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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Grove Property Trust
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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(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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
GROVE PROPERTY TRUST
Notice of Annual Meeting of Shareholders
To be Held June 30, 1998
To our Shareholders:
The Annual Meeting of Shareholders of Grove Property Trust, a Maryland
real estate investment trust (the "Company"), will be held at The Hartford Club,
46 Prospect Street, Hartford, Connecticut, on Tuesday, June 30, 1998, at 11:00
a.m., local time, for the purpose of acting upon the following matters, as well
as such other business as may properly come before the Annual Meeting or any
adjournment thereof:
1. The election of two Trust Managers, each to serve until the
annual meeting of the Company's Shareholders to be held in
2001;
2. The amendment of the Company's Third Amended and Restated
Declaration of Trust dated March 14, 1997, as amended by
Articles Supplementary dated October 23, 1997 (as so amended,
the "Charter"), to reduce the maximum number of Trust Managers
which may serve on the Board from 15 to 11;
3. The amendment of the Charter to increase the total number of
Common Shares and Preferred Shares which the Company has
authority to issue to 34,000,000 and 1,000,000, respectively;
4. The amendment of the Charter to provide that future amendments
to the Charter requiring Shareholder approval may be approved by
the holders of a majority of the Company's outstanding shares
entitled to vote;
5. The amendment of the Company's 1996 Share Incentive Plan (the
"1996 Plan") to increase the number of Common Shares available
for issuance thereunder from 900,000 to 1,400,000 and to permit
awards under the 1996 Plan to be granted to consultants and
advisors to the Company;
6. The ratification of the appointment of Ernst & Young LLP as the
Company's independent public accountants for the year ending
December 31, 1998; and
7. The consideration of any other business which may properly
come before the Annual Meeting.
<PAGE>
Only shareholders of record on the books of the Company at the close of
business on April 7, 1998 will be entitled to vote at the Annual Meeting or any
adjournment thereof.
In order that your shares may be represented at the Annual Meeting,
please date and sign the enclosed proxy card and return it promptly in the
enclosed envelope. If you attend the Annual Meeting, you may vote in person even
though you have previously sent in your proxy card.
A copy of the Company's Annual Report for the year 1997 is enclosed.
By order of the Board of Trust Managers,
Joseph R. LaBrosse
Chief Financial Officer,
Secretary and
Treasurer
Hartford, Connecticut
April , 1998
YOUR VOTE IS IMPORTANT
----------------------
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
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<PAGE>
GROVE PROPERTY TRUST
598 Asylum Avenue
Hartford, Connecticut 06105
PROXY STATEMENT
Annual Meeting of Shareholders
June 30, 1998
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Trust Managers (the "Board") of Grove Property Trust, a Maryland
real estate investment trust ("Grove" or the "Company"), of proxies from the
holders (the "Shareholders") of the Company's issued and outstanding common
shares of beneficial interest, $0.01 par value per share (the "Common Shares"),
in connection with the Annual Meeting of Shareholders to be held on Tuesday,
June 30, 1998, at The Hartford Club, 46 Prospect Street, Hartford, Connecticut
06103, at 11:00 a.m. local time, and at any adjournment(s) or postponement(s) of
such meeting (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders.
This Proxy Statement and enclosed Proxy Card are being mailed to the
Shareholders on or about April 30, 1998.
At the Annual Meeting, the Shareholders will consider and vote upon
proposals (the "Proposals") set forth in the accompanying Notice of Annual
Meeting.
Only the holders of the Common Shares at the close of business on April
7, 1998 (the "Record Date"), are entitled to vote at the Annual Meeting. Each
Common Share is entitled to one vote on all matters. As of the Record Date,
8,453,829 Common Shares were outstanding.
A majority of all votes entitled to be cast at the Annual Meeting shall
constitute a quorum for the transaction of business at the Annual Meeting. A
plurality of all votes cast at the Annual Meeting is sufficient to elect a Trust
Manager (Proposal 1). The affirmative vote of the holders of not less than
two-thirds of all outstanding Common Shares on the Record Date is required to
approve the amendments to the Charter (Proposals 2, 3 and 4). A majority of all
votes cast at the Annual Meeting is sufficient to approve the amendment to the
1996 Plan (Proposal 5). The affirmative vote of a majority of the Common Shares
voted is required to ratify the appointment of Ernst & Young LLP as the
Company's independent public accountants (Proposal 6). Abstentions and broker
non-votes will not be counted as votes cast and will have no effect on the
result of the vote on Proposals 1, 5 and 6. On Proposals 2, 3 and 4, abstentions
and broker non-votes will be the equivalent of a negative vote.
<PAGE>
The Common Shares represented by all properly executed proxies will be
voted at the Annual Meeting as indicated or, if no instruction is given, in
favor of each of the Proposals. As to any other business which may properly come
before the Annual Meeting, all properly executed proxies will be voted by the
persons named therein in accordance with their best judgment. Grove does not
know of any business other than the Proposals which may come before the Annual
Meeting.
Any person giving a proxy has the right to revoke it at any time before
it is exercised (a) by filing with the Secretary of the Company a duly signed
revocation or a proxy bearing a later date or (b) by electing to vote in person
at the Annual Meeting. A notice of revocation need not be on any specific form.
The By-laws of the Company provide that any shareholder who nominates
anyone for election to the Board or proposes any business to be considered at an
annual meeting must give written notice thereof to the Secretary of the Company
at the Company's principal executive office not less than 60 nor more than 90
days prior to the date corresponding to the date on which the preceding year's
annual meeting was held. The shareholder must be a shareholder of record at the
time of giving the notice and be entitled to vote at the relevant annual
meeting. The notice must contain, in the case of nominations to the Board,
information about the nominee required to be included in a proxy statement
prepared in accordance with the rules of the Securities and Exchange Commission
and the nominee's written consent to serve if elected, and in the case of other
business proposed for the annual meeting, a brief description of the business
and the reason(s) therefor. In addition, certain information about the
shareholder giving the notice must be included.
PROPOSAL 1
ELECTION OF TRUST MANAGERS
The number of Trust Managers comprising the Board is currently seven,
divided into three classes. Each class is elected to serve a three-year term,
and classes are elected on a staggered basis. The two Trust Managers who are
nominated for election by the Shareholders at the Annual Meeting are Edmund F.
Navarro and James F. Twaddell. Two Trust Managers, J. Joseph Garrahy and Joseph
R. LaBrosse, have been elected to hold office until the Annual Meeting of
Shareholders to be held in 1999 and three Trust Managers, Damon D. Navarro,
Harold V. Gorman and Theodore R. Bigman, have been elected to hold office until
the Annual Meeting of Shareholders to be held in 2000.
The affirmative vote of the holders of a plurality of the Common Shares
voted at the Annual Meeting in person or by proxy is required for the election
of each nominee for Trust Manager. Unless otherwise specified therein, any proxy
received will be voted FOR the election of the listed nominees.
The nominees for Trust Manager and the continuing Trust Managers, their
present principal occupation or employment as of April 15, 1998, and other
positions held during the past five years are set forth below.
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<PAGE>
Nominees for election as Trust Managers to serve until the 2001 Annual Meeting:
Edmund F. Navarro, age 37, has been a Trust Manager of Grove since
April 1997 and Chief Operating Officer of the Company since 1997. From its
formation in 1994 to 1997, Mr. Navarro was Vice President--Property Management
of Grove. Prior to the March 1997 acquisition by the Company of the property
management and related liabilities of Grove Property Services Limited
Partnership ("GPS") and of properties formerly controlled by affiliates of the
Company's executive officers (collectively, the "Grove Companies"), Edmund
Navarro was President of GPS since 1983. He is responsible for the management of
the properties owned by Grove, marketing and supervision of construction
projects and had similar responsibilities for the Grove Companies. Prior to his
employment with the Grove Companies, Mr. Navarro was a Media Marketing Planner
with Vitt Median International in New York City. Mr. Navarro is a graduate of
the University of Rhode Island with a degree in Marketing.
James F. Twaddell, age 57, has been a Trust Manager of Grove since June
1994. He has been a member of the Investment Banking Group of Schneider
Securities, Inc., Providence, Rhode Island, since 1995. From 1974 to 1995, Mr.
Twaddell served as Chairman of Barclay Investments, Inc., a member firm of the
National Association of Securities Dealers, Inc. ("NASD"). Mr. Twaddell also
served as Chairman of the Regional Investment Bankers Association, a 125-member
cooperative association of regional investment bankers and broker dealers
conducting business throughout the United States, from 1993 to 1994. For the
1993 - 1995 term, he served on both the NASD District 11 Committee and the
District Business Conduct Committee. He has served as Chairman of the Board of
First Mutual Fund, a publicly traded mutual fund, since 1979. Mr. Twaddell
received his B.A. degree from Brown University in 1961.
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The Board recommends that you vote FOR the election of each of the above
nominees for Trust Manager.
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Continuing Trust Managers serving until the 1999 Annual Meeting:
J. Joseph Garrahy, age 67, has been a Trust Manager of Grove since its
formation in June 1994. Mr. Garrahy has served as President of J. Joseph Garrahy
& Associates, Inc., in Providence, Rhode Island, a business consulting firm,
since its formation in 1990. Mr. Garrahy began his career in public service in
1962 as a Rhode Island State Senator. In 1968, he was elected Lieutenant
Governor of the State of Rhode Island, where he served four two-year terms. In
1976, Mr. Garrahy was elected Governor of the State, and was re-elected to that
office in 1978, 1980 and 1982. He served as Chairman of the National Governors'
Association's Subcommittee on Health Policy in 1977 and the National Governors'
Association's Human Services Committee and as Chairman of the Coalition of
Northeast Governors' Committee on Transportation. Mr. Garrahy was a Senior Vice
President with the merchants banking firm of G. William Miller & Company, Inc.
of Washington, D.C., from 1985 to 1990. He is a Director of the Providence and
Worcester
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<PAGE>
Railroad Company. Mr. Garrahy attended the University of Buffalo and the
University of Rhode Island.
Joseph R. LaBrosse, age 35, has been the Chief Financial Officer,
Secretary and Treasurer as well as a Trust Manager of Grove since its formation
in June 1994. Prior to March 1997, Mr. LaBrosse was Chief Financial Officer of
the Grove Companies since 1988. He is responsible for financing, loan portfolio
management, financial reporting, tax planning, cash management, strategic
budgeting and planning. Prior to joining the Company's predecessor in 1988, Mr.
LaBrosse was a real estate tax consultant at Arthur Andersen & Co. in Hartford,
Connecticut. He is a magna cum laude graduate of the University of Connecticut
with a degree in Accounting. He is a licensed Certified Public Accountant and a
member of the American Institute of Certified Public Accountants, the
Connecticut Society of Certified Public Accountants and the Real Estate Finance
Association.
Continuing Trust Managers serving until the 2000 Annual Meeting:
Theodore R. Bigman, age 35, has been a Trust Manager of Grove since
April 1997. From 1987 to 1995, he was a Director at Credit Suisse First Boston
in the real estate group, establishing and managing their REIT effort. He had
primary responsibility for $2.5 billion of initial public offerings by REIT's.
Previously, he had extensive real estate experience in a wide variety of
transactions involving the financing and sale of both individual assets and
portfolios of real estate assets, as well as the acquisition of several real
estate companies. Since 1995, he has been a Principal of Morgan Stanley Asset
Management Inc., a subsidiary of Morgan Stanley Group Inc. ("Morgan Stanley"),
responsible for its real estate securities investment management business. He
graduated from Brandeis University in 1983 with a B.A. in Economics and received
an M.B.A. from Harvard University in 1987.
Harold V. Gorman, age 54, has been a Trust Manager of Grove since its
formation in June 1994. From 1968 to 1993, Mr. Gorman served as Vice President
and Assistant General Counsel of IDV North America. From 1993 to 1995, he served
as Vice President/General Counsel to the Paddington Corporation. Since 1995, he
has served as Vice-President and Regulatory Counsel of Heublein, Inc., located
in Hartford, Connecticut. He received his B.A. from Wesleyan University in 1965
and his J.D. from the University of Connecticut Law School. Mr. Gorman is a
member of the Connecticut Bar Association, the American Bar Association and the
Board of Directors of the Connecticut Arthritis Foundation.
Damon D. Navarro, age 44, has been the Chairman of the Board, President
and Chief Executive Officer of Grove since its formation in June 1994. Mr.
Navarro co-founded the Company's predecessor in 1980 and is responsible for new
business development and strategic planning. Mr. Navarro is a graduate of the
University of Rhode Island with a degree in Finance.
-4-
<PAGE>
Executive Officers
Each executive officer holds office at the pleasure of the Board,
subject to the Employment Agreements described below. The executive officers of
Grove (the "Executive Officers") and their positions and offices with Grove as
of the date hereof are set forth below:
<TABLE>
<CAPTION>
Name Age Positions and Offices Held
---- --- --------------------------
<S> <C> <C>
Damon D. Navarro 44 Chairman of the Board, President, and Chief Executive Officer
Joseph R. LaBrosse 35 Chief Financial Officer, Secretary and Treasurer
Edmund F. Navarro 37 Chief Operating Officer
Brian A. Navarro 43 Executive Vice President - Acquisitions
Gerald A. McNamara 58 Executive Vice President - Marketing and Strategic Planning
</TABLE>
Information as to the recent business experience of Damon Navarro,
Joseph LaBrosse and Edmund Navarro is included above.
Brian A. Navarro, has been Executive Vice President - Acquisitions of
the Company since 1997 and was Vice President - Acquisitions of the Company from
its formation in June 1994 to 1997. Mr. Navarro is responsible for the
acquisition and disposition of properties for the Company. Prior to co-founding
the Company's predecessor in 1980, Brian Navarro acquired, renovated and resold
over 30 residential properties in the Hartford, Connecticut, Springfield,
Massachusetts, and Westerly, Rhode Island, markets. Mr. Navarro is a graduate of
the University of Connecticut with a degree in Finance and a concentration in
real estate.
Gerald A. McNamara has been the Executive Vice President - Marketing
and Strategic Planning of the Company since 1997 and was Vice President -
Marketing and Investor Relations of the Company from its formation in June 1994
to 1997. Mr. McNamara has been a principal of the Company and its predecessor
since 1982. Mr. McNamara is responsible for public relations and strategic
planning. Prior to joining the Company, Mr. McNamara was Senior Vice President
of Heublein International responsible for its food and beverage operations
overseas. Mr. McNamara is a graduate of Trinity College with a degree in History
and Economics.
Damon, Brian and Edmund Navarro are brothers. No family relationship
exists among any of the other Trust Managers or Executive Officers of Grove. No
arrangement or understanding exists between any Trust Manager or Executive
Officer and any other person pursuant to which any Trust Manager or Executive
Officer was elected as a Trust Manager or Executive Officer. Subject to the
provisions of their respective Employment Agreements, Executive Officers of the
Company are elected by and serve at the discretion of the Board.
-5-
<PAGE>
Certain Relationships And Related Transactions
During 1997, the Company was a party to a number of transactions in
which Damon Navarro, Edmund Navarro and Joseph LaBrosse, Executive Officers and
Trust Managers of the Company, and Brian Navarro and Gerald McNamara, Executive
Officers of the Company, had a direct or indirect interest.
The Consolidation Transactions
In March 1997, the Company completed the following: (i) the creation of
an Umbrella REIT ("UPREIT") structure by forming Grove Operating, L.P. (the
"Operating Partnership") to facilitate acquisition transactions by providing
potential sellers with a mechanism to defer their tax liability; (ii) the
acquisition through the Operating Partnership of 20 properties owned by
affiliates of Grove; (iii) the acquisition of the property management assets and
related liabilities of GPS, the entity that managed the properties owned by the
REIT as well as the 20 properties owned by affiliates of Grove; (iv) a $30
million private placement (3,333,333 shares at $9.00 per share) of equity
securities to investors that included, among others, entities managed by Morgan
Stanley or an affiliate of Morgan Stanley and the Oregon Public Employees'
Retirement Fund; (v) the closing of a $25 million revolving credit facility and
a $15 million term loan facility and the release of guarantees by certain of the
Executive Officers; and (vi) an agreement for National Realty, L.P. ("National
Realty") to provide certain property related services to the Company, which
agreement has since been terminated (the transactions described in this
paragraph, collectively, the "Consolidated Transactions").
The valuation of the properties acquired by the Company in the
Consolidation Transactions was determined based primarily upon a capitalization
of net operating income produced by such properties. This methodology was used
because the Company believed it an appropriate method to value such properties.
No third party determination of the value was sought or obtained in connection
with the acquisition by the Company of these properties and the value of such
properties was not determined as a result of arm's-length negotiations. As a
result, there can be no assurance that the aggregate value of the consideration
paid by the Company for such properties did not exceed the fair market value of
the properties and assets acquired by the Company in connection with the
Consolidation Transactions.
As consideration for their ownership interests in the properties
acquired by the Company in the Consolidated Transactions, persons contributing
such properties to the Company received an aggregate of 2,114,439 Common Units
of the Operating Partnership (the "Common Units") (having an aggregate value of
approximately $19.0 million, based upon the approximate market price of the
Common Shares at the time of the Consolidation Transactions) and $3.4 million in
cash. The Executive Officers received an aggregate of 909,115 Common Units
(having an aggregate value of approximately $8.2 million, based upon the
approximate market price of the Common Shares at the time of the Consolidation
Transactions) and $177,669 in cash in connection with the Consolidation
Transactions.
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<PAGE>
The aggregate value of the Common Units received by the Executive Officers
substantially exceeded the book value of the assets that they contributed in the
Consolidation Transactions. The number of Common Units and the cash received by
each of the Executive Officers individually is set forth below.
Executive Officer Common Units Cash
----------------- ------------ ----
Damon D. Navarro................ 289,874 $85,797
Brian A. Navarro................ 282,322 $85,797
Edmund F. Navarro............... 247,174 $6,075
Joseph R. LaBrosse.............. 65,833 _
Gerald A. McNamara.............. 23,912 _
Additionally, the Company paid National Realty $820,286 as reimbursement for
expenses incurred by National Realty in connection with the Consolidation
Transactions.
