<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
VALUE PROPERTY TRUST
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
VALUE PROPERTY TRUST
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
COMMON SHARES, $1.00 par value per share
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
11,226,310
- ------------------------------------------------------------------------------
<PAGE>
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
N/A
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- ------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
N/A
- ------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
N/A
- ------------------------------------------------------------------------------
(3) Filing party:
N/A
- ------------------------------------------------------------------------------
(4) Date filed:
N/A
- ------------------------------------------------------------------------------
________________________
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
2
<PAGE>
VALUE PROPERTY TRUST
(FORMERLY MORTGAGE AND REALTY TRUST)
120 Albany Street, 8th Floor
New Brunswick, New Jersey 08901
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 15, 1996
TO OUR SHAREHOLDERS:
The Annual Meeting of the Shareholders of Value Property Trust (the
"Trust") will be held at_______________________________________ at 10:00 A.M.
(Local Time) on Thursday, February 15, 1996 for the following purposes:
1. To approve the voting rights of certain of the Trust's common
shares, par value $1.00 per share (the "Shares"), held by
entities related to Mutual Series Fund, Inc. and entities
related to Intermarket Corporation that may be precluded from
voting under the Maryland General Corporation Law;
2. To elect seven Trustees to serve until the next Annual Meeting
of Shareholders and until their successors have been duly
elected and qualified;
3. To consider a proposal to approve and adopt the 1995 Share
Option Plan recommended to the shareholders of the Trust by the
Board of Trustees of the Trust; and
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Except as set forth in the Proxy Statement, shareholders of record of
the Trust's Shares at the close of business on December 22, 1995 are entitled
to notice of the meeting and to vote at the meeting and any adjournment or
postponement thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SPECIFY YOUR VOTE
ON THE ACCOMPANYING PROXY AND SIGN, DATE AND RETURN IT AS PROMPTLY AS POSSIBLE
IN THE POSTAGE-PAID ENVELOPE. A PROMPT RETURN OF YOUR PROXY WILL BE GREATLY
APPRECIATED.
By order of the Trustees,
--------------------------------
SECRETARY
December [29], 1995
<PAGE>
VALUE PROPERTY TRUST
(FORMERLY MORTGAGE AND REALTY TRUST)
120 Albany Street, 8th Floor
New Brunswick, New Jersey 08901
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Value Property
Trust, a Maryland real estate investment trust (the "Trust"), in connection
with the solicitation of proxies by the Trustees for use at the Annual Meeting
of Shareholders to be held at _____________________________, on Thursday,
February 15,1996, at 10:00 A.M. (Local Time), and at any adjournment or
postponement thereof. The first date on which this Proxy Statement and
related form of proxy are being sent to the shareholders of the Trust is on or
about December 29, 1995.
A form of proxy for use at the meeting is enclosed. Any shareholder may
revoke a proxy at any time before the authority granted by it is exercised by
giving written notice of revocation to the Secretary of the Trust, by
submitting another executed proxy to the Secretary of the Trust bearing a
later date (but prior to the voting of such proxy), or by attending the
meeting and asking (prior to the voting of such proxy) for a return of such
proxy.
The cost of preparing, assembling and mailing the proxy materials will
be borne by the Trust. In addition to the use of the mails, proxies may be
solicited by personal interview, telephone and telegram by certain officers
and employees of the Trust who will not be specifically compensated for their
services. The Trust must by federal regulation reimburse brokers, dealers,
banks and other entities exercising fiduciary powers holding issued and
outstanding common shares, par value $1.00 per share, of the Trust ("Shares")
as nominees for reasonable out-of-pocket expenses incurred by them in
forwarding these proxy materials to beneficial owners.
Value Property Trust announced that its Prepackaged Plan of
Reorganization (the "Prepackaged Plan") under Chapter 11 of the Bankruptcy
Code was declared effective by the United States Bankruptcy Court for
the Central District of California on Friday, September 29, 1995.
Under the Prepackaged Plan, holders of the Trust's $290,000,000
principal amount of Senior Secured Uncertificated Notes due 1995 received (i)
$110,000,000 principal amount of newly issued 11-1/8% Senior Secured Notes due
2002, (ii) $71,000,000 in cash and (iii) approximately 10,889,430 new Shares
representing in the aggregate approximately 97% of the Shares outstanding
after the effective date. In connection with the Prepackaged Plan, the Trust
effected a one for 33.33 reverse stock split of its outstanding Shares.
Additionally, all former Trustees of Value Property Trust were entirely
replaced by a new set of Trustees on the effective date of the Prepackaged
Plan. This transition has resulted in a lack of continuity of
information between the former and the current Board of Trustees. As a result,
the current Trustees have no means of verifying the validity of the
documentation which serves as the sole basis of certain descriptive
information on Trust policies and practices for the fiscal year 1995
contained in this Proxy Statement.
VOTING SECURITIES
Except as set forth below, each Share is entitled to one vote on each
matter as may properly be brought before the Meeting. Only holders of record
of Shares at the close of business on December 22, 1995 will be entitled to
receive notice of and to vote at the Meeting. On that date there were
11,226,310 Shares outstanding.
The presence in person or by proxy of shareholders entitled to cast a
majority of all the votes entitled to be cast at the Meeting constitutes a
quorum. For purposes of the vote on Proposal 1 (approval of the voting
2
<PAGE>
rights of certain of the Shares held by entities related to Mutual Series
Fund, Inc. (the "Mutual Entities") and Shares held by entities related to
Intermarket Corporation (the "Intermarket Entities") that may be
precluded from voting under the Maryland General Corporation law (the
"MGCL")), abstentions and broker non-votes will have the same effect as votes
against each Proposal.
The Mutual Entities and the Intermarket Entities will deliver proxies in
favor of Proposal 1. However, Proposal 1 will not be deemed to have been
approved unless it receives the affirmative vote of holders of two-thirds of
the Shares other than those of the Mutual Entities and the Intermarket
Entities. There are 5,600,083 Shares held by the Mutual Entities and 2,788,827
Shares held by the Intermarket Entities. Accordingly, the affirmative vote of
holders of two-thirds of 2,828,957 votes (or 1,885,972 votes) is required for
adoption of Proposal 1. Additionally, 8,479 Shares held by certain members of
the Trust's management and by George R. Zoffinger, a Trustee and the Chief
Executive Officer and President of the Trust, are "interested shares",
as defined below, will not be included in the number of Shares entitled to
vote on Proposal 1. The affirmative vote of a plurality of all the votes
cast at a meeting at which a quorum is present is required for adoption of
Proposals 2 and 3. Proposals 2 and 3 will not be deemed to have been approved
unless such Proposals receive the affirmative vote of holders of a plurality
of the Shares other than those of the Mutual Entities and the Intermarket
Entities.
At the record date, to the Trust's knowledge, the following persons or
groups (as that term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) owned beneficially 5% or more
of the Shares:
Mutual Series Fund, Inc. 5,600,083 Shares (49.88%)
Intermarket Corporation 2,788,827 Shares (24.84%)
Angelo Gordon & Co., L.P. 1,230,380 Shares (10.96%)
RISK FACTORS
Shareholders entitled to vote at the Meeting should carefully consider
the following factors in addition to the other information in this Proxy
Statement:
DILUTION OF EXISTING SHAREHOLDERS
Proposal 1, if approved, would ensure voting rights to certain Shares
that might otherwise not be entitled to vote on any matters to be considered
by the shareholders of the Trust. As illustrated below, this could have the
effect of diluting the voting power of those shareholders whose Shares are
currently entitled to vote on all matters and facilitating a potential change
of control of the Trust.
The following is an illustration of the potential dilutive effect of
Proposal 1, if approved, on the voting power of those shareholders whose
Shares are currently entitled to vote on all matters. Such
illustration assumes that (i) the Trust's shareholders are being asked to
approve a matter, such as Proposal 1, that requires the affirmative vote of
two-thirds of all the votes entitled to be cast and (ii) a shareholder, who
owns 10,000 Shares, is entitled to vote all of his Shares. If Proposal 1 is
not adopted, two-thirds of 2,837,400 votes (or 1,891,600 votes) would be
required to adopt the proposal and 945,801 votes would be required to defeat
it. The 10,000 shares owned by the shareholder in such example would
represent approximately 1.07% of the vote needed to defeat the proposal. If
Proposal 1 is adopted, two-thirds of 11,226,310 votes (or 7,484,207
votes) would be required to adopt the proposal and 3,742,104 votes would be
required to defeat it. The 10,000 shares owned by the shareholder in such
example would represent approximately 0.27% of the vote needed to defeat the
proposal. According to the example, as a result of the approval of voting
rights under Proposal 1, the shareholder's relative voting power and ability
to defeat the extraordinary action decreased.
3
<PAGE>
POSSIBILITY OF CONTROL BY SIGNIFICANT SHAREHOLDERS
The Maryland statute pursuant to which certain Shares owned by the
Mutual Entities and the Intermarket Entities may have been denied voting
rights was enacted to protect Maryland corporations and real estate
investment trusts ("REITs") from potential takeovers. If such Shares are
granted voting rights under Proposal 1, the Mutual Entities and the
Intermarket Entities will conclusively hold 49.88% and 24.84%, respectively,
of the Trust's voting power.
