<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to [Section]240.14a-11(c) or
[Section]240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BRADLEY REAL ESTATE, INC.
(Name of Registrant as Specified In Its Charter)
BRADLEY REAL ESTATE, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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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<PAGE> 2
BRADLEY REAL ESTATE, INC.
699 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 1996
April 1, 1996
To Stockholders of
BRADLEY REAL ESTATE, INC.:
The 1996 Annual Meeting of Stockholders (the "Annual Meeting") of Bradley
Real Estate, Inc. (the "Company") will be held at 10:00 a.m. in the Second Floor
Conference Center of The First National Bank of Boston, 100 Federal Street,
Boston, Massachusetts on Thursday, May 9, 1996 for the following purposes:
1. To elect three Directors of the Company to serve for three-year
terms until the 1999 Annual Meeting of Stockholders and until their
respective successors have been elected and qualified;
2. To consider and approve an amendment and restatement of the
Company's 1993 Stock Option Plan; and
3. To consider and act upon any other matters which may properly be
brought before the Annual Meeting and any adjournments or postponements
thereof.
The close of business on March 27, 1996 has been fixed by the Company's
Board of Directors as the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting or any adjournments or postponements
thereof.
The Board of Directors welcomes the former stockholders of Tucker
Properties Corporation to the Bradley family following the recent merger of
Tucker into the Company, and hopes that, as new stockholders of the Company, you
will take advantage of this first opportunity to exercise your voting franchise.
The Board also extends its deepest gratitude to E. Lawrence Miller, our
former President and Chief Executive Officer, who died suddenly in February.
During Larry's decade of service as President, his vision guided the Company
through a period of unprecedented growth while, more importantly, his magnetism
and integrity endowed us with a legacy of trust, respect and friendship in the
real estate and financial communities. Your Company is fortunate to have Larry's
successor, Thomas P. D'Arcy, as a capable steward of that legacy, and
confidently recommends his election along with that of the other Directors
nominated to be re-elected to the Board at the Annual Meeting.
By Order of the Board of Directors:
William B. King, Secretary
- --------------------------------------------------------------------------------
IMPORTANT REMINDER: 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. You may revoke your proxy in writing or at the meeting if
you wish to vote in person.
- --------------------------------------------------------------------------------
<PAGE> 3
BRADLEY REAL ESTATE, INC.
699 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
PROXY STATEMENT
Proxies in the form of the enclosed proxy card are solicited by the Board
of Directors (the "Board") of Bradley Real Estate, Inc., a Maryland corporation
(the "Company"), for use at the 1996 Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held on Thursday, May 9, 1996 in the Second
Floor Conference Center of The First National Bank of Boston, 100 Federal
Street, Boston, Massachusetts at 10:00 a.m. The Board has fixed the close of
business on March 27, 1996 as the record date for determining stockholders
entitled to notice of and to vote at the Annual Meeting. On that date, the
Company had approximately 18,658,515 shares of Common Stock ("Shares")
outstanding, each of which is entitled to one vote at the Annual Meeting.
At the Annual Meeting, stockholders will be asked to vote upon the election
of three Directors of the Company and an amendment and restatement of the
Company's 1993 Stock Option Plan. The presence, in person or by proxy, of at
least a majority in interest of the issued and outstanding Shares is necessary
to constitute a quorum for the transaction of business at the Annual Meeting.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENVELOPE PROVIDED. If a proxy in the form enclosed is signed and
returned, it will be voted as specified on the proxy. If no specific voting
instructions are indicated on the proxy, it will be voted in favor of the
Directors nominated by the Board, in favor of the amendment and restatement of
the Company's 1993 Stock Option Plan and in the named proxies' discretion as to
any other matters which may properly come before the meeting. Any proxy may be
revoked by the stockholder at any time before it is voted, by written notice to
the Company, by executing a proxy bearing a later date, or by voting in person
at the Annual Meeting.
In October, 1994, the Company was reorganized from the form of a
Massachusetts common law business trust, known since its formation in 1961 as
Bradley Real Estate Trust (the "Trust"), to a Maryland corporation. References
herein to the Company also include the Trust with respect to the period prior to
the reorganization. Effective January 31, 1995, in order to vertically integrate
its operations and make the Company a self-administered real estate investment
trust ("REIT"), the Company consummated the acquisition of the REIT advisory
business of R.M. Bradley & Co., Inc. ("RMB"), its long-time external advisor.
References herein to RMB include, as the context may require, either the
Company's advisor prior to such acquisition and/or the new corporation, also
known as R.M. Bradley & Co., Inc., that is continuing the non-REIT operations of
RMB.
Effective March 15, 1996, the Company acquired Tucker Properties
Corporation ("Tucker") through the merger of Tucker with and into the Company
(the "Merger"). Pursuant to the Merger, each outstanding share of Tucker's
common stock was converted into the right to receive .686 of a Share, resulting
in the issuance of approximately 7,428,202 Shares (which are included in the
number of Shares outstanding on the record date for the Annual Meeting). All
full Shares of the Company into which the Tucker shares were converted are
considered to be outstanding for purposes of the Annual Meeting notwithstanding
that the former Tucker stockholders may not yet have surrendered their Tucker
stock certificates for exchange for Company stock certificates.
The Notice of Annual Meeting and Proxy Statement, together with the
Company's Annual Report for 1995, are first being mailed to stockholders on or
about April 1, 1996.
<PAGE> 4
1. ELECTION OF DIRECTORS
A. NOMINEES FOR ELECTION AS DIRECTOR
The Company's Charter and Bylaws provide for a staggered board, divided
into three classes. The Directors of each class serve for three-year terms that
expire over a three-year period on a revolving basis.
The Board of Directors has nominated WILLIAM L. BROWN, THOMAS P. D'ARCY and
JOSEPH E. HAKIM for election as Directors at the Annual Meeting, to serve for
three-year terms until the 1999 Annual Meeting of Stockholders and until their
respective successors have been elected and qualified.
There were seven meetings of the Board of Directors of the Company in 1995.
During 1995, although Mr. Brown and Mr. Towbin each missed two Board meetings,
all of the Directors attended at least 75% of the total number of Board meetings
and of meetings of committees of which they were members.
The Company has standing Audit and Compensation Committees.
The Audit Committee, consisting of Messrs. Brown (as Chairman), Kasnet and
Hynes, with Mr. Hakim as an ex-officio non-voting member, makes recommendations
to the full Board as to the selection of the Company's independent public
accounting firm, meets with representatives of such firm on at least an annual
basis, and reviews transactions between the Company and any Director, officer or
affiliate for potential conflicts of interest. The Audit Committee met once
during 1995.
The Compensation Committee, consisting of Messrs. Kirk (as Chairman), Brown
and Towbin, with Mr. Hakim as an ex-officio non-voting member, is responsible
for the oversight of executive compensation and the issuance and administration
of option and other grants under the Company's 1993 Stock Option Plan. This
Committee met three times during 1995. For more information regarding the
Compensation Committee's duties, see "Report of the Compensation Committee"
below.
During 1995, the Board also had an Executive Committee, consisting of
Messrs. Thorndike (as Chairman), Hakim, Kasnet, Kirk and Miller, which had the
authority to exercise all of the powers of the full Board between Board
meetings, to the extent permitted by Maryland law, and also served the function
of a nominating committee. The Executive Committee, which was discontinued in
February, 1996, met three times during 1995.
<TABLE>
Information regarding the three nominees and the other Directors is set
forth below. This information has been furnished by the individuals named.
Except as otherwise indicated, each individual has held the position indicated
as his principal occupation for at least five years.
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE AND OTHER AFFILIATIONS SINCE EXPIRE
---- --- ---------------------- -------- -------
<S> <C> <C> <C> <C>
William L. Brown......... 74 Mr. Brown was Chairman of the Board of Bank 1990 1999*
of Boston Corporation and The First National
Bank of Boston from 1983 to 1989, Chief
Executive Officer from 1983 to 1987 and
President from 1971 to 1982. He was a
director of both Bank of Boston Corporation
and The First National Bank of Boston until
March 1992. He is also a director of GC
Companies, Inc., Standex International
Corporation, Stone & Webster, Incorporated,
Ionics, Incorporated, North American
Mortgage Company and the John F. Kennedy
Library Foundation.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE AND OTHER AFFILIATIONS SINCE EXPIRE
---- --- ---------------------- -------- -------
<S> <C> <C> <C> <C>
Thomas P. D'Arcy......... 36 Mr. D'Arcy was elected as President, Chief 1996 1999*
Executive Officer and Director of Bradley on
February 13, 1996 to succeed E. Lawrence
Miller following Mr. Miller's death a few
days earlier. Mr. D'Arcy previously served
as Executive Vice President of Bradley since
September, 1995, Senior Vice President of
Bradley since 1992 and Vice President of
Bradley since 1989. Prior to joining
Bradley, Mr. D'Arcy was employed by RMB as a
member of its property management and real
estate brokerage departments for over eight
years. Mr. D'Arcy is a member of the
International Council of Shopping Centers
and the Building Owners and Managers
Association.
Joseph E. Hakim.......... 47 Mr. Hakim was elected Chairman of the Board 1994 1999*
of Directors on February 13, 1996. Mr. Hakim
is President and Chief Executive Officer of
Merchandise Mart Properties, Inc. in
Chicago, Illinois, which manages
approximately 7.5 million square feet of
properties. Mr. Hakim also serves as
Treasurer of the Joseph P. Kennedy, Jr.
