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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
DUKE REALTY INVESTMENTS, INC.
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(Name of Registrant as Specified In Its Charter)
DUKE REALTY INVESTMENTS, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
DUKE REALTY INVESTMENTS, INC.
8888 KEYSTONE CROSSING
SUITE 1200
INDIANAPOLIS, INDIANA
(317) 846-4700
March 20, 1998
Dear Shareholder:
The directors and officers of Duke Realty Investments,
Inc. join me in extending to you a cordial invitation to
attend the annual meeting of our shareholders. This
meeting will be held on Thursday, April 23, 1998, at 10:00
a.m., at the Radisson Plaza Hotel, Keystone at the
Crossing, Indianapolis, Indiana. We believe that both the
shareholders and management of Duke Realty Investments,
Inc. can gain much through participation at these
meetings. Our objective is to make them as informative and
interesting as possible.
The formal notice of this annual meeting and the proxy
statement appear on the following pages. After reading the
proxy statement, PLEASE MARK, SIGN, AND RETURN THE
ENCLOSED PROXY CARD TO ENSURE THAT YOUR VOTES ON THE
BUSINESS MATTERS OF THE MEETING WILL BE RECORDED.
We hope that you will attend this meeting. Whether or not
you attend, we urge you to return your proxy promptly in
the postpaid envelope provided.
We look forward to seeing you on April 23.
Sincerely,
/S/ John W. Wynne
-------------------
John W. Wynne
Chairman
<PAGE>
DUKE REALTY INVESTMENTS, INC.
8888 KEYSTONE CROSSING
SUITE 1200
INDIANAPOLIS, INDIANA
(317) 846-4700
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1998
The annual meeting of the shareholders of Duke
Realty Investments, Inc. (the "Company") will be held at
the Radisson Plaza Hotel, Keystone at the Crossing,
Indianapolis, Indiana on April 23, 1998, at 10:00 a.m.
EST, to consider and to take action on the following
matters:
1. The election of four (4) Directors of the Company.
2. The amendment to the Amended and Restated
Articles of Incorporation of the Company to
increase the number of Directors authorized to be
elected.
3. An amendment to the 1995 Key Employees' Stock
Option Plan of Duke Realty Investments, Inc.
authorizing the issuance of an additional
2,500,000 shares of the Company's common stock
under the plan.
4. An amendment to the 1995 Dividend Increase Unit
Plan of Duke Realty Services Limited Partnership
authorizing the issuance of an additional 200,000
shares of the Company's common stocke under the
plan.
5. The transaction of such other business as may
properly come before the meeting and any
adjournments thereof.
Only shareholders of record at the close of business
on March 3, 1998 are entitled to notice of and to vote at
this meeting and any adjournments thereof.
By order of the Board of Directors,
/s/ John R. Gaskin
----------------------------------
John R. Gaskin
Vice President, General Counsel
and Secretary
Indianapolis, Indiana
March 20, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE,
AND SIGN YOUR PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED FOR YOUR
CONVENIENCE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF
FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING YOUR PROXY
PROMPTLY. RETURNING THE PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
ON ALL MATTERS BROUGHT BEFORE THE MEETING.
<PAGE>
DUKE REALTY INVESTMENTS, INC.
8888 KEYSTONE CROSSING
SUITE 1200
INDIANAPOLIS, INDIANA
(317) 846-4700
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1998
The accompanying proxy is solicited by the Board of
Directors of Duke Realty Investments, Inc. (the "Company")
for use at the annual meeting of shareholders to be held
April 23, 1998 and any adjournments thereof. Only
shareholders of record as of the close of business on
March 3, 1998 will be entitled to vote at the annual
meeting. The Company's principal executive offices are
located at 8888 Keystone Crossing, Suite 1200,
Indianapolis, Indiana 46240. The approximate date of
mailing of this proxy statement is March 20, 1998.
When the proxy is properly executed and returned, the shares it
represents will be voted at the meeting in accordance with
any directions noted on the proxy. If no direction is
indicated, the proxy will be voted in favor of the
proposals set forth in the notice attached to this proxy
statement. Any shareholder giving a proxy has the power to
revoke it at any time before it is voted. Each share of
common stockoutstanding on the record date is entitled to
one vote on each item submitted to the shareholders for
their consideration.
The entire expense of preparing, assembling, printing
and mailing the proxy form and the material used in the
solicitation of proxies will be paid by the Company. The
Company does not expect that the solicitation will be made
by specially engaged employees or paid solicitors.
Although the Company might use such employees or
solicitors if it deems them necessary, no arrangements or
contracts have been made with any such employees or
solicitors as of the date of this statement. In addition
to the use of the mails, solicitation may be made by
telephone, telegraph, facsimile, cable or personal
interview. The Company will request record holders of
shares beneficially owned by others to forward this proxy
statement and related materials to the beneficial owners
of such shares, and will reimburse such record holders for
their reasonable expenses incurred in doing so.
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<PAGE>
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
COMMITTEES OF THE BOARDS OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company met five times during the
last fiscal year. The Board of Directors of the Company
has an Asset Committee, an Audit Committee, an Executive
Compensation Committee, a Finance Committee and a
Nominating Committee.
The function of the Asset Committee is to discuss, review and
authorize business transactions that exceed established
guidelines. The members of the Asset Committee are Messrs.
Hefner, Feinsand, Peterson and Strauss and Ms. Cuneo. Mr.
Strauss served as the Committee's chairman. The Committee
met 12 times in 1997.
The function of the Audit Committee is to evaluate
audit performance, handle relations with the Company's
independent auditors and evaluate policies and procedures
related to internal accounting controls. The members of
the Audit Committee are Messrs. Button, Feinsand, Lytle
and Peterson and Ms. Cuneo. Mr. Feinsand served as the
Committee's chairman. The Committee met 4 times during
1997.
The function of the Executive Compensation Committee
is to review and make recommendations to the Board of
Directors with respect to the compensation of directors,
officers, and employees of the Company, to implement the
Company's stock option and other employee benefit plans
and to make recommendations to the Nominating Committee
regarding individuals qualified to be nominated as
unaffiliated directors. The members of the Executive
Compensation Committee are Messrs. Button, Lytle, Rogers
and Strauss and Ms. Cuneo. Mr. Button served as the
Committee's chairman. The Committee met 4 times during
1997.
The function of the Finance Committee is to review,
recommend and authorize certain debt financing and equity
transactions. The members of the Finance Committee are
Messrs. Baur, Button, Feinsand, Rogers, Staton, Strauss
and Zink. Mr. Rogers served as the Committee's chairman.
The committee met 6 times during 1997.
The function of the Nominating Committee is to
nominate individuals to serve as directors. The Nominating
Committee is comprised of all of the unaffiliated
directors, Messrs. Button, Feinsand, Lytle, Peterson,
Rogers and Strauss and Ms. Cuneo. The committee does not
formally consider nominations by shareholders.
Mr. Button served as the Committee's chairman. The
Committee met once during 1997.
In 1997, all directors attended at least 75% of the meetings of
the Board and all committees of the Board of which they
were members except for Mr. Wynne and Mr. Rogers, whose
attendance rates were 71% and 73%, respectively. In
addition, due to scheduling conflicts with a Presidential
commission on which he serves, Mr. Lytle's attendance rate
was less than 75% during 1997.
COMPENSATION OF DIRECTORS
Each unaffiliated director receives 1,200 shares of Company
Common Share as annual compensation. Unaffiliated
directors also receive a fee of $2,500 for attendance at
each meeting of the Board of Directors. In addition, the
unaffiliated directors receive $500 for participation in
each telephonic meeting of the Board and for participation
in each committee meeting not held in conjunction with a
regularly scheduled Board meeting. Officers of the Company
who are also directors receive no additional compensation
for their services as directors.
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<PAGE>
ELECTION OF DIRECTORS - PROPOSAL NO. 1
Four Directors are to be elected. Geoffrey Button,
John D. Peterson, Ngaire E. Cuneo and Darell E. Zink, Jr.
have been nominated for a term of three years and until
their successors are elected and qualified. All nominees
are members of the present Board of Directors. If, at the
time of the 1998 annual meeting, any nominee is unable or
declines to serve, the discretionary authority provided in
the proxy may be exercised to vote for a substitute or
substitutes. The Board of Directors has no reason to
believe that any substitute nominee or nominees will be
required.
The election of each director requires the
affirmative vote of at least a majority of the common
shares present in person or represented by proxy and
entitled to vote for the election of directors. The holder
of each outstanding share of common stock is entitled to
vote for as many persons as there are directors to be
elected. An abstention, broker non-vote, or direction to
withhold authority will result in a nominee receiving
fewer votes.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THE ELECTION
OF THE FOLLOWING NOMINEES:
NOMINEES FOR ELECTION AS DIRECTORS AT 1998 ANNUAL MEETING
FOR TERMS EXPIRING IN 2001
NAME, AGE, PRINCIPAL OCCUPATION(S) AND DIRECTOR
BUSINESS EXPERIENCE DURING PAST 5 YEARS SINCE
--------------------------------------- -------
GEOFFREY BUTTON, Age 49 1993
An independent real estate and financing consultant. Prior
to 1996, was executive Director of Wyndham Investments
Limited, a property holding company of Allied Domecq
Pension Funds. Director of Sector Communications, Inc.
NGAIRE E. CUNEO, Age 47 1995
Executive Vice President, Corporate Development, Conseco,
Inc., an owner, operator and provider of services to
companies in the financial
services industry. Director of Conseco, Inc. and Bankers
Life Holding Corporation.
JOHN D. PETERSON, Age 64 1986
Chairman of City Securities Corporation, a securities
brokerage firm. Director of Lilly Industries, Inc.
DARELL E. ZINK, JR., Age 51 1993
Executive Vice President, Chief Financial Officer and
Assistant Secretary of the Company.
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<PAGE>
CONTINUING DIRECTORS
The continuing directors listed in the table below will
continue in office until expiration of their terms.
NAME, AGE, PRINCIPAL OCCUPATION(S) AND DIRECTOR
BUSINESS EXPERIENCE DURING PAST 5 YEARS SINCE
---------------------------------------- --------
DIRECTORS WHOSE TERMS EXPIRE IN 1999
THOMAS L. HEFNER, Age 51 1993
President and Chief Executive Officer of the Company.
L. BEN LYTLE, Age 51 1996
Chairman, President and Chief Executive Officer of Anthem,
Inc., a national insurance and financial services firm.
Director of IPALCO Enterprises, Inc.
JOHN W. WYNNE, Age 65 1985
Chairman of the Board of the Company. Retired from Bose
McKinney & Evans, attorneys. Director of First Indiana
Corporation.
EDWARD T. BAUR, Age 51 1997
Vice President and General Manager of the Company. Prior
to joining the Company in 1997, Mr. Baur was the Chief
Executive Officer of Baur Properties.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
HOWARD L. FEINSAND, Age 50 1988
Founder and Principal, Choir Capital Ltd., since 1996.
Managing Director, Citicorp North America, Inc., 1995-
1996; Senior Vice President and Manager, GE Capital
Aviation Services, Inc., an aircraft leasing company,
1994-1995; Senior Vice President of Polaris Aircraft
Leasing Corporation, 1989-1994.
JAMES E. ROGERS, Age 50 1994
Vice Chairman, President and Chief Executive Officer of
CINergy, a regional utility holding company, since
1994. Prior to 1994, Chairman, President and
Chief Executive Officer of PSI Energy, Inc., Director of
CINergy Corp. and Fifth Third Bancorp.
DANIEL C. STATON, Age 45 1993
President of Walnut Capital Partners, an investment and
venture capital company, since 1997. Executive Vice
President and Chief Operating Officer of the Company until
May, 1997. Director of Storage Trust Realty, Inc.
JAY J. STRAUSS, Age 62 1985
Chairman and Chief Executive Officer of Regent Realty
Group, Inc., a general real estate and mortgage banking firm.
- 4 -
<PAGE>
VOTING SECURITIES AND BENEFICIAL OWNERS
The Company has one class of voting common stock
outstanding of which 77,292,688 shares ("Common Shares")
were outstanding as of the close of business on March 3,
1998. The following table shows, as of March 3, 1998, the
number and percentage of Common Shares and interests
("Units") in Duke Realty Limited Partnership ("DRLP"), an
affiliate of the Company, held by (i) all directors and
nominees, (ii) each person known to the Company who beneficially
owned more than five percent of the issued and outstanding
Common Shares, and (iii) certain executive officers. Each Unit is convertible
into one Common Share at the option of the holder. The
total number of Common Shares and Units (other than Units
owned by the Company) outstanding as of the close of
business on March 3, 1998 was 88,181,156.
<TABLE>
<CAPTION>
Effective
Amount and Percent of Economic
Nature of Percent of All Common Ownership of
Beneficial Beneficial All Common Shares Executive
Owner Ownership Shares (1) /Units (2) Officers(3)
- ----------------- --------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Thomas L. Hefner 3,375,088 (4) 4.22% 3.82% 1,736,517
Darell E. Zink, Jr. 3,306,279 (5) 4.14% 3.75% 1,667,708
Daniel C. Staton 3,262,869 (6) 4.10% 3.70% 1,624,298
John W. Wynne 3,372,154 (7) 4.24% 3.82% 1,561,601
Edward T. Baur 1,477,835 (8) 1.88% 1.68% 1,044,030
Gary A. Burk 2,546,582 (9) 3.20% 2.88% 635,227
William E.
Linville, III 110,550 (10) (17) (17) 110,550
Richard W. Horn 104,656 (11) (17) (17) 104,656
Dennis D. Oklak 79,045 (12) (17) (17) 79,045
Geoffrey Button 9,490 (17) (17) N/A
Ngaire E. Cuneo 11,600 (17) (17) N/A
Howard L. Feinsand 7,222 (17) (17) N/A
L. Ben Lytle 2,428 (17) (17) N/A
John D. Peterson 39,580 (13) (17) (17) N/A
James E. Rogers 4,517 (17) (17) N/A
Jay J. Strauss 7,331 (14) (17) (17) N/A
FMR Corp.(15) 8,766,150 11.36% 9.945% N/A
LaSalle Group (16) 4,331,900 5.61% 4.91% N/A
Directors and
Executive
Officers as a
Group (20 persons) 9,300,783 11.22% 10.49% 9,256,353
</TABLE>
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<PAGE>
(1) Assumes that the only Units exchanged for Common Shares
are those owned by such beneficial owner.
(2) Assumes exchange of all outstanding Units for Common Shares.
(3) Reflects Common Shares and Units held directly by executive
officers and members of their family, as well as their
proportionate economic interest in Common Shares and
Units owned by various entities.
(4) Includes 603,071 Common Shares owned by Mr. Hefner and
members of his family and stock options exercisable for
125,957 Common Shares. Also includes the following Units:
(i) 579,506 Units owned directly by Mr. Hefner; and (ii)
2,066,554 Units owned by DMI Partnership, a partnership in which
Mr. Hefner owns a 20.71% beneficial interest.
(5) Includes 673,033 Common Shares owned by Mr. Zink and members of
his family and stock options exercisable for 5,178 Common
Shares. Also includes the following Units: (i) 561,514
Units owned directly by Mr. Zink; and (ii) 2,066,554 Units owned
by DMI Partnership, a partnership in which Mr. Zink owns a 20.71%
beneficial interest.
(6) Includes 784,180 Common Shares owned by Mr. Staton and stock
options exercisable for 13,157 Common Shares. Also
includes the following Units: (i) 398,978 Units owned
directly by Mr. Staton; and (ii) 2,066,554 Units owned by
DMI Partnership, a partnership in which Mr. Staton owns a
20.71% beneficial interest.
