UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to §240.14a-12
UNITED MOBILE HOMES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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UNITED MOBILE HOMES, INC.
Juniper Business Plaza, 3499 Route 9 North, Suite 3-C
Freehold, New Jersey 07728
July 10, 2003
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of the Shareholders of
United Mobile Homes, Inc. (the "Company") to be held at 4:00 p.m., local time,
on Thursday, August 14, 2003, at Juniper Business Plaza, 3499 Route 9 North,
Suite 3-C, Freehold, New Jersey 07728.
At the Annual Meeting, you will be asked to consider and vote upon a proposal to
reincorporate the Company as a Maryland corporation pursuant to a merger of the
Company into a newly formed, wholly-owned subsidiary of the Company incorporated
in Maryland, and the conversion of each outstanding share of common stock of the
Company into one share of common stock of the surviving Maryland corporation
(the "Reincorporation"). The board of directors has carefully considered and
approved the Reincorporation and believes for the reasons described in the
accompanying proxy statement (the "Proxy Statement") that the best interests of
the Company and its shareholders will be served by changing the Company's state
of incorporation from New Jersey to Maryland. Accordingly, your board of
directors unanimously recommends that you vote for the Reincorporation. Approval
of the Reincorporation will constitute approval of all of the provisions set
forth in the Articles of Incorporation and Bylaws of the Maryland corporation
and certain other matters as described in the Proxy Statement.
In addition to voting on the Reincorporation, you will be asked to consider and
vote upon the election of nine directors to the board of directors of the
Company, to consider and approve the Company's 2003 Stock Option Plan and to
ratify the appointment of KPMG LLP, as the Company's independent auditors for
the fiscal year ending December 31, 2003. THE ELECTION OF THE DIRECTORS,
APPROVAL OF THE 2003 STOCK OPTION PLAN AND THE RATIFICATION OF THE INDEPENDENT
AUDITORS ARE NOT CONDITIONED ON THE APPROVAL OF THE REINCORPORATION.
The Reincorporation, the election of directors, the approval of the Company's
2003 Stock Option Plan and ratification of the Company's independent auditors
are more fully described in the Proxy Statement. We urge you to review carefully
the Proxy Statement and accompanying appendices. Copies of the Merger Agreement,
the Articles of Incorporation of the Maryland corporation, the Bylaws of the
Maryland corporation and the Company's 2003 Stock Option Plan are attached as
Appendices A, B, C, and D, respectively, to the Proxy Statement.
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, WHICH
RECOMMENDS A VOTE FOR THE REINCORPORATION, A VOTE FOR THE ELECTION TO THE BOARD
OF DIRECTORS OF EACH PERSON NAMED IN THE PROXY STATEMENT, A VOTE FOR THE
APPROVAL OF THE COMPANY'S 2003 STOCK OPTION PLAN AND A VOTE FOR THE RATIFICATION
OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
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YOUR VOTE IS IMPORTANT TO THE COMPANY. If you fail to return your proxy card or
to vote, it has the same effect as a vote against the Reincorporation. Please
complete, date and sign the enclosed proxy card and return it in the
accompanying postage paid envelope, even if you plan to attend the Annual
Meeting. If you attend the Annual Meeting, you may, if you wish, withdraw your
proxy and vote in person.
Sincerely,
/s/ Eugene W. Landy
-----------------------------------------
Eugene W. Landy
Chairman of the Board
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UNITED MOBILE HOMES, INC.
Juniper Business Plaza, 3499 Route 9 North, Suite 3-C
Freehold, New Jersey 07728
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 14, 2003
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of United Mobile Homes, Inc. (the "Company") will be held at Juniper
Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey 07728, on
Thursday, August 14, 2003, at 4:00 p.m., local time, for the following purposes:
1. To consider and vote on a proposal to reincorporate the Company as a
Maryland corporation by the merger of the Company into a newly formed,
wholly-owned subsidiary of the Company incorporated in Maryland;
2. To elect nine Directors, the names of whom are set forth in the
accompanying proxy statement, to serve for the ensuing year;
3. To approve the Company's 2003 Stock Option Plan;
4. To ratify the appointment of KPMG LLP as independent auditors for the
Company for the fiscal year ending December 31, 2003; and
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only shareholders of record at the close of business on June 23, 2003 are
entitled to receive notice of and to vote at the Meeting or any adjournments
thereof. A complete list of shareholders entitled to vote at the Meeting will be
presented at the meeting for the inspection of the shareholders.
The Company's board of directors would like to have as many shareholders as
possible present or represented at the Meeting. If you are unable to attend in
person, please vote, sign, date and return your enclosed proxy card promptly in
the enclosed envelope.
By Order of the Board of Directors
/s/ Ernest V. Bencivenga
-----------------------------------------
ERNEST V. BENCIVENGA
Secretary
DATED: July 10, 2003
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July 10, 2003
UNITED MOBILE HOMES, INC.
Juniper Business Plaza, 3499 Route 9 North, Suite 3-C
Freehold, New Jersey 07728
----------
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 14, 2003
----------
The following information is furnished in connection with the Annual
Meeting of the Shareholders of United Mobile Homes, Inc. (the "Company") to be
held on Thursday, August 14, 2003, at 4:00 p.m., local time, at Juniper Business
Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey 07728 (the
"Meeting"). Additional copies of the Notice, Proxy Statement and form of proxy
may be obtained by writing to the Company's Investor Relations Department, at
Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey
07728 or by calling the Company's Investor Relations Department at 732-577-9997.
This Proxy Statement and the accompanying proxy card will first be sent on or
about July 10, 2003.
SOLICITATION AND REVOCATION OF PROXIES
Any shareholder giving the accompanying proxy has the power to revoke it at
any time before it is exercised at the Meeting by filing with the Secretary of
the Company an instrument revoking it, by delivering a duly executed proxy card
bearing a later date, or by appearing at the meeting and voting in person.
Shares represented by properly executed proxies will be voted as specified
thereon by the shareholders. Unless the shareholders specify otherwise, such
proxies will be voted FOR the proposals set forth in the Notice of Meeting.
The Company is soliciting proxies pursuant to this Proxy Statement, and the
cost of soliciting the proxies on the enclosed form will be paid by the Company.
In addition to the use of the mails, proxies may be solicited by the directors
and their agents (who will receive no additional compensation therefor) by means
of personal interview, telephone, facsimile or otherwise, and it is anticipated
that banks, brokerage houses and other institutions, nominees or fiduciaries
will be requested to forward the soliciting material to their principals and to
obtain authorization for the execution of proxies. The Company may, upon
request, reimburse banks, brokerage houses and other institutions, nominees and
fiduciaries for their expenses in forwarding proxy material to their principals.
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VOTING RIGHTS
Only record holders of shares of the Company's common stock, $.10 par value
per share ("Shares"), as of the close of business on June 23, 2003 are entitled
to vote at the Meeting. As of the record date, there were issued and outstanding
7,826,486 Shares, each Share being entitled to one vote. The presence at the
Meeting, in person or by properly executed proxy, of a majority of the
outstanding Shares is necessary to constitute a quorum. Proxies relating to
"street name" Shares that are voted by brokers will be counted as Shares present
for purposes of determining the presence of a quorum, but will not be treated as
Shares having voted at the Meeting as to any proposal as to which the broker
does not vote.
To be adopted, the Reincorporation (as defined below) must receive the
affirmative vote of a majority of the Shares entitled to vote. Uninstructed
Shares may not be voted on this matter. Therefore, for the purposes of this
matter, abstentions and broker non-votes have the effect of negative votes. See
"Reincorporation of the Company in Maryland - Vote Required; Board
Recommendation."
In addition, directors are elected by a plurality. For the purposes of this
matter, abstentions and broker non-votes will not be taken into account in
determining the outcome of the election.
The affirmative vote of a majority of the Shares present at the meeting and
entitled to vote is necessary to approve the Company's 2003 Stock Option Plan.
Uninstructed Shares are entitled to vote on this matter. Therefore, for the
purposes of this matter abstentions have the effect of negative votes.
To ratify the appointment of KPMG LLP as the Company's independent
auditors, the affirmative vote of the majority of the Shares present at the
meeting and entitled to vote is necessary. Uninstructed Shares are entitled to
vote on this matter. Therefore, for the purposes of this matter, abstentions
have the effect of negative votes.
With respect to any other business which may properly come before the
Meeting and which may be submitted to a vote of the shareholderss, proxies
received by the Board will be voted in the discretion of the designated proxy
holders.
PROPOSAL 1
RE-INCORPORATION OF THE COMPANY IN MARYLAND
General
The Company's board of directors has unanimously approved a proposal for
the Company to change its state of incorporation from New Jersey to Maryland
(the "Reincorporation"). If approved by the Company's shareholders, the
Reincorporation will be accomplished by the merger (the "Merger") of the Company
with and into its wholly-owned subsidiary, United Mobile Homes, Inc., a Maryland
corporation ("UMH Maryland"). As a result of the Merger, the Company's legal
domicile will be changed from New Jersey to Maryland. Also as a result of the
Merger, the separate existence of the Company will cease and UMH
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Maryland, as the surviving corporation, will succeed to all the business,
properties, assets and liabilities of the Company. The Reincorporation will not,
however, change the business, management or location of the principal executive
offices of the Company. The Company is currently qualified as a real estate
investment trust ("REIT") under the Internal Revenue Code of 1986, as amended
(the "Code"), and the Company intends to continue to operate in such a manner to
maintain that qualification in the future. UMH Maryland was incorporated in
Maryland on June 20, 2003, specifically for the purposes of the Reincorporation
and has conducted no business and has no material assets or liabilities.
The number of directors comprising the board of directors of UMH Maryland
will be nine initially, each of whom is currently a director of the Company. The
Chairman of the Board and President of UMH Maryland is currently the President
of the Company. Shareholders should note that approval of the Reincorporation
will constitute a ratification of all of the currently serving directors of UMH
Maryland.
Upon the terms and subject to the conditions of the Agreement and Plan of
Merger ("Merger Agreement") between the Company and UMH Maryland, at the
effective time of the Merger (the "Effective Time"), each outstanding Share will
be converted into one share of common stock, $.10 par value, of UMH Maryland
(the "Maryland Common Stock"). In addition, at the Effective Time, each
outstanding option to purchase Shares will continue outstanding as a right to
purchase shares of the Maryland Common Stock upon the same terms and conditions
as immediately prior to the Effective Time.
Shareholders will not need to exchange their current certificates in
connection with the Merger. The outstanding certificates representing Shares
will evidence ownership of the equivalent number of shares of Maryland Common
Stock following the Merger and shareholders should retain their existing
certificates. Any share transfer occurring after the Reincorporation will result
in the issuance of Maryland Common Stock certificates to the participants.
The Company's Shares are listed for trading on the American Stock Exchange
and trade under the symbol "UMH." At the Effective Time, this symbol will,
without interruption, represent shares of Maryland Common Stock.
The Company's 1994 Stock Option Plan (the "1994 Plan") and the Company's
2003 Stock Option Plan (the "2003 Plan"), if adopted, will be continued by UMH
Maryland following the Reincorporation. Approval of the proposed Reincorporation
will constitute approval of the adoption and assumption of the 1994 Plan and, if
approved, the 2003 Plan by UMH Maryland.
Also at the Effective Time, the Company will be governed by the Maryland
General Corporation Law (the "Maryland Code"), by the Articles of Incorporation
of UMH Maryland (the "Maryland Charter") and by the Bylaws of UMH Maryland (the
"Maryland Bylaws"), which will result in certain changes in the rights of
shareholders and other matters related to the Company. The most significant
changes are discussed in this Proxy Statement under the caption "Comparison of
the New Jersey Code, New Jersey Charter and New Jersey Bylaws to the Maryland
Code, Maryland Charter and Maryland Bylaws." For additional details and complete
information relating to these and other changes in the rights of shareholders,
please review the Merger Agreement which is attached to this proxy statement as
Appendix A, the Maryland
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Charter which is attached to this proxy statement as Appendix B and the Maryland
Bylaws which are attached to this proxy statement as Appendix C. In addition,
any shareholder wishing to inspect copies of the Company's Certificate of
Incorporation, as amended (the "New Jersey Charter"), and the Company's current
Bylaws (the "New Jersey Bylaws"), may obtain copies of these documents by
sending a request to the Investor Relations Department of the Company at Juniper
Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey 07728.
The Company anticipates that the Merger will become effective as soon as
reasonably practicable after shareholder approval. However, the Merger Agreement
provides that the Merger may be abandoned or deferred prior to the Effective
Time, either before or after shareholder approval, if circumstances arise which,
in the opinion of the board of directors of the Company or UMH Maryland, make
the Merger inadvisable or its deferral advisable. In addition, the Merger
Agreement may be amended at any time prior to the Effective Time, subject to
certain conditions. In the event the Proposal is not adopted or the Merger is
not consummated, the Company will continue to operate as a New Jersey
corporation and subject to the New Jersey Charter and the New Jersey Bylaws.
Reasons for the Merger
The board of directors recommends that the Company become a Maryland
corporation subject to the statutes of Maryland rather than New Jersey for
several reasons. The reasons set forth below do not necessarily appear in the
order of importance to the board.
The board of directors believes the Maryland Code contains provisions more
conducive to the operations of a REIT and Maryland has a more comprehensive and
modern body of law governing REITs than New Jersey does. See "Comparison of the
New Jersey Code, New Jersey Charter and New Jersey Bylaws to the Maryland Code,
Maryland Charter and Maryland Bylaws." For many years, Maryland has had a policy
of encouraging REITs to establish legal domicile in Maryland. As a result, over
100 publicly traded REITs are currently organized under the laws of Maryland,
including approximately 65% of the REITs that are members of the National
Association of Real Estate Investment Trusts, or "NAREIT". Only three REITs, or
approximately 2% of the members of NAREIT, are organized in New Jersey. The
board of directors believes that the large number of REITs incorporated in
Maryland has resulted in the development of a greater, more comprehensive, and
clearer body of relevant case law regarding REITs and issues facing REITs in
Maryland than is currently available for the Company as a New Jersey
corporation. As a result, the board of directors believes that Maryland law
provides the directors and management of a REIT with greater certainty and
predictability in managing the affairs of a REIT.
In addition, due to the large number of REITs incorporated in Maryland, the
Reincorporation would bring the Company's charter documents more in line with
that of other REITs. The board of directors believes that this would be
beneficial to both the Company and its shareholders because the Company's
charter documents would be more consistent with that of other REITs in the
Company's peer group, including such other REITs that own and operate
manufactured housing communities as Chateau Communities, Inc., Sun Communities,
Inc., and Manufactured Home Communities, Inc., which are all incorporated in
Maryland.
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Finally, the Maryland Charter and Maryland statutes will provide the
Company with a greater ability to preserve its REIT status and to defend against
an unsolicited takeover deemed not to be in the best interests of the
stockholders. See "Comparison of the New Jersey Code, New Jersey Charter and New
Jersey Bylaws to the Maryland Code, Maryland Charter and Maryland Bylaws -
Certain Anti-Takover Effects."
Comparison of the New Jersey Code, New Jersey Charter and New Jersey Bylaws to
the Maryland Code, Maryland Charter and Maryland Bylaws
Although there are several differences between the New Jersey Business
Corporation Act (the "New Jersey Code") and the Maryland Code, the board of
directors does not believe that these differences will have a significant impact
on the day-to-day business of the Company. A summary of certain differences
between provisions affecting holders of Shares under the New Jersey Code, the
New Jersey Charter and the New Jersey Bylaws and those affecting holders of
Maryland Common Stock under the Maryland Code, the Maryland Charter and the
Maryland Bylaws is set forth below. The identification of specific differences
is not meant to indicate that other equally or more significant differences do
not exist. This summary does not purport to be complete and is qualified in its
entirety by reference to the Maryland Charter and Maryland Bylaws (copies of
which are attached to this proxy statement as Appendix B and Appendix C,
respectively), the New Jersey Charter and the New Jersey Bylaws (which can be
obtained from the Investor Relations Department of the Company upon request),
and to the New Jersey Code and the Maryland Code. In the following discussion,
the Company, a New Jersey corporation, is also referred to as "UMH New Jersey."
Authorized Capital Stock
The authorized capital stock of UMH New Jersey consists of 15,000,000
shares of common stock, $0.10 per share. The authorized capital stock of UMH
Maryland consists of 23,000,000 shares, initially classified as 20,000,000
shares of Maryland Common Stock, and 3,000,000 shares of excess stock, par value
$0.10 per share ("Maryland Excess Stock"). The Maryland Excess Stock is designed
to protect UMH Maryland's status as a REIT under the Code. See " - REIT Related
Restrictions."
In general under the New Jersey Code, any change in the capitalization of a
corporation organized prior to January 1, 1969, which UMH New Jersey was,
including any increase or decrease in the aggregate number of shares of stock or
in the number of shares of stock of any class authorized for issuance, must be
approved by the affirmative vote of two-thirds of the votes cast by the holders
of shares entitled to vote thereon. In addition, pursuant to the New Jersey
Bylaws, any amendment to the New Jersey Charter must be approved by the
affirmative vote of two-thirds of the votes cast by the holders of shares
entitled to vote thereon. Under the Maryland Code and the Maryland Charter,
however, the board of directors of UMH Maryland has the power, without action by
the shareholders, to increase or decrease the aggregate number of shares of
stock or the number of shares of stock of any class that UMH Maryland has
authority to issue. Also, the board of directors of UMH Maryland has the power
to classify or reclassify any unissued capital stock including classification
into a class or classes of preferred stock, preference stock, special stock or
other stock and to divide or classify shares into one or more series of such
class. The board of directors of UMH Maryland may exercise its power to
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increase the number of authorized shares or to reclassify any unissued shares in
connection with a merger or acquisition, a future underwritten public offering
or private placement or a potential hostile takeover.
Under the New Jersey Code and the New Jersey Charter, each Share is
entitled to one vote on each matter submitted to the shareholders. Under the
Maryland Code and the Maryland Charter, each share of Maryland Common Stock is
entitled to one vote on each matter submitted to shareholders and the Maryland
Excess Stock has no voting rights.
Shareholder Meetings
The New Jersey Bylaws provide that an annual meeting of shareholders will
be held at 4:00 p.m. Eastern Standard Time on the third Tuesday of May at its
principal office or at such other place as is specified in the notice of the
meeting. The Maryland Bylaws provide that the annual meeting of shareholders of
UMH Maryland will be held at the time and on the date during the month of June
as set by the board of directors of UMH Maryland. Both the New Jersey Bylaws and
the Maryland Bylaws provide that the presence in person or by proxy of a
majority of all votes entitled to be cast constitutes a quorum at shareholder
meetings.
Under the New Jersey Code, special meetings of shareholders may be called
by the president or the board of directors or any shareholder, director, officer
or other person as may be provided in the bylaws. Upon application of the holder
or holders of not less than 10% of all the shares entitled to vote at a meeting,
the Superior Court of New Jersey, for good cause shown, may order that a special
meeting be called. Under the New Jersey Bylaws, a special meeting of
shareholders can be called only by the president or the board of directors.
Under the Maryland Code, special meetings of shareholders may be called by
a corporation's board of directors, its president, such other persons as the
charter or bylaws provide, and the holders of shares entitled to cast 25% of the
votes at the special meeting (or such other percentage not greater than a
majority as is specified in the charter or bylaws). The Maryland Bylaws provide
that special meetings may be called by the President of UMH Maryland or by a
majority of its board of directors, and must be called by its secretary upon the
written request of holders of shares entitled to cast at least a majority of all
votes entitled to be cast at such special meeting. A request by shareholders
must state the purpose of the meeting and the matters proposed to be acted upon
at the meeting. Further, shareholders requesting the special meeting must pay
the estimated costs of preparing and mailing the notice of the special meeting.
The board of directors has the sole power to fix the date, place and time of the
special meeting.
Preemptive Rights
Under the New Jersey Code and the Maryland Code, shareholders have
preemptive rights to purchase shares only if the certificate of incorporation so
provides. Neither the New Jersey Charter nor the Maryland Charter provides
shareholders with preemptive rights.
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Shareholder Action by Written Consent
With certain exceptions, the New Jersey Code provides that any action which
may be taken by shareholders at a meeting may be taken without a meeting if
shareholders holding at least the minimum number of votes necessary to authorize
the action consent in writing. Under the Maryland Code, shareholder action may
be taken without a meeting only if all shareholders entitled to vote on the
matter consent in writing to the action proposed to be taken.
Advance Notice Provisions
The New Jersey Bylaws contain no advance notice provisions requiring
advance notice of nominations of persons for election to the board of directors
or proposals of business to be conducted at an annual or special meeting. The
Maryland Bylaws, however, state that nominations of persons for election to the
board of directors and the proposal of business at an annual meeting of
shareholders may only be made (i) pursuant to the corporation's notice of
meeting; (ii) by or at the direction of the corporation's board of directors; or
(iii) by a shareholder entitled to vote at the meeting who complies with the
advance notice requirements of the Maryland Bylaws.
Pursuant to the Maryland Bylaws, a shareholder seeking to nominate persons
for election to the board of directors or propose other business to be conducted
at an annual meeting of shareholders or to nominate persons for election of
directors at any special meeting of shareholders called for the purpose of
electing directors must provide the required notice to the Secretary of UMH
Maryland (i) in the case of an annual meeting, generally not less than 90 days
nor more than 120 days prior to the first anniversary of the mailing of the
notice for the preceding year's annual meeting and (ii) in the case of a special
meeting for the purpose of electing directors, not earlier than the 120th day
prior to such special meeting and not later than the later of the 90th day prior
to such special meeting or the 10th day following the day on which public
disclosure was made of the date of the special meeting. The notice must contain
(i)(a) in respect of proposed nominees for election to the board of directors,
all information required to be disclosed in connection with solicitations of
proxies pursuant to Regulation 14A of the Securities Exchange Act of 1934 (the
"Exchange Act") as to each proposed nominee and (b) in respect of proposed other
business at an annual meeting of shareholders, a description of the proposed
business and the reasons for conducting it at an annual meeting and (ii) as to
the shareholder providing the notice, (a) the shareholder's name and address,
class and number of shares; (b) in the case of a nomination for election to the
board, a description of all arrangements or understandings between the
shareholder and the proposed nominee; (c) in the case of proposed other
business, a description of arrangements or understandings between the
shareholder and any other persons in connection with the proposed other
business; (d) a representation that the shareholder intends to appear in person
at the meeting; and (e) any other information concerning the shareholder as
would be required to be included in a proxy statement pursuant to Regulation 14A
of the Exchange Act. In the case of a proposed nominee for election to the
board, such notice shall also be accompanied by a written consent of each
proposed nominee to be named as a nominee and to serve as a director if elected.
In addition, the shareholder providing such notice must be a shareholder of
record at the time notice is given, on the record date for determining
shareholders entitled to vote and on the meeting date.
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These provisions should not be confused with the rules governing the right
of a shareholder to submit a proposal for inclusion in management's proxy
statement. Those rules are set forth in the SEC's proxy rules and are applicable
to all corporations (including UMH Maryland), wherever organized, that are
subject to the proxy rules.
Size and Composition of the Board
Under the New Jersey Code, a board of directors may consist of one or more
members as provided in the Bylaws and subject to any provision contained in the
certificate of incorporation. The New Jersey Charter does not provide for a
specific number of directors. The New Jersey Bylaws, however, state that the
board of directors must consist of nine members.
Under the Maryland Code, a corporation must have at least three directors
at all times. Subject to this provision, a corporation's bylaws may alter the
number of directors and authorize a majority of the entire board of directors to
alter within specified limits the number of directors set by the corporation's
charter or bylaws. The UMH Maryland board is currently comprised of 9 directors.
The Maryland Bylaws provide that UMH Maryland's board of directors may alter the
number of directors to a number not less than three or more than 15. In addition
to any requirements imposed by the American Stock Exchange and the Securities
and Exchange Commission, the Maryland Charter requires at least three directors
to be independent as defined by Section 3-802 of the Maryland Code.
Classified Board of Directors
The New Jersey Charter does not provide for a staggered board of directors.
The Maryland Charter, however, provides that the members of the board of
directors must be divided, as evenly as possible, into three classes, with
approximately one-third of the directors elected by the shareholders annually.
Each director is to serve a three year term or until his or her successor is
duly elected and has qualified. Consequently, members of the boards of directors
of UMH Maryland serve staggered three-year terms.
Set forth below are the names of the directors of UMH Maryland and the term
of office for each of such persons. All such individuals presently serve as
directors of UMH New Jersey. By voting in favor of the Reincorporation, UMH New
Jersey's shareholders will be deemed to have approved of such persons as
directors of UMH Maryland without further action and without changes in the
classes or terms.
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Name Term to Expire
Ernest V. Bencivenga 2004
Anna T. Chew 2006
Charles P. Kaempffer 2005
Eugene W. Landy 2006
Samuel A. Landy 2006
James E. Mitchell 2004
Richard H. Molke 2005
Eugene Rothenberg 2005
Robert G. Sampson 2004
Cumulative Voting
Both the New Jersey Code and the Maryland Code permit a corporation to
provide for cumulative voting in its charter. Neither the New Jersey Charter nor
the Maryland Charter provides for cumulative voting.
Removal of Directors
Pursuant to the New Jersey Code and the New Jersey Charter, because the
board of directors of UMH New Jersey is not classified, directors may be removed
with or without cause by the shareholders upon the affirmative vote of a
majority of the shares entitled to vote for the election of directors. The
Maryland Charter provides that directors may be removed only for cause by a vote
of at least two-thirds of the votes entitled to be cast generally in the
election of directors.
Filling Vacancies
Under the New Jersey Code, unless the certificate of incorporation or
bylaws provide otherwise, which neither the New Jersey Charter nor the New
Jersey Bylaws do, a vacancy, however caused, may be filled by the affirmative
vote of a majority of the remaining directors. Directors elected by the board of
directors hold office until the next annual meeting of the shareholders. In
addition, under the New Jersey Code, any directorship not filled by the board of
directors may be filled by the shareholders. Under the Maryland Charter,
vacancies on the board of directors are filled by the remaining directors and
the newly elected director serves until the term of that directorship normally
expires.
14
Standard of Conduct for Directors
Under New Jersey law, the standard of conduct for directors is set forth in
Section 14A:6-14 of the New Jersey Code, which requires a director of a New
Jersey corporation to perform his or her duties in "good faith" with a "degree
of diligence, care and skill which ordinarily prudent people would exercise
under similar circumstances in like positions."
Under Maryland law, the standard of conduct for directors is set forth in
Section 2-405.1(a) of the Maryland Code, which requires a director of a Maryland
corporation to perform his or her duties in "good faith" in a manner that he or
she "reasonably believes to be in the best interests of the corporation" and
with the care of an "ordinarily prudent person in a like position under similar
circumstances."
Limitation of Personal Liability of Directors and Officers
Both the New Jersey Code and Maryland Code permit the governing documents
of a corporation to contain provisions limiting personal liability of directors
and others to the corporation or its shareholders for money damages. The New
Jersey Charter provides that directors shall not be personally liable for
negligence and also limits the liability of directors to breaches of duty based
upon an act or omission (i) in breach of the duty of loyalty to the corporation
or its shareholders, (ii) not in good faith or involving a knowing violation of
the law, or (iii) resulting in receipt of an improper personal benefit.
The Maryland Charter, however, contains provisions which limit the personal
liability of directors to the fullest extent permitted by Maryland law. In
addition, as permitted by Maryland law, the Maryland Charter also limits the
personal liability of officers to the same extent as that afforded directors.
The Maryland Code, however, does not permit limitation of personal liability of
directors or officers (i) for the amount of any improper benefit they actually
receive or (ii) to the extent active and deliberate dishonesty on the part of
the director or officer is established by a final judgment as being material to
such cause of action.
Indemnification of Directors and Officers
The New Jersey Code and the Maryland Code each specify certain
circumstances when a corporation must, and other circumstances when it may,
indemnify its officers, directors, employees and agents against legal expenses
and liabilities.
Under New Jersey law, a director, officer, employee or agent may, in
general, be indemnified by the corporation if he has acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of the corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. In addition, under New
Jersey law, corporations must indemnify a director to the extent the director
has been successful on the merits or otherwise in certain proceedings. UMH New
Jersey's Bylaws contain provisions requiring the indemnification of directors,
officers and employees to the fullest extent permitted by New Jersey law.
The Maryland Code requires a corporation, unless its charter provides
otherwise, which the Maryland Charter does not, to indemnify a director or
officer who has been successful, on the
15
merits or otherwise, in the defense of any proceeding to which the person is
made a party by reason of his or her service in that capacity. The Maryland Code
permits a corporation to indemnify its present and former directors and
officers, among others, in connection with any proceeding to which they may be
made a party by reason of their service in those or other capacities unless it
is established that: (i) the act or omission of the director or officer was
material to the matter giving rise to the proceeding and was committed in bad
faith or was the result of active and deliberate dishonesty; (ii) the director
or officer actually received an improper personal benefit in money, property or
services; or (iii) in the case of any criminal proceeding, the director or
officer had reasonable cause to believe that the act or omission was unlawful.