Foundation and the Robert F. Kennedy
Memorial.
John B. Hynes, III....... 37 Mr. Hynes is a Senior Vice President of RMB, 1994 1998
overseeing the operations of its Commercial
Brokerage Division. Prior to joining RMB in
1993, Mr. Hynes directed the Boston office
of Lincoln Property Company (a commercial
real estate development) as its Operating
Partner, and prior to that time was a Vice
President of the Codman Company of Boston.
He is a member of numerous real estate
industry organizations.
Stephen G. Kasnet........ 50 Mr. Kasnet has served as President of 1986 1997
Pioneer Real Estate Advisors, Inc. and Vice
President of The Pioneer Group, Inc. since
January, 1996. He was Managing Director of
First Winthrop Corporation and Winthrop
Financial Associates (real estate de-
velopment and management companies) from
1991 to September, 1995. He is also Chairman
of the Board of Warren Bancorp, Inc. and
Warren Five Cents Savings Bank in Peabody,
Massachusetts, a trustee and Vice President
of Pioneer Real Estate Shares and a member
of the Urban Land Institute.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR TERM TO
NAME AGE AND OTHER AFFILIATIONS SINCE EXPIRE
- ------------------------- --- -------------------------------------------- -------- -------
<S> <C> <C> <C> <C>
Paul G. Kirk, Jr. ....... 58 Mr. Kirk is counsel to, and until 1989 was a 1991 1998
partner of, the law firm of Sullivan &
Worcester in Boston, Massachusetts. He is
also Chairman and Treasurer of Kirk-Sheppard
& Co., Inc., a business advisory and
consulting firm. From 1985 to 1989, he
served as Chairman of the Democratic Party
of the United States, and from 1983 to 1985
as its Treasurer. Mr. Kirk is a director of
ITT Corporation, ITT Hartford Insurance Co.
and Rayonier, Inc. He is a trustee of
Stonehill College and St. Sebastian's
School, Co-Chairman of the Commission on
Presidential Debates, Chairman of the John
F. Kennedy Library Foundation and Chairman
of the National Democratic Institute for
International Affairs.
W. Nicholas Thorndike.... 63 Mr. Thorndike serves as a corporate director 1980 1998
or trustee of a number of organizations,
including Courier Corporation, Providence
Journal Company, Eastern Utility Associates,
Data General Corporation and The Putnam
Funds. He also serves as a trustee of
Massachusetts General Hospital, having
served as Chairman of the Board from 1987 to
1992 and President from 1992 to 1994. Until
December 1988, he was Chairman and Managing
Partner of Wellington Management Company (an
investment advisor). In February, 1994, he
was appointed a successor trustee of certain
private trusts in which he had no beneficial
interest and concurrently became (until
October, 1994) Chairman of two privately-
owned corporations controlled by such
trusts. These corporations filed voluntary
petitions under Chapter 11 of the Federal
Bankruptcy Code in August, 1994.
A. Robert Towbin......... 60 Mr. Towbin is a Managing Director of 1994 1997
Unterberg Harris. From January, 1994 to
August, 1995, he was President and Chief
Executive Officer of the Russian-American
Enterprise Fund and, upon its merger with
the Fund for Large Enterprises in Russia,
Vice Chairman of the resulting U.S. Russia
Investment Fund. From 1987 to 1994, Mr.
Towbin was a Managing Director of Lehman
Brothers. Prior to 1987, he was a director
and Vice Chairman of L.F. Rothschild,
Unterberg, Towbin Holdings, Inc. Mr. Towbin
serves as a director of the Columbus New
Millenium Fund, Gerber Scientific, Inc.,
Globalstar Telecommunications Limited and
K&F Industries Inc., and is a former
director of several other public companies.
He is a member of the Securities Industry
Association and is a director of numerous
charitable and civic organizations.
<FN>
- ---------------
* If elected at the Annual Meeting.
</TABLE>
4
<PAGE> 7
B. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Company pays its Directors annual cash retainers of $12,000, plus a fee
of $1,000 for each Board meeting attended. The chairman of each of the Audit and
Compensation Committees receives an additional fee of $1,000 and each other
committee member an additional fee of $750 for each committee meeting attended.
During 1996, Mr. Hakim's retainer and meeting fees will be $20,000 and $2,000,
respectively, due to his increased responsibilities as Chairman.
The Company is proposing to amend and restate its 1993 Stock Option Plan to
provide for annual grants of options to purchase 2,500 shares to each
non-employee Director. See "Amendment and Restatement of 1993 Stock Option Plan"
below.
The only executive officers of the Company who received cash compensation
from the Company in excess of $100,000 during 1995 were E. Lawrence Miller, the
President and Chief Executive Officer of the Company, Thomas P. D'Arcy,
Executive Vice President (and now Mr. Miller's successor as President and Chief
Executive Officer), and Richard L. Heuer, Executive Vice President.
<TABLE>
Summary Compensation Table
The following table sets forth certain information regarding the cash and
equity-based compensation paid or granted by the Company to or on behalf of
Messrs. Miller, D'Arcy and Heuer with respect to each of the three years ended
December 31, 1995.
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
NAME AND -------------------- STOCK OPTION ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS(#)(1) COMPENSATION($)
- --------------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
E. Lawrence Miller,.............. 1995 $225,000 $100,000 100,000 Shares $10,308(2)
President and 1994 $150,000 $ 75,000 0 Shares $20,610(3)
Chief Executive Officer 1993 $150,000 $ 75,000 11,500 Shares $17,610(4)
Thomas P. D'Arcy,................ 1995 $120,000 $ 50,000 25,000 Shares $ 1,205(5)
Executive Vice President 1994 $110,000 $ 30,000 0 Shares $ 122(6)
1993 $ 95,000 $ 25,000 8,500 Shares $ 122(6)
Richard L. Heuer,................ 1995(7) $175,000 $ 35,000 25,000 Shares $ 3,112(8)
Executive Vice President
<FN>
- ---------------
(1) Stock options granted to the executive officer under the Company's 1993
Stock Option Plan. See "Options Granted in Last Fiscal Year" and "Report of
the Compensation Committee" below with respect to options granted in 1995.
(2) Includes $7,000 for Board retainer and meeting fees, a $74 premium paid by
the Company for a term life insurance policy, and Company matching
contributions of $3,234 under the Company's 401(k) plan.
(3) Includes $20,000 for Board retainer and meeting fees, and a $610 premium
paid by the Company for a term life insurance policy.
(4) Includes $17,000 for Board retainer and meeting fees, and a $610 premium for
a term life insurance policy.
(5) Includes a $74 term life insurance policy premium and Company matching
contributions of $1,131 under the 401(k) plan.
(6) Term life insurance policy premium.
(7) Mr. Heuer joined the Company in January, 1995.
(8) Includes a $74 term life insurance policy premium and Company matching
contributions of $3,038 under the 401(k) plan.
</TABLE>
5
<PAGE> 8
<TABLE>
Options Granted in Last Fiscal Year
The following table describes the stock options granted during 1995 to the
executive officers named in the Summary Compensation Table above.
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL EXERCISE APPRECIATION(2)
OPTION SHARES OPTIONS PRICE PER EXPIRATION -----------------------
NAME GRANTED(1) GRANTED SHARE DATE 5% 10%
---- ------------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
E. Lawrence Miller............. 100,000 46% $14.875 1/25/05(3) $935,481(3) $2,370,692(3)
President and Chief
Executive Officer
Thomas P. D'Arcy............... 25,000 11% $14.875 1/25/05 $233,870 $ 592,673
Executive Vice President
Richard L. Heuer............... 25,000 11% $14.875 1/25/05 $233,870 $ 592,673
Executive Vice President
<FN>
- ---------------
(1) Options for 6,700 shares to each of the named officers were "incentive stock
options" and the remaining options were "nonqualified options" under the
Company's 1993 Stock Option Plan. All the options are fully vested as of
the grant date.
(2) Represents the value of the option spread at the end of the ten-year option
term if the market price of the Shares were to appreciate annually by 5%
and 10%, respectively. While there is no assurance that the market price
will so appreciate, all stockholders would share in any such appreciation.
(3) Mr. Miller's options expire on February 7, 1997, the first anniversary of
his death and approximately two years after the option grant, thereby
reducing the potential realizable values at 5% and 10% assumed annual rates
of appreciation to approximately $152,500 and $312,400, respectively.
</TABLE>
Year-End Option Values
<TABLE>
The following table sets forth certain information regarding aggregate
stock options held at December 31, 1995 by the executive officers named in the
Summary Compensation Table above. No such officer exercised any options during
1995.
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR- OPTIONS AT YEAR-
NAME END(#)(1) END($)(2)
- ---- --------------------- --------------------
<S> <C> <C>
E. Lawrence Miller,............................. 129,001 Shares $ 0
President and Chief Executive Officer
Thomas P. D'Arcy,............................... 40,500 Shares $11,750
Executive Vice President
Richard L. Heuer,............................... 25,000 Shares $ 0
Executive Vice President
<FN>
- ---------------
(1) All of such options were vested and exercisable in full at year-end.
(2) Market value of the Shares underlying the officer's in-the-money options at
year-end (based on a closing market price of $13.50 per Share), minus the
aggregate exercise price.
