<PAGE> 1
SCHEDULE 14a
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CV REIT, INC.
__________________________________________________________________
(Name of Registrant as Specified in Its Charter)
___________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
_________________________________________________________
2) Aggregate number of securities to which transaction
applies:
_________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
__________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________
5) Total fee paid:
__________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
_________________________________________________________
2) Form, Schedule or Registration Statement No.:
__________________________________________________________
3) Filing Party:
__________________________________________________________
4) Date Filed:
__________________________________________________________
<PAGE> 2
CV REIT, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of CV Reit, Inc.
The annual meeting of stockholders of CV Reit, Inc. will be held at
The Sky Club, 200 Park Avenue, Met Life Building, 56th Floor (Vert-Pre
Room), New York, NY 10166, on May 27, 1998, at 9:30 a.m., for
the following purposes:
1. To elect three directors, comprising the class
of directors to be elected for a three-year
term expiring in 2001;
2. To approve the adoption of the CV Reit, Inc.
Non-Employee Director 1998 Stock Option Plan;
3. To approve the appointment of BDO Seidman LLP
as independent auditors of the Company for
1998; and
4. To transact such other business as may
properly be brought before the meeting.
The Board of Directors has fixed the close of business on April 6,
1998 as the record date for the determination of stockholders
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
By: Orilla Floyd, Secretary
April 30, 1998
IT IS IMPORTANT THAT EACH SHAREHOLDER EXERCISE HIS RIGHT TO VOTE.
Whether or not you plan to attend the meeting, we urge that you
execute and return your proxy cards as soon as possible in the
enclosed postage-paid envelope, in order that your shares will be
represented at the meeting. If you attend the meeting, you may
vote in person.
<PAGE> 3
CV REIT, INC.
100 Century Boulevard
West Palm Beach, Florida 33417
PROXY STATEMENT
This statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of CV Reit, Inc. (the
"Company") to be voted at the annual meeting of stockholders of the
Company referred to in the foregoing Notice. Shares represented by
duly executed proxies received by the Company will be voted in
accordance with the instructions contained therein and, in the
absence of specific instructions, will be voted FOR the election of
the three directors who have been nominated by the Board of
Directors, comprising the class of directors to be elected for a
three-year term expiring in 2001; FOR the adoption of the CV Reit,
Inc. Non-Employee Director 1998 Stock Option Plan; FOR the
appointment of the Company's existing independent auditors; and in
accordance with the judgment of the person or persons voting the
proxies on any other matter that may properly be brought before the
meeting. The execution of a proxy will in no way affect a
stockholder's right to attend the Annual Meeting and to vote in
person. Any proxy executed and returned by a stockholder may be
revoked at any time either by giving written notice to the
Secretary of the Company at the above address before it is voted or
by attending the Annual Meeting and revoking the proxy in person.
This Proxy Statement and the accompanying proxy are being sent on
or about April 30, 1998 to stockholders entitled to vote at the
Annual Meeting of Stockholders. The entire cost of soliciting
proxies will be borne by the Company and will be made through the
use of the mails. The Company will, upon request, reimburse
brokerage houses and persons holding shares in their names or in
the names of their nominees for their reasonable expenses in
sending soliciting material to their principals.
The Company has outstanding 7,966,621 shares of Common Stock, $.01
par value ("Common Stock") which are entitled to vote at the
meeting, each share being entitled to one vote. Only stockholders
of record at the close of business on April 6, 1998, will be
entitled to vote at the meeting. There was no other class of
voting securities outstanding at that date.
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
Three directors are to be elected at the meeting. For purposes of
this meeting, the Board of Directors has fixed the number of
directors at seven, divided into three classes. Each class is
elected for a three-year term at successive Annual Meetings of the
Stockholders. In all cases, directors hold office until their
successors have been elected and qualified, or until their earlier
resignation, death or removal.
NOMINEES AND INCUMBENT DIRECTORS
Set forth below are the names of the persons nominated as directors
and directors whose terms do not expire this year, their ages,
their offices in the Company, if any, their principal occupations
or employment for the past five years, the length of their tenure
as directors and the names of other public companies in which such
persons hold directorships. Information regarding their beneficial
ownership of the Company's Common Stock and equity securities of
the Company's subsidiaries is reported under the caption "Security
Ownership of Management". All of the nominees are currently
directors of the Company.
NOMINEES FOR DIRECTORS WHOSE TERM OF OFFICE WILL EXPIRE IN 2001
Stanley Brenner
Mr. Brenner, 72, has been a director of the Company since
1988. Mr. Brenner was a partner of Laventhol & Horvath,
certified public accountants, for more than five years until
his retirement in 1990. From April 1991 until May 1996, Mr.
Brenner served as a consultant to the Company. Mr. Brenner
was Interim President of the Company from August 1996 to
December 1997.
Stanley S. Cohen
Mr. Cohen, 58, became a director of the Company in December
1997. Mr. Cohen is a partner and a member of the Executive
Committee of the law firm of Fox, Rothschild, O'Brien &
Frankel, LLP in Philadelphia, Pennsylvania. Mr. Cohen
previously served for 11 years as Co-Chairman of that firm's
Real Estate Department. Mr. Cohen has served as a past
President of Har Zion Temple and the Auerbach Central Agency
for Jewish Education, a Constituent Agency of the Jewish
Federation of Greater Philadelphia (the "Federation"). Mr.
Cohen is a member of the Board of Trustees of the Federation
and the Greentree School, a non-profit school serving severely
emotionally disturbed children. Mr. Cohen presently serves as
an appointee of the Majority Leader of the Pennsylvania State
House of Representatives as a delegate to the Pennsylvania
Economic Development Financing Authority, which grants loans
to encourage economic development within Pennsylvania, and is
an appointee of the Governor of Pennsylvania to the
Pennsylvania Commission for Women. Fox, Rothschild, O'Brien
& Frankel, LLP provides legal services to the Company.
<PAGE> 5
Allyn L. Levy
Mr. Levy, 70, has been a director of the Company since 1993.
Mr. Levy served as Chairman and Chief Executive Officer of
Patriot Bancorporation of Boston, Massachusetts, and its
predecessor, Harbor National Bank of Boston, from 1975 until
1986. Since 1986, Mr. Levy has been a private investor. He
is also a director of B.J. Wholesale Club, a New York Stock
Exchange listed company. Mr. Levy is not related to H. Irwin
Levy.
INCUMBENT DIRECTORS WHOSE TERM OF OFFICE WILL EXPIRE IN 2000
H. Irwin Levy, Chairman
Mr. Levy, 71, became a director and Chairman of the Board of
the Company in December 1997. Mr. Levy has served as Chairman
of the Board and Chief Executive Officer of Hilcoast
Development Corp. ("Hilcoast"), a real estate developer, since
August 1992. Since 1995, he has also served as a director of
nStor Technologies, Inc., an American Stock Exchange listed
company. Mr. Levy was Chairman of the Board and Chief
Executive Officer of the Company from 1985 to July 1992. He
is currently of counsel to the West Palm Beach law firm of
Levy Kneen Mariani Curtin Wiener Kornfeld and del Russo, which
provides legal services to the Company.
Louis P. Meshon, Sr.
Mr. Meshon, 57, became a director, Chief Executive Officer and
President of the Company in December 1997. Mr. Meshon served
as President of Drexel Realty, Inc. ("Drexel"), a real estate
management and leasing company he co-founded in 1974, until
December 1997, at which time the Company acquired an interest
in Drexel. Mr. Meshon was recently nominated to the Wharton
School's Real Estate Advisory Board.
<PAGE> 6
INCUMBENT DIRECTORS WHOSE TERM OF OFFICE WILL EXPIRE IN 1999
Milton S. Schneider
Mr. Schneider, 48, became a director of the Company in
December 1997. Mr. Schneider is Chief Executive Officer of
The Glenville Group, Inc., headquartered in Plymouth Meeting,
Pennsylvania, involved in the development, ownership and
management of commercial and residential properties. Mr.
Schneider is Chairman of Togar Property Company, an apartment
development company located in Malvern, Pennsylvania. In
addition, Mr. Schneider is Vice Chairman of Parkland
Management Company, a financial services company, Vice
Chairman of Horvitz Newspapers, Inc., which owns seven
newspapers in the State of Washington and Tennessee, and a
director of Bruml Capital Corporation. He is also a faculty
member of the Institute of Private Investors. Mr. Schneider
served for three years as the Chairman of the Metropolitan
Philadelphia Advisory Board of the Anti-Defamation league (the
"ADL"). Mr. Schneider is a member of ADL's National Executive
Committee, a National Commissioner and Chairman of the
National Development Committee, and a trustee of the ADL
Foundation. Mr. Schneider is also an officer and member of
the Board of Trustees of the Federation, Chairman of its
Investment Committee, a board member of its Endowment
Corporation and serves on its Executive Committee; a trustee
and member of the Executive Committee of the Shipley School;
a founding director of TownePride Works, Inc., a non-profit
organization providing job readiness training and placement
for the transitionally needy homeless in Philadelphia; and
serves on numerous other boards and community committees in
the Philadelphia and New York areas.
Alan L. Shulman
Mr. Shulman, 65, has been a director of the Company since 1985
and served as Chairman of the Board from August 1992 until May
1996. Mr. Shulman is a private investor and was previously a
general partner of Unitel Associates, Ltd., a Florida limited
partnership engaged in the ownership and operation of Holiday
Inn motel properties, for more than twenty years until its
dissolution in 1987. Mr. Shulman also serves as a director of
Engle Homes, a NASDAQ listed real estate development company,
and was a director of Island National Bank from its inception
in 1989 until April 1997. A company controlled by Mr. Shulman
leases, operates and manages the Company's Days Inn Motel in
West Palm Beach, Florida.
