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LEXINGTON CORPORATE PROPERTIES TRUST
355 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 692-7260
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
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To the Shareholders of
Lexington Corporate Properties Trust:
The 1998 Annual Meeting of Shareholders of Lexington Corporate Properties
Trust (the "Company") will be held at The Chase Manhattan Bank, 270 Park Avenue,
New York, New York 10017, on Wednesday, May 20, 1998, at 10:30 a.m., New York
City time, for the following purposes:
(1) to elect seven trustees to serve until the 1999 Annual Meeting of
Shareholders;
(2) to approve the Company's 1998 Share Option Plan; and
(3) to transact such other business as may properly come before the
1998 Annual Meeting.
Only shareholders of record at the close of business on April 7, 1998 (the
"Shareholders") are entitled to notice of and to vote at the 1998 Annual Meeting
of Shareholders or any adjournments thereof. A list of Shareholders will be
available for inspection during normal business hours at the offices of the
Company located at 355 Lexington Avenue, New York, New York 10017, during the
ten days preceding the 1998 Annual Meeting of Shareholders.
By Order of the Board of Trustees,
PAUL R. WOOD
Vice President, Chief Accounting
Officer
and Secretary
New York, New York
April 23, 1998
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED WHETHER OR NOT YOU PLAN TO ATTEND THE 1998 ANNUAL MEETING.
THE PROXY MAY BE REVOKED BY YOU AT ANY TIME BY WRITTEN NOTICE TO THE COMPANY
PRIOR TO ITS EXERCISE. GIVING YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING AND AFFIRMATIVELY INDICATE YOUR INTENTION TO
VOTE AT SUCH MEETING.
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LEXINGTON CORPORATE PROPERTIES TRUST
355 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 692-7260
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Trustees of Lexington Corporate
Properties Trust (the "Company") for use at the 1998 Annual Meeting of
Shareholders, and at any adjournments thereof (the "Annual Meeting"), to be held
on Wednesday, May 20, 1998, at The Chase Manhattan Bank, 270 Park Avenue, New
York, New York 10017, at 10:30 a.m. New York City time. This Proxy Statement and
the related proxy card are first being sent to the Shareholders of the Company
on or about April 27, 1998.
Valid proxies will be voted as specified thereon at the Annual Meeting. Any
person giving a Proxy may revoke it by written notice to the Company at any time
prior to its exercise. Attendance at the Annual Meeting will not constitute a
revocation of a proxy unless the Shareholder affirmatively indicates at the
Annual Meeting that such Shareholder intends to vote such Shareholder's shares
in person.
ANNUAL REPORT
The Annual Report to Shareholders and Form 10-K of the Company for the year
ended December 31, 1997, including financial statements audited by KPMG Peat
Marwick LLP, the Company's independent auditors, and their report thereon dated
January 22, 1998, are being mailed together with this Proxy Statement to each
Shareholder. Except as specifically incorporated herein by reference, the Annual
Report is not part of the proxy solicitation material.
VOTING SECURITIES
The holders of record of Common Shares, par value $.0001 per share (the
"Common Shares"), and of Class A Senior Cumulative Convertible Preferred Shares
(the "Preferred Shares"), of the Company at the close of business on April 7,
1998 (the "Record Date") are entitled to vote at the Annual Meeting. On the
Record Date, there were outstanding 16,521,177 Common Shares and 2,000,000
Preferred Shares, each of which Common Shares and Preferred Shares are entitled
to one vote per share on all matters submitted to a vote of Shareholders.
Unless contrary instructions are indicated on the Proxy, all Common Shares
and Preferred Shares represented by valid proxies received pursuant to this
solicitation, unless previously revoked, will be voted at the Annual Meeting FOR
the election of the seven nominees to serve as trustees until the 1999 Annual
Meeting of Shareholders; and FOR the approval of the Company's 1998 Share Option
Plan.
Assuming a quorum is present at the Annual Meeting, (i) the affirmative
vote of the holders of a plurality of the Common Shares and Preferred Shares,
considered as a single class, entitled to be voted at the Annual Meeting will be
required for the election of trustees, and the affirmative vote of the holders
of a plurality of the Preferred Shares, voting separately as a single class,
entitled to be voted at the Annual Meeting will be required for the election of
the Preferred Trustee (as defined), and (ii) the affirmative vote of the holders
of a majority of the Common Shares and Preferred Shares deemed to be voting with
respect to this matter, considered as a single class, will constitute approval
of, Proposal No. 2. For purposes of the foregoing matters, the Common Shares and
Preferred Shares will vote together as a single class, except with respect to
the election of the Preferred Trustee as to which the holders of the Preferred
Shares will vote as a separate class. The Common Shares and Preferred Shares
represented by a valid proxy which abstains with respect to any matter will be
counted in determining the number of votes cast with respect to that matter but
will not be
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counted as an affirmative vote in determining whether the affirmative vote of
the requisite number of shares was cast in favor of that matter. Therefor,
abstentions as to the election of trustees will not affect the election of the
candidates receiving a plurality of the votes cast. Abstentions as to the other
proposals will have the same effect as votes against such proposals. Broker
non-votes will be treated as un-voted for purposes of determining approval of
any such proposal and will not be counted as votes for or against such proposal.
If a Shareholder is a participant in the Company's Dividend Reinvestment
Plan, the proxy card enclosed herewith represents shares in the participant's
account, as well as shares held of record in the participant's name.
The Company knows of no business, other than that set forth above, to be
presented at the Annual Meeting which would be a proper subject for action by
the Shareholders. If any other matter should be presented at the Annual Meeting
upon which a vote properly may be taken, it is intended that any share
represented by a proxy in the accompanying form will be voted with respect
thereto in accordance with the judgment of the person or persons voting such
shares.
PRINCIPAL SECURITY HOLDERS
Except as described herein, no person is known by the Company to own
beneficially in excess of five percent (5.0%) of the outstanding Common Shares
or Preferred Shares as of April 7, 1998. On December 31, 1996, the Company
entered into an agreement with Five Arrows, a real estate investment fund of
which Rothschild Realty Investors II L.L.C. ("Rothschild Investors") is the
managing member, under which Five Arrows agreed to purchase an aggregate of up
to 2,000,000 Preferred Shares, which would be convertible into 2,000,000 Common
Shares, subject to adjustment, at any time. As of December 31, 1997, all
2,000,000 Preferred Shares were purchased by Five Arrows. If the Preferred
Shares were converted into Common Shares, Five Arrows would, as of April 7,
1998, have been the beneficial owner of approximately 10.80% of the issued and
outstanding voting shares of the Company, on a fully diluted basis.
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STOCK OWNERSHIP OF TRUSTEES AND EXECUTIVE OFFICERS
The following table indicates, as of March 31, 1998, (a) the number of
Common Shares and Preferred Shares beneficially owned by each trustee and each
executive officer named in the Summary Compensation Table under "COMPENSATION OF
EXECUTIVE OFFICERS" below, and by all trustees and officers as a group, and (b)
the percentage such shares represent of the total outstanding Common Shares,
Preferred Shares and voting shares. All shares were owned directly on such date
with sole voting and investment power unless otherwise indicated.
BENEFICIAL OWNERSHIP OF
SHARES(1) PERCENT OF CLASS
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COMMON PREFERRED VOTING
NAME OF BENEFICIAL OWNER SHARES SHARES COMMON PREFERRED SHARES
------------------------ --------- --------- ------ --------- ------
E. Robert Roskind..................... 1,285,767(2) -- 6.049% -- 5.529%
Richard J. Rouse...................... 248,243(3) -- 1.174% -- 1.072%
T. Wilson Eglin....................... 194,600(5) -- * -- *
Antonia G. Trigiani................... 152,403(8) -- * -- *
Carl D. Glickman...................... 157,213(4) -- * -- *
Kevin W. Lynch........................ 19,457(6) -- * -- *
John D. McGurk........................ -- 2,000,000(7) -- 100.000% 8.705%
Seth M. Zachary....................... 32,814(9) -- * -- *
All trustees and executive officers as
a group (9 persons)(10)............. 2,116,193 2,000,000 9.712% 100.000% 17.302%
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* Represents beneficial ownership of less than 1.000%
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares as of a given date which such person has the right
to acquire within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person named above on a given
date, any security which such person or persons has the right to acquire
within 60 days after such date is deemed to be outstanding, but is not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
(2) Includes (i) 642,815 units of special limited partner interest held by Mr.
