UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Period Ended: May 31, 1997 Commission File Number: 1-6833
MGI PROPERTIES
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-6268740
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Winthrop Square, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 422-6000
N/A
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Common shares outstanding as of July 10, 1997: 13,604,586
Page 1 of 14 pages
Exhibit Index appears on Page 13
<PAGE>
MGI PROPERTIES
INDEX
PART I: FINANCIAL INFORMATION Page No.
Item 1: Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flow 5
Consolidated Statements of Changes in Shareholders' Equity 6
Notes to Consolidated Financial Statements 7
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Exhibit A: Computation of Earnings Per Share 12
PART II: OTHER INFORMATION
Items 1 - 6 13
Signatures 14
- 2 -
<PAGE>
MGI PROPERTIES
PART I -- FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
May 31, 1997 November 30, 1996
(unaudited)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Real estate, at cost $ 383,158,000 $ 356,024,000
Accumulated depreciation and amortization (48,697,000) (44,810,000)
- ----------------------------------------------------------------------------------------------------------
Net investments in real estate 334,461,000 311,214,000
Cash 8,601,000 15,140,000
Accounts receivable 3,796,000 3,665,000
Other assets 8,662,000 9,645,000
- ----------------------------------------------------------------------------------------------------------
$ 355,520,000 $ 339,664,000
==========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage loans payable $ 112,336,000 $ 138,547,000
Other liabilities 5,729,000 6,682,000
- ----------------------------------------------------------------------------------------------------------
Total liabilities 118,065,000 145,229,000
Shareholders' equity:
Common shares -- $1 par value; 17,500,000 shares authorized;
11,538,095 issued (11,502,271 at November 30, 1995) 13,601,000 11,563,000
Additional paid-in capital 206,755,000 167,185,000
Undistributed net income 17,099,000 15,687,000
- ----------------------------------------------------------------------------------------------------------
Total shareholders' equity 237,455,000 194,435,000
- ----------------------------------------------------------------------------------------------------------
$ 355,520,000 $ 339,664,000
==========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
- 3 -
<PAGE>
MGI PROPERTIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
-------------------------- --------------------------
May 31, 1997 May 31, 1996 May 31, 1997 May 31, 1996
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME
Rental and other income $15,376,000 $13,122,000 $30,258,000 $25,821,000
Interest on investment securities 198,000 100,000 404,000 185,000
- -------------------------------------------------------------------------------------------------------------------------
Total income 15,574,000 13,222,000 30,662,000 26,006,000
- -------------------------------------------------------------------------------------------------------------------------
EXPENSES
Property operating expenses 3,807,000 3,385,000 7,471,000 6,753,000
Real estate taxes 1,853,000 1,591,000 3,672,000 3,102,000
Depreciation and amortization 2,587,000 2,234,000 5,139,000 4,550,000
Interest 2,273,000 2,075,000 4,896,000 3,966,000
General and administrative 790,000 746,000 1,565,000 1,479,000
- -------------------------------------------------------------------------------------------------------------------------
Total expenses 11,310,000 10,031,000 22,743,000 19,850,000
- -------------------------------------------------------------------------------------------------------------------------
Income before net gain and extraordinary item 4,264,000 3,191,000 7,919,000 6,156,000
Net gain -- 9,350,000 600,000 9,350,000
- -------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 4,264,000 12,541,000 8,519,000 15,506,000
Extraordinary item - loss on prepayment of debt -- -- (306,000) --
- -------------------------------------------------------------------------------------------------------------------------
Net income $ 4,264,000 $12,541,000 $ 8,213,000 $15,506,000
=========================================================================================================================
PER SHARE DATA
Net income $ 0.31 $ 1.09 $ 0.63 $ 1.35
=========================================================================================================================
Weighted average shares outstanding 13,598,472 11,535,008 12,964,645 11,526,406
=========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
- 4-
<PAGE>
MGI PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
- --------------------------------------------------------------------------------
Six Months Ended May 31,
-----------------------------
1997 1996
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,213,000 $ 15,506,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense 5,139,000 4,550,000
Net gain (600,000) (9,350,000)
Net extraordinary items 306,000 --
Other 956,000 (1,576,000)
- --------------------------------------------------------------------------------
Net cash provided by operating activities 14,014,000 9,130,000
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of real estate (25,664,000) (19,183,000)
Additions to real estate (3,016,000) (2,832,000)
Deferred tenant charges (901,000) (443,000)
Net proceeds from sales of real estate interests 704,000 6,072,000
Other 376,000 (460,000)
- --------------------------------------------------------------------------------
Net cash used in investing activities (28,501,000) (16,846,000)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to mortgage loans payable, net 15,500,000 14,000,000
Repayment of mortgage loans payable (41,711,,000) (2,396,000)
Mortgage prepayment penalty (306,000) --
Cash distributions (6,801,000) (5,531,000)
Proceeds from issuance of common shares 41,266,000 321,000
- --------------------------------------------------------------------------------
Net cash provided by financing activities 7,948,000 6,394,000
- --------------------------------------------------------------------------------
Net decrease in cash and short-term investments (6,539,000) (1,322,000)
- --------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS
Beginning of period 15,140,000 7,045,000
- --------------------------------------------------------------------------------
End of period $ 8,601,000 $ 5,723,000
================================================================================
See accompanying notes to consolidated financial statements.
- 5 -
<PAGE>
MGI PROPERTIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
- --------------------------------------------------------------------------------
Additional
Common Paid-In Undistributed
Shares Capital Net Income
- --------------------------------------------------------------------------------
Balance at November 30, 1996 $11,563,000 $167,185,000 $ 15,687,000
Net income -- -- 8,213,000
Distributions -- -- (6,801,000)
Sale of common shares 2,000,000 39,075,000 --
Options exercised and other 38,000 495,000 --
- --------------------------------------------------------------------------------
Balance at May 31, 1997 $13,601,000 $206,755,000 $ 17,099,000
================================================================================
See accompanying notes to consolidated financial statements.
- 6 -
<PAGE>
MGI PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1: The results of the interim period are not necessarily indicative of
results to be expected for the entire fiscal year. The figures
contained in this interim report are unaudited and may be subject to
year-end adjustments. Certain prior year amounts have been reclassified
to conform with the current year presentation. In the opinion of
management, all adjustments necessary for a fair presentation of
financial position and results of operations have been included and
such adjustments include only the normal accruals.
Note 2: On June 19, 1997, the Board of Trustees declared a cash dividend of
$.28 per common share payable on July 11, 1997 to shareholders of
record on July 2, 1997. This dividend payment will aggregate $3.8
million.
