SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
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 240.11(c) or Section
240.14a-12
BANYAN STRATEGIC REALTY TRUST
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction
applies:
Shares of Beneficial Interest
2) Aggregate number of securities to which transaction
applies:
10,478,971
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was 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:
...........................................
2) Form, Schedule or Registration Statement No.:
...........................................
3) Filing Party:
...........................................
4) Date Filed:
...........................................
<PAGE>
FORM OF PROXY
BANYAN STRATEGIC REALTY TRUST
150 SOUTH WACKER DRIVE
SUITE 2900
CHICAGO, ILLINOIS 60606
This Proxy is solicited on behalf of the Board of Trustees
The undersigned hereby appoints Leonard G. Levine and Robert G.
Higgins, and each of them, as Proxies, with the power to appoint their
substitutes, and hereby authorizes them to represent and to vote, as
designated below, all the Shares of Beneficial Interest of Banyan Strategic
Realty Trust (the "Trust") held of record by the undersigned on May 9,
1997, at the Annual Meeting of Shareholders when convened on June 25, 1997,
or any adjournment thereof.
Continued on the reverse side.
<PAGE>
This proxy, when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR Proposals 1, 2, 3, 4 and 5.
1. PROPOSAL to elect three Class A Trustees to hold office until the
next Annual Meeting of Shareholders, or otherwise as provided in the
Trust's Amended and Restated Declaration of Trust. (check one box):
FOR AGAINST
WALTER E. AUCH, SR. [ ] [ ]
NORMAN M. GOLD [ ] [ ]
MARVIN A. SOTOLOFF [ ] [ ]
For: except vote withheld from the following nominee(s):
___________________________________________________
2. PROPOSAL to concur in the selection of Ernst & Young LLP as the
Trust's independent auditor for the fiscal year ending December 31, 1997.
(check one box):
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. PROPOSAL to authorize the issuance of shares of the Trust's
beneficial interest to Leonard G. Levine, President of the Trust, pursuant
to the terms of an agreement between the Trust and Mr. Levine. (check one
box):
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. PROPOSAL to Amend Section 3.3 of the Trust's Amended and Restated
Declaration of Trust to Increase the Compensation and other Remuneration
payable to the Class A Trustees. (check one box):
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. PROPOSAL to adopt the Banyan Strategic Realty Trust 1997 Omnibus
Stock and Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. In their discretion, the Proxies are authorized to transact any other
business as may properly come before the Meeting, or any adjournment
thereof.
<PAGE>
DATED:_________________________, 1997
_____________________________________
Signature
_____________________________________
Signature if held jointly
Sign exactly as name appears at left. If joint tenant,
both should sign. If attorney, executor, administrator, trustee or
guardian, give full title as such. If a corporation, please sign corporate
name by President or authorized officer. If partnership, sign in full
partnership name by authorized person.
Please promptly mark, date, sign and return this card using the enclosed
envelope.
<PAGE>
BANYAN STRATEGIC REALTY TRUST
150 South Wacker Drive, Suite 2900
Chicago, Illinois 60606
312-683-3671
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Banyan Strategic Realty Trust:
Notice is hereby given that the annual meeting of shareholders (the
"Meeting" or the "Annual Meeting") of Banyan Strategic Realty Trust, a
Massachusetts business trust (the "Trust" or the "Fund"), will be convened
at The Metropolitan Club, 233 S. Wacker Drive, Chicago, Illinois, on
June 25, 1997, at 9:30 a.m. Central Time (the "Meeting Date"). All
shareholders of the Trust are entitled to attend the Meeting. The Annual
Meeting of Shareholders will be held for the following purposes:
(1) To elect three Class A trustees to hold office until the next
Annual Meeting of Shareholders or otherwise as provided in the Trust's
Amended and Restated Declaration of Trust (the "Declaration");
(2) To concur in the selection of Ernst & Young LLP as the Trust's
independent auditor for the fiscal year ending December 31, 1997;
(3) To authorize the issuance of shares of the Trust's beneficial
interest to Leonard G. Levine, President of the Trust, pursuant to the
terms of an agreement between the Trust and Mr. Levine.
(4) To amend Section 3.3 of the Trust's Amended and Restated
Declaration of Trust to Increase Compensation and other Remuneration
payable to the Class A Trustees.
(5) To adopt the Banyan Strategic Realty Trust 1997 Omnibus Stock
and Incentive Plan
Only shareholders of record at the close of business on May 9, 1997
are entitled to receive notice of and to vote at the Meeting or any
adjournment thereof (the "Eligible Holders"). A complete list of Eligible
Holders will be available for inspection at the Trust's offices for at
least 10 days prior to the Meeting.
A proxy statement and form of proxy are enclosed. Whether or not you
expect to attend the Annual Meeting, it is important that you promptly fill
in, sign, date and mail the proxy in the enclosed envelope so that your
shares may be voted for you.
By order of the Board of Trustees:
Robert G. Higgins
Secretary
The Trust's 1996 Annual Report and Form 10-K as filed
with the Securities and Exchange Commission is enclosed with this notice.
<PAGE>
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS OF
BANYAN STRATEGIC REALTY TRUST
JUNE 25, 1997
This proxy statement is furnished to the holders of shares ("the
Shareholders") of beneficial interest, no par value (the "Shares"), of
Banyan Strategic Realty Trust, a Massachusetts business trust (the "Trust"
or the "Fund"), in connection with the solicitation of proxies by the
Trust's board of trustees (the "Trustees" or the "Board") for use at the
annual meeting of Shareholders. The Trust's annual meeting of Shareholders
for the fiscal year ended December 31, 1996 will be convened on June 25,
1997, at approximately 9:30 a.m. Central Time, and any adjournment thereof
(the "Annual Meeting" or the "Meeting"). Copies of this Proxy Statement,
the attached notice, and the enclosed form of proxy were first sent or
given to Shareholders on or about June 3, 1997. Shareholders who wish to
attend the Annual Meeting should contact the Trust at 312-683-3671 so that
arrangements can be made.
The Trust will bear all costs in connection with the solicitation of
proxies, including the cost of preparing, printing and mailing this Proxy
Statement. In addition to the use of the mails, proxies may be solicited
by the Trustees, the Trust's officers or by employees of Banyan Management
Corp., which provides administrative services to the Trust. None of these
individuals will be compensated for proxy solicitation services, but they
may be reimbursed for out-of-pocket expenses in connection with the
solicitation. For further information regarding Banyan Management Corp.,
see "Certain Relationships and Related Transactions." Arrangements will
also be made with brokerage houses, banks and other custodians, nominees
and fiduciaries for the forwarding of solicitation material to the
beneficial owners of the Shares held of record by those persons, and the
Trust may reimburse these custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses incurred in connection therewith.
