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
Preliminary Proxy Statement |_|
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) |_|
Definitive Proxy Statement |X|
Definitive Additional Materials |_|
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |_|
ASSET INVESTORS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required. |X|
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:
[AIC LETTERHEAD]
ASSET
INVESTORS
CORPORATION
March 30, 1999
To Our Stockholders:
You are cordially invited to the 1999 Annual Meeting of Stockholders of
Asset Investors Corporation, a Maryland corporation, to be held at 1873 South
Bellaire Street, Suite 1700, Denver, Colorado on Monday, May 24, 1999, at 1:00
p.m., local time.
The formal notice of the annual meeting and a proxy statement
describing the matters to be acted upon at the annual meeting are contained in
the following pages.
Enclosed is a proxy that enables you to vote your shares on the matters
to be considered at the annual meeting even if you are unable to attend the
annual meeting. Please mark the proxy to indicate your vote, date and sign the
proxy and return it in the enclosed postage-paid envelope as soon as possible
for receipt prior to the annual meeting. Stockholders also are entitled to vote
on any other matter that properly comes before the annual meeting.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE BE SURE YOU ARE
REPRESENTED AT THE ANNUAL MEETING BY ATTENDING IN PERSON OR BY RETURNING YOUR
PROXY AS SOON AS POSSIBLE. EVEN IF YOU PLAN TO ATTEND IN PERSON, PLEASE DATE,
SIGN AND RETURN THE ENCLOSED PROXY CARD.
Sincerely,
Terry Considine
Chairman of the Board and
Chief Executive Officer
[AIC LETTERHEAD]
ASSET
INVESTORS
CORPORATION
3410 South Galena Street, Suite 210
Denver, Colorado 80231
(303) 614-9400
--------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------------------------------------------------------------
To Our Stockholders:
The 1999 Annual Meeting of Stockholders of Asset Investors Corporation,
a Maryland corporation, will be held at 1873 South Bellaire Street, Suite 1700,
Denver, Colorado, on Monday, May 24, 1999, at 1:00 p.m., local time, to consider
and act upon the following matters:
1. election of Messrs. Richard L. Robinson, Tim Schultz and William J.
White, three Class I Directors, to serve until the annual meeting of
stockholders in 2002 and until their successors are elected and qualified;
2. approval of the reincorporation of Asset Investors Corporation under
the laws of the State of Delaware through the merger of Asset Investors
Corporation into a wholly-owned Delaware subsidiary; and
3. such other business as properly may come before the annual meeting
and any adjournments or postponements thereof.
Only stockholders of record at the close of business on March 25, 1999,
the record date for the annual meeting, will be entitled to notice of and to
vote at the annual meeting.
The Board of Directors of the Company desires to have maximum
representation at the annual meeting and requests that you mark, date, sign and
timely return to the exchange agent, Norwest Shareholder Services, at the
address listed on the enclosed proxy in the postage-paid envelope provided
whether or not you expect to attend the annual meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS,
David M. Becker
Secretary
March 30, 1999
ASSET INVESTORS CORPORATION
3410 South Galena Street, Suite 210
Denver, Colorado 80231
(303) 614-9400
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 24, 1999
To Our Stockholders:
This proxy statement is furnished to the holders of the common stock of
Asset Investors Corporation, a Maryland corporation, in connection with the
solicitation by the Board of Directors of the Company of proxies to be used at
the 1999 Annual Meeting of Stockholders of the Company and at any adjournments
or postponements thereof. The annual meeting will be held at 1873 South Bellaire
Street, Suite 1700, Denver, Colorado, on Monday, May 24, 1999, at 1:00 p.m.,
local time. The annual meeting is being held for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. The proxy materials,
including this proxy statement, the accompanying proxy card and the Notice of
Annual Meeting, are first being mailed to stockholders beginning on or about
March 31, 1999. At the annual meeting, the holders of the Company's common stock
will be asked to consider and vote upon the following proposals (1) the election
of Messrs. Richard L. Robinson, Tim Schultz and William J. White, three Class I
Directors, to serve until the annual meeting of stockholders in 2002 and until
their successors are elected and qualified and (2) the approval of the
reincorporation of the Company in the State of Delaware through the merger of
Asset Investors Corporation into a wholly-owned Delaware subsidiary.
GENERAL INFORMATION
In this proxy statement, the words "the Company," "we," "our" and "us"
refer to Asset Investors Corporation, a Maryland corporation and, as the context
requires, subsidiary entities.
Solicitation
The enclosed proxy is being solicited by the Company. In addition to
solicitations by mail, solicitations may be made by personal interview,
telephone and telegram by our directors and officers. No additional compensation
will be paid to our directors and officers for the solicitation of proxies. We
will employ MacKenzie Partners, Inc. to assist us in the solicitation of
proxies. We expect to incur a fee of approximately $6,000, plus reimbursement of
out-of-pocket expenses for this service. All costs of the solicitation will be
paid solely by the Company. We will reimburse banks, brokers and others holding
shares in their names or the names of nominees or otherwise for reasonable
out-of-pocket expenses incurred in sending proxies and proxy materials to the
beneficial owners of such shares.
Voting Rights and Votes Required
Holders of record of shares of the Company's common stock at the close
of business on the March 25, 1999, the record date for the annual meeting, are
entitled to notice of, and to vote at, the annual meeting. On the record date,
5,563,943 shares of the Company's common stock were outstanding. The presence,
in person or by proxy, of holders of a majority of the shares of the Company's
common stock entitled to vote at the annual meeting constitutes a quorum for the
transaction of business at the annual meeting. Shares represented by proxies
that reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the annual meeting, but with respect to which
such broker or nominee is not empowered to vote on a particular proposal) will
be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum.
Each share of the Company's common stock outstanding on the record date
is entitled to one vote on each matter presented at the annual meeting. If you
are voting by proxy, for your vote to be counted, your properly completed proxy
must be received by the secretary of the Company prior to the time the vote is
taken at the annual meeting. If your shares are held by your broker or other
nominee in "street name," your broker will vote your shares only if you provide
instructions as to how to vote your shares. You should follow the directions
provided by your broker regarding how to instruct your broker to vote your
shares. Without instructions, your shares may not be voted by that broker.
The affirmative vote of a plurality of all of the votes cast at the
annual meeting for the election of directors (assuming a quorum is present) is
necessary for the election of a director. For purposes of the election of
directors, abstentions or "broker non-votes" will not be counted as votes cast
and will have no effect on the result of the vote, although they will count
toward the presence of a quorum.
The affirmative vote of a majority of the votes entitled to be cast by
outstanding shares of voting stock of the Company is required to approve the
reincorporation proposal. For purposes of approval of the reincorporation
proposal, abstentions or "broker non-votes" will have the same effect as votes
against the reincorporation proposal.
The directors and officers of the Company, collectively holding 359,254
shares of the Company's common stock, have indicated that they will vote in
favor of the election of Messrs. Robinson, Schultz and White and the
reincorporation proposal.
Voting of Proxies
Shares of the Company's common stock represented by all properly
executed proxies received prior to the vote at the annual meeting will be voted
as specified in the proxy. Unless contrary instructions are indicated on the
proxy, the shares of the Company's common stock represented by such proxy will
be voted "FOR" the election of Messrs. Richard L. Robinson, Tim Schultz and
William J. White as directors of the Company and "FOR" approval of the
reincorporation proposal. We currently know of no other business to be brought
before the annual meeting other than as described herein. If any other matters
are presented properly to the stockholders for action at the annual meeting and
any adjournments or postponements thereof, the proxy holders named in the
enclosed proxy intend to vote in their discretion on all matters on which the
shares of the Company's common stock represented by such proxy are entitled to
vote.
Revocability of Proxy
You can change your vote at any time before the vote is taken at the
annual meeting. You can do this in one of three ways. First, you can send a
written notice dated later than your proxy card stating that you would like to
revoke your current proxy. Second, you can complete and submit a new proxy card
dated later than your original proxy card. If you choose either of these two
methods, you must submit your notice of revocation or your new proxy card to the
secretary of the Company. Our secretary must receive the notice or new proxy
card before the vote is taken at the annual meeting. Third, you can attend the
annual meeting and vote in person. Simply attending the stockholder meeting,
however, will not revoke your proxy. If you have instructed a broker to vote
your shares, you must follow the directions received from your broker as to how
to change your vote.
Dissenters' Rights of Appraisal
Under applicable state law, you are not entitled to dissenters' rights
of appraisal.
Annual Report
Our 1998 Annual Report to Stockholders, including a copy of our 1998
Annual Report on Form 10-K contains financial and other information about our
activities, including financial statements for the year ended December 31, 1998.
This report is being mailed with this proxy statement to all holders of record
on the record date.
Upon written request addressed to the secretary of the Company at the
address listed above, we will provide a copy of the Annual Report to anyone
whose proxy is being solicited in connection with this proxy statement.
PROPOSAL 1: ELECTION OF DIRECTORS
Our current charter and bylaws provide for three classes of directors
with staggered terms of office. Nominees for each class serve for terms of three
years and until the election and qualification of their successors or until
their earlier resignation, death, disqualification or removal from office. The
Board of Directors currently consists of eight members, including three Class I
Directors whose terms expire at the annual meeting of stockholders in 1999,
three Class II Directors whose terms expires at the annual meeting of
stockholders in 2000 and two Class III Directors whose terms expire at the
annual meeting of stockholders in 2001.
The Company's bylaws require the number of "Independent Directors" to
be not less than four if the number of directors is eight or greater; not less
than three if the number of directors is six or seven; and not less than two if
the number of directors is less than six. An Independent Director is defined in
the Company's bylaws as a person "who is not affiliated, directly or indirectly,
with the person or entity responsible for directing or performing the day-to-day
business affairs of the corporation (the advisor), including a person or entity
to which the advisor subcontracts substantially all of such functions, whether
by ownership of, ownership interest in, employment by, any material business or
professional relationship with, or by serving as an officer or director of, the
advisor or an affiliated business entity of the advisor." Our Independent
Directors are Messrs. Kline, Schultz, Robinson, Benson and White.
Vacancies on the Board of Directors may be filled by a majority of the
Board of Directors; provided, however, that the Independent Directors must
nominate the replacements for vacancies among the Independent Directors. Each
director elected by the Board of Directors to fill a vacancy shall hold office
until the next annual meeting of the stockholders, at which time the
stockholders shall elect a director to serve the remaining term of the class
into which such director is elected.
At the annual meeting, three Class I Directors will be elected to a
term expiring at the annual meeting of stockholders in 2002. Unless otherwise
specified, the enclosed proxy will be voted "FOR" the election of the Board of
Directors' nominees, Messrs. Robinson, Schultz and White, as the Class I
Directors of the Company. Neither management nor the Board of Directors of the
Company knows of any reason why Messrs. Robinson, Schultz or White would be
unavailable to serve as a director. Discretionary authority may be exercised by
the proxy holders named in the enclosed proxy to vote for a nominee proposed by
the Board of Directors if any of Messrs. Robinson, Schultz or White become
unavailable for election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MESSRS.
ROBINSON, SCHULTZ AND WHITE AS DIRECTORS OF THE COMPANY.
PROPOSAL 2: APPROVAL OF OUR REINCORPORATION IN THE STATE OF DELAWARE
Introduction
The Board of Directors has unanimously approved, and for the reasons
described below, recommends that stockholders approve, a proposal in which our
state of incorporation would be changed from Maryland to Delaware. This change
would be accomplished by merging the Company into Asset Investors Corporation, a
wholly owned Delaware subsidiary (referred to in this discussion as the
"Delaware Corporation") newly formed for this purpose. Each outstanding share of
the Company's common stock will be exchanged for one share of the Delaware
Corporation's common stock. Upon completion of the merger, all of the previously
outstanding shares of the Company's common stock will be converted without any
action on the part of the holder into an equal number of shares of Delaware
common stock. Our reincorporation into Delaware will be accomplished under the
terms of an Agreement and Plan of Merger between the Company and the Delaware
Corporation, a copy of which is attached to this proxy statement as Annex A.
At and after the effective time of the merger, each certificate that
previously represented shares of the Company's common stock will be deemed for
all purposes to evidence the right to receive an equal number of shares of
Delaware common stock into which those shares of the Company's common stock have
been converted as a result of the merger. The Company's common stock is
qualified for trading on the New York Stock Exchange under the symbol "AIC" and,
after the reincorporation, the Delaware common stock will continue to be traded
on the New York Stock Exchange under the same symbol.
The Delaware Corporation will be governed by the General Corporation
Law of the State of Delaware and the amended and restated certificate of
incorporation of the Delaware Corporation and the bylaws of the Delaware
Corporation attached hereto as Annexes B and C, respectively. See "Changes in
Company's Charter to be Effected by Reincorporation" and "Certain Differences
Between the Corporation Laws of Maryland and Delaware." Approval of the
reincorporation proposal will not result in any material change in our business,
management, assets, liabilities or net worth.
Assuming that the reincorporation proposal is approved, the 1998 Stock
Incentive Plan will be assumed by the Delaware Corporation. In addition, the
merger agreement provides that the Delaware Corporation will assume all options
outstanding under the stock plan, and that such options will be exercisable for
shares of the Delaware common stock on the same terms upon which outstanding
options are currently exercisable.
You should note that approval of the reincorporation proposal will
constitute approval of the assumption of the stock plan and the outstanding
options by the Delaware Corporation and approval of the certificate of
incorporation of the Delaware Corporation.
The affirmative vote of holders of a majority of the outstanding shares
will be required to approve the reincorporation proposal. If approved by the
stockholders, it is anticipated that our the reincorporation would be completed
within 30 days of stockholder approval. However, the reincorporation process may
be delayed or abandoned, either before or after stockholder approval, if
circumstances arise that, in the opinion of the Board of Directors, make it
inadvisable to proceed.
The following discussion summarizes certain aspects of the
reincorporation proposal, including certain material differences between
Maryland law and Delaware law. This summary does not purport to be a complete
description of the reincorporation proposal or the differences in stockholders'
rights under Maryland law and Delaware law and is qualified by reference to (1)
the merger agreement, (2) the certificate of incorporation of the Delaware
Corporation and (3) the bylaws of the Delaware Corporation. Copies of the
Company's charter and the Company's bylaws are available for inspection at the
Company's principal executive offices, and copies will be sent to any
stockholder, without charge, upon request.
The Merger Agreement
The following summary of certain terms contained in the merger
agreement is not complete and does not contain all of the provisions of the
merger agreement and is qualified in its entirety by reference to the merger
agreement.