</TABLE>
6
<PAGE> 9
C. REPORT OF THE COMPENSATION COMMITTEE
General
The Compensation Committee (the "Committee") consists of Messrs. Kirk (as
Chairman), Brown and Towbin. Concurrently with his becoming Chairman of the
Board in February, 1996, Mr. Hakim was appointed an ex-officio, non-voting
member of the Committee. None of the Committee members has ever been an officer
or employee of the Company.
The Committee's responsibilities include: (i) reviewing the performance of
the Chief Executive Officer and the other executive officers of the Company on
at least an annual basis; (ii) making recommendations as to the cash and
equity-based compensation and benefits to be provided to the executive officers
of the Company; (iii) issuing and administering option and other grants under
the Company's 1993 Stock Option Plan; (iv) informally reviewing the overall
compensation packages of the Company's executive officers as they relate to the
compensation provided by comparable equity REITs, all of which are included in
the industry index set forth in the "Share Performance Graph" below; and (v)
reporting periodically to the full Board with respect to the foregoing.
The Company took a number of significant steps during 1995 which will have
a major impact on future compensation decisions. First, in a series of moves to
vertically integrate its operations and to become a self-administered REIT, in
January, 1995, the Company (i) acquired RMB's REIT advisory business, allowing
the Company to terminate its contractual advisory agreements with RMB and take
on certain former RMB employees, and (ii) hired the management team managing the
Company's Minnesota properties, led by Executive Vice President Richard Heuer,
as direct employees. Second, in September, 1995, the Company (i) hired Irving E.
Lingo, Jr. as its new Chief Financial Officer, and (ii) promoted Vice President
Marianne Dunn to Senior Vice President, with additional management
responsibility for capital raising and acquisition opportunities. Third, in
October, 1995 the Company agreed to acquire Tucker. Following the consummation
of the Merger, approximately 60 former employees of Tucker became employees of
the Company.
Salary and Bonus
Since 1985, Mr. Miller's salary as President (and later Chief Executive
Officer) of the Company was determined pursuant to an employment agreement with
the Company (the "Employment Agreement") whose term continued until June 30,
1995 and thereafter until terminated by either party on 90 days' notice. The
Employment Agreement provided for a minimum annual salary of $150,000 to be paid
to Mr. Miller by the Company. Under the Employment Agreement, Mr. Miller was
eligible to receive such year-end or other bonus as may be determined by the
Committee. In addition, the Employment Agreement provided that if Mr. Miller's
employment were terminated following a change in control of the Company (as
defined in the Employment Agreement), the Company or its successor would be
obligated to continue Mr. Miller's salary and benefits for a period of three
years at the rate in effect immediately prior to such termination. In light of
the Company's move to self-administration, the Committee increased Mr. Miller's
minimum annual salary to $225,000 for 1995.
With respect to the salaries of the other executive officers of the
Company, the Committee in past years relied to a large degree on the subjective
recommendations of Mr. Miller, and expects to continue to do so with respect to
his successor, Mr. D'Arcy's, recommendations in the future. The Committee
intends to structure and maintain the Company's overall compensation, including
salary, bonus, stock options and benefits, for its executive officers (including
the Chief Executive Officer) at levels commensurate with that of equity REITs of
comparable size to the Company. To assist in this process, in late 1994 the
Committee engaged a compensation and benefits consultant with substantial
experience in the REIT industry.
7
<PAGE> 10
As noted in the reports of the Committee in prior years, the Committee's
practice is generally to meet in January or February of each year in order to
determine bonuses payable with respect to the fiscal year just ended, and to set
base salary levels for the current year (and also, in some years, to make stock
option grants). The Committee met in February, 1996, immediately following the
Board of Directors meeting at which Mr. Hakim was elected as Chairman and Mr.
D'Arcy's interim appointment as Mr. Miller's successor was made permanent. At
this meeting, the Committee considered appropriate bonuses with respect to 1995.
The Committee considered the significant roles played by the various executive
officers in the Company's strategic initiatives during 1995, including the
consummation of the acquisition of RMB's REIT advisory business and the
internalization of the management of the Company's Minnesota properties, the
search for and hiring of the Company's new financial and accounting officers,
and the negotiation and execution of the agreement to acquire Tucker, virtually
doubling the Company's size. In addition to these factors, the Committee
considered the Company's success in accessing the public capital markets during
1995, in the form of a public offering of 2,500,000 Shares closed in July, 1995.
The net proceeds of this offering were used to reduce indebtedness. Based on the
foregoing factors, and the Committee's subjective evaluations of the role played
by each of the executive officers, the Committee awarded bonuses for 1995 of
$100,000 to Mr. Miller (such amount to be paid to his estate), $50,000 to Mr.
D'Arcy and $35,000 to Mr. Heuer.
The Committee has also articulated to management and to the Company's
compensation consultant the Committee's desire to formulate a long-term
incentive compensation policy which would incorporate certain corporate goals
and objectives of the Company. The Committee would continue to subjectively
evaluate management's success in meeting these goals and objectives in
determining the amount of any salary increases, bonuses and option or stock
awards.
Stock Option Awards
As reported last year, in January, 1995, in recognition of their soon-to-be
increased responsibilities, the Committee granted options for 100,000 Shares to
Mr. Miller and for 25,000 Shares to each of Messrs. D'Arcy and Heuer. The
Committee also granted options for an aggregate of 67,500 Shares to seven other
individuals during 1995. All options granted during the year are fully vested
and exercisable at the fair market value of the Shares determined by the
Committee at the time of the grant. Each option has a term of ten years, subject
to earlier termination upon termination of employment. Mr. Miller's options
expire on February 7, 1997, the first anniversary of his death.
The Committee is currently developing with management a more flexible
stock-based incentive program under which, in addition to stock options, the
Company could grant to executive officers and other employees a variety of other
stock-based awards, including restricted and unrestricted stock and cash or
other bonuses based upon or measured by stock performance. The Committee has
recommended to the full Board of Directors, and the Board has recommended to
stockholders, the amendment and restatement of the Company's 1993 Stock Option
Plan to permit such additional forms of stock-based compensation under the plan
(although with no increase in the number of Shares subject to the plan). The
Committee expects to make appropriate awards in 1996 to the Chief Executive
Officer and other officers of the Company if the stockholders approve the
amendments to the plan, the value of any such awards to be based at least in
part on an increase in per share funds from operations of the Company as well as
the achievement of other yet-to-be specified performance objectives.
The Committee members also note that they concur in the determination of
the Board of Directors that the Company's 1993 Stock Option Plan be amended to
provide for annual option grants to non-employee Directors of the Company. See
"Amendment and Restatement of 1993 Stock Option Plan" below.
8
<PAGE> 11
Finally, to the extent applicable to the Company, the Committee intends to
review and to take any necessary steps to assure that the Company complies with
income tax regulations limiting the deductibility of executive compensation
above specified amounts paid or awarded by the Company. Certain limitations, as
further described below, would be added to the amended 1993 Stock Option Plan in
order to comply with such regulations.
Submitted by:
Paul G. Kirk, Jr., Chairman
William L. Brown
A. Robert Towbin
<TABLE>
D. SHARE PERFORMANCE GRAPH
The following graph provides a comparison of the five-year cumulative total
stockholder return (assuming reinvestment of dividends) among Bradley Real
Estate, Inc., the NAREIT Equity REIT Index (an industry index) and the Standard
& Poor's 500 Index, beginning on December 31, 1990. The historical information
set forth below is not necessarily indicative of future performance.
[LINE GRAPH]
<CAPTION>
NAREIT Eq-
Measurement Period Bradley Real S&P 500 In- uity REIT
(Fiscal Year Covered) Estate, Inc. dex Index
<S> <C> <C> <C>
12/31/90 100.00 100.00 100.00
12/31/91 124.13 130.55 135.70
12/31/92 169.13 140.56 155.50
12/31/93 212.33 154.60 186.06
12/31/94 189.28 156.63 191.95
12/31/95 182.38 215.25 221.26
</TABLE>
9
<PAGE> 12
2. AMENDMENT AND RESTATEMENT OF 1993 STOCK OPTION PLAN
At the Annual Meeting, stockholders will be asked to consider and approve
an amendment and restatement of the Company's 1993 Stock Option Plan (the
"Plan"), as discussed below.
A. BACKGROUND OF THE PLAN
The Plan was originally adopted by the Board of Trustees of what was then
the Trust in March, 1993 and approved by the Trust's shareholders in May, 1993.
The Plan was adopted by the Company in October, 1994 upon its reorganization
into corporate form. The Plan is administered by the Committee. The Board of
Directors may amend the Plan, subject in certain cases to stockholder approval.
The Plan provides for the granting of options to officers, other employees,
Directors and consultants of the Company and any of its subsidiaries to purchase
Shares aggregating up to 5% of the outstanding Shares. Such options may be
either "incentive stock options" ("Incentive Options") as defined by the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
so qualify ("Nonqualified Options"). Incentive Options may be granted only to
employees, must have an exercise price not less than to the fair market value of
the Shares on the grant date, and may be exercisable for a term of not more than
ten years. Not more than 500,000 Shares may be issued pursuant to Incentive
Options granted under the Plan. Subject to certain other limitations contained
in the Plan, the terms of each option grant are in other respects generally
determined by the Committee in its discretion.
