<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE TOWN AND COUNTRY TRUST
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:________
(2) Aggregate number of securities to which transaction applies:__________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):____________
(4) Proposed maximum aggregate value of transaction:______________________
(5) Total fee paid:_______________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:________________________________________________
(2) Form, Schedule or Registration Statement No.:__________________________
(3) Filing Party:__________________________________________________________
(4) Date Filed:____________________________________________________________
================================================================================
<PAGE> 2
THE TOWN AND COUNTRY TRUST
------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------------------------------------------------
Notice is hereby given that the Annual Meeting of Shareholders of The Town
and Country Trust will be held at The Center Club, 100 Light Street, Baltimore,
Maryland on Thursday, April 30, 1998 at 11:00 A.M., local time, for the purpose
of considering and acting upon:
1. The election of five (5) Trustees, each to hold office until the
next Annual Meeting of Shareholders and until his successor shall be
elected and qualified;
2. A proposal to approve The Town and Country Trust's 1997 Long Term
Incentive Plan; and
3. The transaction of any other business which properly may come
before the meeting and any adjournments thereof.
Shareholders of The Town and Country Trust of record at the close of
business on February 27, 1998 are entitled to vote at the Annual Meeting and any
adjournments thereof.
By order of the Board of Trustees
Daniel G. Berick
Secretary
Baltimore, Maryland
March 27, 1998
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
<PAGE> 3
March 27, 1998
THE TOWN AND COUNTRY TRUST
100 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
---------------------------
PROXY STATEMENT
---------------------------
The accompanying proxy is solicited by the Trustees of The Town and Country
Trust (the "Trust") for use at the Annual Meeting of Shareholders to be held on
April 30, 1998 and any adjournments thereof.
Shareholders of record at the close of business on February 27, 1998 (the
record date) will be entitled to vote at the Annual Meeting and any adjournments
thereof. At that date the Trust had issued and outstanding 15,765,015 Common
Shares of Beneficial Interest (the "Common Shares"), par value $.01 per Common
Share. Each such Common Share is entitled to one vote on all matters properly
coming before the Annual Meeting. At least 7,882,508 Common Shares must be
represented at the Annual Meeting in person or by proxy in order to constitute a
quorum for the transaction of business.
This Proxy Statement and the accompanying form of proxy were first mailed
to Shareholders on March 27, 1998.
ELECTION OF TRUSTEES
At this Annual Meeting, five Trustees are to be elected for a term expiring
at the 1999 Annual Meeting of Shareholders and until their respective successors
are duly elected and qualified. Unless a Shareholder requests that voting of the
proxy be withheld for any one or more of the nominees for Trustee in accordance
with the instructions set forth on the proxy, it presently is intended that
Common Shares represented by proxies solicited hereby will be voted for the
election as Trustees of the five nominees named in the table below. All nominees
have consented to being named in this Proxy Statement and to serve if elected.
Should any nominees subsequently decline or be unable to accept such nomination
or to serve as a Trustee, an event which the Trustees do not now expect, the
persons voting the Common Shares represented by proxies solicited hereby may
either vote such Shares for a slate of five persons which includes a substitute
nominee or for a reduced number of nominees, as they may deem advisable. For
election as a Trustee, a nominee must receive the affirmative vote of a
plurality of the Common Shares voted at the Annual Meeting in person or by
proxy. Neither abstentions nor broker non-votes will be counted as votes cast
and neither will have any effect on the result of the vote, although both will
count toward the determination of the presence of a quorum.
The information concerning the nominees set forth in the following table is
based in part on information received from the respective nominees and in part
on the Trust's records. Each of the nominees first became a Trustee in
connection with the formation of the Trust in 1993.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------- --- --------------------------------------------------
<S> <C> <C>
Alfred Lerner 64 Chairman of the Board of the Trust
Harvey Schulweis 57 Chief Executive Officer and President of the Trust
James H. Berick 64 Chairman of Berick, Pearlman & Mills Co., L.P.A.,
attorneys
H. Grant Hathaway 70 Retired, formerly Vice Chairman, MNC Financial,
Inc., bank holding company
Milton A. Wolf 73 President of Milton A. Wolf Investors,
investments, and Chairman of Zehman-Wolf
Management, Inc., real estate management and
development
</TABLE>
1
<PAGE> 4
Mr. Lerner has been the Chairman of the Board of the Trust since its
formation in May 1993. In addition, Mr. Lerner served as the Chief Executive
Officer of the Trust from May 1993 until October 1997. Mr. Lerner also has
served as the Chairman of the Board and Chief Executive Officer of MBNA
Corporation, a bank holding company, since its inception as a public company in
1991. From 1979 until 1993, Mr. Lerner was the President of The Town and Country
Management Corporation. He was the Chairman of the Board and Chief Executive
Officer of MNC Financial, Inc. from September 1990 until July 1991, and was its
Chairman of the Board from July 1991 until October 1993. Mr. Lerner was the
Chairman of the Board of The Progressive Corporation, an insurance holding
company, from 1988 until April 1993. He is a member of the Boards of Trustees of
Columbia University, the Cleveland Clinic Foundation and Case Western Reserve
University. He also is the President of the Cleveland Clinic Foundation.
Mr. Schulweis has been the Chief Executive Officer of the Trust since
October 1997 and the President of the Trust since its formation in May 1993. Mr.
Schulweis has been the President of Schulweis Realty, Inc., real estate
ownership and management, since 1991. He is a Certified Public Accountant and a
member of the Executive Committee of the National Realty Committee and is a past
member of the Board of Governors of the Real Estate Board of New York.
Mr. Berick has been a Trustee of the Trust since its formation in May 1993.
He has been the Chairman of Berick, Pearlman & Mills Co., L.P.A., since July
1986 and was the President and Treasurer of Realty ReFund Trust, a real estate
investment trust, from 1990 through January 1998. Mr. Berick is a Director of
MBNA Corporation and A. Schulman, Inc.
Mr. Hathaway, now retired, has been a Trustee of the Trust since its
formation in May 1993. In addition, he served as the Vice Chairman of MNC
Financial, Inc. from 1990 until 1993. He also served as Vice Chairman of
Maryland National Bank from 1990 until 1993 and was its President and Chief
Executive Officer in 1991. Mr. Hathaway was the President and Chief Executive
Officer of American Security Bank, N.A. in 1991 and the Chairman and Chief
Executive Officer of Equitable Bank, N.A. from 1979 until 1990. Mr. Hathaway
also served as the President of Equitable Bancorporation from 1975 until 1990
and as its Chief Executive Officer from 1981 until 1990. Mr. Hathaway is the
Chairman of The Kennedy Krieger Institute Development and Resource Board.