PROPOSAL 1
APPROVAL OF THE VOTING RIGHTS OF CERTAIN SHARES
HELD BY ENTITIES RELATED TO MUTUAL SERIES FUND, INC. AND
SHARES HELD BY ENTITIES RELATED TO
INTERMARKET CORPORATION THAT MAY BE PRECLUDED
FROM VOTING UNDER THE MARYLAND GENERAL CORPORATION LAW
BACKGROUND
Subtitle 7 of Title 3 of the MGCL (the "Maryland Control Share
Statute") generally excludes from shares entitled to vote "control shares" (as
described below) of a Maryland corporation acquired pursuant to a "control
share acquisition" (as described below), unless voting rights for such shares
have been approved by the shareholders of the corporation by the affirmative
vote of two-thirds of all votes entitled to be cast (other than "interested
shares", as described below) or, among other exceptions, such acquisition of
shares is made pursuant to a merger agreement with the corporation or the
corporation's charter or by-laws are amended to permit the acquisition of
such shares prior to the acquiring person's acquisition thereof. While the
language of the Control Share Acquisition Statute is not completely clear,
the Trust believes that Shares held by the Mutual Entities and the
Intermarket Entities are not covered by, and therefore have not lost their
voting power under,the Maryland Control Share Statute. However, in order to
remove any uncertainty, the Board of Trustees has voted to present Proposal 1
to the shareholders. (All references to "corporations" in this Background
to Proposal 1 also refer to Maryland REITs.)
"Control shares" generally means shares of a corporation acquired by a
person within any of the following ranges of voting power: (i) one-fifth or
more, but less than one-third of all voting power; (ii)one-third or more, but
less than a majority of all voting power; or (iii) a majority or more of all
voting power. Generally, only those shares acquired in the transaction that
causes a shareholder to own in excess of 20% of the voting common shares of a
corporation that is subject to the Maryland Control Share Statute and the
voting common shares thereafter acquired are precluded from voting under such
statute. "Control share acquisition" generally means the acquisition of
ownership of, or the right to direct the exercise of voting power with
respect to, issued and outstanding control shares, but does not include the
acquisition of shares in a merger, consolidation or share exchange to which
the corporation is a party. "Interested shares" generally means shares of a
corporation in respect of which an acquiring person, an officer of the
corporation or an employee of the corporation who is also a director or
trustee of the corporation is entitled to exercise voting power.
The Intermarket Entities may be deemed to own "control shares" under
clause (i) of the foregoing definition, and the Mutual Entities may be deemed
to own "control shares" under clause (ii) of the foregoing definition. The
Trust believes, based on information provided to it by the Mutual Entities
and the Intermarket Entities, that all of the Shares held by the Mutual
Entities and the Intermarket Entities were received pursuant to the Trust's
Prepackaged Plan. All of the Shares owned by the Mutual Entities and the
Intermarket Entities may therefore be precluded from voting under the Maryland
Control Share Statute.
As stated above, the Maryland Control Share Statute provides a procedure
by which the voting rights for control shares may be approved by the
shareholders of the Trust. Such vote may either be requested by any
4
<PAGE>
shareholder who owns control shares, in which case the Trust must present
the issue for consideration by its shareholders, or the Trust may, on its own
volition, present the issue for consideration by its shareholders and may call
a meeting of shareholders specifically for such purpose. The Board of
Trustees did not intend, and believes that the shareholders of the Trust who
ratified the Trust's Prepackaged Plan did not intend, to preclude the Mutual
Entities and the Intermarket Entities from voting any of their Shares.
Moreover, the Board of Trustees believes that it is in the best interests of
the Trust that its shareholders with the majority of the Trust's economic
interest have the corresponding voting power.
The potential risks to other shareholders that may be associated with
the adoption of Proposal 1 are discussed under "Risk Factors--Dilution of
Existing Shareholders" and "--Possibility of Control by Significant
Shareholders."
PROPOSAL 1
The Mutual Entities currently own 5,600,083 (49.88%) of the Shares and
the Intermarket Entities currently own 2,788,827 (24.84%) of the Shares. The
Board of Trustees proposes that the Trust's shareholders approve the voting
rights of all of the Shares owned by the Mutual Entities and the Shares owned
by the Intermarket Entities that may be deemed to be control shares. The
Mutual Entities and the Intermarket Entities will deliver proxies in favor of
Proposal 1. However, Proposal 1 will not be deemed to have been approved
unless the Proposal receives the affirmative vote of holders of
two-thirds of the Shares other than those of the Mutual Entities and the
Intermarket Entities. Additionally, 8,479 Shares held by certain members of
the Trust's management and by George R. Zoffinger, a Trustee and the Chief
Executive Officer and President of the Trust, are "interested shares" and will
not be included in the number of Shares entitled to vote on Proposal 1.
Accordingly, the affirmative vote of two-thirds of 2,828,957 votes (or
1,885,972 votes) is required to approve Proposal 1. Jeffrey A. Altman, a
Trustee and Chairman of the Board of Trustees of the Trust, is a
Vice President at Mutual Series Fund, Inc. Because of such positions, Mr.
Altman abstained from the vote of the Board of Trustees providing for Proposal
1 to be presented for approval to the Trust's shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 1.
PROPOSAL 2
ELECTION OF TRUSTEES
At the meeting, seven Trustees are to be elected, each to hold office
until the next Annual Meeting of Shareholders and until his successor shall
have been duly elected and qualified. The Board of Trustees has nominated
Jeffrey A. Altman, Carl A. Mayer, Jr., Martin Bernstein, John B. Levy,
Richard B. Jennings, Richard S. Frary and George R. Zoffinger to serve as
Trustees (the "Nominees"). In accordance with Maryland law, the Declaration
of Trust of the Trust, as amended, and the By-laws of the Trust, each
Nominee must receive a majority of the votes cast at the Annual Meeting of
Shareholders in order to be elected. In the absence of instructions to the
contrary, the Shares represented by duly executed proxies other than those of
the Mutual Entities and the Intermarket Entities will be voted for the
election of each of the seven Nominees listed above, all of whom have
consented to be named and to serve if elected. Broker non-votes will not
be considered as votes for purposes of the election of Trustees. All of the
Nominees were appointed Trustees on September 29, 1995 in connection with the
Trust's Prepackaged Plan.
The Trust does not presently know of anything that would preclude any
Nominee from serving. However, should any Nominee for any reason become
unable or unwilling to serve as a Trustee, the discretionary authority
provided in the proxy will be exercised to vote for a substitute or
substitutes unless the Trustees determine to reduce the number of Trustees to
be elected.
5
<PAGE>
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE
FOR ALL OF THE NOMINEES.
INFORMATION REGARDING NOMINEES AND EXECUTIVE OFFICERS
The following table and biographical descriptions set forth certain
information with respect to the seven Nominees for election as trustees at the
Annual Meeting of Shareholders based on information furnished to the Trust by
each Trustee. There is no family relationship between any Trustee or
executive officer of the Trust.
For information with respect to executive officers of the Trust see
"Executive Officers of the Registrant" included in Part I of the Trust's
annual report on Form 10-K. The following information is as of December
1,1995, unless otherwise specified.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
TRUSTEE OWNERSHIP OF OF
NAME AGE SINCE(1) COMMON STOCK (2) CLASS
- ---- --- ------- ------------------ -------
Jeffrey A. Altman ........ 29 1995 5,000(4) *
Carl A. Mayer, Jr......... 57 1995 5,000 *
Martin Bernstein ......... 58 1995 33,162(5) *
John B. Levy ............. 48 1995 9,206(6) *
Richard B. Jennings ...... 51 1995 5,000 *
Richard S. Frary ......... 48 1995 23,775 *
George R. Zoffinger ...... 47 1995 8,443 *
______________________
* Less than one percent.
(1) Trustees are elected at each Annual Meeting to serve until the next
Annual Meeting. All of the Nominees were appointed Trustees on September
29, 1995 in connection with the Trust's Prepackaged Plan.
(2) Except as otherwise noted, each individual in the table above has sole
voting and investment power over the Shares listed.
(4) Beneficial ownership of 5,000 of the Shares reported as beneficially
owned by Mr. Altman is vested in Heine Securities Corporation pursuant to
an agreement between Mr. Altman and Heine Securities Corporation.
(5) 18,775 of the Shares reported as beneficially owned by Mr. Bernstein are
owned by Evelyn Bernstein, Mr. Bernstein's wife. Mr. Bernstein disclaims
beneficial ownership of such Shares.
(6) 4,206 of the Shares reported as beneficially owned by Mr. Levy are owned
by Judith Brown Levy, Mr. Levy's wife. Mr. Levy disclaims beneficial
ownership of such Shares.
6
<PAGE>
NOMINEES FOR ELECTION AS TRUSTEES
<TABLE>
<CAPTION>
POSITIONS
NAME, AGE AND YEAR WITH THE
FIRST BECAME TRUSTEE TRUST PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS
<S> <C> <C>
Jeffrey A. Altman Chairman, Chairman of the Board of Trustees of the Trust since October
29 years Trustee 1995. Vice President of Mutual Series Fund ,Inc. since 1995.
September, 1995 Analyst with Heine Securities Corporation since 1990. Director
of Resurgence Properties Inc.
George R. Zoffinger President, Mr. Zoffinger served as Chairman of the Board of Corestates
47 years Chief New Jersey National Bank from April 1994 to the present.
September, 1995 Executive From April 1995 to the present, he served as Director of
Officer, Multicare, Inc. From December 1991 to April 1994, he served
Trustee as President and Chief Executive Officer of Constellation
Bankcorp and Constellation Bank. From March 30, 1990 to
December, 1991, Mr. Zoffinger served as the Commissioner for
the New Jersey State Department of Commerce and Economic
Development, as well as Chairman of the Board of the New
Jersey Economic Development Authority. Mr. Zoffinger has
served on the Board of Directors of Multicare, Inc. Since April
1995.
Carl A. Mayer, Jr. Trustee Founded The Mayer Group in 1990, an advisor group offering
57 years consulting and marketing expertise and services to real estate
September, 1995 investment companies who are seeking investment capital from
the pension fund community. Mr. Mayer continues to serve as
a principal of The Mayer Group.
Martin Bernstein Trustee A private investor who has been managing family funds since
58 years 1988. Prior to this period, Mr. Bernstein served as a founding
September, 1995 General Partner of Halcyon Investments and Alan B. Slifka &
Co. (investments). Mr. Bernstein also currently serves on the
Board of Directors of Astro Communications and MBO
Properties, Inc.