Further, the Trust has retained the services of ChaseMellon Shareholder
Services to assist in the solicitation of proxies for the Annual Meeting at
a fee payable by the Trust of $4,750 plus out-of-pocket expenses.
Shares represented by properly executed proxies in the accompanying
form received by the Board prior to the Annual Meeting will be voted at the
Annual Meeting. Shares not represented by properly executed proxies will
not be voted. If a Shareholder specifies a choice with respect to any
matter to be acted upon, the Shares represented by that proxy will be voted
as specified. If the Shareholder does not specify a choice, in an
otherwise properly executed proxy, with respect to any proposal referred to
therein, the Shares represented by that proxy will be voted with respect to
that proposal in accordance with the recommendations of the Board described
herein and in accordance with the judgment of the persons acting under
proxies on other matters presented for a vote. A Shareholder who signs and
returns a proxy in the accompanying form may revoke it by: (i) giving
written notice of revocation to the Trust before the proxy is voted at the
Annual Meeting; (ii) executing and delivering a later-dated proxy prior to
or at the Annual Meeting; or (iii) attending the Annual Meeting and voting
the Shares in person.
The close of business on May 9, 1996 has been fixed as the date for
determining those Shareholders entitled to notice of and to vote at the
Annual Meeting (the "Record Date"). On the Record Date, the Trust had
10,478,971 shares outstanding, each of which entitles the holder thereof to
one vote at the Annual Meeting. Only Shareholders of record as of the
Record Date will be entitled to vote at the Annual Meeting. The presence
of a majority of the outstanding shares of beneficial interest, represented
in person or by proxy at the Annual Meeting, will constitute a quorum. The
three nominees receiving the highest vote totals will be elected as
Trustees of the Trust. Accordingly, abstentions and broker non-votes will
not affect the outcome of the election. All other matters to be
<PAGE>
voted on, except proposal number four, will be decided by the affirmative
vote of a majority of the Shares present or represented at the meeting and
entitled to vote. On any such matter, an abstention will have the same
effect as a negative vote but, because Shares held by brokers will not be
considered entitled to vote on matters as to which the brokers withhold
authority, a broker non-vote will have no effect on the vote. With respect
to proposal number four, the affirmative vote of the holders of a majority
of the outstanding shares is required. Accordingly, abstentions and broker
non-votes will have the effect of a negative vote.
The mailing address of the principal executive offices of the Trust is
150 South Wacker Drive, Suite 2900, Chicago, Illinois 60606.
<PAGE>
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following persons or entities are the only persons or entities known to the Trust to be the beneficial
owners of more than five percent (5%) of the outstanding shares as of May 10, 1997:
<CAPTION>
Name and Address of Amount of Beneficial
Title of Class Beneficial Owner Ownership Percent of Class
- -------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C>
Shares of Beneficial Fidelity Management 1,110,550 10.6%
Interest and Research Corp.
82 Devonshire Street
Boston, MA 02109
Shares of Beneficial Magten Asset 1,762,105 16.8%
Interest Management Corp.
350 East 21st Street
New York, NY 10010
</TABLE>
<PAGE>
The following table sets forth the number of Shares owned by all
Trustees and Officers owning Shares, and all Trustees and Officers as a
group as of May 10, 1997:
Name of Amount & Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- ----------
Leonard G. Levine, 16,869 shares Less than 1%
President
Neil D. Hansen, 10,373 shares Less than 1%
First Vice President
Jay E. Schmidt, 2,000 shares Less than 1%
Vice President
Joel L. Teglia, 1,000 shares Less than 1%
Chief Financial Officer
All Trustees and Officers 27,242 shares Less than 1%
of the Trust, as a group
(eight persons)
The Trust is not aware of any arrangements, the operation of which
may, at a subsequent date, result in a change of control of the Trust.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Trust's officers and trustees, and persons who own more than
ten percent of a registered class of the Trust's equity securities, to file
initial statements of beneficial ownership (Form 3), and statements of
changes in beneficial ownership (Forms 4 or 5), of beneficial interest and
other equity securities of the Trust with the Securities and Exchange
Commission (the "SEC") and the National Association of Securities Dealers,
Inc. (the "NASD"). The SEC requires officers, trustees and greater than
ten percent shareholders to furnish the Trust with copies of all these
forms filed with the SEC or the NASD.
To the Trust's knowledge, based solely on its review of the copies of
these forms received by it, or written representations from certain
reporting persons that no additional forms were required for those persons,
the Trust believes that all filing requirements applicable to its
officers, trustees, and greater than ten percent beneficial owners were
complied with during 1996.
<PAGE>
MATTERS TO BE CONSIDERED BY SHAREHOLDERS
1. Election of Trustees
Three individuals will be elected at the Annual Meeting to serve as
Class A Trustees of the Trust until the next annual meeting of Shareholders
or otherwise as provided in the Amended and Restated Declaration of Trust
(the "Declaration"). Unless instructions to the contrary are given, the
persons named as proxy voters in the accompanying proxy, or their
substitutes, will vote for the following nominees for Class A Trustees with
respect to all proxies received by the Trust. If any nominee should become
unavailable for any reason, the votes will be cast for a substitute nominee
designated by the Board. The Trustees have no reason to believe that the
nominees named will be unable to serve if elected.
The nominees for Class A Trustee are as follows:
Principal Occupation(s) Trustee
Name Age During Past Five Years Since
- ---- --- ----------------------------------- -------
Walter E. Auch, Sr. 75 Prior to retiring, Mr. Auch was 1986
the Chairman and Chief Executive
Officer of the Chicago Board of
Options Exchange. Prior to that
time, Mr. Auch was Executive
Vice President, Director and
a member of the executive committee
of PaineWebber. Mr. Auch is a
Director of Pimco Advisors L.P.,
Geotek Communications, Inc.,
Smith Barney Concert Series Funds,
Smith Barney Trak Fund, The Crimson
Partners Funds and Nicholas
Applegate Funds. He is a Trustee
of Hillsdale College and the
Arizona Heart Institute. Mr. Auch
is also a Director of Banyan
Strategic Land Fund II, Banyan
Management Corp. and Legend
Properties, Inc. (f/k/a Banyan
Mortgage Investment Fund).
