-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RfqWV/FMKMn5m/mE3lsLeZKhpxwE1nPwE3tfA5EovCPT6t1inesDF18uCl/dTddX eoYreTD21tpKP47cceToTA== 0001029869-98-000925.txt : 19980716 0001029869-98-000925.hdr.sgml : 19980716 ACCESSION NUMBER: 0001029869-98-000925 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980715 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MGI PROPERTIES CENTRAL INDEX KEY: 0000068330 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046268740 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06833 FILM NUMBER: 98666431 BUSINESS ADDRESS: STREET 1: ONE WINTHROP SQUARE CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174226000 MAIL ADDRESS: STREET 1: ONE WINTHROP SQUARE CITY: BOSTON STATE: MA ZIP: 02110 FORMER COMPANY: FORMER CONFORMED NAME: MORTGAGE GROWTH INVESTORS DATE OF NAME CHANGE: 19880225 FORMER COMPANY: FORMER CONFORMED NAME: EASTERN SHOPPING CENTERS INC DATE OF NAME CHANGE: 19711121 10-Q 1 MGI PROPERTIES FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: May 31, 1998 Commission File Number: 1-6833 ------------ ------
MGI PROPERTIES - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-6268740 - --------------------------------------------- ------------------------------------ (State or other jurisdiction of incorporation (I.R.S. Employer Identification No.) or organization)
One Winthrop Square, Boston, Massachusetts 02110 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 422-6000 --------------------------- N/A - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Common shares outstanding as of July 15, 1998: 13,761,307 Page 1 of 14 pages Exhibit Index appears on Page 13 MGI PROPERTIES INDEX PART I: FINANCIAL INFORMATION Page No. -------- Item 1: Financial Statements Consolidated Balance Sheets 3 Consolidated Statements of Earnings 4 Consolidated Statements of Cash Flow 5 Consolidated Statements of Changes in Shareholders' Equity 6 Notes to Consolidated Financial Statements 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Exhibit 11: Computation of Earnings Per Share 12 PART II: OTHER INFORMATION Items 1 - 6 13 Signatures 14 - 2 - MGI PROPERTIES PART I -- FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------------------------------ May 31, 1998 November 30, 1997 (unaudited) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Real estate Land $ 83,976,000 $ 82,989,000 Buildings and improvements 320,366,000 288,095,000 Tenant improvements 12,831,000 10,859,000 - ------------------------------------------------------------------------------------------------------------------------------------ Total real estate, at cost 417,173,000 381,943,000 Accumulated depreciation and amortization (46,539,000) (47,158,000) - ------------------------------------------------------------------------------------------------------------------------------------ Net investments in real estate 370,634,000 334,785,000 Cash and cash equivalents 7,624,000 13,964,000 Accounts receivable 3,798,000 3,654,000 Other assets 9,416,000 9,641,000 - ------------------------------------------------------------------------------------------------------------------------------------ $391,472,000 $362,044,000 ==================================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage and loans payable $131,983,000 $113,171,000 Other liabilities 5,927,000 6,488,000 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 137,910,000 119,659,000 Shareholders' equity: Common shares -- $1 par value; 17,500,000 shares authorized; 13,758,281 issued (13,625,489 at November 30, 1997) 13,758,000 13,625,000 Additional paid-in capital 208,132,000 207,031,000 Undistributed net income 31,672,000 21,729,000 - ------------------------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 253,562,000 242,385,000 - ------------------------------------------------------------------------------------------------------------------------------------ $391,472,000 $362,044,000 ====================================================================================================================================
See accompanying notes to consolidated financial statements. - 3 - MGI PROPERTIES CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
- ----------------------------------------------------------------------------------------------------------- Three Months Ended ------------------ May 31, 1998 May 31, 1997 - ----------------------------------------------------------------------------------------------------------- INCOME Rental $17,447,000 $15,376,000 Interest 137,000 198,000 - ----------------------------------------------------------------------------------------------------------- Total income 17,584,000 15,574,000 - ----------------------------------------------------------------------------------------------------------- EXPENSES Property operating expenses 4,000,000 3,807,000 Real estate taxes 2,054,000 1,853,000 Depreciation and amortization 2,902,000 2,587,000 Interest 2,644,000 2,273,000 General and administrative 859,000 790,000 - ----------------------------------------------------------------------------------------------------------- Total expenses 12,459,000 11,310,000 - ----------------------------------------------------------------------------------------------------------- Income before net gains 5,125,000 4,264,000 Net gains 1,950,000 -- - ----------------------------------------------------------------------------------------------------------- Income before extraordinary item 7,075,000 4,264,000 Extraordinary item - prepayment of debt -- -- =========================================================================================================== Net income $7,075,000 $4,264,000 PER SHARE DATA Basic earnings per share $0.51 $0.31 =========================================================================================================== Diluted earnings per share $0.50 $0.31 =========================================================================================================== Weighted average shares outstanding 13,756,217 13,598,472 =========================================================================================================== - --------------------------------------------------------------------------------------------------------- Six Months Ended ---------------- May 31, 1998 May 31, 1997 - --------------------------------------------------------------------------------------------------------- INCOME Rental $33,725,000 $30,258,000 Interest 347,000 404,000 - --------------------------------------------------------------------------------------------------------- Total