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Bylaws - Avalon Bay Communities Inc.

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                                     BYLAWS

                                       OF

                          AVALON BAY COMMUNITIES, INC.











                                                                   July 24, 1998




<PAGE>   2


                                                                             
                                     BYLAWS

                                       OF

                          AVALON BAY COMMUNITIES, INC.

                                TABLE OF CONTENTS

                                                                            Page


ARTICLE I  MEETINGS OF STOCKHOLDERS...........................................1
     1.01   PLACE.............................................................1
     1.02   ANNUAL MEETING....................................................1
     1.03   MATTERS TO BE CONSIDERED AT ANNUAL MEETING........................1
     1.04   SPECIAL MEETINGS..................................................3
     1.05   NOTICE............................................................3
     1.06   SCOPE OF NOTICE...................................................3
     1.07   QUORUM............................................................3
     1.08   VOTING............................................................4
     1.09   PROXIES...........................................................4
     1.10   CONDUCT OF MEETINGS...............................................4
     1.11   TABULATION OF VOTES...............................................5
     1.12   INFORMAL ACTION BY STOCKHOLDERS...................................6
     1.13   VOTING BY BALLOT..................................................6

ARTICLE II  DIRECTORS.........................................................6
     2.01   GENERAL POWERS....................................................6
     2.02   OUTSIDE ACTIVITIES................................................6
     2.03   NUMBER, TENURE AND QUALIFICATION..................................7
     2.04   NOMINATION OF DIRECTORS...........................................7
     2.05   ANNUAL AND REGULAR MEETINGS.......................................9
     2.06   SPECIAL MEETINGS..................................................9
     2.07   NOTICE AND CALL OF MEETINGS.......................................9
     2.08   QUORUM............................................................9
     2.09   VOTING............................................................9
     2.10   CONDUCT OF MEETINGS..............................................10
     2.11   RESIGNATIONS.....................................................10
     2.12   REMOVAL OF DIRECTORS.............................................10
     2.13   VACANCIES........................................................10
     2.14   INFORMAL ACTION BY DIRECTORS.....................................10
     2.15   COMPENSATION.....................................................10


                                      (i)
<PAGE>   3

                                                                            Page

ARTICLE III  COMMITTEES......................................................10
     3.01    NUMBER, TENURE AND QUALIFICATION................................10
     3.02    DELEGATION OF POWER.............................................11
     3.03    QUORUM AND VOTING...............................................12
     3.04    CONDUCT OF MEETINGS.............................................12
     3.05    INFORMAL ACTION BY COMMITTEES...................................12

ARTICLE IV  OFFICERS.........................................................12
     4.01   TITLES AND ELECTION..............................................12
     4.02   REMOVAL AND RESIGNATION..........................................13
     4.03   OUTSIDE ACTIVITIES...............................................13
     4.04   VACANCIES........................................................13
     4.05   EXECUTIVE CHAIRMAN OF THE BOARD..................................13
     4.06   CHIEF EXECUTIVE OFFICER..........................................13
     4.07   PRESIDENT........................................................14
     4.08   VICE PRESIDENTS..................................................14
     4.09   SECRETARY........................................................14
     4.10   TREASURER AND CHIEF FINANCIAL OFFICER............................14
     4.11   ASSISTANT SECRETARIES AND ASSISTANT TREASURERS...................15
     4.12   SUBORDINATE OFFICERS.............................................15
     4.13   COMPENSATION.....................................................15

ARTICLE V  SHARES OF STOCK...................................................15
     5.01  FORM OF CERTIFICATES..............................................15
     5.02  TRANSFER OF SHARES................................................16
     5.03  STOCK LEDGER......................................................16
     5.04  RECORDING TRANSFERS OF STOCK......................................16
     5.05  LOST CERTIFICATE..................................................16
     5.06  EMPLOYEE STOCK PURCHASE PLAN......................................17
     5.07  CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE................17

ARTICLE VI  DIVIDENDS AND DISTRIBUTIONS......................................18
     6.01   DECLARATION......................................................18
     6.02   CONTINGENCIES....................................................18

ARTICLE VII  INDEMNIFICATION.................................................18
      7.01   INDEMNIFICATION TO THE EXTENT PERMITTED BY LAW..................18
      7.02   INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION......19
      7.03   INSURANCE.......................................................19
      7.04   NON-EXCLUSIVE RIGHTS TO INDEMNITY; HEIRS AND PERSONAL
             REPRESENTATIVES.................................................19
      7.05   NO LIMITATION...................................................19


                                      (ii)

<PAGE>   4

                                                                            Page

     7.06   AMENDMENT, REPEAL OR MODIFICATION................................19
     7.07   RIGHT OF CLAIMANT TO BRING SUIT..................................20

ARTICLE VIII  NOTICES........................................................20
     8.01   NOTICES..........................................................20
     8.02   SECRETARY TO GIVE NOTICE.........................................20
     8.03   WAIVER OF NOTICE.................................................21

ARTICLE IX  MISCELLANEOUS....................................................21
     9.01   EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE.................21
     9.02   OFFICES OF THE CORPORATION.......................................21
     9.03   BOOKS AND RECORDS................................................21
     9.04   INSPECTION OF BYLAWS AND CORPORATE RECORDS.......................21
     9.05   CONTRACTS........................................................22
     9.06   CHECKS, DRAFTS, ETC..............................................22
     9.07   LOANS............................................................22
     9.08   FISCAL YEAR......................................................22
     9.09   ANNUAL REPORT....................................................23
     9.10   INTERIM REPORTS..................................................23
     9.11   OTHER REPORTS....................................................23
     9.12   BYLAWS SEVERABLE.................................................23

ARTICLE X   AMENDMENT OF BYLAWS..............................................23
     10.01  BY DIRECTORS.....................................................23
     10.02  BY STOCKHOLDERS..................................................23


                                     (iii)
<PAGE>   5



                                   ARTICLE I

                            MEETINGS OF STOCKHOLDERS

         1.01  PLACE. All meetings of the holders (the "Stockholders") of the
issued and outstanding common stock and preferred stock of Avalon Bay
Communities, Inc. (the "Corporation") shall be held at the principal executive
office of the Corporation or such other place within the United States as shall
be stated in the notice of the meeting.

         1.02  ANNUAL MEETINGS. An annual meeting of the Stockholders for the
election of directors of the Corporation ("Directors") and the transaction of
such other business as may be properly brought before the meeting shall be held
on the first Monday of June of each year, or on such other date determined by
the Board of Directors which is not more than fifteen days prior to or after
such first Monday of June, and at such time as shall be fixed by the Board of
Directors. If the date fixed for the annual meeting shall be a legal holiday,
such meeting shall be held on the next succeeding business day. If no annual
meeting is held on the date designated, a special meeting in lieu thereof may be
held, and such special meeting shall have, for purposes of these Bylaws or
otherwise, all the force and effect of an annual meeting. Any and all references
hereafter in these Bylaws to an annual meeting or to annual meetings shall be
deemed to refer also to any special meeting(s) in lieu thereof. Failure to hold
an annual meeting shall not invalidate the Corporation's existence or affect any
otherwise valid acts of the Corporation.