Terms. The merger agreement provides, among other things, that each
share of the Company's common stock issued and outstanding as of the effective
time of the merger will be converted without any action on the part of the
holder thereof, into one share of the Delaware common stock. The merger
agreement contemplates the merger of the Company with and into the Delaware
Corporation, with the Delaware Corporation continuing as the surviving company.
The following is a description of the material terms of the merger agreement and
is qualified in its entirety by reference to the merger agreement, a copy of
which is attached to this proxy statement and is incorporated by reference.
Capitalized terms in this section have the meanings assigned to them in the
merger agreement. All stockholders of the Company and the Delaware Corporation
are urged to read carefully the merger agreement in its entirety.
Closing; Effective Time. The closing of the merger will take place on a
date agreed to by the Company and the Delaware Corporation. The closing will be
held in Denver, Colorado. Subject to the provisions of the merger agreement, the
parties will consummate the merger by filing a Certificate of Merger with the
Secretary of State of Delaware and by filing Articles of Merger with the State
Department of Taxation and Assessments of Maryland. The merger will become
effective at such time as the filings have been completed.
Surviving Corporation Certificate of Incorporation and Bylaws. Under
the merger agreement, the certificate of incorporation and bylaws of the
Delaware Corporation will continue to be the certificate of incorporation and
bylaws of the Delaware Corporation without need for amendment.
Succession. At the effective time of the merger, the separate corporate
existence of the Company shall cease, and the Delaware Corporation shall possess
all the rights, privileges and powers and be subject to all the restrictions,
disabilities and duties of the Company. The employees and agents of the Company
shall become the employees and agents of the Delaware Corporation and continue
to be entitled to the same rights and benefits which they enjoyed as employees
and agents of the Company. The officers and directors of the Company shall
become the officers and directors of the Delaware Corporation until such time as
successors are duly elected in accordance with the bylaws of the Delaware
Corporation and any applicable laws.
Exchange of Certificates. At or prior to the effective time of the
merger, the Delaware Corporation will deposit or cause to be deposited, with
Norwest Shareholder Services (the "Exchange Agent"), for the benefit of holders
of the Company's common stock, certificates representing Delaware common stock
to be issued in the merger. As soon as practicable after the effective time of
the merger, the Exchange Agent will mail a form of transmittal letter to the
holders of certificates representing shares of the Company's common stock. The
form of transmittal letter will contain instructions with respect to the
surrender of such certificates in exchange for certificates representing shares
of Delaware common stock. CERTIFICATES REPRESENTING THE COMPANY'S COMMON STOCK
SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY CARD AND SHOULD NOT BE FORWARDED
TO THE EXCHANGE AGENT EXCEPT WITH A TRANSMITTAL FORM WHICH WILL BE PROVIDED TO
YOU FOLLOWING THE EFFECTIVE TIME OF THE MERGER.
Dissenters' Rights of Appraisal
Under applicable state law, you are not entitled to dissenters' rights
of appraisal.
Principal Reasons For Reincorporation
Prominence, Predictability and Flexibility of Delaware Law. For many
years Delaware has followed a policy of encouraging incorporation in that state,
and, in furtherance of that policy, has been a leader in adopting comprehensive,
modern and flexible corporation laws that are periodically updated and revised
to meet changing business needs. As a result of Delaware's attractive legal
environment, many major corporations have initially chosen Delaware for their
domicile or have subsequently reincorporated in Delaware in a manner similar to
that of this reincorporation proposal. Because of Delaware's prominence as the
state of incorporation for major corporations, both the legislature and the
courts in Delaware have demonstrated a willingness to act quickly and
effectively to meet changing business needs. The Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has emerged construing the Delaware law and establishing public
policies with respect to corporate legal affairs.
Increased Ability to Attract and Retain Qualified Directors. The Board
of Directors has also recommended the reincorporation proposal because it may
permit us to limit the liability of our directors and provide indemnification to
our officers, directors, and employees to a degree greater than is presently
possible under the Maryland law. We seek to retain the most capable individuals
available to serve as our officers and directors. The increasing frequency of
claims and litigation directed against directors and officers has greatly
expanded the risks facing directors and officers of corporations in exercising
their respective duties. The amount of time and money required to respond to
such claims and to defend such litigation can be substantial. The Board of
Directors believes that the adoption of the reincorporation proposal could be a
significant factor in attracting such individuals and in encouraging existing
directors and officers to continue to serve in these capacities and freeing them
to make corporate decisions on their own merits rather than out of a desire to
avoid personal liability. The reincorporation proposal does not result from any
pending legal action against our officers, directors or employees that would be
covered by such Delaware indemnification provisions.
Changes in Company's Charter and Bylaws To Be Effected By Reincorporation
Upon completion of our reincorporation, the certificate of
incorporation of the Delaware Corporation will constitute the certificate of
incorporation of the Company. Although the provisions of the certificate of
incorporation of the Delaware Corporation are similar to those of the Company's
charter in many respects, the reincorporation proposal includes implementation
of provisions in the certificate of incorporation of the Delaware Corporation
that affect the rights of stockholders and management. Approval by the
stockholders of the reincorporation proposal will constitute approval of the
terms of the certificate of incorporation of the Delaware Corporation, including
the provisions described below. In addition, certain other changes altering the
rights of stockholders and powers of management could be implemented in the
future by amendment of the certificate of incorporation of the Delaware
Corporation following stockholder approval, and certain changes could be
implemented by amendment of the bylaws of the Delaware Corporation without
stockholder approval. As stated above, this discussion of the certificate of
incorporation of the Delaware Corporation and the Company's charter is qualified
in its entirety by those documents and by the Maryland law and Delaware law.
Indemnification. The Company's charter provides that the Company shall
indemnify its officers and directors to the fullest extent permitted by the
Maryland law from liability to the Company or its stockholders. Maryland law
distinguishes between those instances in which indemnification of directors is
required and those in which it is permitted. Unless limited by its charter, a
Maryland corporation must indemnify directors against expenses incurred in the
successful defense of any proceeding the director is made a party to by reason
of his or her service in that capacity. Indemnification of a director made a
party to a proceeding by reason of service in that capacity is permitted, unless
it is established that: (1) the act or omission of the director was material to
the matter giving rise to the proceeding and was committed in bad faith or was
the result of active and deliberate dishonesty; (2) the director actually
received an improper personal benefit; or (3) in the case of any criminal
proceeding, the director had reasonable cause to believe that the act or
omission was unlawful. The termination of any proceeding by conviction, or a
plea of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that the director did not
meet the standard of conduct required for indemnification under Maryland law. In
addition to the foregoing, a court, upon application, may in certain
circumstances order indemnification; however, indemnification with respect to
any proceeding by or in the right of the corporation or in which the director is
adjudged liable for receipt of an improper personal benefit may not be made
unless ordered by a court and then only for expenses. Unless limited by its
charter, officers of a Maryland corporation are required to be indemnified to
the same extent as directors are required to be indemnified. Indemnification of
non-director officers, employees and agents is permitted to the same extent that
indemnification of directors is permitted and to such further extent, consistent
with law, as may be provided by its charter, bylaws, general or specific action
of its board of directors, or contract.
In contrast, the certificate of incorporation of the Delaware
Corporation incorporates indemnification provisions to the maximum extent
permitted by Delaware law and provides that directors, officers, employees and
other individuals shall be indemnified against liability to the Delaware
Corporation or its stockholders, other than an action by or in the right of the
Delaware Corporation, if the indemnified person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Delaware Corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. With respect to this standard, under Delaware law, termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that such person is prohibited from
being indemnified. In the event of an action by or in the right of the Delaware
Corporation, indemnification extends only to expenses incurred in connection
with defense or settlement of such an action. In addition, under Delaware law,
upon court approval, a corporation may indemnify an individual found liable to
the corporation, whereas under the Maryland law, a corporation many not
indemnify an individual who has been found liable to the corporation in a
proceeding brought by or in the right of the corporation or on the basis that a
personal benefit was improperly received except, as specified above, for
expenses upon a court order.
Delaware law states that the indemnification provided by statute shall
not be deemed exclusive of any other rights under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise. Under Delaware law,
therefore, the Delaware Corporation is permitted to enter into indemnification
agreements with its directors.
Reasons for New Indemnification Provisions. As previously discussed, we
seek to retain the most capable individuals available to serve as our officers
and directors, and the increasing frequency of claims and litigation directed
against directors and officers has greatly expanded the risks facing directors
and officers of corporations in exercising their respective duties. The amount
of time and money required to respond to such claims and to defend such
litigation can be substantial. We believe that the adoption of the
reincorporation proposal, could be a significant factor in attracting highly
qualified individuals and in encouraging existing directors and officers to
continue to serve the Company in these capacities. The reincorporation proposal
does not result from any pending legal action against the officers, directors or
employees of the Company that would be covered by such Delaware indemnification
provisions.
Possible Disadvantages of New Indemnification Provisions. Although the
Board of Directors believes that the indemnification provisions of Delaware law
and the certificate of incorporation of the Delaware Corporation will enhance
the ability of the Company to attract and retain outstanding members for its
Board of Directors, the indemnification provisions under Delaware law may
provide financial protection to officers or directors, even if such individuals
are deemed undeserving of indemnification by certain stockholders.
Interested Transactions. We are currently governed by the Maryland law
provisions which restrict business combinations involving interested
stockholders. An interested stockholder under the Maryland law is a person who
beneficially owns 10% or more of the voting power of the outstanding voting
stock of a corporation. Under certain circumstances, the Company could be barred
for a period of five years from participating in transactions with interested
stockholders and thereafter could be required to obtain the affirmative vote of
the holders of 80% of the outstanding shares and 2/3 of the outstanding shares
held by non-interested parties prior to participating in transactions with
interested stockholders, even if such transactions were considered beneficial to
the Company. Maryland law permits a Board of Directors to exempt corporations
from the statute as long as the corporation does not yet have any interested
stockholders. We do not currently have any interested stockholders, but the
Board of Directors has not yet elected to exempt us from the statute.
Consequently, some transactions, including ordinary transactions, such as the
sale and lease of assets to interested stockholders, would not be permitted
under Maryland law. These provisions contained in Maryland law could restrict us
from conducting business in an efficient and effective manner. Delaware law
contains a similar restriction on transactions with interested stockholders, and
similarly, Delaware law permits a corporation to elect not to be governed by the
statute. The certificate of incorporation of the Delaware Corporation expressly
elects that the Delaware Corporation not be governed by the business combination
provision of Delaware law. As a result, if the reincorporation proposal is
adopted, we will not be regulated by the business combination provision
contained in Delaware law.
Authorized Stock Designations. The Company's charter provides that the
Company may issue up to 50 million shares of capital stock, par value of $.01
per share. The certificate of incorporation of the Delaware Corporation provides
that the Delaware Corporation may issue up to 35 million shares of common stock
and up to 15 million shares of preferred stock. Under the Company's charter, the
Board of Directors is permitted to classify or reclassify any unissued capital
stock of the Company. Under the certificate of incorporation of the Delaware
Corporation, the Board of Directors is only permitted to classify or reclassify
any unissued of shares of preferred stock of the Company.
Reasons for New Stock Designations. Under Maryland Law, the Board of
Directors may be given the ability to issue stock in any designation, whether
common or preferred, by setting or changing preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption. Delaware law only allows the Board of
Directors of the Delaware Corporation to set or change preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption, with respect to the
preferred stock of the Delaware Corporation.
Certain Differences Between the Corporation Laws of Maryland and Delaware
Maryland law and Delaware law are similar in many respects, but there
are important differences that affect the rights of stockholders and management.
The following is a summary of certain similarities and differences between the
Delaware law and the Maryland law. The discussion is not exhaustive and is
qualified in its entirety by reference to the specific provisions of Delaware
law and Maryland law.
Redemption Retirement. Delaware law prohibits the purchase or
redemption of stock when the capital of a corporation is or will be impaired;
but shares entitled to dividend or liquidation preference may be purchased or
redeemed out of capital if such shares are retired and capital is reduced.
Maryland law, on the other hand, prohibits the purchase or redemption of stock
if, after the purchase or redemption, the corporation would be unable to pay its
debts in the usual course of business, or if the corporation's total assets are,
or would be, less than the sum of the total liabilities plus, unless the charter
provides otherwise, the amount needed to satisfy preferential rights of
stockholders whose preferential rights of distribution are superior to those
receiving the distribution.
Dividends. Delaware law provides that a corporation can pay dividends
out of capital surplus or out of net profits for the current or immediately
preceding fiscal year. Maryland law, unless the charter provides otherwise,
restricts the payment of dividends if the corporation is, or would be unable to
pay its debts in the usual course of business or the corporation's total assets
would be, less than the sum of the total liabilities plus, the amount needed to
satisfy preferential rights upon dissolution of stockholders whose preferential
rights on dissolution are superior to those receiving the distribution.
Dissenters' Rights. Under Delaware law and Maryland law, a dissenting
stockholder of a corporation participating in certain transactions such as
certain mergers or consolidations, may, under varying circumstances be entitled
to demand and receive cash in the amount of the fair value of such stockholder's
shares (as determined by a court) in lieu of the consideration such stockholder
otherwise would have received in such transaction. Delaware law does not
generally require such dissenters' rights of appraisal with respect to (1) a
sale of assets, (2) an amendment of the certificate of incorporation (unless
otherwise provided in the certificate of incorporation), (3) a merger or
consolidation by a corporation, the shares of which are either listed on a
national securities exchange or an interdealer quotation system by the National
Association of Securities Dealers, Inc. or widely-held (i.e., by more than 2,000
stockholders), if such stockholders received shares of the surviving corporation
or of another listed or widely-held corporation, or (4) stockholders of a
corporation surviving a merger if no vote of the stockholders of the surviving
corporation is required to approve the merger. Maryland law has similar
provisions, but under Maryland law, dissenters' rights of appraisal would apply;
(1) with respect to a sale of all or substantially all of a corporation's assets
(except a transfer of assets by a corporation in the ordinary course of its
business to one or more persons if all of the equity interests of the person or
persons are owned directly or indirectly by the transferor) or (2) if a
corporation amends its charter in a way that would alter express contractual
rights of any outstanding stock and substantially and adversely affect the
existing stockholders' rights unless the corporation's charter reserves the
right to do so. Under Maryland law, a stockholder does not have appraisal rights
in a merger or consolidation if such stockholder's stock is listed on a national
exchange or if such stockholder's stock is that of the surviving corporation in
the merger and the merger does not change such stock.