income 34,072,000 30,662,000 - --------------------------------------------------------------------------------------------------------- EXPENSES Property operating expenses 7,926,000 7,471,000 Real estate taxes 3,992,000 3,672,000 Depreciation and amortization 5,568,000 5,139,000 Interest 4,993,000 4,896,000 General and administrative 1,715,000 1,565,000 - --------------------------------------------------------------------------------------------------------- Total expenses 24,194,000 22,743,000 - --------------------------------------------------------------------------------------------------------- Income before net gains 9,878,000 7,919,000 Net gains 8,025,000 600,000 - --------------------------------------------------------------------------------------------------------- Income before extraordinary item 17,903,000 8,519,000 Extraordinary item - prepayment of debt -- (306,000) ========================================================================================================= Net income $17,903,000 $8,213,000 PER SHARE DATA Basic earnings per share $1.31 $0.63 ========================================================================================================= Diluted earnings per share $1.28 $0.62 ========================================================================================================= Weighted average shares outstanding 13,711,816 12,964,645 =========================================================================================================
See accompanying notes to consolidated financial statements. - 4 - MGI PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited)
- ------------------------------------------------------------------------------------------------------------------ Six Months Ended ---------------------------------------------- May 31, 1998 May 31, 1997 - ------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $17,903,000 $ 8,213,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,568,000 5,139,000 Net gains (8,025,000) (600,000) Extraordinary item -- 306,000 Other (1,083,000) 956,000 - ------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 14,363,000 14,014,000 - ------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of real estate (57,127,000) (25,664,000) Additions to real estate (3,957,000) (3,016,000) Deferred tenant charges (1,118,000) (901,000) Net proceeds from sales of real estate interests 17,979,000 704,000 Other 877,000 376,000 - ------------------------------------------------------------------------------------------------------------------ Net cash used in investing activities (43,346,000) (28,501,000) - ------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Additions to mortgage and loans payable, net 46,550,000 15,500,000 Repayment of mortgage and loans payable (16,932,000) (41,711,000) Mortgage prepayment penalty -- (306,000) Cash distributions (7,960,000) (6,801,000) Proceeds from issuance of common shares 985,000 41,266,000 - ------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 22,643,000 7,948,000 - ------------------------------------------------------------------------------------------------------------------ Net decrease in cash and short-term investments (6,340,000) (6,539,000) - ------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS Beginning of period 13,964,000 15,140,000 - ------------------------------------------------------------------------------------------------------------------ End of period $ 7,624,000 $ 8,601,000 ==================================================================================================================
See accompanying notes to consolidated financial statements. - 5 - MGI PROPERTIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)
- -------------------------------------------------------------------------------------------------------------- Additional Common Paid-In Undistributed Shares Capital Net Income - -------------------------------------------------------------------------------------------------------------- Balance at November 30, 1997 $13,625,000 $207,031,000 $21,729,000 Net income -- -- 17,903,000 Distributions -- -- (7,960,000) Options exercised and other 133,000 1,101,000 -- - -------------------------------------------------------------------------------------------------------------- Balance at May 31, 1998 $13,758,000 $208,132,000 $31,672,000 ==============================================================================================================
See accompanying notes to consolidated financial statements. - 6 - MGI PROPERTIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1: The results of the interim period are not necessarily indicative of results to be expected for the entire fiscal year. The figures contained in this interim report are unaudited and may be subject to year-end adjustments. Certain prior year amounts have been reclassified to conform with the current year presentation. In the opinion of management, all adjustments necessary for a fair presentation of financial position and results of operations have been included and such adjustments include only the normal accruals. Note 2: On June 18, 1998, the Board of Trustees declared a cash dividend of $.31 per common share payable on July 10, 1998 to shareholders of record on July 1, 1998. This dividend payment will aggregate $4.3 million. Note 3: Cash paid for interest amounted to $2.6 million and $2.3 million for the three-month periods ended May 31, 1998 and May 31, 1997, respectively. Note 4: At May 31, 1998, the Trust had entered into signed agreements for the sale of two properties having a net carrying value of $2.2 million. In addition, the Trust has initiated a marketing program for the sale of a Somerset, New Jersey office building with a net carrying value of $14.1 million at May 31, 1998. Although the sales are subject to the satisfactory completion of certain terms and conditions, including due diligence by the potential purchasers, the Trust had deemed these three properties held for sale at May 31, 1998 and had ceased depreciating these properties. Subsequent to the end of the quarter, the Trust completed the sale of one of the properties deemed held for sale, a North Carolina office property for $.9 million. In light of the uncertainties inherent in real estate transactions, there can be no assurance that the sale of the remaining two properties deemed held for sale will be successfully completed. Note 5: At May 31, 1998, options to purchase an aggregate of 1,070,225 common shares