Dr. Wolf has served as a Trustee of the Trust since its formation in May
1993. In addition, he has served as the President of Milton A. Wolf Investors
and as the Chairman of Zehman-Wolf Management, Inc. since 1980. Dr. Wolf was the
United States Ambassador to Austria from 1977 until 1980. From 1981 until 1987,
Ambassador Wolf served as a Distinguished Professorial Lecturer in Economics at
Case Western Reserve University. Ambassador Wolf also is a Director of American
Greetings Corp. Ambassador Wolf holds a Ph.D in Economics from Case Western
Reserve University and holds honorary doctoral degrees from Cleveland State
University and Case Western Reserve University. He is Chairman of the American
Austrian Foundation, Vice Chairman of the Council of American Ambassadors and is
a member of the Council on Foreign Relations, the Academy of Political Science
and the American Economic Association. Ambassador Wolf serves on the Boards of
Trustees of Case Western Reserve University and the Cleveland Clinic Foundation.
The Board of Trustees has established an Audit Committee and a Compensation
Committee. James H. Berick, H. Grant Hathaway and Milton A. Wolf comprise the
Audit Committee and the Compensation Committee. The Trust does not have a
nominating committee. The functions of such committee are performed by the Board
of Trustees.
The Audit Committee has been established to (i) make recommendations to the
Trustees concerning the engagement of the Trust's independent public
accountants, (ii) review with the independent public accountants the plans and
results of the audit engagement, (iii) approve professional services provided by
the independent public accountants, (iv) review the independence of the
independent public accountants, (v) consider the range of audit and non-audit
fees, and (vi) review the adequacy of the Trust's internal accounting controls.
The Audit Committee met twice during the fiscal year.
2
<PAGE> 5
The Compensation Committee is responsible for administering the Trust's
Amended and Restated 1993 Long Term Incentive Plan, the Trust's 1997 Long Term
Incentive Plan and for reviewing benefits and executive compensation, including
incentive compensation. The Compensation Committee met once during the fiscal
year.
The Board of Trustees held four meetings during the year ended December 31,
1997. All Trustees attended each meeting of the Trustees and of the Committees
thereof.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH NOMINEE FOR TRUSTEE.
CERTAIN RELATED TRANSACTIONS; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Michael H. Rosen, the Executive Vice President of the Trust, is indebted to
the Trust in connection with the consolidation of certain personal indebtedness,
in the amount of $340,000, as of February 27, 1998. $300,000 of this
indebtedness bears interest at a rate comparable to the rate earned on the
Trust's invested funds. As of February 27, 1998, such rate was 5.09%. The
balance of the indebtedness does not bear interest; however, the Trust has
deferred compensation otherwise due Mr. Rosen in the amount of such balance.
James H. Berick, a Trustee, is Chairman of the law firm Berick, Pearlman &
Mills Co., L.P.A., general counsel to the Trust, which received legal fees from
the Trust during the year ended December 31, 1997 in the amount of $372,076.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Mr. Schulweis has been both an owner and an investor in a significant
number of real estate projects. Of such projects in which Mr. Schulweis or an
affiliate is a general partner, two were sold through foreclosure proceedings,
one in 1994 and one in 1996.
COMPENSATION OF TRUSTEES
The Trust pays an annual fee of $25,000, plus a fee of $2,500 for each
meeting attended, to its Trustees who are not employees of the Trust or any of
its subsidiaries. Trustees who are employees of the Trust are not paid any
Trustees' fees. The Trust reimburses the Trustees for travel expenses incurred
in connection with their activities on behalf of the Trust.
Pursuant to the Amended and Restated 1993 Long Term Incentive Plan (the
"1993 Plan") adopted by the Trust, each Trustee who is not otherwise an employee
of the Trust or its subsidiaries or affiliates automatically receives, on each
January 2, an annual grant of options to purchase 2,000 Common Shares having an
exercise price equal to 100% of the fair market value of the Common Shares at
the date of grant of such option. In addition, each of the Trust's current
non-employee Trustees, upon joining the Board, received an initial grant of
options to purchase 2,000 Common Shares at an exercise price equal to the
initial public offering price of $22.00. Should any additional Trustees be
elected in the future, each such Trustee would receive an initial grant of
options to purchase 2,000 Common Shares having an exercise price equal to 100%
of the fair market value of the Common Shares as of such date. Future option
grants to non-employee Trustees may be made pursuant to either the 1993 Plan or
the 1997 Long Term Incentive Plan (the "1997 Plan") adopted by the Trust, which
Plan is subject to approval by the Trust's Shareholders. The provisions of the
1997 Plan in respect of grants of options to non-employee Trustees are identical
to the provisions in respect thereof under the 1993 Plan. However, the 1997 Plan
provides that annual option grants to non-employee Trustees under the 1997 Plan
shall not duplicate any such grants under the 1993 Plan.
3
<PAGE> 6
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
This report describes the Trust's executive compensation programs and the
basis on which fiscal 1997 compensation determinations were made by the
Compensation Committee in respect of the executive officers of the Trust,
including Mr. Lerner and Mr. Schulweis, each of whom served as the Trust's Chief
Executive Officer during a portion of fiscal 1997.
The Trust's compensation program provides annual cash compensation to
executive officers that recognizes short-term individual and Trust performance
and long-term compensation that encourages executive officers to focus on the
future. The program is designed to reward current performance in proper context
with the long-term health of the Trust and to provide for continuity of
management of the Trust's properties, which the Board of Trustees considers to
be of critical importance. Annual cash compensation consists of salary and
bonus. Long-term incentive programs include grants of share options and
restricted and unrestricted share awards.
The Compensation Committee approved annual salaries and bonuses for the
Trust's executive officers in respect of fiscal 1997. For purposes of
comparison, the Compensation Committee considered salaries and bonuses paid to
the Trust's executive officers by the Trust's predecessor entity, as well as
salaries and bonuses paid to executive officers of other publicly-held real
estate investment trusts. Salaries are based on responsibilities with the Trust,
experience, and individual and Trust performance. Bonuses for executive officers
are based on Trust and individual performance. Bonuses for 1997 for executive
officers were approved by the Compensation Committee based primarily on the
Trust's performance in 1997 relative to plans, goals and objectives, including
financial goals such as growth in funds from operations, management of costs and
acquisitions of new properties, and nonfinancial goals such as tenant
satisfaction, employee turnover and management of internal systems and growth.
Mr. Lerner's salary was fixed and, at his request, he received no bonus or
other incentive compensation. Mr. Schulweis' salary was determined in accordance
with the above criteria. While Mr. Schulweis received no bonus, he did receive
the incentive compensation described below.
To provide long-term incentives, the Compensation Committee may grant share
options and restricted and unrestricted share awards to officers and key
employees under either the 1993 Plan or the 1997 Plan. Share options were
granted in 1997 under the 1997 Plan at an option price equal to the fair market
value of the Trust's Common Shares on the date of grant. These grants are
subject to the approval of the 1997 Plan by the Trust's Shareholders. Subject to
such approval, these options vest over a period of three years beginning on the
first anniversary of the date of each such grant and expire ten years after the
grant date. Restricted Common Shares were awarded in 1997 under the 1993 Plan.