(7) Includes: (i) 894,732 Common Shares owned by Mr. Wynne and
members of his family; (ii) 171,982 Common Shares owned
as trustee under the Phillip R. Duke Irrevocable Trust in
which Mr. Wynne disclaims any beneficial interest and
(iii) stock options exercisable for 28,200 Common Shares.
Also includes the following Units: (i) 210,686 Units owned
directly by Mr. Wynne; and (ii) 2,066,554
Units owned by DMI Partnership, a partnership in which Mr.
Wynne owns a 20.71% beneficial interest.
(8) Includes 3,660 Common Shares owned by Mr. Baur. Also
includes the following Units: (i) 378,854 Units owned
directly by Mr. Baur; and (ii) 1,095,321 Units owned by
Lindbergh-Warson Properties, Inc., a corporation in which
Mr. Baur owns a 60.4% beneficial interest.
(9) Includes: (i) 198,293 Common Shares owned by Mr. Burk and members
of his family; and (ii) stock options exercisable for
125,957 Common Shares. Also includes the following Units:
(i) 155,778 Units owned directly by Mr. Burk; and (ii)
2,066,554 Units owned by DMI Partnership, a partnership in
which Mr. Burk owns a 7.51% beneficial interest
(10) Includes 22,399 Common Shares owned by Mr. Linville and his
family and stock options exercisable for 78,513 Common
Shares. Also includes 9,638 Units beneficially owned by
Mr. Linville under an agreement with a partnership owned
by certain other executive officers.
(11) Includes 34,497 Common Shares owned by Mr. Horn and his spouse
and stock options exercisable for 63,513 Common Shares.
Also includes 6,646 Units beneficially owned by Mr. Horn
under an agreement with a partnership owned by certain
other executive officers.
(12) Includes 17,554 Common Shares owned by Mr. Oklak and stock
options exercisable for 53,511 Common Shares. Also
includes 7,980 Units beneficially owned by Mr. Oklak under
an agreement with a partnership owned by certain other
executive officers.
(13) Includes: (i) 15,898 Common Shares owned by Mr. Peterson and
members of his family; (ii) 9,400 Common Shares owned by
Mr. Peterson as Trustee for the Peterson Family GST
Investment Share Trust; and (iii) 14,282 Common Shares
owned for investment purposes by City Securities
Corporation, a firm in which Mr. Peterson serves as
Chairman of the Board and Chief Executive Officer.
(14) Includes 3,131 shares owned by Mr. Strauss and his spouse, and
4,200 shares held in a trust in which Mr. Strauss' family
members are beneficiaries.
(15) Information about these Common Shares is based upon a
Schedule 13G provided to the Company in February, 1998.
The address of FMR Corp. is 82 Devonshire St., Boston MA 02109.
(16) Information about these Common Shares is based upon a
Schedule 13G provided to the Company in February, 1998.
The LaSalle Group consists of LaSalle Advisors Capital
Management, Inc. and ABKB/LaSalle Securities Limited
Partnership. The address of these entities is 200 East
Randolph Street, Chicago, IL 60601.
(17) Represents less than 1% of the outstanding Common Shares.
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<PAGE>
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
Executive Compensation Philosophy
The primary objectives of the Executive Compensation Committee
(the "Committee") of the Board of Directors in determining
total compensation of the Company's executive officers are
(i) to enable the Company to attract and retain high
quality executives by providing total compensation
opportunities with a combination of compensation elements
which are at or above competitive opportunities and which
provide for moderate fixed costs and leveraged incentive
opportunities, and (ii) to align shareholder interests and
executive rewards by providing substantial incentive
opportunities to be earned by meeting pay-for-performance
standards designed to increase long-term shareholder
value. In order to accomplish these objectives, the
Committee adopted in 1995 an executive compensation
program which provides (i) annual base salaries at or near
the market median, (ii) annual incentive opportunities which reward the
executives for achieving or surpassing performance goals
which represent industry norms of excellence, and (iii)
long-term incentive opportunities which are directly
related to increasing shareholder value.
Section 162(m) of the Internal Revenue Code of 1986, as
amended, imposes a limitation on the deductibility of
nonperformance based compensation in excess of $1 million
paid to certain executive officers. The Compensation
Committee's policy with respect to Section 162(m) is to
make every reasonable effort to ensure that compensation
is deductible to the extent permitted, while
simultaneously providing executives appropriate awards for
their performance. The Company's long-term incentive
plans have been designed to comply with the performance-
based requirements of Section 162(m).
BASE SALARIES AND ANNUAL CASH INCENTIVES
The range of base salaries for the executive officers
of the Company is established after a review by the
Committee of the salaries paid to executive officers of a
comparison group of other publicly traded real estate
investment trusts. Other subjective factors are considered
such as the individual's experience and performance.
An annual cash incentive range is established for
each executive officer at the beginning of the year. The
actual annual cash incentive paid to the executives is
determined based on his or her ability to impact
measurable results. The amount of each executive's annual
award is based on a combination of three performance
factors: (i) overall corporate performance; (ii) business
segment or departmental performance; and (iii) individual
performance. The relative importance of each of the
performance factors in determining annual cash incentives
differs for each executive position with the performance
factor for the most senior executives being based more
heavily on overall corporate performance and the
performance factor for the officers in-charge of business segments
or departments being based on more heavily on the performance of their
segment or department. The overall corporate performance
factor is based on a three-tier measurement system
consisting of Funds from Operations Growth Per Common
Share, Return on Shareholders' Equity and Return on Real
Estate Investments. The business segment performance is
based on certain financial measurements, including the
volume and yield of new acquisitions and developments,
performance of the in-service property portfolio, and the
business segment's operating income contribution to the
Company. The amount of the targeted annual cash incentives
paid is based on the perceived level of attainment of each
of the measurements by the Committee.
LONG-TERM INCENTIVE OPPORTUNITIES
The amount of long-term incentive awarded to
executives on an annual basis is determined at the
discretion of the Committee but is tied to overall
corporate and business segment performance. The longterm
incentive opportunities consist of approximately two-
thirds Stock Options ("Options") and Dividend Increase
Units ("DIUs") and one-third Shareholder Value Grants.
- 7 -
<PAGE>
Stock Option and Dividend Increase Unit Plans:
- ---------------------------------------------
The objectives of the Stock Option and Dividend Increase Unit
Plans are to provide executive officers with long-term
incentive opportunities aligned with the shareholder
benefits of an increased Common Share value and increased
annual dividends. The number of Options and DIUs issued to
each executive annually is set by the Committee based on
the goal of providing approximately two-thirds of the
total annual long-term incentive award through these
plans. The Options and DIUs are for terms of no more than
ten years. In 1997, after a review of the stock option
vesting policies of a comparison group of other publicly
traded real estate investment trusts, the Committee
determined that the Company's vesting schedule was not
competitive and changed the vesting schedule of the Stock
Option and Dividend Increase Unit Plans to 20 percent per
year over a five year period. The Options may not be
issued for less than the fair market value of the
Company's Common Shares at the date of grant. The value of
each DIU at the date of exercise will be determined by
calculating the percentage of the Company's annualized
dividend per share to the market value of one Common Share
(the "Dividend Yield") at the date the DIU is granted and
dividing the increase in the Company's annualized dividend
from the date of grant to the date of exercise by such
Dividend Yield. A DIU may be exercised by a participant
only to the extent that such participant has exercised an
Option to purchase a Common Share of the Company under an
Option granted under the 1995 Stock Option Plan on the
same date as the grant of the DIU.
Shareholder Value Plan:
- ----------------------
The objective of the Shareholder Value Plan is to
provide executive officers with long-term incentive
opportunities directly related to providing total
shareholder return in excess of the median of independent
market indices. The annual Shareholder Value Plan amount
for each executive is set by the Committee with the goal
of providing approximately one-third of the total long-
term incentive award through this plan. The award vests
entirely three years after the date of grant and the
amount paid is based on the Company's total shareholder
return for such three year period as compared to
independent market indices. The independent market
indices used for comparison are the S&P 500 Index and the
NAREIT Equity REIT Total Return Index. The amount of the
award payable may range from zero percent if both of the rankings of
the comparable returns are less than the 50th percentile of both of
the indices to 300 percent if the rankings of both of the comparable
returns are in the 90th percentile or higher of both of
the indices, with 100 percent of the award being payable
at the 60th percentile.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The compensation awarded to Mr. Hefner in 1997
consisted primarily of an annual base salary, an annual
cash incentive award, and grants under the Company's long-
term incentive plans. The total compensation paid to Mr.
Hefner has historically resulted in total compensation
which is below the comparable market median but is
considered appropriate in light of Mr. Hefner's
substantial equity interest in the Company and his stock
options held.
Base Salary:
- ------------
The Committee intends to gradually increase Mr.
Hefner's base salary with the intent that, by 1999, his
base salary will be equal to 90 percent of the market
median of a comparison group of thirteen other publicly
traded real estate investment trusts. Mr. Hefner's annual
base salary for 1997 was $175,000.
Annual Cash Incentive:
- ----------------------
Under the Committee's executive compensation plan,
Mr. Hefner is eligible for a targeted annual cash
incentive bonus. The amount of Mr. Hefner's annual cash
incentive bonus is determined solely upon overall
corporate performance which is based on a three-tier
measurement system consisting of Funds from Operations
Growth Per Common Share, Return on Shareholders' Equity and Return on
Real Estate Investments as compared to pre-determined
target criteria established by the Committee. The amount
of the targeted annual cash incentives paid is based on
the level of attainment of each of the measurements as
compared to the pre-determined standards. For 1997, the
Company's FFO Growth was 18.38% per Common Share, its
Return on Shareholders' Equity was 11.31% and its Return
on Real Estate Investments was 9.72%. Based on this
performance, Mr. Hefner received an Annual Cash Incentive
award of $200,000 for 1997.
Long-Term Incentive Opportunity Award:
- -------------------------------------
Mr. Hefner is also eligible for a targeted long-term incentive
award with a value equal to a percentage of his annual
base salary. The long-term incentive opportunity award
granted to Mr. Hefner in 1997 consisted of i) the grant of
an option to purchase 13,010 Common Shares at a price of
$19.4375 per share, ii) the grant of 13,010 DIUs with a
Dividend Yield of 5.25%, and iii) the award of a targeted
amount of $36,667 under the Shareholder Value Plan.
- 8 -
<PAGE>
EMPLOYMENT AND SEVERANCE AGREEMENTS
In January, 1998, the Executive Compensation Committee of the
Board of Directors approved the adoption of severance
agreements for Messrs. Burk, Linville, Horn and Oklak.
These agreements will provide for the payment of severance
amounts to the executives if, within one year of a change
in control of the Company, employment is terminated by the
Company other than "for cause" or if the executive
voluntarily terminates employment because of a reduction
in the executive's pay or his forced relocation. The
severance payment amounts will equal two
times the sum of the compensation awarded to such
terminated executive for the calendar year preceding the
date of termination. The Company intends to execute
definitive documentation regarding the severance
agreements during the second quarter of 1998.
COMPENSATION COMMITTEE
Geoffrey Button, Chair
Ngaire E. Cuneo
James E. Rogers
Jay J. Strauss
L. Ben Lytle
- 9 -
<PAGE>
PERFORMANCE GRAPH
The following graph compares, over the last five
years, the cumulative total shareholder return on the
Company's Common Shares with the cumulative total return
of the S&P 500 Index, and the cumulative total return of
the NAREIT Equity REIT Total Return Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
COMPANY COMMON SHARE, S&P 500 INDEX,
AND NAREIT EQUITY REIT TOTAL RETURN INDEX *
EDGAR PRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
THE COMPANY NAREIT S&P
----------- ------ ---
<S> <C> <C> <C>
DEC. 1992 100.00 100.00 100.00
DEC. 1993 152.79 119.65 109.99
DEC. 1994 208.59 123.45 111.43
DEC. 1995 247.96 142.30 153.13
DEC. 1996 323.70 192.48 188.29
DEC. 1997 429.92 231.47 251.13
</TABLE>
<TABLE>
<CAPTION>
DEC. 92 DEC. 93 DEC. 94 DEC. 95 DEC. 96 DEC. 97
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Company 100.00 152.79 208.59 247.96 323.70 429.92
NAREIT 100.00 119.65 123.45 142.30 192.48 231.47
S&P 100.00 109.99 111.43 153.13 188.29 251.13
</TABLE>
* Assumes that the value of the investment in the Company's Common
Share and each index was $100 on December 31, 1992 and that all
dividends were reinvested.
- 10 -
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the compensation awarded, earned by,
or paid to the Company's chief executive officer and the Company's
four other most highly compensated executive officers (the
"Named Executive Officers") during the last three fiscal years.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- -----------
Securities (1)
Name and Principal Underlying All Other
Position Year Salary ($) Bonus ($) Options (#) Compensation
----------------- ---- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Thomas L. Hefner 1997 $175,000 $200,000 13,010 $3,200
President and 1996 165,000 100,000 12,880 3,000
Chief Executive
Officer 1995 150,000 60,000 13,512 2,900
Richard W. Horn 1997 $132,700 $300,000 44,192 $3,200
Executive Vice
President 1996 120,000 200,000 17,174 3,000
Office 1995 105,000 100,000 33,016 3,000
William E.
Linville, III 1997 $132,700 $275,000 44,192 $3,200
Executive Vice
President 1996 120,000 225,000 17,174 3,000
Industrial 1995 110,000 120,000 58,016 3,000
Darell E. Zink, Jr. 1997 $150,000 $150,000 13,010 $3,200
Executive Vice
President and 1996 150,000 75,000 12,880 3,000
Chief Financial
Officer 1995 150,000 60,000 13,512 2,900
Gary A. Burk 1997 $150,000 $150,000 13,010 $3,200
President 1995 150,000 75,000 12,880 3,000
Construction Services 1995 150,000 60,000 13,512 2,900
Dennis D. Oklak 1997 $150,000 $150,000 7,096 $3,200
Executive Vice
President, Treasurer, 1996 140,000 85,000 7,872 3,000
and Chief
Administrative Officer 1995 129,231 50,000 20,856 3,000
</TABLE>
(1) Represents allocable contributions by the Company for the account of the
Named Executive Officer to the Company's Profit Sharing and Salary Deferral
Plan.
- 11 -
<PAGE>
STOCK OPTION GRANTS IN 1997
The following table sets forth certain information
for the Named Executive Officers relating to stock option
grants during 1997 under the Company's 1995 Stock Option
Plan.
<TABLE>
<CAPTION>
Individual Grants
-----------------
Number of % of Potential Realizable
Securities Total Value at Assumed
Underlying Options Exercise Annual Rate of
to Granted Price per Stock Price
Options Employees Share Expiration Appreciation for
Name Granted in 1997 ($/Share) Date Option Term (1)
-------------------
5% 10%
- ---- ---------- --------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas L.
Hefner 13,010 3.76% $19.4375 1/29/07 $159,036 $ 403,029
Richard W.
Horn 14,112 4.10% 19.4375 1/29/07 173,485 439,645
30,000 8.67% 21.5625 7/23/07 406,816 1,030,952
William E.
Linville,
III 14,112 4.10% 19.4375 1/29/07 173,485 439,645
30,000 8.67% 21.5625 7/23/07 406,816 1,030,952
Darell E.
Zink, Jr. 13,010 3.76% 19.4375 1/29/07 159,036 403,029
Gary A. Burk 13,010 3.76% 19.4375 1/29/07 159,036 403,029
Dennis D.
Oklak 7,096 2.05% 19.4375 1/29/07 86,742 219,823
</TABLE>
(1) The dollar amounts under these columns are the result
of calculations at the 5% and 10% rates set by the
Securities and Exchange Commission and, therefore, are not intended to
forecast future appreciation of the Company's stock price.