The existing Plan provides that Nonqualified Options may be granted to
Directors who are not employees of the Company ("non-employee Directors"), so
long as such persons are not serving as members of the Committee. To date, no
options have been granted under the Plan to any non-employee Director.
B. PROPOSED AMENDMENT AND RESTATEMENT OF THE PLAN
On March 13, 1996, the Board of Directors adopted an amendment and
restatement of the Plan, subject to stockholder approval: (1) to provide for the
annual, automatic grant of Nonqualified Options to non-employee Directors; (2)
to authorize the grant of restricted stock awards and unrestricted stock awards,
performance share awards, dividend equivalent rights, stock appreciation rights
and other types of stock-based awards; and (3) to add certain limitations in
light of recent tax regulations concerning the deductibility of executive
compensation. The amended and restated Plan changes the name of the Plan to the
"Bradley Real Estate, Inc. 1993 Stock Option and Incentive Plan" in order to
reflect these changes. Although the Plan would authorize a number of additional
types of stock-based awards, the number of Shares subject to the Plan would not
be increased.
The following description of certain features of the Plan, as amended and
restated, is intended to be a summary only. The summary is qualified in its
entirety by the full text of the amended and restated Plan, which is attached
hereto as Appendix A.
1. Non-Employee Director Options.
Each non-employee Director who is serving as a Director of the Company on
the next business day after adjournment of each Annual Meeting of Stockholders,
beginning with the Annual Meeting, will automatically be granted on such day an
option to acquire 2,500 Shares. The exercise price of each such option shall be
the fair market value of the Shares on the date such option is granted. Such
option shall be exercisable in full as of the grant date for a term of ten
years. If a non-employee Director ceases to be a Director for any reason,
however, such option shall be exercisable by the former Director, or by his or
her legal representative, for a
10
<PAGE> 13
period of not more than two years from the date of termination, subject to the
earlier expiration of the ten-year term.
2. Other Stock-Based Awards.
Restricted Stock. The Committee may award Shares to officers, other
employees and consultants, subject to such conditions and restrictions as the
Committee may determine ("Restricted Stock"). These conditions and restrictions
may include the achievement of certain performance goals and/or continued
employment with the Company through a specified restricted period. The purchase
price, if any, of Shares of Restricted Stock will be determined by the
Committee. If the performance goals and other restrictions are not attained, the
grantees will forfeit their awards of Restricted Stock.
Unrestricted Stock. The Committee may also grant any such persons Shares
which are free from any restrictions under the Plan ("Unrestricted Stock").
Unrestricted Stock may be issued in recognition of past services or other valid
consideration, and may be issued in lieu of cash compensation.
Performance Share Awards. The Committee may also grant performance share
awards to employees or other key persons entitling the recipient to receive
Shares or cash upon the achievement of individual or Company performance goals
and such other conditions as the Committee shall determine ("Performance Share
Award").
Dividend Equivalent Rights. The Committee may grant dividend equivalent
rights, which entitle the recipient to receive dividends that would be paid if
the grantee had held specified Shares. Dividend equivalent rights may be granted
as a component of another award or as a freestanding award. Dividend equivalents
credited under the Plan may be paid currently in cash or may be deemed to be
reinvested in additional Shares, which may thereafter accrue additional
equivalents. In certain instances, a person awarded Unrestricted Stock may elect
to defer receipt of the Shares, in accordance with such rules and procedures as
may from time to time be established by the Committee. During the period of
deferral, the deferred stock may receive dividend equivalent rights.
Stock Appreciation Rights. The Committee may award stock appreciation
rights ("SARs") either as a freestanding award or in tandem with a stock option.
Upon exercise of an SAR, the holder will be entitled to receive an amount equal
to the excess of the fair market value on the date of exercise of one Share over
the exercise price per share specified in the related stock option (or, in the
case of freestanding SAR, the price per share specified in such right, which
price may not be less than 85% of the fair market value of the Shares on the
date of grant) times the number of Shares with respect to which the SAR is
exercised. This amount may be paid in cash, in Shares, or a combination thereof,
as determined by the Committee. If the SAR is granted in tandem with a stock
option, exercise of the SAR cancels the related option to the extent of such
exercise.
Change of Control Provisions. The amended and restated Plan provides that
in the event of a "Change of Control" (as defined in the Plan) of the Company,
all stock options and SARs shall automatically become fully exercisable, and all
Restricted Stock and Performance Share Awards shall automatically become fully
vested. In addition, at any time prior to or after a Change of Control, the
Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may determine appropriate.
3. Response to Tax Law Changes.
Each member of the Committee must qualify as an "outside director" as
defined under Section 162(m) of the Code. An individual may receive stock
options or SARs with respect to not more than 250,000 Shares during any one
calendar year. These changes are intended to reduce the circumstances in which
the
11
<PAGE> 14
Company's Federal income tax deductions pertaining to awards under the Plan
might be disallowed under recent rules limiting the deductibility of executive
compensation.
4. Share Limit.
The Plan is not being amended to increase the number of Shares subject to
the Plan. The Shares underlying options granted to non-employee Directors, and
any other stock awards under the Plan, must come from the same pool of Shares as
are currently available for option grants under the Plan, i.e., an aggregate of
5% of the outstanding Shares.
5. Tax Aspects of the Amendments
Nonqualified Options and SARs. There are no Federal income tax
consequences to either the non-employee Director optionees or to the Company on
the grant of a Nonqualified Option. On the exercise of a Nonqualified Option,
the optionee has taxable ordinary income equal to the excess of fair market
value of the Shares received on the exercise date over the option price of the
Shares. The optionee's tax basis for the Shares acquired upon exercise of a
Nonqualified Option is increased by the amount of such taxable income. The
Company will be entitled to a Federal income tax deduction in an amount equal to
such excess. Upon the sale of the Shares acquired by exercise of a Nonqualified
Option, the optionee will realize long-term or short-term capital gain or loss
depending upon his or her holding period for such Shares. Similar tax
consequences result upon the exercise of an SAR.
Stock Awards. The award of Unrestricted Stock to any officer, employee or
consultant, or the vesting of a Performance Share Award, will be treated as
compensation to the grantee taxable at ordinary income rates, and deductible as
an ordinary expense of the Company, at the time of and in the amount equal to
the then fair market value of the Shares awarded. Unless the grantee elects to
treat the value of Shares subject to Restricted Stock awards as ordinary income
at the time of grant by filing an election under Section 83(b) of the Code, the
grantee will be treated as receiving ordinary income in an amount equal to the
fair market value of the Shares at the time the restrictions lapse. The Company
will be entitled to a deduction in a comparable amount at the time that the
grantee is considered to receive ordinary income.
<TABLE>
C. AWARDS PURSUANT TO THE AMENDMENT
The following table sets forth the number of option Shares expected to be
automatically granted under the Plan during 1996 pursuant to the proposed
amendment and restatement. This table does not reflect any options or other
awards which may be granted in the future at the discretion of the Committee.
<CAPTION>
NUMBER OF
NAME OF GROUP OPTION SHARES
------------- -------------
<S> <C>
All non-employee Directors as a group (7 persons)....................... 17,500
All executive officers as a group....................................... 0
All employees, excluding executive officers, as a group................. 0
</TABLE>
D. RECOMMENDATION OF THE BOARD
The Board of Directors believes that it is in the best interest of the
Company to align the interests of the executive officers and other employees of
the Company more closely with those of the stockholders, in order to provide a
greater incentive to such persons to maximize stockholder value. Accordingly, if
the proposed amendment and restatement of the Plan is approved, it is likely
that bonuses or other incentive awards may be paid to officers and employees in
stock or in restricted stock that may vest upon certain defined performance
12
<PAGE> 15
goals or events being met. The Board believes that the pool of Shares already
available for issuance upon the exercise of stock option grants should also be
available for such stock awards.
The Board of Directors has adopted a policy that each Director should, at a
minimum, own Shares of the Company having a value equal to twice the Directors'
annual compensation as such, and that any Director who does not currently own
such amount of Shares should do so within a three-year period. The Board also
believes that stock options can play an important role in the success of the
Company by encouraging and enabling the Company's non-employee Directors, upon
whose business judgment and guidance the Company depends, to develop a further
increased proprietary interest in the Company, thereby aligning the interests of
the Directors more closely with those of the stockholders.
Accordingly, the Board believes the proposed amendments are in the best
interest of the Company and recommends that stockholders approve the amendment
and restatement of the Plan. The amendment and restatement must be approved by
the affirmative vote of the holders of a majority of the Shares present or
represented at and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT AND
RESTATEMENT OF THE PLAN.
3. BENEFICIAL OWNERSHIP OF SHARES
<TABLE>
A. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Information known to the Company with respect to beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Exchange
Act")) of more than 5% of the Shares as of December 31, 1995 is as follows. Such
information is based upon filings received by the Company under the Exchange
Act. The Company does not believe that any beneficial owner of shares of Tucker
who, upon the Merger on March 15, 1996 became a beneficial owner of Shares,
thereby became the owner of more than 5% of the outstanding Shares.