at exercise prices ranging from $7.375 to $24.75 per share were outstanding under MGI's stock option plans for key employees and trustees. All options outstanding at May 31, 1998 expire by April 2008. Note 6: Diluted earnings per share amounts are computed based on the weighted average number of shares actually outstanding plus the shares that would be outstanding assuming the exercise of dilutive stock options, all of which are considered to be common stock equivalents. The number of shares that would be issued from the exercise of stock options has been reduced by the number of shares that could have been purchased from the proceeds at the average market price of the company's stock. Refer to Part I - Exhibit 11 - Computation of Earnings Per Share (page 12). Note 7: MGI intends to quality for the year ended November 30, 1998 as a real estate investment trust ("REIT") under the provisions of Sections 856-860 of the Internal Revenue Code of 1986, as amended. Accordingly, no provision has been made for Federal income taxes. - 7 - MGI PROPERTIES PART I, ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview - -------- MGI is a self-administered equity REIT that owns and operates a diversified portfolio of income producing real estate consisting of 67 commercial properties and three multi-family residential properties. The commercial portfolio consists of 5.7 million square feet, 88% of which is comprised of office, office/r&d and industrial properties. The multi-family properties consist of three residential communities aggregating 959 units. At May 31, 1998, the commercial and residential properties were 96.9% and 94.0% leased, respectively. Since 1992, the Trust has focused on the commercial segment of the real estate market, specifically industrial and office properties located in New England. At May 31, 1998, 66%, based upon cost, of MGI's real estate assets were located in New England. During fiscal 1997, the Trust began the internalization of the property management function for its New England properties. As of May 31, 1998, the Trust had 3.7 million square feet of space under management. On June 18, 1998, the Trust announced that the Board of Trustees would undertake a review of strategic alternatives available to the Trust to maximize shareholder value, including a possible liquidation of the Trust's properties. There can be no assurance with respect to the results that may or may not be accomplished by the Board's strategic review. In the event of a liquidation of the Trust's properties, there can be no assurance of the net realizable value thereof. Liquidity and Capital Resources - ------------------------------- Shareholders' equity at May 31, 1998 was $253.6 million, compared to $242.4 million at November 30, 1997. The increase primarily reflects the excess of net income over distributions paid. At May 31, 1998, financial liquidity was provided by $7.6 million in cash and cash equivalents and by an unused line of credit aggregating $40.0 million. Through the first two quarters of fiscal 1998, the Trust has acquired 12 properties totaling 740,000 square feet for an aggregate price of $57.1 million. The properties were 99% leased as of May 31, 1998. All of the properties are located in New England and include seven office properties totaling 458,300 square feet, four office/research and development properties totaling 242,700 and an industrial building of 39,000 square feet. Additionally, the Trust sold five properties for an aggregate sales price of $28.8 million, of which $10.8 million was provided in the form of the assumption of mortgage loans secured by two of the sold properties. Proceeds from these five sales have been reinvested in property acquisitions through tax-deferred like kind exchanges. After the close of the quarter, the Trust completed the sale of a 16,300 square-foot North Carolina office property for $.9 million. Mortgage and other loans payable totaled $132.0 million at May 31, 1998, a net increase of $18.8 million, when compared to the $113.2 million outstanding at November 30, 1997. During the second quarter of fiscal 1998, MGI entered into a $75 million unsecured credit facility which replaced two secured lines of credit that totaled $45 million. The Trust currently has $35.0 million outstanding under the line of credit whereas at November 30, 1997, there was $15.5 million outstanding under the then existing lines. In addition, the Trust closed on an $11.6 million mortgage loan secured by a Michigan apartment complex and loans totaling $10.8 million were assumed by the purchaser in conjunction with the sale of properties. The balance of the change represents scheduled principal payments. Scheduled loan - 8 - MGI PROPERTIES PART I, ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) principal payments due within 12 months of May 31, 1998 total $3.0 million. MGI believes it will continue to be able to extend or refinance maturing mortgage loans upon satisfactory terms. Cash requirements during the balance of fiscal 1998 include distributions to shareholders, capital and tenant improvements and other leasing expenditures required to maintain MGI's occupancy levels and other investment undertakings. Principal sources of funds in the future are expected to be from property operations, lines of credit, mortgaging or refinancing of existing mortgages on properties and MGI's portfolio of investment securities. Other potential sources of funds include the proceeds of public or private offerings of additional equity or debt securities of the Trust of the sale of real estate investments. The cost of new borrowings or issuances of the Trust's equity securities will be measured against the anticipated returns of investments to be acquired with such funds. The Trust presently anticipates that primarily cash, short-term investments and debt will finance the purchase of additional properties. MGI believes the combination of available cash and short-term investment securities, the value of MGI's unencumbered properties and other resources available to it are sufficient to meet its short and long-term liquidity requirements. Results of Operations - --------------------- Net income for the fiscal quarter ended May 31, 1998, was $7.1 million, or $.51 per share (basic), as compared to $4.3 million, or $.31 per share (basic), in the corresponding quarter of 1997. Included in the 1998 second quarter net income was $2.0 million of gain recognized from the sale of an industrial building located in South Carolina. Income before net gain and extraordinary item was $5.1 