Exhibit 3.2
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BYLAWS
AS AMENDED THROUGH MAY 4, 2001
OF
CAPITAL ALLIANCE INCOME TRUST LTD.
A Delaware Corporation
BYLAWS
as Amended through May 4, 2001
Of
Capital Alliance Income Trust Ltd.
A Delaware Corporation
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TABLE OF CONTENTS
ARTICLE I - THE TRUST: DEFINITIONS............................................1.
1.1. Name......................................................1.
1.2. Registered Office.........................................1.
1.3. Nature of Corporation.....................................1.
1.4. Definitions...............................................1.
ARTICLE II - DIRECTORS........................................................3.
2.1. Number, Term of Office and Qualifications of Directors....3.
2.2 Vacancies.................................................4.
2.3. Nomination of Directors...................................4.
2.4. Place of Meetings.........................................4.
2.5. Meetings by Telephone.....................................4.
2.6. Organizational Meeting....................................4.
2.7. Other Regular Meetings....................................4.
2.8. Special Meetings..........................................4.
2.9. Quorum....................................................5.
2.10. Adjournment and Notice Thereof............................5.
2.11. Action Without Meeting....................................5.
2.12. Removal...................................................5.
2.13. Committees of the Board...................................5.
2.14. Directors' Compensation...................................5.
ARTICLE III - DIRECTORS' POWERS...............................................6.
3.1. Power and Authority of Directors..........................6.
3.2. Specific Powers and Authorities...........................6.
3.3. Additional Powers.........................................8.
ARTICLE IV - EMPLOYMENT OF ADVISOR............................................8.
4.1. Employment of Advisor.....................................8.
4.2. Term......................................................9.
4.3. Other Activities of Advisor...............................9.
ARTICLE V - INVESTMENT POLICY.................................................9.
5.1. General Statement of Policy...............................9.
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5.2. Invested Assets..........................................10.
5.3. Restrictions.............................................11.
ARTICLE VI - OFFICERS........................................................12.
6.1. Officers.................................................12.
6.2. Election of Officers.....................................12.
6.3. Appointed Officers.......................................12.
6.4. Removal and Resignation of Officers......................12.
6.5. Vacancies in Offices.....................................12.
6.6. Chairman of the Board....................................12.
6.7. Vice Chairman of the Board...............................12.
6.8. President................................................12.
6.9. Executive Vice Presidents, Senior Vice Presidents and
Vice Presidents..........................................13.
6.10. Secretary................................................13.
6.11. Treasurer................................................13.
ARTICLE VII - SHAREHOLDERS...................................................13.
7.1. Place of Meetings........................................13.
7.2. Annual Meetings..........................................13.
7.3. Special Meetings and Notice Thereof......................14.
7.4. Adjourned Meetings and Notice Thereof....................15.
7.5. Voting At Meetings of Shareholders.......................15.
7.6. Quorum...................................................15.
7.7. Action Without Meeting...................................16.
7.8. Proxies..................................................16.
7.9. Inspectors of Election...................................16.
ARTICLE VIII - MISCELLANEOUS.................................................18.
8.1. Record Dates and Closing of Transfer Books...............18.
8.2. Inspection of Corporate Records..........................18.
8.3. Inspection of Bylaws.....................................18.
8.4. Representation of Shares of Corporations.................18.
8.5. Shareholders' Disclosures; Redemption of Shares..........18.
8.6. Right to Refuse to Transfer Shares.......................19.
8.7. Limitation on Acquisition of Shares......................19.
8.8. Reliance.................................................19.
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BYLAWS
AS AMENDED THROUGH MAY 4, 2001
OF
Capital Alliance Income Trust Ltd.
A Delaware Corporation
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ARTICLE I - THE TRUST: DEFINITIONS
1.1. Name. The name of the corporation is CAPITAL ALLIANCE
INCOME TRUST LTD. (the "Corporation").
If Capital Alliance Advisors, Inc., or any parent,
subsidiary, affiliate or successor of such corporation shall cease, for any
reason, to render to the Corporation the services of Advisor as defined in
Section 1.4 hereof) pursuant to the contract referred to in Article IV hereof
and any renewal or extension of such contract, then the Directors shall, upon
request of Capital Alliance Advisors, Inc., or its successor, promptly amend the
Certificate of Incorporation ("Certificate") of the Corporation to change the
name of the Corporation to one which does not include any reference to "Capital
Alliance" or any approximation thereof, and shall cease using the words "Capital
Alliance" in its corporate documents and communications.
1.2. Registered Office. The registered office of the
Corporation shall be at 1209 Orange Street, in the City of Wilmington, County of
New Castle, Delaware. However, the Directors may, from time to time, change such
location and maintain other offices or places of business within or without the
State of Delaware, including the City and County of San Francisco, California.
The name of the registered agent at such address is The Corporation Trust
Company.
1.3. Nature of Corporation. The Corporation is a corporation
organized under the laws of the State of Delaware, primarily to invest in, own
and dispose of Home Equity Loans. It is intended that the Corporation shall
carry on its business as a "real estate investment trust ("REIT") under the REIT
Provisions of the Internal Revenue Code.
1.4. Definitions. The terms defined in this Section 1.4 and
in the Certificate whenever used in these Bylaws shall, unless the context
otherwise requires, have the respective meanings hereinafter specified in this
Section 1.4 and in the Certificate. In these Bylaws words in the singular number
include the plural and in the plural number include the singular and a masculine
reference includes the feminine.
All terms defined in Section 4.2 of the Certificate shall
have the same meaning when used in these Bylaws.
(a) Act shall mean the Delaware General Corporation Law, as
amended from time to time.
(b) Advisor shall mean any Person appointed, employed or
contracted with by the Corporation under the provisions of Article IV hereof.
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(c) Affiliate shall mean, with respect to any Person (i) any
Person directly or indirectly controlling, controlled by, or under common
control with another Person, (ii) any Person owning or controlling ten percent
(10%) or more of the outstanding voting securities of such other Person, (iii)
any officer, director or partner of such Person, and (iv) if such Person is an
officer, director or partner, any company for which such Person acts in any
capacity.
(d) Annual Meeting of Shareholders shall have the meaning set
forth in the first sentence of Section 7.2(a).
(e) Appraised Value shall mean the value according to an
appraisal made by an independent Qualified Appraiser of a professional valuation
company. An "independent" appraiser is one who is not "controlled" by the
Directors, the Advisor or its Affiliates. For purposes of the foregoing
sentence, the term "control" shall have the meaning ascribed to it in Rule 405
under the Securities Act of 1933.
(f) Common Shares shall mean the Shares described in Section
4.1 of the Certificate.
(g) Common Shareholders shall mean the holders of the Common
Shares.
(h) Code means the Internal Revenue Code of 1986, as amended
from time to time.
(i) Controlling Person means any person, whatever his title,
who performs executive or senior management functions for the Advisor or its
Affiliates similar to those of executive or senior management officers,
directors or partners; or those holding 5% or more equity interest in the
Advisor or such Affiliate; or a person having the power to direct or cause the
direction of the management level employees and policies of the Advisor or such
Affiliate, whether through the ownership of a voting security, by contract or
otherwise. For the purposes of this definition, not every person who carries a
title such as vice president or senior vice president, corporate secretary or
treasurer shall be considered a Controlling Person, unless such person performs
the functions or has the powers described above, and even in the absence of a
specific title, an executive in a senior management position shall be considered
a Controlling Person.
(j) Certificate means the Certificate of Incorporation and
all amendments, restatements, or modifications thereof.
(k) Financing means indebtedness incurred by the Corporation.
