SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] 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 ss. 240.14a-11(c) or ss. 240.14a-12
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
PROXY STATEMENT
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
505 Main Street
Hackensack, New Jersey 07601
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NOTICE OF ANNUAL MEETING OF HOLDERS
OF SHARES OF BENEFICIAL INTEREST
APRIL 7, 1999
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TO THE HOLDERS OF SHARES OF BENEFICIAL INTEREST OF
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
The Annual Meeting of the holders of shares of beneficial interest (the
"Shareholders") of First Real Estate Investment Trust of New Jersey (the
"Trust") will be held on Wednesday, April 7, 1999, at the Trust's executive
offices, 505 Main Street, Hackensack, New Jersey at 7:30 p.m., Eastern Daylight
Savings Time, for the following purposes:
1. To elect three (3) Trustees, each for a term of three years or until
their successors have been elected and qualify;
2. To consider and act upon a proposal to approve the adoption of the
First Real Estate Investment Trust of New Jersey Equity Incentive
Plan;
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Shareholders of record at the close of business on February 23,
1999 are entitled to notice of and to vote at the meeting.
WILLIAM R. DELORENZO, JR.
Executive Secretary
Hackensack, New Jersey
March 1, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE YOUR REPRESENTATION
AT THE MEETING, HOWEVER, YOU ARE URGED TO SIGN AND DATE THE ACCOMPANYING PROXY
AND MAIL IT AT ONCE IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND
YOUR COOPERATION WILL BE APPRECIATED.
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
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PROXY STATEMENT
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General Information
This Proxy Statement is furnished to the holders (the "Shareholders")
of shares of beneficial interest without par value (the "Shares") of First Real
Estate Investment Trust of New Jersey (the "Trust") in connection with the
solicitation of proxies for use at the annual meeting of holders of beneficial
interests to be held on April 7, 1999, and any adjournment thereof (the "Annual
Meeting"), pursuant to the accompanying Notice of Annual Meeting of Holders of
Shares of Beneficial Interest. Beneficial interests in the Trust are represented
by the Shares, and the Shares are the only authorized, issued and outstanding
class of equity of the Trust. A form of proxy for use at the Annual Meeting is
also enclosed. The Trust anticipates mailing this Proxy Statement to its
Shareholders beginning on March 5, 1999. The executive offices of the Trust are
located at 505 Main Street, Hackensack, New Jersey 07601.
Shareholders may revoke the authority granted by their execution of
proxies at any time before the effective exercise of proxies by filing written
notice of such revocation with the Secretary of the Annual Meeting. Presence at
the Annual Meeting does not of itself revoke the proxy. All Shares represented
by executed and unrevoked proxies will be voted in accordance with the
instructions therein. Proxies submitted without indication will be voted (i) FOR
the nominees for Trustee named in this Proxy Statement, and (ii) FOR the
proposal to approve the adoption of the First Real Estate Investment Trust of
New Jersey Equity Incentive Plan (the "Equity Incentive Plan"). The Board of
Trustees is not aware, at the date hereof, of any matters to be presented at the
Annual Meeting other than the matters described in (i) and (ii) above but if any
other matter incident to the Annual Meeting is properly presented, the persons
named in the proxy will vote thereon according to their best judgment.
The cost of preparing, assembling and mailing the proxy material is to
be borne by the Trust. Proxies for use at the Annual Meeting are being solicited
by the Board of Trustees of the Trust (the "Board of Trustees"). It is not
anticipated that any compensation will be paid for soliciting proxies and the
Trust does not intend to employ specially engaged personnel in the solicitation
of proxies. It is contemplated that proxies will be solicited principally
through the mail. Members of the Board of Trustees and executive officers of the
Trust ("Executive Officers") may also, without additional compensation, solicit
proxies, personally or by mail, telephone, telegraph, facsimile transmission or
special letter.
Voting Securities
The only voting securities entitled to vote at the Annual Meeting are
the Shares. Each Share entitles its owner to one vote on an equal basis. The
number of outstanding Shares on February 23, 1999 was 1,559,788. Only
Shareholders of record on the books of the Trust at the close of business on
that date will be entitled to notice of and to vote at the Annual Meeting. The
holders of a majority of the outstanding Shares, present in person or
represented by proxy, will constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present at the Annual Meeting.
Pursuant to Article III, Section 3.4 of the Amended and Restated
Declaration of Trust of First Real Estate Investment Trust of New Jersey, as
amended (the "Declaration of Trust"), the only matter on which the Shareholders
are entitled to vote is the election of Trustees. However, the Board of Trustees
has determined that it is in the best interests of the Trust and its
Shareholders to permit the Shareholders to vote with respect to the adoption of
the Equity Incentive Plan by the Trust. Trustees shall be elected by a plurality
of the votes cast at the Annual Meeting by the holders of Shares present in
person or represented by proxy and entitled to vote. The proxy card provides
space for a Shareholder to withhold votes for any or all nominees to the Board
of Trustees. The proposal to adopt the Equity Incentive Plan must be approved by
a majority of the votes cast at the Annual Meeting on such proposal by the
holders of Shares present in person or represented by proxy and entitled to
vote.
All votes will be tabulated by the inspector of election appointed for
the Annual Meeting who will separately tabulate affirmative votes, negative
votes, authority withheld for any nominee for Trustee, abstentions and broker
non-votes. Any proxy submitted and containing an abstention or a broker non-vote
will not be counted as a vote cast on any matter to which it relates.
1
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, as of February 23, 1999,
with respect to beneficial ownership, as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial interests
in the Trust, as represented by the Shares, for each Trustee, nominee for
Trustee, and Executive Officer of the Trust. The only persons who beneficially
own more than five percent (5%) of the Shares are two (2) Trustees named in the
table below.
<TABLE>
<CAPTION>
Name of Beneficial Owner Amount and Nature of Beneficial Ownership (1) (2) Percent of Class
- ------------------------ ------------------------------------------------- ----------------
<S> <C> <C>
Robert S. Hekemian (3) 71,951 (4) 4.6%
Donald W. Barney (3) 56,153 (5) 3.6%
John B. Voskian, M.D. (3) 103,218 (6) 6.6%
Herbert C. Klein, Esq. (7) 59,378 (8) 3.8%
Nicholas A. Laganella (7) 3,625 (9)
Charles J. Dodge (7) 500 (9)
Ronald J. Artinian (7) 97,929 (10) 6.3%
Alan L. Aufzien (7) 1,500 (9)
William R. DeLorenzo, Jr., Esq. (11) 3,563 (9)
All Trustees, Nominees for Trustee and
Executive Officers as a group (9 persons) 397,817 (4)(5)(6)(8)(10) 25.5%
</TABLE>
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(1) Except as otherwise indicated, all of the Shares are held beneficially and
of record.
(2) Excludes options which were granted in fiscal 1998 to each of the Trustees
and the Executive Officers of the Trust under the Equity Incentive Plan
which was approved and adopted by the Board of Trustees in fiscal 1998
subject to the approval of the Trust's Shareholders. The number of Shares
subject to options granted to the persons named in the table above are as
follows: Mr. Hekemian - 28,000; Mr. Barney - 28,000; Dr. Voskian - 16,000;
Mr. Klein - 28,000; Mr. Laganella - 15,000; Mr. Dodge - 6,500; Mr. Artinian
- 18,000; Mr. Aufzien - 6,500; and Mr. DeLorenzo - 13,000. If the
Shareholders approve the adoption of the Equity Incentive Plan, all such
options are immediately exercisable. If the Shareholders do not approve the
adoption of the Equity Incentive Plan, all such options will terminate
immediately.
(3) A Trustee and Executive Officer of the Trust.
(4) Includes 18,598 Shares held by Mr. Hekemian's wife, with respect to which
Mr. Hekemian disclaims beneficial ownership. Also includes (i) 18,368
Shares contributed to the Hekemian & Co., Inc. Pension Plan of which Mr.
Hekemian is a trustee and a participant, (ii) an aggregate of 26,341 Shares
which are held by certain partnerships in which Mr. Hekemian is a partner,
and (iii) 3,549 Shares held in certain trusts for which Mr. Hekemian is a
trustee and one trust in which Mr. Hekemian is a beneficiary, with respect
to which Mr. Hekemian disclaims beneficial ownership except to the extent
of his pecuniary interest in the pension plan, partnerships and trusts.
(5) Includes 11,732 Shares held by Mr. Barney's wife and 3,440 Shares which are
held in a trust for Mr. Barney's daughter of which Mr. Barney is the
trustee, with respect to which Mr. Barney disclaims beneficial ownership.
(6) Includes 8,694 Shares held by Dr. Voskian's wife and 1,688 shares which Dr.
Voskian holds as custodian for the benefit of his daughter, with respect to
which Dr. Voskian disclaims beneficial ownership. Also includes an
aggregate of 85,082 Shares held in various trusts for which Dr. Voskian or
his wife is trustee, with respect to which Dr. Voskian disclaims beneficial
ownership.