John B. Levy Trustee Currently the President of John B. Levy & Company, Inc., a
48 years real estate consulting firm based in Richmond, Virginia, and has
September, 1995 served in that capacity since June 1995. Mr. Levy was an
Executive Vice President of Republic Realty Mortgage
Corporation from 1993 to June 1995. Prior to 1993, Mr. Levy
acted as Senior Vice President of Nationsbanc Mortgage
Corporation, and was charged with lender relations, production
of new income property loans and management of the
production offices.
Richard B. Jennings Trustee Currently the President of Realty Capital International Inc., a
51 years real estate investment banking firm, and has served in that
September, 1995 capacity since 1991. Between 1990 and 1991, Mr. Jennings
acted as a Senior Vice President of Landauer Associates, Inc., a
real estate appraisal and advisory firm based in New York, New
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
POSITIONS
NAME, AGE AND YEAR WITH THE
FIRST BECAME TRUSTEE TRUST PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS
<S> <C> <C>
York. Mr. Jennings has also been President of Jennings
Securities Corporation since 1995. Mr. Jennings currently
serves on the Board of Directors of MBO Properties, Inc.
Richard S. Frary Trustee The founding partner and majority shareholder of Tallwood
48 years Associates, Inc., a private merchant banking firm specializing in
September, 1995 corporate restructurings and real estate, and has served in that
capacity since 1990.
</TABLE>
THE BOARD OF TRUSTEES AND ITS COMMITTEES
BOARD OF TRUSTEES
The Trust is managed by a seven member Board of Trustees, a majority of
whom are independent of the Trust's management. The former Board of Trustees
held 12 meetings during fiscal year 1995. Each of the Trustees attended at
least 75% of the total number of meetings of the Board of Trustees and of the
committees of the Trust of which he was a member.
The Board of Trustees has appointed an Audit Committee, Compensation and
Nominating Committee, and an Executive Committee. Descriptions of the Audit
Committee and the Compensation and Nominating Committee follow.
AUDIT COMMITTEE. The Audit Committee, which currently consists of
Messrs. Jennings, Chairman, Bernstein and Mayer, makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the Trust's
internal accounting controls. The Audit Committee met once in fiscal 1995.
The Audit Committee was comprised of Jeffrey M. Bucher, Kent L. Colwell, James
M. Gassaway, John E. Krout and Gerhard N. Rostvold until September 29, 1995.
These individuals were removed and the current committee members were
appointed in connection with the Trust's Prepackaged Plan.
COMPENSATION AND NOMINATING COMMITTEE. The Compensation and Nominating
Committee, which currently consists of Messrs. Bernstein, Chairman, Levy and
Frary, makes recommendations and exercises all powers of the Board of Trustees
in connection with certain compensation matters, including incentive
compensation and benefit plans. The Compensation and Nominating
Committee administers, and has authority to grant awards under, the 1995
Share Option Plan to the employee Trustees and management of the Trust andits
subsidiaries and other key employees. The Compensation and Nominating
Committee is also responsible for recommending to the shareholders and the
Board of Trustees individuals to serve as Trustees and officers of the Trust.
The Compensation and Nominating Committee met 2 times in fiscal year 1995.
The Compensation and Nominating Committee was comprised of Jeffrey M. Bucher,
Kent L. Colwell, James M. Gassaway, John E. Krout and Gerhard N. Rostvold
until September 29, 1995. These individuals were removed and the current
committee members were appointed in connection with the Trust's
Prepackaged Plan. Recommendations from shareholders for nominees for
election as Trustees may be directed to Mr. Martin Bernstein, Chairman of
the Compensation and Nominating Committee, Value Property Trust, 120 Albany
Street, 8th Floor, New Brunswick, New Jersey 08901.
FORMER TRUSTEE COMPENSATION
During the fiscal year ended September 30, 1995, the Trustees received
as compensation for their services as Trustees an annual retainer of $10,000
plus $800 for each regular monthly Trustee meeting attended
8
<PAGE>
in person or conducted by telephone conference; $600 for each committee
meeting attended in person; and $400 for any Trustee or committee meeting,
other than the regular monthly Trustee meeting, convened by telephone
conference; except that no additional compensation was paid for
attendance at any committee meeting held onthe same day as any Trustee
meeting. An additional $100 fee was payable per meeting to the chairman of
any committee.
On September 20, 1989, the Trustees adopted the Pension Plan for
Trustees, effective October 1, 1989. Trustees became eligible for plan
benefits upon completion of five years of service as a Trustee, including
years served prior to the plan's effective date. Under the plan, each
eligible Trustee was entitled to a normal retirement benefit equal to the
annual retainer for Trustees at the rate in effect on the Trustee's
normal retirement date or, if earlier, the Trustee's last day of Board
membership. On April 5, 1995, the Board of Trustees amended the pension plan
for Trustees to provide that should any Trustee's service terminate for
any reason within one year after the effective date of the Prepackaged Plan,
such terminated Trustee would receivea one-time single-sum cash payment equal
in amount to the net present value of the maximum aggregate projected benefit
obligation of the Trust to that Trustee. No other death benefits became
payable on behalf of any Trustee under the plan. All former Trustees were
paid off in connection with the termination of their service under the
Prepackaged Plan.
CURRENT TRUSTEE COMPENSATION
Current Trustees receive $750 for each meeting and, in lieu of an annual
retainer, the Trustees will be granted options to purchase Trust Shares under
the proposed 1995 Share Option Plan, as described in Proposal 4. The Pension
Plan for the Trustees, as currently in effect, would provide no retirement
benefits for the current Trustees because they receive no annual retainer.
[THERE IS A PROPOSAL BEFORE THE BOARD TO TERMINATE THE PLAN AT THE
DECEMBER 18, 1995 BOARD MEETING.]
EXECUTIVE COMPENSATION
The following table provides information about the compensation for the
Chief Executive Officers and the four other most highly compensated officers
of the Trust for the fiscal years ended September 30, 1995, 1994, 1993
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
-------------------------------------- --------------------- --------
OTHER ANNUAL RESTRICTED OPTIONS/ ALL OTHER
FISCAL SALARY BONUS COMPENSATION SHARES SARS LT IP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(2) ($) ($) ($) (#) PAYOUTS ($)(3)
- --------------------------- ------ ------ ----- ------------ ---------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George R. Zoffinger, 1995(4) - - - - - - -
President and Chief 1994 - - - - - - -
Executive Officer........... 1993 - - - - - - -
C.W. Strong, Jr., Former 1995 $175,000 $3,000
Chief Executive Officer..... 1994 175,000 - - - - - 3,000
1993 175,000 - - - - - 3,000
Victor H. Schlesinger, 1995 $100,000 $3,000
Former Chairman............. 1994 100,000 - - - - - 3,000
1993 100,000 - - - - - 3,000
James A. Dalton, Former 1995 $200,301 $25,000 $3,000
Executive Vice President.... 1994 188,348 25,000(5) - - - - 3,000
1993 181,104 20,000 - - - - 3,000
Daniel F. Hennessey, Former 1995 $129,488 $20,000 $3,000
Chief Financial Officer..... 1994 129,488 20,000(5) - - - - 3,000
1993 124,508 20,000 - - - - 3,000
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
-------------------------------------- --------------------- --------
OTHER ANNUAL RESTRICTED OPTIONS/ ALL OTHER
FISCAL SALARY BONUS COMPENSATION SHARES SARS LT IP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(2) ($) ($) ($) (#) PAYOUTS ($)(3)
- --------------------------- ------ ------ ----- ------------ ---------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald W. Burnes, Jr., Former 1995 $127,968 $25,000 - - - - $3,000
Vice President............... 1994 120,595 30,000(5) - - - - 3,000
1993 114,448 30,000 - - - - 3,000
</TABLE>
_______________________
(1) In the fiscal year ended September 30, 1993, the Trust provided certain
personal benefits to its executive officers. The amount of such benefits
to each of the Named Executive Officers did not exceed the lesser of
$50,000 or 10% of salary and bonus for such fiscal year.
(2) Includes salary deferrals and employee contributions to the Trust's
Savings Incentive Plan. See "Savings Incentive Plan" below.
(3) Includes the Trust's matching contributions under the Trust's Savings
Incentive Plan. See "Savings Incentive Plan" below.
(4) Between April 24, 1995 and September 29, 1995, the Trust paid a monthly
consulting fee of $17,667 to GRZ, Inc. for the consulting services of
George R. Zoffinger.
(5) Does not include bonus for calendar year 1994, which was paid in November
1994. The bonuses were $25,000 for Mr. Dalton, $20,000 for Mr. Hennessey,
and $25,000 for Mr. Burnes.
OPTION GRANTS IN FISCAL YEAR 1995; AGGREGATED OPTION EXERCISES IN FISCAL YEAR
1995 AND FISCAL YEAR-END 1995 OPTION VALUES
All options outstanding at the time of the effective date of the
Prepackaged Plan were canceled pursuant to the terms of the Prepackaged Plan,
and no options were granted or exercised in fiscal year 1995.
