As filed with the Securities and Exchange Commission on July 2, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MGI PROPERTIES
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
04-6268740
- -------------------------------------------------------------------------------
(I.R.S. employer identification no.)
One Winthrop Square, Boston, Massachusetts 02110
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
MGI Properties 1997 Employee Stock Option,
Stock Appreciation Rights and Restricted Stock Plan
- -------------------------------------------------------------------------------
(Full title of the plans)
W. Pearce Coues
Chairman of the Board of Trustees
MGI Properties
One Winthrop Square
Boston, Massachusetts 02110
- -------------------------------------------------------------------------------
(Name and address of agent for service)
(617) 422-6000
- -------------------------------------------------------------------------------
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Proposed
Proposed maximum
Title of maximum aggregate Amount of
Securities to Amount to be offering price offering registration
be registered registered per share price fee
---------------- --------------- --------------- ------------- --------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares,
$1.00 par value 675,000(1) $22.06(2) $14,858,426.52(2) $4,502.55
=================================================================================================================================
</TABLE>
(1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended (the "Act"), this Registration Statement also registers such number
of additional Common Shares that may be offered or issued pursuant to the
Registrant's 1997 Employee Stock Option, Stock Appreciation Rights and
Restricted Stock Plan (the "1997 Plan") to prevent dilution resulting from
stock splits, stock dividends or similar transactions.
(2) Includes 30,258 Common Shares with respect to which options and stock
appreciation rights have been granted under the 1997 Plan at an exercise
price of $21.00 per share. An additional 644,742 Common Shares are to be
offered at prices not presently determined. Pursuant to Rule 457(c)
promulgated under the Act, the offering price for these additional Common
Shares is estimated solely for the purpose of determining the registration
fee and is based on $22.06, the average of the high and low prices of the
Common Shares reported on the New York Stock Exchange, Inc. Composite Tape
on June 26, 1997.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below are hereby incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended November 30, 1996;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 28, 1997;
(c) The description of the Registrant's Common Shares, $1.00 par
value, contained in the Registrant's Registration Statements
on Form 8-A filed on March 11, 1988 and June 27, 1989.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all Common Shares offered hereby
have been sold or which deregisters all Common Shares offered hereby then
remaining unsold, are deemed to be incorporated herein by reference and to be a
part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the Common Shares offered hereby will be passed upon
for the Registrant by the firm of Olshan Grundman Frome & Rosenzweig LLP, 505
Park Avenue, New York, New York 10022. Certain members of Olshan Grundman Frome
& Rosenzweig LLP own an aggregate of 15,015 Common Shares and hold options to
purchase an aggregate of 23,400 Common Shares.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 5.3 of the Trust's Second Amended and Restated Declaration of
Trust provides as follows:
The Trust shall indemnify each of its Trustees, officers, employees and
agents (including any Person who serves at its written request as
director, officer, partner, trustee or the like of another organization
in which it has any interest as a shareholder, creditor or otherwise),
against all liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties,
counsel fees, reasonably incurred by him in connection with the defense
or disposition of any action, suit or proceeding, whether civil or
criminal, in which he may be involved or with which he may be
threatened, while acting as Trustee or as an officer, employee or
agent, of the Trust or the Trustees, as the case may be, or thereafter,
by reason of his being or having been such a Trustee, officer, employee
or agent, except with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith or with willful misconduct
or reckless disregard of his duties or gross negligence or not to have
acted in good faith in the reasonable belief that his action was in the
best interests of the Trust; provided, however, that a Trustee
adjudicated to have been
I-1
<PAGE>
grossly negligent (i.e., found to have breached his fiduciary duty of
care) may nevertheless be indemnified pursuant to the provisions of
this paragraph consistent with the provisions of Section 5.2; and
provided, further, however, that as to any matter disposed of by a
compromise payment by such Trustee, officer, employee or agent,
pursuant to a consent decree or otherwise, no indemnification either
for said payment or for any other expenses shall be provided unless
such compromise shall be approved as in the best interest of the Trust
by a majority of the disinterested Trustees or the Trust shall have
received a written opinion of independent legal counsel to the effect
that such Trustee, officer, employee or agent appears to have acted in
good faith in the reasonable belief that his action was in the best
interests of the Trust. The rights accruing to any Trustee, officer,
employee or agent under these provisions shall not exclude any other
right to which he may be lawfully entitled; provided, however, that no
Trustee, officer, employee or agent may satisfy any right of indemnity
or reimbursement granted herein or to which he may be otherwise
entitled except out of the Trust Property, and no Shareholder shall be
personally liable to any Person with respect to any claim for indemnity
or reimbursement or otherwise. The Trustees may make advance payments
in connection with indemnification under this Section 5.3, provided
that the indemnified Trustee, officer, employee or agent shall have
given a written undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such
indemnification.
Any action taken by or conduct on the part of the Adviser, a Trustee,
officer, employee or agent of the Trust in conformity with or in good
faith reliance upon the provisions of Section 2.16 or 3.4 hereof shall
not, for purposes of this Declaration of Trust (including, without
limitation, Sections 5.1 and 5.2 hereof and this Section 5.3),
constitute bad faith, willful misconduct, gross negligence or reckless
disregard of his duties, or failure to act in good faith in the
reasonable belief that his action was in the best interests of the
Trust.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
The following instruments and documents are included as exhibits to
this Registration Statement.
Exhibit
Number Description
------ -----------
4.1 1997 Employee Stock Option, Stock Appreciation Rights and
Restricted Stock Plan.
4.2 Form of Stock Option Agreement.
5 Opinion of Olshan Grundman Frome & Rosenzweig LLP.
23.1 Consent of Olshan Grundman Frome & Rosenzweig LLP
(included in their opinion filed as Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP
I-2
<PAGE>
24 Power of Attorney (included on the Signature Page to this
Registration Statement).
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
b) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
I-3
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, County of Suffolk, Commonwealth of
Massachusetts, on June 30, 1997.
MGI PROPERTIES
By: /s/ W. Pearce Coues
-------------------------------
W. Pearce Coues
Chairman of the Board of
Trustees and Chief Executive
Officer
POWERS OF ATTORNEY AND SIGNATORIES
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated. Each of the undersigned officers and
Trustees of MGI Properties hereby constitutes and appoints W. Pearce Coues,
David P. Morency and Phillip C. Vitali and each of them singly, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him in his name in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission and to
prepare any and all exhibits thereto, and other documents in connection
therewith, and to make any applicable state securities law or blue sky filings,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite or necessary to be done to
enable MGI Properties to comply with the provisions of the Securities Act of
1933, as amended, and all requirements of the Securities and Exchange
Commission, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
<TABLE>
<CAPTION>
Signatures Capacity Date
---------- -------- ----
<S> <C> <C>
/s/ W. Pearce Coues Chairman of the Board of June 30, 1997
- -------------------------- Trustees and Chief
W. Pearce Coues Executive Officer
(principal executive
officer)
/s/ Phillip C. Vitali Executive Vice June 30, 1997
- -------------------------- President, Chief
Phillip C. Vitali Financial Officer and
Treasurer (principal
financial officer)
/s/ David P. Morency Controller (principal June 30, 1997
- -------------------------- accounting officer)
David P. Morency
/s/ George S. Bissell Trustee June 30, 1997
- --------------------------
George S. Bissell
/s/ Herbert D. Conant Trustee June 30, 1997
- --------------------------
Herbert D. Conant
/s/ Francis P. Gunning Trustee June 30, 1997
- --------------------------
Francis P. Gunning
/s/ George M. Lovejoy, Jr. Trustee June 30, 1997
- --------------------------
George M. Lovejoy, Jr.