<PAGE> 7
VOTING PROCEDURES
Under Delaware law and the Company's certificate of incorporation
and by-laws, if a quorum is present, directors are elected by a
plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the
election of directors. A majority of the outstanding shares
entitled to vote, present in person or represented by proxy,
constitutes a quorum. Shares represented by proxies or ballots
withholding votes from one or more directors and any "broker non-votes",
if the broker's proxy is voted for at least one proposal,
will be counted only for purposes of determining a quorum. "Broker
non-votes" are instances where a broker holding Shares of record
for a beneficial owner is precluded by rules of a stock exchange or
the National Association of Securities Dealers, Inc. from voting on
a matter. Otherwise, abstentions and "broker non-votes" will not
be counted for or against matters presented for stockholder
consideration, except that abstentions voting on Proposal 2 will be
treated as present and entitled to vote and counted as a vote
against that proposal. The General Corporation law of the State of
Delaware and the certificate of incorporation of the Company do not
provide for cumulative voting in the election of directors.
The Board of Directors recommends that the stockholders vote their
shares FOR the election of the three directors.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Board of Directors of the Company met seven times during the
year ended December 31, 1997. Each director attended at least 75%
of the meetings.
The Audit Committee, consisting of Messrs. Shulman and Brenner, did
not meet during the past year. The Audit Committee is responsible
for overseeing the financial reporting process and the
effectiveness of internal controls of the Company and for
recommendations to the full Board of Directors, including the
designation of independent auditors on an annual basis.
The Asset Review Committee, consisting of Messrs. Brenner, Allyn L.
Levy and a former director, Alvin Wilensky, met one time during the
past year. Mr. Allyn L. Levy was absent from that meeting. The
Asset Review Committee's functions have included quarterly reviews
of the Company's real estate and loan portfolio and making
recommendations to management and the full Board of Directors with
respect to such matters. Subsequent to the first quarter of 1997,
these functions were performed by the full Board of Directors.
<PAGE> 8
The Acquisition Committee, formed in December 1997, consists of
Messrs. Meshon and H. Irwin Levy. The Acquisition Committee
reviews for recommendation to the full Board of Directors, or
rejection, proposed acquisitions of interests in real property.
The Investment Committee, consisting of Messrs. Brenner, Allyn Levy
and Shulman, did not meet during the past year. The Investment
Committee's functions include the approval of all investments of
the Company not otherwise approved by the full Board of Directors.
The Board of Directors has no standing nomination or compensation
committees or other committees performing similar functions.
EXECUTIVE OFFICERS
The following are the executive officers of the Company (and the
Company's wholly-owned subsidiary, Montgomery CV Realty Trust - the
"Trust", where indicated), their respective ages, the year in which
each was first elected an officer and the office of the Company
held by each. Each executive officer will hold office until the
next annual meeting of the Board of Directors or until their
respective successors have been duly elected and qualified:
Officer
Officer's Name Age Office Since
- -------------- --- ------ -------
H. Irwin Levy 71 Chairman of the Board 1997
Louis P. Meshon, Sr. 57 President and Chief Executive 1997
Officer
Elaine Hauff 35 Vice President and Treasurer 1992
Paul Zambrotta 44 Chief Financial Officer
of the Trust 1997
Orilla Floyd 63 Secretary 1996
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table sets forth, for the years ended December 31,
1997, 1996 and 1995, the compensation awarded to, earned by, or
paid to those persons who were, during 1997 (i) the Chief Executive
Officer of the Company and (ii) the other executive officers of the
Company whose compensation is required to be disclosed pursuant to
the rules of the Securities and Exchange Commission. The only
compensation paid by the Company to its executive officers was base
salary and annual bonuses.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------------------
Name and Principal Position Year Salary($) Bonus($)
- --------------------------- ---- --------- -----------
Stanley Brenner, 1996 10,000 -0-
President (1) 1997 24,000 -0-
Louis P. Meshon, President 1997 -0- -0-
and Chief Executive
Officer (2)
__________
(1) Mr. Brenner served as Interim President from August 1996 until
December 31, 1997.
(2) Mr. Meshon was elected President and Chief Executive Officer
effective December 31, 1997.
OPTION/SAR GRANTS DURING 1997
The following table sets forth information regarding options to
purchase the Company's Common Stock granted pursuant to the
Montgomery CV Trust Executive Stock Option Plan during 1997.
Options granted during 1997 were granted on December 31, 1997 and
become exercisable in equal annual installments of 30,000 shares,
commencing on December 31, 1998. These options are subject to
forfeiture under certain circumstances. No SAR's were granted.
<PAGE> 10
Potential
Realizable
Value at
Assumed Annual
Number of % of Total Exercise Rates of Stock
Securities Options or Price Appreciation
Underlying Granted to Base for Option Term
Options Employees in Price Expiration -------------------
Name Granted(#) Fiscal Year ($/sh) Date 5%($) 10%($)
- ---- ---------- ------------ ------ ---------- --------------------
Louis P.
Meshon,
Sr. 150,000 100% $13.69 12/31/07 $3,344,935 $5,326,250
AGGREGATED YEAR END OPTION VALUES
The following table sets forth information regarding unexercised stock
options as of December 31, 1997. No stock options were exercised during
1997. No SAR's have been granted or are outstanding:
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Dec.31,1997 (#) Dec.31,1997($)
Shares ---------------- ----------------
Acquired on Value Exercis- Unexer- Exercis- Unexer-
Name Exercise(#) Realized($) able cisable sable cisable
- ------- ----------- ----------- ----------------- ----------------
Louis P.
Meshon, Sr. -0- -0- -0- 150,000 -0- -0-
BOARD COMPENSATION REPORT
Since the Board does not have a Compensation Committee, the entire
Board has provided the following Compensation Report:
Executive Compensation Policy - The Board's overall compensation
philosophy is to attract and retain quality talent, which is
critical to both the short-term and long-term success of the
Company, and to create a mutuality of interest between executive
officers and stockholders through compensation structures that
share the rewards and risks of strategic decision making.
The Board examines market compensation levels and trends observed
in the labor market. Market information is used as a frame of
reference for annual salary adjustments and starting salary offers.
Executive salary decisions are generally determined in an annual
review of each individual's performance, decision-making
responsibilities, experience and team-building skills. In certain
instances, these reviews include recommendations by the Company's
financial consultants.
<PAGE> 11
Mr. Meshon's compensation arrangement has been established under an
Employment Agreement, dated December 31, 1997 (the "Employment
Agreement" - see below).
Base Compensation - The Board's approach to base compensation is to
offer competitive salaries in accordance with market practices
prevalent in the Company's geographical areas. Mr. Meshon's
Employment Agreement provides for a base salary of $285,000,
subject to increases, at the sole discretion of a Committee of the
Trust (the "Committee"), in the event that there is a substantial
increase in the scope of his responsibilities, and annually
commencing in December 2000. Pursuant to the Employment Agreement,
in the event the Company does not pay a quarterly dividend to
stockholders of at least $.29 per common share, under certain
circumstances, Mr. Meshon's base salary may be reduced by 50% and
remain at such reduced level until the Company has paid quarterly
dividends of at least $.29 per common share for four consecutive
quarters. In that event, no Performance Bonus (see below) shall be
paid during the period for which such decrease has been in effect.
Bonus Compensation - Under the Employment Agreement, Mr. Meshon is
entitled to an annual performance bonus (the "Performance Bonus")
equal to 5% of the Improvement Percentage, as defined, times the
OP's Funds From Operations, as determined by the Company's
independent auditors. At the sole discretion of the Committee, the
Trust may pay additional bonuses to Mr. Meshon. In addition, Mr.
Meshon is entitled to receive a bonus, based upon a formula set
forth in the Employment Agreement, in the event fees are paid by
third parties to Drexel in connection with the termination, on or
before December 31, 2000, of certain existing management and
leasing agreements between those third parties and Drexel.
The Board generally rewards its other executive officers with
annual bonuses based on performance on specific projects or
transactions, taking into account the overall performance of the
Company. Input from the Company's financial consultants and the
Chief Executive Officer is considered when establishing bonuses for
other executive officers. A balance is made between overall
corporate performance and performance of the specific areas of the
Company under a participant's direct control. This balance
supports the accomplishment of overall objectives and rewards
individual contributions and tasks assigned to Company executives.
<PAGE> 12
Equity-Based Compensation - Stock options provide additional
incentives to key employees to maximize shareholder value. Options
generally vest over specified periods to encourage continued
employment. In accordance with this philosophy, on December 31,
1997, the Company adopted the Montgomery CV Trust Executive Stock
Option Plan which provides for the issuance to certain executives
of options to purchase a maximum of 150,000 shares of Common Stock,
all of which were granted to Mr. Meshon on December 31, 1997 (see
"Option/SAR Grants During 1997").
Employment Agreement - As discussed above, effective December 31,
1997, the Company entered into an Employment Agreement with Mr.
Meshon pursuant to which Mr. Meshon serves as President and Chief
Executive Officer of the Company and President and Chief Operating
Officer of the Trust for five years, with an automatic extension
provision except under certain circumstances. In addition to the
compensation provisions discussed above, if, during the term of the
Employment Agreement, Mr. Meshon's employment is terminated for
Cause, as defined, or Mr. Meshon resigns without Good Reason, as
defined, all or a portion of 227,577 Units owned by Mr. Meshon in
Montgomery CV Realty, L.P., a newly created operating partnership
(the "OP") in which the Trust owns 81.7% and is its sole general
partner, shall be deemed to be transferred to the Trust. The
number of OP Units subject to transfer is reduced on a pro rata
basis over five years. Mr. Meshon acquired those OP Units in
exchange for his shares of Drexel on December 31, 1997.