Roskind in Lepercq Corporate Income Fund L.P. and Lepercq Corporate Income
Fund II L.P., each of which is a subsidiary of the Company, which are
exchangeable, on a one-for-one basis, for Common Shares, (ii) 230,412 units
of special limited partner interest held by The LCP Group, L.P., of which
Mr. Roskind is Chairman, which are exchangeable, on a one-for-one basis,
for Common Shares, (iii) 9,000 Common Shares owned of record by The LCP
Group, L.P., (iv) options to purchase 180,000 Common Shares at an exercise
price of $11.125 per share, 52,600 Common Shares at an exercise price of
$11.875 per share, 32,800 Common Shares at an exercise price of $11.25 per
share and 12,828 Common Shares at an exercise price of $12.325 per share,
(v) 46,650 Common Shares owned of record by Mr. Roskind's wife, and (vi)
13,000 Common Shares owned of record by a private pension plan for the
benefit of Mr. Roskind and his wife. Mr. Roskind disclaims beneficial
ownership of the 46,650 shares listed in clause (v) above.
(3) Includes (i) 46,406 units of special limited partner interest held by Mr.
Rouse in Lepercq Corporate Income Fund L.P. and Lepercq Corporate Income
Fund II L.P., which are exchangeable, on a one-for-one basis, for Common
Shares, (ii) options to purchase 90,000 Common Shares at an exercise price
of $11.125 per share, 43,800 Common Shares at an exercise price of $11.875
per share, 32,800 Common Shares at an exercise price of $11.25 per share
and 8,638 Common Shares at an exercise price of $12.325 per share, and
(iii) 1,500 Common Shares owned of record by a private pension plan for the
benefit of Mr. Rouse.
(4) Includes options to purchase 2,500 Common Shares at an exercise price of
$10.125 per share, 2,500 Common Shares at an exercise price of $9.00 per
share, 2,500 Common Shares at an exercise price of $11.25 per share and
2,500 Common Shares at an exercise price of $14.25 per share.
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(5) Includes options to purchase 61,250 Common Shares at an exercise price of
$11.125 per share, 35,000 Common Shares at an exercise price of $11.875 per
share, 46,000 Common Shares at an exercise price of $11.25 per share and
27,867 Common Shares at an exercise price of $12.325 per share.
(6) Includes options to purchase 2,500 Common Shares at an exercise price of
$11.75 and 2,500 Common Shares at an exercise price of $14.25 per share.
(7) Includes 2,000,000 Preferred Shares owned beneficially and of record by
Five Arrows. Mr. McGurk, among others, has been appointed by Rothschild
Investors as a manager of Five Arrows. Mr. McGurk is also the designee of
Five Arrows to the Company's Board of Trustees. Mr. McGurk disclaims
beneficial ownership of all such Preferred Shares.
(8) Includes options to purchase 61,250 Common Shares at an exercise price of
$11.125 per share, 35,000 Common Shares at an exercise price of $11.875 per
share, 40,000 Common Shares at an exercise price of $11.25 per share and
3,556 Common Shares at an exercise price of $12.325 per share.
(9) Includes options to purchase 2,500 Common Shares at an exercise price of
$10.00 per share, 2,500 Common Shares at an exercise price of $10.125 per
share, 2,500 Common Shares at an exercise price of $9.00 per share, 2,500
Common Shares at an exercise price of $11.25 per share and 2,500 Common
Shares at an exercise price of $14.25 per share.
(10) Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's trustees and executive officers to file initial reports of
ownership and reports of changes in ownership of Common Shares and other
equity securities with the Securities and Exchange Commission and the New
York Stock Exchange. Trustees and executive officers are required to
furnish the Company with copies of all Section 16(a) forms they file. Based
on a review of the copies of such reports furnished to the Company and
written representations from the Company's trustees and executive officers
that no other reports were required, the Company believes that during the
1997 fiscal year the Company's trustees and executive officers complied
with all Section 16(a) filing requirements applicable to them.
PROPOSAL NO. 1
ELECTION OF TRUSTEES
BOARD OF TRUSTEES
The Board of Trustees of the Company currently consists of seven trustees,
and the entire Board is nominated to be elected at the Annual Meeting pursuant
to which this Proxy Statement is being distributed. Election of trustees
requires the affirmative vote of a plurality of the votes cast by holders of the
outstanding Common Shares and Preferred Shares, considered as a single class,
and the election of the Preferred Trustee requires the affirmative vote of a
plurality of the votes cast by holders of the outstanding Preferred Shares,
voting separately as a single class. The seven nominees for trustee are E.
Robert Roskind, Richard J. Rouse, T. Wilson Eglin, Carl D. Glickman, Kevin W.
Lynch, John D. McGurk and Seth M. Zachary. All of the nominees are presently
serving as trustees of the Company. Mr. McGurk is the designee of Five Arrows,
who is serving as the Preferred Trustee and is subject to re-election by the
holders of Preferred Shares voting separately as a single class. Each nominee
has consented to being named in the Proxy Statement and to serve if elected. If
elected, each nominee is expected to serve until the Company's 1998 Annual
Meeting of Shareholders and until his successor is elected. Background
information relating to the nominees for election appears below.
THE ENCLOSED PROXY, IF PROPERLY COMPLETED, SIGNED, DATED AND RETURNED, AND
UNLESS AUTHORITY TO VOTE IS WITHHELD OR A CONTRARY VOTE IS INDICATED, WILL BE
VOTED FOR THE ELECTION OF THESE SEVEN NOMINEES. In the event any such nominee
becomes unavailable for election, votes will be cast, pursuant to authority
granted by the enclosed Proxy, for such substitute nominee as may be designated
by the Board of Trustees. All trustees serve for a term of one year and until
their successors are elected.
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The following information relates to the nominees for election as trustees
of the Company:
NAME BUSINESS EXPERIENCE
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E. ROBERT ROSKIND.................... Mr. Roskind has served as the Chairman of the Board of
Age 53 Trustees and Co-Chief Executive Officer of the Company since
October 1993. He founded The LCP Group, L.P. ("LCP") in 1973
and has been its Chairman since 1976. LCP has acted as
general partner in limited partnerships in which the Company
has had prior dealings. Prior to founding LCP, Mr. Roskind
headed the net leasing financing area of Lehman Brothers
Inc. He is also a general partner of a variety of entities
which serve as the general partner of various partnerships
that hold net leased real properties or interest therein.
Mr. Roskind is a director of Berkshire Realty Company, Inc.,
Krupp Government Income Trust I and Krupp Government Income
Trust II.
RICHARD J. ROUSE..................... Mr. Rouse became the Vice Chairman of the Board of Trustees
Age 52 in April 1996, has served as the Co-Chief Executive Officer
and a trustee of the Company since October 1993, and was the
President of the Company from October 1993 until April 1996.
Mr. Rouse was a managing director of LCP. He had been
associated with LCP since 1979 and had been engaged there in
all aspects of net lease finance, acquisition and
syndication and corporate financing transactions.
T. WILSON EGLIN...................... Mr. Eglin became the President of the Company in April 1996,
Age 33 has served as Chief Operating Officer of the Company since
October 1993, has been a trustee of the Company since May
1994, and was the Executive Vice President of the Company
from October 1993 until April 1996. Prior to his association
with the Company, Mr. Eglin had been associated with LCP
since 1987 and had been its Vice President -- Acquisitions
from 1990 to 1993.
CARL D. GLICKMAN..................... Mr. Glickman has served as a trustee and a member of the
Age 72 Audit Committee and Compensation Committee of the Board of
Trustees of the Company since May 1994. He has been
President of the Glickman Organization since 1953. He is on
the Board of Directors of Alliance Tire & Rubber Co., Ltd.,
Andal Corp., Bear Stearns Companies, Inc., Continental
Health Affiliates, Inc., Franklin Corporation, Infu-Tech,
Inc., Jerusalem Economic Corporation Ltd., Custodial Trust
Company and OfficeMax Inc., as well as numerous private
companies.
