<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ARDEN REALTY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------
<PAGE> 2
DRAFT DATED 4/6/98 8:00 AM
ARDEN REALTY, INC.
9100 Wilshire Boulevard
Suite 700, East Tower
[ARDEN LOGO] Beverly Hills, CA 90212
April 8, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 annual meeting of
shareholders of Arden Realty, Inc. to be held on May 7, 1998, at 9:00 a.m. in
the Opus Ballroom at The Hotel Sofitel, 8555 Beverly Boulevard, Los Angeles,
California 90048.
Information about the meeting and the various matters on which the
shareholders will act is included in the Notice of Annual Meeting of
Shareholders and Proxy Statement that follows. Also included is a Proxy Card and
postage paid return envelope.
It is important that your shares be represented at the meeting. Whether
or not you plan to attend, we hope that you will complete and return your Proxy
Card in the enclosed envelope as promptly as possible.
Sincerely,
/s/ RICHARD S. ZIMAN
Richard S. Ziman
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
ARDEN REALTY, INC.
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
TO BE HELD MAY 7, 1998
To the shareholders of Arden Realty, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the
"Annual Meeting") of Arden Realty, Inc., a Maryland corporation (the "Company"),
will be held in the Opus Ballroom at the Hotel Sofitel, 8555 Beverly Boulevard,
Los Angeles, California 90048 on May 7, 1998, at 9:00 a.m., local time, for the
following purposes:
1. To elect one director to serve until the annual meeting of
shareholders in the year 2001 and until his successor is duly elected
and qualified.
2. To consider and act upon the amendment to the 1996 Stock Option and
Incentive Plan of Arden Realty, Inc. and Arden Realty Limited
Partnership to increase the number of shares of Common Stock reserved
for issuance thereunder (the "Amendment").
3. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
The Board of Directors has fixed the close of business on March 20, 1998
as the record date (the "Record Date") for determining the shareholders entitled
to receive notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ DIANA M. LAING
Diana M. Laing
Chief Financial Officer
and Secretary
April 8, 1998
Beverly Hills, California
<PAGE> 4
ARDEN REALTY, INC.
9100 WILSHIRE BOULEVARD
SUITE 700, EAST TOWER
BEVERLY HILLS, CA 90212
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 7, 1998
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Arden Realty, Inc., a Maryland corporation (the
"Company"), of proxies from the holders of the Company's issued and outstanding
shares of common stock, $.01 par value per share (the "Common Shares"), to be
exercised at the Annual Meeting of Shareholders (the "Annual Meeting") to be
held on May 7, 1998 in the Opus Ballroom at The Hotel Sofitel, 8555 Beverly
Boulevard, Los Angeles, California 90048 at 9:00 a.m. local time, and at any
adjournment(s) or postponement(s) thereof for the purposes set forth in the
accompanying Notice of Annual Meeting.
This Proxy Statement and enclosed form of proxy are first being mailed to
the shareholders of the Company on or about April 8, 1998.
At the Annual Meeting, the shareholders of the Company will be asked to
consider and vote upon the following proposals (the "Proposals"):
1. The election of one director to serve until the annual meeting of
shareholders to be held in the year 2001 and until his successor is duly elected
and qualified, and
2. To consider and act upon the Amendment to the 1996 Stock Option and
Incentive Plan of Arden Realty, Inc. and Arden Realty Limited Partnership (the
"1996 Incentive Plan") to increase the number of shares of Common Stock reserved
for issuance thereunder (the "Amendment").
3. Such other business as may properly come before the Annual Meeting.
Only the holders of record of the Common Shares at the close of business
on March 20, 1998 (the "Record Date") are entitled to notice of and to vote at
the Annual Meeting. Each Common Share is entitled to one vote on all matters. As
of the Record Date, 61,209,499 Common Shares were outstanding.
A majority of the Common Shares outstanding must be represented at the
Annual Meeting in person or by proxy to constitute a quorum for the transaction
of business at the Annual Meeting. Abstentions and broker non-votes will count
toward the presence of a quorum.
In order to be elected as a director, a nominee must receive a plurality
of all the votes cast at the Annual Meeting at which a quorum is present. For
purposes of calculating votes cast in the election of the director, abstentions
will not be counted as votes cast and will have no effect on the result of the
vote on the Proposal regarding the election of the director nominee. The
affirmative vote of the holders of a majority of the shares present and entitled
to vote at the meeting is required for approval of the proposed Amendment to the
1996 Incentive Plan. For purposes of the vote on the proposed Amendment,
abstentions will have the same effect as votes against the proposed Amendment
and broker non-votes will not be counted as shares entitled to vote on the
matter and will have no effect on the result of the vote.
The Common Shares represented by all properly executed proxies returned
to the Company will be voted at the Annual Meeting as indicated or, if no
instruction is given, FOR the nominee for director and Amendment to the 1996
Incentive Plan. As to any other business which may properly come before the
Annual Meeting, all properly executed proxies will be voted by the persons named
therein in accordance with their discretion. The Company does not presently know
of any other business which may come before the Annual Meeting. Any person
giving a proxy has the right to revoke it at any time before it is exercised (a)
by filing with the Secretary of the Company a duly signed revocation or a proxy
bearing a later date or (b) by electing to vote in person at the Annual Meeting.
Mere attendance at the Annual Meeting will not revoke a proxy.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED AND THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------------------------------------
The date of this proxy statement is April 8, 1998.
<PAGE> 5
EXECUTIVE OFFICERS
Following is a biographical summary of the experience of the executive
and senior officers of the Company.
RICHARD S. ZIMAN. Mr. Ziman, 55, is a founder of the Company and has
served as the Chairman of the Board and Chief Executive Officer and as a
Director since its inception. He has been involved in the real estate industry
for over 25 years. In 1990, Mr. Ziman formed Namiz and served as its Chairman of
the Board and Chief Executive Officer from its inception until the formation of
the Company. In 1979 he co-founded Pacific Financial Group, a diversified real
estate investment and development firm headquartered in Beverly Hills, of which
he was the Managing General Partner. Mr. Ziman received his Bachelor's Degree
and his Juris Doctor Degree from the University of Southern California and
practiced law as a partner in the law firm of Loeb & Loeb from 1971 to 1980,
specializing in transactional and financing aspects of real estate.
VICTOR J. COLEMAN. Mr. Coleman, 36, is a founder of the Company and has
served as the President and Chief Operating Officer and as a Director of the
Company since its inception. He was the President, Chief Operating Officer and
cofounder of Namiz from 1990 to 1996. From 1987 to 1989, Mr. Coleman was Vice
President of Los Angeles Realty Services, Inc. and earlier in his career from
1985 to 1987 was Director of Marketing/Investment Advisor of Development Systems
International and an associate at Drexel Burnham Lambert specializing in private
placements with institutional and individual investors. Mr. Coleman received his
Bachelor's Degree from the University of California at Berkeley and received his
Master of Business Administration degree from Golden Gate University.
DIANA M. LAING. Ms. Laing, 43, has served as Chief Financial Officer of
the Company since August 1996 and as Secretary of the Company since February
1997. Prior to joining the Company, Ms. Laing served, from 1985 to 1996, as
Executive Vice President and Chief Financial Officer of South West Property
Trust, Inc., a publicly traded apartment properties real estate investment
trust, and its predecessor Southwest Realty, Ltd. Ms. Laing also served from
1982 to 1985 as Controller, Treasurer and Vice President - Finance of Southwest
Realty, Ltd. From 1981 to 1982, Ms. Laing was Controller of Crawford Energy,
Inc. and she served as a member of the audit staff of Arthur Andersen & Company
from 1978 to 1981. Ms. Laing is a Certified Public Accountant and a member of
the American Institute of CPAs and the Texas Society of Public Accountants. Ms.
Laing received her Bachelor of Science Degree in Accounting from Oklahoma State
University.
ANDREW J. SOBEL. Mr. Sobel, 38, served as Executive Vice President and
Director of Leasing of the Company since its formation through July 1997 and
Executive Vice President, Director of Property Operations since August 1997. He
served as Director of Leasing for Namiz from 1992 to 1996. Mr. Sobel is an
attorney admitted to the State Bar of California in 1985 with 11 years
experience in the practice of real estate law. From 1990 to 1992, Mr. Sobel was
a sole practitioner. From 1987 to 1990 he was an attorney with the law firm of
Pircher, Nichols & Meeks specializing in all aspects of its real estate
transactional practice including acquisitions, leasing and financings. Mr. Sobel
received his Bachelor's Degree from State University of New York at Oswego and
his Juris Doctor Degree from the University of California, Berkeley (Boalt
Hall).