Property Management and Construction Services
Prior to the consummation of the Consolidation Transactions, GPS, a
partnership owned 100% by Messrs. Damon, Brian and Edmund Navarro and Joseph
LaBrosse, provided all of the operating and support functions for the operation
of the Company's four properties, including building management and leasing. The
management agreement between the Company and GPS provided for a management fee
equal to 5% of gross rental revenues, as defined. Management fees paid by the
Company (excluding its predecessors) to GPS in 1997 were $21,795. The
management-related assets and liabilities of GPS were acquired in the
Consolidation Transactions and GPS is no longer active.
Loans by NAVAB Associates
NAVAB Associates (owned one-quarter each by Damon and Brian Navarro and
Ronald and George Abdow) ("NAVAB") from time to time prior to the Consolidation
Transactions made unsecured demand loans to certain of the Company's
predecessors, with interest payable monthly at a rate equal to 2.5% over the
prime rate. In addition, certain of the Company's predecessors made unsecured
demand loans to NAVAB, with interest payable monthly at a rate equal to 1.5%
below the prime rate. In connection with the Consolidation Transactions, the
Company's predecessors paid $1,286,586 to NAVAB and NAVAB paid to the Company's
predecessors $742,873 as payment in full of the amounts due to or from NAVAB.
Substantially all of such net amount was used by NAVAB to repay a bank loan. The
Company is not pursuing additional business with NAVAB and has been informed
that the principals of NAVAB intend to dissolve the entity.
Management of Excluded Properties
Pursuant to management services agreements, the Operating Partnership
provides property management services with respect to certain properties not
owned by the Company in which Executive Officers have an ownership interest.
Such management
-7-
<PAGE>
services agreements provide that the Operating Partnership will receive, with
respect to each property, a fee equal to from 5% to 6% of gross income
(excluding interest income). Such management services agreements have terms of
one year and will automatically renew for successive one-year terms if neither
party thereto gives notice of termination within 90 days prior to the end of the
then current term. During 1997, the Company received management fees under these
agreements in the aggregate amount of $518,000.
The May 1997 Acquisitions
Pursuant to a Contribution Agreement dated as of May 30, 1997,
effective June 1, 1997, the Company acquired through the Operating Partnership
two apartment communities and a 29% controlling interest in the partnership that
owned 349 of the 432 units in River's Bend, an apartment community located in
Windsor, Connecticut.
In connection with these transactions, the Operating Partnership issued
an aggregate of 420,183 Common Units. The Board assigned a value of $10 for each
of the Common Units issued, based upon the approximate market value of a Common
Share at that time. The Company also assumed mortgage debt with an aggregate
remaining principal amount of $6.2 million, borrowed $1.8 million under its
credit facility and used $68,000 of its available cash. As permitted under the
Charter, the Company did not obtain independent appraisals of such properties,
although the transactions were approved by a majority of the Independent Trust
Managers (as defined in the Charter). Of the Common Units issued in connection
with these transactions, an aggregate of 9,625 were issued to entities
controlled 50% by Damon Navarro and 50% by Brian Navarro. An additional 68,441
of such Common Units were issued to a partnership in which Messrs. Damon, Edmund
and Brian Navarro and Joseph LaBrosse are the general partners. For services
rendered in connection with investor communications, negotiation of the
Contribution Agreement dated as of May 30, 1997, and related agreements,
financial analyses of the acquisitions and structuring the transactions,
National Realty was paid an aggregate of $435,619.
On September 30, 1997, the Company acquired the remaining interest in
the partnership owning 349 of the 432 units at River's Bend Apartments from a
non-affiliate for a cash payment of $4.9 million and the assumption of mortgage
debt with an aggregate remaining principal amount of $8.6 million. As a result,
the Company owns all of the partnership that owns these 349 units. None of the
Executive Officers of the Company received any portion of such cash payment.
The July 1997 Acquisitions
On July 2, 1997, the Company acquired 126 condominium units at
Greenfield Village Condominium in Rocky Hill, Connecticut, from an unaffiliated
third party. In connection with the purchase of these units, the Company paid
$107,000 for expense and overhead reimbursement to National Realty.
-8-
<PAGE>
The September 1997 Acquisitions
Pursuant to two Offers to Exchange All Outstanding Limited Partnership
Interests in two affiliated partnerships, effective September 1, 1997, the
Company acquired three residential apartment complexes through the Operating
Partnership. In connection with these transactions, the Operating Partnership
issued an aggregate of 325,836 Common Units. The Board assigned a value of
$10.50 for each of the Common Units issued, based upon the approximate market
value of a Common Share at that time. The Company also assumed mortgage debt
with an aggregate remaining principal amount of $9.8 million, assumed a
short-term liability of $1.1 million, borrowed $750,000 under its credit
facility and used $200,000 of its available cash. As permitted under the
Charter, the Company did not obtain independent appraisals of such properties,
although the transactions were approved by a majority of the Independent Trust
Managers. Of the Common Units issued in connection with these transactions,
3,718 were issued to an entity controlled 50% by Damon Navarro and 50% by Brian
Navarro and 794 were issued to an entity owned 32.34% by Damon Navarro and Brian
Navarro. An additional 41,579 of such Common Units were issued to a partnership
in which Messrs. Damon, Edmund and Brian Navarro and Joseph LaBrosse are the
general partners. In connection with this acquisition, the Company paid National
Realty a fee of $215,706.
The October 1997 Acquisitions
On October 31, 1997, the Company closed the acquisitions of one
multifamily property containing a total of 100 units and of two affiliate-owned
retail properties containing a total of approximately 16,400 rentable square
feet. In connection with these transactions, the Company issued an aggregate of
148,668 Common Units and paid an aggregate of approximately $7.0 million in
cash. The Board assigned a value of $10.50 for each of the Common Units issued,
based upon the approximate market value of a Common Share at the time the
acquisitions were approved by the Board. As permitted under the Charter, the
Company did not obtain independent appraisals of such properties, although the
transactions were approved by a majority of the Independent Trust Managers. Of
the Common Units issued in connection with these transactions, 3,256 were issued
to an entity owned 40% by Damon Navarro, 40% by Brian Navarro and 20% by Edmund
Navarro. In connection with these acquisitions, the Company paid National Realty
a fee of $70,000.
Brokerage Services
Following the consummation of the Consolidation Transactions, National
Realty, which is 100% owned by Messrs. Damon, Brian and Edmund Navarro and
Joseph LaBrosse, provided real estate brokerage and related services to the
Company. Prior to the Consolidation Transactions, these services were provided
by GPS. The real estate brokerage services performed by National Realty for the
Company included the finding, underwriting and negotiation of purchase contracts
with respect to properties to be acquired by the Company, the negotiation of the
contracts with respect to properties to be sold by the Company and certain
commercial leasing services. In connection with such services,
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<PAGE>
National Realty received a commission on purchases or sales arranged by
National Realty of less than 2%. The brokerage services contracts provided for
indemnification by the Operating Partnership of National Realty and its
affiliates for any liability incurred in performing such services, except in
certain circumstances. The brokerage services contracts were not negotiated on
an arm's-length basis and Messrs. Damon, Brian and Edmund Navarro and Mr. Joseph
LaBrosse may have had conflicts of interest (due to their ownership of National
Realty) in connection with the brokerage services contracts and the provision of
real estate brokerage services by National Realty to the Company. The fees and
reimbursements of expenses paid to National Realty for services provided to the
Company in 1997 are set forth above in the description of each set of
acquisitions.
Security Ownership of Trust Managers and Executive Officers
The following table sets forth information as of the Record Date
regarding the beneficial ownership of Common Shares by each Trust Manager and
Executive Officer of Grove named in the Summary Compensation Table below, and by
all Trust Managers and Executive Officers of Grove as a group. Each person named
in the table has the sole voting and investment power with respect to all shares
shown as beneficially owned by such person, except as otherwise set forth in the
notes to the table.
<TABLE>
<CAPTION>
Number of Percentage of
Name and Address of Common Common
Beneficial Owner(1) Shares Shares
- ---------------- ------ ------
<S> <C> <C>
Damon D. Navarro......................................................426,795(2) 4.8%
Joseph R. LaBrosse....................................................100,437(3) 1.2%
Edmund F. Navarro.....................................................360,327(4) 4.1%
Theodore R. Bigman..................................................1,695,766(5) 20.1%
James F. Twaddell......................................................49,101(6) *
Harold V. Gorman........................................................9,331(7) *
J. Joseph Garrahy......................................................10,937(8) *
Brian A. Navarro......................................................409,405(9) 4.6%
Gerald A. McNamara.....................................................59,117(10) *
Trust Managers and Executive Officers as a Group (9 Persons)........3,121,216(11) 36.3%
</TABLE>
- ---------------------
* Less than 1%
(1) Each person listed has a business address c/o the Company, 598 Asylum
Avenue, Hartford, Connecticut 06105.
(2) Includes 332,639 Common Shares which might be acquired by Mr. Navarro upon
redemption of an equal number of Common Units and 59,748 Common Shares
which could be acquired within 60 days upon exercise of options.
(3) Includes 76,833 Common Shares which might be acquired by Mr. LaBrosse upon
redemption of an equal number of Common Units and 18,050 Common Shares
which could be acquired within 60 days upon exercise of options.
-10-
<PAGE>
(4) Includes 281,008 Common Shares which might be acquired by Mr. Navarro upon
redemption of an equal number of Common Units and 58,348 Common Shares
which could be acquired within 60 days upon exercise of options.
(5) Represents the Common Shares which are owned by entities managed by Morgan
Stanley or an affiliate of Morgan Stanley as to which Mr. Bigman has shared
voting and investment power.
(6) Includes 11,221 and 9,331 Common Shares which could be acquired by Mr.
Twaddell within 60 days upon exercise of warrants and options,
respectively.
(7) Common Shares which could be acquired by Mr. Gorman within 60 days upon
exercise of options.
(8) Includes 8,543 Common Shares which could be acquired by Mr. Garrahy within
60 days upon exercise of options.
(9) Includes 325,086 Common Shares which might be acquired by Mr. Navarro upon
redemption of an equal number of Common Units and 58,348 Common Shares
which could be acquired within 60 days upon exercise of options.
(10) Includes 40,750 Common Shares which might be acquired by Mr. McNamara upon
redemption of an equal number of Common Units and 14,528 Common Shares
which could be acquired within 60 days upon exercise of options.
(11) Includes 1,056,317 Common Shares which might be acquired upon redemption of
an equal number of Common Units and 11,221 and 241,227 Common Shares which
could be acquired within 60 days upon exercise of warrants and options,
respectively.
Security Ownership of Certain Beneficial Owners
Set forth below is a table, as of December 31, 1997, indicating those
persons whom the management of the Company believes to be beneficial owners of
more than 5% of the Common Stock. The following information is based on reports
filed with the Company and the Securities and Exchange Commission as of December
31, 1997.
<TABLE>
<CAPTION>
Name and Business Address Common Shares Percent of
Of Beneficial Owner Beneficially Common Shares
Owned
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Morgan Stanley Group Inc. 1,695,776(1) 20.1%
1221 Avenue of the Americas
22nd Floor
New York, NY 10020
Oregon Public Employees' Retirement Fund, by 836,929(2) 9.9%
ABKB/LaSalle Securities Limited, as agent for Oregon
Public Employees' Retirement Fund
100 East Pratt Street, 20th Floor
Baltimore, MD 21202
FMR Corp. 445,000(3) 5.3%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------------
(1) Morgan Stanley Group Inc. has advised that with respect to such shares it
has (i) sole voting and dispositive power for 65,707 shares and (ii) shared
voting and dispositive power for 1,630,059 shares.
-11-
<PAGE>
(2) ABKB/LaSalle Securities Limited has advised that with respect to such
shares it has (i) sole voting and dispositive power for 46,000 shares and
(ii) shared voting and dispositive power for 790,929 shares.
(3) FMR Corp. has advised that with respect to such shares it has (i) sole
voting power for 50,000 shares and (ii) sole dispositive power for 445,000
shares.
Board Meetings
The Board held nine meetings during 1997. The Board also took action
once during the year by consent action. Management also confers frequently with
the Trust Managers on an informal basis to discuss Grove's affairs.
Board Committees
The Board has established an Audit Committee, an Acquisition and
Investment Committee and a Compensation Committee. The Board does not have a
nominating committee or a committee performing the functions of a nominating
committee; the entire Board performs the usual functions of such committee.
Audit Committee. The Audit Committee makes recommendations concerning
the engagement of independent public accountants, reviews with the independent
public accountants the plans and results of audit engagements, 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 Company's internal
accounting controls. The current members of the Audit Committee are Messrs.
Gorman and Garrahy. The Audit Committee met once during 1997.
Acquisition and Investment Committee. The Acquisition and Investment
Committee has the authority to acquire, dispose of and finance investments for
the Company (including the direct or indirect purchase or sale by the Company of
real estate properties or interests in real estate properties) and to execute
contracts and agreements, including those related to the borrowing of money by
the Company or the purchase or sale by the Company of direct or indirect
interests in real properties, and generally to exercise all other powers of the
Trust Managers except those which require action by all Trust Managers or the
Independent Trust Managers under the Charter or Bylaws or under applicable law.
The current members of the Acquisition and Investment Committee are Messrs.
Garrahy, E. Navarro and Bigman. The Acquisition and Investment Committee met
four times during 1997.
Compensation Committee. The Compensation Committee has the authority to
determine compensation for the Company's Executive Officers and to administer
the 1994 Share Option Plan (the "1994 Plan") and the 1966 Plan. The Compensation
Committee has the authority to grant share options in accordance with the 1994
Plan to the Trust Managers, Executive Officers, other key employees of the
Company and consultants and to grant share options and share appreciation rights
to the Trust Managers, Executive Officers and other key employees of the Company
in accordance with the 1996 Plan. The current
-12-
<PAGE>
members of the Compensation Committee are Messrs. Twaddell and Gorman. The
Compensation Committee met once during 1997.
Compensation of Trust Managers
Currently, the Company pays the non-employee Trust Managers a fee of
$1,000 for attending each meeting of the Board. Trust Managers who are employees
of the Company are not paid any trust manager fees. In addition, the Company
reimburses the Trust Managers for travel expenses incurred in connection with
their activities on behalf of the Company.
The 1996 Plan provides that each Non-Employee Trust Manager (as defined
in the 1996 Plan) who is first elected or appointed after the 1996 Annual
Meeting of Shareholders receives an automatic initial grant of a nonqualified
stock option to purchase 10,000 Common Shares. In addition, promptly following
the date of each annual meeting of shareholders, each Non-Employee Trust Manager
elected by the shareholders will receive an additional automatic grant of an
option to purchase 5,000 Common Shares; provided, however, that no Non-Employee
Trust Manager will receive more than one such automatic grant in any calendar
year. The exercise price for options granted to Non-Employee Trust Managers
under the 1996 Plan is 100% of the fair market value of the Common Shares on the
date of grant. Each such option will expire ten years from the grant date
(subject to earlier termination). Upon the consummation of the Consolidation
Transactions, each Non-Employee Trust Manager received a grant of an option to
purchase 10,000 Common Shares at an exercise price of $9 per Common Share. Such
options have a term of 10 years, and vest 50% on each of the first two
anniversaries of the date of grant.
Non-Employee Trust Managers who assist the Company in locating
acquisitions which are consummated receive a finder's fee of 0.2% of the
acquisition purchase price plus an additional 0.1% if they participate in the
negotiations.
Executive Compensation
The following tables set forth information concerning compensation paid
and share options granted to the Company's Executive Officers for the years
ended December 31, 1997, 1996 and 1995.
-13-
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
---------------------------------------- ---------------------------------------
Awards Payouts
----------------------- ----------
Name and Restricted
Principal Other Annual Stock Options/ LTIP All Other
Position Year Salary Bonus Compensation Awards SARS Payouts Compensation
-------- ---- ------ ----- ------------ ------ ---- ------- ------------
<S> <C> <C> <C>
Damon D. 1997 $34,839 none none none 177,133 none none
Navarro/Chief 1996 none none none none 12,048 (1) none none
Executive 1995 none none none none none none none
Officer
Joseph R. 1997 $38,512 none none none 101,601 none none
LaBrosse/Chief 1996 none none none none 4,016 (1) none none
Financial 1995 none none none none none none none
Officer
Edmund F. 1997 $34,839 none none none 177,133 none none
Navarro/Vice 1996 none none none none 12,048 (1) none none
President 1995 none none none none none none none
Brian A. 1997 $35,331 none none none 177,133 none none
Navarro/Vice 1996 none none none none 12,048 (1) none none
President 1995 none none none none none none none
Gerald A. 1997 $19,667 none none none 60,000 none none
McNamara/Vice 1996 none none none none 4,725 (1) none none
President 1995 none none none none none none none
</TABLE>
- -------------
(1) The number of Common Shares underlying such options has been adjusted to
give effect to the stock split and stock dividend paid by the Company in
March 1997 (the "Stock Split"), as provided in the 1994 Plan.
-14-
<PAGE>
<TABLE>
<CAPTION>
OPTIONS GRANTED DURING THE YEAR ENDED DECEMBER 31, 1997
Individual Grants
-----------------------------------------
% of Total Potential
Options Realizable Value at
Number of Granted to Assumed Annual
Securities Employees in Exercise or Rates of Stock
Underlying Options Fiscal Base Price Appreciation
Price Expiration for Option Term
---------------------
Name Granted (#)( Year ($/share) Date 5% 10%
---- ------------ ---- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Damon Navarro 75,000 9% $10.05 3/13/07 $474,000 $1,201,500
102,133 13% 10.90 11/23/07 699,611 1,774,050
Joseph LaBrosse 25.000 3% 10.05 3/13/07 158,000 400,500
76,701 9% 10.90 11/23/07 525,402 1,332,296
Brian Navarro 75,000 95 10.05 3/13/07 474,000 1,201,500
102,133 13% 10.90 11/23/07 699,611 1,774,050
Edmund Navarro 75,000 9% 10.05 3/13/07 474,000 1,201,500
102,133 13% 10.90 11/23/07 699,611 1,774,050
Gerald McNamara 20,000 2% 10.05 3/13/07 126,400 320,400
40,000 5% 10.90 11/23/07 274,000 694,800
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
Value of Unexercised
Shares Number of Securities Underlying In-the-Money Options at
Acquired on Value Unexercised Options at FY-End FY-End ($) Exercisable/
Name Exercise Realized Exercisable/Unexercisable Unexercisable
---- -------- -------- ------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Damon Navarro 0 0 59,748/147,665 71,902/59,937
Joseph LaBrosse 0 0 18,050/91,778 21,252/19,979
Brian Navarro 0 0 58,348/147,665 69,865/59,937
Edmund Navarro 0 0 58,348/147,665 69,865/59,937
Gerald McNamara 0 0 14,528/53,150 18,224/19,638
</TABLE>
-15-
<PAGE>
Employment Agreements
In connection with the Consolidation Transactions, Grove entered into
an Employment Agreement with each Executive Officer each of which was amended in
November 1997 to increase the base salary payable thereunder. The annual base
salary for each Executive Officer is as follows: Messrs. Damon Navarro, Brian
Navarro, Edmund Navarro and Joseph LaBrosse: $100,000; and Mr. McNamara:
$50,000.