         1.03  MATTERS TO BE CONSIDERED AT ANNUAL MEETING.

               (a)  At an annual meeting of Stockholders, only such business
shall be conducted, and only such proposals shall be acted upon, as shall have
been properly brought before the annual meeting (i) by, or at the direction of,
a majority of the Board of Directors, or (ii) by any holder of record (both as
of the time notice of such proposal is given by the Stockholder as set forth
below and as of the record date for the annual meeting in question) of any
shares of the Corporation's capital stock entitled to vote at such annual
meeting who complies with the procedures set forth in this Section 1.03. For a
proposal to be properly brought before an annual meeting by a Stockholder, the
Stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation, and such Stockholder or his representative must be present in
person at the annual meeting. For each annual meeting, a Stockholder's notice
shall be timely if delivered to, or mailed and received at, the principal
executive offices of the Corporation (A) not less than seventy-five (75) days
nor more than one hundred eighty (180) days prior to the anniversary date of the
immediately preceding annual meeting of Stockholders or special meeting in lieu
thereof (the "Anniversary Date") or (B) in the event that the annual meeting of
Stockholders is called for a date more than seven (7) calendar days prior to the
Anniversary Date, not later than the close of business on (1) the twentieth
(20th) calendar day (or if that day is not a business day for the Corporation,
on the next succeeding business day) following the earlier of (x) the date on
which notice of the date of such meeting was mailed to Stockholders, or (y) the
date on which the date of such meeting


                                       1
<PAGE>   6

was publicly disclosed, or (2) if such date of notice or public disclosure
occurs more than seventy-five (75) calendar days prior to the scheduled date of
such meeting, then the later of (x) the twentieth (20th) calendar day (or if
that day is not a business day for the Corporation, on the next succeeding
business day) following the date of the first to occur of such notice or public
disclosure or (y) the seventy-fifth (75th) calendar day prior to such scheduled
date of such meeting (or if that day is not a business day for the Corporation,
on the next succeeding business day).

         For purposes of these Bylaws, "publicly disclosed" and "public
disclosure" shall mean disclosure in a (i) press release reported by the Dow
Jones News Service, Associated Press or comparable national news service, (ii)
report or other document filed publicly with the Securities and Exchange
Commission (including, without limitation, a Form 8-K), or (iii) letter or
report sent to Stockholders of record of the Corporation.

               (b)  A Stockholder's notice to the Secretary shall set forth as
to each matter the Stockholder proposes to bring before the annual meeting (i) a
brief description of the proposal desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the Corporation's stock transfer books,
of the Stockholder proposing such business and of the beneficial owners (if any)
of the stock registered in such Stockholder's name and the name and address of
other Stockholders known by such Stockholder to be supporting such proposal on
the date of such Stockholder's notice, (iii) the class and number of shares of
the Corporation's capital stock which are beneficially owned by the Stockholder
and such beneficial owners (if any) on the date of such Stockholder's notice and
by any other Stockholders known by such Stockholder to be supporting such
proposal on the date of such Stockholder's notice, and (iv) any financial
interest of the Stockholder or of any such beneficial owner in such proposal.

               (c)  If the Board of Directors, or a designated committee
thereof, determines that any Stockholder proposal was not timely made in
accordance with the terms of this Section 1.03, such proposal shall not be
presented for action at the annual meeting in question. If the Board of
Directors, or a designated committee thereof, determines that the information
provided in a Stockholder's notice does not satisfy the informational
requirements of this Section in any material respect, the Secretary of the
Corporation shall promptly notify such Stockholder of the deficiency in the
notice. Such Stockholder shall have an opportunity to cure the deficiency by
providing additional information to the Secretary within the period of time,
not  to exceed five (5) days from the date such deficiency notice is given to
the  Stockholder, determined by the Board of Directors or such committee. If
the  deficiency is not cured within such period, or if the Board of Directors
or such  committee determines that the additional information provided by the
Stockholder, together with the information previously provided, does not
satisfy  the requirements of this Section 1.03 in any material respect, then
such  proposal shall not be presented for action at the annual meeting in
question.
                       
               (d)  Notwithstanding the procedure set forth in the preceding
paragraph, if neither the Board of Directors nor such committee makes a
determination as to the validity of


                                       2
<PAGE>   7

any Stockholder proposal as set forth above, the presiding officer of the annual
meeting shall determine and declare at the annual meeting whether the
Stockholder proposal was made in accordance with the terms of this Section 1.03.
If the presiding officer determines that a Stockholder proposal was made in
accordance with the terms of this Section 1.03, the presiding officer shall so
declare at the annual meeting. If the presiding officer determines that a
Stockholder proposal was not made in accordance with the provisions of this
Section 1.03, the presiding officer shall so declare at the annual meeting and
such proposal shall not be acted upon at the annual meeting.

               (e)  This provision shall not prevent the consideration and
approval or disapproval at the annual meeting of reports of officers, Directors
and committees of the Board of Directors, but in connection with such reports,
no new business shall be acted upon at such annual meeting except in accordance
with the provisions of this Section 1.03.

         1.04  SPECIAL MEETINGS. The Executive Chairman of the Board of
Directors (the "Executive Chairman"), the Chief Executive Officer, the President
or a majority of the Board of Directors may call special meetings of the
Stockholders. In addition, the Secretary of the Corporation shall call a special
meeting of the Stockholders on the written request of Stockholders entitled to
cast a majority of all the votes entitled to be cast at the meeting. Such
request shall state the purpose or purposes of such meeting and the matters
proposed to be acted on thereat. The date, time, place and record date for any
special meeting, including a special meeting called at the request of
Stockholders, shall be established by the Board of Directors or officer calling
the same.

         1.05  NOTICE. Not fewer than ten (10) nor more than ninety (90) days
before the date of every meeting of Stockholders, written notice of such meeting
shall be given, in accordance with Article VIII, to each Stockholder entitled to
vote at the meeting or entitled to notice of the meeting by statute, stating the
time and place of the meeting and, in the case of a special meeting or as
otherwise may be required by statute, the purpose or purposes for which the
meeting is called.

         1.06  SCOPE OF NOTICE. No business shall be transacted at a special
meeting of Stockholders except that specifically designated in the notice of the
meeting. Subject to the provisions of Section 1.03, any business of the
Corporation may be transacted at the annual meeting without being specifically
designated in the notice, except such business as is required by statute to be
stated in such notice.

         1.07  QUORUM. At any meeting of Stockholders, the presence in person
or by proxy of Stockholders entitled to cast a majority of all the votes
entitled to be cast at the meeting shall constitute a quorum; but this Section
1.07 shall not affect any requirement under any statute or the charter of the
Corporation, as amended from time to time (the "Charter"), for the vote
necessary for the adoption of any measure. If, however, a quorum is not present
at any meeting of Stockholders, the Stockholders present in person or by proxy
or the presiding officer shall have the power to adjourn the meeting from time
to time without notice


                                       3
<PAGE>   8

other than announcement at the meeting until a quorum is present and the meeting
so adjourned may be reconvened without further notice, except that if
adjournment is 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 to each Stockholder of record entitled to vote thereat.
At any meeting called to resume an adjourned meeting at which a quorum is
present, any business may be transacted that might have been transacted at the
meeting as originally notified. The Stockholders present at a meeting which has
been duly called and convened and at which a quorum is present at the time
counted may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Stockholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the shares
required to constitute a quorum.

         1.08  VOTING. A majority of the votes cast at a meeting of
Stockholders duly called and at which a quorum is present shall be sufficient to
take or authorize action upon any matter which may properly come before the
meeting, unless more than a majority of the votes cast is specifically required
by statute, the Charter or these Bylaws. Unless otherwise provided by statute or
the Charter, each outstanding share (a "Share") of stock of the Corporation (the
"Stock"), regardless of class, shall be entitled to one vote upon each matter
submitted to a vote at a meeting of Stockholders. Any holder of shares entitled
to vote on any matter may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or vote them against the proposal,
other than elections to office, but, if the Stockholder fails to specify the
number of shares such Stockholder is voting affirmatively, it shall be
conclusively presumed that the Stockholder's approving vote is with respect to
all shares said Stockholder is entitled to vote. Shares of its own Stock
directly or indirectly owned by the Corporation shall not be voted at any
meeting and shall not be counted in determining the total number of outstanding
Shares entitled to vote at any given time, but Shares of its own voting Stock
held by it in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding Shares at any given time.
Notwithstanding anything else contained in these Bylaws, the rights of any class
of "Excess Stock" (as such term is defined in the Charter) and the rights of
holders of any class of Excess Stock shall be limited to the rights with respect
thereto provided in the Charter. Notwithstanding the foregoing, a plurality of
the votes cast at a meeting of Stockholders duly called and at which a quorum is
present shall be sufficient to elect a Director.