Note 3: Cash paid for interest amounted to $2.3 million and $2.1 million for
the three-month periods ended May 31, 1997 and May 31, 1996,
respectively.
Note 4: At May 31, 1997, options to purchase an aggregate of 995,461 common
shares at exercise prices ranging from $7.375 to $21.375 per share were
outstanding under MGI's stock option plans for key employees and
trustees. All options outstanding at May 31, 1997 expire by April 2007.
Note 5: During the first quarter of fiscal 1997, the Trust prepaid a $12.3
million mortgage and incurred a $306,000 penalty ($.03 per share),
which was recorded as an extraordinary loss.
Note 6: MGI intends to qualify for the year ended November 30, 1997 as a
real estate investment trust under the provisions of Sections 856-860
of the Internal Revenue Code of 1986, as amended. Accordingly, no
provision has been made for Federal income taxes.
- 7 -
<PAGE>
MGI PROPERTIES
PART I, ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Shareholders' equity at May 31, 1997 was $237.5 million, compared to
$194.4 million at November 30, 1996. The increase primarily reflects net
proceeds of $41.1 million from an equity offering of 2,000,000 common shares as
well as the excess of net income over distributions paid. At May 31, 1997,
financial liquidity was provided by $8.6 million in cash and cash equivalents
and by unused lines of credit aggregating $40.5 million.
Through the first two quarters of fiscal 1997, the Trust has acquired
seven properties totaling 476,200 square feet for an aggregate price of $25.6
million. The properties were 99% leased as of May 31, 1997. All of the
properties are located in New England, including two office properties totaling
80,800 square feet in suburban Hartford, Connecticut. The remaining five
buildings consist of both office/research and development and industrial
properties that are located in the metropolitan Boston Massachusetts area. At
the end of the second quarter, the Trust's New England investments equal
approximately 52% of the total cost of its real estate. Additionally, the Trust
has signed contracts to acquire, subject to its satisfactory completion of due
diligence and the satisfaction of certain other conditions, five additional New
England properties at prices aggregating $16.6 million. It is anticipated these
investments will close later in the year, if all conditions and terms are met,
although there is no assurance that MGI will acquire these properties.
Mortgage and other loans payable totaled $112.3 million at May 31,
1997, a net decrease of $26.2 million, compared to $138.5 million at November
30, 1996. The Trust utilized $28.0 million of the offering proceeds to repay the
outstanding balances on its lines of credit. The line was subsequently drawn
down by $4.5 million in connection with the property acquisitions. In addition,
the Trust refinanced a $12.3 million, 9.3% mortgage with an $11.0 million loan
bearing interest at a rate of 8.12%. The balance of the change represents
scheduled principal payments. Scheduled loan principal payments due within
twelve months of May 31, 1997 total $3.2 million. MGI believes it will continue
to be able to extend or refinance maturing mortgage loans upon satisfactory
terms.
Cash requirements during the balance of fiscal 1997 include
distributions to shareholders, capital and tenant improvements and other leasing
expenditures required to maintain MGI's occupancy levels and other investment
undertakings. Principal sources of funds in the future are expected to be from
property operations, lines of credit, mortgaging or refinancing of existing
mortgages on properties and MGI's portfolio of investment securities. Other
potential sources of funds include the proceeds of public or private offerings
of additional equity or debt securities of the Trust of the sale of real estate
investments. The cost of new borrowings or issuances of the Trust's equity
securities will be measured against the anticipated returns of investments to be
acquired with such funds.
The Trust presently anticipates that primarily cash, short-term
investments and debt will finance the purchase of additional properties. MGI
believes the combination of available cash and short-term investment securities,
the value of MGI's unencumbered properties and other resources available to it
are sufficient to meet its short and long-term liquidity requirements.
- 8 -
<PAGE>
MGI PROPERTIES
PART I, ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Results of Operations
Net income for the fiscal quarter ended May 31, 1997, was $4.3 million,
or $.31 per share on the increased average number of shares outstanding, as
compared to $12.5 million, or $1.09 per share, in the corresponding quarter of
1996. Included in the 1996 second quarter net income was $9.4 million of gain
recognized from the sale of MGI's interests in a California apartment complex.
Income before net gain and extraordinary item was $4.3 million and $3.2 million
for the quarters ended May 31, 1997 and May 31, 1996, respectively.
Net income for the six months ended May 31, 1997, was $8.2 million, or $.63 per
share on the increased average number of shares outstanding, as compared to
$15.5 million, or $1.35 per share, a year ago. Income before net gain and
extraordinary item was $7.9 million and $6.1 million for the six months ended
May 31, 1997 and May 31, 1996, respectively. Included in 1997 year-to-date net
income was a gain of $0.6 million which was partially offset by an extraordinary
loss of $0.3 million incurred in connection with a loan refinancing prepayment
fee. Included in the 1996 year-to-date net income was the previously mentioned
gain of $9.4 million.
Funds from operations ("FFO") totaled $6.8 million in the second
quarter of fiscal 1997, compared to $5.4 million in the corresponding quarter of
1996. Funds from operations for the six months ended May 31, 1997 and 1996 were
$13.0 million and $10.7 million, respectively. MGI calculates FFO in conformity
with the NAREIT definition which is net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures. MGI
believes FFO is an appropriate supplemental measure of operating performance.
The following is a reconciliation of net income to FFO:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
May 31, 1997 May 31, 1996 May 31, 1997 May 31, 1996
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net Income $4,264,000 $12,541,000 $ 8,213,000 $15,506,000
Less net gain and extraordinary item -- (9,350,000) (294,000) 9,350,000)
Plus building depreciation 2,051,000 1,758,000 4,092,000 4,048,000
Plus tenant improvement and
commission amortization 506,000 456,000 1,003,000 478,000
------------ ------------ ------------- ------------
FFO $6,821,000 $5,405,000 $13,014,000 $10,682,000
============ ============ ============= ============
</TABLE>
The change in FFO, compared to the corresponding periods in 1996, is
attributable to the same factors that affected income before net gain and
extraordinary item in such periods, with the exception of depreciation and
amortization expense.
- 9 -
<PAGE>
MGI PROPERTIES
PART I, ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
In comparing the second quarter of fiscal 1997 to that of the previous
year, the increase in net income before net gain and extraordinary item of
approximately $1.1 million resulted principally from a $1.6 million increase in
property operating income which is offset by increases in interest expense and
depreciation and amortization of $0.4 million and $0.2 million, respectively.