/s/ William F. Murdoch, Jr. Trustee June 30, 1997
- ---------------------------
William F. Murdoch
Trustee June , 1997
- ---------------------------
Rodger P. Nordblom
</TABLE>
I-4
MGI PROPERTIES
1997 EMPLOYEE STOCK OPTION,
STOCK APPRECIATION RIGHTS AND RESTRICTED STOCK PLAN
I. PURPOSE
The purpose of the 1997 Employee Stock Option, Stock Appreciation
Rights and Restricted Stock Plan (the "Plan") is to promote the interests of MGI
Properties (the "Trust") and its shareholders by providing a means by which
competent officers, key employees and employee-Trustees (hereinafter sometimes
referred to as "key employees" or "optionees") of the Trust or of any subsidiary
corporation or parent corporation of the Trust now existing or hereafter formed
or acquired who are responsible for the continued growth of the Trust, can
acquire a proprietary interest in the Trust, and thus create in such key
employees an increased interest in and a greater concern for the welfare of the
Trust and its shareholders.
The Plan is intended to satisfy the performance-based compensation
exception to the cap on the Trust's tax deduction imposed by Section 162(m) of
the Internal Revenue Code of 1986, as it may from time to time be amended (the
"Code") and to align with recent changes to Rule 16(b) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act").
The stock options ("Options"), restricted stock ("Restricted Stock")
and stock appreciation rights ("Rights") offered pursuant to the Plan are a
matter of separate inducement and are not in lieu of any salary or other
compensation for the services of any key employee.
The Trust, by means of the Plan, seeks to retain the services of
persons now holding key positions and to secure the services of persons capable
of filling such positions.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422A of the
Code or options that do not meet the requirements for Incentive Options
("Nonqualified Options"), but the Trust makes no warranty as to the
qualification of any Option as an Incentive Option.
The Plan is intended to provide participants with stock-based incentive
compensation which is not subject to the deduction limitation rules prescribed
under Section 162(m) of the Code, and should be construed to the extent possible
as providing for remuneration which is "performance-based compensation" within
the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder.
<PAGE>
II. SHARES SUBJECT TO THE PLAN
The total number of Common Shares of the Trust, $1.00 par value per
share (the "Common Shares"), which may be (i) purchased pursuant to the exercise
of Options granted under the Plan or (ii) acquired pursuant to the exercise of
Rights granted under the Plan or pursuant to the award of Restricted Stock
granted under the Plan shall not exceed, in the aggregate, 675,000 Common Shares
as of the effective date (the "Shares"). The term "Shares" shall include any
securities, cash or other property into which Shares may be changed through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
issuance of rights to subscribe or change in capital structure. The maximum
number of Shares that may be subject to Options and related Rights or Restricted
Stock granted under the Plan to any individual in any calendar year shall not
exceed 75,000, and the method of counting such Shares shall conform to any
requirements applicable to performance-based compensation under Section 162(m)
of the Code.
Shares which may be acquired under the Plan may be either authorized
but unissued Shares, Shares held in the Trust's treasury, or both, at the
discretion of the Trust. If and to the extent that (i) Options granted under the
Plan expire or terminate without having been exercised and (ii) Restricted Stock
granted under the Plan is repurchased or forfeited, Shares subject to such
expired or terminated Options and related Rights or repurchased or forfeited
Restricted Shares shall be available for new grants of Options and related
Rights and Restricted Stock under the Plan, provided that the grant and the
terms of such new Options and related Rights and Restricted Stock shall in all
respects comply with applicable legal requirements. Notwithstanding the above,
however, the expiration or termination of Options and related Rights and
repurchased or forfeited Shares shall not increase the reserve of 675,000 Shares
for grants to key employees.
Except as provided in Article XXI hereof, the Trust may, from time to
time during the period beginning March 27, 1997 (the "Effective Date") and
ending on March 26, 2007 (the "Termination Date"), grant to key employees of the
Trust, or of any subsidiary corporation or parent corporation of the Trust now
existing or hereafter formed or acquired, Options and related Rights and
Restricted Stock under the terms hereinafter set forth. Notwithstanding the
foregoing, Options, Rights and/or Restricted Stock granted or awarded hereunder
prior to March 27, 1997 shall be valid and binding, subject to the approval of
the Plan by the shareholders on or before April 30, 1997.
As used in the Plan, the terms "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 425(f) and 425(e) of the Code.
-2-
<PAGE>
III. ADMINISTRATION
The Board of Trustees of the Trust (the "Board of Trustees") shall
designate a committee for the administration of matters relating to Restricted
Stock and Options to be granted to key employees (the "Committee"), whether
Incentive or Nonqualified Options or both and related Rights. The Committee
shall consist of two or more Trustees. Each member of the Committee shall be a
"non-employee director" within the meaning of Rule 16b-3, or any successor rule
or regulation, ("Rule 16b-3") promulgated under the Exchange Act and shall also
be an "outside director" under Section 162(m) of the Code. A majority of the
members of the Committee shall constitute a quorum, and the act of a majority of
the members of the Committee shall be the act of the Committee. Any member of
the Committee may be removed at any time either with or without cause by
resolution adopted by the Board of Trustees, and any vacancy on the Committee
may at any time be filled by resolution adopted by the Board of Trustees.
Subject to the express provisions of the Plan, the Committee shall have
the authority, in its discretion, to determine the key employees to whom
Options, Rights and Restricted Stock shall be granted, the number of Shares
which shall be subject to each Option, Right or Restricted Stock award, the
purchase price of each Share which shall be subject to an Option, Right or
Restricted Stock, the period(s) during which such Options or Rights shall be
exercisable (whether in whole or in part) or the terms of any Restricted Stock
award, and the other terms and provisions thereof. In determining the key
employees to whom Options, Rights or Restricted Stock shall be granted and the
number of Shares for which Options, Rights or Restricted Stock shall be granted
to each such employee, the Committee shall consider the length of service, the
amount of earnings, and the responsibilities and duties of such employee;
provided, however, that no employee shall be granted Incentive Options in any
calendar year to purchase shares of stock in the Trust or in any subsidiary
corporation or parent corporation of the Trust which exceed the maximum
allotment prescribed in Article V hereof.
Subject to the express provisions of the Plan, the Committee also shall
have the authority to construe the Plan and Options, Rights and Restricted Stock
granted or awarded hereunder, to amend the Plan and Options, Rights and
Restricted Stock granted or awarded hereunder, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the respective Options (which need not be identical), Rights
(which need not be identical) and Restricted Stock (which need not be identical)
and to make all other determinations necessary or advisable for administering
the Plan.
The Committee also shall have the authority to require, in its
discretion, that the key employee agree, at the time of the grant of an Option
and of a related Right not to sell or otherwise
-3-
<PAGE>
dispose of Shares acquired pursuant to the exercise of an Option or Right, as
the case may be, granted under the Plan for a period of six (6) months following
the date of grant.
The determination of the Committee on matters referred to in this
Article III shall be conclusive.
Any or all powers and functions of the Committee may at any time and
from time to time be exercised by (i) the full Board of Trustees (except in the
case of the grant of Incentive Options) or (ii) a committee composed solely of
two or more persons that, at the time of such exercise, are "non-employee
directors" within the meaning of Rule 16b-3 and also are "outside directors"
under Section 162(m) of the Code.
The Committee 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 of
Trustees or by the Committee in the engagement of such counsel, consultant or
agent shall be paid by the Trust. No member or former member of the Committee or
of the Board of Trustees shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted hereunder.