EMPLOYEES' RETIREMENT PLAN
On September 20, 1989, the Trustees adopted an Employees' Retirement
Plan effective September 30,1989. On December 16, 1992, the Trustees amended
and restated the Employees' Retirement Plan effective January 1, 1992 (as
amended on July 20, 1994, and effective January 1, 1995 and as may be further
amended, the "Retirement Plan"). All employees are eligible to participate
in the Retirement Plan provided that they are at least 21 years of age and
have been employed for twelve consecutive months, during which period the
employee has completed at least 1000 hours of service. Under the Retirement
Plan, each eligible employee after completing five years of vesting service
becomes 100% vested and entitled to a retirement pension. Benefits can be
paid as a lump sum or as an annual retirement income for life equal to the
greater of (a) the sum of (i) 1.3% of the highest five-year average annual
base salary, multiplied by the number of years of credited service up to and
including 35 thereof and (ii) 0.4% of the highest five-year average annual
base salary in excess of Social Security covered compensation (as adjusted
every five years), multiplied by the number of years of credited service up
to and including 35 thereof or (b) the sum of (i) 1.3% of the highest
five-year average annual base salary, multiplied by the number of years of
credited service up to and including 15 thereof; (ii) 1.5% of the highest
five-year average annual base salary, multiplied by the number of years of
credited service from 16 to 25 years inclusive; (iii) 0.5% of the highest
five-year average annual base salary, multiplied by the number of years of
credited service from 26 to 35 years inclusive; and (iv) 0.4% of the highest
five-year average annual base salary in excess of Social Security coved
compensation (as adjusted every five years), multiplied by the number of
years of credited service up to and including 25 thereof.
In November 1995, the Trustees amended the Retirement Plan to change
from the Pension Benefit Guaranty Corporation interest rate used for valuing
lump sum distributions to the new General Agreement on Tariffs and Trade
interest rate and mortality table for valuing lump sum distributions. As a
result of this
10
<PAGE>
amendment, the current market value of Retirement Plan assets approximates
the current aggregate lump sumamounts due to participants.
Unreduced retirement benefits may begin to be paid at normal retirement
(age 65 and five years of participation in the Retirement Plan), late
retirement, or five years prior to Social Security retirement age with 20
years of service. Currently, the Retirement Plan covers only four individuals.
The table below shows the estimated annual benefits payable upon
retirement under the Trust's Retirement Plan. Retirement benefits shown are
based upon retirement at age 65 and the payment of a straight life annuity to
the employee. The annual benefit under the Retirement Plan will not exceed
the lesser of $112,221 or 100% of the participant's average compensation for
three consecutive Fiscal Years (as defined in the Retirement Plan) in which
such eligible employee is an active participant in the Retirement Plan. [THE
RETIREMENT PLAN CURRENTLY COVERS ONLY FOUR INDIVIDUALS, AND THERE IS A
PROPOSAL BEFORE THE BOARD TO TERMINATE THE PLAN AT THE DECEMBER 18, 1995 BOARD
MEETING.]
PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFIT
AVERAGE OF 5
HIGHEST
ANNUAL YEARS OF SERVICE
COMPENSATION
LEVELS 15 20 25 30 35
- ----------------- --------- -------- -------- -------- --------
$125,000 $29,427 $40,486 $51,545 $58,854 $68,663
150,000 35,802 49,236 62,670 71,604 83,538
175,000 42,177 57,986 73,795 84,354 98,413
200,000 48,552 66,736 84,920 97,104 112,221
225,000 54,927 75,486 96,045 109,854 112,221
For the fiscal year ended September 30, 1995, the base salary for
purposes of the Retirement Plan for the Named Executive Officers is set forth
in the salary column of the Summary Compensation Table. The Named Executive
Officers were credited with years of service under the Retirement Plan as
follows: Mr.Dalton, 13 years; Mr. Hennessey, 24 years; Mr. Burnes, 6 years;
and Mr. Zoffinger, 0 years. Mr. Strong and Mr. Schlesinger did not
participate in the Retirement Plan.
The benefits listed in the Pension Plan Table are not subject to
reduction for Social Security or other offset amounts.
SAVINGS INCENTIVE PLAN
On September 20, 1989, the Trustees adopted a Savings Incentive Plan
effective September 30, 1989, to provide retirement benefits for eligible
employees of the Trust. On December 16, 1992, the Trustees amended and
restated the Savings Incentive Plan effective January 1, 1992, and the
current Board of Trustees further amended the plan on October 2, 1995 (as
amended, the "Savings Plan"). As of October 2, 1995, all employees of the
Trust are eligible to participate in the Savings Plan immediately upon
employment. Under the Savings Plan, each eligible employee may authorize
payroll deductions of not less than 1% nor more than 15% of the employee's
earnings before bonus income, not to exceed the dollar limit permissible
under the Internal Revenue Code of 1986, as amended (the "Code") ($9,240 in
1995). The Trust will match each employee's contribution for the payroll
period, subject to a limitation of 6% of the employee's compensation for the
payroll period, with the maximum amount of contribution by the Trust in any
year being $3,000. [THE BOARD IS CURRENTLY CONSIDERING A PROPOSAL TO AMEND
THE SAVINGS PLAN.]
11
<PAGE>
Benefits will be paid to terminating participants as soon as possible
following the participant's date of termination. Participants have a 100%
nonforfeitable right to their contributions to the Savings Plan and
the Trust's matching contributions vest at the rate of 20% for each year of
service, but will, in any event, be 100% vested at the later of age 65 or
after five years of participation in the Savings Plan, or in the event of
disability or death. Subject to certain limitations, hardship distributions of
a participant's fully vested account balance are permitted on account of a
demonstrable, immediate and heavy financial need.
EMPLOYEE RETENTION PLAN
The Trustees adopted an Employee Retention Plan (the "Retention Plan"),
dated October 17, 1990, as amended January 16, 1991 and March 20, 1991,
designed to provide a financial incentive for key employees to successfully
restructure the Trust and maximize the net worth of the Trust. The Retention
Plan was approved by the Bankruptcy Court by order dated February 26, 1991.
The Retention Plan is administered by the Compensation and Nominating
Committee which determines the allocation of amounts among the participants.
Victor H. Schlesinger, former Chairman and C.W. Strong, Jr., former Chief
Executive Officer, did not participate in the Retention Plan.
Two portions of the Retention Plan as originally adopted remain in
place. The first portion of the Retention Plan provides for a termination pay
plan (the "Termination Pay Plan") that will remain in effect during the
period ending on the later of (i) the date that the obligations (including,
without limitation, interest accrued from and after January 31, 1991) payable
by the Trust to or for the benefit of any creditor holding a "Class 3 Claim"
under the 1992 amendment to the Trust's 1991 Joint Plan of Reorganization
(the "Prior Plan")are no longer outstanding (the "Original Effective
Period"), (ii) the maturity date of the Trust's new 11-1/8% Senior Secured
Notes due 2002 that were issued in connection with the Prepackaged Plan (the
"New Senior Notes"), or (iii) the date on which the New Senior Notes are
repaid in full (periods set forth in (i)-(iii), collectively, are referred to
below as the "Effective Period"). Any eligible employee who is terminated
without Cause (as defined in the Retention Plan) during the Effective Period
will be entitled to termination pay of not less than 12 weeks and nor more
than 18 months salary depending on the employee's years of employment and
position with the Trust. The number of months salary for Messrs. Dalton,
Hennessey and Burnes are 18, 18 and 12, respectively. Medical and dental
coverage will be continued during any termination pay period.
On September 30, 1995, the Trust expensed the $1.3 million cost of the
Termination Pay Plan. After fiscal year end, the majority of the Trust's
existing employees were terminated and the Trust commenced payments to such
employees.
The second portion of the Retention Plan is an incentive program which
may provide total incentive payments during the Original Effective Period of
not more than $1,250,000. On September 16, 1992, the Compensation and
Nominating Committee approved a continuation of the incentive program for
calendar year 1993 based on a formula for reducing the Trust's outstanding
indebtedness. Under this incentive program, because the outstanding
indebtedness was no greater than $290,000,000 at December 31, 1992, $125,000
was deposited in the pool. Similarly, $125,000 was deposited in the pool at
December 31, 1993 and December 31,1994. The amounts paid from the pool to
the Named Executive Officers for the fiscal years ended September 30, 1995,
1994 and 1993 are included in the Summary Compensation Table.
INDEMNIFICATION
The MGCL provides for indemnification of directors, trustees, officers,
employees and agents, except to the extent that (i) it is proved that the
person actually received an improper benefit or profit in money, property or
services, or (ii) a judgment or other final adjudicated is entered in a
proceeding based on a finding that the person's action, or failure to act, was
the result of active and deliberate dishonesty and was material to the cause
of action adjudication in the proceeding. (Md. Code, Title 2 Sec. 2-418
(1994) ) Article 7.04 of
12
<PAGE>
the Declaration of Trust provides that the Trust will indemnify, to the full
extent permitted by Maryland law, now or hereafter in force, the trustees and
officers of the Trust. The Trust is not aware of any pending legal
proceedings for which any such person would be entitled to indemnification.
REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE
OBJECTIVES OF EXECUTIVE COMPENSATION. In connection with the Trust's
Prepackaged Plan, a new Board of Trustees was appointed. No member of the new
Board of Trustees served on the former Board of Trustees. The new Board of
Trustees appointed a new Compensation and Nominating Committee (the
"New Compensation Committee") on October 2, 1995. No member of the New
Compensation Committee served on the former Compensation Committee (the
"Former Compensation Committee"). The New Compensation Committee lacks any
personal knowledge of the past practices of the Former Compensation
Committee. It is therefore unclear to the New Compensation Committee as to the
precise manner in which the Former Compensation Committee arrived at its
decisions for the compensation of the Trust's executives in fiscal year 1995.
All observations concerning the Former Compensation Committee policies and
practices are based on information contained in the Minutes of the
Compensation Committee prior to the time the New Compensation Committee took
office (the "Record"). The New Compensation Committee has no means of
verifying the validity of the Record. The Record purports that the Former
Compensation Committee adopted a compensation structure that was designed to
attract and retain experienced and motivated officers who would contribute to
the Trust's growth and profitability. As described below, the Record also
represents that the Trust combined base salaries with performance based cash
bonuses and equity awards to reward its officers and employees for
their performance.