The indemnity may cover judgments, penalties, fines, settlements and
reasonable expenses actually incurred by the director or officer in connection
with the proceeding; provided, however, that if the proceeding is one by or in
the right of the Maryland corporation, indemnification is not permitted with
respect to any proceeding in which the director or officer has been adjudged to
be liable to the corporation. In addition, a director or officer of a Maryland
corporation may not be indemnified with respect to any proceeding charging
improper personal benefit to the director or officer in which the director or
officer was adjudged to be liable on the basis that personal benefit was
improperly received. The termination of any proceeding by conviction or upon a
plea of nolo contendere or its equivalent or an entry of an order of probation
prior to judgment creates a rebuttable presumption that the director or officer
did not meet the requisite standard of conduct required for permitted
indemnification. The termination of any proceeding by judgment, order or
settlement, however, does not create a presumption that the director or officer
did not meet the requisite standard of conduct for permitted indemnification.
As a condition to advancing expenses to a director or officer who is a
party to a proceeding, Maryland law requires UMH Maryland to obtain a written
affirmation from the director or officer of his or her good faith belief that he
or she has met the standard of conduct necessary for indemnification by UMH
Maryland and a written statement by or on his or her behalf to repay the amount
paid or reimbursed by UMH Maryland if it is ultimately determined that the
standard of conduct was not met.
The Maryland Charter provides that, to the fullest extent permitted by
Maryland law, UMH Maryland will indemnify and advance expenses to a director or
officer of UMH Maryland. The Maryland Charter also provides that UMH Maryland
may indemnify other employees and agents to the extent authorized by UMH
Maryland's board of directors or the Maryland Bylaws. The Maryland Bylaws do not
authorize any such indemnification for non-director, non-officer employees or
agents. The Maryland Bylaws also provide that UMH Maryland may maintain
insurance to protect any director or officer against expense, liability or loss,
whether or not UMH Maryland would have the power to indemnify such person
against such expense, liability or loss under the Maryland Bylaws.
Dividends
Both the New Jersey Code and the Maryland Code provide that a corporation
may pay dividends to its shareholders from time to time as authorized by the
board of directors. The New Jersey Code, however, prohibits a corporation from
making a distribution to its shareholders if,
16
after giving effect to such distribution, the corporation would be unable to pay
its debts as they become due in the usual course of business or the
corporation's total assets would be less than its total liabilities.
Likewise, the Maryland Code states that no dividend or other distribution
may be made if, after giving effect to the distribution, (i) the corporation
would not be able to pay its debts as they become due in the usual course of
business or (ii) the corporation's total assets would be less than the sum of
the corporation's total liabilities plus, unless the corporation's charter
provides otherwise, which the Maryland Charter does not, the amounts payable to
shareholders having preferential rights to assets in the event of dissolution of
the corporation. The Maryland Bylaws provide that, before payment of any
dividends, there may be 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, determine proper as a reserve
fund for contingencies, for equalizing dividends or other distributions, for
repairing or maintaining any property of the corporation or for such other
purpose as the board of directors shall determine to be in the best interest of
the corporation, and the board of directors may modify or abolish any such
reserve.
Charter Amendments
In general, for corporations organized prior to January 1, 1969, which UMH
New Jersey was, the New Jersey Code requires amendments to a corporation's
certificate of incorporation to be approved by the board of directors and
shareholders holding two-thirds of the voting stock entitled to vote thereon,
unless the corporation's certificate of incorporation requires a greater
percentage. The New Jersey Charter does not require such greater percentage.
However, to amend certain terms of a corporation's certificate of incorporation,
the New Jersey Code allows an amendment to be made by board action alone (for
example, an amendment to effect a share dividend).
In general under the Maryland Code, amendments to a corporation's articles
of incorporation must be approved by the board of directors and by the
shareholders by the vote of at least two-thirds of the votes entitled to vote
thereon. Under the Maryland Code, certain charter amendments may be effected
solely by the board of directors, such as an amendment changing the name of a
corporation or an amendment increasing or decreasing the number of authorized
shares of stock (see "- Authorized Capital Stock").
Amendments to Bylaws
Under the New Jersey Code, a corporation's board of directors has the power
and authority to make, alter and repeal the corporation's bylaws, unless such
power is specifically reserved to the shareholders in the certificate of
incorporation. UMH New Jersey's Charter does not contain such a reservation. The
New Jersey Code further provides that the shareholders may make, alter or amend
the corporation's bylaws and that the shareholders may further prescribe that
any bylaw made by them shall not be altered or repealed by the board.
Under the Maryland Code, an amendment to the Bylaws requires the approval
of the shareholders unless the charter or bylaws confers the power to amend to
the Board of Directors.
17
The Maryland Charter and the Maryland Bylaws confer the exclusive right to amend
the Bylaws upon the Board of Directors.
Inspection of Books and Records
Under the New Jersey Code, generally, any shareholder who has owned shares
for six months or who owns, or is authorized by persons owning, at least 5% of
the outstanding shares of any class or series may submit a written demand for
any proper purpose to inspect and copy minutes of proceedings of its
shareholders and record of shareholders. Additionally, under the New Jersey
Code, upon written request, each shareholder is entitled to the corporation's
balance sheet at, and its profit and loss and surplus statements as of, the
preceding fiscal year.
Under the Maryland Code, any person or group of persons who has been a
shareholder of record for a minimum of six months and who owns, individually or
collectively, at least 5% of a corporation's outstanding shares has a right to
(i) inspect the corporation's books of account and stock ledger; (ii) present to
any officer or resident agent of the corporation a written request for a
statement of its affairs; and (iii) in the case of any corporation that does not
maintain the original or a duplicate stock ledger at its principal office,
present to any officer or resident agent of the corporation a written request
for a list of its shareholders. Additionally, under the Maryland Code, any
shareholder may inspect and copy, during usual business hours, the corporation's
bylaws, minutes of the proceedings of shareholders, annual statements of affairs
and any voting trust agreements on file at the corporation's principal office
and has the right to request the corporation to provide a sworn statement
showing all securities issued and all consideration received by the corporation
for such securities within the preceding 12 months.
Appraisal Rights
Under both New Jersey and Maryland law, shareholders in certain
circumstances have the right to dissent from certain corporate transactions and
to receive an appraisal of the value of their shares, provided that statutory
procedures are followed. As permitted by Maryland law, however, the Maryland
Charter provides that shareholders do not have dissenters' rights of appraisal,
unless a majority of the entire board of directors determines otherwise. The
Reincorporation does not trigger any appraisal rights. See " - Dissenting
Shareholders' Rights of Appraisal."
In cases where appraisal rights are available, both the New Jersey Code and
the Maryland Code provide that a shareholder exercising his or her right to
dissent may demand payment in cash for his or her shares equal to their fair
value, excluding any appreciation or depreciation in anticipation of the
transaction (although under the Maryland Code such appreciation or depreciation
may be included in determining fair value if its exclusion would be
inequitable). Under the New Jersey Code and the Maryland Code, fair value is
determined by agreement with the corporation or, if an agreement cannot be
reached, by the Superior Court in New Jersey or by any appropriate court in
Maryland upon the petition of the surviving corporation or the dissenting
shareholder.
Under New Jersey Code, dissenting shareholders are entitled to appraisal
rights in connection with the merger; consolidation; or sale, lease, exchange or
other disposition of all or
18
substantially all of the assets of a corporation not in the regular course of
business. However, unless the certificate of incorporation otherwise provides,
which the New Jersey Charter does not, appraisal rights are not provided when:
(i) the shares entitled to vote on such transaction are listed on a national
securities exchange or held of record by not less than 1,000 shareholders (or
shareholders receive in such transaction cash and/or securities which are listed
on a national securities exchange or are held of record by not less than 1,000
shareholders), or (ii) no vote of the corporation's shareholders is required for
the proposed transaction.
Under the Maryland Code, there are no appraisal rights if (i) the stock is
listed on a national securities exchange or is designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc.; (ii) the stock in question is that of the successor
in the merger, unless the merger alters the contract rights of the stock as
expressly set forth in the charter and the charter does not reserve the right to
do so, or the stock is to be changed or converted in whole or in part in the
merger into something other than either stock in the successor, cash, scrip or
other rights or interests arising out of provisions for the treatment of
fractional shares of stock in the successor; (iii) the stock is not entitled to
vote on the transaction; (iv) the charter provides the shareholders are not
entitled to appraisal rights; or (v) the stock is that of an open-end investment
company registered under the Investment Company Act of 1940, as amended, and the
value placed on the stock in the transaction is its net asset value.
Extraordinary Transactions
For corporations organized prior to January 1, 1969, which UMH New Jersey
was, the New Jersey Code requires that a sale or disposition of all or
substantially all of a corporation's assets not in the ordinary course, a merger
or consolidation of the corporation with another corporation or a dissolution of
the corporation must be recommended by the board of directors and, with certain
exceptions, approved by two-thirds of the outstanding stock entitled to vote
thereon, unless otherwise provided in a corporation's certificate of
incorporation and except for certain business combinations with interested
shareholders which are prohibited and subjected to certain super-majority voting
requirements and certain anti-takeover provisions discussed below (see "-
Anti-Takeover Provisions"). Also, under the New Jersey Code, any acquisition
which involves the issuance of additional voting shares, such that the number of
additional voting shares issued exceeds 40% of the voting shares outstanding
prior to the transaction, must be approved by the majority of the shares (or, if
applicable, a majority of each class or series of shares) entitled to vote
thereon.
Under the Maryland Code, unless the charter provides otherwise, a sale,
lease, transfer or exchange of all or substantially all of a corporation's
assets not in the ordinary course of business or a merger, consolidation or
share exchange involving the corporation generally requires approval by a
two-thirds vote of the shares of the corporation entitled to vote thereon. In
addition, Subtitle 6 of the Maryland Code prohibits certain business
combinations with interested shareholders and imposes certain super-majority
voting requirements in respect of certain business combinations with interested
shareholders. See " - Business Combination Statutes."
19
Business Combination Statutes
The New Jersey Code provides that any person making an offer to purchase in
excess of 10% (or such amount which, when aggregated with such person's present
holdings, exceeds 10%) of any class of equity securities of any corporation or
other issuer of securities organized under the laws of New Jersey must, twenty
days before the offer is made, file a disclosure statement with the target
company and with the Bureau of Securities of the Division of Consumer Affairs of
the New Jersey Department of Law and Public Safety (the "Bureau"). The takeover
bid may not proceed until after the receipt by the filing party of the Bureau's
permission. Such permission may not be denied unless the Bureau, after a public
hearing, finds that (i) the financial condition of the offeror is such as to
jeopardize the financial stability of the target company or prejudice the
interests of any employees or security holders who are unaffiliated with the
offeror, (ii) the terms of the offer are unfair or inequitable to the security
holders of the target company, (iii) the plans and proposals which the offeror
has to make any material change in the target company's, business, corporate
structure, or management are not in the interest of the target company's
remaining security holders or employees, (iv) the competence, experience and
integrity of those persons who would control the operation of the target company
are such that it would not be in the interest of the target company's remaining
security holders or employees to permit the takeover, or (v) the terms of the
takeover bid do not comply with the provisions of Chapter 10A of the New Jersey
Code.
Chapter 10A was added to the New Jersey Code in 1986 to protect
shareholders and other corporate "constituents." It generally provides that no
resident domestic corporation shall engage in any business combination with any
interested shareholder for a period of five years following that interested
shareholder's stock acquisition date unless the business combination is approved
by the board of directors prior to that stock acquisition date. An "interested
shareholder" is any person (other than the resident domestic corporation or its
subsidiary) that (i) is the beneficial owner directly or indirectly of 10% or
more of the voting power of the outstanding voting stock of the resident
domestic corporation or (ii) is an affiliate or associate of that resident
domestic corporation and, at any time within the five year period immediately
prior to the date in question, was a beneficial owner, directly or indirectly,
of 10% or more of the voting power of the then outstanding stock of that
resident corporation. A "beneficial owner" of stock is a person that,
individually or with or through any of its affiliates or associates: (i)
beneficially owns that stock, directly or indirectly, (ii) has the right to
acquire or vote that stock, or (iii) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of that
stock with any other beneficial owner thereof. An "affiliate" of a beneficial
owner is a person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the beneficial owner. The New Jersey definition of "business combinations"
includes any merger or consolidation.
With the exception of certain excluded categories of transactions, a
"business combination" is prohibited unless any one of the following three
conditions is satisfied: (1) the board of directors of the resident domestic
corporation approves the business combination prior to the stock acquisition
date of the interested shareholder; (2) the holders of two-thirds of the voting
stock of the resident domestic corporation not beneficially owned by the
interested shareholder approve the business combination by affirmative vote at a
meeting called for that purpose; or (3) the shareholders of the resident
domestic corporation, among other things,
20
receive a minimum price for their shares and the consideration is received in
cash or in the same form as previously paid by the interested shareholder for
its shares.
The Maryland Code prohibits, with certain exceptions, certain "business
combinations" (including a merger, consolidation, share exchange or, in certain
circumstances, an asset transfer or issuance or reclassification of equity
securities) between a Maryland corporation and an "interested shareholder."
Interested shareholders (i) are persons who beneficially own 10% or more of the
voting power of the corporation's shares or (ii) are affiliates or associates of
the corporation who, at any time within the two-year period prior to the date in
question, were the beneficial owner of 10% or more of the voting power of the
corporation's shares. Such business combinations are prohibited for 5 years
after the most recent date on which the interested shareholder became an
interested shareholder. Thereafter, any such business combination must be
recommended by the board of directors of the corporation and approved by the
affirmative vote of at least (i) 80% of the votes entitled to be cast by holders
of outstanding voting shares of the corporation and (ii) 66 2/3% of the votes
entitled to be cast by holders of outstanding voting shares of the corporation
other than shares held by the interested shareholder or an affiliate or
associate of the interested shareholder with whom the business combination is to
be effected, unless, among other things, the corporation's shareholders receive
a minimum price for their shares and the consideration is received in cash or in
the same form as previously paid by the interested shareholder for its shares.
These provisions of the Maryland Code do not apply, however, to business
combinations that are approved or exempted by the board of directors of the
corporation prior to the time that the interested shareholder becomes an
interested shareholder. The Maryland Charter expressly adopts the business
combination provisions of the Maryland Code, but explicitly states that these
provisions do not apply to any transaction with Monmouth Real Estate Investment
Corporation or Monmouth Capital Corporation, which are affiliates of UMH New
Jersey and UMH Maryland, unless those entities undergo a Change in Control as
defined in the Marland Charter.
Control Share Statute
The Maryland Code provides that, with certain exceptions, "control shares"
of a corporation acquired in a "control share acquisition" have no voting rights
except to the extent approved by the affirmative vote of two-thirds of the
shareholders, excluding shares of stock owned by the acquiring person or by
officers or directors who are employees of the corporation. "Control shares" are
shares of voting stock which, if aggregated with all other such shares
previously acquired by such a person, would entitle the acquiring person to
exercise voting power in electing directors within one of the following ranges
of voting power: (i) 10% or more but less than 33 1/3%, (ii) 33 1/3% or more but
less than a majority, or (iii) a majority or more of all voting power. Control
shares do not include shares the acquiring person is then entitled to vote as a
result of having previously obtained shareholder approval. A "control share
acquisition" means, subject to certain exceptions, the acquisition of, ownership
of or the power to direct the exercise of voting power with respect to, control
shares.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of various conditions (including an undertaking to pay expenses),
may compel the board of directors of the corporation to call a special meeting
of shareholders to be held within 50 days of demand therefore to consider the
voting rights of the shares. If no request for a meeting is made, the
corporation may itself present the question at any shareholders' meeting.
21
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to voting rights, as of
the date of the last control share acquisition or of any meeting of shareholders
at which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a shareholders' meeting and the
acquiring person becomes entitled to vote a majority of the shares entitled to
vote, all other shareholders may exercise appraisal rights. The fair value of
the shares as determined for purposes of such appraisal rights may not be less
than the highest price per share paid in the control share acquisition, and
certain limitations and restrictions otherwise applicable to the exercise of
dissenters' appraisal rights do not apply in the context of a control share
acquisition.
The Maryland control share acquisition statute does not apply to stock
acquired in a merger, consolidation or stock exchange if the corporation is a
party to the transaction, or to acquisitions previously approved or exempted by
a provision in the charter or bylaws of the corporation adopted before the
acquisition of stock.
As permitted under the Maryland Code, the Maryland Bylaws contain a
provision opting out of the Maryland control share acquisition statute.
The New Jersey Code contains no similar provisions regarding control
shares.
Dissolution
Under the New Jersey Code, a corporation may be dissolved upon (i) the
recommendation of the corporation's board of directors and (ii) if the
corporation was organized prior to January 1, 1969, which UMH New Jersey was,
the affirmative vote of two-thirds of the votes cast by the shareholders
entitled to vote thereon. Dissolution of a corporation may also be authorized
without action by the board of directors if all shareholders entitled to vote
thereon consent in writing.
The Maryland Code permits the dissolution of a corporation if (i) the board
of directors adopts by a majority vote of the entire board a resolution advising
dissolution and (ii) the dissolution is approved by the affirmative vote of not
less than two-thirds of all votes entitled to be cast on the matter.
Judicial Dissolution
Under both the New Jersey Code and the Maryland Code, if a deadlock of the
directors precludes corporate action, or if a division of the shareholders makes
election of directors impossible, shareholders are permitted to seek a judicial
dissolution. Under the New Jersey Code, the Superior Court may appoint a
custodian, while under the Maryland Code, a court of equity may grant a
dissolution. Such action under the New Jersey Code may be instituted by any
shareholder. Under the Maryland Code, involuntary dissolution by judicial order
may be sought only by shareholders entitled to cast at least 25% of the votes
entitled to be cast in the election of directors. However, when the individuals
in control of the corporation are alleged to be acting illegally, oppressively
or fraudulently, or when the division among shareholders is so severe that
22
for a period which includes two consecutive meeting dates the shareholders have
failed to elect successors to directors whose terms should have expired, any
shareholder entitled to vote in the election of directors may petition for
dissolution.
Liquidation Rights
Under the New Jersey Charter, there is only one class of stock, common
stock. Accordingly, it is entitled to all of the assets of UMH New Jersey
available for distribution upon liquidation after payment of, or provision for,
all liabilities of UMH New Jersey. Under the Maryland Charter, the Maryland
Common Stock and the Maryland Excess Stock are entitled to all of the assets of
UMH Maryland upon liquidation after payment of, or provision for, all
liabilities of MH Maryland, subject to any preferential rights granted to any
capital stock of UMH Maryland.
Payment for Stock
Both the New Jersey Code and the Maryland Code allow a contract for future
labor to constitute consideration for the issuance of stock.
REIT Related Restrictions
For the Company to qualify as a REIT under the Code, the Company must
satisfy a number of statutory requirements, including a requirement that no more
than 50% in value of its outstanding shares of stock may be owned, actually or
constructively, by five or fewer individuals (as defined by the Code to include
certain entities) during the last half of a taxable year (other than the first
taxable year of REIT status). In addition, if the Company, or an actual or
constructive owner of 10% or more of the Company, actually or constructively
owns 10% or more of a tenant of the Company (or a tenant of any partnership in
which the Company is a partner), the rent received by the Company (either
directly or through any such partnership) from such tenant will not be
qualifying income for purposes of the REIT gross income tests of the Code. The
Company's capital stock must also be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of twelve months or during a
proportionate part of a shorter taxable year.
In contrast to the New Jersey Charter which does not contain any provisions
designed to protect UMH New Jersey's status as a REIT, the Maryland Charter
contains limitations to protect UMH Maryland's status as a REIT. Under the
Maryland Charter, any person who acquires or attempts to acquire shares of
Maryland Equity Stock (as defined in the Maryland Charter) in violation of the
ownership limitations and transfer restrictions must give written notice to UMH
Maryland. In addition, every shareholder of more than 5% of the number or value
of outstanding Maryland Equity Stock must give written notice to UMH Maryland of
the number of shares of Maryland Equity Stock beneficially or constructively
owned. Under the Maryland Charter, if a transfer of the capital stock of UMH
Maryland or a change in the capital structure of UMH Maryland would result in
(i) any person (as defined in the Maryland Charter) directly or indirectly
acquiring beneficial ownership of more than 9.8% of the capital stock of UMH
Maryland; (ii) the outstanding capital stock of UMH Maryland being
constructively or beneficially owned by fewer than 100 persons; or (iii) UMH
Maryland being "closely held"
23
within the meaning of Section 856 of the Code or otherwise failing to qualify as
a REIT under the Code, then: (a) the board of directors of UMH Maryland may take
any action it deems advisable to refuse to give effect to, or to prevent, such
transfer; (b) any proposed transfer will be void ab initio and will not be
recognized by UMH Maryland; (c) UMH Maryland will have the right to redeem the
shares proposed to be transferred at a price equal to the lesser of the price
per share paid in the transaction which created the violation and the last
reported sales price on the American Stock Exchange on the trading date
immediately prior to the date UMH Maryland gives notice of redemption; and (d)
the shares proposed to be transferred will be automatically converted into and
exchanged for shares of a separate class of stock, the Maryland Excess Stock,
having no voting rights.
Holders of Maryland Excess Stock do have certain rights in the event of any
liquidation, dissolution or winding up of the corporation. The Maryland Charter
further provides that the Maryland Excess Stock will be held by a trustee
appointed by UMH Maryland in trust (i) for the person or persons to whom the
shares are ultimately transferred, until such time as the shares are
re-transferred to a person or persons in whose hands the shares would not be
Maryland Excess Stock and certain price-related restrictions are satisfied and
(ii) with respect to dividend rights (and rights to funds in excess of the
amounts paid to the holder) for the benefit of a charitable beneficiary
appointed by UMH Maryland. The board of directors of UMH Maryland may, in its
sole and absolute discretion, exempt certain persons from the ownership
limitations contained in the Maryland Charter if ownership of shares of Equity
Stock by such persons would not disqualify UMH Maryland as a REIT under the
Code.
Certain Anti-Takeover Effects
The New Jersey Code and the New Jersey Charter currently contain provisions
which may be viewed as having anti-takeover effects. For example, shareholders
of the UMH New Jersey do not have cumulative voting rights in the election of
directors and UMH is subject to New Jersey's business combination statute. In
addition, because UMH New Jersey was organized prior to January 1, 1969,
approval of two-thirds of UMH's shareholders is necessary to amend the New
Jersey Charter and to engage in certain extraordinary transactions, such as a
sale of all or substantially all of UMH New Jersey's assets, or merger or
consolidation of UMH New Jersey with another corporation.
The Maryland Charter and the Maryland Bylaws also contain provisions that
may be deemed to have anti-takeover effects. For example, the Maryland Charter
(i) does not allow for cumulative voting by shareholders; (ii) provides for a
classified board of directors, and (iii) contains limitations on the amount of
securities of UMH Maryland any person can own. In addition, the Maryland Bylaws
contain provisions that (i) give the board of directors the exclusive power to
fill vacancies on the board and provide that any director so appointed will
serve for the remaining term of that directorship; (ii) give the board the
exclusive power to determine the numbers of directors; (iii) require advance
notice of any shareholder nominations for director and proposals of business by
shareholders to be conducted at the meeting; (iv) limit shareholders' ability to
call a special meeting; (v) give the board of directors the exclusive power to
amend the Maryland Bylaws; (vi) require approval of two-thirds of the shares to
remove directors for cause; (vii) require the board of directors to have at
least three independent directors as defined by Section 3-802 of the Maryland
Code which allows UMH Maryland to opt into
24
certain statutory anti-takeover provisions; and (viii) specifically opt into the
business combination provisions of the Maryland Code (with the exception that
such provisions do not apply to transactions with Monmouth Real Estate
Investment Corporation or Monmouth Capital Corporation, which are affiliates of
UMH New Jersey and UMH Maryland), unless those entities undergo a Change in
Control as defined in the Maryland Charter. Additionally, the Maryland Charter
provides that the board of directors may authorize additional shares of capital
stock and may classify or reclassify only unissued capital stock, including
classification into shares of preference stock, without shareholder action. Such
stock could be issued in such a way as to have anti-takeover effects.
Anti-takeover provisions in the New Jersey and Maryland statutes and in the
corporate governance structure of UMH New Jersey and UMH Maryland can impede a
hostile takeover and give the corporation's board of directors a stronger
bargaining position and additional time to negotiate a better price or a better
alternative transaction for shareholders, as opposed to either accepting or
permitting by inaction a transaction based on the takeover terms proposed by the
offeror. Such anti-takeover provisions may have the effect, however, of
discouraging or frustrating offers that a number of shareholders would be
willing to accept.
Federal Income Tax Consequences of the Reincorporation
The Reincorporation is intended to be tax-free under the Code. Accordingly,
the Company believes that no gain or loss will be recognized by the holders of
the Shares as a result of the Merger, that no gain or loss will be recognized by
UMH New Jersey or by UMH Maryland as a result of the Merger, and that UMH
Maryland will succeed, without adjustment, to the tax attributes of UMH New
Jersey. The Company believes that each shareholder will have the same basis in
the stock of UMH Maryland received in the Merger as in the Shares held
immediately prior to the time the Merger becomes effective and the holding
period of the stock of UMH Maryland will include the period during which the
corresponding Shares were held; provided, however, that such corresponding
Shares were held as a capital asset at the time of the effectiveness of the
Merger. The Company has not obtained, and does not intend to obtain, a legal
opinion or ruling from the Internal Revenue Service with respect to the tax
consequences of the Reincorporation.
The Company believes that no gain or loss should be recognized by the
holders of outstanding options to purchase Shares, so long as (i) such options
(a) were originally issued in connection with the performance of services by the
optionee and (b) lacked a readily ascertainable value (for example, were not
actively traded on an established market) when originally granted and (ii) the
options to purchase the Maryland Common Stock into which the Company's
outstanding options will be converted in the Reincorporation also lack a readily
ascertainable value when issued.
The foregoing is only a summary of certain federal income tax consequences.
Shareholders and option holders should consult their own tax advisors as to the
effect of the Merger on their ownership of Shares, including the affect under
applicable state or local tax laws.
25
Accounting Treatment of the Merger
The Merger is expected to be characterized as and treated as if it were a
"pooling of interests" (rather than a "purchase") for financial reporting and
related purposes, with the result that the historical accounts of UMH New Jersey
will be combined for all periods and presented as the historical results of UMH
Maryland.
Dissenting Shareholders' Rights of Appraisal
Pursuant to Chapter 11 of the New Jersey Code, appraisal rights are
generally not available if the shares entitled to vote on the transaction are
listed on a national securities exchange. Because UMH New Jersey's shares are
listed on the American Stock Exchange, no appraisal rights are available in
connection with the Merger.
Vote Required; Board Recommendation
To be adopted the Reincorporation must receive the affirmative vote of the
majority of the Shares entitled to vote. If you hold your Shares in "street
name" through a broker or other nominee, your broker or nominee is not permitted
to exercise voting discretion with respect to the Reincorporation. Therefore,
your broker will not vote your Shares unless you provide instructions on how to
vote. You should instruct your broker how to vote your Shares by following the
directions your broker provides. If you do not provide instructions to your
broker, your Shares will not be voted and this will have the same effect as a
vote against the Proposal to approve the Reincorporation. Also, abstentions will
have the effect of votes against the Reincorporation Proposal. The persons named
as proxies in the accompanying proxy intend to vote in favor of the
Reincorporation. A vote for the Reincorporation proposal will constitute (i)
approval of the change in the Company's state of incorporation from New Jersey
to Maryland through a Merger of UMH New Jersey into UMH Maryland, (ii) approval
of the Maryland Charter, (iii) approval of the Maryland Bylaws, (iv)
ratification of all of UMH Maryland's directors, and (v) approval of all other
aspects of the Reincorporation, including the adoption of the 1994 Plan and, if
adopted, the 2003 Plan by UMH Maryland and issuance of options to purchase
shares of UMH Maryland common stock in exchange for options to purchase shares
of UMH Maryland.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE PROPOSAL TO REINCORPORATE THE COMPANY IN THE STATE OF MARYLAND.
PROPOSAL 2
ELECTION OF DIRECTORS
Nine persons have been nominated to serve on the board of directors of the
Company. Your proxy will be voted for the election of the nine nominees named in
this proxy statement, all of whom are members of the present board of directors,
to serve for a one-year term, unless you specifically withhold your authority.
All nominees have agreed to serve, if elected, for the new term. If for any
reason any of the nine nominees becomes unavailable for election, your proxy
will be voted for any substitute nominee who may be selected by the board of
directors prior to
26
or at the meeting, or, if no substitute is selected by the board of directors,
for a motion to reduce the membership of the board of directors to the number of
the nominees who are available to serve. In the event the membership of the
board of directors is reduced, it is anticipated that it would be restored to
the original number at the next annual meeting. In the event a vacancy occurs on
the board of directors after the Meeting but before the Merger, the New Jersey
Bylaws provide that any such vacancy will be filled for the unexpired term by a
majority vote of the remaining directors. The Company has no knowledge that any
of the nine nominees will become unavailable for election.
Your proxy cannot be voted for a greater number of persons than the
nominees named.
Some of the nominees for director are also officers of the Company and/or
officers and/or directors of other companies, including Monmouth Capital
Corporation and Monmouth Real Estate Investment Corporation, both publicly-owned
affiliates of the Company. From time to time, the Company may engage in
transactions with its officers or directors and their affiliates. See "Certain
Relationships and Related Transactions." All such transactions are approved in
advance by a special committee of directors consisting solely of independent
directors and are only approved if the transaction is reflective of fair market
value.