Restrictions on such Common Shares lapse on termination of the officer's
employment due to death, disability, retirement or a change in control of the
Trust. Upon termination of employment for any other reason, all restricted
Common Shares as to which the restrictions have not lapsed are forfeited to the
Trust. Holders of restricted Common Shares have all of the rights of holders of
Common Shares, including the right to receive dividends and to vote. Mr. Lerner,
at his request, was not granted any share options or awarded any restricted
Common Shares in 1997. Mr. Schulweis received a grant of options to acquire
40,000 Common Shares and an award of 50,000 restricted Common Shares in 1997.
The Compensation Committee
James H. Berick
H. Grant Hathaway
Milton A. Wolf
4
<PAGE> 7
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid or to be paid by the
Trust or its subsidiaries in respect of services rendered during the Trust's
fiscal year ended December 31, 1997 to the Trust's Chief Executive Officer and
each of the Trust's other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL -----------------------
COMPENSATION RESTRICTED
------------------- STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS AWARDS(1) (SHARES) COMPENSATION
--------------------------- ----------- -------- ------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Alfred Lerner, 1997 $200,000 $ 0 $ 0 0 $ 0
Chairman of the Board, 1996 $200,000 $ 0 $ 0 0 $ 0
Chief Executive Officer until 1995 $200,000 $ 0 $ 0 0 $ 0
October 1997
Harvey Schulweis, 1997 $200,000 $ 0 $ 756,250 40,000(2) $ 0
President, Chief Executive 1996 $200,000 $ 0 $ 203,125 0 $ 0
Officer since October 1997 1995 $200,000 $ 0 $ 472,656 25,000 $ 0
Michael H. Rosen, 1997 $175,000 $75,000 $ 94,531 20,000(2) $96,250(3)
Executive Vice President 1996 $175,000 $75,000 $ 0 0 $95,731
1995 $193,750 $93,750 $1,289,063 20,000 $95,776
Jennifer C. Munch, 1997 $110,000 $50,000 $ 32,141 10,000(2) $34,061(3)
Vice President--Treasurer 1996 $110,000 $40,000 $ 0 0 $33,542
1995 $116,250 $42,500 $ 300,781 10,000 $33,587
Alan W. Lasker, 1997 $110,000 $15,000 $ 272,250 15,000(2) $ 6,114(3)
Vice President--Finance 1996 $110,000 $10,000 $ 0 0 $ 5,667
1995 $110,000 $10,000 $ 0 10,000 $ 5,712
- ---------
(1) The total number of restricted shares and the aggregate market value thereof
at December 31, 1997 are as follows: Mr. Lerner held no restricted shares;
Messrs. Schulweis and Rosen each held 100,000 restricted shares having an
aggregate market value of $1,768,750; Mrs. Munch held 24,000 restricted
shares having an aggregate market value of $424,500; and Mr. Lasker held
18,000 restricted shares having an aggregate market value of $318,375.
Dividends accrue and are paid on the restricted shares. The aggregate market
value is based on the fair market value at December 31, 1997 of $17.6875 per
share.
(2) These options were granted under the 1997 Plan and such grants are subject
to approval of the 1997 Plan by the Trust's Shareholders.
(3) Amounts shown include the following: Trust or subsidiary contributions to
defined-contribution plan--$7,638 for each of Mr. Rosen and Mrs. Munch and
$5,538 for Mr. Lasker; Trust or subsidiary payments of term life insurance
premiums--$864 for Mr. Rosen, $522 for Mrs. Munch and $576 for Mr. Lasker;
and Trust or subsidiary payments of split-dollar life insurance
premiums--$87,748 for Mr. Rosen and $25,901 for Mrs. Munch.
</TABLE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options during fiscal year 1997 to the named executive officers. In accordance
with the rules of the Securities and Exchange Commission, the table shows the
hypothetical gains or "option spreads" that would exist for the respective
options. The gains are based on assumed rates of annual compounded share price
appreciation of 5% or 10% from the date the options were granted over the full
option term of ten years. No gain to the optionees is possible without an
increase in share price which will benefit all Shareholders proportionately.
Regardless of the theoretical value of an option, its ultimate value will depend
on the market value of the Common Shares at a future date and that value will
depend on a variety of factors, including the overall condition of the stock
market and the Trust's results of operations and financial condition. There can
be no assurance that the values reflected in this table will be achieved.
5
<PAGE> 8
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
-------------------------------------------------- ANNUAL RATES
% OF TOTAL OF SHARE PRICE
OPTIONS APPRECIATION
GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES EXERCISE OR (4) GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION -------------------- PRESENT
NAME (#)(1) YEAR(2) ($/SH)(3) DATE 5% 10% VALUE(5)
---- ------- ---------- ----------- ---------- -- --- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Alfred Lerner 0 0% $ 0 N/A $ 0 $ 0 $ 0
Harvey Schulweis 40,000 33.33% $15.125 06/17/07 $380,600 $964,200 $ 23,600
Michael H. Rosen 20,000 16.67% $15.125 06/17/07 $190,300 $482,100 $ 11,800
Jennifer C. Munch 10,000 8.33% $15.125 06/17/07 $ 95,150 $241,050 $ 5,900
Alan W. Lasker 15,000 12.50% $15.125 06/17/07 $142,725 $361,575 $ 8,850
- ---------
(1) All options for Common Shares were granted pursuant to the 1997 Plan and
such grants are subject to approval of the 1997 Plan by the Trust's
Shareholders. Such options become exercisable at the rate of one-third per
year, commencing on the first anniversary of the date of grant of the
option. Mr. Lerner did not receive a 1997 stock option grant at his request.
(2) Based upon 120,000 options granted to all employees.
(3) Fair market value on the date of grant (June 17, 1997).
(4) The potential realizable values illustrated at 5% and 10% compounded annual
appreciation assume that the price of the Trust's Common Shares increases to
$24.64 and $39.23 per share, respectively, over the 10-year term of the
options. If the named executive officers realize these values, the Trust's
Shareholders will realize aggregate appreciation in the price of the Trust's
outstanding Common Shares of approximately $150 million or $380 million,
respectively, over the same period.
(5) Amounts reflect the estimated present value of the grant as of the grant
date using the Black-Scholes option pricing model. The following assumptions
were used to estimate the grant date present value: (1) each option for
Common Shares is exercised immediately upon vesting (averaging two years
from the June 17, 1997 grant date); (2) expected volatility or fluctuation
of the Trust's share price of approximately 18% each year calculated based
on historical fluctuations; (3) expected dividend rate of $1.60 per Common
Share based on current dividend levels; and (4) discount to present value
based on an annual rate of return of 6.1%, which was the approximate rate at
the grant date for a five-year zero coupon bond.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NO. OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR END FISCAL YEAR END
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(1)
---- ----------- -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Alfred Lerner 0 $0 0/0 $0/$0
Harvey Schulweis 0 $0 91,667/48,333 $281,772/$133,228
Michael H. Rosen 0 $0 63,333/26,667 $196,040/$75,835
Jennifer C. Munch 0 $0 36,667/13,333 $112,710/$37,915
Alan W. Lasker 0 $0 6,667/18,333 $24,585/$50,728
- ---------
(1) Amounts shown include options granted under the 1997 Plan, which Plan is
subject to the approval of the Trust's Shareholders.