(l) Fiscal Quarter means the three-month period ending on the
last day of the third, sixth, ninth and twelfth calendar months of each Fiscal
Year of the Corporation.
(m) Gross Income means the gross income of the Corporation
within the meaning of Section 61(a) of the Code.
(n) Majority in Interest means Shareholders holding more than
50% of the outstanding Shares of a specified class of Shares held by all
Shareholders of the specified class of Shares at the Record Date for any vote of
the Shareholders.
(o) Person means and includes natural persons, corporations,
limited partnerships general partnerships, associations, companies, trusts,
estates, custodians, nominees, or other individuals or entities in its own or
any representative capacity.
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(p) Prime Rate means, during any calendar month, the prime
rate (or base rate) reported in the Money Rates column of the Wall Street
Journal published on the first business day of each month. In the event the Wall
Street Journal ceases publication of the Prime Rate, the Prime Rate shall mean
the prime rate (or base rate) in effect for Bank of America, San Francisco,
California, on the first business day of each month.
(q) Prospectus means the prospectus of the Corporation
pursuant to which the Corporation from time to time offers its Shares, as the
same may at any time and from time to time be amended or supplemented after the
effective date thereof.
(r) Purchase Price of Home Equity Loans means the price paid
or amount loaned upon the purchase or making of a Home Equity Loan.
(s) Qualified Appraiser means an appraiser who (i) is
approved by the Advisor, (ii) is registered on the approved appraiser list of at
least four lending institutions, (iii) maintains at least $500,000 in errors and
omissions insurance, and (iv) demonstrates qualification by membership in a
recognized appraisal society or otherwise to the satisfaction of the Advisor.
(t) Record Holder means the holder of Shares as recorded on
the books of the Corporation as of the close of business on a particular day.
(u) REIT means a real estate investment trust, as defined in
Sections 856-860 of the Code.
(v) REIT Provisions of the Internal Revenue Code means Part
II, Subchapter M of Chapter 1, of the Code, as now enacted or hereafter amended,
or successor statutes, and regulations and rulings promulgated thereunder.
(w) Securities means any stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participation in temporary or interim certificates for, receipts for,
guarantee of, or warrants, options or rights to subscribe to, purchase or
acquire any of the foregoing.
(x) Shares means the shares of beneficial interest of the
designated class of Shares of the Corporation as described in Section 4.1 of the
Certificate, and, if no class is designated, all Shares of the Corporation
outstanding at the designated time.
(y) Shareholders means, as of any particular time, all
holders of record of outstanding Shares of the designated class of Shares (or
series thereof) of the Corporation at such time, and, if no class is designated,
all holders of record of all outstanding Shares of the Corporation.
(z) Sponsor means any Person directly or indirectly
instrumental in organizing, wholly or in part, the Corporation, or any Person
who will manage or participate in the management of the Corporation, and any
Affiliate of any such Person. Sponsor does not include wholly independent third
parties, such as attorneys, accountants and underwriters whose only compensation
is for professional services rendered in connection with the offering of Shares.
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ARTICLE II - DIRECTORS
2.1. Number, Term of Office and Qualifications of Directors.
There shall be no less than three (3) nor more than seven (7) Directors, until
changed by amendment of the Certificate duly adopted amending this Article II.
Each Director shall hold office until the expiration of his term and until the
election and qualification of his successor. The directors shall be divided into
three classes with Class One consisting of two directors, Class Two consisting
of two directors, and Class Three consisting of one director. The term of office
of Class One directors shall expire at the first, the term of office of the
Class Two directors shall expire at the second, and the term of office of the
Class Three director shall expire at the third annual meeting of shareholders
held after the first election of directors in classes. At the first meeting of
shareholders at which directors are elected, directors shall be elected in
classes as set forth herein, with the directors in each class to be determined
as provided in connection with that election. Each director shall serve until
the end of the term for which elected and until a successor has been elected and
qualified. Notwithstanding the foregoing, and except as otherwise required by
law, whenever the holders of any one or more classes or series of outstanding
shares shall have the right, voting separately as a class or series, to elect
one or more directors of the Corporation, the terms of the director or directors
elected by those holders shall expire at the next succeeding Annual Meeting of
Shareholders.
2.2 Vacancies. Vacancies and newly-created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the Directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced.
2.3. Nomination of Directors. Nominations for the election of
Directors when a Director is removed or withdraws may be made by the Board of
Directors or by any Shareholder entitled to vote in the election of Directors
generally holding ten percent (10%) or more of the Shares outstanding; provided,
however, any such Shareholder entitled to vote in the election of Directors
generally may nominate one or more Persons for election as Directors at a
meeting only if written notice of such Shareholder's intent to make such
nomination or nominations has been given, by personal delivery, by registered
mail, or by telegraphic or other facsimile transmission, and actually received
by the Secretary of the Corporation not less than on a date in the current year
which corresponds to a date at least one hundred twenty (120) days before the
date on which the Corporation first mailed its proxy materials for the prior
year's annual meeting of shareholders. Each such notice shall set forth: (a) the
name and address of the Shareholder who intends to make the nomination and of
the Person or Persons to be nominated; (b) a representation that the Shareholder
is a holder of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to nominate
the Person or Persons specified in the notice; (c) a description of all
arrangements or understandings between the Shareholder and each nominee and any
other Person or Persons (naming such Person or Persons) pursuant to which the
nomination or nominations are to be made by the Shareholder; (d) such other
information regarding each nominee proposed by such Shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities Exchange Act of 1934, as amended, had the nominee been
nominated, or intended to be nominated, by the Board of Directors; and (e) the
consent of each nominee to serve as a Director if so elected. The Chairman of
the meeting may refuse to acknowledge the nomination of any Person not made in
compliance with the foregoing procedure.
2.4. Place of Meetings. Meetings of the Board of Directors
may be held at any place within or outside the jurisdiction of incorporation
that has been designated from time to time by resolution
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of the Board of Directors. In the absence of such a designation, regular
meetings shall be held at the principal executive offices of the Corporation.
2.5. Meetings by Telephone. Unless otherwise restricted by
the Certificate or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all Persons who participate
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
2.6. Organizational Meeting. Immediately following each
Annual Meeting of Shareholders, the Board of Directors shall hold a regular
meeting for the purpose of organization, any desired election of officers, and
the transaction of any other business. Notice of the meeting is hereby dispensed
with.
2.7. Other Regular Meetings. Other regular meetings of the
Board of Directors may be held without call or notice at such times as shall
from time to time be determined by the Board. Notice of all such meetings of the
Board is hereby dispensed with.
2.8. Special Meetings. Special meetings of the Board of
Directors may be called at any time, and for any purpose, by the Chairman of the
Board, the President, any Vice President, the Secretary or any two directors.
Notice of the time and place of special meetings shall be
delivered personally or by telephone or facsimile transmission to each Director
or sent by first-class mail or telegram, charges prepaid, addressed to each
Director at that Director's address as it is shown on the records of the
Corporation. In case the notice is mailed, it shall be deposited in the United
States mail at least four (4) days before the time of the holding of the
meeting. In case the notice is delivered personally, or by telephone, facsimile
transmission or telegram, it shall be delivered personally or by telephone,
facsimile transmission or to the telegraph company at least twenty-four (24)
hours before the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated either to the Director or to a
Person at the office of the Director, who the Person giving the notice has
reason to believe will promptly communicate it to the Director. The notice need
not specify the purpose of the meeting nor the place if the meeting is to be
held at the principal executive offices of the Corporation.
2.9. Quorum. At all meetings of the Board of Directors, a
majority of the authorized number 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, except as may be otherwise specifically provided by statute or by the
Certificate. If a quorum shall not be present at a 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, until a quorum
shall be present.