The Employment Agreements provide that the Executive Officers shall
devote a substantial part of their business time to the operations of Grove. The
Employment Agreements establish the base salaries set forth above and provide
for an initial three-year term for each of the Executive Officers. The term of
each Employment Agreement is automatically extended for an additional year upon
expiration of the initial term and any extension period unless either Grove or
the Executive Officer provides the other with at least 120 days' prior written
notice that such term will not be extended. If the Employment Agreements are
terminated by Grove "without cause" or are terminated by the Executive Officer
after a "change in control" or for "good reason" (as defined therein), the
Executive Officer will be entitled to a lump sum payment equal to 200 percent of
such Executive Officer's annual base salary plus an amount equal to the
aggregate value of all bonuses, whether cash, stock, options, or otherwise,
granted to such Executive Officer for the previous year.
Non-Competition Agreements
In connection with the Consolidation Transactions, the Executive
Officers entered into non-competition agreements with Grove (the
"Non-Competition Agreements"). The Non-Competition Agreement of each Executive
Officer precludes him from directly or indirectly developing, redeveloping,
acquiring, managing or operating multi-family or retail mixed-use properties,
other than certain properties owned by the Grove Companies not included in the
Consolidation Transactions, which compete with the Grove Properties or with
properties acquired by Grove in the future for so long as he is an Executive
Officer, Trust Manager, significant Shareholder (5% or more of the outstanding
Common Shares) or employee of, or consultant to, Grove, and for a period of
twenty-four months after termination thereof other than in the event of
termination of his employment by Grove without cause or by the Executive Officer
in the event of a "change in control" or "for good reason" (as defined therein).
Except for the Executive Officers, no other Trust Manager had an interest in any
of the Grove Companies and will not be bound by the Non-Competition Agreements.
REPORT OF THE COMPENSATION COMMITTEE
The Company's executive compensation program is intended to attract,
retain and reward experienced, highly motivated executives who contribute to the
Company's growth. The Compensation Committee of the Board is currently composed
of two Independent
-16-
<PAGE>
Trust Managers. The Compensation Committee is responsible for setting base
salaries for the Executive Officers, which are currently fixed by the Employment
Agreements between the Company and each of the Executive Officers, including the
Chief Executive Officer. The Compensation Committee also determines awards
under, and administers, the 1994 Plan and the 1996 Plan.
During 1997, the Compensation Committee approved the salaries paid to
the Executive Officers under the Employment Agreements which became effective
upon completion of the Consolidation Transactions. Prior to March 1997, the
Company did not pay cash compensation to the Executive Officers. The salaries of
$50,000 per year payable to Messrs. D. Navarro, LaBrosse, E. Navarro and B.
Navarro and of $25,000 per year to Mr. McNamara reflected the Compensation
Committee's evaluation of the expense which the Company could reasonably bear at
that time and took into consideration the substantially expanded role of the
Executive Officers following consummation of the Consolidation Transactions.
In connection with the completion of the Company's underwritten public
offering in November 1997, the Compensation Committee approved amendments to the
Employment Agreements increasing the base salary of Messrs. D. Navarro,
LaBrosse, E. Navarro and B. Navarro to $100,000 per year and of Mr. McNamara to
$50,000 per year. The Compensation Committee believed that this adjustment was
appropriate to reflect more accurately the contributions of the Executive
Officers to the Company as the Company continued to grow. The Compensation
Committee also concluded, based on a review of base salaries in the Company's
industry, that increased base salaries would be necessary for the Company to
remain competitive in attracting and retaining talented executives.
Another component of the Company's compensation program in 1997 was the
granting of options under the 1996 Plan to the Executive Officers and to other
key employees. The Compensation Committee believes that the granting of options
to the Executive Officers, including the Chief Executive Officer, benefits the
Company's shareholders generally by tying a significant portion of an Executive
Officer's long-term compensation to the market value of the Company's Common
Shares and, therefore, to the interests of its shareholders. The numbers of
Common Shares covered by options granted to the Executive Officers, including
the Chief Executive Officer, during 1997 were based on the Compensation
Committee's evaluation of the overall contribution of the individual Executive
Officer to the Company during 1997, including the role of the Executive Officer
in completing both the Consolidation Transactions and the underwritten public
offering in November 1997. The Compensation Committee intends to continue review
of Executive Officers' compensation and will make such modifications in its
approach to executive compensation as it determines to be appropriate in light
of the Company's financial
-17-
<PAGE>
performance, changes in the size of the Company, the performance of its officers
and executive compensation practices of its peer group.
EXECUTIVE COMPENSATION
COMMITTEE
James F. Twaddell
Harold V. Gorman
PERFORMANCE GRAPH
The line graph below sets forth the cumulative total shareholder return
on the Shares as compared with the cumulative total return of the American Stock
Exchange ("AMEX") Market Value Index and the NAREIT Equity REIT
Index-Apartments, in each case (i) for the six months or years beginning on June
30, 1994 and ending on December 31, 1997, and (ii) assuming that $100 was
invested on June 30, 1994 and that all dividends were reinvested.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
6/30/94 1994 1995 1996 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Grove Property Trust $100.00 $ 82.49 $ 84.92 $105.91 $156.19
NAREIT Equity REIT Index-Apartments $100.00 $100.79 $113.15 $145.89 $169.28
AMEX Market Value Index $100.00 $102.26 $129.28 $137.54 $166.82
</TABLE>
-18-
<PAGE>
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE CHARTER WITH
RESPECT TO THE MAXIMUM NUMBER OF TRUST MANAGERS
The Board of Trust Managers has unanimously adopted, and recommends to
the shareholders for approval, an amendment to the Company's Charter to reduce
the maximum number of Trust Managers which may serve on the Board from time to
time from 15 to 11. The proposed amendment to the Company's Charter must be
approved by the affirmative vote of the holders of not less than two-thirds of
all Common Shares outstanding on the Record Date. Further, the amendment to the
Company's Charter must be filed with the Maryland State Department of
Assessments and Taxation to become effective. The proposed amendment would not
affect the number of directors to be elected at the Annual Meeting.
The maximum number of Trust Managers which may serve on the Company's
Board from time to time is currently fixed by the Company's Charter at 15. The
proposed amendment would decrease the maximum number of Trust Managers to 11.
The Board has concluded that efficient management of the Company would be
impeded if the number of Trust Managers serving at any time exceeds 11. Because
of provisions of the Charter requiring that at least a majority of the Trust
Managers be Independent Trust Managers (as defined) and that certain
transactions be approved by at least a majority of the Independent Trust
managers, a Board composed of more than 11 Trust Managers could be unable to act
as promptly as needed under certain circumstances.
A reduction in the maximum number of Trust Managers from 15 to 11, when
combined with the Charter provision that no Trust Manager may be removed from
office other than for cause, could have the effect of impeding a change of
control of the Company unless such Change of Control is approved by the Board.
As a result, transactions which might benefit all or a majority of the
Shareholders might not be presented to the Shareholders for consideration.
If the proposed amendment is approved at the Annual Meeting, Section
2.1 of the Charter would be amended to read in its entirety as follows:
SECTION 2.1. Number. The number of Trust Managers
initially shall be five, which number may thereafter be
increased or decreased by the Trust Managers then in
office from time to time; however, the total number of
Trust Managers shall be not less than two and not more
than 11. No reduction in the number of Trust Managers
shall cause the removal of any Trust Managers from
office prior to the expiration of his term.
- --------------------------------------------------------------------------------
The Board recommends that you vote FOR the Charter amendment to reduce the
maximum number of Trust Managers.
- --------------------------------------------------------------------------------
-19-
<PAGE>
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE CHARTER WITH
RESPECT TO THE NUMBER OF AUTHORIZED SHARES
The Board of Trust Managers has unanimously adopted, and recommends to
the Shareholders for approval, an amendment to the Company's Charter to increase
the total number of Common Shares and Preferred Shares which the Company has
authority to issue from 13,999,000 and 1,000, respectively, to 34,000,000 and
1,000,000, respectively. The proposed amendment to the Company's Charter must be
approved by the affirmative vote of the holders of not less than two-thirds of
all Common Shares outstanding on the Record Date. Further, the amendment to the
Company's Charter must be filed with the Maryland State Department of
Assessments and Taxation to become effective.
The authorized capital of the Company currently consists of 13,999,000
Common Shares and 1,000 Preferred Shares. As of December 31, 1997, the Company
had 8,453,829 Common Shares outstanding. In addition, at that date 47,248 Common
Shares and 1,017,726 Common Shares were reserved for issuance upon the exercise
of outstanding warrants or for the Company's stock option plans, respectively.
As of December 31, 1997, the Operating Partnership had 3,003,729 Common Units
outstanding for which an equal number of Common Shares are reserved for possible
issuance upon redemption of such Common Units. As a result, there are 12,522,532
Common Shares either outstanding or reserved for specific purposes leaving only
1,476,438 Common Shares for future issuance. The Company anticipates that it
will need to issue or reserve additional Common Shares in the future. Such
reservations may be required because of the issuance by the Operating
Partnership of additional Common Units in connection with future acquisitions of
properties.
The Board believes that it is in the best interests of the Company to
have additional authorized shares available for possible future actions, such as
financings, investments and acquisitions, stock splits and dividends, employee
benefit plans and other corporate purposes. Other than possible reservations of
additional Common Shares in connection with issuances by the Operating
Partnership of Common Units in connection with the acquisition of additional
properties, there are no present plans, understandings or agreements for the
issuance of the Common Shares proposed to be authorized pursuant to this
proposal.
Authorized but unissued Common Shares and Preferred Shares may be
issued at such times, for such purposes and for such consideration as the Board
may determine without further shareholder approval, except as otherwise required
by law or applicable stock exchange rules. However, the Board does not intend to
issue any of the Common Shares or Preferred Shares to be authorized under the
amendment except upon terms that the Board deems to be in the best interest of
the Company. The issuance of additional Common Shares or Preferred Shares
without further shareholder approval may, among other things, have a dilutive
effect on earnings per share and on the equity of the present
-20-
<PAGE>
holders of Common Shares and their voting rights. Holders of Common Shares have
no preemptive rights.
If the proposed amendment is approved at the Annual Meeting, Section
5.1 of the Charter would be amended to read in its entirety as follows:
SECTION 5.1. Authorized Shares. The total number of
Shares which the Trust has authority to issue is
35,000,000 shares, of which 34,000,000 are Common
Shares, $.01 par value per share (each, "Common Share"
or collectively, "Common Shares") and 1,000,000 are
Preferred Shares, $.01 par value per share ("Preferred
Shares").
- --------------------------------------------------------------------------------
The Board recommends that you vote FOR the increase in the number of authorized
Shares.
- --------------------------------------------------------------------------------
PROPOSAL 4
APPROVAL OF AN AMENDMENT TO THE CHARTER WITH
RESPECT TO SHAREHOLDER APPROVAL OF AMENDMENTS
The Board of Trust Managers has unanimously adopted, and recommends to
the Shareholders for approval, an amendment to the Company's Charter to provide
that future amendments to the Company's Charter requiring shareholder approval
may be approved by the holders of a majority of the Company's outstanding shares
entitled to vote. Under the present terms of the Company's Charter, a proposed
amendment to the Company's Charter requiring shareholder approval must be
approved by the affirmative vote of the holders of not less than two-thirds of
the outstanding shares entitled to vote.
The proposed amendment must be approved by the affirmative vote of the
holders of not less than two-thirds of Common Shares outstanding on the Record
Date. Further, the amendment to the Company's Charter must be filed with the
Maryland State Department of Assessments and Taxation to become effective.
In 1997, Maryland law was amended to permit a REIT organized under
Maryland law to provide in its declaration of trust that actions by shareholders
may be taken with a lesser vote than would otherwise be required under Maryland
law. The current provision in the Company's Charter requiring amendments needing
shareholder approval to be approved by the holders of two-thirds of the
outstanding shares entitled to vote may present an obstacle to obtaining
approval of an amendment even if the amendment is considered desirable by the
holders of a majority of the Common Shares. Since the vote required is based on
the number of shares entitled to vote, an abstention or a broker non-vote on a
proposed amendment to the Charter is the equivalent of a negative vote. The
Board has concluded that it would be in the interest of the Company and the
Shareholders to amend the Charter to reduce the vote required for shareholder
approval of an amendment to a simple majority of the shares entitled to vote.
-21-
<PAGE>
If the proposed amendment is approved at the Annual Meeting, Section
9.1 of the Charter would be amended to read in its entirety as follows:
SECTION 9.1. By Shareholders. Except as provided in
Section 9.2 hereof, this Declaration of Trust may be
amended only by the affirmative vote of the holders of
not less than a majority of all the Shares then
outstanding and entitled to vote on the matter.
PROPOSAL 5
AMENDMENTS TO THE COMPANY'S 1996 SHARE INCENTIVE PLAN
The Board of Trust Managers has unanimously adopted, and recommends to
the Shareholders for approval, amendments to the 1996 Plan which will provide
(i) for an increase in the maximum number of Common Shares which may be issued
under the 1996 Plan from 900,000 to 1,400,000 and (ii) permit grants of awards
under the 1996 Plan to consultants or advisors (who provide bona fide services
to the Company, but not services relating to capital raising). On April 15,
1998, the closing price of a Common Share as reported on the American Stock
Exchange was $10 9/16. The full text of the 1996 Plan, as amended, is set forth
in Appendix A attached hereto.
As of April 15, 1998, awards covering 810,000 Common Shares made to
employees and Non-Employee Trust Managers of the Company under the 1996 Plan
were outstanding. Although 90,000 Common Shares remain available for awards
under the 1996 Plan, the Board believes that the availability of additional
Common Shares for awards under the 1996 Plan is necessary to enhance the
Company's continuing efforts to attract and retain talented employees and
directors. In addition, the Board believes it would be beneficial for the
Company to have the flexibility to compensate outside consultants or advisors
for services to the Company through the grant of awards under the 1996 Plan.
Except for the increase in the number of Common Shares reserved for the 1996
Plan and for the ability to grant awards under the 1996 Plan to consultants and
advisors, the terms of the 1996 Plan would be unchanged from those approved at
the Special Meeting of Shareholders held on March 10, 1997. The following
description of the 1996 Plan as amended is qualified by reference to the text of
the 1996 Plan as amended contained in Appendix A.
All employees of Grove and its subsidiaries, including the Executive
Officers, and consultants or advisors to the Company (who provide bona fide
services to the Company, but not services relating to capital raising) are
eligible to receive awards under the 1996 Plan, subject to the discretion of the
Compensation Committee to determine the particular individuals who, from time to
time, will be selected to receive awards. The 1996 Plan will remain in existence
as to all outstanding awards until all such awards are either exercised,
converted or terminated; provided, however, that no award can be made after
December
-22-
<PAGE>
31, 2006. An employee, consultant or advisor who receives an award under the
1996 Plan is referred to in this description of the 1996 Plan as a
"Participant."
Awards to Participants under the 1996 Plan may be in the form of
non-qualified stock options, incentive stock options (which may be granted only
to employees), stock appreciation rights ("SAR's"), restricted stock and other
share-based incentive awards. Awards may be granted singly, or in tandem or in
combination with other awards. Each award will be evidenced by an award
agreement setting forth the specific terms and conditions applicable to that
award. Awards under the 1996 Plan that are not vested or exercised will
generally be nontransferable by a holder (other than by will, the laws of
descent and distribution or a qualified domestic relations order) and rights
thereunder will generally be exercisable, during the holder's lifetime, only by
the holder (or by his guardian or legal representative), subject to such
exceptions as (consistent with applicable legal considerations) may be
authorized from time to time by the Compensation Committee.
Options. Stock options authorized under the 1996 Plan are rights to
purchase a specified number of Common Shares at a set price during a specified
period. Unless the Compensation Committee provides otherwise, and such provision
is reflected in the award agreement, the exercise price for each Common Share
covered by an option may not be less than the fair market value of a Common
Share on the date of grant. Stock options that are granted as incentive stock
options will be granted with an exercise price no less than fair market value
(110% of fair market value if the incentive stock option is granted to a person
who owns more than 10% of the combined voting power of Grove or any corporate
subsidiary), and with such additional terms as are necessary to satisfy the
applicable requirements of Section 422 of the Internal Revenue Code. Under
current tax law, the fair market value of the Common Shares for which incentive
stock options are exercisable for the first time by an optionee during any
calendar year may not exceed $100,000 (measured as of the date such options are
granted). The 1996 Plan also provides that the maximum number of Common Shares
or share-units that may be subject to all share-based awards, including options,
SAR's and restricted stock awards, that are granted to any Participant under the
1996 Plan during any calendar year, will not exceed 500,000 Common Shares (or
share-units), either individually or in the aggregate.