(7) A Trustee of the Trust.
(8) Includes 6,938 Shares held by Mr. Klein's wife and 4,250 Shares held in a
trust for the benefit of Mr. Klein's son of which Mr. Klein's wife is
trustee, with respect to which Mr. Klein disclaims beneficial ownership.
(9) Shares beneficially owned do not exceed one percent (1%) of the Trust's
issued and outstanding Shares.
(10) Includes 23,762 Shares which are in a family trust with respect to which
Mr. Artinian disclaims beneficial ownership except to the extent of his
pecuniary interest in such trust. Also includes 900 Shares which are held
by Mr. Artinian as custodian for the benefit of his son, with respect to
which Mr. Artinian disclaims beneficial ownership.
(11) An Executive Officer of the Trust.
2
<PAGE>
ELECTION OF TRUSTEES
(Item 1 on Proxy Card)
The Trust is governed by the Board of Trustees. The Declaration of
Trust provides that the Board of Trustees shall consist of not fewer than five
(5) nor more than nine (9) Trustees. The Board of Trustees currently consists of
eight (8) members. Each Trustee is elected for a term of three (3) years and the
terms of at least two (2) Trustees expire every year.
Nominees
The Board of Trustees has nominated the following individuals for
election at the Annual Meeting to three (3) year terms as Trustees:
Robert S. Hekemian
John B. Voskian, M.D.
Charles J. Dodge
Each of the nominees is currently a member of the Board of Trustees
whose term is scheduled to expire on the date of the Annual Meeting. Please see
the section of this Proxy Statement captioned "Board of Trustees" for a
description of the business experience of and other relevant information with
respect to each of the nominees.
It is the intention of the persons named in the accompanying proxy to
vote, unless otherwise instructed, in favor of the election of the three (3)
nominees named above as Trustees. If any of the nominees should be unable to
serve, the proxies will be voted for the election of such other person or
persons as shall be determined by the persons named in the proxy in accordance
with their judgment. Management of the Trust is not aware of any reason why any
of the nominees, if elected, would be unable to serve as a Trustee.
The Board of Trustees recommends a vote "FOR" the nominees for Trustee.
Board of Trustees
The members of the Board of Trustees of the Trust are:
<TABLE>
<CAPTION>
Name Age Year First Elected to the Board of Trustees
- ---- --- -------------------------------------------
<S> <C> <C>
Robert S. Hekemian 67 1980
Donald W. Barney 58 1981
John B. Voskian, M.D. 74 1968
Herbert C. Klein, Esq. 68 1961
Nicholas A. Laganella 80 1969
Charles J. Dodge 55 1990
Ronald J. Artinian 50 1992
Alan L. Aufzien 69 1992
</TABLE>
Robert S. Hekemian has been active in the real estate industry for more
than forty-five (45) years. Mr. Hekemian has served as Chairman of the Board of
the Trust since 1991, and as a Trustee since 1980. His current term as a member
of the Board of Trustees is scheduled to expire in April 1999, and he has been
nominated for another three (3) year term as a Trustee. From 1981 to 1991, Mr.
Hekemian was President of the Trust. Mr. Hekemian devotes approximately
twenty-five percent (25%) of his time to execute his duties as an Executive
Officer of the Trust. Since 1983, Mr. Hekemian has also been the Chief Executive
Officer and Chairman of the Board of Hekemian & Co., Inc., a real estate
brokerage and management company which manages the Trust's properties ("Hekemian
& Co."). See the section captioned "Certain Relationships and Related Party
Transactions" in this Proxy Statement. Mr. Hekemian is a director of Summit
Bank. He is also a director, partner and officer in numerous private real estate
corporations and partnerships. Mr. Hekemian is the brother-in-law of Dr.
Voskian.
3
<PAGE>
Donald W. Barney has served as President of the Trust since 1993, and
as a Trustee since 1981. His current term as a member of the Board of Trustees
is scheduled to expire in April 2001. Mr. Barney devotes approximately five
percent (5%) of his time to execute his duties as an Executive Officer of the
Trust. Mr. Barney has been associated with Union Camp Corporation, a diversified
manufacturer of paper, packaging products, chemicals and wood products since
1969, most recently, and until December 31, 1998, as Vice President and
Treasurer. Mr. Barney is also a director of Ramapo Financial Corporation and a
partner and director in several other private real estate investment companies.
Mr. Barney was formerly the brother-in-law of Mr. DeLorenzo.
Dr. John B. Voskian has served as Secretary and a Trustee of the Trust
since 1968. His current term as a member of the Board of Trustees is scheduled
to expire in April 1999, and he has been nominated for election to another three
(3) year term as a Trustee. Dr. Voskian spends less than five percent (5%) of
his time with respect to his duties as an Executive Officer of the Trust. A
physician, Dr. Voskian has retired from the practice of medicine. Dr. Voskian is
also a director and an officer of a number of private real estate companies. Dr.
Voskian is the brother-in-law of Mr. Hekemian.
Herbert C. Klein, Esq. has served as a Trustee since 1961. His current
term as a member of the Board of Trustees is scheduled to expire in April 2000.
From 1991 through the end of 1992, Mr. Klein served as President of the Trust.
Mr. Klein has been an attorney since 1956 with a practice devoted to real
estate, corporate matters and government relations. From March 1995 to January
1999, Mr. Klein was a director of the law firm of Hannoch Weisman located in
Roseland, New Jersey. In January 1999, Mr. Klein became a partner in the law
firm of Nowell Amoroso Klein Bierman P.A., with offices located in Hackensack,
New Jersey and New York City. See the section captioned "Certain Relationships
and Related Party Transactions" in this Proxy Statement. From January 1993 to
January 1995, Mr. Klein was a member of the United States Congress, House of
Representatives, for the 8th Congressional District of New Jersey. Mr. Klein is
also a former member of the New Jersey Legislature.
Nicholas A. Laganella has served as a Trustee since 1969. His current
term as a member of the Board of Trustees is scheduled to expire in April 2000.
Since 1946, Mr. Laganella has been President of P.T.&L. Construction Company.
Since 1998, Mr. Laganella has also been associated with Paramus Associates, a
land developer.
Charles J. Dodge has served as a Trustee since 1990. His current term
as a member of the Board of Trustees is scheduled to expire in April 1999, and
he has been nominated for election to another three (3) year term as a Trustee.
Mr. Dodge has been associated with the David Cronheim Mortgage Corporation since
1973 and has been its Chief Executive Officer since 1980. See the section
captioned "Certain Relationships and Related Party Transactions" in this Proxy
Statement.
Ronald J. Artinian has served as a Trustee since 1992. His current term
as a member of the Board of Trustees is scheduled to expire in April 2001. From
1989 to 1998, Mr. Artinian was an investment banker with Smith Barney, Inc.,
including positions as a Managing Director and National Sales Manager. Smith
Barney is now Salomon Smith Barney Holdings, Inc., a subsidiary of Citigroup
Inc. Mr. Artinian retired from Smith Barney in January 1998 in order to pursue
other business interests as a private investor.
Alan L. Aufzien has served as a Trustee since 1992. His current term as
a member of the Board of Trustees is scheduled to expire in April 2001. Since
1986, Mr. Aufzien has been Chairman and Managing Partner of the Norall
Organisation, an investment company. From 1980 to 1998, Mr. Aufzien was a
partner in the Meadowlands Basketball Association, t/a New Jersey Nets (Member
of the National Basketball Association), and was its Chairman and Chief
Executive Officer, and then its Secretary and Treasurer, as well as a member of
its Board of Directors. Mr. Aufzien is a minority stockholder following the sale
of the New Jersey Nets in the latter part of 1998. Since 1986, Mr. Aufzien has
also been the Chairman and Chief Executive Officer of New York Harbour
Associates, a real estate developer. Mr. Aufzien is a director of Rent A Wreck
of America, Inc.
Meetings of the Board of Trustees; Committees
During the fiscal year ended October 31, 1998, the Board of Trustees
held five (5) meetings. The Board of Trustees has two (2) standing committees:
the Executive Committee and the Audit Committee. During fiscal 1998, each member
of the Board of Trustees attended more than 75% of the aggregate number of (i)
meetings of the Board of Trustees and (ii) meetings of the committees of the
Board of Trustees on which he served. The Executive Secretary of the Trust,
William R. DeLorenzo, Jr., attends meetings of the Board of Trustees and each of
its committees in a nonvoting capacity.
Executive Committee
The current members of the Executive Committee of the Board of Trustees
(the "Executive Committee") are Robert S. Hekemian, Donald W. Barney, Ronald J.
Artinian, Herbert C. Klein and Charles J. Dodge. Mr. Hekemian is the Chairman of
the Executive Committee. The Executive Committee is authorized to make policy
and certain business decisions during any interval between meetings of the Board
of Trustees. All decisions of the Executive Committee are reported to the Board
of Trustees on a regular basis. During fiscal 1998, the Executive Committee met
seven (7) times.