For the options expiring on January 29, 2007, the
Company's per share stock price would be $31.66 and $50.42
if increased 5% and 10%, respectively, compounded annually
over the 10-year option term. For the options expiring on
July 23, 2007, the Company's per share stock price would
be $35.12 and $55.93 if increased 5% and 10%,
respectively, compounded annually over the 10-year option
term.
The following table presents certain information for the Named
Executive Officers relating to the exercise of stock
options during 1997 and, in addition, information relating
to the valuation of unexercised stock options.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options at 12/3/197 In-the-Money Options
Acquired ------------------- at 12/31/97 (1)
On Value Exercis- Unexercis- --------------------
Exercise Realized able able Exer'ble Unexer'ble
Name (#) ($) (#) (#) ($) ($)
- -------------- -------- -------- -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas L.
Hefner 0 0 120,779 59,623 $1,465,281 $568,423
Richard W.
Horn 0 0 54,240 87,142 625,695 576,172
William E.
Linville,III 0 0 64,240 102,142 738,820 745,860
Darell E.
Zink, Jr. 0 0 120,779 59,623 1,465,281 568,423
Gary A. Burk 0 0 120,779 59,623 1,465,281 568,423
Dennis D.
Oklak 0 0 47,518 35,306 567,011 335,241
</TABLE>
(1) Based on the closing price of the Company's Common
Shares on December 31, 1997 of $24.25.
- 12 -
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock
Priced-Based-Plans
Number of Performance ------------------
Shares, Period
DIUs, or Until
Name Other Rights Payout Threshold Target Maximum
- ------------------- ------------- ---------- --------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Thomas L. Hefner
Dividend Increase
Unit Plan (1) 13,010 DIUs N/A N/A N/A N/A
Shareholder Value
Plan (2) N/A 3 Yrs. $0 $36,667 $110,000
Richard W. Horn
Dividend Increase
Unit Plan (1) 44,192 DIUs N/A N/A N/A N/A
Shareholder Value
Plan (2) N/A 3 Yrs. $0 $40,000 $120,000
William E.
Linville, III
Dividend Increase
Unit Plan (1) 44,192 DIUs N/A N/A N/A N/A
Shareholder Value
Plan (2) N/A 3 Yrs. $0 $40,000 $120,000
Darell E. Zink, Jr.
Dividend Increase
Unit Plan (1) 13,010 DIUs N/A N/A N/A N/A
Shareholder Value
Plan (2) N/A 3 Yrs. $0 $36,667 $110,000
Gary A. Burk
Dividend Increase
Unit Plan (1) 13,010 DIUs N/A N/A N/A N/A
Shareholder Value
Plan (2) N/A 3 Yrs. $0 $36,667 $110,000
Dennis D. Oklak
Dividend Increase
Unit Plan (1) 7,096 DIUs N/A N/A N/A N/A
Shareholder Value
Plan (2) N/A 3 Yrs. $0 $20,000 $ 80,000
</TABLE>
(1) Under the 1995 Dividend Increase Unit Plan, DIUs are
granted to key employees. DIUs vest over a five-year
period at 20% per year. A participant may exercise DIUs
only to the extent that such participant has purchased a
Company Common Share pursuant to an option granted under
the 1995 Stock Option Plan on the same date as the grant
of the DIU. The value of each DIU at the date of exercise
is determined by calculating the Dividend Yield at the
date the DIU is granted and dividing the increase in the
Company's annualized dividend from the date of grant to
the date of exercise by such Dividend Yield. DIUs not
exercised within 10 years of the date of grant are
forfeited. Distribution of a participant's benefits under
the 1995 Dividend Increase Unit Plan will be made in a
single lump sum payment in the form of the Company's
Common Shares. The "In-the-Money" value of vested DIUs at
December 31, 1997 for these executives was $27,869 for
Messrs. Hefner, Zink and Burk, $37,160 for Messrs. Horn
and Linville, and $13,730 for Mr. Oklak.
(2) Under the 1995 Shareholder Value Plan, awards are
granted in specified dollar amounts to selected key
employees. The specified award is payable to the
participant on the third anniversary of the grant of the
award. The payment of the bonus award amount will be
adjusted based upon the Company's cumulative total
shareholder return for the three year period beginning on the date of grant
as compared to the cumulative total return for the S&P 500
Index and the NAREIT Equity REIT Total Return Index (the
"Indices") for the same period. The Company's cumulative
total shareholder return is calculated by determining the
average per share closing price of the Company's Common
Shares for the 30 day period preceding the end of the
three year period increased by an amount that would be
realized if all cash dividends paid during the three year
period were reinvested in Common Shares of the Company and
comparing this amount to the average per share closing
price of the Company's Common Shares for the 30 day period
preceding the date of grant. The payment of one-half of
the bonus award is adjusted based upon the percentile
ranking of the Company's cumulative total shareholder
return as compared to each of the Indices for the same
period. The payment adjustment may range from zero percent
if both of the rankings of the comparable returns are less
than the 50th percentile of both of the Indices to 300
percent if both of the rankings are in the 90th percentile
or higher of both of the Indices, with 100 percent of the
award being payable at the 60th percentile. Distribution
of a participant's adjusted bonus award at the end of the
three-year period after the date of grant will be made one-
half in cash and one-half in the form of Common Shares of
the Company. The amount of the awards payable to these
executives on December 31, 1997 was $53,460 for Messrs.
Hefner, Zink, and Burk, $71,280 for Messrs. Linville and
Horn, and $23,166 for Mr. Oklak.
- 13 -
<PAGE>
CERTAIN TRANSACTIONS
A wholly owned subsidiary of the Company is the sole general
partner of Duke Realty Services Limited Partnership (the
"Services Partnership"), which is in turn the sole general
partner of Duke Construction Limited Partnership (the
"Construction Partnership"). The operations of these
entities are included in the consolidated financial
statements of the Company. The Services Partnership
provides third-party property management, leasing,
construction management and development services and the
Construction Partnership provides thirdparty construction
services. Certain of the executive officers own limited
partnership interests in these entities. Thomas L. Hefner,
Daniel C. Staton, Darell E. Zink, Jr., John W. Wynne, Gary
A. Burk and David R. Mennel, all of whom are officers or
Directors of the Company, control DMI Partnership ("DMI"),
which owns ninety percent of the capital interests of the
Services Partnership and a profit's interest which varies
from ten percent to ninety percent. The share of net
income of the Services Partnership allocated to DMI in
1997 was $1,186,019. DMI's share of net income from the
Services Partnership is included in minority interest in
the Company's financial statements. The Company has an
option to acquire DMI's interest in the Services
Partnership in exchange for 833,334 Units. DMI also
indirectly owns a ninety-five percent limited partnership
interest in the Construction Partnership, which the
Company has the option to purchase for $1,000. The
Construction Partnership has a deficit cumulative capital
balance; thus there was no allocation of net income to any
of the partners of the Construction Partnership, including
DMI.
The Services Partnership and the Construction
Partnership provide property management, leasing,
construction and other tenant related services to
properties in which Messrs. Hefner, Staton, Zink, Wynne,
Burk and Mennel have ownership interests. The Company has
an option to acquire these executive officers' interests
in these properties (the "Option Properties"). In 1997,
the Services Partnership and the Construction Partnership
received fees of $3,313,822 for services provided to the
Option Properties. The fees charged by the Services
Partnership and the Construction Partnership for such
services are equivalent to those charged to other third-
party owners for similar services except for one property.
Pursuant to an agreement with this property's lender, the
payment of 75% of the fees is deferred and is payable only
from excess sale or refinancing proceeds. The Company
agreed to this deferral in order to retain certain
contracts for services provided to other properties owned
by the lender. In 1997, $223,908 of such fees were
deferred.
The Company also leased operating facilities in certain of the
Option Properties. In 1997, the aggregate rent under such
leases was approximately $69,783. The rental amount paid
is comparable to similar space in the area.
DRLP has a $20.0 million loan to the Services
Partnership, which requires interest only payments at 12%
through September, 2003. The loan then amortizes over a 15-
year period with interest at 12% until final maturity in
September, 2018. The loan is guaranteed by an entity owned
indirectly by Messrs. Hefner, Staton, Zink, Wynne, Burk
and Mennel.
Messrs. Hefner, Staton, Zink, Wynne, Burk and Mennel as well as
Edward T. Baur, a member of the Board of Directors, have
personal guarantees for $73.6 million of the Company's
debt. DRLP has indemnified them from any liability with
respect to such debt.
The Company contracts with Steel Frame Erectors, Inc.
("SFE"), an entity owned by Messrs. Hefner, Staton, Zink,
Wynne, Burk and Mennel, for certain construction-related
services. During 1997, the total costs under these
contracts for Company related projects were $1,360,728.
The constructions fees earned by SFE on company related
projects were $75,723.
The Company contracted with an affiliates of Conseco,
Inc. during 1997 for certain construction and insurance
related services. Ms. Cuneo, a director of the Company, is
an Executive Vice President and director of Conseco, Inc.
In 1997, the Company received $1,037,175 in construction
related fees from a Conseco, Inc. affiliate and paid a
Conseco, Inc. affiliate $1,000,961 in insurance premiums.
In 1997, the Company constructed a 78,000 square foot office
building, which was entirely leased to an affiliate of
Anthem, Inc. for a 10-year period. Mr. Lytle, a director
of the Company, is Chairman, President and Chief Executive
Officer of Anthem, Inc. The lease commenced in October,
1997. The lease rate is comparable to similar space in the
area.
- 14 -
<PAGE>
On March 1, 1997, Park 100 Investors, Inc. ("Park
100") was merged into the Company. The only assets of
Park 100 at the time of the merger were 773,256 Units of
Duke Realty Limited Partnership. As a result of the
merger, the shareholders of Park 100 received 773,256
Common Shares of the Company. Immediately prior to the
merger, Mr. Wynne, Mr. Hefner and Mr. Zink owned 32%, 12%
and 2%, respectively, of the stock of Park 100.
On October 1, 1997, certain individuals and entities
collectively known as the Baur Group contributed
substantially all their assets to Duke Realty Limited
Partnership in return for 1,925,337 Units of Duke Realty
Limited Partnership with a value of $40.8 million, $20
million of cash and the assumption of $79 million in
indebtedness. The contributed assets consisted primarily
of 8 suburban office properties, 3 industrial properties
and 36 acres of undeveloped land located in St. Louis,
Missouri. Mr. Baur was the controlling owner and chief
executive officer of the Baur Group. Following the
acquisition of these properties, the Company employed Mr. Baur as Vice
President and General Manager of its St. Louis office. On
October 22, 1997, Mr. Baur was elected to the Company's Board
of Directors.
APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION - PROPOSAL NO. 2
The Board of Directors has adopted an amendment to the
Amended and Resated Articles of Incorporation of the Company
to increase the number of Directors authorized to be elected
from twelve (12) to fifteen (15). The Board has no current plans to
increase the number of directors. However, the Board believes that the
increase in the number of authorized Directors will provide
the Company with needed flexibility in the event it is
desirable to further enhance the quality and diversity of the
Board or to add directors in connection with the acquisition
of another company or a large portfolio of properties.
The first sentence of Section 7.01 of the Amended and Restated
Articles of Incorporation, as currently on file with the
Indiana Secretary of State, currently provides that there
shall be no fewer than five (5) nor more than twelve (12)
Directors. The amendment to the Articles would replace the
first sentence of Section 7.01 with the following sentence:
"There shall be no fewer than five (5) nor more than
fifteen (15) directors."
The amendment to the Articles of Incorporation increasing
the number of authorized directors requires an affirmative
vote of a majority of the shares outstanding and entitled
to vote. Abstentions and broker non-votes will have the same
effect as votes against the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
AMENDMENT TO THE ARTICLES OF INCORPORATION BE APPROVED, AND
THEREFORE RECOMMENDS A VOTE FOR THIS PROPOSAL.
APPROVAL OF AMENDMENT TO 1995 KEY EMPLOYEES' STOCK OPTION
PLAN OF DUKE REALTY INVESTMENTS, INC. - PROPOSAL NO. 3
The Board of Directors has adopted an amendment to the 1995 Key
Employees Stock Option Plan of Duke Realty Investments, Inc.
(the "1995 Stock Option Plan") and is recommending the
amendment to shareholders for approval. The amendment would
increase the number of Common Shares available for issuance
under the 1995 Stock Option Plan. If approved by the
stockholders, the number of Common Shares available for
issuance would increase by 2,500,000.
The Board of Directors believes that stock options and
other performance based awards play an important role in the
success of the Company. The Company must be able make stock
option grants in order to attract, motivate and retain the
caliber of officers and other key employees necessary to the
Company's future growth and success. The amendment is
necessary to provide for an adequate number of Common Shares
available for grant under the 1995 Stock Option Plan.
- 15 -
<PAGE>
The Company has not requested an increase in the number
of Common Shares to be issued under its stock option plans
since 1993. Since that time, the Company's assets and the
number of key employees of the Company have grown
substantially.
The Board of Directors believes that adding more Common
Share to the 1995 Stock Option Plan will help the Company to
achieve its goals by keeping the Company's incentive
compensation program competitive with those of other companies, and by
continuing to align the Company's long-term compensation programs with
shareholder interests. Accordingly, the Board of Directors has voted,
subject to stockholder approval, to increase the number of
Common Shares available under the 1995 Stock Option Plan.
The 1995 Stock Option Plan was adopted by the Board of
Directors in 1995 and approved by the shareholders in April,
1996 as a successor to the Duke Realty Services Limited
Partnership 1993 Stock Option Plan (the "1993 Plan"). The
adoption of the 1995 Stock Option Plan did not result in an
increase in the number of shares otherwise issuable under the
1993 Plan. Upon approval of the 1995 Stock Option Plan by the
shareholders, no further grants were permitted under the 1993
Plan. Prior to approval of this amendment by the
shareholders, 2,630,000 shares are issuable under the 1995
and 1993 plans. As of March 3, 1998, options to purchase
445,828 Common Shares were exercised under the plans, and
options to purchase 1,802,921 Common Shares were outstanding
under the plans. In addition, in January, 1998, the Executive
Compensation Committee granted options to purchase an
additional 428,396 shares of Common Share under the 1995
Stock Option Plan, the exercise of which are subject to the
approval of additional authorized shares by the shareholders.
The amendment to the 1995 Stock Option Plan and the 1995
Dividend Increase Unit Plan (discussed below) each require an
affirmative vote of a majority of the Common Shares present
in person or represented by proxy and entitled to vote at the
Annual Meeting. For these proposals, an abstention will have
the same effect as a vote against the proposal. Broker non-
votes will not be voted for or against the proposals and will
not be counted as entitled to vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE AMENDMENT TO
THE 1995 STOCK OPTION PLAN BE APPROVED, AND THEREFORE RECOMMENDS A VOTE FOR
THIS PROPOSAL.
MATERIAL FEATURES OF THE 1995 STOCK OPTION PLAN
If the amendment to the 1995 Stock Option Plan for an
additional 2,500,000 shares is approved by the shareholders,
the Committee will be authorized to grant options to purchase
up to 3,616,800 Common Shares under the plan (1). As of March
3, 1998, options to purchase 1,185,855 Common Shares have
been granted by the Company (including 428,396 options that
may only be exercised upon the approval of an increase in the
number of shares by the shareholders). On March 3, 1998, the
market value of the 3,616,800 shares that may be awarded
under the 1995 Stock Option Plan was $82,282,200.
The 1995 Stock Option Plan provides for the granting of
incentive stock options ("ISOs") (as defined in Section 422
of the Internal Revenue Code) and nonqualified stock options
("NSOs"). The plan provides for the granting of options to
key employees. Key employees includes officers and other
employees of the Company and its affiliates as determined by
the Committee. There are currently 85 employees participating
in the plan.