</TABLE>
6
<PAGE> 9
PERFORMANCE GRAPH
The following graph compares total Shareholder returns from August 23, 1993
through December 31, 1997 to the Standard & Poor's 500 Stock Index ("S&P 500")
and to the National Association of Real Estate Investment Trusts, Inc.'s Equity
REIT Total Return Index ("NAREIT"). The graph assumes that the value of the
investment in the Trust's Common Shares and each index was $100 at August 31,
1993 and that all dividends were reinvested. The Shareholder return shown on the
following graph is not necessarily indicative of future performance.
The following graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Trust specifically incorporates this information
by reference and otherwise shall not be deemed filed under such Acts.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Trust S&P 500 NAREIT
<S> <C> <C> <C>
August 31, 1993 100 100 100
December 31, 1993 93.39 100.56 97.14
December 31, 1994 71.79 102.88 100.22
December 31, 1995 69.78 141.39 115.52
December 31, 1996 87.88 173.86 156.26
December 31, 1997 116.94 231.87 187.91
</TABLE>
RETIREMENT PLAN
An affiliate of the Trust, The TC Operating Limited Partnership, maintains
a non-contributory, defined-contribution plan established by its predecessor for
the benefit of employees. The plan covers all employees who are twenty and
one-half years old with six months or more of service. Participants qualify for
benefits upon reaching the age of sixty-five and early retirees qualify provided
they have completed ten years of service. After three years of service,
participants become 20% vested in employer contributions which are based on
current compensation levels. From the fourth through the seventh years, vesting
increases by 20% each year until full vesting occurs. For the fiscal year ended
December 31, 1997, $7,638 was contributed to the plan accounts of each of Mr.
Rosen and Mrs. Munch and $5,538 was contributed to the plan account of Mr.
Lasker. Messrs. Lerner and Schulweis are not participants in such plan.
7
<PAGE> 10
OWNERSHIP OF COMMON SHARES OF BENEFICIAL INTEREST
The following table sets forth information as of February 27, 1998 in
respect of beneficial ownership of Common Shares by each person known to the
Trust to own 5% or more of its Common Shares, by each Trustee, by each named
executive officer and by all Trustees and executive officers as a group.
<TABLE>
<CAPTION>
SHARES % OF OWNERSHIP TOTAL SHARES
BENEFICIALLY OUTSTANDING OF SHARE AND SHARE
NAME OWNED(1)(2) SHARES EQUIVALENTS(3) EQUIVALENTS/%(4)
---- ----------- ------ -------------- ----------------
<S> <C> <C> <C> <C>
Alfred Lerner
25875 Science Park Drive
Beachwood, Ohio 44122............ 1,000,000 6.3% 2,152,299 3,152,299/17.3%
Harvey Schulweis................... 310,000 2.0% 215,230 525,230/ 2.9%
James H. Berick.................... 17,200(5) * -- --
H. Grant Hathaway.................. 62,000 * -- --
Milton A. Wolf..................... 78,800(6) * -- --
Michael H. Rosen................... 170,000 1.1% -- --
Jennifer C. Munch.................. 71,612(7) * -- --
Alan W. Lasker..................... 29,000 * -- --
All Trustees and Executive Officers
as a Group (8 persons)........... 1,738,612 11.0%
- ---------
* Less than 1% of the Common Shares outstanding
(1) Includes the following number of Common Shares which are not owned but can
be purchased within 60 days upon the exercise of options granted under the
1993 Plan: 12,000 by each of James H. Berick, H. Grant Hathaway and Milton
A. Wolf; 100,000 by Mr. Schulweis; 70,000 by Mr. Rosen; 40,000 by Mrs.
Munch; and 10,000 by Mr. Lasker.
(2) Includes the following number of restricted Common Shares awarded under the
1993 Plan: 100,000 for Mr. Schulweis, 100,000 for Mr. Rosen, 24,000 for
Mrs. Munch and 18,000 for Mr. Lasker.
(3) In consideration of the contributions of their interests in the Trust's
original properties as part of the formation of the Trust, Messrs. Lerner
and Schulweis retained beneficial ownership of their limited partnership
interests in the Operating Partnership, in which the Trust is an 86.00%
general partner. As of February 27, 1998, Messrs. Lerner and Schulweis
owned 12.10% and 1.21% limited partnership interests, respectively, in the
Operating Partnership. The limited partners of the Operating Partnership
share proportionately with the Trust, as general partner, in the net income
or loss and any distributions of the Operating Partnership; therefore, Mr.
Lerner's 12.10% limited partnership interest in the Operating Partnership
is the economic equivalent of 2,152,299 Common Shares of the Trust and Mr.
Schulweis' 1.21% limited partnership interest in the Operating Partnership
is the economic equivalent of 215,230 Common Shares of the Trust. Pursuant
to the partnership agreement of the Operating Partnership, Messrs. Lerner
and Schulweis each may convert his limited partnership interest into such
number of Common Shares.
(4) Percentage shown calculated based on conversion of all share equivalents
into Common Shares.
(5) Includes 1,200 shares held solely by Mr. Berick's wife, beneficial
ownership of which Mr. Berick disclaims.
(6) Includes 4,500 shares held solely by Dr. Wolf's wife and 800 shares held
solely by Dr. Wolf's wife as guardian for their adult child, beneficial
ownership of which Dr. Wolf disclaims.
(7) Includes 606 shares held solely by Mrs. Munch's husband, beneficial
ownership of which Mrs. Munch disclaims.
</TABLE>
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<PAGE> 11
PROPOSAL TO APPROVE THE 1997 LONG TERM INCENTIVE PLAN
As with the Trust's 1993 Plan, the Trust's 1997 Plan authorizes grants of
share options to Trustees, officers and key employees of the Trust, as well as
awards of restricted and unrestricted shares to such officers and key employees.
The Board of Trustees has adopted the 1997 Plan, which is being submitted for
approval of the Trust's Shareholders, as approximately 27,500 Common Shares
remain available at February 27, 1998, for future option grants or share awards
under the 1993 Plan. The full text of the 1997 Plan is attached as Exhibit A to
this Proxy Statement and the description of such Plan which follows is qualified
by reference to the full text of the 1997 Plan.
The 1997 Plan currently authorizes the issuance of 1,200,000 Common Shares
pursuant to grants of options and share awards. At February 27, 1998, options
for 120,000 Common Shares had been granted, all of which are outstanding, and
1,080,000 Common Shares remain available for future grants and awards.
Section 14 of the 1997 Plan provides that in the event of a stock split or
dividend or similar transaction, the number and kind of Common Shares reserved
for issuance pursuant to the 1997 Plan, and the number and kind of Common Shares
covered by outstanding options and awards, will be adjusted.
The 1997 Plan is administered by the Compensation Committee, which has
authority to select participants from among those officers and key employees
eligible and to determine the form and substance of awards and any condition and
restrictions on them. Trustee share options are granted as described below.
Officers and key employees of the Trust are eligible to receive grants of
employee share options and awards under the 1997 Plan. Approximately 70 officers
and key employees were eligible to participate in the 1997 Plan during 1997.