2.10. Adjournment and Notice Thereof. A majority of the
Directors present, whether or not constituting a quorum, may adjourn any meeting
to another time or place.
Notice of the time and place of holding an adjourned meeting
need not be given to absent Directors if the time and place are fixed at the
meeting adjourned.
2.11. Action Without Meeting. Unless otherwise restricted by
the Certificate or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any
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committee thereof may be taken without a meeting, if all members of the Board 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 or committee.
2.12. Removal. Unless otherwise restricted by the Certificate
or these Bylaws, any director or the entire Board of Directors may be removed,
with or without cause, by the holder of a majority of Shares entitled to vote at
an election of Directors.
2.13. Committees of the Board. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the Directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee who may replace any absent or disqualified
member at any meeting of the committee. In the absence of disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it, but no such committee shall have the power or authority in reference
to amending the Certificate, adopting an agreement of merger or consolidation,
recommending to the Shareholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
Shareholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the Bylaws of the Corporation; and, unless the resolution or the
Certificate expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Each committee
shall keep regular minutes of its meetings and report the same to the Board of
Directors when required.
2.14. Directors' Compensation. Directors who are not officers
or Shareholders of the Advisory Company shall receive reasonable compensation
for their services as determined by the Board of Directors from time to time.
Such compensation may be set from time to time by resolution of the Board of
Directors. Directors shall be reimbursed for expenses incurred in attending
meetings of the Board of Directors.
ARTICLE III - DIRECTORS' POWERS
3.1. Power and Authority of Directors. The Directors, subject
only to the specific limitations contained in the Certificate, the Act or these
Bylaws, shall have, without further or other authorization, and free from any
power or control on the part of the Shareholders, full, absolute and exclusive
power, control and authority over the business and affairs of the Corporation,
and may do all such acts and things as in their sole judgment and discretion are
necessary for or incidental to or desirable for the carrying out of any of the
purposes of the Corporation or the conducting of the business of the
Corporation. Any determination made in good faith by the Directors of the
purposes of the Corporation or the existence of any power or authority hereunder
shall be conclusive. In construing the provisions of the Certificate, the Act or
these Bylaws, presumption shall be in favor of the grant of powers and authority
to the Directors. The
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enumeration of any specific power or authority herein shall not be construed as
limiting the general powers or authority or any other specified power or
authority conferred herein upon Directors.
3.2. Specific Powers and Authorities. Subject only to the
express limitations contained in the Certificate, the Act or these Bylaws, and
in addition to any powers and authorities conferred by the Certificate, the Act
or these Bylaws, or which the Directors may have by virtue of any present or
future statute or rule or law, the Directors without any action or consent by
the Shareholders shall have and may exercise at any time and from time to time
the following powers and authorities which may or may not be exercised by them
in their sole judgment and discretion and in such manner and upon such terms and
conditions as they may from time to time deem proper:
(a) To retain, invest and reinvest the capital or other funds
of the Corporation in real or personal property of any kind (including, without
limitation, Home Equity Loans and Securities), and to increase the capital of
the Corporation at any time by the issuance of additional Shares for such
consideration as they deem appropriate;
(b) For such consideration as they deem proper, to invest in,
purchase or otherwise acquire for cash or other property or through the issuance
of Shares or through the issuance of notes, debentures, bonds or other
obligations of the Corporation and hold for investment real, personal or mixed,
tangible or intangible, property of any kind wherever located in the world,
including without limitation (i) the entire or any participating interest in
rents, lease payments or other income from, or the entire or any participating
interest in the profits from, or the entire or any participating interest in,
the equity or ownership of Home Equity Loans or other interests in real
property; (ii) in connection with any such investment, purchase or acquisition,
a share of interest or profits from Home Equity Loans or rents, lease payments
or other gross income from, or a share of the profits from, or a share in the
equity, ownership or other interest in real property, either directly (through
the securitization of Home Equity Loans) or through joint venture, general or
limited partnerships, or other lawful combinations or associations with
independent third parties or with the Advisor or its Affiliates or a combination
of such Persons; and (iii) Securities of every nature;
(c) To sell, rent, lease, hire, exchange, release, partition,
assign, mortgage, pledge, hypothecate, grant security interests in, encumber,
negotiate, convey, transfer or otherwise dispose of any and all of the
Corporation's assets by deeds, trust deeds, assignments, bills of sale,
transfers, leases, mortgages, financing statements, security agreements and
other instruments for any of such purposes executed and delivered for and on
behalf of the Corporation or the Directors by one or more of the Directors or by
a duly authorized officer, employee, agent or any nominee of the Corporation;
(d) To issue, subject to the provisions of the Certificate,
Shares, bonds, debentures, notes or other evidences of indebtedness, which may
(i) be secured or unsecured, (ii) be subordinated to any indebtedness of the
Corporation, (iii) be convertible into Shares (or any class or series thereof),
and (iv) include options, warrants and rights to subscribe to, purchase or
acquire any of the foregoing, all without vote of or other action by the
Shareholders, to such Person for such case, property or other consideration
(including Securities issued or created by, or interests in any Person) at such
time or times and on such terms as the Directors may deem advisable and to list
any of the foregoing Securities issued by the Corporation on any securities
exchange and to purchase or otherwise acquire, hold, cancel, reissue, sell and
transfer any of such Securities;
(e) To enter into leases, contracts, obligations, and other
agreements for a term extending beyond the term of office of the Directors or
for a lesser term;
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(f) To borrow money and give negotiable or non-negotiable
instruments therefor; to guarantee, indemnify or act as surety with respect to
payment or performance of obligations of third parties; to enter into other
obligations on behalf of the Corporation; and to assign, convey, transfer,
mortgage, subordinate, pledge, grant security interests in, encumber or
hypothecate the Corporation's assets to secure any of the foregoing;
(g) To lend money through Home Equity Loans or otherwise, and
whether secured or unsecured;
(h) To create reserve funds for any purpose;
(i) To incur any pay out of the Corporation's assets any
charges or expenses, and disburse any funds of the Corporation, which charges,
expenses or disbursements are, in the opinion of the Directors, necessary for or
incidental to or desirable for, and are incurred in connection with, the
carrying out of any of the purposes of the Corporation or the conducting of the
business of the Corporation, including without limitation taxes and other
governmental levies, charges and assessments of whatever kind or nature, imposed
upon or against the Directors in connection with the Corporation or the
Corporation's assets or upon or against the Corporation's assets or any part
thereof, and for any of the purposes herein;
(j) To deposit funds or Securities held by the Corporation in
banks, trust companies, savings and loan associations and other depositories,
whether or not such deposits will draw interest, the same to be subject to
withdrawal on such terms and in such manner and by such Person or Persons
(including any one or more Directors, officers, agents or representatives) as
the Directors may determine;
(k) To possess and exercise all the rights, powers and
privileges appertaining to the ownership of all or any interests in Mortgages,
Home Equity Loans, or Securities issued or created by, any Person, forming part
of the Corporation's assets, to the same extent that an individual might, and,
without limiting the generality of the foregoing, to vote or give any consent,
request or notice, or waive any notice, either in person or by proxy or power of
attorney, with or without power of substitution, to one or more Persons, which
proxies and powers of attorney may be for meetings or action generally or for
any particular meeting or action, and may include the exercise of discretionary
powers;
(l) To enter into joint ventures, general or limited
partnerships and any other lawful combinations or associations with independent
third parties or with the Advisor or its Affiliates or a combination of such
Persons;
(m) To elect, appoint, engage or employ such officers for the