Options may be granted under the 1995 Stock Option Plan
for a period of ten years commencing October 1, 1995. The
1995 Stock Option Plan will expire on September 30, 2005
except as to outstanding options, which options shall remain
in effect until they have been exercised or terminated or
have expired. Annual grants of more than 50,000 options to
any one officer or key employee are not permitted under the
plan.
- --------
(1) The Committee is also authorized to issue up to an
additional 800,000 shares under the 1995 Stock Option Plan to the extent
that any options granted under the 1993 Plan are terminated
due to lapse or forfeiture. As of March 3, 1998, 21,640 options under
the 1993 Plan have been terminated. Management believes
it is unlikely that there will be a significant
increase in the number of these options that will be terminated.
- 16 -
<PAGE>
The term of each option, the date an option becomes exercisable
and the option price will be determined by the Committee
except that the term of an option may not exceed ten years
and the option price may not be less than the fair market
value of the Common Shares on the date the option is
granted. In the case of ISO's granted to holders of more
than 10% of the total voting power of the Company's Common
Shares, the term of the option may not exceed 5 years and
the option price may not be less than 110% of the fair
market value of the stock at the date of grant. Payment of
the exercise price may be made in cash, or at the
discretion of the Committee, in the form of Common Shares
of the Company or a combination of cash and stock.
If an optionee's employment terminates for any reason
other than cause (as defined) or his total disability (as
defined) or death, any outstanding options which were
exercisable on his date of termination will terminate 90
days after the optionee's employment terminates. If an optionee is
terminated for cause, all outstanding options will
terminate on the date his employment terminates. If an
optionee's employment terminates because of death or total
disability, all outstanding options remain exercisable for
a period of one year from the date of termination of
employment. In the event of the death, total disability or
retirement (on or after attaining age 65) of the optionee
or a change in control of the Company (as defined), all
outstanding options become immediately exercisable.
In any calendar year no participant under the 1995 Stock Option
Plan may be granted ISOs to the extent that the aggregate
exercise price of such ISOs (determined at the date the
ISOs are granted) that are exercisable for the first time
in any calendar year by such participant exceeds $100,000.
The Board of Directors may, at any time, without the
approval of the shareholders of the Company, alter, amend,
modify, suspend or discontinue the 1995 Stock Option Plan
except for any such alterations which would (i) increase
the aggregate number of shares subject to options under
the 1995 Stock Option Plan (except to the extent otherwise
provided for as a result of stock dividends, splits,
combinations or other changes of shares described in the
plan document); (ii) decrease the minimum option price;
(iii) permit any Committee member to become eligible to
receive grants of options under the 1995 Stock Option
Plan; (iv) withdraw administration of the 1995 Stock
Option Plan from the Committee or the Board of Directors;
(v) extend the term of the 1995 Stock Option Plan or the
maximum period during which any option may be exercised;
(vi) change the manner of determining the option price; or
(vii) change the class of individuals eligible for options
under the 1995 Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES OF THE 1995 STOCK OPTION PLAN
The 1995 Stock Option Plan provides for the issuance of options
qualified as ISOs within the meaning of Section 422 of the
Internal Revenue Code and NSOs. The federal income tax
consequences to the Company and to the optionee arising
from the grant and exercise of the option and the
subsequent sale of the Common Shares are significantly
different for the two types of options.
In the case of ISOs, the optionee recognizes no income and no
compensation expense deduction is allowable to the Company or its
subsidiaries at the time of either the grant or exercise
of the option. However, any difference between the option
price and the fair market value of the shares on the date
of exercise constitutes an alternative minimum tax
adjustment for the optionee. If the shares acquired
through an ISO are (i) held for at least two years from
the date the option is granted and at least one year from
the date the option is exercised and (ii) the optionee was
an employee at all times from the date the ISO was granted
until the day three months before the ISO is exercised,
any gain realized by the optionee on the subsequent sale
of the shares will be treated as long-term capital gain
for federal income tax purposes and no compensation
expense deduction will be allowable to the Company or its
subsidiaries. A sale of such shares by the optionee at a
gain prior to meeting these holding period requirements
will result in the recognition of ordinary income by the
optionee and a corresponding compensation expense
deduction to the Company or its subsidiaries.
In the case of NSOs, the optionee recognizes no
income and no deduction is allowable to the Company or its
subsidiaries at the time the option is granted. At the
time an NSO is exercised, the optionee will recognize
ordinary income, in the form of compensation, and the
Company or its subsidiaries will be entitled to a
compensation expense deduction equal to the excess of the
fair market value of the shares on the date the NSO is
exercised over the exercise price of the shares.
- 17 -
<PAGE>
The fair market value of the stock at the time of exercise
is the basis for the determination of capital gain or loss
upon the optionee's subsequent disposition of the shares.
APPROVAL OF AMENDMENT TO 1995 DIVIDEND INCREASE UNIT PLAN OF DUKE REALTY
SERVICES LIMITED PARTNERSHIP - PROPOSAL NO. 4
The Board of Directors has adopted an amendment to the 1995
Dividend Increase Unit Plan of Duke Realty Services
Limited Partnership (the "1995 Dividend Increase Unit
Plan") and is recommending the amendment to stockholders
for approval. The amendment would increase the number of
Common Shares available for issuance under the 1995
Dividend Increase Unit Plan. If approved by the
stockholders, the number of Common Shares available for
issuance would increase by 200,000 shares.
The purpose of the 1995 Dividend Increase Unit Plan
is to incentive key employees of the Company to maximize
the dividend paying capacity of the Company. Each grant
(a "DIU") made under the 1995 Dividend Increase Unit Plan
is exercisable by the recipient over a 10year period
following the date of grant. The value of each DIU at the
date of exercise is determined by calculating the dividend
yield on the Common Shares at the date the DIU is granted
and dividing the increase in the Company's annualized
dividend from the date of grant to the date of exercise by
such dividend yield. The value of each DIU on the date of
exercise is payable in Common Shares.
The 1995 Dividend Increase Unit Plan was approved by
the shareholders at the April, 1996 Annual Meeting. The
original number of shares authorized for issuance under
the 1995 Dividend Increase Unit Plan was 200,000.
As noted above, the Board of Directors believes that
performance based awards play an important role in the
success of the Company. The amendment is necessary to
provide for an adequate number of Common Shares available
for grant under the 1995 Dividend Increase Unit Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE AMENDMENT TO
THE 1995 DIVIDEND INCREASE UNIT PLAN BE APPROVED, AND THEREFORE RECOMMENDS
A VOTE FOR THIS PROPOSAL.
MATERIAL FEATURES OF THE 1995 DIVIDEND INCREASE UNIT PLAN
Under the 1995 Dividend Increase Unit Plan, the
Committee may grant one or more DIUs to key employees of
the Services Partnership. There are currently 85 employees
participating in the plan. If the amendment to the 1995
Dividend Increase Unit Plan is approved by the
shareholders, the Committee will be authorized to issue up
to 400,000 Common Shares under the plan. As of March 3,
1998, the market value of the 400,000 shares that may be
issued under the 1995 Dividend Increase Unit Plan was
$9,100,000.
The value of each DIU at the date of exercise will be
determined by calculating the dividend yield on the
Company's Common Shares (the "Dividend Yield") at the date
the DIU is granted and dividing the increase in the
Company's annualized dividend from the date of grant to
the date of exercises by such Dividend Yield. A DIU may be
exercised by a participant only to the extent that such
participant has purchased a Common Share of the Company
pursuant to the exercise of an option granted under the
1995 Stock Option Plan on the same date as the grant of
the DIU. The term of each DIU and the date the DIUs become
exercisable shall be determined by the Committee except
that the term of a DIU may not exceed ten years.
During a participant's lifetime, his DIUs are
nontransferable and may be exercised only by him. If a
participant's employment terminates for any reason other
than cause (as defined) or his total disability (as
defined) or death, any outstanding DIUs will terminate 90
days after the participant's employment terminates. If a
participant is terminated for cause, all outstanding DIUs
will terminate on the date his employment terminates. If a
participant's employment terminates because of death or
total disability, all outstanding DIUs remain exercisable
for a period of one year from the date of
- 18 -
<PAGE>
termination of employment. In the event of death, total
disability or retirement (on or after attaining age 65) of
the participant or a change in control of the Company (as
defined), all outstanding DIUs become immediately
exercisable.
Distribution of a participant's benefit under the
1995 Dividend Increase Unit Plan will be made in a single
lump sum payment in the form of Common Shares of the
Company. The number of shares to be issued will be based
on the fair market value of the Company's Common Shares at
the time of exercise. In the event of a change of control
of the Company, each participant will be entitled to
receive, within 90 days of the date of change in control, a lump sum
payment in cash equal to the value of his Units at the
date of change of control.
The Board of Directors may, at any time, without the
approval of the shareholders of the Company, alter, amend,
modify, suspend or discontinue the 1995 Dividend Increase
Unit Plan except for any such alterations which would (i)
increase the aggregate number of shares which could be
issued under the 1995 Dividend Increase Unit Plan (except
to the extent otherwise provided for as a result of stock
dividends, splits, combinations or other changes of shares
described in the plan document); (ii) permit any Committee
member to become eligible to receive grants under the 1995
Dividend Increase Unit Plan; (iii) withdraw administration
of the 1995 Dividend Increase Unit Plan from the Committee or the
Board of Directors; (iv) extend the term of the 1995 Dividend
Increase Unit Plan or the maximum period during which any DIU may
be exercised; (v) change the manner of determining the value of a DIU; or
(vi) change the class of individuals eligible for options
under the 1995 Dividend Increase Unit Plan.
FEDERAL INCOME TAX CONSEQUENCES
At the time a DIU is exercised, the participant will recognize
ordinary income in the form of compensation, and the
Company or its subsidiaries will be entitled to a
compensation expense deduction equal to the value of the
Common Share transferred to the participant.
DISCLOSURE OF BENEFITS
-----------------------
The benefits to be received under the 1995 Stock Option Plan
and the 1995 Dividend Increase Unit Plan are generally not
determinable because all awards are within the discretion of
the Committee and the ultimate value of the awards is dependent upon
the performance of the Company. The awards made under the plans for the
Company's last fiscal year are outlined in the following table.
<TABLE>
<CAPTION>
Stock Option Dividend Increase
------------ ----------------
Grants in 1997 Unit Awards in 1997
-------------- -------------------
(#) (#)
-------------- -------------------
<S> <C> <C>
Executive Officer Group (1) 134,350 134,350
Non-Executive Officer Employee Group 211,658 211,658
</TABLE>
(1) Represents awards made to the named executive officers of the Company as
disclosed in detail above under "Compensation of Executive Officers"
APPOINTMENT OF AUDITORS
The Company's consolidated financial statements for the fiscal
year ended December 31, 1997, were audited by KPMG Peat Marwick LLP ("KPMG").
The Company has selected KPMG as its independent auditors for the fiscal year
ending December 31, 1998. Representatives of KPMG are expected to be
present at the annual meeting, with the opportunity to
make a statement if they desire to do so, and will be
available to respond to questions.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
- 19 -
<PAGE>
Any shareholder of the Company wishing to have a
proposal considered for inclusion in the Company's proxy
solicitation materials for the 1998 annual meeting of the
shareholders must set forth such proposal in writing and file it with
the Secretary of the Company on or before November 19, 1998. The Board of
Directors of the Company will review any shareholder proposals that are filed as
required, and will determine whether such proposals meet
applicable criteria for inclusion in its 1998 proxy
solicitation materials or consideration at the 1999 annual
meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934,
as amended, requires the Company's officers and directors,
and persons who beneficially own more than 10% of the
Company's Common Shares, to file reports of ownership and
changes in ownership with the Securities and Exchange
Commission. Based on a review of these forms, the Company
believes that during 1997 all of its officers, directors
and greater than 10% beneficial owners timely filed the
forms required under Section 16(a) with one exception:
Mr. Baur filed a late Form 3 reporting his beneficial
ownership in the Company after his election to the
Company's Board of Directors.
ANNUAL REPORT
A copy of the Company's Annual Report for the year ended
December 31, 1997 has been provided to all shareholders as
of the record date. The Annual Report is not to be
considered as proxy solicitation material.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought
before this annual meeting. However, if other matters
should come before the meeting, it is the intention of
each person named in the proxy to vote such proxy in
accordance with his or her judgment on such matters.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
Whether or not you attend the meeting, you are urged to
execute and return the proxy.
For the Board of Directors,
[Signature]
John W. Wynne
CHAIRMAN
March 17, 1998
- 20 -
<PAGE>
EXHIBIT A
1995 KEY EMPLOYEES' STOCK OPTION PLAN
-------------------------------------
OF
--
DUKE REALTY INVESTMENTS, INC.
-----------------------------
ARTICLE I
INTRODUCTION
1.1. Purpose. The 1995 Key Employees' Stock Option Plan of Duke Realty
--------
Investments, Inc. (the "Plan") is designed to promote the
interests of the Company and its Subsidiaries by
encouraging their officers and key employees, upon whose
judgment, initiative and industry the Company and its
Subsidiaries are largely dependent for the successful
conduct and growth of their businesses, to continue their
association with the Company and its Subsidiaries by
providing additional incentive and opportunity for unusual
industry and efficiency through stock ownership, and by
increasing their proprietary interest in the Company and
their personal interest in its continued success and
progress. The Plan provides for the granting of (i) incentive stock
options ("ISO's") and (ii) nonqualified stock options
("NSO's").
1.2. Effective Date and Duration. The Effective Date of the Plan is
----------------------------
October 1, 1995. Options may be granted under the Plan
for a period of ten (10) years commencing October 1, 1995;
however, no options may be exercised until this Plan has
been approved by a majority of the shares of the Company
represented at the shareholders' meeting at which approval
of the Plan is considered. No options shall be granted
after September 30, 2005. Upon that date, the Plan shall
expire except as to outstanding options, which options
shall remain in effect until they have been exercised or
terminated or have expired. ISO's must be granted within
ten (10) years of the date the Plan is adopted by the
Board of Directors or approved by the shareholders of the
Company, whichever is earlier.
1.3. Administration. The Plan shall be administered by the Committee.
---------------
The Committee, from time to time, may adopt any rule or
procedure it deems necessary or desirable for the proper
and efficient administration of the Plan provided it is
consistent with the terms of the Plan. The decision of a
majority of the Committee members shall constitute the
decision of the Committee. Subject to the provisions of
the Plan, the Committee is authorized (i) to grant ISO's
and NSO's; (ii) to determine the employees to be granted
ISO's and NSO's; (iii) to determine the option period, the option price
and, subject to the limitations of Section 3.2, the number
of shares subject to each option; (iv) to determine the
time or times at which options will be granted; (v) to
determine the time or times at which each option becomes
exercisable and the duration of the exercise period; (vi)
to determine other conditions and limitations, if any,
applicable to the exercise of each option; and (vii) to
determine the nature and duration of the restrictions, if
any, to be imposed upon the sale or other disposition of
shares acquired by any optionee upon exercise of an
option, and the nature of the events, if any, and the
duration of the period, in or with respect to which any
optionee's rights to shares acquired upon exercise of an
option may be forfeited. Each option granted under the
Plan shall be evidenced by a written stock option
agreement containing terms and conditions established by
the Committee consistent with the provisions of the Plan,
including such terms as the Committee shall deem advisable
in order that each ISO shall constitute an "incentive
stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
The Committee's determinations and interpretations with
respect to the Plan shall be final and binding on all
parties. Any notice or document required to be given to
or filed with the Committee will be properly given or
filed if delivered or mailed by certified mail, postage
prepaid, to the Committee at 8888 Keystone Crossing, Suite
1200, Indianapolis, Indiana 46240-2182.