JEFFREY A. BERGER. Mr. Berger, 35, has served as Senior Vice
President - Acquisitions of the Company since October 1997. Prior to joining the
Company, Mr. Berger served as Vice President and Director of Berger Realty
Group, a privately held real estate company in Chicago, Illinois. Berger Realty
Group managed and leased approximately 1,000 apartments, and over two million
rentable square feet of office, retail, and R&D/industrial properties. Mr.
Berger was responsible for all acquisitions and finance and for managing a staff
of 75 people. Prior to joining Berger Realty Group, Mr. Berger served as
Assistant Vice President of Real Estate Acquisitions for Heitman Financial.
DANIEL S. BOTHE. Mr. Bothe, 32, served as Vice President - Finance of
the Company from December 1996 to December 1997 and Senior Vice
President - Finance since January 1998. From 1993 to 1996, Mr. Bothe was a
management consultant with the E&Y Kenneth Leventhal Real Estate Group of Ernst
& Young LLP. From 1988 to 1991, Mr. Bothe served as a member of the audit staff
of KPMG Peat Marwick LLP specializing in real estate. Mr. Bothe is a Certified
Public Accountant in the State of California and a member of the America
Institute of CPAs. Mr. Bothe received his Bachelor of Science Degree in
Accounting from San Diego State University and his Master of Business
Administration Degree from the University of Southern California.
RICHARD S. DAVIS. Mr. Davis, 39, has served as Chief Accounting Officer
of the Company since January 1998. From 1996 to 1997, Mr. Davis was with
Catellus Development Corporation where he was responsible for accounting and
finance for the asset management and development divisions. From 1985 to 1996,
Mr. Davis served as a member of the audit staff of both KPMG Peat Marwick LLP
and Price Waterhouse LLP specializing in real estate. Mr. Davis is a
2
<PAGE> 6
Certified Public Accountant in the states of California and Missouri and a
member of the American Institute of CPAs. Mr. Davis received his Bachelor of
Science Degree in Accounting from the University of Missouri at Kansas City.
RANDY J. NOBLITT. Mr. Noblitt, 41, has served as Senior Vice
President - Asset Management of the Company since November 1997. From 1995 to
1997, Mr. Noblitt established a management consulting practice serving the real
estate industry. From 1993 to 1995, Mr. Noblitt served as Senior Vice President
of Tishman West in charge of the Southern California operation. In 1992 and 1993
Mr. Noblitt served as Senior Portfolio Manager and Director of Management
Services for Cushman & Wakefield in Southern California. Mr. Noblitt's career
includes extensive experience in asset management, leasing and development of
all commercial property types. Mr. Noblitt received his Bachelor of Science
Degree in Business Administration from California State University, Northridge.
ROBERT C. PEDDICORD. Mr. Peddicord, 36, has served as Vice
President - Leasing of the Company from December 1996 to September 1997 and
Senior Vice President - Leasing since October 1997. From 1987 to 1996, Mr.
Peddicord was a Managing Director in the West Los Angeles office of Julien J.
Studley, representing landlords and tenants in the leasing of office space. From
1984 to 1986, Mr. Peddicord served as a branch Vice President for Great Western
Financial Corporation. Mr. Peddicord received his Bachelor's Degree in Economics
from the University of California at Los Angeles.
HERBERT L. PORTER. Mr. Porter, 59, has served as Senior Vice
President - Construction and Development of the Company since its formation. He
served as Director of Construction and Capital Improvements for Namiz from 1993
to 1996. From 1973 to 1992, Mr. Porter was a partner/owner in his own real
estate development and property management company specializing in medium to
high-rise commercial office buildings. Mr. Porter's over 24 years in commercial
office development include planning, financing, acquisition, entitlements and
approvals, design, construction, marketing, leasing, tenant improvements and
outright sale. Mr. Porter received his Bachelor's Degree from the University of
Southern California.
3
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the
compensation paid by the Company for services rendered during the fiscal year
ended December 31, 1997 and for the period from the Company's inception as a
public Company, October 9, 1996 through December 31, 1996 to the named
executives indicated below. Prior to the inception of the Company as a public
company on October 9, 1996, the Company did not pay any compensation to its
officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- ------------
OTHER ANNUAL OPTIONS STOCK
NAME TITLE YEAR SALARY($) BONUS($) COMPENSATION($) GRANTED(#) BONUS(#)
---- ----- ---- --------- -------- --------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard S. Ziman....... Chairman of the Board, 1997 $300,000 $228,000 $9,600 211,000
Chief Executive Officer 1996 75,000 -- 2,400 400,000 --
and Director
Victor J. Coleman...... President, Chief Operating 1997 250,000 162,500 7,800 140,000
Officer and Director 1996 62,500 -- 1,950 250,000 --
Diana M. Laing......... Chief Financial Officer 1997 195,000 114,500 6,000 60,000
and Secretary 1996 48,750 -- 1,500 50,000 --
Andrew J. Sobel........ Executive Vice President and 1997 150,000 87,500 45,000
Director of Property 1996 31,250 7,750 -- 40,000 3,750(1)
Operations
Herbert L. Porter...... Senior Vice President - 1997 130,000 48,000 30,000
Construction and 1996 32,550 5,100 -- 30,000 1,250(1)
Development
</TABLE>
- ---------------
(1) Represents the number of shares for a one-time Common Stock Bonus in 1996.
OPTION GRANTS IN LAST FISCAL YEAR
The following table presents information relating to options granted to
purchase Common Shares to the Named Executive Officers during 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF
COMMON SHARES TOTAL OPTIONS SHARE PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED(#) FISCAL YEAR PER SHARE DATE 5% 10%
---- ------------- ------------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard S. Ziman 211,000 37.9% $32.25 10/15/07 $4,280,000 $10,846,000
Victor J. Coleman 140,000 29.2% 32.25 10/15/07 3,296,000 8,353,000
Diana M. Laing 60,000 10.8% 32.25 10/15/07 1,217,000 3,084,000
Andrew J. Sobel 45,000 8.1% 32.25 10/15/07 913,000 2,313,000
Herbert L. Porter 30,000 5.4% 32.25 10/15/07 609,000 1,542,000
</TABLE>
- ---------------
(1) All options granted in 1997 become exercisable in three equal installments
beginning on the first anniversary of the date of grant and have a term of
ten years subject to earlier termination in certain events related to
termination of employment. The option exercise price is equal to fair market
value of the Common Shares on the date of grant.
(2) Assumed annual rates of stock price appreciation for illustrative purposes
only. Actual stock prices will vary from time to time based upon market
factors and the Company's financial performance. No assurances can be given
that these appreciation rates will be achieved.
4
<PAGE> 8
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning exercised
and unexercised options held by the Named Executive Officers at December 31,
1997.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
SHARES AT DECEMBER 31, 1997 DECEMBER 31, 1997
ACQUIRED ON VALUE --------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(1)
---- ----------- ----------- ----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard S. Ziman... 133,333 $1,433,330 -- 477,667 $2,867,000
Victor J.
Coleman.......... -- -- 83,333 306,667 $896,000 1,792,000
Diana M. Laing..... -- -- 16,667 93,333 179,000 358,000
Andrew J. Sobel.... -- -- 13,333 50,000 143,000 287,000
Herbert L.
Porter........... -- -- 10,000 71,667 108,000 215,000
</TABLE>
- ---------------
(1) Based on the closing price of $30.75 per Common Share on December 31, 1997,
as reported by the New York Stock Exchange.
EMPLOYMENT AGREEMENTS
Each of Messrs. Ziman and Coleman has entered into an employment
agreement with the Company. The employment agreements of Messrs. Ziman and
Coleman have an initial term of three years and are subject to automatic
one-year extensions following the expiration of the initial term. For the first
year of the term, the employment agreements of Messrs. Ziman and Coleman provide
for an initial annual base compensation in the amounts set forth in the
Executive Compensation table with the amount of any initial bonus to be
determined by the Compensation Committee. For subsequent years, both the amount
of the base compensation and any bonus will be determined by the Compensation
Committee.