Committees of the Board of Directors and Meeting Attendance
The board of directors had four meetings during the last fiscal year. No
director attended fewer than 75% of the meetings of the entire board or of the
committees on which he or she served.
The board of directors has a standing Audit Committee, Stock Option
Committee and Compensation Committee. The Company does not have a standing
Nominating Committee.
The Audit Committee, which, among other things, recommends to the directors
the independent public accountants to be engaged by the Company and reviews with
management the Company's internal accounting procedures and controls, had four
meetings, including telephone meetings, during the last fiscal year. Charles P.
Kaempffer, Richard H. Molke, and Eugene D. Rothenberg, all of whom are outside
directors, serve on the Audit Committee.
The Stock Option Committee, which administers the Company's 1994 Plan, had
one meeting during the last fiscal year. Charles P. Kaempffer, Richard H. Molke,
and Eugene D. Rothenberg serve on the Stock Option Committee.
The Compensation Committee, which makes recommendations to the entire board
of directors concerning executive compensation, had one meeting during the last
fiscal year. Richard H. Molke and Eugene D. Rothenberg serve on the Compensation
Committee.
27
Nominees for Directors
Present Position with the Company; Business
Experience During Past Five Years; Other Director
Nominee Age Directorships Since
------- --- ------------------------------------------------------------ --------
Ernest V. Bencivenga 85 Secretary/Treasurer (1984 to present) and Director. 1969
Financial Consultant (1976 to present); Treasurer and
Director (1961 to present) and Secretary (1967 to present)
of Monmouth Capital Corporation, an affiliate of the
Company; Treasurer and Director (1968 to present) Monmouth
Real Estate Investment Corporation, an affiliate of the
Company.
Anna T. Chew 45 Vice President and Chief Financial Officer (1995 to present) 1995
and Director. Vice President (2001 to present) and Director
(1994 to present) of Monmouth Capital Corporation, an
affiliate of the Company; Certified Public Accountant;
Controller (1991 to present) and Director (1993 to present)
of Monmouth Real Estate Investment Corporation, an affiliate
of the Company.
Charles P. Kaempffer 66 Director. Director (1970 to present) of Monmouth Capital 1969
Corporation, an affiliate of the Company; Director (1974 to
present) of Monmouth Real Estate Investment Corporation, an
affiliate of the Company; Vice Chairman and Director (1996
to present) of Community Bank of New Jersey.
Eugene W. Landy 69 Chairman of the Board (1995 to present), President (1969 to 1969
1995) and Director. Attorney at Law; Chairman of the Board
(2001 to present), President and Director (1961 to present)
of Monmouth Capital Corporation, an affiliate of the
Company; President and Director (1968 to present) of
Monmouth Real Estate Investment Corporation, an affiliate of
the Company. Eugene W. Landy is the father of Samuel A.
Landy.
Samuel A. Landy 43 President (1995 to present), Vice President (1991-1995) and 1992
Director. Attorney at Law; Director (1994 to present) of
Monmouth Capital Corporation, an affiliate of the Company;
Director (1989 to present) of Monmouth Real Estate
28
Present Position with the Company; Business
Experience During Past Five Years; Other Director
Nominee Age Directorships Since
------- --- ------------------------------------------------------------ --------
Investment Corporation, an affiliate of the Company. Samuel
A. Landy is the son of Eugene W. Landy.
James E. Mitchell 63 Director. Attorney at Law; General Partner, Mitchell 2001
Partners, L.P. (1979 to present); President, Mitchell
Capital Management, Inc. (1987 to present).
Richard H. Molke 77 Director. Vice President (1984 to 1998) of Remsco, 1986
Associates, Inc., a construction firm.
Eugene Rothenberg 70 Director. Director (2001 to present) of Monmouth Capital 1977
Corporation, an affiliate of the Company. Retired
physician.
Robert G. Sampson 77 Director. Director (1963 to present) of Monmouth Capital 1969
Corporation, an affiliate of the Company; Director (1968 to
2001) of Monmouth Real Estate Investment Corporation, an
affiliate of the Company; General Partner (1983 to present)
of Sampco, Ltd., an investment group.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION TO THE BOARD OF DIRECTORS EACH PERSON NAMED ABOVE
PROPOSAL 3
ADOPTION OF THE COMPANY'S 2003 STOCK OPTION PLAN
The Company is asking its shareholders to approve the proposed 2003 Stock
Option Plan (the "2003 Plan"). The 2003 Plan is designed to provide a means to
attract, motivate and retain officers and key employees and to further the
growth and financial success of the Company by aligning the interests of
officers and key employees through the ownership of equity in the Company and
other incentives with the interests of the Company's stockholders. The 2003 Plan
replaces the Company's existing 1994 Stock Option Plan (the "1994 Plan"), which,
pursuant to its terms, terminates December 31, 2003. The 1994 Plan provides for
the grant of options to purchase 750,000 shares of the Company's common stock,
par value $.10 per share (the "Common Stock"), of which 496,700 shares have been
issued or are the subject to existing awards as of June 23, 2003. No future
awards will be granted under the 1994 Plan in the event of shareholder approval
of the 2003 Plan.
29
Description of the 2003 Stock Option Plan
The following paragraphs provide a summary of the principal features of the
2003 Plan and its operation. The following summary is qualified in its entirety
by reference to the 2003 Plan, a copy of which is attached as Appendix D hereto.
Administration of the 2003 Stock Option Plan
The Board of Directors adopted the 2003 Plan on June 19, 2003, subject to
shareholder approval. The 2003 Plan will be administered by the Compensation
Committee (the "Committee") comprised of two or more directors of the Company,
none of whom shall be officers or employees of the Company and all of whom shall
be "non-employee directors" (within the meaning of Rule 16b-3 promulgated under
the 1934 Act) and "outside directors" (as required by Section 162(m) of the
Code). The members of the Committee will be appointed from time to time by, and
will serve at the pleasure of, the Board of Directors. Currently, the Committee
consists of Richard H. Molke and Eugene D. Rothenberg. The 1994 Plan is
administered by an Option Committee. Currently, the Option Committee consists of
Charles P. Kaempffer, Richard H. Molke and Eugene D. Rothenberg.
The Committee has the sole discretion to administer and construe the 2003
Plan in accordance with its provisions. Subject to the terms of the 2003 Plan,
the Committee's authority shall include the power to (a) determine persons
eligible for awards, (b) prescribe the terms and conditions of the awards, (c)
accelerate the time at which all or any part of an option awarded under the 2003
Plan may be exercised, (d) amend or modify the terms and conditions of an award
with the consent of the participant, (e) interpret the 2003 Plan and the awards,
(f) adopt rules for the administration, interpretation and application of the
2003 Plan as are consistent therewith, (g) interpret, amend or revoke any such
rules, and (h) make determinations necessary or advisable for the administration
of the 2003 Plan.
Shares Subject to Awards
The 2003 Plan sets aside 1,500,000 Shares for issuance upon the exercise of
options granted under the 2003 Plan. The ending sales price of the Company's
common stock on June 18, 2003 was $16.51 per share. If options granted under the
2003 Plan expire or terminate for any reason without having been exercised in
full, the Shares subject to, but not delivered under, such options shall become
available for additional option grants under the 2003 Plan. Currently, option
awards under the 2003 Plan are not determinable.
Eligibility to Receive Awards
Key employees of the Company and any of its subsidiaries including officers
and directors who are employees shall be eligible to be selected to receive one
or more grants of options under the 2003 Plan. Currently there are approximately
15 individuals considered to be key employees of the Company.
In making the determination as to the persons to whom an option award shall
be granted, the Committee may take into account such individual's salary and
tenure, duties and responsibilities, their present and potential contributions
to the success of the Company, the
30
recommendation of supervisors, and such other factors as the Committee or any
delegate may deem important in connection with accomplishing the purposes of the
Plan.
Option Terms
Subject to the terms and provisions of the 2003 Plan, options may be
granted to participants at any time and from time to time as determined by the
Committee. The Committee shall determine the number of Shares subject to each
option. The Committee may grant incentive stock options ("ISOs," which are
entitled to favorable tax treatment), nonqualified stock options, or any
combination thereof. The maximum number of Shares that may be granted as options
in any one fiscal year to a participant under the 2003 Plan is two hundred
thousand (200,000). Each option may be exercised only after one (1) year of
continued employment by the Company or one of its subsidiaries immediately
following the date the option is granted.
The exercise price of each option is set by the Committee. In the case of a
nonqualified stock option, the exercise price must equal at least one hundred
percent (100%) of the fair market value of a Share on the date granted. In the
case of an ISO, the exercise price must equal at least one hundred percent
(100%) of the fair market value of a Share on the date granted; or, consistent
with Section 422(c)(5) of the Internal Revenue Code, one hundred ten percent
(110%) of the fair market value of a Share if the participant (together with
persons whose stock ownership is attributed to the participant pursuant to
Section 424(d) of the Internal Revenue Code) owns on the date the option is
granted stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any of its subsidiaries.
The aggregate fair market value (determined on the date of grant) of the
Shares with respect to which ISOs are exercisable for the first time by any
participant during any calendar year (under all plans of the Company and its
subsidiaries) shall not exceed $100,000.
The exercise price of each option must be paid in full in cash at the time
of exercise. The Committee may also permit exercise by other means, including by
tendering previously acquired Shares. Options expire at the times established by
the Committee (or earlier in the event that the participant's employment is
terminated), but generally not later than 10 years after the date of grant.
Nontransferability of Options
Except as otherwise permitted by the Committee, an option granted under the
2003 Plan generally may not be transferred. The Committee may permit a transfer,
upon a participant's death, to beneficiaries designated by the participant.
Amendments and Termination of the 2003 Stock Option Plan
The Board of Directors generally may amend or terminate the 2003 Plan, or
any part of the 2003 Plan, at any time and for any reason; provided, however,
that if and to the extent required by law or to maintain the 2003 Plan's
qualification under the Internal Revenue Code, the rules of any national
securities exchange (if applicable), or any other applicable law, any such
amendment shall be subject to stockholder approval. The amendment, suspension or
termination of the 2003 Plan shall not, without the consent of a participant,
alter or impair any
31
rights or obligations under any award granted to such participant. No award may
be granted during any period of suspension or after termination of the Plan.
Tax Aspects
The following discussion is intended to provide an overview of the U.S.
federal income tax laws which are generally applicable to options granted under
the 2003 Plan as of the date of this Proxy Statement. People or entities in
differing circumstances may have different tax consequences, and the tax laws
may change in the future. This discussion is not to be construed as tax advice.
A recipient of a stock option will not have taxable income on the date of
grant. Upon exercise of nonqualified options, the participant will recognize
ordinary income equal to the difference between the fair market value of the
shares on the date of exercise and the exercise price. Any gain or loss
recognized upon any later disposition of the shares generally will be capital
gain or loss, if held for more than 12 months after exercise.
Purchase of shares upon exercise of an ISO will not result in any taxable
income to the participant, except for purposes of the alternative minimum tax.
Gain or loss recognized by the participant on a later sale or other disposition
either will be long-term capital gain or loss or ordinary income, depending upon
how long the participant holds the shares. Any ordinary income recognized will
be in the amount, if any, by which the lesser of (1) the fair market value of
such shares on the date of exercise, or (2) the amount realized from the sale,
exceeds the exercise price.
The Company will be entitled to a tax deduction for an option grant under
the 2003 Plan in an amount equal to the ordinary income realized by the
participant at the time the participant recognizes such income.
32
Equity Compensation Plan Information
The following table gives information about our common stock that may be
issued upon the exercise of options as of December 31, 2002 under the Company's
1994 Stock Option Plan. The following table does not include the Company's
proposed 2003 Stock Option Plan.
------------------------------- --------------------- ----------------- ---------------------
Plan Category Number of securities Weighed-average Number of securities
to be issued upon exercise price of remaining available
exercise of outstand- outstanding for future issuance
ing options, warrants options, warrants under equity com-
and rights and rights pensation plans
(excluding securities
reflected in column
(a))
(a) (b) (c)
------------------------------- --------------------- ----------------- ---------------------
Equity compensation
plans approved by
security holders 388,000 $10.28 227,300
------------------------------- --------------------- ----------------- ---------------------
Equity compensation
plans not approved by
security holders -0- -0- -0-
------------------------------- --------------------- ----------------- ---------------------
Total 388,000 --- 227,300
------------------------------- --------------------- ----------------- ---------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ADOPTION OF THE COMPANY'S 2003 STOCK OPTION PLAN
PROPOSAL 4
RATIFICATION OF INDEPENDENT AUDITORS
The board of directors recommends approval of the ratification of the
appointment of KPMG LLP as independent auditors for the Company for the year
ending December 31, 2003. KPMG LLP has served as independent auditors of the
Company since 1994. There are no affiliations between the Company and KPMG LLP,
its partners, associates or employees, other than its employment as independent
auditors for the Company. KPMG LLP informed the Company that it has no direct or
indirect financial interest in the Company. The Company expects a representative
of KPMG LLP to be present at the Meeting either to make a statement or to
respond to appropriate questions.
The ratification of the appointment of the independent auditors must be by
the affirmative vote of a majority of the votes cast at the Annual Meeting. In
the event KPMG LLP does not receive an affirmative vote of the majority of the
votes cast by the holders of shares entitled to vote, then another firm will be
appointed as Independent Auditors and the shareholders will be asked to ratify
the appointment at the next annual meeting.
33
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF KPMG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table lists information with respect to the beneficial
ownership of the Company's Shares as of May 31, 2003 by:
o each person known by the Company to beneficially own more than five
percent of the Company's outstanding Shares;
o the Company's directors;
o the Company's executive officers; and
o all of the Company's executive officers and directors as a group.
Unless otherwise indicated, the person or persons named below have sole
voting and investment power and that person's address is c/o United Mobile
Homes, Inc., Juniper Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold,
New Jersey 07728. In determining the number and percentage of Shares
beneficially owned by each person, Shares that may be acquired by that person
under options exercisable within 60 days of May 31, 2003 are deemed beneficially
owned by that person and are deemed outstanding for purposes of determining the
total number of outstanding Shares for that person and are not deemed
outstanding for that purpose for all other shareholders.
Name and Address Amount and Nature Percentage
of Beneficial Owner of Beneficial of Shares
Ownership(1) Outstanding(2)
Ernest V. Bencivenga 34,565(3) *
Anna T. Chew 74,970(4) 1.47%
Charles P. Kaempffer 32,424(5) *
Eugene W. Landy 980,856(6)(12) 13.48%
Samuel A. Landy 280,655(7) 5.14%
James E. Mitchell 170,254(8) 2.19%
Richard H. Molke 106,405(9) 1.37%
34
Eugene D. Rothenberg 81,303(10) 1.05%
Robert G. Sampson 131,486(11) 1.69%
Directors and Officers as a Group 1,892,917(12) 26.71%
* Less than 1%
-------------------------
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the Company believes that the persons named
in the table have sole voting and investment power with respect to all Shares
listed.
(2) Based on the number of Shares outstanding on May 31, 2003 which was
7,759,975 Shares.
(3) Includes (a) 9,073 shares owned by Mr. Bencivenga's wife, (b) 8,730
shares held in Mr. Bencivenga's 401(k) Plan, and (c) 5,000 shares issuable upon
exercise of stock options.
(4) Includes (a) 69,285 shares owned jointly with Ms. Chew's husband, (b)
5,685 shares held in Ms. Chew's 401(k) Plan, and (c) 40,000 shares issuable upon
exercise of stock options.
(5) Includes (a) 2,000 shares owned by Mr. Kaempffer's wife, and (b)
30,425 shares held in the Charles P. Kaempffer Defined Benefit Pension Plan of
which Mr. Kaempffer is Trustee with power to vote.
(6) Includes (a) 81,086 shares owned by Mr. Landy's wife, (b) 172,608
shares held by Landy Investments, Ltd. for which Mr. Landy has power to vote,
(c) 113,212 shares held in the Landy & Landy Profit Sharing Plan of which Mr.
Landy is a Trustee with power to vote, (d) 57,561 shares held in the Landy &
Landy Pension Plan of which Mr. Landy is a Trustee with power to vote, (e)
50,000 shares held in the Eugene W. Landy Charitable Legal Annuity Trust, and
(f) 75,000 shares issuable upon exercise of stock options. Excludes 226,953
shares held by Mr. Landy's adult children in which he disclaims any beneficial
interest.
(7) Includes (a) 26,299 shares owned jointly with Mr. Landy's wife, (b)
27,015 shares in custodial accounts for Mr. Landy's minor children under the NJ
Uniform Transfers to Minors Act in which he disclaims any beneficial interest
but has power to vote, (c) 6,221 shares in the Samuel Landy Limited Partnership,
(d) 9,558 shares held in Mr. Landy's 401(k) Plan, and (e) 125,000 shares
issuable upon exercise of stock options.
(8) Includes 135,286 shares held by Mitchell Partners in which Mr.
Mitchell has a beneficial interest.
(9) Includes 49,064 shares owned by Mr. Molke's wife.
(10) Includes 56,878 shares held by Rothenberg Investments, Ltd. in which
Dr. Rothenberg has a beneficial interest.
35
(11) Includes 48,492 shares held by Sampco Ltd. in which Mr. Sampson has a
beneficial interest.
(12) Excludes 80,200 shares (1.03%) owned by Monmouth Real Estate
Investment Corporation. Eugene W. Landy owns beneficially approximately 5.38% of
Monmouth Real Estate Investment Corporation.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows compensation paid or accrued
by the Company to its Chief Executive Officer, President and Vice President for
services rendered during the fiscal years ended December 31, 2002, 2001 and
2000. There were no other executive officers whose aggregate cash compensation
exceeded $100,000.
Annual Compensation
Name and ------------------------------------------------
Principal Position Year Salary Bonus Other
-------------------- ---- ------ ----- -----
Eugene W. Landy 2002 $150,000 $ - $17,276 (1)
Chief Executive Officer 2001 $150,000 $ - $15,076 (1)
2000 $150,000 $ - $53,876 (1)
Samuel A. Landy 2002 $285,000 $14,961 $21,585 (2)
President 2001 $224,615 $25,704 $21,028 (2)
2000 $214,615 $ 8,269 $18,432 (2)
Anna T. Chew 2002 $160,488 $16,194 $19,000 (3)
Vice President 2001 $145,898 $15,631 $17,646 (3)
2000 $132,635 $14,119 $16,003 (3)
(1) Represents Director's fees and fringe benefits. Also includes an
accrual of $40,000 in 2000 for pension and other benefits in accordance with
Eugene W. Landy's employment contract.
(2) Represents Director's fees, fringe benefits and discretionary
contributions by the Company to the Company's 401(k) Plan allocated to the
account of the named executive officer.
(3) Represents Director's fees, fringe benefits and discretionary
contributions by the Company to the Company's 401(k) Plan allocated to the
account of the named executive officer.
36
1994 Stock Option Plan
On May 26, 1994, the shareholders approved and ratified the Company's 1994
Stock Option Plan authorizing the grant to officers, directors and key employees
options to purchase up to 750,000 Shares. Options may be granted any time up to
December 31, 2003. No option is available for exercise ten years after the date
it is granted. All options are exercisable one year from the date of grant. The
option price shall not be below the fair market value at date of grant. Canceled
or expired options are added back to the "pool" of Shares available under the
Plan.
The following table sets forth, for the executive officers named in the
Summary Compensation Table, information regarding individual grants of stock
options made during the year ended December 31, 2002:
Potential Realized
Percent Price Value at Assumed
Options Granted to Per Expiration Annual Rates for
Name Granted Employees Share Date Option Terms
---- ------- --------- ----- ---- ------------
5% 10%
-- ---
Samuel A Landy 25,000 37% $12.95 01/04/10 $110,991 $307,001
Anna T. Chew 10,000 15% $12.60 06/20/10 $ 60,159 $144,092
The following table sets forth, for the executive officers named in the
Summary Compensation Table, information regarding stock options outstanding at
December 31, 2002:
Number of Value of
Shares Unexercised Unexercised
Acquired at Year-End Options at Year-
Upon Value Exercisable / End Exercisable
Name Exercise Realized Unexercisable Unexercisable
---- -------- -------- ------------- -------------
Eugene W. Landy -0- N/A 75,000 / -0- $328,000 / $ -0-
Samuel A. Landy -0- N/A 125,000 / 25,000 $394,062 / $14,750
Anna T. Chew 8,000 $10,000 40,000 / 10,000 $162,475 / $9,400
37
Employment Agreements
On December 14, 1993, the Company and Eugene W. Landy entered into an
Employment Agreement under which Mr. Landy receives an annual base compensation
of $150,000 (as amended) plus bonuses and customary fringe benefits, including
health insurance, participation in the Company's 401(k) Plan, stock options,
five weeks' vacation and use of an automobile. Additionally, there may be
bonuses voted by the Board of Directors. The Employment Agreement is terminable
by either party at any time subject to certain notice requirements. On severance
of employment for any reason, Mr. Landy will receive severance of $450,000,
payable $150,000 on severance and $150,000 on the first and second anniversaries
of severance. In the event of disability, Mr. Landy's compensation will continue
for a period of three years, payable monthly. On retirement, Mr. Landy will
receive a pension of $50,000 a year for ten years, payable in monthly
installments. In the event of death, Mr. Landy's designated beneficiary will
receive $450,000, $100,000 thirty days after death and the balance one year
after death. The Employment Agreement automatically renews each year for
successive one-year periods.
Effective January 1, 2002, the Company and Samuel A. Landy entered into a
three-year Employment Agreement under which Mr. Samuel Landy receives an annual
base salary of $285,000 for 2002, $299,250 for 2003 and $314,212 for 2004 plus
bonuses and customary fringe benefits. Bonuses are at the discretion of the
Board of Directors and are based on certain guidelines. Mr. Samuel Landy will
also receive four weeks vacation, use of an automobile, and stock options for
25,000 shares in each year of the contract. On severance or disability, Mr.
Samuel Landy is entitled to one year's salary.
Effective January 1, 2003, the Company and Anna T. Chew entered into a 3
year Employment Agreement. Ms. Chew will receive an annual base salary of
$177,200 for 2003, plus bonuses and customary fringe benefits. Each year Ms.
Chew will receive a 10% increase in her base salary. On severance for any
reason, Ms. Chew is entitled to an additional one year's salary. In the event of
disability, her salary shall continue for a period of two years.
Other Information
The directors received a fee of $1,000 for each Board meeting attended and
an additional fixed annual fee of $10,000 payable $2,500 quarterly. Effective
April 1, 2002, the meeting fee was increased to $1,500. Directors appointed to
committees received $150 for each committee meeting attended. Those specific
committees are Compensation Committee, Audit Committee and Stock Option
Committee.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Overview and Philosophy
The Company has a Compensation Committee consisting of two independent,
outside directors. This Committee is responsible for making recommendations to
the board of directors concerning compensation. The Compensation Committee takes
into consideration three major factors in setting compensation.
38
The first consideration is the overall performance of the Company. The
board of directors believes that the financial interests of the executive
officers should be aligned with the success of the Company and the financial
interests of its shareholders. Increases in funds from operations, the
enhancement of the Company's equity portfolio, and the success of the Dividend
Reinvestment and Stock Purchase Plan all contribute to increases in stock
prices, thereby maximizing shareholders' return.
The second consideration is the individual achievements made by each
officer. The Company is a small REIT. The board of directors is aware of the
contributions made by each officer and makes an evaluation of individual
performance based on their own familiarity with the officer.
The final criteria in setting compensation is comparable wages in the
industry. In this regard, the REIT industry maintains excellent statistics.
Evaluation
Mr. Eugene Landy is under an employment agreement with the Company. His
base compensation under this contract is $150,000 per year. (The Summary
Compensation Table for Mr. Eugene Landy shows a salary of $150,000 and $17,276
in director's fees, fringe benefits and legal fees).
The Committee also reviewed the progress made by Mr. Samuel A. Landy,
President. Funds from operations increased by approximately 13%. Mr. Samuel
Landy is under an employment agreement with the Company. His base compensation
under this contract was $285,000 for 2002.
Compensation Committee:
Richard H. Molke
Eugene D. Rothenberg
Report of Audit Committee
The Board of Directors has adopted a written charter for the Audit
Committee.
The Company has an Audit Committee consisting of three "independent"
directors, as defined by the listing standards of the American Stock Exchange.
The Audit Committee's role is to act on behalf of the board of directors in the
oversight of all material aspects of the Company's reporting, internal control
and audit functions.
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2002.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees.
39
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees and have discussed with the auditors the
auditors' independence.
Based on the reviews and discussions referred to above, we recommend to the
board of directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2002.
Audit Committee:
Charles P. Kaempffer
Richard H. Molke
Eugene D. Rothenberg
AUDIT FEES
The aggregate fees billed by KPMG LLP, for professional services rendered
for the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2002 and for the reviews of the financial statements included
in the Company's Quarterly Reports on Form 10-Q for that fiscal year were
$39,500.
Financial Information Systems Design and Implementation Fees
There were no fees billed by KPMG LLP for professional services rendered
for information technology services relating to financial information systems
design and implementation for the fiscal year ended December 31, 2002.
All Other Fees
The aggregate fees billed by KPMG LLP, for services rendered to the Company
for the fiscal year ended December 31, 2002, other than for services described
above, were $36,000.
The Audit Committee has determined that the provision of the non-audit
services described above is compatible with maintaining KPMG LLP's independence.
Audit Committee:
Charles P. Kaempffer
Richard H. Molke
Eugene D. Rothenberg
40
COMPARATIVE STOCK PERFORMANCE
The following line graph compares the total return of the Company's common
stock for the last five years to the NAREIT All REIT Total Return Index,
published by the National Association of Real Estate Investment Trusts (NAREIT),
and the S&P 500 Index for the same period. The total return reflects stock price
appreciation and dividend reinvestment for all three comparative indices. The
information herein has been obtained from sources believed to be reliable, but
neither its accuracy nor its completeness is guaranteed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Monmouth Real Estate Investment Corporation
As of December 31, 2002, the Company owned a total of 738,942 shares of
Monmouth Real Estate Investment Corporation ("MREIC") common stock with a cost
of $4,404,622. These shares were purchased primarily through MREIC's Dividend
Reinvestment and Stock Purchase Plan. The market value of these shares as of
December 31, 2002, was $5,113,476. There are five Directors of the Company who
are also Directors and shareholders of MREIC.
Transactions with Monmouth Capital Corporation and The Mobile Home Store, Inc.
During 2002, 2001 and 2000, the Company purchased shares of Monmouth
Capital Corporation ("MCC") common stock primarily through its Dividend
Reinvestment and Stock Purchase Plan. Seven directors of the Company are also
directors and shareholders of MCC.
41
Prior to April 1, 2001, The Mobile Home Store, Inc. ("MHS"), a wholly-owned
subsidiary of MCC, sold and financed the sales of manufactured homes. MHS paid
the Company market rent on sites where MHS had a home for sale. Total site
rental income from MHS amounted to $33,370 and $109,550, respectively, for the
years ended December 31, 2001 and 2000.
Effective April 1, 1996 through April 1, 2001, MHS leased space from the
Company to be used as sales lots, at market rates, at most of the Company's
communities. Total rental income relating to these leases amounted to $38,370
and $153,480 for the years ended December 31, 2001 and 2000, respectively.
During 2001 and 2000, the Company had approximately $49,000, and $52,000,
respectively, of rental homes that were sold to MHS at book value.
During 2002, 2001 and 2000, the Company purchased from MHS at its cost, 2,
3 and 11 homes, respectively, totaling $43,181, $47,953 and $201,399,
respectively, to be used as rental homes. On March 30, 2001, the Company also
purchased at carrying value all of the remaining inventory of MHS. This amounted
to $2,261,624. The Company also assumed the inventory financing of $1,833,871.
Other Matters
In August, 1999, the Company entered into a lease for its corporate
offices. The lease is for a five-year term at market rates with monthly lease
payments of $12,000, plus a proportionate share of real estate taxes and common
area maintenance. The lessor of the property is owned by certain officers and
directors of the Company. The lease payments and the resultant lease term
commenced on May 1, 2000. Approximately 50% of the monthly lease payment of
$12,000, plus its proportionate share of real estate taxes and common area
maintenance is reimbursed by other related entities utilizing the leased space.
OTHER MATTERS
The board of directors knows of no other matters other than those stated in
this Proxy Statement which are to be presented for action at the Annual Meeting.
If any other matters should properly come before the Annual Meeting, it is
intended that proxies in the accompanying form will be voted on any such matter
in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such matters is conferred by such proxies
upon the persons voting them.
The Company will provide, without charge, to each person being solicited by
this Proxy Statement, on the written request of any such person, a copy of the
Annual Report of the Company on Form 10-K for the year ended December 31, 2002
(as filed with the Securities and Exchange Commission), including the financial
statements and schedules thereto. All such requests should be directed to United
Mobile Homes, Inc., Attention: Investor Relations, Juniper Business Plaza, 3499
Route 9 North, Suite 3-C, Freehold, NJ 07728.
42
COMPLIANCE WITH EXCHANGE ACT FILING REQUIREMENTS
The rules of the Securities and Exchange Commission require the Company to
disclose any late filings of stock ownership reports by its directors and
executive officers and by persons who own more than 10% of the Company's Shares.
