
stockholders' payment to the Corporation of such costs, the secretary shall give
notice to each stockholder entitled to notice of the meeting. Special meetings
of the stockholders shall be called at the request of the stockholders as may be
required by law.
SECTION 3. PLACE OF MEETINGS.
Meetings of stockholders shall be held at such place in the United
States as is set from time to time by the Board of Directors.
SECTION 4. NOTICE.
Not less than ten nor more than 90 days before each meeting of
stockholders, the secretary shall give to each stockholder entitled to vote at
such meeting and to each stockholder not entitled to vote who his entitled to
notice of the meeting written or printed notice stating the time and place of
the meeting and, in the case of a special meeting or as otherwise may be
required by statute, the purpose for which the meeting is called, either by mail
or by presenting it to such stockholder personally or by leaving it at his
residence or usual place of business. If mailed, such notice shall be deemed to
be given when deposited in the United States mail addressed to the stockholder
at his post office address as it appears on the records of the Corporation, with
postage thereon prepaid.
SECTION 5. SCOPE OF NOTICE.
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 statute to be stated in such notice. No business
shall be transacted at a special meeting of stockholders except as specifically
designated in the notice.
SECTION 6. QUORUM.
At any meeting of stockholders, the presence in person or by proxy of
stockholders entitled to cast a majority of all the votes entitled to be cast at
such meeting shall constitute a quorum; but this section shall not affect any
requirement under any statute or the Charter of the Corporation for the vote
necessary for the adoption of any measure. If, however, such quorum shall not be
present at any meeting of the stockholders, the stockholders entitled to vote at
such meeting, present in person or by proxy, shall have power to adjourn the
meeting from time to time to a date not more than 120 days after the original
2
<PAGE> 64
record date without notice other than announcement at the meeting. At such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 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 may be voted for as many individuals as there are directors to be
elected and for whose election the share is entitled to be voted. A majority of
the votes cast at a meeting of stockholders duly called and at which a quorum is
present shall be sufficient to approve any other matter which may properly come
before the meeting, unless more than a majority of the votes cast is required by
statute or by the Articles of the Corporation. Unless otherwise provided in the
Articles, each outstanding share, regardless of class, shall be entitled to one
vote on each matter submitted to a vote at a meeting of stockholders.
SECTION 8. PROXIES.
A stockholder may vote the stock owned of record by him, either in
person or by proxy executed in writing by the stockholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
Corporation before or at time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
SECTION 9. VOTING OF STOCK BY CERTAIN HOLDERS.
Stock registered in the name of a corporation, partnership, trust or
other entity, if entitled to be voted, may be voted by the president or a vice
president, a general partner or trustee thereof, as the case may be, or a proxy
appointed by any of the foregoing individuals, unless some other person who has
been appointed to vote such stock pursuant to a bylaw or a resolution of the
board of directors of such corporation or other entity presents a certified copy
of such bylaw or resolution, in which case such person may vote such stock. Any
director or other fiduciary may vote stock registered in his name as such
fiduciary, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it
shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding shares entitled to be voted at any given time,
unless they are held by it in a fiduciary capacity, in which case they
3
<PAGE> 65
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 of
closing of the stock transfer books, the time after the record date of closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.
SECTION 10. INSPECTORS.
At any meeting of stockholders, the chairman of the meeting may, or
upon the request of any stockholder shall, appoint one or more persons as
inspectors for such meeting. Such inspectors shall ascertain and report the
number of shares represented at the meeting based upon their determination of
the validity and effect of proxies, count all votes, report the results and
perform such other acts as are proper to conduct the election and voting with
impartiality and fairness to all the stockholders.
Each report of an inspector shall be in writing and signed by him or
by a majority of them if there is more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
SECTION 11. NOMINATIONS AND STOCKHOLDER BUSINESS.
(a) Annual Meeting of Stockholders.