Ms. Laing entered into an employment agreement with the Company
effective August 1, 1996 which has an initial term of one year and is subject to
automatic one-year extensions following the expiration of the initial term. On
August 1, 1997, Ms. Laing's employment agreement was extended for a one year
term. Ms. Laing's employment agreement provides for an initial annual base
compensation in the amount set forth in the Executive Compensation table and
entitles her to an initial cash bonus in an amount to be determined by the
Compensation Committee but not to exceed 20% of her initial annual base
compensation. For any subsequent years in which the employment agreement is
extended beyond the initial term, the amount of Ms. Laing's base compensation
and any bonus will be determined by the Compensation Committee.
In addition, Mr. Sobel entered into an employment agreement with the
Company which has an initial term of three years and is subject to automatic
one-year extensions following the expiration of the initial term. Mr. Sobel's
employment agreement provides for an initial annual base compensation in the
amount set forth in the Executive Compensation table and entitles him to an
initial cash bonus in an amount to be determined by the Compensation Committee.
For any subsequent years in which the employment agreement is extended beyond
the initial term, the amount of Mr. Sobel's base compensation and any bonus will
be determined by the Compensation Committee.
The employment agreements of Messrs. Ziman, Coleman, and Sobel, and Ms.
Laing entitle the executives to participate in the Company's 1996 Incentive Plan
(each executive has been allocated the number of stock options set forth in the
Executive Compensation table) and to receive certain other insurance and pension
benefits. In addition, in the event of a termination by the Company without
"cause," a termination by the executive for "good reason," or a termination
pursuant to a "change in control" of the Company (as such terms are defined in
the respective employment agreements), the terminated executive will be entitled
to (i) a single severance payment (the "Severance Amount") and (ii) continued
receipt of certain benefits including medical insurance, life and disability
insurance and participation in all pension, 401(k) and other employee plans and
benefits established by the Company for its executive employees for a specified
period of time following the date of termination (collectively, the "Severance
Benefits"). The Severance Amount for Messrs. Ziman and Coleman is equal to the
sum of two times the executive's average annual base compensation and two times
the highest annual bonuses received during the preceding thirty-six month
period. The Severance Amount for Mr. Sobel is equal to the sum of three times
his average annual base compensation for the preceding 36 months and three times
the highest annual bonus received by him in the preceding 36 months. The
Severance Amount for Ms. Laing is equal to the executive's annual base
compensation for the preceding 12 month period.
5
<PAGE> 9
Receipt of the Severance Benefits shall continue for two years commencing on the
date of termination in the case of Messrs. Ziman and Coleman, for three years
commencing on the date of termination in the case of Mr. Sobel, and for one year
commencing on the date of termination in the case of Ms. Laing.
As part of the employment agreements, each of Messrs. Ziman, Coleman,
and Sobel are bound by a non-competition covenant with the Company which
prohibits them from engaging in (i) the acquisition, renovation, management or
leasing of any office properties in the Los Angeles, Orange and San Diego
counties of Southern California and (ii) any active or passive investment in or
reasonably relating to the acquisition, renovation, management or leasing of
office properties in the Los Angeles, Orange and San Diego counties of Southern
California for a period of one year following the date of such executive's
termination, unless such termination was without cause.
401(K) PLAN
Effective January 1, 1997, the Company established the Arden Realty
401(k) Plan and Trust (the "401(k) Plan") to cover eligible employees of the
Company and any designated affiliate.
The 401(k) Plan permits eligible employees of the Company to defer up to
20% of their annual compensation, subject to certain limitations imposed by the
Code. The employees' elective deferrals are immediately vested and non-
forfeitable upon contribution to the 401(k) Plan. Employees are generally
eligible to participate in the 401(k) Plan after six months of service. The
Company currently makes matching contribution to the 401(k) Plan equal to 50% of
each participating employee's contribution. Employees vest 25% in the Company's
contributions for each full year of service, vesting 100% after four full years
of service.
The 401(k) Plan qualifies under Section 401 of the Code so that
contributions by employees or by the Company to the 401(k) Plan, and income
earned on plan contributions, are not taxable to employees until withdrawn from
the 401(k) Plan, and so that contributions by the Company are deductible by the
Company when made.
BOARD OF DIRECTORS MEETINGS AND ATTENDANCE
The Board of Directors of the Company (the "Board") held fifteen
meetings during the Company's last full fiscal year. All directors attended at
least 75% of the aggregate of (i) the total number of meetings of the Board
while they were on the Board and (ii) the total number of meetings of the
committees of the Board on which such directors served.
BOARD COMMITTEES
The Board has an Audit Committee, an Executive Committee, a Compensation
Committee, and an Acquisition Committee.
Audit Committee. The Audit Committee consists of Mr. Good, its Chairman,
and Mr. Covitz. The Audit Committee makes recommendations concerning the
engagement of independent public accountants, reviews with the independent
public accountants the scope and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls. The Audit Committee met two times during 1997.
Executive Committee. The Executive Committee consists of Mr. Ziman, its
Chairman, and Mr. Coleman. Subject to the Company's conflict of interest
policies, the Executive Committee has authority to dispose of real property and
the power to authorize on behalf of the full Board of Directors, the execution
of certain contracts and agreements, including those related to the borrowing of
money by the Company (and, consistent with the Partnership Agreement of Arden
Realty Limited Partnership (the "Operating Partnership"), to cause the Operating
Partnership to take such actions). The Executive Committee did not meet during
1997.
Compensation Committee. The Compensation Committee consists of Mr.
Roath, its Chairman, and Messrs. Covitz and Good. The function of the
Compensation Committee is to (i) establish, review, modify, and adopt
compensation plans and arrangements for the Company, (ii) review, determine and
establish the compensation (including bonuses) of the officers of the Company,
and (iii) grant bonuses and other compensation to such officers of the Company.
The Compensation Committee met three times during 1997.
Acquisitions Committee. The Acquisitions Committee consists of Mr.
Ziman, its Chairman, and Messrs. Coleman and Covitz. The Acquisition Committee
has the authority to approve the acquisition of real property
6
<PAGE> 10
with purchase prices up to $20,000,000. Any acquisitions greater in amount
require full Board approval. The Acquisitions Committee met five times during
1997.
COMPENSATION OF DIRECTORS
Each of the Company's non-employee directors receives annual
compensation of $18,000 for his services. In addition, each non-employee
director receives $1,000 for each Board of Directors meeting attended. Each
non-employee director attending any committee meetings receives an additional
$1,000 for each committee meeting attended, unless the committee meeting is held
on the day of a meeting of the Board. Each non-employee director is also
reimbursed for reasonable expenses incurred to attend director and committee
meetings. Officers of the Company who are directors are not paid any directors'
fees. In addition, under the Company's stock incentive plan, upon his initial
appointment to the Board, each non-employee director is automatically granted
options to purchase 10,000 Common Shares at the then current market price. These
initial options vest during the directors' continued service at a rate of 2,500
Common Shares per year. On October 15, 1997, each non-employee director was
granted options to purchase an additional 10,000 common shares at the closing
stock price on such date ($32.25). These options vest during the directors'
continued service over a three-year period, with one third of the options
vesting on each anniversary of the grant date.
The following table sets forth certain information concerning exercised
and unexercised options held by non-employee directors at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES
UNDERLYING OPTIONS
GRANTED(#) EXERCISE
---------------------------- PRICE
NAME EXERCISABLE UNEXERCISABLE PER SHARE
---- ----------- ------------- ---------
<S> <C> <C> <C>
Carl D. Covitz....................... 2,500... 7,500 $20.00
-- 10,000 32.25
Steven C. Good....................... 2,500 7,500 20.00
-- 10,000 32.25
Larry S. Flax........................ 2,500 7,500 27.00
-- 10,000 32.25
Kenneth B. Roath..................... 2,500 7,500 20.00
-- 10,000 32.25
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no Compensation Committee interlocks and no employees of the
Company participate on the Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board (the "Committee") is composed of
three non-employee directors whose names appear at the end of this report, each
of whom has general review authority over compensation levels of all corporate
officers and key management personnel, oversees benefit and compensation
programs, and, from time to time, considers and recommends new programs to the
Board.
The Committee is responsible for reviewing the performance of, and
recommending to the Board the compensation of Mr. Richard S. Ziman, the
Company's Chairman of the Board and Chief Executive Officer. The Board has the
final authority to set Mr. Ziman's compensation.
In 1997, Mr. Ziman received an annual base salary of $300,000 pursuant
to his employment agreement with the Company, as well as a performance-based
cash bonus of $228,000. In determining the amount of the cash bonus to Mr.
