1995 DIVIDEND INCREASE UNIT PLAN
OF
DUKE REALTY SERVICES LIMITED PARTNERSHIP
ARTICLE I
INTRODUCTION
1.1. PURPOSE. The 1995 Dividend Increase Unit Plan of Duke Realty Services
Limited Partnership (the "Plan") is designed to retain selected officers and key
employees of the Partnership and to encourage the growth of the Partnership and
its Affiliates.
1.2. EFFECTIVE DATE. The Effective Date of the Plan is October 1, 1995.
Provided, however, the Committee may, in its discretion, grant Units under the
Plan the terms of which provide that the effective date of the grant is on or
after January 1, 1995.
1.3. ADMINISTRATION. The Plan shall be administered by the Committee. The
Committee, from time to time, may adopt any rule or procedure it deems necessary
or desirable for the proper and efficient administration of the Plan, provided
it is consistent with the terms of the Plan. The decision of a majority of the
Committee members shall constitute the decision of the Committee. The
Committee's determinations and interpretations with respect to the Plan shall be
final and binding on all parties. Any notice or document required to be given
to or filed with the Committee will be properly given or filed if delivered or
mailed by certified mail, postage prepaid, to the Committee at 8888 Keystone
Crossing, Suite 1200, Indianapolis, Indiana 46240-2182.
1.4 DEFINITIONS. For purposes of this Plan, unless a different meaning is
clearly required by the context:
(a) "Affiliate" or "Affiliates" means (i) any general partner of the
Partnership, (ii) any entity which owns a majority of the ownership interests of
the Partnership, (iii) any entity that owns a majority of the ownership
interests of an entity described in clause (i) or (ii) or an Affiliate of any
such entity, or (iv) any Subsidiary.
(b) "Board of Directors" means the board of directors of Duke
Services, Inc.
(c) "Change in Control of the Company" means (i) any merger,
consolidation or similar transaction which involves the Company and in which
persons who are the shareholders of the Company immediately prior to such
transaction own, immediately after such transaction, shares of the surviving or
combined entity which possess voting rights equal to or less than fifty percent
(50%) of the voting rights of all shareholders of such entity, determined on a
fully diluted basis; (ii) any sale, lease, exchange, transfer or other
disposition of all or any substantial part of the consolidated assets of the
Company; (iii) any tender, exchange, sale or other disposition (other than
disposition of the stock of the Company or any Subsidiary in connection with
bankruptcy, insolvency, foreclosure, receivership or other similar
transactions) or purchases (other than purchases by the Company or any Company
sponsored employee benefit plan, or purchases by members of the board of
directors of the Company or any Subsidiary) of shares which represent more than
twenty-five percent (25%) of the voting power of the Company or any Subsidiary;
(iv) during any period of two (2) consecutive years, individuals who at the date
of the adoption of the Plan constitute the Company's board of directors cease
for any reason to constitute at least a majority thereof, unless the election of
each director at the beginning of such period has been approved by directors
representing at least a majority of the directors then in office who were
directors on the date of the adoption of the Plan; (v) a majority of the
Company's board of directors recommends the acceptance of or accept any
agreement, contract, offer or other arrangement providing for, or any series of
transactions resulting in, any of the transactions described above.
Notwithstanding the foregoing, a Change in Control of the Company (A) shall not
occur as a result of the issuance of stock by the Company in connection with any
public offering of its stock, or (B) be deemed to have occurred with respect to
any transaction unless such transaction has been approved or shares have been
tendered by a majority of the shareholders who are not Section 16 Grantees.
(d) "Code" means the Internal Revenue Code, as amended.
(e) "Committee" means the Executive Compensation Committee of the
board of directors of the Company.
(f) "Company" means Duke Realty Investments, Inc.
(g) "Effective Date" means October 1, 1995.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "For Cause" means (i) the willful and continued failure of a
Participant to perform his required duties as an officer or employee of the
Partnership or any Affiliate, (ii) any action by a Participant which involves
willful misfeasance or gross negligence, (iii) the requirement of or direction
by a federal or state regulatory agency which has jurisdiction over the
Partnership or any Affiliate to terminate the employment of the Participant,
(iv) the conviction of the Participant of the commission of any criminal offense
which involves dishonesty or breach of trust, or (v) any intentional breach by
the Participant of a material term, condition or covenant of any agreement
between the Participant and the Partnership or any Affiliate.
(j) "Participant" means an officer or key employee who is designated
to participate in the Plan as provided in Article II.