In the event of Mr. Meshon's death or disability, the Trust shall
be required to make severance payments for one year equal to Mr.
Meshon's base salary, plus certain fringe benefits in the event of
disability.
In the event Mr. Meshon terminates his employment for Good Reason,
as defined, or after the occurrence of a Significant Event, as
defined (which includes a change in control of the Company and a
transfer of substantially all of the Company's assets and
business), the Trust is required to pay severance benefits equal to
the greater of the aggregate sum of all compensation (including
bonuses based on historical averages) due to Mr. Meshon during the
remaining term of the Employment Agreement, or 199% of Mr. Meshon's
annual salary for the year prior to termination. In addition, Mr.
Meshon would be entitled to receive certain fringe benefits for up
to three years.
<PAGE> 13
Respectfully submitted,
H. Irwin Levy, Chairman
Stanley Brenner
Stanley S. Cohen
Allyn L. Levy
Louis P. Meshon, Sr.
Milton S. Schneider
Alan L. Shulman
BOARD COMPENSATION
Except for Messrs. Meshon and H. Irwin Levy, directors of the
Company are paid $1,000 for attending each Board of Directors
meeting, $500 for attending each committee meeting, and effective
January 1, 1998, also receive monthly compensation of $1,000. If
the CV Reit, Inc. Non-Employee Director 1998 Stock Option Plan is
approved at the meeting, non-employee directors, excluding Mr. H.
Irwin Levy, will receive annual grants of options to purchase 5,000
shares of Common Stock and the Board will have the authority to
grant, in its sole discretion, a stock option to purchase up to
20,000 shares of Common Stock on the date any individual first
commences service as a non-employee director (see "Approval of the
Adoption of the CV Reit, Inc. Non-Employee Director 1998 Stock
Option Plan").
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has no Compensation Committee. The Chief Executive
Officer's salary is based upon the Employment Agreement, discussed
herein. Other executive salary decisions are determined in an
annual review based upon recommendations of the Company's financial
consultants and approved by the Chief Executive Officer and the
Chairman of the Board. During 1997, the Board consisted of Mr.
Brenner, Interim President, and three outside directors - Messrs.
Wilensky (Chairman), Allyn L. Levy and Shulman. Effective December
31, 1997, the Board consists of Messrs. H. Irwin Levy (Chairman),
Meshon, Brenner, Cohen, Allyn L. Levy, Meshon, Schneider and
Shulman.
<PAGE> 14
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder
return (assuming reinvestment of dividends) to CV Reit, Inc.'s
stockholders during the five year period ended December 31, 1997,
as well as an overall stock market index (S&P 500 Index) and CV
Reit's peer group index (REIT Industry Index):
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
CV Reit, Inc. 100.00 139.53 151.62 212.89 286.50 311.08
S&P 500 Index 100.00 109.99 111.43 153.13 186.29 251.13
REIT Industry
Index 100.00 118.55 119.50 141.38 191.93 228.13
Total returns assume $100 invested on December 31, 1992 in the
Company's Common Stock, the S&P 500 Index and the REIT Industry
Index with reinvestment of dividends.
TRANSACTIONS WITH OTHERS
H. Irwin Levy/Hilcoast
During December 1981 and January 1982, the Company sold each of its
recreation facilities at the Century Villages in West Palm Beach,
Deerfield Beach and Boca Raton in separate transactions to
different purchasers, including Mr. Levy, for sales prices based
upon independent appraisals. The Company sold the recreation
facilities at Boca Raton to Mr. Levy for $18 million, subject to a
lease currently to a corporation owned by Mr. Levy. (The annual
net rental to Mr. Levy on that lease is $2,162,000.) Mr. Levy paid
$410,000 in cash, assumed an existing first mortgage to an
unrelated party in the principal sum of $3,415,000 (which amount
has been repaid in full), and issued 4-year and 30-year non-recourse
promissory notes to the Company in the principal amounts
of $1,640,000 and $12,535,000, respectively. The 4-year note was
non-interest bearing and has been paid in full. The 30-year note
bears interest at 13.25% per annum and, at December 31, 1997, the
outstanding balance on this note was $11 million. During the year
ended December 31, 1997, the Company recognized $1.5 million in
interest income on this note.
<PAGE> 15
Since 1990, companies owned by Mr. Levy and certain members of his
family have leased, managed and operated the recreation facilities
at the Century Villages in West Palm Beach, Deerfield Beach and
Boca Raton, which are collateral for certain notes held by the
Company with an outstanding balance of $41.2 million (including the
$11 million discussed above) at December 31, 1997. During 1997,
the Company leased approximately 3,000 square feet of office space
to those companies on a month-to-month basis for $2,500 per month,
plus an allocation of utility expenses.
Mr. Levy is Chairman of the Board, Chief Executive Officer and a
majority stockholder of Hilcoast, the Company's largest borrower.
At December 31, 1997, amounts due from Hilcoast consisted of
mortgage notes aggregating $36.1 million, which included the
following:
Recreation Note
The Recreation Note, in the amount of $25 million as of December
31, 1997, is collateralized by first mortgages on certain real
estate within the Century Village at Pembroke Pines, Florida active
adult condominium project (the "Pembroke Century Village"),
including the recreation facilities at that project (the "Pembroke
Recreation Facilities"). The Recreation Note bears interest at 11%
and through July 31, 1998, requires monthly interest payments only.
On July 31, 1998, the Recreation Note is scheduled to be converted
to an 11% fixed rate, 25-year, $25 million, self-amortizing loan
providing for equal monthly payments of principal and interest
aggregating approximately $2.9 million per annum. This note may
not be prepaid by Hilcoast without a prepayment penalty and is
collateralized by first mortgages on the Pembroke Recreation
Facilities.
Lines of Credit
Lines of Credit to Hilcoast consist of revolving construction loan
commitments which as of December 31, 1997, aggregated $7.3 million,
of which $5.1 million was outstanding on that date. The Lines of
Credit are collateralized by real estate within the Pembroke
Century Village; bear interest, payable monthly, at 11%; mature
through July 1998; provide for unused commitment fees of 1.8% per
annum; and require specific release prices, principally based on
sales of condominium apartments at the Pembroke Century Village, to
be applied as permanent reductions of amounts available under the
lines of credit.
<PAGE> 16
Other
Other real estate mortgage notes due from Hilcoast amounted to $6.1
million as of December 31, 1997 and included $5 million payable
July 31, 1998 with interest, payable quarterly, at 10%,
collateralized by the Pembroke Recreation Facilities. The
remaining mortgage note due from Hilcoast matures in June 1998 and
bears interest, payable monthly, at 11%.
Effective July 31, 1992, the Company and Hilcoast entered into a
consulting and advisory agreement under which Hilcoast provides
certain investment advisory, consulting and administrative services
to the Company, excluding matters related to Hilcoast's loans from
the Company. The agreement, which originally expired in July 31,
1994, has been extended to June 30, 1999, and provides for the
payment of $10,000 per month to Hilcoast, plus reimbursement for
all out-of-pocket expenses. The agreement may be terminated by
Hilcoast upon 180 days notice and by the Company upon 30 days
notice.
On December 31, 1997, the OP acquired 100% of nine shopping centers
and an office building for a purchase price of approximately $61.7
million. Two of the shopping centers were acquired from Mr. Levy
and members of his family in exchange for 386,811 OP Units (valued
at approximately $4.6 million), including 77,363 OP Units (valued
at approximately $900,000) issued to Mr. Levy. The number of OP
Units is subject to adjustment under certain circumstances. The
economic basis used to determine the acquisition price was the same
as that used for the other properties acquired by the OP on that
date.
Alan L. Shulman
On November 7, 1988, the Company entered into a lease with Century
Inn Operating Corp., a company controlled by Mr. Shulman ("Century
Inn"), for the operation and management of its Days Inn motel in
West Palm Beach, Florida. The lease, as amended, provides for
annual rent through the expiration of the lease term, on August 31,
1999, equal to a minimum of $330,000, plus 30% of gross room
revenues in excess of $1.3 million. The lease also provides for
the Company to be paid 50% of certain amounts received by the
lessee from the concessionaire who operates the food and beverage
facilities at the motel. During the year ended December 31, 1997,
the Company recognized rent income of $489,000 under the lease. On
March 9, 1998, the Company entered into a contract to sell the
motel for net cash proceeds of $4.2 million, subject to various
conditions. If the sale is completed, Century Inn has agreed to
pay rent to the Company through the date of closing equal to 25% of
room revenues from January 1, 1998 through the date of closing. In
addition, Century Inn would be entitled to receive a $250,000 early
termination fee from the buyer.
<PAGE> 17
PRINCIPAL STOCKHOLDERS
As of March 1, 1998, the following persons were known by the
Company to own beneficially (as defined under applicable rules of
the Securities and Exchange Commission) more than 5% of its
outstanding Common Stock:
Amount and
Nature of
Title Beneficial Percent
Name and Address of Class Ownership(1) of Class
- ---------------- ------------ ------------ --------
H. Irwin Levy............. Common Stock 817,397(2) 10.3%
100 Century Boulevard
West Palm Beach, FL 33417
Alan J. Evans and Robert
J. Cartagena, Trustees.. Common Stock 655,759(3) 8.2%
100 Century Boulevard
West Palm Beach, FL 33417
__________
(1) Unless otherwise indicated, each stockholder listed has
the sole power to vote and direct disposition of the
shares of the Company shown as beneficially owned by such
stockholder.