Ziman, the Committee considered the overall performance of the Company for 1997
as compared to other REITs. In addition, he received an option exercisable for
211,000 Common Shares. The Committee believes that the option grant to Mr. Ziman
in 1997 is consistent with the long-term performance objectives of the Company,
and is also consistent with the Committee's philosophy to link a substantial
portion of the chief executive officer's compensation with the long-term value
created for the Company's stockholders. The option vests equally over three
years, with the first third becoming exercisable one year from the date of
grant.
7
<PAGE> 11
The Committee also reviews the individual performance level for other
senior executives whose compensation is detailed in this Proxy Statement.
The Committee believes that the Company's executive compensation program
has been a significant influence on improving stockholder returns because it is
demanding and is aligned with stockholder interests.
OVERALL POLICY
The key elements of the Company's senior executive compensation program
consist of base salary, cash bonuses and a long-term incentive program. The
senior executive compensation program is intended to enable the Company to
attract, motivate, and retain senior executives, by providing a fully
competitive total compensation package based on both individual and corporate
performance and recognizing individual initiative and achievement. In the view
of the Committee, the program fully satisfied those goals in 1997.
The program employs cash incentives based upon performance and stock
options with time vesting provisions. The Committee endorses the view that
performance-based annual cash compensation and stock-based long-term incentives
aid in aligning management's and stockholders' interests and enhance value to
stockholders. Accordingly, these elements play an important role in the total
compensation packages for the Company's executive officers.
ANNUAL COMPENSATION PROGRAM
Annual total cash compensation for senior executives consists of base
salary and performance-based cash bonuses.
Base salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual, and
by reference to the competitive marketplace for executives, including a
comparison to base salaries for comparable positions at other real estate
companies.
The amounts of bonus awards are determined by evaluating the performance
of the senior executive and the overall performance of the Company.
LONG-TERM INCENTIVE PROGRAM
The long-term incentive program for the senior executives consists
solely of the use of stock options. All of the senior executives participate in
this long-term program and received stock options in 1997. The primary purpose
of the program is to offer an incentive for the improvement of the long-term
performance of the Company and promote growth in stockholder value.
Options may be granted under the stock option program to senior
executives of the Company at the discretion of the Committee. The exercise price
for all option shares granted to senior executives is the fair market value on
the date of the grant.
Each of the stock options granted to senior executives in October 1997
has an exercise price of $32.25 per share and becomes exercisable in three equal
installments on the three ensuing anniversary dates of the award.
Annual compensation and stock options granted to the Company's senior
executive officers in 1997 are summarized in the Executive Compensation Table of
this Proxy Statement.
Compensation Committee
---------------------------
Kenneth B. Roath, Chairman
Carl D. Covitz
Steven C. Good
Date: April 8, 1998
The above report of the Compensation Committee will not be deemed to be
incorporated by reference into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent that
the Company specifically incorporates the same by reference.
8
<PAGE> 12
PERFORMANCE GRAPH
As a part of the rules concerning executive compensation disclosure, the
Company is obligated to provide a chart comparing the yearly percentage change
in the cumulative total stockholder return on the Company's Common Shares over a
five-year period. However, since the Company's Common Shares have been publicly
traded only since October 4, 1996, such information is provided from this date
through December 31, 1997.
The following line graph compares the change in the Company's cumulative
shareholder return on its Common Shares to the cumulative total return of the
Standard & Poor's 500 Stock Index ("S&P 500 Index") and the NAREIT Equity REIT
Total Return Index ("NAREIT Index") from October 3, 1996, the effective date of
the Company's initial public offering, to December 31, 1997. The graph assumes
the investment of $100 in the Company and each of the indices on October 3, 1996
and as required by the Securities and Exchange Commission, the reinvestment of
all distributions. The NAREIT Index for October 1996 was prorated to adjust for
the partial month. The return shown on the graph is not necessarily indicative
of future performance.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) NAREIT Index 'Arden Realty, Inc.' S&P 500 Index
<S> <C> <C> <C>
10/4/96 100.00 100.00 100.00
12/31/96 118.51 138.13 108.08
3/31/97 119.32 138.09 110.90
6/30/97 125.10 134.29 129.80
9/30/97 139.51 160.72 139.33
12/31/97 141.90 159.70 143.26
</TABLE>
<TABLE>
<CAPTION>
10/4/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Arden Realty, Inc. $100.00 $138.13 $138.09 $134.29 $160.72 $159.70
NAREIT Index 100.00 118.51 119.32 125.10 139.51 141.90
S&P 500 Index 100.00 108.08 110.90 129.80 139.33 143.26
</TABLE>
9
<PAGE> 13
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Shares (or Common Shares for which limited
partnership interests in the Operating Partnership ("OP Units") are
exchangeable) as of December 31, 1997 for (1) each person known by the Company
to be the beneficial owner of five percent or more of the Company's outstanding
Common Shares (or Common Shares for which OP Units are exchangeable), (2) each
director and each Named Executive Officer and (3) the directors and officers of
the Company as a group. Except as indicated below, all such Common Shares are
owned directly, and the indicated person has sole voting and investment power.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE OF COMMON
NAME AND ADDRESS(1) COMMON STOCK SHARES OUTSTANDING(2)
------------------- ------------------- ----------------------
<S> <C> <C> <C>
Cohen & Steers Capital Management 4,681,500 13.08%
757 Third Avenue
New York, NY 10017
Morgan Stanley, Dean Witter, 2,320,000 6.55%
Discover & Co.
1585 Broadway, 38th Floor
New York, NY 10036
Franklin Resources, Inc. 2,106,415 5.90%
777 Mariners Island Blvd.
San Mateo, CA 94404
Richard S. Ziman 1,891,639(3) 5.28%
Victor J. Coleman 1,301,099(4) 3.63%
Diana M. Laing 21,667(5) *
Andrew J. Sobel 17,083(6) *
Herbert L. Porter 10,520(7) *
Carl D. Covitz 2,500(8) *
Larry S. Flax 12,500(8) *
Steven C. Good 2,500(8) *
Kenneth B. Roath 3,500(8) *
All directors and officers as a group (15 3,289,675 9.19%
persons)
</TABLE>
- ---------------
* Less than one percent.
(1) Unless otherwise indicated, the address for each of the persons listed is
9100 Wilshire Boulevard, East Tower, Suite 700, Beverly Hills, CA 90212
(2) For Messrs. Ziman and Coleman, beneficial ownership of Common Shares is
currently held 100% in the form of OP Units. In addition, amounts for
individuals assume that all OP Units held by the person are exchanged for
Common Shares and that none of the OP Units held by other persons are
exchanged for Common Shares. Amounts for all directors and officers as a
group assume all OP Units owned by directors and officers are exchanged for
Common Shares.
(3) Includes (a) 775,196 shares held by an entity in which Messrs. Ziman and
Coleman have shared voting and investment power, of which shares Mr. Ziman
disclaims beneficial ownership in the 40% of such shares in which he has no
pecuniary interest, (b) 353,212 shares owned by entities directly and
indirectly owned 100% by Mrs. Ziman, and (c) 136,674 shares owned by a
family partnership of Mr. Ziman, in which Mr. Ziman has shared voting and
investment power and of which Mr. Ziman is a 20% general partner and
disclaims beneficial ownership of the remaining 80% in which he has no
pecuniary interests.
(4) Includes (a) 775,196 shares held by entities in which Messrs. Ziman and
Coleman have shared voting and investment power, of which shares Mr. Coleman
disclaims beneficial ownership of the 60% of such shares in which he has no
pecuniary interest, (b) 99,458 shares owned by an entity owned 100% by Mr.
Coleman, (c) 1,600 shares owned of record by the Jessica Lauren Encell Trust
of which Mr. Coleman is the trustee with sole voting and
10
<PAGE> 14
disposition power, d) 1,600 shares owned of record by the Tara Elle Coleman
Trust of which Mr. Coleman is the trustee with sole voting and disposition
power, and (e) and 83,333 shares related to exercisable stock options.
(5) Includes 16,667 shares related to exercisable stock options.
(6) Includes 13,333 shares related to exercisable stock options.
(7) Includes 10,000 shares related to exercisable stock options.
(8) Includes 2,500 shares related to exercisable stock options. Each of the
Company's non-employee directors hold options to purchase 20,000 Common
Shares.