(k) "Partnership" means Duke Realty Services Limited Partnership.
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(l) "Permanent and Total Disability" means any disability that would
qualify as a disability under Code Section 22(e)(3).
(m) "Per Share Value" means the per share New York Stock Exchange
closing price for the Company's common stock on the date of determination.
(n) "Plan" means the dividend increase plan embodied herein, as
amended from time to time, known as the 1995 Dividend Increase Unit Plan of Duke
Services Limited Partnership.
(o) "Section 16 Grantee" means a person subject to potential
liability under Section 16(b) of the Exchange Act with respect to transactions
involving equity securities of the Company.
(p) "Subsidiary" or "Subsidiaries" means a corporation, partnership
or limited liability company, a majority of the outstanding voting stock,
general partnership interests or membership interest, as the case may be, of
which is owned or controlled directly or indirectly, by the Partnership, by the
Company or by one or more other Subsidiaries. For the purposes of this
definition, "voting stock" means stock having voting power for the election of
directors, or trustees, as the case may be, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
(r) "Unit" means a dividend increase unit granted under Section 3.1.
1.5. SHARES COVERED BY THE PLAN. The stock which may be issued under the
Plan in connection with the exercise of Units shall be shares of authorized
common stock of the Company and may be unissued shares or reacquired shares
(including shares purchased in the open market), or a combination of the two, as
the Committee may from time to time determine. Provided, however, subject to
the provisions of Section 5.2 and the provisions of this Section 1.5, the
maximum number of shares to be delivered upon the exercise of all Units granted
under the Plan shall not exceed One Hundred Thousand (100,000) shares. Shares
covered by the grant of a Unit that remains unexercised upon the expiration or
termination of the Unit may be made subject to further grants of Units.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
Participation in the Plan is limited to those officers and key employees of
the Partnership and its Affiliates who, from time to time, shall be designated
by the Committee. Committee members shall not be eligible to receive grants of
Units under this Plan while serving as Committee members. A
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designated employee will become a Participant in the Plan as of the later of the
Effective Date or the date specified by the Committee.
ARTICLE III
BENEFITS
3.1. GRANT OF UNITS. The Committee, in its sole discretion, may grant one
(1) or more Units to a Participant upon his entry into the Plan. The Committee,
in its sole discretion, may also grant additional Units to a Participant at any
time after the initial grant. Provided, however, notwithstanding any other Plan
provision, during any calendar year, no Participants shall be granted more than
twenty five thousand (25,000) Units.
3.2. EXERCISE OF UNITS. A Participant may exercise his Units subject to
the following requirements:
(a) VESTING OF UNITS: A Participant must be vested in a Unit in
order for that Unit to be exercised. For this purpose, the Committee will
specify the vesting schedule for each Unit it grants at the time of the grant.
Notwithstanding the foregoing, a Participant will, as of the date of a Change in
Control of the Company or his termination of employment due to Permanent and
Total Disability, retirement on or after attaining age sixty-five (65) or death,
become fully vested in all Units that have been granted to him.
(b) TIMING OF EXERCISE: A Unit must be exercised on or before the
tenth anniversary of the date on which it was granted. If not exercised on or
before that date, the Unit will expire and be forfeited.
(c) PRIOR EXERCISE OF STOCK OPTIONS. Units may be exercised only to
the extent that the same or a greater number of shares of the Company's common
stock have been acquired by the Participant through the exercise of a stock
option which was granted under the 1995 Key Employees' Stock Option Plan of Duke
Realty Investments, Inc. (the "Stock Option Plan") on the same date on which the
Units were granted. Such acquisition may have been prior to or simultaneous
with the exercise of such Units. For example, if a Participant was granted an
option under the Stock Option Plan to acquire five hundred (500) shares of the
Company's stock on the same date he was granted two hundred (200) Units under
the Plan, the Participant may not exercise the two hundred (200) Units granted
hereunder until he has acquired at least two hundred (200) shares of stock under
that stock option grant. Thus, if the Participant has acquired (or
simultaneously acquires with his exercise of the Units) one hundred (100) shares
under that stock option grant, he may at any time on or after the date of such
acquisition exercise up to one hundred (100) Units hereunder, as long as all the
other Plan conditions and limitations have been satisfied with respect to such
exercise, including the satisfaction by the Participant of the vesting
requirements applicable to the Units desired to be exercised. Shares of Company
stock acquired by the exercise of an option granted under the Stock Option Plan
on a date other than
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the date on which the Units were granted hereunder may not be used as a basis
for the exercise of such Units.