(2) Includes 97,292 shares owned by a corporation controlled
by Mr. Levy. Excludes 100,000 shares owned by Mr.
Levy's wife. Mr. Levy disclaims beneficial ownership of
the excluded shares.
(3) Shares owned by a family trust established by Mr. Evans's
wife, of which Messrs. Evans and Cartagena are Trustees.
<PAGE> 18
SECURITY OWNERSHIP OF MANAGEMENT
As of March 1, 1998, all directors, and all directors and executive officers
of the Company as a group, beneficially owned (as defined under the
applicable rules of the Securities and Exchange Commission) shares of the
Company, and OP Units of limited partnership interests in the Company's
approximately 81.7% owned subsidiary, Montgomery CV Realty, L.P., as follows:
Percent
Amount and of Class
Nature of -------------
Title Beneficial Common OP
Name and Address of Class Ownership(1) Stock Units
- ---------------- ------------ ------------ ------ -------
H. Irwin Levy ............ Common Stock 817,397(2) 10.3%
100 Century Boulevard OP Units 77,363(6)(7) (5)
West Palm Beach, FL 33417
Allyn L. Levy............. Common Stock 20,000(3) (5)
100 Century Boulevard OP Units 0 --
West Palm Beach, FL 33417
Alan L. Shulman........... Common Stock 10,680 (5)
100 Century Boulevard OP Units 0 --
West Palm Beach, FL 33417
Stanley Brenner........... Common Stock 2,500 (5)
100 Century Boulevard OP Units 0 --
West Palm Beach, FL 33417
Stanley S. Cohen ......... Common Stock 1,145(4) (5)
2000 Market Street OP Units 0 --
Philadelphia, PA 19103
Louis P. Meshon, Sr. ..... Common Stock 0 --
580 W. Germantown Pike, OP Units 673,206(6)(7) 6.9%
Suite 200
Plymouth Meeting, PA 19462
Milton S. Schneider ...... Common Stock 0 --
580 W. Germantown Pike, OP Units 20,826(6)(7) (5)
Suite 202
Plymouth Meeting, PA 19462
All Directors ............ Common Stock 851,722 10.7%
and Executive Officers OP Units 771,395(6)(7)(8) 7.9%
as a Group (10 persons)
__________
(1) See Note (1) on page 17.
(2) See Note (2) on page 17.
(3) Held by a revocable trust, of which Mr. Levy is the
trustee and income beneficiary.
(4) Includes 1,000 shares jointly owned with Mr. Cohen's wife.
(5) Less than 1%.
(6) Subject to adjustment under certain circumstances.
<PAGE> 19
(7) The Trust (a wholly-owned subsidiary of CV Reit, Inc.) owns
7,966,621 OP Units (representing 81.7% of the OP). The
holders of the remaining 18.3%, or 1,787,010 OP Units, have
the right to require the OP to redeem their OP Units for cash
at any time after December 31, 1998. However, upon a holder
giving notice of the exercise of this right, the Trust has the
right to acquire such holder's OP Units in exchange for cash
or, if certain conditions are satisfied, an equal number of
shares of CV Reit's Common Stock.
(8) Includes an aggregate of approximately 469,000 OP Units held
in escrow subject to satisfaction of certain conditions.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's directors and
executive officers, and persons who own more than ten percent of
the Company's outstanding Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock. Such persons
are required by SEC regulation to furnish the Company with copies
of all such reports they file.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and written
representations that no other reports were required, the officers,
directors and greater than ten percent beneficial owners of the
Company have complied with all applicable Section 16(a) filing
requirements.
<PAGE> 20
PROPOSAL 2
APPROVAL OF THE ADOPTION OF THE CV REIT, INC.
NON-EMPLOYEE DIRECTOR 1998 STOCK OPTION PLAN
BACKGROUND
On January 15, 1998, the Board of Directors adopted the CV Reit,
Inc. Non-Employee Director 1998 Stock Option Plan (the "Director
Plan"), subject to and conditioned upon the approval of the
stockholders of the Company and the authorization for listing of
the Common Stock available under the Director Plan by the New York
Stock Exchange. The following description of the Director Plan is
a summary and is qualified in its entirety by reference to the
Director Plan, a copy of which has been filed as Appendix A to this
Proxy Statement.
PURPOSE
The purpose of the Director Plan is to enhance the profitability
and value of the Company by enabling the Company to make automatic
annual grants of stock options to certain non-employee directors of
the Company and to make discretionary grants of stock options to
induce certain individuals to commence service as a non-employee
director, in order to attract, retain and reward such individuals
and to strengthen the mutuality of interests between the
non-employee directors and the stockholders.
ADMINISTRATION
The Director Plan will be administered by the Board of Directors.
The Board of Directors has the full authority to interpret the
Director Plan, to grant discretionary awards under the Director
Plan, to determine the persons to whom discretionary awards will be
granted, to determine the number of stock options to be granted in
connection with discretionary awards, to prescribe the form or
forms of instruments evidencing awards and to make all other
determinations and to take all such steps in connection with the
Director Plan and the stock options as the Board of Directors, in
its sole discretion, deems necessary or desirable.
<PAGE> 21
ELIGIBILITY
All non-employee directors of the Company will automatically
receive periodic grants of stock options under the Director Plan
(as described below) and certain non-employee directors will be
eligible to receive a discretionary grant of stock options under
the Director Plan as an inducement to commence service as a
non-employee director. Eligibility to receive discretionary grants
of stock options under the Director Plan will be determined by the
Board of Directors in its sole discretion. For purposes of the
Director Plan, a "non-employee director" is any director of the
Company (other than H. Irwin Levy) who is not an employee of the
Company, Montgomery CV Realty Trust, Montgomery CV Realty L.P.,
Drexel Realty, Inc., Royce Realty, Inc. or any entity affiliated
with any of the foregoing.
AVAILABLE SHARES
A maximum of 150,000 shares of Common Stock may be issued under the
Director Plan.
The Board of Directors may, in accordance with the terms of the
Plan and in its sole discretion, make appropriate adjustments to
the number of shares available for the grant of options and the
terms of outstanding options to reflect any change in the Company's
capital structure or business by reason of any stock dividend,
stock split, recapitalization, reorganization, merger, consolidation,
sale of all or substantially all the assets of the Company
or any similar change affecting the Company's capital structure or
business.
TYPES OF AWARDS
Automatic Stock Option Awards. The Director Plan provides for the
automatic annual grant of 5,000 non-qualified stock options to each
non-employee director of the Company on each January 15th during
the term of the Plan provided that a sufficient number of shares
are available to satisfy exercise of the options and, if a
sufficient number of shares are not available, each non-employee
director shall receive an option to purchase a pro rata portion of
the remaining shares.
Discretionary Stock Option Awards. The Board of Directors has the
authority to grant, in its sole discretion, a stock option to
purchase up to 20,000 shares of Common Stock on the date any
individual first commences service as a non-employee director in
order to induce such individual to commence service as a non-employee
director.
<PAGE> 22
TERMS OF AWARDS
The options will have a ten year term, subject to earlier
expiration in the event of a termination of directorship, and an
exercise price equal to the fair market value of the Common Stock
at the time of grant. All options granted under the Director Plan,
other than options granted on January 15, 1998, will be fully
vested on the date of grant.
On January 15, 1998, options were automatically granted, subject to
stockholder approval of the Director Plan and the authorization for
listing the Common Stock available under the Director Plan on the
New York Stock Exchange, to the five (5) non-employee directors
(which had an exercise price of $14.50; the fair market value of a
share of Common Stock on April 15, 1998 was $14.13). These options
will become fully vested 180 days after the date of grant and upon
the optionee's death or a change in control of the Company (as
defined in the Director Plan), provided that, in each case, the
non-employee director does not incur a termination of directorship
prior thereto. Notwithstanding the foregoing, the automatic
options granted to non-employee directors on January 15, 1998 may
not be exercised on or prior to the sixty-fifth day after the date
on which the Director Plan is approved by the stockholders of the
Company.
Upon a termination of directorship (other than for cause as "cause"
is defined under Delaware law), all vested options will remain
exercisable until the earlier of one year (or, in the case of
death, two years) or the expiration of the option term. In the
event of a termination of directorship for cause, all outstanding
options will immediately terminate. The option price upon exercise
of any option may be paid: (i) in cash, check, money order or bank
draft, (ii) in shares of Common Stock owned by the optionee for at
least 6 months (free and clear of any liens and encumbrances),
(iii) if the Common Stock is then traded on a national securities
exchange or quoted on a national quotation system, through a
brokered, cashless exercise procedure, or (iv) by such other
method as is approved by the Board of Directors.
<PAGE> 23
AMENDMENT OR TERMINATION
The Director Plan provides that it may be amended, suspended or
terminated by the Board of Directors, provided, however, that,
unless otherwise required by law or specifically provided herein,
the rights of a participant with respect to stock options granted
prior to such amendment, suspension or termination, may not be
impaired without the consent of such participant. Notwithstanding
the foregoing, the Board of Directors may not effect any amendment
that would require the approval of the stockholders of the Company
under applicable law or under any regulation of a national
securities exchange or automated quotation system unless such
approval is obtained.