Norman M. Gold 66 Senior Partner in the law firm of 1986
Altheimer & Gray; Mr. Gold has
practiced law for over forty years,
specializing in tax, corporate and
real estate law. Mr. Gold is a
Trustee of New Plan Realty Trust and
a Director of Banyan Management Corp.
He is a Certified Public Accountant
and member of the Chicago and
American Bar Associations.
Marvin A. Sotoloff 53 Partner of The Palmer Group Ltd., 1986
a company involved in real estate
brokerage, development and property
management, concentrating on commercial
real estate. Prior to joining
The Palmer Group Ltd., Mr. Sotoloff
was regional vice president of
Premisys Real Estate Services Inc.,
a subsidiary of the Prudential Realty
Group. A licensed real estate broker,
Mr. Sotoloff is a past president of
<PAGE>
Principal Occupation(s) Trustee
Name Age During Past Five Years Since
- ---- --- ----------------------------------- -------
the Chicago Office Leasing Brokers
Association and is a Director of
Banyan Management Corp. He is also
an attorney and a member of the
Illinois and Pennsylvania Bar
Associations.
The Board is required to meet at least four times per year, either in
person or by telephonic conference. The Board met six times in 1996,
including one time as the Audit Committee. The Trustees did not establish
any nominating, compensation or other committees or other groups performing
similar functions during 1996, other than the Audit Committee which is
comprised of all of the Trustees.
RECOMMENDATION OF THE BOARD: The Board hereby recommends and
nominates Messrs. Auch, Gold and Sotoloff for election as Class A Trustees
of the Trust by the Shareholders at the Annual Meeting to serve until the
next annual meeting of Shareholders or as otherwise provided in the
Declaration.
The three nominees receiving the highest vote totals will be elected
as Trustees of the Trust.
2. SELECTION OF INDEPENDENT AUDITOR
The Trust's financial statements, including those for the fiscal year
ended December 31, 1996, are included in the Annual Report furnished to all
Shareholders. The year-end statements have been audited by the independent
firm of Ernst & Young LLP which has served as the Fund's independent
auditor since the fiscal year ended December 31, 1989. The Board believes
that Ernst & Young LLP is knowledgeable about the Trust's operations and
accounting practices and is well qualified to act in the capacity of
independent auditor. Therefore, the Board has selected Ernst & Young LLP
as the Trust's independent auditor to examine its financial statements for
the fiscal year ended December 31, 1997. Although the selection of an
auditor does not require a Shareholder vote, the Board believes it is
desirable to obtain the concurrence of the Shareholders to this selection.
Due to the difficulty and expense involved in retaining another independent
firm on short notice, the Board does not contemplate appointing another
firm to act as the Trust's independent auditor for fiscal year 1997 if the
Shareholders do not concur in the appointment of Ernst & Young LLP.
Instead, the Board will consider the vote as advice in making their selec-
tion of an independent auditor for the following year.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD: That the Shareholders concur in the
following resolution which will be presented for a vote of the Shareholders
at the Annual Meeting:
RESOLVED, that the Shareholders concur in the appointment by the Board
of Ernst & Young LLP to serve as the Trust's independent auditor for the
fiscal year ended December 31, 1997.
The affirmative vote of a majority of the votes cast by Shareholders
present in person or by proxy and eligible to vote at the Annual Meeting, a
quorum being present, is required to adopt the foregoing resolution.
<PAGE>
3. PROPOSAL TO AUTHORIZE THE ISSUANCE OF SHARES OF THE
TRUST'S BENEFICIAL INTEREST TO LEONARD G. LEVINE, PRESIDENT
OF THE TRUST, PURSUANT TO THE TERMS OF AN AGREEMENT BETWEEN
THE TRUST AND MR. LEVINE.
Mr. Levine serves as the President and Chief Executive Officer of the
Trust pursuant to an employment agreement entered into January 1, 1990 and
subsequently amended on December 31, 1992 (the "Employment Agreement").
Pursuant to the terms of this agreement, all incentive compensation earned
by Mr. Levine in connection with reinvestment activities as described in
the Employment Agreement subsequent to January 1, 1993 is paid 80% in cash
and 20% in shares of the Trust's beneficial interest on or before March 15
of the year following the period for which the incentive is earned. See
"Compensation of Trustees and Executive Officers-Executive Compensation"
for a detailed explanation of amounts paid or payable to Mr. Levine under
the Employment Agreement. In addition, under the terms of the Employment
Agreement, as soon as practicable after December 31, 1997, or, if earlier,
upon termination of Mr. Levine's employment, the amount of incentive
compensation payable to Mr. Levine is recalculated on a cumulative basis
covering the period January 1, 1993 through December 31, 1997 giving effect
to all unrealized profits and gains generated in connection with the
reinvestment activities which are excluded for purposes of the annual
calculation. If the total cumulative incentive compensation as recomputed
exceeds the aggregate compensation previously paid to Mr. Levine, the Trust
is obligated to pay Mr. Levine the excess in cash no later than March 15,
1998. If the recomputed incentive compensation is less than what has
previously been paid to Mr. Levine, then Mr. Levine is required to return
all or some portion of the shares previously awarded to him. The purpose
of providing a portion of Mr. Levine's incentive compensation in the form
of shares is to further align Mr. Levine's interests with those of the
Shareholders.
Mr. Levine and the Trust have recently agreed to further amend the
Employment Agreement. Under the terms of this second amendment, and
subject to approval of the Trust's Shareholders, all of the incentive
compensation payable to Mr. Levine under the Employment Agreement for the
fiscal years ended December 31, 1996 and 1997, as well as any amounts
payable resulting from the cumulative recalculation described above would
be paid in shares of the Trust's beneficial interest rather than 80% in
cash for the annual awards and 100% in cash for the cumulative adjustment.
As required by the rules promulgated by the Nasdaq National Market, since
the number of shares issuable to Mr. Levine under this amendment may exceed
25,000, the Board is seeking approval of the Trust's Shareholders. A copy
of the second amendment to the Employment Agreement is included herewith as
Annex A.
If the Shareholders do not approve the additional issuance of shares
to Mr. Levine, then he will continue to receive incentive compensation
payable in accordance with the existing terms of the Employment Agreement
described above. The issuance of shares to Mr. Levine in respect of 20% of
his incentive compensation was authorized and ratified by the Trust's
shareholders on June 27, 1995.