The 1997 Plan authorizes grants of incentive and non-qualified employee
share options. All employee share options have an exercise price that is not
less than the fair market value of the Common Shares on the date the option is
granted, and none may be exercised more than ten years from the date of grant.
Options expire sooner following termination of employment. The Compensation
Committee has authority to establish and to eliminate restrictions on exercise.
Options may be exercised by delivery of cash or, if permitted by the
Compensation Committee, Common Shares, or both. The closing price of the Common
Shares on the New York Stock Exchange on February 27, 1998, was $16.875 per
Common Share.
The employee options granted during 1997 will expire ten years from the
date of grant and are exercisable one-third after one year, two-thirds after two
years and in full after three years from the date of grant. The Compensation
Committee has classified the options granted during 1997 as incentive share
options, to the extent permitted by law.
The 1997 Plan provides for automatic grants of non-qualified share options
to Trustees who are not officers or employees of the Trust or any of its
subsidiaries. An initial grant of options for 2,000 Common Shares is made when a
person who is not an employee becomes a Trustee. Subsequent grants of options
for 2,000 Common Shares are made to each non-employee Trustee on January 2 of
each year. The exercise price of these options is the closing price of the
Common Shares on the New York Stock Exchange on the grant date. These options
are exercisable immediately and expire on the earlier of ten years from the
grant date or 90 days after the grantee ceases to be a Trustee. The 1997 Plan
provides that such automatic grants shall not duplicate any such annual grants
made to non-employee Trustees under the 1993 Plan. The January 2, 1998, grant of
options to non-employee Trustees was made under the 1993 Plan and no such
options have been granted under the 1997 Plan.
The 1997 Plan authorizes share awards either with or without restrictions.
The Compensation Committee determines the number of shares to be awarded and the
restrictions, if any, on shares. Restricted shares may be issued following the
lapse of restrictions or at the time of the award, in which
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<PAGE> 12
case the participant has all rights of a Shareholder, including the right to
vote the shares and receive dividends. Unless otherwise provided by the
Compensation Committee, restrictions lapse upon death, disability, retirement or
termination of employment following a change in control, as those terms are
defined in the 1997 Plan. The Compensation Committee may shorten the period of
any restriction. If the participant's employment terminates prior to lapse of
the restrictions, restricted shares are forfeited to the Trust.
Under current Federal income tax laws, a participant does not recognize
income upon receipt of a share option. At the time of exercise of a
non-qualified option, a participant recognizes ordinary income in an amount
equal to the difference between the fair market value of the Common Shares on
the exercise date and the exercise price.
A participant does not recognize income upon exercise of an incentive share
option. If the Common Shares acquired from exercise of an incentive share option
are held for at least two years from the grant date of the option and one year
from the exercise date, the participant will recognize long-term capital gain
upon sale of the Common Shares in an amount equal to the difference between the
sale price and the exercise price of the option. If the Common Shares are sold
sooner, the participant generally will recognize ordinary income or loss on the
date of sale in an amount equal to the lesser of the difference between the sale
price and the exercise price and the difference between the fair market value of
the Common Shares on the exercise date and the exercise price.
The Trust generally is entitled to an income tax deduction, at the time the
participant recognizes ordinary income, in an amount equal to the amount of
ordinary income recognized by the participant.
The Trust may withhold, or require a participant to remit to the Trust, an
amount sufficient to satisfy any Federal, state and local withholding tax
requirements. A participant may satisfy a tax withholding requirement by
delivery of Common Shares owned by the participant, including shares the
participant is entitled to receive upon exercise of the option.
The Board of Trustees may amend the 1997 Plan and any outstanding grants
made under the 1997 Plan without the approval of Shareholders, except that no
amendment will be effective without Shareholder approval if Shareholder approval
would be required under the rules of the New York Stock Exchange.
As of February 27, 1998, Harvey Schulweis, Chief Executive Officer and
President of the Trust, Michael H. Rosen, Executive Vice President of the Trust,
Jennifer C. Munch, Vice President -- Treasurer of the Trust and Alan W. Lasker,
Vice President -- Finance of the Trust, who, with Mr. Lerner, are all of the
current executive officers of the Trust, have been granted options to purchase
40,000, 20,000, 10,000 and 15,000 Common Shares, respectively, or 85,000 Common
Shares in the aggregate. As of February 27, 1998, James H. Berick, H. Grant
Hathaway and Milton A. Wolf, who are all of the current non-employee Trustees of
the Trust and each of whom is a nominee as Trustee of the Trust, have been
granted no options to purchase Common Shares of the Trust under the 1997 Plan.
As of February 27, 1998, all employees of the Trust, excluding executive
officers, have been granted, in the aggregate, options to purchase 35,000 Common
Shares under the 1997 Plan. Mr. Lerner did not receive any option grants or
share awards at his request.
Approval of the 1997 Plan will require that (i) a majority of the Common
Shares entitled to vote at this meeting vote in person or by proxy on this
Proposal; and (ii) a majority of the votes cast at this meeting are voted in
favor of the 1997 Plan. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR APPROVAL OF
THE 1997 LONG TERM INCENTIVE PLAN.
SELECTION OF ACCOUNTANTS
The Trustees have selected Ernst & Young LLP as independent accountants for
the Trust for the fiscal year ending December 31, 1998. Ernst & Young LLP were
the independent accountants for the
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<PAGE> 13
Trust for the fiscal year ended December 31, 1997 and are considered by the
Trustees to be well qualified.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and to be available to respond to appropriate questions.
OTHER MATTERS
The Trustees know of no matters to be presented for action at the Annual
Meeting other than those described in this Proxy Statement. Should other matters
come before the meeting, the Common Shares of the Trust represented by proxies
solicited hereby will be voted in respect thereof in accordance with the best
judgment of the proxy holders.
SHAREHOLDER PROPOSALS
If a Shareholder intends to present a proposal at the Annual Meeting of
Shareholders presently scheduled for April 1999 such proposal must be received
by the Trust on or before November 18, 1998 in order to be considered for
inclusion in the Trust's Proxy Statement and form of proxy relating to that
meeting.
REVOCATION OF PROXIES
A proxy may be revoked at any time before a vote is taken or the authority
granted otherwise is exercised. Revocation may be accomplished by the execution
of a later proxy in respect of the same shares or by giving notice in writing or
in open meeting.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Trust. The Trust does
not expect to pay for the solicitation of proxies, but may pay brokers,
nominees, fiduciaries and custodians their reasonable expenses for sending proxy
materials to principals and obtaining their instructions. In addition to
solicitation by mail, proxies may be solicited in person, by telephone or
telegraph or by officers, Trustees and regular employees of the Trust.
By order of the Board of Trustees
Daniel G. Berick
Secretary
March 27, 1998
11
<PAGE> 14
EXHIBIT A
THE TOWN AND COUNTRY TRUST
1997 LONG TERM INCENTIVE PLAN
1. ESTABLISHMENT AND PURPOSE
The Town and Country Trust (the "Company") hereby establishes the 1997 LONG
TERM INCENTIVE PLAN (the "Plan"). The Plan permits the grant of share options
and restricted or unrestricted share awards.