Stockholder Inspection Rights. The rights of stockholders of a Maryland
corporation and a Delaware corporation to inspect and copy corporate records
differ in certain respects. Under Maryland law, any stockholder may inspect the
bylaws, minutes of the proceedings of stockholders, annual statements of
affairs, and voting trust agreements of the corporation at the corporation's
principal office. Any stockholder may also present a written request for a
statement showing all stock and securities issued by the corporation during a
specified period of not more than 12 months before the date of the request, the
consideration received per share or unit and the value of any consideration
other than money as set forth in a resolution of the board of directors. In
addition, stockholders of record who own and have owned for at least six months
at least five percent of the outstanding stock of any class may inspect and copy
the corporation's books of account and its stock ledger, and request an account
of the corporation's affairs with no statutory restriction upon the purpose of
such inspection. Under Delaware law, on the other hand, any stockholder may,
upon written demand stating the stockholder's purpose, inspect and copy for any
proper purpose the corporation's stock ledger, list of stockholders, and its
other books and records. A proper purpose is one reasonably related to such
person's interest as a stockholder. Accordingly, for stockholders holding less
than five percent of the outstanding stock of any class, the right of inspection
of some recourse may be broader under Delaware law than under Maryland law. For
some stockholders, however, the Maryland rights of inspection that are available
may be less restrictive with respect to the purpose for which the right may be
exercised, and the lack of access to stockholder records under Delaware law
could result in the impairment of the stockholders' ability to coordinate
opposition to management proposals, including proposals with respect to a change
in control of the corporation.
Limitation of Liability. Under Delaware law, directors' liability for
monetary damages to the corporation or its stockholders cannot be limited by the
charter for (1) breaches of their duty of loyalty to the Company and its
stockholders; (2) acts or omissions not in good faith; (3) acts or omissions
that involve intentional misconduct; (4) acts or omissions that involve knowing
violations of law; (5) willful or negligent violations regarding the prohibition
on the payment of unlawful dividends or unlawful stock purchases or redemptions
or (6) transactions from which a director derives improper personal benefit. The
liability of officers may not be limited under Delaware law. Under Maryland law,
the charter of a corporation may include a provision expanding or limiting the
liability of directors and officers to the corporation or to stockholders for
money damages except where a director or officer (1) has received an improper
benefit or profit in money, property or services or (2) has engaged in active
and deliberate dishonesty that is material to a cause of action resulting in an
adverse judgment against the officer or director. For more details, see
"Possible Disadvantages of New Indemnification Provisions" under the heading
"Changes in Company's Charter and Bylaws To Be Effected By Reincorporation."
Voting Requirements for Mergers and Other Consolidations. Maryland law
requires a vote of two-thirds of all stockholders entitled to vote to approve a
merger, consolidation or sale of all or substantially all of the assets of a
corporation; however, the Company's charter lowers this statutory voting
requirement to a majority of the total number of votes entitled to be cast
thereon. Delaware law and the certificate of incorporation of the Delaware
Corporation require the vote of a majority of the outstanding shares for all
corporate actions requiring stockholder approval; consequently, the voting
requirements for business combinations would be the same for the Delaware
Corporation as they currently are for the Company.
Business Combinations with Interested Stockholder. Maryland law
provides that, unless the Board of Directors has approved the acquisition of
voting stock under which a person becomes an interested stockholder (generally,
a stockholder acquiring 10% or more of the voting stock of a corporation), a
Maryland corporation may not engage in certain business combinations with any
interested stockholder for five years following the most recent date on which
the interested stockholder became an interested stockholder. Moreover, Maryland
law provides that business combinations with an "interested stockholder" after
such five-year period must be recommended by the board of directors and approved
by (1) at least 80% of the outstanding shares of the voting stock of the
corporation and (2) at least two-thirds of the outstanding shares of voting
stock (other than voting stock held by an interested stockholder or an affiliate
thereof), unless certain value and other standards are met or an exemption is
available. Although Delaware law contains a similar provision, the Delaware
Corporation has elected not to be governed by the provision in its certificate
of incorporation. For more duties see "Changes in the Company's Charter and
Bylaws to be Effected by Reincorporation."
Accounting Treatment
Because the Delaware Corporation is our newly formed, wholly-owned
subsidiary, we expect that the merger will be accounted for using the pooling of
interests method of accounting. The pooling of interests method of accounting
assumes that the combining companies were merged from inception and the
historical financial statements for the periods prior to the consummation of the
merger are restated as though the companies had been combined from inception.
State Regulation Requirements
Upon effectiveness of the merger, the State Department of Assessments
and Taxation of Maryland must file a certificate of merger with each county in
the state of Maryland naming the parties to the merger and identifying the
location of the surviving corporation's principal executive offices. According
to the Maryland law, the successor corporation to a merger is liable for all the
debts and obligations of each nonsurviving entity. Consequently, the Delaware
Corporation will become the successor to all of our assets and liabilities.
Recommendation of Board of Directors
The Company is seeking the affirmative vote of the holders of a
majority of all votes entitled to be cast by holders of the Company's common
stock for approval of the reincorporation proposal. The Board of Directors
believes the reincorporation proposal will both be beneficial because of the
prominence, flexibility and predictability of established the Delaware law and
the assistance Delaware law will provide in attracting the most qualified
persons as to serve as our officers and directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF OUR
REINCORPORATION IN THE STATE OF DELAWARE.
DESCRIPTION OF SECURITIES
Set forth below is a summary of certain provisions of the capital stock
to be issued by the Delaware Corporation. The following summary does not purport
to be complete and is subject to and qualified in its entirety by reference to
the certificate of incorporation and the bylaws of the Delaware Corporation.
The Delaware Corporation will issue one series of Delaware common
stock. The Board of Directors of the Delaware Corporation shall have authority
to issue up to 50 million shares of capital stock, of which 35 million may be
designated Delaware common stock. As of March 25, 1999, 100 shares of Delaware
common stock were issued and outstanding. If the reincorporation proposal is
approved by the Company's stockholders, 5,563,943 shares of the Company's common
stock will be converted into 5,563,943 shares of Delaware common stock. For more
details relating to the Delaware common stock, see "Certain Differences Between
the Corporation Laws of Maryland and Delaware" under the heading "Proposal 2:
Approval of the Reincorporation of the Company in the State of Delaware."
The Delaware Corporation may issue, from time to time, shares of one or
more series or classes of preferred stock. Under the certificate of
incorporation of the Delaware Corporation, the Delaware Corporation has the
authority to issue up to 15 million shares of preferred stock. The Board of
Directors of the Delaware Corporation may classify or reclassify any unissued
shares of preferred stock by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of such shares of preferred stock including, but not limited to, ownership
restrictions consistent with the ownership limitations contained in the
certificate of incorporation of the Delaware Corporation with respect to each
class or subclass of capital stock. The Delaware Corporation has not yet issued
a class of preferred capital stock.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Certain information with respect to our nominees for election as
directors, our continuing directors and our executive officers, as of March 5,
1999, appears below and was furnished in part by each such person.
Each of our executive officers serves for a term of one year and until
his or her successor is elected and qualified or until his or her earlier
resignation or removal by the Board of Directors. There are no family
relationships among any of our directors and executive officers.
<TABLE>
<CAPTION>
Age First Elected Position(s) Held with the Company
--- ------------- ---------------------------------
<S> <C> <C>
Terry Considine 51 September 1996 Chairman of the Board of Directors (Class II)
and Chief Executive Officer
Thomas L. Rhodes 59 September 1998 Vice Chairman of the Board of Directors (Class III)
Bruce E. Moore 56 February 1998 Director (Class I), President and Chief Operating Officer
Bruce D. Benson 60 October 1996 Independent Director (Class II) and Chairman of the Compensation
Committee
Elliot H. Kline 58 September 1988 Independent Director (Class III), Member of the Compensation
Committee and Chairman of the Audit Committee
Richard L. Robinson 69 January 1990 Independent Director (Class I) and Member of the Audit and
Compensation Committees
Tim Schultz 50 July 1994 Independent Director (Class I) and Member of the Audit and
Compensation Committees
William J. White 60 December 1996 Independent Director (Class II) and Member of the Audit and
Compensation Committees
David M. Becker 39 December 1997 Chief Financial Officer, Treasurer and Secretary
</TABLE>
Terry Considine has been our Chairman of the Board of Directors and
Chief Executive Officer since April 1998. From September 1996 to April 1998, Mr.
Considine served as Co-Chairman of the Board of Directors and Co-Chief Executive
Officer of the Company. Mr. Considine also serves as Chairman of the Board of
Directors and Chief Executive Officer of Commercial Assets, Inc. ("CAX"). He is
the sole owner of Considine Investment Co. and has also been the Chairman of the
Board of Directors and Chief Executive Officer of Apartment Investment and
Management Company ("AIMCO"), one of the largest apartment REITs in the United
States since July 1994. Mr. Considine has been and remains involved as a
principal in a variety of real estate activities, including the acquisition,
renovation, development and disposition of properties. Mr. Considine has also
controlled entities engaged in other businesses, such as television
broadcasting, gasoline distribution and environmental laboratories. Mr.
Considine received a B.A. from Harvard College and a J.D. from Harvard Law
School and was formerly admitted as a member of the Massachusetts Bar.
Mr. Considine has had substantial real estate experience. From 1975
through July 1994, partnerships or other entities in which Mr. Considine had
controlling interests invested in approximately 35 multifamily apartment
properties and commercial real estate properties. Six of these real estate
assets (four of which were multifamily apartment properties and two of which
were office properties) did not generate sufficient cash flow to service their
related indebtedness and were foreclosed upon by their lenders, causing pre-tax
losses of approximately $11.9 million to investors and losses of approximately
$2.7 million to Mr. Considine.
Thomas L. Rhodes has been our Vice Chairman of the Board of Directors
of the Company since April 1998. From September 1996 to April 1998, Mr. Rhodes
served as Co-Chairman of the Board of Directors and Co-Chief Executive Officer
of the Company. Mr. Rhodes also serves as Vice Chairman of the Board of
Directors of CAX. Mr. Rhodes has also been a Director of AIMCO since July 1994.
Mr. Rhodes has served as the President and a Director of National Review
magazine since 1992. From 1976 to 1992, he held various positions at Goldman,
Sachs & Co. and was elected a General Partner in 1986. He currently serves as a
Director of Delphi Financial Group, Inc. and its subsidiaries, Delphi
International, Ltd., Oracle Reinsurance and The Lynde and Harry Bradley
Foundation. Mr. Rhodes is Trustee of The Heritage Foundation.
Bruce E. Moore was appointed our President and Chief Operating Officer
in February 1998. He also serves as President and Chief Operating Officer of
Commercial Assets. Mr. Moore is the founder and was the Chief Executive Officer
of Brandywine Financial Services Corporation and its affiliates ("Brandywine"),
a private real estate firm specializing in various aspects of the real estate
industry, including asset management, consulting, development, property
management, brokerage and capital formation. He is a certified public
accountant, holds a Masters in Accounting and a Bachelor of Science in Economics
from the Wharton School of the University of Pennsylvania. Mr. Moore is a
director and past president of the Media Youth Center, and a past advisory-board
member for the Department of Recreation and Intercollegiate Athletics for the
University of Pennsylvania. In addition, Mr. Moore is a member of the National
Association of Real Estate Investment Trusts and the International Council of
Shopping Centers.
David M. Becker has functioned as our Chief Financial Officer,
Treasurer and Secretary since December 1997 and was appointed to such positions
in February 1998. Since December 1997, Mr. Becker has also served as Chief
Financial Officer, Secretary and Treasurer of Commercial Assets and was
appointed to such positions in April 1998. From September 1995 until joining the
Company, he was both the Chief Financial Officer of Westfield Development
Company, Inc. and Vice President-Finance of The Frederick Ross Co., related
companies involved in commercial real estate development, brokerage and
management. Prior to September 1995, he held various executive positions with
CONCORD Services, Inc., a privately-held company involved in multiple
businesses, including trading, manufacturing and finance. CONCORD Services, Inc.
declared bankruptcy in February 1995. In addition, Mr. Becker was Chief
Financial Officer and General Counsel of Ramtron International Corporation, a
publicly-held semiconductor manufacturer, from October 1989 until July 1994. Mr.
Becker is an attorney and certified public accountant. He received a B.A. from
the University of Northern Iowa and a J.D. from the University of Denver.
Bruce D. Benson has served as a Director of the Company and CAX since
October 1996 and previously served as a Director of the Company from February
1992 through November 1993. In February 1998, Mr. Benson became the Chairman of
the Company's compensation committee. For the past 32 years, he has been
President and owner of Benson Mineral Group, Inc., a domestic oil and gas
production company located in Denver, Colorado. He is also Chairman, Chief
Executive Officer and President of United States Exploration, Inc., an oil and
gas exploration company listed on the American Stock Exchange. He serves on
numerous Boards of Trustees and Boards of Directors, including Chairman, Denver
Zoological Foundation; Past Chairman and Past President, Boy Scouts of America,
Denver Area Council; Trustee and Past President of the Board of Trustees,
Berkshire School, Sheffield, Massachusetts; Past Trustee, Smith College,
Northampton, Massachusetts; Past Chairman, Colorado Commission on Higher
Education; and past member, Board of Directors, University of Colorado
Foundation; and Chairman of the Total Learning Environmental Capital Campaign of
the University of Colorado. In 1994, he was the Republican nominee for the
Governor of Colorado.
Elliot H. Kline has served as a Director of the Company since September
1988, as a member of its compensation committee since February 1998, as a member
of its audit committee since December 1988 and as Chairman of the audit
committee since November 1990. Dr. Kline has served as Executive-in-Residence at
Arizona State University-West since August 1993. Dr. Kline served as President
of In The Interim Management Consulting, a firm specializing in consulting to
universities, from 1989 to 1993. Dr. Kline served as the Dean of the College of
Business Administration at the University of Denver from 1987 to 1989; as the
Dean and a Professor of the School of Business and Public Administration at the
University of the Pacific from 1977 to 1987; and as the Director and an
Associate Professor of the Institute of Public Affairs and Administration at
Drake University from 1970 to 1977.
Richard L. Robinson has served as a Director of the Company since
January 1990, as a member of its audit committee since August 1993 and as a
member of its compensation committee since February 1998. Mr. Robinson has
served as Chairman of the Board of Directors and Chief Executive Officer of
Robinson Dairy, Inc., a Denver-based institutional dairy products manufacturer
and distributor, since 1975 and prior thereto served in various executive
positions with that company for 20 years. Mr. Robinson also serves as a Director
of US Exploration. He is active in numerous civic and charitable organizations,
is past Chairman of the Greater Denver Chamber of Commerce and a past President
of the State Board of Agriculture, the governing body for the Colorado State
University System.