Corporation as the Directors may determine, who may be removed or discharged at
the discretion of the Directors, such officers to have such powers and duties,
and to serve such terms and at such compensation, as may be prescribed by the
Directors or by these Bylaws; to engage or employ any Persons (including any
Director or officer and any Person with which any Director or officer is
directly or indirectly connected) as agents, representatives, employees, or
independent contractors (including, without limitation, real estate advisors,
loan servicing agents, investment advisors, transfer agents, registrars,
underwriters, accountants, attorneys at law, real estate agents, managers,
appraisers, brokers, architects, engineers, construction managers, general
contractors or compensation managers, general contractors or otherwise) in one
or more capacities, and to pay compensation from the Corporation for services in
as many capacities as such Person may be so engaged or employed; and, except as
prohibited by law, to delegate any of the powers and duties of the Directors to
any one or more Directors, advisors, agents, representatives, officers,
employees, independent contractors or other Persons;
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(n) To determine from time to time, the value of all or any
part of the Corporation's assets and of any services, Securities, assets, or
other consideration to be furnished to or acquired by the Corporation, and from
time to time to revalue all or any part of the Corporation's assets in
accordance with such appraisals or other information as are, in the Director's
sole judgment, necessary and/or satisfactory;
(o) To collect, sue for, and receive all sums of money or
other assets coming due to the Corporation, and to engage in, intervene in,
prosecute, join, defend, compound, compromise, abandon or adjust, by arbitration
or otherwise, any actions, suits, proceedings, disputes, claims, controversies,
demands or other litigation relating to the Corporation, the Corporation's
assets or the Corporation's affairs, to enter into agreements therefor, whether
or not any suit is commenced or claim accrued or asserted and, in advance of any
controversy, to enter into agreements regarding arbitration, adjudication or
settlement thereof;
(p) To renew, modify, release, compromise, extend,
consolidate, or cancel, in whole or in part, any obligation to or of the
Corporation;
(q) To purchase and pay for out of the Corporation's assets
insurance contracts and policies insuring the Corporation's assets against any
and all risks and insuring the Corporation and/or any or all of the Directors,
the Shareholders, officers, employees, agents, investment advisors or
independent contractors of the Corporation against any and all claims and
liabilities of every nature asserted by any Person arising by reason of any
action alleged to have been taken or omitted by the Corporation or by any such
person as Director, Shareholder, officer, employee, agent, investment advisor or
independent contractor, whether or not the Corporation would have the power to
indemnify such person against such liability;
(r) To cause legal title to any of the Corporation's assets
to be held by and/or in the name of the Directors, or except as prohibited by
law, by and/or in the name of the Corporation or one or more of the Directors or
any other Person, on such terms, in such manner, with such powers in such Person
as the Directors may determine, and with or without disclosure that the
Corporation or Directors are interested therein;
(s) To adopt a fiscal year for the Corporation, and from time
to time to change such fiscal year;
(t) To adopt and use a seal (but the use of seal shall not be
required for the execution of instruments or obligations of the Corporation);
(u) To make, perform, and carry out, or cancel and rescind,
contracts of every kind for any lawful purpose without limit as to amount, with
any Person, firm, trust, association, corporation, municipality, country,
parish, state, territory, government or other municipal or governmental
subdivision. These contracts shall be for such duration and upon such terms as
the Directors in their sole discretion shall determine; and
(v) To do all other such acts and things as are incident to
the foregoing, and to exercise all powers which are necessary or useful to carry
on the business of the Corporation, to promote any of the purposes for which the
Corporation is formed, and to carry out the provisions of the Certificate and
these Bylaws.
9
3.3. Additional Powers. The Directors shall additionally have
and exercise all the powers conferred by the laws of Delaware upon corporations
or real estate investment trusts formed under such laws, insofar as such laws
are not in conflict with the provisions of the Certificate and these Bylaws.
ARTICLE IV - EMPLOYMENT OF ADVISOR
4.1. Employment of Advisor. The Directors are responsible for
the general policies of the Corporation and for such general supervision of the
business of the Corporation conducted by all officers, agents, employees,
advisors, managers or independent contractors of the Corporation as may be
necessary to insure that such business conforms to the provisions of the
Certificate and these Bylaws. However, the Directors shall not be required
personally to conduct all the business of the Corporation, and consistent with
their ultimate responsibility as stated above, the Directors shall have the
power to appoint, employ or contract with any Person (including one or more of
themselves or any corporation, partnership, or trust in which one or more of
them may be directors, officers, stockholders, partners or Directors) as the
Directors may deem necessary or proper for the transaction of the business of
the Corporation. The Directors may, therefore, employ or contract with such
Person (herein referred to as the "Advisor" but may also be referred to as
"Manager"), and the Directors may grant or delegate such authority to the
Advisor as the Directors may in their sole discretion deem necessary or
desirable without regard to whether such authority is normally granted or
delegated by Directors. Capital Alliance Advisors, Inc., a California
corporation, shall be the Advisor or Manager to the Corporation pursuant to the
agreement provided for herein.
The Directors (subject to the provisions of Sections 4.2)
shall have the power to determine the terms and compensation of the Advisor or
any other Person whom they may employ or with whom they may contract. The
Directors may exercise broad discretion in allowing the Advisor to administer
and regulate the operations of the Corporation, to act as agent for the
Corporation, to execute documents on behalf of the Directors, and to make
executive decisions which conform to general policies and general principles
previously established by the Directors.
4.2. Term. The Directors shall not enter into any advisory or
management contract with the Advisor unless such contract has a term (other than
the initial term) of no more than two (2) years and provides for bi-annual
renewal or extension thereafter. Extensions of the advisory contract shall be
subject to the approval of a Majority in Interest of the Shareholders. The term
of the initial advisory contract shall expire on December 31, 1998. The advisory
or management contract with the Advisor may be terminated by the Advisor upon
120 days' prior written notice, or by the Corporation without cause by action of
the Directors, subject to approval of such action by the Directors by vote or
consent of a Majority in Interest of the Shareholders of the Corporation and
upon 120 days' prior written notice. The advisory or management contract shall
also require the Advisor to cooperate with the Corporation to provide an orderly
management transition after any termination.
4.3. Other Activities of Advisor. The Advisor shall not be
required to administer the investment activities of the Corporation as its sole
and exclusive function and may have other business interests and may engage in
other activities similar or in addition to those relating to the Corporation,
including the rendering of services and advice to other Persons (including other
real estate investment trusts) and the management of other investments
(including investments of the Advisor and its Affiliates). The Directors may
request the Advisor to engage in, or manage and advise, other activities or
investments which complement the Corporation's investments, including those
conducted through a subsidiary of the Corporation and the
10
Advisor may receive compensation or commissions therefor from the Corporation,
its Affiliates, or other Persons.
The Advisor shall be required to use its best efforts to
present a continuing and suitable investment program to the Corporation which is
consistent with the investment policies and objectives of the Corporation, but
neither the Advisor nor any Affiliate of the Advisor shall be obligated to
present any particular investment opportunity to the Corporation even if such
opportunity is of a character which, if presented to the Corporation, could be
taken by the Corporation, and, subject to the foregoing, shall be protected in
taking for its own account or recommending to others, such particular investment
opportunity. The Advisor or its Affiliates, or a combination thereof, may enter
into joint ventures or other lawful combinations or associations with the
Corporation in connection with the acquisition and ownership of Home Equity
Loans, mortgage loans or other real or personal property investments.
Upon request of any Director, the Advisor and any Person who
controls, is controlled by, or is under common control with the Advisor, shall
from time to time promptly furnish the Directors with information on a
confidential basis as to any investments within the Corporation's investment
policies made by the Advisor or such other Person for its own account.