<CAPTION>
NO. OF SHARES PERCENT PERCENT
NAME AND ADDRESS BENEFICIALLY OF CLASS OF CLASS
OF BENEFICIAL OWNER OWNED AT 12/31/95 AT 3/15/96
------------------- ------------- ----------- ----------
<S> <C> <C> <C>
FMR Corp.(1)............................................ 1,394,200 12.4% 7.5%
82 Devonshire Street
Boston, MA 02109
Cohen & Steers Capital Management, Inc.(2).............. 1,324,600 11.8% 7.1%
757 Third Avenue
New York, NY 10017
Putnam Investments, Inc.(3)............................. 562,400 5.0% 3.0%
One Post Office Square
Boston, MA 02109
<FN>
- ---------------
(1) In a filing on Schedule 13G under the Exchange Act dated February 14, 1996,
FMR Corp., the parent company of Fidelity Management & Research Company and
Fidelity Management Trust Company, reported that it had sole power to direct
the disposition of all of these Shares and sole power to direct the voting
of 15,000 of these Shares. Such report indicated that 1,379,200 of such
Shares were beneficially owned by Fidelity Management & Research Company and
15,000 of such Shares were beneficially owned by Fidelity Management Trust
Company.
</TABLE>
13
<PAGE> 16
(2) In a filing on Schedule 13G under the Exchange Act dated January 26, 1996,
Cohen & Steers Capital Management, Inc. reported that it had sole voting
power with respect to 1,131,000 of such Shares and sole dispositive power
with respect to all 1,324,600 of such Shares.
(3) In a filing on Schedule 13G under the Exchange Act dated January 29, 1996,
Putnam Investments, Inc., the parent company of Putnam Investment
Management, Inc. and the Putnam Advisory Company, Inc., indicated that it
had shared voting and dispositive power with respect to 22,900 and 562,400
of such Shares, respectively. Such report indicated that 539,300 of such
Shares were beneficially owned by Putnam Investment Management, Inc. and
23,100 of such Shares were beneficially owned by the Putnam Advisory
Company, Inc.
<TABLE>
B. SECURITY OWNERSHIP OF MANAGEMENT
Information known to the Company with respect to beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of Shares by Directors and
executive officers as of March 22, 1996 is as follows. Such information is based
on filings received by the Company under the Exchange Act, as supplemented by
additional information provided to the Company.
<CAPTION>
NO. OF SHARES BENEFICIALLY OWNED
---------------------------------
SOLE VOTING & SHARED VOTING & PERCENT
NAME OF BENEFICIAL OWNER DISPOSITION DISPOSITION OF CLASS
------------------------ ------------- --------------- ----------
<S> <C> <C> <C>
William L. Brown........................................ 1,500 -0- *
Thomas P. D'Arcy........................................ 41,912(1) -0- *
Joseph E. Hakim......................................... 7,800 1,000(2) *
John B. Hynes, III...................................... -0- -0- *
Stephen G. Kasnet....................................... 1,325 8,350(3) *
Paul G. Kirk, Jr. ...................................... 1,500 -0- *
W. Nicholas Thorndike................................... 12,877 -0- *
A. Robert Towbin........................................ 5,000 -0- *
All Directors and executive officers as a group (12
persons).............................................. 147,264(4) 11,856 *
<FN>
- ---------------
* Less than one percent.
(1) Includes 40,500 Shares subject to stock options granted to Mr. D'Arcy under
the Company's stock option plans.
(2) Shares owned by Mr. Hakim's spouse, as to which Mr. Hakim disclaims
beneficial ownership.
(3) Voting and dispositive power shared with Mr. Kasnet's spouse. Does not
include any Shares which may be beneficially owned by Pioneer Real Estate
Shares, of which Mr. Kasnet serves as trustee and Vice President.
(4) Includes 109,500 Shares subject to stock options granted to executive
officers of the Company under the Company's stock option plans. During 1995
Richard Heuer, Executive Vice President of the Company, and Carmella Brown,
the former Treasurer of the Company, each inadvertently failed to file on a
timely basis a form required under Section 16 of the Exchange Act, in each
case reporting one transaction.
</TABLE>
14
<PAGE> 17
4. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
No Director, officer or associate of any such person is or at any time
during 1995 was indebted to the Company, and it has not been the Company's
practice to make loans to Directors, officers or their associates.
The law firm of Goodwin, Procter & Hoar LLP, of which a professional
corporation controlled by William B. King, Secretary of the Company, is a
partner, provides legal services to the Company.
5. INDEPENDENT PUBLIC ACCOUNTANT
KPMG Peat Marwick LLP examined and reported upon the Company's financial
statements for the fiscal year ended December 31, 1995. A representative of KPMG
Peat Marwick LLP is expected to be present at the Annual Meeting with the
opportunity to make a statement, if he or she so desires, and to answer
appropriate questions from stockholders.
6. SOLICITATION OF PROXIES AND VOTING PROCEDURES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, solicitation may also be made by personal interview,
telegram, facsimile transmission or telephone. Directors and officers of the
Company may participate in such solicitation.
Shares held of record by stockholders or brokers who do not return a signed
and dated proxy or attend the Annual Meeting in person will not be considered
present or represented at the Annual Meeting, and will not be counted in
determining the presence of a quorum. Abstentions and broker non-votes, if any,
will count towards the presence of a quorum. Directors are elected by a
plurality of votes if a quorum is present. Therefore, votes withheld will have
no effect on the outcome of the election of Directors. For purposes of the vote
on the amendment and restatement of the Plan, abstentions will have the same
effect as a vote against approval, and broker non-votes, if any, will have no
effect.
7. STOCKHOLDER PROPOSALS AND OTHER MATTERS
Stockholder proposals intended to be presented at the 1997 Annual Meeting
of Stockholders must be received by the Company on or before December 3, 1996
for inclusion in the Company's Proxy Statement and form of proxy for that
meeting. Stockholder nominations for Directors, and certain other stockholder
proposals, must be received by the Company (i) not less than 75 days nor more
than 150 days prior to the anniversary date of the immediately preceding annual
meeting or special meeting in lieu thereof (the "Anniversary Date") or, (ii) if
the Annual Meeting is called for a date more than seven calendar days prior to
the Anniversary Date, not later than the close of business on (1) the 20th
calendar day (or if that day is not a business day for the Company, on the next
succeeding business day) following the earlier of (x) the date on which notice
of the date of such meeting was mailed to stockholders, or (y) the date on which
the date of such meeting was publicly disclosed, or (2) if such date of notice
or public disclosure occurs more than 75 calendar days prior to the scheduled
date of such meeting, then the later of (x) the 20th calendar day (or if that
day is not a business day for the Company, on the next succeeding business day)
following the date of the first to occur of such notice or public disclosure or
(y) the 75th calendar day prior to such scheduled date of such meeting (or if
that day is not a business day for the Company, on the next succeeding business
day).
The Directors know of no other business to be presented at the Annual
Meeting. If other matters properly come before the meeting, the persons named as
proxies will vote on such matters in accordance with their best judgment.
15
<PAGE> 18
You are urged to complete, date, sign and return your proxy promptly to
make certain your Shares will be voted at the Annual Meeting, even if you plan
to attend the meeting in person. If you desire to vote your Shares in person at
the meeting, your proxy may be revoked. For your convenience in returning the
proxy card, a preaddressed and postage paid envelope has been enclosed.
YOUR PROXY IS IMPORTANT
WHETHER YOU OWN FEW OR MANY SHARES.
PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY CARD TODAY.
16
<PAGE> 19
Appendix A
BRADLEY REAL ESTATE, INC.
1993 STOCK OPTION AND INCENTIVE PLAN
AS AMENDED AND RESTATED ON MARCH 13, 1996
1. PURPOSE; DEFINED TERMS
(a) This 1993 Stock Option and Incentive Plan (the "Plan") is intended as a
performance incentive for officers, Directors, employees and consultants of
Bradley Real Estate, Inc. (the "Company") and its Subsidiaries (as hereinafter
defined) to enable the persons to whom Options or other Awards are granted (the
"Optionees" or "Grantees") to acquire or increase a proprietary interest in the
success of the Company. The Company intends that this purpose will be effected
by the granting of "incentive stock options" ("Incentive Options") as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonqualified stock options ("Nonqualified Options"), and rights to receive
restricted stock ("Restricted Stock Awards"), unrestricted stock ("Unrestricted
Stock Awards"), performance shares ("Performance Share Awards"), stock
appreciation rights ("Stock Appreciation Rights") and dividend equivalent rights
("Dividend Equivalent Rights").
(b) The undifferentiated terms "Option" and "Options" include both
Incentive Options and Nonqualified Options. The terms "Award" and "Awards"
include Options, Restricted Stock Awards, Unrestricted Stock Awards, Performance
Share Awards, Stock Appreciation Rights and Dividend Equivalent Rights. The term
"Subsidiaries" includes any corporation, partnership or other organization in
which the Company owns at the time of the grant of the Award fifty percent or
more of the economic interest in the equity of such organization.
2. AWARDS TO BE GRANTED AND ADMINISTRATION
(a) Options granted under the Plan may be either Incentive Options or
Nonqualified Options, and shall be designated as such at the time of grant. To
the extent that any Option intended to be an Incentive Option shall fail to
qualify as an "incentive stock option" under the Code, such Option shall be
deemed to be a Nonqualified Option; and, subject to the preceding part of this
sentence, any Option not designated as either an Incentive Option or a
Nonqualified Option shall be presumed to be intended to be an Incentive Option
unless clear by its terms that it is not eligible to qualify as an Incentive
Option.