The increase in interest expense is due to the higher average balance of debt
outstanding in 1997. Property operating income is defined as rental and other
income less property operating expenses and real estate taxes. The change in
property operating income reflects the additional income from the acquisition of
properties totaling $1.8 million, offset, in part, by the income effect of $0.2
million due to the sale of properties.
Change in Property Operating Income for Quarter Ended May 31, 1997 versus
May 31, 1996
<TABLE>
<CAPTION>
Properties Held 1997 and 1996 1997 and 1996
Both Fiscal Years Acquisitions Sales Net Change
----------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Industrial $ 6,000 $ 551,000 $ (96,000) $ 461,000
Office 26,000 1,043,000 -- 1,069,000
Office R&D 3,000 136,000 -- 139,000
Apartment 41,000 -- -- 41,000
Retail (108,000) -- -- (108,000)
Land and Partnership -- 96,000 (128,000) (32,000)
----------- ----------- ----------- -----------
$ (32,000) $ 1,826,000 $ (224,000) $ 1,570,000
=========== =========== =========== ===========
</TABLE>
For the six months ended May 31, 1997 property operating income from
properties held in both fiscal years had increased approximately 1.5%, on an
annualized basis, when compared to the comparable 1996 period. When the quarter
and six months ended May 31, 1997 are compared to the prior year period, the
performance of the "comparable properties" reflects an increase in retail
vacancy at Yorkshire Plaza in Aurora, Illinois. Yorkshire Plaza was 77% leased
at May 31, 1997 as compared to 95% at May 31, 1996. While management believes
that the center is favorably located, the lease market is soft due to an excess
supply of retail space.
Substantially all of the increase in property operating income is from the
acquisitions of properties located in New England which has been the focus of
the Trust's investment activity over the past several years. The increase is a
function of both acquisitions and increases in rental rates. During the first
two quarters of fiscal 1997 the Trust signed, with tenants located in New
England, leases totaling approximately 230,000 square feet which were at
aggregate rents approximately 35% over prior rent levels. These increases will
be recognized as new lease terms commence. As of May 31, 1997, the Trust's New
England portfolio consists of thirty-nine properties aggregating 3.6 million
square feet
Scheduled lease expirations and completed leasing (in square feet) for the
portfolio as a whole are as follows at May 31, 1997:
Scheduled Expirations
----------------------
Property Percentage 1997 Remaining Scheduled
Type Leased Leasing 1997 1998
- -------- ---------- ------- --------- ---------
Industrial 98.3% 421,700 32,400 660,200
Office 94.6% 168,500 22,600 132,100
Office/R&D 100.0% 21,000 -- 312,000
Retail 88.6% 24,400 9,900 79,200
------ ------- ------ ---------
Total 96.4% 635,600 64,900 1,183,500
====== ======= ====== =========
- 10 -
<PAGE>
MGI PROPERTIES
PART I, ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Of the 635,600 total square feet leased year-to-date in 1997, approximately
620,000 square feet (which includes the 230,000 square feet leased in New
England properties) pertained to renewals or new leases of previously occupied
space. Rents on the 620,000 square feet increased an aggregate 20% over prior
rent levels, which is equal to $965,000 per annum once all the leases have
commenced. Of this $965,000, approximately $106,000 has been reflected in
earnings for the first six months of 1997; the balance will be recognized as new
lease rates go into effect over the next twelve months. The fiscal 1998
scheduled lease expirations represent 22% of MGI's total commercial portfolio,
which is approximately 8% higher than 1997 scheduled expirations a year ago at
this time. Scheduled remaining expirations for New England properties total
40,000 square feet and 509,000 square feet in 1997 and 1998, respectively.
Existing rent levels relative to New England space coming up for renewal appear
to be generally below prevailing market rents. Included in the 1998 retail
expirations is 53,200 square feet scheduled to expire at the 313,000 square-foot
Yorkshire Plaza in Aurora, Illinois.
Forward Looking Statements
Statements made or incorporated in this Report may contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are dependent on a number of factors which
could cause actual results to differ materially from those expressed or implied
in the forward-looking statements. Such factors include, among other things,
satisfactory completion of the anticipated acquisitions, maintaining or
improving the current occupancy and rent levels at the acquisition and other
properties, as well as those set forth in Risk Factors (Item 1) and Management's
Discussion and Analysis of Financial Condition and Results of Operations in
MGI's Form 10-K for the year ended November 30, 1996.
- 11 -
<PAGE>
MGI PROPERTIES
PART I - EXHIBIT A
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Three Months Ended May 31, Six Months Ended May 31,
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY
Net income $ 4,264,000 $12,541,000 $ 8,213,000 $15,506,000
=============================================================================================================================
Weighted average number of shares outstanding
during the period 13,598,472 11,535,008 12,964,645 11,526,406
=============================================================================================================================
Primary earnings per share $ 0.31 $ 1.09 $ 0.63 $ 1.35
=============================================================================================================================
ASSUMING FULL DILUTION
Net income $ 4,264,000 $12,541,000 $ 8,213,000 $15,506,000
=============================================================================================================================
Weighted average number of shares outstanding
during the period 13,598,472 11,535,008 12,964,645 11,526,406
=============================================================================================================================
Earnings per share assuming full dilution $ 0.31 $ 1.09 $ 0.63 $ 1.35
=============================================================================================================================
</TABLE>
Note: Outstanding stock options are not taken into account in the computation
of earnings per share as they are not materially dilutive.
- 12 -
<PAGE>
MGI PROPERTIES
PART II - OTHER INFORMATION
Item 1: Legal Proceedings: Not applicable.
Item 2: Changes in Securities: Not applicable.
Item 3: Defaults upon Senior Securities: Not applicable.
Item 4: Submission of Matters to a Vote of Security Holders:
Thefollowing matters were submitted to a vote of shareholders
at the March 27, 1997 Annual Meeting of Shareholders:
(a) The election of two Trustees to serve for a term of three years
expiring on the date of the Trust's Annual Meeting of Shareholders
in 2000. The vote on this was William F. Murdoch, Jr. - 12,418,534
affirmative and 101,987 withheld; and, Roger P. Nordblom -
12,417,461 affirmative and 103,060 withheld.
(b) The ratification and approval of the adoption of the Trust's 1997
Employee Stock Option, Stock Appreciation Rights and Restricted
Stock Plan. The vote on this proposal was - 11,535,434 for,
840,688 against and 144,399 abstaining.
Item 5: Other Information: Not applicable.