There were three late filings in 2002. Mr. Bencivenga and Ms. Chew failed to
report on a Form 4 a grant of options to each of them. Such grant was
subsequently reported on a Form 5. Also, Monmouth Real Estate Investment
Corporation incorrectly reported the number of shares it sold in 2002 and
subsequently corrected that error on a Form 5.
SHAREHOLDER PROPOSALS FOR THE 2004
ANNUAL MEETING OF SHAREHOLDERS
Proposals in Company's Proxy Statement
Shareholder proposals submitted for inclusion as a shareholder proposal in
the Company's proxy materials for the 2004 Annual Meeting of Shareholders must
be received by the Company at its office at Juniper Business Plaza, 3499 Route 9
North, Suite 3-C, Freehold, New Jersey 07728 no later than March 12, 2004.
Proposals to be Introduced at the Annual Meeting but not Intended to be Included
in the Company's Proxy Statement
In order to be considered at the 2004 Annual Meeting of Shareholders,
shareholder proposals must comply with the advance notice and eligibility
requirements contained in the Maryland Bylaws, if the Reincorporation is
approved and the Company reincorporates in Maryland. The Maryland Bylaws provide
that shareholders are required to give advance notice to the Company of any
business to be brought by a shareholder before a shareholders' meeting and must
comply with the notice procedures set forth in the Maryland Bylaws. The advanced
notice and eligibility requirements of the Maryland Bylaws are described above
in the section of this Proxy Statement captioned "Reincorporating the Company in
Maryland - Comparison of the New Jersey Code, New Jersey Charter and New Jersey
Bylaws to Maryland Code, Maryland Charter and Maryland Bylaws - Advance Notice
Provisions."
Under the Maryland Bylaws, for the proxy statement for the 2004 Annual
Meeting of shareholders, a qualified shareholder intending to introduce a
proposal or nominate a director at the 2004 Annual Meeting of Shareholders but
not intending the proposal to be included in the Company's proxy materials
should give written notice to the Company's Secretary not later than April 16,
2004, and not earlier than March 12, 2004.
In the event that the Company reincorporates in Maryland, the advance
notice and eligibility requirements of Monmouth Maryland are set forth in
Article 2, Sections 11 and 12 of the Maryland Bylaws. Copies of the Maryland
Bylaws are attached to this Proxy Statement as Appendix C and are also available
upon request. Such requests and any shareholder proposals should be sent to the
Secretary of the Company at Juniper Business Plaza, 3499 Route 9 North, Suite
3-C, Freehold, New Jersey 07728.
43
If the Company does not reincorporate in Maryland, a shareholder intending
to introduce a proposal or nominate a director at the 2004 Annual Meeting of
Shareholders, but not intending the proposal to be included in the Company's
proxy materials, should give notice to the Company's Secretary no later than May
26, 2004.
By Order of the Board of Directors
ERNEST V. BENCIVENGA
Secretary
Date: July 10, 2003
44
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Merger Agreement") dated as of June 23,
2003, is entered into by and between UNITED MOBILE HOMES, INC., a Maryland
corporation ("UMH Maryland"), and UNITED MOBILE HOMES, INC., a New Jersey
corporation ("UMH New Jersey").
RECITALS
A. UMH Maryland was formed as a wholly-owned subsidiary of UMH New Jersey in
connection with a proposal for the reincorporation of UMH New Jersey in
Maryland.
B. The reincorporation of UMH New Jersey is to be effected by merging UMH New
Jersey with and into UMH Maryland and causing the stockholders of UMH New
Jersey to become the stockholders of UMH Maryland, with each outstanding
share of common stock of UMH New Jersey being deemed at the effective time
of the merger to be one share of common stock of UMH Maryland.
C. The Maryland General Corporation Law (the "Maryland Code") and the New
Jersey Business Corporation Act (the "New Jersey Code") permit the
reorganization of UMH New Jersey into UMH Maryland provided that UMH New
Jersey and UMH Maryland each adopt a plan of merger which sets forth the
terms and conditions of the proposed merger, the mode of carrying the
merger into effect, the manner and basis of converting the shares of each
corporation into shares or other securities or obligations of the surviving
corporation and other applicable provisions.
D. The boards of directors of UMH New Jersey and UMH Maryland have determined
that it is advisable and in the best interests of its stockholders that UMH
New Jersey merge with and into UMH Maryland upon the terms and subject to
the conditions of this Merger Agreement for the purpose of effecting the
reincorporation of UMH New Jersey in the State of Maryland and have
approved this Merger Agreement.
AGREEMENT
In consideration of the premises and the agreements set forth herein, the
receipt and sufficiency of which are hereby acknowledged, UMH Maryland and UMH
New Jersey hereby agree as follows:
Section 1. Merger.
------
Subject to the terms and conditions set forth in this Merger Agreement, UMH
New Jersey will merge with and into its wholly-owned subsidiary, UMH Maryland,
and UMH New Jersey will cease to exist and UMH Maryland will be the surviving
corporation (the "Merger"). UMH Maryland is hereinafter sometimes referred to as
the "Surviving Corporation." Provided the conditions set forth in Section 8 of
this Merger Agreement have been satisfied or waived, UMH New Jersey and UMH
Maryland will, at such time as they deem advisable, cause a Certificate of
Merger (the "Certificate of Merger") to be executed, acknowledged and filed with
the Secretary of State of New Jersey as provided in Title 14A:10-4.1 of the New
Jersey Permanent Statutes
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and Articles of Merger (the "Articles of Merger") to be filed with the State
Department of Assessments and Taxation of Maryland (the "SDAT") as provided in
Section 3-107 of the Maryland Code. The Merger will become effective as of the
later to occur of the filing of a Certificate of Merger with the Secretary of
State of New Jersey and the acceptance for record of the Articles of Merger by
the SDAT (the "Effective Time"). The parties intend by this Merger Agreement to
effect a "reorganization" under Section 368 of the Internal Revenue Code of
1986, as amended.
Section 2. Manner and Basis of Converting Shares.
-------------------------------------
UMH Maryland has authority to issue 23,000,000 shares of capital stock,
initially classified as 20,000,000 shares of common stock, par value of $.10 per
share ("Maryland Common Stock") and 3,000,000 shares of excess stock, par value
$.10 per share, and UMH Maryland has 100 shares of Maryland Common Stock issued
and outstanding, all of which are owned by UMH New Jersey. UMH New Jersey has
authority to issue 15,000,000 shares of common stock, par value $.10 per share
("New Jersey Common Stock"), of which 7,826,486 shares were issued and
outstanding as of June 23, 2003. At the Effective Time, (a) each issued and
outstanding share of New Jersey Common Stock will immediately be converted into
one validly issued, fully paid and nonassessable share of Maryland Common Stock
without an exchange of certificates or any action on the part of the
stockholders thereof; (b) the 100 shares of Maryland Common Stock owned by UMH
New Jersey, that will then be owned by UMH Maryland by virtue of the Merger,
will be retired and resume the status of authorized and unissued shares and any
capital represented by such shares will be eliminated; and (c) each share of New
Jersey Common Stock held in UMH New Jersey's treasury, will be cancelled and
retired without payment of any consideration therefor and will cease to exist.
Section 3. Options.
-------
At the Effective Time, UMH Maryland will assume and continue all of UMH New
Jersey's stock option plans and agreements, including but not limited to UMH New
Jersey's 1994 Stock Option Plan, and the outstanding and unexercised portions of
all options and rights to buy New Jersey Common Stock will become options or
rights for the same number of shares of Maryland Common Stock with no other
changes in the terms and conditions of such options or rights, including
exercise prices, and effective upon the Effective Time, UMH Maryland hereby
assumes the outstanding and unexercised portions of such options and rights and
the obligations of UMH New Jersey with respect thereto.
Section 4. Stock Certificates.
------------------
Upon and after the Effective Time, all of the outstanding certificates
which prior to that time represented shares of New Jersey Common Stock will be
deemed for all purposes to evidence ownership of and to represent the shares of
Maryland Common Stock into which the shares of UMH New Jersey represented by
such certificates have been converted as herein provided. The registered owner
on the books and records of UMH New Jersey or its transfer agent of any such
outstanding stock certificate will, until such certificate is surrendered for
transfer or conversion or otherwise accounted for to UMH Maryland or its
transfer agent, have
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and be entitled to exercise any voting and other rights with respect to, and to
receive any dividend and other distributions upon, the shares of UMH Maryland
Common Stock.
Section 5. Articles of Incorporation and Bylaws.
------------------------------------
The Articles of Incorporation and Bylaws of UMH Maryland in effect at the
Effective Time of the Merger will be the Articles of Incorporation and Bylaws of
UMH Maryland as the Surviving Corporation until further amended in accordance
with their terms and the Maryland Code.
Section 6. Officers and Directors.
----------------------
The executive officers of UMH Maryland immediately prior to the Effective
Time will be the executive officers of the Surviving Corporation thereafter,
without change, until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and Bylaws. The
directors of UMH Maryland immediately prior to the Effective Time will be the
directors of the Surviving Corporation thereafter, without change, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
Section 7. Further Assurances.
------------------
Each of UMH Maryland and UMH New Jersey will execute or cause to be
executed all documents and will take or cause to be taken all actions and do or
cause to be done all things necessary, proper or advisable under the laws of the
states of New Jersey and Maryland to consummate and effect the Merger and
further the purpose of this Merger Agreement.
Section 8. Conditions.
----------
Consummation of the Merger and related transactions is subject to
satisfaction of the following conditions prior to the Effective Time:
The Merger must have been approved by the requisite vote of
stockholders of UMH New Jersey and UMH Maryland, and all other necessary
action must have taken place to authorize the execution, delivery and
performance of this Merger Agreement by UMH New Jersey and UMH Maryland.
All regulatory approvals necessary in connection with the consummation
of the Merger and the transactions contemplated thereby must have been
obtained.
Section 9. Termination; Amendment.
----------------------
This Merger Agreement may be terminated and the Merger abandoned or
deferred by either UMH Maryland or UMH New Jersey by appropriate resolution of
the board of directors of either UMH Maryland or UMH New Jersey at any time
prior to the Effective Time notwithstanding approval of this Merger Agreement by
the stockholders of UMH New Jersey or UMH Maryland, or both, if circumstances
arise which, in the opinion of the board of directors of
A-3
UMH New Jersey or UMH Maryland make the Merger inadvisable or such deferral of
the time of consummation of the Merger advisable. Subject to applicable law and
subject to the rights of the stockholders to approve any amendment that would
have a material adverse effect on the stockholders, this Merger Agreement may be
amended, modified or supplemented by written agreement of the parties hereto at
any time prior to the Effective Time with respect to any of the terms contained
herein.
Section 10. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the States of New Jersey and Maryland.
IN WITNESS WHEREOF, this Agreement and Plan of Merger has been executed and
attested to by the persons indicated below as of June 23, 2003.
UNITED MOBILE HOMES, INC.,
a Maryland corporation
ATTEST:
By: /s/ Anna T. Chew
/s/ Elizabeth Chiarella --------------------------------------
---------------------------- Name: Anna T. Chew
------------------------------------
Title: Vice President
-----------------------------------
UNITED MOBILE HOMES, INC.,
a New Jersey corporation
ATTEST:
By: /s/ Anna T. Chew
/s/ Elizabeth Chiarella --------------------------------------
----------------------------- Name: Anna T. Chew
------------------------------------
Title: Vice President
-----------------------------------
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APPENDIX B
ARTICLES OF INCORPORATION
OF
UNITED MOBILE HOMES, INC.
The undersigned, being a natural person and acting as incorporator,
does hereby form a business corporation in the State of Maryland, pursuant to
the provisions of the Maryland General Corporation Law.
ARTICLE I
INCORPORATOR
The name of the incorporator is Anna T. Chew.
The incorporator's address, including the street and number, if any,
including the county or municipal area, and including the state or county, is:
c/o United Mobile Homes, Inc., Juniper Business Plaza, 3499 Route 9 North, Suite
3-C, Freehold, Monmouth County, New Jersey 07728.
The incorporator is at least eighteen years of age.
The incorporator is forming the corporation named in these Articles of
Incorporation (the "Charter") under the general laws of the State of Maryland,
to wit, the Maryland General Corporation Law.
ARTICLE II
NAME AND DURATION
The name of the corporation is UNITED MOBILE HOMES, INC. (the
"Corporation"). The duration of the Corporation shall be perpetual.
ARTICLE III
PURPOSES
SECTION 1 PURPOSE OF THE CORPORATION
(a) Authorization. The purposes for which the Corporation is formed
are:
(i) To engage in the business of a real estate investment
trust ("REIT") as that term is defined in the Internal Revenue Code of
1986, as amended, or any successor statute (the "Code") at any time
prior to the occurrence of the Restriction Termination Date, if any, as
defined in Article V, Section 2;
(ii) To engage in any lawful act or activity for which
corporations may be organized under the general laws of the State of
Maryland now or hereafter in force, including the Maryland General
Corporation Law, and to do all things and exercise all powers, rights
and privileges that a business corporation may now or hereafter be
organized or authorized to do or to exercise under the laws of the
State of Maryland; and
(iii) To engage in any one or more businesses or transactions,
or to acquire all or any portion of any entity engaged in any one or
more businesses which the Board of Directors may from time to time
authorize or approve, whether or not related to the business described
elsewhere in this Article III or to any other business at the time or
theretofore engaged in by the Corporation.
(b) General. The foregoing enumerated purposes and objects shall be in
no way limited or restricted by reference to, or inference from, the terms of
any other clause of this or any other Article of this Charter, and each shall be
regarded as independent; and they are intended to be and shall be construed as
powers as well as purposes and objects of the Corporation and shall be in
addition to and not in limitation of the general powers of corporations under
the general laws of the State of Maryland, including the Maryland General
Corporation Law.
ARTICLE IV
PRINCIPAL OFFICE IN MARYLAND
AND RESIDENT AGENT
The present address of the principal office of the Corporation in the
State of Maryland is 300 East Lombard Street, Baltimore, Maryland 21202. The
name and address of the resident agent of the Corporation in the State of
Maryland are The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202. See Attachment A for the signed Statement of Consent
to Serve as Registered Agent executed by The Corporation Trust Incorporated.
ARTICLE V
CAPITAL STOCK
SECTION 1 AUTHORIZED CAPITAL STOCK.
(a) Authorized Shares. The total number of shares of capital stock of
all classes that the Corporation has authority to issue is 23,000,000 initially
classified as 20,000,000 shares of
B-2
common stock, par value $0.10 per share (the "Common Stock"), and 3,000,000
shares of excess stock, par value $0.10 per share (the "Excess Stock").
The aggregate par value of all authorized shares of stock having par
value is initially $2,300,000. If shares of one class of stock are classified or
reclassified into shares of another class of stock pursuant to this Article V,
the number of authorized shares of the former class shall be automatically
decreased and the number of shares of the latter class shall be automatically
increased, in each case by the number of shares so classified or reclassified,
so that the aggregate number of shares of stock of all classes that the
Corporation has authority to issue shall not be more than the total number of
shares of stock set forth in the first sentence of the prior paragraph.
A majority of the entire Board of Directors, without action by the
stockholders, may amend the Charter to increase or decrease the aggregate number
of authorized shares of stock or the number of shares of stock of any class that
the Corporation has authority to issue.
The Common Stock and the Excess Stock shall each constitute separate
classes of capital stock of the Corporation.
(b) Terminology. All classes of capital stock except Excess Stock are
referred to herein as "Equity Stock;" all classes of capital stock including
Excess Stock are referred to herein as "Stock."
SECTION 2 REIT-RELATED RESTRICTIONS AND LIMITATIONS ON THE EQUITY STOCK.
Until the "Restriction Termination Date," as defined below, all Equity
Stock shall be subject to the following restrictions and limitations intended to
preserve the Corporation's status as a REIT.
(a) Definitions. As used in this Article V, the following terms shall
have the indicated meanings:
"Beneficial Ownership" or "Beneficially Own" shall mean
ownership of Equity Stock by a Person who would be treated as an owner
of such Equity Stock either directly or constructively through the
application of Section 544 of the Code, as modified by Section
856(h)(1)(B) of the Code. The terms "Beneficial Ownership" and
"Beneficially Own" and "Beneficially Owned" and "Beneficial Owner"
shall have the correlative meanings.
"Beneficiary" shall mean a beneficiary of the Trust as
determined pursuant to Section 5(f) of this Article V.
"Charitable Beneficiary" shall mean one or more beneficiaries
of the Trust as determined pursuant to Section 5(b)(ii) of this Article
V, provided that each such organization must be described in Section
501(c)(3) of the Code and contributions to each such organization must
be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and
2522 of the Code.
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"Constructive Ownership" or "Constructively Own" shall mean
ownership of Equity Stock by a Person who would be treated as an owner
of such Equity Stock either directly or indirectly through the
application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code. The terms "Constructive Ownership" and
"Constructively Own," "Constructively Owned" and "Constructive Owner"
shall have the correlative meanings.
"Market Price" shall mean the last reported sales price
reported on the American Stock Exchange ("AMEX"), of Equity Stock on
the trading day immediately preceding the relevant date, or if not then
traded on AMEX, the last reported sales price of Equity Stock on the
trading day immediately preceding the relevant date as reported on any
exchange or quotation system over which Equity Stock may be traded, or
if not then traded over any exchange or quotation system, then the
market price of Equity Stock on the relevant date as determined in good
faith by the Board of Directors of the Corporation.
"Ownership Limit" shall mean 9.8% in value or in number of
shares of the outstanding Equity Stock, whichever is more restrictive.
The number and value of the Equity Stock of the Corporation shall be
determined by the Board of Directors in good faith, which determination
shall be conclusive for all purposes.
"Person" shall mean an individual, corporation, limited
liability company, partnership, estate, trust (including a trust
qualified under Section 401(a) or 501(c)(17) of the Code), a portion of
a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint
stock company or other entity and also includes a group as that term is
used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
"Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer that results in Excess Stock as described below
in Section 5 of this Article V, the purported beneficial transferee for
whom the Purported Record Transferee would have acquired Equity Stock
if such Transfer had been valid under Section 2(b) of this Article V.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Stock, the Person who would
have been the record holder of Equity Stock if such Transfer had been
valid under Section 2(b) of this Article V.
"Restriction Termination Date" shall mean the effective date,
if any, for revocation or termination of the Corporation's REIT
election pursuant to Section 856(g) of the Code, as specified in a
resolution of the Board of Directors of the Corporation determining
that it is no longer in the best interests of the Corporation to
attempt to, or continue to, qualify as a REIT. If no such effective
date is specified in such resolution, the Restriction Termination Date
shall be the date such revocation or termination otherwise becomes
effective.
B-4
"Transfer" shall mean any sale, transfer, gift, assignment,
devise or other disposition of Equity Stock (including (i) the granting
of any option or entering into any agreement for the sale, transfer or
other disposition of Equity Stock or (ii) the sale, transfer,
assignment or other disposition of any securities or rights convertible
into or exchangeable for Equity Stock), whether voluntary or
involuntary, whether of record beneficially or constructively
(including but not limited to transfers of interests in other entities
that result in changes in Beneficial Ownership or Constructive
Ownership of Equity Stock), and whether by operation of law or
otherwise. The terms "Transfers" and "Transferred" shall have the
correlative meanings.
"Trust" shall mean the trust created pursuant to Section 5(b) of
this Article V.
"Trustee" shall mean any Person that is unaffiliated with the
Corporation, the Purported Beneficial Transferee, and the Purported
Record Transferee, that the Corporation appoints to serve as trustee
pursuant to Section 5 of this Article V.
(b) Ownership Limitation and Transfer Restrictions with Respect to
Equity Stock.
(i) Except as provided in Section 2(f) of this Article V,
prior to the Restriction Termination Date, no Person shall
Beneficially Own or Constructively Own shares of Equity Stock
in excess of the Ownership Limit.
(ii) Except as provided in Section 2(f) of this Article V,
prior to the Restriction Termination Date, any Transfer that,
if effective, would result in any Person Beneficially Owning
or Constructively Owning Equity Stock in excess of the
Ownership Limit shall be void ab initio as to the Transfer of
such Equity Stock that would be otherwise Beneficially Owned
or Constructively Owned (as the case may be) by such Person in
excess of the Ownership Limit; and the Purported Record
Transferee (and the Purported Beneficial Transferee, if
different) shall acquire no rights in such excess shares of
Equity Stock.
(iii) Except as provided in Section 2(f) of this Article V,
prior to the Restriction Termination Date, any Transfer that,
if effective, would result in the outstanding Equity Stock
being Beneficially Owned by less than 100 Persons (determined
under the principles of Section 856(a)(5) of the Code) shall
be void ab initio as to the Transfer of such Equity Stock that
would be otherwise Beneficially Owned by the transferee; and
the Purported Record Transferee (and the Purported Beneficial
Transferee, if different) shall acquire no rights in such
shares of Equity Stock.
(iv) Prior to the Restriction Termination Date, any Transfer
that, if effective, would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the
Code, or would otherwise result in the Corporation failing to
qualify as a REIT, shall be void ab initio as to the Transfer
of the shares of Equity Stock that would cause the Corporation
to be "closely held" within the meaning of Section 856(h) of
the Code or otherwise to fail to qualify as a REIT, as the
case
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may be; and the Purported Record Transferee (and the
Purported Beneficial Transferee, if different) shall acquire
no rights in such shares of Equity Stock.
(v) If the Board of Directors or its designee shall at any
time determine in good faith that a Transfer of Equity Stock
has taken place in violation of this Section 2(b) or that a
Person intends to acquire or has attempted to acquire
Beneficial Ownership (determined without reference to any
rules of attribution) or Constructive Ownership of any Equity
Stock of the Corporation in violation of this Section 2(b),
the Board of Directors or its designee shall take such action
as it deems advisable to refuse to give effect to or to
prevent such Transfer, including but not limited to, refusing
to give effect to such Transfer on the books of the
Corporation or instituting proceedings to enjoin such
Transfer; provided, however, that any Transfers or attempted
Transfers in violation of Section 2(b)(ii), Section 2(b)(iii)
or Section 2(b)(iv) of this Article V shall automatically
result in the conversion and exchange described in Section
2(c), irrespective of any action (or non-action) by the Board
of Directors, except as provided in Section 2(f) of this
Article V.
(c) Automatic Conversion of Equity Stock into Excess Stock. Subject to
Section 5(a) of this Article V below:
(i) If, notwithstanding the other provisions
contained in this Article V, at any time prior to the
Restriction Termination Date there is a purported Transfer or
other change in the capital structure of the Corporation such
that any Person would Beneficially Own or Constructively Own
Equity Stock in excess of the Ownership Limit, then, except as
otherwise provided in Section 2(f) of this Article V, such
shares of Equity Stock in excess of the Ownership Limit
(rounded up to the nearest whole share) shall automatically
(and without action by the Corporation or by any purported
Transferor, Purported Record Transferee or Purported
Beneficial Transferee of such Equity Stock, in the case of a
Transfer) be converted into and exchanged for an equal number
of shares of Excess Stock. Such conversion and exchange shall
be effective as of the close of business on the business day
prior to the date of the purported Transfer or change in
capital structure. The shares of Equity Stock converted into
and exchanged for Excess Stock shall be cancelled and deemed
to be shares of authorized and unissued Equity Stock of the
same class as such stock had been immediately prior to it
becoming Excess Stock.
(ii) If, notwithstanding the other provisions
contained in this Article V, at any time prior to the
Restriction Termination Date there is a purported Transfer or
other change in the capital structure of the Corporation that,
if effective, would result in the outstanding Equity Stock
being owned beneficially by less than 100 persons (as
determined under the principals of Section 856(a)(5) of the
Code), or would cause the Corporation to become "closely held"
within the meaning of Section 856(h) of the Code or would
otherwise cause the Corporation to fail to qualify as a REIT,
then the shares of Equity Stock being Transferred, or
resulting from any other change in the capital structure of
the Corporation, that would
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result in the outstanding Equity Stock being owned
beneficially by less than 100 persons (as determined under
the principals of Section 856(a)(5) of the Code), or would
cause the Corporation to be "closely held" within the
meaning of Section 856(h) of the Code or would otherwise
cause the Corporation to fail to qualify as a REIT, as the
case may be, (rounded up to the nearest whole share) shall
automatically (and without any action by the Corporation or
by any purported Transferor, Purported Record Transferee or
Purported Beneficial Transferee of such Equity Stock, in the
case of a Transfer) be converted into and exchanged for an
equal number of shares of Excess Stock. Such conversion and
exchange shall be effective as of the close of business on
the business day prior to the date of the purported Transfer
or change in capital structure. The shares of Equity Stock
converted into and exchanged for Excess Stock shall be
cancelled and deemed to be shares of authorized and unissued
Equity Stock of the same class as such stock had been
immediately prior to it becoming Excess Stock.
(d) The Corporation's Right to Redeem Stock. The Corporation shall have
the right to redeem any Stock that is Transferred, or is attempted to be
Transferred, in violation of Section 2(b) of this Article V, or which has become
shares of Excess Stock as provided in Section 2(c) of this Article V, at a price
per share equal to the lesser of (i) the price per share in the transaction that
created such violation or attempted violation (or, in the case of a devise or
gift, the Market Price at the time of such devise or gift) and (ii) the Market
Price of the class of Equity Stock to which such shares of Excess Stock relate
on the date the Corporation, or its designee, gives notice of such redemption.
The Corporation shall have the right to redeem any Stock described in this
Section for a period of 90 days after the later of (i) the date of the Transfer
or attempted Transfer or (ii) the date the Board of Directors determines in good
faith that a Transfer has occurred, if the Corporation does not receive a notice
of such Transfer pursuant to Section 2(e) of this Article V.
(e) Notice Requirements and General Authority of the Board of Directors
to Implement REIT-Related Restrictions and Limitations.
(i) Any Person who acquires or attempts to acquire
shares of Equity Stock in violation of Section 2(b) of this
Article V, and any Person who is a Purported Record Transferee
or a Purported Beneficial Transferee such that Equity Stock
proposed to be acquired is converted into Excess Stock under
Section 2(c) of this Article V, shall immediately give written
notice or in the event of a proposed or attempted Transfer,
give at least 15 days' prior written notice to the Corporation
of such event and shall provide to the Corporation such other
information as the Corporation may request in order to
determine the effect, if any, of such Transfer or attempted
Transfer on the Corporation's status as a REIT.
(ii) Prior to the Restriction Termination Date, every
Beneficial Owner or Constructive Owner of more than 5.0% (or
such other percentage, between 0.5% and 5.0%, as provided in
the income tax regulations promulgated under the Code) of the
number or value of outstanding Equity Stock of the Corporation
shall, within 30 days after December 31 of each year, give
written notice to the
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Corporation stating the name and address of such Beneficial
Owner or Constructive Owner, the number of shares of Equity
Stock Beneficially Owned or Constructively Owned as of each
dividend record date within the preceding fiscal year, and a
description of how such shares are held. Each such
Beneficial Owner or Constructive Owner shall provide to the
Corporation the additional information that the Corporation
may reasonably request in order to determine the effect, if
any, of such Beneficial Ownership or Constructive Ownership
on the Corporation's status as a REIT.
(iii) Prior to the Restriction Termination Date, each
Person who is a Beneficial Owner or Constructive Owner of
Equity Stock and each Person (including the stockholder of
record) who is holding Equity Stock for a Beneficial Owner or
Constructive Owner shall provide to the Corporation the
information that the Corporation may reasonably request, in
good faith, in order to determine the Corporation's status as
a REIT, to comply with the requirements of any taxing
authority or governmental agency or to determine any such
compliance.
(iv) Each certificate for Equity Stock to be issued
by the Corporation hereafter will bear substantially the
following legend:
"The securities represented by this Certificate are
subject to restrictions on ownership and Transfer for the
purpose of the Corporation's maintenance of its status as a
"Real Estate Investment Trust" under the Internal Revenue Code
of 1986, as amended. Except as otherwise provided pursuant to
the Charter of the Corporation, no Person may Beneficially Own
or Constructively Own Equity Stock in excess of 9.8% (in value
or in number of shares of Equity Stock, whichever is more
restrictive) of the outstanding Equity Stock of the
Corporation, with further restrictions and exceptions set
forth in the Charter of the Corporation. There may be no
Transfer that would cause a violation of the Ownership Limit,
that would result in Equity Stock of the Corporation being
Beneficially Owned by fewer than 100 Persons, that would
result in the Corporation's being "closely held" under Section
856(h) of the Code, or that would otherwise result in the
Corporation failing to qualify as a REIT. Any Person who
attempts or proposes to own, Beneficially Own or
Constructively Own Equity Stock in excess of, or in violation
of, the above limitations must notify the Corporation in
writing at least 15 days prior to such proposed or attempted
Transfer to such Person. If an attempt is made to violate
these restrictions on Transfers, (i) any Purported Transfer
will be void and will not be recognized by the Corporation,
(ii) the Corporation will have the right to redeem the Stock
proposed to be Transferred, and (iii) the Stock represented
hereby generally will be automatically converted into and
exchanged for Excess Stock, which will be held in trust by the
Trustee in part for the benefit of a Charitable Beneficiary.
All capitalized terms in this legend have the meanings defined
in the Charter of the Corporation, a copy of which, including
the restrictions on ownership and Transfer, will be sent
without charge to each stockholder who directs a request for
such information to the Chairman of the Board of the
Corporation."
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(v) Subject to Section 2(f)(v) of this Article V,
nothing contained in this Article V shall limit the authority
of the Board of Directors to take such other action as it
deems necessary or advisable to protect the Corporation and
the interests of its stockholders by preservation of the
Corporation's status as a REIT.