BASE SALARY. In establishing base salary levels for the Named Executive
Officers, the Former Compensation Committee claimed that it relied on reports
made available by the National Association of Real Estate Investment Trusts
("NAREIT") which compared the compensation of various executives of other
REITs. In setting a base salary level for a particular executive, the Former
Compensation Committee reported that it reviewed the Compensation Study for
Positions in the Real Estate Investment Trust Industry and compensation
trends in the real estate industry in general with respect to several
variables, including position and responsibilities, type of real estate owned
and market capitalization. The Record represents that the Former Compensation
Committee then voted on the recommendation the Chairman of the Compensation
Committee of an amount he believed was commensurate with comparable
executives in the industry.
BONUSES UNDER THE RETENTION PLAN. The Record purports that incentive
bonuses were awarded to certain Named Executive Officers in fiscal years 1995,
1994 and 1993 in accordance with the second portion of the Employee Retention
Plan detailed above and that these incentive bonuses were designed to provide
a financial incentive for the Named Executive Officers to continue their
employment with the Trust throughout there structuring process.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Record represents that
the base salary of the Trust's Chief Executive Officer was determined by
reviewing the NAREIT survey of Chief Executive Officer compensation among
various REITs nationwide, analyzing the same variables listed above and
voting on there commendation of the Chairman of the Compensation Committee.
C.W. Strong, Jr., Chief Executive Officerof the Trust in fiscal year 1995,
received no bonus under the Retention Plan or otherwise in fiscal year 1995.
COMPENSATION COMMITTEE PROCEDURES FOR FISCAL YEAR 1996. The New
Compensation Committee is in the process of formulating ongoing compensation
policies for the upcoming fiscal year.
SUBMITTED BY THE NEW COMPENSATION COMMITTEE:
Martin Bernstein John B. Levy Richard S. Frary
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return for the period from September 1990 to September 1995
(assuming an initial investment of $100 and reinvestment of any dividends)
among the Trust, the Standard & Poor's ("S & P") 500 Index and the NAREIT
Hybrid Total Return Index (the "Index"), an industry index of 18 "hybrid"
REITs. The Index includes REITs which do not have at least 75% of their
gross invested book assets invested directly or indirectly in either the
equity ownership of real estate or in mortgage loans. Upon written request,
the Trust will provide shareholders with a list of the REITs included in the
Index. The historical information set forth below is not necessarily
indicative of future performance.
<TABLE>
<CAPTION>
9/90 12/90 3/91 6/91 9/91 12/91 3/92 6/92 9/92 12/92
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Value Property
Trust $100.00 $ 61.29 $106.45 $ 74.19 $ 61.61 $ 45.16 $ 61.29 $ 41.94 $ 29.03 $ 32.28
- -------------------------------------------------------------------------------------------------
NAREIT Hybrid $100.00 $ 95.34 $116.62 $120.14 $123.01 $132.67 $128.03 $132.42 $143.77 $154.88
- -------------------------------------------------------------------------------------------------
S&P 500 $100.00 $108.95 $124.81 $124.56 $131.26 $142.24 $138.61 $141.33 $145.71 $153.15
</TABLE>
<TABLE>
<CAPTION>
3/93 6/93 9/93 12/93 3/94 6/94 9/94 12/94 3/95 6/95 9/95
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Value Property
Trust $ 45.18 $ 17.75 $ 10.48 $ 14.53 $ 12.90 $ 10.48 $ 10.48 $ 3.64 $ 5.24 $ 6.45 $ 8.08
- -----------------------------------------------------------------------------------------------------
NAREIT Hybrid $178.45 $177.37 $189.34 $187.44 $191.45 $196.74 $198.39 $194.95 $198.88 $218.49 $226.62
- -----------------------------------------------------------------------------------------------------
S&P 500 $159.71 $160.53 $164.84 $168.44 $162.02 $162.88 $170.69 $170.65 $187.25 $205.13 $221.43
- -----------------------------------------------------------------------------------------------------
</TABLE>
[Graphic Chart]
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Bucher, Colwell, Gassaway, Krout and Rostvold served as members
of the Trust's Former Compensation Committee during the Trust's fiscal year
ended September 30, 1995. None of such individuals was, during such fiscal
year, an officer or employee of the Trust, or formerly an officer of the
Trust or had any relationship requiring disclosure by the Trust under Item
404 of Regulation S-K promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth information concerning the only persons,
entities or groups which the Trust believes are the beneficial owners of five
percent or more of the outstanding shares of the Trust's Shares as of
September 30, 1995.
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- --------------------- ----------------
Mutual Series Fund, Inc. 5,600,083 49.88%
51 JFK Parkway
Short Hills, New Jersey 07078
Intermarket Corporation 2,788,827 24.84%
667 Madison Avenue
20th Floor
New York, New York 10021
Angelo Gordon & Co., L.P. 1,230,380 10.96%
245 Park Avenue
New York, New York 10167
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information at September 30, 1995, taking
into effect the 1 for 33.33 reverse Share split with respect to the beneficial
ownership of Shares by each Named Executive Officer and Trustee of the Trust
and by all Trustees and Named Executive Officers as a group. The information
set forth below is based upon filings with the Securities and Exchange
Commission, the Trust's Share records, and information obtained by the Trust
from the persons named below. As of September 30, 1995, no individual
Trustee or officer had beneficial ownership of 1% or more of the outstanding
Shares and all Trustees and officers as a group beneficially owned .5% of the
outstanding Shares.
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP OF CLASS
- --------------------------- -------------------- --------
C.W. Strong, Jr. .................. 70 *
James A. Dalton ................... 0 *
Daniel F. Hennessey ............... 17 *
Donald W. Burnes, Jr. ............. 0 *
Victor H. Schlesinger ............. 256 *
George R. Zoffinger ............... 8,443 *
Carl A. Mayer, Jr. ................ 5,000 *
15
<PAGE>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP OF CLASS
- --------------------------- -------------------- --------
Martin Bernstein .................. 33,162(2) *
John B. Levy ...................... 9,206(3) *
Richard B. Jennings ............... 5,000 *
Richard S. Frary .................. 23,775 *
Jeffrey Altman .................... 5,000(4) *
Trustees and Named Executive Officers(5)
as a group ........................ 89,965 *
_________________
* Less than one percent.
(1) The address of all Named Executive Officers is in care of the Company.
(2) Includes 18,775 shares owned by Evelyn Bernstein, Mr. Bernstein's wife.
(3) All 4,206 shares owned by Judith Brown Levy, Mr. Levy's wife.
(4) Beneficial ownership of 5,000 of the Shares reported as beneficially
owned by Mr. Altman is vested in Heine Securities Corporation pursuant to
an agreement between Mr. Altman and Heine Securities Corporation.
(5) Includes all Named and current Executive Officers.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act required the Trust's executive
officers and Trustees, and persons who own more than 10% of a registered class
of the Trust's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC") and the New
York Stock Exchange (the "NYSE"). Officers, Trustees and greater than 10%
shareholders are required by SEC regulation to furnish the Trust with copies
for all Section 16(a) forms they file. To the Trust's knowledge, based
solely on review of the copies of such reports furnished to the Trust and
written representations that no other reports were required during the fiscal
year ended September 30, 1995, all Section 16(a) filing requirements
applicable to its executive officers, Trustees and greater than 10% beneficial
owners were satisfied.
PROPOSAL 3
ADOPTION OF THE 1995 SHARE OPTION PLAN
The Board of Trustees has adopted the 1995 Share Option Plan (the "1995
Plan") for Trustees, officers, employees and other key persons of the Trust
and its subsidiaries, subject to the approval of the 1995 Plan by the
shareholders. The Board of Trustees believes that Share options and other
Share-based incentive awards can play an important role in the success of the
Trust by encouraging and enabling the officers and other employees of the
Trust and its subsidiaries upon whose judgment, initiative and efforts the
Trust largely depends for the successful conduct of its business to acquire a
proprietary interest in the Trust. The Board of Trustees anticipates that
providing such persons with a direct stake in the Trust will assure a closer
identification of the interests of participants in the 1995 Plan with those of
the Trust, thereby stimulating their efforts on the Trust's behalf and
strengthening their desire to remain with the Trust. The Board of Trustees
believes that the proposed 1995 Plan will help the Trust to achieve its goals
by keeping the Trust's incentive compensation program dynamic and competitive
with those of other companies. Accordingly, the Board of Trustees believes
that the 1995 Plan is in the best interests of the Trust and its shareholders
and recommends that the shareholders approve the 1995 Plan. A summary of the
proposed 1995 Plan is set forth below.
16
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THIS PROPOSAL.
SUMMARY OF THE 1995 PLAN
The following description of certain features of the 1995 Plan is
intended to be a summary only. The summary is qualified in its entirety by
the full text of the 1995 Plan which is attached hereto as EXHIBIT A.
NUMBER OF SHARES SUBJECT TO THE 1995 PLAN. The 1995 Plan provides for the
grant of options to purchase up to 870,000 Shares, subject to adjustment for
share splits, share dividends and similar events. On December 8, 1995, the
closing price of the Shares, as reported on the NYSE, was $____ per share.
To the extent that awards under the 1995 Plan do not vest or otherwise revert
to the Trust, the Shares represented by such awards may be the subject of
subsequent awards.
NATURE OF OPTIONS. The 1995 Plan provides for the grant of incentive
stock options ("Incentive Options")which qualify under Section 422 of the
Code, and nonqualified stock options ("Non-Qualified Options"). Holders of
options also receive dividend equivalent rights.
1995 PLAN ADMINISTRATION. The 1995 Plan is administered by the
Compensation Committee. It is the intention of the Trust that all members of
the Compensation Committee be "disinterested persons" as that term is defined
under the rules promulgated by the SEC.