<PAGE>
1.4. Definitions. For purposes of this Plan, unless a different
-----------
meaning is clearly required by the context:
(a) "Board of Directors" means the board of directors of the Company.
(b) "Change in Control of the Company" means (i) any
merger, consolidation or similar transaction which
involves the Company and in which persons who are the
shareholders of the Company immediately prior to such
transaction own, immediately after such transaction,
shares of the surviving or combined entity which possess
voting rights equal to or less than fifty percent (50%) of
the voting rights of all shareholders of such entity,
determined on a fully diluted basis; (ii) any sale, lease,
exchange, transfer or other disposition of all or any
substantial part of the consolidated assets of the
Company; (iii) any tender, exchange, sale or other
disposition (other than disposition of the stock of the
Company or any Subsidiary in connection with bankruptcy,
insolvency, foreclosure, receivership or other similar
transactions) or purchases (other than purchases by the
Company or any Company sponsored employee benefit plan, or
purchases by members of the Board of Directors of the
Company or any Subsidiary) of shares which represent more
than twenty-five percent (25%) of the voting power of the
Company or any Subsidiary; (iv) during any period of two
(2) consecutive years, individuals who at the date of the
adoption of the Plan constitute the Company's Board of
Directors cease for any reason to constitute at least a
majority thereof, unless the election of each director at
the beginning of such period has been approved by
directors representing at least a majority of the
directors then in office who were directors on the date of
the adoption of the Plan; (v) a majority of the Company's
Board of Directors recommends the acceptance of or accept
any agreement, contract, offer or other arrangement
providing for, or any series of transactions resulting in,
any of the transactions described above. Notwithstanding
the foregoing, a Change in Control of the Company (A)
shall not occur as a result of the issuance of stock by
the Company in connection with any public offering of its
stock, or (B) be deemed to have occurred with respect to
any transaction unless such transaction has been approved
or shares have been tendered by a majority of the
shareholders who are not Section 16 Grantees.
(c) "Code" means the Internal Revenue Code, as amended.
(d) "Committee" means the Executive Compensation Committee of the
Board of Directors of the Company.
(e) "Company" means Duke Realty Investments, Inc.
(f) "Effective Date" means October 1, 1995.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means the per share
closing price for the Company's common stock on the New
York Stock Exchange on the date of determination.
(i) "For Cause" means (i) the willful and
continued failure of an optionee to perform his required
duties as an officer or employee of the Company or any
Subsidiary, (ii) any action by an optionee which involves
willful misfeasance or gross negligence, (iii) the
requirement of or direction by a federal or state
regulatory agency which has jurisdiction over the Company
or any Subsidiary to terminate the employment of an
optionee, (iv) the conviction of an optionee of the
commission of any criminal offense which involves
dishonesty or breach of trust, or (v) any intentional
breach by an optionee of a material term, condition or
covenant of any agreement between the optionee and the Company or any
Subsidiary.
(j) "Permanent and Total Disability" or
"Permanently and Totally Disabled" means any disability
that would qualify as a disability under Code Section
22(c)(3).
<PAGE>
(k) "Plan" means the stock option plan
embodied herein, as amended from time to time, known as
the 1995 Key Employees' Stock Option Plan of Duke Realty
Investments, Inc.
(l) "Section 16 Grantee" means a person subject to
potential liability under Section 16(b) of the Exchange
Act with respect to transactions involving equity
securities of the Company.
(m) "Subsidiary" or "Subsidiaries" means a
corporation, partnership or limited liability company, a
majority of the outstanding voting stock, general
partnership interests or membership interests, as the
case may be, of which is owned or controlled, directly or
indirectly, by the Company or by one or more other
Subsidiaries of the Company. For the purposes of this
definition, "voting stock" means stock having voting
power for the election of directors, or trustees, as the
case may be, whether at all times or only so long as no
senior class of stock has such voting power by reason of
any contingency.
ARTICLE II
-----------
ELIGIBILITY AND PARTICIPATION
-----------------------------
Officers and other key employees of the Company or
of any of its Subsidiaries, as selected by the Committee,
shall be eligible to receive grants of ISO's and NSO's
under the Plan. Committee members shall not be eligible
to receive grants of options under the Plan while serving
as Committee members.
ARTICLE III
----------
BENEFITS
--------
3.1. Shares Covered by the Plan. The stock to be subject to options
--------------------------
under the Plan shall be shares of authorized common stock of the
Company and may be unissued shares or reacquired shares
(including shares purchased in the open market), or a
combination of the two, or shares which are not issued in
connection with the Duke Realty Services Limited Partnership
1993 Stock Option Plan, as the Committee may from time to time
determine. Subject to the provisions of Section 4.2 and the
provisions of this Section 3.1, the maximum number of shares to
be delivered upon exercise of all options granted under the
Plan shall not exceed (i) Five Hundred Fifty-Eight Thousand
Four Hundred (558,400) shares and (ii) the number of shares
authorized under the Duke Realty Services Limited Partnership
1993 Stock Option Plan that become available due to the lapse,
forfeiture or other termination of stock options granted under
such plan. Provided, however, the total number of shares to be
delivered upon exercise of the options granted under the Plan
under clause (ii) of the previous sentence shall not exceed
Four Hundred Thousand (400,000) shares. Shares covered by an
option that remains unpurchased upon the expiration or
termination of the option may be made subject to further
options.
3.2. Grant of Options. The Committee shall be responsible for granting
----------------
all options under the Plan. The Committee shall also determine, in
its sole discretion, with respect to each optionee, whether the
options granted shall be ISO's or NSO's, or a combination
of the two; and whether any employee shall be given
discretion to determine whether any options granted to
him shall be ISO's or NSO's or a combination of the two.
Provided, however, notwithstanding any other Plan
provison, during any calendar year, no optionee shall be
granted options to acquire more than twenty five thousand
(25,000) shares of Company stock.
3.3. Option Price.
------------
<PAGE>
(a) ISO Option Price. The option price per share of stock under
----------------
each ISO shall be not less than one hundred percent (100%) of
the Fair Market Value of the share on the date on which the
option is granted; provided, however, as to officers and key
employees who, at the time an ISO is granted, own, within the meaning of
Code Section 425(d), more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any
Subsidiary (referred to as "Shareholder-Employees"), the
purchase price per share of stock under each ISO shall be not
less than one hundred ten percent (110%) of the Fair Market
Value of the stock on the date on which the option is granted.
(b) NSO Option Price. The option price per share of stock under
-----------------
each NSO shall be determined by the Committee in its discretion;
provided, however, the option price per share shall not be
less than one hundred percent (100%) of the Fair Market
Value of the share on the date on which the option is
granted.
3.3. Option Period. No option period shall exceed ten (10) years;
-------------
provided, however, the option period with respect to ISO's
granted to Shareholder-Employees shall not exceed five (5)
years.
3.4. Special Calendar Year Limitation on Shares Subject to ISO's.
-----------------------------------------------------------
The aggregate Fair Market Value (determined at the time of the grant
of the ISO's) of the stock with respect to which ISO's are
exercisable for the first time by an eligible employee
during any calendar year (under all plans providing for the
grant of incentive stock options of the Company or any of
its Subsidiaries) shall not exceed One Hundred Thousand
Dollars ($100,000.00).
3.5. Sequence of Exercising Incentive Stock Options.
----------------------------------------------
Any ISO granted to an employee pursuant to the Plan shall
be exercisable even if there are outstanding previously
granted but unexercised ISO's with respect to such
employee.
3.7 Vesting of Options. All options granted under the Plan shall
------------------
vest, and thereby become exercisable at such time or times
as shall be determined by the Committee in its sole
discretion. The stock option agreement between the Company
and the optionee shall include the schedule under which the
option shall vest.
3.8 Vesting on Change in Control or Death, Retirement or Disability of
-----------------------------------------------------------------
Optionee. Notwithstanding the provisions of Section 3.7, in the event of a
Change in Control of the Company or upon the death,
Permanent and Total Disability or retirement on or after
attaining age sixty-five (65) of the optionee, any options
granted under this Plan may be exercised in full without
regard to any restrictions on the vesting of the options
contained in the option agreement between the Company and
the optionee.
3.9. Early Termination of Option.
---------------------------
(a) Termination of Employment. All rights to exercise an option
-------------------------
shall terminate ninety (90) days after the effective date of
the optionee's termination of employment with the Company and its
Subsidiaries, but not later than the date the option expires
pursuant to its terms, unless such termination is For Cause or
is on account of the Permanent and Total Disability or death of
the optionee. Transfer of employment from the Company to a
Subsidiary, or vice versa, or from one Subsidiary to another,
shall not be deemed a termination of employment. The Committee
shall have the authority to determine in each case whether a
leave of absence on military or government service shall be
deemed a termination of employment for purposes of this
subsection (a).
(b) For Cause Termination. If an optionee's employment with the
--------------------
Company and its Subsidiaries is terminated For Cause, no
previously unexercised option granted hereunder may be
exercised. Rather, all unexercised options shall terminate
effective on the date the optionee receives notice of his
termination For Cause.
<PAGE>
(c) Permanent and Total Disability or Death of Optionee. If an
---------------------------------------------------
optionee's employment terminates due to Permanent and Total Disability
or death, his option shall terminate one (1) year after
termination of his employment due to his Permanent and
Total Disability or death (but not later than the date the
option expires pursuant to its terms). During such period,
subject to the limitations of this Plan and the option
agreement between the Company and the optionee, the
optionee, his guardian, attorney-in-fact or personal
representative, as the case may be, may exercise the
option in full. Notwithstanding the foregoing, in the case
of an ISO, such option shall be exercisable as an ISO only
during the three (3) month period immediately following
the optionee's death and in no event later than the date
specified in the stock option agreement. During the
remainder of such one (1) year period, the option may be
exercised as an NSO.
3.10. Payment for Stock. Full payment for shares purchased hereunder
-----------------
shall be made at the time the option is exercised. Payment
may be made by delivering to the Company (a) cash; (b) at
the discretion of the Committee, whole shares of common
stock of the Company ("Delivered Stock") which (i) has
been owned by the optionee for more than six (6) months
and has been paid for, within the meaning of SEC Rule 144
(and, if such stock was purchased from the Company by use
of a promissory note, such note has been fully paid with
respect to such stock), or (ii) was obtained by the
optionee in the public market or otherwise
than through the exercise of an option under this Plan or
under any other stock option plan involving Company stock;
(c) at the discretion of the Committee, a combination of
cash and Delivered stock; or (d) provided that a public
market for the Company's common stock exists, (i) through
a "same day sale" commitment from the optionee and a
broker-dealer that is a member of the National Association
of Securities Dealers ("NASD Dealer") whereby the optionee
irrevocably elects to exercise the option and to sell a
portion of the common stock so purchased in order to pay
the option price, and whereby the NASD Dealer irrevocably
commits upon receipt of such stock to forward the option
price directly to the Company; or (ii) through a "margin"
commitment from the optionee and an NASD Dealer whereby
the optionee irrevocably elects to exercise the option and
to pledge the stock so purchased and to the NASD Dealer in
a margin account as security for a loan from the NASD
Dealer in the amount of the option price and Whereby the
NASD Dealer irrevocably commits upon receipt of such stock
to forward the option price directly to the Company.
Delivered Stock shall be valued by the Committee at its
Fair Market Value determined as of the date of the
exercise of the option. No shares shall be issued until
full payment for them has been made, and an optionee shall
have none of the rights of a shareholder with respect to
any shares until they are issued to him. Upon payment of
the full purchase price, and any required withholding
taxes, the Company shall issue a certificate or
certificates to the optionee evidencing ownership of the
shares purchased pursuant to the exercise of the option
which contain(s) such terms, conditions and provisions as
may be required and as are consistent with the terms,
conditions and provisions of the Plan and the stock option
agreement between the Company and the optionee.
3.11. Income and Employment Tax Withholding.
------------------------------------
(a) Payment by Optionee. The optionee shall be solely
-------------------
responsible for paying to the Company all required
federal, state, city and local taxes applicable to his (i)
exercise of an NSO under the Plan and (ii) disposition of
shares acquired pursuant to the exercise of an ISO in a
disqualifying disposition of the shares under Code Section
422(a)(1).
(b) NSO Withholding With Company Stock. Notwithstanding the
----------------------------------
provisions of subsection (a), with respect to stock to be
issued pursuant to the exercise of an NSO, the Committee,
in its discretion and subject to such rules as it may
adopt, may permit the optionee to satisfy, in whole or in
part, any withholding tax obligation which may arise in
connection with the exercise of the NSO by having the
Company retain shares of stock which would otherwise be
issued in connection with the exercise of the NSO or accept
delivery from the optionee of shares of Company stock which
have a Fair Market Value, determined as of the date of the
delivery of such shares, equal to the amount of the
withholding tax to be satisfied by that retention or
delivery.
<PAGE>
(c) ISO Disqualifying Disposition Withholding with Company
------------------------------------------------------
Stock. Notwithstanding the provisions of subsection (a),
with respect to shares of stock to be issued pursuant to the exercise of
any ISO, the Committee, in its discretion and subject to
such rules as it may adopt, may permit the optionee to satisfy, in whole or
in part, any withholding tax obligation which may arise in
connection with the disqualifying disposition of the
shares under Code Section 422(a)(1) by having the Company
accept delivery from the optionee of shares of
stock having a Fair Market Value, determined as of the
date of the delivery of such shares, equal to the amount
of the withholding tax to be satisfied by that delivery.
3.11. Notice of Disqualifying Disposition. Any ISO granted hereunder
-----------------------------------
shall require the optionee to notify the Committee of any
disposition of any stock issued pursuant to the exercise
of the ISO under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying
dispositions), within ten (10) days of such disposition.
ARTICLE IV
PLAN ADMINISTRATION AND INTERPRETATION
--------------------------------------
4.1. Amendment and Termination. The Board of Directors or the Committee
-------------------------
may, at any time, without the approval of the stockholders
of the Company (except as otherwise required by applicable
law, rule or regulations, or listing requirements of any
National Securities Exchange on which are listed any of
the Company's equity securities, including without
limitation any shareholder approval requirement of Rule
16b-3 or any successor safe harbor rule promulgated under
the Exchange Act ), alter, amend, modify, suspend or
discontinue the Plan, but may not, without the consent of
the holder of an option, make any alteration which would
adversely affect an option previously granted under the
Plan or, without the approval of the stockholders of the
Company, make any alteration which would: (a) increase the
aggregate number of shares subject to options under the
Plan, except as provided in Section 4.2; (b) decrease the
minimum option price, except as provided in Section 4.2;
(c) permit any Committee member to become eligible to
receive grants of options under the Plan; (d) withdraw
administration of the Plan from the Committee or the Board
of Directors; (e) extend the term of the
Plan or the maximum period during which any option may be exercised;
(f) change the manner of determining the option price; or (g) change the
class of individuals eligible for options under the Plan.
4.2. Changes in Stock.
-----------------
(a) Substitution of Stock and Assumption of Plan. In the event
--------------------------------------------
of any change in the common stock of the Company through stock
dividends, split-ups, recapitalizations, reclassifications,
conversions, or otherwise, or in the event that other
stock shall be converted into or substituted for the
present common stock of the Company as the result of any
merger, consolidation, reorganization or similar
transaction which results in a Change in Control of the
Company, then the Committee may make appropriate
adjustment or substitution in the aggregate number, price,
and kind of shares available under the Plan and in the
number, price and kind of shares covered under any options
granted or to be granted under the Plan. The Committee's
determination in this respect shall be final and
conclusive. Provided, however, that the Company shall
not, and shall not permit its Subsidiaries to, recommend, facilitate or
agree or consent to a transaction or series of
transactions which would result in a Change of Control of
the Company unless and until the person or persons or the
entity or entities acquiring or succeeding to the
assets or capital stock of the Company or any of its
Subsidiaries as a result of such transaction or
transactions agrees to be bound by the terms of the Plan
so far as it pertains to options theretofore granted but
unexercised and agrees to assume and perform the
obligations of the Company hereunder. Notwithstanding the
foregoing provisions of this subsection (a), no adjustment shall be made
which would operate to reduce the option price of any ISO
below the Fair Market Value of the stock (determined on
the date the option was granted) which is subject to an
ISO.