4
<PAGE>
Audit Committee
The current members of the Audit Committee of the Board of Trustees
(the "Audit Committee") are Donald W. Barney, Charles J. Dodge and Alan L.
Aufzien. Mr. Barney is the Chairman of the Audit Committee. The Audit Committee
held one (1) meeting during fiscal 1998. The Audit Committee selects and
recommends to the Board of Trustees the independent certified public accountants
to audit the books and accounts of the Trust. In addition, the Audit Committee
reviews and approves the scope and cost of all services (including non-audit
services) provided by the accounting firm selected to conduct the audit. The
Audit Committee also monitors the effectiveness of the audit effort and
financial reporting and inquires into the adequacy of the Trust's financial and
operating controls.
Executive Compensation
The following table sets forth information concerning the compensation
of all of the Executive Officers of the Trust for services in all capacities to
the Trust for the fiscal years ended October 31, 1998, 1997 and 1996. Except for
the Chairman of the Board who devotes approximately twenty-five percent (25%) of
his business activities to the Trust, no other Executive Officer devotes more
than ten percent (10%) of his business activities to the Trust. No Executive
Officer of the Trust was compensated by the Trust in fiscal 1998, or in any
previous fiscal year, in an amount in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
------------ ------------
Securities
Underlying All Other
Name and Principal Position Year Retainer Fee ($)(1) Options (#) (2) Compensation ($)(3)
- --------------------------- ---- ------------------- --------------- -------------------
<S> <C> <C> <C> <C>
Robert S. Hekemian
Chairman of the Board 1998 $ 5,000 28,000 $12,700
1997 5,000 -- 11,500
1996 5,000 -- 8,700
Donald W. Barney
President 1998 5,000 28,000 12,100
1997 5,000 -- 12,300
1996 5,000 -- 8,300
John B. Voskian, M.D.
Secretary 1998 0 16,000 8,500
1997 0 -- 7,100
1996 0 -- 7,900
William R. DeLorenzo, Jr., Esq.
Executive Secretary and Treasurer 1998 10,500 13,000 7,000
1997 10,500 -- 6,400
1996 10,500 -- 2,800
</TABLE>
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(1) Retainer fee represents payment to the Executive Officers for their
services as an Executive Officer of the Trust.
(2) On September 10, 1998, options were granted to the Executive Officers under
the Equity Incentive Plan which was approved and adopted on that date by
the Board of Trustees, subject to approval of the Trust's Shareholders. The
options granted to the Executive Officers are subject to the approval of
the Equity Incentive Plan by the Trust's Shareholders. If the Trust's
Shareholders do not approve the Equity Incentive Plan, then all options
granted to the Executive Officers will terminate without any consideration
to them.
(3) With respect to Mr. Hekemian, Mr. Barney and Dr. Voskian, such amounts
represent annual retainer fees and meeting and other fees paid to each of
them as consideration for their service on the Board of Trustees and, if
applicable, the Executive Committee and the Audit Committee. With respect
to Mr. DeLorenzo, such amounts represent fees paid to him for his
attendance, as a nonvoting member, at the meetings of the Board of Trustees
and at meetings of the Executive Committee and Audit Committee. See the
section of this Proxy Statement captioned "Trustees' Compensation."
5
<PAGE>
In fiscal 1998, an annual retainer of $5,000 was paid to Mr. Hekemian,
Mr. Barney and Mr. DeLorenzo for their services as Executive Officers of the
Trust. Mr. DeLorenzo also received a $5,500 retainer for services rendered to
the Board of Trustees and its Executive Committee and Audit Committee. Except
for the options which have been granted to the Executive Officers, the Trust has
not made available or paid any other compensation or benefits to its Executive
Officers, whether it be in the form of bonus, long-term incentive or deferred
compensation, perquisites, rights, warrants, convertible securities, performance
units, performance shares or other similar instruments. There are no employment
contracts between the Trust and any of the Executive Officers, nor is there any
compensatory plan or arrangement between the Trust and any of the Executive
Officers pursuant to which an Executive Officer would receive payments as the
result of his resignation, retirement or any other terminating event, or as a
result of a change in control of the Trust. The Trust does not maintain any
employee benefit plans.
Option Grants
Options were granted in fiscal 1998 to the Executive Officers of the
Trust as well as to the Trustees and certain other individuals. The options were
granted under the Equity Incentive Plan which has been approved and adopted by
the Board of Trustees subject to the approval of the Trust's Shareholders. If
the Equity Incentive Plan is not approved by the Trust's Shareholders, all
options granted will terminate without any consideration to the grantees.
The following table shows, for the fiscal year ended October 31, 1998,
certain information regarding the options granted to each of the Executive
Officers of the Trust.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
-----------------
Number of % of Total
Securities Options
Underlying Granted in Exercise or
Options Fiscal Base Expiration Grant Date
Name Granted (#) (1) Year (2) Price ($/Sh) Date Present Value ($) (3)
- ---- --------------- -------- ------------ ---- ---------------------
<S> <C> <C> <C> <C> <C>
Robert S. Hekemian 28,000 14.9% $30 9/10/08 $343,280
Donald W. Barney 28,000 14.9% 30 9/10/08 343,280
John B. Voskian, M.D. 16,000 8.5% 30 9/10/08 196,160
William R. DeLorenzo, Jr. Esq. 13,000 6.9% 30 9/10/08 159,380
</TABLE>
- -----------------
(1) If the Trust's Shareholders approve the adoption of the Equity Incentive
Plan, all of the options set forth in this table will be immediately
exercisable.
(2) Represents percentage of total options granted in fiscal 1998.
(3) The estimated present value at grant date of the options set forth in this
table has been calculated using the Black-Scholes option pricing model. The
following assumptions were made for purposes of calculating the grant date
present value; a risk free interest rate of 5.25%, a volatility rate of
3.3%, and estimated time until exercise of ten (10) years. The actual
value, if any, an optionee will realize upon exercise of an option will
depend on the excess of the fair market value of the Shares over the
exercise price of the option on the date the option is exercised.
6
<PAGE>
Fiscal Year-End Option Values
The following table shows certain information regarding the fiscal
year-end values of the options held by each of the Executive Officers of the
Trust.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at Fiscal Year-End (#) at Fiscal Year-End ($)(2)
--------------------------------------- -------------------------------------
Name Exercisable (1) Unexercisable Exercisable Unexercisable
- ---- --------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert S. Hekemian 28,000 --- --- ---
Donald W. Barney 28,000 --- --- ---
John B. Voskian, M.D. 16,000 --- --- ---
William R. DeLorenzo, Jr., Esq. 13,000 --- --- ---
</TABLE>
- ---------------
(1) If the Trust's Shareholders approve the adoption of the Equity Incentive
Plan, all of the options disclosed in this table will be immediately
exercisable. No option may be exercised unless and until the Trust's
Shareholders approve the Equity Incentive Plan. Accordingly, no option was
exercised during fiscal 1998.
(2) The value of unexercised in-the-money options represents the difference
between an option's exercise price and the fair market value of the Shares
on October 31, 1998 ($30 per Share). None of the options disclosed in this
table were in the money on October 31, 1998, since the exercise price for
all of these options is $30. If the adoption of the Equity Incentive Plan
is approved by the Trust's Shareholders, the actual value, if any, an
Executive Officer may realize upon the exercise of an option will depend
upon the excess of the fair market value of the Shares over the exercise
price on the date the option is exercised.
Trustees' Compensation
In fiscal 1998, each Trustee received an annual retainer fee in the
amount of $5,500 and a fee of $500 for each meeting of the Board of Trustees or
of the Executive Committee or Audit Committee attended. Mr. DeLorenzo, the
Executive Secretary, receives the same meeting fee for each such meeting he
attends. The Chairmen of the Executive Committee and the Audit Committee receive
a $600 meeting fee for each meeting attended. In addition, the Trust pays a fee
in the amount of $600 to any Trustee and the Executive Secretary for visiting a
site to inspect a property being reviewed by the Trust, and will also reimburse
all actual and reasonable out-of-pocket expenses incurred in connection with
each such site visit. In the fiscal year ended October 31, 1998, the Trust paid
total fees of $94,300 to the Trustees and Mr. DeLorenzo as consideration for
their service with respect to the Board of Trustees and the Executive Committee
and Audit Committee. For fiscal 1999, the annual retainer paid to Trustees will
increase to $7,000 and meeting fees will increase to $600 with the Chairman of
each of the Executive Committee and Audit Committee receiving a $700 meeting
fee.