RECOMMENDATION OF THE BOARD
The Board believes the issuance of the additional shares to Mr. Levine
as contemplated by the second amendment to the Employment Agreement serves
to further align Mr. Levine's interest with those of the Shareholders and
recommends that the Shareholders concur in the following resolution which
will be presented for a vote of Shareholders at the Annual Meeting:
RESOLVED, that the Trust be and hereby is authorized to make
future issuances of shares of the Trust's shares of beneficial interest to
Mr. Levine consistent with the terms of the Employment Agreement and the
second amendment to the Employment Agreement.
<PAGE>
The affirmative vote of a majority of the votes cast by Shareholders
present in person or by proxy and eligible to vote at the Annual Meeting,
assuming a quorum being present, is required to adopt the foregoing
resolution.
4. PROPOSAL TO AMEND SECTION 3.3 OF THE TRUST'S AMENDED AND
RESTATED DECLARATION OF TRUST TO INCREASE THE COMPENSATION
AND OTHER REMUNERATION PAYABLE TO THE CLASS A TRUSTEES.
Under the provisions of the Trust's Amended and Restated Declaration
of Trust, the Class A Trustees (currently Messrs. Auch, Gold and Sotoloff)
are entitled to receive $15,000 per year for their services as Trustees.
Previously, the Shareholders authorized payment of meeting fees to the
Trustees of $875 for each meeting attended in person and $250 an hour for
each telephonic board meeting. In light of the time and responsibility
involved in serving as a Trustee and giving consideration to the fact that
Trustee's compensation has not otherwise been increased since June 19,
1991, the Trust is hereby proposing to increase the amount of fees payable
to the Trustees annually from $15,000 to $20,000 and the per meeting fees
from $875 to $1,000 for each meeting attended in person and from $250 an
hour to $500 for each meeting attended via telephonic conference call. A
copy of the proposed amendment to the Declaration is attached as Annex B.
RECOMMENDATION OF THE BOARD
The Board of Trustees recommends that the Shareholders adopt the
following resolution:
RESOLVED, that the first sentence of Section 3.3 of the Trust's
Amended and Restated Declaration of Trust be and hereby is deleted in its
entirety and replaced with the following:
The Class A Trustees shall be entitled to receive $20,000
per year for their services as Trustees plus $1,000 for each meeting of the
Board attended in person and $500 for each meeting of the Board attended
via telephonic conference call.
The affirmative vote of the holders of a majority of the outstanding
shares is required to adopt the foregoing resolution.
5. PROPOSAL TO ADOPT THE BANYAN STRATEGIC REALTY TRUST 1997
OMNIBUS STOCK AND INCENTIVE PLAN
On May 14, 1997, the Board of Trustees adopted, subject to shareholder
approval, the 1997 Omnibus Stock and Incentive Plan (the "Plan") to allow
the Trust to make stock-based awards as part of the Company's compensation.
A total of 1.0 million shares of the Trust's shares of beneficial interest
is issuable under the Plan. Subject to shareholder approval of the Plan,
the Board intends to award options to purchase a total of 41,000 shares to
various executives and employees of the Trust, exclusive of the Trust's
president, Leonard G. Levine, who receives performance based compensation
pursuant to his Employment Agreement. The Plan provides for incentive
stock options, non-statutory stock options, stock appreciation rights,
performance shares and units. The Board believes that the Plan will
successfully advance the Trust's long-term financial success by permitting
it to attract and retain outstanding executive talent and motivate superior
performance by encouraging and providing a means for participants to obtain
an ownership interest in the Trust. The affirmative vote of the holders of
a majority of the shares of beneficial interest present, in person or by
proxy, is necessary for approval of the Plan. The complete text of the
Plan is set forth in Annex C hereto and should be read in its entirety by
Shareholders.
<PAGE>
ADMINISTRATION AND ELIGIBILITY
The Plan will be administered by the Board of Trustees or a committee
thereof, each of whom will be a "disinterested person" within the meaning
of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act") or any similar rule which may subsequently be in effect
("Rule 16b-3") and each of whom is an "outside director" within the meaning
of Internal Revenue Code Section 162(m)(4)(c)(i) and the regulations
promulgated thereunder. The Plan requires the Company to fully indemnify
the Trustees or the committee against losses, costs, expenses and
liabilities arising from actions taken or failure to act under the Plan.
The Board is authorized to grant awards under the Plan to those employees
(including executive officers) and trustees of the Trust and its
subsidiaries as the Board selects, in its discretion. The Board may
delegate any of its authority under the Plan to persons it deems
appropriate (such as officers of the Trust) to the extent that delegation
would not prevent the Plan from complying with Rule 16b-3 or Internal
Revenue Code Section 162(m)(4)(c)(i).
OPTIONS AND APPRECIATION RIGHTS
The Plan authorizes the Board to grant options to employees or
trustees in number and on terms determined by the Board; provided, however,
that each person serving as a Class A Trustee on the tenth business day
after final adjournment of the Trust's annual meeting convened on June 25 ,
1997 will receive options to acquire 2,000 Shares, and provided further
that each person serving as a Class A Trustee ten business days after the
final adjournment of each succeeding annual meeting will be granted options
to purchase 2,000 Shares.
Each grant of an option must be evidenced by an agreement between the
parties specifying the exercise price, the duration of the option, the
number of Shares to which the option pertains and such other provisions as
the Board determines. This agreement will also specify whether the option
is intended to be an incentive stock option within the meaning of Internal
Revenue Code Section 422, or alternatively, a non-qualified stock option
not covered by this section of the Code. Subject to additional
limitations, the exercise price for each grant of an option under the Plan
may not be less than one hundred percent (100%) of the fair market value of
a Share on the date of grant provided that with respect to an incentive
stock option, the fair market value may not exceed the maximum limitation
under Section 422 in the first year that the option may be exercised;
provided that the incentive options exceeding the limitation will be
treated as non-qualified stock options. Options granted under the Plan
will be exercisable at such times and subject to such restrictions and
conditions as determined by the Board. These terms and conditions need not
be the same for each grant or for each participant. Each option granted to
an employee will expire at the time determined by the Board at the time of
grant; provided, however, that, subject to additional limitations in
certain cases, no option may be exercised later than the tenth (10th)
anniversary date of its grant. The Plan permits optionees, with certain
exceptions, to pay the exercise price of options in cash or Shares (valued
at fair market value on the date of exercise) or a combination thereof.
The Plan also authorizes the Board to grant appreciation rights to
employee participants (including executive officers). An appreciation
right entitles the grantee to receive upon exercise an amount determined by
multiplying (a) the difference between the fair market value of a Share on
the date of exercise over the grant price; or (b) the number of Shares
covered by the appreciation right. At the Board's discretion the Trust may
pay amounts due to the holder in the form of Shares (valued at its fair
market value on the date of exercise), cash or a combination thereof.