(1) Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the stockholders may
be made at an annual meeting of stockholders (i) pursuant to the
4
<PAGE> 66
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 meeting and
who complied with the notice procedures set forth in this
Section 11(a).
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to
clause (iii) of paragraph (a)(1) of this Section 11, the
stockholder must have given timely notice thereof in writing
to the secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to the secretary at
the principal executive offices of the Corporation not less
than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting
is advanced by more than 30 days or delayed by more than 60
days from such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual
meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (i) as to each person
whom the stockholder proposed to nominate for election or
reelection as a director all information relating to such
person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if
elected); (ii) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of
the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and of
the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination
or proposal is made, (x) the name and address of such
stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (y) the class and number of shares
of stock of the Corporation which are owned beneficially and
of record by such stockholder and such
5
<PAGE> 67
beneficial owner.
(3) Notwithstanding anything in the second sentence
of paragraph (a)(2) 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
naming all of the nominees for director or specifying the size
of the increased Board of Directors made by the Corporation at
least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this
Section 11(a) shall also be considered timely, but only with
respect to nominees for any new positions created by such
increase, if it shall be delivered to the secretary at the
principal executive offices of the Corporation not later than
the close of business on the tenth day following the day on
which such public announcement is first made by the
Corporation.
(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. Nominations of persons for
election to the Board of Directors may be made at a special
meeting of stockholders at which directors are to be elected
(i) pursuant to the Corporation's notice of meeting, (ii) by
or at the direction of the Board of Directors or (iii)
provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any
stockholder of the Corporation who is a stockholder of record
at the time of giving of notice provided for in this Section
11(b), who is entitled to vote at the meeting and who complied
with the notice procedures set forth in this Section 11(b). In
the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors
to the Board of Directors, any such stockholder may nominate a
person or persons (as the case may be) for election to such
position as specified in the Corporation's notice of meeting,
if the stockholder's notice required by paragraph (a)(2) of
this Section 11(b) shall be delivered to the secretary at the
principal executive offices of the Corporation not earlier
than the 90th day prior to such special meeting and not later
than the close of business on the later of the 60th day prior
to such special meeting or the tenth day following the day on
which public announcement is first made of the date of the
special
6
<PAGE> 68
meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
(c) General.
(1) Only such persons who are nominated in accordance
with the procedures set forth in this Section 11 shall be
eligible to serve as directors and only such business shall be
conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures
set forth in this Section 11. The presiding officer of the
meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth
in this Section 11 and, if any proposed nomination or business
is not in compliance with this Section 11, to declare that
such defective nomination or proposal be disregarded.
(2) For purposes of this Section 11, "public
announcement" shall mean disclosure in a press release
reported by the Dow Jones New Service, Associated Press or
comparable news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
(3) 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
and the rules and regulations thereunder with respect to the
matters set forth in this Section 11. Nothing in this Section
11 shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 12. INFORMAL ACTION BY STOCKHOLDERS.
Any action required or permitted to be taken at a meeting of
stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by each stockholder entitled to vote on the matter
and each stockholder entitled to notice of a meeting of stockholders (but not to
vote thereat) has waived in writing any right to dissent from such action, and
such consent and waiver are filed with the minutes of proceedings of the
stockholders.
7
<PAGE> 69
SECTION 13. VOTING BY BALLOT.
Voting on any question or in any election may be via voce
unless the presiding officer shall order or any stockholder shall demand that
voting be by ballot.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS; QUALIFICATIONS.
The business and affairs of the Corporation shall be managed under the
direction of its Board of Directors. A majority of the persons serving as
directors of the Corporation at any time shall be directors who are unaffiliated
(in the sole determination of the Board of Directors, which determination shall
be final) with and who do not receive compensation from the Corporation (other
than as a result of status as a director of the Corporation) ("Independent
Directors"). Notwithstanding the foregoing requirement, no action otherwise
validly taken by the Board of Directors during a period in which a majority of
its members are not Independent Directors shall be invalidated or otherwise
affected by such circumstance, nor shall such circumstance subject the directors
taking any such action to a higher standard of care or to liability other than
that which would have applied to such action were a majority of the members of
the Board of Directors Independent Directors at the time such action was taken.