Tim Schultz has served as Director of the Company and as a member of
its audit committee since July 1994. In February 1998, Mr. Schultz became a
member of the Company's compensation committee. He is President and Executive
Director of the Boettcher Foundation, a Colorado not-for-profit, charitable
corporation, and from August 1994 until November 1995, he was Chairman and
President of Colorado Open Lands, a Colorado not-for-profit corporation. From
1990 until August 1994, he was employed by the law firm of Arnold & Porter as a
Consultant-Corporate/Government Relations with responsibilities ranging from
serving as Chairman of a large land trust to representing clients' needs in
connection with state and local government issues. From May 1987 to July 1990,
Mr. Schultz served as Executive Director of the State of Colorado Department of
Local Affairs and from November 1983 to May 1987, as Commissioner of Agriculture
for the State of Colorado Department of Agriculture, both cabinet level
positions. From 1987 to 1991, he served as Chairman of the Colorado Economic
Development Commission.
William J. White has served as Director of the Company and member of
its audit committee since December 1996, and became a member of its compensation
committee in February 1998. Mr. White has served as Chairman of Bigelow and Co.,
an investment-banking firm located in Denver, Colorado that specializes in
municipal and corporate finance, since 1995. From 1992 through 1995, Mr. White
was President and owner of First Denver Financial Corporation and in 1991 and
1992, was President of Affiliated Capital Markets, a division of Affiliated
National Bank. Prior to these positions, Mr. White served in various positions
culminating as Chairman of Kirchner Moore and Company, an investment banking
firm. Mr. White serves on the Board of Directors of Guaranty Bank and Trust
Company.
Meetings of the Board of Directors and its Committees
The Board of Directors held nine regular meetings in 1998. During 1998,
no director attended fewer than 75% of the aggregate number of meetings of the
Board of Directors and all committees thereof on which he served.
The audit committee of the Board of Directors held one meeting in 1998.
Messrs. Kline (Chairman), Robinson, Schultz and White are the current members of
this committee. Among other things, the audit committee reviews and approves the
scope of the annual audit undertaken by our independent certified public
accountants and meets with them as necessary to review the progress and results
of their work as well as their recommendations. The audit committee also reviews
our internal audit procedures and reporting systems.
The compensation committee of the Board of Directors held one meeting
in 1998. Messrs. Benson (Chairman), Kline, Robinson, Schultz and White are the
current members of this committee. The compensation committee determines
compensation for the chief executive officer and vice chairman of the Company,
and reviews compensation policy for other executive officers.
During 1998, we did not have a nominating committee or any other
committee performing a similar function. Procedures for nominating persons to
the Board of Directors are contained in our bylaws.
Compliance With Section 16(a) of the Exchange
Our executive officers and directors, and persons who own more than 10%
of the Company's common stock, are required under the Securities Exchange Act of
1934 to file reports of ownership and changes in ownership of securities of the
Company with the Securities and Exchange Commission and the New York Stock
Exchange, Inc. Copies of those reports also must be furnished to us. Based
solely upon a review of the copies of reports furnished to us, we believe that
for the year ended December 31, 1998, all filing requirements were timely met by
our executive officers, directors and beneficial owners of more than ten percent
of our stock except as follows: Messrs. Becker and Moore were each late in
filing reports on Form 3 relating to ownership of equity interests. Mr. Rhodes
was late filing his report on Form 4 relating to change in beneficial ownership,
and Mr. Benson was twice late filing his reports on Form 4 relating to changes
in beneficial ownership.
Executive Compensation
In the fiscal year ended December 31, 1998, none of Messrs. Considine,
Rhodes or Moore received any compensation in his capacity as Chief Executive
Officer, Vice Chairman and President and Chief Operating Officer, respectively.
Mr. Becker received total salary and bonus in 1998 of $150,000 as the Chief
Financial Officer, Treasurer and Secretary.
In their capacity as executive officers, each of Messrs. Considine,
Rhodes, Becker and Moore received options to acquire shares of the Company's
common stock. See "Director Compensation." Neither Messrs. Considine nor Rhodes,
each of whom is a stockholder of the Company and CAX, was at any time on or
prior to December 31, 1998 granted options to acquire shares of the Company's
common stock other than in his capacity as an executive officer. Mr. Moore, a
stockholder in the Company, was not at any time on or prior to December 31, 1998
granted options to acquire shares of the Company's common stock other than in
his capacity as an executive officer.
The following table sets forth, in summary form, the compensation paid
by the Company to each individual who served as its Chief Executive Officer,
President and one executive officer of the Company during 1998 whose salary
exceeded $100,000 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
Awards
--------------------- ---------------------
Securities
Underlying
Name and Principal Positions (1) Year Salary ($) Options (#)
- --------------------------------------------- ------------- --------------------- ---------------------
<S> <C> <C> <C>
Terry Considine 1998 - 300,000
Chief Executive Officer 1997 - -
1996 - -
Thomas L. Rhodes (1) 1998 - 100,000
Co-Chief Executive Officer 1997 - -
1996 - -
Bruce E. Moore 1998 - 250,000
President and Chief Operating Officer 1997 - -
1996 - -
David M. Becker 1998 150,000 40,000
Chief Financial Officer 1997 - -
1996 - -
- ----------
<FN>
(1) From September 1996 to April 1998, Mr. Rhodes served as Co-Chief Executive Officer of the Company.
</FN>
</TABLE>
The following tables set forth certain information regarding stock options
granted to the Named Executive Officers during 1998:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable
--------------------------------------------------------------- Value at Assumed
Number of Annual Rates of Stock
Securities % of Total Price Appreciation for
Underlying Options Granted Option Term
Options to Employees in Exercise Expiration --------------------------
Name Granted (#)(1) Fiscal Year (%) Price ($/sh)(2) Date 5% ($) 10% ($)
---- ------------- --------------- --------------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Terry Considine 300,000 43.5% 19.375 4/21/08 3,655,000 9,264,000
Thomas L. Rhodes 100,000 14.5% 19.375 4/21/08 1,218,000 3,088,000
Bruce E. Moore 250,000 36.2% 19.375 4/21/08 3,045,000 7,720,000
David M. Becker 40,000 5.8% 19.375 11/30/07 487,000 1,235,000
- ----------
<FN>
(1) During 1998, each of the Named Executive Officers received options
constituting nonqualified stock options to purchase shares of common stock
under the 1998 Stock Incentive Plan. Messrs. Considine, Moore and Rhode's
options are subject to a three-year vesting period such that one-third of
such options vest on each of the first three anniversaries after the
respective date of grant. Mr. Becker's options vest in four equal annual
installments beginning on December 1, 1998.
(2) The exercise price is equal to the fair market value of the common stock
on the date of grant.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Value Year-end (#) at Fiscal Year-end
Acquired Realized Exercisable/ ($) Exercisable/
Name On Exercise (#) ($)(1) Unexercisable Unexercisable(2)
---- --------------- ------ ------------- ----------------
<S> <C> <C> <C> <C>
Terry Considine -- -- 0/300,000 0/0
Thomas L. Rhodes -- -- 0/100,000 0/0
Bruce E. Moore -- -- 0/250,000 0/0
David M. Becker -- -- 10,000/30,000 0/0
- ----------
<FN>
(1) Represents the product of (A) the difference between (i) the closing
price of the common stock on the NYSE on the exercise date and (ii) the
option exercise price and (B) the number of securities underlying such
options.
(2) The value of unexercised in-the-money options is calculated by
multiplying (A) the number of securities underlying such options by (B)
the difference between (i) the closing price of the common stock at
December 31, 1998 and (ii) the option exercise price.
</FN>
</TABLE>
Director Compensation
During 1998, each of our non-employee directors received, at such
director's election, either (i) $15,000 and 800 shares of the Company's common
stock or (ii) 1,600 shares of the Company's common stock, plus an additional
$300 for each meeting of the Board of Directors or committee thereof attended.
In addition, all directors are reimbursed for expenses related to their
attendance at Board of Directors and committee meetings.
Under the existing 1998 Stock Incentive Plan, on the date of the 1998
annual stockholders meeting, all of our non-employee directors received an
automatic grant of options to acquire 2,800 shares of the Company's common stock
with an exercise price equal to the closing price of the Company's common stock
on such date. Such options were immediately exercisable and have a term of 10
years.
Under the 1998 Stock Incentive Plan, all of our non-employee directors
will automatically receive annual grants of market-price options to acquire
2,800 shares of the Company's common stock on the date of each annual
stockholders meeting. These options will be immediately exercisable upon grant
and have a term of ten years.
Compensation Committee Interlocks and Insider Participation
During 1998, Messrs. Benson, Kline, Robinson, Schultz and White served
on the compensation committee. Messrs. Considine and Rhodes each served as
Co-Chief Executive Officer and Co-Chairman of the Board of the Company and CAX
through April 1998. Thereafter, Mr. Considine served as Chairman of the Board
and Chief Executive Officer of the Company and CAX, and Mr. Rhodes served as
Vice Chairman of the Board of the Company and CAX. Mr. Considine is Chairman of
the Board and Chief Executive Officer of AIMCO and Mr. Rhodes serves on the
compensation committee of AIMCO.
Compensation Committee Report to Stockholders
The five directors who are not members of management constitute the
compensation committee. The compensation committee:
* determines the compensation of the Chief Executive Officer and the
Vice Chairman;
* reviews and approves the compensation of other corporate officers
holding executive positions;
* reviews the general compensation and benefit practices of the
Company; and
* administers our compensation and stock incentive plans.
The compensation committee considers various factors including:
* recruitment, motivation and retention of our management team;
* alignment of management financial rewards with stockholder
objectives for total return (dividend income plus share price
appreciation); and
* reasonability in consideration of all the facts, including total
return, the size and complexity of the Company and the practices
of other real estate investment trusts.
Compensation of senior management is comprised of Base Compensation,
Discretionary Compensation and Incentive Compensation. The policy of the
compensation committee is to set Base Compensation at or below the median paid
by comparable companies to executive officers with comparable responsibilities,
to utilize Discretionary Compensation, generally cash and not more than Base
Compensation, to reward specific achievements, and to make the chief financial
reward Incentive Compensation which is tied directly to the creation of
stockholder value.
BASE COMPENSATION. The compensation committee determined 1998 Base
Compensation for the Chief Executive Officer and the Vice Chairman, reviewed and
approved 1998 Base Compensation for other senior management based upon the
recommendation of the Chief Executive Officer and Vice Chairman and considered
such 1998 Base Compensation reasonable. Base Compensation for the Chief
Executive Officer and Vice Chairman for 1998-2000 is options to purchase 300,000
and 100,000 shares, respectively, of the Company's common stock at $19.375 per
share.
DISCRETIONARY COMPENSATION. For 1998, the compensation committee
considered, among other things:
* the achievement of the 1998 objective for per share Adjusted Funds
From Operations;
* our growth in size and complexity during 1998;
* the number and size of 1998 acquisitions and their financings; and
* our total return for 1998 as compared to the Morgan Stanley REIT
Index.
No Discretionary Compensation was awarded to senior management.
INCENTIVE COMPENSATION. The compensation committee bases Incentive
Compensation primarily by reference to "Excess Value Added," calculated as the
amount, if any, by which our total return exceeds total returns achieved by
other real estate investment trusts (as measured by Morgan Stanley REIT Index)
multiplied by the weighted average market value of our stock and OP Units
outstanding during the measurement period.
In 1998, our total return was a negative 36% which was less than the
negative 17% Total Return of the Morgan Stanley REIT Index. The compensation
committee awarded no Incentive Compensation in 1998 to either the Chief
Executive Officer or Vice Chairman and approved awards to other senior
management of options to acquire 35,000 shares of our common stock at $15.06 per
share. The options vest 60% after three years and an additional 20% annually for
years four and five.
CHIEF EXECUTIVE OFFICER AND VICE CHAIRMAN. In determining the
compensation for the Chief Executive Officer and Vice Chairman, the compensation
committee considered, among other things, our 1998 financial performance:
* Total Return for 1998 of a negative 36%;
* investment of $130 million in manufactured home communities from
May 1997 to July 1998;
* investment of $23 million by Commercial Assets, Inc. in
manufactured home communities from August to December 1998; and
* recruitment of Bruce E. Moore as President and Chief Operating
Officer.
EQUITY TRANSACTIONS IN SUPPORT OF COMPENSATION OBJECTIVES
The compensation committee has determined that we are well served by
the alignment of interest that occurs when senior management has the same
financial interests as do other stockholders. To promote this end, the
compensation committee and the Board of Directors have:
* structured Board annual compensation to be paid in stock options
and at least 50% of annual director's fees paid in stock with
meeting fees paid in cash;
* structured Base Compensation of Chief Executive Officer, Vice
Chairman and President for 1998-2000 entirely in options to
acquire stock at 100% of then current value; and
* granted to other senior management options to acquire stock at
100% of then current value which are fully vested only after three
or five years.
Date: February 1, 1999 BRUCE D. BENSON (Chairman)
ELLIOT H. KLINE
RICHARD L. ROBINSON
TIM SCHULTZ
WILLIAM J. WHITE
THE ABOVE REPORT WILL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE
INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THE SAME BY REFERENCE.
PERFORMANCE GRAPH
The following graphs compare the change in the cumulative total return
of the Company's common stock for the period from March 31, 1997, which was the
quarter-end immediately prior to the date we made our first investment in
manufactured home communities, through December 31, 1998, with (1) the
cumulative total return of the Standard & Poor's 500 Stock Index and (2) a peer
group consisting of Chateau Communities, Inc., Sun Communities, Inc. and
Manufactured Home Communities, Inc., each a company in the manufactured home
community business.
Prior to March 31, 1997, our assets had been invested in mortgages, and
the peer group index with which we have previously compared our stock-price
performance consisted of all Mortgage REITs as defined by the National
Association of Real Estate Investment Trusts. In order to provide stockholders
with the most meaningful information, we have provided a table demonstrating our
performance as compared with the performance of our previous peer group.
The following graph was prepared based on the following assumptions:
(a) an initial investment of $100 was invested at the close of business on March
31, 1997 in (1) common stock of the Company; (2) stock of the companies in the
Standard & Poor's 500 Index; and (3) stock of the companies in our peer group
index; and (b) all dividends received were reinvested. The stock price
performance shown on the graph is not necessarily indicative of future price
performance.
Name 3/31/97 12/31/97 12/31/98
---- ------- -------- --------
Company $100 $120 $ 76
S&P 500 $100 $128 $165
Peer Group $100 $125 $125
The following graph was prepared based on the following assumptions:
(a) an initial investment of $100 at the close of business on March 31, 1997
invested in (1) common stock of the Company; (2) stock of the companies in the
Standard & Poor's 500 Index; and (3) stock of a peer group consisting of all
Mortgage REITs as defined by the National Association of Real Estate Investment
Trusts; and (b) all dividends received were reinvested. The stock price
performance shown on the graph is not necessarily indicative of future price
performance.