IV. ELIGIBILITY
Incentive Options and related Rights may be granted only to salaried
key employees of the Trust or of any subsidiary corporation or parent
corporation of the Trust, except members of the Committee and except as
hereinafter provided, and shall not be granted to any officer or Trustee who is
not also a salaried key employee.
Nonqualified Options, related Rights and Restricted Stock may be
granted or awarded only to salaried key employees of the Trust or of any
subsidiary corporation or parent corporation of the Trust, except members of the
Committee and except as hereinafter provided.
Any person who shall have retired from active employment by the Trust,
although such person shall have entered into a consulting contract with the
Trust, shall not be eligible to receive a grant of an Incentive Option or
related Right or a Nonqualified Option or related Right.
An Incentive Option shall not be granted to any person who, at the time
such Incentive Option is granted, owns Shares of the Trust or any subsidiary
corporation or parent corporation of the Trust which possess more than ten
percent (10%) of the total combined voting power of all classes of shares of the
Trust or of any
-4-
<PAGE>
subsidiary corporation or parent corporation of the Trust, unless (i) the
exercise price per share is not less than one hundred ten percent (110%) of the
fair market value per share on the date such Option is granted and (ii) such
Option by its terms is not exercisable after the expiration of five (5) years
from the date such Option is granted. In determining share ownership of any such
person, the rules of Section 425(d) of the Code shall be applied and the
Committee may rely on representations of fact made to it by the key employee and
believed by it to be true.
V. MAXIMUM ALLOTMENT OF INCENTIVE OPTIONS
The aggregate fair market value (determined at the time the Incentive
Option is granted) of the stock with respect to which Incentive Options are
exercisable for the first time by such optionee during any calendar year (under
all such plans of the optionee's employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000.
VI. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Option granted hereunder
shall be such amount as the Committee shall, in its best judgment, determine;
provided, however, that, subject to Article IV hereof, the price of any Option
shall not be less than one hundred percent (100%) of the fair market value per
Share on the date the Option is granted.
If the Shares are listed on a national securities exchange in the
United States on the date any Option is granted, the fair market value per Share
shall be deemed to be the closing sale price at which the Shares are sold on
such national securities exchange on the date such Option is granted. If the
Shares are listed on a national securities exchange in the United States on such
date but the Shares are not traded on such date, or such national securities
exchange is not open for business on such date, the fair market value per Share
shall be determined as of the closest preceding date on which such exchange
shall have been open for business and the Shares were traded. If the Shares are
listed on more than one national securities exchange in the United States on the
date any such Option is granted, the Committee shall determine which national
securities exchange shall be used for the purpose of determining the fair market
value per Share.
If at the date any Option is granted a public market exists for the
Shares but the Shares are not listed on a national securities exchange in the
United States, the fair market value per Share shall be deemed to be the mean
between the closing bid and asked quotations in the over-the-counter market for
the Shares in the United States on the date such Option is granted. If there are
no bid and asked quotations for the Shares on such date, the fair market value
per Share shall be deemed to be the mean between the
-5-
<PAGE>
closing bid and asked quotations in the over-the-counter market in the United
States for the Shares on the closest date, preceding the date such Option is
granted, for which such quotations are available.
The Trust shall cause such stock certificates to be issued only when it
shall have received the full purchase price for the Shares in cash, certified
check, bank draft or money order; provided, however, that in lieu of cash,
certified check, bank draft or money order, the holder of an Option may exercise
his Option, in whole or in part, (i) by delivering to the Trust, Shares of the
Trust (in proper form for transfer and accompanied by all requisite stock
transfer tax stamps or cash in lieu thereof) owned by such holder for at least
six months (and, in the case of Shares acquired upon the exercise of Incentive
Options, for the holding periods required under Section 425 of the Code) and
having a fair market value equal to the cash exercise price applicable to that
portion of the Option being exercised by the delivery of such Shares, the fair
market value of the Shares so delivered to be determined in accordance with this
Article VI or as may be required in order to comply with or to conform to the
requirements of any applicable laws or regulations; or (ii) through the written
election of the optionee to have Shares withheld from the Shares otherwise to be
received upon the exercise of an Option and having a fair market value equal to
the cash exercise price applicable to the portion of the Option being exercised
by the withholding of such Shares, the fair market value of the Shares so
withheld to be determined in accordance with this Article VI or as may be
required in order to comply with or to conform to the requirements of any
applicable laws or regulations.
Notwithstanding the foregoing, subject to the provisions of Part 207 of
Title 12, Code of Federal Regulations, as from time to time in effect (herein
called "Regulation G"), the Committee, in its sole and absolute discretion, (i)
may, generally or in specific instances, authorize the extension and maintenance
of credit by the Trust, or (ii) may arrange for the extension or maintenance of
credit by any person upon the same terms and conditions as those upon which the
Trust (under the provisions of Regulation G) may extend or maintain such credit
to participants under the Plan for the purpose of financing the exercise of
Options granted to such participants under the Plan. Interest shall be charged
on any such extension of credit at a rate not less than that promulgated under
the applicable Federal rate (as defined in Section 1274(d) of the Code) for the
month in which such credit is extended.
-6-
<PAGE>
VII. USE OF PROCEEDS
The cash proceeds from the sale of Shares subject to the Options
granted hereunder are to be added to the general funds of the Trust and used for
its general purposes as the Board of Trustees shall determine.
VIII. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE
Except as otherwise provided below, a holder of an Option may exercise
such Option with respect to one hundred percent (100%) of the aggregate number
of Shares, or any portion thereof, subject to the Option.
Subject to the provisions of Articles IV and V, any Option granted
hereunder shall be exercisable during a period of not more than ten (10) years
from the date of grant of such Option.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part. If any Option granted hereunder shall terminate prior to the Termination
Date, the Committee shall have the right to use the Shares as to which such
Option shall not have been exercised to grant one or more additional Options to
any eligible employee (in which case, such new Option may be either Incentive or
Nonqualified, as determined by the Committee) or Restricted Stock, but any such
grant of an additional Option or Restricted Stock shall be made prior to the
close of business on the Termination Date.
In no event shall an Option granted hereunder be exercised for a
fraction of a share.
IX. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as to
all or part of the Shares covered thereby by the giving of written notice of the
exercise thereof to the Secretary of the Trust at the principal business office
of the Trust, specifying the number of Shares to be purchased and accompanied by
payment of the purchase price.
Such payments may consist, in whole or in part, of the proceeds of
loans made or guaranteed by the Trust to finance the acquisition of the Shares
pursuant to Article VI hereof.
-7-
<PAGE>
X. STOCK APPRECIATION RIGHTS; RESTRICTED STOCK AWARDS
A. Stock Appreciation Rights
Rights may be granted to key employees in connection with the grant of
Options upon such terms and conditions as the Committee may prescribe. Rights
may be granted only in connection with the grant of an Option under the Plan and
only with respect to fifty percent of the Shares related to Options. Each Right
shall contain a provision that it shall become non-exercisable and shall be
forfeited to the extent that the related Option is exercised or terminates for
any reason other than the exercise of the Right. The exercise of Rights in lieu
of the exercise of related Options shall entitle the optionee to receive Common
Shares having a fair market value equal to, but in no event in excess of, the
appreciation since the date of grant in the fair market value of the Common
Shares subject to such related Option (the "Differential"). The Differential
shall be payable only in Common Shares.