The Board may grant freestanding or tandem appreciation rights or any
combination of these forms. The grant price of a freestanding right will
be equal to the fair market value of a Share on the date of grant. The
grant price of tandem rights will be equal to the exercise price of the
related option. Tandem rights may be exercised for all or part of the
Shares subject to the related options upon the surrender of the right to
exercise the equivalent portion of the related option. A tandem right may
be exercised only with respect to the Shares for which its related option
is then exercisable. Each grant of an appreciation right will be evidenced
by an agreement specifying the grant price, the term of the right, and such
other provisions as the Board determines. The term of an appreciation
right granted under the Plan may not exceed ten (10) years.
PERFORMANCE AWARDS
The Plan authorizes the Board to grant performance awards to employee
participants in the form of either grants of performance shares/units (each
performance share representing one Share) or performance units representing
an amount established by the Board at the time of the award (which amount
may, without limitation, be equal to the fair market value of one Share).
The Board will set performance goals which will determine the number and/or
value of the performance shares or units paid to a participant.
When earned, performance awards will be paid in a single lump sum
following the close of the performance period in Shares, cash or a
combination thereof. At the Board's discretion, recipients of performance
awards may receive any dividends declared with respect to shares earned in
connection with performance shares/units and may also be granted the right
to exercise voting rights with respect to those Shares.
RESTRICTED STOCK OR RESTRICTED STOCK EQUIVALENTS
The Plan authorizes the Board to grant restricted stock to employee
participants in amounts and subject to the restrictions determined by the
Board. Stock certificates evidencing restricted Shares will be held by the
Trust and restricted Shares may not be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated during the restricted period.
During the restricted period, the Board will retain custody of any
distributions (other than regular cash dividends) made or declared with
respect to restricted Shares. Other than these restrictions on transfer,
the participant will have all the rights of a holder of such Shares of
restricted stock.
VESTING AND CANCELLATION PROVISIONS
Except for stock options awarded to Class A Trustees, Awards granted
under the Plan will vest and be exercisable in installments as follows:
(i) to the extent of 33.3% of the number of Shares commencing on the first
anniversary of the date of grant; (ii) to the extent of an additional 33.3%
of Shares commencing on the second anniversary of the date of grant; and
(iii) to the extent of an additional 33.4% of Shares commencing on the
third anniversary of the date of grant; provided that the Board may
accelerate vesting in the event of a Participant's death, permanent
disability or retirement in accordance with the Trust's retirement policy
or where the Board determines that acceleration is in the Company's best
interest provided further that no Award will vest if, to do so, would
create a situation in which the exercise of the Award would result in an
"excess parachute payment" within the meaning of Section 280G of the Code.
Stock options granted to the Class A Trustees will vest and be exercisable
in installments as follows: (i) to the extent of 50.0% of the number of
Shares commencing on the first anniversary of the date of grant; and (ii)
to the extent of 50.0% of the number of Shares commencing on the second
anniversary of the date of grant. If the participant does not, in any
given period, purchase all of the Shares subject to the award, the
participant's right to purchase any Shares not purchased in the period will
continue until the expiration or sooner termination of the award, except to
the extent provided otherwise in the Plan. Except as otherwise provided
herein or in the Plan, as a condition to the grant of any award to any
employee, the participant must remain in the continuous employ of the
Company or its subsidiaries for the period of time specified by the Board
in the Plan.
<PAGE>
Except as otherwise provided, awards granted to employees are
exercisable only prior to "termination of employment." A participant will
be considered to incur a "termination of employment" on the latest date on
which the participant no longer is, for whatever reason, an officer or
employee of the Trust or its subsidiaries ("Termination of Employment").
If a participant incurs a Termination of Employment due to death or
permanent and total disability or retirement, all awards granted under the
Plan and outstanding on the date of the Termination of Employment will be
exercisable to the extent provided in the participant's Plan Agreement.
Stock options granted to a Class A Trustee are exercisable only so long as
the individual continues to hold office; provided, however, that if the
individual ceases to hold office due to death, permanent and total
disability or expiration of the individual's term of office after the
individual attains his 75th birthday, all awards granted under the Plan
will be exercisable in accordance with the individual's Plan Agreement.
PLAN AGREEMENTS
Each award granted under the Plan will be evidenced by a written Plan
Agreement specifying, among other things, the period for which the award is
granted, the number of Shares covered by the award, the exercise price and
the exercise schedule. The grant and exercise of awards under the Plan are
subject to all applicable federal, state and local laws, rules and
regulations and, if required, any approvals by any government or regulatory
agency.
TERMS OF THE PLAN; AMENDMENT AND ADJUSTMENT
No awards may be granted under the Plan after June 26, 2007. The Plan
may be terminated by the Board at any time with respect to options and
appreciation rights which have not been granted. In addition, the Board
may amend the Plan from time to time, without the authorization or approval
of the Shareholders, but no amendment may impair the rights of the holder
of any award without such holder's consent. Any such amendment could
increase the cost of the Plan to the Trust.
The Plan provides that in the event of a stock dividend or stock
split, or a combination or other increase or reduction in the number of
issued Shares, the Board may, in order to prevent dilution or enlargement
of rights under awards make such adjustments in the number and type of
Shares authorized by the Plan and covered by outstanding awards under the
Plan and the price thereof. The Board may provide in any award agreement
that, in the event of a merger, consolidation, reorganization, sale or
exchange of substantially all of the assets or termination or dissolution
of the Trust, any of which could involve a change in control of the Trust,
the rights under outstanding awards may be accelerated or adjustments may
be made in order to prevent the dilution or enlargement of rights
thereunder.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a brief summary of the
federal income tax rules relevant to stock options, appreciation rights,
performance awards, restricted stock and supplemental cash payments. These
rules are highly technical and subject to change. The following discussion
is limited to the federal income tax rules relevant to the Trust and to
individuals who are citizens or residents of the United States. The
discussion does not address the state, local or foreign income tax rules
relevant to stock options, appreciation rights, performance awards,
restricted stock and supplemental cash payments. Employees are urged to
consult their personal tax advisors with respect to the federal, state,
local and foreign tax consequences relating to stock options, appreciation
rights, performance awards, restricted stock and supplemental cash
payments.
<PAGE>
INCENTIVE STOCK OPTIONS ("ISO"). A participant who is granted an ISO
recognizes no income upon grant or exercise of the option. However, the
excess of the fair market value of the Shares on the date of exercise over
the option exercise price is an item includible in the optionee's
alternative minimum taxable income. An optionee may be required to pay an
alternative minimum tax even though the optionee receives no cash with
which to pay such tax upon exercise of the ISO.