KEVIN W. LYNCH....................... Mr. Lynch is a founder and principal of The Townsend Group,
Age 45 an institutional real estate consulting firm founded in
1983. Prior to forming The Townsend Group, Mr. Lynch was a
Vice President for Stonehenge Capital Corporation. Mr. Lynch
has been involved in the commercial real estate business
since 1974, and is a director of First Industrial Realty
Trust.
JOHN D. MCGURK....................... Mr. McGurk is the founder and President of Rothschild
Age 54 Realty, Inc., the advisor to Five Arrows, and is the
designee of Five Arrows to the Board of Trustees. Prior to
starting Rothschild Realty, Inc. in 1981, Mr. McGurk served
as a regional vice president for The Prudential Insurance
Company of America, where he oversaw its New York City real
estate loan portfolio, equity holdings, joint ventures and
projects under development. Mr. McGurk is a member of the
Urban Land Institute, Pension Real Estate Association, Real
Estate Board of New York and the National Real Estate
Association, and is the president of the Trustee Committee
of the Caedmon School.
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SETH M. ZACHARY. Mr. Zachary has served as a trustee and a member of the Audit
Age 45 Committee and Compensation Committee of the Board of Trustees of
the Company since November 1993. Since 1987, he has been a partner
in the law firm of Paul, Hastings, Janofsky & Walker LLP. He has been
affiliated as a part-time faculty member and lecturer at New York
University School of Law since 1984 and the University of Southern
California since 1990.
BOARD OF TRUSTEES AND COMMITTEES OF THE BOARD OF TRUSTEES
The Board of Trustees of the Company held six meetings during the fiscal
year ended December 31, 1997. All trustees serving as members of the Board of
Trustees, as constituted at the time of each meeting, attended all meetings,
with the exception of Mr. Lynch who missed one meeting. The Board of Trustees
has two standing committees: the Audit Committee and the Compensation Committee.
The Board of Trustees does not have a nominating committee, and the usual
functions of such a committee are performed by the entire Board of Trustees.
Audit Committee. The principal functions of the Audit Committee include
making recommendations concerning the engagement of independent public
accountants, reviewing with the independent public accountants plans and results
of the of the audit engagement, approving professional services provided by the
independent public accountants, reviewing the independence of the independent
public accountants, considering the range of the audit, and reviewing the
adequacy of the Company's internal accounting controls. The Audit Committee's
current members are Messrs. Glickman, Lynch, McGurk and Zachary. The Audit
Committee met twice during 1997 to discuss matters concerning 1997.
Compensation Committee. The principal functions of the Compensation
Committee are to determine the compensation for the Company's executive officers
and to administer and review the Company's incentive compensation plans,
including the Company's employee stock plan. The Compensation Committee, whose
current members are Messrs. Glickman, Lynch, McGurk and Zachary, met in February
1998 to discuss matters pertaining to 1997. The Compensation Committee met once
during 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1996, the Company was granted an option by LCP, an affiliate of
Mr. Roskind, exercisable any time to acquire general partnership interests
currently owned by LCP in two limited partnerships, Net 1 L.P. and Net 2 L.P.
(collectively, the "Net Partnerships"), which own net leased office, industrial
and retail properties. Under the terms of the option, the Company, subject to
review of any such transaction by the independent members of its Board of
Trustees, may acquire the general partnership interests in either or both of the
Net Partnerships at their fair market value based upon a formula relating to
partnership cash flows, with the Company retaining the option of paying such
fair market value in securities of the Company, units representing interests in
partnerships controlled by the Company or cash (or a combination thereof).
In connection with the foregoing, the Company is obligated to pay LCP an
aggregate amount of $1,778,250 for rendering services in connection with the
original acquisition of certain properties. Simple interest is payable monthly
from available net cash flow of the respective original properties on the
various unpaid principal portions of the fees, at annual rates ranging from
12.25% to 19.00%. Monthly installment payments are to commence at various dates
to satisfy principal and current interest payments as well as any unpaid accrued
interest outstanding. The original principal amounts have been discounted at an
annual rate of 13.00%.
CERTAIN BUSINESS RELATIONSHIPS
Seth M. Zachary, who is presently serving as a member of the Board of
Trustees and is a nominee to serve as a trustee until the 1999 Annual Meeting of
Shareholders, is a partner of Paul, Hastings, Janofsky &
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Walker LLP, which is the general counsel to the Company. The Company intends to
continue to retain the services of Paul, Hastings, Janofsky & Walker LLP for
general, corporate and other matters.
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Cash and Certain Other Compensation. The following table
contains certain information regarding aggregate compensation paid or accrued by
the Company during the years ended December 31, 1997, 1996 and 1995 to the
Chairman of the Board of Trustees and Co-Chief Executive Officer, the Vice-
Chairman and Co-Chief Executive Officer, the President and Chief Operating
Officer and the Chief Financial Officer of the Company, all of whom received an
annual salary and bonus in excess of $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL -----------------------------------
COMPENSATION AWARDS PAYOUTS
---------------- ----------------------- ---------
LONG-
OTHER TERM ALL
ANNUAL RESTRICTED SECURITIES INCENTIVE OTHER
FISCAL COMPEN- SHARE UNDERLYING PLAN COMPEN-
NAME AND YEAR SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
PRINCIPAL POSITION ENDED ($) ($)(1) ($) ($)(2) (#)(3) ($) ($)(4)
------------------ -------- ------- ------ ------- ---------- ---------- --------- -------
E. Robert Roskind............. 12/31/97 237,500 22,917 -- -- 316,710 -- 20,900
Chairman of the Board of 12/31/96 200,000 18,333 -- -- 265,400 -- 900
Trustees and Co-Chief 12/31/95 200,000 18,333 -- 20,000 236,200 -- 900
Executive Officer
Richard J. Rouse.............. 12/31/97 136,250 12,833 -- -- 201,152 -- 13,340
Vice Chairman and Co- 12/31/96 125,000 11,458 -- -- 166,600 -- 750
Chief Executive Officer(5) 12/31/95 125,000 11,458 -- 12,600 133,800 -- 750
T. Wilson Eglin............... 12/31/97 150,000 14,667 -- -- 253,716 -- 50,900
President and Chief 12/31/96 120,000 11,000 -- -- 142,250 -- 600
Operating Officer(6) 12/31/95 100,000 9,166 -- 10,000 81,000 -- 600
Antonia G. Trigiani........... 12/31/97 127,500 11,917 -- -- 150,474 -- 12,780
Chief Financial Officer 12/31/96 120,000 11,000 -- -- 136,250 -- 600
and Treasurer 12/31/95 100,000 9,166 -- 10,000 75,000 -- 600
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(1) Bonus amounts include amounts contributed at the election of the Company
pursuant to the Company's plan established under Section 401(k) of the
Internal Revenue Code of 1986, as amended, and year-end compensation awarded
to all employees at the discretion of the Company.
(2) Amount represents the dollar value of awards of restricted shares at $11.25
per share for 1995, the closing price of the Common Shares on December 29,
1995, the business day immediately prior to the date the restricted share
grant became effective.
(3) Of the 1995 share options, 56,200, 43,800, 35,000 and 35,000 were granted on
February 27, 1995 to Messrs. Roskind, Rouse and Eglin and Ms. Trigiani,
respectively. The remaining options listed were granted to the named
executive officers on July 28, 1995 in connection with an exercise of
previously granted options. The exercise price of each share option was
equal to the price at which the previously granted options were purchased,
which was $11.125. On February 27, 1995, the Common Shares had a fair market
value of $9.125 and on July 28, 1995, the Common Shares had a fair market
value of $10.875. Of the 1996 share options, 32,800, 32,800, 46,000 and
40,000 were granted on January 2, 1996 to Messrs. Roskind, Rouse and Eglin
and Ms. Trigiani, respectively. The remaining options were granted to the
named executive officers on January 24, 1996 in connection with an exercise
of previously granted options. The exercise price of each such share option
as equal to the price at which the previously granted options were
purchased, which was $11.875. On January 2, 1996, the Common Shares had a
fair market value of $11.25 and on January 24, 1996, the Common Shares had a
fair market value of $11.50. The Company has not granted any share
appreciation rights in 1997.
(4) Amount represents any amount received as a stock or cash bonus awarded at
the discretion of the Company, and the dollar value of life insurance
premiums paid by the Company during the applicable fiscal year with respect
to the life of the named executive officer.