Compensation Report
The full Board of Trustees determines the amounts of the annual
retainer and meeting fees paid to the Executive Officers and Trustees. As set
forth in the "Summary Compensation Table" included in this Proxy Statement, the
Executive Officers receive only a nominal retainer fee as annual compensation
for their services as Executive Officers of the Trust. The Board of Trustees
believes that the amounts of the retainer fees paid to the Executive Officers
are reasonable, based on the amount of time devoted by each of them in executing
their duties as Executive Officers and since the operation of the Trust's
business has been managed principally by Hekemian & Co., which received fees and
commissions in consideration for its services. See the section of this Proxy
Statement captioned "Certain Relationships and Related Party Transactions."
With respect to the options granted under the Equity Incentive Plan in
fiscal 1998 to the Executive Officers and Trustees, the Board of Trustees
considered the efforts expended and contributions made by such individuals over
the course of their involvement with the Trust. The Board of Trustees also took
into account the level of compensation which has been paid to such individuals
in consideration for their services to the Trust and the fact that no other
long-term incentive, bonus or deferred compensation program has been or is
currently available to compensate the Executive Officers or Trustees. The
options granted are subject to the approval of the adoption of the Equity
Incentive Plan by the Trust's Shareholders at the Annual Meeting.
Members of the Board of Trustees
Robert S. Hekemian Nicholas A. Laganella
Donald W. Barney Charles J. Dodge
John B. Voskian, M.D. Ronald J. Artinian
Herbert C. Klein, Esq. Alan L. Aufzien
7
<PAGE>
Performance Graph
The graph below compares the cumulative total return on the Shares for
the period covering the five fiscal years ended October 31, 1998 with the
performance of the Russell 2000(R) Index and the NAREIT Equity REIT Index. The
graph assumes that $100 was invested on October 31, 1993 in the Trust's Shares,
the Russell 2000(R) Index, and the NAREIT Equity REIT Index, and that all
dividends were reinvested.
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------------
10/93 10/94 10/95 10/96 10/98 10/98
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
First Real Estate Investment Trust of New Jersey 100 101 105 115 143 184
Russell 2000 100 100 118 137 178 160
NAREIT Equity REIT 100 94 106 132 175 152
</TABLE>
Certain Relationships and Related Party Transactions
Mr. Hekemian and his brother, Samuel, and two sisters Marilyn Voskian
and Ann Krikorian, currently own all of the issued and outstanding shares of
Hekemian & Co., with Mr. Hekemian and his brother each owning approximately
47.5% of such shares and each of their sisters owning 2.5% of such shares.
Pursuant to the terms of the Management Agreement, dated December 20,
1961, between Hekemian & Co. and the Trust, as amended (the "Management
Agreement"), Hekemian & Co. serves as the managing agent for the Trust's
properties. Robert S. Hekemian, Chairman of the Board of Trustees of the Trust,
is currently the Chairman of the Board of Hekemian & Co. The following family
members of Robert S. Hekemian are also officers of Hekemian & Co. and serve in
the positions set forth opposite their names.
Samuel P. Hekemian (brother) - President
Robert S. Hekemian, Jr. (son) - Executive Vice President
Bryan S. Hekemian (son) - Vice President and Secretary
David B. Hekemian (son) - Vice President and Treasurer
Serge Krikorian (brother-in-law) - Vice President-Insurance Department
8
<PAGE>
Pursuant to the terms of the Management Agreement, the Trust pays
Hekemian & Co. fees based on a percentage of rents collected as compensation for
its management services. The Trust also reimburses Hekemian & Co. for the
salaries, payroll taxes, insurance costs and certain other costs of personnel
employed at the Trust's properties by Hekemian & Co. on behalf of the Trust.
From time to time, the Trust engages Hekemian & Co. to provide certain
additional services, such as consulting services related to development and
financing activities of the Trust. Separate fee arrangements are negotiated
between Hekemian & Co. and the Trust with respect to such services.
During the fiscal year ended October 31, 1998, the management fees paid
by the Trust to Hekemian & Co. were approximately $576,000 plus an office
overhead fee of approximately $66,000. In addition, the Trust paid Hekemian &
Co. approximately $718,000 in fees and commissions for the services provided by
Hekemian & Co. in connection with the Trust's acquisition of a retail property
in Patchogue, New York and certain mortgage financings and lease transactions
completed by the Trust.
Hekemian & Co. has notified the Trust that it is in the process of
dissolving the company and that it believes such dissolution proceedings are
being and will continue to be conducted in an orderly manner. The Trust does not
believe that these dissolution proceedings will cause a disruption in the
services provided to it by Hekemian & Co.
Robert S. Hekemian serves on the Board of Directors of Summit Bank. The
Trust has an $8 million line of credit with Summit Bank which is scheduled to
expire on May 31, 1999. At February 23, 1999, the Trust did not have any
outstanding borrowings under the Summit Bank credit facility. The Trust's
Franklin Crossing retail property in Franklin Lakes, New Jersey, and its
residential apartment properties located in Lakewood, Palisades Park and
Hasbrouck Heights, New Jersey serve as collateral for the Summit Bank credit
facility. In connection with the Trust's $10.9 million purchase of the
Patchogue, New York retail property in December 1997, the Trust obtained a $7.5
million mortgage loan from Summit Bank to finance a portion of the purchase
price. The mortgage loan is payable in monthly installments of $54,816 including
interest at an annual rate of 7.375% through January 2005 at which time the
outstanding balance is due. The mortgage loan is secured by the Patchogue, New
York retail property. In addition, the Trust pays Summit Bank fees which are
customary for these types of loans.
In fiscal 1998, Cronheim Mortgage Co. acted as a mortgage broker in
connection with the Trust's refinancing of the Trust's mortgage debt with
respect to the Westwood Plaza Shopping Center in Westwood, New Jersey. Cronheim
Mortgage Co. received fees and commissions in the aggregate amount of $18,550
for such services. Mr. Charles J. Dodge, a Trustee of the Trust, is the Chief
Executive Officer of Cronheim Mortgage Co.
The law firm of Hannoch Weisman was retained by the Trust during fiscal
1998 to furnish legal services and received $62,436 in fees from the Trust for
its services. Herbert C. Klein, a Trustee, was a director of the law firm. The
law firm of Nowell Amoroso, P.A. furnished legal services to the Trust during
fiscal 1998 and received $2,000 in fees from the Trust for its services. William
R. DeLorenzo, Jr., an Executive Officer of the Trust, was a partner in the law
firm. The law firm of Nowell Amoroso Klein Bierman, P.A. has furnished legal
services to the Trust during fiscal 1999. Mr. Klein and Mr. DeLorenzo are
partners in the law firm.
The Trust believes that the terms of the foregoing transactions are
consistent with the usual trade terms for other transactions with unaffiliated
parties in the ordinary course of business.
The Trust owns a forty percent (40%) membership interest in Westwood
Hills, LLC ("Westwood Hills") which is the owner of a 210 unit residential
apartment complex in Westwood, New Jersey. In addition, certain Trustees (Robert
S. Hekemian, Donald W. Barney, Herbert C. Klein, Esq. and Ronald J. Artinian)
and members of the immediate families of certain Trustees (Robert S. Hekemian,
John B. Voskian, M.D. and Herbert C. Klein, Esq.) beneficially own thirty-eight
percent (38%) of the remaining membership interests in Westwood Hills. Pursuant
to the terms of an operating agreement, the Trust is the managing member of
Westwood Hills. Hekemian & Co. currently serves as the managing agent for
Westwood Hills. During fiscal 1998, Westwood Hills paid approximately $131,000
in management fees to Hekemian & Co. During the first quarter of fiscal 1999,
Westwood Hills completed a refinancing of its outstanding mortgage debt,
yielding net proceeds of approximately $4.9 million. Pursuant to its 40% equity
investment in Westwood Hills, the Trust received a $2 million distribution out
of such proceeds. In connection with the refinancing, Robert S. Hekemian was
required to provide a personal guarantee in certain limited circumstances. The
Trust and all other members of Westwood Hills have agreed to indemnify Mr.
Hekemian with respect to this guaranty. At October 31, 1998, the Trust had a
$100,000 note receivable from Westwood Hills that was due on demand and accrued
interest at an annual rate of 7%. The note was paid in full during the first
quarter of fiscal 1999.
9
<PAGE>
PROPOSAL TO APPROVE THE ADOPTION OF THE EQUITY INCENTIVE PLAN
(Item 2 on Proxy Card)
General. Effective September 10, 1998, the Board of Trustees approved
and adopted the Equity Incentive Plan, subject to the approval of the
Shareholders of the Trust. The Board of Trustees approved the Equity Incentive
Plan in order to enhance the ability of the Trust to attract and maintain
Trustees, Executive Officers and other persons or entities, including, without
limitation, consultants and employees of consultants, who are in a position to
make significant contributions to the success of the Trust. The Equity Incentive
Plan is also designed to reward such persons or entities for their contributions
to the Trust and to encourage such persons or entities to take into account the
long-term interests of the Trust by providing a method whereby such persons or
entities can share in the long-term growth of the Trust.