SAR's. SAR's entitle the recipient to receive, upon surrender of the
right, but without other payment, an amount (payable in cash, Common Shares or
another form of payout as determined by the Compensation Committee) based on the
appreciation in the value of a Common Share on the date the SAR is exercised
over the base price of the Common Share established in the award agreement. An
SAR may be granted as a stand-alone SAR or in tandem with a share option. Unless
otherwise determined by the Compensation Committee, the minimum base price for a
stand-alone SAR is the fair market value of a Common Share on the date the SAR
is granted, and the minimum base price for an SAR granted in tandem with an
option (whether the SAR is granted at the time the related option is granted or
thereafter) is the exercise price per Common Share for such option. To the
extent an SAR in tandem with an option is exercised as to a number of
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<PAGE>
Common Shares, the related option will be cancelled with respect to an equal
number of Common Shares.
Restricted Share Awards. A restricted share award is an award entitling
the recipient to acquire, at no cost or for a purchase price determined by the
Compensation Committee, Common Shares subject to such restrictions and
conditions as the Compensation Committee may determine at the time of grant.
Conditions may be based on continuing employment and/or achievement of
pre-established performance goals and objectives. A Participant who receives a
restricted share award will have all rights of a shareholder with respect to
such restricted stock, including voting and dividend rights, subject to
non-transferability restrictions and other conditions contained in the written
instrument evidencing the restricted share award or the resolution of the
Compensation Committee authorizing such award. Common Shares underlying a
restricted share award will become vested with respect to a Participant
following the date or dates specified or the attainment of the pre-established
performance goals, objectives or other conditions associated with such
restricted share award, such as continued employment. Following such date or
dates or the attainment of such pre-established performance goals, objectives or
other conditions, restricted stock will be deemed "vested" and will no longer be
restricted stock.
In general, the Company will have the right to repurchase from a
Participant any Common Shares still subject to restrictions under the award
agreement immediately upon a termination of such Participant's service to the
Company, at a cash price per share equal to the price paid by such Participant
for such restricted shares, or, if acquired at no cost, to require forfeiture of
such restricted shares; provided, however, that the Compensation Committee may
provide that no such right of repurchase or forfeiture exists if the
Participant's termination of employment is other than for "cause" (as defined in
the 1996 Plan), or occurs after a "change of control" (as defined in the 1996
Plan), or because of the Participant's retirement, death or disability, or
otherwise.
Other Share-Based Awards. Other share-based awards might include phantom
stock or units, performance stock or units, bonus stock or units, dividend
equivalent units, or similar securities or rights and other awards payable in or
with a value derived from or related to the fair market value of the Common
Shares, payable on such terms as the Compensation Committee may approve. Such
awards may be granted, become vested or be payable based upon attainment of
specified corporate or individual performance goals.
Performance-Based Awards. Under Section 162(m) of the Internal Revenue
Code, the Company may not deduct certain compensation in excess of $1.0 million
to the Chief Executive Officer or any one of the four other most highly
compensated executive officers of the Company unless, among other things, this
compensation qualifies as "performance-based" compensation under Section 162(m),
and the material terms of the plan for such compensation are approved by
stockholders. Certain types of awards under the 1996 Plan may be granted to
qualify as performance-based compensation under Section 162(m) of the Internal
Revenue Code. Stock options and SAR's that are granted at a fair market value
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<PAGE>
exercise price are intended to qualify as performance-based compensation. In
addition, other performance-based awards may qualify as performance-based
compensation. All employees of the Company and its subsidiaries are eligible to
receive such performance-based awards, and performance goals are any one or a
combination of earnings per share, return on equity, Total Shareholder Return
and FFO. Specific cycles, weightings of more than one performance goal and
target levels of performance upon which actual payments will be based, as well
as the award levels payable upon achievement of specified levels of performance,
will be determined by the Compensation Committee no later than the applicable
deadline under Section 162(m), and in any event at a time when achievement of
such targets is substantially uncertain. These variables may change from cycle
to cycle. Appropriate adjustments to the performance goals and targets in
respect of performance-based awards may be made by the Compensation Committee
based upon objective criteria in the case of significant acquisitions or
dispositions by the Company, a change in capitalization, a corporate transaction
or a complete or partial liquidation, extraordinary gains or losses, material
changes in accounting principles or practices, or other events that were not
anticipated (or the effects of which were not anticipated) at the time goals
were established, in order to neutralize the effect of such events on the
performance-based awards.
The Compensation Committee must certify the achievement of the
applicable performance goals and the satisfaction of other material terms of a
performance-based award prior to payment. Performance-based awards generally
will be paid following the completion of each cycle. The Compensation Committee
may retain discretion to reduce, but not increase, the amount payable under a
performance-based award to any participant, notwithstanding the achievement of
targeted performance goals. Performance-based awards may be accelerated in the
event of a Change of Control (as defined below).
Provisions Applicable to All Awards to Participants. Awards may be
granted in connection with the surrender or cancellation of previously granted
awards, or may be amended, under such terms and conditions, including numbers of
Common Shares and exercise price, exercisability or termination, that are the
same as or different from the existing awards, all as the Compensation Committee
may approve.
Options to Non-Employee Trust Managers. The 1996 Plan provides that
each Non-Employee Trust Manager who is first elected or appointed after March
10, 1997 (the date of original shareholder approval of the 1996 Plan), will
receive an automatic initial grant of a non-qualified share option to purchase
10,000 Common Shares. In addition, promptly following the date of each Annual
Meeting of Shareholders (beginning with the 1997 Annual Meeting), each
Non-Employee Trust Manager elected by the shareholders (including any director
reelected at such meeting) will receive an additional automatic grant of an
option to purchase 5,000 Common Shares; provided, however, that no Non-Employee
Trust Manager will receive more than one such automatic grant in any calendar
year. The exercise price per Common Share for grants to Non-Employee Trust
Managers equals 100% of the Fair Market Value of a Common Share on the date of
grant. Each such option will expire ten years from the grant date (subject to
earlier termination). Each
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<PAGE>
option will become exercisable in increments of 50% per year on each of the
first two anniversaries of the date of grant. If a Non-Employee Trust Manager's
service terminates by reason of death, disability, or retirement, the options
will immediately become and remain fully exercisable for one year after the date
of such termination or until the expiration date of such option, whichever
occurs first. If a Non-Employee Trust Manager's service terminates for any other
reason, that portion of the option that is not exercisable at such time will
terminate immediately and any portion then exercisable may be exercised until
the earlier of three months after the date of termination or the expiration date
of the option. In the event of a Change of Control (as defined below), each
option granted to a Non-Employee Trust Manager will become immediately
exercisable. If the nominees for election as Trust Managers named herein are
elected at the Annual Meeting, Mr. Twaddell would receive an option to purchase
5,000 Common Shares.
Administration; Change of Control. The 1996 Plan is administered by the
Compensation Committee, consisting of at least two directors who satisfy the
"non-employee director" requirements of Rule 16b-3 under the Securities Exchange
Act of 1934 and the "outside director" requirements of Section 162(m) of the
Internal Revenue Code. The Compensation Committee has authority, within the
terms and limitations of the 1996 Plan, to designate recipients of awards,
determine or modify the form, amount, terms, conditions, restrictions, and
limitations of awards, including vesting provisions, terms of exercise of an
award, expiration dates and the treatment of an award in the event of the
retirement, disability, death or other termination of a Participant's service
with the Company, and to construe and interpret the 1996 Plan. Such authority
includes the discretion to accelerate and extend outstanding awards but does not
include the ability to reduce by amendment the exercise or purchase price of an
outstanding award.
The Compensation Committee is authorized to include in award agreements
with Participants specific provisions relating to the treatment of awards in the
event of a "Change of Control" of the Company and is authorized to take certain
other actions in such an event. A "Change of Control" is defined generally to
include the following: (i) certain acquisitions of 25% or more of the combined
voting power of the then outstanding Common Shares and any other securities of
the Company entitled to vote generally in the election of trust managers, (ii)
the failure of persons currently serving on the Board, together with persons
nominated by at least a majority of the continuing directors, to constitute at
least a majority of the Board, (iii) approval by the shareholders of the Company
of any reorganization, merger or consolidation of the Company in which the
beneficial owners of the Common Shares and other voting securities of the
Company immediately prior to such transaction fail to own beneficially at least
50% of the combined voting power of all securities entitled to vote generally in
the election of trust managers following such transaction, or (iv) approval by
the shareholders of the Company of any complete liquidation or dissolution of
the Company or of any sale or other disposition of all or substantially all of
the Company's assets.
Other. The number of Common Shares that may be issued in connection
with awards under the 1996 Plan will not exceed 1,400,000. The number and kind
of shares
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<PAGE>
available for grant and the Common Shares subject to outstanding awards (as well
as individual share limits on awards, performance targets and exercise prices of
awards) may be adjusted to reflect the effect of a stock dividend, split,
recapitalization, merger, consolidation, reorganization, combination or exchange
of Common Shares, extraordinary dividend or other distribution or other similar
transaction. Any unexercised or undistributed portion of any expired, canceled,
terminated or forfeited award, or any alternative form of consideration under an
award that is not paid in connection with the settlement of any portion of an
award, will again be available for award under the 1996 Plan, whether or not the
Participant has received benefits of ownership (such as dividends or dividend
equivalents or voting rights) during the period in which the Participant's
ownership was restricted or otherwise not vested.
Full payment for Common Shares purchased on exercise of any option,
along with payment of any required tax withholding, must be made at the time of
such exercise in cash or, if permitted by the Compensation Committee, in
exchange for a promissory note in favor of the Company, in shares of stock
having a fair market value equivalent to the exercise price and withholding
obligation, or any combination thereof, or pursuant to such "cashless exercise"
procedures as may be permitted by the Compensation Committee. Any payment
required in respect of other awards may be in such amount and in any lawful form
of consideration as may be authorized by the Compensation Committee.
The 1996 Plan generally does not impose any minimum vesting periods on
options or other awards. The maximum term of an option or any other award is ten
years.
Federal Income Tax Consequences
The federal income tax consequences of participation in the 1996 Plan
are as follows:
Share Options
The grant of an incentive share option, or the designation of an
outstanding option as an incentive share option, would have no immediate tax
consequences to the Company or to the optionee. Under the Internal Revenue Code,
a holder of shares acquired pursuant to the exercise of an incentive share
option would realize no income at the time of exercise. If the optionee holds
his or her shares for at least two years from the date of the grant of the
option and at least one year from the date of exercise, he or she will realize
taxable long-term capital gain or long-term capital loss upon a subsequent sale
of the shares at a price different from the exercise price. In the event that
the optionee satisfies the holding period requirements described above, no
deduction would be allowed to the Company for federal income tax purposes in
connection with the grant or exercise of the option, or the transfer of shares
acquired pursuant to such exercise.
If, however, the optionee disposes of his or her shares within the
holding periods described above (a "disqualifying disposition"): (i) the
optionee will realize ordinary income in the year of such disposition in an
amount equal to the difference between the fair
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<PAGE>
market value of such shares on the date of exercise and the exercise price,
provided that if the disposition is a sale or exchange with respect to which a
loss (if sustained) would be recognized to the optionee and the amount realized
from such sale or exchange is less than the fair market value on the exercise
date, then the ordinary income will be limited to the excess of the amount
realized upon the sale or exchange of the shares over the option price; (ii) the
Company will be entitled to a deduction for such year in the amount of the
ordinary income, if any, so realized; (iii) the optionee will realize capital
gain or loss, short-term or long-term, as the case may be, as described below,
in an amount equal to the difference between (a) the amount realized by him or
her upon such sale or exchange of the shares and (b) the exercise price paid by
him or her increased by the amount of ordinary income, if any, realized by him
or her upon such disposition.
Any capital gain or loss (as described above) resulting from a
disqualifying disposition of shares acquired upon exercise of an incentive share
option will be long-term gain or loss if the shares with respect to which such
gain or loss is realized have been held for more than one year.
As to shares acquired through exercise of an incentive share option,
the amount by which the fair market value at the time of exercise exceeds the
exercise price is an item of "tax preference" for purposes of computing the
alternative minimum tax on individuals.
If previously held shares are used to exercise an option, the tax basis
of shares exchanged upon such an exercise would carry over on a share-by-share
basis to an equal number of newly acquired shares (such newly acquired shares
being hereinafter referred to as "swap shares"). Any shares acquired upon such
exercise in excess of the number of previously held shares exchanged (such
excess shares being hereinafter referred to as "spread shares") would have a tax
basis of zero. For purposes of determining whether a disqualifying disposition
of either swap shares or spread shares has occurred, the one-year and two-year
holding periods applicable from exercise and grant of the option, respectively,
would be unaffected; that is, the one-year holding period begins on the date the
option is exercised through the exchange of previously held shares. The two-year
holding period commences on the date the option so exercised was originally
granted. However, for purposes of determining whether any capital gain realized
upon a disqualifying disposition of shares acquired pursuant to an exercise in
which previously held shares were exchanged was long-term or short-term capital
gain, the holding period for swap shares would include the period for which the
shares exchanged therefor were held, whereas the holding period for spread
shares would commence on the date the option was exercised. In the event both
swap shares and spread shares are acquired pursuant to the exercise of an option
and a disqualifying disposition of any of such newly acquired shares is
subsequently made, the disqualifying disposition will be deemed to involve the
shares with the lowest tax basis.
In any event, if shares acquired through exercise of an incentive share
option are exchanged for other shares pursuant to an incentive share option
before the expiration of the one-year and two-year holding periods described
above, the exchange will be a taxable
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transaction with respect to the shares given up in the exchange and the
transaction will constitute a disqualifying disposition of those shares.
The grant of a non-qualified share option would have no immediate tax
consequence to the Company or to the optionee. A holder of shares acquired upon
the exercise of such an option would realize taxable ordinary income at the time
of exercise of the option in an amount equal to the excess of the fair market
value of the shares acquired at the time of exercise over the exercise price for
those shares, and the amount of such excess would be deductible for federal
income tax purposes by the Company (subject to the test of reasonable
compensation). The holder of shares acquired upon exercise of such an option may
be required by the Compensation Committee upon the exercise thereof to deposit
with the Company an amount equal to the income tax which the Company is
obligated to withhold pursuant to applicable federal, state and local tax
withholding requirements. The holder of such shares ordinarily realizes upon
their disposition a short-term or long-term capital gain or loss, depending on
the holding period of the shares, equal to the difference between (i) the amount
realized on the sale and (ii) the tax basis of the shares.
In the case of shares acquired by exercise of a non-qualified share
option using previously held shares, as to the number of acquired shares equal
to the number of shares transferred by the optionee, (i) no income will be
recognized in respect of such exercise, (ii) the basis of such shares will equal
the basis in the optionee's hands of the shares exchanged therefor and (iii) the
holding period of such shares will include the period for which the transferred
shares were held. As to any shares acquired in such an exercise in excess of the
number of shares transferred, (i) ordinary income will be recognized in an
amount equal to the fair market value of the shares so acquired, (ii) the basis
of such shares shall be fair market value of the shares so acquired and (iii)
the holding period will begin on the exercise date. Any gain or loss resulting
from the disposition of shares acquired upon such exercise of any option will be
long-term gain or loss if the shares with respect to which such gain or loss is
realized have been held (or deemed held) for more than one year.
It should be noted that under the Internal Revenue Code, to the extent
that the exercisability of an option is accelerated on account of a change of
control, the value of the acceleration would be treated as a "parachute
payment," subject to an excise tax imposed on the optionee and nondeductible by
the employer. Such consequences would follow, however, only if the total
"parachute payments" (including the value of the acceleration) were of
sufficient magnitude to give rise to "excess parachute payments" under the
Internal Revenue Code. Furthermore, amounts constituting "reasonable
compensation" may reduce the portion of the payments treated as "excess
parachute payments." The Committee Report to the Tax Reform Act of 1986
indicates that the benefit of acceleration of stock options issued as a part of
a normal compensation package granted more than one year before the change of
control presumptively constitutes reasonable compensation.
Generally, a corporation, in any given year, will pay the higher of the
alternative minimum tax or the regular federal income tax. The corporate
alternative minimum tax is
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computed by applying a flat 20% tax rate against alternative minimum taxable
income. Under currently applicable accounting principles, no expense is charged
at the time of exercise of an option. As noted above, however, there may be a
tax deduction arising as a result of option exercise. This difference between
accounting and tax treatment thus could result in an increase to alternative
minimum taxable income and a corresponding increase in the alternative minimum
tax.
Stock Appreciation Rights
The grant of an SAR would have no immediate tax consequence to the
right holder or to the Company. The exercise of such a right would cause the
right holder to realize taxable ordinary income at the time of exercise in an
amount equal to the cash awarded or the value of any Common Shares delivered
upon settlement thereof. Such amount would also be deductible for federal income
tax purposes by the Company (subject to the test of reasonable compensation).
SAR's are subject to applicable federal, state and local tax
withholding requirements. If the Company proposes, or is required, to distribute
Common Shares pursuant to the Plan, it may require the recipient to remit to it
an amount sufficient to satisfy such tax withholding requirements prior to the
delivery of any certificates for such Common Shares. The Compensation Committee
may, in its discretion and subject to such rules as it may adopt, permit a
Participant to pay all or a portion of the federal, state and local withholding
taxes arising in connection with the exercise of an SAR by electing to have the
Company withhold Common Shares having a Fair Market Value equal to the amount to
be withheld.
Restricted Share Awards
The grant of restricted shares as additional compensation will result
in the recipient's realizing taxable ordinary income in an amount equal to the
value of any restricted shares awarded. Any such amount would also be deductible
for federal income tax purposes by the Company (subject to the test of
reasonable compensation). The income and deduction will arise when the
restricted shares cease to be subject to a "substantial risk of forfeiture," as
defined by Section 83(c) of the Internal Revenue Code. Generally, a substantial
risk of forfeiture will exist so long as the recipient may be denied the value
of the restricted shares awarded, whether by forfeiture for "bad acts," a
repurchase right in the Company at less than fair market value, or otherwise. As
the 1996 Plan permits the Compensation Committee to place conditions on any
stock so awarded it is impossible to determine the time when any particular
stock award may be income to the recipient and a deduction to the Company.
Other Awards
The current federal income tax consequences of other awards authorized
under the 1996 Plan generally follow certain basic patterns: SAR's are taxed and
deductible in substantially the same manner as nonqualified options; restricted
share awards will
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generally be subject to tax at the time of vesting; performance awards and
dividend equivalents generally are subject to tax at the time of payment;
unconditional stock bonuses are generally subject to tax at the time of payment;
in each of the foregoing cases, the Company or a subsidiary will generally have
(at the time the participant recognizes income) a corresponding deduction.