(f) Exemptions.
(i) Notwithstanding anything to the contrary
contained in this Charter, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel or other
evidence or conditions satisfactory to the Board of Directors
in its sole and absolute discretion, the Board of Directors
may in its sole and absolute discretion exempt certain Persons
from the ownership limitations by reason of their status under
the Internal Revenue Code in that ownership by such Persons
would not disqualify the Corporation as a REIT under the Code.
(ii) Notwithstanding anything to the contrary
contained in this Charter, the Board of Directors may in its
sole and absolute discretion authorize the issuance and sale
of Equity Stock (or securities convertible into or
exchangeable for Equity Stock) from the Corporation to any
Person in connection with capital formation activities,
subject to such conditions as the Board of Directors may, in
its sole and absolute discretion, deem appropriate, even if as
a result of such issuance such Person's ownership of Equity
Stock would violate the Ownership Limit. The Board of
Directors may, in its sole and absolute discretion, rely upon
receipt of a ruling from the Internal Revenue Service or an
opinion of counsel or other evidence or conditions
satisfactory to the Board of Directors in its sole and
absolute discretion in determining that the Corporation will
not lose its REIT status as a result of the issuance and the
granting of the exemption herein.
(iii) Notwithstanding anything to the contrary
contained in this Charter, the Board of Directors may grant
exemptions to Persons who might otherwise exceed the Ownership
Limit, such as in the case of issuance of stock options
approved by the stockholders or grants of stock under existing
employment agreements or future employment agreements approved
by the stockholders, provided the Corporation has received a
ruling from the Internal Revenue Service or an opinion of
counsel or other evidence or conditions satisfactory to the
Board of Directors, in its sole and absolute discretion, that
the transaction will not result in the disqualification of the
Corporation as a REIT under the Code.
(iv) Notwithstanding anything to the contrary
contained in this Charter, the Board of Directors may in its
sole and absolute discretion grant exemptions from the
ownership restrictions contained herein in the event that the
Board of Directors has deemed that it is no longer in the
Corporation's best interests to attempt to qualify, or
continue to qualify, as a REIT under the Code. The Board of
Directors shall file a certificate to this effect with the
Corporation's transfer agent and registrar declaring that the
restrictions on transfer are no longer applicable. Until such
time, the restrictions shall remain in effect.
B-9
(v) Nothing in this Article V shall preclude the
settlement of a transaction entered into through the
facilities of any interdealer quotation system or national
securities exchange upon which Equity Stock is traded.
Notwithstanding the previous sentence, certain transactions
may be settled by providing Excess Stock as set forth in this
Article V.
(vi) Subject to sub-paragraph (b)(iv) of this Article
V, Section 2, an underwriter which participates in a public
offering or a private placement of Equity Stock (or securities
convertible into or exchangeable for Equity Stock) may
Beneficially Own or Constructively Own shares of Equity Stock
(or securities convertible into or exchangeable for Equity
Stock) in excess of the Ownership Limit but only to the extent
necessary to facilitate such public offering or private
placement or to support such offering or placement in the
aftermarket.
(g) Savings Provision. If any of the restrictions on transfer of stock
contained in this Article are determined to be void, invalid or unenforceable by
any court of competent jurisdiction, then the Purported Record Transferee or the
Purported Beneficial Transferee may be deemed, at the option of the Corporation,
to have acted as an agent of the Corporation in acquiring such Equity Stock and
to hold such Equity Stock on behalf of the Corporation. In such case, the
Purported Record Transferee or Purported Beneficial Transferee, as the case may
be, must sell, transfer or otherwise dispose of such Equity Stock if directed to
do so by the Corporation. All proceeds resulting from such sale, transfer or
disposition in excess of the lesser of (i) the price per share paid by the
Purported Record Transferee or Purported Beneficial Transferee (or, in the case
of a devise or gift, the Market Price at the time of such devise or gift) and
(ii) the Market Price of the class of Equity Stock on the date the Corporation,
or its designee, notifies the Purported Record Transferee or the Purported
Beneficial Transferee to sell, transfer or otherwise dispose of the Equity Stock
shall be paid to, or as directed by, the Corporation.
SECTION 3 CLASSIFICATION AND RECLASSIFICATION OF STOCK.
(a) Power of Board to Classify or Reclassify Stock. The Board of
Directors shall have the power, in its sole and absolute discretion, to classify
or reclassify any unissued Stock, whether now or hereafter authorized, by
setting, altering or eliminating in any one or more respects, from time to time,
before the issuance of such Stock, any feature of such Stock, including, but not
limited to, the designation, preferences, conversion or other rights, voting
powers, qualifications and terms and conditions of redemption of, and
limitations as to dividends and any other restrictions on, such Stock. The power
of the Board of Directors to classify and reclassify any of the shares of
capital stock shall include, without limitation, subject to the provisions of
the Charter, authority to classify or reclassify any unissued shares of such
stock into a class or classes of preferred Stock, preference Stock, special
Stock or other Stock, and to divide and classify shares of any class into one or
more series of such class, by determining, fixing or altering one or more of the
following:
(i) The distinctive designation of such class or
series and the number of shares which constitute such class or
series; provided that, unless otherwise prohibited by the
terms of such or any other class or series, the number of
shares of any class or series may be decreased by the Board of
Directors in connection
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with any classification or reclassification of unissued
shares and the number of shares of such class or series may
be increased by the Board of Directors in connection with
any such classification or reclassification, and any shares
of any class or series which have been redeemed, purchased,
otherwise acquired or converted into shares of Common Stock
or any other class or series shall become part of the
authorized capital stock and be subject to classification
and reclassification as provided in this subparagraph.
(ii) Whether or not and, if so, the rates, amounts
and times at which, and the conditions under which, dividends
shall be payable on shares of such class or series, whether
any such dividends shall rank senior or junior to or on a
parity with the dividends payable on any other class or series
of stock, and the status of any such dividends as cumulative,
cumulative to a limited extent or non-cumulative and as
participating or non-participating.
(iii) Whether or not shares of such class or series
have voting rights, in addition to any voting rights provided
by law and, if so, the terms of such voting rights.
(iv) Whether or not shares of such class or series
have conversion or exchange privileges and, if so, the terms
and conditions thereof, including provision for adjustment of
the conversion or exchange rate in such events or at such
times as the Board of Directors may determine.
(v) Whether or not shares of such class or series
will be subject to redemption and, if so, the terms and
conditions of such redemption, including the date or dates
upon or after which they will be redeemable and the amount per
share payable in case of redemption, which amount may vary
under different conditions and at different redemption dates;
and whether or not there will be any sinking fund or purchase
account in respect thereof, and if so, the terms thereof.
(vi) The rights of the holders of shares of such
class or series upon the liquidation, dissolution or winding
up of the affairs of, or upon any distribution of the assets
of, the Corporation, which rights may vary depending upon
whether such liquidation, dissolution or winding up is
voluntary or involuntary and, if voluntary, may vary at
different dates, and whether such rights will rank senior or
junior to or on a parity with such rights of any other class
or series of stock.
(vii) Whether or not there will be any limitations
applicable, while shares of such class or series are
outstanding, upon the payment of dividends or making of
distributions on, or the acquisition of, or the use of moneys
for purchase or redemption of, any stock of the Corporation,
or upon any other action of the Corporation, including action
under this subparagraph, and, if so, the terms and conditions
thereof.
B-11
(viii) Any other preferences, rights, restrictions,
including restrictions on transferability, and qualifications
of shares of such class or series, not inconsistent with law
and the Charter of the Corporation.
Any of the terms of any class or series of stock set or changed
pursuant to this Section 3(a) may be made dependent upon facts ascertainable
outside the Charter (including determinations by the Board of Directors or other
facts or events within the control of the Corporation) and may vary among
holders thereof, provided that the manner in which such facts, events or
variations shall operate upon the terms of such class or series of stock is
clearly and expressly set forth in the articles supplementary filed with the
State Department of Assessments and Taxation of Maryland.
(b) Ranking of Stock. For the purposes hereof and of any articles
supplementary to the Charter providing for the classification or
reclassification of any shares of capital stock or of any other charter document
of the Corporation (unless otherwise provided in any such articles or document),
any class or series of stock of the Corporation shall be deemed to rank:
(i) Prior to another class or series either as to
dividends or upon liquidation, if the holders of such class or
series are entitled to the receipt of dividends or of amounts
distributable on liquidation, dissolution or winding up, as
the case may be, in preference or priority to holders of such
other class or series.
(ii) On a parity with another class or series either
as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates or redemption or
liquidation price per share thereof be different from those of
such others, if the holders of such class or series of stock
are entitled to receipt of dividends or amounts distributable
upon liquidation, dissolution or winding up, as the case may
be, in proportion to their respective dividend rates or
redemption or liquidation prices, without preference or
priority over the holders of such other class or series.
(iii) Junior to another class or series either as to
dividends or upon liquidation, if the rights of the holders of
such class or series are subject or subordinate to the rights
of the holders of such other class or series in respect of the
receipt of dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case may be.
SECTION 4 COMMON STOCK.
Subject to the provisions of Sections 2 and 5 of this Article V, the
Common Stock shall have the following designation, preferences, conversion or
other rights, voting powers, qualifications and terms and conditions of
redemption, limitations as to dividends and any other restrictions, and such
others as may be afforded by law:
(a) Voting Rights. Subject to action, if any, by the Board of
Directors, pursuant to Section 3 of this Article V, each share of Common Stock
shall have one vote, and, except as otherwise provided in respect of any class
of Equity Stock hereafter classified or reclassified, the
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exclusive voting power for all purposes shall be vested in the holders of the
Common Stock. Shares of Common Stock shall not have cumulative voting rights.
(b) Dividend Rights. After provision(s) with respect to preferential
dividends on any then outstanding classes of Equity Stock, if any, fixed by the
Board of Directors pursuant to Section 3 of this Article V shall have been
satisfied, and after satisfaction of any other requirements, if any, including
with respect to redemption rights and preferences, of any such classes of Equity
Stock, then and thereafter the holders of Common Stock shall be entitled to
receive, pro rata in relation to the number of shares of Common Stock held by
them, such dividends or other distributions as may be authorized from time to
time by the Board of Directors and declared by the Corporation out of funds
legally available therefor.
(c) Liquidation Rights. In the event of the voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, after distribution in
full of the preferential amounts, if any, fixed pursuant to Section 3 of this
Article V, to be distributed to the holders of any then outstanding Equity
Stock, and subject to the right, if any, of the holders of any outstanding
Equity Stock to participate further in any liquidating distributions, all of the
assets of the Corporation, if any, remaining, of whatever kind available for
distribution to stockholders after the foregoing distributions have been made
shall be distributed to the holders of the Common Stock, ratably in proportion
to the number of shares of Common Stock held by them. For purposes of making
liquidating distributions pursuant to this Section 4(c) of this Article V,
Excess Stock shall be included as part of the Common Stock to the extent
provided in Section 5(e) of this Article V below.
(d) Conversion Rights. Each share of Common Stock is convertible into
Excess Stock as provided in Section 2(c) of this Article V. At all times, the
Corporation shall have a sufficient number of authorized, but unissued, shares
of Equity Stock to permit the exchange of shares of Excess Stock for shares of
Equity Stock as contemplated by Section 5(f) of this Article V.
SECTION 5 EXCESS STOCK.
(a) Condition to Issuance. The provisions of this Article V to the
contrary notwithstanding, the automatic conversion and exchange of certain
Equity Stock into Excess Stock in the circumstances provided for in Section 2(c)
of this Article V shall be deemed not to have occurred, nunc pro tunc, if the
Corporation shall have determined, in the sole and absolute discretion of the
Board of Directors, that the issuance by the Corporation of Excess Stock would
cause the Corporation to fail to satisfy the organizational and operational
requirements that must be met for the Corporation to qualify for treatment as a
REIT.
(b) Ownership of Excess Stock in Trust.
(i) Upon any purported Transfer that results in
Excess Stock pursuant to Section 2(c) of this Article V, such
Excess Stock shall be held, in book entry form, in the name of
the Trustee in Trust for the exclusive benefit of (i) one or
more Charitable Beneficiaries and (ii) such Beneficiary or
Beneficiaries to whom an interest in such Excess Stock may
later be transferred pursuant to Section 5(f)
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of this Article V. Excess Stock so held in Trust shall be
issued and outstanding Stock of the Corporation. The
Purported Record Transferee shall have no rights in such
Excess Stock except the right to designate a transferee of
such Excess Stock upon the terms specified in Section 5(f)
of this Article V. The Purported Beneficial Transferee shall
have no rights in such Excess Stock except as provided in
Section 5(f) of this Article V.
(ii) By written notice to the Trustee, the
Corporation must designate one or more nonprofit organizations
to be the Charitable Beneficiary of the interest in the Trust
such that (i) the shares of Excess Stock held in the Trust
would not violate the restrictions set forth in Section 2(b)
of this Article V in the hands of such Charitable Beneficiary
and (ii) each such organization must be described in Section
501(c)(3) of the Code and contributions to each such
organization must be eligible for deduction under each of
Sections 170(b)(1)(A), 2055 and 2522 of the Code.
(c) No Voting Rights. Except as required by law, Excess Stock shall not
be entitled to vote on any matters. Subject to applicable law, any vote cast by
the Purported Record Transferee in respect of shares of Excess Stock prior to
the discovery that shares of Equity Stock had been converted into Excess Stock,
shall be void ab initio.
(d) Dividend Rights. Subject to the provisions of this Section 5(d) of
this Article V, Excess Stock will be entitled to receive dividends equal to the
dividends declared on any class of Equity Stock from which the Excess Stock had
been converted, and a declaration of dividends on such class of Equity Stock
will also constitute a declaration of dividends on the Excess Stock. The Trustee
will have all rights to dividends or other distributions with respect to shares
of Excess Stock held in the Trust, which rights will be exercised for the
exclusive benefit of the Charitable Beneficiary. Any dividend or other
distribution paid prior to the discovery by the Corporation that the shares of
Equity Stock had been converted into Excess Stock and transferred to the Trustee
must be paid with respect to such shares of Excess Stock to the Trustee by the
Purported Record Transferee or the Purported Beneficial Transferee that
attempted to Transfer such Equity Stock upon demand and any dividend or other
distribution authorized but unpaid must be paid when due to the Trustee. Any
dividends or distributions so paid over to the Trustee must be held in trust for
the Charitable Beneficiary. Notwithstanding the provisions of this Article V,
until the Corporation has received notification that shares of Equity Stock have
been converted to Excess Stock and transferred into a Trust, the Corporation
will be entitled to rely on its share transfer and other stockholder records for
purposes of preparing lists of stockholders entitled to vote at meetings,
determining the validity and authority of proxies and otherwise conducting votes
of stockholders.
(e) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of,
the Corporation, the Trustee, as holder of the Excess Stock in Trust, will be
entitled to receive that portion of the assets of the Corporation that would
have been distributed to the Equity Stock in respect of which the Excess Stock
was issued. The Trustee, as holder of the Excess Stock in Trust, must distribute
ratably to the Beneficiaries of the Trust, when determined, any assets received
in respect of the Excess Stock in any liquidation, dissolution or winding up of,
or any distribution of the assets of, the
B-14
Corporation, provided that any amounts per share in excess of (i) the price per
share paid by the Purported Record Transferee or Purported Beneficial Transferee
for the Equity Stock that resulted in Excess Stock or (ii) if the Purported
Record Transferee or Purported Beneficial Transferee did not give value for such
Excess Stock (through gift, devise or other transaction), the price per share
equal to the Market Price on the date of the purported Transfer that resulted in
the Excess Stock, must be paid to the Charitable Beneficiary.
(f) Restrictions on Transfer; Designation of Beneficiary.
(i) Excess Stock is not transferable. The Purported
Record Transferee or Purported Beneficial Transferee may
freely designate a Beneficiary of an interest in the Trust
(representing the number of shares of Excess Stock held by the
Trust attributable to a purported Transfer that resulted in
Excess Stock), if the Excess Stock held in the Trust would not
be Excess Stock in the hands of such Beneficiary and the
Purported Record Transferee or Purported Beneficial Transferee
does not receive consideration for designating such
Beneficiary that reflects an amount per share of Excess Stock
that exceeds (x) the price per share that such Purported
Record Transferee or Purported Beneficial Transferee paid for
the Equity Stock in the purported Transfer that resulted in
the Excess Stock; or (y) if the Purported Record Transferee or
Purported Beneficial Transferee did not give value for such
Excess Stock (through a gift, devise or other transaction),
the price per share equal to the Market Price on the date of
the purported Transfer that resulted in the Excess Stock. Upon
such transfer of an interest in the Trust, (A) the
corresponding shares of Excess Stock in the Trust shall
automatically be exchanged for an equal number of shares of
Equity Stock of the same class as such stock had been
previously, immediately prior to it becoming Excess Stock, (B)
such shares of Equity Stock shall be transferred of record to
the transferee of the interest in the Trust if such Equity
Stock would not be Excess Stock in the hands of such
Beneficiary, and (C) the shares of Excess Stock exchanged for
Equity Stock shall be cancelled and shall be deemed to be
authorized and unissued shares of Excess Stock. Prior to any
transfer of any interest in the Trust, the Purported Record
Transferee or Purported Beneficial Transferee must give
advance notice to the Corporation of the intended transfer
containing the identity of the intended transferee and any
additional information requested by the Corporation, and the
Corporation must have waived in writing its redemption rights
under Section 2(d) of this Article V.
(ii) Notwithstanding the foregoing, if a Purported
Record Transferee or Purported Beneficial Transferee receives
a price for designating a Beneficiary of an interest in the
Trust that exceeds the amounts allowable under Section 5(f)(i)
of this Article V, such Purported Record Transferee or
Purported Beneficial Transferee shall pay, or cause such
Beneficiary to pay, such excess to the Charitable Beneficiary.
If, prior to the discovery by the Corporation that shares of
Equity Stock have been converted into Excess Stock and
transferred to the Trustee, such shares are sold by a
Purported Record Transferee or Purported Beneficial
Transferee, then (i) such shares shall be deemed to have been
sold on behalf of the Trust and (ii) to the extent that the
Purported Record Transferee or
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Purported Beneficial Transferee received an amount for such
shares that exceeds the amount allowable under Section
5(f)(i) of this Section V, such excess shall be paid to the
Trustee upon demand.
(iii) Each Purported Record Transferee and Charitable
Beneficiary waive any and all claims that they may have
against the Trustee and the Trust arising out of the
disposition of any shares of Excess Stock transferred to the
Trust, except for claims arising out of the gross negligence
or willful misconduct of, or any failure to make payments in
accordance with this Section 5(f)(iii) of this Article V by,
the Trustee or the Corporation.
SECTION 6 GENERAL PROVISIONS.
(a) Interpretation and Ambiguities. The Board of Directors has the
power to interpret and to construe the provisions of this Article V, including
any definition contained in Section 2, and the Board of Directors has the power
to determine the application of the provisions of this Article V with respect to
any situation based on the facts known to it, and any such interpretation,
construction and determination shall be final and binding on all interested
parties, including the stockholders.
(b) Severability. If any provision of this Article V or any application
of any such provision is determined to be void, invalid or unenforceable by any
court having jurisdiction over the issue, the validity and enforceability of the
remaining provisions will not be affected and other applications of such
provision will be affected only to the extent necessary to comply with the
determination of such court.
(c) Charter and Bylaws. All persons who shall acquire stock in the
Corporation shall acquire the same subject to the provisions of the Charter and
the Bylaws of the Corporation.
ARTICLE VI
THE BOARD OF DIRECTORS
SECTION 1 AUTHORIZED NUMBER AND INITIAL DIRECTORS.
The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors. The authorized number of directors
of the Corporation initially shall be 9, which number may be increased or
decreased pursuant to the Bylaws of the Corporation, but shall never be less
than the minimum number permitted by the General Laws of the State of Maryland
now or hereafter in force. The persons who shall serve as directors effectively
immediately and until their successors are duly elected and qualified are as
follows:
Ernest V. Bencivenga
Anna T. Chew
Charles P. Kaempffer
Eugene W. Landy
Samuel A. Landy
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James E. Mitchell
Richard H. Molke
Eugene Rothenberg
Robert G. Sampson
At least three of the directors of the Corporation shall be Independent
Directors (as defined in Section 2 of this Article VI). No decrease in the
number of directors shall shorten the term of any incumbent director.
SECTION 2 INDEPENDENT DIRECTORS
For the purpose of this Article VI, the term "Independent Directors"
means the Directors of the Corporation who satisfy the requirements of Section
3-802 of the Maryland General Corporation Law.
SECTION 3 DIRECTORS ELECTED BY SPECIFIC STOCKHOLDERS.
Whenever the holders of any one or more series of Equity Stock of the
Corporation have the right, voting separately as a class, to elect one or more
directors of the Corporation, the Board of Directors must consist of the
directors so elected in addition to the number of directors fixed as provided in
Section 1 of this Article VI or in the Bylaws. Notwithstanding the foregoing,
and except as otherwise may be required by law, whenever the holders of any one
or more series of Equity Stock of the Corporation have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
terms of the director or directors elected by such holders will expire at the
next succeeding annual meeting of stockholders.
SECTION 4 GENERAL TERM OF OFFICE; CLASSES OF DIRECTORS.
The directors of the Corporation (except for the directors elected by
the holders of any one or more series of Equity Stock of the Corporation as
provided in Section 3 of this Article VI) are divided into three classes, Class
I, Class II and Class III, as follows:
(i) The term of office of Class I extends until the
2004 annual meeting of stockholders and until their successors
are elected and qualified and thereafter the term of office of
Class I directors will be for three years and until their
successors are elected and qualified;
(ii) the term of office of Class II extends until the
2005 annual meeting of stockholders and until their successors
are elected and qualified and thereafter the term of office of
Class II directors will be for three years and until their
successors are elected and qualified; and
(iii) the term of office of Class III extends until
the 2006 annual meeting of stockholders and until their
successors are elected and qualified and thereafter the term
of office of Class III directors will be for three years and
until their successors are elected and qualified.
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The number of directors in each class must be as nearly equal
in number as possible. If the number of directors is changed, any increase or
decrease must be apportioned among the classes so as to maintain or attain, if
possible, the equality of the number of directors in each class. If such
equality is not possible, the increase or decrease must be apportioned among the
classes in such a way that the difference in the number of directors in any two
classes does not exceed one. The names of the individuals who will serve as
initial directors until their successors are elected and qualified are as
follows:
Class I: Ernest V. Bencivenga
James E. Mitchell
Robert G. Sampson
Class II: Charles P. Kaempffer
Richard H. Molke
Eugene Rothenberg
Class III: Anna T. Chew
Eugene W. Landy
Samuel A. Landy
These directors may increase the number of directors and may fill any
vacancy, whether resulting from an increase in the number of directors or
otherwise, on the Board of Directors occurring before the election provided for
below in Section 6 in the manner provided by law.
SECTION 5 REMOVAL OF DIRECTORS.
Subject to the rights of holders of one or more classes or series of
Equity Stock to elect or remove one or more directors, a director may be removed
from office but only for cause and only by the affirmative vote of at least
two-thirds of the votes entitled to be cast generally in the election of
directors. For the purpose of this paragraph, "cause" means termination because
of a director's personal dishonesty, incompetence, willful misconduct, breach of
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses) or final cease and desist order.
SECTION 6 FILLING VACANCIES.
The Corporation elects, at such time as such election becomes
available under Section 3-802(b) of the Maryland General Corporation Law, that,
except as may be provided by the Board of Directors in setting the terms of any
class or series of Equity Stock, any and all vacancies on the Board of Directors
may be filled only by the affirmative vote of a majority of the remaining
directors in office, even if the remaining directors do not constitute a quorum,
and any director elected to fill a vacancy shall serve for the remainder of the
full term of the directorship in which such vacancy occurred.
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SECTION 7 BOARD AUTHORIZATION OF SHARE ISSUANCES.
The Board of Directors of the Corporation, without any action
by stockholders, may authorize the issuance from time to time of Stock of any
class, whether now or hereafter authorized, or securities convertible into Stock
of any class, whether now or hereafter authorized, for such consideration as the
Board of Directors may deem advisable, subject to such restrictions or
limitations, if any, as may be set forth in the Charter or the Bylaws of the
Corporation and without any action by the stockholders.
SECTION 8 PREEMPTIVE AND APPRAISAL RIGHTS.
(a) Preemptive Rights. No holder of any Stock or any other securities
of the Corporation, whether now or hereafter authorized, has any preemptive
right to subscribe for or purchase any Stock or any other securities of the
Corporation other than such, if any, as the Board of Directors, in its sole and
absolute discretion, may determine and at such price or prices and upon such
other terms as the Board of Directors, in its sole and absolute discretion, may
fix; and any Stock or other securities which the Board of Directors may
determine to offer for subscription may, as the Board of Directors in its sole
and absolute discretion shall determine, be offered to the holders of any class,
series or type of Stock or other securities at the time outstanding to the
exclusion of the holders of any or all other classes, series or types of stock
or other securities at the time outstanding.
(b) Appraisal Rights. Holders of shares of Stock shall not be entitled
to exercise any rights of an objecting stockholder provided for under Title 3,
Subtitle 2 of the Maryland General Corporation Law unless the Board of
Directors, upon the affirmative vote of a majority of the entire Board of
Directors, shall determine that such rights shall apply, with respect to all or
any classes or series of Stock, to a particular transaction or all transactions
occurring after the date of such determination in connection with which holders
of such shares would otherwise be entitled to exercise such rights.
SECTION 9 AMENDMENTS TO THE BYLAWS.
Notwithstanding any other provision of the Charter or the
Bylaws of the Corporation, the Board of Directors of the Corporation has the
exclusive power to make, repeal, alter, amend and rescind the Bylaws of the
Corporation.
SECTION 10 CERTAIN OTHER DETERMINATIONS BY THE BOARD OF DIRECTORS.
The determination as to any of the following matters, made in
good faith by or pursuant to the direction of the Board of Directors consistent
with the Charter and in the absence of actual receipt of an improper benefit in
money, property or services or active and deliberate dishonesty established by a
court, shall be final and conclusive and shall be binding upon the Corporation
and every holder of Stock: (1) the manner in which distributions are to be made
to stockholders; (2) the amount of the net income of the Corporation for any
period and the amount of assets at any time legally available for the payment of
dividends, redemption of Stock or the payment of other distributions on Stock;
(3) the amount of paid-in surplus, net assets, annual or other net profit, net
assets in excess of capital, undivided profits or excess of profits over losses
on sales of assets; (4) the amount, purpose, time of creation, increase or
decrease, alteration or
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'
cancellation of any reserves or charges and the propriety thereof (whether or
not any obligation or liability for which such reserves or charges has been
created has been paid or discharged); (5) the fair value, or any sale, bid or
asked price to be applied in determining the fair value, of any asset owned or
held by the Corporation; (6) any matters relating to the acquisition, holding
and disposition of any assets of the Corporation; and (7) any other matter
relating to the business and affairs of the Corporation. Except as otherwise
provided by statute or the Bylaws, no stockholder has the right to inspect any
book, account or document of the Corporation unless authorized to do so by
resolution of the Board of Directors.
SECTION 11 RESERVED POWERS OF THE BOARD OF DIRECTORS.
The enumeration and definition of particular powers of the
Board of Directors included in this Article VI shall in no way be limited or
restricted by reference to or inference from the terms of any other clause of
this or any other provision of the charter of the Corporation, or construed or
deemed by inference or otherwise in any manner to exclude or limit the powers
conferred upon the Board of Directors under the general laws of the State of
Maryland as now or hereafter in force.
ARTICLE VII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF THE
STOCKHOLDERS AND DIRECTORS
SECTION 1 REIT QUALIFICATION.
The Board of Directors shall use its reasonable best efforts
to cause the Corporation and its stockholders to qualify for U.S. federal income
tax treatment in accordance with the provision of the Code applicable to a REIT.
In furtherance of the foregoing, the Board of Directors shall use its reasonable
best efforts to take such actions as are necessary, and may take such actions as
in its sole and absolute discretion are desirable, to preserve the status of the
Corporation as a REIT, provided, however, that if the Board of Directors
determines in its sole and absolute discretion, that it is no longer in the best
interests of the Corporation to continue to have the Corporation qualify as a
REIT, the Board of Directors may revoke or otherwise terminate the Corporation's
REIT election pursuant to Section 856(g) of the Code. Nothing contained in the
Charter shall limit the authority of the Board of Directors to take such action
as it in its sole and absolute discretion deems necessary or advisable to
protect the Corporation and the interests of the stockholders by maintaining the
Corporation's eligibility to be, and preserving the Corporation's status as, a
qualified REIT under the Code.
SECTION 2 STOCKHOLDER PROPOSALS.
For any stockholder proposal to be presented in connection
with an annual or special meeting of stockholders of the Corporation, including
any proposal relating to the nomination of a director to be elected to the Board
of Directors of the Corporation, the
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stockholder must have given timely written notice thereof in writing to the
Secretary of the Corporation in the manner and containing the information
required by the Bylaws.