SECTION 2. NUMBER AND TENURE.
At any regular meeting or at any special meeting called for that
purpose, 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 Maryland General Corporation
Law, 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. Each
director shall hold office for a term of one year and until his successor is
elected and qualified, or until his resignation, removal (in accordance with the
Charter), retirement or death.
8
<PAGE> 70
SECTION 3. REGULAR MEETINGS.
The Board of Directors may provide, by resolution, the time and place,
either within or without the State of Maryland, for the holding of regular
meetings of the Board of Directors without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by or at the
request of the chairman of the board, president or by a majority of the
directors then in office. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or without
the State of Maryland, as the place for holding any special meeting of the Board
of Directors called by them.
SECTION 5. NOTICE.
Notice of any special meeting shall be given by written notice
delivered personally, transmitted by facsimile, telegraphed or mailed to each
director at his business or residence address. Personally delivered, facsimile
transmitted or telegraphed notices shall be given at least twenty-four hours
prior to the meeting. Notice by mail shall be given at least five days prior to
the meeting. If mailed, such notice shall be deemed to be given when deposited
in the United States mail properly addressed, with postage thereon prepaid. If
given by telegram, such notice shall be deemed to be given when the telegram is
delivered to the telegraph company. 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 this notice, unless specifically required by statute
or these Bylaws.
SECTION 6. QUORUM.
A majority of the directors shall constitute a quorum for transaction
of business at any meeting of the Board of Directors, provided that, if less
than a majority of such directors are present at said meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice, and provided further that if, pursuant to the Articles of the
Corporation or these Bylaws, the vote of a majority of a particular group of
directors is required for action, a quorum must also include a majority of such
group.
SECTION 7. VOTING.
The action of the majority of the directors present at
9
<PAGE> 71
a meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater or lesser proportion is required
for such action by the Articles, these Bylaws or applicable statute.
SECTION 8. TELEPHONE MEETINGS.
Directors may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation in a meeting by
these means shall constitute presence in person at the meeting.
SECTION 9. INFORMAL ACTION BY DIRECTORS.
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting, if a consent in writing to
such action is signed by each director and such written consent is filed with
the minutes of proceedings of the Board of Directors.
SECTION 10. COMPENSATION.
Unless restricted by the Charter, the Board of Directors shall have
the authority to fix the compensation of directors.
SECTION 11. REMOVAL OF DIRECTORS.
The stockholders may remove any director in the manner provided in the
Charter of the Corporation.
SECTION 12. LOSS OF DEPOSIT.
No director shall be liable for any loss which may occur by reason of
the failure of the bank, trust company, savings and loan association or other
institution with whom moneys or stock have been deposited.
SECTION 13. SURETY BONDS.
Unless required by law, no director shall be obligated to give any
bond or surety or other security for the performance of any of his duties.
10
<PAGE> 72
SECTION 14. RELIANCE.
Each director, officer, employee and agent of the Corporation shall,
in the performance of his duties with respect to the Corporation, be fully
justified and protected with regard to any act or failure to act in reliance in
good faith upon the books of account or other records of the Corporation, upon
an opinion of counsel or upon reports made to the Corporation by any of its
officers or employees or by the advisers, accountants, appraisers or other
experts or consultants selected by the Board of Directors or officers of the
Corporation, regardless of whether such counsel or expert may also be a
director.
SECTION 15. CERTAIN RIGHTS OF DIRECTORS.
The directors shall have no responsibility to devote their full time
to the affairs of the Corporation. Any director, officer, employee or agent of
the Corporation, in his personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to those
of or relating to the Corporation.
ARTICLE IV
COMMITTEES
SECTION 1. NUMBER, TENURE AND QUALIFICATIONS.