(d) PRIOR NOTICE OF EXERCISE. The Participant must notify the
Committee of his intent to exercise a Unit by completing an election form
authorized by the Committee and filing such form with the Committee at least ten
(10) business days prior to the requested exercise date.
(e) TERMINATION OF EMPLOYMENT. All rights to exercise a Unit shall
terminate ninety (90) days after the effective date of the Participant's
termination of employment with the Partnership and its Affiliates, but not later
than the date the Unit expires pursuant to its terms, unless such termination is
For Cause or is on account of the Permanent and Total Disability or death of the
Participant. Transfer of employment from the Partnership to an Affiliate, or
vice versa, shall not be deemed a termination of employment. The Committee
shall have the authority to determine in each case whether a leave of absence on
military or government service shall be deemed a termination of employment for
purposes of this subsection (e). However, if a Participant's employment
terminates due to Permanent and Total Disability or death, his right to exercise
his Units shall expire one (1) year after his termination of employment (but not
later than the date the Unit expires pursuant to its terms). During such
period, subject to the limitations of this Plan and the Unit grant, the
Participant, his guardian, attorney-in-fact or personal representative, as the
case may be, may exercise his Unit in full.
(f) FOR CAUSE TERMINATION. If a Participant's employment with the
Partnership and its Affiliates is terminated For Cause, no previously
unexercised Unit granted hereunder may be exercised. Rather, all unexercised
Units shall terminate effective on the date the Participant receives notice of
his termination For Cause.
(g) WITHHOLDING OF TAXES. Each Participant shall be solely
responsible for, and the Partnership will withhold from any amounts payable
under this Plan, all legally required federal, state, city and local taxes. The
Committee, in its discretion and subject to such rules as it may adopt, may
permit a Participant to satisfy, in whole or in part, any withholding tax
obligation which may arise in connection with his exercise of Units by having
the Partnership retain shares of stock which would otherwise be issued in
connection with the exercise of the Units or accept delivery from the
Participant of shares of Company stock which have a value, determined as of the
date of the delivery of such shares, equal to the amount of withholding tax to
be satisfied by that retention or delivery.
3.3. CALCULATION OF UNIT VALUE. Upon the exercise date, the Unit or Units
being exercised will be valued for all purposes under this Plan in accordance
with the following formula. First, the Per Share Value of a share of the
Company's common stock as of the effective date on which the Unit was granted
will be determined. Second, the quarterly cash dividend rate per share of the
Company's common stock most recently declared prior to the
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effective date of the grant will be determined and annualized (multiplied by
four). Third, that annualized cash dividend will be divided by the Per Share
Value on the effective date of the grant to set the grant date dividend yield.
Fourth, the quarterly cash dividend rate per share of the Company's common stock
which was most recently declared on or before the exercise date will be
determined and annualized (multiplied by four). Fifth, the annualized cash
dividend on the effective date of the grant (as determined under the second
step) will be subtracted from the annualized dividend on the exercise date (as
determined under the fourth step) to determine the increase in the annualized
cash dividend. Sixth, the amount of the increase (as determined under the fifth
step) will be divided by the grant date dividend yield (as determined under the
third step) to establish the Unit's value on the exercise date. For all
purposes of this Plan, if there is no Per Share Value for Company stock on the
date on which an event which requires the stock to be valued, the per share
value shall be the Per Share Value for Company stock on the trading date
immediately preceding the date on which the stock is required to be valued.
For example, if the Per Share Value of a share of Company stock on the
effective date of a Unit's grant was $30.00, the quarterly dividend rate on the
date of grant was $0.49 and the quarterly dividend rate on the date of exercise
was $0.55, then the Unit's value at exercise would be $3.67, determined under
the six steps in the preceding paragraph as follows:
(1) $30.00 [NYSE Closing Price on Date of Grant]
(2) $1.96 [$0.49 (Company's Quarterly Cash Dividend on Date of
Grant) x 4]
(3) 6.5333% [ (2) DIVIDED BY (1) ]
(4) $2.20 [$0.55 (Company's Quarterly Cash Dividend on Date of
Exercise) x 4]
(5) $0.24 [$2.20 - $1.96 = Increase in Annualized Cash Dividend]
(6) $3.67 [ (5) DIVIDED BY (3) ]
If the Participant had been granted one hundred (100) Units and he exercised all
of those Units, he would be entitled to receive whole shares of Company common
stock with a value of $367 based on the Per Share Value on the date of exercise.
(The number of shares to be distributed is described under Section 4.2.)