Name 3/31/97 12/31/97 12/31/98
---- ------- -------- --------
Company $100 $120 $ 76
S&P 500 $100 $128 $ 165
Mortgage REITs $100 $107 $ 76
These Performance Graphs shall not be incorporated into any future
filings with the Securities and Exchange Commission.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT
The table below sets forth, as of March 5, 1999, the number of shares
of the Company's common stock beneficially owned by (1) each person known by us
to be a beneficial owner of more than 5% of the Company's common stock; (2) all
directors, individually, and each executive officer that holds the Company's
common stock, individually; and (3) all of our directors and executive officers
as a group, which information was furnished in part by each such person.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Name of Beneficial Owner(1) Ownership Class (2)
- --------------------------- --------- ---------
<S> <C> <C>
Terry Considine (3) 506,330 8.6%
Thomas L. Rhodes (4) 214,362 3.7%
Bruce E. Moore (5) 146,480 2.6%
Bruce D. Benson (6) 130,912 2.3%
Elliot H. Kline (7) 46,843 *
Richard L. Robinson (8) 50,027 *
Tim Schultz (9) 27,061 *
William J. White (10) 12,525 *
David M. Becker (11) 18,110 *
The Wilder Corporation of Delaware (12) 601,891 10.7%
All directors and executive officers as a group (9 persons) 1,152,650 18.1%
- -----------
<FN>
* Denotes ownership of less than 1% of the outstanding shares of the
Company's common stock.
(1) Includes, where applicable, shares owned by such person's minor children
and spouse and by other related individuals and entities. Unless
otherwise indicated, such person has sole voting and investment power as
to the shares listed and such person's address is 3410 South Galena
Street, Suite 210, Denver, Colorado 80231. Excludes units of limited
partnership of Asset Investors Operating Partnership ("OP Units") that
are not redeemable within 60 days.
(2) All shares which a person had the right to acquire within 60 days after
the record date were deemed to be outstanding for the purpose of
computing the "Percent of Class" owned by such person but were not deemed
to be outstanding for the purpose of computing the "Percent of Class"
owned by any other person. At the record date, 5,563,943 shares were
outstanding.
(3) Mr. Considine's shares are held by Titahotwo Ltd. and Titahothree Ltd.,
limited partnerships in which he is the sole general partner. Includes
127,549 options exercisable and 204,432 OP Units redeemable within 60
days.
(4) Includes 44,314 options exercisable and 138,604 OP Units redeemable
within 60 days.
(5) Includes 8,721 shares of the Company's common stock owned by Brandywine
Real Estate Management Services Corporation, an entity in which the
stockholder owns a 50% interest, and 83,334 options exercisable and
25,355 OP Units redeemable within 60 days.
(6) Includes 28,388 options exercisable and 63,839 OP Units redeemable within
60 days.
(7) Includes 17,843 options exercisable within 60 days.
(8) Includes 21,261 options exercisable within 60 days.
(9) Includes 19,552 options exercisable within 60 days.
(10) Includes 8,925 options exercisable within 60 days.
(11) Includes 10,000 options exercisable within 60 days.
(12) Includes 56,960 OP Units redeemable within 60 days.
</FN>
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions involving FAM. Prior to November 1997, our daily
activities were performed by Financial Asset Management LLC ("FAM"), pursuant to
a management agreement (the "AIC Management Agreement"). FAM provided similar
services to CAX pursuant to a separate agreement (the "CAX Management
Agreement," and collectively with the AIC Management Agreement, the "Management
Agreements"). Messrs. Considine, Rhodes and Benson are principal owners of FAM.
In November 1997, our stockholders approved the purchase of FAM's
assets and operations, including the Management Agreements, in exchange for (i)
676,696 OP Units and (ii) the issuance of up to 240,000 additional OP Units if
we achieve certain performance goals. In 1998, FAM distributed the 676,696 OP
Units to its owners. Messrs. Considine, Rhodes and Benson received 204,286,
138,458, and 63,839 OP Units, respectively, from this distribution.
In August 1998, we issued 120,000 of the above described 240,000 OP
Units to FAM as a result of the achievements of investment and return goals. FAM
distributed these OP Units and Messrs. Considine, Rhodes and Benson received
36,227, 29,433, and 11,321 OP Units, respectively, from this distribution.
If the average share price of the Company's common stock exceeds $20.00
for a 90-day period prior to June 17, 1999, then we will issue to FAM the
remaining 120,000 OP Units described above. FAM will distribute to Messrs.
Considine, Rhodes and Benson the following number of OP Units: 60,000, 42,000
and 18,000.
Transactions Involving Mr. Moore. During 1998, AIC Community Management
Partnership ("AICCMP") received property management and accounting fees of
$335,000 from communities in which the Company owns an interest. We own 50% of
AICCMP and Community Management Investors Corporation ("CMIC") owns 50% of
AICCMP. Mr. Moore owns 35% of CMIC. In order for AICCMP to provide the above
services, AICCMP utilizes staff and resources of Brandywine Financial Services
Corporation and its affiliates ("Brandywine").
Brandywine Home Sales Corporation, an affiliate of Brandywine, provides
real estate brokerage services in our communities for both new home sales and
existing home resales and Brandywine Commercial Services Corporation, an
affiliate of Brandywine, provides maintenance services in our communities. As
such, these companies receive, as applicable, commissions from the home
manufacturer or the home owner depending on the circumstances and fees from us
for maintenance services provided. Mr. Moore owns 50% of these companies. During
1998, these companies received $130,000 in sales commissions related to homes
located in our communities and $725,000 for maintenance services provided to our
communities.
Other Transactions. Asset Investors Equity, Inc. ("AIE") and AIC
Manufactured Housing Corp. ("AICMHC") engage in activities and receive fees that
would not otherwise be permitted under the tax rules governing REITs. In
December 1998, AIC Management Corp. ("AIC Management," and, together with AICMHC
and AIE, the "Decontrolled Subsidiaries") merged with and into AIE, with AIE
surviving the transaction. In order to allow us to maintain our REIT status,
Messrs. Considine and Rhodes equally own some or all of the outstanding voting
common stock of the Decontrolled Subsidiaries. Prior to the merger, the voting
common stock of AICMHC and AIC Management was acquired in exchange for
promissory notes which bear interest at 7% per annum and had an aggregate
original principal amount of approximately $27,000, in the case of AICMHC, and
$315,000, in the case of AIC Management. In addition, we acquired all of the
non-voting capital stock of each of the Decontrolled Subsidiaries in exchange
for a cash contribution of $509,485 in the case of AICMHC, and a contribution of
assets valued at $5,950,000 in the case of AIC Management. We have also loaned
$2 million to AICMHC, which loan bears interest at a rate of 10% per annum.
Messrs. Considine and Rhodes together own 5% of the outstanding shares of common
stock of AICMHC and 3.5% of the outstanding shares of common stock of AIE and
100% and 60% of the voting stock of AICMHC and AIE, respectively. Interest in
the amount of $26,967 has been paid currently through February 28, 1999 by
Messrs. Considine's and Rhodes' with respect to their notes to AICMHC and AIC
Management.
We lease certain assets which we would not otherwise be permitted to
operate under the tax rules governing REITs to AIC RV Management Corp. ("AIC RV
Management"), an entity that is owned equally by Messrs. Considine and Rhodes.
During 1998, AIC RV Management paid aggregate lease payments of $282,000 to us.
AIC RV Management has a line of credit from us of up to $80,000, which bears
interest at a rate of 10% per annum. As of December 31, 1998, AIC RV Management
has drawn $80,000 against this line of credit.
See also "Compensation Committee Interlocks and Insider Participation."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences
of the reincorporation. The discussion contained herein is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), regulations issued
thereunder ("Treasury Regulations"), rulings and other administrative
pronouncements issued by the IRS, and judicial decisions, all in effect as of
the date of this proxy statement, and all of which are subject to change,
possibly with retroactive effect. This summary is for general information only
and does not purport to discuss all aspects of federal income taxation that may
be important to a particular investor in light of its investment or tax
circumstances, or to certain types of investors subject to special tax rules
(including financial institutions, broker-dealers, insurance companies, and,
except to the extent discussed below, tax-exempt organizations and foreign
investors, as determined for United States federal income tax purposes). This
summary assumes that investors hold the Company's common stock as "capital
assets" (generally, property held for investment).
EACH STOCKHOLDER SHOULD CONSULT ITS TAX ADVISOR REGARDING THE FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE REINCORPORATION AND OF
ACQUIRING, HOLDING, EXCHANGING, OR OTHERWISE DISPOSING OF THE COMPANY'S COMMON
STOCK, AND OF THE COMPANY'S ELECTION TO BE TREATED FOR FEDERAL INCOME TAX
PURPOSES AS A REIT.
The reincorporation proposal is intended to qualify as a
reorganization within the meaning of Section 368(a) of the Code. Provided that
the reincorporation of the Company does so qualify under the Code, no gain or
loss will be recognized by holders of the Company's common stock upon the
receipt of the Delaware Corporation's stock in the merger, and no gain or loss
will be recognized by the Company or the Delaware Corporation upon consummation
of the merger. In addition, each former holder of the Company's common stock
will have the same basis in the Delaware Corporation's stock received by such
holder under the merger as such holder had in the shares of the Company's common
stock surrendered in the merger, and such holder's holding period with respect
to the Delaware Corporation's stock will include the period that the holder held
the corresponding common stock of the Company surrendered in exchange therefor
provided such common stock of the Company was held by the holder as a capital
asset at the time of the merger.
COMPANY'S RELATIONSHIP WITH INDEPENDENT AUDITORS
Our Board of Directors appointed the firm of Ernst & Young LLP to audit
the financial statements of the Company through December 31, 1998. A
representative of Ernst & Young LLP is expected to be present at the annual
meeting and available to respond to appropriate questions. Ernst & Young LLP has
indicated that it will not make a statement, although an opportunity for a
statement will be provided. Stockholders are not being requested to ratify this
appointment.
OTHER MATTERS
We know of no matters to be brought before the annual meeting other
than as set forth herein. However, if any such other matters are properly
presented to the stockholders for action at the annual meeting and any
adjournments or postponements thereof, it is the intention of the proxy holders
named in the enclosed proxy to vote in their discretion on all matters on which
the shares represented by such proxy are entitled to vote.
STOCKHOLDER PROPOSALS TO BE INCLUDED
IN THE 2000 PROXY STATEMENT
Stockholder proposals to be considered for inclusion in the proxy
statement for the 2000 Annual Meeting of Stockholders must be received by us on
or before November 9, 1999.
ADDITIONAL INFORMATION
All documents subsequently filed by us prior to May 24, 1999 under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, shall be deemed incorporated by reference into this proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS,
Terry Considine
Chairman of the Board
March 30, 1999
ANNEX A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Merger Agreement"), dated as of
March 15, 1999, between Asset Investors Corporation, a Maryland corporation (the
"Company") and Asset Investors Corporation, a Delaware corporation (the
"Delaware Corporation"). The Company and the Delaware Corporation are hereafter
sometimes collectively referred to as the "Constituent Corporations."
WHEREAS, the Company is a corporation duly organized and existing under
the laws of the State of Maryland;
WHEREAS, the Delaware Corporation is a corporation duly organized and
existing under the laws of the State of Delaware;
WHEREAS, the respective Board of Directors of the Company and the
Delaware Corporation have determined that it is advisable and in the best
interests of each of such corporations that the Company merge with and into the
Delaware Corporation 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 Delaware; and
WHEREAS, the respective Boards of Directors of the Company and the
Delaware Corporation have, by resolutions duly adopted, approved this Merger
Agreement; the Company has adopted this Merger Agreement as the sole stockholder
of the Delaware Corporation and the Board of Directors of the Company has
directed that this Merger Agreement be submitted to a vote of the Company Common
Stock shareholders.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, the Company and the Delaware Corporation hereby agree as
follows:
l. Merger. The Company shall be merged with and into the Delaware
Corporation (the "Merger"), and the Delaware Corporation shall be the surviving
corporation (hereafter sometimes referred to as the "Surviving Corporation").
The Merger shall become effective upon the time and date of filing with the
Secretary of State of Delaware of a Certificate of Merger under Section 252 of
the General Corporation Law of the State of Delaware (the "Effective Time").
2. Governing Documents.
(a) The Certificate of Incorporation of the Delaware
Corporation, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation without change or
amendment until thereafter amended in accordance with the provisions thereof and
applicable laws.
(b) The Bylaws of the Delaware Corporation, 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 laws.
3. Succession. At the Effective Time, the separate corporate existence
of the Company shall cease, and the Delaware Corporation shall possess all the
rights, privileges, powers and franchises of a public and private nature and be
subject to all the restrictions, disabilities and duties of the Company; and all
the 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 share subscriptions and all other things in action or belonging to
the Company, shall be vested in the Surviving Corporation; and all property,
rights, privileges, powers and franchises, and all and every other interest
shall thereafter be the property of the Surviving Corporation as if they were of
the Company, and the title to any real estate vested by deed or otherwise in the
Company, shall not revert or be in any way impaired by reason of the General
Corporation Law of the State of Delaware; but all rights of creditors and all
liens upon any property of the Company shall be preserved unimpaired, and all
debts, liabilities and duties of the Company shall thence forth 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. All
corporate acts, plans, policies, agreements, arrangements, approvals and
authorizations of the Company, its shareholders, Board of Directors and
committees thereof, officers and agents which were valid and effective
immediately prior to the Effective Time, shall be taken for all purposes as the
acts, plans, policies, agreements, arrangements, approvals and authorizations of
the Delaware Corporation and shall be as effective and binding thereon as the
same were with respect to the Company. The employees and agents of the Company
shall become the employees and agents of the Delaware Corporation and continue
to be entitled to the same rights and benefits which they enjoyed as employees
and agents of the Company. The officers and directors of the Company shall
become the officers and directors of the Surviving Corporation until such time
as successors are duly elected in accordance with the Bylaws of the Surviving
Corporation and any applicable laws. The requirements of any plans or agreements
of the Delaware Corporation involving the issuance or purchase by the Company of
certain shares of its capital stock shall be satisfied by the issuance or
purchase of a like number of shares of the Delaware Corporation stock.
4. Further Assurances. From time to time, as and when required by the
Delaware Corporation, or by its successors and assigns, there shall be executed
and delivered on behalf of the Company such deeds 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 Delaware 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 of the Delaware 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
and other instruments.