If the optionee holds the Shares acquired upon exercise of the ISO for
at least two years from the date of grant and at least one year following
exercise (the "Statutory Holding Periods"), the optionee's gain, if any,
upon a subsequent disposition of the Shares, is taxed as long-term capital
gain. If the optionee disposes of Shares acquired pursuant to the exercise
of an ISO before satisfying the Statutory Holding Periods (a "Disqualifying
Disposition"), the optionee may recognize both compensation income and
capital gain in the year of disposition. The amount of the compensation
income generally equals the excess of (i) the lesser of the amount realized
on disposition or the fair market value of the Shares on the exercise date
over (ii) the exercise price. The balance of the gain realized on such a
disposition, if any, is long- or short-term capital gain depending on
whether the Shares have been held for more than one year following exercise
of the ISO.
Special rules apply for determining an optionee's tax basis in and
holding period for common stock acquired upon the exercise of an ISO if the
optionee pays the exercise price of the ISO in whole or in part with
previously-owned Shares. Under these rules, the optionee does not
recognize any income or loss from delivery of Shares (other than Shares
previously acquired through the exercise of an ISO and not held for the
Statutory Holding Periods) in payment of the exercise price; provided
however, that if an optionee pays the exercise price of an ISO in whole or
in part with previously-owned Shares that were acquired upon the exercise
of an ISO and that have not been held for the Statutory Holding Periods,
the optionee will recognize compensation income (but not capital gain)
under the rules applicable to Disqualifying Dispositions. The optionee's
tax basis in and holding period for the newly-acquired Shares will be
determined as follows: (i) as to the number of newly-acquired Shares equal
to those of the previously-owned Shares delivered, so that the optionee's
tax basis in and holding period for the newly-acquired Shares will be equal
to the previously owned Shares delivered; the optionee's basis in and
holding period (for capital gain, but not Disqualifying Disposition,
purposes) for the previously-owned Shares will carry over to the newly-
acquired Shares on a share-for-share basis; (ii) as to the remaining newly-
acquired Shares, the optionee's basis will be zero (or, if part of the
exercise price is paid in cash, the amount of such cash divided by the
number of such remaining newly-acquired Shares), and the optionee's holding
period will begin on the date such Shares are transferred. Under proposed
regulations, any Disqualifying Disposition is deemed made from Shares with
the lowest basis first.
The Trust is not entitled to any deduction with respect to the grant
or exercise of an ISO or the subsequent disposition by the optionee of the
Shares acquired if the optionee satisfies the Statutory Holding Periods.
If these holding periods are not satisfied, the Trust is entitled to a
deduction in the year the optionee disposes of the Shares in an amount
equal to the optionee's compensation income.
NON-STATUTORY STOCK OPTIONS. A participant who is granted a non-
statutory stock option generally recognizes no income upon grant of the
option. At the time of exercise, however, the optionee recognizes
compensation income equal to the difference between the exercise price and
the fair market value of the Shares received on the date of exercise. This
income is subject to income and employment tax withholding. The Trust is
entitled to an income tax deduction corresponding to the compensation
income recognized by the optionee in the year that the income is recognized
by the optionee.
<PAGE>
When an optionee disposes of Shares received upon the exercise of a
non-statutory stock option, the optionee will recognize capital gain or
loss equal to the difference between the sales proceeds received and the
optionee's basis in the stock sold. The optionee's capital gain will be
long- or short-term, depending upon whether the stock sold was held more
than one year. The Trust will not receive a deduction for any gain
recognized by the optionee.
If an optionee pays the exercise price for a non-statutory option
entirely in cash, the optionee's tax basis in the Shares received equals
the stock's fair market value on the exercise date, and the optionee's
holding period begins on the day after the exercise date. If, however, an
optionee pays the exercise price of a non-statutory option in whole or in
part with previously-owned Shares, then the optionee's tax basis in and
holding period for the newly-acquired Shares will be determined as follows:
(i) as to the number of newly acquired Shares equal to the previously-owned
Shares delivered, the optionee's basis in and holding period for the
previously-owned Shares will carry over to the newly-acquired Shares on a
share-for-share basis; (ii) as to each remaining newly-acquired Share, the
optionee's basis will equal the Share's value on the exercise date, and the
optionee's holding period will begin on the day after the exercise date.
SPECIAL TREATMENT OF CERTAIN OFFICERS. An optionee who is an
executive officer of the Trust is considered an "insider" for purposes of
Section 16 of the Exchange Act and thus is subject to suit under Section
16(b) of the Exchange Act for sale of property occurring within six months
of receipt of such property (the "Section 16(b) Restriction"). Under
current SEC rules, in the case of stock received pursuant to the exercise
of an option, such six month period begins on the date the option is
granted. Under Section 83(c)(3) of the Internal Revenue Code and the
regulations thereunder, the Section 16(b) Restriction is considered a
"substantial risk of forfeiture" with respect to stock received by an
insider.
As a result of the Section 16(b) Restriction, an optionee who is an
executive officer of the Trust generally recognizes taxable income six
months after the grant of a non-statutory stock option (i.e., on the date
the Section 16(b) restriction lapses) if the optionee exercises such option
within such six month period unless the optionee files a Section 83(b)
Election with the Internal Revenue Service within 30 days of exercise to
recognize taxable income on the exercise date. A "Section 83(b) Election"
is an election to recognize income on the date that property subject to a
substantial risk of forfeiture is received rather than on the date such
substantial risk of forfeiture lapses. If an optionee exercises an option
more than six months after the date it was granted, the optionee recognizes
income on the exercise date.
The measure of the optionee's compensation income is the difference
between the fair market value of the Shares on the date the optionee
recognizes income with respect to such Shares, and the option exercise
price. The Trust is entitled to an income tax deduction for compensation
income taxed to the optionee. Any gain the optionee realizes on the
subsequent disposition of the Shares will receive long- or short-term
capital gain treatment depending (except in the case of Shares the holding
period of which is determined by reference to the holding period of
previously-owned Shares exchanged therefor) upon whether the Shares have
been held for more than one year following the date upon which the amount
of his or her compensation income was determined.
Optionees who are insiders are also subject to special treatment with
respect to ISOs. For alternative minimum tax purposes, if an ISO is
exercised by an insider within six months of the date it was granted, the
insider's alternative minimum taxable income is measured on the value of
the Shares on the date such six months period lapses, rather than such
value on the exercise date.