ARTICLE VIII
BUSINESS COMBINATIONS
The Corporation has elected to incorporate in the State of Maryland with
the intention to rely on the provisions of Subtitle 6, Special Voting
Requirements (Sections 3-601 through Sections 3-605 at the date of
incorporation) of the Maryland General Corporation Law ("Subtitle 6") as it may
be amended or renumbered from time to time; provided, however, that the
Corporation expressly elects that Section 3-602 of Subtitle 6 shall not govern
or apply to any transaction, including a "business combination" as defined by
Section 3-601 of Subtitle 6, with Monmouth Real Estate Investment Corporation, a
Maryland corporation ("MREIC"), or Monmouth Capital Corporation, a New Jersey
corporation ("MCC"); provided, however, that if MREIC or MCC undergoes a Change
in Control (as defined below) after the date of this Charter, the Corporation
expressly elects that Section 3-602 of Subtitle 6 shall again govern or apply to
a "business combination" as defined by Section 3-601 of Subtitle 6 with MREIC or
MCC. In the event the provisions of Subtitle 6 are effectively repealed or
otherwise deleted from the Maryland General Corporation Law or any other
Maryland statute governing the Corporation, (i) the Corporation hereby
incorporates by reference in this Article VIII of this Charter the provisions of
Subtitle 6 as in effect on the date of the Company's incorporation in Maryland
with the same effect as if such provisions had been set forth in full text in
this Article VIII, and (ii) the Corporate further expressly elects that Section
3-602 of Subtitle 6 as incorporated by reference shall not govern or apply to
any transaction, including a "business combination" as defined by Section 3-601
of Subtitle 6 as incorporated by reference, with MREIC or MCC unless MREIC or
MCC undergoes a Change in Control after the date of this Charter. For the
purposes of this Article VII, "Change in Control" shall be deemed to have
occurred if (i) any Person, or any two or more Persons acting as a group, and
all affiliates of such Person or Persons (each, a "Group"), who prior to such
time owned less than 50% of the then outstanding capital stock of the
Corporation shall acquire shares of the Corporation's capital stock in one or
more transactions or series of transactions, including by merger, and after such
transaction or transactions such Group beneficially owns 50% or more of the
Corporation's capital stock or (ii) the Corporation sells all or substantially
all of its assets to any Group, which immediately prior to the time of such
transaction, beneficially owned less than a majority of the then outstanding
capital of stock of the Corporation.
ARTICLE IX
INDEMNIFICATION
SECTION 1 INDEMNIFICATION.
The Corporation must indemnify its Directors and officers, whether
serving the Corporation or at its request any other entity, who were or are
parties or are threatened to be made parties to any threatened or actual suit,
investigation, or other proceeding, including administrative actions, because of
their status or actions as Directors or officers to the full extent required or
permitted by the General Laws of the State of Maryland now or hereafter in
force, including the advance of expenses under the procedures and to the full
extent permitted by law. The Corporation may indemnify other employees and
agents, whether serving the Corporation or at its request any other entity, to
the extent authorized by the Board of Directors or the Corporation's Bylaws and
permitted by law. The foregoing rights of indemnification are not exclusive of
any other rights to which those seeking indemnification may be entitled. The
Board of Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such Bylaws, resolutions or contracts implementing such
provisions or such further indemnification arrangements as may be permitted by
law. No amendment of the Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the right to indemnification provided
hereunder with respect to acts or omissions occurring prior to such amendment or
repeal or shall
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limit or eliminate the rights granted under indemnification agreements entered
into by the corporation and its directors, officers, agents and employees.
SECTION 2 LIMITATION OF LIABILITY.
To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer of the
Corporation will be liable to the Corporation or its stockholders for money
damages. No amendment of the Charter of the Corporation or repeal any of its
provisions will apply to or affect in any respect the applicability of the
preceding sentence with respect to any act or omission which occurred prior to
such amendment or repeal.
ARTICLE X
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in the Charter upon approval of the Board of Directors
of the Corporation and the affirmative vote of the holders of not less than
two-thirds (2/3) of all votes entitled to be cast on such matter.
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IN WITNESS WHEREOF, I have adopted and signed these Articles
of Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated: June 20, 2003
/s/ Ann T. Chew
-------------------------------------------------
Anna T. Chew, Incorporator
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APPENDIX C
BYLAWS
OF
UNITED MOBILE HOMES, INC.
A MARYLAND CORPORATION
TABLE OF CONTENTS
ARTICLE I OFFICES......................................................1
SECTION 1. PRINCIPAL OFFICE.............................................1
SECTION 2. ADDITIONAL OFFICES...........................................1
ARTICLE II STOCKHOLDERS.................................................1
SECTION 1. ANNUAL MEETING...............................................1
SECTION 2. SPECIAL MEETING..............................................1
SECTION 3. PLACE OF MEETINGS............................................2
SECTION 4. NOTICE.......................................................2
SECTION 5. QUORUM; ADJOURNMENTS.........................................2
SECTION 6. VOTING.......................................................2
SECTION 7. PROXIES......................................................3
SECTION 8. ORGANIZATION.................................................3
SECTION 9. CONDUCT OF BUSINESS..........................................4
SECTION 10. INSPECTORS...................................................4
SECTION 11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS..........4
SECTION 12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE TRANSACTED
AT ANNUAL MEETING............................................6
SECTION 13. LIST OF STOCKHOLDERS.........................................7
SECTION 14. VOTING OF STOCK BY CERTAIN HOLDERS...........................7
ARTICLE III DIRECTORS....................................................7
SECTION 1. GENERAL POWERS; QUALIFICATIONS...............................7
SECTION 2. NUMBER AND TENURE............................................7
SECTION 3. VACANCIES....................................................8
SECTION 4. REGULAR MEETINGS.............................................8
SECTION 5. SPECIAL MEETINGS.............................................8
SECTION 6. NOTICE.......................................................8
SECTION 7. QUORUM.......................................................8
SECTION 8. VOTING.......................................................9
SECTION 9. MEETINGS HELD OTHER THAN; IN PERSON..........................9
i
SECTION 10. INFORMAL ACTION BY DIRECTORS.................................9
SECTION 11. COMPENSATION OF DIRECTORS....................................9
SECTION 12. REMOVAL OF DIRECTORS.........................................9
SECTION 13. RESIGNATION..................................................9
ARTICLE IV COMMITTEES..................................................10
SECTION 1. EXECUTIVE COMMITTEE.........................................10
SECTION 2. AUDIT COMMITTEE.............................................10
SECTION 3. OTHER COMMITTEES............................................10
SECTION 4. POWERS AND QUALIFICATIONS...................................10
SECTION 5. CONDUCT OF BUSINESS.........................................10
SECTION 6. EMERGENCY...................................................11
ARTICLE V OFFICERS....................................................11
SECTION 1. GENERAL PROVISIONS..........................................11
SECTION 2. ELECTION, TENURE, REMOVAL AND RESIGNATION OF OFFICERS...11
SECTION 3. CHAIRMAN OF THE BOARD.......................................12
SECTION 4. PRESIDENT...................................................12
SECTION 5. VICE PRESIDENT..............................................12
SECTION 6. SECRETARY...................................................13
SECTION 7. ASSISTANT SECRETARIES.......................................13
SECTION 8. TREASURER...................................................13
SECTION 9. ASSISTANT TREASURERS........................................13
ARTICLE VI INDEMNIFICATION.............................................14
SECTION 1. PROCEDURE...................................................14
SECTION 2. EXCLUSIVITY, ETC............................................14
SECTION 3. SEVERABILITY; DEFINITIONS...................................15
SECTION 4. INSURANCE...................................................15
ARTICLE VII STOCK.......................................................15
SECTION 1. CERTIFICATES................................................15
SECTION 2. TRANSFERS...................................................16
SECTION 3. LOST CERTIFICATE............................................16
SECTION 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE..........16
ii
SECTION 5. STOCK LEDGER................................................17
SECTION 6. TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR.....17
ARTICLE VIII FISCAL YEAR...................................................17
ARTICLE IX DISTRIBUTIONS...............................................17
SECTION 1. AUTHORIZATION...............................................17
SECTION 2. CONTINGENCIES...............................................18
ARTICLE X INVESTMENT POLICY...........................................18
ARTICLE XI WAIVER OF NOTICE............................................18
ARTICLE XII FINANCE.....................................................18
SECTION 1. CHECKS AND DRAFTS...........................................18
SECTION 2. DEPOSITS....................................................18
ARTICLE XIII CERTAIN ELECTIONS.............................................19
ARTICLE XIV SUNDRY PROVISIONS.............................................19
SECTION 1. BOOKS AND RECORDS...........................................19
SECTION 2. BONDS.......................................................19
SECTION 3. VOTING SHARES IN OTHER CORPORATIONS.........................19
SECTION 4. RELIANCE UPON BOOKS, REPORTS AND RECORDS....................19
SECTION 5. TIME PERIODS................................................20
SECTION 6. TAX STATUS..................................................20
ARTICLE XV AMENDMENT OF BYLAWS.........................................20
iii
BYLAWS
OF
UNITED MOBILE HOMES, INC.
ARTICLE 1
OFFICES
Section 1. PRINCIPAL OFFICE
The principal office of the Corporation shall be located in
Maryland at such place as the Board of Directors may designate.
Section 2 ADDITIONAL OFFICES
The Corporation may have its principal executive offices and
additional offices at such places as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. ANNUAL MEETING
Beginning in 2004, the Corporation shall hold an annual
meeting of its stockholders to elect directors and transact any other business
within its powers at such time and on such date during the month of June in each
year as the Board of Directors shall set. Except as these Bylaws, the Articles
of Incorporation of the Corporation (the "Charter") or statute provides
otherwise, any business may be considered at an annual meeting without the
purpose of the meeting having been specified in the notice. Failure to hold an
annual meeting does not invalidate the Corporation's existence or affect any
otherwise valid corporate acts.
Section 2. SPECIAL MEETING
At any time in the interval between annual meetings, a special
meeting of the stockholders may be called by the Chairman of the Board, by the
President or by a majority of the Board of Directors by a vote at a meeting or
in writing (addressed to the Secretary) with or without a meeting. Subject to
the procedures set forth in Section 11 of this Article II and this Section,
special meetings of the stockholders shall be called by the Secretary at the
request of stockholders only on the written request of stockholders entitled to
cast at least a majority of all the votes entitled to be cast at the meeting. A
request for a special meeting shall state the purpose of such meeting and the
matters proposed to be acted on at such meeting. The Secretary shall inform the
stockholders making such request of the reasonably estimated costs of preparing
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and mailing a notice of the meeting and, upon such stockholders' payment to the
Corporation of such costs, the Secretary shall give notice to each stockholder
entitled to notice of the meeting. The Board of Directors shall have sole power
to fix the date and time of the special meeting.
Section 3. PLACE OF MEETINGS
Meetings of stockholders shall be held at such place as is set
from time to time by the Board of Directors.
Section 4. NOTICE
Not less than 10 nor more than 90 days before each meeting of
stockholders, the Secretary shall give written notice of the meeting to each
stockholder entitled to vote at such meeting and to each stockholder not
entitled to vote who is entitled to notice of the meeting. The notice shall
state the time and place of the meeting and, if a special meeting or notice of
the purpose is required by statute, the purpose of the meeting. Notice is given
to a stockholder when it is personally delivered to the stockholder, left at the
stockholder's residence or usual place of business, mailed to him or her at his
or her address as it appears on the records of the Corporation or transmitted to
the stockholder by electronic mail to any electronic mail address of the
stockholder or by any other electronic means.
Section 5. QUORUM; ADJOURNMENTS
Unless statute or the Charter provides otherwise, at a meeting
of stockholders, the presence in person or by proxy of stockholders entitled to
cast a majority of all the votes entitled to be cast at such meeting shall
constitute a quorum; but this section shall not affect any requirement under any
statute or the Charter of the Corporation for the vote necessary for the
adoption of any measure.
Whether or not a quorum is present at any meeting of the
stockholders, a majority of the stockholders entitled to vote and present at
such meeting, in person or by proxy, shall have power to adjourn the meeting
from time to time to a date not more than 120 days after the original record
date without notice other than announcement at the meeting. At such adjourned
meeting at which a quorum is present, any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 6. VOTING
Except as otherwise provided in the Charter or in Article III,
Section 3, a director is elected at a duly called annual or special meeting of
stockholders at which a quorum is present by a plurality of the votes cast. A
majority of the votes cast at a meeting of stockholders duly called and at which
a quorum is present is sufficient to approve any other matter which may properly
come before the meeting, unless more than a majority of the votes cast is
required by statute or by the Charter of the Corporation. Unless otherwise
provided in the Charter or with respect to a particular class or series of stock
as determined by the Board of Directors and other than Excess Stock (as defined
in the Charter) of the Corporation, each outstanding share of stock, regardless
of class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of stockholders; however, a share is not entitled to be voted if it is
not fully paid.
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Section 7. PROXIES
A stockholder may vote the stock the stockholder owns of
record either in person or by proxy. A stockholder may sign a writing
authorizing another person to act as proxy. Signing may be accomplished by the
stockholder or the stockholder's authorized agent signing the writing or causing
the stockholder's signature to be affixed to the writing by any reasonable
means, including facsimile signature. A stockholder may authorize another person
to act as proxy by transmitting, or authorizing the transmission of, an
authorization by a telegram, cablegram, datagram, electronic mail or any other
electronic or telephonic means to the person authorized to act as proxy or to
any other person authorized to receive the proxy authorization on behalf of the
person authorized to act as the proxy, including a proxy solicitation firm,
proxy support service organization, or other person authorized by the person who
will act as proxy to receive the transmission. Unless a proxy provides
otherwise, it will not be valid more than 11 months after its date. A proxy is
revocable by a stockholder at any time without condition or qualification unless
the proxy states that it is irrevocable and the proxy is coupled with an
interest. The interest with which a proxy may be coupled includes an interest in
the stock to be voted under the proxy or another general interest in the
Corporation or its assets or liabilities. Before or at the time of the meeting,
a proxy shall be filed with the Secretary of the Corporation or with any person
authorized by the Secretary to receive proxy authorizations and who shall
promptly submit such proxy authorizations to the Secretary.
Section 8. ORGANIZATION
Every meeting of stockholders shall be conducted by the
Chairman of the Board, or in case of a vacancy in the office or absence of the
Chairman of the Board, by the President, or in the case of a vacancy in the
office or absence of the President, by one of the following officers present at
the meeting: the Vice Presidents in their order of rank and seniority, or, in
the absence of such officers, a chairman chosen by the stockholders by the vote
of a majority of the votes cast by stockholders present in person or by proxy.
The Secretary, or, in the Secretary's absence, an Assistant Secretary, or in the
absence of both the Secretary and Assistant Secretaries, a person appointed by
the Board of Directors or, in the absence of such appointment, a person
appointed by the chairman of the meeting shall act as secretary. In the event
that the Secretary presides at a meeting of the stockholders, an Assistant
Secretary shall record the minutes of the meeting. The order of business and all
other matters of procedure at any meeting of stockholders shall be determined by
the chairman of the meeting. The chairman of the meeting may prescribe such
rules, regulations and procedures and take such actions as, in the discretion of
such chairman, are appropriate for the proper conduct of the meeting, including,
without limitation, (a) restricting admission to the time set for the
commencement of the meeting; (b) limiting attendance at the meeting to
stockholders of record of the Corporation, their duly authorized proxies or
other such persons as the chairman of the meeting may determine; (c) limiting
participation at the meeting on any matter to stockholders of record of the
Corporation entitled to vote on such matter, their duly authorized proxies or
other such persons as the chairman of the meeting may determine; (d) limiting
the time allotted to questions or comments by participants; (e) maintaining
order and security at the meeting; (f) removing any stockholder who refuses to
comply with meeting procedures, rules or guidelines as set forth by the chairman
of the meeting; and (g) recessing or adjourning the meeting to a later date and
time and place announced at the meeting. Unless
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otherwise determined by the chairman of the meeting, meetings of stockholders
shall not be required to be held in accordance with the rules of parliamentary
procedure.
Section 9. CONDUCT OF BUSINESS
Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the stockholders may be made at
an annual meeting of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation (i) who was a stockholder of record at the time
of giving notice(s) provided for in Section 11 and Section 12 of this Article
II, (ii) who is entitled to vote at the meeting and (iii) who complied with the
notice procedures and requirements set forth in Section 11 and Section 12 of
this Article II. Nominations of persons for election to the Board of Directors
and the proposal of business to be considered by the stockholders may be made at
a special meeting of stockholders (a) only pursuant to the Corporation's notice
of meeting and (b), in the case of nominations of persons for election to the
Board of Directors, (i) by or at the direction of the Board of Directors or (ii)
by any stockholder of the Corporation (A) who was a stockholder of record at the
time of giving notice provided for in Section 11, (B) who is entitled to vote at
the meeting and (C) who complied with the notice procedures and requirements set
forth in Section 11 of this Article II. The chairman of the meeting shall have
the power and duty to determine whether a nomination or any business proposed to
be brought before the meeting was made in accordance with the procedures set
forth in Section 11 and Section 12 of this Article II and this Section and, if
any proposed nomination or business is not in compliance with Section 11 and
Section 12 of this Article II and this Section, to declare that such defective
nomination or proposal be disregarded.
Section 10. INSPECTORS
At any meeting of stockholders, the chairman of the meeting
may, or upon the request of stockholders, present in person or proxy, entitled
to cast 10% in number of votes entitled to be cast, shall, appoint one or more
persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting based upon their
determination of the validity and effect of proxies, count all votes, report the
results and perform such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the stockholders.
Each report of an inspector shall be in writing and signed by
him or by a majority of them if there is more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.
Section 11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS
Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the
Corporation. Nominations of persons for election to the Board of Directors may
be made at any annual meeting of stockholders, or at any special meeting of
stockholders called for the purpose of electing directors, (a) by or at the
direction of
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the Board of Directors (or any duly authorized committee thereof) or (b) by any
stockholder of the Corporation (i) who is a stockholder of record on the date of
the giving of the notice provided for in this Section, on the record date for
the determination of stockholders entitled to vote at the meeting and on the
date of the meeting, and (ii) who complies with the notice procedures set forth
in this Section. A stockholder's notice must be delivered to or mailed and
received by the Secretary at the principal executive offices of the Corporation
(a) in the case of an annual meeting, not less than 90 days nor more than 120
days prior to the first anniversary of the mailing of the notice for the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, notice by the stockholder must be so
delivered (x) not earlier than the 120th day prior to the date of mailing of the
notice for such annual meeting and (y) not later than the close of business on
the later of the 90th day prior to the date of mailing of the notice for such
annual meeting or the 10th day following the day on which public announcement of
the date of mailing of such meeting is first made; and (b) in the case of a
special meeting of stockholders called for the purpose of electing directors,
not earlier than the 120th day prior to such special meeting and not later than
the close of business on the later of the 90th day prior to such special meeting
or the tenth day following the day on which public disclosure of the date of the
special meeting was made. A stockholder's notice to the Secretary must be in
writing and set forth (a) as to each person whom the stockholder proposes to
nominate for election as a director, all information relating to such person
that is required to be disclosed in connection with solicitations of proxies for
election of directors pursuant to Regulation 14A of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving the notice (i) the
name and address of such stockholder as they appear on the Corporation's books
and of the beneficial owner, if any, on whose behalf the nomination is made,
(ii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such stockholder and
such beneficial owner, (iii) a description of all arrangements or understandings
between such stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s) are to be
made by such stockholder, (iv) a representation that such stockholder intends to
appear in person at the meeting to nominate the persons named in its notice and
(v) any other information relating to such stockholder that would be required to
be disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
Regulation 14A of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee to be named as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section. If the
chairman of the meeting determines that a nomination was not made in accordance
with the foregoing procedures, the chairman of the meeting shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded. No adjournment or postponement of a meeting of stockholders shall
commence a new period for the giving of notice of a stockholder proposal
hereunder.
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Section 12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE TRANSACTED AT
ANNUAL MEETING
No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (b) otherwise properly
brought before the annual meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (c) otherwise properly
brought before the annual meeting by any stockholder of the Corporation (i) who
is stockholder of record on the date of the giving of the notice provided for in
this Section, on the record date for the determination of stockholders entitled
to vote at the annual meeting and on the date of the annual meeting, and (ii)
who complies with the notice procedures set forth in this Section. A
stockholder's notice must be delivered to or mailed and received by the
Secretary at the principal executive offices of the Corporation not less than 90
days nor more than 120 days prior to the first anniversary of mailing of the
notice for the preceding year's annual meeting; provided, however, that in the
event that the date of the annual meeting is advanced by more than 30 days or
delayed by more than 60 days from such anniversary date, notice by the
stockholder must be so delivered (x) not earlier than the 120th day prior to the
date of mailing of the notice for such annual meeting and (y) not later than the
close of business on the later of the 90th day prior to the date of mailing of
the notice for such annual meeting or the tenth day following the day on which
public announcement of the date of such meeting is first made. A stockholder's
notice to the Secretary must in writing set forth as to each matter such
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting, the reasons for
conducting such business at the annual meeting, and any material interest of the
stockholder in the proposed business, (ii) the name and address of such
stockholder as they appear on the Corporation's books and of the beneficial
owner, if any, on whose behalf the proposal is made, (iii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder and such beneficial owner, (iv) a
description of all arrangements or understandings between such stockholder and
any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of such
stockholder in such business and (v) a representation that such stockholder
intends to appear in person at the annual meeting to bring such business before
the meeting. If requested by the Corporation, the stockholder must provide all
other information that would be required to be filed with the Securities and
Exchange Commission if, with respect to the business proposed to be brought,
before the meeting, the person proposing such business was a participant in a
solicitation subject to Section 14 of the Exchange Act. No business shall be
conducted at the annual meeting of stockholders except business brought before
the annual meeting in accordance with the procedures set forth in Section 11 of
this Article II or in this Section; provided, however, that once business has
been properly brought before the annual meeting in accordance with such
procedures, nothing in Section 11 of this Article II nor in this Section shall
be deemed to preclude discussion by any stockholder of any such business. If the
chairman of an annual meeting determines that business was not properly brought
before the annual meeting in accordance with the foregoing procedures, the
chairman of the meeting shall declare to the meeting that the business was not
properly brought before the meeting and such business shall not be transacted.
No adjournment or postponement of a meeting of stockholders shall commence a new
period for the giving of notice of a stockholder proposal hereunder.
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Section 13. LIST OF STOCKHOLDERS
At each meeting of stockholders, a full, true and complete
list of all stockholders entitled to vote at such meeting, showing the number
and class of shares held by each and certified by the transfer agent for such
class or by the Secretary, shall be furnished by the Secretary.
Section 14. VOTING OF STOCK BY CERTAIN HOLDERS
The Board of Directors may adopt by resolution a procedure by
which a stockholder may certify in writing to the Corporation that any shares of
stock registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date of
closing of the stock transfer books, the time after the record date of closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS; QUALIFICATIONS
The business and affairs of the Corporation shall be managed
under the direction of its Board of Directors. All powers of the Corporation may
be exercised by or under authority of the Board of Directors, except as
conferred on or reserved to the stockholders by statute or by the Charter or
these Bylaws.
Section 2. NUMBER AND TENURE
The Corporation shall have at least three Independent
Directors, as defined in the Charter. The Corporation shall have the number of
directors provided in the Charter until changed as herein provided. The Board of
Directors shall be divided into three classes as and in the manner provided in
the Charter. Except as the Charter provides otherwise, a majority of the entire
Board of Directors may alter the number of directors set by the Charter to a
number not exceeding 15 nor less than the minimum number then permitted herein,
but the action may not affect the tenure of office of any director. Each
director shall hold office for such term as is specified in the Charter and
until his or her successor is elected and qualified, or until his or her
resignation, removal (in accordance with the Charter), retirement or death.
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Section 3. VACANCIES
Vacancies on the Board of Directors shall be filled as
provided in the Charter of the Corporation.
Section 4. REGULAR MEETINGS
After each meeting of stockholders at which directors shall
have been elected, the Board of Directors shall meet as soon thereafter as
practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board of Directors or announced by the Secretary at such stockholders
meeting, the Board of Directors shall meet immediately following the close of,
and at the place of, such stockholders meeting. Any other regular meeting of the
Board of Directors shall be held on such date and time and at such place as may
be designated from time to time by resolution of the Board of Directors. No
notice of such meeting following a stockholders meeting or any other regular
meeting shall be necessary if held as hereinabove provided.
Section 5. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by a
majority of the Directors then in office or at the request of the Chairman of
the Board or the President. A special meeting of the Board of Directors shall be
held on such date and at any place as may be designated from time to time by the
Board of Directors. In the absence of designation such meeting shall be held at
such place as may be designated in the call.
Section 6. NOTICE
Except as provided in Article III, Section 4, the Secretary
shall give notice to each director of each regular and special meeting of the
Board of Directors. The notice shall state the time and place of the meeting.
Notice is given to a director when it is delivered personally to the director,
left at the director's residence or usual place of business, or sent by
telegraph, facsimile transmission, electronic mail or telephone, at least 24
hours before the time of the meeting or, in the alternative by mail to his or
her address as it shall appear on the records of the Corporation, at least 72
hours before the time of the meeting. Unless these Bylaws or a resolution of the
Board of Directors provides otherwise, the notice need not state the business to
be transacted at or the purposes of any regular or special meeting of the Board
of Directors. Any meeting of the Board of Directors, regular or special, whether
or not a quorum is present, may adjourn from time to time to reconvene at the
same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement.
Section 7. QUORUM
A majority of the entire Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
provided that, if less than a majority of such directors are present at said
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice, and provided further that if, pursuant to the
Charter or these Bylaws, the vote of a majority of a particular group of
directors
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is required for action, a quorum must also include a majority of such
group. Interested directors may be counted in determining the existence of a
quorum.
Section 8. 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 or lesser proportion is required for such
action by the Charter, these Bylaws or applicable statute.
Section 9. MEETINGS HELD OTHER THAN IN PERSON
Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means constitutes presence in person at a meeting.
Section 10. INFORMAL ACTION BY DIRECTORS
Any action required or permitted to be taken at a meeting of
the Board of Directors may be taken without a meeting, if an unanimous consent
in writing to such action is signed by each director and such written consent is
filed with the minutes of proceedings of the Board of Directors.
Section 11. COMPENSATION OF DIRECTORS
Unless restricted by the Charter, the Board of Directors shall
have the authority to fix the fees and other compensation of directors for their
service as directors, including, without limitation, their services as members
of committees of the Board of Directors. The directors may be paid their
expenses, if any, for attendance at each meeting of the Board of Directors or a
committee of the Board of Directors. Directors who are full-time employees of
the Corporation need not be paid for attendance at meetings of the Board of
Directors or committees of the Board of Directors for which fees are paid to
other directors.
Section 12. REMOVAL OF DIRECTORS
A director may be removed in the manner provided in the
Charter of the Corporation.
Section 13. RESIGNATION
Any director may resign at any time by sending a written
notice of such resignation to the principal executive office of the Corporation
addressed to the Secretary. Such resignation shall take effect upon receipt
thereof by the Secretary or such other date as specified in the notice.
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ARTICLE IV
COMMITTEES
Section 1. EXECUTIVE COMMITTEE
The Board of Directors may appoint an Executive Committee of
three or more directors to whom they may delegate any of the powers and
authorities of the Board of Directors. The Board of Directors may prescribe the
procedures of the Executive Committee, change the membership thereof and appoint
one or more directors to act as alternate members to replace absent or
disqualified members. Each of the Chairman of the Board and the President must
be a member of the Executive Committee; provided, however, if the President is
not also a director, the President will be an ex officio member of the Executive
Committee.
Section 2. AUDIT COMMITTEE
The Board of Directors shall appoint an Audit Committee and
shall ensure that the membership, duties and responsibilities of the Audit
Committee comply with applicable laws and stock exchange requirements at all
times.
Section 3. OTHER COMMITTEES
The Board of Directors may appoint from among its members such
other committees, composed of one or more directors, to serve at the pleasure of
the Board of Directors, and shall appoint from its members such other committees
as are required by applicable laws and stock exchange requirements and shall
ensure that the membership, duties and responsibilities of such committees
comply with applicable laws and stock exchange requirements at all times.
Section 4. POWERS AND QUALIFICATIONS
The Board of Directors may delegate to committees appointed
under this Article IV any of the powers of the Board of Directors, except the
power to authorize dividends on stock, elect directors, issue stock other than
as provided below, recommend to the stockholders any action which requires
stockholder approval, amend the Charter or these Bylaws, or approve any merger
or share exchange which does not require stockholder approval. If the Board of
Directors has given general authorization for the issuance of stock providing
for or establishing a method or procedure for determining the maximum number of
shares to be issued, a committee of the Board, in accordance with that general
authorization or any stock option or other plan or program adopted by the Board
of Directors, may authorize or fix the terms of stock subject to classification
or reclassification and the terms on which any stock may be issued, including
all terms and conditions required or permitted to be established or authorized
by the Board of Directors.
Section 5. CONDUCT OF BUSINESS
Each committee may determine the procedural rules for meeting
and conducting its business and shall act in accordance therewith, except as
otherwise provided herein or
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required by law. Adequate provisions shall be made for notice to members of all
meetings; a majority of the members shall constitute a quorum, and all matters
shall be determined by a majority vote of the members present. Action may be
taken by any committee without a meeting if all members thereof consent thereto
in writing, and the writing is filed with the minutes of the proceedings of such
committee.