         1.09  PROXIES. A Stockholder may vote the Shares owned of record by
him or her, either in person or by proxy executed in writing by the Stockholder
or by his or her duly authorized agent. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven (11) months from the date of its execution, unless
otherwise provided in the proxy.

         1.10  CONDUCT OF MEETINGS.

               (a)  The Executive Chairman or, in the absence of the
Executive Chairman, the Chief Executive Officer or, in the absence of both the
Executive Chairman and the Chief

                                       4
<PAGE>   9

Executive Officer, the President, or, in the absence of all of the foregoing
officers, a presiding officer appointed by the Board of Directors, shall preside
over meetings of the Stockholders. The Secretary of the Corporation, or, in the
absence of the Secretary and Assistant Secretaries, the person appointed by the
presiding officer (the "Presiding Officer") of the meeting shall act as
secretary of such meeting. Unless otherwise approved by the Presiding Officer,
attendance at a meeting of Stockholders is restricted to Stockholders of record,
persons authorized in accordance with Section 1.09 to act by proxy, and officers
of the Corporation.

               (b)  The Presiding Officer shall call the meeting to order,
establish the agenda, and conduct the business of the meeting in accordance
therewith, or at the Presiding Officer's discretion, it may be conducted
otherwise in accordance with the wishes of the Stockholders in attendance. The
Presiding Officer shall also conduct the meeting in an orderly manner, rule on
the precedence of, and procedure on, motions and other procedural matters, and
exercise discretion with respect to such procedural matters with fairness and
good faith toward all those entitled to take part. The Presiding Officer may
impose reasonable limits on the amount of time taken up at the meeting on
discussion in general or on remarks by any one Stockholder. Should any person in
attendance become unruly or obstruct the meeting proceedings, the Presiding
Officer shall have the power to have such person removed from participation.
Notwithstanding anything in the Bylaws to the contrary, no business shall be
considered at a meeting except in accordance with the procedures set forth in
this Section 1.10 and Section 1.03 above. The Presiding Officer of a meeting
shall, if the facts warrant, determine and declare to the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this Section 1.10 and Section 1.03 above, and if the Presiding
Officer should so determine, he or she shall so declare to the meeting, and such
business shall not be transacted.

         1.11   TABULATION OF VOTES. At any annual or special meeting of
Stockholders, the presiding officer shall be authorized to appoint one or more
persons as tellers for such meeting (the "Teller" or "Tellers"). The Teller may,
but need not, be an officer or employee of the Corporation. The Teller shall be
responsible for tabulating or causing to be tabulated shares voted at the
meeting and reviewing or causing to be reviewed all proxies. In tabulating
votes, the Teller shall be entitled to rely in whole or in part on tabulations
and analyses made by personnel of the Corporation, its counsel, its transfer
agent, its registrar or such other organizations that are customarily employed
to provide such services. The Teller may be authorized by the Presiding Officer
to determine on a preliminary basis the legality and sufficiency of all votes
cast and proxies delivered under the Corporation's Charter, Bylaws and
applicable law. The Presiding Officer may review all preliminary determinations
made by the Teller hereunder, and in doing so, the Presiding Officer shall be
entitled to exercise his or her sole judgment and discretion and he or she shall
not be bound by any preliminary determinations made by the Teller. Each report
of the Teller shall be in writing and signed by him or her or by a majority of
them if there is more than one. The report of the majority shall be the report
of the Tellers.

                                       5
<PAGE>   10

         1.12  INFORMAL ACTION BY STOCKHOLDERS. An action required or
permitted to be taken at a meeting of Stockholders may be taken without a
meeting if a consent in writing, setting forth such action, is signed by all the
Stockholders entitled to vote on the subject matter thereof and any other
Stockholders entitled to notice of a meeting of Stockholders (but not to vote
thereat) have waived in writing any rights which they may have to dissent from
such action, and such consents and waivers are filed with the records of
Stockholders meetings. Such consents and waivers may be signed by different
Stockholders on separate counterparts.

         1.13  VOTING BY BALLOT. Voting on any question or in any election
may be viva voce unless the presiding officer shall order or any Stockholder at
voting be by ballot.


                                   ARTICLE II

                                    DIRECTORS

         2.01  GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of its Board of Directors. All powers of
the Corporation may be exercised by or under the authority of the Board of
Directors, except as conferred on or reserved to the Stockholders by statute,
the Charter or these Bylaws.

         2.02  OUTSIDE ACTIVITIES. The Board of Directors and its members are
required to spend only such time managing the business and affairs of the
Corporation as is necessary to carry out their duties in accordance with Section
2-405.1 the Maryland General Corporation Law, as amended from time to time (the
"MGCL"). Except as set forth in the Charter or by separate agreement, the Board
of Directors, each Director, and the agents, officers and employees of the
Corporation or of the Board of Directors or of any Director may engage with or
for others in business activities of the types conducted by the Corporation.
Except as set forth in the Charter or by separate agreement, none of such
individuals has an obligation to notify or present to the Corporation or each
other any investment opportunity that may come to such person's attention even
though such investment might be within the scope of the Corporation's purposes
or various investment objectives. Any interest that a Director has in any
investment opportunity presented to the Corporation must be disclosed by such
Director to the Board of Directors (and, if voting thereon, to the Stockholders
or to any committee of the Board of Directors) within ten (10) days after the
later of the date upon which such Director becomes aware of such interest or the
date upon which such Director becomes aware that the Corporation is considering
such investment opportunity. If such interest comes to the interested Director's
attention after a vote to take such investment opportunity, the voting body
shall be notified of such interest and shall reconsider such investment
opportunity if not already consummated or implemented.

                                       6
<PAGE>   11

         2.03  NUMBER, TENURE AND QUALIFICATION. The number of Directors of
the Corporation shall be that number set forth in the Charter or such other
number as may be designated from time to time by resolution of a majority of the
entire Board of Directors; provided, however, that the number of Directors shall
be not less than five (5) nor greater than fifteen (15) and further provided
that the tenure of office of a Director shall not be affected by any decrease in
the number of Directors. The minimum or maximum number of Directors provided in
this Section 2.03 may be changed only by amendment to these Bylaws or by
amendment to the Corporation's Charter, provided that any such amendment shall
be both duly adopted by the affirmative vote of a majority of the outstanding
shares entitled to vote and deemed advisable or approved by the Board of
Directors. Each Director shall serve for the term set forth in the Charter and
until his or her successor is elected and qualified.

         2.04  NOMINATION OF DIRECTORS.

               (a)  Nominations of candidates for election as Directors of the
Corporation at any annual meeting of Stockholders may be made (i) by, or at the
direction of, a majority of the Board of Directors or (ii) by any holder of
record (both as of the time notice of such nomination is given by the
Stockholder as set forth below and as of the record date for the annual meeting
in question) of any shares of the Corporation's capital stock entitled to vote
at such meeting who complies with the procedures set forth in this Section 2.04.
Any Stockholder who seeks to make such a nomination, or his representative, must
be present in person at the annual meeting. Only persons nominated in accordance
with the procedures set forth in this Section 2.04 shall be eligible for
election as Directors at an annual meeting of Stockholders.