Item 6: Exhibits and Reports on Form 8-K:
a) Exhibits:
Part I - Exhibit A -- Computation of Earnings Per Share (see page
12).
4.1 MGI Properties amended and restated 1994 Trustees stock
option plan.
4.2 MGI Properties amended and restated 1994 employee stock
option and stock appreciation rights plan.
4.3 MGI Properties amended and restated 1988 stock option and
stock appreciation rights plan.
27 Financial Data Schedule
b) Reports on Form 8-K: None.
- 13 -
<PAGE>
MGI PROPERTIES
SIGNATURES
Pursuant to the requirements to the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: July 11, 1997 /s/Phillip C. Vitali
-------------------------------
Phillip C. Vitali
Executive Vice President and Treasurer
(Chief Financial Officer)
Date: July 11, 199 /s/David P. Morency
--------------------------------------
David P. Morency
Controller
(Principal Accounting Officer)
- 14 -
MGI PROPERTIES
AMENDED AND RESTATED
1994 TRUSTEES STOCK OPTION PLAN
I. PURPOSE
The purpose of the 1994 Trustees' Stock Option Plan (the "Plan") is to
secure for MGI Properties and its shareholders the benefits arising from stock
ownership by its trustees. The Plan will provide a means whereby such trustees
purchase common shares of MGI Properties pursuant to options granted in
accordance with the Plan.
The Plan has been amended and restated as of December 18, 1996 in order to
align the Plan 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").
II. DEFINITIONS
The following capitalized terms used in the Plan shall have the respective
meanings set forth in this Article:
2.1 "Board" shall mean the Board of Trustees of the Trust.
2.2 "Chairman" shall mean the duly appointed Chairman of any standing
Committee of the Board.
2.3 "Committee" shall mean a duly appointed standing
committee of the Board.
2.4 "Trust" shall mean MGI Properties.
2.5 "Trustees" shall mean any person who is a member of the Board.
2.6 "Eligible Person" shall mean any Trustee.
2.7 "Exercise Price" shall mean the price per Share at which an Option may
be exercised.
2.8 "Fair Market Value" shall mean the closing sale price of a Share as
reported on the New York Stock Exchange Composite Tape on the Grant Date or on
the preceding date if no Shares were traded on such Grant Date. If the Shares
are not reported on the New York Stock Exchange or on another national
securities exchange, Fair Market Value shall be deemed to be the average of the
high bid and asked prices of the Shares on the over-the-counter market on the
<PAGE>
Grant Date, or the next preceding date on which the last prices were recorded.
2.9 "Grant Date" shall mean any date that an Option shall be granted
pursuant to the Plan as appropriate.
2.10 "Option" shall mean an Option to purchase Shares granted pursuant to
the Plan.
2.11 "Option Agreement" shall mean the written agreement described in
Article VI herein.
2.12 "Permanent Disability" shall mean the condition of an Eligible Person
who is unable to participate as a member of the Board, by reason of any
medically determined physical or mental impairment which can be expected to
result in death or which can be expected to last for a continuous period of not
less than twelve (12) months.
2.13 "Purchase Price" shall be the Exercise Price multiplied by the
number of whole Shares with respect to which an Option may be exercised.
2.14 "Shares" shall mean common shares of the Trust.
III. ADMINISTRATION
3.1 General. This Plan shall be administered by the full Board of Trustees
or a Committee thereof composed solely of two or more persons that are
"non-employee directors" within the meaning of Rule 16b-3 promulgated under the
Exchange Act and in accordance with the express provisions of the Plan.
3.2 Powers of the Committee. Subject to review by the Board, the Committee
shall have full and complete authority to adopt such rules and regulations and
to make all such other determinations not inconsistent with the Plan as may be
necessary for the administration of the Plan.
IV. SHARES SUBJECT TO PLAN
Subject to adjustment in accordance with Article VIII, an aggregate of
170,000 Shares is reserved for issuance under this Plan. Shares sold under this
Plan may be either authorized, but unissued Shares or reacquired Shares. If an
Option, or any portion thereof, shall expire or terminate for any reason without
having been exercised in full, the unpurchased Shares covered by such Option
shall be available for future grants of Options.
-2-
<PAGE>
V. GRANTS
5.1 Grants of Options. Subject to the express provisions of the Plan, the
Committee shall have the authority, in its discretion, to determine the Trustees
to whom the Options shall be granted, the number of Shares which shall be
subject to each Option, the purchase price of each Share which shall be subject
to each Option, the period(s) during which such Options shall be exercisable
(whether in whole or in part), and the other terms and provisions thereof. In
determining the Trustees to whom Options shall be granted and the number of
Shares for which Options shall be granted, the Committee shall consider the
length of service of the Trustee and the amount of earnings of the Trust.
5.2 Determination Final. The determination of the Committee on matters
referred to this Article V shall be final.
VI. TERMS OF OPTION
6.1 Written Agreement. Each Option shall be evidenced by a written Option
Agreement executed by the Trust and the Eligible Person which shall specify the
Grant Date, the number of Shares subject to the Option, the Exercise Price which
shall be the Fair Market Value on the Grant Date and shall also include or
incorporate by reference the substance of all of the following provisions and
such other provisions consistent with this Plan as the Board or the Committee
may determine.
6.2 Term. The term of the Option shall be not more than ten (10) years from
the Grant Date of each Option, subject to earlier termination in accordance with
Articles VI and IX.
6.3 Restriction on Exercise. The Committee shall have the authority to
require, in its discretion, that the Eligible Person agree, at the time of the
grant of an Option, not to sell or otherwise dispose of Shares acquired pursuant
to the exercise of an Option granted under the Plan for a period of six (6)
months following the date of grant.
6.4 Exercise Price. The Exercise Price for each Share subject to an Option
shall be the Fair Market Value of the Share as determined in accordance with
Section 2.8 hereof.
6.5 Manner of Exercise. An Option shall be exercised in accordance with its
terms, by delivery of a written notice of exercise to the Trust and payment of
the full purchase price of the Shares being purchased. An Eligible Person may
exercise an Option with respect to all or less than all of the Shares for which
the Option may then be exercised, but an Eligible Person must exercise the
Option in whole Shares.
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6.6 Payment. The Purchase Price of Shares purchased pursuant to an Option
or portion thereof may be paid:
(a) in United States Dollars, in cash or by check, bank draft or money
order payable to the Trust:
(b) by delivery of Shares already owned by an Eligible Person for at least
six (6) months with an aggregate Fair Market Value on the date of exercise equal
to the Purchase Price; or
(c) at the election of an Eligible Person, by the withholding of Shares
otherwise to be received upon the exercise of an Option with an aggregate Fair
Market Value on the date of exercise equal to the Purchase Price.