The Board of Directors may appoint from among its members an Executive
Committee, an Audit Committee and other committees, composed of two or more
directors, to serve at the pleasure of the Board of Directors.
SECTION 2. POWERS.
The Board of Directors may delegate to committees appointed under
Section 1 of this Article any of the powers of the Board of Directors, except as
prohibited by law.
11
<PAGE> 73
SECTION 3. MEETINGS.
At every meeting of any such committee, the presence of a majority of
all the members thereof shall constitute a quorum and the affirmative vote of a
majority of the members present shall be necessary for the adoption by it of any
resolution. 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 4. TELEPHONE MEETINGS.
Members of a committee of the Board of Directors may participate in a
meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation in a meeting by these means shall constitute presence in
person at the meeting.
SECTION 5. INFORMAL ACTION BY COMMITTEES.
Any action required or permitted to be taken at any meeting of a
committee of the Board of Directors may be taken without a meeting if a consent
in writing to such action is signed by each member of the committee and such
written consent is filled with the minutes of proceedings of such committee.
ARTICLE V
OFFICERS
SECTION 1. GENERAL PROVISIONS.
The officers of the Corporation shall include a chief executive
officer, a president, one or more vice presidents, a secretary and a treasurer
and may include a chairman of the board, a chief operating officer, a chief
financial officer, a treasurer, one or more assistant secretaries and one or
more assistant treasurers. In addition, the Board of Directors may from time to
time appoint such other officers with such powers and duties as they shall deem
necessary or desirable. The Chairman of the Board shall be a director, other
officers need not be directors. Any two or more offices except president and
secretary may be held by the same person. In its discretion, the Board of
Directors may leave unfilled any office except that of president, treasurer and
secretary.
12
<PAGE> 74
SECTION 2. ELECTION, TENURE AND REMOVAL OF OFFICERS.
The Board of Directors shall elect the officers. The Board of
Directors may from time to time authorize any committee or officer to appoint
assistant and subordinate officers. Election or appointment of an officer,
employee or agent shall not of itself create contract rights. All officers shall
be appointed to hold their offices, respectively, during the pleasure of the
Board. The Board of Directors (or, as to any assistant or subordinate officer,
any committee or officer authorized by the Board) may remove an officer at any
time. The removal of an officer does not prejudice any of his contract rights.
The Board of Directors (or, as to any assistant or subordinate officer, any
committee or officer authorized by the Board) may fill a vacancy which occurs in
any office for the unexpired portion of the term.
SECTION 3. CHIEF EXECUTIVE OFFICER.
The President shall be the chief executive officer of the Corporation
unless the Board of Directors designates the Chairman of the Board as chief
executive officer. Subject to the control of the Board of Directors and the
executive committee (if any), the chief executive officer shall have general
executive charge, management and control of the properties, business and
operations of the Corporation with all such powers as may be reasonably incident
to such responsibilities; he may agree upon and execute all leases, contracts,
evidences of indebtedness and other obligations in the name of the Corporation
and may sign all certificates for shares of capital stock of the Corporation;
and shall have such other powers and duties as designated in accordance with
these bylaws and as from time to time may be assigned to him by the Board of
Directors.
SECTION 4. CHIEF OPERATING OFFICER.
The Board of Directors may designate a chief operating officer. The
chief operating officer shall have the responsibilities and duties as set forth
by the Board of Directors or the chief executive officer.
SECTION 5. CHIEF FINANCIAL OFFICER.
The Board of Directors may designate a chief financial officer. The
chief financial officer shall have the responsibilities and duties as set forth
by the Board of Directors or the chief executive officer.
13
<PAGE> 75
SECTION 6. CHAIRMAN OF THE BOARD.
If elected, the Chairman of the Board shall preside at all meetings of
the stockholders and of the Board of Directors; and the Chairman shall have such
other powers and duties as designated in these bylaws and as from time to time
may be assigned to the Chairman by the Board of Directors.
SECTION 7. PRESIDENT.