MISCELLANEOUS
Participants required to file reports under Section 16(a) of the
Exchange Act may be limited to certain specific exercise, election
or holding periods with respect to the awards granted to them under
the Director Plan. Although awards will generally be
nontransferable (except by will or the laws of descent and
distribution), the Board of Directors may determine at the time of
grant or thereafter that a nonqualified stock option that is
otherwise nontransferable is transferable in whole or in part and
in such circumstances, and under such conditions, as specified by
the Board of Directors. A non-employee director shall have no
rights with respect to an Option until such Option is granted
pursuant to the terms of the Director Plan.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the principal U.S. federal income tax
consequences with respect to options under the Director Plan is
based on statutory authority and judicial and administrative
interpretations as of the date of this Proxy Statement, which are
subject to change at any time (possibly with retroactive effect)
and may vary in individual circumstances. Therefore, the following
is designed to provide only a general understanding of the federal
tax consequences (state and local tax consequences are not
addressed below). Each recipient of a grant is urged to consult
their own tax advisor as to the specific tax consequences to such
grantee of the grant. This discussion is limited to the U.S.
federal income tax consequences to individuals who are citizens or
residents of the U.S., other than certain individuals who are also
subject to foreign taxes. In general, an optionee will realize no
taxable income upon the grant of stock options and the Company will
not receive a deduction at the time of such grant, unless the
option has a readily ascertainable fair market value (as determined
under applicable tax law) at the time of grant. Upon exercise of
a stock option, an optionee generally will recognize ordinary
income in an amount equal to the excess of the fair market value of
the stock on the date of exercise over the exercise price. Upon a
subsequent sale of the stock by the optionee, the optionee will
recognize short-term or long-term capital gain or loss, depending
upon his or her holding period for the stock. The Company will
generally be allowed a deduction equal to the amount recognized by
the optionee as ordinary income.
<PAGE> 24
The Director Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The
Director Plan is not, nor is it intended to be, qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended.
VOTING PROCEDURES
The affirmative vote of at least a majority of the shares of Common
Stock present in person or represented by proxy and entitled to
vote on this matter at the meeting is required to approve the
adoption of the Director Plan. The Board of Directors recommends
that the stockholders vote their shares FOR the proposal to adopt
the Director Plan.
PROPOSAL 3
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed BDO Seidman LLP
as independent auditors for the Company for the year ending
December 31, 1998, subject to the approval of stockholders. BDO
Seidman LLP acted as independent auditors for the Company for the
year ended December 31, 1997. A representative of BDO Seidman LLP
is expected to be present at the stockholders' meeting, will have
the opportunity to make a statement if he or she desires to do so,
and will be available to respond to appropriate questions.
<PAGE> 25
The Board of Directors recommends that the stockholders vote their
shares FOR the appointment of BDO Seidman LLP as the Company's
independent auditors.
GENERAL
The Board of Directors does not know of any matters other than the
foregoing proposals that will be presented for consideration at the
meeting. However, if other matters properly come before the
meeting, it is the intention of the persons named in the enclosed
proxy to vote thereon in accordance with their judgment. In the
event that any nominee is unable to serve as a director at the date
of the meeting, the enclosed form of proxy will be voted for any
nominee who shall be designated by the Board of Directors to fill
such vacancy.
STOCKHOLDERS' PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, proposals of stockholders to be presented at the annual
meeting to be held in 1999 must be received for inclusion in the
Company's proxy statement no later than December 30, 1998.
Dated: West Palm Beach, Florida
April 30, 1998
<PAGE> 26
C A R D
PROXY
CV REIT, INC.
The undersigned hereby appoints LOUIS P. MESHON, SR. AND H.
IRWIN LEVY, and each of them, the attorneys and proxies of the
undersigned, with power of substitution, to vote on behalf of the
undersigned all the shares of stock of CV REIT, INC. which the
undersigned is entitled to vote at the Annual meeting of
Stockholders of CV REIT, INC. to be held at The Sky Club, 200 Park
Avenue, Met Life Building, 56th floor (Vert-Pre Room), New York,
New York 10166, on May 27, 1998 at 9:30 a.m. and at all
adjournments thereof, hereby revoking any proxy heretofore given
with respect to such stock, and the undersigned authorizes and
instructs said proxies to vote as follows:
1. Election of directors
___
/__/ FOR the election of the nominees listed below
(three year term)
Stanley Brenner, Allyn L. Levy, and Stanley S. Cohen
___
/__/ WITHHOLD AUTHORITY to vote for all the nominees
listed above.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name on the list above.)
2. Approve the adoption of the CV Reit, Inc. Non-Employee Director
1998 Stock Option Plan
___ ___ ___
/__/ FOR /__/ AGAINST /__/ ABSTAIN
3. Approve the appointment of BDO Seidman LLP as independent
auditors for the Company for fiscal 1998.
___ ___ ___
/__/ FOR /__/ AGAINST /__/ ABSTAIN
4. In their discretion, upon such other business as may be properly
brought before the meeting.
<PAGE> 27
If this Proxy is properly executed and returned, the shares
represented hereby will be voted. If not otherwise specified, this
Proxy will be voted FOR the persons nominated as directors, and FOR
proposal number 2 and number 3.
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR
BELOW.
Dated: ________________________, 1998
_____________________________________
_____________________________________
(Signature of Stockholders)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<PAGE> 1
Appendix A
CV REIT, INC.
NON-EMPLOYEE DIRECTOR
1998 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I. PURPOSE . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II. DEFINITIONS . . . . . . . . . . . . . . . . . . .1
ARTICLE III. ADMINISTRATION. . . . . . . . . . . . . . . . . .2
ARTICLE IV. SHARES AND OTHER LIMITATIONS. . . . . . . . . . .4
ARTICLE V. ELIGIBILITY . . . . . . . . . . . . . . . . . . .6
ARTICLE VI. STOCK OPTIONS . . . . . . . . . . . . . . . . . .6
ARTICLE VII. TERMINATION PROVISIONS. . . . . . . . . . . . . .8
ARTICLE VIII. NON-TRANSFERABILITY . . . . . . . . . . . . . . .9
ARTICLE IX. CHANGE IN CONTROL . . . . . . . . . . . . . . . .9
ARTICLE X. TERMINATION OR AMENDMENT OF PLAN. . . . . . . . 10
ARTICLE XI. UNFUNDED PLAN . . . . . . . . . . . . . . . . . 11
ARTICLE XII. GENERAL PROVISIONS. . . . . . . . . . . . . . . 11
ARTICLE XIII. EFFECTIVE DATE OF PLAN. . . . . . . . . . . . . 13
ARTICLE XIV. TERM OF PLAN. . . . . . . . . . . . . . . . . . 14
ARTICLE XV. NAME OF PLAN. . . . . . . . . . . . . . . . . . 14
<PAGE> 2
CV Reit, Inc.
Non-Employee Director 1998 Stock Option Plan
ARTICLE I.
PURPOSE
The purpose of the CV Reit, Inc. Non-Employee
Director 1998 Stock Option Plan (the "Plan") is to enhance the
profitability and value of CV Reit, Inc. (the "Company") for the
benefit of its stockholders by enabling the Company: (i) to make
automatic annual grants of Stock Options to Non-Employee
Directors, and (ii) to make discretionary grants of Stock Options
to induce certain individuals to commence service as Non-Employee
Directors, thereby attracting, retaining and rewarding such Non-Employee
Directors and strengthening the mutuality of interests
between such Non-Employee Directors and the Company's
stockholders.
ARTICLE II.
DEFINITIONS
For purposes of the Plan, the following terms shall have the
following meanings:
2.1. "Board" shall mean the Board of Directors of the
Company.
2.2. "Cause" shall mean, with respect to a Participant's
Termination of Directorship, an act or failure to act that
constitutes "cause" for removal of a director under applicable
Delaware law.
2.3. "Change in Control" shall have the meaning set forth
in Article IX.
2.4. "Code" shall mean the Internal Revenue Code of 1986,
as amended. Any reference to any section of the Code shall also
be a reference to any successor provision.
2.5. "Common Stock" shall mean the common stock, par value
$.01 per share, of the Company.
2.6. "Company" shall mean CV Reit, Inc., a Delaware
corporation, and its successors and assigns.
2.7. "Effective Date" shall mean the effective date of the
Plan as defined in Article XIII.
<PAGE> 3
2.8. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
2.9. "Fair Market Value" for purposes of the Plan, unless
otherwise required by any applicable provision of the Code or any
regulations issued thereunder, shall mean, as of any date, the
last sales price reported for the Common Stock on the applicable
date: (i) as reported on the principal national securities
exchange on which it is then traded or the Nasdaq Stock Market,
Inc., or (ii) if not traded on any such national securities
exchange or the Nasdaq Stock Market, Inc., as quoted on an
automated quotation system sponsored by the National Association
of Securities Dealers. If the Common Stock is not readily
tradable on a national securities exchange, the Nasdaq Stock
Market, Inc., or any automated quotation system sponsored by the
National Association of Securities Dealers, its Fair Market Value
shall be set in good faith by the Board. For purposes of the
grant of any Stock Option, the applicable date shall be the date
on which the Option is granted or, if the sale of the Common
Stock shall not have been reported or quoted on such date, on the
first day prior thereto on which the sale of the Common Stock was
reported or quoted.
2.10. "Non-Employee Director" shall mean any director of
the Company (other than H. Irwin Levy) who is not an employee of
the Company, Montgomery CV Realty Trust, Montgomery CV Realty
L.P., Drexel Realty, Inc., Royce Realty, Inc. or any entity
affiliated with any of the foregoing.
2.11. "Participant" shall mean any Non-Employee Director to
whom a grant of an Option has been made under the Plan.
2.12. "Rule 16b-3" shall mean Rule 16b-3 under Section
16(b) of the Exchange Act as then in effect or any successor
provisions.
2.13. "Stock Option" or "Option" shall mean any Option to
purchase shares of Common Stock granted to any Non-Employee
Director under the Plan.