230,000 Shares have been reserved for issuance under the Equity
Incentive Plan, subject to adjustment pursuant to the terms of certain
anti-dilution provisions of the Equity Incentive Plan.
Administration. The Equity Incentive Plan will be administered by the
Board of Trustees. When the Board of Trustees deems it to be appropriate, it
will take into account the suggestions and recommendations of the Executive
Committee. The Board of Trustees has complete authorization to make all
determinations necessary or advisable for the administration of the Equity
Incentive Plan, including who will participate; the granting of awards; and the
number and type of awards as well as the terms, conditions and limitations
applicable to the awards.
Effective Date and Term of Plan. If approved by the Trust's
Shareholders, the Equity Incentive Plan will be effective as of September 10,
1998. The Equity Incentive Plan will terminate on September 10, 2008. While no
award will be granted under the Equity Incentive Plan following its termination,
any award outstanding at the time of termination of the Equity Incentive Plan
will continue to exist pursuant to its terms.
Eligibility. The Board of Trustees may grant awards under the Equity
Incentive Plan to members of the Board of Trustees, the Executive Officers of
the Trust, and such other persons or entities, including consultants and
employees of consultants, who, in the opinion of the Board of Trustees, have
made or are in a position to make a significant contribution to the success of
the Trust (each, a "Participant").
Awards under the Equity Incentive Plan. The types of awards which can
be issued to Participants under the Equity Incentive Plan include options
("Options"), restricted share awards ("Restricted Share Awards"), and other
share based awards ("Other Share Based Awards").
(i) OPTIONS. An Option granted to a Participant will be a
nonqualified option which shall not qualify as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Options granted provide the optionee with the opportunity to acquire Shares upon
the exercise of the Options and the payment of the exercise price to the Trust.
An Option shall have an exercise price equal to the fair market value of the
Shares on the date of the grant of the Option. For purposes of the Equity
Incentive Plan, "fair market value" is defined as the arithmetic mean of the
highest and lowest selling prices of the Shares quoted on the OTC Bulletin Board
Service provided by NASD, Inc. or as reported by a nationally recognized
broker/dealer which makes a market in the Shares. If there are no sales of
Shares on the grant date but there were sales on a date within a reasonable
period before such date, fair market value is determined by taking the mean
between the highest and lowest selling prices of the Shares on the nearest date
before the grant date. If actual sales are not available during a reasonable
period before the grant date, the fair market value may be determined by taking
the mean between the bona fide closing bid and asked prices for the Shares on
the grant date, or if such information is not available on such date, the mean
between the bona fide closing bid and asked prices for the Shares which are
available for the nearest date before the grant date, if such date is within a
reasonable period of the grant date. In the event that the Board of Trustees
determines that the fair market value of the Shares cannot be determined on the
basis of selling prices or bid and asked prices pursuant to any of the methods
set forth above, then the best estimate of the fair market value of the Shares
shall be established by the Board of Trustees acting in good faith and using all
available financial data and other relevant factors affecting the fair market
value of the Shares.
(ii) RESTRICTED SHARE AWARDS. A Restricted Share Award
provides a Participant with an opportunity to acquire Shares subject to certain
restrictions, conditions and forfeiture provisions as the Board of Trustees may
determine, including, without limitation, restrictions on transfer and
conditions based on continuous service with the Trust, achievement of business
objectives, and individual and Trust performance. Subject to the conditions
specified by the Board of Trustees, a Participant receiving a Restricted Share
Award will have all the rights of a Shareholder of the Trust with respect to the
Shares, including the right to vote the Shares and the right to receive any
dividends thereon. The consideration, if any, required to be paid by the
Participant in exchange for Restricted Share Awards shall be determined by the
Board of Trustees, but in no event shall any required consideration be greater
than the fair market value of the Shares on the date of grant of the award.
10
<PAGE>
(iii) OTHER SHARE BASED AWARDS. Other Share Based Awards may
include the grant and issuance of Shares as bonuses or in lieu of cash
compensation. The consideration, if any, required to be paid by the Participant
in exchange for Other Share Based Awards shall be determined by the Board of
Trustees, but in no event shall any required consideration be greater than the
fair market value of the Shares on the date of grant of the award.
(iv) TRUSTEES' FEES. A Trustee may request to receive payment
of all or a portion of the Trustee's annual retainer fee and meeting fees in the
form of Shares; provided, that such request must be approved by the Board of
Trustees.
Other Information. The maximum number of Shares which may be awarded to
any Participant pursuant to all awards granted to such Participant under the
Equity Incentive Plan shall not exceed thirty percent (30%) of the number of
Shares reserved for issuance. The maximum number of Shares awarded to any
Participant pursuant to Restricted Share Awards and Other Share Based Awards
shall not exceed ten percent (10%) of the number of Shares reserved for issuance
under the Equity Incentive Plan. There shall be no limit on the number of Shares
that a Trustee may acquire in lieu of Trustees' fees. The exercise price of an
Option or the consideration for any other award shall be paid in cash; provided,
that the Board of Trustees may allow, in its sole discretion, payment through
the delivery of Shares owned by the grantee.
In the event there is any change in the Shares of the Trust through a
split or combination of the Shares, or by reason of a merger, consolidation or
reorganization of the Trust, including a change in the Trust's form of business
entity, or if there is a Share dividend, outstanding awards granted under the
Equity Incentive Plan shall apply to the securities of the Trust or any other
entity to which a holder of the number of Shares of the Trust subject to awards
would have been entitled by reason of any such action or transaction.
Outstanding awards shall also be amended as to price and other terms if
necessary to reflect the foregoing events, and the Board of Trustees, in its
discretion, may make other adjustments to such awards and their terms and
conditions which the Board of Trustees deems necessary to protect such awards
from dilution or diminution in value. In the event of a cash dividend, there
shall be no adjustment to an award or its terms, unless such cash dividend is
attributable to the sale by the Trust of a property or properties or to a
refinancing by the Trust, in which case the Board of Trustees, in its
discretion, may amend an award and its terms and conditions in order to protect
such award from dilution or diminution in value.
In the event of (i) a "change in control" (as such term is defined in
the Equity Incentive Plan), or (ii) a sale of all or substantially all of the
Trust's assets (other than a sale of assets to a subsidiary or other affiliated
entity of the Trust), all outstanding Options shall become exercisable (to the
extent not already exercisable) immediately before or contemporaneously with the
occurrence of the change in control or sale of all or substantially all of the
Trust's assets, and each outstanding Restricted Share Award shall immediately
become free of all restrictions, conditions and forfeiture provisions.
In the event of the dissolution or liquidation of the Trust, all
outstanding Options shall terminate as of the date fixed by the Board of
Trustees; provided, however, that not less than thirty (30) days written notice
of the date so fixed shall be given to each Participant who shall have the right
during such period to exercise the Option as to all or any part of the Shares
covered by the Option. Each outstanding Restricted Share Award shall immediately
become free of all restrictions, conditions and forfeiture provisions.
Certain Federal Income Tax Consequences of the Equity Incentive Plan.
The following description of certain federal income tax consequences of the
Equity Incentive Plan is based upon current statutes, regulations and
interpretations and does not include state or local income tax consequences
applicable to a person who receives an award under the Equity Incentive Plan.
The grant of an Option generally will not result in income for the
Participant or in a deduction for the Trust. The exercise of an Option will
result in ordinary income for the Participant and a business deduction for the
Trust measured by the difference between the fair market value of the Shares
received at the time of exercise and the Option's exercise price. The Trust will
have the right to deduct from any cash payment under the Equity Incentive Plan
taxes that are required to be withheld and to condition the obligation to
deliver or vest Shares under the Equity Incentive Plan upon the Participant
paying the Trust such amount as the Trust may request to satisfy any liability
for applicable withholding taxes.
If the Shares issued pursuant to a Restricted Share Award are subject
to restrictions resulting in a "substantial risk of forfeiture" pursuant to the
meaning of such term under Section 83 of the Code, the grant of the Restricted
Share Award will not result in income to the Participant or in a business
deduction for the Trust. If there are no such restrictions, conditions,
limitations or forfeiture provisions, the Participant will recognize ordinary
income and the Trust will be entitled to a business deduction upon receipt of
the Shares. Dividends paid to the Participant while the Shares remain subject to
any restrictions will be treated as ordinary income. At the time the
restrictions lapse, the Participant will recognize ordinary income and the Trust
will be entitled to a business deduction measured by the fair market value of
the Shares at the time of lapse less the amount of consideration, if any, paid
by the Participant for the Restricted Share Award.
11
<PAGE>
As to the Other Share Based Awards, any Participant who receives Shares
as bonus compensation or in lieu of cash compensation shall recognize ordinary
income and the Trust will be entitled to a business deduction, measured by the
fair market value of the Shares issued to the Participant.