Rights shall be exercisable and be payable in the following manner:
1. A Right shall be exercisable by the optionee at any time the Option
to which it relates could be exercised, but only upon a showing of "hardship" by
the optionee and upon consent of the Committee; provided, however, that there
shall be no hardship requirement in the event of a Hostile Change in Control (as
hereinafter defined). The Committee shall promulgate a standard for determining
a "hardship," said standard to be applied uniformly to all optionees under the
Plan. An optionee wishing to exercise shall give written notice of such exercise
to the Trust addressed to the Trust's Secretary. Upon the exercise of a Right,
the optionee shall only be entitled to receive Common Shares of the Trust. The
Committee, upon receipt of such notice, shall, without transfer or issue tax to
the optionee or other person entitled to exercise the Right, deliver to the
person exercising such Right a certificate or certificates for the Trust's
Common Shares which are issuable upon exercise of the Right. The date the Trust
receives the written notice of exercise hereunder is referred to herein as the
exercise date. If there is any adjustment to an Option pursuant to Section XIII,
that adjustment shall be reflected in the tandem Right. Notwithstanding the
foregoing, and except in the event of a Hostile Change in Control, Rights may be
exercised only if prior to the exercise thereof, or, simultaneously with the
exercise thereof, the optionee or his successor, has exercised or exercises an
equivalent number of Options granted pursuant to this Plan (whether related or
unrelated to the Right). After a Hostile Change of Control, an optionee may
exercise all Options in full as Rights, without limitation.
-8-
<PAGE>
Example:
To illustrate the impact of the grant and exercise of Rights by
optionees, it is assumed that:
(a) An optionee was granted an Option under the Plan to purchase
100 Shares at an exercise price of $20 per share;
(b) The optionee was granted Rights in tandem with the Option
giving the optionee the right to exercise up to 50 Rights (one-half of
the 100 Shares subject to the Option) in the event of hardship;
(c) The optionee has not received any other Options;
(d) The Shares have appreciated in value to $50 per Share; and
(e) The optionee qualifies under the hardship requirements and
wishes to acquire the maximum number of Shares upon the exercise of
his Rights.
Under the Plan, the optionee must first partially exercise an Option
granted under the Plan, the Trust's 1994 Employee Stock Option and Stock
Appreciation Rights Plan or the Trust's 1988 Stock Option and Stock Appreciation
Rights Plan for Key Employees, and purchase 50 Shares for the specified exercise
price. (For purposes of this example, it is assumed that the optionee will first
exercise 50 of the 100 Options granted at $20 per share for an out-of-pocket
cost of $1,000.)
After his or her exercise, the optionee may surrender his Option to
purchase an additional 50 Shares and may exercise Rights. Upon exercise of
Rights, the optionee will be entitled to receive Shares having a value equal to
$1,500, i.e., the excess of the aggregate fair market value of 50 Shares (50
Shares X $50=$2,500) over the aggregate exercise price (50 Shares X $20 =
$1,000). Since the fair market value of the Shares is $50, 30 Shares would be
issued to the optionee upon the exercise of his Rights ($1,500 divided by $50=30
Shares).
In summary, if the optionee wishes to exercise the maximum number of
Rights, the optionee will be required to purchase 50 Shares at an aggregate cost
of $1,000 and surrender the balance of his Option to purchase 50 Shares. In such
circumstances, the optionee will receive 30 Shares upon exercise of his Rights.
2. The exercise of a Right shall automatically result in the surrender
of the related Option by the optionee on a share for share basis to the extent
Shares under such related Option are used to calculate the Differential. Shares
issued pursuant to the exercise of a Right shall not be available for granting
further Options under the Plan.
-9-
<PAGE>
3. The Committee may impose any other conditions it prescribes upon the
exercise of a Right, which conditions may include a condition that the Right may
only be exercised in accordance with rules and regulations adopted by the
Committee from time to time.
4. Upon the exercise of a Right and surrender of the related Option
right, the Trust shall issue to the person surrendering the related Option right
an amount equivalent to the Differential, in the Trust's Common Shares as
determined in accordance with this Article X. The shares to be issued upon the
exercise of a Right may consist either in whole or in part of shares of the
Trust's authorized but unissued Common Shares or the Trust's authorized and
issued Common Shares held in its treasury. No fractional Common Shares shall be
issued and the Committee shall determine whether cash shall be given in lieu of
such fractional share or whether such fractional share shall be eliminated.
Each Right and all rights and obligations thereunder shall expire on a
date no later than the date of expiration of the underlying Option.
A Right shall terminate and may no longer be exercised upon the
termination of the related Option.
B. Restricted Stock Awards
A Restricted Stock award entitles the recipient to acquire, at no cost
or for a purchase price determined by the Committee, Shares subject to such
restrictions and conditions as the Committee may determine at the time of grant.
Conditions may be based on continuing employment and/or achievement of
pre-established performance goals and objectives.
Any person who is granted Restricted Stock (a "Restricted Stock
Recipient") shall have no rights with respect to such Restricted Stock unless
the Restricted Stock Recipient shall have accepted the Restricted Stock within
60 days (or such shorter period as the Committee may specify) following the
award date by making payment to the Trust, if required, by certified or bank
check or other instrument or form of payment acceptable to the Committee in an
amount equal to the specified purchase price, if any, of the Shares covered by
the Restricted Stock and by executing and delivering to the Trust a written
instrument that sets forth the terms and conditions of the Restricted Stock in
such form as the Committee shall determine.
Upon complying with the paragraph above, a Restricted Stock Recipient
shall have the rights of a shareholder with respect to the voting of the
Restricted Stock, subject to such other conditions contained in the written
instrument evidencing the Restricted Stock. Unless the Committee shall otherwise
determine,
-10-
<PAGE>
certificates evidencing the Restricted Stock shall remain in the possession of
the Trust until such Restricted Stock is vested as provided in such written
agreement.
Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of except as specifically provided herein. Upon
the termination of employment of any key employee with the Trust, any subsidiary
corporation and any parent corporation of the Trust for any reason except death
or becoming totally disabled (as described in Section 105(d)(4) of the Code),
the Trust shall have the right, at the discretion of the Committee, to
repurchase such Restricted Stock at its purchase price, or to require forfeiture
of such Restricted Stock to the Trust if acquired at no cost, from the
Restricted Stock Recipient or the Restricted Stock Recipient's legal
representative. The Trust must exercise such right of repurchase or forfeiture
not later than the 90th day following such termination of employment (unless
otherwise specified in the written instrument evidencing the Restricted Stock).
The Committee at the time of grant shall specify the date or dates
and/or the attainment of pre-established performance goals, objectives and other
conditions on which the non-transferability of the Restricted Stock and the
Trust's right of repurchase or forfeiture shall lapse. Subsequent to such date
or dates and/or the attainment of such pre-established performance goals,
objectives and other conditions, the Shares on which all restrictions have
lapsed shall no longer be Restricted Stock and shall be deemed "vested." A
Restricted Stock Recipient shall also become vested in all of his or her
Restricted Stock upon his or her termination of employment for reason of death
or becoming totally disabled (as described in Section 105(d)(4) of the Code).
The written instrument evidencing Restricted Stock may require or
permit the immediate payment, waiver, deferral or investment of dividends paid
on the Restricted Stock.
XI. NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
Neither an Incentive Option nor a related Right granted hereunder shall
be transferable otherwise than by will, the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act of 1986, as amended, or the rules and regulations promulgated
thereunder. Any Incentive Option or related Right granted hereunder shall be
exercisable, during the lifetime of the holder, only by such holder or by such
holder's guardian or legal representative. Nonqualified Options may be
transferable only to the extent authorized by the Committee in respect of a
particular grant.