2.14. "Termination of Directorship" shall mean, with
respect to a Non-Employee Director, that the Non-Employee
Director has ceased to be a director of the Company.
2.15. "Transfer" or "Transferred" shall mean anticipate,
alienate, attach, sell, assign, pledge, hypothecate, encumber,
charge or otherwise transfer.
ARTICLE III.
ADMINISTRATION
3.1. The Board. The Plan shall be administered and
interpreted by the Board.
<PAGE> 4
3.2. Plan Awards. The Board shall have full authority to
interpret the Plan and to decide any questions and settle all
controversies and disputes that may arise in connection with the
Plan; to select the individuals to whom Stock Options may be
granted under Section 6.3; to determine the number of Stock
Options to be granted to an individual under Section 6.3; to
prescribe the form or forms of instruments evidencing Options and
any other instruments required under the Plan and to change such
forms from time to time; and to make all other determinations and
to take all such steps in connection with the Plan and the
Options as the Board, in its sole discretion, deems necessary or
desirable.
3.3. Guidelines. Subject to Article X hereof, the Board
shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan
and perform all acts, including the delegation of its
administrative responsibilities, as it shall, from time to time,
deem advisable; to construe and interpret the terms and
provisions of the Plan and any Stock Option issued under the Plan
(and any agreements relating thereto); and to otherwise supervise
the administration of the Plan. The Board may correct any
defect, supply any omission or reconcile any inconsistency in the
Plan or in any agreement relating thereto in the manner and to
the extent it shall deem necessary to carry the Plan into effect,
but only to the extent any such action would be permitted under
the applicable provisions of Rule 16b-3. To the extent
applicable, the Plan is intended to comply with the applicable
requirements of Rule 16b-3 and shall be limited, construed and
interpreted in a manner so as to comply therewith, however
noncompliance with Rule 16b-3 shall have no impact on the
effectiveness of an Option granted under the Plan.
3.4. Decisions Final. Any decision, interpretation or
other action made or taken in good faith by or at the direction
of the Company or the Board (or any of its members) arising out
of or in connection with the Plan shall be within the absolute
discretion of the Company or the Board, as the case may be, and
shall be final, binding and conclusive on the Company and all
employees and Participants and their respective heirs, executors,
administrators, successors and assigns.
3.5. Reliance on Counsel. The Company or the Board may
consult with legal counsel, who may be counsel for the Company or
other counsel, with respect to its obligations or duties
hereunder, or with respect to any action or proceeding or any
question of law, and shall not be liable with respect to any
action taken or omitted by it in good faith pursuant to the
advice of such counsel.
3.6. Designation of Consultants/Liability.
(a) The Board may designate employees of the Company
and professional advisors to assist the Board in the
administration of the Plan and may grant authority to
employees to execute agreements or other documents on behalf
of the Board.
<PAGE> 5
(b) The Board may employ such legal counsel,
consultants and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion
received from any such counsel or consultant and any
computation received from any such consultant or agent.
Expenses incurred by the Board in the engagement of any such
counsel, consultant or agent shall be paid by the Company.
The Board, its members and any person designated pursuant to
paragraph (a) above shall not be liable for any action or
determination made in good faith with respect to the Plan.
To the maximum extent permitted by applicable law, no
officer or former officer of the Company or member or former
member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or
any Stock Options granted under it. To the maximum extent
permitted by applicable law and the Certificate of
Incorporation and By-Laws of the Company and to the extent
not covered by insurance, each officer or former officer and
member or former member of the Board shall be indemnified
and held harmless by the Company against any cost or expense
(including reasonable fees of counsel reasonably acceptable
to the Company) or liability (including any sum paid in
settlement of a claim with the approval of the Company), and
advanced amounts necessary to pay the foregoing at the
earliest time and to the fullest extent permitted, arising
out of any act or omission to act in connection with the
Plan, except to the extent arising out of such officer's or
former officer's, member's or former member's own fraud or
bad faith. Such indemnification shall be in addition to any
rights of indemnification the officers, directors or members
or former officers, directors or members may have under
applicable law or under the Certificate of Incorporation or
By-Laws of the Company. Notwithstanding anything else
herein, this indemnification will not apply to the actions
or determinations made by an individual with regard to Stock
Options granted to him or her under the Plan.
ARTICLE IV.
SHARES AND OTHER LIMITATIONS
4.1. Shares.
The aggregate number of shares of Common Stock which may be
issued under the Plan shall not exceed 150,000 shares (subject to
any increase or decrease pursuant to Section 4.2), which may be
either authorized and unissued Common Stock or Common Stock held
in or acquired for the treasury of the Company or both. If any
Stock Option granted under the Plan expires, terminates or is
cancelled for any reason without having been exercised in full,
the number of shares of Common Stock underlying the unexercised
Stock Option shall again be available for issuance under the
Plan. In determining the number of shares of Common Stock
available for issuance under the Plan, if Common Stock has been
exchanged by a Participant as full or partial payment to the
Company in connection with the exercise of a Stock Option, the
number of shares of Common Stock exchanged as payment in
connection with the exercise shall again be available for
issuance under the Plan.
<PAGE> 6
4.2. Changes.
(a) The existence of the Plan and the Stock Options granted
hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in
the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting Common
Stock, the authorization or issuance of additional shares of
Common Stock, the dissolution or liquidation of the Company, any
sale or transfer of all or part of its assets or business or any
other corporate act or proceeding.
(b) In the event there is any change in the capital
structure or business of the Company by reason of any stock
dividend or extraordinary dividend, stock split or reverse stock
split, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, non-cash
distributions with respect to its outstanding Common Stock or
capital stock other than Common Stock, reclassification of its
capital stock, any sale or transfer of all or part of the
Company's assets or business, or any similar change affecting the
Company's capital structure or business, and the Board determines
in good faith that an adjustment is necessary or appropriate
under the Plan to prevent substantial dilution or enlargement of
the rights granted to, or available for, Participants under the
Plan or as otherwise necessary to reflect the change in order to
provide a substantially equivalent benefit to the Participants,
then the aggregate number and kind of shares or securities or
other property which thereafter may be subject to Options granted
under the Plan, the number and kind of shares or other securities
or other property (including cash) to be issued upon exercise of
an outstanding Stock Option granted under the Plan that is not
cancelled or terminated pursuant to another provision of the Plan
and the purchase or exercise price of such an Option shall be
appropriately adjusted consistent with such change in such manner
as the Board may deem equitable to prevent substantial dilution
or enlargement of the rights granted to, or available for,
Participants under the Plan or as otherwise necessary to reflect
the change, and any such adjustment determined by the Board in
good faith shall be binding and conclusive on the Company and all
Participants and their respective heirs, executors,
administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any
adjustment to a Stock Option pursuant to Section 4.2(a) or (b)
shall be aggregated until, and eliminated at, the time of
exercise. No fractional shares of Common Stock shall be issued
under the Plan. The Board may reduce the number of shares to a
whole number of shares or may, in its sole discretion, pay cash
in lieu of any fractional shares of Common Stock in settlement of
awards under the Plan. Notice of any adjustment shall be given
by the Board to each Participant whose Stock Option has been
adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of the
Plan.
<PAGE> 7
(d) In the event of a merger or consolidation in which the
Company is not the surviving entity or in the event of any
transaction that results in the acquisition of all or
substantially all of the Company's outstanding Common Stock by a
single person or entity or by a group of persons and/or entities
acting in concert, or in the event of the sale or transfer of all
or substantially all of the Company's assets (all of the
foregoing being referred to as "Acquisition Events"), then the
Board may, in its sole discretion, terminate all outstanding
Stock Options, effective as of the date of the Acquisition Event,
by delivering notice of termination to each such Participant at
least thirty (30) days prior to the date of consummation of the
Acquisition Event; provided, that during the period from the date
on which such notice of termination is delivered to the
consummation of the Acquisition Event, each such Participant
shall have the right to exercise in full all of his or her Stock
Options that are then outstanding (whether vested or not vested
and without regard to any limitations on exercisability otherwise
contained in the Stock Option) but contingent on the occurrence
of the Acquisition Event, and, provided that, if the Acquisition
Event does not take place within a specified period after giving
such notice for any reason whatsoever, the notice and exercise
shall be null and void. If an Acquisition Event occurs, to the
extent the Board does not terminate the outstanding Stock Options
pursuant to this Section 4.2(d), then the provisions of Section
4.2(b) shall apply.
4.3. Purchase Price. Notwithstanding any provision of the
Plan to the contrary, if authorized but previously unissued
shares of Common Stock are issued under the Plan, such shares
shall not be issued for a consideration which is less than as
permitted under applicable law.
ARTICLE V.
ELIGIBILITY
5.1. Eligibility. Non-Employee Directors automatically
receive grants of Stock Options under Section 6.2 and are
eligible to receive grants of Stock Options under Section 6.3 in
accordance with the terms of the Plan. Eligibility to receive
grants of Stock Options under Section 6.3 of the Plan will be
determined by the Board in its sole discretion.
ARTICLE VI.
STOCK OPTIONS
6.1. Non-Qualified Stock Options. Stock Options granted
hereunder shall be non-qualified stock options.
<PAGE> 8
6.2. Automatic Awards. Without further action by the Board
or the stockholders of the Company, but subject to Section 6.3,
each Non-Employee Director shall, subject to the terms of the
Plan, be granted a Stock Option to purchase 5,000 shares of
Common Stock on each January 15th (including, without limitation,
on January 15, 1998 (the "Initial Option")) during the term of
the Plan, provided that a sufficient number of shares are
available under Section 4.1 to satisfy exercise of the Options
and, if a sufficient number of shares are not available, each
Non-Employee Director shall receive an Option to purchase a pro
rata portion of the remaining shares.