6.7 Transferability. Options shall be transferable (other than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as it may from
time to time be amended or Title I of the Employee Retirement Income Security
Act of 1986, as amended, or the rules and regulations promulgated thereunder) to
the extent authorized by the Committee in respect of a particular grant.
6.8 Termination of Service. If an Eligible Person's service as a Trustee
terminates for any reason, an Option held on the date of termination may be
exercised in whole or in part at any time within two (2) years after the date of
such termination (but in no event after the term of the Option expires) and
shall thereafter terminate.
VII. GOVERNMENT AND OTHER REGULATIONS
7.1 Delivery of Shares. The obligation of the Trust to issue or transfer
and deliver Shares for exercised Options under the Plan shall be subject to all
applicable laws, regulations, rules, orders and approvals which shall then be in
effect.
7.2 Holding of Stock After Exercise of Option. The Option Agreement shall
provide that the Eligible Person, by accepting such Option, represents and
agrees, for the Eligible Person and his permitted transferees hereunder that
none of the Shares purchased upon exercise of the Option shall be acquired with
a view to any sale, transfer or distribution of the Shares in violation of the
Securities Act of 1933, as amended (the "Act") and, as a condition of exercise,
the person receiving an Option shall furnish evidence satisfactory to that Trust
to that effect, including an indemnification of the Trust in the event of any
violation of the Act by such person. Notwithstanding the foregoing, the Trust in
its sole discretion may register under the Act the Shares issuable upon exercise
of the Options under the Plan.
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VIII. ADJUSTMENTS
8.1 Proportionate Adjustments. If the outstanding Shares are increased,
decreased, changed into or exchanged into a different number or kind of Shares
or securities of the Trust through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
to the maximum number and kind of Shares as to which Options may be granted
under this Plan. A corresponding adjustment changing the number or kind of
Shares allocated to unexercised Options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding Options shall be made without change in the
Purchase Price applicable to the unexercised portion of the Option with a
corresponding adjustment in the Exercise Price of the Shares covered by the
Option. Notwithstanding the foregoing, there shall be no adjustment for the
issuance of Shares on conversion of notes, preferred stock or exercise of
warrants issued by the Board or the sale or issuance of Shares for such
consideration as the Board deems appropriate.
8.2 Dissolution or Liquidation. Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation of the Trust with one
or more corporations or trusts as a result of which the Trust is not the
surviving entity, or upon a sale of substantially all of the property or more
than 80% of the then outstanding Shares of the Trust to another corporation or
trust, the Trust shall give to each Eligible Person at the time of adoption of
the plan for liquidation, dissolution, merger or sale either (1) a reasonable
time thereafter within which to exercise the Option prior to the effective date
of such liquidation or dissolution, merger or sale, or (2) the right to exercise
the Option as to an equivalent number of shares of stock of the entity
succeeding the Trust or acquiring its business by reason of such liquidation,
dissolution, merger, consolidation or reorganization.
IX. AMENDMENT OR TERMINATION OF PLAN
9.1 Amendments. The Board may at any time amend or revise the terms of the
Plan; provided, however, that no such amendment or revision shall, unless
appropriate shareholder approval of such amendment or revision is obtained:
(a) increase the maximum number of Shares which may be sold pursuant to
Options granted under the Plan, except as permitted under the provisions of
Article VIII;
(b) change the minimum Exercise Price set forth in Article VI;
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(c) increase the maximum term of Options provided for in Article VI; or
(d) permit the granting of Options to any one other than as provided in
Article V.
9.2 Termination. The Board at any time may suspend or terminate this Plan.
This Plan, unless sooner terminated, shall terminate on the tenth anniversary of
its adoption by the Board. No Option may be granted under this Plan while this
Plan is suspended or after it is terminated.
9.3 Consent of Holder. No amendment, suspension or termination of the Plan
shall, without the consent of the holder of Options, alter or impair any rights
or obligations under any Option theretofore granted under the Plan.
X. MISCELLANEOUS PROVISIONS
10.1 Privilege of Stock Ownership. No Eligible Person entitled to exercise
any Option granted under the Plan shall have any of the rights or privileges of
a shareholder of the Trust with respect to any Shares issuable upon exercise of
an Option until certificates representing the Shares shall have been issued and
delivered.
10.2 Plan Expenses. Any expenses incurred in the administra-
tion of the Plan shall be borne by the Trust.
10.3 Use of Proceeds. Payments received from an Eligible Person upon the
exercise of Options shall be used for general corporate purposes of the Trust.
10.4 Governing Law. The Plan has been adopted under the laws of the
Commonwealth of Massachusetts. The Plan and all Options which may be granted
hereunder and all matters related thereto, shall be governed by and construed
and enforceable in accordance with the laws of the Commonwealth of Massachusetts
as it then exists.
XI. SHAREHOLDER APPROVAL
This Plan is subject to approval, at a duly held shareholders' meeting
within twelve (12) months after the date the Board approves this Plan, by the
affirmative vote of holders of a majority of the Shares of the Trust represented
in person or by proxy and entitled to vote at the meeting. Options may be
granted, but not exercised, before such shareholder approval. If the
shareholders fail to approve the Plan within the required time period, any
Options granted under this Plan shall be void, and no additional Options may
thereafter be granted.
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XI. 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.
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MGI PROPERTIES
AMENDED AND RESTATED
1994 EMPLOYEE STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN
I. PURPOSE
The purpose of the 1994 Employee Stock Option and Stock Appreciation
Rights 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 to create in such key employees an increased
interest in and a greater concern for the welfare of the Trust and its
shareholders.
The Plan has been amended and restated as of December 18, 1996 in order to
align the Plan 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") 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 422 of the
Internal Revenue Code of 1986, as it may from time to time be amended (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.
II. SHARES SUBJECT TO THE PLAN
The total number of Common Shares of the Trust which may be purchased
pursuant to the exercise of Options granted under the Plan or acquired pursuant
to the exercise of Rights granted under the Plan shall not exceed, in the
aggregate, 400,000 Common Shares as of the effective date (the "Shares"). The
term "Shares" shall include any securities, cash or other property into which
Shares
<PAGE>
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.