The purpose of the Plan is to promote the long term growth and
profitability of the Company by providing trustees, officers and other key
employees of the Company and its subsidiaries with incentives to improve
shareholder value and contribute to the success of the Company and to enable the
Company to attract, retain and reward the best available persons for positions
of substantial responsibility.
2. DEFINITIONS
(a) "Cause" means the occurrence of one of the following:
(i) Conviction for a felony or for any crime or offense lesser than
a felony involving the property of the Company, a subsidiary or a
partnership in which the Company has a direct or indirect interest.
(ii) Conduct that has caused demonstrable and serious injury to the
Company, a subsidiary or a partnership in which the Company has a direct
or indirect interest, monetary or otherwise, as evidenced by a final
determination of a court or governmental agency of competent
jurisdiction in effect after exhaustion or lapse of all rights of
appeals.
(iii) Gross neglect or dereliction of duty to the Company or other
grave misconduct by the participant and failure to cure such situation
within 30 days after receipt of notice thereof from the Chief Executive
Officer of the Company. If the participant initiating such misconduct is
the Chief Executive Officer of the Company, the committee appointed
pursuant to Section 3 (the "Committee"), as authorized by not less than
two-thirds of all of its members shall give such notice to the Chief
Executive Officer.
(b) "Change in Control" shall mean the occurrence of either:
(i) a change of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A, or any
successor provision thereto, promulgated under the Securities Exchange
Act of 1934 ("Exchange Act"); provided that, without limitation, a
Change in Control shall be deemed to have occurred if (a) any "person"
or "group" (as those terms are used in Sections 13(d) and 14(d),
respectively, of the Exchange Act), other than Alfred Lerner or a
"group" including Alfred Lerner, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 issued under the Exchange Act), directly or
indirectly, of securities of the Company entitled to cast 25% or more of
the votes entitled to be cast for the election of trustees of the
Company by the holders of its then outstanding securities; and (b) at
any time during the period of 36 months subsequent to the securities
acquisition described above, individuals who at the beginning of such
period constitute the Board of Trustees cease for any reason to
constitute at least the majority thereof unless the nomination for
election of each new trustee was approved by a vote of at least
two-thirds of the trustees still in office who were trustees at the
beginning of such 36 month period; or
(ii) any "person" or "group," as described above, other than Alfred
Lerner or a "group" including Alfred Lerner, is or becomes the
"beneficial owner," directly or indirectly, of securities
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<PAGE> 15
of the Company entitled to cast 40% or more of the votes entitled to be
cast for the election of trustees of the Company by the holders of its
then outstanding securities.
(c) "Code" means the Internal Revenue Code of 1986, as amended, and
any successor statute.
(d) "Common Shares" means Common Shares of Beneficial Interest of the
Company.
(e) "Competition" means acting as a director, trustee, partner,
officer, employee, consultant or advisor with or to, or acquiring an
ownership interest in excess of 5% of, a corporation, partnership, firm or
other entity that engages in any business which competes with the Company
or any subsidiary of the Company as determined by the Board of Trustees in
its sole discretion.
(f) "Disability" means a permanent and total disability as defined in
Section 22(e)(3) of the Code, as determined by the Committee.
(g) "Fair Market Value" of a Common Share for any purpose shall be
determined in accordance with policies adopted by the Committee.
(h) "Retirement" means retirement as defined under the Town and
Country Management Corporation's pension or any successor plan thereto, if
any, or termination of employment on retirement with the approval of the
Committee.
(i) "Subsidiary" and "subsidiaries" mean only a corporation or
corporations within the meaning of the definition of "subsidiary
corporation" provided in Section 424(f) of the Code, or any successor
statute of similar import.
3. ADMINISTRATION
(a) The Plan shall be administered by a Committee of not less than
three trustees of the Company.
(b) The Committee, consistent with the provisions of the Plan, shall
be authorized to (i) select persons to participate in the Plan subject to
the provisions of Section 5 hereof, (ii) determine the form and substance
of grants made under the Plan to each participant, and the conditions and
restrictions, if any, subject to which such grants will be made, (iii)
interpret the Plan and (iv) adopt, amend, or rescind such rules and
regulations for carrying out the Plan as it may deem appropriate. Decisions
of the Committee on all matters relating to the Plan shall be in the
Committee's sole discretion and shall be conclusive and binding on all
parties, including the Company, its shareholders and the participants in
the Plan. The validity, construction and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with
applicable federal and state laws and rules and regulations promulgated
pursuant thereto.
(c) The Committee shall have no authority to administer, modify or
interpret Section 7 of the Plan or any grants or awards made pursuant to
Section 7.
4. SHARES AVAILABLE FOR THE PLAN
Subject to adjustments as provided in Section 14, an aggregate of 1,200,000
Common Shares may be issued pursuant to the Plan. If any grant under the Plan
expires or terminates unexercised, becomes unexercisable or is forfeited as to
any Common Shares, such unpurchased or forfeited Common Shares shall thereafter
be available for further grants under the Plan, except as otherwise provided by
applicable rule of the Securities and Exchange Commission.
5. PARTICIPATION
(a) Participation in the Plan, except for Section 7, is limited to
those officers and other key employees of the Company and its Subsidiaries
selected by the Committee, including trustees who are officers of the
Company. Trustees who are not officers or employees of the Company or a
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<PAGE> 16
Subsidiary are not eligible to participate in the Plan except as provided
in Section 7. Only trustees who are not officers or employees of the
Company are eligible to participate under Section 7.
(b) Nothing in the Plan or in any grant thereunder shall confer any
right on an employee to continue in the employ of the Company or shall
interfere in any way with the right of the Company to terminate an employee
at any time.
6. EMPLOYEE SHARE OPTIONS
Subject to the other applicable provisions of the Plan, the Committee from
time to time may grant to eligible participants non-qualified share options or
incentive share options. Incentive share options shall be treated as, and are
intended to qualify as, "incentive stock options", as that term is defined in
Section 422 of the Code. The options granted shall be subject to the following
terms and conditions:
(a) Price. The price per share payable upon the exercise of each
option ("exercise price") shall not be less than 100% of the Fair Market
Value of the Common Shares on the date the option is granted.
(b) Payment. Options may be exercised in whole or in part upon payment
of the exercise price of the Common Shares to be acquired. Payment may be
made in cash or, if authorized by the Committee, in Common Shares or a
combination of cash and Common Shares. The Fair Market Value of Common
Shares delivered on exercise of options shall be determined on the date of
exercise. Common Shares delivered in payment of the exercise price may be
already owned Common Shares or, if approved by the Committee, Common Shares
acquired upon exercise of the option. Any fractional Common Share will be
paid in cash. The Company, in accordance with policies approved by the
Committee, may make or guarantee loans to participants to assist them to
exercise options.