ARTICLE V - INVESTMENT POLICY
5.1. General Statement of Policy. The Directors intend, to
the extent funds are not fully invested in Home Equity Loans or other mortgage
loans or investments contemplated herein to invest the Corporation's assets in
investments such as: (i) short-term government securities, certificates of
deposit and bank deposits, (ii) Securities of government agencies, (iii)
bankers' acceptances, (iv) certificates of deposit, (v) deposits in commercial
banks, (vi) participation in pools of mortgages or bonds and notes such as
Federal Home Loan Mortgage Corporation participation sale certificates ("Freddie
Mac PC's"), Government National Mortgage Association modified pass-through
certificates ("Ginnie Mae's"), and/or (vii) other short-term investment
Securities and money market funds. The Directors intend to invest, directly or
indirectly, primarily in the ownership or other interests in Home Equity Loans.
The Directors may also participate or invest in investments with other
investors, including investors (which may include the Advisor or its Affiliates)
having investment policies similar to those of the Corporation, on the same or
different terms, and the Advisor may act as advisor to such other investors,
including investors who have the same or similar investment policies.
It is the intention and policy of the Directors that the
Capital Contributions (less reserves and except for interim and other authorized
investments) will be primarily invested, directly or indirectly (through a
subsidiary or otherwise), in Home Equity Loans and other mortgage loans which
consist of loans secured by trust deeds on single family residential properties
and two-to-four unit residential properties located in the States of California,
Oregon, Washington, Nevada, Utah and Colorado. It is also the intention and
policy of the Directors that the Combined Loan-to-Value ratio of the amount of
the Home Equity Loan and of the lien of any other indebtedness to which the Home
Equity Loan is subordinate shall not exceed seventy-five percent (75%) of the
Appraised Value of the subject property securing the Home Equity Loan (provided
that such limitation shall not apply to residential mortgage loans originated or
acquired by a subsidiary of the Corporation). The Corporation will not invest in
loans secured primarily by commercial, agricultural or undeveloped or raw land
or properties although such properties may be taken as additional security for
Home Equity Loans, and up to twenty-five percent (25%) of the appraised value of
such properties may be considered in the Loan-to-Value computations for a Home
Equity Loan.
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The Corporation will require title insurance on all Home
Equity Loans, and will require standard hazard and casualty insurance for the
benefit of the Corporation on all property securing a Home Equity Loan.
Subject to the investment restrictions in Section 5.3, the
Directors may alter any or all of the above-described investment policies and
may take such actions in connection therewith if they should determine such
change or actions to be in the best interest of the Corporation and its
Shareholders. Subject to the preceding sentence, the Directors shall endeavor to
invest the Corporation's assets in accordance with the investment policies set
forth in this Article V, but the failure so to invest its assets shall not
affect the validity of any investment made or action taken by the Directors.
The general purpose of the Corporation, at such time as it
elects to qualify as a REIT, will be to make investments and to seek income
which qualify under the REIT Provisions of the Internal Revenue Code provided,
however, that no Director, officer, employee, agent, investment advisor or
independent contractor of the Corporation shall be liable for any act or
omission resulting in the loss of tax benefits under the Internal Revenue Code,
except for that arising from his own bad faith, willful misconduct, gross
negligence or reckless disregard of his duties.
5.2. Invested Assets. To the extent that the Corporation has
assets not otherwise invested in accordance with Section 5.1, the Directors may
invest such assets in:
(a) obligations of, or guaranteed by, the United States
Government or any agencies or political subdivisions thereof (and hedge
investments with respect to such obligations);
(b) obligations of, or guaranteed by, any state, territory or
possession of the United States of America or any agencies or political
subdivisions thereof;
(c) securities of a subsidiary of the Corporation permitted
by the REIT Provisions of the Code without affecting the Corporation's status as
a REIT; and
(d) evidences of deposits in, or obligations of, banking
institutions, state and federal savings and loan associations and savings
institutions which are members of the Federal Deposit Insurance Corporation or
of the Federal Home Loan Bank System.
5.3. Restrictions. The Corporation shall not:
(a) invest in any foreign currency (except as necessary for
the offer of the Corporation's securities in a foreign state), bullion,
commodities, or commodities futures contracts (which shall not be deemed to
include investments under Section 5.2(a), above);
(b) invest in contracts for the sale of real estate;
(c) engage in any short sale (except in connection with a
long sale);
(d) invest in Mortgage loans on commercial or agricultural
property or on undeveloped land or raw land; provided that a security interest
in such properties may be taken as additional security for a Home Equity Loan
and up to twenty-five percent (25%) of the appraised value of such property may
12
be considered in determining the combined loan-to-value ratio of such Home
Equity Loan so long as the residential property securing the Home Equity Loan is
the primary security for such loan;
(e) other than in connection with a public offering of the
Corporation's Shares, grant options or warrants to purchase Shares at exercise
prices less than their fair market value or for a noncash consideration which
has a market value less than the value of the subject Shares on the date of
grant of the options or warrants, unless such options or warrants are issued as
part of a financing arrangement or a corporate compensation, pension or
profit-sharing plan. In no event shall options or warrants be exercisable later
than five (5) years from any date of grant, and the aggregate number of Shares
issuable at any time by exercise of outstanding options or warrants shall not
exceed an amount equal to 10% of the outstanding Shares of any class on the date
of grant plus options granted to underwriters in connection with a public
offering of the Corporation's Shares;
(f) issue "redeemable securities" as defined in Section
2(a)(32) of the Investment Company Act of 1940;
(g) engage in trading as compared with investment activities
(except to the extent permitted by the REIT Provisions of the Code without
affecting the Corporation's status as a REIT), or engage in the business of
underwriting or agency distribution of Securities issued by others;
(h) hold property primarily for sale to customers in the
ordinary course of the trade or business of the Corporation or any subsidiary
thereof (except to the extent permitted by the REIT Provisions of the Code
without affecting the Corporation's status as a REIT), but this prohibition
shall not be construed to deprive the Corporation of the power to sell any Home
Equity Loan or to sell any property which it owns at any time by reason of
foreclosure of a Home Equity Loan or to conduct a mortgage banking business
through a subsidiary corporation (in which it has a controlling economic
interest) to the extent permitted by the REIT Provisions of the Code without
affecting the Corporation's status as a REIT;
(i) make any loan to the Advisor of the Corporation;
(j) engage in any practice or transaction wherein the
Advisor, Directors or any Affiliate receives any rebate, kick-back or other
reciprocal payments in the course of their dealings with the Corporation;
(k) borrow money on the security of the Corporation's
portfolio of Home Equity Loans in an amount in excess of four (4) times the
total shareholder's equity as set forth on the Corporation's most recent audited
balance sheet; and
(l) other than in connection with the termination and
liquidation of the Corporation, sell, convey, assign, transfer or otherwise
dispose of fifty percent (50%) or more of the Corporation's assets in one or
more related transactions with a single or related parties, without the approval
of a Majority-in-Interest of the Shareholders, voting by class.
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ARTICLE VI - OFFICERS
6.1. Officers. The officers of the Corporation shall be a
President, a Secretary and a Treasurer. The Corporation may also have, at the
discretion of the Board of Directors, a Chairman of the Board, a Vice Chairman
of the Board, one or more Executive Vice Presidents, one or more Senior Vice
Presidents, one or more Vice Presidents, one or more Assistant Secretaries, one
or more Assistant Treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 6.3 hereof. Any number of offices may
be held by the same Person.
6.2. Election of Officers. The officers of the Corporation,
except such officers as may be appointed in accordance with the provisions of
Sections 6.3 or 6.5 hereof, shall be chosen by the Board of Directors, and each
shall serve at the pleasure of the Board, subject to the rights, if any, of an
officer under any contract of employment.