The Trust believes that compensation income recognized by any of its
Executive Officers pursuant to the Equity Incentive Plan will qualify as
performance-based compensation and, for purposes of deduction by the Trust, will
be exempt from the $1 million deduction limit imposed by Section 162(m) of the
Code.
The Equity Incentive Plan is not a qualified plan under Section 401(a)
of the Code.
Plan Benefits. The following table sets forth information as of
February 23, 1999 with respect to the number of options granted under the Equity
Incentive Plan to the persons and groups of persons identified in this table.
Such options have been granted subject to obtaining the approval of the Trust's
Shareholders of the adoption of the Equity Incentive Plan. As of the date of
this Proxy Statement, the Board of Trustees has granted a total of 188,500
options.
<TABLE>
<CAPTION>
Number of
Name and Position Options
- ----------------- -------
<S> <C>
Robert S. Hekemian
Chairman of the Board and Trustee ................... 28,000
Donald W. Barney
President and Trustee ............................... 28,000
John B. Voskian, M.D.
Secretary and Trustee .............................. 16,000
William R. DeLorenzo, Jr., Esq.
Executive Secretary and Treasurer .................. 13,000
Executive Officer Group ............................... 85,000
Non-Executive Officer Trustee Group ................... 74,000
Non-Executive Officer and Non-Trustee Group (1) ....... 29,500
</TABLE>
- ------------------
(1) Represents options granted to employees of Hekemian & Co., all of whom have
provided services to the Trust.
Vote Required. Approval by the Trust's Shareholders of the proposal to
adopt the Equity Incentive Plan requires the affirmative vote of a majority of
the votes cast at the Annual Meeting by the holders of Shares present in person
or represented by proxy. If the proposal is not approved by the Shareholders,
the Equity Incentive Plan will not be adopted by the Trust and all options which
have been granted will terminate immediately without any consideration being
paid to the holders of such options.
Inasmuch as each of the Trustees will be a participant and has been
granted options under the Equity Incentive Plan (subject to the approval of the
Equity Incentive Plan by the Trust's Shareholders), the Board of Trustees will
not make any recommendation to the Trust's Shareholders regarding their approval
of the adoption of the Equity Incentive Plan.
12
<PAGE>
OTHER MATTERS
The Board of Trustees does not know of any other business which will be
presented for consideration at the Annual Meeting. Except as the Board of
Trustees may otherwise permit, only the business set forth and discussed in the
Notice of Meeting and this Proxy Statement may be acted on at the Annual
Meeting. If any other business incident to the Annual Meeting is properly
presented at the Annual Meeting, or any adjournment thereof, the proxy holders
will vote in regard thereto according to their discretion insofar as such
proxies are not limited to the contrary.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Selection of the independent public accountants for the Trust is made
by the Board of Trustees and is based upon the recommendation of the Audit
Committee. J.H. Cohn L.L.P. ("J.H. Cohn") has been selected as the Trust's
independent public accountants for the current fiscal year. J.H. Cohn has
audited the books, records and accounts of the Trust since 1991 and has provided
both audit and nonaudit services to the Trust. Audit services include: (i)
regular examination of the Trust's financial statements, including work relating
to quarterly reviews, SEC filings, and consultation on accounting and financial
reporting matters, and (ii) audit of specific financial and statistical
information. Nonaudit services include income tax consultation and systems
consultation projects. All audit and nonaudit services provided by J.H. Cohn are
approved by the Audit Committee which gives due consideration to the potential
impact of nonaudit services on auditor independence.
Representatives of J.H. Cohn will be present at the Annual Meeting and
will have an opportunity to make a statement if the representatives desire to do
so and will be available to respond to appropriate questions.
ANNUAL REPORT
The Annual Report to Shareholders (the "Annual Report") for the fiscal
year ended October 31, 1998 accompanies this Proxy Statement. J.H. Cohn has
audited the financial statements of the Trust for the fiscal year ended October
31, 1998, which financial statements are contained in the Annual Report. Such
Annual Report, including the audited financial statements contained therein, is
not incorporated in this Proxy Statement and is not deemed to be part of the
proxy soliciting material.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Trust's Executive
Officers and Trustees, and persons who own more than ten percent of the Shares,
to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with
the Securities and Exchange Commission ("SEC"). Executive Officers, Trustees and
greater than ten percent shareholders are required by SEC regulation to furnish
the Trust with copies of all Forms 3, 4 and 5 they file.
The Trust filed a Registration Statement on Form 8-A ("Form 8-A") with
the SEC on November 6, 1998 to register the Shares under the Exchange Act.
Accordingly, during the fiscal year ended October 31, 1998, the filing
requirements of Section 16(a) of the Exchange Act were not applicable. Each of
the Trustees and Executive Officers of the Trust filed a Form 3 with the SEC
contemporaneous with the filing of the Form 8-A.
SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the Trust's next annual
meeting must be received by the Trust at its principal executive offices for
inclusion in its proxy statement and form of proxy relating to that meeting no
later than October 29, 1999.
13
<PAGE>
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT THE SHAREHOLDERS
VOTE IN FAVOR OF THE NOMINEES TO THE BOARD OF TRUSTEES.
THE TRUST SUBMITS TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. COPIES OF THE REPORT WILL BE FURNISHED WITHOUT CHARGE UPON
WRITTEN REQUEST RECEIVED FROM ANY HOLDER OF RECORD OR BENEFICIAL OWNER OF SHARES
OF THE TRUST. REQUESTS SHOULD BE DIRECTED TO SHAREHOLDER RELATIONS, FIRST REAL
ESTATE INVESTMENT TRUST OF NEW JERSEY, 505 MAIN STREET, P.O. BOX 667,
HACKENSACK, NEW JERSEY 07602.
ALL SHAREHOLDERS ARE URGED TO MARK, SIGN, DATE AND SEND THEIR PROXIES
WITHOUT DELAY TO REGISTRAR AND TRANSFER COMPANY, 10 COMMERCE DRIVE, CRANFORD,
NEW JERSEY 07016. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED.
William R. DeLorenzo, Jr.
Executive Secretary
March 1, 1999
14
<PAGE>
REVOCABLE PROXY
First Real Estate Investment Trust of New Jersey
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
Annual Meeting of Holders of Shares of
Beneficial Interest - April 7, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby nominates and appoints Robert S. Hekemian and William R.
DeLorenzo, Jr., Esq. and each of them, the true and lawful attorneys, agents and
proxies of the undersigned, with full power of substitution, to vote with
respect to all of the shares, representing beneficial interests, of FIRST REAL
ESTATE INVESTMENT TRUST OF NEW JERSEY standing in the name of the undersigned at
the close of business on February 23, 1999, at the annual meeting of holders of
shares of beneficial interest to be held at the Trust's headquarters, 505 Main
Street, Hackensack, New Jersey 07601, on April 7, 1999 at 7:30 p.m., and at any
and all adjournment or adjournments thereof, with all powers that the
undersigned would possess if personally present and especially (but without
limiting the general authorization and power hereby given) to vote as indicated
hereon.
1. ELECTION OF TRUSTEES:
Robert S. Hekemian,
John B. Voskian, M.D., and Charles J. Dodge
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
INSTRUCTION:To withhold authority to vote for any individual nominee, mark "For
All Except"and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. EQUITY INCENTIVE PLAN:
To approve the adoption of the First Real Estate Investment Trust of New Jersey
Equity Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion upon such other matters as may properly come before the
meeting or any adjournment or adjournments thereof.
The shares represented by this Proxy will be voted in the manner directed,
and if no instructions to the contrary are indicated, will be voted FOR the
election of the nominees indicated on this Proxy, and FOR the proposal to
approve the adoption of the First Real Estate Investment Trust of New Jersey
Equity Incentive Plan as indicated on this Proxy.
IMPORTANT: Please sign exactly as your name appears. When signing as
attorney, executor, administrator, trustee or guardian, please set forth your
full title. If signer is a corporation, please sign the full corporate name by a
duly authorized officer. Joint owners should each sign.
<PAGE>
Please be sure to sign and
date this Proxy in the box below.
---------------------------------
Date
---------------------------------
Shareholder sign above
---------------------------------
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
<PAGE>
FIRST REAL ESTATE INVESTMENT TRUST
OF NEW JERSEY
EQUITY INCENTIVE PLAN
1. Name and Purpose of Plan.
1.01 Name. The Name of this Plan is the "First Real Estate
Investment Trust of New Jersey Equity Incentive Plan."
1.02 Purpose. The purpose of this First Real Estate Investment
Trust of New Jersey Equity Incentive Plan is to advance the
interests of First Real Estate Investment Trust of New Jersey
(the "Company") by enhancing the ability of the Company to (i)
attract and retain members of its Board of Trustees, executive
officers and other persons or entities, including, without
limitation, employees, consultants and employees of
consultants, who are in a position to make significant
contributions to the success of the Company; (ii) reward such
persons or entities for such contributions; and (iii)
encourage such persons or entities to take into account the
long-term interests of the Company.
