PROPOSAL NO. 1 - APPROVAL OF THE ARTICLES OF AMENDMENT TO THE COMPANY'S CHARTER TO GIVE BYLAW ACCESS TO STOCKHOLDERS
Our Board of Directors recommends a vote FOR the proposal to approve of the Articles of Amendment to our Charter to give bylaw access to stockholders
Amendment to the Company’s Charter: Stockholder Access to the Bylaws
Upon recommendation of the Nominating and Corporate Governance Committee, our Board has declared advisable and recommends that stockholders approve the Articles of Amendment to the Company's charter (the "Bylaw Access Amendment") to provide the Board and the Company's stockholders with the concurrent power to amend our bylaws.
Purpose and Effect of the Bylaw Access Amendment
Currently, both our charter and bylaws provide the Board with the exclusive power to amend the bylaws. Our Board is committed to good corporate governance and monitors regularly our corporate governance policies and practices. Our Board carefully considered the advantages and disadvantages of adopting a change to our charter to allow for stockholders to amend the bylaws. The Company's bylaws establish a number of fundamental corporate governance operating principles, including rules for meetings of directors and stockholders and the election and duties of directors and officers, among other provisions. In the past, the Board believed that the default position under Maryland General Corporation Law provided an effective means for the Board to ensure that any amendments to our bylaws were prudent and designed to protect and maximize long-term value for all stockholders. More recently, the Nominating and Corporate Governance Committee considered the various positions for and against allowing stockholders to amend the bylaws. After weighing these considerations, and upon the recommendation of the Nominating and Corporate Governance Committee, the Board has determined it is in the best interest of the Company's stockholders to vote for amending the charter to allow stockholders to amend our bylaws.
The general description of the Bylaw Access Amendment set forth above is qualified in its entirety by reference to the text of the Proposed Charter Amendment - Bylaws, which is contained in Articles of Amendment attached as Annex A to this Proxy Statement and is incorporated by reference herein.
On September 14, 2020, the Board approved, subject to approval of the Bylaw Access Amendment, an amendment to Section 7.07 of our bylaws which will allow for the bylaws to be adopted, altered or repealed by the affirmative vote of a majority of the Board or by the stockholders, by the affirmative vote of a majority of all the votes entitled to be cast on the matter (the "Bylaw Amendment"). This Bylaw Amendment does not require approval by our stockholders and is conditioned upon the approval of the Bylaw Access Amendment at the Special Meeting and upon the effectiveness of the Bylaw Access Amendment. The Bylaw Amendment would replace Section 7.07 of our bylaws with the following:
Section 7.07. Amendments. The Board of Directors shall have the power to adopt, alter or repeal any provision of these bylaws and to make new bylaws. In addition, these bylaws may also be adopted, altered or repealed, and new bylaws may be made, pursuant to a binding proposal that is (a) submitted to the stockholders for approval at a duly called annual meeting or special meeting of stockholders by (i) the Board of Directors or (ii) a stockholder who provides to the Corporation timely notice of such proposal that satisfies the notice procedures and all other relevant provisions of Article 2 and who is, at the record date set by the Board of Directors for the purpose of determining stockholders entitled to vote on such matter, at the time such notice is delivered to the Corporation and as of such meeting, a stockholder that satisfies the ownership and other eligibility requirements of Rule 14a-8 under the Exchange Act and Article 2 of these bylaws, and (b) approved by the stockholders by the affirmative vote of a majority of the votes entitled to be cast on the matter.
If approved by the requisite vote, the Bylaw Access Amendment will become effective upon the filing of Articles of Amendment with the State Department of Assessments and Taxation in Maryland (the "SDAT") to reflect the changes to Article 5. If the Bylaw Access Amendment is not approved by the requisite vote, then the proposed amendment to Article 5 of our charter will not be filed with the SDAT and our Board shall continue to have the exclusive power to adopt, alter or repeal any provision of our bylaws pursuant to our charter.