<PAGE>
APPRECIATION RIGHTS. A participant who is granted an appreciation
right generally recognizes no income upon the grant of the appreciation
right. At the time of exercise, however, the participant shall recognize
compensation income equal to any cash received and the fair market value of
any Shares received. This income is subject to withholding. The Trust is
entitled to an income tax deduction corresponding to the ordinary income
recognized by the participant.
PERFORMANCE AWARDS. The grant of a performance award does not
generate taxable income to the participant or an income tax deduction to
the Trust. Any cash and the fair market value of any Shares received as
payment in respect of a performance award will constitute ordinary income
to the participant (in the case of a participant who is an insider, the
fair market value of the Shares six months after receipt will be used to
measure income, unless a Section 83(b) Election is filed). The
participant's income is subject to income and employment tax withholding.
The Trust will be entitled to an income tax deduction corresponding to the
ordinary income recognized by the participant.
RESTRICTED STOCK. A participant who is granted restricted stock
generally does not recognize income at the time of the grant unless the
individual makes a Section 83(b) Election to have the grant taxed as
compensation income at the date of receipt, with the result that any future
appreciation (or depreciation) in the value of the Shares granted will be
taxed as capital gains (or loss) upon a subsequent sale of the Shares.
However, if the participant does not make a Section 83(b) Election, then
the grant shall be taxed as compensation income at the full fair market
value on the date that the restrictions imposed on the Shares expire.
Unless a participant makes a Section 83(b) Election, any dividend paid on
Shares subject to the restrictions is compensation income to the
participant and compensation expense to the Trust. Any compensation income
a participant recognizes from a grant of restricted stock is subject to
income and employment tax withholding. The Trust is entitled to an income
tax deduction for any compensation income taxed to the participant.
PAYMENT OF WITHHOLDING TAXES. The Trust will have the power to
withhold, or require a participant to remit to the Trust an amount
sufficient to satisfy any federal, state, local or foreign withholding tax
requirements on any grant or exercise made pursuant to the 1996 Plan.
However, to the extent permissible under applicable tax, securities and
other laws, the Board may, in its sole discretion, permit the participant
to satisfy a tax withholding requirement by delivering Shares previously
owned by the participant or directing the Trust to apply Shares to which
the participant is entitled as a result of the exercise of an option of the
lapse of a period of restriction, to satisfy such requirement.
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth information with respect to the Trust's
executive officers. Each officer is elected by the Trustees and serves
until his successor is elected and qualified or until his death,
resignation or removal by the Trustees:
Other Principal Occupation(s) Office & Year
Name Age During Past Five Years First Elected
- ---- --- ---------------------------- -------------
Leonard G. Levine 50 Mr. Levine has been President President, 1990
of the Trust since 1990. He
also serves as President of
Banyan Strategic Land Fund II
and is a Director of Banyan
Management Corp.
Neil D. Hansen 50 Mr. Hansen has been First Vice First Vice
President of the Trust since President, 1991
1991. He also serves as
First Vice President of Banyan
Strategic Land Fund II and
Banyan Management Corp.
Mr. Hansen is also a certified
public accountant.
Robert G. Higgins 45 From 1990 to 1992, Mr. Higgins Vice President
was a contract partner at the and
law firm of Chapman and Cutler. General
He is an attorney at law Counsel,
admitted to the bar in the 1992;
States of Illinois, Minnesota Secretary, 1995
and Texas. Mr. Higgins also
serves as Vice President,
General Counsel and Secretary
of Banyan Strategic Land Fund II
and Banyan Management Corp.
Mr. Higgins also operates a
sole practice of law.
Joel L. Teglia 35 From 1991 to 1994, Mr. Teglia Vice President
was the Controller for Banyan and
Management Corp. Mr. Teglia Chief Financial
also serves as Vice President Officer, 1994
and Chief Financial Officer of
Banyan Strategic Land Fund II
and Banyan Management Corp.
He is a certified public
accountant.
Jay E. Schmidt 45 From 1992 to 1995 Mr. Schmidt Vice President-
served as Vice President of Acquisitions,
Acquisitions for Banyan 1995
Management Corp. He was
appointment Vice President of
the Trust in 1995. He is also
an attorney and is admitted
to the bar in the State of
Wisconsin and is a licensed
real estate broker.
<PAGE>
COMPENSATION OF TRUSTEES AND EXECUTIVE OFFICERS
A. TRUSTEE COMPENSATION
The Trustees are paid an annual fee of $15,000, payable quarterly,
plus $875 for each Board meeting, including meetings of the audit
committee, attended in person and $250 an hour for each Board meeting,
including meetings of the audit committee, attended via telephonic
conference call. In addition, each Trustee is reimbursed for out-of-pocket
expenses incurred in attending meetings of the Board.
<PAGE>
<TABLE>
B. EXECUTIVE COMPENSATION
Compensation paid to executive officers of the Trust for the years ended December 31, 1996, 1995 and 1994 is
as follows:
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION (1) AWARDS PAYOUTS
-------------------------------- ----------------------- -------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
YEAR SALARY BONUS COMPENSATION AWARD(S) SARs (#) PAYOUTS COMPENSATION
---- ------ ----- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leonard G. Levine 1996 $189,247 $ 66,985 n/a $ 7,700(2) n/a n/a n/a
President and Chief 1995 $184,812 $111,739 n/a $24,899(2) n/a n/a n/a
Executive Officer 1994 $179,900 n/a n/a n/a n/a n/a n/a
Jay E. Schmidt 1996 $154,615 $ 65,000(3) n/a n/a n/a n/a n/a
Vice President- 1995 $148,136 $ 27,000(3) n/a n/a n/a n/a n/a
Acquisitions 1994 n/a n/a n/a n/a n/a n/a n/a
<FN>
(1) Compensation for the all other executives, with the exception of Mr. Schmidt, of the Trust for 1996, 1995
and 1994 was less than $100,000 per individual.
(2) See incentive compensation program disclosure below.
(3) Mr. Schmidt's 1996 and 1995 bonuses were discretionary and based upon job performance pursuant to an annual
review. Mr. Schmidt is not awarded any other compensation by the Trust. The $27,000 bonus represents
Mr.Schmidt's 1994 bonus paid in 1995. During 1996, Mr. Schmidt was paid a bonus equal to $30,000 for the year
ended December 31, 1995 and $35,000 for the year ended December 31,1996.