Change of Control
If, as a result of a Change of Control, a participant's options, SAR's
or other rights become immediately exercisable, or Common Shares or other
benefits covered by another type of award are immediately vested or issued, the
additional value, if any, attributable to the acceleration or issuance may be
deemed a "parachute payment" under Section 280G of the Internal Revenue Code. In
such case, the participant may be subject to a 280G non-deductible excise tax as
to all or a portion of such economic value, in addition to any income tax
payable. The Company generally will not be entitled to a deduction for that
portion of any parachute payment that is subject to the excise tax.
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The Board recommends that you vote FOR the amendments to the 1996 Share
Incentive Plan.
- --------------------------------------------------------------------------------
PROPOSAL 6
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has appointed the firm of Ernst & Young LLP to audit the
financial statements of the Company for the fiscal year ending December 31,
1998. Ernst & Young LLP served as the Company's independent public accountants
for the fiscal year ended December 31, 1997. A proposal to ratify this
appointment is being presented to the Shareholders at the Annual Meeting. A
representative of Ernst & Young LLP is expected to be present at the meeting and
available to respond to appropriate questions and, although that firm has
indicated that no statement will be made, an opportunity for a statement will be
provided.
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The Board recommends that you vote FOR the proposed ratification of
appointment of Ernst & Young LLP as independent public accountants for
the Company for the fiscal year ending December 31, 1998.
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that
Grove's Executive Officers and Trust Managers, and persons who own more than ten
percent of a registered class of Grove's equity securities, file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Trust Managers, Executive Officers and greater-than-ten-percent shareholders are
required by regulation of the
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Securities and Exchange Commission to furnish Grove with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, Grove believes that all Section 16(a) filings
required to be filed in respect of 1997 by its Executive Officers, Trust
Managers and greater-than-ten-percent beneficial owners were timely made, except
as follows: Messrs. Brian and Damon Navarro each failed to timely file three
reports to report twelve transactions; Messrs. Edmund Navarro and Joseph
LaBrosse each failed to timely file three reports to report seven transactions;
Mr. Joseph Garrahy failed to timely file three reports to report three
transactions; and Mr. Gerald McNamara failed to timely file one report to report
one transaction
SHAREHOLDER PROPOSALS
Proposals of Shareholders intended to be present at the Annual Meeting
of Shareholders to be held in 1999 must be received by the Secretary of Grove at
Grove's principal executive office no later than January 4, 1999, for inclusion
in Grove's proxy statement and form of proxy relating to that meeting.
FINANCIAL AND OTHER INFORMATION
Grove's Annual Report for the fiscal year ended December 31, 1997,
including financial statements, is being concurrently sent to the Shareholders.
The Annual Report is not a part of the proxy solicitation materials.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by Grove. Brokers and
nominees should forward soliciting materials to the beneficial owners of the
Common Shares held of record by such persons, and Grove will reimburse them for
their reasonable forwarding expenses. In addition to the use of the mails,
proxies may be solicited by Trust Managers, Executive Officers and regular
employees of Grove, who will not be specially compensated for such services, by
means of personal calls upon, or telephonic or telegraphic communications with,
Shareholders or their personal representatives. In addition, the Company has
retained Corporate Investor Communications, Inc. to assist in the solicitation
of proxies at a fee estimated to be $5,500.
OTHER MATTERS
The Board knows of no matters other than those described in this Proxy
Statement which are likely to come before the Annual Meeting. If any other
matters properly come before the Annual Meeting, the persons named in the
accompanying form of Proxy intend to vote the proxies in accordance with their
best judgment.
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APPENDIX A
1996 SHARE INCENTIVE PLAN OF
GROVE PROPERTY TRUST
(formerly Grove Real Estate Asset Trust)
GROVE OPERATING, L.P.
AND
PROPERTY PARTNERSHIPS
(as amended to March 11, 1998)
<PAGE>
1996 SHARE INCENTIVE PLAN
OF
GROVE PROPERTY TRUST
(formerly Grove Real Estate Asset Trust)
GROVE OPERATING, L.P.
AND
PROPERTY PARTNERSHIPS
(as amended to March 11, 1998)
TABLE OF CONTENTS
PAGE
SECTION 1. PURPOSES 1
SECTION 2. DEFINITIONS; RULES OF CONSTRUCTION 1
SECTION 3. ELIGIBILITY 7
SECTION 4. AWARDS 7
SECTION 5. COMMON SHARES AVAILABLE UNDER PLAN 12
SECTION 6. AWARD AGREEMENTS 16
SECTION 7. ADJUSTMENTS; CHANGE IN CONTROL; ACQUISITIONS 18
SECTION 8. ADMINISTRATION 22
SECTION 9. NON-EMPLOYEE TRUST MANAGER OPTIONS 23
SECTION 10. AMENDMENT AND TERMINATION OF PLAN 26
SECTION 11. MISCELLANEOUS 26
<PAGE>
1996 SHARE INCENTIVE PLAN
OF
GROVE PROPERTY TRUST
(formerly Grove Real Estate Asset Trust)
GROVE OPERATING, L.P.
AND
PROPERTY PARTNERSHIPS
(as amended to March 11, 1998)
Grove Property Trust [formerly Grove Real Estate Asset Trust], a
Maryland real estate investment trust (the "Company"), Grove Operating, L.P., a
Delaware limited partnership (the "Operating Partnership"), and each of the
Property Partnerships (defined below)have adopted the 1996 Share Incentive Plan
(the "Plan"), effective March 10,1997, [as amended to March 11, 1998] for the
benefit of their eligible employees, certain consultants or advisors to the
Company and the Trust Managers (defined below).
SECTION 1. PURPOSES
The purposes of this Plan are as follows:
(a) To provide an additional incentive for Trust Managers, key
employees and certain consultants or advisors to the Company to further the
growth, development and financial success of the Company, the Operating
Partnership and the Property Partnerships by personally benefiting through the
ownership of Company shares and/or rights which recognize such growth,
development and financial success.
(b) To enable the Company, the Operating Partnership and the Property
Partnerships to obtain and retain the services of Trust Managers, key employees
and certain consultants or advisors to the Company considered essential to the
long-range success of the Company, the Operating Partnership and the Property
Partnerships by offering them an opportunity to own shares of the Company and/or
rights which will reflect such growth, development and financial success.
SECTION 2. DEFINITIONS; RULES OF CONSTRUCTION
(a) DEFINED TERMS. The terms defined in this Section shall have the
following meanings for purposes of this Plan:
"Acquiror" shall have the meaning set forth in Section 7(c)(1).
"Award" shall mean an award granted pursuant to Section 4 or Section 9.
<PAGE>
2
"Award Agreement" shall mean an agreement described in Section 6,
setting forth the terms and conditions of an Award granted to a Participant.
"Beneficiary" shall mean a person or persons (including a trust or
trusts) validly designated by a Participant or, in the absence of a valid
designation, entitled by will or the laws of descent and distribution, to
receive the benefits specified in the Award Agreement and under this Plan in the
event of a Participant's death.
"Board of Trust Managers" or "Board" shall mean the Board of Trust
Managers of the Company.
"Change of Control" shall have the meaning set forth in Section 7(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Committee described in Section 8.
"Common Shares" shall mean the Company's common shares of beneficial
interest, $0.01 par value per share.
"Common Units" shall mean units representing ownership interests in the
Operating Partnership.
"Company" shall mean Grove Property Trust [formerly Grove Real Estate
Asset Trust], a Maryland real estate investment trust.
"Company Charter" shall mean the Third Amended and Restated Declaration
of Trust of the Company, as amended from time to time.
"Company Employee" shall mean any officer or other employee (as defined
in accordance with Section 3401(c) of the Code) of the Company or of any entity
which is then a Company Subsidiary.
"Company Subsidiary" shall mean any corporation, partnership or other
entity (other than the Company) in an unbroken chain beginning with the Company
if all of them (including the Company) in the aggregate, other than the last one
in the unbroken chain, then own shares or other interests possessing 50 percent
or more of the total combined economic interests or the total combined voting
power of all classes of shares or other interests in each of the others (other
than the Company) in such chain; provided, however, that "Company Subsidiary"
shall not include the Operating Partnership, or any Operating Partnership
Subsidiary, the Property Partnership or any Property Partnership Subsidiary.
"Continuing Trust Manager" shall have the meaning set forth in Section
7(c)(2).
<PAGE>
3
"Employee" shall mean any Company Employee, Operating Partnership
Employee or Property Partnership Employee.
"Employer" shall mean the Company, a Company Subsidiary, the Operating
Partnership, an Operating Partnership Subsidiary, a Property Partnership and/or
a Property Partnership Subsidiary, as appropriate to the context.
"EPS" shall mean earnings per Common Share on a fully diluted basis.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Executive Officer" shall mean an executive officer as defined
in Rule 3b-7 under the Exchange Act, provided that, if the Board has designated
the executive officers of the Company for purposes of reporting under the
Exchange Act, the designation shall be conclusive for purposes of this Plan.
"Fair Market Value" shall mean the average of the closing prices of the
Common Shares for the five trading days immediately preceding the applicable
date as reported on the composite tape of American Stock Exchange issues (or, if
the security is not so listed, the principal national stock exchange on which
the security is then listed or, if the security is not listed on any national
stock exchange, such other reporting system as shall be selected by the
Committee). The Committee shall determine the Fair Market Value of any security
that is not publicly traded using criteria as it shall determine, in its sole
discretion, to be appropriate for the valuation.
"FFO" shall mean net income (loss) (computed in accordance with GAAP),
excluding gains (or losses) from debt restructuring and sales of property, plus
real estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures.
"For Cause" shall mean (i) (x) the continued failure by the Participant
to substantially perform his or her duties with an Employer (other than any such
failure resulting from his or her incapacity due to physical or mental illness),
or (y) the engaging by the Participant in conduct which is materially injurious
to an Employer, monetarily or otherwise, in either case as determined by the
Committee, or (ii) if the Participant has an employment agreement with any
Employer that defines "cause," such definition.
"Incentive Share Option" shall have the meaning set forth in Section
4(a)(2).
"Insider" shall mean any person who is subject to Section 16(b) of the
Exchange Act.
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4
"Net Cash Flow" shall mean cash and cash equivalents derived from
either (i) net cash flow from operations or (ii) net cash flow from operations,
financings and investing activities, as determined by the Committee at the time
an Award is granted.
"Non-Employee Trust Manager" shall mean a member of the Board of Trust
Managers who is not also an Employee.
"Non-Qualified Share Option" shall have the meaning set forth in
Section 4(a)(1).
"Operating Partnership" shall mean Grove Operating, L.P., a Delaware
limited partnership.
"Operating Partnership Agreement" shall mean the agreement of limited
partnership of the Operating Partnership, as the same may be amended, modified
or restated from time to time.
"Operating Partnership Employee" shall mean any officer or other
employee (as defined in accordance with Section 3401(c) of the Code) of the
Operating Partnership or any entity which is then an Operating Partnership
Subsidiary.
"Operating Partnership Optionee Purchased Shares" shall have the
meaning set forth in Section 6(e)(1).
"Operating Partnership Purchase Price" shall have the meaning set forth
in Section 6(e)(2).
"Operating Partnership Purchased Shares" shall have the meaning set
forth in Section 6(e)(2).
"Operating Partnership Subsidiary" shall mean any corporation,
partnership or other entity (other than the Operating Partnership, the Property
Partnerships and the Property Partnership Subsidiaries) in an unbroken chain
beginning with the Operating Partnership if all of them (including the Operating
Partnership) in the aggregate, other than the last one in the unbroken chain,
then own more than 50 percent of the total combined economic interests or the
total combined voting power of all classes of shares or other interests in each
of the others (other than the Operating Partnership).
"Option" shall mean a share option granted under Section 4(a)(1) or
(2). An Option granted under this Plan shall, as determined by the Committee, be
either a Non-Qualified Share Option or an Incentive Share Option; provided,
however, that Options granted to anyone other than Company Employees shall be
Non-Qualified Share Options.
"Participant" shall mean any Employee, any Officer, any Non-Employee
Trust Manager or any consultant or advisor who provides or has provided bona
fide
<PAGE>
5
services to the Company, but not services related to capital raising, who is
granted an Award pursuant to this Plan that remains outstanding.
"Performance-Based Awards" shall have the meaning set forth in Section
4(b).
"Performance Goal" shall mean EPS or ROE or Net Cash Flow or Total
Shareholder Return or FFO, and "Performance Goals" shall mean any combination
thereof.
"Plan" shall mean this 1996 Share Incentive Plan of Grove Property
Trust [formerly Grove Real Estate Asset Trust], Grove Operating Partnership and
Property Partnerships, as amended from time to time.
"Property Partnership" shall mean any entity formed or owned by the
Operating Partnership for the purpose of holding or managing real property, and
which has been designated by the Board, in its sole discretion, as a
participating employer under the Plan.
"Property Partnership Employee" shall mean any officer or other
employee (as defined in accordance with Section 3401(c) of the Code) of a
Property Partnership or any entity which is then a Property Partnership
Subsidiary.
"Property Partnership Optionee Purchased Shares" shall have the meaning
set forth in Section 6(f)(1).
"Property Partnership Purchase Price" shall have the meaning set forth
in Section 6(f)(2).
"Property Partnership Purchased Shares" shall have the meaning set
forth in Section 6(f)(2).
"Property Partnership Subsidiary" shall mean any corporation,
partnership, or other entity (other than a Property Partnership) in an unbroken
chain beginning with a Property Partnership if all of them (including such
Property Partnership) in the aggregate, other than the last one in the unbroken
chain, then own more than 50 percent of the total combined economic interests or
total combined voting power of all classes of stock or other interests in each
of the others (other than such Property Partnership).
"QDRO" shall mean a qualified domestic relations order as defined in
Section 414(p) of the Code or Title I, Section 206(d)(3) of the Employee
Retirement Income Security Act of 1974, as amended (to the same extent as if
this Plan was subject thereto), or the applicable rules thereunder.
"Qualifying Option" shall have the meaning set forth in Section 4(b).
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6
"Qualifying Share Appreciation Right" shall have the meaning set forth
in Section 4(b).
"Restricted Shares" shall have the meaning set forth in Section 4(c).
"ROE" shall mean consolidated net income of the Company (less preferred
dividends) divided by the average consolidated common shareholders' equity.
"Rule 16b-3" shall mean Rule 16b-3 under Section 16 of the
Exchange Act, as amended from time to time.
"Share Appreciation Right" shall have the meaning set forth in Section
4(a)(3).
"Share-Based Awards" shall mean Awards, as described in Sections
4(a)(1) through (4) and Section 4(c), that are payable or denominated in or have
a value derived from the value of, or an exercise or conversion privilege at a
price related to, Common Shares.
"Share Ownership Limit" shall mean (i) the restrictions on
ownership and transfer of Common Shares provided in Article VII of the Company
Charter, and (ii) any other restrictions on ownership and transfer set forth in
the Company Charter.
"Share Units" shall mean the number of units under a Share-Based Award
payable solely in cash or actually paid in cash, determined by reference to the
number of Common Shares by which the Share-Based Award is measured.
"Subsidiary" shall mean any Company Subsidiary, Operating Partnership
Subsidiary or Property Partnership Subsidiary.
"Total Shareholder Return" shall mean, with respect to the Company or
other entities (if measured on a relative basis), the (i) change in the market
price of its common shares (as quoted in the principal market on which it is
traded as of the beginning and ending of the period) plus dividends and other
distributions paid, divided by (ii) the beginning quoted market price, all of
which is adjusted for any changes in equity structure including, but not limited
to, stock splits and stock dividends.
"Trust Manager" shall mean a member of the Board.
(b) FINANCIAL AND ACCOUNTING TERMS. Except as otherwise expressly
provided or the context otherwise requires, financial and accounting terms,
including terms defined herein as Performance Goals, are used as defined for
purposes of, and shall be determined in accordance with, generally accepted
accounting principles and as derived from the audited consolidated financial
statements of the Company, prepared in the ordinary course of business.
<PAGE>
7
(c) RULES OF CONSTRUCTION. For purposes of this Plan and the Award
Agreements, unless otherwise expressly provided or the context otherwise
requires, the terms defined in this Plan include the plural and the singular,
and pronouns of either gender or neutral shall include, as appropriate, the
other pronoun forms.
SECTION 3. ELIGIBILITY
Any one or more Awards may be granted to any Employee or any consultant
or advisor who provides or has provided bona fide services to the Company, but
not services related to capital raising, who is designated by the Committee to
receive an Award. Non-Employee Trust Managers shall not be eligible to receive
any Awards except for the Non-Qualified Share Options granted automatically
without action of the Committee under the provisions of Section 9, and
consultants or advisors shall not be eligible to receive Incentive Share
Options.
SECTION 4. AWARDS
(a) TYPE OF AWARDS. The Committee may grant any of the following types
of Awards, either singly, in tandem or in combination with other Awards:
(1) NON-QUALIFIED SHARE OPTIONS. A Non-Qualified Share Option is an
Award in the form of an option to purchase Common Shares that is not intended to
comply with the requirements of Code Section 422. Unless the Committee provides
otherwise, and such provision is reflected in the Award Agreement, the exercise
price of each Non-Qualified Share Option granted under this Plan shall be not
less than the Fair Market Value of the Common Shares on the date that the Option
is granted. All Non-Qualified Share Options granted at an exercise price not
less than Fair Market Value on the date of grant shall be treated as
Performance-Based Awards subject to the applicable restrictions of Section 4(b).
(2) INCENTIVE SHARE OPTIONS. An Incentive Share Option is an Award
in the form of an option to purchase Common Shares that is intended to comply
with the requirements of Code Section 422 or any successor Section of the Code.