(b) The Plan shall be administered by a committee (the "Committee") of not
less than two Directors of the Company appointed by the Board of Directors of
the Company (the "Board of Directors"), none of whom, during his or her service
as a member of the Committee or during the one-year period prior to his or her
commencement of service as such shall have been granted any Award under this or
any other stock option plan of the Company, except as provided in Section 7
hereof. It is the intention of the Company that each member of the Committee
shall be a "disinterested person" as that term is defined and interpreted
pursuant to Rule 16b-3(c)(2) or any successor rule thereto promulgated under the
Securities Exchange Act of 1934, as amended (the "Act"), and an "outside
director" within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder. Unless otherwise determined by the Board of Directors,
the members of the Compensation Committee of the Board of Directors shall serve
as the Committee under the Plan to the extent such members of the Compensation
Committee are "disinterested persons" and "outside directors." Action by the
Committee shall require the affirmative vote of a majority of all its members.
A-1
<PAGE> 20
(c) Subject to the terms and conditions of the Plan, the Committee shall
have the power:
(i) To determine from time to time the Awards to be granted to
eligible persons under the Plan and to prescribe the terms and provisions
(which need not be identical) of Awards granted under the Plan to such
persons;
(ii) To construe and interpret the Plan and grants thereunder and to
establish, amend, and revoke rules and regulations for administration of
the Plan. In this connection, the Committee may correct any defect or
supply any omission, or reconcile any inconsistency in the Plan, in any
Award agreement, or in any related agreements, in the manner and to the
extent it shall deem necessary or expedient to make the Plan fully
effective. All decisions and determinations by the Committee in the
exercise of this power shall be final and binding upon the Company and the
Optionees and Grantees;
(iii) To amend any outstanding Award, subject to Section 17 hereof,
and to accelerate or extend the vesting or exercisability of any Award and
to waive conditions or restrictions on any Awards, to the extent it shall
deem appropriate; and
(iv) Generally, to exercise such powers and to perform such acts as
are deemed necessary or expedient to promote the best interests of the
Company with respect to the Plan.
3. AUTHORIZED SHARES
(a) Awards may be granted under the Plan for up to such aggregate number of
Shares of Common Stock, par value $.01 per share, of the Company ("Shares") as
does not exceed 5% of the total number of outstanding Shares (which limit shall
be applied in the case of each Award on the basis of the total number of
outstanding Shares at the time of such grant and without considering as
outstanding any Shares that are the subject of any Awards granted on the same
day as such grant or any unexercised options under the Plan or any other option
plan of the Company); provided, however, that the maximum number of Shares for
which Incentive Options may be granted under the Plan shall not exceed 500,000
Shares (which number is subject to adjustment as provided in Section 13).
Subject to such overall limitations, Shares may be issued pursuant to any type
or types of Award; provided, however, that Options or Stock Appreciation Rights
with respect to not more than 250,000 Shares (which number is subject to
adjustment as provided in Section 13) may be granted to any one individual
during any one calendar year period.
(b) Whenever any outstanding Option under the Plan expires, is cancelled or
is otherwise terminated (other than by exercise in the case of Incentive
Options), the Shares allocable to the unexercised portion of such Option may
again be the subject of Awards under the Plan. The Shares underlying any other
Awards which are forfeited, canceled, reacquired by the Company, satisfied
without the issuance of Shares or otherwise terminated (other than by exercise)
shall also be added back to the Shares available for issuance under the Plan.
4. ELIGIBILITY
(a) Incentive Options may be granted only to officers or other employees of
the Company or its Subsidiaries, including members of the Board of Directors who
are also officers or employees of the Company or any of its Subsidiaries. All
other Awards may be granted to officers or other employees of the Company or any
of its Subsidiaries and to consultants (which term includes persons who provide
services to the Company or its Subsidiaries). Nonqualified Options may be
granted to non-employee members of the Board of Directors pursuant to Section 7.
A-2
<PAGE> 21
(b) No person shall be eligible to receive any Incentive Option under the
Plan if, at the date of grant, such person beneficially owns stock representing
in excess of 9.8 percent of the voting power of all outstanding capital stock of
the Company.
(c) Notwithstanding any other provision of the Plan, the aggregate fair
market value (determined as of the time the Incentive Option is granted) of the
Shares with respect to which Incentive Options are exercisable for the first
time by any individual during any calendar year (under all plans of the Company
and its parent and Subsidiaries, if any) shall not exceed $100,000.
5. TERMS OF THE OPTION AGREEMENTS
Subject to the terms and conditions of the Plan, each option agreement
shall contain such provisions as the Committee shall from time to time deem
appropriate. Option agreements need not be identical, but each option agreement
by appropriate language shall include the substance of all of the following
provisions, and any such provisions may be included in the option agreement by
reference to the Plan:
(a) Expiration; Termination of Employment. Each Option shall expire
on the date specified in the option agreement, which date shall not be
later than the tenth anniversary of the date on which the Option was
granted ("grant date") in the case of an Incentive Option and not later
than one week following the tenth anniversary of the grant date in the case
of a Nonqualified Option. If an Optionee's employment with the Company or
any of its Subsidiaries terminates for any reason, the Committee may in its
discretion provide, at any time, that any outstanding Option granted to
such Optionee under the Plan shall be exercisable for such period following
termination of employment as may be specified by the Committee, subject to
the expiration date of such Option.
(b) Minimum Shares Exercisable. The minimum number of shares with
respect to which an Option may be exercised at any one time shall be one
hundred (100) shares, or such lesser number as is subject to exercise under
the Option at the time.
(c) Exercise. Each Option shall be exercisable in such installments
(which need not be equal) and at such times as may be designated by the
Committee. To the extent not exercised, installments shall accumulate and
be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the Option expires.
(d) Purchase Price. The purchase price per Share subject to each
Option shall be determined by the Committee; provided, however, that the
purchase price per Share subject to each Incentive Option shall be not less
than the fair market value of the Shares on the date such Option is
granted, which unless otherwise determined by the Committee in any
particular case shall be deemed to be the average closing price of the
Shares as reported on the principal stock exchange on which the Shares are
listed on each of the ten business days immediately preceding the date of
the grant of the Option.
(e) Rights of Optionees. No Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i)
the Option shall have been exercised pursuant to the terms thereof, (ii)
all requirements under applicable law and regulations shall have been
complied with to the satisfaction of the Company, (iii) the Company shall
have issued and delivered the Shares to the Optionee, and (iv) the
Optionee's name shall have been entered as a stockholder of record on the
books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such Shares.
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<PAGE> 22
(f) Transfer. No Option granted hereunder shall be transferable by
the Optionee other than by will or by the laws of descent and distribution,
and such Option may be exercised during the Optionee's lifetime only by the
Optionee, or his or her guardian or legal representative.
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
(a) Any Option granted under the Plan may be exercised by the Optionee in
whole or, subject to Section 5(b) hereof, in part by delivering to the Company
on any business day a written notice specifying the number of Shares the
Optionee then desires to purchase (the "Notice").
(b) Payment for the Shares purchased pursuant to the exercise of any Option
shall be made either: (i) in cash or by check for good funds or other payment
acceptable to the Company equal to the Option exercise price for the number of
shares specified in the Notice (the "Total Option Price"); (ii) if authorized by
the applicable option agreement and if permitted by law, by delivery of Shares
that the Optionee may freely transfer having a fair market value, determined by
reference to the provisions of Section 5(d) hereof, equal to or less than the
Total Option Price, plus cash in an amount equal to the excess, if any, of the
Total Option Price over the fair market value of such Shares; (iii) by the
Optionee delivering the Notice to the Company together with irrevocable
instructions to a broker to promptly deliver the Total Option Price to the
Company in cash or by other method of payment acceptable to the Company,
provided, however, that the Optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity or other agreements as
the Company shall prescribe as a condition of payment under this clause (iii);
(iv) if the Directors have authorized the loan of funds to the Optionee for the
purpose of enabling or assisting the Optionee to effect the exercise of the
Option, with the proceeds of such loan; or (v) any combination of the foregoing
which in the aggregate equals the Total Option Price.
(c) The delivery of certificates representing Shares to be purchased
pursuant to the exercise of an Option will be contingent upon the Company's
receipt of the Total Option Price and of any written representations from the
Optionee required by the Committee, and the fulfillment of any other
requirements contained in the option agreement or applicable provisions of law.
7. OPTIONS GRANTED TO INDEPENDENT DIRECTORS
(a) Each Director who is not also an employee of the Company or any of its
Subsidiaries (an "Independent Director") who is serving as Director of the
Company on the next business day after the adjournment of each annual meeting of
stockholders, beginning with the 1996 annual meeting, shall automatically be
granted on such day a Nonqualified Option to acquire 2,500 Shares. The exercise
price per share for the Shares covered by an Option granted under this Section 7
shall be equal to the fair market value of the Shares, determined by reference
to the formula stated in Section 5(d), on the date the Option is granted.
(b) An Option granted under this Section 7 shall be exercisable in full as
of the grant date and for a term of ten years thereafter provided that if the
Optionee ceases to be a Director for any reason, such Option shall thereafter be
exercisable by the Optionee, or by his or her legal representative, for a period
of two years from the date of termination, or until the expiration of the stated
term of the Option if earlier. Options granted under this Section 7 may be
exercised only by written notice to the Company specifying the number of shares
to be purchased. Payment of the full purchase price of the shares to be
purchased may be made by one or more of the methods specified in Section
6(b)(i), (ii) or (iii). An Optionee shall have the rights of a stockholder only
as to Shares acquired upon the exercise of an Option and not as to unexercised
Options.