Members of a committee of the Board of Directors may
participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
Section 6. EMERGENCY
In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the
Corporation by its directors and officers as contemplated by the Charter and
these Bylaws, any two or more available members of the then incumbent Executive
Committee shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Corporation in accordance with
Section 4 of this Article IV. In the event of the unavailability, at such time,
of a minimum of two members of the then incumbent Executive Committee, the
available directors shall elect an Executive Committee consisting of any two
members of the Board of Directors, whether or not they be officers of the
Corporation, which two members shall constitute the Executive Committee for the
full conduct and management of the affairs of the Corporation in accordance with
the foregoing provisions of this Section. Any provisions of these Bylaws (other
than this Section) and any resolutions which are contrary to the provisions of
this Section shall be suspended until it shall be determined by any interim
Executive Committee acting under this Section that it shall be to the advantage
of the Corporation to resume the conduct and management of its affairs and
business under all the other provisions of these Bylaws.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS
The officers of the Corporation shall be a President,
Secretary and Treasurer. The Board of Directors may elect or may empower the
President to appoint such other officers as the business of the Corporation may
require, including a Chairman of the Board, one or more Vice Presidents, one or
more Assistant Secretaries and one or more Assistant Treasurers. The terms,
compensation and duties of all officers of the Corporation shall be determined
by these Bylaws or by the Board of Directors. All officers shall serve at the
pleasure of the Board of Directors, subject to the rights, if any, of any
officer under any employment contract.
Section 2. ELECTION, TENURE, REMOVAL AND RESIGNATION OF OFFICERS
Officers shall be elected by the Board of Directors, which
shall consider that subject at its first meeting after every annual meeting of
stockholders and at other meetings as may be appropriate to fill a vacancy in an
office. The Board of Directors may from time to time
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authorize any committee or officer to appoint assistant and subordinate
officers. Election or appointment of an officer, employee or agent shall not of
itself create contract rights. Each officer shall hold his office until his
successor is elected and qualified or until his earlier resignation or removal.
Any person may hold one or more offices except that the same person may not
serve concurrently as both the President and a Vice President. The Board of
Directors (or, as to any assistant or subordinate officer, any committee or
officer authorized by the Board) may remove an officer at any time, with or
without cause. The removal of an officer does not prejudice any of his or her
contract rights. The Board of Directors (or, as to any assistant or subordinate
officer, any committee or officer authorized by the Board) may fill a vacancy
which occurs in any office for the unexpired portion of the term. Any officer
may resign at any time by giving written notice to the Board of Directors. 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.
Any such resignation is without prejudice to the rights, if any, of the
Corporation under any contract to which the officer is a party.
Section 3. CHAIRMAN OF THE BOARD
The Corporation may have a Chairman of the Board. If elected,
the Chairman of the Board, shall have the following powers and duties: The
Chairman of the Board shall preside at all meetings of the stockholders and the
Board of Directors. Unless otherwise designated, the Chairman of the Board shall
be the chief executive officer of the Corporation. In general, he shall perform
such duties as are customarily performed by the chief executive officer of a
corporation and shall perform such other powers and duties as may from time to
time be assigned to the Chairman of the Board by the Board of Directors or as
prescribed by these Bylaws. If the Corporation elects not to have a Chairman of
the Board, all of the powers and duties of the Chairman of the Board shall be
held and performed by the President.
Section 4. PRESIDENT
The Corporation shall have a President. In the absence of the
Chairman of the Board, the President shall preside at all meetings of the
stockholders and the Board of Directors. Unless otherwise designated, the
President shall be the Chief Operating Officer of the Corporation. In general,
he shall perform such duties as are customarily performed by the president of a
corporation and shall perform such other powers and duties as may from time to
time be assigned to the President by the Chairman of the Board or the Board of
Directors or as prescribed by these Bylaws.
Section 5. VICE PRESIDENT
The Corporation may have one or more Vice Presidents. If
elected, the Vice President shall have the following powers and duties: In the
absence or disability of the President, any Vice President shall perform all of
the duties of the President and when so acting shall have all of the powers of,
and be subject to all of the restrictions upon, the President. The Vice
President shall have such other powers and perform such other duties as the
Chairman of the Board, the President or the Board of Directors may from time to
time prescribe.
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Section 6. SECRETARY
The Corporation shall have a Secretary. The Secretary shall
attend all meetings of the Board of Directors and all meetings of the
stockholders and record all proceedings of such meetings in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and meetings of the Board of Directors. The Secretary shall
have such other powers and perform such other duties as the Chairman of the
Board, the President or the Board of Directors may from time to time prescribe.
Section 7. ASSISTANT SECRETARIES
The Corporation may have one or more Assistant Secretaries. If
elected, the Assistant Secretaries shall have the following powers and duties:
In the absence of the Secretary or in the event of the Secretary's inability or
refusal to act, any Assistant Secretary may perform the duties and exercise the
powers of the Secretary and shall have such other powers and perform such other
duties as the Chairman of the Board, the President or the Board of Directors may
from time to time prescribe.
Section 8. TREASURER
The Corporation shall have a Treasurer. The Treasurer shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements and books belonging to the
Corporation and shall deposit all monies and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall also disburse the funds of the
Corporation as may be ordered by the Board of Directors, and shall render to the
President and the Board of Directors, at their regular meetings, or when the
Board of Directors so requires, an account of all of the Treasurer's
transactions and of the financial condition of the Corporation. The Treasurer
shall have such other powers and perform such other duties as the Chairman of
the Board, the President or the Board of Directors may from time to time
prescribe.
Section 9. ASSISTANT TREASURERS
The Corporation may have one or more Assistant Treasurers. If
elected, the Assistant Treasurers shall have the following powers and duties: In
the absence of the Treasurer or in the event of the Treasurer's inability or
refusal to act, any Assistant Treasurer may perform the duties and exercise the
powers of the Treasurer and shall have such other powers and perform such other
duties as the Chairman of the Board, the President or the Board of Directors may
from time to time prescribe.
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ARTICLE VI
INDEMNIFICATION
Section 1. PROCEDURE
Any indemnification or payment of expenses in advance of the
final disposition of any proceeding under Article IX of the Charter, shall be
made promptly, and in any event within 60 days, upon the written request of the
director or officer entitled to seek indemnification (the "Indemnified Party").
The right to indemnification and advances hereunder shall be enforceable by the
Indemnified Party in any court of competent jurisdiction, if (i) the Corporation
denies such request, in whole or in part; or (ii) no disposition thereof is made
within 60 days. The Indemnified Party's costs and expenses incurred in
connection with successfully establishing his or her right to indemnification,
in whole or in part, in any such action shall also be reimbursed by the
Corporation. It shall be a defense to any action for advance for expenses that
(a) a determination has been made that the facts then known to those making the
determination would preclude indemnification or (b) the Corporation has not
received both (i) an undertaking as required by law to repay such advances in
the event it shall ultimately be determined that the standard of conduct has not
been met and (ii) a written affirmation by the Indemnified Party of such
Indemnified Party's good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met.
Section 2. EXCLUSIVITY, ETC.
The indemnification and advance of expenses provided by the
Charter and these Bylaws (i) shall not be deemed exclusive of any other rights
to which a person seeking indemnification or advance of expenses may be entitled
under any law (common or statutory), or any agreement, vote of stockholders or
disinterested directors or other provision that is consistent with law, both as
to action in his or her official capacity and as to action in another capacity
while holding office or while employed by or acting as agent for the
Corporation, (ii) shall continue in respect of all events occurring while a
person was a director or officer after such person has ceased to be a director
or officer, and (iii) shall inure to the benefit of the estate, heirs, executors
and administrators of such person. The Corporation shall not be liable for any
payment under this Bylaw in connection with a claim made by a director or
officer to the extent such director or officer has otherwise actually received
payment under an insurance policy, agreement, vote or otherwise, of the amounts
otherwise indemnifiable hereunder. All rights to indemnification and advance of
expenses under the Charter and hereunder shall be deemed to be a contract
between the Corporation and each director or officer of the Corporation who
serves or served in such capacity at any time while this Bylaw is in effect. Any
repeal or modification of this Bylaw shall not in any way diminish any rights to
indemnification or advance of expenses of such director or officer or the
obligations of the Corporation arising hereunder with respect to events
occurring, or claims made, while this Bylaw or any provision hereof is in force
or with respect to claims made after its adoption in respect of events occurring
before its adoption, nor shall such repeal or modification diminish any person's
rights to indemnification or advances of expenses or performance of other
obligations of the Corporation under any agreement of indemnification between
the Corporation and such person.
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Section 3. SEVERABILITY; DEFINITIONS
The invalidity or unenforceability of any provision of this
Article VI shall not affect the validity or enforceability of any other
provision hereof. If this Article VI or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director or officer as to all expenses (including
attorneys' fees), liability and loss reasonably incurred by such director or
officer in connection with any action, suit, proceeding or investigation
referred to in this Article VI to the fullest extent permitted by any portion of
this Article VI that shall not have been invalidated or by any other applicable
law. The phrase "this Bylaw" in this Article VI means this Article VI in its
entirety.
Section 4. INSURANCE
The Corporation may purchase and maintain insurance on behalf
of any director, officer, employee or agent against any liability asserted
against or incurred by that director or officer in any capacity or arising out
of the director's, officer's, employee's or agent's status as such, whether or
not the Corporation would have the power to indemnify the director, officer,
employee or agent against such liability under the provisions of this Article.
The Corporation may create a trust fund, grant a security interest or use other
means, including, without limitation, a letter of credit, to ensure the payment
of such sums as may become necessary to effect indemnification as provided
herein.
ARTICLE VII
STOCK
Section 1. CERTIFICATES
The Corporation's Excess Stock (the "Excess Stock") shall be
issued in book entry form only, and without certificates. For that purpose, the
Corporation shall cause appropriate records to be maintained of all registered
holders of the Excess Stock and the number of shares of Excess Stock,
respectively, held by each, from time to time.
Except as provided above with respect to the Excess Stock,
each stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number of shares of each class of stock held by him or
her in the Corporation. Each certificate shall be signed by the President or a
Vice President and countersigned by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer and may be sealed with the actual seal
or a facsimile thereof, if any, of the Corporation. The signatures may be either
manual or facsimile. Certificates shall be consecutively numbered; and if the
Corporation shall, from time to time, issue several classes or series of stock,
each class or series may have its own number sequence. A certificate is valid
and may be issued whether or not the officer, transfer agent or registrar who
signed it is still an officer, transfer agent or registrar when it is issued.
Each stock certificate shall include on its face the name of the Corporation,
the name of the stockholder or other person to whom it is issued, and the class
of stock and number of shares it represents. Each certificate shall also include
on its face or back (a) a statement of any restrictions on transferability and a
statement of the designations and any preferences, conversion and other rights,
voting powers, restrictions,
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limitations as to dividends, qualifications, and terms and conditions of
redemption of the stock of each class which the Corporation is authorized to
issue, of the differences in the relative rights and preferences between the
shares of each series of a preferred or special class in series which the
Corporation is authorized to issue, to the extent they have been set, and of the
authority of the Board of Directors to set the relative rights and preferences
of subsequent series of a preferred or special class of stock or (b) a statement
which provides in substance that the Corporation will furnish a full statement
of such information to any stockholder on request to the Secretary and without
charge. Except as provided in the Maryland Uniform Commercial Code - Investment
Securities, the fact that a stock certificate does not contain or refer to a
restriction on transferability that is adopted after the date of issuance does
not mean that the restriction is invalid or unenforceable. A certificate may not
be issued until the stock represented by it is fully paid.
Section 2. TRANSFERS
The Board of Directors shall have the power and authority to
make such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates of stock; and may appoint transfer
agents and registrars thereof. The duties of the transfer agent and registrar
may be combined.
Section 3. LOST CERTIFICATE
The Board of Directors of the Corporation may, in its sole
discretion, determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen or destroyed, or the
Board of Directors may delegate such power to any officer or officers of the
Corporation. In its sole discretion, the Board of Directors or such officer or
officers may require the owner of the certificate to give a bond, with
sufficient surety, to indemnify the Corporation against any loss or claim
arising as a result of the issuance of a new certificate. In its sole
discretion, the Board of Directors or such officer or officers may refuse to
issue such new certificate except upon the order of a court having jurisdiction
in the premises.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE
The Board of Directors may, and shall have the sole power to,
set a record date or direct that the stock transfer books be closed for a stated
period for the purpose of making any proper determination with respect to
stockholders, including which stockholders are entitled to request a special
meeting of stockholders, notice of a meeting of stockholders, vote at a meeting
of stockholders, receive a dividend, or be allotted other rights. The record
date may not be prior to the close of business on the day the record date is
fixed nor, subject to Article II, Section 5, more than 90 days before the date
on which the action requiring the determination will be taken; the transfer
books may not be closed for a period longer than 20 days; and, in the case of a
meeting of stockholders, the record date or the closing of the transfer books
shall be at least ten days before the date of the meeting. If no record date is
fixed and the stock transfer books are not closed for the determination of
stockholders, (a) the record date for the determination of stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day on which the notice of meeting is mailed; and (b) the record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any
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other rights shall be the close of business on the day on which the resolution
of the directors, declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except where the
determination has been made through the closing of the transfer books and the
stated period of closing has expired.
Section 5. STOCK LEDGER
The Corporation shall maintain at its principal office or at
the office of its transfer agent, an original or duplicate share ledger
containing the name and address of each stockholder and the number of shares of
each class held by such stockholder. The stock ledger may be in written form or
in any other form which can be converted within a reasonable time into written
form for visual inspection. The original or duplicate of the stock ledger shall
be kept at the offices of the transfer agent for the particular class of stock,
or if none, at the principal office in the State of Maryland or the principal
executive offices of the Corporation.
Section 6. TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR
The Board of Directors shall have power to employ one or more
transfer agents, dividend disbursing agents and registrars and to authorize them
on behalf of the Corporation to keep records, to hold and disburse any dividends
and distributions and to have and perform in respect of all original issues and
transfers of shares, dividends and distributions and reports and communications
to stockholders, the powers and duties usually had and performed by transfer
agents, dividend disbursing agents and registrars of a Maryland corporation.
ARTICLE VIII
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.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION
Dividends and other distributions upon the stock of the
Corporation may be authorized by the Board of Directors, subject to the
provisions of law and the Charter. Dividends and other distributions may be paid
in cash, property or stock of the Corporation, subject to the provisions of law
and the Charter.
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Section 2. CONTINGENCIES
Before payment of any dividends or other distributions, there
may be 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, determine proper as a reserve fund for
contingencies, for equalizing dividends or other distributions, for repairing or
maintaining any property of the Corporation or for such other purpose as the
Board of Directors shall determine to be in the best interest of the
Corporation, and the Board of Directors may modify or abolish any such reserve.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Charter, the Board of
Directors may from time to time adopt, amend, revise or terminate any policy or
policies with respect to investments by the Corporation as it shall deem
appropriate in its sole discretion.
ARTICLE XI
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 or herein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the purpose
of any meeting need be set forth in the waiver of notice, unless specifically
required by statute. The attendance of any Person at any meeting shall
constitute a waiver of notice of such meeting, except where such Person attends
a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
ARTICLE XII
FINANCE
Section 1. CHECKS AND DRAFTS
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness, in the name of the Corporation shall
be signed by such officer or officers, agent or agents of the Corporation and in
such manner as shall from time to time be determined by the Board of Directors.
Section 2. DEPOSITS
All funds of the Corporation not otherwise employed shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may designate.
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ARTICLE XIII
EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE
The provisions of Sections 3-701 to 3-709 of the Maryland
General Corporation Law shall not apply to any acquisition by any person of
shares of the capital stock of the Corporation. Such shares of capital stock are
exempted from such Sections to the fullest extent permitted by Maryland law.
This section may be repealed, in whole or in part, at any time, whether before
or after an acquisition of control shares and, upon such repeal, may, to the
extent provided by any successor bylaw, apply to any prior or subsequent control
share acquisition.
ARTICLE XIV
SUNDRY PROVISIONS
Section 1. 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 and of any executive or other committee when
exercising any of the powers of the Board of Directors. The books and records of
the Corporation may be in written form or in any other form which 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. The original or a certified copy of these Bylaws shall be kept at
the principal office of the Corporation.
Section 2. BONDS
The Board of Directors may require any officer, agent or
employee of the Corporation to give a bond to the Corporation, conditioned upon
the faithful discharge of his or her duties, with one or more sureties and in
such amount as may be satisfactory to the Board of Directors.
Section 3. VOTING SHARES IN OTHER CORPORATIONS
Stock of other corporations, associations or trusts,
registered in the name of the Corporation, may be voted by the Chairman of the
Board, the President, any Vice President or a proxy appointed by any of them.
The Board of Directors, however, may by resolution appoint some other person to
vote such shares, in which case such person shall be entitled to vote such
shares upon the production of a certified copy of such resolution.
Section 4. RELIANCE UPON BOOKS, REPORTS AND RECORDS
Each director and officer of the Corporation shall, in the
performance of his or her duties with respect to the Corporation, be entitled to
rely on any information, opinion report or statement, including financial
statement or other financial data, prepared or presented by an officer or
employee of the Corporation whom the director or officer reasonably believes to
be reliable and competent in the matters presented, by a lawyer, certified
public accountant or other
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person as to a matter which the director or officer reasonably believes to be
within the person's professional or expert competence or by a committee of the
Board of Directors on which the director does not serve, as to a matter within
its designated authority, if the director believes the committee to merit
confidence.
Section 5. TIME PERIODS
In applying any provision of these Bylaws which require that
an act be done or not done a specified number of days prior to an event or that
an act be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded
and the day of the event shall be included.
Section 6. TAX STATUS
It is intended that the Corporation shall qualify as a REIT
under the REIT Provisions of the Internal Revenue Code during such period as the
Board of Directors shall deem it advisable to qualify the Corporation. The
failure of the Corporation to qualify as a REIT or the loss of such status shall
not render the Board of Directors liable to the stockholders or to any other
Person or operate in any manner to dissolve the Corporation.
ARTICLE XV
AMENDMENT OF BYLAWS
In accordance with the Charter, these Bylaws may be repealed,
altered, amended or rescinded only by vote of a majority of the Board of
Directors at a meeting held in accordance with the provisions of these Bylaws.
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APPENDIX D
UNITED MOBILE HOMES, INC.
2003 STOCK OPTION PLAN
SECTION 1
EFFECTIVE DATE AND PURPOSE
1.1 Effective Date. The Board of Directors of the Company has adopted the
Plan on June 19, 2003, subject to the approval of the stockholders of the
Company within twelve (12) months of such date.
1.2 Purpose of the Plan. The Plan is designed to provide a means to
attract, motivate and retain eligible Participants and to further the growth and
financial success of the Company by aligning the interests of Participants
through the ownership of Shares and other incentives with the interests of the
Company's stockholders.
SECTION 2
DEFINITIONS
2.1 The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:
2.2 "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the 1934 Act or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.
2.3 "Award" means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options or Incentive Stock Options.
2.4 "Award Agreement" means the written agreement setting forth the terms
and provisions applicable to each Award granted under the Plan.
2.5 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.6 "Cause" means (i) Participant's conviction of a felony or any crime
involving moral turpitude, (ii) any public disparagement by the Participant of
the Company, or (iii) the willful engaging by the Participant in conduct
materially injurious to the Company, monetarily or otherwise.
2.7 "Change in Control" shall have the meaning assigned to such term in
Section 10.
2.8 "Code" means the Internal Revenue Code of 1986, as amended. Reference
to a specific section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
2.9 "Committee" means the committee appointed by the Board pursuant to
Section 4.1 to administer the Plan.
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2.10 "Company" means United Mobile Homes, Inc., a New Jersey corporation,
or any successor thereto.
2.11 "Disability" means a permanent and total disability that qualifies a
Participant for disability benefits under the Company's long term disability
plan; or if no such plan is maintained, a permanent and total disability that
renders the Participant unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
2.12 "Employee" means any employee of the Company or its Subsidiaries,
whether such employee is so employed at the time the Plan is adopted or becomes
so employed subsequent to the adoption of the Plan.
2.13 "Exercise Price" means the price at which a Share may be purchased by
a Participant pursuant to the exercise of an Option.
2.14 "Fair Market Value" means, as of any given date, (i) the closing sales
price of the Shares on any national securities exchange on which the Shares are
listed; or (ii) if there is no regular public trading market for such Shares,
the fair market value of the Shares as determined by the Committee.
2.15 "Fiscal Year" means the fiscal year of the Company.
2.16 "Grant Date" means, with respect to an Award, the date such Award is
granted to a Participant.
2.17 "Incentive Stock Option" means an Option to purchase Shares which is
designated as an Incentive Stock Option and is intended to meet the requirements
of Section 422 of the Code.
2.18 "Nonqualified Stock Option" means an Option to purchase Shares which
is not an Incentive Stock Option.
2.19 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
2.20 "Participant" means an Employee who has an outstanding Award under the
Plan.
2.21 "Plan" means the United Mobile Homes, Inc. 2003 Stock Option Plan, as
set forth in this instrument and as hereafter amended from time to time.
2.22 "Retirement" means a Termination of Service by reason of individual's
retirement on or after attaining age 65 (or any earlier normal retirement age
specified in a Company-sponsored qualified retirement plan).
2.23 "Shares" means the shares of common stock, $.10 par value, of the
Company.
2.24 "Subsidiary" means, consistent with Section 424(f) of the Code, any
corporation (other than the Company) in an unbroken chain of entities beginning
with the Company if, at the time of the granting of an Award, each of the
entities other than the last entity in the unbroken chain owns more than fifty
percent (50%) of the total combined voting power in one of the other entities in
such chain.
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2.25 "Termination of Service" means, a cessation of the employee-employer
relationship between such person and the Company or a Subsidiary for any reason
unless there is a simultaneous reengagement of the person by the Company or a
Subsidiary.
SECTION 3
ELIGIBILITY
3.1 Participants. Awards may be granted in the discretion of the Committee
among key employees and officers of the Company and its Subsidiaries.
3.2 Non-Uniformity. Awards granted hereunder need not be uniform among
eligible Participants and may reflect distinctions based on title, compensation,
responsibility or any other factor the Committee deems appropriate.
SECTION 4
ADMINISTRATION
4.1 The Committee. The Plan shall be administered by the Compensation
Committee comprised of two or more directors of the Company, none of whom shall
be officers or employees of the Company and all of whom shall be "non-employee
directors" (within the meaning of Rule 16b-3 promulgated under the 1934 Act) and
"outside directors" (as required by Section 162(m) of the Code). The members of
the Committee shall be appointed from time to time by, and shall serve at the
pleasure of, the Board of Directors. In the absence of such appointment, the
Board of Directors shall serve as the Committee and shall have all of the
responsibilities, duties, and authority of the Committee set forth herein.
4.2 Authority of the Committee. The Committee shall have the exclusive
authority to administer and construe the Plan in accordance with its provisions.
The Committee's authority shall include, without limitation, the power to (a)
determine persons eligible for Awards, (b) prescribe the terms and conditions of
the Awards, (c) accelerate the time at which all or any part of an Option may be
exercised, (d) amend or modify the terms and conditions of an Award with the
consent of the Participant, (e) interpret the Plan and the Awards, (f) adopt
rules for the administration, interpretation and application of the Plan as are
consistent therewith, (g) interpret, amend or revoke any such rules, and (h)
make all other determinations necessary or advisable for the administration of
the Plan, subject to the exclusive authority of the Board under Section 8.1 to
amend or terminate the Plan.
4.3 Delegation by the Committee. The Committee, in its sole discretion and
on such terms and conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to one or more officers of the Company;
provided, however, that the Committee may not delegate its authority and powers
in any way which would jeopardize the Plan's qualification under Rule 16b-3 or
the deductibility of Awards under Section 162(m) of the Code.
4.4 Factors to Consider for Granting Awards. In making the determination as
to the persons to whom an Award shall be granted, the Committee or any delegate
may take into account such individual's salary and tenure, duties and
responsibilities, their present and potential contributions to the success of
the Company, the recommendation of supervisors, and such other factors as the
Committee or any delegate may deem important in connection with accomplishing
the purposes of the Plan.
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4.5 Decisions Binding. All determinations and decisions made by the
Committee and any of its delegates pursuant to Section 4.3 shall be final,
conclusive, and binding on all persons, and shall be given the maximum deference
permitted by law.
4.6 Committee Governance. The Committee shall select one of its members as
its Chairman and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by not less than a majority of its
members. Any decision or determination reduced to writing and signed by all of
the members of the Committee shall be fully effective as if it had been made by
a majority vote at a meeting duly called and held. The grant of an Award shall
be effective only if a written agreement is duly executed and delivered by and
on behalf of the Company following such grant. The Committee may appoint a
Secretary and may make such rules and regulations for the conduct of its
business as it shall deem advisable.
SECTION 5
SHARES SUBJECT TO THE PLAN
5.1 Number of Shares. Subject to adjustment as provided in Section 5.3, the
total number of Shares available for grant under the Plan shall not exceed one
million five hundred thousand Shares. Shares granted under the Plan may be
either authorized but unissued Shares or treasury Shares, or any combination
thereof.
5.2 Lapsed Awards. Unless determined otherwise by the Committee, Shares
related to Awards that are forfeited, terminated, expire unexercised, tendered
by a Participant to the Company in connection with the exercise of an Award,
withheld from issuance in connection with a Participant's payment of tax
withholding liability, settled in cash in lieu of Shares, or settled in such
other manner so that a portion or all of the Shares included in an Award are not
issued to a Participant shall be available for grant under the Plan.
5.3 Adjustments in Awards and Authorized Shares. In the event of a merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, stock split, combination, or other similar change in the corporate
structure of the Company affecting the Shares, the Committee shall adjust the
number and class of Shares which may be delivered under the Plan, the number,
class and price of Shares subject to outstanding Awards, and the numerical
limits of Section 5.1 in such manner as the Committee shall determine to be
advisable or appropriate to prevent the dilution or diminution of such Awards.
5.4 Repurchase Option. The Board may include in the terms of any Award
Agreement that the Company shall have the option to repurchase Shares of any
Participant acquired pursuant to any Award granted under the Plan upon a
Participant's Termination of Service. The terms of such repurchase right shall
be set forth in the Award Agreement.
5.5 Buy-Out Provision. The Board may at any time offer on behalf of the
Company to buy-out, for a payment in cash or Shares, an Award previously
granted, based on such terms and conditions as the Board shall establish and
communicate to the Participants at the time such offer is made; provided,
however, to the extent Sections 13(e) and/or 14(e) of the 1934 Act and the rules
and regulations thereunder are applicable to any such offer, the Company shall
comply with the requirements of such sections.
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SECTION 6
STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Participants at any time and from time to time as
determined by the Committee. The Committee shall determine the number of Shares
subject to each Option. The Committee may grant Incentive Stock Options,
Nonqualified Stock Options, or any combination thereof. The maximum number of
Shares that may be granted as Options in any one Fiscal Year to a Participant
shall be Two Hundred Thousand (200,000). Each Option may be exercised only after
one (1) year of continued employment by the Company or one of its Subsidiaries
immediately following the date the Option is granted.
6.2 Award Agreement. Each Option shall be evidenced by an Award Agreement
that shall specify the Exercise Price, the expiration date of the Option, the
number of Shares to which the Option pertains, any conditions to exercise of the
Option and such other terms and conditions as the Committee shall determine. The
Award Agreement shall also specify whether the Option is intended to be an
Incentive Stock Option or a Nonqualified Stock Option.
6.3 Exercise Price. Subject to the provisions of this Section 6.3, the
Exercise Price for each Option shall be determined by the Committee and shall be
provided in each Award Agreement.
6.3.1 Nonqualified Stock Options. In the case of a Nonqualified Stock
Option, the Exercise Price shall not be less than one hundred percent
(100%) of the Fair Market Value of a Share on the Grant Date; provided,
however, in no case shall the Exercise Price be less than the par value of
such Share.
6.3.2 Incentive Stock Options. In the case of an Incentive Stock
Option, the Exercise Price shall be not less than one hundred percent
(100%) of the Fair Market Value of a Share on the Grant Date; or,
consistent with Section 422(c)(5) of the Code, one hundred ten percent
(110%) of the Fair Market Value of a Share if the Participant (together
with persons whose stock ownership is attributed to the Participant
pursuant to Section 424(d) of the Code) owns on the Grant Date stock
possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any of its Subsidiaries; provided, however, in
no case shall the Exercise Price be less than the par value of such Share.
6.3.3 Substitute Options. Notwithstanding the provisions of Sections
6.3.1 and 6.3.2, in the event that the Company consummates a transaction
described in Section 424(a) of the Code, persons who become Participants on
account of such transaction may be granted Options in substitution for
options granted by such former employer. If such substitute Options are
granted, the Committee, consistent with Section 424(a) of the Code, may
determine that such substitute Options shall have an exercise price less
than one hundred (100%) of the Fair Market Value of the Shares on the Grant
Date.
6.4 Expiration of Options.
6.4.1 Expiration Dates. Except as provided in Section 6.7.3 regarding
Incentive Stock Options, each Option shall terminate upon the earlier of
the first to occur of the following events:
(a) The date(s) for termination of the Option set forth in the
Award Agreement;
(b) The date determined under Section 6.8 regarding Termination
of Service; or
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(c) The expiration of ten (10) years from the Grant Date.