5. Conversion of Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof,
(a) Each share of the Company Common Stock outstanding
immediately prior to the Effective Time shall be changed and converted into and
shall be one fully paid and nonassessable share of Delaware Common Stock, and
(b) The 100 shares of Delaware Common Stock presently issued
and outstanding in the name of the Company shall be cancelled and retired and
resume the status of authorized and unissued shares of Delaware Common Stock,
and no shares of Delaware Common Stock or other securities of the Delaware
Corporation shall be issued in respect thereof.
(c) Exchange of Certificates. The Company shall designate a
bank or trust company to act as agent for the holders of Shares in connection
with the Merger (the "Exchange Agent") to receive the funds to which holders of
the Company Common Stock shall become entitled pursuant this Article 5. Such
funds shall be invested by the Exchange Agent as directed by the Company or the
Surviving Corporation.
(1) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a Certificate or Certificates, whose shares of the Company
Common Stock were converted into the right to receive Delaware Common Stock (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in such form and have such
other provisions as the Company and the Delaware Corporation may reasonably
specify) and (ii) instructions for use in effecting the surrender of
Certificates in exchange for Delaware Certificates. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by the Company, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Delaware Certificate for each Share formerly
represented by such Certificate, and the Certificate so surrendered shall
forthwith be cancelled. If the Delaware Certificate is to be made to a person
other than the person in whose name the surrendered Certificate is registered,
it shall be a condition of exchange that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
person requesting such exchange shall have paid any transfer and other taxes
required by reason of the exchange of the Certificate to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. Until surrendered as contemplated by this section, each
Certificate shall be deemed, at any time after the Effective Time, to represent
only the right to receive a Delaware Certificate as contemplated by this
section.
(2) Transfer Books; No Further Ownership Rights in
Shares. At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of
Shares on the records of the Company. From and after the Effective Time, the
holders of Certificates which immediately prior to the Effective Time
represented the Company Common Stock shall cease to have any rights with respect
to such the Company Common Stock, except as otherwise provided for herein or by
applicable law. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged as
provided in this Article II.
(3) Termination of Fund; No Liability. At any time
following six months after the Effective Time, the Surviving Corporation shall
be entitled to require the Exchange Agent to deliver to it any Delaware
Certificates which had been made available to the Exchange Agent and which have
not been disbursed to holders of Certificates, and thereafter such holders shall
be entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect to
the Delaware Certificates payable upon due surrender of their Certificates,
without any interest thereon. None of the Surviving Corporation, the Company or
the Exchange Agent shall be liable to any holder of a Certificate for a Delaware
Certificate delivered to a public official pursuant to any applicable abandoned
property, escheat or similar laws.
(4) Lost Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making and delivery of an
affidavit of that fact by the person claiming such Certificate to have been
lost, stolen or destroyed and, if required by the Company, the posting by such
person of a bond in such reasonable amount as the Company may direct as
indemnity against any claim that would be made against the Delaware Corporation,
the Surviving Corporation or the Company with respect to such Certificate, the
Exchange Agent shall issue, in exchange for such lost, stolen or destroyed
Certificate, a Delaware Certificate deliverable in respect of such Certificate
pursuant to this Article 5.
6. Condition to Merger. The Merger shall have received the requisite
approval of the holders of the Company Common Stock and the Delaware Common
Stock.
7. Stock Certificates. At and after the Effective Time, all of the
outstanding certificates which immediately prior to the Effective Time
represented the Company Common Stock shall be deemed for all purposes to
evidence ownership of, and to represent, Delaware Common Stock, into which the
Company Common Stock formerly represented by such certificates have been
converted as herein provided. The registered owner on the books and records of
the Delaware Corporation or its transfer agents of any such outstanding stock
certificate shall, until such certificate shall have been surrendered for
transfer or otherwise accounted for to the Delaware Corporation or its transfer
agents, 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 Delaware Common Stock, evidenced by such outstanding certificate as above
provided.
8. Board of Directors and Officers. The members of the Board of
Directors and the officers of the Surviving Corporation immediately after the
Effective Time of the Merger shall be the persons who were the members of the
Board of Directors and the officers, respectively, of the Company immediately
prior to the Effective Time, and such persons shall serve in such offices,
respectively, for the terms provided by law or in the Bylaws, or until their
respective successors are elected and qualified.
9. Options. Upon the Effective Time, each outstanding option ("Option")
of the Company to purchase the Company Common Stock shall be converted into and
become an option to purchase the same number of shares of Delaware Common Stock
at the same exercise price, and upon the same terms and subject to the same
conditions as set forth in each Option as in effect on the Effective Time. As of
the Effective Time, the Delaware Corporation shall assume all of the obligations
of the Company under the Warrants.
10. Other Employee Benefit Plans. As of the Effective Time, the
Delaware Corporation hereby assumes all obligations of the Company under any and
all employee benefit plans in effect as of the Effective Time or with respect to
which employee rights or accrued benefits are outstanding as of the Effective
Time.
11. Amendment. Subject to applicable law, 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. Abandonment. At any time prior to the Effective Time, this Merger
Agreement may be terminated and the Merger may be abandoned by the Board of
Directors of either the Company or the Delaware Corporation, or both,
notwithstanding approval of this Merger Agreement by the stockholders of the
Delaware Corporation or the shareholders of the Company or both, if
circumstances arise which, in the opinion of the Board of Directors of the
Company make the Merger inadvisable.
13. Counterparts. In order to facilitate the filing and recording of
this Merger Agreement the same may be executed in two or more counterparts, each
of which shall be deemed to be an original and the same agreement.
IN WITNESS WHEREOF, the Company and the Delaware Corporation have
caused this Merger Agreement to be signed by their respective duly authorized
officers as of the date first above written.
ASSET INVESTORS CORPORATION,
A Maryland Corporation
By: /s/Terry Considine
------------------------------------
Terry Considine
Chairman and Chief Executive Officer
<PAGE>
ATTEST:
By: /s/David M. Becker
-----------------------
David M. Becker
Secretary
ASSET INVESTORS CORPORATION,
A Delaware Corporation
By: /s/Terry Considine
------------------------------------
Terry Considine
Chairman and Chief Executive Officer
ATTEST:
By: /s/David M. Becker
-----------------------
David M. Becker
Secretary
ANNEX B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ASSET INVESTORS CORPORATION
FIRST: Name. The name of the Corporation is Asset Investors
Corporation (hereinafter the "Corporation").
SECOND: Address. The address of the registered office of the
Corporation in the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: Purpose. The purposes for which the Corporation is
formed are to engage in any lawful act or activity (including, without
limitation or obligation, engaging in business as a real estate investment trust
under the Code) for which corporations may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL"). For purposes of this Certificate, "REIT" means a real estate
investment trust as defined in Section 856 of the Code.
FOURTH: Stock.
4.1 The total number of shares of stock which the Corporation
shall have authority to issue is 35,000,000 shares of Common Stock, each having
a par value of $.01 and 15,000,000 shares of Preferred Stock, each having a par
value of $.01.
4.2 Each share of Common Stock shall entitle the owner thereof
to vote at the rate of one vote for each share held.
4.3 All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of this Certificate and the
Bylaws of the Corporation.
FIFTH: Incorporator. The name and mailing address of the Sole
Incorporator is as follows:
Name Address
---- -------
Mary E. Keogh P.O. Box 636
Wilmington, DE 19899
SIXTH: Board of Directors and Management of Corporation. The
following provisions are inserted for the management of the business and the
conduct of the affairs of the Corporation, and for further definition,
limitation and regulation of the powers of the Corporation and of its directors
and stockholders:
6.1 The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
6.2 The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the Bylaws of the
Corporation.
6.3 The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the Bylaws of the
Corporation. The directors shall be divided into three classes, designated Class
I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board of Directors. The names and classes of the initial directors are:
Terry Considine Class II
Thomas L. Rhodes Class III
Bruce E. Moore Class I
Bruce D. Benson Class II
Elliot H. Kline Class III
Richard L. Robinson Class I
Tim Schultz Class I
William J. White Class II
Class I directors shall be elected to serve until the first Annual Meeting of
Stockholders, Class II directors to serve until one year thereafter and Class
III directors to serve until two years thereafter. At each succeeding annual
meeting of stockholders, successor to the class of directors whose term expires
at that annual meeting shall be elected for a three-year term. If the number of
directors is changed in accordance with the terms of the charter of the
Corporation, any increase or decrease shall be apportioned among the classes so
as to maintain the number of directors in each class as nearly equal as
possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director. A
director shall hold office until the annual meeting for the year in which his
term expires and until his successor shall be elected and shall qualify,
subject, however, to the director's prior death, resignation, disqualification
or removal from office. A director may be removed for cause only, and not
without cause, and only action of the stockholders taken by holders of at least
75% of all shares of stock then entitled to vote for the election of directors.
Any vacancy on the Board of Directors that results from a newly created
directorship may be filled by the affirmative vote of a majority of the Board of
Directors then in office, and any other vacancy occurring on the Board of
Directors may be filled by a majority of the directors then in office, although
less than a quorum, or by a sole remaining director. Any vacancy on the Board of
Directors that results from the removal of a director also may be filled by the
stockholders by the affirmative vote of holders of a majority of all shares of
stock then entitled to vote for the election of directors. Any director elected
to fill a vacancy not resulting from an increase in the number of directors
shall have the same remaining term as that of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one
or more classes or series of Preferred Stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office, filling
of vacancies and other features of such directorships shall be governed by the
terms of the charter of the Corporation applicable thereto, and such directors
so elected shall not be divided into classes pursuant to Paragraph 3 of this
Article SIXTH unless expressly provided by such terms. Election of directors
need not be written ballot unless the Bylaws so provide.
6.4 To the fullest extent permitted by Delaware law, director
shall be personally liable to the Corporation or any of its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article SIXTH by the stockholders of the
Corporation shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification.
6.5 In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the GCL,
this Certificate of Incorporation, and any Bylaws adopted by the stockholders;
provided, however, that no Bylaws hereafter adopted by the stockholders shall
invalidate any prior act of the directors which would have been valid if such
Bylaws had not been adopted.
6.6 The Corporation shall seek to elect and maintain status as
a REIT under Sections 856-860 of the Code. The Board of Directors shall use its
reasonable best efforts to cause the Corporation to satisfy the requirements for
qualification as a REIT under the Code, including, but not limited to, the
ownership of its outstanding stock, the nature of its assets, the sources of its
income, and the amount and timing of its distributions to its stockholders;
however, if the Board of Directors determines that it is no longer in the best
interests of the Corporation to continue to be qualified as a REIT, the Board of
Directors may revoke or otherwise terminate the Corporation's REIT election
pursuant to Section 856(g) of the Code. The Board of Directors also may
determine that compliance with any restriction or limitation on stock ownership
and transfers set forth in Article SEVENTH is no longer required for REIT
qualification.
SEVENTH: Restriction on Transfer and Ownership of Shares
7.1 Whenever it is deemed by the Board of Directors to be
prudent in protecting the tax status of the Corporation, the Board of Directors
may require to be filed with the Corporation a statement or affidavit from each
proposed transferee of shares of the Corporation setting forth the number of
shares already owned by the transferee and any related person(s) specified in
the form prescribed by the Board of Directors for that purpose. All contracts
for the sale or other transfer of shares of the Corporation shall be subject to
this provision.
7.2 Prior to any transfer or transaction which would cause the
stockholder to own, directly or indirectly, shares in excess of the "Limit" as
defined in Section 4 of this Article VII, and in any event upon demand of the
Board of Directors, each stockholder shall file with the Corporation an
affidavit setting forth the number of shares of the Corporation (A) owned
directly and (B) owned indirectly (for purposes of this Section, shares not
owned directly shall be deemed to be owned indirectly by a person if that person
would be the beneficial owner of such shares for purposes of Rule 13d-3, or any
successor rule thereto, promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, and/or would be considered to own
such shares by reason of the attribution rules in Section 544 of the Internal
Revenue Code of 1954, as amended (the "Code")), by the person filing the
affidavit. The affidavit to be filed with the Corporation shall set forth all
information required to be reported in returns filed by stockholders under
Regulation I.857-9 issued by the Internal Revenue Service, or similar provisions
of any successor regulation, and in reports to be filed under Section 13(d) of
the Securities Exchange Act of 1934. The affidavit, or an amendment thereto,
must be filed with the Corporation within 10 days after demand therefor and at
least 15 days prior to any transfer or transaction which, if consummated, would
cause the filing person to hold shares in excess of the "Limit," as defined in
Section 4 of this Article VII. The Board of Directors shall have the right, but
shall not be required, to refuse to transfer any shares purportedly transferred
other than in compliance with the notice provisions of this Section.
7.3 Any acquisition of shares of the Corporation that would
result in the disqualification of the Corporation as a real estate investment
trust under the Code shall be void ad initio to the fullest extent permitted
under applicable law and the intended transferee of such shares shall be deemed
never to have had an interest therein. If the foregoing provision is determined
to be void or invalid by virtue of any legal decision, statute, rule or
regulation, then the transferee of such shares shall be deemed, at the option of
the Corporation, to have acted as agent on behalf of the Corporation in
acquiring such shares and to hold such shares on behalf of the Corporation.
7.4 Notwithstanding any other provision hereof to the
contrary, and subject to the provisions of Section 5 of this Article VII, no
person, or persons acting as a group, shall at any time directly or indirectly
acquire ownership in the aggregate of more than 9.8% of the outstanding shares
of the Corporation (the "Limit"). Shares which would but for this Section 4, be
owned by a person or a group of persons in excess of the Limit at any time shall
be deemed "Excess Shares." For the purposes of determining and dealing with
Excess Shares, the term "ownership" shall be defined to include shares
constructively owned by a person under Section 544 of the Code and shall also
include shares beneficially owned by a person for purposes of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and the term "group" shall have the same meaning as that
term has for purposes of Section 13(d)(3) of such Act. All shares of the
Corporation which any person has the right to acquire upon exercise of
outstanding rights, options and warrants, and upon conversion of any securities
convertible into shares, if any, shall be considered outstanding for purposes of
the Limit if such inclusion will cause such person to own more than the Limit.
The Board of Directors shall have the right, but shall not be required, to
refuse to transfer shares if, as a result of the transfer, any person would hold
Excess Shares.
7.5 The Limit set forth in Section 4 of this Article VII shall
not apply to the acquisition of shares of the Corporation, by an underwriter in
a public offering of shares of the Corporation, or in any transaction involving
the issuance of shares by the Corporation, in which the Board of Directors
determines that the underwriter or other person or party initially acquiring
such shares will timely distribute such shares to or among others such that,
following such distribution, none of such Shares will be Excess Shares. The
Board of Directors in its discretion may exempt from the Limit and from the
filing requirements of Section 2 of this Article VII ownership or transfers of
certain designated shares while owned by or transferred to a person who has
provided the Board of Directors with evidence and assurances acceptable to the
Board of Directors that the qualification of the Corporation as a real estate
investment trust under the Code would not be jeopardized thereby.