(c) Terms of Options. The term during which each option may be
exercised shall be determined by the Committee, but in no event shall an
option be exercisable (i) prior to six months, or (ii) more than ten years,
from the date the option is granted. All rights to purchase Common Shares
pursuant to an option shall, unless sooner terminated, expire at the date
designated by the Committee. The Committee shall determine the date on
which each option shall become exercisable and may provide that an option
shall become exercisable in installments or upon the occurrence of
specified events. The shares constituting each installment may be purchased
in whole or in part at any time after such installment becomes exercisable,
subject to such minimum exercise requirement as may be designated by the
Committee. The Committee may accelerate the time at which any option may be
exercised, and may impose resale restrictions on all or a portion of the
Common Shares delivered upon exercise of any option. Prior to the exercise
of the option and issuance of the Common Shares issuable upon exercise of
the option, the optionee shall have no rights to any dividends or other
distributions in respect of such shares or be entitled to any voting rights
on any Common Shares subject to outstanding options.
(d) Termination of Employment.
(i) If a participant ceases to be an employee of the Company or any
subsidiary due to death or Disability, each of the participant's options
shall become fully vested and exercisable and shall remain so for a
period of one year from the date of termination of employment, but in no
event after its expiration date.
(ii) If a participant ceases to be an employee of the Company upon
Retirement, each option of the participant shall become fully vested and
exercisable and shall remain so for a period of two years from the date
of Retirement, but in no event after its expiration date. If the
participant engages in Competition without written approval from the
Company to do so, any unexercised options will be forfeited.
A-3
<PAGE> 17
(iii) If a participant ceases to be an employee of the Company due
to Cause, all of the participant's options shall be forfeited
immediately.
(iv) If a participant ceases to be an employee of the Company for
any reason other than death, Disability, Retirement or Cause, each
option of the participant which is vested and exercisable shall remain
so for a period of ninety days from the date of termination of
employment, but in no event after its expiration date, and then shall
terminate. Options which have not vested at the termination date will be
forfeited. If the participant engages in Competition without written
approval from the Company to do so, all unexercised options will be
forfeited.
(e) Restrictions on Incentive Share Options.
(i) The aggregate Fair Market Value (determined as of the grant
date) of Common Shares in respect of which all incentive share options
first become exercisable by any participant in any calendar year under
this or any other plan of the Company or any related or predecessor
corporation of the Company (as defined in the applicable regulations
under the Code) may not exceed $100,000. If any incentive share
option(s) granted under the Plan would cause such dollar limits to be
exceeded, then the excess portion of the incentive share option(s) shall
become exercisable in the next or succeeding calendar year in which its
exercisability would not violate the dollar limitations.
(ii) The exercise price of any incentive share option granted to a
participant who owns (within the meaning of Section 422(b)(6) of the
Code, after the application of the attribution rules in Section 424(d)
of the Code) more than 10% of the combined voting power of all classes
of shares of the Company or any related corporation shall be not less
than 110% of the Fair Market Value of the Common Shares on the grant
date and the term of such option shall not exceed five years.
(iii) In the event that a participant ceases to be an employee of
the Company or a subsidiary due to a reason other than Disability, the
participant's incentive share options shall be treated as incentive
share options only if exercised by the participant within ninety days
after the date of termination of employment.
(iv) No option shall be an incentive share option unless so
designated by the Committee at the time of grant.
7. NON-EMPLOYEE TRUSTEE SHARE OPTIONS
(a) Each person who becomes a non-employee trustee of the Company
shall be granted a non-qualified share option to purchase 2,000 Common
Shares on the date the person becomes a trustee. The exercise price shall
be the closing price of the Common Shares on the New York Stock Exchange on
the grant date.
(b) Each person who is a non-employee trustee on January 2 of each
year beginning on and after January 2, 1998 shall be granted an option to
purchase 2,000 Common Shares on that date or the next day the New York
Stock Exchange is open for trading. The exercise price shall be the closing
price of the Common Shares on the New York Stock Exchange on the grant
date.
(c) Options may be exercised in whole or in part by payment of the
exercise price for the Common Shares to be acquired. Payment must be made
in cash.
(d) All options shall be exercisable immediately following the
effective date of grant. The term during which each option may be exercised
shall be ten years from the date it is granted. All rights to purchase
shares pursuant to an option shall, unless sooner terminated, expire ninety
days after the grantee is no longer an eligible trustee. No option granted
under this Section 7 shall be duplicative of any non-employee trustee
option granted under the Company's Amended and Restated 1993 Long Term
Incentive Plan.
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<PAGE> 18
8. RESTRICTED AND UNRESTRICTED SHARE AWARDS
(a) Subject to the other applicable provisions of the Plan, the
Committee at any time and from time to time may award Common Shares to such
participants and in such amounts as it determines. Each award of Common
Shares shall specify the applicable restrictions, if any, on such shares,
the duration of such restrictions, and the time or times at which such
restrictions shall lapse in respect of all or a portion of the Common
Shares that are part of the award. The Committee may reduce or shorten the
duration of any restriction applicable to any shares awarded to any
participant under the Plan.
(b) Restricted shares may be issued at the time of award, subject to
forfeiture if the restrictions do not lapse, or upon lapse of the
restrictions. If Common Shares are issued at the time of the award, the
participant may be required to pay nominal consideration in accordance with
state law and will be required to deposit the certificates with the Company
during the period of restriction thereon and to execute a blank stock power
therefor. Except as otherwise provided by the Committee, during such period
of restriction the participant shall have all of the rights of a holder of
Common Shares, including but not limited to the rights to receive dividends
or other distributions in respect of such shares (or amounts equivalent to
such dividends or distributions) and to vote. If Common Shares are issued
upon lapse of restrictions, the Committee may provide that the participant
will be entitled to receive any amounts per share pursuant to any dividend
or distribution paid by the Company on its Common Shares to shareholders of
record after the award and prior to the issuance of the shares.
(c) Except as otherwise provided by the Committee, on termination of a
grantee's employment due to death, Disability, Retirement or a Change in
Control during any period of restriction, all restrictions on Common Shares
awarded to such grantee shall lapse. On termination of a grantee's
employment for any other reason, all restricted shares in respect of which
restrictions have not lapsed shall be forfeited to the Company.
9. WITHHOLDING OF TAXES
(a) As a condition to any grant or payment by the Company under the
Plan or to the delivery of certificates for Common Shares issued under the
Plan, the Company may require that the grantee pay to the Company in cash
or, if permitted in accordance with other provisions of the Plan or
approved by the Committee, in Common Shares valued at Fair Market Value on
the date as of which the withholding tax liability is determined, any
federal, state or local taxes of any kind required by law to be withheld in
respect of any grant, payment or issuance or delivery of Common Shares.
(b) Unless otherwise determined by the Committee, a participant may
also deliver Common Shares, including Common Shares acquired upon exercise
of the option, in satisfaction of any amount the Company is required to
withhold for taxes in connection with the exercise of an option subject, if
the optionee is subject to Section 16(b) of the Securities Exchange Act of
1934, to such restrictions as may be imposed from time to time by the
Securities and Exchange Commission.