COMPLIANCE WITH FEDERAL SECURITIES LAWS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities (collectively,
"Insiders"), to file with the Commission initial reports of ownership and
reports of changes in ownership of the Company's Common Shares and other equity
securities of the Company. Insiders are required by regulation of the Commission
to furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, during the year ended December 31, 1997, all Insiders
complied with all Section 16(a) filing requirements applicable to them.
11
<PAGE> 15
PROPOSAL I: ELECTION OF DIRECTOR
Pursuant to the Company's charter (the "Charter"), the Company has seven
directors, who are divided into three classes, as nearly equal in number as
possible. Arthur Gilbert, a director who had been elected to a term expiring in
1998, resigned as a director on April 16, 1997. Accordingly, the Board is
considering potential replacements for Mr. Gilbert as a director but will not
submit a nominee to replace him at the Annual Meeting. Currently, the Board
consists of six members. The directors currently are divided into three classes,
consisting of one member whose term will expire at this Annual Meeting, two
members whose terms will expire at the year 1999 annual meeting of shareholders
and three members whose terms will expire at the year 2000 annual meeting of
shareholders.
Pursuant to the Charter, at each annual meeting the successors to the
class of directors whose terms expire at such meeting shall be elected to hold
office for a term expiring at the annual meeting of shareholders held in the
third year following the year of their election. Accordingly, at the Annual
Meeting, the nominee for election will be elected to hold office for a term of
three years until the annual meeting of shareholders to be held in the year
2001, and until his successor is duly elected and qualified.
EXCEPT WHERE OTHERWISE INSTRUCTED, PROXIES SOLICITED BY THIS PROXY
STATEMENT WILL BE VOTED FOR THE ELECTION OF THE BOARD'S NOMINEE LISTED BELOW.
This nominee has consented to be named in this Proxy Statement and to serve as a
director if elected.
The information below relating to the nominee for election as director
and for each of the other directors whose terms of office continue after the
Annual Meeting has been furnished to the Company by the respective individuals.
NOMINEE FOR DIRECTOR
STEVEN C. GOOD. Mr. Good, 55, has served as a member of the Board of
Directors of the Company since its inception as a public company in October
1996. Mr. Good is the senior partner in the firm of Good Swartz & Berns, an
accountancy corporation founded in 1993 which evolved from the firm of Block,
Good and Gagerman, which he founded in 1976. Prior to 1976, Mr. Good was a
senior manager at Laventhol & Horwath, a national accounting firm, and later a
partner at Freedman, Morse, Horowitz & Good. Mr. Good is a founder and past
Chairman of CU Bancorp, where he directed the bank's operations from 1982
through 1989. For the past ten years he has been a member of the Board of
Directors of OSI Systems, Inc., a publicly traded electronics firm. Mr. Good is
also a member of the Board of Directors of Big Dog, Inc., a publicly-traded
retailer of sportsware. Mr. Good received his Bachelor of Science in Business
Administration from the University of California at Los Angeles and attended
UCLA's Graduate School.
VOTE REQUIRED AND BOARD RECOMMENDATION
The director will be elected by a favorable vote of a plurality of all
the votes cast at a meeting at which a quorum is present. For purposes of the
election of the director, abstentions will count toward calculation of a quorum
but will not be counted as votes casts and will have no effect on the results of
the vote. Unless instructed to the contrary, the shares represented by the
proxies will be FOR the election of the nominee named above.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION
OF STEVEN C. GOOD TO SERVE UNTIL THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
IN THE YEAR 2001 AND UNTIL A SUCCESSOR IS DULY ELECTED AND QUALIFIED.
OTHER DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
Information concerning the other directors whose terms do not expire at
the Annual Meeting is set forth below.
RICHARD S. ZIMAN. Chairman of the Board and Chief Executive Officer and
Director. Biographical information regarding Mr. Ziman is set forth under
"Executive Officers" in this Proxy Statement. Mr. Ziman's term as a Director is
scheduled to expire at the year 1999 annual meeting of shareholders.
VICTOR J. COLEMAN. President and Chief Operating Officer and Director.
Biographical information regarding Mr. Coleman is set forth under "Executive
Officers" in this Proxy Statement. Mr. Coleman's term as a Director is scheduled
to expire at the year 1999 annual meeting of shareholders.
CARL D. COVITZ. Mr. Covitz, 59, has served as a member of the Board of
Directors of the Company since its inception as a public company in October
1996. For the past 18 years, Mr. Covitz has served as the owner and President of
Landmark Capital, Inc., a national real estate development and investment
company involved in the construction, financing, ownership and management of
commercial, residential and warehouse properties. Mr. Covitz has also
12
<PAGE> 16
previously served, from 1990 to 1993, as Secretary of the Business,
Transportation & Housing Agency of the State of California as well as Under
Secretary and Chief Operating Officer of the U.S. Department of Housing and
Urban Development from 1987 to 1989. Mr. Covitz is currently on the Board of
Directors and was past Chairman of the Board of Directors of Century Housing
Corporation and is the past Chairman of the Board of several organizations
including the Federal Home Loan Bank of San Francisco and the Los Angeles City
Housing Authority. Mr. Covitz received his Bachelor's Degree from the Wharton
School at the University of Pennsylvania and his Master of Business
Administration from the Columbia University Graduate School of Business. Mr.
Covitz' term as a Director is scheduled to expire at the year 2000 annual
meeting of shareholders.
LARRY S. FLAX. Mr. Flax, 55, has served as a member of the Board of
Directors of the Company since December 1996. Mr. Flax is Co-Founder and
Co-Chairman of the Board of California Pizza Kitchen. Prior to becoming a
restaurateur in 1985, Mr. Flax served in Los Angeles as Assistant U.S. Attorney
from 1968 to 1972, Chief of Civil Rights from 1970 to 1971 and Assistant Chief
of the Criminal Division for the United States Department of Justice from 1971
to 1972. Mr. Flax attended the University of Washington as an undergraduate and
received his Juris Doctor and LLM from the University of Southern California Law
School. Mr. Flax's term as a Director is scheduled to expire at the year 2000
annual meeting of shareholders.
KENNETH B. ROATH. Mr. Roath, 62, has served as a member of the Board of
Directors of the Company since its inception as a public company in October
1996. Mr. Roath is currently Chairman, President and Chief Executive Officer of
Health Care Property Investors, Inc., a leader in the health care REIT industry.
Mr. Roath is past Chairman and a former member of the Executive Committee of the
National Association of Real Estate Investment Trusts ("NAREIT") and also serves
as a member of NAREIT's Board of Governors. He is a director of Franchise
Finance Corporation of America. Mr. Roath received his Bachelor's Degree in
accounting from San Diego State University. Mr. Roath's term as a Director is
scheduled to expire at the year 2000 annual meeting of shareholders.
PROPOSAL 2: AMENDMENT TO THE 1996 STOCK OPTION AND INCENTIVE PLAN OF
ARDEN REALTY, INC. AND ARDEN REALTY LIMITED PARTNERSHIP
On April 7, 1998, the Board unanimously authorized an amendment (the
"Amendment") to the 1996 Stock Option and Incentive Plan of Arden Realty, Inc.
and Arden Realty Limited Partnership (the "1996 Incentive Plan"). Subject to
stockholder approval, the Amendment provides for an increase in the number of
Common Shares reserved for issuance under the Plan from 1,500,000 to 3,000,000;
provided, however, that commencing with the first business day of each fiscal
year of the Company hereafter beginning with January 1, 1999, such maximum
number of shares reserved for issuance hereunder shall be a number equal to five
percent (5%) of the number of Common Shares issued and outstanding as of
December 31 of the immediately preceding fiscal year.
The summary of the provisions of the Amendment and of the 1996 Incentive
Plan which follows is not intended to be complete, and reference should be made
to the Amendment and the 1996 Incentive Plan for complete statements of the
terms and provisions. The Amendment is attached hereto as exhibit "A," however,
due to its length, the 1996 Incentive Plan is not included with this Proxy
Statement. To obtain a copy of the 1996 Incentive Plan, requests should be
directed to: Secretary, Arden Realty, Inc., 9100 Wilshire Boulevard, Suite 700,
Beverly Hills, California 90212, telephone number (310) 271-8600.
BACKGROUND AND GENERAL NATURE AND PURPOSE OF THE PLAN
The 1996 Incentive Plan was unanimously adopted by the Board on
September 16, 1996 and was approved by its sole shareholder on September 16,
1996.