-11-
<PAGE>
XII. TERMINATION OF EMPLOYMENT
Upon termination of employment of any key employee with the Trust and
all subsidiary corporations and any parent corporation of the Trust, any Option
or Right previously granted to the key employee shall to the extent not
theretofore exercised, terminate and become null and void, except that:
(a) If the key employee shall die, or become totally and
permanently disabled (as described in Section 105(d)(4) of the Code),
while in the employ of such corporation or Trust or at a time when such
employee was entitled to exercise an Option or related Right as herein
provided, in case of death, the legal representative of such employee,
or such person who acquired such Option and/or related Right by bequest
or inheritance or by reason of death of the key employee or in the case
of total and permanent disability, the key employee may, not later than
one (1) year from the date of death or total and permanent disability,
exercise such Option or such related Right in respect of any or all of
the total number of Shares as shall have been subject to such Option or
Right; and
(b) if the employment of any key employee to whom such Option
or such related Right shall have been granted shall terminate by reason
of such employee's retirement (at such age or upon such conditions as
shall be specified by the Committee) or dismissal by the Trust other
than for cause (as defined below), and while such employee is entitled
to exercise such Option or such related Right as herein provided, such
employee shall have the right to exercise such Option or Right so
granted, to the extent of the number of Shares subject to such Option
or Right which were purchasable by him at the date of termination of
his employment, at any time up to and including three (3) months after
the date of such termination of employment.
Notwithstanding the foregoing, the optionee may exercise options
granted hereunder at any time up to two years after his employment with the
Trust ceases for any reason; however, if any option is exercised after the
periods set forth in the preceding paragraph, or such longer periods for the
valid exercise of an Incentive Option after termination as may be established
under the Code, such option shall no longer be an Incentive Option but shall
convert into a Non-qualified Option.
In no event, however, shall any person be entitled to exercise any
Option after the expiration of the period of exercisability of such Option as
specified therein.
If an Option or related Right granted hereunder shall be exercised by
the legal representative of a deceased employee or
-12-
<PAGE>
former employee, or by a person who acquired an Option or Right hereunder by
bequest or inheritance or by reason of the death of any employee or former
employee, written notice of such exercise shall be accompanied by a certified
copy of letters testamentary or by equivalent proof of the right of such legal
representative or other person to exercise such Option or Right.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and the Trust (or any parent or subsidiary
corporation) if, at the time of the determination, the individual was an
"employee" of the Trust (or any parent or subsidiary corporation) for purposes
of Section 422(a) of the Code. If an individual is on leave of absence taken
with the consent of the corporation by which such individual was employed, or is
on active military service, and is determined to be an "employee" for purposes
of the exercise of an Option or Right, such individual shall not be entitled to
exercise such Option or Right during such period and while the employment
relationship is treated as continuing intact unless such individual shall have
obtained the prior written consent of such corporation, which consent shall be
signed by the Chairman of the Board, the President, an executive vice-president
or other duly authorized officer of such corporation.
A termination of employment shall not be deemed to occur by reason of
(i) the transfer of a key employee from employment by the Trust to employment by
a subsidiary corporation or a parent corporation of the Trust or (ii) the
transfer of a key employee from employment by a subsidiary corporation or a
parent corporation of the Trust to employment by the Trust or by another
subsidiary or parent corporation of the Trust.
XIII. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
Notwithstanding any other provision contained herein, in the event of
any change in the Shares subject to the Plan or to any Option or Right granted
under the Plan (through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, spin-off, combination of
shares, or exchange of shares) and with respect to other dilutive or
anti-dilutive events appropriate adjustments shall be made by the Committee as
to the maximum number of Shares subject to the Plan available for, Options,
Rights or Restricted Stock, the maximum number of Shares for which Options,
Rights or Restricted Stock may be granted to any one employee, and the number of
Shares and price per Share subject to outstanding Options or Rights as shall be
equitable to prevent dilution or enlargement of rights under the Options, Rights
or Restricted Stock, and the determination of the Committee as to these matters
shall be conclusive; provided, however, that (i) any such adjustment with
respect to an Incentive Option and any related Right shall comply with the rules
of Section 425(a) of the Code, and (ii) in no event shall any adjustment be
-13-
<PAGE>
made which would render any Incentive Option granted hereunder other than an
Incentive Option for purposes of Section 422A of the Code.
XIV. RIGHT TO TERMINATE EMPLOYMENT OR TRUSTEESHIP
The Plan shall not impose any obligation on the Trust or on any
subsidiary corporation or parent corporation thereof to continue the employment
or trusteeship or directorship of any holder of any Option, Right or Restricted
Stock; nor shall it impose any obligation on the part of any holder of Options,
Rights or Restricted Stock to remain in the employ, or to remain a trustee or
director, of the Trust or of any subsidiary corporation or parent corporation
thereof.
XV. PURCHASE FOR INVESTMENT; SECURITIES ACT REGISTRATION
Except as hereafter provided, the holder of Options, Rights or
Restricted Stock granted or awarded hereunder shall, upon any exercise hereof,
execute and deliver to the Trust a written statement, in form satisfactory to
the Trust, in which such holder represents and warrants that such holder is
purchasing or acquiring the Shares issued or awarded hereunder for such holder's
own account, for investment only and not with a view to the resale or
distribution thereof, and agrees that any subsequent resale or distribution of
any of such Shares shall be made only pursuant to either (a) a Registration
Statement on an appropriate form under the Securities Act of 1933, as amended
(the "Securities Act"), which Registration Statement has become effective and is
current with regard to the Shares being sold, or (b) a specific exemption from
the registration requirements of the Securities Act, but in claiming such
exemption the holder shall, prior to any offer of sale or sale of such Shares,
obtain a prior favorable written opinion, in form and substance satisfactory to
the Trust, from counsel for or approved by the Trust, as to the application of
such exemption thereto. The foregoing restriction shall not apply to (i)
issuance by the Trust so long as the Shares being issued are registered under
the Securities Act and a prospectus in respect thereof is current or (ii)
reofferings of Shares by affiliates of the Trust (as defined in Rule 405 or any
successor rule or regulation promulgated under the Securities Act) if the Shares
being reoffered are registered under the Securities Act and a prospectus in
respect thereof is current.
XVI. ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
Upon any exercise of an Option or related Right which may be granted
hereunder or upon the vesting of Restricted Stock which may be awarded hereunder
and, in the case of an Option, payment of the purchase price in accordance with
Article VI hereof, a certificate or certificates for the Shares as to which the
Option or related Right has been exercised or for the Shares as to which the
-14-
<PAGE>
Restricted Stock has vested shall be issued by the Trust in the name of the
person exercising the Option or related Right or possessing the vested
Restricted Stock and shall be delivered to or upon the order of such person or
persons.
The Trust may endorse such legend or legends upon the certificates of
Shares issued upon exercise of an Option or Right or the vesting of Restricted
Stock granted hereunder, and the Committee may issue such "stop transfer"
instructions to its transfer agent in respect of such Shares, as such Committee,
in its discretion, determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act, (ii) implement the provisions of any agreement between the
Trust and the optionee or grantee with respect to such Shares, or (iii) permit
the Trust to determine the occurrence of a disqualifying disposition, as
described in Section 421(b) of the Code, of Shares transferred upon exercise of
an Incentive Option granted under the Plan.
The Trust shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Trust in connection with such issuance or transfer, except fees
and expenses which may be necessitated by the filing or amending of a
Registration Statement under the Securities Act, which fees and expenses shall
be borne by the recipient of the Shares unless such Registration Statement has
been filed by the Trust for its own corporate purposes (and the Trust so states)
in which event the recipient of the Shares shall bear only such fees and
expenses as are attributable solely to the inclusion of such Shares in the
Registration Statement.