million and $4.3 million for the quarters ended May 31, 1998 and May 31, 1997, respectively. Net income for the six months ended May 31, 1998, was $17.9 million, or $1.31 per share (basic), as compared to $8.2 million, or $.63 per share (basic), a year ago. Income before net gain and extraordinary item was $9.9 million and $7.9 million for the six months ended May 31, 1998 and May 31, 1997, respectively. Included in 1998 year-to-date net income were net gains of $8.0 million from the sale of five properties. Included in the 1997 year-to-date net income was a net gain of $.6 million which was partially offset by an extraordinary loss of $0.3 million incurred in connection with a loan refinancing prepayment fee. Funds from operations ("FFO") totaled $8.0 million in the second quarter of fiscal 1998, compared to $6.8 million in the corresponding quarter of 1997. Funds from operations for the six months ended May 31, 1998 and 1997 were $15.3 million and $13.0 million, respectively. MGI calculates FFO in conformity with the NAREIT definition which is net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. MGI believes FFO is an appropriate supplemental measure of operating performance. - 9 - MGI PROPERTIES PART I, ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) The following is a reconciliation of net income to FFO:
Three Months Ended Six Months Ended ------------------ ---------------- May 31, 1998 May 31, 1997 May 31, 1998 May 31, 1997 ------------ ------------ ------------ ------------ Net Income $7,075,000 $4,264,000 $17,903,000 $ 8,213,000 Less net gain and extraordinary item (1,950,000) -- (8,025,000) (294,000) Plus building depreciation 2,249,000 2,051,000 4,285,000 4,092,000 Plus tenant improvement and commission amortization 612,000 506,000 1,200,000 1,003,000 ---------- ---------- ----------- ----------- FFO $7,986,000 $6,821,000 $15,363,000 $13,014,000 ========== ========== =========== ===========
The change in FFO, compared to the corresponding periods in 1997, is attributable to the same factors that affected income before net gain and extraordinary item in such periods, with the exception of depreciation and amortization expense. In comparing the second quarter of fiscal 1998 to that of the previous year, the approximate $.9 million increase in net income before net gain and extraordinary item resulted principally from a $1.7 million increase in property operating income which was offset by increases in interest expense and depreciation and amortization of $0.4 million and $0.3 million, respectively. The increase in interest expense is due to the higher average balance of debt outstanding in 1998. Property operating income is defined as rental and other income less property operating expenses and real estate taxes. The change in property operating income reflects the additional income of $2.0 million from the acquisition of properties, a 10.4%, or $0.9 million, increase in income from "same store" properties owned throughout the second quarters of both fiscal 1998 and 1997, offset, in part, by the income effect of $1.2 million due to the sale of properties. With respect to the comparable properties, the increase in property operating income is primarily due to increased revenues, particularly in the office and office/research & development properties, reflecting the adjustment to market rents as leases rollover.
Change in Property Operating Income for Quarter Ended May 31, 1998 versus May 31, 1997 - -------------------------------------------------------------------------------------- Properties Held 1998 and 1997 1998 and 1997 Both Fiscal Years Acquisitions Sales Net Change ----------------- ------------ ----- ---------- Industrial $100,000 $ 879,000 $ (540,000) $ 439,000 Office 400,000 766,000 (169,000) 997,000 Office R&D 276,000 340,000 -- 616,000 Apartment 24,000 -- (336,000) (312,000) Retail 20,000 -- (124,000) (104,000) Land and Partnership 40,000 -- -- 40,000 -------- ---------- ------------ ----------- $860,000 $1,985,000 $(1,169,000) $1,676,000 ======== ========== ============ ===========
- 10 - MGI PROPERTIES PART I, ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) For the six months ended May 31, 1998 property operating income from properties held in both fiscal years had increased by $1.3 million, approximately 8.1%, when compared to the comparable 1997 period. While the increase in income was mostly driven by increased rental revenue, the office properties experienced a 5.5% drop in operating expenses due to both lower utility expense and lower management costs on those properties managed by the Trust. Base rents on commercial leases renewed or released in the first two quarters of 1998 are expected to increase approximately 28%, which should generate an estimated $0.4 million of additional rental income during the second half of fiscal 1998 as such new leases become effective. Scheduled lease expirations and completed leasing (in square feet) for the portfolio as a whole are as follows at May 31, 1998:
Scheduled Expirations ------------------------------------ Property Percentage 1998 Remaining Scheduled Type Leased Leasing 1998 1999 ---- ------ ------- --------- --------- Industrial 96.9% 240,100 58,600 284,100 Office 96.6% 163,400 75,500 163,200 Office/R&D 97.8% 124,300 93,100 130,500 Retail 95.9% 104,100 3,000 21,300 ----- ------- ------- ------- Total 96.9% 631,900 230,200 599,100 ===== ======= ======= =======
The remaining fiscal 1998 scheduled lease expirations represent 4% of MGI's total commercial portfolio. Scheduled expirations for New England properties total 188,100 and 529,600 square feet, including 129,400 and 507,300 square feet for Massachusetts properties for the balance of 1998 and in 1999, respectively. At this time, the Trust's scheduled expirations for the year 2000 total 1,062,066 square feet, with 956,938 square feet related to New England properties. Existing rent levels relative to most New England space coming up for renewal appear to be generally below prevailing market rents. Forward Looking Statements - -------------------------- Statements made or incorporated in this Report may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are dependent on a number of factors which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Such factors include, among other things, the risks of future action or inaction by the Trustees relative to a possible liquidation of the Trust's properties (including the possibility of litigation pertaining thereto), maintaining or improving the current occupancy and rent levels at the acquisition and other properties, as well as those set forth in Risk Factors (Item 1) and Management's Discussion and Analysis of Financial Condition and Results of Operations in MGI's Form 10-K for the year ended November 30, 1997. - 11 - MGI PROPERTIES PART I - EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE
- ----------------------------------------------------------------------------------------------------------- Three Months Ended May 31, -------------------------- 1998 1997 - ----------------------------------------------------------------------------------------------------------- PRIMARY Net income $ 7,075,000 $ 4,264,000 =========================================================================================================== Weighted average number of shares outstanding during the period 13,756,217 13,598,472 =========================================================================================================== Primary earnings per share $0.51 $0.31 =========================================================================================================== ASSUMING FULL DILUTION Net income $ 7,075,000 $ 4,264,000 =========================================================================================================== Weighted average number of shares outstanding during the period 14,059,877 13,883,488 =========================================================================================================== Earnings per share assuming full dilution $0.50 $0.31 =========================================================================================================== - --------------------------------------------------------------------------------------------------------- Six Months Ended May 31, ------------------------ 1998 1997 - --------------------------------------------------------------------------------------------------------- PRIMARY Net income $17,903,000 $ 8,213,000 ========================================================================================================= Weighted average number of shares outstanding during the period 13,711,816 12,964,645 ========================================================================================================= Primary earnings per share $1.31 $0.63 ========================================================================================================= ASSUMING FULL DILUTION Net income $17,903,000 $ 8,213,000 ========================================================================================================= Weighted average number of shares outstanding during the period 14,019,953 13,258,738 ========================================================================================================= Earnings per share assuming full dilution $1.28 $0.62 =========================================================================================================
- 12 - MGI PROPERTIES PART II - OTHER INFORMATION Item 1: Legal Proceedings: Not applicable. Item 2: Changes in Securities and Use of Proceeds: Not applicable. Item 3: Defaults upon Senior Securities: Not applicable. Item 4: Submission of Matters to a Vote of Security Holders: The following was submitted to a vote of shareholders at the March 26, 1998 Annual Meeting of Shareholders: (a) The election of three Trustees to serve for a term of three years expiring on the date of the Trust's Annual Meeting of Shareholders in 2001. The vote on this was George S. Bissell - 12,239,382 affirmative and 93,822 withheld; W. Pearce Coues - 12,249,239 affirmative and 83,965 withheld; and, Robert M. Melzer - 12,237,990 affirmative and 95,214 withheld. Item 5: Other Information: Not applicable. Item 6: Exhibits and Reports on Form 8-K: a) Exhibits: Part I - Exhibit 11 -- Computation of Earnings Per Share (see page 12). Exhibit 99 -- Form of Indemnity Agreement b) Reports on Form 8-K: Dated June 18, 1998. - 13 - MGI PROPERTIES SIGNATURES Pursuant to the requirements to the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: July 15, 1998 /s/ Phillip C. Vitali ------------- --------------------- Phillip C. Vitali Executive Vice President and Treasurer (Chief Financial Officer) Date: July 15, 1998 /s/ David P. Morency ------------- -------------------- David P. Morency Controller (Principal Accounting Officer) -14- EX-99 2 INDEMNITY AGTEEMENT INDEMNITY AGREEMENT AGREEMENT, as of June 18, 1998 (the "Agreement"), between MGI Properties, a Massachusetts trust (the "Trust") and __________ (the "Indemnitee"). WHEREAS, it is essential to the Trust to retain and attract as trustees and executive officers the most capable persons available; WHEREAS, Indemnitee has agreed to serve as a trustee or executive officer of the Trust; WHEREAS, both the Trust and Indemnitee recognize the increased risk of litigation and other claims being asserted against trustees and executive officers of public companies in today's environment; WHEREAS, the Bylaws (the "Bylaws") and Declaration of Trust (the "Declaration of Trust") of the Trust require the Trust to indemnify and advance expenses to its trustees and certain executive officers to the fullest extent provided by law, and the Indemnitee has agreed to serve (or continue to serve) as a trustee (or executive officer) of the Trust in part in reliance on such provisions in the Bylaws and Declaration of Trust; and WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Trust in an effective manner and Indemnitee's reliance on the foregoing provisions in the Bylaws and Declaration of Trust, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such provisions in the Bylaws and Declaration of Trust will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such provisions in the Bylaws or Declaration of Trust or any change in the composition of the Trust's Board of Trustees or acquisition transaction relating to the Trust), the Trust wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent permitted by law and as set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and of Indemnitee agreeing to serve as a trustee or executive officer of the Trust and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions: (a) Change in Control: shall be deemed to have occurred upon any of the following events: (i) The acquisition in one or more transactions by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty percent (20%) or more of the combined voting power of the Trust's then outstanding voting securities (the "Voting Securities.), provided, however, that for purposes of this Section l(a)(i), the Voting Securities acquired directly from the Trust by any