Unless the Board of Directors otherwise determines, the President
shall have the authority to agree upon and execute all leases, contracts,
evidences of indebtedness and other obligations in the name of the Corporation;
and, unless the Board of Directors otherwise determines, he shall, in the
absence of the Chairman of the Board or if there be no Chairman of the Board,
preside at all meetings of the stockholders and (should the President be a
director) of the Board of Directors; and the President shall have such other
powers and duties as designated in accordance with these bylaws and as from time
to time may be assigned to the President by the Board of Directors.
SECTION 8. VICE PRESIDENTS.
The Vice Presidents shall perform such duties and have such powers as
the Board of Directors may from time to time prescribe.
SECTION 9. SECRETARY.
The Secretary shall keep the minutes of all meetings of the Board of
Directors and the minutes of all meetings of the stockholders, in books provided
for that purpose; he shall attend to the giving and serving of all notices; he
may in the name of the Corporation affix the seal of the Corporation to all
contracts of the Corporation and attest thereto; he may sign with the other
appointed officers all certificates for shares of capital stock of the
Corporation; the Secretary shall have charge of the certificate books, transfer
books and stock ledgers, and such other books and papers as the Board of
Directors may direct, all of which shall at all reasonable times be open to
inspection of any director upon application at the office of the Corporation
during business hours, and he shall in general perform all duties incident to
the office of Secretary, subject to the control of the chief executive officer
and the Board of Directors.
14
<PAGE> 76
SECTION 10. TREASURER.
The Treasurer shall have responsibility for the custody and control of
all the funds and securities of the Corporation. He shall perform all acts
incident to the position of Treasurer subject to the control of the chief
executive officer and the Board of Directors; and the Treasurer shall, if
required by the Board of Directors, give such bond for the faithful discharge of
the Treasurer's duties in such form as the Board of Directors may require.
SECTION 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
Each Assistant Treasurer and Assistant Secretary shall have the usual
powers and duties pertaining to his office, together with such other powers and
duties as may be assigned to him by the chief executive officer or the Board of
Directors. The Assistant Treasurers shall exercise the powers of the Treasurer
during that officer's absence or inability or refusal to act. The Assistant
Secretaries shall exercise the powers of the Secretary during that officer's
absence or inability or refusal to act.
SECTION 12. SALARIES.
The salaries of the officers shall be fixed from time to time by the
Board of Directors and no officer shall be prevented from receiving such salary
by reason of the fact that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS.
The Board of Directors may authorize any officer or agent to enter
into any contract or to execute and deliver any instruments in the name of and
on behalf of the Corporation and such authority may be general or confined to
specific instances. Any agreement, deed, mortgage, lease or other document
executed by one or more of the directors or by an authorized person shall be
valid and binding upon the Board of Directors and upon the Corporation when
authorized or ratified by action of the Board of Directors.
SECTION 2. CHECKS AND DRAFTS.
All checks, drafts or other orders for the payment of
15
<PAGE> 77
money, notes or other evidences of indebtedness in the name of the Corporation
shall be signed by such officer or officers, agent or agents of the Corporation
and in such manner as shall from time to time be determined by the Board of
Directors.
SECTION 3. DEPOSITS.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may designate.
ARTICLE VII
STOCK
SECTION 1. CERTIFICATES.
The Corporation's Excess Stock (the "Excess Stock"), shall be issued
in book entry form only, and without certificates. For that purpose, the
Corporation shall cause appropriate records to be maintained of all registered
holders of the Excess Stock and the number of shares of Excess Stock,
respectively, held by each, from time to time.