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
XVII. WITHHOLDING TAXES
The Trust may require a key employee exercising a Nonqualified Option
or a related Right granted hereunder to reimburse the Trust which employs such
employee for any taxes required by any government to be withheld or otherwise
deducted and paid by such Trust or corporation in respect of the issuance of
Shares. In lieu thereof, the Trust or corporation which employs such employee
shall have the right to withhold the amount of such taxes from any other sums
due or to become due from such Trust or corporation to the employee upon such
terms and conditions as the Committee shall prescribe.
-15-
<PAGE>
XVIII. CHANGE OF CONTROL
Upon the occurrence of a Hostile Change of Control or a Change of
Control as defined in this section:
(i) each outstanding Option and related Rights shall
automatically become fully exercisable notwithstanding any provision to
the contrary herein; and
(ii) restrictions and conditions on all Restricted Stock
awards shall automatically be deemed waived, and the recipients of such
Restricted Stock awards shall become entitled to receipt of the
certificates evidencing the Restricted Stock, unless the Committee
(provided the Committee is composed of the persons who were members
thereof prior to a Hostile Change of Control) shall otherwise expressly
provide.
A "Hostile Change in Control" means a transaction, event or election
constituting a "Change in Control" (as hereinafter defined) which was not
approved by, or in, an election in which the Trustees participating in such
election were nominated or elected by at least two-thirds of the members of the
Board of Trustees of the Trust in office immediately prior to the Change in
Control.
A "Change in Control" of the Trust means and includes each and all of
the following occurrences:
(i) Any business combination, including but not limited to a
merger of the Trust, which has been approved by the requisite vote of
the shareholders;
(ii) The acquisition by any person or "group" of persons (as
defined under Section 13(d) of the Exchange Act), directly or
indirectly, of twenty-five percent (25%) or more of the combined voting
power of the outstanding shares of the Trust entitled to vote generally
in the election of Trustees;
(iii) Individuals who at the beginning of any period of three
(3) consecutive years constitute the entire Board of Trustees of the
Trust shall for any reason during such period cease to constitute a
majority thereof;
(iv) A change in control that would be required to be reported
as such under the Exchange Act and/or the exercise by a person or group
of "control" of the Trust within the meaning of Section 2(9) of the
Investment Company Act of 1940, as amended; or
(v) The Trust fails to qualify as a "REIT" under Internal
Revenue Code Sections 856 et seq., by reason of five
-16-
<PAGE>
or fewer individuals owning more than 50% in value of the
outstanding shares.
If a Hostile Change in Control which would otherwise result in the
abrogation of the hardship requirement and of the prior or simultaneous exercise
of the Options requirement, will, in the nonreviewable judgment of the
Committee, be deemed to constitute a "golden parachute" as same is defined under
Section 280G of the Internal Revenue Code of 1986 ("Section 280G"), the
Committee shall reduce the number of Shares which may otherwise be issued as a
result of the exercise of the Right, to the extent necessary to avoid Section
280G treatment as a "golden parachute." Notwithstanding such an adjustment,
however, the Trust makes no warranty as to the avoidance of Section 280G
treatment.
XIX. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board of Trustees shall determine in its discretion
that the listing, registration or qualification of the Shares covered by the
Plan upon any national securities exchange or under any state or federal law, or
the consent or approval of any governmental or regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
Shares under the Plan, no Shares shall be delivered unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board of Trustees.
XX. AMENDMENT OF THE PLAN
The Board of Trustees or the Committee may, from time to time, amend
the Plan; provided, however, that no amendment shall be made, without the
approval of the shareholders of the Trust (a) if such approval is required by
the Code in respect of Incentive Options or under Rule 16b-3 with respect to any
Options granted pursuant to this Plan. Notwithstanding the foregoing, amendments
by the Trustees or the Committee, to conform to or comply with changes in the
Code or Rule 16b-3 may be adopted without shareholder approval (unless such
approval is required by the Code). The rights and obligations under any Option
or Right granted before amendment of the Plan or any unexercised portion of such
Option or Right shall not be adversely affected by amendment of the Plan or the
Option or Right without the consent of the holder of the Option or Right.
XXI. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Trustees may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated by action of the Board of Trustees, shall
terminate at the close of business on the Termination Date. An Option, Right or
Restricted Stock award may not be granted while the Plan is suspended or after
it is terminated. Rights and obligations under any Option, Right or
-17-
<PAGE>
Restricted Stock award granted while the Plan is in effect shall not be altered
or impaired by suspension or termination of the Plan, except upon the consent of
the person to whom the Option or Right was granted. The power of the Committee
to construe and administer any Options, Rights or Restricted Stock award granted
prior to the termination or suspension of the Plan under Article III shall
nevertheless continue after such termination or during such suspension.
XXII. GOVERNING LAW
The Plan, such Options, Rights and Restricted Stock awards as may be
granted hereunder and all related matters shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of Massachusetts,
from time to time obtaining.
XXIII. EFFECTIVE DATE
The Plan shall become effective at 5:00 P.M., Eastern time, on the
Effective Date, the date on which the Plan is adopted and approved by the
shareholders of the Trust.
XXIV. EXCULPATION
MGI Properties is a Massachusetts trust and all persons dealing with
the Trust must look solely to the property of this Trust for the enforcement of
any claims against the Trust. Neither the Trustees, officers, agents nor
shareholders of this Trust assume any personal liability for obligations entered
into on its behalf.
-18-
STOCK OPTION AND STOCK APPRECIATION RIGHTS AGREEMENT, made as of this
[ ] day of [ ] between MGI Properties (the "Trust") and [ ], an employee of the
Trust (the "Optionee").
NOW, THEREFORE, the Trust and the Optionee, by his acceptance of the
grant of these stock options intended to qualify as incentive stock options
("ISO") under the Internal Revenue Code of 1986, amended (the "Code"), and
related stock appreciation rights ("SAR"), agree as follows:
1. Grant of ISO and SAR. The Trust hereby grants to the Optionee as a
separate inducement and agreement in connection with his acting as an employee
of the Trust and not in lieu of any salary or other remuneration for services,
an ISO to purchase all or any part of an aggregate of [ ] Common Shares of the
Trust (either unissued or treasury), $1.00 par value (the "Shares"), and a
maximum of [ ] SAR in connection therewith, on the terms and subject to the
conditions hereinafter set forth and further subject to the provisions of the
Trust's 1997 Stock Option, Stock Appreciation Rights and Restricted Stock Plan
(the "1997 Plan"). The foregoing grant is subject to ratification and approval
of the 1997 Plan by shareholders of the Trust.
2. Purchase Price. The exercise price shall be $[ ] per Share, the
closing price of the Shares on the New York Stock Exchange on [ ].
3. Term of Option. Notwithstanding anything to the contrary contained
herein or in the 1997 Plan, the ISO and SAR granted
<PAGE>
hereunder shall expire no later than 11:59 P.M. on [ ]
(the "Termination Date").
4. Vesting. (a) Option. Subject to Sections 5 and 7 hereof, the ISO and
SAR are exercisable, with respect, in each case to [50%] thereof, at any time
and from time to time from and after the date hereof, and with respect in each
case to the remaining [50%] thereof, at any time and from time to time from and
after [ ], to and including the Termination Date; provided, however, that in the
event that the Optionee shall cease to be employed by the Trust at any time
prior to [ ], the remaining [50%] of the ISO and SAR shall not vest and become
exercisable and shall thereafter be null and void; and provided further that the
exercise of the vested ISO and SAR may not be exercised as to fractional Shares,
and the aggregate fair market value (determined at the time of grant) of the
Shares with respect to which the ISO is exercisable for the first time by the
Optionee during any calendar year (under all incentive stock option plans of the
Trust or its parent or subsidiary corporations) shall not exceed $100,000. Any
right to acquire Shares under this Agreement or any other incentive stock option
agreement that is not exercisable in any year because of this Paragraph 4(a)
shall become exercisable for the first time in the first subsequent calendar
year in which the exercisability of such rights does not violate the fair market
value limitation of the previous sentence.