<PAGE>
(b) Conversion of Stock. In the event of a Change in Control of
-------------------
the Company pursuant to which another person or entity acquires
control of the Company (such other person or entity being
the "Successor"), the kind of shares of common stock which
shall be subject to the Plan and to each outstanding
option, shall, automatically by virtue of such Change in
Control of the Company, be converted into and replaced by
shares of common stock, or such other class of securities
having rights and preferences no less favorable than
common stock of the Successor, and the number of shares
subject to the option and the purchase price per share
upon exercise of the option shall be correspondingly
adjusted, so that, by virtue of such Change in Control of
the Company, each optionee shall have the right to
purchase (i) that number of shares of common stock of the
Successor which have a Fair Market Value equal, as of the
date of such Change in Control of the Company, to the Fair
Market Value, as of the date of such Change in Control, of
the shares of common stock of the Company theretofore
subject to his option, and (ii) for a purchase price per
share which, when multiplied by the number of shares of
common stock of the Successor subject to the option, shall
equal the aggregate exercise price at which the optionee
could have acquired all of the shares of common stock of
the Company previously optioned to the optionee.
4.3. Information to be Furnished by Optionees. Optionees, or any other
----------------------------------------
persons entitled to benefits under this Plan, must furnish
to the Committee such documents, evidence, data or other
information as the Committee considers necessary or
desirable for the purpose of administering the Plan. The
benefits under the Plan for each optionee, and each other
person who is entitled to benefits hereunder, are to be
provided on the condition that he furnish full, true and
complete data, evidence or other information, and that he
will promptly sign any document reasonably related to the
administration of the Plan requested by the Committee.
4.4. Employment Rights. Neither the Plan nor any stock option
-----------------
agreement executed under the Plan shall constitute a
contract of employment and participation in the Plan will
not give an optionee the right to be rehired or retained
in the employ of the Company, nor will participation in
the Plan give any optionee any right or claim to any
benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.
4.5. Evidence. Evidence required of anyone under the Plan may be by
--------
certificate, affidavit, document or other information which
the person relying thereon considers pertinent and reliable,
and signed, made or presented by the proper party or parties.
4.6. Gender and Number. Where the context admits, words in the
-----------------
masculine gender shall include the feminine gender, the
plural shall include the singular and the singular shall
include the plural.
4.7. Action by Company. Any action required of or permitted by the
-----------------
Company under the Plan shall be by resolution of the Board of
Directors or by a person or persons authorized by resolution of
the Board of Directors.
4.8. Controlling Laws. Except to the extent superseded by laws of the
----------------
United States, the laws of Indiana shall be controlling in all
matters relating to the Plan.
4.9. Mistake of Fact. Any mistake of fact or misstatement of fact
---------------
shall be corrected when it becomes known and proper adjustment
made by reason thereof.
4.10.Severability. In the event any provisions of the Plan shall be
------------
held to be illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and endorsed as if such illegal or
invalid provisions had never been contained in the Plan.
<PAGE>
4.11.Effect of Headings. The descriptive headings of the sections of
------------------
this Plan are inserted for convenience of reference and identification
only and do not constitute a part of this Plan for purposes of
interpretation.
4.12.Nontransferability. No option shall be transferable, except by
------------------
the optionee's will or the laws of descent and distribution. During
the optionee's lifetime, his option shall be exercisable (to the
extent exercisable) only by him. The option and any
rights and privileges pertaining thereto shall not be
transferred, assigned, pledged or hypothecated by him in
any way, whether by operation of law or otherwise and
shall not be subject to execution, attachment or similar
process.
4.13.Liability. No member of the Board of Directors or the Committee
---------
or any officer or employee of the Company or its
Subsidiaries shall be personally liable for any action,
omission or determination made in good faith in connection
with the Plan. Each optionee, in the stock option
agreement between him and the Company, shall agree to
release and hold harmless the Company, the Board of
Directors, the Committee and all officers and employees of
the Company and its Subsidiaries from and against any tax
liability, including without limitation interest and
penalties, incurred by the optionee in connection with his
participation in the Plan.
4.14.Investment Representations. Unless the shares subject to an
--------------------------
option are registered under the Securities Act of 1933, each
optionee, in the stock option agreement between the Company and the
optionee, shall agree for himself and his legal
representatives that any and all shares of common stock
purchased upon the exercise of the option shall be acquired
for investment and not with a view to, or for sale in
connection with, any distribution of those shares. Any share
issued pursuant to an exercise of an option subject to this
investment representation shall bear a legend evidencing this
restriction.
4.15.Use of Proceeds. The proceeds received by the Company from the
---------------
sale of stock pursuant to the Plan will be used for general
corporate purposes, including without limitation the purchase
by the Company of additional limited partnership units in Duke
Realty Limited Partnership.
DUKE REALTY INVESTMENTS, INC.
DATED: October 26, 1995 By: /s/ Thomas L. Hefner
-------------------------
Thomas L. Hefner, President and
Chief Executive Officer
<PAGE>
AMENDMENT ONE TO THE 1995
KEY EMPLOYEES' STOCK OPTION PLAN OF
DUKE REALTY INVESTMENTS, INC.
This Amendment One to the 1995 Key Employees' Stock
Option Plan of Duke Realty Investments, Inc. ("Plan") is
hereby adopted this 25th day of August, 1997 by Duke
Realty Investments, Inc. ("Company"), effective as of the
dates specified herein;
WITNESSETH:
WHEREAS, the Company adopted the Plan for the
purposes set forth therein; and
WHEREAS, pursuant to Section 4.1 of the Plan, the
Company has reserved the right to amend the Plan with
respect to certain matters, by action of the Board of
Directors ("Board") or the Executive Compensation
Committee thereof ("Committee"); and
WHEREAS, the Board has approved a two (2) for one (1)
stock split of the Company's common stock effective as of
August 25, 1997, with respect to all shareholders of
record as of August 18, 1997; and
WHEREAS, the Plan currently provides that the maximum
number of shares to be delivered upon the exercise of all
options thereunder shall not exceed five hundred fifty-
eight thousand four hundred (558,400) shares; and
WHEREAS, the two (2) for one (1) stock split requires
that the maximum number of shares to be delivered upon the
exercise of all options under the Plan be increased, on a
two (2) for one (1) basis;
WHEREAS, the Committee has determined to amend the Plan in
certain additional respects; and
WHEREAS, the Committee has approved and adopted this Amendment
One;
NOW, THEREFORE, pursuant to the authority reserved to
the Company under Section 4.1 of the Plan, the Plan is
hereby amended, effective as of the dates specified
herein, in the following particulars:
1. By substituting the following for Section 1.3 of the Plan
effective as of October 1, 1995:
"1.3.Administration. The Plan shall be administered by
--------------
the Committee. The Committee, from time to time, may
adopt any rule or procedure it deems necessary or
desirable for the proper and efficient administration
of the Plan provided it is consistent with the terms
of the Plan. The decision of a majority of the
Committee members shall constitute the decision of the
Committee. Subject to the provisions of the Plan, the
Committee is authorized (i) to grant ISO's and NSO's;
(ii) to determine the employees to be granted ISO's
and NSO's; (iii) to determine the option period, the
option price and, subject to the limitations of
Section 3.2, the number of shares subject to each
option; (iv) to determine the time or times at which
options will be granted; (v) to determine the time or
times at which each option becomes exercisable and the
duration of the exercise period; (vi) to permit, in
its discretion, the limited transferability of NSO's
granted to an optionee; (vii) to determine other
conditions and limitations, if any, applicable to the
exercise of each option; and (viii) to determine the
nature and
<PAGE>
duration of the restrictions, if any, to be imposed
upon the sale or other disposition of shares acquired
by any optionee upon exercise of an option, and the
nature of the events , if any, and the duration of the
period, in or with respect to which any optionee's
rights to shares acquired upon exercise of an option
may be forfeited. Each option granted under the Plan
shall be evidenced by a written stock option agreement
containing terms and conditions established by the
Committee consistent with the provisions of the Plan,
including such terms as the Committee shall deem
advisable in order that each ISO shall constitute an
"incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended
(the "Code"). The Committee's determinations and
interpretations with respect to the Plan shall be
final and binding on all parties. Any notice or
document required to be given to or filed with the
Committee will be properly given or filed if delivered
or mailed by certified mail, postage prepaid, to the
Committee at 8888 Keystone Crossing, Suite 1200,
Indianapolis, IN 46240-2182.
2. By substituting the following for Section 3.1 of the Plan
effective as of August 25, 1997:
"3.1. Shares Covered by the Plan. The stock to be
--------------------------
subject to options under the Plan shall be shares of
authorized common stock of the Company and may be
unissued shares or reacquired shares (including shares
purchased in the open market), or a combination of the
two, or shares which are not issued in connection with
the Duke Realty Services Limited Partnership 1993 Stock
Option Plan, as the Committee may from time to time
determine. Subject to the provisions of Section
4.2 and the provisions of this Section 3.1, the maximum
number of shares to be delivered upon exercise of all
options granted under the Plan shall not exceed (i) one
million one hundred sixteen thousand eight hundred
(1,116,800) shares and (ii) the number of shares
authorized under the Duke Realty Services Limited
Partnership 1993 Stock Option Plan that become
available due to the lapse, forfeiture or other
termination of stock options granted under such plan.
Provided, however, the total number of shares to be
delivered upon exercise of the options granted under
the Plan under clause (ii) of the previous sentence
shall not exceed eight hundred thousand (800,000)
shares. Shares covered by an option that remains
unpurchased upon the expiration or termination of the
option may be made subject to further options."
3. By substituting the following for Section 3.2 of the Plan
effective as of August 25, 1997:
"3.2. Grant of Options. The Committee shall be
----------------
responsible for granting all options under the Plan.
The Committee shall also determine, it is sole discretion,
with respect to each optionee, whether the options granted
shall be ISO's or NSO's, or a combination of the two; and
whether any employee shall be given discretion to determine
whether any options granted to him shall be ISO's or NSO's or
a combination of the two. Provided, however, notwithstanding
any other Plan provision, during any calendar year, no
optionee shall be granted options to acquire more than fifty
thousand (50,000) shares of Company stock."
4. By substituting the following for Section 3.7 of the Plan
effective as of October 1, 1995:
"3.7 Vesting of Options. All options granted under
------------------
the Plan shall vest, and thereby become exercisable,
at such time or times as shall be determined by the
Committee in its sole discretion. The stock option
agreement between the Company and
<PAGE>
the optionee shall include the schedule under which the
option shall vest. The Committee may, in its sole
discretion, amend such schedule in a manner which
causes options previously granted under the Plan to
vest under a more rapid schedule. The Committee shall
not amend such schedule to provide for the slower
vesting of any options previously granted under the
Plan."
5. By adding the following sentence to the end of Section 3.10 of
the Plan effective as of October 1, 1995:
"For purposes of this Section 3.10, payment for
shares purchased hereunder may be delivered to the
Company through such attestation or certification
procedures as may be established by the Committee
from time to time in its sole discretion."
6. By substituting the following for Section 4.12 of the Plan
effective as of October 1, 1995:
"4.12. Nontransferability.
------------------
(a) No option shall be transferable, except by the optionee's will or
the laws of descent and distribution. During the optionee's lifetime,
his option shall be exercisable (to the extent exercisable) only by
him. The option, and any rights and privileges pertaining thereto,
shall not be transferred, assigned, pledged or hypothecated by the
optionee in any way, whether by operation of law or otherwise and
shall not be subject to execution, attachment or similar process.
(b) Notwithstanding the provisions of subsection (a), the Committee
may, in its sole discretion, permit the transfer of NSO's by an
optionee to: (i) the spouse, child or grandchildren of the optionee
("Immediate Family Members"); (ii) a trust or trusts for the
exclusive benefit of Immediate Family Members; or (iii) a partnership
or limited liability company in which the optionee and/or the
Immediate Family Members are the only equity owners, (collectively,
"Eligible Transferees"). Provided that, in the event the Committee
permits the transferability of NSO's granted to the optionee, the
Committee may subsequently, in its discretion, restrict the ability of
the optionee to transfer NSO's granted to the Optionee thereafter. An
option that is transferred to an Immediate Family Member shall not be
transferable by such Immediate Family Member, except for any transfer
by such Immediate Family Member's will or by the laws of descent and
distribution upon the death of such Immediate Family Member. ISO's
granted under the Plan shall be nontransferable.
(c) In the event that the Committee, in its sole discretion, permits
the transfer of NSO's by an optionee to an Eligible Transferee under
this Section 4.12, the options transferred to the Eligible Transferee
must be exercise by such Eligible Transferee and, in the event of the
death of such Eligible Transferee, by such Eligible Transferee's
executor or administrator only in the same manner, to the same extent
and under the same circumstances (including, without limitation, the
time period within which the options must be exercised) as the
optionee or, in the event of the optionee's death, the executor or
administrator of the optionee's estate, could have exercised such
options. The optionee, or in the event of optionee's death, the
optionee's estate, shall remain liable for all federal, state, city
and local taxes applicable upon the exercise of an NSO by an Eligible
Transferee."
<PAGE>
7. All other provisions of the Plan shall remain the same.
IN WITNESS WHEREOF, Duke Realty Investments, Inc., by its
officers thereunder duly authorized, has executed this
Amendment One to the 1995 Key Employees' Stock Option Plan
of Duke Realty Investments, Inc. this 25th day of August,
1997, but effective as of the dates specified herein.
DUKE REALTY INVESTMENTS, INC.
By: /s/ Thomas L. Hefner
-------------------------
Thomas L. Hefner, President and
Chief Executive Officer
<PAGE>
AMENDMENT TWO TO THE 1995
KEY EMPLOYEES' STOCK OPTION PLAN OF
DUKE REALTY INVESTMENTS, INC.
-----------------------------------
This Amendment Two to the 1995 Key Employees' Stock
Option Plan of Duke Realty Investments, Inc. ("Plan") is
hereby adopted this 29th day of January, 1998 by Duke
Realty Investments, Inc. ("Company"), effective as of the
date specified herein;
W I T N E S S E T H:
WHEREAS, the Company adopted the Plan for the
purposes set forth therein; and
WHEREAS, pursuant to Section 4.1 of the Plan, the
Company has reserved the right to amend the Plan with
respect to certain matters by action of the Executive
Compensation Committee of the Board of Directors
("Committee"); and
WHEREAS, the Committee has approved an increase in the maximum
number of shares to be delivered upon the exercise of
options thereunder by 2,500,000 shares; and
WHEREAS, the Committee has approved and authorized
this Amendment Two;
NOW, THEREFORE, pursuant to the authority reserved to
the Company under Section 4.1 of the Plan, the Plan is
hereby amended, effective as of January 1, 1998, by
substituting the following for the phrase "(i) one million
one hundred sixteen thousand eight hundred (1,116,800)
shares and" where that phrase appears in Section 3.1 of
the Plan:
"(i) three million six hundred sixteen thousand
eight hundred (3,616,800) shares, for years beginning
on or after January 1, 1998 and"
IN WITNESS WHEREOF, Duke Realty Investments, Inc. has executed
this Amendment Two to the 1995 Key Employees' Stock Option
Plan of Duke Realty Investments, Inc. this 29th day of
January, 1998, but effective as of January 1, 1998.