Except as provided above with respect to the Excess Stock, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number of shares of each class of stock held by him in
the Corporation. Each certificate shall be signed by the chief executive
officer, the president or a vice president and countersigned by the secretary or
an assistance secretary or the treasurer or an assistant treasurer and may be
sealed with the seal, if any, of the Corporation. The signatures may be either
manual or facsimile. Certificates shall be consecutively numbered; and if the
Corporation shall, from time to time, issue several classes or series of stock,
each class or series may have its own number sequence. A certificate is valid
and may be issued whether or not an officer who signed it is still an officer
when it is issued. Each certificate representing shares which are restricted as
to their transferability or voting powers, which are preferred or limited as to
their dividends or as to their allocable portion of the assets upon liquidation
or which are redeemable at the option of the Corporation, shall have a statement
of such restriction, limitation, preference or redemption provision, or a
summary thereof, plainly stated on the certificate. In lieu of such statement or
summary, the Corporation may set forth upon the face or back of the certificate
a statement that the Corporation will furnish to any
16
<PAGE> 78
stockholder, upon request and without charge, a full statement of such
information.
SECTION 2. TRANSFERS.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a stock certificate duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, the Corporation
shall issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
Notwithstanding the foregoing, transfers of shares of any class of
stock will be subject in all respects to the Charter of the Corporation.
SECTION 3. LOST CERTIFICATE.
The Board of Directors (or any officer designated by it) may direct a
new certificate to be issued in place of any certificate previously issued by
the Corporation alleged to have been lost, stolen or destroyed upon the making
of an affidavit of that fact by the person claiming the certificate to be lost,
stolen or destroyed. When authorizing the issuance of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or his legal representative to advertise the same in such manner as
they shall require and/or to give bond, with sufficient surety, to the
Corporation to indemnify it against any loss or claim which may arise as a
result of the issuance of a new certificate.
SECTION 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD
DATE.
The Board of Directors may set, in advance, a record date for the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders, or stockholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in any
case, shall not be prior to the close of business on
17
<PAGE> 79
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 is to be held or taken.
In lieu of fixing a record date, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not longer
than 20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days before the date
of such meeting.
If no record date is fixed and the stock transfer books are not closed
for the determination of stockholders, (a) the record date for the determination
of stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day on which the notice of meeting is
mailed; and (b) the record date for the determination of stockholders entitled
to receive payment of a dividend or an allotment of any other rights shall be
the close of business on the day on which the resolution of the directors,
declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any meeting
of stockholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, except where the determination has been
made through the closing of the transfer books and the stated period of closing
has expired.
SECTION 5. STOCK LEDGER.
The Corporation shall maintain at its principal office or at the
office of its counsel, accountants or transfer agent, an original or duplicate
share ledger containing the name and address of each stockholder and the number
of shares of each class held by such stockholder.
18
<PAGE> 80
SECTION 6. FRACTIONAL STOCK; ISSUANCE OF UNITS.
The Board of Directors may issue fractional stock or provide for the
issuance of scrip, all on such terms and under such conditions as they may
determine. Notwithstanding any other provision of the Articles or these Bylaws,
the Board of Directors may issue units consisting of different securities of the
Corporation. Any security issued in a unit shall have the same characteristics
as any identical securities issued by the Corporation, except that the Board of
Directors may provide that for a specified period securities of the Corporation
issued in such unit may be transferred on the books of the Corporation only in
such unit.
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
DIVIDENDS
SECTION 1. DECLARATION.
Dividends upon the stock of the Corporation may be declared by the
Board of Directors, subject to the provisions of law and the Articles of the
Corporation. Dividends may be paid in cash, property or stock of the
Corporation, subject to the provisions of law and the Articles.
SECTION 2. CONTINGENCIES.
Before payment of any dividends, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors may from time to time, in its absolute discretion, think proper as
a reserve fund for contingencies, for equalizing dividends, for repairing or
maintaining any property of the Corporation or for such other purpose as the
Board of Directors shall determine to be in the best interest of the
Corporation, and the Board of Directors may modify or abolish any such reserve
in the manner in which it was created.
19
<PAGE> 81
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Charter of the Corporation, the Board
of Directors may from time to time adopt, amend, revise or terminate any policy
or policies with respect to investments by the Corporation as it shall deem
appropriate in its sole discretion.