The principal purposes of the 1996 Incentive Plan are to provide
performance incentives for directors, non employee directors, officers, other
key employees and consultants of the Company through the grant or issuance of
options, restricted stock, performance awards, dividend equivalents, deferred
stock, stock payments and stock appreciation rights ("SARs"), thereby
stimulating their personal and active interest in the Company's development and
financial success, further aligning their interests with the interests of the
shareholders and inducing them to remain in the Company's employ.
The shares of stock subject to options, awards of restricted stock,
performance awards, dividend equivalents, awards of deferred stock, stock
payments or SARs will initially be Common Shares. The 1996 Incentive Plan limits
the number of shares subject to options that any individual may receive in any
year under the 1996 Incentive Plan to 425,000. On December 31, 1997 the closing
price of a Common Share on the NYSE was $30.75.
13
<PAGE> 17
The 1996 Incentive Plan provides for appropriate adjustments in the
number and kind of shares subject to the 1996 Incentive Plan and to outstanding
grants under the 1996 Incentive Plan in the event of a stock split, stock
dividend or certain other types of recapitalizations.
If any portion of a stock option, SAR or other award terminates or
lapses unexercised, or is canceled upon the grant of a new option, SAR or other
award (which may be at a higher or lower exercise price than the option, SAR or
other award so canceled), the shares which were subject to the unexercised
portion of the option, SAR or other award may again be optioned, granted or
awarded under the 1996 Incentive Plan.
The 1996 Incentive Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended, and is not a qualified plan
under Section 401(a) of the Internal Revenue Code of 1986, as amended. Proceeds
received by the Company from the sale of Common Shares pursuant to the 1996
Incentive Plan will be used for general corporate purposes.
DESCRIPTION OF AMENDMENT OF THE 1996 INCENTIVE PLAN
The Amendment increases the number of Common Shares reserved for
issuance under the Plan from 1,500,000 to 3,000,000; provided, however, that
commencing with the first business day of each fiscal year of the Company
hereafter beginning with January 1, 1999, such maximum number of shares reserved
for issuance hereunder shall be a number equal to five percent (5%) of the
number of Common Shares issued and outstanding as of December 31 of the
immediately preceding fiscal year.
The 1996 Incentive Plan constitutes an important part of the Company's
compensation programs. In order to attract and retain the services of
experienced and capable persons who can make significant contributions to the
further growth and success of the Company, the Board and the Compensation
Committee believe that it is in the best interest of the Company and its
stockholders to approve the Amendment.
ADMINISTRATION
The 1996 Incentive Plan is administered by the Compensation Committee of
the Board, consisting solely of two or more Directors, none of whom is or may be
an officer or employee of the Company. The Committee is authorized to select
from among the eligible employees and consultants the individuals to whom
options, SARs, restricted stock and other awards are to be granted and to
determine the number of shares to be subject to and the terms and conditions of
the options, SARs, restricted stock or other awards, consistent with the 1996
Incentive Plan. The Committee is also authorized to adopt, amend and rescind
rules relating to the administration of the 1996 Incentive Plan.
PAYMENT FOR SHARES
The exercise or purchase price for all options, SARs, restricted stock
and other rights to acquire Common Shares, together with any applicable tax
required to be withheld, must be paid in full in cash at the time of exercise or
purchase but may, with the approval of the Committee, be paid in whole or in
part in Common Shares owned by the option holder (or issuable upon exercise of
the option) having a fair market value on the date of exercise equal to the
aggregate exercise price of the shares to be purchased. The Committee may also
authorize other lawful consideration to be applied to the payment of the
exercise or purchase price of an award.
AMENDMENT AND TERMINATION
Amendments of the 1996 Incentive Plan to increase the number of shares
as to which options, SARs, restricted stock and other awards may be granted
(except for adjustments resulting from stock splits and the like) will require
the approval of the Company's shareholders within twelve months before or after
the action by the Board or the Committee. In all other respects the 1996
Incentive Plan can be amended, modified, suspended or terminated by the Board or
the Committee alone, unless the action would otherwise require shareholder
approval as a matter of applicable law, regulation or rule. Amendments of the
1996 Incentive Plan will not, without the consent of the participant, affect a
participant's rights under an option, SAR, restricted stock or other award
previously granted, unless the award itself otherwise expressly so provides. The
1996 Incentive Plan will terminate after ten years from the date adopted by the
Board or the date approved by the shareholders, whichever is sooner.
14
<PAGE> 18
ELIGIBILITY
Any key employee of (i) the Company, (ii) the Partnership, (iii) any
corporation that is a "Corporate Subsidiary" (as those terms are defined in the
1996 Incentive Plan) or (iii) any partnership, limited liability company or
corporation that is then a "Partnership Subsidiary" (as that term is defined in
the 1996 Incentive Plan), including the Chairman of the Board and the Company's
four most highly compensated officers other than the Chairman of the Board, is
eligible to receive options, SARs, restricted stock and other awards under the
1996 Incentive Plan. Consultants and other independent contractors maintaining a
significant business relationship with the Company, the Partnership, a Corporate
Subsidiary or a Partnership Subsidiary are eligible to receive non-qualified
stock options, SARs, restricted stock and other awards under the 1996 Incentive
Plan. In addition, the 1996 Incentive Plan provides for the automatic grant of
non qualified stock options to the Company's non-employee directors pursuant to
a formula, as described in further detail below.
AWARDS UNDER THE 1996 INCENTIVE PLAN
The 1996 Incentive Plan provides that the Committee may grant or issue
stock options, SARs, restricted stock, deferred stock, dividend equivalents,
performance awards, stock payments or any combination thereof. Each grant or
issuance will be set forth in a separate agreement with the person receiving the
award and will indicate the type, terms and conditions of the award.
Incentive stock options ("ISOs") will be designed to comply with the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
will be subject to restrictions contained in the Code, including the requirement
that the exercise price be equal to at least 100% of the fair market value of
the Common Shares on the grant date and that the term be limited to 10 years,
but may be subsequently modified so as to be disqualified from treatment as an
incentive stock option. Incentive stock options may not be granted to persons
that are not employees.
Nonqualified stock options ("NQSOs") will provide for the right to
purchase Common Shares at a specified price which may not be less than fair
market value on the date of grant, and usually will become exercisable (in the
discretion of the Committee) in one or more installments after the grant date.
NQSOs expire not later than 10 years after the date the options are granted.
The 1996 Incentive Plan also provides for NQSOs to be granted to
non-employee directors of the Company as follows: (i) Each person who is a
non-employee director as of the date of the initial public offering of Common
Shares automatically shall be granted an option to purchase 10,000 Common Shares
vesting in four equal annual installments on the date of such initial public
offering and (ii) each person who is initially elected to the Board after the
consummation of the initial public offering of Common Shares and who is a
non-employee director at the time of such initial election automatically shall
be granted an NQSO to purchase 10,000 Common Shares on the date of such initial
election to the Board. Members of the Board who are employees who subsequently
retire from the Company and remain on the Board will not receive an option grant
pursuant to the grant to such initial non-employee directors described above.
Restricted stock may be sold to participants at various prices (but not
below par value) and made subject to restrictions specified by the Committee.
Restricted stock may be repurchased by the Company at the original purchase
price upon a participant's termination of employment or consultancy. Purchasers
of restricted stock, unlike recipients of options, may have voting rights and
will receive dividends prior to the time when the restrictions lapse.
Deferred stock may be awarded to participants, typically without payment
of consideration, but subject to vesting conditions based upon a vesting
schedule or performance criteria established by the Committee. Unlike restricted
stock, deferred stock will not be issued until the deferred stock award has
vested, and recipients of deferred stock generally will have no voting or
dividend rights prior to the time the vesting conditions are satisfied.
Stock appreciation rights may be granted in connection with a stock
option, or independently. SARs granted by the Committee in connection with a
stock option typically will provide for payments to the holder based upon
increases in the price of the Common Shares over the exercise price of the
related option. There are no limitations specified in the 1996 Incentive Plan
upon the exercise of SARs or upon the amount of gain realizable from the
exercise of SARs. The Committee may elect to pay SARs in cash or in Common
Shares or in a combination of cash and Common Shares.
Dividend equivalents are rights to receive the equivalent value of
dividends paid on Common Shares. They represent the value of the dividends per
share paid by the Company, calculated with reference to the number of shares
covered by stock options, SARs, deferred stock or performance awards held by the
participant.
15
<PAGE> 19
Performance awards include cash bonuses, stock bonuses or other
performance or incentive awards paid in cash, Common Shares or in a combination
of cash and Common Shares. Typically they consist of "phantom" stock awards
which provide for payments based upon increases in the market value, book value,
net profits or other measure of value of the Company's Common Shares or other
specific performance criteria determined appropriate by the Committee, in each
case over a period or periods determined by the Committee.