DUKE REALTY INVESTMENTS, INC.
By: /s/ Dennis D. Oklak
Dennis D. Oklak, Executive Vice President
and Chief Administrative Officer
<PAGE>
EXHIBIT B
1995 DIVIDEND INCREASE UNIT PLAN
OF
DUKE REALTY SERVICES LIMITED PARTNERSHIP
ARTICLE I
INTRODUCTION
-------------
1.1. Purpose. The 1995 Dividend Increase Unit Plan of Duke Realty Services
-------
Limited Partnership (the "Plan") is designed to retain selected officers
and key employees of the Partnership and to encourage the growth of the
Partnership and its Affiliates.
1.2. Effective Date. The Effective Date of the Plan is October 1, 1995.
--------------
Provided, however, the Committee may, in its discretion, grant Units
under the Plan the terms of which provide that the effective date of the
grant is on or after January 1, 1995.
1.3. Administration. The Plan shall be administered by the Committee. The
--------------
Committee, from time to time, may adopt any rule or procedure it deems
necessary or desirable for the proper and efficient administration of
the Plan, provided it is consistent with the terms of the Plan. The
decision of a majority of the Committee members shall constitute the
decision of the Committee. The Committee's determinations and
interpretations with respect to the Plan shall be final and binding on
all parties. Any notice or document required to be given to or filed with
the Committee will be properly given or filed if delivered or mailed by
certified mail, postage prepaid, to the Committee at 8888 Keystone
Crossing, Suite 1200, Indianapolis, Indiana 46240-2182.
1.4 Definitions. For purposes of this Plan, unless a different meaning is
-----------
clearly required by the context:
(a) "Affiliate" or "Affiliates" means (i) any general
partner of the Partnership, (ii) any entity which owns a majority of the
ownership interests of the Partnership, (iii) any entity that owns a
majority of the ownership interests of an entity described in clause
(i) or (ii) or an Affiliate of any such entity, or (iv) any Subsidiary.
(b) "Board of Directors" means the board of directors of Duke
Services, Inc.
(c) "Change in Control of the Company" means (i) any merger,
consolidation or similar transaction which involves the Company and in
which persons who are the shareholders of the Company immediately prior
to such transaction own, immediately after such transaction, shares of
the surviving or combined entity which possess voting rights equal to or
less than fifty percent (50%) of the voting rights of all shareholders of
such entity, determined on a fully diluted basis; (ii) any sale, lease,
exchange, transfer or other disposition of all or any substantial part of
the consolidated assets of the Company; (iii) any tender, exchange, sale
or other disposition (other than disposition of the stock of the Company
or any Subsidiary in connection with bankruptcy, insolvency, foreclosure,
receivership or other similar transactions) or purchases (other than
purchases by the Company or any Company sponsored employee benefit plan,
or purchases by members of the board of directors of the Company or any
Subsidiary) of shares which represent more than twenty-five percent (25%)
of the voting power of the Company or any Subsidiary; (iv) during any
period of two (2) consecutive years, individuals who at the date of the
adoption of the Plan constitute the Company's board of directors cease
for any reason to constitute at least a majority thereof, unless the
election of each director at the beginning of such period has been
approved by directors representing at least a majority of the directors
then in office who were directors
<PAGE>
on the date of the adoption of the Plan; (v) a majority of the
Company's board of directors recommends the acceptance of or accept
any agreement, contract, offer or other arrangement providing for,
or any series of transactions resulting in, any of the transactions
described above. Notwithstanding the foregoing, a Change in Control
of the Company (A) shall not occur as a result of the issuance of
stock by the Company in connection with any public offering of its
stock, or (B) be deemed to have occurred with respect to any
transaction unless such transaction has been approved or shares have
been tendered by a majority of the shareholders who are not Section
16 Grantees.
(d) "Code" means the Internal Revenue Code, as amended.
(e) "Committee" means the Executive Compensation Committee
of the board of directors of the Company.
(f) "Company" means Duke Realty Investments, Inc.
(g) "Effective Date" means October 1, 1995.
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(i) "For Cause" means (i) the willful and
continued failure of a Participant to perform his required
duties as an officer or employee of the Partnership or any
Affiliate, (ii) any action by a Participant which involves
willful misfeasance or gross negligence, (iii) the
requirement of or direction by a federal or state
regulatory agency which has jurisdiction over the
Partnership or any Affiliate to terminate the employment
of the Participant, (iv) the conviction of the Participant
of the commission of any criminal offense which involves
dishonesty or breach of trust, or (v) any intentional
breach by the Participant of a material term, condition or
covenant of any agreement between the Participant and the
Partnership or any Affiliate.
(j) "Participant" means an officer or key
employee who is designated to participate in the Plan as
provided in Article II.
(k) "Partnership" means Duke Realty Services Limited
Partnership.
(l) "Permanent and Total Disability" means any
disability that would qualify as a disability under Code
Section 22(e)(3).
(m) "Per Share Value" means the per share New
York Stock Exchange closing price for the Company's common
stock on the date of determination.
(n) "Plan" means the dividend increase plan embodied
herein, as amended from time to time, known as the 1995
Dividend Increase Unit Plan of Duke Services Limited
Partnership.
(o) "Section 16 Grantee" means a person subject to
potential liability under Section 16(b) of the Exchange
Act with respect to transactions involving equity
securities of the Company.
(p) "Subsidiary" or "Subsidiaries" means a
corporation, partnership or limited liability company, a
majority of the outstanding voting stock, general
partnership interests or membership
interest, as the case may be, of which is owned or
controlled directly or indirectly, by the Partnership, by
the Company or by one or more other Subsidiaries. For the
purposes of this definition, "voting stock" means stock
having voting power for the election of directors, or
trustees, as the case may be, whether at all times or only
so long as no senior class of stock has such voting power
by reason of any contingency.
<PAGE>
(r) "Unit" means a dividend increase unit
granted under Section 3.1.
1.5. Shares Covered by the Plan. The stock which may be issued under the
--------------------------
Plan in connection with the exercise of Units shall be shares of authorized
common stock of the Company and may be unissued shares or reacquired shares
(including shares purchased in the open market), or
a combination of the two, as the Committee may from time to time
determine. Provided, however, subject to the provisions of Section
5.2 and the provisions of this Section 1.5, the maximum number of
shares to be delivered upon the exercise of all Units granted under
the Plan shall not exceed One Hundred Thousand (100,000) shares.
Shares covered by the grant of a Unit that remains unexercised upon
the expiration or termination of the Unit may be made subject to
further grants of Units.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
------------------------------
Participation in the Plan is limited to those officers and key
employees of the Partnership and its Affiliates who, from time to
time, shall be designated by the Committee. Committee members shall
not be eligible to receive grants of Units under this Plan while
serving as Committee members. A designated employee will become a
Participant in the Plan as of the later of the Effective Date or the
date specified by the Committee.
ARTICLE III
Benefits
---------
3.1. Grant of Units. The Committee, in its sole discretion, may grant one
--------------
(1) or more Units to a Participant upon his entry into the Plan. The
Committee, in its sole discretion, may also grant additional Units to
a Participant at any time after the initial grant. Provided, however,
notwithstanding any other Plan provision, during any calendar year, no
Participants shall be granted more than twenty five thousand (25,000) Units.
3.2. Exercise of Units. A Participant may exercise his Units subject to the
-----------------
following requirements:
(a) Vesting of Units: A Participant must be vested in a Unit in order
----------------
for that Unit to be exercised. For this purpose, the Committee will specify
the vesting schedule for each Unit it grants at the time of
the grant. Notwithstanding the foregoing, a Participant will, as of the date
of a Change in Control of the Company or his termination of employment due to
Permanent and Total Disability, retirement on or after attaining age sixty-
five (65) or death, become fully vested in all Units that have been granted to
him.
(b) Timing of Exercise: A Unit must be exercised on or before the
------------------
tenth anniversary of the date on which it was granted. If not
exercised on or before that date, the Unit will expire and be
forfeited.
(c) Prior Exercise of Stock Options. Units may be exercised only to
-------------------------------
the extent that the same or a greater number of shares of the
Company's common stock have been acquired by the
Participant through the exercise of a stock option which
was granted under the 1995 Key Employees' Stock Option
Plan of Duke Realty Investments, Inc. (the "Stock Option
Plan") on the same date on which the Units were granted.
Such acquisition may have been prior to or simultaneous
with the exercise of such Units. For example, if a
Participant was granted an option under the Stock Option
Plan to acquire five hundred (500) shares of the Company's
stock on the same date he was granted two hundred (200)
Units under the Plan, the Participant may not exercise the
two hundred (200) Units granted hereunder until he has
acquired at least two hundred (200) shares of stock under
that stock option grant. Thus, if the Participant has
acquired (or simultaneously acquires with his exercise of
the Units) one
<PAGE>
hundred (100) shares under that stock option grant, he may
at any time on or after the date of such acquisition
exercise up to one hundred (100) Units hereunder, as long
as all the other Plan conditions and limitations have been
satisfied with respect to such exercise, including the
satisfaction by the Participant of the vesting
requirements applicable to the Units desired to be
exercised. Shares of Company stock acquired by the
exercise of an option granted under the Stock Option Plan
on a date other than the date on which the Units were
granted hereunder may not be used as a basis for the
exercise of such Units.
(d) Prior Notice of Exercise. The Participant must notify the
------------------------
Committee of his intent to exercise a Unit by completing an election
form authorized by the Committee and filing such form with the Committee at
least ten (10) business days prior to the requested exercise date.
(e) Termination of Employment. All rights to exercise a Unit shall
-------------------------
terminate ninety (90) days after the effective date of the
Participant's termination of employment with the Partnership and
its Affiliates, but not later than the date the Unit expires
pursuant to its terms, unless such termination is For Cause or is
on account of the Permanent and Total Disability or death of the
Participant. Transfer of employment from the Partnership to an
Affiliate, or vice versa, shall not be deemed a termination of
employment. The Committee shall have the authority to determine in
each case whether a leave of absence on military or government
service shall be deemed a termination of employment for purposes of
this subsection (e). However, if a Participant's employment
terminates due to Permanent and Total Disability or death, his
right to exercise his Units shall expire one (1) year after his
termination of employment (but not later than the date the Unit
expires pursuant to its terms). During such period, subject to the
limitations of this Plan and the Unit grant,
the Participant, his guardian, attorney-in-fact or personal
representative, as the case may be, may exercise his Unit in full.
(f) For Cause Termination. If a Participant's employment with the
--------------------
Partnership and its Affiliates is terminated For Cause, no previously
unexercised Unit granted hereunder may be exercised. Rather, all
unexercised Units shall terminate effective on the date
the Participant receives notice of his termination For
Cause.
<PAGE>
(g) Withholding of Taxes. Each Participant shall be solely
--------------------
responsible for, and the Partnership will withhold from
any amounts payable under this Plan, all legally required
federal, state, city and local taxes. The Committee, in
its discretion and subject to such rules as it may adopt,
may permit a Participant to satisfy, in whole or in part,
any withholding tax obligation which may arise in
connection with his exercise of Units by having the
Partnership retain shares of stock which would otherwise
be issued in connection with the exercise of the Units or
accept delivery from the Participant of shares of Company
stock which have a value, determined as of the date of the
delivery of such shares, equal to the amount of
withholding tax to be satisfied by that retention or
delivery.
3.3. Calculation of Unit Value. Upon the exercise date, the Unit or Units
-------------------------
being exercised will be valued for all purposes under this Plan in
accordance with the following formula. First, the Per Share Value of a
share of the Company's common stock as of the effective date on which
the Unit was granted will be determined. Second, the
quarterly cash dividend rate per share of the Company's
common stock most recently declared prior to the effective
date of the grant will be determined and annualized
(multiplied by four). Third, that annualized cash dividend
will be divided by the Per Share Value on the effective
date of the grant to set the grant date dividend yield.
Fourth, the quarterly cash dividend rate per share of the
Company's common stock which was most recently declared on
or before the exercise date will be determined and
annualized (multiplied by four). Fifth, the annualized
cash dividend on the effective date of the grant (as
determined under the second step) will be subtracted from
the annualized dividend on the exercise date (as
determined under the fourth step) to determine the
increase in the annualized cash dividend. Sixth, the
amount of the increase (as determined under the fifth
step) will be divided by the grant date dividend yield (as
determined under the third step) to establish the Unit's
value on the exercise date. For all purposes of this Plan,
if there is no Per Share Value for Company stock on the
<PAGE>
date on which an event which requires the stock to be
valued, the per share value shall be the Per Share Value
for Company stock on the trading date immediately
preceding the date on which the stock is required to be
valued.
For example, if the Per Share Value of a share of Company stock
on the effective date of a Unit's grant was $30.00, the
quarterly dividend rate on the date of grant was $0.49 and
the quarterly dividend rate on the date of exercise was
$0.55, then the Unit's value at exercise would be $3.67,
determined under the six steps in the preceding paragraph
as follows:
(1) $30.00 [NYSE Closing Price on Date of Grant]
(2) $1.96 [$0.49 (Company's Quarterly Cash Dividend on
Date of Grant) x 4]
(3) 6.5333% [ (2) , (1) ]
(4) $2.20 [$0.55 (Company's Quarterly Cash Dividend on
Date of Exercise) x 4]
(5) $0.24 [$2.20 - $1.96 = Increase in Annualized Cash Dividend]
(6) $3.67 [ (5) , (3) ]
If the Participant had been granted one hundred (100) Units and he
exercised all of those Units, he would be entitled to receive whole
shares of Company common stock with a value of $367 based on the Per
Share Value on the date of exercise. (The number of shares to be
distributed is described under Section 4.2.)
<PAGE>
ARTICLE IV
DISTRIBUTIONS
-------------
4.1. Time of Payment. The Partnership will pay to each Participant the
---------------
value of the Unit or Units, rounded to the nearest whole share of Company
common stock, with respect to which a proper and timely
election has been made. Such payment shall be made as soon as
practicable following the exercise date.
4.2. Manner of Payment. Distribution of a Participant's benefit under
-----------------
Section 4.1 will be made in a single lump sum in the form of whole
shares of Company common stock. The number of shares to
be issued under this Section 4.2 will be based on the Per
Share Value on the exercise date of the Units.
For example, if the Per Share Value on
the date of exercise was $50.00 and the payment amount
determined under Section 3.3 (reduced by any tax
withholdings pursuant to Section 3.2(g)) was $367.00, the
Participant would be entitled to receive seven (7) shares
of Company stock (367 , 50 = 7.34). On the other hand, if
the payment amount determined under Section 3.3 (reduced
by any tax withholdings pursuant to Section 3.2(g)) was
$380.00, the Participant would be entitled to receive
eight (8) shares of Company stock ($380 , 50 = 7.60).
4.3. Distribution on Change of Control. Notwithstanding any other Plan
---------------------------------
provision to the contrary, each Participant will be entitled to receive,
within ninety (90) days of a Change in Control of the
Company, a lump sum payment, in cash, of the value of his
Units determined under Section 3.3 as of the date of the
Change in Control of the Company. Provided, however no
distribution under the Plan shall be made to a Participant
who is a Section 16 Grantee as a result of a Change in
Control of the Company until six (6) months from the date
on which the Units were granted to the Participant. This
limitation shall not apply if the Section 16 Grantee dies
or incurs a mental or physical disability which, in the
opinion of the Committee, renders the Section 16 Grantee
unable or incompetent to carry out the job
responsibilities which such Section 16 Grantee held or the
tasks to which such Section 16 Grantee was assigned at the
time the disability was incurred, and which is expected to
be permanent or of an indefinite duration.