6.4.2 Committee Discretion. Subject to the limits of Section 6.4.1,
the Committee shall provide in each Award Agreement when each Option
expires and becomes unexercisable, and may, after an Option is granted,
extend the maximum term of the Option (subject to Section 6.7 regarding
Incentive Stock Options).
6.5 Exercisability of Options.
6.5.1 Timing of Exercise. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and
conditions as the Committee shall determine. After an Option is granted,
the Committee may accelerate the exercisability of the Option. If the
Committee provides that any Option is exercisable only in installments, the
Committee may at any time waive such installment exercise provisions, in
whole or in part, based on such factors as the Committee may determine.
6.5.2 Restrictions on Exercise. The Committee may postpone any
exercise of an Option for such period as the Committee in its discretion
may deem necessary in order to permit the Company (i) to effect or maintain
registration of the Plan or the Shares issuable upon the exercise of an
Option under the Securities Act of 1933, as amended, or the securities laws
of any applicable jurisdiction, (ii) to permit any action to be taken in
order to comply with restrictions or regulations incident to the
maintenance of a public market for its Shares or to list the Shares
thereon; or (iii) to determine that such Shares and the Plan are exempt
from such registration or that no action of the kind referred to in (ii)
above need be taken; and the Company shall not be obligated by virtue of
any terms and conditions of any Award or any provision of the Plan to
permit the exercise of an Option to sell or deliver Shares in violation of
any federal or state securities or other law. Any such postponement shall
not extend the term of an Option as set forth in Section 6.4.1; and neither
the Company nor its directors or officers or any of them shall have any
obligation or liability to the Participant, to any successor of a
Participant or to any other person with respect to any Shares as to which
an Option shall lapse because of such postponement.
6.6 Payment.
6.6.1 Notice. Options shall be exercised by a Participant's delivery
of a written notice of exercise to the Secretary of the Company (or its
designee), setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by full payment for the Shares.
6.6.2 Form of Payment. Upon the exercise of an Option, the Exercise
Price shall be payable to the Company in full in cash or its equivalent.
The Committee may also permit exercise (a) by tendering previously acquired
Shares having an aggregate Fair Market Value at the time of exercise equal
to the total Exercise Price or (b) by any other means which the Committee
determines to provide legal consideration for the Shares, and to be
consistent with the purposes of the Plan and with all applicable laws and
regulations, provided that such other means shall be set forth in the Award
Agreement.
6.6.3 Delivery of Certificates. As soon as practicable after receipt
of a written notification of exercise and full payment for the Shares
purchased, the Company shall deliver to the Participant, Share certificates
(which may be in book entry form) representing such Shares.
6.7 Certain Additional Provisions for Incentive Stock Options.
D-6
6.7.1 Exercisability. The aggregate Fair Market Value (determined on
the Grant Date(s)) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by any Participant during any
calendar year (under all plans of the Company and its Subsidiaries) shall
not exceed $100,000.
6.7.2 Company and Subsidiaries Only. Incentive Stock Options may be
granted only to Participants who are employees of the Company or its
Subsidiaries on the Grant Date.
6.7.3 Expiration. No Incentive Stock Option may be exercised after the
expiration of ten (10) years from the Grant Date; provided, however, that
if the Option is granted to an employee who, together with persons whose
stock ownership is attributed to the employee pursuant to Section 424(d) of
the Code, owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any of its
Subsidiaries, consistent with Section 422(c)(5) of the Code, the Option may
not be exercised after the expiration of five (5) years from the Grant
Date.
6.8 Termination of Service.
6.8.1 Termination for Cause. Unless otherwise specifically provided in
the Award Agreement, an Option may not be exercised after a Participant's
Termination of Service by the Company or a Subsidiary for Cause
6.8.2 Termination Due To Death or Disability. Unless otherwise
specifically provided in the Award Agreement, an Option may not be
exercised more than three (3) months after a Participant's Termination of
Service due to death or Disability.
6.8.3 Termination For Other Reasons. Unless otherwise specifically
provided in the Award Agreement, an Option may not be exercised more than
three (3) months after a Participant's Termination of Service for any
reason other than described in Section 6.8.1 or 6.8.2.
6.9 Restriction on Option Transfer. Except as otherwise determined by the
Committee and set forth in the Award Agreement, no Option may be transferred,
gifted, bequeathed, pledged, assigned, or otherwise alienated or hypothecated,
voluntarily or involuntarily, except that the Committee may permit a transfer,
upon the Participant's death, to beneficiaries designated by the Participant as
provided in Section 7.5.
SECTION 7
MISCELLANEOUS
7.1 No Effect on Employment or Service. Nothing in the Plan shall interfere
with or limit in any way the right of the Company or any Subsidiary to terminate
any Participant's employment or service at any time, with or without Cause.
Employment with the Company or any Subsidiary is on an at-will basis only,
unless otherwise provided by an applicable employment or service agreement
between the Participant and the Company or any Subsidiary, as the case may be.
7.2 Participation. No Participant shall have the right to be selected to
receive an Award under the Plan, or, having been so selected, to be selected to
receive a future Award.
7.3 Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost,
D-7
liability or expense (including attorneys' fees) that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan or any Award Agreement, and (b) from any and all amounts paid by him or
her in settlement thereof, with the Company's prior written approval, or paid by
him or her in satisfaction of any judgment in any such claim, action, suit or
proceeding against him or her; provided, however, that he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or Bylaws, by contract, as a matter of law or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.
7.4 Successors. All obligations of the Company under the Plan, with respect
to Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business or assets of the Company.
7.5 Beneficiary Designations. If permitted by the Committee, a Participant
under the Plan may name a beneficiary or beneficiaries to whom any vested but
unexercised Award shall be transferred in the event of the Participant's death.
Each such designation shall revoke all prior designations by the Participant and
shall be effective only if given in a form and manner acceptable to the
Committee. In the absence of any such designation, any vested benefits remaining
at the Participant's death shall be transferred to the Participant's estate and,
subject to the terms of the Plan and of the applicable Award Agreement, any
unexercised vested Award may be exercised by the administrator or executor of
the Participant's estate.
7.6 No Rights as Stockholder. No Participant (nor any beneficiary thereof)
shall have any of the rights or privileges of a stockholder of the Company with
respect to any Shares issuable pursuant to an Award (or the exercise thereof),
unless and until certificates representing such Shares shall have been issued,
recorded on the records of the Company or its transfer agents or registrars, and
delivered to the Participant (or his or her beneficiary).
7.7 Uncertificated Shares. To the extent that the Plan provides for
issuance of certificates to reflect the transfer of Shares, the transfer of such
Shares may be effected on a noncertificated basis, to the extent not prohibited
by applicable law or the rules of any stock exchange.
7.8 Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
or Awards, or other property shall be issued or paid in lieu of fractional
Shares or whether such fractional Shares or any rights thereto shall be
forfeited or otherwise eliminated.
7.9 Deferrals. The Committee may permit a Participant to defer receipt of
the payment of cash or the delivery of Shares that would otherwise be due to
such Participant under an Award. Any such deferral election shall be subject to
such rules and procedures as shall be determined by the Committee.
7.10 Investment Representation. As a condition to the exercise of an Award,
the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares.
D-8
SECTION 8
AMENDMENT, TERMINATION, AND DURATION
8.1 Amendment, Suspension, or Termination. The Board, in its sole
discretion, may amend or terminate the Plan, or any part thereof, at any time
and for any reason; provided, however, that if and to the extent required by law
or to maintain the Plan's qualification under the Code, the rules of any
national securities exchange (if applicable), or any other applicable law, any
such amendment shall be subject to stockholder approval. The amendment,
suspension or termination of the Plan shall not, without the consent of the
Participant, alter or impair any rights or obligations under any Award
theretofore granted to such Participant. No Award may be granted during any
period of suspension or after termination of the Plan.
8.2 Duration of the Plan. The Plan shall become effective in accordance
with Section 1.1, and subject to Section 8.1 shall remain in effect thereafter;
provided, however, that without further stockholder approval, no Incentive Stock
Option may be granted under the Plan after the tenth (10th) anniversary of the
effective date of the Plan.
SECTION 9
TAX WITHHOLDING AND TAX BONUSES
9.1 Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or the exercise thereof), the Company shall have the power
and the right to deduct or withhold from any amounts due to the Participant from
the Company, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state and local taxes (including the
Participant's FICA obligation) required to be withheld with respect to such
Award (or the exercise thereof).
9.2 Withholding Arrangements. The Committee, pursuant to such procedures as
it may specify from time to time, may permit a Participant to satisfy such tax
withholding obligation, in whole or in part, by (a) electing to have the Company
withhold otherwise deliverable Shares, or (b) delivering to the Company Shares
then owned by the Participant having a Fair Market Value equal to the amount
required to be withheld. The amount of the withholding requirement shall be
deemed to include any amount that the Committee agrees may be withheld at the
time any such election is made, not to exceed the amount determined by using the
maximum federal, state or local marginal income tax rates applicable to the
Participant with respect to the Award on the date that the amount of tax to be
withheld is to be determined. The Fair Market Value of the Shares to be withheld
or delivered shall be determined as of the date that the taxes are required to
be withheld.
9.3 Tax Bonuses. The Committee shall have the authority, at the time of
grant of an Option or at any time thereafter, to approve tax bonuses to
designated Participants to be paid upon their exercise of Options granted
hereunder. The amount of any such payments shall be determined by the Committee.
The Committee shall have full authority in its absolute discretion to determine
the amount of any such tax bonus and the terms and conditions affecting the
vesting and payment thereafter.
SECTION 10
CHANGE IN CONTROL
10.1 Change in Control. Notwithstanding Section 6.1, if provided under the
terms of an Award Agreement, Awards granted under the Plan that are outstanding
and not then exercisable or are
D-9
subject to restrictions at the time of a Change in Control shall become
immediately exercisable, and all restrictions shall be removed, as of such
Change in Control, and shall remain as such for the remaining life of the Award
as provided herein and within the provisions of the related Award Agreements.
10.2 Definition. For purposes of the Plan, a Change in Control shall be
deemed to have occurred at any of the following times:
(a) Upon the acquisition (other than from the Company) by any person,
entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of
the 1934 Act (excluding, for this purpose, the Company or its affiliates,
or any person, entity, or group that has beneficial ownership at the date
of the adoption of this Plan of 20% or more of the outstanding shares of
common stock of the Company, or any employee benefit plan of the Company or
its affiliates which acquires beneficial ownership of voting securities of
the Company) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 20% or more of either the then
outstanding shares of common stock of the Company or the Combined Voting
Power of the Company's then outstanding voting securities. "Combined Voting
Power" means, as to any corporation or other entity, the combined voting
power of such corporation's or entity's then outstanding voting securities
generally entitled to vote in the election of directors, or comparable
governing body, or the combined voting power of any other entity's voting
securities which directly or indirectly has the power to elect a majority
of such directors or members of a comparable governing body of such other
entity.
(b) At the time individuals who, as of the date hereof, constitute the
Board (as of the date hereof, the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934
Act) shall be, for purposes of this Subsection (c)(ii), considered as
though such person were a member of the Incumbent Board; or
(c) Upon the consummation of a merger, consolidation or other similar
reorganization involving the Company and one or more other entities (in
each case, with respect to which persons who were the shareholders of the
Company immediately prior to such merger, consolidation or reorganization
do not, immediately thereafter, own more than 50% of the Combined Voting
Power of the merged, consolidated or reorganized entity's then outstanding
voting securities) or the consummation of a sale of all or substantially
all of the assets of the Company (other than a transaction in which persons
who were shareholders of the Company immediately prior to such sale
immediately after the consummation thereof own more than 50% of the
Combined Voting Power of the entity acquiring such assets) or the approval
by the shareholders of the Company of a plan of liquidation or dissolution
of the Company; or
(d) The occurrence of any other event which the Incumbent Board in its
sole discretion determines constitutes a Change of Control.
D-10
SECTION 11
LEGAL CONSTRUCTION
11.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
11.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
11.3 Requirements of Law. The grant of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required from time to time.
11.4 Securities Law Compliance. To the extent any provision of the Plan,
Award Agreement or action by the Committee fails to comply with any applicable
federal or state securities law, it shall be deemed null and void, to the extent
permitted by law and deemed advisable or appropriate by the Committee.
11.5 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of New Jersey; provided,
however, that if the Company reincorporates as a Maryland corporation, any Award
Agreement with respect to any Award granted after the effective date of the
reincorporation, and the Plan as it relates to any such Award and Award
Agreement, shall be construed in accordance with and governed by the laws of the
State of Maryland.
11.6 Captions. Captions are provided herein for convenience of reference
only, and shall not serve as a basis for interpretation or construction of the
Plan.
UNITED MOBILE HOMES, INC.
By:
------------------------------------------
Title:
---------------------------------------
D-11
APPENDIX A
NON-QUALIFIED STOCK OPTION AGREEMENT
This NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of this ____ day of
___________________, 200__, by and between United Mobile Homes, Inc., a ________
corporation (the "Company"), and ___________________ (the "Optionee").
Pursuant to the United Mobile Homes, Inc. 2003 Stock Option Plan (the
"Plan"), the Compensation Committee has determined that the Optionee is to be
granted a Non-Qualified Stock Option (the "Option") to purchase shares of the
Company's common stock, on the terms and conditions set forth herein. It is
intended that the Option shall not constitute an "Incentive Stock Option" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Any capitalized terms not defined herein shall have the meaning set
forth in the Plan.
1. Number of Shares and Option Price. The Option entitles the Optionee to
purchase [______] shares of the Company's common stock, par value $.10 per share
(the "Option Shares"), at a price of [_____] per share (the "Option Price").
2. Period of Option. The term of the Option and of this Option
Agreement shall commence on the date hereof (the "Grant Date") and terminate
upon the earlier of (i) the expiration of ________ years from the Grant Date, or
(ii) the occurrence of one of the events set forth under Section 6.4.1 of the
Plan. Upon termination of the Option, all rights of the Optionee hereunder shall
cease.
3. Vesting of Options.
Option 1: One Year Vesting
The Option Shares granted hereunder shall be fully vested and
nonforfeitable on __________ (one year from grant date), except as otherwise
provided herein.
The right of the Optionee to purchase Shares may be exercised in whole
or in part at any time or from time to time following such date up to the
expiration of the stated term of such Option as set forth under Section 2 above.
Option 2: Graduated Vesting
For so long as the Optionee is employed by the Company or a Subsidiary,
the Option Shares granted hereunder shall vest as follows:
(a) ____________ percent (___%) of the Option Shares (rounded down to
the nearest whole number of shares) on ____________;
(b) An additional ____________ percent (___%) of the Option Shares
(rounded down to the nearest whole number of shares) on ___________; and
(c) The remainder of the Option Shares on ____________.
Notwithstanding the foregoing, the Option Shares shall immediately
vest, to the extent not already vested, in the event of a Change in Control
(subject to the limitations set forth in the Plan).
a-1
The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above.
Option 3: Cliff Vesting
For so long as the Optionee is employed by or provides services to the
Company or a Subsidiary, the Option Shares granted hereunder shall vest on
____________. Notwithstanding the foregoing, the Option Shares shall immediately
vest, to the extent not already vested, in the event of a Change in Control
(subject to the limitations set forth in the Plan).
The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above.
4. Non-transferability of Option. The Option and this Option Agreement
shall not be transferable otherwise than by will or by laws of descent and
distribution; and the Option may be exercised, during the lifetime of the
Optionee, only by the Optionee or by the Optionee's legal representative.
5. Exercise of Option. The Option shall be exercised in the following
manner: the Optionee, or the person or persons having the right to exercise the
Option upon the death or Disability of the Optionee, shall deliver to the
Company written notice specifying the number of vested Option Shares which the
Optionee elects to purchase, together with either (i) cash, (ii) shares of
Company common stock having Fair Market Value determined as of the date of
exercise, or (iii) any combination of the above, the sum of which equals the
total price to be paid upon the exercise of the Option, and the stock purchased
shall thereupon be promptly delivered. The Optionee will not be deemed to be a
holder of any shares pursuant to exercise of the Option until the date of
issuance to the Optionee of a stock certificate for such shares and until the
shares are paid in full.
6. Termination of Service.
If the Optionee incurs a Termination of Service by the Company or a
Subsidiary for Cause, the Optionee's unexercised Option Shares, irrespective of
whether or not vested, shall be immediately forfeited.
If the Optionee incurs a Termination of Service due to death or
Disability, the Optionee may exercise his or her unexercised and vested Option
Shares for a period of up to three months following the Optionee's Termination
of Service.
If the Optionee incurs a Termination of Service for any reason other
than described in (a) or (b) above, the Optionee may exercise his or her
unexercised and vested Option Shares for a period of up to three months after
the Optionee's Termination of Service.
7. Notices. Any notice required or permitted under this Option
Agreement shall be deemed given when delivered personally, or when deposited in
a United States Post Office, postage prepaid, addressed, as appropriate, to the
Optionee either at the Optionee's address set forth below or such other address
as the Optionee may designate in writing to the Company, or the Company:
Attention: Board of Directors/Corporate Secretary, at the Company's address or
such other address as the Company may designate in writing to the Optionee.
a-2
8. Withholding of Taxes. As a condition to the issuance of the Option
Shares, the Optionee shall (a) remit to the Company at the time of any exercise
of the Option any taxes required to be withheld by the Company under federal,
state or local laws as a result of the exercise of the Option; or (b) instruct
the Company to withhold in accordance with applicable law from any compensation
payable to the Optionee the taxes required to be held by the Company under
federal, state or local laws as a result of the exercise of the Option; or (c)
instruct the Company to withhold such number of shares as are necessary for the
fair market value of such shares to equal the amount of taxes required to be
withheld by the Company, under federal, state, or local laws as a result of the
exercise of the Option. The determination of the amount of any such withholding
shall be made by the Company.
9. Failure to Enforce Not a Waiver. The failure of the Company to
enforce at any time any provision of this Option Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.
10. Incorporation of Plan. The Plan is hereby incorporated by reference
and made a part hereof, and the Option and this Option Agreement are subject to
all terms and conditions of the Plan.
11. Amendments. This Option Agreement may be amended or modified at any
time by an instrument in writing signed by the parties hereto.
12. Successors and Assigns. This Option Agreement shall inure to the
benefit of and be binding upon the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Option Agreement on
the day and year first above written.
COMPANY: UNITED MOBILE HOMES, INC.
By:
------------------------------------------------
Title:
---------------------------------------------
The undersigned hereby
accepts and agrees to all
the terms and provisions of
the foregoing Option
Agreement and to all the
terms and provisions of the
Plan herein incorporated by
reference.
OPTIONEE:
-------------------------------------------
a-3
APPENDIX B
INCENTIVE STOCK OPTION AGREEMENT
This INCENTIVE STOCK OPTION AGREEMENT, dated as of this ____ day of
___________________, 200__, by and between United Mobile Homes, Inc., a ________
corporation (the "Company"), and ___________________ (the "Optionee").
Pursuant to the United Mobile Homes, Inc. 2003 Stock Option Plan (the
"Plan"), the Compensation Committee has determined that the Optionee is to be
granted an Incentive Stock Option (the "Option") to purchase shares of the
Company's common stock, on the terms and conditions set forth herein. It is
intended that the Option shall constitute an "Incentive Stock Option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Any capitalized terms not defined herein shall have the meaning set
forth in the Plan.
12. Number of Shares and Option Price. The Option entitles the Optionee
to purchase [______] shares of the Company's common stock, par value $.10 per
share (the "Option Shares"), at a price of [_____] per share (the "Option
Price").
13. Period of Option. The term of the Option and of this Option
Agreement shall commence on the date hereof (the "Grant Date") and terminate
upon the earlier of (i) the expiration of ________ years from the Grant Date, or
(ii) the occurrence of one of the events set forth under Section 6.4.1 of the
Plan. Upon termination of the Option, all rights of the Optionee hereunder shall
cease.
14. Vesting of Options.
Option 1: Immediate Vesting
The Option Shares granted hereunder shall be fully vested and
nonforfeitable at all times on and after _________________(at least one year
following the Grant Date).
The right of the Optionee to purchase Shares may be exercised in whole
or in part at any time or from time to time up to the expiration of the stated
term of such Option as set forth under Section 2 above.
Option 2: Graduated Vesting
For so long as the Optionee is employed by the Company or a Subsidiary,
the Option Shares granted hereunder shall vest as follows:
(a) ____________ percent (___%) of the Option Shares (rounded
down to the nearest whole number of shares) on ______________;
(b) An additional ____________ percent (___%) of the Option
Shares (rounded down to the nearest whole number of shares) on
___________; and
(c) The remainder of the Option Shares on ____________.
Notwithstanding the foregoing, the Option Shares shall immediately
vest, to the extent not already vested, in the event of a Change in Control
(subject to the limitations set forth in the Plan).
b-1
The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above.
Option 3: Cliff Vesting
For so long as the Optionee is employed by the Company or a Subsidiary,
the Option Shares granted hereunder shall vest on ____________. Notwithstanding
the foregoing, the Option Shares shall immediately vest, to the extent not
already vested, in the event of a Change in Control (subject to the limitations
set forth in the Plan).
The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above.
Non-transferability of Option. The Option and this Option Agreement shall not be
transferable otherwise than by will or by laws of descent and
distribution; and the Option may be exercised, during the lifetime of
the Optionee, only by the Optionee or by the Optionee's legal
representative.
Exercise of Option. The Option shall be exercised in the following manner: the
Optionee, or the person or persons having the right to exercise the
Option upon the death or Disability of the Optionee, shall deliver to
the Company written notice specifying the number of vested Option
Shares which the Optionee elects to purchase, together with either (i)
cash, (ii) shares of Company common stock having Fair Market Value
determined as of the date of exercise, or (iii) any combination of the
above, the sum of which equals the total price to be paid upon the
exercise of the Option, and the stock purchased shall thereupon be
promptly delivered. The Optionee will not be deemed to be a holder of
any shares pursuant to exercise of the Option until the date of
issuance to the Optionee of a stock certificate for such shares and
until the shares are paid in full.
Termination of Service.
If the Optionee incurs a Termination of Service by the Company or a
Subsidiary for Cause, the Optionee's unexercised Option Shares, irrespective of
whether or not vested, shall be immediately forfeited.
If the Optionee incurs a Termination of Service due to death or
Disability, the Optionee may exercise his or her unexercised and vested Option
Shares for a period of up to three months following the Optionee's Termination
of Service.
If the Optionee incurs a Termination of Service for any reason other
than described in (a) or (b) above, the Optionee may exercise his or her
unexercised and vested Option Shares for a period of up to three months after
the Optionee's Termination of Service.
15. Notices. Any notice required or permitted under this Option
Agreement shall be deemed given when delivered personally, or when deposited in
a United States Post Office, postage prepaid, addressed, as appropriate, to the
Optionee either at the Optionee's address set forth below or such other address
as the Optionee may designate in writing to the Company, or the Company:
Attention: Board of Directors/Corporate Secretary, at the Company's address or
such other address as the Company may designate in writing to the Optionee.
b-2
16. Withholding of Taxes. As a condition to the issuance of the Option
Shares, the Optionee shall (a) remit to the Company at the time of any exercise
of the Option any taxes required to be withheld by the Company under federal,
state or local laws as a result of the exercise of the Option; or (b) instruct
the Company to withhold in accordance with applicable law from any compensation
payable to the Optionee the taxes required to be held by the Company under
federal, state or local laws as a result of the exercise of the Option; or (c)
instruct the Company to withhold such number of shares as are necessary for the
fair market value of such shares to equal the amount of taxes required to be
withheld by the Company, under federal, state, or local laws as a result of the
exercise of the Option. The determination of the amount of any such withholding
shall be made by the Company.
17. Disposition of Option Shares. It is understood that this Option is
intended to qualify as an "Incentive Stock Option" as defined in Section 422 of
the Code. Accordingly, the Optionee understands that in order to obtain the
benefits of an incentive stock option under Section 421 of the Code, no sale or
other disposition may be made of any Shares acquired upon exercise of the Option
within one (1) year after the day of the transfer of such Shares to the
Optionee, nor within two (2) years after the Grant Date of the Option. If the
Optionee disposes (whether by sale, exchange, gift, transfer or otherwise), of
any such Shares within said periods, the Optionee will notify the Company in
writing within ten (10) days after such disposition.
18. Failure to Enforce Not a Waiver. The failure of the Company to
enforce at any time any provision of this Option Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.
19. Incorporation of Plan. The Plan is hereby incorporated by reference
and made a part hereof, and the Option and this Option Agreement are subject to
all terms and conditions of the Plan.
20. Amendments. This Option Agreement may be amended or modified at any
time by an instrument in writing signed by the parties hereto.
21. Successors and Assigns. This Option Agreement shall inure to the
benefit of and be binding upon the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Option Agreement on
the day and year first above written.
COMPANY: UNITED MOBILE HOMES, INC.
By:
------------------------------------------------
Title:
---------------------------------------------
The undersigned hereby
accepts and agrees to all
the terms and provisions of
the foregoing Option
Agreement and to all the
terms and provisions of the
Plan herein incorporated by
reference.
OPTIONEE:
--------------------------------------------
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APPENDIX C
UNITED MOBILE HOMES, INC.
OPTION EXERCISE CERTIFICATE
The undersigned Optionee and United Mobile Homes, Inc. (the "Company"),
are parties to [a Non-Qualified Stock Option Agreement] [an Incentive Stock
Option Agreement] (the "Agreement"). The Optionee hereby notifies the Company
that the Optionee wishes to exercise Options for the number of Shares(s)
specified below as of the exercise date indicated. All Capitalized terms in this
Certificate have the meanings given to them in the United Mobile Homes, Inc.
2003 Stock Option Plan (the "Plan") and the Agreement.
Number of Shares with respect
to which Options are Exercised:
------------------------------------
Exercise Price per Share:
------------------------------------
Aggregate Exercise Price:
------------------------------------
Form of Payment: Cash (check attached)
------------------------------------
Exercise Date:
------------------------------------
IN WITNESS WHEREOF the undersigned has executed this certificate as of
the Exercise Date.
OPTIONEE: (Signature)
---------------------------------
(Typed or printed name)
---------------------------------
UNITED MOBILE HOMES, By:
INC.: ----------------------------------------
Title:
--------------------------------------
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PROXY PROXY
UNITED MOBILE HOMES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy is Solicited on Behalf of the Board of Directors
PLEASE FILL IN, DATE AND SIGN PROXY AND RETURN
IN THE ENCLOSED PREPAID ENVELOPE PROMPTLY
The undersigned hereby constitutes and appoints Eugene W. Landy, Ernest
V. Bencivenga, and Samuel A. Landy, and each or any of them, the attorneys and
proxies of the undersigned, each with the power of substitution, to attend and
act for the undersigned at the Annual Meeting of Stockholders of United Mobile
Homes, Inc., a New Jersey corporation (the "Company"), to be held at Juniper
Business Plaza, 3499 Route 9 North, Suite 3-C, Freehold, New Jersey on Thursday,
August 14, 2003, at 4:00 p.m., local time, and at any adjournments or
postponements thereof, and in connection therewith to vote all of the Company's
common stock which the undersigned would be entitled to vote, as set forth
below. This proxy revokes all prior proxies given by the undersigned.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS SET FORTH BELOW.
PROPOSAL 1: TO REINCORPORATE THE COMPANY AS A MARYLAND CORPORATION BY THE MERGER
OF THE COMPANY INTO A NEWLY FORMED, WHOLLY-OWNED SUBSIDIARY OF THE COMPANY
INCORPORATED IN MARYLAND.
| | FOR | | AGAINST | | ABSTAIN
PROPOSAL 2: ELECTION OF DIRECTORS - NOMINEES ARE: ERNEST V. BENCIVENGA, ANNA T.
CHEW, CHARLES P. KAEMPFFER, EUGENE W. LANDY, SAMUEL A. LANDY, JAMES E. MITCHELL,
RICHARD H. MOLKE, EUGENE ROTHENBERG AND ROBERT G. SAMPSON.
| | FOR ALL NOMINEES | | WITHHOLD AUTHORITY FOR ALL NOMINEES
| | FOR ALL EXCEPT:
------------------------------------
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT PERSON'S NAME ON THE LINE ABOVE.
PROPOSAL 3: TO APPROVE THE COMPANY'S 2003 STOCK OPTION PLAN.
| | FOR | | AGAINST | | ABSTAIN
PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS
FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003.
| | FOR | | AGAINST | | ABSTAIN
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED BY THE
UNDERSIGNED ON THIS PROXY. IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED
HEREON, THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR PROPOSAL
1, FOR ALL THE NOMINEES FOR DIRECTOR AND FOR PROPOSALS 3 AND 4. THIS PROXY
CONFERS DISCRETIONARY AUTHORITY AS DESCRIBED IN, AND MAY BE REVOKED IN THE
MANNER DESCRIBED IN, THE PROXY STATEMENT MAILED ON OR ABOUT JULY 10, 2003,
RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED.
NO PROPOSAL IS CONDITIONED UPON THE APPROVAL OF ANY OTHER PROPOSAL.
Receipt of Notice of Meeting and Proxy Statement is hereby acknowledged.
Dated: __________________________, 2003
Signature: ________________________________
Signature: ________________________________
Important: Please date this Proxy; sign exactly as your name(s) appear hereon.
When signing as joint tenants, all parties to the joint tenancy should sign.
When signing the Proxy as attorney, executor, administrator, trustee or
guardian, please give full title as such.