2. Definitions of Terms.
2.01 General Definitions. The following words and phrases, when
used in the Plan, unless otherwise specifically defined or
unless the context clearly otherwise requires, shall have the
following respective meanings:
(a) "Award" means a grant in the form of (i) nonqualified
options to purchase Shares, (ii) Restricted Shares,
or (iii) other Share-based awards.
(b) "Award Agreement" means an agreement between the
Company and the Participant entered into with respect
to Awards granted under the Plan.
(c) "Board" means the Board of Trustees of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder.
(e) "Change in Control" means (i) thirty percent (30%) or
more of the Company's Shares have been acquired by
any "person" (as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934) other than directly
from the Company; or (ii) a merger, consolidation or
reorganization of the Company other than a merger,
consolidation or reorganization which would result in
the Shares of the Company outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
shares of the surviving entity) more than seventy
percent (70%) of the combined voting power of the
Shares of the Company or such surviving entity
outstanding immediately after such
1
<PAGE>
merger, consolidation or reorganization; except that
a merger, consolidation or reorganization effected to
implement a recapitalization of the Company (or
similar transaction) in which no "person" (as
hereinabove defined) acquires more than thirty
percent (30%) of the combined voting power of the
Company's outstanding Shares shall not constitute a
Change in Control of the Company; or (iii) thirty
percent (30%) or more of the members of the Board who
were elected by the shareholders are persons who were
not nominated or elected at the three (3) most recent
annual meetings of the shareholders of the Company.
(f) "Company" means First Real Estate Investment Trust of
New Jersey.
(g) "Fair Market Value" on any date ("valuation date") is
defined as the arithmetic mean of the highest and
lowest selling prices of the Shares quoted on the OTC
Bulletin Board(R) Service provided by NASD, Inc., or
as reported by a nationally recognized broker/dealer
which makes a market in the Shares, or as reported by
equivalent exchanges or markets as may heretofore be
utilized by the Company, on such valuation date. If
there are no sales of Shares on the valuation date
but there were sales on a date within a reasonable
period before the valuation date, Fair Market Value
is determined by taking the mean between the highest
and lowest selling prices of the Shares on the
nearest date before such valuation date. If actual
sales are not available during a reasonable period
before the valuation date, the Fair Market Value may
be determined by taking the mean between the bona
fide closing bid and asked prices for the Shares on
the valuation date, or if none exist on such date,
the mean between the bona fide closing bid and asked
prices for the Shares which are available for the
nearest date before valuation date, if such date is
within a reasonable period of the valuation date. In
the event that the Board determines that the Fair
Market Value of the Shares cannot be determined on
the basis of selling or bid and asked prices pursuant
to any of the methods set forth above, then the best
estimate of the Fair Market Value of the Shares shall
be established by the Board acting in good faith and
using all available financial data and other relevant
factors affecting Fair Market Value.
(h) "Just Cause" shall mean: (i) a Participant's
conviction for a felony or for fraud; (ii) a
Participant engaging in any conduct, by way of act or
omission, which in the opinion of the Board has the
potential to cause, or does cause, a material adverse
effect on the Company's business; (iii) a Participant
failing to return from authorized leave from the
Company; (iv) a Participant being found to be under
the influence of, or to have distributed, any illegal
narcotic substance while on the Company's premises,
including any property site of the Company; (v) a
Participant acting dishonestly or committing theft of
Company property; or (vi) the work performance of a
Participant failing to meet Company standards.
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(i) "Option" means a nonqualified option (which shall not
qualify as an incentive stock option under Section
422 of the Code) to purchase Shares.
(j) "Participant" means those eligible to participate
under the Plan, including the members of the Board
and the executive officers of the Company, and such
other persons or entities, including, without
limitation, employees, consultants, and employees of
consultants, who, in the opinion of the Board, are in
a position to make a significant contribution to the
success of the Company or any of its Subsidiaries,
and who have been selected by the Board to
participate under the Plan (each, a "Participant" and
collectively, the "Participants").
(k) "Personal Representative" means the person who
manages the affairs of another because of incapacity
or death.
(l) "Plan" means First Real Estate Investment Trust of
New Jersey Equity Incentive Plan.
(m) "Restricted Shares" means Shares as more specifically
defined in Section 5.01(b) herein.
(n) "Retirement" means retirement from service or active
employment with the Company at or after age 65. The
determination of the Board as to an individual's
Retirement shall be conclusive on all parties.
(o) "Share" designates beneficial interest in the
Company, and the Shares represent the only class of
equity in the Company.
(p) "Subsidiary" means a present or future corporation,
or other business organization, of which the Company
owns or controls, or will own or control, more than
fifty percent (50%) of the total combined voting
power of all classes of stock or other equity
interests.
(q) "Trustee" means a member of the Board.
2.02 Other Definitions. In addition to the above definitions,
certain words and phrases used in the Plan and any Award
Agreement entered into in connection with the Plan may be
defined in other portions of the Plan or in such Award
Agreement.
3. Administration of Plan.
3.01 The Board. The Plan will be administered by the Board, taking
into account, where appropriate, the suggestions and
recommendations of the Executive Committee of the Board.
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3.02 Powers of the Board.
(a) The Board will have full and exclusive power to
interpret the Plan, to adopt rules, regulations and
guidelines relating to the Plan, to grant waivers of
Plan restrictions and to make all of the
determinations necessary for its administration. Such
determinations and actions of the Board, and all
other determinations and actions of the Board made or
taken under authority granted by any provision of the
Plan will be conclusive and binding on all parties.
(b) The Board has the authority, within the limits set
forth in the Plan, to (i) determine the persons to
whom Awards may be granted, (ii) determine the number
of Shares to be covered by each Award, (iii)
establish the terms, conditions and provisions of the
Award to be granted, and (iv) establish restrictions
on the Awards or subsequently waive any Award
restriction or permit any Award restriction to lapse.
3.03 Effective Date and Term of Plan.
(a) Effective Date. The Plan will become effective on
September 10, 1998, subject to the Plan being
approved by the Company's shareholders. Awards under
the Plan may be made prior to the approval of the
Plan by the Company's shareholders.
(b) Termination Date. The Plan will terminate on
September 10, 2008, subject to earlier termination of
the Plan by the Board pursuant to Section 10 herein.
No Award may be granted under the Plan after the
termination date of the Plan, but Awards previously
granted may continue and remain outstanding beyond
that date pursuant to the terms of such Awards.
4. Shares Subject to the Plan.
4.01 Shares Subject to Plan. Subject to adjustment as provided in
Section 8 herein, the aggregate number of Shares reserved for
issuance under the Plan shall be 230,000.
4.02 Limit Upon Number of Shares Awarded. The maximum number of
Shares awarded to any Participant pursuant to all Awards
granted to such Participant under the Plan shall not exceed
thirty percent (30%) of the number of Shares reserved for
issuance hereunder. The maximum number of Shares awarded to
any Participant pursuant to Restricted Shares and other
Share-based awards shall not exceed ten percent (10%) of the
number of Shares reserved for issuance hereunder. There shall
be no limit on the number of Shares a Trustee may acquire in
lieu of Board fees as provided for in Section 11 of this Plan.
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5. Granting of Awards.
5.01 Form of Award.
(a) Options. The principal form of Award granted under
the Plan shall be Options pursuant to which the
Participant would receive Shares upon the exercise
thereof.
(b) Restricted Shares. The Board shall have the right to
grant "Restricted Shares" which shall be Shares
issued subject to certain restrictions, conditions
and forfeiture provisions as the Board may determine,
including, but not limited to, restrictions on
transfer and conditions based on continuous service
with the Company or any of its Subsidiaries,
achievement of business objectives, and individual
and Company performance. Subject to such
restrictions, conditions and forfeiture provisions as
may be established by the Board, any Participant
receiving Restricted Shares will have all the rights
of a shareholder of the Company with respect to the
Shares, including the right to vote the Shares and
the right to receive any dividends thereon.
(c) Other Share-based Awards. The Board shall have the
right to grant other Share-based awards to
Participants under the Plan, including the grant and
issuance of Shares as bonuses or in lieu of cash
compensation.
5.02 Term of Award.
The term of any Award shall be determined by the
Board; provided, that the maximum term shall be no
longer than ten (10) years from the date of grant of
the Award. Shares subject to Options and other Awards
granted under the Plan which expire, terminate or are
cancelled without having been exercised in full
become available again for grants pursuant to Options
or other Awards.
5.03 Transfers. No Award (other than an Award in the form of a
direct issuance of Shares without any restrictions) may be
assigned, pledged or transferred other than by will or by the
laws of descent and distribution and, during the Participant's
lifetime, will be exercisable only by the Participant or, in
the event of a Participant's incapacity, by the Participant's
Personal Representative.