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 Options granted under the Plan expire or
terminate without having been exercised, Shares subject to such expired or
terminated Options and related Rights shall be available for new grants of
Options and related Rights under the Plan, provided that the grant and the terms
of such new Options and related Rights shall in all respects comply with
applicable legal requirements. Notwithstanding the above, however, the
expiration or termination of Options and related Rights shall not increase the
reserve of 400,000 Shares for grants to key employees.
Except as provided in Article XX, the Trust may, from time to time during
the period beginning March 16, 1994 (the "Effective Date") and ending on March
15, 2004 (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 under the terms
hereinafter set forth.
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 424(f) and 424(e) of the Code.
III. ADMINISTRATION
The Board of Trustees of the Trust (the "Board of Trustees") shall
designate a committee for the administration of matters relating to 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 that are "non-employee directors" within the meaning of Rule 16b-3 (or
any successor rule or regulation) ("Rule 16b-3") promulgated under the Exchange
Act. 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 and
Rights shall be granted, the number of Shares which shall be subject to each
Option or Right, the
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purchase price of each Share which shall be subject to each Option or Right, the
period(s) during which such Options or Rights shall be exercisable (whether in
whole or in part), and the other terms and provisions thereof. In determining
the key employees to whom Options and Rights shall be granted and the number of
Shares for which Options or Rights 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.
Subject to the express provisions of the Plan, the Committee also shall
have the authority to construe the Plan and Options and Rights granted
thereunder, to amend the Plan and Options and Rights granted thereunder, 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) and Rights (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 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 the full Board of Trustees or a committee of the
Board of Trustees 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.
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.
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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 and related Rights may be granted to salaried key
employees of the Trust or of any subsidiary corporation or parent corporation of
the Trust by the Committee (provided none may be granted to 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 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 424(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
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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 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 424 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
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<PAGE>
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.
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), but any such grant of an
additional Option 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.
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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.
X. 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.
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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.
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 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.
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<PAGE>
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, the Trustees elected were not 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 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.
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
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exercise of a Right shall not be available for granting further
Options under the Plan.
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.
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 Code, 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.
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
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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 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
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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 Incentive Options and related Rights
or Nonqualified Options and related Rights, as the case may be, the maximum
number of Shares for which Options or Rights 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
Options or Rights, 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 424(a) of the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other than an
Incentive Option for purposes of Section 422 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 an Option or Right; nor shall it
impose any obligation on the part of any holder of an Option or Right to remain
in the
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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 an Option or related Right
granted 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 acquired thereunder 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 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 shall be issued by
the Trust in the name of the person exercising the Option or related Right 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 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
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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.
XVIII. 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.
XIX. 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 if such approval is required by the Code in
respect of Incentive Options or
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under Rule 16b-3 with respect to any Options granted pursuant to the 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.
XX. 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 or Right
may not be granted while the Plan is suspended or after it is terminated. Rights
and obligations under any Option or Right 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 or Rights
granted prior to the termination or suspension of the Plan under Article III
shall nevertheless continue after such termination or during such suspension.
XXI. GOVERNING LAW
The Plan, such Options and Rights as may be granted thereunder 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.
XXII. 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.
XXIII. 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.
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MGI PROPERTIES
AMENDED AND RESTATED 1988 STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN
The resolutions adopted on March 12, 1989 by the MGI Properties Board of
Trustees, attached hereto as Exhibit A, are hereby incorporated by reference as
if they were included herein, including the provision that this Amended and
Restated Plan be deemed to be two separate plans administered as two separate
and distinct plans, one for Trustees and one for key employees.
I. PURPOSE
The purpose of this Stock Option And Stock Appreciation Rights Plan (the
"Plan") is to promote the interests of MGI PROPERTIES, formerly Mortgage Growth
Investors (the "Trust") and its shareholders by providing a means by which
competent officers, key employees and Trustees 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 to create in such key
employees and Trustees an increased interest in and a greater concern for the
welfare of the Trust and its shareholders.
The Plan has been amended and restated as of December 18, 1996 in order to
align the Plan 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") 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 or
Trustee.
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 422 of the
Internal Revenue Code of 1986, as it may from time to time be amended (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.
<PAGE>
II. SHARES SUBJECT TO THE PLAN
The total number of Common Shares of the Trust which either may be
purchased pursuant to the exercise of Options granted under the Plan or acquired
pursuant to the exercise of Rights granted under the Plan shall not exceed, in
the aggregate, 450,000 shares as of the effective date (the "Shares"), 300,000
of which Shares may be issued pursuant to Incentive Options and/or to
Nonqualified Options or Rights granted in tandem therewith to key employees (to
the extent hereinafter provided) and 150,000 of which may be issued pursuant to
Nonqualified Options to Trustees. 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.
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 Options granted under the Plan expire or
terminate without having been exercised, Shares subject to such expired or
terminated Options and related Rights shall be available for new grants of
Options and related Rights under the Plan, provided that the grant and the terms
of such new Options and related Rights shall in all respects comply with the
provisions of the Plan. Notwithstanding the above, however, the expiration or
termination of Options and related Rights (which Rights may be granted to
employees only) shall not increase the reserve of 300,000 shares for grants to
employees or the reserve of 150,000 Shares for grants to Trustees.
Except as provided in Article XXII, the Trust may, from time to time during
the period beginning March 17, 1988 (the "Effective Date") and ending March 16,
1998 (the "Termination Date"), grant to key employees or Trustees, or of any
subsidiary corporation or parent corporation of the Trust now existing or
hereafter formed or acquired, Options or, for employees only, both Options and
related Rights, under the terms hereinafter set forth.
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 424(f) and 424(e) of the Code.
III. ADMINISTRATION
The Board of Trustees of the Trust (the "Board of Trustees") shall
designate two committees, one for the administration of matters relating to
Options to be granted to key employees ("Employees' Committee"), whether
Incentive or Nonqualified Options
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or both and related Rights, and the other committee for the administration of
matters relating to Options to be granted to Trustees (the "Trustees'
Committee"), which Options may only be Nonqualified Options. Each Committee
shall consist of no fewer than three Trustees. Each member of the Employees'
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 the
Exchange Act. A majority of the members of the governing Committee shall
constitute a quorum, and the act of a majority of the members of the governing
Committee shall be the act of such Committee. Any member of either Committee may
be removed at any time either with or without cause by resolution adopted by the
Board of Trustees, and any vacancy on either Committee may at any time be filled
by resolution adopted by the Board of Trustees.