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(5) Mr. Rouse was elected Vice Chairman of the Company on April 1, 1996, and
until such date had served as President of the Company.
(6) Mr. Eglin was elected President and Chief Operating Officer of the Company
on April 1, 1996, and until such date had served as Executive Vice President
and Chief Operating Officer of the Company.
Stock Options. The following table sets forth certain information
concerning share options granted during the fiscal year ended December 31, 1997
to each of the executive officers named in the Summary Compensation Table. Since
inception, the Company has not granted any share appreciation grants.
OPTION GRANTS IN FISCAL YEAR 1997
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF SHARE
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------------------- ---------------------
NUMBER OF PERCENTAGE(%) OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL 1997 ($/SHARE) DATE 5%($) 10%($)
---- ---------- ---------------- ----------- ---------- --------- ---------
E. Robert Roskind...... 51,310 23.12% 12.325 08/01/02 807,115 1,018,480
Richard J. Rouse....... 34,552 15.57% 12.325 08/01/02 543,509 685,841
T. Wilson Eglin........ 111,466 50.23% 12.325 08/01/02 1,753,379 2,212,548
Antonia G. Trigiani.... 14,224 6.41% 12.325 08/01/02 223,746 282,340
Option Exercises/Value of Unexercised Options. The following table sets
forth certain information concerning the exercise of share options during the
fiscal year ended December 31, 1997, by each of the executive officers named in
the Summary Compensation Table, and the year-end value of unexercised options
held by such persons.
SHARE OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- -------- -------- ----------- ------------- ----------- -------------
E. Robert Roskind........... -- -- 278,228 38,482 1,140,913 119,777
Richard J. Rouse............ -- -- 175,238 25,914 708,398 80,657
T. Wilson Eglin............. -- -- 170,117 83,599 668,188 260,203
Antonia G. Trigiani......... -- -- 139,806 10,668 567,396 33,204
COMPENSATION OF TRUSTEES
Each trustee who is not employed by the Company receives an annual fee of
$20,000 for service as a trustee. In addition, such trustees receive $1,000 for
each meeting of the Board of Trustees or any committee thereof attended by the
trustee and reimbursement for expenses incurred in attending such meetings.
Pursuant to the 1994 Outside Director Stock Plan, as amended, during 1997 each
non-employee trustee was required to receive not less than 50% of such trustee's
fees in Common Shares at an amount per share equal to 95% of the fair market
value of one Common Share as of the date of purchase. During 1997, Messrs.
Glickman, Lynch and Zachary elected to receive 100% of their fees in Common
Shares with respect to the six meetings which the Board of Trustees held in
1997. Pursuant to the Company's 1993 Stock Option Plan, non-employee trustees
automatically are granted each year, on January 1, non-qualified share options
to purchase, after a one-year holding period, 2,500 Common Shares at an exercise
price equal to the fair market value of the Common Shares on the date of the
grant.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1997, the Compensation Committee
consisted of Carl D. Glickman, Kevin W. Lynch, John D. McGurk and Seth M.
Zachary. None of such persons are or have been executive officers of the
Company. Mr. Zachary is a partner of Paul, Hastings, Janofsky & Walker LLP,
which is the general counsel to the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF TRUSTEES
For the fiscal year ended December 31, 1997, all matters concerning
executive compensation for the Co-Chief Executive Officers and other executive
officers were considered and acted upon by the Compensation Committee of the
Board of Trustees.
Compensation Philosophy. The Company's compensation program for executive
officers is based upon a desire to achieve both its short- and long-term
business goals and strategies with a view to enhancing shareholder value. To
achieve its goals, the Company recognizes that it must adopt a compensation
program which will attract, retain and motivate qualified and experienced
executive officers and that its compensation program should align the financial
interests of its executive officers with those of its shareholders.
Compensation of Executive Officers (other than the Co-Chief Executive
Officers). In approving the annual salary for Mr. Eglin and Ms. Trigiani, the
Board of Trustees considered several factors, including the scope of the
individual's responsibilities, the cost of living, the historical financial
results of the Company and the anticipated financial performance of the Company.
The compensation determination for each individual was largely subjective, did
not involve discussions with the individual executive officer regarding such
executive officer's compensation requirements and no specific weight was given
to any particular factor. In addition to their base salaries, these executive
officers of the Company receive discretionary bonuses tied to their individual
performances and the overall performance of the Company. Mr. Eglin and Ms.
Trigiani are eligible to receive additional bonuses under the Company's
Incentive Bonus Plan tied to growth in the Company's operating cash flow per
share. The Board of Trustees has not established specific performance goals for
the payment of discretionary bonuses.
Compensation of Co-Chief Executive Officers. As with the other executive
officers, the Board of Trustees determined the annual salaries for the Co-Chief
Executive Officers based upon a number of factors and criteria, including the
historical financial results of the Company, the anticipated financial
performance of the Company and the requirements of such Co-Chief Executive
Officers. The compensation determination for each of the Co-Chief Executive
Officers was largely subjective, and no specific weight was given to any
particular factor. The Co-Chief Executive Officers of the Company are also
eligible to receive discretionary bonuses tied to their individual and overall
performances and to participate in the Company's Incentive Bonus Plan. The Board
of Trustees has not established specific performance goals for the payment of
discretionary bonuses.
1993 Stock Option Plan. The Company believes that providing executive
officers with opportunities to acquire significant equity stakes in its growth
and prosperity through the grant of share options will enable the Company to
attract and retain qualified and experienced executive officers. Share options
represent a valuable portion of the compensation program for the Company's
executive officers. Share options may be awarded to executive officers at the
time they join the Company and periodically thereafter. The exercise price of
share options has been tied to the fair market value of the Company's Common
Shares on the date of the grant and the options will only have value as the
value of the Company's Common Shares increases. Grants of share options to
executive officers generally are made by the Compensation Committee upon the
recommendation of senior management and are based upon the level of each
executive officer's position with the Company, an evaluation of the executive
officer's past and expected future performance and the number of outstanding and
previously granted options.
Incentive Bonus Plan. The Company maintains an Incentive Bonus Plan
pursuant to which participants in the Incentive Bonus Plan are entitled to
receive annual bonuses which are tied to growth in the Company's operating cash
flow per share. The Incentive Bonus Plan is administered by the Compensation
Committee on
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an annual basis. The bonus amount, which is shared among plan participants, will
not exceed an amount equal to 10% of the amount determined by multiplying (a)
the difference between (i) the Company's operating cash flow per share for the
year during which the incentive bonus amount is being determined (the
"Measurement Year") (before calculation of the bonus amount) and (ii) $1.14, the
Company's operating cash flow per share for the calendar year 1993 (calculated
as if the Company had been in existence on January 1, 1993) by (b) the weighted
average number of Common Shares outstanding during the Measurement Year. The
Incentive Bonus Plan also provides that, notwithstanding the foregoing, no
incentive bonus will be paid in respect of any Measurement Year if the Company's
operating cash flow per share (before calculation of the bonus amount) for the
Measurement Year does not exceed the Company's operating cash flow per share in
the year prior to the Measurement Year. The participants in the Incentive Bonus
Plan currently include Messrs. Roskind, Rouse and Eglin and Ms. Trigiani. No
bonuses under the Incentive Bonus Plan were payable with respect to the fiscal
years ended December 31, 1995, December 31, 1996 and December 31, 1997.
Other Bonuses. In addition to bonuses that may be payable to participants
under the Incentive Bonus Plan, the Compensation Committee may also approve the
payment of other bonuses to executive officers and employees of the Company
based on their contributions and performances.
Compensation Committee of the Board of
Trustees
Carl D. Glickman
Kevin W. Lynch
John D. McGurk
Seth M. Zachary
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PERFORMANCE GRAPH
The graph and table set forth below compare the cumulative total
shareholder return on the Company's Common Shares for the period of October 22,
1993 through December 31, 1997 with the NAREIT Equity REIT Total Return Index,
which includes all tax-qualified equity REITs listed on the New York Stock
Exchange, the American Stock Exchange and the NASDAQ National Market System, and
the S&P 500 Index for the same period. The graph and table assume an investment
of $100 in the Common Shares in each index on October 22, 1993 (and the
reinvestment of all dividends), the date trading commenced for the Common Shares
on the New York Stock Exchange.