ARTICLE XI
SEAL
SECTION 1. SEAL.
The Board of Directors may authorize the adoption of a seal by the
Corporation. The seal shall have inscribed thereon the name of the Corporation
and the year of its organization. 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 required to place its seal to a document,
it shall be sufficient to meet the requirements of any law, rule or regulation
relating to a seal to place the word "(SEAL)" adjacent to the signature of the
person authorized to execute the document on behalf of the Corporation.
ARTICLE XII
INDEMNIFICATION
SECTION 1. PROCEDURE.
Any indemnification, or payment of expenses in advance of the final
disposition of any proceeding, shall be made promptly, and in any event within
60 days, upon the written request of the director or officer entitled to seek
indemnification (the "Indemnified Party"). The right indemnification and
advances hereunder shall be enforceable by the Indemnified Party in any court of
competent jurisdiction, if (i) the Corporation denies such request, in whole or
in part, or (ii) no disposition thereof is made within 60 days. The Indemnified
Party's costs and expenses incurred in connection with successfully establishing
his right to indemnification, in whole or in part, in any such action shall also
be reimbursed by
20
<PAGE> 82
the Corporation. It shall be a defense to any action for advance for expenses
that (a) a determination has been made that the facts then known to those making
the determination would preclude indemnification or (b) the Corporation has not
received both (i) an undertaking as required by law to repay such advances in
the event it shall ultimately be determined that the standard of conduct has not
been met and (ii) a written affirmation by the Indemnified Party of such
Indemnified Party's good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met.
SECTION 2. EXCLUSIVITY, ETC.
The indemnification and advance of expenses provided by the Charter
and these Bylaws shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advance of expenses may be entitled under any
law (common or statutory), or any agreement, vote of stockholders or
disinterested directors or other provision that is consistent with law, both as
to action in his official capacity and as to action in another capacity while
holding office or while employed by or acting as agent for the Corporation,
shall continue in respect of all events occurring while a person was a director
or officer after such person has ceased to be a director or officer, and shall
inure to the benefit of the estate, heirs, executors and administrators of such
person. All rights to indemnification and advance of expenses under the Charter
of the Corporation and hereunder shall be deemed to be a contract between the
Corporation and each director or officer of the Corporation who serves or served
in such capacity at any time while this Bylaw is in effect. Nothing herein shall
prevent the amendment of this Bylaw, provided that no such amendment shall
diminish the rights of any person hereunder with respect to events occurring or
claims made before its adoption or as to claims made after its adoption in
respect of events occurring before its adoption. Any repeal or modification of
this Bylaw shall not in any way diminish any rights to indemnification or
advance of expenses of such director or officer or the obligations of the
Corporation arising hereunder with respect to events occurring, or claims made,
while this Bylaw or any provision hereof is in force.
SECTION 3. SEVERABILITY; DEFINITIONS.
The invalidity or unenforceability of any provision of this Article
XII shall not affect the validity or enforceability of any other provision
hereof. The phrase "this Bylaw" in this Article XII means this Article XII in
its entirety.
21
<PAGE> 83
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Charter of
the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated herein, shall be deemed equivalent to the giving
of such notice. Neither the business to be transacted at nor the purpose of any
meeting need be set forth in the waiver of notice, unless specifically required
by statute. The attendance of any person at any meeting shall constitute a
waiver of notice of such meeting, except where such person attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
In accordance with the Charter, these Bylaws may be repealed, altered,
amended or rescinded (a) by the stockholders of the Corporation (considered for
this purpose as one class) by the affirmative vote of not less than 80% of all
of the votes entitled to be cast generally in the election of directors which
are cast on the matter at any meeting of stockholders called for that purpose
(provided that notice of such proposed repeal, alteration, amendment or
rescission is included in the notice of such meeting) or (b) by vote of a
majority of the Board of Directors at a meeting held in accordance with the
provisions of these Bylaws.
22