The exercise price of each Incentive Share Option granted under this Plan shall
be not less than the Fair Market Value of the Common Shares on the date that the
Option is granted; provided, however, that the exercise price of any Incentive
Share Option granted to a Participant who owns more than 10% of the total
combined voting power of all classes of shares of the Company (including for
this purpose Common Units redeemable for Common Shares) shall not be less than
110% of such Fair Market Value. In addition, the Committee shall include such
other terms [in] any Incentive Share Option as it deems necessary or desirable
to qualify the Option as an incentive stock option under the provisions of
Section 422 of the Code. To the extent that the aggregate "fair market value" of
Common Shares with respect to which one or more Incentive Share Options
<PAGE>
8
first become exercisable by a Participant in any calendar year exceeds $100,000,
taking into account both Common Shares subject to Incentive Share Options under
this Plan and shares subject to incentive share options under all other plans of
the Company or of other entities referenced in Code Section 422(d)(1), the Share
Options shall be treated as Non-Qualified Share Options. All Incentive Share
Options granted at an exercise price not less than Fair Market Value on the date
of grant shall be treated as Performance-Based Awards subject to the applicable
restrictions of Section 4(b). No Incentive Share Option shall be granted to any
person who is not an employee (as defined in Section 3401(c) of the Code) of the
Company or a Company Subsidiary.
(3) SHARE APPRECIATION RIGHTS. A Share Appreciation Right is an
Award in the form of a right to receive, upon surrender of the right, but
without other payment, an amount based on appreciation in the value of Common
Shares as of the date the Share Appreciation Right is exercised, over a base
price established in the Award, payable in cash, Common Shares or such other
form or combination of forms of payout, at times and upon conditions (which may
include a Change of Control), as may be approved by the Committee. Unless the
Committee provides otherwise, and such provision is reflected in the Award
Agreement, the minimum base price of a Share Appreciation Right granted under
this Plan shall be not less than the lowest of the Fair Market Value of the
underlying Common Shares on the date the Share Appreciation Right is granted or,
in the case of a Share Appreciation Right related to an Option (whether already
outstanding or concurrently granted), the exercise price of the related Option.
All Share Appreciation Rights granted at a base price not less than Fair Market
Value on the date of grant shall be treated as Performance-Based Awards subject
to the applicable restrictions of Section 4(b).
(4) OTHER SHARE-BASED AWARDS. The Committee may from time to time
grant Awards under this Plan that provide Participants with Common Shares or the
right to purchase Common Shares, or provide other incentive Awards (including,
but not limited to, phantom shares or units, performance shares or units, bonus
shares or units, dividend equivalent units, or similar securities or rights and
other awards) payable in or with a value derived from or related to the Fair
Market Value of Common Shares. The Awards shall be in a form determined by the
Committee, provided that the Awards shall not be inconsistent with the other
express terms of this Plan. The Committee shall have the discretion to determine
whether Awards under this Section 4(a)(4) to Executive Officers that are either
granted or become vested, exercisable or payable based on attainment of one or
more Performance Goals shall only be granted as Performance-Based Awards under
Section 4(b) and the Committee may, in its sole discretion, make Restricted
Share Awards under Section 4(c), rather than as Performance-Based Awards under
Section 4(b).
(b) SPECIAL PERFORMANCE-BASED AWARDS. Without limiting the generality
of the foregoing, any of the types of Awards listed in Section 4(a) may be
granted as awards that satisfy the requirements for "performance-based
compensation" within the meaning of Code Section 162(m) ("Performance-Based
<PAGE>
9
Awards"), the grant, vesting, exercisability or payment of which depends on the
degree of achievement of the Performance Goals relative to preestablished
targeted levels for the Company on a consolidated basis, provided that such
Awards satisfy the requirements of this Section 4(b). Notwithstanding anything
contained in this Section 4(b) to the contrary, any Option or Share Appreciation
Right with an exercise price or a base price not less than Fair Market Value on
the date of grant shall be subject only to the requirements of clauses (1) and
(3)(A) below in order for such Awards to satisfy the requirements for
Performance-Based Awards under this Section 4(b) (with such Awards hereinafter
referred to as a "Qualifying Option" or a "Qualifying Share Appreciation Right",
respectively). With the exception of any Qualifying Option or Qualifying Share
Appreciation Right, an Award that is intended to satisfy the requirements of
this Section 4(b) shall be designated as a Performance-Based Award at the time
of grant.
(1) ELIGIBLE CLASS. The eligible class of persons for Awards under
this Section 4(b) shall be all Employees.
(2) PERFORMANCE GOALS. The performance goals for any Awards under
this Section 4(b) (other than Qualifying Options and Qualifying Share
Appreciation Rights) shall be, on an absolute or relative basis, one or more of
the Performance Goals. The specific performance target(s) with respect to
Performance Goal(s) must be established by the Committee in advance of the
deadlines applicable under Code Section 162(m) and while the performance
relating to the Performance Goal(s) remains substantially uncertain.
(3) INDIVIDUAL LIMITS. The maximum number of Common Shares or Share
Units that are issuable under Options, Share Appreciation Rights or other
Share-Based Awards (described under Section 4(a)(4)) that are granted as
Performance-Based Awards during any calendar year to any Participant under this
Plan shall not exceed 500,000 (or, in the case of awards of Restricted Shares,
250,000 Common Shares), either individually or in the aggregate, subject to
adjustment as provided in Section 7. Awards that are canceled during the year
shall be counted against this limit to the extent required by Code Section
162(m).
(4) COMMITTEE CERTIFICATION. Before any Performance-Based Award
under this Section 4(b) (other than Qualifying Options and Qualifying Share
Appreciation Rights) is paid, the Committee must certify in writing (by
resolution or otherwise) that the applicable Performance Goal(s) and any other
material terms of the Performance-Based Award were satisfied; provided, however,
that a Performance-Based Award may be paid without regard to the satisfaction of
the applicable Performance Goal in the event of a Change of Control as provided
in Section 7(b).
(5) TERMS AND CONDITIONS OF AWARDS; COMMITTEE DISCRETION TO REDUCE
PERFORMANCE AWARDS. The Committee shall have discretion to determine the
conditions, restrictions or other
<PAGE>
10
limitations, in accordance with the terms of this Plan and Code Section 162(m),
on the payment of individual Performance-Based Awards under this Section 4(b).
To the extent set forth in an Award Agreement, the Committee may reserve the
right to reduce the amount payable in accordance with any standards or on any
other basis (including the Committee's discretion) as the Committee may impose.
(6) ADJUSTMENTS FOR MATERIAL CHANGES. In the event of (i) a
significant acquisition or disposition by the Company, (ii) a change in
capitalization, a transaction or a complete or partial liquidation, or (iii) any
extraordinary gain or loss or other event that is treated for accounting
purposes as an extraordinary item under generally accepted accounting
principles, (iv) any material change in accounting policies or practices
affecting the Company and/or the Performance Goals or targets or (v) any other
event that was not anticipated (or the effects of which were not anticipated) at
the time the Performance Goals were established, then, to the extent any of the
foregoing events (or a material effect thereof) was not anticipated at the time
the targets were set, the Committee may make adjustments to the Performance
Goals and/or targets, applied as of the date of the event, and based solely on
objective criteria, so as to neutralize, in the Committee's judgment, the effect
of the event on the applicable Performance-Based Award.
(7) INTERPRETATION. Except as specifically provided in this Section
4(b), the provisions of this Section 4(b) shall be interpreted and administered
by the Committee in a manner consistent with the requirements for exemption of
Performance-Based Awards granted to Executive Officers as "performance-based
compensation" under Code Section 162(m) and regulations and other
interpretations issued by the Internal Revenue Service thereunder.
(c) AWARD OF RESTRICTED SHARES.
(1) RESTRICTED SHARE AWARDS.
(A) The Committee may, from time to time, in its absolute
discretion:
(i) Select from among the Employees or consultants or
advisors who provide or have provided bona fide services to the Company, but not
services relating to capital raising (including Employees or consultants or
advisors who provide or have provided bona fide services to the Company, but not
services relating to capital raising, who have previously received other awards
under this Plan) such of them as in its opinion should be awarded Restricted
Shares; and
(ii) Determine the purchase price, if any, and other terms
and conditions (including, without limitation, in the case of awards to
Operating Partnership Employees and Property Partnership Employees, the
mechanism
<PAGE>
11
for the transfer of the Restricted Shares and payment therefor) applicable to
such Restricted Shares consistent with this Plan.
(B) The Committee shall establish the purchase price, if any,
and form of payment for Restricted Shares; provided, however, that such purchase
price shall be no less than the par value of the Common Shares to be purchased
unless otherwise permitted by applicable state law, and, in all cases, legal
consideration shall be required for each issuance of Restricted Shares.
(C) Upon the selection of an Employee or a consultant or
advisor to be awarded Restricted Shares, the Committee shall instruct the
Secretary of the Company to issue such Restricted Shares and may impose such
conditions on the issuance of such Restricted Shares as it deems appropriate and
consistent with this Plan.
(2) CONSIDERATION. As consideration for the issuance of Restricted
Shares, in addition to payment of any purchase price, the Participant shall
agree, in a written Award Agreement, to continue to provide services to his
Employer for a period of at least one year after the Restricted Shares are
issued (or such shorter period as may be fixed in the Award Agreement or by
action of the Committee following grant of the Restricted Shares). Nothing in
this Plan or in any Award Agreement hereunder shall (A) confer on any
Participant any right to (i) continue in the employ of, or to continue to
provide consulting or advisory services to, any Employer, or (ii) receive
severance pay from any Employer, or (B) interfere with or restrict in any way
the rights of any Employer, which are hereby expressly reserved, to discharge
such Participant at any time for any reason whatsoever, whether or not For
Cause.
(3) RIGHTS AS SHAREHOLDERS. Upon delivery of the Restricted Shares
to a Participant or, if applicable, to the escrow holder pursuant to Section
4(c)(6), such Participant shall have, unless otherwise provided by the
Committee, all the rights of a shareholder with respect to said shares, subject
to the restrictions in his Award Agreement, including the right to receive all
dividends and other distributions paid or made with respect to the shares;
provided, however, that in the discretion of the Committee, any extraordinary
distributions with respect to the Common Shares shall be subject to the
restrictions set forth in Section 4(c)(4) and subject to any resolution of the
Board or the Committee.
(4) RESTRICTION. All Restricted Shares issued under this Plan
(including any shares received by Participants with respect to Restricted Shares
as a result of stock dividends, stock splits or any other form of
recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment with, or
providing consulting or advisory services to, any Employer, Company performance
and individual performance; provided, however, that by action taken after the
Restricted Shares are issued, the Committee may, on such terms and
<PAGE>
12
conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Award Agreement. Restricted Shares may
not be sold or encumbered until all restrictions are terminated or expire.
Unless provided otherwise by the Committee, if no consideration was paid by the
Participant upon issuance, his rights in unvested Restricted Shares shall lapse
upon the termination of his employment or his providing consulting or advisory
services to any Employer.
(5) REPURCHASE OF RESTRICTED SHARES. The Committee shall provide in
the terms of each individual Award Agreement relating to Restricted Shares that
the Company shall have the right to repurchase from a Participant the unvested
Restricted Shares then subject to restrictions under the Award Agreement
immediately upon a termination of his employment or his providing consulting or
advisory services, at a cash price per share equal to the price paid by such
Participant for such Restricted Shares, or, if acquired at no cost, to require
forfeiture of such Restricted Shares; provided, however, that provision may be
made that no such right of repurchase shall exist in the event of a termination
of service not For Cause, or following a Change of Control of an Employer, or
because of the holder's retirement, death or disability, or otherwise.
(6) ESCROW. In its sole discretion, the Committee may appoint the
Secretary of the Company or such other escrow holder as the Committee may
designate to retain physical custody of each certificate representing Restricted
Shares until all of the restrictions imposed under the Award Agreement with
respect to the shares evidenced by such certificate expire or shall have been
removed.
(7) LEGEND. In order to enforce the restrictions imposed upon
Restricted Shares hereunder, the Committee may, in its discretion, cause a
legend or legends to be placed on certificates representing all Restricted
Shares that are still subject to restrictions under Award Agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.
(d) MAXIMUM TERM OF AWARDS. No Award that contemplates exercise or
conversion may be exercised or converted to any extent, and no other Award that
defers vesting, shall remain outstanding and unexercised, unconverted or
unvested more than ten years after the date the Award was initially granted.
SECTION 5. COMMON SHARES AVAILABLE UNDER PLAN
(a) AGGREGATE SHARE LIMIT. The maximum number of Common Shares that may
be issued under the Plan pursuant to all Share-Based Awards (including Incentive
Share Options) is 1,400,000, subject to adjustment as provided in this Section 5
or Section 7.
<PAGE>
13
(b) REISSUE OF SHARES AND SHARE UNITS. Any unexercised, unconverted or
undistributed portion of any expired, cancelled, terminated or forfeited Award,
or any alternative form of consideration under an Award that is not paid in
connection with the settlement of an Award or any portion of an Award, shall
again be available for Award under Section 5(a), whether or not the Participant
has received benefits of ownership (such as dividends or dividend equivalents or
voting rights) during the period in which the Participant's ownership was
restricted or otherwise not vested. Common Shares that are issued pursuant to
Awards and subsequently reacquired by the Company pursuant to the terms and
conditions of the Awards shall be available for reissuance under the Plan. If
the Company withholds Common Shares pursuant to Section 5(f), the number of
Common Shares that would have been deliverable with respect to an Award but that
are withheld may in effect not be issued, but the aggregate number of Common
Shares issuable with respect to the applicable Award shall be reduced by the
number of Common Shares withheld and such Common Shares shall be available for
additional Awards under this Plan.
(c) INTERPRETIVE ISSUES. Additional rules for determining the number of
Common Shares authorized under this Plan may be adopted by the Committee, as it
deems necessary or appropriate.
(d) TREASURY SHARES; NO FRACTIONAL SHARES. The Common Shares which may
be issued (which term includes Common Shares reissued or otherwise delivered)
pursuant to an Award under this Plan may be treasury or authorized but unissued
Common Shares or Common Shares acquired, subsequently or in anticipation of a
transaction under this Plan, in the open market or in privately negotiated
transactions to satisfy the requirements of this Plan. No fractional shares
shall be issued but fractional interests may be accumulated. The Committee,
however, may determine that cash, other securities, or other property will be
paid or transferred in lieu of any fractional share interests.
(e) CONSIDERATION. The Common Shares issued under this Plan may be
issued (subject to Section 11(d)) for any lawful form of consideration, the
value of which equals the par value of the Common Shares or such greater or
lesser value as the Committee, consistent with Sections 11(d), 4(a) and 4(c),
may require.
(f) PURCHASE OR EXERCISE PRICE; WITHHOLDING. The exercise or purchase
price (if any) of the Common Shares issuable pursuant to any Award and any
withholding obligation under applicable tax laws shall be paid in cash or,
subject to the Committee's express authorization and the restrictions,
conditions and procedures the Committee may impose, any one or combination of
(i) cash, (ii) a check payable to the order of the Company, (iii) the delivery
of Common Shares having a Fair Market Value equivalent to the applicable
exercise price and withholding obligation, provided that any such shares used in
payment shall have been owned by the Participant at least six months prior to
the date of exercise, (iv) a reduction in the amount of Common Shares or other
amounts otherwise issuable or payable pursuant to such Award, (v) by notice and
<PAGE>
14
third party payment in such manner as may be authorized by the Committee or (vi)
the delivery of a promissory note, or other obligation for the future payment of
money, the terms and conditions of which shall be determined (subject to Section
11(d)) by the Committee. In the case of a payment by the means described in
clause (iii) or (iv) above, the Common Shares to be so delivered or offset shall
be determined by reference to the Fair Market Value of the Common Shares on the
date as of which the payment or offset is made.
(g) CASHLESS EXERCISE. The Committee may permit the exercise of the
Award and payment of any applicable withholding tax in respect of an Award by
delivery of written notice, subject to the Company's receipt of a third party
payment in full in cash for the exercise price and the applicable withholding
prior to issuance of Common Shares, in the manner and subject to the procedures
as may be established by the Committee.
(h) TRANSFER OF COMMON SHARES TO A COMPANY EMPLOYEE, NON-EMPLOYEE TRUST
MANAGER, OTHER BOARD MEMBER OR CONSULTANT OR ADVISOR. As soon as practicable
after receipt by the Company or a Company Subsidiary, pursuant to Section 5(f),
of payment for the Common Shares with respect to which an Option (which, in the
case of a Company Employee, was issued to and is held by such Company Employee
in his capacity as a Company Employee), or portion thereof, is exercised by a
Participant who is a Company Employee, a Non-Employee Trust Manager or a
consultant or advisor, with respect to each such exercise, the Company shall
transfer to the Participant the number of Common Shares equal to:
(1) the amount of the payment made by the Participant to the
Company pursuant to Section 5(f), divided by
(2) the exercise price per share of the Common Shares subject to
the Option.
(i) TRANSFER OF SHARES TO AN OPERATING PARTNERSHIP EMPLOYEE. As soon as
practicable after receipt by the Company, pursuant to Section 5(f), of payment
for the Common Shares with respect to which an Option (which was issued to and
is held by an Operating Partnership Employee in his capacity as an Operating
Partnership Employee), or portion thereof, is exercised by a Participant who is
an Operating Partnership Employee, with respect to each such exercise:
(1) the Company shall transfer to the Participant the number of
Common Shares equal to (A) the amount of the payment made by the Participant to
the Company pursuant to Section 5(f) divided by (B) the Fair Market Value of a
Common Share at the time of exercise (the "Operating Partnership Optionee
Purchased Shares");
<PAGE>
15
(2) the Company shall sell to the Operating Partnership the number
of Common Shares (the "Operating Partnership Purchased Shares") equal to the
excess of (A) the amount obtained by dividing (i) the amount of the payment made
by the Participant to the Company pursuant to Section 5(f) by (ii) the exercise
price per share of the Common Shares subject to the Option, over (B) the
Operating Partnership Optionee Purchased Shares.
The price to be paid by the Operating Partnership to the Company for
the Operating Partnership Purchased Shares (the "Operating Partnership Purchase
Price") shall be an amount equal to the product of (A) the number of Operating
Partnership Purchased Shares multiplied by (B) the Fair Market Value of a Common
Share at the time of the exercise; and
(3) as soon as practicable after receipt of the Operating
Partnership Purchased Shares by the Operating Partnership, the Operating
Partnership shall transfer such shares to the Participant at no additional cost,
as additional compensation.