6.3. Initial Awards. The Board shall have the authority,
in its sole discretion, to grant to an individual a Stock Option
to purchase up to 20,000 shares of Common Stock on the date any
individual first commences service as a Non-Employee Director to
induce such individual to commence service as a Non-Employee
Director. A Non-Employee Director who receives an initial award
pursuant to this Section 6.3 shall not be entitled to an
automatic award under Section 6.2 until January 15th of the
calendar year following the grant of the initial award.
6.4. Terms of Options. Stock Options granted under this
Article VI shall be subject to the following terms and conditions
and shall be in such form, not inconsistent with terms of the
Plan, as the Board shall deem desirable:
(a) Exercise Price. The exercise price per share of
Common Stock subject to a Stock Option shall be equal to the
Fair Market Value of the Common Stock at the time of grant.
(b) Exercisability. Except as otherwise provided
herein, the Initial Option shall fully vest and become
exercisable one hundred eighty (180) days after the date of
grant, provided that the Participant has not incurred a
Termination of Directorship prior thereto and all other
Options shall be fully vested on the date of grant.
Notwithstanding anything else herein, no Stock Option may be
exercised on or prior to the sixty-fifth (65th) day after
the date on which the Plan is approved by the stockholders
of the Company.
(c) Method of Exercise. Subject to the vesting and
waiting period provisions of Section 6(b) above, Stock
Options may be exercised in whole or in part at any time
during the Option term, by giving written notice of exercise
to the Company specifying the number of shares to be
purchased, accompanied by payment in full of the exercise
price. Common Stock purchased pursuant to the exercise of a
Stock Option shall be paid for at the time of exercise as
follows: (i) in cash or by check, bank draft or money order
payable to the order of Company; (ii) if the Common Stock is
traded on a national securities exchange or quoted on a
national quotation system through the delivery of
irrevocable instructions to a broker to deliver promptly to
the Company an amount equal to the purchase price; (iii) by
delivery of Common Stock owned by the Participant for a
period of at least six (6) months (and for which the
Participant has good title free and clear of any liens and
encumbrances) based on the Fair Market Value of the Common
Stock on the payment date; or (iv) by such other method
approved by the Board. No shares of Common Stock shall be
issued until payment thereof, as provided herein, has been
made or provided for.
<PAGE> 9
(d) Option Agreement. Options shall be evidenced by
Option agreements in such form as the Board shall approve
from time to time.
(e) Option Term. If not previously exercised,
canceled or terminated, each Stock Option shall expire ten
(10) years after the date the Stock Option is granted.
ARTICLE VII.
TERMINATION PROVISIONS
7.1. Termination of Directorship. The following rules
apply with regard to Stock Options upon the Termination of
Directorship of a Participant:
(a) Termination of Directorship by Reason of Death.
Upon a Participant's Termination of Directorship by reason
of death, all then outstanding Stock Options shall fully
vest and become exercisable (to the extent unvested on the
date of death) and all then outstanding Stock Options shall
remain exercisable by the legal representative of the estate
at any time within a period of two (2) years from the date
of death, but in no event beyond the expiration of the
stated term of such Stock Options.
(b) Termination of Directorship other than for Cause
or Death. Upon a Participant's Termination of Directorship
on account of resignation, failure to stand for reelection
or failure to be reelected or otherwise other than as set
forth in Section 7.1(a) or (c), all then outstanding Stock
Options held by the Participant may be exercised, to the
extent exercisable on the date of such Termination of
Directorship, at any time within a period of one (1) year
from the date of such Termination of Directorship, but in no
event beyond the expiration of the stated term of such Stock
Options.
(c) Termination of Directorship for Cause. Upon
removal for Cause, or failure to be renominated for Cause,
or if the Company obtains or discovers information after
Termination of Directorship that such Participant had
engaged in conduct that would have justified a removal for
Cause during such directorship, all then outstanding Stock
Options of such Participant shall immediately terminate and
shall be null and void.
(d) Termination of Stock Options. Except as provided
in Section 7.1(a), Stock Options that were not exercisable
during the period that an individual serves as a Non-Employee
Director shall not thereafter become exercisable
upon a Termination of Directorship for any reason or no
reason whatsoever, and such Stock Options shall terminate
and become null and void upon a Termination of Directorship.
<PAGE> 10
ARTICLE VIII.
NON-TRANSFERABILITY
8.1. Non-Transferability. Except as provided in the last
sentence of this Article VIII, no Stock Option shall be
Transferred by a Participant otherwise than by will or by the
laws of descent and distribution. All Stock Options shall be
exercisable, during the Participant's lifetime, only by the
Participant. No Stock Option shall, except as otherwise
specifically provided by law or herein, be Transferred in any
manner, and any attempt to Transfer any Stock Option shall be
void, and no such Stock Option shall in any manner be used for
the payment of subject to, or otherwise encumbered by or
hypothecated for the debts, contracts, liabilities, engagements
or torts of any person who shall be entitled to such Stock
Option, nor shall it be subject to attachment or legal process
for or against such person. Notwithstanding the foregoing, the
Board may determine at the time of grant or thereafter, that a
Stock Option that is otherwise not transferable pursuant to this
Article VIII is transferable in whole or part and in such
circumstances, and under such conditions, as specified by the
Board.
ARTICLE IX.
CHANGE IN CONTROL
9.1. Benefits. In the event of a Change in Control of
the Company (as defined below), all outstanding Stock Options
granted prior to the Change in Control shall be fully vested and,
subject to the second sentence of Section 6.4(b) above,
immediately exercisable in their entirety, provided that the
Participant has not incurred a Termination of Directorship prior
thereto.
9.2. Change in Control. For purposes of the Plan, a
"Change in Control" shall be deemed to have occurred:
(a) upon any person (as defined in Section 3(a)(9) of
the Exchange Act and as used in Sections 13(d) and 14(d)
thereof) excluding the Company or any employee benefit plan
sponsored or maintained by the Company (including any
trustee of any such plan acting in his or her capacity as
trustee), becoming the beneficial owner (as defined in Rule
13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company having at least twenty-five
percent (25%) of the total number of votes that may be cast
for the election of directors of the Company;
(b) if during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in
paragraph (a), (c), or (d) of this Section or a director
whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
person other than the Board) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at
the beginning of the two (2) year period or whose election
or nomination for election was previously so approved, cease
for any reason to constitute at least a majority of the
Board;
<PAGE> 11
(c) upon the merger or consolidation of the Company
with any other corporation or entity, other than a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation; or
(d) upon approval by the stockholders of the Company
of a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets other than the
sale of all or substantially all of the assets of the
Company to a person or persons who beneficially own,
directly or indirectly, at least fifty percent (50%) or more
of the combined voting power of the outstanding voting
securities of the Company at the time of the sale.
ARTICLE X.
TERMINATION OR AMENDMENT OF PLAN
10.1. Termination or Amendment. Notwithstanding any other
provision of the Plan, the Board may at any time, and from time
to time, amend, in whole or in part, any or all of the provisions
of the Plan (including any amendment deemed necessary to ensure
that the Company may comply with any regulatory requirement
referred to in this Article X), or suspend or terminate it
entirely, retroactively or otherwise; provided, however, that,
unless otherwise required by law or specifically provided herein,
the rights of a Participant with respect to Stock Options granted
prior to such amendment, suspension or termination, may not be
impaired without the consent of such Participant. A Non-Employee
Director shall have no rights with respect to a Stock Option
until such Option is granted pursuant to the terms of the Plan.
Notwithstanding the first sentence of this Section
10.1, the Board may not effect any amendment that would require
the approval of stockholders under applicable law or under any
regulation of a national securities exchange or automated
quotation system unless such approval is obtained.
<PAGE> 12
ARTICLE XI.
UNFUNDED PLAN
11.1. Unfunded Status of Plan. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments and the value of any
securities or other property as to which a Participant has a
fixed and vested interest but which are not yet made or issued to
a Participant by the Company, nothing contained herein shall give
any such Participant any rights that are greater than those of a
general creditor of the Company.
ARTICLE XII.
GENERAL PROVISIONS
12.1. Legend. The Board may require each person receiving
shares of Common Stock pursuant to the exercise of a Stock Option
under the Plan to represent to and agree with the Company in
writing that such person is an accredited investor within the
meaning of Rule 501 of Regulation D promulgated under the
Securities Act of 1933 and is acquiring the shares of Common
Stock without a view to distribution thereof. In addition to any
legend required pursuant to the Plan, the certificates for such
shares of Common Stock may include any legend which the Board
deems appropriate to reflect any restrictions on Transfer.
All certificates for shares of Common Stock delivered under
the Plan shall be subject to such stock transfer orders and other
restrictions as the Board may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is
then listed or any national securities association system upon
whose system the Common Stock is then quoted, any applicable
Federal or state securities law, and any applicable corporate
law, and the Board may cause a legend or legends to be put on any
such certificates to make appropriate reference to such
restrictions.
12.2. Other Plans. Nothing contained in the Plan shall
prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally
applicable or applicable only in specific cases.
12.3. No Right to Serve as a Non-Employee Director.
Neither the Plan nor the grant or exercise of any Stock Options
hereunder shall impose any obligations on the Company to retain
any Participant as a Non-Employee Director nor shall it impose on
the part of any Participant any obligation to continue to serve
as a Non-Employee Director.
<PAGE> 13
12.4. Withholding of Taxes. The Company shall have the
right to deduct from any payment to be made to a Participant, or
to otherwise require, prior to the issuance or delivery of any
shares of Common Stock or the payment of any cash hereunder,
payment by the Participant of, any Federal, state or local taxes
required by law to be withheld.