               (b)  Nominations, other than those made by, or at the direction
of, the Board of Directors, shall be made pursuant to timely notice in writing
to the Secretary of the Corporation as set forth in this Section 2.04. For each
annual meeting of the Corporation, a Stockholder's notice shall be timely if
delivered to, or mailed and received at, the principal executive offices of the
Corporation (i) not fewer than seventy-five (75) days nor more than one hundred
eighty (180) days prior to the Anniversary Date or (ii) in the event that the
annual meeting of Stockholders is called for a date more than seven (7) calendar
days prior to the Anniversary Date, not later than the close of business on (A)
the twentieth (20th) calendar day (or if that day is not a business day for the
Corporation, on the next succeeding business day) following the earlier of (1)
the date on which notice of the date of such meeting was mailed to Stockholders,
or (2) the date on which the date of such meeting was publicly disclosed, or (B)
if such date of notice or public disclosure occurs more than seventy-five (75)
calendar days prior to the scheduled date of such meeting, then the later of (1)
the twentieth (20th) calendar day (or if that day is not a business day for the
Corporation, on the next succeeding business day) following the date of the
first to occur of such notice or public disclosure or (2) the seventy-fifth
(75th) calendar day prior to such scheduled date of such meeting (or if that day
is not a business day for the Corporation, on the next succeeding business day).

                                       7
<PAGE>   12

               (c)  A Stockholder's notice of nomination shall set forth as to
each person the Stockholder proposes to nominate for election as a Director (i)
the name, age, business address and residence address of such person; (ii) the
principal occupation or employment of such person for the past five (5) years;
(iii) the class and number of shares of the Corporation's capital stock which
are beneficially owned by such person on the date of such notice; (iv) such
nominee's written consent to be named in the proxy statement as a nominee and to
serve as a Director if elected; and (v) any other information relating to such
person that is required to be disclosed in solicitations of proxies with respect
to nominees for election under the Securities Exchange Act of 1934, as amended,
and the Rules and Regulations promulgated thereunder, and as may otherwise be
deemed necessary or desirable by the Corporation's counsel, in the exercise of
his or her discretion. Notice by a Stockholder shall, in addition to the
above-referenced information, set forth as to the Stockholder giving the notice
(A) the name and address, as they appear on the Corporation's stock transfer
books, of such Stockholder and of the beneficial owners (if any) of the stock
registered in such Stockholder's name; (B) the name and address of other
Stockholders known by such Stockholder to be supporting such nominees on the
date of such Stockholder's notice; (C) the class and number of shares of the
Corporation's capital stock which are beneficially owned by such Stockholder and
such beneficial owners (if any) on the date of such Stockholder notice; and (D)
the class and number of shares of the Corporation's capital stock which are
beneficially owned by any other Stockholders known by such Stockholder to be
supporting such nominees on the date of such Stockholder notice. At the request
of the Board of Directors, any person nominated by or at the direction of the
Board of Directors for election as a Director at an annual meeting shall furnish
to the Secretary of the Corporation that information which would be required to
be set forth in a Stockholder's notice of nomination of such nominee.

               (d)   No person shall be elected by the Stockholders as a
Director of the Corporation unless nominated in accordance with the procedures
set forth in this Section 2.04. If the Board of Directors, or a designated
committee thereof, determines that a nomination made by any Stockholder was not
timely made in accordance with the terms of this Section, such nomination shall
not be considered at the annual meeting in question. If the Board of Directors,
or a designated committee thereof, determines that the information provided in a
Stockholder's notice does not satisfy the informational requirements of this
Section 2.04 in any material respect, the Secretary of the Corporation shall
promptly notify such Stockholder of the deficiency in the notice. Such
Stockholder shall have an opportunity to cure the deficiency by providing
additional information to the Secretary within the period of time, not to exceed
five (5) days from the date such deficiency notice is given to such Stockholder,
determined by the Board of Directors or such committee. If the deficiency is not
cured within such period, or if the Board of Directors or such committee
determines that the additional information provided by such Stockholder,
together with the information previously provided, does not satisfy the
requirements of this Section 2.04 in any material respect, such nomination shall
not be considered at the annual meeting in question.

                                       8
<PAGE>   13

               (e)  Notwithstanding the procedures set forth in the preceding
paragraph, if neither the Board of Directors nor a designated committee thereof
makes a determination as to the validity of any nominations by any Stockholder
as set forth above, the presiding officer of the Stockholders' meeting shall
determine and declare at the Stockholders' meeting whether a nomination was made
in accordance with the terms of this Section 2.04. If the presiding officer
determines that a nomination was not made in accordance with the terms of this
Section 2.04, such nomination shall be disregarded and the Board of Directors
shall make all Director nominations on behalf of the Corporation.

         2.05  ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of
Directors may be held immediately after and at the same place as the annual
meeting of Stockholders, or at such other time and place, either within or
without the State of Maryland, as is selected by resolution of the Board of
Directors, and no notice other than this Bylaw or such resolution shall be
necessary. The Board of Directors may provide, by resolution, the time and
place, either within or without the State of Maryland, for the holding of
regular meetings of the Board of Directors without other notice than such
resolutions.

         2.06  SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Executive Chairman, the Chief
Executive Officer or a majority of the Directors then in office. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Board of Directors called by them.

         2.07  NOTICE AND CALL OF MEETINGS. Notice of any special meeting to
be provided herein shall be given, in accordance with ARTICLE VIII, by written
notice delivered personally, telegraphed or telecopied to each Director at his
or her business or residence at least twenty-four (24) hours, or by mail at
least five (5) days, prior to the meeting. Neither the business to be transacted
at, nor the purpose of, any annual, regular or special meeting of the Board of
Directors need be specified in the notice, unless specifically required by
statute, the Charter or these Bylaws.

         2.08  QUORUM. A majority of the Board of Directors then in office
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors; provided, however, that a quorum for the transaction of
business with respect to any matter in which any Director (or affiliate of such
Director) who is not an independent Director has any interest shall consist of a
majority of the Directors that includes a majority of the independent Directors
then in office. If less than a majority of the Board of Directors is present at
said meeting, a majority of the Directors present may adjourn the meeting from
time to time without further notice.

         2.09  VOTING. The action of a majority of the Directors present at a
meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such
action by applicable statute, the


                                       9
<PAGE>   14

Charter or these Bylaws; provided, however, that no act relating to any matter
in which a Director (or affiliate of such Director) who is not an independent
Director has any interest shall be the act of the Board of Directors unless such
act has been approved by a majority of the Board of Directors that includes a
majority of the independent Directors.

         2.10  CONDUCT OF MEETINGS. All meetings of the Board of Directors
shall be called to order and presided over by the Executive Chairman, or in the
absence of the Executive Chairman, by the Chief Executive Officer (if a member
of the Board of Directors) or, in the absence of the Executive Chairman and the
Chief Executive Officer, by a member of the Board of Directors selected by the
members present. The Secretary of the Corporation, or in the absence of the
Secretary, any Assistant Secretary, shall act as secretary at all meetings of
the Board of Directors, and in the absence of the Secretary and Assistant
Secretaries, the presiding officer of the meeting shall designate any person to
act as secretary of the meeting. Members of the Board of Directors may
participate in meetings of the Board of Directors by conference telephone or
similar communications equipment by means of which all Directors participating
in the meeting can hear each other at the same time, and participation in a
meeting in accordance herewith shall constitute presence in person at such
meeting for all purposes of these Bylaws.

         2.11  RESIGNATIONS. Any Director may resign from the Board of
Directors or any committee thereof in the manner provided in the Charter.

         2.12  REMOVAL OF DIRECTORS. Any Director may be removed in the manner
provided in the Charter.

         2.13  VACANCIES. Vacancies on the Board of Directors shall be filled
in the manner provided in the Charter.

         2.14  INFORMAL ACTION BY DIRECTORS. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting if a consent in writing to such action is signed by all of the Directors
and such written consent is filed with the minutes of the Board of Directors.
Consents may be signed by different Directors on separate counterparts.