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<PAGE> 23
(c) The provisions of this Section 7 shall govern the rights and
obligations of the Company and Independent Directors respecting Options granted
or to be granted to Independent Directors pursuant to this Section 7,
notwithstanding any other provision of the Plan. The provisions of this Section
7 which affect the price, date of exercisability, option period or amount of
Shares under an Option shall not be amended more than once in any six-month
period, other than to comport with changes in the Code or the Employee
Retirement Income Security Act of 1974, as amended.
8. RESTRICTED STOCK AWARDS
(a) A Restricted Stock Award is an Award entitling the recipient to acquire
Shares, at par value or such other purchase price determined by the Committee,
subject to such restrictions and conditions as the Committee may determine at
the time of grant ("Restricted Stock"). Conditions may be based on continuing
employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives.
(b) Upon execution of a written instrument setting forth the Restricted
Stock Award and paying any applicable purchase price, a Grantee shall have the
rights of a stockholder with respect to the voting of the Restricted Stock,
subject to such conditions contained in the written instrument evidencing the
Restricted Stock Award. Unless the Committee shall otherwise determine,
certificates evidencing the Restricted Stock shall remain in the possession of
the Company until such Restricted Stock is vested as provided in Section 8(d)
below.
(c) Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of except as specifically provided herein or in
the written instrument evidencing the Restricted Stock Award. If a Grantee's
employment (or other business relationship) with the Company and its
Subsidiaries terminates for any reason, the Company shall have the right to
repurchase all shares of Restricted Stock with respect to which conditions have
not lapsed at their purchase price, from the Grantee or the Grantee's legal
representative.
(d) The Committee at the time of grant shall specify the date or dates
and/or the attainment of preestablished performance goals, objectives and other
conditions on which the non-transferability of the Restricted Stock and the
Company's right of repurchase or forfeiture shall lapse. Subsequent to such date
or dates and/or the attainment of such pre-established performance goals,
objectives and other conditions, the shares on which all restrictions have
lapsed shall no longer be Restricted Stock and shall be deemed "vested." Except
as may otherwise be provided by the Committee at any time, a Grantee's rights in
any shares of Restricted Stock that have not vested shall automatically
terminate upon the Grantee's termination of employment (or other business
relationship) with the Company and its Subsidiaries and such shares shall either
be forfeited or subject to the Company's right of repurchase as provided in this
Section 8.
(e) The written instrument evidencing the Restricted Stock Award may
require or permit the immediate payment, waiver, deferral or investment of
dividends paid on the Restricted Stock.
9. UNRESTRICTED STOCK AWARDS
(a) The Committee may, in its sole discretion, grant (or sell at a purchase
price determined by the Committee) an Unrestricted Stock Award, pursuant to
which the Grantee may receive Shares free of any restrictions under the Plan.
Unrestricted Stock Awards may be granted or sold as described in the preceding
sentence in respect of past services or other valid consideration, or in lieu of
any cash compensation due to such Grantee.
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<PAGE> 24
(b) The Committee may permit the Grantee of any Unrestricted Stock Award to
elect in advance to defer receipt of such Award in accordance with such rules
and procedures as may be established by the Committee for that purpose. The
Grantee of any deferred Unrestricted Stock Award shall be entitled to receive
Dividend Equivalent Rights on the deferred Shares unless otherwise specified by
the Committee.
(c) The right to receive Shares on a deferred basis may not be sold,
assigned, transferred, pledged or otherwise encumbered, other than by will or
the laws of descent and distribution.
10. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire Shares upon the attainment of specified
performance goals. The Committee may make Performance Share Awards independent
of or in connection with the granting of any other Award under the Plan. The
Committee in its sole discretion shall determine whether and to whom Performance
Share Awards shall be made, the performance goals applicable under each such
Award, the periods during which performance is to be measured, and all other
limitations and conditions applicable to the Performance Share Awards.
(b) Restrictions on Transfer. Performance Share Awards and all rights with
respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered, other than by will or the laws of descent and
distribution.
(c) Rights as a Shareholder. A participant receiving a Performance Share
Award shall have the rights of a shareholder only as to Shares actually received
by the participant under the Plan and not with respect to Shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of Shares
under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Committee).
(d) Termination. Except as may otherwise be provided by the Committee at
any time prior to termination of employment (or other business relationship), a
participant's rights in all Performance Share Awards shall automatically
terminate upon the participant's termination of employment (or business
relationship) with the Company and its Subsidiaries for any reason.
(e) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment (or other business relationship), the Committee may in
its sole discretion accelerate, waive or, subject to Section 17 hereof, amend
any or all of the goals, restrictions or conditions imposed under any
Performance Share Award.
11. STOCK APPRECIATION RIGHTS
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an
Award entitling the recipient to receive an amount in cash or Shares or a
combination thereof having a value equal to the excess of the fair market value
of a Share, determined by reference to Section 5(d) hereof, on the date of
exercise over the exercise price per Stock Appreciation Right set by the
Committee at the time of grant, which price shall not be less than 85% of the
fair market value of the Shares on the grant date (or over the option exercise
price per share, if the Stock Appreciation Right was granted in tandem with an
Option) multiplied by the number of Shares with respect to which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment.
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<PAGE> 25
(b) Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted by the Committee in tandem with, or independently of, any Option granted
pursuant to the Plan (other than Options granted pursuant to Section 7). In the
case of a Stock Appreciation Right granted in tandem with a Nonqualified Option,
such Stock Appreciation Right may be granted either at or after the time of the
grant of such Option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option, such Stock Appreciation Right may be
granted only at the time of the grant of the Option.
(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem with an Option shall
be exercisable at such time or times and to the extent that the related
Option shall be exercisable.
(ii) A Stock Appreciation Right or applicable portion thereof granted
in tandem with an Option shall terminate and no longer be exercisable upon
the termination or exercise of the related Option. Upon exercise of a Stock
Appreciation Right, the applicable portion of any related Option shall be
surrendered.
(iii) Stock Appreciation Rights granted in tandem with an Option shall
be transferable only when and to the extent that the underlying Option
would be transferable. Stock Appreciation Rights not granted in tandem with
a Option shall not be transferable otherwise than by will or the laws of
descent or distribution. All Stock Appreciation Rights shall be exercisable
during the participant's lifetime only by the participant or the
participant's legal representative.
(d) Rules Relating to Exercise. In the case of a participant subject to
the restrictions of Section 16(b) of the Act, no Stock Appreciation Right (as
referred to in Rule 16b-3(e) or any successor rule under the Act) shall be
exercised except in compliance with any applicable requirements of Rule 16b-3 or
any successor rule. If a full or partial settlement in cash would result, (i)
such a participant may not exercise a Stock Appreciation Right or any related
Option during the first six months of the term of the Stock Appreciation Right
or Option to be exercised; and (ii) such a participant may exercise a Stock
Appreciation Right only either: (A) during the period beginning on the third
business day following the date of release of quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date, unless a different period is specified by Rule
16b-3 or any successor rule under the Act; (B) pursuant to an irrevocable
election to exercise made at least six months in advance of the effective date
of the election, which election shall be subject to the consent or disapproval
of the Committee; or (C) pursuant to an election to exercise incident to death,
disability or termination of employment; provided, however, that the
requirements set forth in this sentence shall no longer apply to the extent no
longer required for compliance with Rule 16b-3 in the event that such rule is
amended after March 13, 1996.
12. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would be
paid on the Shares specified in the Dividend Equivalent Right (or other Award to
which it relates) if such Shares were held by the recipient. A Dividend
Equivalent Right may be granted hereunder as a component of another Award or as
a freestanding Award. The terms and conditions of Dividend Equivalent Rights
shall be specified in the grant. Dividend equivalents credited to the holder of
a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional Shares, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at fair market value of the Shares,
determined by reference to Section 5(d) hereof, on the date of reinvestment or,
at the discretion of the Company, at such other price as may then apply under
any dividend reinvestment plan
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<PAGE> 26
sponsored by the Company. Dividend Equivalent Rights may be settled in cash or
Shares or a combination thereof, in a single installment or installments, at the
discretion of the Company. A Dividend Equivalent Right granted as a component of
another Award may provide that such Dividend Equivalent Right shall be settled
upon exercise, settlement, or payment of, or lapse of restrictions on, such
other Award, and that such Dividend Equivalent Right shall expire or be
forfeited or annulled under the same conditions as such other Award. A Dividend
Equivalent Right granted as a component of another Award may also contain terms
and conditions different from such other Award.
(b) Interest Equivalents. Any Award under the Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
13. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
(a) If the Shares as a whole are increased, decreased, changed into or
exchanged for a different number or kind of shares or securities of the Company,
whether through merger, consolidation, reorganization, recapitalization,
reclassification, stock dividend, stock split, combination of shares, exchange
of shares, change in corporate structure or the like, an appropriate and
proportionate adjustment shall be made in the number and kind of shares subject
to the Plan, and in the number, kind, and per share exercise price of shares
subject to outstanding unexercised Options or other Awards or portions thereof
granted prior to any such change; but no such adjustments shall be made with
respect to outstanding unexercised Options or other Awards solely as a result of
the Company's issuance of additional Shares or purchase of outstanding Shares in
either case for fair consideration as determined by the Board of Directors. In
the event of any such adjustment in an outstanding Award, the Optionee or
Grantee thereafter shall have the right to purchase the number of Shares under
such Award at the per share price, as so adjusted, which the Optionee or Grantee
could purchase at the total purchase price applicable to the Award immediately
prior to such adjustment.