ARTICLE V
MISCELLANEOUS
--------------
<PAGE>
5.1. Amendment or Termination. The Board of Directors or the Committee
------------------------
may, at any time, without the approval of the stockholders
of the Company (except as otherwise required by applicable
law, rule or regulations, or listing requirements of any
National Securities Exchange on which are listed any of
the Company's equity securities, including without
limitation any shareholder approval requirement of Rule
16b-3 or any successor safe harbor rule promulgated under
the Exchange Act), alter, amend, modify, suspend or
discontinue the Plan but may not, without the consent of
the holder of a Unit, make any alteration which would
adversely affect a Unit previously granted under the Plan
or, without the approval of the stockholders of the
Company, make any alteration which would: (a) increase the
aggregate number of shares which could be issued pursuant
to the exercise of Units under the Plan, except as
provided in Section 5.2; (b) permit any Committee member
to become eligible to receive grants of Units under the
Plan; (c) withdraw administration of the Plan from the
Committee or the Board of Directors; (d) extend the term
of the Plan or the maximum period during which any Unit
may be exercised; (e) change the manner of calculating the
value of Units; or (f) change the class of individuals
eligible for the grant of Units under the Plan.
5.2. Changes in Stock.
----------------
(a) Substitution of Stock and Assumption of Plan. In the event of any
--------------------------------------------
change in the common stock of the Company through stock dividends, split-
ups, recapitalizations, reclassifications, conversions, or otherwise, or in
the event that other stock shall be converted into or substituted for the
present common stock of the Company as a result of
any merger, consolidation, reorganization or similar transaction which
results in a Change in Control of the Company, then the Committee may make
appropriate adjustment or substitution in the aggregate number, price, and
kind of shares to be distributed under the Plan and in the calculation of a
Unit's value provided in Section 3.3. The Committee's determination in this
respect shall be final and conclusive. Provided, however, that the
Partnership shall not, and shall not permit its Affiliates to, recommend,
facilitate or agree or consent to a transaction or series of transactions
which would result in a Change of Control of the Company unless and until the
person or persons or entity or entities acquiring or succeeding to the assets
or capital stock of the Company or any of its Affiliates as a result of such
transaction or transactions agrees to be bound by the terms of the Plan so
far as its pertains to Units theretofore granted but unexercised and agrees
to assume and perform the obligations of the Partnership hereunder.
(b) Conversion of Stock. In the event of a Change in Control of the
-------------------
Company pursuant to which another person or entity acquires control of
the Company (such other person or entity being the "Successor"), the
kind of shares of common stock which shall be subject to the Plan and
to each outstanding Unit, shall, automatically, by virtue of such
Change in Control of the Company, be converted into and replaced by
shares of common stock, or such other class of securities having
rights and preferences no less favorable than common stock of the
Successor, and the calculation of a Unit's value shall be
correspondingly adjusted, so that, by virtue of such Change in
Control of the Company, each Participant shall have the right to
receive that number of shares of common stock of the Successor which
have a fair market value equal, as of the date of such Change in
Control of the Company, to the fair market value, as of the date of such
Change in Control of the Company, of the shares of common stock of the Company
to which the Units relate.
5.3. Information to be Furnished by Participants. Participants, or any
-------------------------------------------
other persons entitled to benefits under this Plan, must furnish to
the Committee such documents, evidence, data or other information as
the Committee considers necessary or desirable for the purpose of
administering the Plan. The benefits under the Plan for each
Participant, and each other person who is entitled to benefits
hereunder, are to be provided on the condition that he furnish full,
true and complete data, evidence or other information, and that he
will promptly sign any document reasonably related to the
administration of the Plan requested by the Committee.
<PAGE>
5.4. Employment Rights. The Plan does not constitute a contract of
-----------------
employment and participation in the Plan will not give a Participant
the right to be rehired or retained in the employ of the Partnership,
nor will participation in the Plan give any Participant any right or claim
to any benefit under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan.
5.5. Evidence. Evidence required of anyone under the Plan may be by
--------
certificate, affidavit, document or other information which the person
relying thereon considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
5.6. Gender and Number. Where the context admits, words in the masculine
-----------------
gender shall include the feminine gender, the plural shall include the
singular and the singular shall include the plural.
5.7. Action by Partnership. Any action required of or permitted by the
---------------------
Partnership under the Plan shall be by resolution of the Board of
Directors or by a person or persons authorized by resolution of the
Board of Directors.
5.8. Controlling Laws. Except to the extent superseded by laws of the
----------------
United States, the laws of Indiana shall be controlling in all matters
relating to the Plan.
5.9. Mistake of Fact. Any mistake of fact or misstatement of fact shall be
---------------
corrected when it becomes known and proper adjustment made by reason
thereof.
5.10. Severability. In the event any provisions of the
------------
Plan shall be held to be illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and endorsed as if such illegal
or invalid provisions had never been contained in the Plan.
5.11. Effect of Headings. The descriptive headings of the sections of this
------------------
Plan are inserted for convenience of reference and identification only and
do not constitute a part of this Plan for purposes of
interpretation.
5.12. Nontransferability. No Unit shall be transferable, except by the
-----------------
Participant's will or the law of descent and distribution. During the
Participant's lifetime, his Unit shall be exercisable (to the extent
exercisable) only by him. The Unit and any rights and privileges
pertaining thereto shall not be transferred, assigned, pledged or
hypothecated by him in any way, whether by operation of law or
otherwise and shall not be subject to execution,
attachment or similar process.
5.13.Liability. No member of the Board of Directors or the Committee or
---------
any officer or employee of the Partnership or its
Affiliates shall be personally liable for any action,
omission or determination made in good faith in connection
with the Plan. By participating in the Plan, each
Participant agrees to release and hold harmless the
Partnership, the Affiliates (and their respective
directors, officers and employees) and the Committee from
and against any tax liability, including without
limitation, interest and penalties, incurred by the
Participant in connection with his participation in the
Plan.
<PAGE>
5.14.Funding. Benefits payable under this Plan to a Participant or to a
--------
beneficiary will be paid by the Partnership from its
general assets. Shares of the Company stock to be
distributed hereunder shall be acquired by the Partnership
either directly from the Company, on the open market or a
combination thereof. The Partnership is not required to
segregate on its books or otherwise establish any funding
procedure for any amount to be used for the payment of
benefits under this Plan. The Partnership may, however, in
its sole discretion, set funds aside in investments to
meet its anticipated obligations under the Plan. Any such
action or set-aside may not be deemed to create a trust of
any kind between the Partnership and any Participant or
beneficiary or to constitute the funding of any Plan
benefits. Consequently, any person entitled to a payment
under the Plan will have no rights greater than the rights
of any other unsecured creditor of the Partnership.
DUKE REALTY SERVICES LIMITED PARTNERSHIP
Dated:October 26, 1995 By: /s/ David R. Mennel
-----------------------------
David R. Mennel, President of
Duke Services, Inc., its
General Partner
<PAGE>
AMENDMENT ONE TO THE 1995
DIVIDEND INCREASE UNIT PLAN OF
DUKE REALTY SERVICES LIMITED PARTNERSHIP
----------------------------------------
This Amendment One to the 1995 Dividend Increase Unit Plan of
Duke Realty Services Limited Partnership ("Plan") is hereby adopted
this 25th day of August, 1997 by Duke Services, Inc. as
the sole general partner of Duke Realty Services Limited
Partnership ("Company"), effective as of the date
specified herein;
W I T N E S S E T H:
WHEREAS, the Company adopted the Plan for the
purposes set forth therein; and
WHEREAS, pursuant to Section 5.1 of the Plan, the
Company has reserved the right to amend the Plan with
respect to certain matters, by action of the Board of
Directors ("Board"); and
WHEREAS, the Board has approved a two (2) for one (1)
stock split of the Company's common stock effective as of
August 25, 1997, with respect to all shareholders of
record as of August 18, 1997; and
WHEREAS, the Plan currently provides that the maximum
number of shares to be delivered upon the exercise of
Units thereunder shall not exceed one hundred thousand
(100,000) shares; and
WHEREAS, the two (2) for one (1) stock split requires
that the maximum number of shares to be delivered upon the
exercise of Units under the Plan be increased, on a two
(2) for one (1) basis;
WHEREAS, the Board has determined to amend the Plan in certain
additional respects; and
WHEREAS, the Board has approved and adopted this Amendment One;
NOW, THEREFORE, pursuant to the authority reserved to
the Company under Section 5.1 of the Plan, the Plan is
hereby amended, effective as of the dates specified herein, in the following
particulars:
1. By substituting the following for Section 1.5 of the Plan
effective as of August 25, 1997:
"1.5. Shares Covered by the Plan. The stock which may be issued
--------------------------
under the Plan in connection with the exercise of
Units shall be shares of authorized common stock of
the Company and may be unissued shares or reacquired
shares (including shares purchased in the open
market), or a combination of the two, as the
Committee may from time to time determine. Provided,
however, subject to the provisions of Section 5.2 and
the provisions of this Section 1.5, the maximum
number of shares to be delivered upon the exercise of
all Units granted under the Plan shall not exceed Two
Hundred Thousand (200,000) shares. Shares covered by
the grant of a Unit that remains unexercised upon the
expiration or termination of the Unit may be made
subject to further grants of Units."
2. By substituting the following for Section 3.1 of the
Plan, effective as of August 25, 1997:
"3.1. Grant of Units. The Committee, in its sole discretion, may grant
--------------
one (1) or more Units to a Participant upon his entry into the
Plan. The Committee, in its sole discretion, may also grant
additional Units to a Participant at any time after the initial
grant. Provided, however, notwithstanding any other Plan
provision, during any calendar year, no Participant shall be
granted more than Fifty Thousand (50,000) Units."
<PAGE>
3. By substituting the following for Section 3.2(a) of the Plan
effective as of October 1, 1995:
"(a) Vesting of Units: A Participant must be vested in a Unit in order
----------------
for that Unit to be exercised. For this purpose, the
Committee will specify the vesting schedule for each
Unit it grants at the time of the grant. In
addition, the Committee may, in its sole discretion,
amend such schedule in a manner which causes those
units previously granted under the Plan to vest under
a more rapid schedule. Provided, however, the
Committee shall not amend such schedule to provide
for the slower vesting of Units previously granted
under the Plan. Notwithstanding the foregoing, a
Participant will, as of the date of a Change in
Control of the Company or his termination of
employment due to Permanent and Total Disability,
retirement on or after attaining age sixty-five (65)
or death, become fully vested in all Units that have
been granted to him."
4. All other provisions of the Plan shall remain the same.
IN WITNESS WHEREOF, Duke Services, Inc., as the sole
general partner of Duke Realty Services Limited
Partnership, by its officers thereunder duly authorized,
has executed this Amendment One to the 1995 Dividend
Increase Unit Plan of Duke Realty Services Limited
Partnership this 25th day of August, 1997, but effective
as of the dates specified herein.
DUKE REALTY SERVICES LIMITED PARTNERSHIP
By: /s/ David R. Mennel
-----------------------------------
David R. Mennel, President
of Duke Services, Inc., its
General Partner
<PAGE>
AMENDMENT TWO TO THE 1995
DIVIDEND INCREASE UNIT PLAN OF
DUKE REALTY SERVICES LIMITED PARTNERSHIP
----------------------------------------
This Amendment Two to the 1995 Dividend Increase Unit
Plan of Duke Realty Services Limited Partnership ("Plan")
is hereby adopted this 29th day of January, 1998 by Duke
Services, Inc. ("Company") as the sole general partner of
Duke Realty Services Limited Partnership, effective as of
the date specified herein;
W I T N E S S E T H:
WHEREAS, the Company adopted the Plan for the
purposes set forth therein; and
WHEREAS, pursuant to Section 5.1 of the Plan, the
Company has reserved the right to amend the Plan with
respect to certain matters, by action of the Executive
Compensation Committee of the Board of Directors of Duke
Realty Investments, Inc. ("Committee"); and
WHEREAS, the Committee has approved an increase in
the maximum number of shares to be delivered upon the
exercise of Units thereunder from 200,000 shares to
400,000 shares; and
WHEREAS, the Committee has approved and authorized
this Amendment Two;
NOW, THEREFORE, pursuant to the authority reserved to
the Company under Section 5.1 of the Plan, the Plan is
hereby amended, effective as of January 1, 1998, by substituting the
following for Section 1.5 of the Plan:
"1.5. Shares Covered by the Plan. The stock which may be
--------------------------
issued under the Plan in connection with the exercise of
Units shall be shares of authorized common stock of the
Company and may be unissued shares or reacquired shares
(including shares purchased in the open market), or a
combination of the two, as the Committee may from time to
time determine. Provided, however, subject to the
provisions of Section 5.2 and the provisions of this
Section 1.5, the maximum number of shares to be delivered
upon the exercise of all Units granted under the Plan
shall, effective as of January 1, 1998, be increased from
a maximum of Two Hundred Thousand (200,000) shares to a
maximum of Four Hundred Thousand (400,000) shares. Shares
covered by the grant of a Unit that remains unexercised
upon the expiration or termination of the Unit may be made
subject to further grants of Units."
IN WITNESS WHEREOF, Duke Services, Inc., as the sole
general partner of Duke Realty Services Limited
Partnership, by its officers thereunder duly authorized,
has executed this Amendment Two to the 1995 Dividend
Increase Unit Plan of Duke Realty Services Limited
Partnership this 29th day of January, 1998, but effective
as of January 1, 1998.
DUKE REALTY SERVICES LIMITED
PARTNERSHIP By: Duke
Services, Inc.
By: /s/ Dennis D. Oklak
-----------------------
Dennis D. Oklak, Executive Vice President
and Chief Administrative Officer
<PAGE>
PROXY DUKE REALTY INVESTMENTS, INC. PROXY
8888 KEYSTONE CROSSING, SUITE 1200
INDIANAPOLIS, INDIANA 46240
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Thomas L. Hefner, John W. Wynne
and John R. Gaskin, and each of them, attorneys-in-fact and
proxies, with full power of substitution, to vote, as designated on the
reverse side of this proxy, all Common Shares of Duke Realty Investments,
Inc. which the undersigned would be entitled to vote if personally
present at the annual meeting of Shareholders to be held on April 23,
1998, at 10:00 a.m. and at any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
/x/ Please mark your votes as in this example.
FOR ALL NOMINEES WITHHOLD
LISTED AT RIGHT AUTHORITY NOMINEES:
(except as to vote for Geoffrey Button
indicated to the nominee(s) John D. Peterson
contrary below) listed at right Ngaire E. Cuneo
Darell E. Zink, Jr.
1. ELECTION OF
DIRECTORS FOR A
TERM OF THREE
YEARS. / / / /
For, except vote withheld from the following nominee(s):
--------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE AMENDMENT TO THE ARTICLES
OF INCORPORATION TO INCREASE THE NUMBER OF
DIRECTORS AUTHORIZED TO BE ELECTED TO FIFTEEN. / / / / / /
3. PROPOSAL TO APPROVE AMENDMENT TO THE 1995 STOCK
OPTION PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE BY 2,500,000 SHARES / / / / / /
4. PROPOSAL TO APPROVE AMENDMENT TO THE 1995
DIVIDEND INCREASE UNIT PLAN TO INCREASE THE
NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
BY 200,000 SHARES / / / / / /
In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3 and 4.
The undersigned acknowledges receipt from Duke Realty Investments, Inc. prior
to the execution of this proxy, a notice of the meeting, a proxy statement,
and an annual report to shareholders.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
SIGNATURE __________________________________________ DATE ___________________
SIGNATURE __________________________________________ DATE ___________________
(SIGNATURE IF HELD JOINTLY)
NOTE: Please sign exactly as name appears above. When shares are
held as joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee, or guardian, please give full
title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please
sign in partnership name by authorized person.
REVOCABLE PROXY