(b) SAR. An SAR shall be exercisable by the Optionee at any
time the Option to which it relates could be exercised, but only
-2-
<PAGE>
upon a showing of "hardship" by the Optionee and upon consent of the
Administrative-Audit Committee; provided, however, that there shall be no
hardship requirement in the event of a Hostile Change in Control (as defined in
the 1997 Plan). The Administrative-Audit Committee shall promulgate a standard
for determining a "hardship," said standard to be applied uniformly to all
Optionees under the 1997 Plan.
Upon the exercise of an SAR and surrender of the related Option, the
Trust shall issue Shares having a fair market value equal to, but in no event in
excess of, the appreciation since the date of grant in the fair market value of
the Shares subject to the related Option (the "Differential").
Notwithstanding the foregoing, and except in the event of a Hostile
Change in Control, the SAR may be exercised only if prior to or simultaneously
with the exercise thereof the Optionee or his successor has exercised or
exercises an equivalent number of Options granted pursuant to any of the Trust's
stock option and stock appreciation rights plans (whether related or unrelated
to the SAR). After a Hostile Change in Control, an Optionee may exercise all
Options in full as an SAR, without limitation.
If a Hostile Change in Control which would otherwise result in the
abrogation of the hardship requirement and of the prior or simultaneous exercise
of Option requirement, will, in the nonreviewable judgment of the
Administrative-Audit Committee, be deemed to constitute a "golden parachute" as
defined by Section 280G of the Code ("Section 280G"), the Administrative-Audit
-3-
<PAGE>
Committee shall reduce the number of Shares which may otherwise be issued as a
result of the exercise of the SAR to the extent necessary to avoid Section 280G
treatment as a "golden parachute." Notwithstanding such an adjustment, however,
the Trust makes no warranty as to the avoidance of Section 280G treatment.
The exercise of an SAR shall automatically result in the surrender of
the related Option by the Optionee on a share for share basis to the extent
Shares under such related Option are used to calculate the Differential. Shares
issued pursuant to the exercise of an SAR shall not thereafter be available for
granting further Options under the 1997 Plan. An SAR shall terminate and may no
longer be exercised upon the termination of the related Option, other than as a
consequence of the exercise of the SAR.
The SAR may only be exercised in accordance with rules and regulations
adopted by the Administrative-Audit Committee from time to time.
5. Termination as an Employee.
(a) The ISO and SAR shall be exercisable according to the terms hereof
while the Optionee remains an employee of the Trust and for two years after
termination of employment for any reason; provided, however, if any ISO is
exercised after the allowed periods set forth in the next sentence, or such
longer periods as may then be in effect under the Code, then the ISO shall
convert into a non-qualified option. The allowed periods under current law are
as follows: (i) if the Optionee dies, or becomes totally and permanently
disabled (as described in Section 72(m)(7) of the
-4-
<PAGE>
Code), while an employee of the Trust or while entitled to exercise an ISO and
SAR hereunder, in the case of death, the legal representative of the Optionee or
the person who acquired the ISO and SAR by bequest or inheritance, or in the
case of total and permanent disability, the Optionee may exercise 100% of the
ISO and SAR for one year from the date of death or total and permanent
disability, and (ii) if the Optionee retires or is dismissed other than "for
cause" (as such term is defined under the 1997 Plan), the Optionee may exercise
the ISO and SAR, to the extent exercisable at the date of termination of
employment, for three (3) months after such date. In no event may the ISO and
SAR be exercised after the Termination Date.
(b) Notwithstanding the foregoing, the Optionee may exercise the ISO
and SAR granted hereunder at any time up to two years after his employment with
the Trust ceases for any reason; provided, however, if the ISO and SAR is
exercised after the periods set forth in the preceding paragraph (unless a
longer period for the valid exercise of an incentive option has been established
under the Code), such ISO shall no longer be a valid incentive option but shall
convert into a non-qualified option.
6. Non-Transferability. The ISO and SAR granted hereunder shall not be
assignable by the Optionee, except by (i) the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined in the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations promulgated thereunder. Notwithstanding the
-5-
<PAGE>
foregoing, no Option may be transferred pursuant to this Section 6 unless the
transferee agrees to be bound by all the provisions of this Agreement.
7. Exercise Upon Sale, Merger or Other Reorganization Transaction.
Notwithstanding any other provision hereof, in the event that the
Trust, its shareholders, or both, enter into a written agreement to dispose of
all or substantially all of the assets or stock of the Trust by means of a sale,
merger, consolidation, reorganization, liquidation or similar transaction (other
than a reorganization, merger or consolidation effected solely to change the
Trust's name or domicile), the ISO and SAR granted pursuant hereto shall become
immediately exercisable, whether or not such Options were exercisable prior to
such event, during the period of time beginning with the date on which the Trust
agrees in writing to enter into such transaction, and ending on the earlier of
the date the ISO and SAR would otherwise have expired or the date on which the
transaction is consummated. The Optionee may in writing request that, in lieu of
exercising the ISO, he may receive cash equal to the difference between the sale
price or merger consideration per share and the exercise price multiplied by the
number of Shares subject to the ISO issued hereunder; provided, however, that
such cash shall be paid not earlier than the closing date of the transaction
subject to this Paragraph 7. Upon the consummation of the transaction, any
unexercised ISO and SAR issued hereunder shall terminate and cease to be
effective. In the event that the Trust's agreement to enter into any such
transaction is
-6-
<PAGE>
terminated, the unexercised portion of any ISO and SAR shall revert to the
status they had before the Trust agreed to enter into the transaction in
question. Any exercise of an ISO and SAR made before the agreement to enter into
the transaction was terminated shall remain effective after the termination of
the agreement, notwithstanding that the ISO and SAR may have become exercisable
solely by reason of the Trust entering into the agreement. If any ISO is
exercised pursuant to this Paragraph 7 earlier than provided for by Paragraph
4(a) hereof, then such ISO shall convert into a non-qualified option.
8. Anti-Dilution. The ISO and SAR granted pursuant to this Agreement
shall continue notwithstanding any change or exchange of the Shares subject to
the 1997 Plan and/or to the ISO and SAR whether through recapitalization, stock
split, split-up, split-off, spin-off, merger, consolidation, reorganization,
stock dividend, combination of shares or exchange of shares. In the event of
such a change or exchange, appropriate adjustments shall be made, and with
respect to other dilutive or anti-dilutive events appropriate adjustments may be
made, by the Administrative-Audit Committee as to the number of Shares subject
to the ISO and SAR and/or in their per-share exercise price as shall be
equitable to prevent dilution or enlargement of rights hereunder. Any such
adjustment shall comply with the rules of Section 424(a) of the Code, if
applicable. Adjustment of the number of Shares subject to the ISO and SAR shall
not make the ISO and SAR become exercisable as to a fractional Share. Subject to
the foregoing limitations, the terms of any such
-7-
<PAGE>
adjustment shall be determined by the Administrative-Audit Committee, and such
determination made in good faith shall be final. In no event shall any
adjustment be made that would render the ISO other than an "incentive stock
option" for purposes of Section 422 of the Code.
9. Exercise of ISO.
(a) Eligibility. Except as provided in Paragraphs 5 and 7 hereof, the
ISO and SAR may not be exercised unless the Optionee shall have continued to be
an employee of the Trust from the date hereof to the date of the exercise of the
ISO and SAR.