(b) Adjustments under this Section 13 shall be determined by the Committee
and such determinations shall be conclusive. The Committee shall have the
discretion and power in any such event to determine and to make effective
provision for acceleration of the time or times at which any Option or portion
thereof shall become exercisable. No fractional Shares shall be issued under the
Plan on account of any adjustment specified above.
14. EFFECT OF CERTAIN TRANSACTIONS
In the case of (i) the dissolution or liquidation of the Company, (ii) a
reorganization, merger, consolidation or other business combination in which the
Company is acquired by another entity or in which the Company is not the
surviving entity, or (iii) the sale of all or substantially all of the assets of
the Company to another entity, the Plan and the Awards issued hereunder shall
terminate upon the effectiveness of any such transaction or event, unless
provision is made in connection with such transaction for the assumption of
Awards theretofore granted, or the substitution for such Awards of new awards,
by the successor entity or parent thereof, with appropriate adjustment as to the
number and kind of shares and the per share exercise prices, as provided in
Section 13. In the event of such termination, all outstanding Options and Stock
Appreciation Rights shall be exercisable in full for at least fifteen days prior
to the date of such termination whether or not otherwise exercisable during such
period.
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15. TAX WITHHOLDING
(a) Each Grantee (which term shall be deemed to include an Optionee) shall,
no later than the date as of which the value of any Award granted hereunder or
of any Shares or other amounts received thereunder first becomes includable in
the gross income of the Grantee for federal income tax purposes (the "Tax
Date"), pay to the Company, or make arrangements satisfactory to the Company
regarding payment of, any federal, state, or local taxes of any kind required by
law to be withheld with respect to such income.
(b) A Grantee may elect to have such tax withholding obligation satisfied,
in whole or in part, by (i) authorizing the Company to withhold from Shares to
be issued pursuant to an Award a number of Shares with an aggregate fair market
value (determined in accordance with Section 5(d) as of the date the withholding
is effected) that would satisfy the withholding amount due, or (ii) transferring
to the Company Shares owned by the Grantee with an aggregate fair market value
(determined in accordance with Section 5(d) as of the date the withholding is
effected) that would satisfy the withholding amount due. With respect to any
Grantee who is subject to Section 16(b) of the Act, to the extent required for
compliance with Rule 16b-3, the election to satisfy tax withholding obligations
in the manner permitted by this Section 15(b) shall be subject to the same
restrictions as applicable under Section 11(d) with respect to such person's
exercise of a Stock Appreciation Right.
16. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section 16:
(a) Each outstanding Option and Stock Appreciation Right shall
automatically become fully exercisable.
(b) All restrictions and conditions on each Restricted Stock Award,
Performance Share Award and Dividend Equivalent Right shall automatically lapse
and all Awards under the Plan shall be deemed fully vested.
(c) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Act (other than the Company, any of its Subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any employee
benefit plan or trust of the Company or any of its Subsidiaries), together
with all "affiliates" and "associates" (as such terms are defined in Rule
12b-2 under the Act) of such person, shall become the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 25% or more of either
(A) the combined voting power of the Company's then outstanding securities
having the right to vote in an election of the Board of Directors ("voting
securities") or (B) the then outstanding Shares (in either such case other
than as a result of an acquisition of securities directly from the
Company); or
(ii) persons who, as of the effective date of the amendment and
restatement of the Plan, constitute the Company's Board of Directors (the
"Incumbent Directors") cease for any reason, including, without limitation,
as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that
any person becoming a Director of the Company subsequent to the Effective
Date whose election or nomination for election was approved by a vote of at
least a majority of the Incumbent Directors shall, for purposes of this
Plan, be considered an Incumbent Director; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
stockholders of the Company, immediately prior to the
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<PAGE> 28
consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, shares representing in the aggregate 80% or
more of the voting securities of the corporation issuing cash or securities
in the consolidation or merger (or of its ultimate parent corporation, if
any), (B) any sale, lease, exchange or other transfer (in one transaction
or a series of transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of the Company or
(C) any plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
Shares or other voting securities outstanding, increases (x) the proportionate
number of Shares beneficially owned by any person to 25% or more of the Shares
then outstanding or (y) the proportionate voting power represented by the voting
securities beneficially owned by any person to 25% or more of the combined
voting power of all then outstanding voting securities; provided, however, that
if any person referred to in clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional Shares or other voting securities
(other than pursuant to a stock split, stock dividend, or similar transaction),
then a "Change of Control" shall be deemed to have occurred for purposes of the
foregoing clause (i).
17. AMENDMENT OF THE PLAN
The Board of Directors may discontinue the Plan or amend the Plan at any
time, and from time to time, subject to any required regulatory approval, the
limitation set forth in Section 7(c) and the limitation that, except as provided
in Sections 5, 13 and 14 hereof, no amendment shall be effective unless approved
by the stockholders of the Company in accordance with applicable law and
regulations at an annual or special meeting held within twelve months before or
after the date of adoption of such amendment, where such amendment will:
(a) increase the number of Shares as to which Awards may be granted
under the Plan.
(b) change in substance Section 4 hereof relating to eligibility to
participate in the Plan;
(c) change in substance Section 5(d) relating to the requirement that
the purchase price per Share subject to each Incentive Option be not less
than the fair market value of the Shares on the date such Incentive Option
is granted;
(d) increase the maximum term of Options provided for herein; or
(e) otherwise materially increase the benefits accruing to
participants under the Plan.
Except as provided in Section 5, 13 and 14 hereof, rights and obligations
under any Award granted before any amendment of the Plan shall not be altered or
impaired by such amendment, except with the consent of the Grantee.
18. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of Shares or stock options otherwise than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases. Neither the Plan nor any Award granted hereunder
A-10
<PAGE> 29
shall be deemed to confer upon any employee any right to continued employment
with the Company or its Subsidiaries.
19. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
(a) The obligation of the Company to sell and deliver Shares with
respect to Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(b) The Plan shall be governed by Maryland law, except to the extent
that such law is preempted by federal law.
20. EFFECTIVE DATE OF PLAN; STOCKHOLDER APPROVAL
The Plan first became effective on March 4, 1993, the date that it was
approved by the Board of Trustees of the Company's predecessor, Bradley Real
Estate Trust; the Plan was approved by the shareholders of said Trust in
accordance with applicable laws and regulations at the annual meeting held on
May 20, 1993. The Plan was amended and restated by the Board of Directors on
March 13, 1996; such amendment and restatement will become effective upon
approval by the stockholders of the Company at an annual or special meeting of
stockholders. No Awards may be granted under the Plan after March 4, 2003 the
tenth anniversary of the original effective date of the Plan.
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<PAGE> 30
DETACH HERE BRA 27
BRADLEY REAL ESTATE, INC.
PROXY FOR THE 1996 ANNUAL MEETING OF STOCKHOLDERS ON MAY 9, 1996
P
R
O
X
Y
The undersigned, revoking any proxy heretofore given, hereby appoints
JOSEPH HAKIM and THOMAS P. D'ARCY, and each of them (with full power to act
alone), proxies with power of substitution to act and vote on behalf of the
undersigned, as designated on the reverse side, all shares of Common Stock of
BRADLEY REAL ESTATE, INC., (the "Company") held of record by the undersigned at
the close of business on March 27, 1996, at the 1996 Annual Meeting of
Stockholders of the Company to be held on May 9, 1996, or at any adjournment or
postponement thereof. The proxies are further authorized to vote, in their
discretion, upon such other business as may properly come before the meeting or
any adjournment or postponement thereof. The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement and
the Company's 1995 Annual Report. This proxy may be revoked at any time before
it is exercised.
UNLESS OTHERWISE INSTRUCTED, THIS PROXY WILL BE VOTED "FOR" THE
NOMINEES FOR DIRECTOR SET FORTH ON THE REVERSE SIDE AND "FOR" THE AMENDMENT AND
RESTATEMENT OF THE COMPANY'S 1993 STOCK OPTION PLAN.
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 31
<TABLE>
DETACH HERE BRA 27
PLEASE MARK
/ X / VOTES AS IN
THIS EXAMPLE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES SET FORTH BELOW AND A VOTE "FOR" PROPOSAL 2.
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
1. Proposal to elect three Directors to hold office 2. Proposal to approve an
until the 1999 Annual Meeting of Stockholders and amendment and restatement of / / / / / /
until their successors are elected and qualified. the Company's 1993 Stock
Option Plan.
NOMINEES: William L. Brown, Thomas P. D'Arcy and
Joseph Hakim
FOR WITHHELD
THE / / FROM THE / /
NOMINEES NOMINEES
/ /
---------------------------------------------------- MARK HERE MARK HERE
FOR, EXCEPT VOTE WITHHELD FROM THE ABOVE NOMINEE(S): FOR ADDRESS / / IF YOU PLAN / /
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Sign exactly as name appears hereon. Joint owners should each sign.
(NOTE: When signing as Executor, Administrator, Custodian, Attorney,
Trustee, Guardian, etc., please add full title.)
Signature: Date: Signature: Date:
--------------------- ------------ --------------------- ------------
</TABLE>