THE PERIOD OF OCTOBER 22, 1993 THROUGH DECEMBER 31, 1997
LEXINGTON NAREIT EQUITY
MEASUREMENT PERIOD CORPORATE REIT TOTAL RETURN
(FISCAL YEAR COVERED) PROPERTIES TRUST S&P 500 INDEX INDEX
10/22/93 100.00 100.00 100.00
12/31/93 110.96 101.23 99.82
12/31/94 110.14 102.56 103.00
12/31/95 146.63 140.94 118.72
12/31/96 195.89 173.30 160.59
12/31/97 217.51 231.14 193.12
FINANCIAL AND OTHER INFORMATION
Information required by this item is incorporated by reference to the
material appearing under the headings "Selected Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Financial Statements and Supplementary Data" in the Company's Form 10-K.
PROPOSAL NO. 2
APPROVAL OF THE ADOPTION OF THE COMPANY'S 1998 SHARE OPTION PLAN
The Board of Trustees has approved the adoption of the Company's 1998 Share
Option Plan which, subject to shareholder approval, authorizes the grant of
incentive stock options, non-qualified stock options, restricted share awards
and DERs (as defined below). A description of the 1998 Share Option Plan is set
forth below. The Company currently has in place the 1993 Stock Option Plan,
pursuant to which options to purchase 1,337,897 Common Shares are outstanding
and 262,103 Common Shares remain available for future
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option grants. The maximum number of Common Shares to be subject to the 1998
Share Option Plan is 800,000.
THE ENCLOSED PROXY, IF PROPERLY SIGNED AND RETURNED, AND UNLESS AUTHORITY
TO VOTE IS WITHHELD, WILL BE VOTED FOR THE ADOPTION OF THE COMPANY'S 1998 SHARE
OPTION PLAN. The affirmative vote of the holders of a majority of the Common
Shares and Preferred Shares deemed to be voting with respect to this matter,
considered as a single class, will constitute approval of the adoption of the
1998 Share Option Plan.
The purpose of the 1998 Share Option Plan is to advance the interests of
the Company by providing an opportunity to selected employees and trustees of
and consultants to the Company to share in the growth and prosperity of the
Company by providing them with an opportunity to increase their Common Share
ownership through option and DER grants, and awards of restricted shares. The
Board of Trustees believes that providing such opportunities assists in the
attraction, retention and motivation of qualified employees and, as such,
provides Company employees with additional incentive to devote their best
efforts to pursue and sustain the Company's financial success through the
achievement of corporate goals. Accordingly, the Board of Trustees believes that
the adoption of the 1998 Share Option Plan is in the best interest of the
Company.
A principal feature included in the 1998 Share Option Plan is the
authorization to grant dividend equivalent rights ("DERs"). As more fully
described below, DERs entitle the recipient to receive credits for dividends
that would be paid if the recipient had held the specified number of Common
Shares subject to the DER. As a form of long-term incentive compensation, DERs
are especially useful to a real estate investment trust ("REIT") which, under
the REIT requirements of the Code, distributes most of its earnings to
shareholders in the form of dividends. The Company believes that share options
capture only the portion of total shareholder return reflected in increased
share prices. DERs, when granted in tandem with share options, will provide
better alignment between participant incentives and total shareholder return by
giving eligible participants the opportunity to share in the value created
through dividend payments as well as share price growth.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE
IN FAVOR OF HE PROPOSAL TO ADOPT THE COMPANY'S 1998 SHARE OPTION PLAN. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL
UNLESS SHAREHOLDERS SPECIFY OTHERWISE.
1998 SHARE OPTION PLAN
The Board of Trustees has adopted the 1998 Share Option Plan, which
authorizes the discretionary grant of options intended to qualify as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), to key employees of the Company and the
discretionary grant of non-qualified share options, restricted share awards and
DERs to key employees, trustees and consultants of the Company. The maximum
number of Common Shares subject to options and restricted share awards under the
1998 Share Option Plan is 800,000. Under the 1998 Share Option Plan, each
non-employee trustee who is a non-employee trustee of the Company on the last
day of a calendar year will automatically be granted non-qualified options to
purchase 2,500 Common Shares on January 1 of the next following year at a
purchase price per share equal to 100% of the fair market value per share on the
date of grant. This provision relating to automatic grants to non-employee
trustees will effectively replace a similar provision under the Company's 1993
Stock Option Plan. The 1998 Share Option Plan also authorizes the award of
restricted Common Shares.
Dividend Equivalent Rights. Under the 1998 Share Option Plan, the Company
may grant DERs to key employees, trustees and consultants which DERs entitle the
recipient to receive credits for dividends that would be paid if the recipient
had held the number of Common Shares specified in the DER grant. The Company
intends to grant DERs in tandem with share option awards where appropriate to
compensate eligible participants. Dividends payable in respect of DERs may be
paid currently or be deemed to be reinvested in additional Common Shares. DERs
may be settled in cash, shares, or a combination thereof, in a single
installment or several installments, as specified in the award.
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The 1998 Share Option Plan will remain in effect, subject to the Board of
Trustee's right to terminate it earlier in certain circumstances, until all
shares subject to the plan have been purchased or acquired pursuant to the
plan's provisions. However, no grants may be made after ten years from the date
the 1998 Share Option Plan was adopted by the Board of Trustees.
Administration of 1998 Share Option Plan. The 1998 Share Option Plan
provides that it is to be administered by the Compensation Committee of the
Board of Trustees, all of the members of which must be non-employee trustees of
the Company and "Non-Employee Directors" within the meaning of the rules
promulgated under the Securities Exchange Act of 1934. The Compensation
Committee has the authority to determine to whom options will be granted, the
number of shares made subject to each option and the terms of the option. The
maximum term of any option and any DER is five years.
Option Exercise Price. The option price per share of all incentive stock
options must be at least 100% of the fair market value per Common Share on the
date of grant. To the extent that the fair market value, as of the date of
grant, of the shares, with respect to which incentive stock options become
exercisable for the first time during any given calendar year, exceeds $100,000,
the option will be treated as a non-qualified option. In addition, if an
optionee owns more than 10% of the Common Shares at the time he is granted an
incentive stock option, the option price per share cannot be less than 110% of
the fair market value per share, and the term of the option cannot exceed five
years.
Non-qualified options may not be granted at an exercise price per share
less than 85% of the fair market value of one Common Share on the date of grant.
The 1998 Share Option Plan provides a variety of means which may be used by
an optionee in payment of the exercise price of options. The optionee may pay by
cash or by check, or as provided by the Compensation Committee at the time of
the award or at a later time, by the written election of the optionee to have
shares withheld by the Company from the shares otherwise to be received by the
optionee upon exercise of other options. In the case of these "cash-less
exercises," the optionee receives a credit towards the exercise price of other
options, equal to the difference between the aggregate exercise price of the
options used in payment ("withheld options") on the exercise of other options
("exercised options") and the aggregate fair market value of the shares
underlying the withheld options on the date of exercise. Shares underlying the
exercised options are issued to the optionee, and withheld options are
cancelled. The 1998 Share Option Plan also provides a means to the Compensation
Committee to permit an optionee to satisfy applicable Federal, state and local
income tax and employment tax withholding obligations, in whole or in part, by
electing to have the Company withhold shares upon the exercise of options. All
shares withheld or canceled in the manner set forth above are returned to the
status of shares available for grant of future options.
Special Vesting. The 1998 Share Option Plan provides that, upon the
occurrence of certain events, the unexercised portion of all outstanding options
may, at the option of the Board of Trustees or if specified in the option,
become fully vested and exercisable in full immediately. Such events include (a)
the delivery to Company shareholders of a notice announcing a shareholders'
meeting to consider a proposed acquisition of the Company, and (b) the
commencement of a tender offer for the voting capital stock of the Company,
other than a self-tender by the Company. A merger or other similar
reorganization that the Company does not survive, or a sale of substantially all
of its assets, will cause every option outstanding to terminate to the extent
not then exercised, unless any surviving entity agrees to assume the obligations
under the 1998 Share Option Plan. The 1998 Share Option Plan also provides that
the Board of Trustees has the discretion to accelerate the vesting of any
restricted shares granted under the 1998 Share Option Plan.