6.3. Appointed Officers. The Board of Directors may appoint,
and may empower the President to appoint, such other officers as the business of
the Corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in the Bylaws or as
the Board of Directors may from time to time determine.
6.4. Removal and Resignation of Officers. Subject to the
rights, if any, of any officer under any contract of employment, any officer may
be removed, either with out without cause, by a majority of the Board of
Directors, at any regular or special meeting of the Board or, except in case of
an officer chosen by the Board of Directors, by any officer upon whom such power
of removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice
to the Corporation. Any resignation shall take effect at the date of the receipt
of that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall not
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the officer is a
party.
6.5. Vacancies in Offices. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in these Bylaws for regular appointments to that
office.
6.6. Chairman of the Board. The Chairman of the Board, if
such an officer be elected, may, if present, preside at meetings of the Board of
Directors or delegate such authority to the President. The Chairman of the Board
shall exercise and perform such other powers and duties as may be from time to
time assigned to him by the Board of Directors or as prescribed by these Bylaws.
6.7. Vice Chairman of the Board. The Vice Chairman of the
Board of Directors, if such an officer be elected, shall exercise and perform
such duties as may be assigned to him by the Board of Directors or as prescribed
by these Bylaws.
6.8. President. Subject to such supervisory powers, if any,
as may be given by the Board of Directors to the Chairman of the Board, if there
be such an officer, the President shall be the chief executive officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general
14
supervision, direction, and control of the business and the officers of the
Corporation. He shall preside at all meetings of the Shareholders and, pursuant
to appropriate delegation by the Chairman of the Board, at all meetings of the
Board of Directors. He shall have the general powers and duties of management
usually vested in the office of the President of a Corporation, and shall have
such other powers and duties as may be prescribed by the Board of Directors or
by these Bylaws.
6.9. Executive Vice Presidents, Senior Vice Presidents and
Vice Presidents. The Executive Vice Presidents, Senior Vice Presidents and the
Vice Presidents, if such officers be elected, shall have such powers and perform
such duties as form time to time may be prescribed for them respectively by the
Board of Directors or by these Bylaws, and by the President or the Chairman of
the Board.
6.10. Secretary. The Secretary shall keep or cause to be
kept, at the principal executive office or such other place as the Board of
Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and Shareholders, with the time and place of
holding, whether regular or special, and, if special, how authorized, the notice
given, the names of those present at directors' meetings or committee meetings,
the number of Shares present or represented at Shareholders' meetings, and the
proceedings.
The Secretary shall keep, or cause to be kept, at the
principal executive office, a share register, or a duplicate share register,
showing the names of all Shareholders and their addresses, the number and class
of shares held by each, the number and date of certificates issued for the same,
and the number and date of cancellation of every certificate surrendered for
cancellation.
The Secretary shall give, or cause to be given, notice of all
meetings of the Shareholders and of the Board of Directors required by these
Bylaws or Bylaw to be given; shall keep the seal of the Corporation, if one be
adopted, in safe custody; and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or by these Bylaws.
6.11. Treasurer. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct books and records of
accounts of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, retained earnings and Shares. The books of account shall, at
all reasonable times, be open to inspection by any Director.
The Treasurer shall deposit all monies and other valuables in
the name and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
President and the Directors, whenever they request it, an account of all of the
Treasurer's transactions as Chief Financial Officer and of the financial
condition of the Corporation, and shall have other powers and perform such other
duties as may be prescribed by the Board of Directors or by these Bylaws.
15
ARTICLE VII - SHAREHOLDERS
7.1. Place of Meetings. All annual and all other meetings of
Shareholders shall be held at the principal office of the Corporation, or at any
other place within or without the State of Delaware which may be designated
either by the Board of Directors pursuant to authority hereinafter granted to
said board, or by the written consent of all Shareholders entitled to vote
thereat, given either before of after the meeting and filed with the Secretary
of the Corporation.
7.2. Annual Meetings.
(a) Time of Holding. The Annual Meetings of Shareholders
shall be held on the first Wednesday in June of each year at 10:00 o'clock a.m.;
provided, however, that should said day fall upon a legal holiday, then any such
Annual Meeting of Shareholders shall be held at the same time and place or the
next day thereafter ensuing which is not a legal holiday, and, provided,
further, that the Directors may designate a different time and place for the
holding of such meeting if it so decides. At such meetings Directors shall be
elected, reports of the affairs of the Corporation shall be considered, and any
other business may be trans acted which is within the powers of the
Shareholders.
(b) Notice. Written notice of each Annual Meeting shall be
given to each Shareholder of record entitled to vote, either personally or by
mail or other means of written communication, charges prepaid, addressed to such
Shareholder at his address appearing on the books of the Corporation or given by
him to the Corporation for the purpose of notice. If a Shareholder gives no
address, notice shall be deemed to have been given if sent by mail or other
means of written communication addressed to the place where the principal office
of the Corporation is situated or if published at least once in some newspaper
of general circulation in the county in which said office is located. All such
notices shall be sent to each Shareholder entitled thereto not less that ten
(10) days and not more than sixty (60) days before each Annual Meeting, shall
specify the place, the day and the hour of each such meeting and those matters
which the Board of Directors, at the time of the notice, intends to present for
action by the Shareholders.
(c) Advance Notice of Shareholder Proposals. No proposal by
any Shareholders other than two or more members of the Board of Directors, the
Chairman of the Board, or the President shall be submitted for approval of the
Shareholders at any Annual Meeting of the Shareholders, unless the Shareholder
advancing such proposal shall have given timely notice thereof to the Chairman
of the Board, the President, or the Secretary of the Corporation. To be timely,
such notice shall be delivered or mailed by registered mail or by telegraphic or
other facsimile transmission, and actually received not less than on a date in
the current year which corresponds to a date at least one hundred twenty (120)
days before the date on which the Corporation first mailed its proxy materials
for the prior year's annual meeting of shareholders. Such notice shall set forth
as to each matter such Shareholder proposes to bring before the meeting (i) a
reasonably detailed description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting, (ii) the
name and the business and residence address of the Shareholder proposing such
business, (iii) the class and number of Shares of stock of the Corporation which
are owned by such Shareholder, (iv) any material interest of such Shareholder in
such business; and (v) any other information that is required to be provided by
such Shareholder pursuant to the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder. Notwithstanding anything in these
Bylaws to the contrary, no business proposed by any Shareholders other than two
or more members of the Board of Directors, the Chairman of the Board or the
President shall be conducted at an Annual Meeting of Shareholders except in
accordance with the procedures set forth in this subsection 7.2(c). The Chairman
16
of the meeting shall, if the facts warrant, determine and declare at the meeting
that business was not properly brought before the meeting and in accordance with
the provisions of these Bylaws, and if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.
7.3. Special Meetings and Notice Thereof.
(a) How Called. Special meetings of the Shareholders for any
proper purpose whatsoever may be called at any time by the President or by two
Directors or the Chairman of the Board or by Shareholders holding an aggregate
of not less than 10% of the outstanding Shares of the Corporation ("10%
Shareholders"). A special meeting may be called by any 10% Shareholder(s) only
upon written request delivered or mailed by registered mail or by telegraphic or
other facsimile transmission to the Chairman of the Board, the President or the
Secretary of the Corporation, which request contains a reasonably detailed
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting. If a special meeting of
Shareholders is called upon the request of any 10% Shareholder(s), then the
Chairman of the Board shall cause notice thereof to be promptly given to the
Shareholders entitled to vote in accordance with the provisions of this Article
VII. Any special meeting will be held on the date and at the time designated by
the Chairman of the Board or the Board of Directors, which shall be not less
than ten (10) nor more than sixty (60) days after the giving of notice thereof.