Stock payments include payments in the form of Common Shares, options or
other rights to purchase Common Shares, made as part of a deferred compensation
arrangement and in lieu of all or any portion of compensation that would
otherwise be paid to an employee. Stock payments may be based upon the fair
market value, book value, net profits or other measure of value of the Common
Shares or other specific performance criteria determined appropriate by the
Committee, determined on the date such stock payment is made or on any date
thereafter.
MISCELLANEOUS PROVISIONS
The terms of options and other rights to acquire Common Shares granted
under the 1996 Incentive Plan may provide for termination of the options or
other rights upon dissolution or liquidation of the Company, the merger or
consolidation of the Company into or with another corporation, the exchange of
all or substantially all of the assets of the Company for the securities of
another corporation, the acquisition by another corporation of all or
substantially all of the Company's assets or the acquisition by another
corporation of 80% or more of the Company's then outstanding voting stock; but
in that event the Committee may also give the option holder or other grantee the
right to exercise the outstanding options or rights in full during some period
prior to the occurrence of any of those events, even though the options or
rights have not yet become fully exercisable.
The 1996 Incentive Plan specifies that the Company may make loans to key
employees in connection with their exercise of options, purchase of shares or
realization of the benefits of other awards granted under the 1996 Incentive
Plan. The terms and conditions of the loans, if any are made, are to be set by
the Committee.
In consideration of the granting of a stock option, SAR, dividend
equivalent, performance award, stock payment, or right to receive restricted or
deferred stock, the employee or consultant must agree in the written agreement
embodying the award to remain in the employ of, or to continue as a consultant
for, the Company, the Partnership, a Corporate Subsidiary or a Partnership
Subsidiary for at least one year after the award is granted.
The dates on which options or other awards under the 1996 Incentive Plan
first become exercisable and on which they expire will be set forth in
individual stock options or other agreements setting forth the terms of the
awards. The agreements generally will provide that options and other awards
expire on or soon after the termination of the individual's status as an
employee or consultant, although the Committee may provide that options and
other awards continue to be exercisable following a termination without cause,
or following a change in control of the Company, or because of the individual's
retirement, death, disability or otherwise. Similarly, restricted stock granted
under the 1996 Incentive Plan that has not vested generally will be subject to
repurchase by the Company in the event of the participant's termination of
employment or consultancy.
No option, SAR or other right to acquire Common Shares granted under the
1996 Incentive Plan may be assigned or transferred by the grantee, except by
will or the laws of descent and distribution, although the shares underlying
those rights may be transferred if the option has been exercised or all
applicable restrictions have lapsed. During the lifetime of the holder of any
option or right, the option or right may be exercised only by the holder.
The Company will be entitled to require participants to discharge
withholding tax obligations in connection with the issuance, vesting or exercise
of any option or other right granted under the 1996 Incentive Plan. Shares held
by or to be issued to a participant may also be used to discharge tax
withholding obligations related to the issuance, vesting or exercise of options
or other rights or the receipt of other awards, subject to the discretion of the
Committee to disapprove that use.
FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH THE 1996 INCENTIVE PLAN
The tax consequences of the 1996 Incentive Plan under current federal
law are summarized in the following discussion which deals with the general tax
principles applicable to the 1996 Incentive Plan, and is intended for general
information only. In addition, the tax consequences described below are subject
to the limitation of the 1993 Omnibus Budget Reconciliation Act ("OBRA"), as
discussed in further detail below. State and local income taxes are not
discussed, and may vary depending on individual circumstances and from locality
to locality.
16
<PAGE> 20
Nonqualified Stock Options. For federal income tax purposes, the
recipient of NQSOs granted under the 1996 Incentive Plan will not have taxable
income upon the grant of the option, nor will the Company then be entitled to
any deduction. Generally, upon exercise of NQSOs the optionee will realize
ordinary income, and the Company will be entitled to a deduction, in an amount
equal to the difference between the option exercise price and the fair market
value of the stock at the date of exercise. An optionee's basis for the stock
for purposes of determining his gain or loss on his subsequent disposition of
the shares generally will be the fair market value of the stock on the date of
exercise of the NQSO.
Incentive Stock Options. There is no taxable income to an employee when
an ISO is granted to him or when that option is exercised; however, the amount
by which the fair market value of the shares at the time of exercise exceeds the
option price will be an "item of adjustment" for purposes of alternative minimum
tax. Gain realized by an optionee upon sale of stock issued on exercise of an
ISO is taxable at capital gains rates, and no tax deduction is available to the
Company, unless the optionee disposes of the shares within two years after the
date of grant of the option or within one year of the date the shares were
transferred to the optionee. In such event the difference between the option
exercise price and the fair market value of the shares on the date of the
option's exercise will be taxed as ordinary income; the balance of the gain, if
any, will be taxed as capital gain. The Company will be entitled to a deduction
with regard to an ISO only to the extent the employee has ordinary income. An
ISO exercised more than three months after an optionee's retirement from
employment, other than by reason of death or disability, will be taxed as an
NQSO, with the optionee deemed to have received income upon such exercise
taxable at ordinary income rates. The Company will be entitled to a tax
deduction equal to the ordinary income, if any, realized by the optionee.
Stock Appreciation Rights. No taxable income is realized upon the
receipt of an SAR, but upon exercise of the SAR the fair market value of the
shares received, determined on the date of exercise of the SAR, or the amount of
cash received in lieu of shares, must be treated as compensation taxable as
ordinary income to the recipient in the year of such exercise. The Company will
be entitled to a deduction for compensation paid in the same amount which the
recipient realized as ordinary income.
Restricted Stock and Deferred Stock. An employee to whom restricted or
deferred stock is issued will not have taxable income upon issuance and the
Company will not then be entitled to a deduction, unless in the case of
restricted stock an election is made under Section 83(b) of the Code. However,
when restrictions on shares of restricted stock lapse, such that the shares are
no longer subject to repurchase by the Company, the employee will realize
ordinary income and the Company will be entitled to a deduction in an amount
equal to the fair market value of the shares at the date such restrictions
lapse, less the purchase price therefor. Similarly, when deferred stock vests
and is issued to the employee, the employee will realize ordinary income and the
Company will be entitled to a deduction in an amount equal to the fair market
value of the shares at the date of issuance. If an election is made under
Section 83(b) with respect to restricted stock, the employee will realize
ordinary income at the date of issuance equal to the difference between the fair
market value of the shares at that date less the purchase price therefor and the
Company will be entitled to a deduction in the same amount. The Code does not
permit a Section 83(b) election to be made with respect to deferred stock.
Dividend Equivalents. A recipient of a dividend equivalent award 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 be entitled to
a corresponding deduction. Performance Awards. A participant who has been
granted a performance award will not realize taxable income at the time of
grant, and the Company will not be entitled to a deduction at that time. When an
award is paid, whether in cash or Common Shares of the Company, the participant
will have ordinary income, and the Company will be entitled to a corresponding
deduction.
Stock Payments. A participant who receives a stock payment in lieu of a
cash payment that would otherwise have been made will be taxed as if the cash
payment has been received, and the Company will have a deduction in the same
amount.
Deferred Compensation. Participants who defer compensation generally
will recognize no income, gain or loss for federal income tax purposes when
NQSOs are granted in lieu of amounts otherwise payable, and the Company will not
be entitled to a deduction at that time. When and to the extent options are
exercised, the ordinary rules regarding nonqualified. stock options outlined
above will apply.
Effect of 1993 Omnibus Budget Reconciliation Act on the 1996 Incentive
Plan. Under OBRA, which became law in August 1993, income tax deductions of
publicly-traded companies may be limited to the extent total compensation
(including base salary, annual bonus, stock option exercises and non-qualified
benefits paid in 1996 and thereafter) for
17
<PAGE> 21
certain executive officers exceeds $1 million (less the amount of any "excess
parachute payments" as defined in Section 280G of the Code) in any one year.
However, under OBRA, the deduction limit does not apply to certain
"performance-based" compensation established by an independent compensation
committee which is adequately disclosed to, and approved by, stockholders. In
particular, stock options and SARs will satisfy the performance-based exception
if the awards are made by a qualifying compensation committee, the plan sets the
maximum number of shares that can be granted to any particular employee within a
specified period and the compensation is based solely on an increase in the
stock price after the grant date (i.e., the option exercise price is equal to or
greater than the fair market value of the stock subject to the award on the
grant date).