Federal Income Tax Consequences. With respect to "incentive stock
options," no income generally will be taxable to an optionee at the time of
purchase of shares. Upon disposition of the shares, the participant will be
subject to tax and the amount of a tax will depend upon the holding period. If
the shares are disposed of by the participant at least two years after the date
of grant and one year after the date of purchase, the excess of the fair market
value of the shares at the time of such disposition over the exercise price
generally will be treated as long-term or mid-term capital gain, depending on
the holding period. Generally, shares held for more than 18 months will be
subject to a maximum long-term capital gain rate of 20%, and shares held for
more than one year but not more than 18 months will be subject to a maximum
mid-term capital gain rate of
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28%. If the shares are disposed of before the expiration of these holding
periods, the excess of the fair market value of the shares measured generally as
of the exercise date over the exercise price will be treated as ordinary income,
and any further gains generally will be long-term, mid-term or short-term
capital gains, depending on the holding period. The Company is not entitled to a
deduction for amounts taxed as ordinary income to a participant, except to the
extent of ordinary income reported by participants upon disposition of shares
before the expiration of the holding period. The exercise of an incentive stock
option may subject the employee to the alternative minimum tax. With respect to
non-qualified options, taxable income will result to an optionee on the date of
option exercise in an amount equal to the excess of the fair market value of the
shares measured generally as of the exercise date over the exercise price, and
any further gains after exercise generally will be long-term, mid-term or
short-term capital gains, depending on the holding period. The Company, assuming
all applicable tax-reporting obligations are satisfied, would generally receive
a tax deduction corresponding to the optionee's ordinary income. With respect to
DERs, recipients will not realize taxable income at the time of grant, and the
Company will not be entitled to a deduction at that time. When a dividend
equivalent is paid, the participant will recognize ordinary income, and the
Company will generally be entitled to a corresponding deduction.
Tax withholding obligations arise upon an optionee's exercise of a
non-qualified option. The Company has the right to defer issuing option shares
until these tax withholding obligations are satisfied. The 1998 Share Option
Plan allows optionees to satisfy these obligations by electing either to have
the Company withhold option shares or to deliver to the Company Common Shares
the optionee already owns. Such an election is irrevocable and is subject to
Compensation Committee approval and certain timing and other restrictions.
Grants of restricted shares under the 1998 Share Option Plan will be
treated as ordinary income to the recipient in an amount equal to the fair
market value of the granted shares as of the date the restrictions lapse, less
the value of any consideration provided thereafter by the recipient. In
addition, if the recipient makes a Code Section 83(b) election, with respect to
restricted shares, the recipient will realize ordinary income at the date of
issuance equal to the difference between the fair market value at that date less
the purchase price therefore. The Company is entitled to a corresponding
deduction for the amount taxed as ordinary income to the recipient. If the
shares are disposed of by the participant, any further gain will be treated as
short-term, mid-term or long-term capital gain by the recipient, depending on
the holding period.
Amendments to 1998 Share Option Plan. The Board of Trustees may amend,
modify or terminate the 1998 Share Option Plan at any time, provided that any
such action shall be approved by holders of a majority of the outstanding voting
capital stock of the Company at a meeting of shareholders, to the extent that
such shareholder approval is necessary to comply with applicable provisions of
the Code, rules promulgated pursuant to Section 16 of the Securities Exchange
Act of 1934, applicable state law or exchange listing requirements, provided
that no amendments, modification or termination of the 1998 Share Option Plan
shall, without the consent of each optionee affected thereby, alter or impair
any of his or her rights or obligation under any previously granted option.
OTHER MATTERS
The Board of Trustees is not aware of any business to come before the
Annual Meeting other than the election of trustees, and the proposals set forth
above under the captions "Proposal No. 1" and "Proposal No. 2". However, if any
other matters should properly come before the Annual Meeting, including matters
relating to the conduct of the Annual Meeting, it is intended that proxies in
the accompanying form will be voted in respect thereof in accordance with the
judgment of the person or persons voting the proxies.
APPOINTMENT OF INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP has served as independent auditors of the
Company since the fiscal year ended December 31, 1993 and has been selected by
the Company to serve as its independent auditors for the year ending December
31, 1998. Management expects that representatives of KPMG Peat Marwick LLP will
attend the Annual Meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions. Audit
services of KPMG Peat Marwick LLP
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for the prior years have included the audit of the financial statements of the
Company included in the Annual Report to Shareholders and Form 10-K, services
related to the filings with the Securities and Exchange Commission, and
consultation and assistance on accounting and related matters. The services
furnished by KPMG Peat Marwick LLP have been at customary rates and terms. There
are no existing direct or indirect understandings or agreements that place a
limit on current or future years' audit fees.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by the Company. The
Company expects to retain ChaseMellon Shareholder Services, L.L.C., an outside
proxy solicitation firm, in connection with the Annual Meeting. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy material to the beneficial
owners of Common Shares. In addition to solicitations by mail, trustees,
officers and regular employees of the Company may solicit proxies personally or
by telegraph or telephone without additional compensation.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Shareholders, any shareholder proposal to take
action at such meeting must be received at the office of the Company located at
355 Lexington Avenue, New York, New York 10017, no later than December 22, 1998.
Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934, as amended.
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LEXINGTON CORPORATE PROPERTIES TRUST
1998 SHARE OPTION PLAN
1. Purpose. The purpose of the Lexington Corporate Properties Trust 1998
Share Option Plan (the "Plan") is to advance the interests of Lexington
Corporate Properties Trust, a Maryland statutory real estate investment trust
(the "Company"), by providing an opportunity to selected key employees, trustees
and consultants of the Company to purchase Common Shares, $.0001 par value, of
the Company (the "Common Shares") and to receive DERs (as hereinafter defined).
By encouraging such share ownership, the Company seeks to attract, retain and
motivate employees, trustees and consultants of experience and ability. It is
intended that this purpose will be effected by the granting of nonqualified
stock options ("nonqualified options") and incentive stock options ("incentive
options") intended to qualify under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). As an additional form of long-term incentive
compensation, DERs, which the Company intends to grant either in conjunction
with share option grants or separately and which entitle the recipient to
receive credits for dividends that would be paid if the recipient had held
specified Common Shares, are especially useful to a real estate investment trust
("REIT") which, under the REIT requirements of the Code, distributes most of its
earnings to shareholders in the form of dividends. DERs alignment between
participant incentives and total shareholder return by giving eligible
participants the opportunity to share in the value created through dividend
payments as well as share price growth.
2. Effective Date. This Plan was adopted by the Board of Trustees of the
Company on May 20, 1998 and is effective as of May 20, 1998, the date it was
approved by the holders of a majority of the outstanding capital stock of the
Company.
3. Shares Subject to the Plan. The number of shares with respect to which
options may be granted under the Plan shall not exceed 800,000 Common Shares.
Any Common Share subject to an option under the Plan which for any reason (i)
expires, (ii) is terminated unexercised or (iii) is withheld by the Company from
the shares otherwise to be received or otherwise held by any optionee under the
Plan through the written election of such optionee pursuant to the provisions of
Section 8(e) of the Plan, may again be the subject of an option under the Plan.
In addition, any shares purchased by an optionee upon exercise of an option
under the Plan that are subsequently reacquired by the Company pursuant to a
repurchase right under the terms of such option may again be the subject of an
option under the Plan. The Common Shares delivered upon exercise of options
granted under the Plan may, in whole or in part, be authorized but unissued
shares, treasury shares, or any other issued shares subsequently reacquired by
the Company.
4. Administration. The Plan shall be administered by the Board of
Trustees (the "Board") or the Compensation Committee (the "Committee") of the
Board of Trustees, all of the members of which Committee must be trustees of the
Company who qualify as "Non-Employee Directors" within the meaning of Rule
16b-3(b)(3)(i) promulgated under Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Subject to the provisions of the Plan,
the Committee shall have full power to construe and interpret the Plan and to
establish, amend and rescind rules and regulations for its administration. Any
decisions made with respect thereto shall be final and binding on the Company,
the optionees and all other persons. In addition, no employee, trustee or
consultant shall have a right to be granted an option or a DER or, having
received an option or a DER, a right to again be granted an option or a DER,
except to the extent provided in Paragraph 9 hereof.