Person shall be excluded from the determination of such Person's Beneficial Ownership of voting securities (but such Voting Securities shall be included in the calculation of the total number of Voting Securities then outstanding); or (ii) The individuals who, as of June 18, 1998, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Trust's shareholders, of any new trustee was approved by a vote of at least two-thirds of the Incumbent Board, such new trustee shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; or (iii) Approval by shareholders of the Trust of (A) a merger or consolidation involving the Trust if the shareholders of the Trust immediately before such merger or consolidation do not own, directly or indirectly immediately following such merger or consolidation, more than seventy-five percent (75%) of the combined voting power of the outstanding voting securities of the entity resulting from such merger or consolidation in substantially the same proportion as their ownership of the Voting Securities immediately before such merger or consolidation or (B) a complete liquidation or dissolution of the Trust or an agreement for the sale or other disposition of all or substantially all of the assets of the Trust. -2- (iv) Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because twenty percent (20%) or more of the then outstanding Voting Securities is acquired by (i) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the Trust or any of its subsidiaries or (ii) any entity which, immediately prior to such acquisition, is owned directly or indirectly by the shareholders of the Trust in the same proportion as their ownership of stock in the Trust immediately prior to such acquisition. Nor shall a Change in Control be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the subsequent acquisition of Voting Securities by the Trust which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Trust, and after such share acquisition by the Trust, the Subject Person becomes the Beneficial of an), additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (b) Claim: any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether commenced or conducted by the Trust or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or other. (c) Expenses: consist of attorneys' fees and all other costs, charges and expenses paid or incurred in connection with investigating, defending, settling, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in any Claim relating to any Indemnifiable Event. -3- (d) Indemnifiable Event: any event or occurrence related to the fact that Indemnitee is, was or has agreed to become a trustee, officer, employee, agent or fiduciary of the Trust, or is or was serving or has agreed to serve in any capacity, at the request of the Trust, in any other corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Indemnitee in any such capacity. (e) Potential Change in Control: shall be deemed to have occurred if (i) the Trust enters into an agreement or arrangement, the consummation of which would result in the occurrence of a Change in Control; (ii) any person (including the Trust) publicly announces an intention to take or to begins taking actions which if completed would constitute a Change in Control; or (iii) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (f) Voting Securities: any securities of the Trust which vote generally in the election of trustees. 2. Indemnification: Expenses: Procedure: (a) Basic Indemnification Agreement. In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the Trust shall indemnify Indemnitee who has acted in good faith (without regard to the negligence or other fault of the Indemnitee) to the fullest extent permitted by applicable law, as soon as practicable but in no event later than thirty days after written demand is presented to the Trust, against any and all Expenses, judgments, fines, penalties, excise taxes and amounts paid or to be paid in settlement (if such settlement is approved in advance by the Trust, which approval shall not be unreasonably withheld) (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties, excise taxes or amounts paid or to be paid in settlement) of such Claim. If Indemnitee makes a request to be -4- indemnified under this Agreement, the Board of Trustees (acting by a quorum consisting of trustees who are not parties to the Claim with respect to the Indemnifiable Event or, if such a quorum is not obtainable, acting upon an opinion in writing of independent legal counsel ("Board Action")) shall, as soon as practicable but in no event later than thirty days after such request, authorize such indemnification. Notwithstanding anything in the Bylaws or this Agreement to the contrary, following a Change in Control, Indemnitee shall, unless prohibited by law, be entitled to indemnification pursuant to this Agreement in connection with any Claim made hereunder. (b) Advancement of Expenses. Notwithstanding anything in the Bylaws or this Agreement to the contrary, if so requested by Indemnitee, the Trust shall advance (within two business days of such request) any and all Expenses relating to a Claim to Indemnitee (an "Expense Advance"), upon the receipt of a written undertaking by or on behalf of Indemnitee to repay such Expense Advance if a judgment or other final adjudication adverse to Indemnitee establishes that Indemnitee, with respect to such Claim, is not eligible for indemnification. (c) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his right to be indemnified under this Agreement, give the Trust notice in writing as soon as practicable of any Claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Such notice shall contain the written affirmation of the Indemnitee that the standard of conduct necessary for indemnification hereunder has been satisfied. Notice to the Trust shall be directed to the Secretary of the Trust in the manner provided in Section 18 hereof. Indemnitee shall give the Trust such information and cooperation as it may reasonably require and as shall be within Indemnitee's power. A delay in giving notice under this Section 2(c) shall not invalidate the Indemnitee's right to indemnity under this Agreement unless such delay prejudices the defense of the claim or the availability to the Trust of insurance coverage for such claim. -5- (d) Selection of Counsel. In the event the Trust shall be obligated under Section 2(b) hereof to pay the Expenses of any proceeding against Indemnitee, the Trust, unless the Indemnitee determines that a conflict of interest exists between the Indemnitee and the