If the notice is not given with twenty (20) days after receipt of the request,
the Shareholders requesting the meeting may give the notice. Nothing contained
in this Section 7.3 shall be construed as limiting, fixing or affecting the time
when a meeting of Shareholders called by action of the Chairman of the Board,
the President or two or more members of the Board of Directors may be held or
the nature of the business that may be transacted at such meeting.
(b) Notice. Except in special cases where other express
provision is made by statute, notices of special meetings shall be given in the
same manner as for Annual Meetings of Shareholders. Notices of any special
meeting shall specify, in addition to the place, the day and the hour of such
meeting, the general nature of the business to be transacted, and no other
business may in fact be transacted. In the case of any special meeting called at
the request of any 10% Shareholder(s), the only business which may be proposed
by such 10% Shareholder in the notice of the meeting, or proposed by such 10%
Shareholder(s) to be transacted at the meeting, shall be the business specified
in such 10% Shareholder(s)' request for a special meeting. In the case of any
special meeting called at the request of any 10% Shareholder(s), however, the
President, any two Directors or the Chairman of the Board may bring business
before the meeting which is in addition to the business proposed by the 10%
Shareholder(s), which additional business may be proposed by the President, any
two Directors or the Chairman of the Board in the notice of the Meeting.
(c) Conduct of Meetings. The Chairman of the Board of
Directors (or such other person as may be designated by the Board of Directors
to chair any annual or special meeting of the Shareholders) (the "Chairman")
shall be authorized to determine or to establish procedures governing the
organization of each annual or special meeting of Shareholders, the order of
business to be considered at such meetings and all matters relating to the
conduct of such meetings, including, without limitation, admission to the
meetings and admission procedures, the persons entitled to address the meetings,
time limits for speaking, question and answer periods, the permissibility or
impermissibility of utilizing court reporting equipment, tape recorders, cameras
or other mechanical devices, the opening and closing of the polls, and, subject
to Section 7.5, the inspection and counting of proxies and ballots. Meetings
shall be conducted in a manner designed to accomplish the business of the
meetings in a prompt and orderly fashion, without distraction and disruption.
17
Roberts' Rules of Order or any other manual of parliamentary procedure shall
have no applicability to the conduct of such Shareholders' meetings unless
otherwise determined by the Chairman of the Board.
7.4 Adjourned Meetings and Notice Thereof. Any Shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the Chairman of the Board or by the vote of the majority of
the Shares, the holders of which are either present in person or represented by
proxy thereat, but in the absence of a quorum no other business may be
transacted at such meeting.
When any other Shareholders' meeting, either annual or
special, is adjourned for more than forty-five (45) days or if after the
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given as in the case of a special meeting. Save as
aforesaid, it shall not be necessary to give any notice of an adjournment or of
the business to be transacted at an adjourned meeting other than by announcement
at the meeting at which such adjournment is taken.
7.5. Voting At Meetings of Shareholders. Subject to the right
of the Board of Directors to provide otherwise, only persons in whose name
Shares entitled to vote standing on the stock records of the Corporation on the
day immediately preceding the day upon which notice of any meeting of
Shareholders is given, as provided in this Article, shall be entitled to notice
of and to vote at such meeting, notwithstanding any transfer of any Shares on
the books of the Corporation after such record date; provided, however, the
Board of Directors may in advance fix a record date other than that otherwise
provided for herein, and, provided, further, such record date shall not be more
than sixty (60) days nor less then ten (10) days prior to such meeting.
Such vote may be via voce or by ballot; provided, however,
that all elections for Directors must be held by ballot upon demand made by a
Shareholder at any election and before the voting begins. The candidates
receiving the highest number of votes up to the number of Directors to be
elected shall be elected.
7.6. Quorum. The presence in person or by proxy of persons
entitled to vote a majority of the voting Shares at any meeting shall constitute
a quorum for the transaction of business. Except as provided in the next
sentence, the affirmative vote of a majority of the Shares represented and
voting at a duly held meeting at which a quorum is present (which Shares voting
affirmatively also constitute at least a majority of the required quorum), shall
be an act of the Shareholders, unless a vote of a greater number is required
herein, or by the Certificate or the Act. The Shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough Shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least the majority of the Shares required to constitute a quorum.
7.7. Action Without Meeting. Except as elsewhere provided in
the Certificate or in these Bylaws, any action which may be taken at any annual
or special meeting of the Shareholders may be taken without a meeting and
without prior notice, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of all of the outstanding Shares.
Directors may not be elected by written consent except by unanimous written
consent of all Shares entitled to vote for the election of Directors.
Any Shareholder giving a written consent, or the
Shareholder's proxy holders, or a transferee of the Shares or a personal
representative of the Shareholder to their respective proxy holders, may revoke
the consent by a writing received by the Corporation prior to the time that
written consents of the number
18
of Shares required to authorize the proposed action have been filed with the
Secretary of the Corporation, but may not do so thereafter. Such revocation is
effective upon its receipt by the Secretary of the Corporation.
7.8. Proxies. Every person entitled to vote or execute
consents shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the Secretary of the Corporation, provided that no such
proxy shall be valid after the expiration of three (3) years from the date of
its execution unless the person executing it specifies therein the length of
time for which such proxy is to continue in force.
A proxy shall be deemed signed if the Shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the Shareholder or the Shareholder's attorney in
fact. A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless revoked by the Person executing it
before the vote pursuant to that proxy by (a) a writing delivered to the
Corporation stating that the proxy is revoked, (b) execution of a subsequent
proxy, (c) attendance at the meeting and voting in person, or (d) transfer of
the Shares represented by the proxy to a transferee who becomes a Shareholder of
record prior to the record date established for the vote. Such validly executed
proxy otherwise may be revoked by written notice of the death or incapacity of
the maker of that proxy received by the Corporation before the vote pursuant to
that proxy is counted.
7.9. Inspectors of Election. Before any meeting of
Shareholders, the Board of Directors may appoint any Persons other than nominees
for office to act as inspectors of election at the meeting or its adjournment.
If no inspectors of election are so appointed, the Chairman of the meeting may,
and on the request of any Shareholder or a Shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall not be
less than two. If inspectors are appointed at a meeting on the request of one or
more Shareholders or proxies, the holders of a majority of Shares or their
proxies present at the meeting shall determine the precise number of inspectors
to be appointed. If any person appointed as inspector fails to appear or fails
or refuses to act, the Chairman of the meeting may, and upon the request of any
Shareholder or a Shareholder's proxy shall, appoint a Person to fill that
vacancy.
The inspectors shall:
(a) Determine the number of Shares outstanding and
the voting power of each, the Shares represented at the
meeting, the existence of a quorum, and the authenticity,
validity, and effect of proxies;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions
in any way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct
the election or vote with fairness to all Shareholders.
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ARTICLE VIII - MISCELLANEOUS
8.1. Record Dates and Closing of Transfer Books. From time to
time the Directors may fix a future date, not exceeding sixty (60) days
preceding the date of any meeting of Shareholders or the date fixed for the
payment of any dividend or distribution or for the allotment of rights or when
any change or conversion or exchange of Shares is to go into effect as the
record date for the determination of the Shareholders entitled to notice of and
to vote at any such meeting or to receive any such dividend or distribution or
any allotment of rights or to exercise the rights with respect to any such
change, conversion or exchange of Shares. If a time is so fixed only
Shareholders of record on the date so fixed shall be entitled to notice of and
to vote at such meeting or to receive such dividend or distribution or allotment
of rights or to exercise such rights, as the case may be, notwithstanding any
transfer of Shares on the books of the Corporation after the record date so
fixed. The Directors may close the books of the Corporation against transfers of
Shares during the whole or any part of the period between the record date and
the date so fixed for the meeting, payment, distribution, allotment, change or
exercise of rights.