Subject to the express provisions of the Plan, each Committee shall have
authority, in its discretion, to determine the employees to whom Options and
Rights shall be granted and the Trustees to whom Options shall be granted, the
number of Shares which shall be subject to each Option or Right, the purchase
price of each Share which shall be subject to each Option or Right, the
period(s) during which such Options or Rights shall be exercisable (whether in
whole or in part), and the other terms and provisions thereof. In determining
the employees to whom Options and Rights shall be granted and the Trustees to
whom Options shall be granted and the number of Shares for which Options or
Rights shall be granted to each employee or Trustee, as the case may be, each
Committee shall consider the length of service, the amount of earnings, and the
responsibilities and duties of such employee or Trustee, as the case may be;
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.
Subject to the express provisions of the Plan, each Committee also shall
have authority to construe the Plan and Options and Rights (in the case of the
Employees' Committee) granted thereunder, to amend the Plan and Options and
Rights granted thereunder, 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) and Rights (which need not be identical)
and to make all other determinations necessary or advisable for administering
the Plan.
Each Committee also shall have the authority to require, in its discretion,
that the employee or Trustee, as the case may be, agree, at the time of the
grant of an Option and for employees only, of a related Right, not to sell or
otherwise 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 acquisition.
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<PAGE>
The determination of the governing Committee on matters referred to in this
Article III shall be conclusive.
Any or all powers and functions of either Committee may at any time and
from time to time be exercised by the full Board of Trustees or a committee of
the Board of Trustees 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.
Each 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 either Committee in the engagement of such counsel, consultant or
agent shall be paid by the Trust. No member or former member of either 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 or related Right 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 Employees' Committee and except as hereinafter
provided, and shall not be granted to any officer or Trustee who is not also a
salaried key employee. 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.
Nonqualified Options and related Rights, may be granted to salaried key
employees of the Trust or of any subsidiary corporation or parent corporation of
the Trust by the Employees' Committee (provided none may be granted to members
of the Employees' Committee and except as hereinafter provided). Nonqualified
Options may be granted by the Trustees' Committee to Trustees who are and are
not also salaried key employees of the Trust, of any subsidiary corporation or
parent corporation of the Trust. Grants of Nonqualified Options by the Trustees'
Committee, however, may be made only during the calendar months of December,
March, June and September and no grant shall entitle the Trustee (in his
capacity as such) to purchase in excess of 25,000 Shares (subject to adjustment
pursuant to Article XIII hereunder) pursuant to a Nonqualified Option. Any
person who was a Trustee but is no longer a Trustee of the Trust, shall not
thereafter be eligible to receive a grant of a Nonqualified Option by reason of
his former status as a Trustee.
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<PAGE>
An Option shall not be granted to any person who, at the time such 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 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 424(d) of the Code shall be applied, and either Committee may
rely on representations of fact made to it by the employee or Trustee, as the
case may be, 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 governing Committee shall, in its best judgment,
determine; provided, however, that, the price of any Option shall not be less
than one hundred percent (100%) of the fair market value per Share at the date
the Option is granted; and, provided further, however, that in the case of an
Option granted to a person who at the time such Option is granted, owns shares
of the Trust or any subsidiary corporation or parent corporation which possess
more than ten percent (10%) of the total combined voting power of all classes of
shares of the Trust or of any subsidiary corporation or parent corporation of
the Trust, the purchase price for each share shall be such amount as the
Employees' Committee or Trustees' Committee, as the case may be, in its best
judgment, shall determine to be not less than one hundred and ten percent (110%)
of the fair market value per share at 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 quotation 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
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<PAGE>
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
governing 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 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 or bank draft, provided, however, that in lieu of cash, certified check or
bank draft, the holder of an Option may exercise his Option, in whole or in
part, 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 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 as of the date immediately preceding
the date on which the Option is exercised, or as may be required in order to
comply with or to conform to the requirements of any applicable laws or
regulations.
VII. USE OF PROCEEDS
The cash proceeds of 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.
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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 Employees' Committee or the Trustees' Committee, as the case may be,
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 Employees' Committee) or Trustee (in which case, such new
Option may only be a Nonqualified Option), as the case may be, but any such
grant of an additional Option 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. In the case of Nonqualified Options, however,
such written notice may be delivered only within the thirty-day period
commencing the first day following the filing by the Trust of its annual or
periodic reports on Form 10-K or 10-Q, as the case may be, with the Securities
and Exchange Commission.
X. STOCK APPRECIATION RIGHTS
Rights may be granted to key employees in connection with the grant of
Options upon such terms and conditions as the Employees' Committee may
prescribe. Rights may be granted only in connection with the grant of an Option
under the Plan and only with respect to up 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.
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<PAGE>
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
Employees' Committee; provided, however, that there shall be no
hardship requirement in the event of a Hostile Change in Control (as
hereinafter defined). The Employees' 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 Employees' 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 in Control an
Employee-Optionee may exercise all Options in full as Rights, without
limitation.
Example:
To illustrate the impact of the grant and exercise of Rights by
Employee-Optionees, it is assumed that:
(i) An Optionee was granted an Option under the Plan to
purchase 100 Shares at an exercise price of $20 per share;
(ii) 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;
(iii) The Optionee has not received any other Options;
(iv) The Shares have appreciated in value to $50 per
Share; and
-8-
<PAGE>
(v) 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 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 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.
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, the Trustees elected were not 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 Regulation 13(d) of the Securities Exchange Act of 1934),
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;
-9-
<PAGE>
(iv) A change in control that would be required to be reported
as such under the Securities Exchange Act of 1934 and/or the
regulations promulgated thereunder 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;
(v) The Trust fails to qualify as a "REIT" under Internal
Revenue Code Sections 856, et seq., by reason of five 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 Options requirement, will, in the nonreviewable judgment of the Employees'
Committee, be deemed to constitute a "golden parachute" as same is defined by
Section 280G of the Internal Revenue Code of 1986 ("Section 280G"), the
Employees' 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.
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 this Plan.
3. The Employees' 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 Employees' 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 Share shall be
issued and the Employees' 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.
-10-
<PAGE>
A Right 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 Right.
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 or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code, 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.