Trust with respect to a particular Claim, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Trust, the Trust will be not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ his own separate counsel in any such proceeding in addition to or in place of any counsel retained by the Trust on behalf of Indemnitee at Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Trust, (B) Indemnitee shall have concluded that there may be a conflict of interest between the Trust and Indemnitee in the conduct of any such defense or (C) the Trust shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Trust. (e) Litigation Concerning Right to Indemnification. If there has been no Board Action or Arbitration (as defined in Section 3), or if Board Action determines that Indemnitee would not be permitted to be indemnified, in any respect, in whole or in part, in accordance with Section 2(a) of this Agreement, Indemnitee shall have the right to commence litigation in the court which is hearing the action or proceeding relating to the Claim for which indemnification is sought or in any court in the Commonwealth of Massachusetts having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any Board Action or any aspect thereof, and the Trust hereby consents to service of process and to appear in any such proceeding. Notwithstanding anything in the Declaration of Trust, the Bylaws or this Agreement -6- to the contrary, if Indemnitee has commenced legal proceedings in a court of competent jurisdiction or Arbitration to secure a determination that Indemnitee should be indemnified under this Agreement, the Declaration of Trust, the Bylaws or applicable law, any Board Action that Indemnitee would not be permitted to be indemnified in accordance with Section 2(a) of this Agreement shall not be binding in the event that such legal proceedings are finally adjudicated. Any Board Action not followed by such litigation or Arbitration shall be conclusive and binding on the Trust and Indemnitee. 3. Change in Control. The Trust agrees that if there is a Change in Control, Indemnitee, by giving written notice to the Trust and the American Arbitration Association (the "Notice"), may require that any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration (the "Arbitration") in Boston, Massachusetts in accordance with the Rules of the American Arbitration Association (the "Rules") Arbitration shall be conducted by a panel of three arbitrators selected in accordance with the Rules within thirty days of delivery of the Notice. The decision of the panel shall be made as soon as practicable after the panel has been selected, and the parties agree to use their reasonable efforts to cause the panel to deliver its decision within ninety days of its selection. The Trust shall pay all fees and expenses of the Arbitration. The Arbitration shall be conclusive and binding on the Trust and Indemnitee and the Trust or Indemnitee may cause judgment upon award rendered by the arbitrators to be entered in any court having jurisdiction thereof. 4. Establishment of Trust. In the event of a Potential Change in Control or a Change in Control, the Trust shall, promptly upon written request by Indemnitee, create a trust (the "Trust Fund") for the benefit of Indemnitee and from time to time, upon written request of Indemnitee to the Trust, shall fund such Trust Fund in an amount, as set forth in such request, sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for and defending any Claim relating to an Indemnifiable Event, and any and all judgments, fines, penalties and settlement amounts of any and all Claims relating to an Indemnifiable Event from time to time actually paid or claimed, reasonably anticipated or proposed to be paid. The terms of the Trust Fund shall provide that upon a Change in Control (i) the Trust Fund shall not be revoked or the principal thereof invaded, without the written consent of Indemnitee; (ii) the trustee of the -7- Trust Fund shall advance, within two business days of a request by Indemnitee, any and all Expenses to Indemnitee, not advanced directly by the Trust to Indemnitee (and Indemnitee hereby agrees to reimburse the Trust under the circumstances under which Indemnitee would be required to reimburse the Trust under Section 2 (b) of this Agreement) (iii) the Trust Fund shall continue to be funded by the Trust in accordance with the funding obligation set forth above: (iv) the trustee of the Trust Fund shall promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise; and (v) all unexpended funds in such Trust Fund shall revert to the Trust upon a final determination by Board Action or Arbitration or a court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified under the terms of this Agreement. The trustee of the Trust Fund shall be an independent third party chosen by Indemnitee. Nothing in this Section 4 shall relieve the Trust of any of its obligations under this Agreement. 5. Indemnification for Additional Expenses. The Trust shall indemnify Indemnitee against any and all expenses (including attorneys' fees, subject to Section 19 hereof) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted by or action brought by or against Indemnitee for (i) indemnification or advance payment of Expenses by the Trust under law, this Agreement, or any other agreement or Bylaw of the Trust now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any trustees' and officers' liability insurance policies maintained by the Trust, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Trust for some or a portion of the Expenses, judgments, fines, penalties, excise taxes and amounts paid or to be paid in settlement of a Claim but not, however, for all of the total amount thereof, the Trust shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including, without limitation, dismissal without prejudice, Indemnitee shall be presumed to be entitled to indemnification against any and all Expenses, judgments, fines, penalties, excise taxes and amounts paid or to be paid in -8- settlement of such Claim in connection with any determination by Board Action, Arbitration or a court of competent jurisdiction that Indemnitee is not entitled to be indemnified hereunder and the burden of proof shall be on the Trust to establish that Indemnitee is not so entitled. 7. No Presumption. For purposes of this Agreement, the termination of any claim, action, suit or proceeding, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law or this Agreement. 