(c) An election to deliver Common Shares to pay withholding taxes must
be made on or before the date the amount of tax to be withheld is
determined, and once made will be irrevocable. The withholding tax
obligation that may be paid by the withholding or delivery of Common Shares
may not exceed the participant's estimated federal, state and local income
tax obligations in connection with the exercise of the option or the sale
of Common Shares received upon exercise of the option. The Fair Market
Value of the Common Shares to be withheld or delivered will be the Fair
Market Value on the date as of which the amount of tax to be withheld is
determined.
(d) The Company, to the extent permitted or required by law, shall
have the right to deduct from any payment of any kind (including salary or
bonus) otherwise due to a grantee any federal, state or local taxes of any
kind required by law to be withheld in respect of any grant or payment or
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<PAGE> 19
the issuance or delivery of Common Shares under the Plan, or to retain or
sell without notice a sufficient number of Common Shares to be issued to
such grantee to provide for any such taxes.
10. WRITTEN AGREEMENT
Each employee to whom a grant is made under the Plan shall enter into a
written agreement with the Company that shall contain such provisions,
consistent with the provisions of the Plan, as may be established by the
Committee.
11. TRANSFERABILITY
No option or restricted share award (prior to lapse of the restrictions),
granted under the Plan shall be transferable by an employee otherwise than by
will or the laws of descent and distribution. An option may be exercised only by
the optionee or grantee thereof or his or her guardian or legal representative.
12. LISTING AND REGISTRATION
If the Committee determines that the listing, registration or qualification
upon any securities exchange, or under any law, of Common Shares subject to any
option or award is necessary or desirable as a condition of, or in connection
with, the grant or the issuance or purchase of Common Shares thereunder, no such
option may be exercised in whole or in part and no shares may be issued unless
such listing, registration or qualification is effected to the satisfaction of
the Committee.
13. TRANSFER OF EMPLOYEE
Transfer of an employee from the Company to a Subsidiary, from a Subsidiary
to the Company, or from one Subsidiary to another, shall not be considered a
termination of employment. Nor shall it be considered a termination of
employment if an employee is placed on military or sick leave or such other
leave of absence which is considered by the Company as continuing intact the
employment relationship, until the employee's right to reemployment shall no
longer be guaranteed either by law or contract.
14. ADJUSTMENT; BUSINESS COMBINATIONS
(a) In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, share exchange,
consolidation, substantial distribution of assets, or any other change in
the corporate structure or shares of the Company, the number and kind of
shares reserved for issuance under the Plan, the number and kind of shares
covered by outstanding options and awards made under the Plan, the exercise
price of outstanding options, and the number and kind of shares to be
covered by options to be granted pursuant to Section 7 of the Plan shall be
appropriately adjusted.
(b) In the event of any merger, share exchange, consolidation or other
reorganization in which the Company is not the surviving or continuing
corporation, or in which the Company's shareholders become entitled to
receive cash, securities of the Company other than voting Common Shares or
securities of another issuer, or in the event of a Change in Control, (a)
all outstanding options shall become vested and immediately exercisable and
(b) all restrictions on restricted shares shall immediately lapse, at a
date not later than the effective date of the transaction, notwithstanding
any restriction on exercise or vesting.
15. TERMINATION AND MODIFICATION OF THE PLAN
(a) The Board of Trustees, without approval of the shareholders, may
modify or terminate the Plan, except that no modification shall become
effective without prior approval of the shareholders of the Company if
shareholder approval would be required for continued compliance with Rule
16b-3 of the Securities and Exchange Commission, or if the modification
would (a) increase the total amount of shares which may be issued under the
Plan (except as provided in Section 14 hereof),
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<PAGE> 20
(b) change the class of employees eligible to participate, (c) materially
increase benefits to participants, or (d) extend the period during which
options may be granted or exercised. No amendment to Section 7 of the Plan
shall be made more than once every six months other than to conform with
changes in the Code or the rules thereunder.
(b) No termination of the Plan shall affect outstanding options or
awards previously made under the Plan.
(c) The Committee may amend or modify the grant of any outstanding
option or award in any manner to the extent that the Committee would have
had the authority to make such grant as so modified or amended, including
without limitation to change the date or dates as of which an option
becomes exercisable or restrictions on shares are to lapse. However, no
modification may be made that would materially adversely affect any grant
previously made under the Plan without the approval of the grantee. The
Committee shall be authorized to make modifications to the Plan and
outstanding awards of a minor or administrative nature or that may be
required, authorized or made desirable by Federal or state laws applicable
to the Company and/or the participants. The Board of Trustees shall
exercise the power referred to in this paragraph in respect of Section 7 of
the Plan or options granted thereunder.
16. LIMITATION ON BENEFITS
Notwithstanding any other provision of the Plan, no option may be exercised
and no award will vest to the extent such exercise, vesting or payment will
create an "excess parachute payment" as defined in Section 280G of the Code, and
the portion of the option or award creating the excess parachute payment shall
be forfeited and canceled.
17. EFFECTIVE DATE
The Plan shall become effective as of June 17, 1997, the date of its
adoption by the Board of Trustees of the Company. The Plan shall be subject to
ratification within twelve months of the effective date by an affirmative vote
of a majority of Common Shares present and entitled to vote at a shareholders'
meeting at which a quorum representing a majority of the outstanding Common
Shares is present.
18. TERMINATION DATE
No further grants may be made under the Plan following the close of
business on the day preceding the tenth anniversary of the effective date of the
Plan.
A-7
<PAGE> 21
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PLEASE PROXY
SIGN AND
RETURN THE TOWN AND COUNTRY TRUST THIS PROXY IS SOLICITED ON BEHALF OF
THIS THE BOARD OF TRUSTEES
PROXY
WHETHER The undersigned hereby appoints ALFRED LERNER, HARVEY
OR NOT SCHULWEIS and JAMES H. BERICK and each of them as Proxies, each
YOU EXPECT with the full power to appoint his substitute, and hereby
TO ATTEND authorizes them to represent and to vote, as designated below,
THE all the Common Shares of Beneficial Interest of The Town and
MEETING Country Trust held of record by the undersigned on February 27,
------- 1998, at the Annual Meeting of Shareholders to be held on
YOU MAY April 30, 1998, and at any adjournments thereof:
NEVERTHELESS
VOTE IN 1. Election of five (5) Trustees for a term expiring at the 1999
PERSON IF Annual Meeting of Shareholders.
YOU ATTEND
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the contrary to vote for all
below) nominees listed below
Alfred Lerner, Harvey Schulweis, James H. Berick,
H. Grant Hathaway and Milton A. Wolf
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided
below.)
_________________________________________________________________
2. To approve The Town and Country Trust's 1997 Long Term
Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the Proxies are authorized to vote upon
such other business as properly may come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF
PROPOSALS 1 AND 2.
(Continued, and to be signed on the other side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued from other side)
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign.
When signing as attorney, as
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
Dated:________________ , 1998
_____________________________
Signature
_____________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY CARD
PROMPTLY USING THE
ENCLOSED ENVELOPE