XII. TERMINATION OF EMPLOYMENT OR OF TRUSTEESHIP
Upon termination of employment of any employee or upon termination of
trusteeship of any Trustee with the Trust and all subsidiary corporations and
any parent corporation of the Trust, any Option or Right previously granted to
the employee or any Option previously granted to the Trustee shall, to the
extent not theretofore exercised, terminate and become null and void, except
that
(a) If the employee or Trustee shall die, or become totally
and permanently disabled (as described in Section 105(d)(4) of the
Code), while in the employ of or while acting as a Trustee of such
corporation or Trust or at a time when such employee or Trustee was
entitled to exercise an Option or related Right as herein provided, in
case of death, the legal representative of such employee, Trustee or
such person who acquired such Option and/or related Right by bequest or
inheritance or by reason of death of the employee or Trustee or in the
case of total and permanent disability the employee or Trustee may, not
later than one (1) year from the date of death or total and permanent
disability, exercise such Option or, in the case of an employee, 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 employee or if the trusteeship of
any Trustee to whom such Option or, in the case of an employee, such
related Right shall have been granted shall terminate by reason of the
employee's or Trustee's retirement (at such age or upon such conditions
as shall be specified by the Employees' Committee or by the Trustees'
Committee, as the case may be) or dismissal by the Trust other
-11-
<PAGE>
than for cause (as defined below), and while such employee or Trustee
is entitled to exercise such Option or, in the case of an employee,
such related Right as herein provided, such employee or Trustee 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 or
trusteeship, at any time up to and including three (3) months after the
date of such termination of employment or trusteeship.
In no event, however, shall any person be entitled to exercise any Option
or related Right after the expiration of the period of exercisability of such
Option or related Right as specified therein.
If any employee voluntarily terminates his employment, or is discharged for
cause, or, if any Trustee voluntarily terminates his trusteeship, or is relieved
as a Trustee for cause, any Option or related Right granted hereunder shall,
unless otherwise specified by the governing Committee in the Option or related
Right, forthwith terminate with respect to any unexercised portion thereof;
provided, however, that in the event of a Hostile Change in Control (as defined
in Article X hereinabove), only an employee's termination for "just cause" (as
then defined in the Trust's "Plan For Severance Compensation After Hostile
Takeover," which definition is incorporated by reference herein) will terminate
an employee's Option and related Right (if any) granted hereunder.
If an Option or a related Right granted hereunder shall be exercised by the
legal representative of a deceased employee or former employee, Trustee or
former Trustee, or by a person who acquired an Option or Right granted hereunder
by bequest or inheritance or by reason of the death of any employee or former
employee, Trustee or former Trustee, 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 purpose of the Plan, "for cause" shall mean, as determined by the
governing Committee or by the Board of Trustees, in its sole discretion, (a) the
willful commission by an employee or Trustee of an act that causes or may cause
substantial damage to the Trust or a subsidiary corporation or parent
corporation of the Trust; (b) the commission by an employee or Trustee of an act
of fraud in the performance of such employee's or Trustee's duties on behalf of
the Trust or a subsidiary corporation or parent corporation of the Trust; or (c)
conviction of the employee or Trustee for commission of a felony in connection
with the performance of the duties of such employee or of such Trustee on
-12-
<PAGE>
behalf of the Trust or a subsidiary corporation or parent corporation of the
Trust.
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, a senior vice-president or
other duly authorized officer of such corporation.
A termination of employment or of trusteeship, as the case may be, shall
not be deemed to occur by reason of (i) the transfer of an employee from
employment by the Trust to employment by a subsidiary corporation or a parent
corporation of the Trust or (ii) the transfer of an employee from employment by
a subsidiary corporation or a parent corporation of the Trust to employment by
the Trust or by another subsidiary corporation or parent corporation of the
Trust, (iii) the transfer of a Trustee from the Board of Trustees of the Trust
to the Board of Directors of a subsidiary corporation or parent corporation of
the Trust or (iv) the transfer of a director from the Board of Directors of a
subsidiary or parent corporation of the Trust to the Board of Trustees 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) appropriate adjustments shall be made, and with respect to
other dilutive or anti-dilutive events appropriate adjustments shall be made by
the governing Committee as to the maximum number of Shares subject to the Plan
available for Incentive Options and related Rights or available for Nonqualified
Options and related Rights, as the case may be, the maximum number of Shares for
which Options or Rights may be granted to any one employee or Trustee, 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 Options or
Rights, and the determination of the governing Committee as to these
-13-
<PAGE>
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 424(a) of the Code, and (ii) in no event shall any adjustment
be made which would render any Incentive Option granted hereunder other than an
Incentive Option for purposes of Section 422 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 of any holder of an Option or Right; nor shall it impose any
obligation on the part of any holder of an Option or Right to remain in the
employ of the Trust or to remain as a Trustee 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 an Option or related Right
granted 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 acquired thereunder 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 and, in the case of an Option, payment of the purchase price, a
certificate or certificates for the Shares as to which the Option or related
Right has been exercised shall be
-14-
<PAGE>
issued by the Trust in the name of the person exercising the Option or related
Right 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 granted hereunder, and the
governing 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 an employee or Trustee who is an employee exercising
a Nonqualified Option or a related Right granted hereunder to reimburse the
Trust which employs such employee or Trustee 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 or Trustee upon such terms and conditions as the
Employees' Committee shall prescribe.
XVIII. 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
-15-
<PAGE>
exchange or under any state or federal law, or the consent or approval of any
governmental 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.
XIX. AMENDMENT OF THE PLAN
The Board of Trustees or the Committee may, from time to time, amend the
Plan, provided that no amendment shall be made, without the approval of the
shareholders of the Trust 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 the Plan. Notwithstanding the foregoing, amendments by the Trustees,
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.
XX. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Trustees may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated under Article XXII or by action of the Board of
Trustees, shall terminate at the close of business on the Termination Date. An
Option or Right may not be granted while the Plan is suspended or after it is
terminated. Rights and obligations under any Option or Right 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 Rights
was granted. The power of the governing Committee to construe and administer any
Options or Rights granted prior to the termination or suspension of the Plan
under Article III shall nevertheless continue after such termination or during
such suspension.
XXI. GOVERNING LAW
The Plan, such Options and Rights as may be granted thereunder 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.
-16-
<PAGE>
XXII. 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.
XXIII. 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.
-17-
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<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> MAY-31-1997
<CASH> 8,601
<SECURITIES> 000
<RECEIVABLES> 3,796
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 8,662
<PP&E> 383,158
<DEPRECIATION> (48,697)
<TOTAL-ASSETS> 355,520
<CURRENT-LIABILITIES> 5,729
<BONDS> 112,336
<COMMON> 13,601
000
000
<OTHER-SE> 206,755
<TOTAL-LIABILITY-AND-EQUITY> 355,520
<SALES> 15,376
<TOTAL-REVENUES> 15,574
<CGS> 000
<TOTAL-COSTS> 9,037
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<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 2,273
<INCOME-PRETAX> 4,264
<INCOME-TAX> 000
<INCOME-CONTINUING> 4,264
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<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 4,264
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
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