         2.15  COMPENSATION. An annual fee for services and payment for
expenses of attendance at each meeting of the Board of Directors, or of any
committee thereof, may be allowed to any Director by resolution of the Board of
Directors.


                                       10
<PAGE>   15

                                  ARTICLE III

                                   COMMITTEES

         3.01  NUMBER, TENURE AND QUALIFICATION. The Board of Directors may
appoint from among its members certain committees as described below. The term
of office of any committee member shall be as provided in the resolution of the
Board of Directors designating such member but shall not exceed such member's
term as Director. Any member of a committee may be removed at any time by
resolution adopted by a majority of the Directors. If any committee may take or
authorize any act as to any matter in which any Director (or affiliate of such
Director) who is not an independent Director has or may have any interest, a
majority of the members of such committee shall be independent Directors, except
that any such committee consisting of only two Directors may have one
independent Director and one Director who is not an independent Director.

               (a)  Executive Committee. The Board of Directors may, by
resolution adopted by a majority of the Directors, appoint an Executive
Committee, consisting of one or more Directors. The Board may designate one or
more Directors as an alternate member of the Executive Committee, who may
replace any absent member at any meeting of the Executive Committee.

               (b)  Audit Committee. The Board of Directors shall, by resolution
adopted by a majority of the Directors, appoint an Audit Committee consisting of
two or more Directors whose membership on the Audit Committee shall meet the
requirements set forth in the applicable rules, if any, of the New York Stock
Exchange, as amended from time to time. The Board may designate one or more
Directors as an alternate member of the Audit Committee, who may replace any
absent member at any meeting of the Audit Committee.

               (c)  Compensation Committee. The Board of Directors shall, by
resolution adopted by a majority of the authorized number of Directors, appoint
a Compensation Committee, consisting of two or more Directors, each of whom is
not an employee, officer or former officer of the Corporation or a subsidiary or
division thereof, or a relative of a principal executive officer, or an
individual member of an organization acting as an advisor, consultant, or legal
counsel, receiving compensation on a continuing basis from the Corporation in
addition to the compensation pursuant to Section 2.15 hereof. The Board may
designate one or more Directors as an alternate member of the Compensation
Committee, who may replace any absent member at any meeting of the Compensation
Committee.

               (d)  Other Committees. The Board of Directors may, by resolution
adopted by a majority of the authorized number of Directors, designate such
other standing or special committees, each consisting of one or more Directors,
as it may from time to time deem advisable to perform such general or special
duties as may from time to time be delegated to any such committee by the Board
of Directors, subject to the limitations contained in the MGCL or imposed by the
Charter or these Bylaws. The Board may designate one or more


                                       11
<PAGE>   16

Directors as an alternate member of any committee designated pursuant to this
Section 3.01(d), who may replace any absent member at any meeting of the such
committee.

         3.02  DELEGATION OF POWER. The Board of Directors may delegate to
these committees in the intervals between meetings of the Board of Directors any
of the powers of the Board of Directors to manage the business and affairs of
the Corporation, except those powers which the Board of Directors is
specifically prohibited from delegating pursuant to Section 2-411 of the MGCL.

         3.03  QUORUM AND VOTING. A majority of the members of any committee
shall constitute a quorum for the transaction of business by such committee, and
the act of a majority of the quorum shall constitute the act of the committee,
except that no act relating to any matter in which any Director (or affiliate of
such Director) who is not an independent Director has any interest shall be the
act of any committee unless a majority of the independent Directors on the
committee vote for such act.

         3.04  CONDUCT OF MEETINGS. Each committee shall designate a presiding
officer of such committee, and if not present at a particular meeting, the
committee shall select a presiding officer for such meeting. Each committee
shall adopt its own rules governing the time and place of holding and the method
of calling its meetings and the conduct of its proceedings shall be as provided
by such rules, and it shall also meet at the call of any member of the
committee. Members of any committee may participate in meetings of such
committee by conference telephone or similar communications equipment by means
of which all Directors participating in the meeting can hear each other at the
same time, and participation in a meeting in accordance herewith shall
constitute presence in person at such meeting for all purposes of these Bylaws.
Each committee shall keep minutes of its meetings, and report the results of any
proceedings at the next succeeding annual or regular meeting of the Board of
Directors.

         3.05  INFORMAL ACTION BY COMMITTEES. Any action required or permitted
to be taken at any meeting of a committee of the Board of Directors may be taken
without a meeting, if a written consent to such action is signed by all members
of the committee and such written consent is filed with the minutes of
proceedings of such committee. Consents may be signed by different members on
separate counterparts.

                                   ARTICLE IV

                                    OFFICERS

         4.01  TITLES AND ELECTION. The Corporation shall have an Executive
Chairman of the Board, a Chief Executive Officer, a President, one or more Vice
Presidents (including Executive Vice Presidents or Senior Vice Presidents), a
Secretary, a Treasurer (who shall also be the Chief Financial Officer of the
Corporation) and such Assistant Secretaries and Assistant Treasurers and such
other officers as the Board of Directors, or any committee or


                                       12
<PAGE>   17

officer appointed by the Board of Directors for such purpose, may from time to
time elect. The officers of the Corporation elected by the Board of Directors
shall be elected annually at the first meeting of the Board of Directors
following each annual meeting of Stockholders. If the election of such officers
shall not take place at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until the first
meeting of the Board of Directors following the next annual meeting of
Stockholders and until his successor is duly elected and qualified or until his
death, resignation or removal in the manner hereinafter provided. Any two or
more offices, except President and Vice President, may be held by the same
person. Election or appointment of an officer or agent shall not of itself
create contract rights between the Corporation and such officer or agent. No
officer need be a Stockholder or a Director of the Corporation.

         4.02  REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by a majority of the Directors at the time in office, at
any regular or special meeting of the Board of Directors, or, except in the case
of an officer chosen by the Board of Directors, by a committee or an 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
such resignation shall take effect at the date of the receipt of such notice or
at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.

         4.03  OUTSIDE ACTIVITIES. The officers and agents of the Corporation
are required to spend only such time managing the business and affairs of the
Corporation as is necessary to carry out their duties in accordance with the law
and these Bylaws. The officers and agents of the Corporation may engage with or
for others in business activities of the types conducted by the Corporation.
Except as set forth in the Charter or by separate agreement, the officers and
agents of the Corporation (other than those serving who are also Directors) do
not have an obligation to notify or present to the Corporation or each other any
investment opportunity that may come to such person's attention even though such
investment might be within the scope of the Corporation's purposes or various
investment objectives. Any interest that an officer or an agent has in any
investment opportunity presented to the Corporation must be disclosed by such
officer or agent to the Board of Directors (and, if voting thereon, to the
Stockholders or to any committee of the Board of Directors) within ten (10) days
after the later of the date upon which such officer or agent becomes aware of
such interest or that the Corporation is considering such investment
opportunity. If such interest comes to the attention of the interested officer
or agent after a vote to take such investment opportunity, the voting body shall
reconsider such investment opportunity if not already consummated or
implemented.

         4.04  VACANCIES. A vacancy in any office may be filled by the Board
of Directors for the unexpired portion of the term.

         4.05  EXECUTIVE CHAIRMAN OF THE BOARD. The Executive Chairman of the
Board shall, if present, preside at all meetings of the Stockholders and the
Board of Directors,


                                       13
<PAGE>   18

and 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 prescribed by these Bylaws.