5. Eligible Participants. In its sole discretion, the Committee may grant
DERs, incentive options or nonqualified options, or any combination of the
three, to key employees of the Company or any parent or subsidiary of the
Company, including members of the Board of Trustees who are also key employees
of the Company or any subsidiary of the Company.
6. Duration of the Plan. The Plan shall terminate when all Common Shares
that may be made subject to options under the Plan have been acquired or, in the
case of incentive options only, ten years from the effective date of this Plan,
if earlier, unless terminated earlier pursuant to Paragraph 15 hereof, and no
options or DERs may be granted thereafter.
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7. Restrictions on Incentive Options. Ordinarily, the aggregate fair
market value, determined as of the date an incentive stock option is granted, of
the Common Shares with respect to which incentive options are exercisable for
the first time by an individual during any calendar year shall not exceed
$100,000. If an incentive option is granted pursuant to which the aggregate fair
market value of shares with respect to which it first becomes exercisable in any
calendar year by an individual exceeds the aforementioned $100,000 limitation,
the portion of such option which is in excess of the $100,000 limitation shall
be treated as a nonqualified option pursuant to Section 422(d)(1) of the Code.
In the event that an individual is eligible to participate in any other share
option plan of the Company or any parent or subsidiary of the Company which is
also intended to comply with the provisions of Section 422 of the Code, the
$100,000 limitation shall, to the extent provided under Section 422 of the Code,
apply to the aggregate number of shares for which incentive stock options may be
granted under all such plans.
8. Terms and Conditions of Option Grants. Subject to Paragraph 9 hereof,
options granted under this Plan shall be evidenced by share option agreements in
such form and containing such terms and conditions not inconsistent with the
Plan as the Board or the Committee shall approve from time to time, which
agreements shall evidence the following terms and conditions:
(a) Price. Subject to the conditions in Paragraph 8(b) hereof, if
applicable, the purchase price per share payable upon the exercise of each
incentive option granted hereunder shall be as determined by the Board or
the Committee in its discretion, and shall be at least 100% of the fair
market value per share on the date of grant. The purchase price per share
payable upon exercise of each nonqualified option granted hereunder shall
be as determined by the Board or the Committee in its discretion and shall
be at least 85% of the fair market value per share on the date of grant.
The Board or the Committee, in its discretion, also may establish (but need
not) a purchase price payable upon acquisition of a nonqualified option.
(b) 10% Shareholder. If any optionee is on the date of grant the
owner of shares (as determined under Sections 422(b)(6) and 424(d) of the
Code) possessing more than 10% of the total combined voting power of all
classes of shares of the Company or any parent or subsidiary of the
Company, then the option price per share subject to such incentive option
shall not be less than 110% of the fair market value of one share on the
date of grant.
(c) Number of Shares. Each share option grant agreement shall
specify the number of Common Shares to which it pertains.
(d) Exercise. Subject to Paragraphs 9 and 11 hereof, each option
grant shall be exercisable for the full amount or for any part thereof and
at such intervals or in such installments as the Board or the Committee may
determine at the time it grants such option; provided, however, that (i) no
option grant shall be exercisable with respect to any Common Share later
than five years after the date of such grant and (ii) to the extent that an
option is subject to exercise over a specified period of time, at least 20%
of the total number of Common Shares subject to the option shall become
exercisable on or before each anniversary of the date of the grant of the
option.
(e) Notice of Exercise and Payment. An option shall be exercisable
only by delivery of written notice to the Company's Treasurer or any other
officer of the Company designated by the Board or the Committee to accept
such notices on its behalf, specifying the number of Common Shares for
which it is exercised. If said shares are not at that time effectively
registered under the Securities Act of 1933, as amended, the optionee shall
include with such notice a letter, in form and substance satisfactory to
the Company, confirming that the shares are being purchased for the
optionee's own account for investment and not with a view to distribution.
Payment shall be made in full at the time the option is exercised. Payment
shall be made by cash or by check, or, if provided by the Board or the
Committee at the time of award or if otherwise acceptable to the Board or
the Committee, (i) through the written election of the optionee to have
Common Shares withheld by the Company from the shares otherwise to be
received or otherwise held by the optionee, with such withheld shares
having an aggregate fair market value on the date of exercise equal to or
less than the aggregate option price, plus (ii) cash or a check for any
difference. The Board or the Committee shall determine acceptable methods
for tendering and
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withholding Common Shares as payment upon exercise of an option and may
impose such limitations and prohibitions on the exercise of options other
than by cash or check, as it deems appropriate (including, without
limitation, any limitation or prohibition established in light of the rules
under Section 16 of the Exchange Act or designed to avoid certain
accounting consequences which may result from the use of Common Shares as
payment upon exercise of an option). The Board or the Committee may
establish or assist in the establishment of a program (which need not be
administered in a nondiscriminatory or uniform manner) under which a third
party may make bona-fide loans on arm's-length terms to any or all
optionees to assist such optionees with the satisfaction of any or all of
the obligations that such optionees may have hereunder (including, without
limitation, a loan program under which the third party would advance the
aggregate option price to the optionee and be repaid with option shares or
the proceeds thereof).
(f) Withholding Taxes; Delivery of Shares. The Company's obligation
to deliver Common Shares upon exercise of options, in whole or in part,
shall be subject to the optionee's satisfaction of all applicable federal,
state and local income and employment tax withholding obligations. The
Board or the Committee, in its discretion (and giving consideration to,
without limitation, Section 16 of the Exchange Act), may permit the
optionee to satisfy the obligation, in whole or in part, by irrevocably
electing to have the Company withhold Common Shares, or to deliver to the
Company Common Shares that the optionee already owns, having a value equal
to the amount required to be withheld. The value of shares to be withheld,
or delivered to the Company, shall be based on the fair market value of the
shares, as determined in accordance with procedures to be established by
the Board or the Committee, on the date the amount of tax to be withheld is
to be determined.
(g) Termination of Service. Each option agreement shall contain
provisions for the termination of the options granted thereunder if the
optionee ceases for any reason to be an employee, consultant or trustee of
the Company or any subsidiary of the Company, as follows:
(i) if the optionee ceases to perform services for the Company or
any parent or subsidiary of the Company by reason of resignation or
other voluntary action of the optionee, or if the Company or any parent
or subsidiary of the Company determines that it no longer wishes to
engage the optionee's services and makes such determination based on
cause (as specified in the applicable share option agreement), the
optionee may, at any time within a period of 30 days after the optionee
ceases to perform services, exercise each of the optionee's options to
the extent that the option was exercisable by the optionee on the date
on which the optionee ceased to perform services for the Company or any
parent or subsidiary of the Company;
(ii) if the optionee ceases to perform services for the Company or
any parent or subsidiary of the Company for any reason other than cause
(as specified in the applicable share option agreement), resignation or
other voluntary action before retirement (as defined in (v) below),
death or disability (as defined in (iii) below), the optionee may, at
any time within a period of three months after the optionee ceases to
perform services, exercise each of his options to the extent that the
option was exercisable by the optionee on the date on which the optionee
ceases to perform services for the Company or any parent or subsidiary
of the Company;
(iii) if the optionee ceases to perform services for the Company or
any parent or subsidiary of the Company because of a disability within
the meaning of Section 22(e)(3) of the Code, the optionee may, at any
time within a period of one year after the optionee ceases to perform
services, exercise the option to the extent that the option was
exercisable by the optionee on the date the optionee ceases to perform
services;
(iv) if the optionee dies at a time when the optionee might have
exercised the option, then the optionee's estate, personal
representative or beneficiary to whom it has been transferred by will or
the laws of descent and distribution may at any time within a period of
one year after the optionee's death exercise the option to the extent
the optionee might have exercised it at the time of his death; and
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(v) if the optionee ceases to perform services for the Company or
any parent or subsidiary of the Company because of the optionee's
retirement at or after attainment of age 60, the optionee may exercise
incentive options within three months, and nonqualified stock options
within a period of one year, after the optionee's retirement date.
(h) Rights as Shareholder. The optionee shall have no rights as a
shareholder with respect to any Common Shares covered by an option until
the date the option has been exercised and the full purchase price for such
shares has been received by the Company.