(j) TRANSFER OF SHARES TO A PROPERTY PARTNERSHIP EMPLOYEE. As soon as
practicable after receipt by the Company, pursuant to Section 5(f), of payment
for the Common Shares with respect to which an Option (which, in the case of a
Property Partnership Employee, was issued to and is held by such Property
Partnership Employee in his capacity as a Property Partnership Employee), or
portion thereof, is exercised by a Participant who is a Property Partnership
Employee, with respect to each such exercise:
(1) the Company shall transfer to the Participant the number of
Common Shares equal to (A) the amount of the payment made by the Participant to
the Company pursuant to Section 5(f) divided by (B) the Fair Market Value of a
Common Share at the time of exercise (the "Property Partnership Optionee
Purchased Shares");
(2) the Company shall sell to the Property Partnership the number
of Common Shares (the "Property Partnership Purchased Shares") equal to the
excess of (A) the amount obtained by dividing (i) the amount of the payment made
by the Participant to the Company pursuant to Section 5(f) by (ii) the exercise
price per share of the Common Shares subject to the Option, over (B) the
Property Partnership Optionee Purchased Shares. The price to be paid by the
Property Partnership to the Company for the Property Partnership Purchased
Shares (the "Property Partnership Purchase Price") shall be an amount equal to
the product of (A) the number of Property Partnership Purchased Shares
multiplied by (B) the Fair Market Value of a Common Share at the time of the
exercise;
(3) as soon as practicable after receipt of the Property
Partnership Purchased Shares by a Property Partnership, such Property
Partnership shall transfer such shares to the Participant at no additional cost,
as additional compensation.
<PAGE>
16
(k) TRANSFER OF PAYMENT TO THE OPERATING PARTNERSHIP OR A PROPERTY
PARTNERSHIP. As soon as practicable after receipt by the Company (i) of the
amount described in Section 5(f) and, where applicable, (ii) a related Operating
Partnership Purchase Price or Property Partnership Purchase Price described in
Section 5(i) or 5(f), the Company shall contribute to the Operating Partnership
or the applicable Property Partnership, as the case may be, an amount of cash
equal to such payment and the Operating Partnership or the applicable Property
Partnership, as the case may be, shall issue an additional interest in the
Operating Partnership or the applicable Property Partnership, as the case maybe,
on the terms set forth in the Operating Partnership Agreement or in the
agreement of limited partnership of the applicable Property Partnership.
SECTION 6. AWARD AGREEMENTS
Each Award under this Plan shall be evidenced by an Award Agreement in
a form approved by the Committee setting forth, the number of Common Shares or
Share Units, as applicable, subject to the Award, and the price (if any) and
term of the Award and, in the case of Performance-Based Awards, the applicable
Performance Goals. The Award Agreement shall also set forth (or incorporate by
reference) (i) other material terms and conditions applicable to the Award as
determined by the Committee consistent with the limitations of this Plan, and
(ii) in the case of Share-Based Awards to Operating Partnership Employees and
Property Partnership Employees, the mechanisms for the transfer of such Common
Shares and payment therefor, including but not limited to the mechanisms in
Sections 5(h), 5(i), 5(j) and 5(k).
(a) INCORPORATED PROVISIONS. Award Agreements shall be subject to the
terms of this Plan and shall be deemed to include the following terms, unless
the Committee in the Award Agreement otherwise (consistent with applicable legal
considerations) provides:
(1) NON-ASSIGNABILITY: The Award shall not be assignable nor
transferable, except (i) by will or by the laws of descent and distribution,
(ii) pursuant to a QDRO or any other exception to transfer restrictions
expressly permitted by the Committee and set forth in the Award Agreement (or an
amendment thereto) or (iii) in the case of Awards constituting Incentive Share
Options, as permitted by the Code. The restrictions on exercise and transfer
shall not be deemed to prohibit, to the extent permitted by the Committee, (a)
transfers without consideration for estate and financial planning purposes,
transfers to such other persons or in such other circumstances as the Committee
may in the Award Agreement expressly permit. During the lifetime of a
Participant, the Award shall be exercised only by such Participant or by his or
her guardian or legal representative, except as expressly otherwise provided
consistent with the foregoing transfer restrictions. The designation of a
Beneficiary hereunder shall not constitute a transfer prohibited by the
foregoing provisions.
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17
(2) RIGHTS AS SHAREHOLDER: Except as specifically set forth herein,
a Participant shall have no rights as a holder of Common Shares with respect to
any unissued securities covered by an Award until the date the Participant
becomes the holder of record of these securities. Except as provided in Section
7, no adjustment or other provision shall be made for dividends or other
shareholder rights, except to the extent that the Award Agreement provides for
dividend equivalents or similar economic benefits.
(3) WITHHOLDING: The Participant shall be responsible for payment
of any taxes or similar charges required by law to be withheld from an Award or
an amount paid in satisfaction of an Award, and these obligations shall be paid
by the Participant on or prior to the payment of the Award. In the case of an
Award payable in cash, the withholding obligation shall be satisfied by
withholding the applicable amount and paying the net amount in cash to the
Participant. In the case of an Award paid in Common Shares, a Participant shall
satisfy the withholding obligation as provided in Section 5(f).
(4) SECTION 83(b) ELECTION: No Participant may make an election
under Code Section 83(b) with respect to any Award under this Plan, unless
otherwise expressly permitted by the Committee, in its sole discretion.
(b) OTHER PROVISIONS. Award Agreements may include other terms and
conditions as the Committee shall approve including, but not limited to, the
following:
(1) TERMINATION OF SERVICE: A provision describing the treatment of
an Award in the event of the retirement, disability, death or other termination
of a Participant's employment with or services to an Employer, including any
provisions relating to the vesting, exercisability, forfeiture or cancellation
under Code Section 162(m).
(2) VESTING; EFFECT OF TERMINATION; CHANGE OF CONTROL: Any other
terms consistent with the terms of this Plan as are necessary and appropriate to
effect the Award to the Participant including, but not limited to, the vesting
provisions, any requirements for continued employment, any other restrictions or
conditions (including performance requirements) of the Award, and the method by
which (consistent with Section 7) the restrictions or conditions lapse, and the
effect on the Award of a Change of Control.
(3) REPLACEMENT AND SUBSTITUTION: Any provisions permitting or
requiring the surrender of outstanding Awards or securities held by the
Participant in whole or in part in order to exercise or realize rights under or
as a condition precedent to other Awards, or in exchange for the grant of new or
amended Awards under similar or different terms.
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18
(4) RELOADING: Any provisions for successive or replenished Awards
including, but not limited to, reload Options.
(5) TERMINATION OF BENEFITS: A provision that any and all
unexercised Awards and all rights under this Plan of a Participant who received
such Award (or his or her designated Beneficiary or legal representative) and
the exercise or vesting thereof, shall be forfeited if, prior to the time of
such exercise, the Participant shall (i) be employed by a competitor of, or
shall be engaged in any activity in competition with, any Employer without such
Employer's consent, (ii) divulge without any Employer's consent any secret or
confidential information belonging to such Employer, (iii) engage in any other
activities which would constitute grounds for termination For Cause or (iv) be
terminated For Cause.
(c) CONTRACT RIGHTS, FORMS AND SIGNATURES. Any obligation of the
Company or an Employer to any Participant with respect to an Award shall be
based solely upon contractual obligations created by this Plan and an Award
Agreement. No Award shall be enforceable until the Award Agreement or a receipt
has been signed by the Participant and on behalf of the Company and, in the
Committee's discretion, the applicable Employer by an Executive Officer (other
than the recipient) or his or her delegate or, in the case of an Award to an
Insider, by the Participant and the Company, and [in] the Committee's
discretion, the applicable Employer, whose signature shall be acknowledged by a
member of the Committee. By executing the Award Agreement or receipt, a
Participant shall be deemed to have accepted and consented to the terms of this
Plan and any action taken in good faith under this Plan by and within the
discretion of the Committee, the Board of Trust Managers or their delegates.
Unless the Award Agreement otherwise expressly provides, there shall be no third
party beneficiaries of the obligations of the Company or any Employer to the
Participant under the Award Agreement.
SECTION 7. ADJUSTMENTS; CHANGE IN CONTROL; ACQUISITIONS.
(a) ADJUSTMENTS. If there shall occur any recapitalization, stock split
(including a stock split in the form of a stock dividend), reverse stock split,
merger, combination, consolidation, or other reorganization or any extraordinary
dividend or other extraordinary distribution in respect of the Common Shares
(whether in the form of cash, Common Shares or other property), or any split-up,
spin-off, extraordinary redemption, combination or exchange of outstanding
Common Shares, or there shall occur any other similar transaction or event in
respect of the Common Shares, or a sale of substantially all the assets of the
Company as an entirety, then the Committee shall, in the manner and to the
extent, if any, as it deems appropriate and equitable to the Participants and
consistent with the terms of this Plan, and taking into consideration the effect
of the event on the holders of the Common Shares:
(1) proportionately adjust any or all of
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19
(A) the number and type of Common Shares and Share Units which
thereafter may be made the subject of Awards (including the specific maximum
numbers of Common Shares or Share Units set forth elsewhere in this Plan),
(B) the number, amount and type of Common Shares, other
property, Share Units or cash subject to any or all outstanding Awards,
(C) the grant, purchase or exercise price, or conversion ratio
of any or all outstanding Awards, or of the Common Shares, other property or
Share Units underlying the Awards,
(D) the securities, cash or other property deliverable upon
exercise or conversion of any or all outstanding Awards,
(E) subject to Section 4(b), the performance targets or
standards appropriate to any outstanding Performance-Based Awards,
(F) any other terms as are affected by the event; or
(2) subject to any applicable limitations in the case of a
transaction to be accounted for as a pooling of interests under generally
accepted accounting principles, provide for
(A) an appropriate and proportionate cash settlement or
distribution, or
(B) the substitution or exchange of any or all outstanding
Awards, or the cash, securities or property deliverable on exercise, conversion
or vesting of the Awards. Notwithstanding the foregoing, in the case of an
Incentive Share Option, no adjustment shall be made which would cause this Plan
to violate Code Section 424(a) or any successor provisions thereto, without the
written consent of the Participant adversely affected thereby. The Committee may
act prior to an event described in this paragraph (a) (including at the time of
an Award by means of more specific provisions in the Award Agreement) if deemed
necessary or appropriate to permit the Participant to realize the benefits
intended to be conveyed by an Award in respect of the Common Shares in the case
of an event described in paragraph (a).
(b) CHANGE OF CONTROL. The Committee may, in the Award Agreement,
provide for the effect of a Change of Control on an Award. Such provisions may
include, but are not limited to, any one or more of the following with respect
to any or all Awards: (i) the specific consequences of a Change of Control on
the Awards; (ii) a reservation of the Committee's right to determine in its
discretion at any time that there shall be full acceleration or no acceleration
of benefits under the Awards; (iii) that only certain or limited benefits under
the Awards shall be accelerated; (iv) that the Awards shall be accelerated for a
limited time only; or (v) that acceleration of the Awards shall be subject to
additional conditions precedent (such as a termination of employment
<PAGE>
20
following a Change of Control). In addition to any action required or authorized
by the terms of an Award, the Committee may take any other action it deems
appropriate to ensure the equitable treatment of Participants in the event of or
in anticipation of a Change of Control including, but not limited to, any one or
more of the following with respect to any or all Awards: (i) the acceleration or
extension of time periods for purposes of exercising, vesting in, or realizing
gain from, the Awards; (ii) the waiver of conditions on the Awards that were
imposed for the benefit of the Company or any Employer; (iii) provision for the
cash settlement of the Awards for their equivalent cash value, as determined by
the Committee, as of the date of the Change of Control; or (iv) such other
modification or adjustment to the Awards as the Committee deems appropriate to
maintain and protect the rights and interests of Participants upon or following
the Change of Control. The Committee also may accord any Participant a right to
refuse any acceleration of exercisability, vesting or benefits, whether pursuant
to the Award Agreement or otherwise, in such circumstances as the Committee may
approve. Notwithstanding the foregoing provisions of this Section 7(b) or any
provision in an Award Agreement to the contrary, in no event shall the Committee
be deemed to have discretion to accelerate or not accelerate or make other
changes in or to any or all Awards, in respect of a transaction, if such action
or inaction would be inconsistent with or would otherwise frustrate the intended
accounting for a proposed transaction as a pooling of interests under generally
accepted accounting principles.
(c) CHANGE OF CONTROL DEFINITION. For purposes of this Plan, a "Change
of Control" of the Company shall be deemed to have occurred upon the happening
of any of the following events:
(1) the acquisition or holding, other than in or as a result of a
transaction approved by the Continuing Trust Managers (as defined in paragraph
(c)(2) below) of the Company, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (an "Acquiror") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the combined voting power of the then
outstanding Common Shares and other shares of the Company entitled to vote
generally in the election of trust managers, but excluding for this purpose:
(A) any such acquisition (or holding) by any Employer, or any
employee benefit plan (or related trust) of such Employer; or
(B) any such acquisition (or holding) by any corporation with
respect to which, following such acquisition, more than 50% of, respectively,
the then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Common Shares
and other voting securities of the Company immediately prior to such acquisition
in substantially the same proportion as their
<PAGE>
21
ownership, immediately prior to such acquisition, of the then outstanding Common
Shares of the Company and of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
trust managers;
(2) individuals who, as of the date hereof, constitute the Board
(the "Continuing Trust Managers") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a trust manager
subsequent to the date hereof whose election, or nomination for election by the
shareholders of the Company, was approved by a vote of at least a majority of
the persons then comprising the Continuing Trust Managers shall be considered a
Continuing Trust Manager, but excluding, for this purpose, any such individual
whose initial election as a member of the Board is in connection with an actual
or threatened "election contest" relating to the election of the trust managers
of the Company (as such term is used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); or
(3) approval by the shareholders of the Company of
(A) a reorganization, merger or consolidation of the Company,
with respect to which in each case all or substantially all of the individuals
and entities who were the respective beneficial owners of the Common Shares or
voting securities of the Company immediately prior to such reorganization,
merger or consolidation will not, immediately following such reorganization,
merger or consolidation, beneficially own, directly and indirectly, more than
50% of, respectively, the then outstanding Common Shares and the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors of the entity resulting from such reorganization,
merger or consolidation, or
(B) a complete liquidation or dissolution of the Company, or
(C) the sale or other disposition of all or substantially all
of the assets of the Company.
(d) BUSINESS ACQUISITIONS. Awards may be granted under this Plan on the
terms and conditions as the Committee considers appropriate, which may differ
from those otherwise required by this Plan, to the extent necessary to reflect
substitution for or assumption of share incentive awards held by employees of
other entities who become employees of any Employer as the result of a merger of
the employing entity with, or the acquisition of the property or stock of the
employing entity by, any Employer, directly or indirectly.
<PAGE>
22
SECTION 8. ADMINISTRATION.
(a) COMMITTEE AUTHORITY AND STRUCTURE. This Plan and all Awards granted
under this Plan shall be administered by the Compensation Committee of the Board
or such other committee of the Board as may be designated by the Board and made
up solely of two or more Non-Employee Directors (as defined in Rule
16b-3(b)(3)under the Exchange Act and the "outside director" requirement of Code
Section 162(m)). The members of the Committee shall be designated by the Board.
A majority of the members of the Committee (but not fewer than two) shall
constitute a quorum. The vote of a majority of a quorum or the unanimous written
consent of the Committee shall constitute action by the Committee.
(b) SELECTION AND GRANT. The Committee shall have the authority to
determine the Employees, consultants or advisors (if any) to whom Awards will be
granted under this Plan, the type of Award or Awards to be made, and the nature,
amount, pricing, timing and other terms of Awards to be made to any one or more
of these individuals, and to establish the installments (if any) in which such
Awards shall become exercisable or shall vest, or determine that no delayed
exercisability or vesting is required, and establish the events of termination
or reversion of such Awards, subject to the terms of this Plan.
(c) CONSTRUCTION AND INTERPRETATION. The Committee shall have the power
to interpret and administer this Plan and Award Agreements, and to adopt, amend
and rescind related rules and procedures. All questions of interpretation and
determinations with respect to this Plan, the number of Common Shares, Share
Appreciation Rights, or units or other Awards granted, and the terms of any
Award Agreements, the adjustments required or permitted by Section 7, and other
determinations hereunder shall be made by the Committee and its determination
shall be final and conclusive upon all parties in interest. In the event of any
conflict between an Award Agreement and any non-discretionary provisions of this
Plan, the terms of this Plan shall govern.
(d) EXPRESS AUTHORITY (AND LIMITATIONS ON AUTHORITY) TO CHANGE TERMS OF
AWARDS. Without limiting the Committee's authority under other provisions of
this Plan (including Sections 7 and 10), but subject to any express limitations
of this Plan (including under Sections 7 and 10), the Committee shall have the
authority to accelerate the exercisability or vesting of an Award, to extend the
term or waive early termination provisions of an Award (subject to the maximum
ten-year term under Section 4(b)), to cancel, modify or waive any Employer's
rights with respect to an Award or restrictive conditions of an Award (including
forfeiture conditions), to modify, discontinue, suspend, or terminate any or all
outstanding Awards held by Employees, with or without adjusting any holding
period or other terms of the Award, in any case in such circumstances as the
Committee deems appropriate. The Committee may not, however, reduce by amendment
the exercise or purchase price of an outstanding Award.
<PAGE>
23
(e) RULE 16b-3 CONDITIONS; BIFURCATION OF PLAN. It is the intent of the
Employers that this Plan and Share-Based Awards hereunder satisfy and be
interpreted in a manner, that, in the case of Participants who are or may be
Insiders, satisfies any applicable requirements of Rule 16b-3, so that these
persons will be entitled to the benefits of Rule 16b-3 or other exemptive rules
under Section 16 under the Exchange Act and will not be subjected to avoidable
liability thereunder as to Awards intended to be entitled to the benefits of
Rule 16b-3. Notwithstanding anything to the contrary in this Plan, the
provisions of this Plan may at any time be bifurcated by the Board or the
Committee in any manner so that certain provisions of this Plan or any Award
Agreement intended (or required in order) to satisfy the applicable requirements
of Rule 16b-3 are only applicable to Insiders and to those Awards to Insiders
intended to satisfy the requirements of Rule 16b-3.