ARTICLE IV
DISTRIBUTIONS
4.1. TIME OF PAYMENT. The Partnership will pay to each Participant the
value of the Unit or Units, rounded to the nearest whole share of Company common
stock, with respect to which a proper and timely election has been made. Such
payment shall be made as soon as practicable following the exercise date.
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4.2. MANNER OF PAYMENT. Distribution of a Participant's benefit under
Section 4.1 will be made in a single lump sum in the form of whole shares of
Company common stock. The number of shares to be issued under this Section 4.2
will be based on the Per Share Value on the exercise date of the Units. For
example, if the Per Share Value on the date of exercise was $50.00 and the
payment amount determined under Section 3.3 (reduced by any tax withholdings
pursuant to Section 3.2(g)) was $367.00, the Participant would be entitled to
receive seven (7) shares of Company stock (367 DIVIDED BY 50 = 7.34). On the
other hand, if the payment amount determined under Section 3.3 (reduced by any
tax withholdings pursuant to Section 3.2(g)) was $380.00, the Participant would
be entitled to receive eight (8) shares of Company stock ($380 DIVIDED BY 50 =
7.60).
4.3. DISTRIBUTION ON CHANGE OF CONTROL. Notwithstanding any other Plan
provision to the contrary, each Participant will be entitled to receive, within
ninety (90) days of a Change in Control of the Company, a lump sum payment, in
cash, of the value of his Units determined under Section 3.3 as of the date of
the Change in Control of the Company. Provided, however no distribution under
the Plan shall be made to a Participant who is a Section 16 Grantee as a result
of a Change in Control of the Company until six (6) months from the date on
which the Units were granted to the Participant. This limitation shall not
apply if the Section 16 Grantee dies or incurs a mental or physical disability
which, in the opinion of the Committee, renders the Section 16 Grantee unable or
incompetent to carry out the job responsibilities which such Section 16 Grantee
held or the tasks to which such Section 16 Grantee was assigned at the time the
disability was incurred, and which is expected to be permanent or of an
indefinite duration.
ARTICLE V
MISCELLANEOUS
5.1. AMENDMENT OR TERMINATION. The Board of Directors or the Committee
may, at any time, without the approval of the stockholders of the Company
(except as otherwise required by applicable law, rule or regulations, or listing
requirements of any National Securities Exchange on which are listed any of the
Company's equity securities, including without limitation any shareholder
approval requirement of Rule 16b-3 or any successor safe harbor rule promulgated
under the Exchange Act), alter, amend, modify, suspend or discontinue the Plan
but may not, without the consent of the holder of a Unit, make any alteration
which would adversely affect a Unit previously granted under the Plan or,
without the approval of the stockholders of the Company, make any alteration
which would: (a) increase the aggregate number of shares which could be issued
pursuant to the exercise of Units under the Plan, except as provided in Section
5.2; (b) permit any Committee member to become eligible to receive grants of
Units under the Plan; (c) withdraw administration of the Plan from the Committee
or the Board of Directors; (d) extend the term of the Plan or the maximum period
during which any Unit may be exercised; (e) change the manner of calculating the
value of Units; or (f)
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change the class of individuals eligible for the grant of Units under the Plan.
5.2. CHANGES IN STOCK.
(a) SUBSTITUTION OF STOCK AND ASSUMPTION OF PLAN. In the event of
any change in the common stock of the Company through stock dividends, split-
ups, recapitalizations, reclassifications, conversions, or otherwise, or in the
event that other stock shall be converted into or substituted for the present
common stock of the Company as a result of any merger, consolidation,
reorganization or similar transaction which results in a Change in Control of
the Company, then the Committee may make appropriate adjustment or substitution
in the aggregate number, price, and kind of shares to be distributed under the
Plan and in the calculation of a Unit's value provided in Section 3.3. The
Committee's determination in this respect shall be final and conclusive.
Provided, however, that the Partnership shall not, and shall not permit its
Affiliates to, recommend, facilitate or agree or consent to a transaction or
series of transactions which would result in a Change of Control of the Company
unless and until the person or persons or entity or entities acquiring or
succeeding to the assets or capital stock of the Company or any of its
Affiliates as a result of such transaction or transactions agrees to be bound by
the terms of the Plan so far as its pertains to Units theretofore granted but
unexercised and agrees to assume and perform the obligations of the Partnership
hereunder.