         4.06  CHIEF EXECUTIVE OFFICER. Unless otherwise determined by the
Board of Directors and subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Executive Chairman, the Chief Executive
Officer shall, subject to the control of the Board of Directors, have general
supervision, direction, and control of the business of the Corporation and 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 prescribed by these Bylaws. If the
Executive Chairman is absent, the Chief Executive Officer shall preside, when
present, at all meetings of the Stockholders and the Board of Directors.

         4.07  PRESIDENT. Unless otherwise determined by the Board of
Directors, the President shall exercise and perform such duties as may be from
time to time assigned to him by the Board of Directors or prescribed by these
Bylaws.

         4.08  VICE PRESIDENTS. In the absence or disability of the President,
the Vice Presidents in order of their rank as fixed by the Board of Directors,
or if not ranked, the Vice President 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. The Vice
Presidents shall have such other powers and perform such other duties as may be
from time to time assigned to them by the Board of Directors or prescribed by
these Bylaws.

         4.09  SECRETARY.

               (a)  The Secretary shall keep, or cause to be kept, a book of
minutes in written form of the proceedings of the Board of Directors, committees
of the Board of Directors, and Stockholders. Such minutes shall include all
waivers of notice, consents to the holding of meetings, or approvals of the
minutes of meetings executed pursuant to these Bylaws or the MGCL. The Secretary
shall keep, or cause to be kept at the principal executive office or at the
office of the Corporation's transfer agent or registrar, a record of its
Stockholders, giving the names and addresses of all Stockholders and the number
and class of shares held by each.

               (b)  The Secretary shall give, or cause to be given, notice of
all meetings of the Stockholders and of the Board of Directors required by these
Bylaws or by law to be given, and shall keep the seal of the Corporation in safe
custody, and shall have such other powers and perform such other duties as may
be from time to time assigned to him by the Board of Directors or prescribed by
these Bylaws.


                                       14
<PAGE>   19

         4.10  TREASURER AND CHIEF FINANCIAL OFFICER.

               (a)  The Treasurer and Chief Financial Officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of account in written form or any other form capable of being
converted into written form.

               (b)  The Treasurer and Chief Financial Officer shall deposit all
monies and other valuables in the name and to the credit of the Corporation with
such depositaries as may be designated by the Board of Directors. He shall
disburse all funds of the Corporation as may be ordered by the Board of
Directors, shall render to the Executive Chairman, Chief Executive Officer,
President and Directors, whenever any of them requests it, an account of all of
his transactions as Treasurer and Chief Financial Officer and of the financial
condition of the Corporation, and shall have such other powers and perform such
other duties as may be from time to time assigned to him by the Board of
Directors or prescribed by these Bylaws.

         4.11  ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Board of
Directors, or any committee or officer appointed by the Board of Directors for
such purpose, may appoint one or more Assistant Secretaries or Assistant
Treasurers. The Assistant Secretaries and Assistant Treasurers (i) shall have
the power to perform and shall perform all the duties of the Secretary and the
Treasurer, respectively, in such respective officer's absence and (ii) shall
perform such duties as shall be assigned to him by the Secretary or Treasurer,
respectively, or by the Executive Chairman, Chief Executive Officer, President
or the Board of Directors, or any such designated committee or officer.

         4.12  SUBORDINATE OFFICERS. The Corporation shall have such
subordinate officers as the Board of Directors, or any committee or officer
appointed by the Board of Directors for such purpose, may from time to time
elect. Each such officer shall hold office for such period and perform such
duties as the Board of Directors, Executive Chairman, Chief Executive Officer,
President or any designated committee or officer may prescribe.

         4.13  COMPENSATION. The salaries and other compensation and
remuneration, of any kind, if any, of the officers shall be fixed from time to
time by the Board of Directors or a committee thereof. No officer shall be
prevented from receiving such compensation, if any, by reason of the fact that
he is also a Director of the Corporation. The Board of Directors may authorize
any committee or officer, upon whom the power of appointing assistant and
subordinate officers may have been conferred, to fix the compensation and
remuneration of such assistant and subordinate officers.


                                       15
<PAGE>   20

                                   ARTICLE V

                                 SHARES OF STOCK

         5.01  FORM OF CERTIFICATES. Certificates for shares of stock of the
Corporation shall be in such form and design as the Board of Directors shall
determine and shall be signed in the name of the Corporation by the Executive
Chairman of the Board or the President or Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or any Assistant Secretary. Each
certificate shall state the certificate number, the date of issuance, the
number, class or series, the name of the record holder of the shares represented
thereby, and the name of the Corporation. Each certificate representing shares
of Stock which are restricted as to their transferability or voting powers,
which are preferred or limited as to their allocable portion of the assets upon
liquidation or which are redeemable at the option of the Corporation, shall have
a statement of such restriction, limitation, preference or redemption provision,
or a summary thereof, plainly stated on the certificate. In lieu of such
statement or summary, the Corporation may set forth on 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.

         5.02  TRANSFER OF SHARES. Shares of Stock may only be transferred in
accordance with all restrictions on transfer set forth in the Charter. Before
any transfer of stock is entered upon the books of the Corporation, or any new
certificate is issued therefor, the older certificate, properly endorsed, shall
be surrendered and canceled, except when a certificate has been lost, stolen or
destroyed.

         5.03  STOCK LEDGER. The Corporation shall maintain at its principal
executive office or at the office of its counsel, accountants or transfer agent
or at such other place designated by the Board of Directors an original or
duplicate stock ledger containing the names and addresses of all the
Stockholders and the number of shares of each class of Stock held by each
Stockholder. The stock ledger shall be maintained pursuant to a system that the
Corporation shall adopt allowing for the issuance, recordation and transfer of
its Stock by electronic or other means that can be readily converted into
written form for visual inspection and not involving any issuance of
certificates. Such system shall include provisions for notice to acquirers of
Stock (whether upon issuance or transfer of Stock) in accordance with Sections
2-210 and 2-211 of the MGCL, and Section 8-204 of the Commercial Law Article of
the State of Maryland. The Corporation shall be entitled to treat the holder of
record of any Share or Shares as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such Share on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of the State
of Maryland. Until a transfer is duly effected on the stock ledger, the
Corporation shall not be affected by any notice of such transfer, either actual
or constructive. Nothing herein shall impose upon the Corporation, the Board of
Directors or officers or their agents and representatives a duty or limit their
rights to inquire as to the actual ownership of Shares.

                                       16
<PAGE>   21

         5.04  RECORDING TRANSFERS OF STOCK. If transferred in accordance with
any restrictions on transfer contained in the Charter, these Bylaws or
otherwise, Shares shall be recorded as transferred in the stock ledger upon
provision to the Corporation or the transfer agent of the Corporation of an
executed stock power duly guaranteed and any other documents reasonably
requested by the Corporation, and the surrender of the certificate or
certificates, if any, representing such Shares. Upon receipt of such documents,
the Corporation shall issue the statements required by Sections 2-210 and 2-211
of the MGCL and Section 8-204 of the Commercial Law Article of the State of
Maryland, issue as needed a new certificate or certificates (if the transferred
Shares were certificated) to the persons entitled thereto, cancel any old
certificates and record the transaction upon its books.

         5.05  LOST CERTIFICATE . The Board of Directors may direct a new
certificate to be issued in the place of any certificate theretofore issued by
the Corporation alleged to have been stolen, lost or destroyed upon the making
of an affidavit of that fact by the person claiming the certificate of Stock to
be stolen, lost 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 stolen, lost or destroyed
certificate or his legal representative to advertise the same in such manner as
it shall require and/or to give bond, with sufficient surety, to indemnify the
Corporation against any loss or claim which may arise by reason of the issuance
of a new certificate.