(i) Non-Transferability. No option shall be transferable by the
optionee otherwise than by will or the laws of descent and distribution,
and each option shall be exercisable during the optionee's lifetime only by
the optionee (or the optionee's guardian or legal representative).
(j) Repurchase of Shares by the Company. Any Common Shares purchased
by an optionee upon exercise of an option may, in the discretion of the
Committee, be subject to repurchase by the Company if and to the extent
specifically set forth in the share option agreement pursuant to which
Common Shares were purchased.
9. Grants to Non-employee Trustees. Each non-employee trustee who is a
non-employee trustee of the Company on the last day of a calendar year or who
has ceased to be a trustee during the calendar year due to the trustee's death
or retirement at an age greater than 65 shall automatically be granted
nonqualified options to purchase 2,500 Common Shares on January 1 of the next
following calendar year at a purchase price per share equal to 100% of the fair
market value per share on the date of grant. Any option granted to a non-
employee trustee shall terminate on or following the non-employee trustee's
termination of service in accordance with the provisions of Paragraph 8(g)(i)
through (v) hereof. Non-employee trustees' options shall otherwise be subject to
the terms and conditions of this Plan.
10. Share Dividends; Share Splits; Share Combinations;
Recapitalizations. Appropriate adjustment shall be made by the Board or the
Committee in the maximum number of Common Shares subject to the Plan to give
effect to any share dividends, share splits, reverse share splits, share
combinations, reclassifications, recapitalizations and other similar changes in
the capital structure of the Company. Appropriate adjustment shall be made in
the number, kind and option price of shares covered by any outstanding options
hereunder to give effect to any share dividends, share splits, reverse share
splits, share combinations, reclassifications, recapitalizations and other
similar changes in the capital structure of the Company after the date such
option is granted.
11. Acceleration of Exercisability Under Certain Circumstances. Upon the
occurrence of any of the events listed below, all outstanding incentive options
and nonqualified options held by all optionees may, at the option of the Board
or the Committee or if specified in the specific option agreement, become
immediately exercisable in full and/or no longer subject to any right of the
Company (or any designee) to repurchase shares purchased pursuant thereto. The
events are:
(a) delivery of written notice of a shareholders' meeting to the
shareholders of the Company announcing a shareholders' meeting at which the
shareholders will consider a proposed acquisition of the Company by merger
or other combination, a proposed sale of substantially all the Company's
assets or similar proposed transaction or a reorganization of the Company;
or
(b) commencement (within the meaning of Rule 14d-2 as promulgated
under the Exchange Act) of a "tender offer" for Common Shares subject to
Section 14(d) of the Exchange Act, other than a self-tender by the Company.
12. Merger; Sale of Assets; Dissolution. In the event of a change of the
Common Shares of the Company resulting from a merger or similar reorganization
as to which the Company is the surviving corporation, the number and kind of
shares which thereafter may be subject to options and sold under the Plan and
the number and kind of shares then subject to options granted hereunder and the
price per share thereof shall be appropriately adjusted in such manner as the
Board or the Committee may deem equitable to prevent substantial dilution or
enlargement of the rights available or granted hereunder. Except as otherwise
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determined by the Board or the Committee, a merger or a similar reorganization
in which the Company does not survive, a liquidation or distribution of the
Company, or a sale of all or substantially all of the assets of the Company,
shall cause every option outstanding hereunder to terminate, to the extent not
then exercised, unless any surviving entity agrees to assume the obligations
hereunder.
13. Terms and Conditions of DERs. A Dividend Equivalent Right is an award
entitling the recipient to receive credits based on cash dividends that would be
paid on the Common Shares specified in the Dividend Equivalent Right (or other
award to which it relates) if such shares were held by the recipient. A Dividend
Equivalent Right may be granted hereunder to any participant as a component of
another award granted hereunder or as a freestanding award. The terms and
conditions of Dividend Equivalent Rights shall be specified in the grant.
Dividend Equivalent Rights credited to a participant may be paid currently or
may be deemed to be reinvested in Common Shares. Any such reinvestment shall be
at fair market value on the date of reinvestment or such other price as may then
apply under a dividend reinvestment plan sponsored by the Company, if any.
Dividend Equivalent Rights may be settled in cash or shares or a combination
thereof, in a single installment or multiple installments. A Dividend Equivalent
Right granted as a component of another award hereunder may provide that such
Dividend Equivalent Right shall be settled upon exercise, settlement, or payment
of, or lapse of restrictions on, such other award, and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other award. A Dividend Equivalent Right granted as a
component of another award hereunder may also contain terms and conditions
different from such other award.
14. Definitions.
(a) The term "DERs" or "Dividend Equivalent Rights" means awards
granted pursuant to Paragraph 13 hereof.
(b) The term "employee" shall have, for purposes of this Plan, the
meaning ascribed to "employee" under Section 3401(c) of the Code and the
regulations promulgated thereunder.
(c) The term "fair market value" shall mean, in the case of shares for
which there is a generally recognized market, the price of the shares
prevailing on a national securities exchange which is registered under the
Exchange Act, and in the case of shares not traded on such national
securities exchange, the price as determined in accordance with procedures
to be established in good faith by the Board or the Committee. With respect
to incentive options, the Board or the Committee shall determine fair
market value in conformance with regulations, if available, issued by the
Internal Revenue Service with regard to incentive stock options.
(d) The term "option", unless otherwise indicated, means either an
incentive option or a nonqualified option.
(e) The term "optionee" means an employee, consultant or trustee of
the Company to whom an option is granted under the Plan.
(f) The term "parent" shall have, for the purpose of this Plan, the
meaning ascribed to it under Section 424(e) of the Code.
(g) The term "subsidiary" shall have, for purposes of this Plan, the
meaning ascribed to it under Section 424(f) of the Code and regulations
promulgated thereunder.
15. Termination or Amendment of Plan. The Board may from time to time,
with respect to any shares at the time not subject to options, suspend or
terminate the Plan or amend or revise the terms of the Plan; provided that the
provisions of the Plan, to the extent that they relate to the granting of
nonqualified options to non-employee trustees (including without limitation
Paragraph 9) may not be amended more than once every six months (other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder); and provided further that any
amendment of the Plan shall be approved by shareholders representing a majority
of the outstanding shares of capital stock of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable laws of the State of Maryland, voting as a single class, to the
extent that such shareholder approval is necessary to
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comply with applicable provisions of the Code, rules promulgated pursuant to
Section 16 of the Exchange Act, applicable state law, or NASD or exchange
listing requirements.
No amendment, suspension or termination of the Plan shall, without the
consent of any affected optionee, alter or impair any rights or obligations
under any option theretofore granted to such optionee under the Plan.
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
LEXINGTON CORPORATE PROPERTIES TRUST
The undersigned hereby appoints Antonia G. Trigiani and Paul R. Wood
proxies, with power to act without the other and with power of substitution,
and hereby authorizes them to represent and vote, as designated on the other
side, all the shares of Lexington Corporate Prooperties Trust standing in the
name of the undersigned with all powers which the undersigned would possess if
present at the Annual Meeting of Shareholders of the Company to be held may 20,
1998 or any adjournment thereof.
(Continued, and to be marked, dated, and signed, on the other side)
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24
| |
| |
- ---- ----
Please mark [X]
your vote as
indicated in
this example.
(1) to elect seven directors to serve until the 1999 Annual Meeting of
Shareholders.
FOR all nominees WITHHOLD
listed to the right AUTORITY
(except as marked to to vote for all nominees
the contrary listed to the right
[ ] [ ]
Election of Directors include:
E. Robert Rosking, Richard J. Rouse, T. Wilson Englin, Carl D. Glickman,
John D. McGurk Kevin W. Lynch, Seith M. Zachary
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH NOMINEES'S NAME IN THE LIST ABOVE.)
(2) to adopt, ratify and approve the Company's 1998 Share Option Plan; and
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(3) to transact such other business as may properly come before the 1988
Annual Meeting.
----- Please sign exactly as your name
| appears on this Proxy Card. When
signing as attorney, executor,
administrator, trustee, guardian or
corporate or partnership official,
please give full title as such and
the full name of the entity on
behalf of whom you are signing. If
a partnership, please sign in
partnership name by authorized
person.
Dated: ________________________, 1988
_____________________________________
Signature
_____________________________________
Signature
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