ELIGIBILITY. The Compensation Committee has full power to select, from
among the employees eligible for awards, the individuals to whom awards will
be granted, to make any combination of awards to participants, and to
determine the specific terms and conditions of each award, subject to the
provisions of the 1995 Plan. Incentive Options may be granted only to
officers and other full-time employees of the Trust or its subsidiaries.
Non-qualified Options may be granted to officers, employees and other
key persons of the Trust or its subsidiaries. Trustees of the Trust who
are not employed by the Trust or its subsidiaries ("Independent Trustees")
will also be eligible for certain awards under the 1995 Plan, as described
below.
SHARE OPTIONS GRANTED TO INDEPENDENT TRUSTEES. The Plan provides that
each person who was a non-employee member of the Board of Trustees on October
5, 1995 shall automatically be granted on such date a Non-qualified Option to
purchase 35,000 Shares and each person who first becomes a non-employee
member of the Board of Trustees after October 5, 1995 shall automatically be
granted, upon the date such person first becomes a trustee, a Non-qualified
Option to purchase 10,000 Shares. All of these options are granted at fair
market value.
OTHER OPTION TERMS. The option exercise price of each option will be
determined by the Compensation Committee but may not be less than 100% of the
fair market value of the Shares. The term of each option will be fixed by the
Compensation Committee and may not exceed ten years from date of grant. The
Compensation Committee will determine at what time or times each option may
be exercised and, subject to the provisions of the 1995 Plan, the period of
time, if any, after retirement or termination of employment for any reason
during which options may be exercised. Options may be made exercisable in
installments and the exercisability of options may be accelerated by the
Compensation Committee. The Plan provides that in the event of a "Change of
Control" (as defined in the 1995 Plan) of the Trust, all options shall
automatically become fully exercisable. Upon exercise of options, the option
exercise price must be paid in full either in cash, check or other instrument
acceptable to the Compensation Committee or, if the Compensation Committee so
permits, by delivery of Shares already owned by the optionee. The exercise
price may also be delivered to the Trust by a broker pursuant to irrevocable
instructions to the broker from the optionee. No options shall be
transferable by the Optionee other than by will or by the laws of descent and
distribution, and options may be exercised during the Optionee's lifetime
only by the Optionee, his or her guardian or legal representative.
17
<PAGE>
DIVIDEND EQUIVALENT RIGHTS. Each option granted under the Plan shall
also generate Dividend Equivalent Rights ("DERs") which shall entitle the
optionee to receive an additional Share for each DER received upon the
exercise of the option, at no additional cost, based on the following
formula: As of the last business day of each calendar quarter, the amount of
cash dividends paid by the Trust on each Share with respect to that quarter
shall be divided by the fair market value per Share as of the last business
day of such calendar quarter to determine the actual number of DERs accruing
on each Share subject to the option. Such amount of DERs shall be applied
against the number of shares covered by the option to determine the number of
DERs which accrued during such quarter.
ADJUSTMENTS FOR SHARE DIVIDENDS, MERGERS, ETC. The Compensation
Committee will make appropriate adjustments as to the number and kind of
shares and the per share exercise prices to reflect share dividends, share
splits and similar events. In the event of a merger, liquidation, sale of
the Trust or similar event, the 1995 Plan and the options shall terminate,
unless provision is made in connection with such transaction for the
assumption of options granted, or the substitution for such options of new
options of the successor entity, with appropriate adjustment as to the number
and kind of shares and the per share exercise prices. In the event of such a
termination, all outstanding options shall be exercisable in full for at
least fifteen days prior to the date of such termination whether or not
otherwise exercisable during such period.
TAX WITHHOLDING. Optionees are responsible for the payment of any
federal, state or local taxes that the Trust is required by law to withhold
upon the exercise of any option granted by the 1995 Plan. Optionees may elect
to have such tax withholding obligations satisfied either by authorizing the
Trust to withhold Shares to be issued pursuant to an option exercise or by
transferring to the Trust Shares having a value equal to the amount of such
taxes. Such an election is subject to certain limitations for participants
subject to the requirements of Section 16(b) of the Exchange Act.
AMENDMENTS AND TERMINATION. The Board of Trustees may at any time amend
the 1995 Plan. However, no amendment shall be effective unless approved by
the shareholders at an annual meeting or a special meeting held within twelve
months before or after the date of adoption of such amendment, where such
amendment increases the number of Shares issuable under the 1995 Plan,
effects any substantive change in the eligibility provisions of the 1995
Plan, reduces the minimum option price, or materially increases benefits
accruing to participants under the 1995 Plan.
EFFECTIVE DATE OF 1995 PLAN. The 1995 Plan will become effective upon
the affirmative vote of the holders of at least a majority of the Shares
present or represented and entitled to vote at the Annual Meeting of
Shareholders. Subject to such approval of shareholders and to the
requirement that no Shares may be issued prior to such approval, options may
be granted on and after adoption of the 1995 Plan by the Board of Trustees. No
option may be granted after the tenth anniversary of the effective date of
the 1995 Plan.
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE
The following is a summary of the principal Federal income tax
consequences of option grants under the 1995 Plan. It does not describe all
Federal tax consequences under the 1995 Plan, nor does it describe state or
local tax consequences.
INCENTIVE OPTIONS. Under the Code, an employee will not realize taxable
income by reason of the grant or the exercise of an Incentive Option. If an
employee exercises an Incentive Option and does not dispose of the Shares
until the later of (a) two years from the date the option was granted or (b)
one year from the date the Shares were transferred to the employee, the
entire gain, if any, realized upon disposition of such Board of Trustees will
be taxable to the employee as long-term capital gain, and the Trust will not
be entitled to any deduction. If an employee disposes of the Shares within
such one-year or two-year period in a manner so as to violate the holding
period requirements (a "disqualifying disposition"), the employee generally
will realize ordinary income in the year of disposition and the Trust will
receive a corresponding deduction in an amount
18
<PAGE>
equal to the excess of (1) the lesser of (x) the amount, if any, realized on
the disposition and (y) the fair market value of the Shares on the date the
option was exercised over (2) the option price. Any additional gain realized
on the disposition will be long-term or short-term capital gain and any loss
will be long-term or short-term capital loss. The employee will be
considered to have disposed of his Shares if he sells, exchanges, makes a
gift of or transfers legal title to the Shares (except by pledge or by
transfer on death). If the disposition of Board of Trustees is by gift and
violates the holding period requirements, the amount of the employee's
ordinary income (and the Trust's deduction) is equal to the fair market value
of the Shares on the date of exercise less the option price. If the
disposition is by sale or exchange, the employee's tax basis will equal the
amount paid for the Shares plus any ordinary income realized as a result of
the disqualifying distribution. The exercise of an Incentive Option may
subject the employee to the alternative minimum tax.
Special rules apply if an employee surrenders Shares in payment of the
exercise price of his Incentive Option.
An Incentive Option that is exercised by an employee more than three
months after an employee's employment terminates will be treated as a
Non-qualified Option for Federal income tax purposes. In the case of an
employee who is disabled, the three-month period is extended to one year and
in the case of an employee who dies, the three-month employment rule does not
apply.
NON-QUALIFIED OPTIONS. There are no Federal income tax consequences to
either the optionee, or the Trust on the grant of a Non-qualified Option. On
the exercise of a Non-qualified Option, the optionee (except as described
below) has taxable ordinary income equal to the excess of the fair market
value of the Shares received on the exercise date over the option price of
the Board of Trustees. The optionee's tax basis for the Board of Trustees
acquired upon exercise of a Non-qualified Option is increased by the amount
of such taxable income. The Trust will be entitled to a Federal income tax
deduction in an amount equal to such excess, provided the Trust complies with
applicable withholding rules. Upon the sale of the Board of Trustees
acquired by exercise of a Non-qualified Option, the optionee will realize
long-term or short-term capital gain or loss depending upon his or her
holding period for such Board of Trustees.
Section 83 of the Code and the regulations thereunder provide that the
date for recognition of ordinary income (and the Trust's equivalent
deduction) upon exercise of a Non-qualified Option and for the commencement
of the holding period of the Board of Trustees thereby acquired by a person
who is subject to Section 16 of the Exchange Act will be delayed until the
date that is the earlier of (i) six months after the date of the exercise and
(ii) such time as the Shares received upon exercise could be sold at a gain
without the person being subject to such potential liability.
Special rules apply if an optionee surrenders Shares in payment of the
exercise price of a Non-qualified Option.
PARACHUTE PAYMENTS. The exercise of any portion of any option that is
accelerated due to the occurrence of a change of control may cause a portion
of the payments with respect to such accelerated options to be treated as
"parachute payments" as defined in the Code. Any such parachute payments may
be non-deductible to the Trust, in whole or in part, and may subject the
recipient to a non-deductible 20% federal excise tax on all or portion of
such payment (in addition to other taxes ordinarily payable).
LIMITATION ON TRUST'S DEDUCTIONS. As a result of Section 162(m) of the
Code, the Trust's deduction for certain awards under the Plan may be limited
to the extent that the Chief Executive Officer or other executive officer
whose compensation is required to be reported in the summary compensation
table receives compensation (other than performance-based compensation) in
excess of $1 million a year.