         5.06  EMPLOYEE STOCK PURCHASE PLANS. The Board of Directors shall
have the authority, in its discretion, to adopt one or more employee stock
purchase plans or agreements, containing such terms and conditions as the Board
may prescribe, for the issue and sale of unissued shares of the Corporation, or
of its issued shares acquired or to be acquired, to the employees of the
Corporation or to the employees of its subsidiary corporations or to a trustee
on their behalf, and for the payment of such shares in installments or at one
time, and for such consideration as may be fixed by the Board or any committee
thereof, and may provide for aiding any such employees in paying for such shares
by compensation for services rendered, promissory notes or otherwise. The Board
of Directors, or any committee thereof, may carry out and administer any such
plan or delegate part or all of the administration of any such plan to any other
entity or person.

         5.07  CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.

               (a)  The Board of Directors may fix, in advance, a date as the
record date for the purpose of determining Stockholders entitled to notice of,
or to vote at, any meeting of Stockholders, or Stockholders entitled to receive
payment of any dividend or the allotment of any rights, or in order to make a
determination of Stockholders for any other proper purpose. Such date, in any
case, shall not be prior to the close of business on the day the record date is
fixed and shall be not more than ninety (90) days, and in case of a meeting of
Stockholders not less than ten (10) days, prior to the date on which the meeting
or particular action requiring such determination of Stockholders is to be held
or taken.

                                       17
<PAGE>   22

               (b)  In lieu of fixing a record date, the stock transfer books
may be closed by the Board of Directors in accordance with Section 2-511 of the
MGCL for the purpose of determining Stockholders entitled to notice of or to
vote at a meeting of Stockholders.

               (c)  If no record date is fixed and the stock transfer books are
not closed for the determination of Stockholders, (i) the record date for the
determination of Stockholders entitled to notice of, or to vote at, a meeting of
Stockholders shall be at the close of business on the day on which the notice of
meeting is mailed or the thirtieth (30th) day before the meeting, whichever is
the closer date to the meeting; and (ii) the record date for the determination
of Stockholders entitled to receive payment of a dividend or an allotment of any
rights shall be at the close of business on the day on which the resolution of
the Board of Directors declaring the dividend or allotment of rights is adopted.

               (d)  When a determination of Stockholders entitled to vote at any
meeting of Stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.


                                   ARTICLE VI

                           DIVIDENDS AND DISTRIBUTIONS

         6.01  DECLARATION. Dividends and other distributions upon the Stock
may be declared by the Board of Directors as set forth in the applicable
provisions of the Charter and any applicable law, at any meeting, limited only
to the extent of Section 2-311 of the MGCL. Dividends and other distributions
upon the Stock may be paid in cash, property or Stock of the Corporation,
subject to the provisions of law and of the Charter.

         6.02  CONTINGENCIES. Before payment of any dividends or other
distributions upon the Stock, there may be set aside (but there is no duty to
set aside) out of any funds of the Corporation available for dividends or other
distributions such sum or sums as the Board of Directors may from time to time,
in its absolute discretion, think proper as a reserve fund to meet
contingencies, for repairing or maintaining any property of the Corporation or
for such other purpose as the Board of Directors shall determine to be in the
best interests of the Corporation, and the Board of Directors may modify or
abolish any such reserve in the manner in which it was created.


                                       18
<PAGE>   23

                                  ARTICLE VII

                                 INDEMNIFICATION

         7.01  INDEMNIFICATION TO THE EXTENT PERMITTED BY LAW. The Corporation
shall indemnify, to the full extent authorized or permitted by Maryland
statutory or decisional law or any other applicable law, any person made, or
threatened to be made, a party to any action or proceeding (whether civil or
criminal or otherwise) by reason of the fact he, his testator or intestate is or
was a Director or officer of the Corporation or any predecessor of the
Corporation, or is or was serving at the request of the Corporation or any
predecessor of the Corporation as a director or officer of, or in any other
capacity with respect to, any other corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise (an "Indemnified Person"),
including the advancement of expenses under procedures provided under such law;
provided, however, that no indemnification shall be provided for expenses
relating to any willful or grossly negligent failure to make disclosures
required by the next to last sentence of Sections 2.02 or 4.03 hereof as applied
to Directors and officers respectively. The Corporation shall indemnify any
Indemnified Person's spouse (whether by statute or at common law and without
regard to the location of the governing jurisdiction) and children to the same
extent and subject to the same limitations applicable to any Indemnified Person
hereunder for claims arising out of the status of such person as a spouse or
child of such Indemnified Person, including claims seeking damages from marital
property (including community property) or property held by such Indemnified
Person and such spouse or property transferred to such spouse or child, but such
indemnity shall not otherwise extend to protect the spouse or child against
liabilities caused by the spouse's or child's own acts. The provisions of this
Section 7.01 shall constitute a contract with each Indemnified Person who serves
at any time while these provisions are in effect and may be modified adversely
only with the consent of affected Indemnified Persons and each such Indemnified
Person shall be deemed to be serving as such in reliance on these provisions.

         7.02  INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article VII with respect to the indemnification of and
advancement of expenses to Directors and officers of the Corporation.

         7.03  INSURANCE. The Corporation shall have the power to purchase and
maintain insurance to protect itself and any Indemnified Person, employee or
agent of the Corporation against any liability, whether or not the Corporation
would have the power to indemnify him or her against such liability.

         7.04  NON-EXCLUSIVE RIGHTS TO INDEMNITY; HEIRS AND PERSONAL
REPRESENTATIVES. The rights to indemnification set forth in this Article VII
are in addition to all rights which any Indemnified Person may be entitled as a
matter of law or by


                                       19
<PAGE>   24

contract, and shall inure to the benefit of the heirs and personal
representatives of each Indemnified Person.

         7.05  NO LIMITATION. In addition to any indemnification permitted by
these Bylaws, the Board of Directors shall, in its sole discretion, have the
power to grant such indemnification to such persons as it deems in the interest
of the Corporation to the full extent permitted by law. This Article shall not
limit the Corporation's power to indemnify against liabilities other than those
arising from a person's serving the Corporation as a Director or officer.

         7.06  AMENDMENT, REPEAL OR MODIFICATION. Any amendment, repeal or
modification of any provision of this Article VII by the Stockholders or the
Directors of the Corporation is effective on a prospective basis only and
neither repeal nor modification of such provisions shall adversely affect any
right or protection of a Director or officer of the Corporation under this
Article VII existing at the time of such amendment, repeal or modification.

         7.07  RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 7.01
of this Article VII is not paid in full by the Corporation within ninety (90)
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the MGCL for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its Stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the MGCL, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its Stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant has not met the applicable standard of conduct.


                                  ARTICLE VIII

                                     NOTICES

         8.01  NOTICES. Whenever notice is required to be given pursuant to
these Bylaws, it shall be construed to mean either written notice personally
delivered against written receipt, or notice in writing transmitted by mail, by
depositing the same in a post office or letter box,


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<PAGE>   25

in a post-paid sealed wrapper, addressed, if to the Corporation, to 2900
Eisenhower Avenue, Suite 300, Alexandria, Virginia 22314 (or any subsequent
address selected by the Board of Directors), attention Chief Executive Officer,
or if to a Stockholder, Director or officer, at the address of such person as it
appears on the records of the Corporation. In addition, whenever notice is
required to be given to a Stockholder, such requirement shall be satisfied when
written notice is left at such Stockholder's residence or usual place of
business. Unless otherwise specified, notice sent by mail shall be deemed to be
given at the time mailed.

         8.02  SECRETARY TO GIVE NOTICE. All notices required by law or these
Bylaws to be given by the Corporation shall be given by the Secretary or any
other officer of the Corporation designated by the Executive Chairman or the
Chief Executive Officer. If the Secretary and Assistant Secretary are absent or
refuse or neglect to act, the notice may be given by any person directed to do
so by the Executive Chairman or the Chief Executive Officer or, with respect to
any meeting called pursuant to these Bylaws upon the request of any Stockholders
or Directors, by any person directed to do so by the Stockholders or Directors
upon whose request the meeting is called.