6. Vesting.
6.01 Vesting. Options will be exercisable pursuant to the terms
fixed by the Board. Any restrictions, conditions and
forfeiture provisions imposed on Restricted Shares shall lapse
or terminate pursuant to their terms or the terms of the Plan.
6.02 Acceleration of Vesting Period. The applicable vesting periods
of Options will be accelerated, and the applicable
restrictions, conditions and forfeiture provisions imposed on
Restricted Shares may be terminated earlier, as provided for
in Sections 8 and 9 of the Plan, or as otherwise determined by
the Board, in its sole discretion.
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7. Exercise Price and Payment.
7.01 Exercise Price of Option. An Option shall have an exercise
price equal to the Fair Market Value of the Shares on the date
of the grant of the Option.
7.02 Price of Other Awards. With respect to other Awards granted by
the Board, the consideration, if any, required to be paid by
the Participant in exchange for such Award shall be determined
by the Board, but in no event shall any required consideration
be greater than the Fair Market Value of the Shares on the
date of grant of the Award.
7.03 Form of Payment. Payment for the Options and any other Award
issued for consideration will be made in cash; provided, that
the Board may allow, in its sole discretion, payment through
the delivery of Shares owned by the Award recipient, duly
endorsed for transfer to the Company, with a Fair Market Value
on the date of exercise of an Option or date of issuance of
any other Award equal to the aggregate exercise price of the
Options or exercised portion thereof, or the full
consideration to be paid for any other Award. If payment for
the Shares acquired is to be made in cash, then full payment
will be made at the time of the exercise of an Option and at
the time of issuance of any other Award. If the Board permits
payment for the Shares acquired to be made in Shares owned by
the Award recipient, then the Company shall provide written
notice to the Award recipient of the number of Shares which
must be delivered in full payment of the Option exercise price
or the consideration required to be paid for any other Award,
and the Award recipient shall deliver such number of Shares to
the Company within two (2) business days of the receipt of
such notice from the Company.
8. Adjustment of Award.
8.01 Adjustment of and Changes in the Shares. In the event there is
any change in the Shares of the Company through a split or
combination of the Shares, or by reason of a merger,
consolidation or reorganization of the Company, including a
change in the Company's form of business entity, or if there
is a Share dividend, outstanding Awards granted under the Plan
shall apply to the securities of the Company or any other
entity to which a holder of the number of Shares of the
Company subject to Awards would have been entitled by reason
of any such action or transaction. Outstanding Awards shall be
amended as to price and other terms if necessary to reflect
the foregoing events, and the Board, in its discretion, may
make other adjustments to such Awards and their terms and
conditions which the Board deems necessary to protect such
Awards granted under the Plan from dilution or diminution in
value, or as may otherwise be deemed to be equitable under the
circumstances.
8.02 Change in Control and Sale of All or Substantially All of the
Assets. In the event of (i) a Change in Control, or (ii) a
sale of all or substantially all of the Company's assets
(other than a sale of assets to a Subsidiary or other
affiliated entity of the Company), all outstanding Options
shall become exercisable
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immediately before or contemporaneously with the occurrence of
a Change in Control or sale of all or substantially all of the
Company's assets, and each outstanding Restricted Share shall
immediately become free of all restrictions, conditions and
forfeiture provisions upon the occurrence of a Change in
Control or sale of all or substantially all of the Company's
assets.
8.03 Dissolution or Liquidation of Company. In the event of the
dissolution or liquidation of the Company, the outstanding
Options shall terminate as of the date fixed by the Board;
provided, however, that not less than thirty (30) days written
notice of the date so fixed shall be given to each Participant
who shall have the right during such period to exercise the
Participant's Options as to all or any part of the Shares
covered thereby. Further, in the event of the dissolution or
liquidation of the Company, each outstanding Restricted Share
shall immediately become free of all restrictions, conditions
and forfeiture provisions.
8.04 Adjustment of Exercise Price for Cash Dividend. In the event
of a cash dividend, there shall be no adjustment to an Award
or its terms, unless such cash dividend is attributable to the
sale by the Company of a property or properties or to a
refinancing by the Company, in which case the Board, in its
discretion, may amend an Award and its terms and conditions in
order to protect such Award from dilution or diminution in
value, or as may otherwise be deemed to be equitable by the
Board under the circumstances.
9. Death, Disability, Retirement and Termination of Participant.
9.01 Death, Retirement or Disability. In the event that the
relationship between the Participant and the Company or any of
its Subsidiaries is terminated by reason of the Participant's
death, Retirement, or "disability" (as such term is defined in
Section 22(e)(3) of the Code), all of the Participant's
Options shall become immediately exercisable. The Participant,
the Participant's Personal Representative or the Participant's
designated beneficiary or estate, shall have the term
remaining on the Option from the date of death, Retirement or
disability to exercise all or any part of the Options. As to
Restricted Shares, the Board, in its discretion, may waive any
restriction or permit any restriction to lapse.
9.02 Resignation. If the Participant resigns from the Company or
any Subsidiary, the Participant shall have sixty (60) days to
exercise all or any part of an Option which is fully vested on
or before the date of termination. As to Restricted Shares,
the Board, in its discretion, may waive any restriction or
permit any restriction to lapse.
9.03 Termination other than for Just Cause. In the event a
Participant's employment or consulting relationship is
terminated by the Company for any reason other than for Just
Cause, each Option, or any part thereof, scheduled to vest on
or before the succeeding anniversary date of the grant of the
Option following the date of termination shall become
immediately exercisable, and the Participant shall have sixty
(60) days from the date of termination to exercise all or any
part of such
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vested Options. As to Restricted Shares, the Board, in its
discretion, may waive any restriction or permit any
restriction to lapse.
9.04 Termination for Just Cause. If the Participant's employment or
consulting relationship is terminated by the Company for Just
Cause, all Options and Restricted Shares held by the
Participant will be immediately terminated and forfeited back
to the Company (other than those Restricted Shares where all
restrictions have lapsed and all other conditions of ownership
have been satisfied), respectively.
9.05 Removal of Trustee. If a Trustee is removed from the Board for
any reason, all Options and Restricted Shares held by the
Trustee will be immediately terminated and forfeited back to
the Company (other than those Restricted Shares where all
restrictions have lapsed and all other conditions of ownership
have been satisfied), respectively.
9.06 Failure to Nominate or Elect Trustee. If a Trustee is not
nominated for re-election to the Board or if a nominated
Trustee is not elected to the Board by the Company's
shareholders, then any such Trustee shall have thirty (30)
days from the date such Trustee receives notice from the
Company that he or she has not been nominated for re-election
to the Board or has not been elected to the Board by the
Company's shareholders to exercise all or part of any Option
which is fully vested on or before the expiration of such
thirty (30) day notice period. As to Restricted Shares, the
Board, in its discretion, may waive any restriction or permit
any restriction to lapse.
10. Termination, Modification and Amendment of Plan.
The Plan may be terminated, modified or amended by the Board at any
time; however, (i) any modification or amendment increasing the
aggregate number of Shares which may be issued under the Plan will be
subject to shareholder approval, and (ii) any termination, modification
or amendment of the Plan which will adversely affect or alter the terms
of any then outstanding Options or Restricted Shares will be subject to
the consent of the holders thereof.
11. Trustee's Fees.
Subject to the limitations contained in Section 4.01 of this Plan on
the number of Shares which may be issued pursuant to this Plan, the
Board, in its sole discretion, may permit any member of the Board to
receive all or a portion of the member's annual Board retainer fee,
Board meeting fees, and Board committee fees in the form of Shares. Any
member of the Board who desires to receive all or any part of such
Board fees in Shares must provide the Company with written notice of
the member's election to receive payment of Board fees in this form no
later than five (5) business days prior to the date of payment of such
fees. If the Board agrees to pay such fees in the form of Shares, then
the number of Shares with an aggregate Fair Market Value on the
scheduled date(s) for payment of the annual Board retainer fee and on
the date of the Board or committee
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meeting for which fees are payable which is equal to the aggregate
amount of such Board fees shall be issued to the Board member no later
than fifteen (15) days following the date of payment of such Board fees
by the Company. No fractional Shares will be issued in connection with
any election pursuant to this Section to receive Shares in lieu of
Board fees.
12. Miscellaneous.
12.01 Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of New Jersey.
12.02 Successors and Assigns. The provisions of this Plan shall be
binding upon all successors and assigns of any such
Participant including, without limitation, the estate of a
Participant, any Personal Representative of a Participant and
any receiver, trustee in bankruptcy or representative of the
creditors of a Participant.
12.03 Tax Withholding. The Company will have the right to deduct
from any cash payment under the Plan taxes that are required
to be withheld and to condition the obligation to deliver or
vest Shares under this Plan upon the Participant's paying the
Company such amounts as the Company may request to satisfy any
liability for applicable withholding taxes.
12.04 Rights of a Shareholder. Except as specifically provided by
the Plan, the receipt of an Award will not give a Participant
rights as a shareholder of the Company.
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