(b) CONVERSION OF STOCK. In the event of a Change in Control of the
Company pursuant to which another person or entity acquires control of the
Company (such other person or entity being the "Successor"), the kind of shares
of common stock which shall be subject to the Plan and to each outstanding Unit,
shall, automatically, by virtue of such Change in Control of the Company, be
converted into and replaced by shares of common stock, or such other class of
securities having rights and preferences no less favorable than common stock of
the Successor, and the calculation of a Unit's value shall be correspondingly
adjusted, so that, by virtue of such Change in Control of the Company, each
Participant shall have the right to receive that number of shares of common
stock of the Successor which have a fair market value equal, as of the date of
such Change in Control of the Company, to the fair market value, as of the date
of such Change in Control of the Company, of the shares of common stock of the
Company to which the Units relate.
5.3. INFORMATION TO BE FURNISHED BY PARTICIPANTS. Participants, or any
other persons entitled to benefits under this Plan, must furnish to the
Committee such documents, evidence, data or other information as the Committee
considers necessary or desirable for the purpose of administering the Plan. The
benefits under the Plan for each Participant, and each other person who is
entitled to benefits hereunder, are to be provided on the condition that he
furnish full, true and complete data, evidence or other information, and that he
will promptly sign any document reasonably related to the administration of the
Plan requested by the Committee.
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5.4. EMPLOYMENT RIGHTS. The Plan does not constitute a contract of
employment and participation in the Plan will not give a Participant the right
to be rehired or retained in the employ of the Partnership, nor will
participation in the Plan give any Participant any right or claim to any benefit
under the Plan, unless such right or claim has specifically accrued under the
terms of the Plan.
5.5. EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person relying
thereon considers pertinent and reliable, and signed, made or presented by the
proper party or parties.
5.6. GENDER AND NUMBER. Where the context admits, words in the masculine
gender shall include the feminine gender, the plural shall include the singular
and the singular shall include the plural.
5.7. ACTION BY PARTNERSHIP. Any action required of or permitted by the
Partnership under the Plan shall be by resolution of the Board of Directors or
by a person or persons authorized by resolution of the Board of Directors.
5.8. CONTROLLING LAWS. Except to the extent superseded by laws of the
United States, the laws of Indiana shall be controlling in all matters relating
to the Plan.
5.9. MISTAKE OF FACT. Any mistake of fact or misstatement of fact shall be
corrected when it becomes known and proper adjustment made by reason thereof.
5.10. SEVERABILITY. In the event any provisions of the Plan shall be held
to be illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
endorsed as if such illegal or invalid provisions had never been contained in
the Plan.
5.11. EFFECT OF HEADINGS. The descriptive headings of the sections of this
Plan are inserted for convenience of reference and identification only and do
not constitute a part of this Plan for purposes of interpretation.
5.12. NONTRANSFERABILITY. No Unit shall be transferable, except by the
Participant's will or the law of descent and distribution. During the
Participant's lifetime, his Unit shall be exercisable (to the extent
exercisable) only by him. The Unit and any rights and privileges pertaining
thereto shall not be transferred, assigned, pledged or hypothecated by him in
any way, whether by operation of law or otherwise and shall not be subject to
execution, attachment or similar process.
5.13. LIABILITY. No member of the Board of Directors or the Committee or
any officer or employee of the Partnership or its Affiliates shall be personally
liable for any action, omission or determination made in good faith
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in connection with the Plan. By participating in the Plan, each Participant
agrees to release and hold harmless the Partnership, the Affiliates (and their
respective directors, officers and employees) and the Committee from and against
any tax liability, including without limitation, interest and penalties,
incurred by the Participant in connection with his participation in the Plan.
5.14. FUNDING. Benefits payable under this Plan to a Participant or to a
beneficiary will be paid by the Partnership from its general assets. Shares of
the Company stock to be distributed hereunder shall be acquired by the
Partnership either directly from the Company, on the open market or a
combination thereof. The Partnership is not required to segregate on its books
or otherwise establish any funding procedure for any amount to be used for the
payment of benefits under this Plan. The Partnership may, however, in its sole
discretion, set funds aside in investments to meet its anticipated obligations
under the Plan. Any such action or set-aside may not be deemed to create a
trust of any kind between the Partnership and any Participant or beneficiary or
to constitute the funding of any Plan benefits. Consequently, any person
entitled to a payment under the Plan will have no rights greater than the rights
of any other unsecured creditor of the Partnership.
DUKE REALTY SERVICES LIMITED
PARTNERSHIP
Dated: 10/26/95 By: /s/ David R. Mennel
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David R. Mennel, President of
Duke Services, Inc., its
General Partner
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