7.6 All Excess Shares may be redeemed by the Corporation, in
the discretion of the Board of Directors, by mailing a written notice of
redemption to the holder of the Excess Shares not less than one week prior to
the redemption date as determined by the Board of Directors and included in the
notice. The price to be paid for Excess Shares shall be equal to (A) the closing
price of the shares on the last business day prior to the redemption date on the
principal national securities exchange on which such shares are listed or
admitted to trading, or (B) if such shares are not so listed or admitted to
trading, the closing bid price on such last business day as reported on the
NASDAQ System, if quoted thereon, or (C) if not determinable as aforesaid, the
net asset value of the shares redeemed, as determined in good faith by the Board
of Directors. Notwithstanding the foregoing sentence, in no event may the
redemption price be greater than the net asset value of the shares redeemed, as
determined in good faith greater than the net asset value of the shares
redeemed, as determined in good faith by the Board of Directors. The price paid
for any shares redeemed shall be paid on the redemption date fixed by the Board
and included in the notice to the shareholder. From and after the date fixed for
redemption, the holder of any shares so called for redemption shall cease to be
entitled to any distributions and other benefits with respect to such shares,
except only the right to payment of the redemption price fixed as aforesaid.
7.7 Nothing contained in this Article VII or in any other
provision hereof 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 qualified real estate investment trust under the code.
7.8 For purposes of this Article VII only, the term "person"
shall include individuals, corporations, limited partnerships, general
partnerships, joint stock companies or associations, joint ventures,
associations, consortia, companies, trusts, banks, trust companies, land trusts,
common law trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof.
7.9 If any provision of this Article VII or any application of
any such provision is determined to be invalid by any federal or state court
having jurisdiction over the issues, the validity 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.
7.10 The Board of Directors shall have the right, but shall
not be required, to refuse to transfer any shares of the Corporation to any
person if the ownership of shares by such person would result in the imposition
of a tax on the Corporation or any other holder (nominee or otherwise) of shares
of the Corporation (a "Disqualified Organization"). Any shares of the
Corporation owned by a Disqualified Organization may, in the discretion of the
Board, be redeemed by the Corporation at the redemption price and in the same
manner as Excess Shares may be redeemed pursuant to Section 7.6 of this Article
SEVENTH. If the foregoing provision is determined to be void or invalid by
virtue of any legal decision, statute, rule or regulation, then any Disqualified
Organization holding shares of the Corporation shall be deemed, at the option of
the Corporation, to have acted as an agent of the Corporation in acquiring such
shares and to hold such shares on behalf of the Corporation. The Board of
Directors may adopt such procedures regarding the transfer and redemption of
shares as it deems necessary to implement this Section 10."
EIGHTH: Meetings. Meetings of stockholders may be held within
or without the State of Delaware, as the Bylaws may provide. The books of the
Corporation may be kept (subject to any provision contained in the GCL) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the Bylaws of the Corporation.
NINTH: Amendment. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
TENTH: Business Combination. The Corporation elects not to be
governed by Section 203 of the GCL relating to business combinations with
interested stockholders.
ELEVENTH: Stockholder Action by Unanimous Written Consent. The
Corporation elects, pursuant to Section 228 of the GCL, to permit stockholder
action in lieu of a meeting upon the unanimous written consent of all
stockholders entitled to take such action at a meeting.
I, THE UNDERSIGNED, being the Sole Incorporator
hereinbefore named, for the purpose of forming a corporation pursuant to the
GCL, do make this Certificate, hereby declaring and certifying that this is my
act and deed and the facts herein stated are true, and accordingly have hereunto
set my hand this ____ day of May, 1999.
--------------------------------
Mary Keogh
Sole Incorporator
ANNEX C
BY-LAWS
OF
ASSET INVESTORS CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
Section 2. Annual Meetings. The Annual Meetings of
Stockholders for the election of directors shall be held on such date and at
such time, during the 31-day period from May 15 to June 15, as shall be
designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
Section 3. Special Meetings. Unless otherwise required by law
or by the certificate of incorporation of the Corporation, as amended and
restated from time to time (the "Certificate of Incorporation"), special
meetings of stockholders, for any purpose or purposes, may be called by (i) a
majority of the board of directors, (ii) a majority of the Independent
Directors, (iii) the chairman of the board, (iv) the president, (v) a vice
president, (vi) the secretary, (vii) the assistant secretary. Special meetings
of stockholders shall be called by the secretary upon the written request of the
holders of shares entitled to not less than twenty-five percent (25%) of all the
votes entitled to be cast at such meeting by notice mailed within ten days after
the receipt of such request. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. The secretary
shall inform such stockholders of the reasonably estimated cost of preparing and
mailing such notice of the meeting, and upon payment by such stockholders to the
corporation of such costs the secretary shall give notice stating the purpose or
purposes of the meeting. No special meeting need be called upon the request of
the holders of shares entitled to cast less than a majority of all votes
entitled to be cast at such meeting, to consider any matter which is
substantially the same as a matter voted upon at any special meeting of the
stockholders held during the preceding twelve months. At a Special Meeting of
Stockholders, only such business shall be conducted as shall be specified in the
notice of meeting (or any supplement thereto).
Section 4. Notice. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
In the case of a special meeting of stockholders convened at
the request of stockholders, as provided for in Section 3 above, the notice
herein provided for shall be given by the secretary, in the manner herein
provided, within ten days after receipt of such request of stockholders. Such a
special meeting shall be held not less than twenty nor more than sixty days
after receipt of said request of stockholders.
Section 5. Adjournments. Any meeting of the stockholders may
be adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 6. Quorum. Unless otherwise required by law or the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. A quorum, once established, shall
not be broken by the withdrawal of enough votes to leave less than a quorum. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
in the manner provided in Section 5, until a quorum shall be present or
represented.
Section 7. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these By-laws, any question brought before any
meeting of stockholders, other than the election of directors, shall be decided
by the vote of the holders of a majority of the total number of votes of the
capital stock represented and entitled to vote thereat, voting as a single
class. Unless otherwise provided in the Certificate of Incorporation, and
subject to Section 5 of Article V hereof, each stockholder represented at a
meeting of stockholders shall be entitled to cast one vote for each share of the
capital stock entitled to vote thereat held by such stockholder. Such votes may
be cast in person or by proxy but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The Board
of Directors, in its discretion, or the officer of the Corporation presiding at
a meeting of stockholders, in such officer's discretion, may require that any
votes cast at such meeting shall be cast by written ballot.
Section 8. Nature of Business at Meetings of Stockholders. No
business may be transacted at an annual meeting of stockholders, other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors (or
any duly authorized committee thereof), (b) otherwise properly brought before
the annual meeting by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (c) otherwise properly brought before the
annual meeting by any stockholder of the Company (i) who is a stockholder of
record on the date of the giving of the notice provided for in this Section 8
and on the record date for the determination of stockholders entitled to vote at
such annual meeting and (ii) who complies with the notice procedures set forth
in this Section 8.
In addition to any other applicable requirements, for business
to be properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to the
Secretary of the Company.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Company not less than sixty (60) days nor more than ninety (90) days prior to
the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure of the date of the annual meeting was made, whichever
first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of such stockholder,
(iii) the class or series and number of shares of capital stock of the Company
which are owned beneficially or of record by such stockholder, (iv) a
description of all arrangements or understandings between such stockholder and
any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of such
stockholder in such business and (v) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting.
No business shall be conducted at the annual meeting of
stockholders except business brought before the annual meeting in accordance
with the procedures set forth in this Section 8; provided, however, that, once
business has been properly brought before the annual meeting in accordance with
such procedures, nothing in this Section 8 shall be deemed to preclude
discussion by any stockholder of any such business. If the Chairman of an annual
meeting determines that business was not properly brought before the annual
meeting in accordance with the foregoing procedures, the Chairman shall declare
to the meeting that the business was not properly brought before the meeting and
such business shall not be transacted.
Section 9. Nomination of Directors. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors of the Company, except as may be otherwise provided in the
Certificate of Incorporation with respect to the right of holders of preferred
stock of the Corporation to nominate and elect a specified number of directors
in certain circumstances. Nominations of persons for election to the Board of
Directors may be made at any annual meeting of stockholders, or at any special
meeting of stockholders called for the purpose of electing directors, (a) by or
at the direction of the Board of Directors (or any duly authorized committee
thereof) or (b) by any stockholder of the Company (i) who is a stockholder of
record on the date of the giving of the notice provided for in this Section 9
and on the record date for the determination of stockholders entitled to vote at
such meeting and (ii) who complies with the notice procedures set forth in this
Section 9.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder must have given timely
notice thereof in proper written form to the Secretary of the Company.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of the
Company (a) in the case of an annual meeting, not less than sixty (60) days nor
more than ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within thirty (30) days
before or after such anniversary date, notice by the stockholder in order to be
timely must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth (10th) day following the day on which notice of
the date of the special meeting was mailed or public disclosure of the date of
the special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth (a) as to each person whom the stockholder proposes to
nominate for election as a director (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the class or series and number of shares of capital stock of
the Company which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Company which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the
Company unless nominated in accordance with the procedures set forth in this
Section 9. If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the nomination was defective and such defective nomination
shall be disregarded.
Section 10. Action by Unanimous Written Consent. Any action
required or permitted to be taken by the stockholders of the Corporation at a
duly called annual or special meeting of stockholders of the Corporation may be
taken by unanimous written consent.
Section 11. List of Stockholders Entitled to Vote. The officer
of the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder of the Corporation who is present.
Section 12. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 12 of this Article II or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 13. Conduct of Meetings. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the safety of
those present; (iv) limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
determine; (v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.
ARTICLE III
DIRECTORS
Section 1. Number, Term and Election of Directors. During all
periods in which the Corporation seeks to be qualified to be taxed as a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986 (as
amended), the Board of Directors shall include Independent Directors (as defined
below). The number of Independent Directors shall not be: (i) less than four if
the number of Directors is eight or greater; (ii) less than three if number of
Directors is six or seven; and (iii) less than two if the number of Directors is
less than six.
At such time as the Corporation seeks to qualify as a real
estate investment trust (a "REIT"), a majority of the Board of Directors shall
be Independent Directors. For purposes of these By-Laws, "Independent Director"
shall mean a director of the Corporation who is not affiliated, directly or
indirectly, with the person or entity responsible for directing or performing
the day-to-day business affairs of the corporation (the "Advisor"), including a
person or entity to which the Advisor subcontracts substantially all of the
functions of the Advisor, whether by ownership of, ownership interest in,
employment by, any material business or professional relationship with, or by
serving as an officer or director of, the Advisor or an affiliated business
entity of the Advisor. Independent Directors shall also mean those who perform
no other services for the Corporation, except as director(s). An indirect
relationship shall include circumstances in which a member of the immediate
family of a director (such person's spouse, parents, children, siblings, mothers
and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law) has
one of the foregoing relationships with the Advisor or the Corporation. For
purposes of these By-Laws, "Sponsor" shall mean any person directly or
indirectly instrumental in organizing, wholly or in part, the Corporation, the
Advisor or any person who will manage or participate in the management of the
Corporation, and any affiliate of any such person, but does not include a person
whose only relationship with the Corporation is as that of an independent
property manager, whose only compensation is as such. "Sponsor" also does not
include wholly independent third parties such as attorneys, accountants and
underwriters whose only compensation is for professional services.
Notwithstanding the foregoing, if a majority of the existing Independent
Directors of the Company deem a director to be independent, such person shall be
an Independent Director.
The board of directors shall be divided into three classes,
each class to consist of not less than one nor more than five directors. All
classes shall be as nearly equal in number as possible.
Until the first annual meeting of stockholders or until
successors are duly elected and qualify, the board shall consist of the persons
named as such in the corporation's charter whose initial terms shall be for the
periods specified therein. After the initial term of each initial director, each
director shall serve for a term of three years. If the number of directors is
increased by the board of directors and the board of directors elects additional
directors to fill the vacancies resulting from the increase, the board shall
specify the class into which such directors are being elected. Directors need
not be stockholders in the corporation.
Section 2. Vacancies. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising for any cause other than by
reason of an increase in the number of directors may be filled only by a
majority of the directors then in office, though less than a quorum; provided,
however, that if, in the circumstances described in Section 1 a majority of the
board of directors shall be Independent Directors, then Independent Directors
shall nominate replacements for vacancies among the Independent Directors. Any
vacancy occurring by reason of an increase in the number of directors may be
filled by action of a majority of the entire board of directors then in office.
If the stockholders of any class or series are entitled separately to elect one
or more directors, a majority of the remaining directors elected by that class
or series may fill any vacancy among the number of directors elected by that
class or series. The directors so chosen shall hold office until the next annual
election and until their successors are duly elected and qualified, or until
their earlier death, resignation or removal.
Section 3. Duties and Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of Directors
which may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation or
by these By-Laws required to be exercised or done by the stockholders.
The board of directors shall be responsible for establishing
the investment policies of the corporation and shall have a fiduciary duty
towards the stockholders of the corporation with respect thereto, and such
investment policies shall be reviewed, ratified or amended, from time to time
but at least annually, by action by the majority of the directors, including a
majority of the Independent Directors. In addition, action by the majority of
the directors, including a majority of the Independent Directors, is required to
establish or approve modifications to the policies of the corporation with
respect to: the content, frequency and stockholder review of annual reports;
changes to the contract with the corporation's Advisor; and compensation of the
Advisor; the maximum operating expenses of the corporation, the maximum expenses
to be borne by the corporation in connection with a public offering of the
common stock of the corporation; the commissions and fees the corporation will
pay in acquiring investment properties; the appraisal of properties to be
purchased by the corporation; and the establishment of an amendment to any
dividend reinvestment plans.
Section 4. Meetings. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware. The
first meeting of each newly elected board of directors shall be held as soon as
practicable after the annual meeting of the stockholders at which the directors
were elected. The meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver sighed by all
of the directors as provided in Article III, except that no notice shall be
necessary if such meeting is held immediately after the adjournment, and at the
site, of the annual meeting of stockholders. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as may from
time to time be determined by the Board of Directors. Special meetings of the
Board of Directors may be called by the Chairman, if there be one, the
President, a majority of the members of the elective committee or by any two
directors. Notice thereof stating the place, date and hour of the meeting shall
be given to each director either by mail not less than forty-eight (48) hours
before the date of the meeting, by telephone or telegram on twenty-four (24)
hours' notice, or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances.
Section 5. Quorum. Except as otherwise required by law or the
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present.