         8.03  WAIVER OF NOTICE. Whenever any notice is required to be given
pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein for which notice is given, shall
be deemed equivalent to the giving of such notice. A written waiver of notice of
a Stockholders meeting shall be filed with the records of such meeting. Neither
the business to be transacted at nor the purpose of any meeting need be set
forth in the waiver of notice, unless specifically required by statute. The
attendance of any person at any meeting shall constitute a waiver of notice of
such meeting, except where such person attends a meeting for the express purpose
of objecting to the transaction of any business on the ground that the meeting
is not lawfully called or convened.


                                   ARTICLE IX

                                  MISCELLANEOUS

         9.01  EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE. The provisions
of Sections 3-701 to 3-709 of the MGCL, as amended from time to time, shall not
apply to any Share of Stock of the Corporation now or hereafter held by any
current or future Stockholders. All shares of Stock currently outstanding or
issued in the future are exempted from such Sections of the MGCL to the fullest
extent permitted by Maryland law.

         9.02  OFFICES OF THE CORPORATION. The principal executive office for
the transaction of the business of the Corporation is hereby fixed and located
at 2900 Eisenhower Avenue, Suite 300, Alexandria, Virginia 22314. The Board of
Directors is hereby granted full power and authority to change said principal
office from one location to another. Branch and


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<PAGE>   26

subordinated offices may at any time be established by the Board of Directors at
any place or places where the Corporation is qualified to do business.

         9.03  BOOKS AND RECORDS. The Corporation shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its Stockholders and Board of Directors meetings and of its
executive or other committees when exercising any of the powers or authority of
the Board of Directors. The books and records of the Corporation may be in
written form or in any other form that can be converted within a reasonable time
into written form for visual inspection. Minutes shall be recorded in written
form but may be maintained in the form of a reproduction.

         9.04  INSPECTION OF BYLAWS AND CORPORATE RECORDS. These Bylaws, the
accounting books and records of the Corporation, the minutes of proceedings of
the Stockholders, annual statements of affairs and any voting trust agreements
on record shall be open to inspection upon written demand delivered to the
Corporation by any Stockholder or holder of a voting trust certificate at any
reasonable time during usual business hours, for a purpose reasonably related to
such holder's interests as a Stockholder or as the holder of such voting trust
certificate, in each case as set forth in the MGCL. Other documents, such as
Stockholder lists, shall be made available for inspection by any Stockholder or
holder of a voting trust certificate as set forth in the MGCL.

         9.05  CONTRACTS. The Board of Directors may authorize any officer(s)
or agent(s) to enter into any contract or to execute and deliver any instrument
in the name of and on behalf of the Corporation, and such authority may be
general or confined to specific instances.

         9.06  CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officers or agents of the
Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.

         9.07  LOANS.

               (a)  Such officers or agents of the Corporation as from time to
time have been designated by the Board of Directors shall have authority (i) to
effect loans, advances, or other forms of credit at any time or times for the
Corporation, from such banks, trust companies, institutions, corporations,
firms, or persons, in such amounts and subject to such terms and conditions, as
the Board of Directors from time to time has designated; (ii) as security for
the repayment of any loans, advances, or other forms of credit so authorized, to
assign, transfer, endorse, and deliver, either originally or in addition or
substitution, any or all personal property, real property, stocks, bonds,
deposits, accounts, documents, bills, accounts receivable, and other commercial
paper and evidences of debt or other securities, or any rights or interests at
any time held by the Corporation; (iii) in connection with any loans, advances,
or other forms of credit so authorized, to make, execute, and deliver one or
more notes, mortgages, deeds of trust, financing statements, security
agreements, acceptances, or written

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<PAGE>   27

obligations of the Corporation, on such terms and with such provisions as to the
security or sale or disposition of them as those officers or agents deem proper;
and (iv) to sell to, or discount or rediscount with, the banks, trust companies,
institutions, corporations, firms or persons making those loans, advances, or
other forms of credit, any and all commercial paper, bills, accounts receivable,
acceptances, and other instruments and evidences of debt at any time held by the
Corporation, and, to that end, to endorse, transfer, and deliver the same.

               (b)  From time to time the Corporation shall certify to each
bank, trust company, institution, corporation, firm or person so designated, the
signatures of the officers or agents so authorized. Each bank, trust company,
institution, corporation, firm or person so designated is authorized to rely
upon such certification until it has received written notice that the Board of
Directors has revoked the authority of those officers or agents.

         9.08  FISCAL YEAR. The Board of Directors shall have the power, from
time to time, to fix the fiscal year of the Corporation by a duly adopted
resolution, and, in the absence of such resolution, the fiscal year shall be the
year ending December 31.

         9.09  ANNUAL REPORT. Not later than one hundred twenty (120) days
after the close of each fiscal year, the Board of Directors of the Corporation
shall cause to be sent to the Stockholders an Annual Report in such form as may
be deemed appropriate by the Board of Directors. The Annual Report shall include
audited financial statements and shall be accompanied by the report thereon of
an independent certified public accountant.

         9.10  INTERIM REPORTS.  The Corporation may send interim reports to
the Stockholders having such form and content as the Board of Directors deem
proper.                         

         9.11  OTHER REPORTS. Any distributions to Stockholders of income or
capital assets shall be accompanied by a written statement disclosing the source
of the funds distributed unless at the time of distribution they are accompanied
by a written explanation of the relevant circumstances. The statement as to such
source shall be sent to the Stockholders not later than sixty (60) days after
the close of the fiscal year in which the distributions were made.

         9.12  BYLAWS SEVERABLE. The provisions of these Bylaws are severable,
and if any provision shall be held invalid or unenforceable, that invalidity or
unenforceability shall attach only to that provision and shall not in any
manner affect or render invalid or unenforceable any other provision of these
Bylaws, and these Bylaws shall be carried out as if the invalid or
unenforceable provision were not contained herein.                      


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<PAGE>   28

                                   ARTICLE X

                               AMENDMENT OF BYLAWS

         10.01 BY DIRECTORS. The Board of Directors shall have the power, at
any annual or regular meeting, or at any special meeting if notice thereof is
included in the notice of such special meeting, to alter or repeal any Bylaws of
the Corporation and to make new Bylaws, except that the Board of Directors shall
not alter or repeal (i) Section 2.03 to change the minimum or maximum number of
Directors without the vote of the Stockholders required therein, (ii) Section
7.01 without a vote of the Stockholders and the consent of any Indemnified
Persons whose rights to indemnification, based on conduct prior to such
amendment, would be adversely affected by such proposed alteration or repeal;
(iii) this Section 10.01; or (iv) Section 10.02.

         10.02  BY STOCKHOLDERS. With the approval of the Board of Directors,
the Stockholders shall have the power, by affirmative vote of a majority of the
outstanding shares of common stock of the Corporation, at any annual meeting
(subject to the requirements of Section 1.03), or at any special meeting if
notice thereof is included in the notice of such special meeting, to alter or
repeal any Bylaws of the Corporation and to make new Bylaws, except that the
Stockholders shall not alter or repeal Section 7.01 without the consent of any
Indemnified Persons adversely affected by such proposed alteration or repeal,
and except that a vote of two-thirds of the outstanding shares of common stock
of the Corporation is required to amend Sections 1.03, 2.04 and 2.13.

         The foregoing are certified as the Bylaws of the Corporation as in
effect at the close of business on July 24, 1998.


                                                 /S/ JEFFREY B. VAN HORN
                                                 -------------------------------
                                                 Jeffrey B. Van Horn
                                                 Secretary




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