(b) Investment. Upon the exercise of the ISO and SAR (and prior to the
issuance of the certificate or certificates for the Shares in respect of which
the ISO and SAR is exercised), the Optionee shall execute a warranty that he is
purchasing the Shares for investment, in the form attached hereto as Exhibit A.
It is understood, however, that the Trust has filed or will file registration
statements with the Securities and Exchange Commission registering Shares
issuable pursuant to grants made under the Plan on Form S-8. Accordingly, the
grant made hereby to the Optionee is made from the Trust's reserve of such
Shares. The Trust will use its best efforts to maintain the effectiveness of
such registration statements, but shall not be obligated to do so.
10. Method of Exercise. The ISO and SAR shall be exercisable only by
delivery of written notice to the Secretary of the Trust at the Trust's
executive offices (presently One Winthrop Square, Boston, Massachusetts 02110)
prior to the expiration of the ISO and
-8-
<PAGE>
SAR as specified in Paragraphs 3 and 5 hereof. Such notice shall state the
election to exercise the ISO and SAR and the number of Shares in respect of
which it is being exercised, and shall be signed by the person or persons so
exercising such ISO and SAR. The date the Trust receives written notice shall be
the exercise date. In the event the ISO and SAR shall be exercised pursuant to
the provisions of Paragraph 5 hereof by a person or persons other than the
Optionee, such notice shall be accompanied by proof satisfactory to the Trust of
the right of such person or persons to exercise the ISO and SAR. Upon receipt of
notice, payment in full of the purchase price for the Shares as to which the ISO
is being exercised, and an executed warranty in the form attached hereto as
Exhibit A, the Trust shall issue and deliver a certificate or certificates
representing such number of Shares. Upon receipt of notice of exercise of SAR,
an executed warranty in the form attached hereto as Exhibit "A" and either a
showing of "hardship" satisfactory to the Administrative-Audit Committee or the
occurrence of a Hostile Change in Control, the Administrative-Audit Committee
shall, without transfer or issue tax to the Optionee or other person entitled to
exercise the SAR, deliver to the person exercising such SAR certificates for the
Trust's Common Shares which are properly issuable upon exercise of the SAR.
11. Payment. The purchase price shall be payable in United States
dollars upon the exercise of the ISO and shall be paid in cash, by certified
check or by bank draft. In lieu of cash, certified check or bank draft, the
purchase price may be satisfied
-9-
<PAGE>
by (x) the delivery of Shares of the Trust (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by the Optionee for at least the holding periods required under Section
422 of the Code and having a fair market value equal to the exercise price
applicable to that portion of the ISO being exercised, the fair market value of
the Shares so delivered to be determined in accordance with Article VI of the
1997 Plan or as may be required in order to comply with or to conform to the
requirements of any applicable laws or regulations, or (y) through the written
election of the Optionee to have Shares withheld from the Shares otherwise to be
received upon the exercise of an Option and having a fair market value equal to
the cash exercise price applicable to the portion of the ISO being exercised by
the withholding of such Shares, the fair market value of the Shares so withheld
to be determined in accordance with Article VI of the 1997 Plan or as may be
required in order to comply with or to conform to the requirements of any
applicable laws or regulations.
12. Notices. Any notice to be given to the Trust shall be addressed to
the Secretary of the Trust at the Trust's office referred to in Paragraph 10
above, and any notice given to the Optionee shall be addressed to the Optionee
at the address then appearing on the personnel records of the Trust, or at such
other address as either party may hereafter designate in writing to the other.
Except for purposes of determining the exercise date, any such notice shall be
deemed to have been duly given if and when
-10-
<PAGE>
enclosed in a properly sealed envelope, addressed as aforesaid and deposited,
first class postage prepaid, in the United States mails.
13. Miscellaneous.
(a) The Optionee acknowledges and agrees that the ISO and SAR are
subject to the terms and conditions of the 1997 Plan and the Code provisions
pursuant to which such 1997 Plan was adopted.
(b) The Trust is a Massachusetts business trust and all persons dealing
with the Trust must look solely to the property of the Trust for the enforcement
of any claims against the Trust. Neither the Trustees, officers, agents nor
shareholders of this Trust assume any personal liability in connection with its
business or assume any personal liability for obligations entered into on its
behalf.
(c) All capitalized terms shall have the meanings ascribed thereto in
the 1997 Plan, unless the context requires otherwise or such terms are otherwise
defined herein.
(d) The grant of this ISO and SAR is subject to shareholder
ratification and approval of the 1997 Plan.
IN WITNESS WHEREOF, the Trust has caused this Stock Option and Stock
Appreciation Rights Agreement to be duly executed by its officers thereunto duly
authorized.
MGI PROPERTIES
By:
---------------------------------
(Seal)
ACCEPTED:
- --------------------------------
Optionee
-11-
<PAGE>
Exhibit A
PURCHASE FOR INVESTMENT
I, [ ], in connection with exercising options to purchase _________
Shares of MGI Properties, do hereby represent and warrant that I am purchasing
the Shares for my own account for investment only and not with a view to the
resale or distribution thereof. I will not resell or distribute the Shares
acquired in connection herewith unless (1) a Registration Statement with respect
to these shares is on file with the Securities and Exchange Commission, has
become effective and is current, or (2) a specific exemption from the
registration requirements is available to me. If I sell the Shares acquired in
connection herewith under subdivision (2), I will first obtain a favorable
written opinion from counsel approved by MGI Properties that such exemption is
available to me.
Date:
----------------------------------
[ ]
-12-
June 30, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: MGI Properties
Registration Statement on Form S-8
Gentlemen:
Reference is made to the Registration Statement on Form S-8
dated the date hereof (the "Registration Statement"), filed with the Securities
and Exchange Commission by MGI Properties, a Massachusetts business trust (the
"Trust"). The Registration Statement relates to an aggregate of 675,000 common
shares, par value $1.00 per share (the "Common Shares"), of the Trust. Such
Common Shares are issuable upon exercise of options granted or to be granted
under the Trust's 1997 Employee Stock Option, Stock Appreciation Rights and
Restricted Stock Plan (the "Plan").
We advise you that we have examined originals or copies
certified or otherwise identified to our satisfaction of the Declaration of
Trust and By-laws of the Trust, each as amended to date, minutes of meetings of
the Board of Trustees and shareholders of the Trust, the Plan, the Registration
Statement, and such other documents, instruments and certificates of officers
and representatives of the Trust and public officials, and we have made such
examination of the law, as we have deemed appropriate as the basis for the
opinion hereinafter expressed. In making such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, and the
<PAGE>
Securities and Exchange Commission
June 30, 1997
Page -2-
conformity to original documents of documents submitted to us as
certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the
675,000 Common Shares that are the subject of the Registration Statement, when
issued and paid for in accordance with the terms and conditions of the Plan,
will be duly and validly issued, fully paid and non-assessable.
We advise you that certain members of this firm own an
aggregate of 15,015 Common Shares and hold options to purchase an aggregate of
23,400 Common Shares.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Olshan Grundman Frome & Rosenzweig LLP
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
Exhibit 23.2
Consent of Independent Auditors
The Board of Trustees
MGI Properties:
We consent to the incorporation by reference in the registration statement (No.
333-15245) on Form S-3 and in the registration statement on Form S-8 of MGI
Properties of our report dated December 19, 1996, relating to the consolidated
balance sheets of MGI Properties and subsidiaries as of November 30, 1996 and
1995, and the related consolidated statements of earnings, changes in
shareholders' equity and cash flows for each of the years in the three-year
period ended November 30, 1996, and the related financial statement schedule,
which report appears in the November 30, 1996 annual report on Form 10-K of MGI
Properties.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
June 30, 1997