19
<PAGE>
NEW PLAN BENEFITS
The number of Shares that may be granted under the 1995 Plan to executive
officers and non-executive officers is undeterminable at this time, as such
grants are subject to the discretion of the Compensation Committee. However,
the following table sets forth information regarding option grants to various
eligible participants and groups under the 1995 Plan, to the extent known, as
of November 21, 1995:
20
<PAGE>
VALUE PROPERTY TRUST, 1995 SHARE OPTION PLAN
<TABLE>
<CAPTION>
Option
Name of Participant or Group Shares Granted
- ---------------------------- --------------
<S> <C>
George Zoffinger, President and
Chief Officer, Trustee and Nominee for
Election as Trustee 244,000
C.W. Strong, Jr., President and Chief
Executive Officer for Fiscal Year 1995 0
Victor H. Schlesinger, Chairman for
Fiscal Year 1995 0
James A. Dalton, Executive Vice
President and Chief Operating Officer
for Fiscal Year 1995 0
Jeffrey A. Altman, Trustee and Nominee
for Election as Trustee 35,000(1)
Carl A. Mayer, Jr., as Trustee and
Nominee for Election as Trustee 35,000
Martin Bernstein, as Trustee
and Nominee for Election as Trustee 35,000
John B. Levy, as Trustee
and Nominee for Election as Trustee 35,000
Richard B. Jennings, as Trustee
and Nominee for Election as Trustee 35,000
Richard S. Frary, as Trustee
and Nominee for Election as Trustee 35,000
Robert M. Craig, Senior Vice President 50,000
Paul H. Ciancimino, Senior Vice President 50,000
James S. Weld, Senior Vice President 50,000
Executive Officers as a Group 394,000
Non-Executive Trustees as a Group 210,000
Non-Executive Employees as a Group 65,000
</TABLE>
_________________
(1) Any beneficial ownership of Shares by Mr. Altman is vested in Heine
Securities Corporation pursuant to an agreement between Mr. Altman and Heine
Securities Corporation.
21
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 4
OTHER MATTERS
The Trustees are not aware of any matters not set forth herein that may
come before the meeting. If, however, further business properly comes before
the meeting, the persons named in the proxies will vote the Shares
represented thereby in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal to the shareholders of the
Trust for inclusion in the proxy materials of the Trustees for the Annual
Meeting of Shareholders to be held on February 15, 1997 may do so by
forwarding such proposal in writing no later than September 1, 1996 to the
Corporate Secretary at Value Property Trust, 120 Albany Street, 8th Floor,
New Brunswick, NJ 08901. The Trust reserves the right to omit any proposal
from its proxy materials which the Trust is not required under applicable
rules to include therein.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
TRUST. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD TODAY.
22
<PAGE>
EXHIBIT A
VALUE PROPERTY TRUST
1995 SHARE OPTION PLAN
1. PURPOSES
This Share Option Plan (the "Plan") is intended as a performance
incentive for trustees, officers, employees and other key persons of Value
Property Trust (the "Trust") and its Subsidiaries (as hereinafter defined) to
enable the persons to whom options are granted (the "Optionees") to acquire
or increase a proprietary interest in the success of the Trust. The Trust
intends that this purpose will be effected by the granting of "incentive
stock options" ("Incentive Options") as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock
options ("Non-qualified Options") and dividend equivalent rights under the
Plan. The term "Subsidiaries" includes corporation or entity in which stock
or other securities possessing fifty percent (50%) or more of the total
combined voting power of all classes of securities is owned directly or
indirectly by the Trust.
2. OPTIONS TO BE GRANTED AND ADMINISTRATION
(a) Options granted under the Plan may be either Incentive Options or
Non-qualified Options.
(b) The Plan shall be administered by the Compensation and Nominating
Committee (the "Compensation Committee") of the Board of Trustees of the
Trust (the "Board"). It is the intention of the Trust that each member of
the Compensation Committee shall be a "disinterested person" as that term is
defined and interpreted pursuant to Rule 16b-3 or any successor rule thereto
promulgated under the Securities Exchange Act of 1934, as amended (the "1934
Act"). Action by the Compensation Committee shall require the affirmative
vote of a majority of all its members.
(c) Subject to the terms and conditions of the Plan, the Compensation
Committee shall have the power:
(i) To determine from time to time the persons to be granted
options from among those persons eligible under the Plan and the type and
number of options to be granted to such persons and the common shares of
beneficial interest of the Trust covered thereby, and to prescribe the terms
and provisions (which need not be identical) of each option granted under the
Plan to such persons;
(ii) To construe and interpret the Plan and options granted
thereunder and to establish, amended and revoke rules and regulations for
administration of the Plan. In this connection, the Compensation Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan, or in any option agreement, in the manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective. All
decisions and determinations by the Compensation Committee in the exercise of
this power shall be final and binding upon the Trust and the Optionees; and
(iii) Generally, to exercise such powers and to perform such
acts as are deemed necessary or expedient to promote the best interests of
the Trust with respect to the Plan.
3. SHARES
(a) The shares subject to the options granted under the Plan shall be
common shares of beneficial interest, par value $1.00 per share, of the Trust
("Common Shares"). The total number of shares that may be issued pursuant to
options granted under the Plan shall not exceed an aggregate of 870,000
Common Shares. Such number shall be subject to adjustment as provided in
Section 7 hereof.
23
<PAGE>
(b) Whenever any outstanding option under the Plan expires, is
canceled or is otherwise terminated (other than by exercise), the Common
Shares allocable to the unexercised portion of such option may again be the
subject of options under the Plan.
4. ELIGIBILITY
(a) Incentive Options may be granted only to officers and other
full-time employees of the Trust or its Subsidiaries, including members of
the Board who are also employees of the Trust or its Subsidiaries.
Non-qualified Options may be granted to officers, employees, or other key
persons of the Trust or its Subsidiaries and to members of the Board
(regardless of whether they are also employees); provided, however, that no
option may be granted under the Plan to any non-employee member of the Board
except as provided in Section 4(d) hereof.
(b) If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of the Trust or any
subsidiary or parent corporation, the purchase price per Common Share subject
to any Incentive Option granted to such employee shall be not less than 110%
of the fair market value of a single Common Share on the grant date.
(c) The aggregate fair market value (determined as of the time the
option is granted) of the Common Shares with respect to which Incentive
Options become exercisable for the first time by any individual during any
calendar year shall not exceed $100,000. Any option granted under the Plan
in excess of the foregoing limitations shall be deemed to be a Non-qualified
Option.
(d) Each person who is a non-employee member of the Board on October
5, 1995 shall automatically be granted on such date a Non-qualified Option to
purchase 35,000 Common Shares and each person who first becomes a
non-employee member of the Board after October 5, 1995 shall automatically be
granted, upon the date such person first becomes a trustee, a Non-qualified
Option to purchase 10,000 Common Shares. The terms of such options,
including without limitation the purchase price per Common Share thereunder,
shall be determined as set forth in Section 5 hereof. The preceding
sentences of this Section 4(d), and the provisions of Section 5(d) hereof
(solely as they relate to the purchase price per Common Share subject to
options granted to non-employee trustees), shall not be amended more than
once in any six-month period, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the rules thereunder. The provisions of this Section 4(d) shall apply only
to automatic grants of options to non-employee trustees, and shall not be
deemed to modify, limit or otherwise apply to any other provisions of the
Plan or to any option granted thereunder to any other participant.
5. TERMS OF OPTION AGREEMENTS
Each option agreement shall contain such provisions as the Compensation
Committee shall from time to time deem necessary or expedient. Each option
granted under the Plan shall be subject to the following provisions:
(a) EXPIRATION. Each option shall expire on the date specified in
the option agreement, which date shall not be later than the tenth anniversary
of the date on which the option was granted.
(b) MINIMUM SHARES EXERCISABLE. The minimum number of shares with
respect to which an option may be exercised at any one time shall be 100
shares, or such lesser number of shares as is subject to exercise under the
option at the time.
(c) VESTING AND TERMINATION OF EMPLOYMENT.
(i) Each option shall become vested and exercisable in such
installments (which need not be equal) and on such dates as may be designated
by the Compensation Committee at the time such option is granted under the
Plan or otherwise. To the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the date the option expires.
24
<PAGE>
(ii) In the event of a Change in Control of the Trust (as
defined in Section 5(g) below), all options outstanding under the Plan as of
the date of such Change in Control shall become immediately exercisable in
full, notwithstanding any vesting or other provisions of the option agreement.
(iii) The Compensation Committee may in its discretion
specify, at the time an option is granted under the Plan or otherwise, a
period or periods within which such option may be exercised following
retirement of the Optionee or termination of the Optionee's employment with
the Trust or its Subsidiaries for any reason.
(d) PURCHASE PRICE. The purchase price per Common Share under
each option shall be not less than the fair market value of a single Common
Share on the date the option is granted. For the purposes of the Plan, the
fair market value of the Common Shares on such date shall be determined in
good faith by the Compensation Committee; provided, however, that if the
Common Shares are admitted to trading on a national securities exchange on
the date the option is granted, the fair market value shall not be less than
the closing price reported for the Common Shares on such exchange for the
grant date.
(e) DIVIDEND EQUIVALENT RIGHTS. Each option granted under this
Plan shall also generate Dividend Equivalent Rights ("DERs") which shall
entitle the optionee to receive an additional Common Share for each DER
received upon the exercise of the option, at no additional cost, based on the
formula set forth herein. As of the last business day of each calendar
quarter, the amount of cash dividends paid by the Trust on each Common Share
with respect to that quarter shall be divided by the Fair Market Value per
Common Share as of the last business day of such calendar quarter to
determine the actual number of DERs accruing on each Common Share subject to
the option. Such amount of DERs shall be applied against the number of
shares covered by the option to determine the number of DERs which accrued
during such quarter. The provisions of this Section 5(e) shall not be
amended more than once in any six-month period, other than to comport with
changes in the Code or ERISA.
FOR EXAMPLE. Assume that an optionee holds an option to purchase
600 Common Shares. Further assume that the dividend per share for the first
quarter was $0.10 and that the Fair Market Value per Common Share on the last
business day of the quarter was $20. Therefore, .005 DER would accrue per
Share for that quarter and such optionee would receive three DERs for that
quarter (600 X .005). For purposes of determining how many DERs would accrue
during the second quarter, the option would be considered to be for 603
Common Shares.