12.5. Listing and Other Conditions.
(a) Unless otherwise determined by the Board, as long
as the Common Stock is listed on a national securities
exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock
pursuant to the exercise of an Option shall be conditioned
upon such shares being listed on such exchange or system.
The Company shall have no obligation to issue such shares
unless and until such shares are so listed; provided,
however, that any delay in the issuance of such shares shall
be based solely on a reasonable business decision and the
right to exercise any Option with respect to such shares
shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of
the opinion that any sale or delivery of shares of Common
Stock pursuant to the exercise of an Option is or may in the
circumstances be unlawful or result in the imposition of
excise taxes on the Company under the statutes, rules or
regulations of any applicable jurisdiction, the Company
shall have no obligation to make such sale or delivery, or
to make any application or to effect or to maintain any
qualification or registration under the Securities Act of
1933, as amended, or otherwise with respect to shares of
Common Stock or Options, and the right to exercise any
Option shall be suspended until, in the opinion of said
counsel, such sale or delivery shall be lawful or will not
result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension under
this Section 12.5, any Option affected by such suspension
which shall not then have expired or terminated shall be
reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available
during the period of such suspension, but no such suspension
shall extend the term of any Options.
(d) A Participant shall be required to supply the
Company with any certificates, representations and
information that the Company requests and otherwise
cooperate with the Company in obtaining any listing,
registration, qualification, exemption, consent or approval
the Company deems necessary or appropriate.
(e) If the grant of any Option or any sale or delivery
of shares of Common Stock pursuant to exercise of an Option
adversely affects the Company's qualification as a real
estate investment trust within the meaning of Sections 856
through 860 of the Code, the Company shall have no
obligation to make such grant, sale or delivery until such
grant, sale or delivery will no longer adversely affect such
qualification.
12.6. Governing Law. The Plan shall be governed and
construed in accordance with the laws of the State of Delaware
(regardless of the law that might otherwise govern under
applicable Delaware principles of conflict of laws).
<PAGE> 14
12.7. Construction. Wherever any words are used herein in
the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so
apply.
12.8. Other Benefits. No Option granted or exercised under
the Plan shall be deemed compensation for purposes of computing
benefits under any retirement plan of the Company nor affect any
benefits under any other benefit plan now or subsequently in
effect under which the availability or amount of benefits is
related to the level of compensation.
12.9. Costs. The Company shall bear all expenses included
in administering the Plan, including expenses of issuing Common
Stock pursuant to the exercise of any Options hereunder.
12.10. Death/Disability. The Board may in its discretion
require the transferee of a Participant's Options to supply it
with written notice of the Participant's death or disability and
to supply it with a copy of the will (in the case of the
Participant's death) or such other evidence as the Board deems
necessary to establish the validity of the Transfer of an Option.
The Board may also require the agreement of the transferee to be
bound by all of the terms and conditions of the Plan.
12.11. Severability of Provisions. If any provision of the
Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof,
and the Plan shall be construed and enforced as if such
provisions had not been included.
12.12. Headings and Captions. The headings and captions
herein are provided for reference and convenience only, shall not
be considered part of the Plan, and shall not be employed in the
construction of the Plan.
ARTICLE XIII.
EFFECTIVE DATE OF PLAN
The Plan has been adopted by the Board effective as of
January 15, 1998 (the "Effective Date"), subject to and
conditioned upon: (i) the approval of the Plan by the
stockholders of the Company in accordance with the laws of the
State of Delaware and the requirements of any applicable national
securities exchange or automated quotation system ("Stockholder
Approval"); and (ii) the authorization for listing of the Common
Stock initially available for issuance under the Plan by the New
York Stock Exchange ("Exchange Authorization"). Grants of
Options under the Plan will be made on or after the Effective
Date of the Plan; provided that, if the Plan is not approved by
the requisite vote of stockholders, all Options which have been
granted pursuant to the terms of the Plan shall be null and void.
Notwithstanding anything else herein to the contrary, no Options
may be exercised prior to Stockholder Approval of the Plan and
Exchange Authorization of the Common Stock available for issuance
thereunder.
<PAGE> 15
ARTICLE XIV.
TERM OF PLAN
No Stock Options shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date, but Stock
Options granted prior to such date may extend beyond that date.
ARTICLE XV.
NAME OF PLAN
The Plan shall be known as the "CV Reit, Inc. Non-Employee
Director 1998 Stock Option Plan."
<PAGE> 16
OPTION AGREEMENT
CV REIT, INC.
PURSUANT TO THE
NON-EMPLOYEE DIRECTOR 1998 STOCK OPTION PLAN
Dear [Eligible Director]:
Preliminary Statement
As a director of CV Reit, Inc. (the "Company") on the
[Insert Grant Date/Annual Date of Grant] and pursuant to the terms
of the CV Reit, Inc. Non-Employee Director 1998 Stock Option Plan,
annexed hereto as Exhibit 1 (the "Plan"), you, as an eligible
director, have been granted a nonqualified stock option (the
"Option") to purchase the number of shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), set forth
below.
The terms of the grant are as follows:
1. Tax Matters. No part of the Option granted hereby
is intended to qualify as an "incentive stock option" under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Grant of Option. Subject in all respects to the
Plan and the terms and conditions set forth herein, including,
without limitation, the provisions requiring stockholder approval
and authorization for listing by the New York Stock Exchange of
Option shares, you are hereby granted an Option to purchase from
the Company up to [ ] shares of Common Stock, at a price per
share of [$_________] (the "Option Price").
3. Exercisability. Subject to Sections 4 and 5 below,
you may exercise all or any part of your Option on or after the
later of: (i) one hundred eighty (180) days after the date of grant
or (ii) sixty-five (65) days after the date of approval of the Plan
by the stockholders of the Company, provided that, you have not
incurred a Termination of Directorship prior thereto. Upon the
occurrence of a Change in Control or your death, the Option shall
immediately become fully vested and exercisable with respect to all
shares subject thereto in accordance with and to the extent
provided under the terms of the Plan.
4. Termination of Option. Unless terminated as
provided below or otherwise pursuant to the Plan in the event of a
Participant's Termination of Directorship, the Options shall expire
on the earlier of: (i) at the end of the one (1) year period
commencing on the date of Termination of Directorship other than
due to death or (ii) at the end of the two (2) year period
commencing on the date of Termination of Directorship due to death.
In no event shall the Option be exercisable more than ten (10)
years after the date of grant.
<PAGE> 17
5. Termination of Directorship for Cause. Upon your
removal, your failure to stand for reelection or failure to be
renominated, all for Cause, or if the Company obtains or discovers
information after your termination as a director that you had
engaged in conduct during your directorship that would have
justified your removal for Cause (as defined in the Plan), the
Option shall immediately terminate and shall be null and void.
6. Restriction on Transfer of Option. The Option
granted hereby is not transferable otherwise than by will or under
the applicable laws of descent and distribution and consistent with
the provisions of the Plan and during your lifetime may be
exercised only by you or your guardian or legal representative. In
addition, the Option shall not be assigned, negotiated, pledged or
hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, negotiate,
pledge or hypothecate the Option, or in the event of any levy upon
the Option by reason of any execution, attachment or similar
process contrary to the provisions hereof, the Option shall
immediately become null and void. Notwithstanding the foregoing,
the Board may determine that an Option that is otherwise not
transferable pursuant to Article VIII of the Plan is transferable
in whole or in part and in such circumstances, and under such
conditions, as specified by the Board.
7. Rights as a Stockholder. You shall have no rights
as a stockholder with respect to any shares covered by the Option
until you shall have become the holder of record of the shares, and
no adjustments shall be made for dividends in cash or other
property, distributions or other rights in respect of any such
shares, except as otherwise specifically provided for in the Plan.
8. Provisions of Plan Control. This grant is subject
to all the terms, conditions and provisions of the Plan and to such
rules, regulations and interpretations relating to the Plan as may
be adopted by the Board and as may be in effect from time to time.
Any capitalized term used but not defined herein shall have the
meaning ascribed to such term in the Plan. The annexed copy of the
Plan is incorporated herein by reference. If and to the extent
that this grant conflicts or is inconsistent with the terms,
conditions and provisions of the Plan, the Plan shall control, and
this grant shall be deemed to be modified accordingly.
9. Notices. Any notice or communication given
hereunder shall be in writing and shall be deemed to have been duly
given when delivered in person or, in the case of notice to the
Company, by facsimile to the facsimile number set forth below
confirmed by simultaneous notice by mail, or when dispatched by
telecopy, or one business day after having been dispatched by a
nationally recognized courier service or three business days after
having been mailed by United States registered or certified mail,
return receipt requested, postage prepaid, to the appropriate party
at the address (or, in the case of notice to the Company, facsimile
number) set forth below (or such other facsimile number or address
as the Company or you shall hereafter from time to time specify).
<PAGE> 18
If to the Company, to:
CV Reit, Inc.
100 Century Boulevard,
West Palm Beach, Florida 33417
Attention:
If to you, to:
the address indicated below your signature at the
end of this grant letter or, if your address is not indicated
below, the address indicated in the records of the Company.
10. Right to Terminate Directorship. Neither the Plan
nor the grant of any Option hereunder shall impose any obligations
on the Company and/or the stockholders of the Company to retain you
as a director, nor shall it impose any obligation on your part to
remain as a director of the Company.
Sincerely,
CV REIT, INC.
By:______________________________
Name:
Title:
Accepted:
________________________
[PARTICIPANT]
Address:
________________________
________________________