(f) DELEGATION AND RELIANCE. The Committee may delegate to the officers
or employees of any Employer the authority to execute and deliver those
instruments and documents, to do all acts and things, and to take all other
steps deemed necessary, advisable or convenient for the effective administration
of this Plan in accordance with its terms and purpose, except that the Committee
may not delegate any discretionary authority to grant or amend an Award or with
respect to substantive decisions or functions regarding this Plan or Awards as
these relate to the material terms of Performance-Based Awards to Executive
Officers or to the timing, eligibility, pricing, amount or other material terms
of Awards to Insiders. In making any determination or in taking or not taking
any action under this Plan, the Board and the Committee may obtain and may rely
upon the advice of experts, including professional advisors to the Company. No
trust manager, officer, employee or agent of any Employer shall be liable for
any such action or determination taken or made or omitted in good faith.
(g) EXCULPATION AND INDEMNITY. Neither the Employers nor any member of
the Board of Trust Managers or of the Committee, nor any other person
participating in any determination of any question under this Plan, or in the
interpretation, administration or application of this Plan, shall have any
liability to any person for any action taken or not taken in good faith under
this Plan or for the failure of an Award (or action in respect of an Award) to
satisfy Code requirements as to incentive stock options or to realize other
intended tax consequences, to qualify for exemption or relief under Rule 16b-3
or to comply with any other law, compliance with which is not required on the
part of an Employer.
SECTION 9. NON-EMPLOYEE TRUST MANAGER OPTIONS.
(a) PARTICIPATION. Awards under this Section 9 shall be
nondiscretionary, shall be made only to Non-Employee Trust Managers and shall be
evidenced by Award Agreements setting forth the terms and conditions in this
Section 9 and in Sections 6(a) and 6(b)(5).
<PAGE>
24
(b) INITIAL AWARD. Upon the consummation of the transactions
contemplated by the Company's Proxy Statement for a Special Meeting of
Shareholders to be held on March [10], 1997, there shall be granted
automatically to each Non-Employee Trust Manager (without action by the Board or
Committee) a Non-Qualified Share Option (the date of grant of which shall be the
closing date of such transactions) to purchase 10,000 Common Shares.
(c) ANNUAL OPTION GRANTS.
(1) AWARD UPON ELECTION OR APPOINTMENT. After approval of this Plan
by the shareholders of the Company, if any person who has not received an
initial Award pursuant to Section 9(b) and is not then an officer or employee of
an Employer shall become a Trust Manager of the Company, there shall be granted
automatically to such person (without any action by the Board or Committee) a
Non-Qualified Share Option (the date of grant of which shall be the date such
person takes office) to purchase 10,000 Common Shares.
(2) SUBSEQUENT ANNUAL AWARDS. Immediately following the annual
shareholders' meeting in each year during the term of this Plan there shall be
granted automatically (without any action by the Committee or the Board) to each
Non-Employee Trust Manager elected by the shareholders of the Company at such
meeting a Non-Qualified Share Option (the date of grant of which shall be the
date of such meeting) to purchase 5,000 Common Shares.
(3) MAXIMUM NUMBER OF SHARES. A Non-Employee Trust Manager shall
not receive more than one grant of Non-Qualified Share Options under this
Section 9 in any calendar year.
(d) EXERCISE PRICE. The exercise price per Common Share covered by each
Option granted under this Section 9 shall be 100% of the Fair Market Value of
the Common Shares on the date of grant. The exercise price of the Common Shares
issuable pursuant to any Option granted under this Section and any withholding
obligation under applicable tax laws shall be paid in cash or any one or
combination of (i) cash, (ii) a check payable to the order of the Company, and
(iii) the delivery of Common Shares, provided that any such shares used in
payment shall have been owned by the Participant at least six months prior to
the date of exercise and (iv) by notice and third party payment to the Company
prior to any issue of Common Shares and otherwise in accordance with all
applicable legal requirements in such manner as may be authorized by the
Committee for all Participants. In the case of a payment by the means described
in clause (iii) above, the Common Shares to be so delivered shall be determined
by reference to the Fair Market Value of the Common Shares on the date as of
which the payment is made.
(e) OPTION PERIOD AND EXERCISABILITY. Each Option granted under this
Section 9 and all rights or obligations thereunder shall expire ten years
<PAGE>
25
after the date of grant and shall be subject to earlier termination as provided
below. Each Option granted under this Section 9 shall become exercisable in
increments of 50% per year on each of the first two anniversaries of the date of
grant.
(f) TERMINATION OF TRUST MANAGERS. If a Non-Employee Trust Manager's
services as a member of the Board of Trust Managers terminate by reason of
death, disability (the inability of the Non-Employee Trust Manager to continue
to perform his or her duties of employment as determined by the Committee) or
retirement, an Option granted pursuant to this Section held by such Participant
shall immediately become and shall remain fully exercisable for one year after
the date of such termination or until the expiration of the stated term of such
Option, whichever first occurs. If a Non-Employee Trust Manager's services as a
member of the Board of Trust Managers terminate for any other reason, any
portion of an Option granted pursuant to this Section 9 which is not then
exercisable shall terminate and any portion of such Option which is then
exercisable may be exercised for three months after the date of such termination
or until the expiration of the stated term, whichever first occurs.
(g) ADJUSTMENTS. Options granted under this Section 9 shall be subject
to adjustment as provided in Section 7, but only to the extent that (i) such
adjustment and the Committee's actions in respect thereof satisfy applicable
criteria under Rule 16b-3, (ii) such adjustment in the case of a Change of
Control is effected pursuant to the terms of a reorganization agreement approved
by shareholders of the Company, and (iii) such adjustment is consistent with
adjustments to Options held by persons other than Executive Officers or Trust
Managers of the Company.
(h) ACCELERATION UPON A CHANGE OF CONTROL. Upon the occurrence of a
Change of Control, each Option granted under this Section 9 shall become
immediately exercisable in full. To the extent that any Option granted under
this Section 9 is not exercised prior to (i) a dissolution of the Company or
(ii) a merger or other event that the Company does not survive, and no provision
is (or consistent with the provisions of this Section 9 can be) made for the
assumption, conversion, substitution or exchange of the Option, the Option shall
terminate upon the occurrence of such event.
(i) LIMITATIONS ON AMENDMENTS. The provisions of this Section 9 with
respect to the amount, purchase price and timing of Options and the eligibility
requirements shall not be amended more than once every six months (other than as
may be necessary to conform to any applicable changes in the Code or the rules
thereunder), unless such amendment would be consistent with the provisions of
Rule 16b-3.
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26
SECTION 10. AMENDMENT AND TERMINATION OF PLAN.
The Board of Trust Managers may at any time amend, suspend or
discontinue this Plan, without shareholder approval, except to the extent that
such shareholder approval is required under applicable law. The Committee may at
any time alter or amend any or all Award Agreements under this Plan in any
manner that would be authorized for a new Award under this Plan including, but
not limited to, any manner set forth in Section 8(d) (subject to any applicable
limitations thereunder). Notwithstanding the foregoing, no such action by the
Board or the Committee shall, in any manner adverse to a Participant other than
as expressly permitted by the terms of an Award Agreement, affect any Award then
outstanding and evidenced by an Award Agreement without the consent in writing
of the Participant or a Beneficiary who has become entitled to an Award.
SECTION 11. MISCELLANEOUS
(a) UNFUNDED PLANS. This Plan shall be unfunded. None of the Company,
the Employers, the Board of Trust Managers or the Committee shall be required to
segregate any assets that may at any time be represented by Awards made pursuant
to this Plan. None of the Company, Employers, the Board of Trust Managers or the
Committee shall be deemed to be a trustee of any amounts to be paid or
securities to be issued under this Plan. To the extent that a Participant,
Beneficiary or other person acquires a right to receive payment pursuant to any
Award hereunder, such right shall be no greater than the right of any unsecured
general creditor of any Employer.
(b) RIGHTS OF EMPLOYEES.
(1) NO RIGHT TO AN AWARD. Status as an Employee shall not be
construed as a commitment that any one or more Awards will be made under this
Plan to an Employee or to Employees generally. Status as a Participant shall not
entitle the Participant to any additional Award.
(2) NO ASSURANCE OF EMPLOYMENT. Nothing contained in this Plan (or
in any other documents related to this Plan or to any Award) shall confer upon
any Employee or Participant any right to continue in the employ or other service
of any Employer or constitute any contract (of employment or otherwise) or limit
in any way the right of any Employer to change a person's compensation or other
benefits or to terminate the employment or service of a person with or without
cause, but, nothing contained in this Plan or any document related hereto shall
adversely affect any independent contractual right of such person without his or
her consent thereto.
(c) EFFECTIVE DATE; DURATION. This Plan has been adopted by the Board
of Trust Managers of the Company. This Plan shall become effective upon and
shall be subject to the approval of the shareholders of the Company. Any Award
granted
<PAGE>
27
prior to such shareholder approval of the Plan or the amendments to the Plan
approved by the Board of Trust Managers on March 11, 1998 shall be conditioned
on such approval and, if such approval is not obtained on or before the first
anniversary of the date the Plan or such amendments were adopted by the Board,
such awards shall be null and void. This Plan shall remain in effect until any
and all Awards under this Plan have been exercised, converted or terminated
under the terms of this Plan and applicable Award Agreements. Notwithstanding
the foregoing, no Award may be granted under this Plan after December 31, 2006.
Any Award granted prior to such date may be amended after such date in any
manner that would have been permitted prior to such date, except that no such
amendment shall increase the number of shares subject to, comprising or
referenced in such Award.
(d) COMPLIANCE WITH LAWS. This Plan, Award Agreements, and the grant,
exercise, conversion, operation and vesting of Awards, and the issuance and
delivery of Common Shares and/or other securities or property or the payment of
cash under this Plan, Awards or Award Agreements, are subject to compliance with
all applicable federal and state laws, rules and regulations (including, but not
limited to, state and federal insider trading, registration, reporting and other
securities laws and federal margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of counsel
for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions (and
the person acquiring such securities shall, if requested by the Company, provide
such evidence, assurance and representations to the Company as to compliance
with any thereof) as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements.
(e) APPLICABLE LAW. This Plan, Award Agreements and any related
documents and matters shall be governed in accordance with the laws of the State
of Maryland, except as to matters of Federal law.
(f) NON-EXCLUSIVITY OF PLAN. Nothing in this Plan shall limit or be
deemed to limit the authority of any Employer, the Board or the Committee to
grant awards or authorize any other compensation, with or without reference to
the Common Shares, under any other plan or authority.
(g) SEVERABILITY. In case any provision in this Plan shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions, or of such provision in any other
jurisdiction, shall not in any way be affected or impaired thereby.
(h) OWNERSHIP AND TRANSFER RESTRICTIONS. Common Shares acquired
pursuant to an Award shall be subject to the restrictions on ownership and
transfer set forth in the Company Charter, and any additional restrictions set
forth in the Award Agreement. The Committee, in its sole discretion, may impose
such additional restrictions on the ownership and transferability of such Common
Shares as it
<PAGE>
28
deems appropriate in order to preserve the qualification of the Company as a
real estate investment trust, within the meaning of Code Sections 856 through
860. The Committee may require a Participant to give the Company prompt notices
of any disposition of Common Shares acquired by exercise of an Incentive Stock
Option before the later to occur of (1) two years after the date of grant of
such Option or (2) one year after the transfer of such Common Shares to the
Participant. Any such restriction or notice requirement shall be set forth in
the Award Agreement and may be referred to on the Share certificate.
(i) RESTRICTIONS ON AWARDS. Notwithstanding anything herein to
the contrary, no Award shall be payable in Common Shares and no Option shall be
exercisable if, in the sole discretion of the Committee, such would be likely to
result in any of the following:
(1) The Participant's ownership of Common Shares being in violation
of the Share Ownership Limit or otherwise prohibited under the Company Charter;
or
(2) Income to the Company that could impair its status as a real
estate investment trust, within the meaning of Code Sections 856 through 860.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers duly authorized [as of the] 14 day of March, 1997
and as of March 11, 1998 with respect to the amendments to the Plan approved by
the Board of Trust Managers on such date.
GROVE REAL ESTATE ASSET TRUST
By: /s/ Joseph R. LaBrosse
------------------------------
Name: Joseph R. LaBrosse
Title: Secretary
GROVE OPERATING, L.P.
By: GROVE REAL ESTATE ASSET TRUST,
its general partner
By: /s/ Joseph R. LaBrosse
-----------------------------
Name: Joseph R. LaBrosse
Title: Secretary
<PAGE>
29
PROPERTY PARTNERSHIPS:
GROVE AVON ASSOCIATES LIMITED PARTNERSHIP
By: GR-AVON, INC., its general partner
By: /s/ Joseph R. LaBrosse
------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
AVONPLACE ASSOCIATES LIMITED PARTNERSHIP
By: AVON WATCH HILL, INC.,
its general partner
By: /s/ Joseph R. LaBrosse
------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
GR-ENFIELD ASSOCIATES LIMITED PARTNERSHIP
By: GEALP, INC., its general partner
By: /s/ Joseph R. LaBrosse
------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
GROVE LONGMEADOW ASSOCIATES
LIMITED PARTNERSHIP
By: LONGMEADOW WATCH HILL, INC.,
its general partner
By: /s/ Joseph R. LaBrosse
------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
<PAGE>
30
GR-PROPERTIES III LIMITED PARTNERSHIP
By: GROVE INVESTMENT GROUP, INC.,
its general partner
By: /s/ Joseph R. LaBrosse
----------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
GR-WESTWYND ASSOCIATES LIMITED PARTNERSHIP
By: GROVE CAYA CORPORATION,
its general partner
By: /s/ Joseph R. LaBrosse
---------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
GROVE OPPORTUNITY FUND II
LIMITED PARTNERSHIP
By: GOF II, INC., its general partner
By: /s/ Joseph R. LaBrosse
---------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
SHORELINE LONDON ASSOCIATES
LIMITED PARTNERSHIP
By: OCEAN REEF LONDON, INC.,
its general partner
By: /s/ Joseph R. LaBrosse
---------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
<PAGE>
31
NAUTILUS PROPERTIES LIMITED PARTNERSHIP
By: NPLP, INC., its general partner
By: /s/ Joseph R. LaBrosse
---------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
GROVE-WESTFIELD ASSOCIATES
LIMITED PARTNERSHIP
By: GROVE INVESTMENT GROUP, INC.,
its general partner
By: /s/ Joseph R. LaBrosse
---------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
GROVE-WEST SPRINGFIELD ASSOCIATES
LIMITED PARTNERSHIP
By: GROVE INVESTMENT GROUP, INC.,
its general partner
By: /s/ Joseph R. LaBrosse
---------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
FOXWOODBURG, L.P.
By: FWB, INC., its general partner
By: /s/ Joseph R. LaBrosse
---------------------------------
Name: Joseph R. LaBrosse
Title: Treasurer
<PAGE>
DETACH HERE
GROVE PROPERTY TRUST
The undersigned hereby appoints Damon D. Navarro and Joseph R. LaBrosse,
P and each of PROXY them, as proxies, with full power of substitution in
R each, to vote the shares of Grove Property Trust (the "Company") of the
O undersigned at the Annual Meeting of the Shareholders to be held on
X Tuesday, June 30, 1998 at 11:00 a.m. at The Hartford Club, 46 Prospect
Y Street, Hartford, Connecticut 06103 and any adjournment thereof as
specified on the reverse side.
--------------------
(continued on reverse side) SEE REVERSE SIDE
--------------------
<PAGE>
DETACH HERE
[x] Please mark
votes as in
this example.
This proxy is solicited by the Board of Trust Managers and may be revoked prior
to exercise. This proxy, when properly executed, will be voted as directed
herein by the undersigned shareholder. In the absence of direction, this proxy
will be voted FOR Items 1, 2, 3, 4, 5 and 6.
1. Election of two Trust Managers, each to serve until
the annual meeting of the Company's Shareholders to be
held in 2001.
Nominees: Edmund F. Navarro and
James F. Twaddell
FOR WITHHELD
[ ] [ ]
[ ]
--------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. The amendment of the
Company's Third Amended and [ ] [ ] [ ]
Restated Declaration of
Trust dated March 14, 1997,
as amended by Articles
Supplementary dated October
23, 1997 (as so amended,
the "Charter") to reduce the
maximum number of Trust
Managers which may serve on
the Board from 15 to 11.
FOR AGAINST ABSTAIN
3. The amendment of the
Charter to increase the [ ] [ ] [ ]
total number of Common
Shares and Preferred Shares
which the Company has
authority to issue to
34,000,000 and 1,000,000,
respectively.
FOR AGAINST ABSTAIN
4. The amendment of the
Charter to provide that [ ] [ ] [ ]
future amendments to the
Charter requiring
Shareholder approval may be
approved by the holders of
a majority of the Company's
outstanding shares entitled
to vote.
FOR AGAINST ABSTAIN
5. The amendment of the
Company's 1996 Share [ ] [ ] [ ]
Incentive Plan (the "1996
Plan") to increase the
number of Common Shares
available for issuance
thereunder from 900,000 to
1,400,000 and to permit
awards under the 1996 Plan
to be granted to
consultants and advisors
to the Company.
FOR AGAINST ABSTAIN
6. The ratification of
the appointment of Ernst & [ ] [ ] [ ]
Young LLP as the Company's
independent public
accountants for the year
ending December 31, 1998.
7. Other Business:
In their discretion, the proxies are authorized to vote
upon such other business as may properly be brought
before the meeting. The Board of Trust Managers at
present knows of no other formal business to be brought
before the meeting.
IF YOU PLAN TO
MARK HERE FOR [ ] ATTEND THE MEETING, [ ]
ADDRESS CHANGE AND INDICATE NUMBER OF
NOTE AT LEFT ATTENDEES IN THE BOX
Signature Date Signature Date
------------- ---------- ------------- --------