Section 6. Actions by Written Consent. Unless otherwise
provided in the Certificate of Incorporation, or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 7 shall constitute presence in person at such meeting.
Section 8. Committees. 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, provided that a majority of the
members shall be Independent Directors. The board of directors may delegate to
any committees any of the powers of the board of directors except the power to
declare dividends or distributions on stock, recommend to the stockholders any
action which requires stockholders approval, amend the by-laws, approve any
merger or share exchange which does not require stockholder approval or issue
stock. However, if the board of directors has given general authorization for
the issuance of stock, a committee of the board, in accordance with a general
formula or method specified by the board of directors by resolution or by
adoption of a stock option plan, may fix the terms of stock subject to
classification or reclassification and the terms on which any stock may be
issued.
Notice of committee meetings shall be given in the same manner
as notice for special meetings of the board of directors.
One-third of the members of any committee shall be present in
person at any meeting of such committee in order to constitute a quorum for the
transaction of business at such meeting, and the act of a majority present shall
be the act of such committee. The board of directors may designate a chairman of
any committee and such chairman or any two members of any committee may fix the
time and place of its meetings unless the board shall otherwise provide. In the
absence or disqualification of any member of any committee, the members thereof
present at any meeting and not disqualified from voting, whether or not they
constitute a quorum, may unanimously appoint another director to act at the
meeting in the place of such absent or disqualified members; provided, however,
that in the event of the absence or disqualification of and Independent
Director, such appointee shall be an Independent Director.
The committees shall keep minutes of their proceedings and
shall report the same to the board of directors at the meeting next succeeding,
and any action by the committees shall be subject to revision and alteration by
the board of directors, provided that no rights of third persons shall be
affected by any such revision or alteration.
The board of directors shall have the power at any time to
change the membership of any committee, to fill all vacancies, to designate
alternate members to replace any absent or disqualified member, or to dissolve
any such committee.
Section 9. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director, payable in cash or securities. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
Section 10. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because the director or officer's vote is
counted for such purpose if (i) the material facts as to the director or
officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board
of Directors or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (ii) the material
facts as to the director or officer's relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or ratified
by the Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President, a Secretary and a
Treasurer. The Board of Directors, in its discretion, also may choose a Chairman
of the Board of Directors (who must be a director) and one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers and
agents as it shall deem necessary. Any number of offices may be held by the same
person, unless otherwise prohibited by law or the Certificate of Incorporation.
The officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation.
Section 2. Election. The Board of Directors, at its first
meeting held after each Annual Meeting of Stockholders (or action by written
consent of stockholders in lieu of the Annual Meeting of Stockholders), shall
elect the officers of the Corporation who shall serve for one year and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors; and all officers of the Corporation shall hold
office until their successors are chosen and qualified, or until their earlier
death, resignation or removal. Any officer elected by the Board of Directors may
be removed at any time by the affirmative vote of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers
of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do so by the Board of Directors and
any such officer may, in the name of and on behalf of the Corporation, take all
such action as any such officer may deem advisable to vote in person or by proxy
at any meeting of security holders of any corporation in which the Corporation
may own securities and at any such meeting shall possess and may exercise any
and all rights and power incident to the ownership of such securities and which,
as the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of
the Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation, unless the
Board of Directors designates the President as the Chief Executive Officer, and,
except where by law the signature of the President is required, the Chairman of
the Board of Directors shall possess the same power as the President to sign all
contracts, certificates and other instruments of the Corporation which may be
authorized by the Board of Directors. During the absence or disability of the
President, the Chairman of the Board of Directors shall exercise all the powers
and discharge all the duties of the President. The Chairman of the Board of
Directors shall also perform such other duties and may exercise such other
powers as may from time to time be assigned by these By-Laws or by the Board of
Directors.
Section 5. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, have general supervision of the business of the Corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect. The President shall execute all bonds, mortgages, contracts
and other instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-Laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman of the
Board of Directors, or if the Board of Directors shall otherwise designate, the
President shall be the Chief Executive Officer of the Corporation. The President
shall also perform such other duties and may exercise such other powers as may
from time to time be assigned to such officer by these By-Laws or by the Board
of Directors.
The president may be designated by the board of directors as
the chief operating officer of the corporation. In the absence of the chairman
of the board, or in the event of the inability of the chairman of the board to
act, the president shall have authority to exercise the power and perform the
duties of the chairman of the board. He or she shall have such further powers
and duties as may be conferred on him or her by the board of directors.
Section 6. Vice Presidents. At the request of the President or
in the President's absence or in the event of the President's inability or
refusal to act (and if there be no Chairman of the Board of Directors), the Vice
President, or the Vice Presidents if there is more than one (in the order
designated by the Board of Directors), shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Each Vice President shall perform such
other duties and have such other powers as the Board of Directors from time to
time may prescribe. If there be no Chairman of the Board of Directors and no
Vice President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings
of the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman of the Board of Directors or the President, under
whose supervision the Secretary shall be. If the Secretary shall be unable or
shall refuse to cause to be given notice of all meetings of the stockholders and
special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest to the affixing by such officer's signature.
The Secretary shall see that all books, reports, statements, certificates and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of the Treasurer and for the restoration to the Corporation, in case of the
Treasurer's death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the Corporation.
Section 9. Assistant Secretaries. Assistant Secretaries, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to act, shall
perform the duties of the Secretary, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of the Treasurer's disability or refusal to act, shall
perform the duties of the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Treasurer. If required
by the Board of Directors, an Assistant Treasurer shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of the office
of Assistant Treasurer and for the restoration to the Corporation, in case of
the Assistant Treasurer's death, resignation, retirement or removal from office,
of all books, papers, vouchers, money and other property of whatever kind in the
Assistant Treasurer's possession or under the Assistant Treasurer's control
belonging to the Corporation.
Section 11. Other Officers. Such other officers as the Board
of Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by such stockholder in the Corporation. If the corporation has
authority to issue stock of more than one class, the stock certificate shall
contain on its face or back a full statement or summary 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 and if the corporation is authorized to issue any preferred or special
class in series, the differences in the relative rights and preferences between
the share of each series to the extent they have been set, and the authority of
the board of directors to set the relative rights and preferences of subsequent
series. In lieu of such full statement or summary, there may be set forth upon
the face or back of the certificate a statement that the corporation will
furnish to any stockholder upon request and without charge, a full statement of
such information. A summary of such information included in a registration
statement permitted to become effective under the federal Securities Act of
1933, as now or hereafter amended, shall be an acceptable summary for the
purposes of this section. Every stock certificate representing shares of stock
which are restricted as to transferability by the corporation shall contain a
full statement of the restriction or state that the corporation will furnish
information about the restriction to the stockholder on request and without
charge. A stock certificate may not be issued until the stock represented by it
is fully paid, except in the case of stock purchased under an option plan as
permitted by law.
Section 2. Signatures. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 3. Lost Certificates. The Board of Directors may
direct a new certificate to be issued in place of any certificate theretofore
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
of stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or the owner's legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed or the issuance of such new certificate.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by the Certificate of Incorporation,
applicable law and these By-Laws. Transfers of stock shall be made on the books
of the Corporation only by the person named in the certificate or by such
person's attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new certificate shall be
issued. No transfer of stock shall be valid as against the Corporation for any
purpose until it shall have been entered in the stock records of the Corporation
by an entry showing from and to whom transferred.
Section 5. Record Date.
(a) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; providing, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall not be more than ten days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in this State,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of Directors
is required by law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolutions
taking such prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
Section 6. Record Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise required by
law.
Section 7. Transfer Agents and Registrars. The board of
directors may in its discretion, appoint one or more banks or trust companies in
such city or cities as the board of directors may deem advisable, from time to
time, to act as transfer agents and/or registrars of the shares of stock of the
corporation; and, upon such appointments being made, no certificate representing
shares shall be valid until countersigned by one of such transfer agents and
registered by one of such registrars.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required
by law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto. Attendance of
a person at a meeting, present in person or represented by proxy, shall
constitute a waiver of notice of such meeting, except where the person attends
the meeting for the express purpose of objecting at the beginning of the meeting
to the transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the requirements of the DGCL and the provisions of the
Certificate of Incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors (or any action by
written consent in lieu thereof in accordance with Section 6 of Article III
hereof), and may be paid in cash, in property, or in shares of the Corporation's
capital stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
Section 5. Restricted and Prohibited Activities. The
corporation shall not: invest in unimproved real property (that is, acquire an
equity interest in property for purposes other than producing income, which has
no development or construction in progress thereon nor is any development or
construction planned to commence thereof within the year); invest in mortgage
loans (but not including mortgage related securities) without an appraisal of
the underlying property; invest in real estate contracts of sale unless the same
are in recordable form; invest in or make a mortgage loan on property in excess
of 100% of its appraised value (unless other mortgage loan underwriting criteria
would justify such investment); invest in or make a mortgage loan subordinate to
a mortgage or equity interest in the property held by the Advisor, the sponsor,
a director or an affiliate of any of the foregoing; issue equity securities
redeemable at the option of the holder thereof; issue options or warrants to
insiders if such options or warrants are not to be sold to the public or cover
in excess of 9.8% of the outstanding shares of the corporation; issue options or
warrants to any persons with an exercise price less than the fair market value
of the shares covered at the date of issuance; or issue its common stock on a
deferred payment basis.
Section 6. Maximum Expenses. The Independent Directors shall
evaluate the total fees and expenses of the corporation from time to time but at
least annually and determine that the same are fair and reasonable in the light
of the investment experience of the corporation, the net assets and the net
income of the corporation, and that the fees and expenses paid are comparable to
those of the real estate industry in general. The directors shall use as a
guideline the maximum fees and expenses set forth in the North American
Securities Administrators Association, Inc., Statement of Policy Regarding Real
Estate Investment Trusts, as the same shall be in effect from time to time.
Section 7. Advisory Contract and Compensation. The board of
directors may delegate the duty of management of the assets and the
administration of its day-to-day operations to an Advisor pursuant to a written
contract or contracts which have obtained the approval, including the approval
of renewals thereof, of the board of directors, including a majority of the
Independent Directors.
The majority of the directors, including a majority of the
Independent Directors, shall review and ratify, amend or repeal the advisory
contract in effect between the corporation and its Advisor at least annually.
The directors shall review the performance of the Advisor before reviewing such
contract. No advisory contract shall have a term in excess of one year, and such
contract shall be terminable by a majority of the Independent Directors or the
Advisor, without cause, upon sixty days written notice. The Independent
Directors shall review the compensation of the Advisor at least annually to
determine that such compensation is reasonable in relation to the nature and
quality of the services provided. Such compensation shall conform to the
limitations set forth in the North American Securities Administrators
Association, Inc., Statement of Policy Regarding Real Estate Investment Trusts,
as the same shall be in effect from time to time. The relevant factors in
evaluating such compensation shall be those set forth in such Statement of
Policy.
Statement 8. Checks. All checks, drafts and orders for the
payment of money, notes and other evidences of indebtedness, issued in the name
of the corporation shall be signed by the president or the treasurer or by such
officer or officers as the board of directors may from time to time designate.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings
other than Those by or in the Right of the Corporation. Subject to Section 3 of
this Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director or officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person 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 such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person 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 reasonable cause to believe that such
person's conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings
by or in the Right of the Corporation. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Authorization of Indemnification. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (i) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (ii) by a committee of such directors designated by a
majority vote of such directors, even though less than a quorum, or (iii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion or (iv) by the stockholders. Such
determination shall be made, with respect to former directors and officers, by
any person or persons having the authority to act on the matter on behalf of the
Corporation. To the extent, however, that a present or former director or
officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.
Section 4. Good Faith Defined. For purposes of any
determination under Section 3 of this Article VIII, a person shall be deemed to
have acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Corporation, or, with respect to
any criminal action or proceeding, to have had no reasonable cause to believe
such person's conduct was unlawful, if such person's action is based on the
records or books of account of the Corporation or another enterprise, or on
information supplied to such person by the officers of the Corporation or
another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 4 shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 4 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth in
Section 1 or 2 of this Article VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director or officer may apply to the Court of Chancery in the State of Delaware
for indemnification to the extent otherwise permissible under Sections 1 and 2
of this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VIII.
Section 7. Nonexclusively of Indemnification and Advancement
of Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation, any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power or
the obligation to indemnify such person against such liability under the
provisions of this Article VIII.
Section 9. Certain Definitions. For purposes of this Article
VIII, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding
anything contained in this Article VIII to the contrary, except for proceedings
to enforce rights to indemnification (which shall be governed by Section 5
hereof), the Corporation shall not be obligated to indemnify any director or
officer in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended
or repealed, in whole or in part, or new By-Laws may be adopted by the
stockholders or by the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new By-Laws be contained in
the notice of such meeting of stockholders or Board of Directors as the case may
be. All such amendments must be approved by either the holders of a majority of
the outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article
IX and in these By-Laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would have if there were no
vacancies.
* * *
Adopted as of: _____________________
Last Amended as of: ________________
<
ANNEX D
ASSET INVESTORS CORPORATION
Annual Meeting of Shareholders - May 24, 1999
This proxy is solicited on behalf of the
Board of Directors.
The undersigned hereby appoints Terry Considine, Thomas L. Rhodes and Bruce E.
Moore, jointly and severally, proxies with full power of substitution, and
hereby authorizes them to represent and to vote, as designated below, all shares
of common stock of Asset Investors Corporation held of record by the undersigned
on March 25, 1999, at the Annual Meeting of Shareholders to be held on May 24,
1999, and any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 BELOW
1. ELECTION OF THREE DIRECTORS TO CLASS I OF THE BOARD OF DIRECTORS.
(Check one box only):
[ ] FOR all nominees listed below [ ] WITHHOLD authority to vote
(except as marked to the for all nominees listed
contrary below): below:
Richard L. Robinson Tim Schultz William J. White
(Instruction: To withhold authority to vote for any nominees,
check the "FOR all nominees" box above and write
in the space provided below the names of the
nominees for whom you wish to withhold authority
to vote.)
----------------------------------
----------------------------------
2. REINCORPORATION OF THE COMPANY IN DELAWARE INCLUDING APPROVAL OF
THE MERGER AGREEMENT AND RELATED MATTERS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENTS THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2 AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
THE UNDERSIGNED HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN BY THE UNDERSIGNED
TO VOTE AT THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
DATED ___________________, 1999 _______________________________________
(Sign Here)
PROXY _______________________________________
(Sign Here, if Held Jointly)
Please sign EXACTLY as your
name appears on this card.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give your full title. All
joint owners should sign. If a
corporation, sign in full
corporate name by an
authorized officer. If in a
partnership, sign in
partnership name by an
authorized person.