8. Contribution. In the event that the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Trust, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Claim relating to an Indemnifiable Event, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such action by Board Action or Arbitration or by the court before which such action was brought in order to reflect (i) the relative benefits received by the Trust and Indemnitee as a result of the event (s) and/or transaction (s) giving cause to such action; and/or (ii) the relative fault of the Trust (and its other trustees, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s). Indemnitee's right to contribution under this Section 8 shall be determined in accordance with, pursuant to and in the same manner as, the provisions in Sections 2 and 3 hereof relating to Indemnitee's right to indemnification under this Agreement. 9. Notice to the Trust by Indemnitee. Indemnitee agrees to promptly notify the Trust in writing upon being served with or having actual knowledge of any citation summons, compliant, indictment or any other similar document relating to any action which may result in a claim of indemnification or contribution hereunder. 10. Non-exclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Declaration of Trust or Bylaws or applicable law, and nothing herein shall be deemed to diminish or otherwise restrict Indemnitee's right to indemnification under any such other provision. To the extent applicable law or the Declaration of Trust or the Bylaws of the Trust, as in effect on the date hereof or at any time in the future, permit greater -9- indemnification than as provided for in this Agreement, the parties hereto agree that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such law or provision of the Declaration of Trust or Bylaws and this Agreement shall be deemed amended without any further action by the Trust or Indemnitee to grant such greater benefits. Indemnitee may elect to have Indemnitee's rights hereunder interpreted on the basis of applicable law in affect at the time of execution of this Agreement, at the time of the occurrence of the Indemnifiable Event giving rise to a claim or at the time indemnification is sought. 11. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Trust or any affiliate of the Trust against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Trust or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern. 12. Amendments, Etc. Except as provided in Section 10 hereof, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the panics hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 13. Subrogation. In the event of payment under this Agreement, the Trust shall be subrogated to the extent of such payment to all of the rights of recovery with respect to such payment of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Trust effectively to bring suit to enforce such rights. 14. No Duplication of Payments. The Trust shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder. 15. Binding Effect, Etc. This Agreement shall be binding upon and inure to the benefit of and be enforceable against and by the parties hereto and their respective successors, assigns -10- (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Trust), spouses, heirs and personal and legal representatives. The Trust shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Trust, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Trust would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a trustee and/or officer of the Trust or of any other enterprise at the Trust's request. 16. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 17. Exceptions. Any other provision herein to the contrary notwithstanding, the Trust shall not be obligated pursuant to the terms of this Agreement to indemnify the Indemnitee in the following circumstances: (a) Excluded Acts. The Trust shall not be obligated to indemnify any Indemnitee who is a trustee for any acts or omissions or transactions of such person in such capacity from which a trustee may not be relieved of liability under the laws of the state in which the Trust is organized; or (b) Claims. The Trust shall not be obligated to indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) to the extent that Indemnitee has otherwise actually received payment, or payments have been made on behalf of Indemnitee, with respect to such expense or liability (under any insurance policy, provision of the Trust's Declaration of Trust or Bylaws, or otherwise) of amounts otherwise indemnifiable hereunder; or (c) Claims Under Section 16(b). The Trust shall not be obligated to indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the 1934 Act, or any similar successor statute. -11- 18. Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand or when mailed by certified registered mail, return receipt requested, with postage prepaid: A. If to Indemnitee, to: ------------------------- ------------------------- ------------------------- or to such other person or address which Indemnitee shall furnish to the Trust in writing pursuant to the above. B. If to the Trust, to: MGI Properties One Winthrop Square Boston, Massachusetts, 02110 or to such person or address as the Trust shall furnish to Indemnitee in writing pursuant to the above. 19. Attorneys' Fees. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys' fees, incurred by Indemnitee with respect to such action, unless as a part of such action, a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Trust under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys' fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee's counterclaims and cross-claims made in such action), unless as a part of such action the court determines that each of Indemnitee's material defenses to such action were made in bad faith or were frivolous. 20. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the state in which the Trust is organized, which laws are applicable to -12- contracts made and to be performed in such state without giving to the principles of conflicts of laws. 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute a single agreement. -13- IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of June 18, 1998. MGI PROPERTIES By: ----------------------------------- Name: Title: INDEMNITEE --------------------------------------- BY: -14- EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS NOV-30-1998 MAY-31-1998 7,624 000 3,798 000 000 9,416 417,173 (46,539) 391,472 5,927 131,983 13,758 000 000 239,804 391,472 17,447 17,584 000 9,815 000 000 2,644 5,125 000 5,125 000 000 000 7,075 .51 .50
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