It is the Company's policy generally to design the Company's
compensation programs to conform with the OBRA legislation and related
regulations so that total compensation paid to any employee will not exceed $1
million in any one year, except for compensation payments in excess of $1
million which qualify as "performance-based." The Company intends to comply with
other requirements of the performance-based compensation exclusion under OBRA,
including option pricing requirements and requirements governing the
administration of the 1996 Stock Incentive Plan, so that the deductibility of
compensation paid to top executives thereunder is not expected to be disallowed.
VOTE REQUIRED AND BOARD RECOMMENDATION
In order to approve the Amendment, the affirmative vote of the holders
of a majority of the shares present and entitled to vote at the meeting is
required for approval of the proposed Amendment to the 1996 Incentive Plan. For
purposes of the vote on the proposed Amendment, abstentions will have the same
effect as votes against the proposed Amendment and broker non-votes will not be
counted as shares entitled to vote on the matter and will have no effect on the
result of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ADOPTION OF
THE PROPOSED AMENDMENT TO THE 1996 INCENTIVE PLAN
SHAREHOLDER PROPOSALS
The Bylaws of the Company provide that in order for a stockholder to
nominate a candidate for election as a director at an annual meeting of
shareholders or propose business for consideration at such meeting, notice
generally must be given to the Secretary of the Company no more than 90 days nor
less than 60 days prior to the first anniversary of the preceding year's annual
meeting. The fact that the Company may not insist upon compliance with these
requirements should not be construed as a waiver by the Company of its rights to
do so at any time in the future.
AUDITORS
Subject to its discretion to appoint alternative auditors if it deems
such action appropriate, the Board of Directors has retained Ernst & Young, LLP
as the Company's auditors for the current fiscal year. The Board of Directors
has been advised that Ernst & Young, LLP is independent with regard to the
Company within the meaning of the Securities Act and the applicable published
rules and regulations thereunder. Representatives of Ernst & Young, LLP are
expected to be present at the Annual Meeting and will have the opportunity to
make statements if they desire and to respond to appropriate questions from
stockholders.
18
<PAGE> 22
PROXY SOLICITATION EXPENSE
The cost of soliciting proxies will be borne by the Company. The Company
will also request persons, firms and corporations holding shares beneficially
owned by others to send proxy material to, and obtain proxies from, the
beneficial owners of such shares and will, upon request, pay the holders'
reasonable expenses for doing so.
April 8, 1998
By Order of the Board of Directors
/s/ DIANA M. LAING
Diana M. Laing
Chief Financial Officer
and Secretary
19
<PAGE> 23
EXHIBIT "A"
AMENDMENT TO THE
1996 STOCK OPTION AND INCENTIVE PLAN OF
ARDEN REALTY, INC. AND ARDEN REALTY LIMITED PARTNERSHIP
This Amendment to the 1996 Stock Option and Incentive Plan of Arden
Realty, Inc. and Arden Realty Limited Partnership (the "Amendment") is adopted
by Arden Realty, Inc., a Maryland corporation (the "Company"), effective as of
May 7, 1998.
RECITALS
A. The 1996 Stock Option and Incentive Plan of Arden Realty, Inc. and
Arden Realty Limited Partnership (the "1996 Incentive Plan") was adopted by the
Board of Directors and approved by the shareholders of the Company on September
16, 1996.
B. On April 7, 1998, the Board of Directors adopted an Amendment to the
1996 Incentive Plan.
C. Section 10.2 of the 1996 Incentive Plan provides that the Board may
amend the 1996 Incentive Plan, subject in certain instances to receipt of
approval of the shareholders of the Company.
D. Section 422 of the Internal Revenue Code of 1986, as amended,
requires that there be stated in the 1996 Incentive Plan an aggregate number of
shares issuable upon exercise of incentive stock options granted under the 1996
Incentive Plan.
E. On April 7, 1998, the Board of Directors of the Company unanimously
adopted an Amendment to the 1996 Incentive Plan increasing the number of shares
of Common Stock reserved for issuance from 1,500,000 to 3,000,000 shares,
implementing a mechanism by which the number of shares reserved for issuance
under the 1996 Incentive Plan will be a percentage of the number of shares of
Common Stock outstanding in order to meet the needs of the 1996 Incentive Plan,
and limiting the aggregate number of shares issuable upon exercise of incentive
stock options granted under the 1996 Incentive Plan to 6,000,000.
F. The Amendment to the 1996 Incentive Plan was presented to the
shareholders for approval at the 1998 Annual Meeting held on the 7th day of May,
1998.
20
<PAGE> 24
AMENDMENT
The 1996 Incentive Plan is amended as provided herein and except as so
amended the 1996 Incentive Plan remains in full force and effect. Terms used
herein not otherwise defined shall have the meaning ascribed to them in the 1996
Incentive Plan.
1. Article II, Section 2.1, Paragraph (a) -- Shares Subject to Plan, is
hereby amended in its entirety to read as follows:
2.1 Shares Subject to Plan.
(a) The shares of stock subject to Options, awards of Restricted
Stock, Performance Awards, Dividend Equivalents, awards of Deferred Stock,
Stock Payments or Stock Appreciation Rights shall be Common Stock,
initially shares of the Company's Common Stock, par value $.01 per share.
The maximum number of such shares which may be issued upon exercise of such
options or rights or upon any such awards under the Plan shall be three
million (3,000,000); provided, however, that commencing with the first
business day of each fiscal year of the Company hereafter beginning with
January 1, 1999, such maximum number of shares reserved for issuance
hereunder shall be a number equal to five percent (5%) of the number of
shares of Common Stock issued and outstanding as of December 31 of the
immediately preceding fiscal year; provided, further, the aggregate number
of shares issuable upon exercise of Incentive Stock Options granted
hereunder shall not exceed 6,000,000. The shares of Common Stock issuable
upon exercise of such options or rights or upon any such awards may be
either previously authorized but unissued shares or treasury shares.
The undersigned, Diana M. Laing, secretary of the Company, hereby
certifies that the Board and the shareholders of the Company adopted the
foregoing Amendment to the 1996 Incentive Plan on April 7, 1998 and May 7, 1998,
respectively.
EXECUTED at Beverly Hills, California this ____ day of May, 1998.
--------------------------------------------------------------------------
Diana M. Laing, Secretary
21
<PAGE> 25
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of Director: FOR the nominee listed below [ ] WITHHOLD AUTHORITY to vote [ ]
(except as indicated to the contrary) for the nominee listed below.
Nominee: STEVEN C. GOOD
2. Amendment to the 1996 Stock Option and Incentive Plan. 3. To vote and otherwise represent the undersigned in the
discretion of the proxy holder upon such other business as
FOR [ ] AGAINST [ ] ABSTAIN [ ] may properly come before the meeting or any adjournment
or postponement thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and
or Comments Mark Here [ ]
Please sign exactly as your name appears hereon. When
signing as attorney, executor, administrator, trustee,
or guardian, please give full title. If more than one
trustee, all should sign. All joint owners should sign.
If a corporation, please sign in full corporate name
by President or other authorized officer.
Dated: _____________________________________________, 1998
__________________________________________________________
(Signature)
__________________________________________________________
(Signature if held jointly)
(Please sign, date and return this proxy in the enclosed postage prepaid envelope.) Votes must be indicated
[X] in Black or Blue Ink. [ ]
- ------------------------------------------------------------------------------------------------------------------------------
ARDEN REALTY, INC.
9100 Wilshire Boulevard, East Tower, Suite 700
Beverly Hills, California 90212
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Arden Realty, Inc. acknowledges receipt of a copy of the 1997 Annual Report on Form 10-K
and the proxy statement dated April 8, 1998, and, revoking any proxy heretofore given, hereby appoints Richard S. Ziman
and Victor J. Coleman, and each of them, as proxies for the undersigned, and hereby authorizes each of them to vote all
of the shares of Common Stock of the Company held of record by the undersigned on March 20, 1998, at the Annual Meeting
of Stockholders to be held on May 7, 1998, or any adjournment or postponement thereof, and otherwise to represent the
undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE. THIS PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED,
IT WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3. DISCRETION WILL BE USED WITH RESPECT TO SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
ARDEN REALTY, INC.
P.O. Box 11414
New York, N.Y. 10203-0414
(Continued and to be dated and signed on the reverse side.)
</TABLE>