(f) RIGHTS OF OPTIONEES. No Optionee shall be deemed for any
purpose to be the owner of any Common Shares subject to any option unless and
until (i) the option shall have been exercised pursuant to the terms thereof,
(ii) the Trust shall have issued and delivered the shares to the Optionee,
and (iii) the Optionee's name shall have been entered as a stockholder of
record on the books of the Trust. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such Common
Shares.
(g) CHANGE IN CONTROL. For purposes of the Plan, a "Change in
Control" shall be deemed to have occurred in either of the following events:
(i) when any new "person" (as such term is used in Sections 13(d)and 14(d)(2)
of the 1934 Act) becomes a "beneficial owner" (as such term is defined in
Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of
securities of the Trust representing forty-nine percent (49%) or more of the
total number of votes that may be cast for the election of trustees of the
Trust; or (ii) if, as a result of, or in connection with, any tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who were trustees of the Trust immediately before such transaction
shall cease to constitute at least fifty percent (50%) of the Board or of any
success or institution.
(h) TRANSFER. No options shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. Options may
be exercised during the Optionee's lifetime only by the Optionee, his or her
guardian or legal representative.
25
<PAGE>
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
(a) Any option granted under the Plan may be exercised by the
Optionee by delivering to the Trust on any business day a written notice
specifying the number of Common Shares the Optionee then desires to purchase
(the "Notice").
(b) Payment for the Common Shares purchased pursuant to the
exercise of an option shall be made either (i) in cash, check or other
instrument acceptable to the Trust equal to the option price for the number
of shares specified in the Notice (the "Total Option Price"), or (ii) if
authorized by the applicable option agreement, in Common Shares having a fair
market value on the date of exercise, determined as provided in Section 5(d)
hereof, equal to or less than the Total Option Price, plus cash in an amount
equal to the excess, if any, of the Total Option Price over the fair market
value of such Common Shares. In addition, payment for the Common Shares may
be made, if permitted by the Trust, by the Optionee delivering the Notice to
the Trust together with irrevocable instructions to a broker to promptly
deliver to the Trust the Total Option Price in cash or by check or other
instrument acceptable to the Trust; provided that in the event the Optionee
chooses to pay the option purchase price as so provided, the Optionee and the
broker shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Trust shall prescribe as a condition of
such payment procedure. Payment instruments will be received subject to
collection. The delivery of certificates representing Common Shares to be
purchased pursuant to the exercise of an option will be contingent upon
receipt by the Trust of the Total Option Price for such shares and the
fulfillment of any other applicable requirements (including payment of any
amount required to be withheld by the Trust pursuant to any applicable law).
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
(a) If the Trust's Common Shares as a whole are increased,
decreased, changed into or exchanged for a different number or kind of shares
or securities of the Trust, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock
split, combination of shares, exchange of shares, change in corporate
structure or the like, or distributions to shareholders, an appropriate and
proportionate adjustment shall be made in the number and kind of shares
subject to the Plan, and in the number, kind and per share exercise price of
shares subject to unexercised options or portions thereof granted prior to
any such change. In the event of any such adjustment in an outstanding
option, the Optionee thereafter shall have the right to purchase the number
of shares under such option at the per share price, as so adjusted, which the
Optionee could purchase at the total purchase price applicable to the option
immediately prior to such adjustment.
(b) The Compensation Committee shall have the discretion and power
in the case of any event specified in Section 7(a) to determine and to make
effective provision for acceleration of the time or times at which any option
or portion thereof shall become exercisable. No fractional Common Shares
shall be issued under the Plan on account of any adjustment specified herein.
(c) Adjustments under this Section 7 shall be determined by the
Compensation Committee and such determination shall be conclusive.
8. EFFECT OF CERTAIN TRANSACTIONS
In the case of (i) the dissolution or liquidation of the Trust, (ii) a
reorganization, merger or consolidation in which the Trust is acquired by
another entity (other than a holding Trust formed by the Trust) or in which
the Trust is not the surviving entity, or (iii) the sale of all or
substantially all of the assets of the Trust to another entity, the Plan and
the options issued hereunder shall terminate, unless provision is made in
connection with such transaction for the assumption of options theretofore
granted, or the substitution for such options of new options of the success
or entity or parent thereof, with appropriate adjustment as to the number and
kind of shares and the per share exercise prices, as provided in Section 7.
In the event of such termination, all outstanding options under the Plan
shall be exercisable in full for at least fifteen (15) days prior to the date
of such termination whether or not otherwise exercisable during such period.
26
<PAGE>
9. TAX WITHHOLDING
(a) PAYMENT BY OPTIONEE. Each Optionee shall, no later than the
date as of which the value of any option or stock appreciation right granted
hereunder or of any shares issued upon the exercise of such option or stock
appreciation right first becomes includable in the gross income of the
Optionee for federal income tax purposes (the "Tax Date"), pay to the Trust,
or make arrangements satisfactory to the Trust regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld
with respect to such income.
(b) PAYMENT IN SHARES. An Optionee may elect to have such tax
withholding obligation satisfied, in whole or in part, by (i) authorizing the
Trust to withhold from shares to be issued to the Optionee a number of Common
Shares with an aggregate fair market value that would satisfy the withholding
amount due, or (ii) transferring to the Trust Common Shares owned by the
Optionee with an aggregate fair market value that would satisfy the
withholding amount due. With respect to any Optionee who is subject to
Section 16(b) of the 1934 Act, the following additional restrictions shall
apply:
(i) the election to satisfy tax withholding obligations in
the manner permitted by this Section 9(b) shall be made either (A) during the
period beginning on the third business day following the date of release for
publication of quarterly or annual financial information and ending on the
twelfth business day following such date, or (B) at least six months prior to
the Tax Date;
(ii) such election shall be irrevocable;
(iii) such election shall be subject to the consent or
disapproval of the Compensation Committee; and
(iv) such election shall not be made within six months of the
date of grant of the Option.
10. AMENDMENT OF THE PLAN
The Board may amend the Plan at any time, and from time to time, subject
to any required regulatory approval and to the limitation that, except as
provided in Sections 7 and 8 hereof, no amendment shall be effective unless
approved by the shareholders of the Trust in accordance with applicable law
and regulations at an annual or special meeting held within twelve months
before or after the date of adoption of such amendment, where such amendment
will:
(a) increase the number of Common Shares as to which options may
be granted under the Plan;
(b) change in substance Section 4 hereof relating to eligibility
to participate in the Plan;
(c) reduce the minimum option price; or
(d) otherwise materially increase the benefits accruing to
participants under the Plan.
Except as provided in Sections 7 and 8 hereof, rights and obligations
under any option granted before any amendment of the Plan shall not be
altered or impaired by any such amendment in a manner adverse to an Optionee,
except with the consent of the Optionee.
11. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the
Plan to the shareholders of the Trust for approval shall be construed as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific
cases. The Plan or the
27
<PAGE>
granting of options thereunder shall not be deemed to confer upon any
employee of the Trust or its Subsidiaries any right to continued employment.
12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
(a) The obligation of the Trust to sell and deliver Common Shares
with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities and tax laws, and the obtaining of all such approvals from
governmental agencies as may bedeemed necessary or appropriate by the
Compensation Committee.
(b) The Plan shall be governed by Maryland law, except to the
extent that such law is preempted by federal law.
13. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon approval by the holders of a
majority of Common Shares of the Trust present or represented or entitled to
vote at a meeting of shareholders. Subject to such approval of shareholders
and to the requirement that no Common Shares may be issued hereunder prior to
such approval, options may be granted on and after adoption of this Plan by
the Board. No option may be granted under the Plan after the tenth
anniversary of the effective date of the Plan.
233213.c2
28
<PAGE>
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS OF VALUE PROPERTY TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned shareholder(s) of Value Property Trust (the "Trust") hereby
appoints Mr. George R. Zoffinger, proxy, with full power of substitution, for
and in the name of the undersigned at the Annual Meeting of Shareholders of
the Trust to be held on February 15, 1996 and at any and all adjournments
thereof, to vote all shares of the Trust's common shares, par value $1.00 per
share (the "Shares") held of record by the undersigned on December 22, 1995,
as if the undersigned were present and voting the Shares.
1. Proposal to approve the voting rights of certain of the Trust's
Shares held by entities related to Mutual Series Fund, Inc. and
entities related to Intermarket Corporation that may be precluded from
voting under the Maryland General Corporation Law.
/ / FOR / / AGAINST / / ABSTAIN
(Abstentions for Proposal 1 will have the same effect as votes against.)
_______________________________________________________________________________
2. ELECTION OF / / FOR all nominees / / WITHHOLD
DIRECTORS. listed below AUTHORITY
(except as indicated to vote for all
to the contrary). nominees listed
below.
Nominees: Jeffrey A. Altman, Carl A. Mayer, Martin Bernstein, John B. Levy,
Richard B. Jennings, Richard S. Frary and George R. Zoffinger
(INSTRUCTIONS: To withhold authority to vote for any nominee, write the
nominee's name on the space provided below.)
_______________________________________________________________________________
3. Proposal to approve and adopt the 1995 Share Option Plan described in the
related Proxy Statement under the caption "ADOPTION OF 1995 SHARE OPTION
PLAN."
/ / FOR / / AGAINST / / ABSTAIN
CONTINUED AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE.
4. The proxies are authorized to vote in their discretion upon such other
business as may properly come before the meeting.
<PAGE>
The Shares represented by this proxy will be voted in the manner directed.
In the absence of any direction, the Shares will be voted FOR each nominee
named in Proposal 2 above, FOR Proposal 3, and in accordance with the
proxies' discretion on such other business that may properly come before the
meeting.
DATED:________________________________, 199_
____________________________________________
(Signature)
____________________________________________
(Signature if held jointly)
(Please date this Proxy and sign exactly as your
name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title. If there is more
than one trustee, all should sign. All joint
owners should sign.)
I PLAN TO ATTEND THE MEETING / /
227842.c2