8.2. Inspection of Corporate Records. The share register or
duplicate share register, the books of account, and the minutes of the
proceedings of the Shareholders and Directors shall be open to inspection upon
the written demand of any Shareholder at any reasonable time and for a purpose
reasonably related to his interests as a Shareholder and shall be exhibited at
any time when required by the demand of ten percent (10%) or more of the Shares
represented at any Shareholders' meeting. Such inspection may be made in person
or by an agent or attorney and shall include the right to make extracts at the
expense of the Shareholder. Demand of inspection other than at a Shareholders'
meeting shall be made in writing upon the President, Secretary or Assistant
Secretary of the Corporation.
8.3. Inspection of Bylaws. The Directors shall keep at the
principal office for the transaction of business of the Corporation the original
or a copy of these Bylaws as amended or otherwise altered to date, certified by
the Secretary, which shall be open to inspection by the Shareholders at all
reasonable times during office hours.
8.4. Representation of Shares of Corporations. The President
or any Vice President and the Secretary or Assistant Secretary of the
Corporation, acting either in person or by a proxy or proxies designated in a
written instrument duly executed by said officers, are authorized to vote,
represent, and exercise on behalf of the Corporation all rights incident to any
shares of any corporation standing in the name of the Corporation.
8.5. Shareholders' Disclosures; Redemption of Shares. The
Shareholders shall upon demand disclose to the Directors in writing such
information with respect to direct and indirect ownership of the Shares as the
Directors deem necessary to comply with the provisions of the Code and the
regulations thereunder as the same shall be from time to time amended or to
comply with the requirements of any other taxing authority. If the Corporation
has elected to qualify as a REIT and the Directors shall at any time and in good
faith be of the opinion that direct or indirect ownership of Shares of the
Corporation has or may become concentrated to an extent which would prevent the
Corporation from qualifying as a REIT under the REIT Provisions of the Code, the
Directors shall have the power by lot or other means deemed equitable by them to
prevent the transfer of and/or call for redemption a number of such Shares
sufficient in the opinion of the Directors to maintain or bring the direct or
indirect ownership of Shares of the Corporation into conformity with the
requirements for such a REIT. The redemption price shall be (i) the last
reported sale
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price of the Shares on the last business day prior to the redemption date on the
principal national securities exchange or quotation system on which the Shares
are listed or admitted to trading, or (ii) if not determined as aforesaid, as
determined in good faith by the Directors; provided, however, that the
provisions of Section 4.3(c) of the Certificate shall control with respect to
the redemption of Series A Preferred Shares. From and after the date fixed for
redemption by the Directors, the holder of any Shares so called for redemption
shall cease to be entitled to dividends, distributions, voting rights and other
benefits with respect to such Shares, excepting only to the right to payment of
the redemption price fixed as aforesaid. For the purpose of this Section 8.5,
the term "individual" shall be construed as provided in Section 542(a)(2) of the
Internal Revenue Code or any successor provisions and "ownership" of Shares
shall be determined as provided in Section 544 of the Internal Revenue Code or
any successor provision.
8.6. Right to Refuse to Transfer Shares. Whenever it is
deemed by them to be reasonably necessary to protect the tax status of the
Corporation, the Directors may require a statement or affidavit from each
Shareholder or proposed transferee of Shares or warrants or similar rights to
purchase Shares, setting forth the number of Shares (and warrants, rights or
options to purchase Shares) already owned by him and any related Person
specified in the form prescribed by the Directors for that purpose. If, in the
opinion of the Directors, which shall be conclusive upon any proposed transferor
or proposed transferee of Shares or Warrants any proposed transfer or exercise
would jeopardize the status of the Corporation as a REIT under the Internal
Revenue Code of 1954, as now enacted or as hereafter amended, the Directors may
refuse to permit such transfer or exercise. Any attempted transfer or exercise
as to which the Directors have refused their permission shall be void and of no
effect to transfer any legal or beneficial interest in the Shares or Warrants.
All contracts for the sale or other transfer or exercise of Shares or Warrants
shall be subject to this provision.
8.7. Limitation on Acquisition of Shares.
(a) Subject to the provisions of Section 8.7(b), no person
may own in excess of 9.8% of the total outstanding Shares, and no Shares shall
be transferred or issued (for example, upon the exercise of Warrants) to any
person if, following such transfer, such person's direct or indirect ownership
of Shares would exceed this limit. For the purpose of this Section 8.7,
ownership of Shares shall be computed in accordance with Internal Revenue Code
Sections 542(a) and 544.
(b) If Shares are purportedly acquired by any person in
violation of this Section 8.7, such acquisition shall be valid only to the
extent it does not result in a violation of this Section 8.7, and such
acquisition shall be null and void with respect to the excess ("Excess Shares").
Excess Shares shall be deemed to have been acquired and to be held on behalf of
the Corporation, and, as the equivalent of Treasury Shares for such purpose,
shall not be considered to be outstanding for quorum or voting purposes, and
shall not be entitled to receive dividends, interest or any other distribution.
(c) This Section 8.7 shall apply to the acquisition of Shares
by means other than through the Corporation's Dividend Reinvestment Plan, if
any. So long as any person so holds more than 9.8% of the outstanding Shares, a
lower percentage limit may be established by the Directors to the extent
necessary to assure, to the extent possible, that no five persons own more than
50% of the outstanding Shares.
(d) The Corporation shall, if deemed necessary or desirable
to implement the provisions of this Section 8.7, include on the face or back of
each Share or Warrant certificate issued by the Corporation an appropriate
legend referring the holder of such certificate to the restrictions contained in
this Section 8.7
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and stating that the complete text of this Section 8.7 is on file with the
Secretary of the Corporation at the Corporation's offices.
(e) Nothing herein contained shall limit the ability of the
Directors to impose, or to seek judicial or other imposition of additional
restrictions if the Corporation has elected to be taxed under the REIT
Provisions of the Code and deemed necessary or advisable to protect the
Corporation and the interests of its Shareholders by preservation of the
Corporation's status as a qualified real estate investment trust under the REIT
Provisions of the Code.
(f) If any provision of this Section 8.7 or any application
of any such provision is determined to be invalid by any federal or state court
having jurisdiction over the issue, the validity of the remaining provisions
shall not be affected and the other applications of such provisions shall be
affected only to the extent necessary to comply with the determination of such
court.
8.8. Reliance. The Directors and officers may consult with
counsel, and the advice or opinion of such counsel shall be full and complete
personal protection to all of the Directors and officers in respect of any
action taken or suffered by them in good faith and in reliance on and in
accordance with such advice or opinion. In discharging their duties, Directors
and officers, when acting in good faith, may rely upon financial statements of
the Corporation represented to them to be correct by the Chairman or the officer
of the Corporation having charge of its books of account, or stated in a written
report by an independent certified public accountant fairly to present the
financial position of the Corporation. The Directors may rely, and shall be
personally protected in acting, upon any instrument or other document believed
by them to be genuine.
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify that:
1. I am the Secretary of CAPITAL ALLIANCE INCOME TRUST LTD.,
a Delaware corporation; and
2. The foregoing Bylaws represent the Bylaws duly adopted by
the Directors of the Corporation on May 4, 2001.
CAPITAL ALLIANCE INCOME TRUST LTD.
Dated: May 4, 2001. By: Linda St. John, Secretary