</TABLE>
<PAGE>
Mr. Levine serves as Chief Executive Officer of the Trust pursuant to
an employment agreement entered into with the Trust by Mr. Levine on
January 1, 1990. The Agreement expires on December 31, 1997. Under the
contract, Mr. Levine's base salary is adjusted on January 1 of each year
based on increases in the "consumer price index". For the year ended
December 31, 1996, Mr. Levine was paid a base salary of $184,812.
Mr. Levine is eligible to receive compensation under an incentive
program included in his contract. Effective January 1,1993, Mr. Levine
earns incentive compensation based on the recovery on foreclosed real
estate assets owned by the Trust as of December 31, 1992 and on the
performance of the Trust's reinvestment activities. In particular, Mr.
Levine will earn incentive compensation on foreclosed real estate assets
equal to : (i) 1% of the amount of the Trust's secured claims which are
converted to cash, and (ii) 3% of the Trust's unsecured claims which are
converted to cash. Mr. Levine is paid incentive compensation earned on the
Trust's foreclosed activities as soon as practical after the end of each
calendar year without regard to whether he is employed by the Trust on the
date of payment. Mr. Levine's annual incentive compensation earnings from
reinvestment activities are based on reinvestment returns, adjusted for
unrealized losses, to the Trust in excess of a set index, based on the
annual yield of five-year Treasury Notes plus 100 basis points ("investment
hurdle") as of January 1 of each year, according to the following: (i) $500
for each basis point by which the Trust's rate of return from reinvestment
activities exceeds the investment hurdle up to 500 basis points; and (ii)
$250 per each basis point by which the rate of return from reinvestment
activities exceeds the investment hurdle plus 500 basis points. The
investment hurdle for the year ended December 31, 1995 was 8.88%.
Incentive compensation earned on reinvestment activities is paid 80%
in cash and 20% in shares ("Award Shares") of the Trust on March 15 of the
year following the period for which the incentive was earned. The Award
Shares are subject to forfeiture and certificates representing the Award
Shares are held by the Trust pending satisfaction of the vesting
requirements, for the benefit of Mr. Levine until the earlier of: (i)
December 31, 1997; (ii) the termination of Mr. Levine's employment by the
Trust without just cause; or (iii) the permanent disability or death of Mr.
Levine. For the year ended December 31, 1995, Mr. Levine's incentive
compensation earned on recovery of foreclosed activities and returns on
reinvestment activities was $36,185 and $38,500, respectively. The $36,185
in incentive compensation earned by Mr. Levine during 1995 on recovery of
foreclosed assets is comprised of: $19,315 which is equal to 1% of the
amount of the Trust's secured claims converted to cash, and $16,870 equal
to 3% of the Trust's unsecured claims converted to cash. In 1996, Mr.
Levine was paid $66,985 representing 80% of his 1995 incentive in cash and
1,833 Award Shares valued at $4.20 per share or $7,700 representing 20% in
Award Shares of the Trust. For the year ended December 31, 1994, Mr.
Levine's incentive compensation earned on recovery of foreclosed activities
and return on reinvestment activities was $12,139 and $124,500,
respectively. Payment of Mr. Levine's 1994 incentive compensation occurred
during the second quarter of 1995 with the payment of $111,740,
representing 80% of his incentive, in cash and 6,036 Award Shares valued at
$4.125 per share or $24,899 representing 20% in Award Shares of the Trust.
The total Award Shares held by the Trust on behalf of Mr. Levine are 7,869.
For the year ended December 31, 1993, Mr. Levine did not earn any incentive
compensation from foreclosed activities or reinvestment activities.
Either Mr. Levine or the Trust can terminate the employment agreement
at any time upon 90 days written notice. If the Trust terminates the
agreement for cause, or Mr. Levine voluntarily terminates, the Trust will
pay all salary and incentive compensation earned through the date of
termination. In the event of Mr. Levine's death or permanent disability,
he is entitled to all incentive compensation earned through the date of his
disability or death plus any disability or life insurance proceeds in the
amount of two times his annual salary which is consistent with standard
insurance benefits of all Banyan Management Corp. personnel, but he is not
entitled to any other severance payments. If his employment is terminated
<PAGE>
without cause following a change of control (as defined in the employment
agreement) the Trust is obligated to pay Mr. Levine's salary during the
remainder of the employment period and must pay him all incentive
compensation which he would have earned if all the Trust's assets had been
converted into cash and all proceeds were distributed. If Mr. Levine is
terminated without cause but no change of control has occurred, he will
receive a severance payment equal to one year's salary plus all incentive
compensation earned through the date of his termination (including
incentive compensation based upon assets converted into cash within one
year following his termination of the Trust had he received an "expression
of interest" prior to Mr. Levine's termination), plus an amount equal to
the full cost of continuing Mr. Levine's health benefits for one year.
BOARD OF TRUSTEES REPORT ON EXECUTIVE COMPENSATION
This report was prepared by the members of the Trust's board of
trustees (the "Board"), all of whom are independent. The Board does not
have a separate compensation committee. Instead, the Board as a whole
establishes and administers compensation policies for the Trust's principal
executive officers.
The Board is guided by the following principles in establishing
executive compensation: (1) attracting and retaining outstanding executive
officers familiar with the Trust's business; and (2) ensuring that a
substantial portion of executive compensation is variable and tied to
quantifiable measures of the Trust's performance. These principles are
discussed in more detail below.
Chief Executive Compensation
- ----------------------------
In early 1990, the Board suspended the Trust's advisory relationship
with VMS Realty Partners which was subsequently terminated and hired
Leonard G. Levine to serve as the Trust's president and chief executive
officer. Since the focal point of the Trust's business plan at that time
was to gain control of the assets securing mortgage loans made by the Trust
which were in default, a substantial portion of Mr. Levine's compensation
was tied to the Trust's recovery of both secured and unsecured claims.
In mid-1992, the Board authorized investment of the cash recovered on
the secured and unsecured claims (the "Investible Cash") and subsequently
amended Mr. Levine's contract effective as of October 1, 1992. Under this
amended contract, which expires December 31, 1997, Mr. Levine receives a
base salary of $184,812 per year plus incentive compensation tied in part
to recoveries on the remaining secured and unsecured claims converted into
cash on or after January 1, 1993 and in part to the returns earned on the
Investible Cash which is invested in new real estate assets. The base
salary is subject to annual adjustments tied to increases in the Consumer
Price Index.
In establishing Mr. Levine's compensation package, the Board reviewed
industry compensation studies compiled by independent consultants and
considered Mr. Levine's experience and knowledge of the real estate market
in general and the Trust asset base in particular. In an effort to (i)
create a compensation package which would be attractive to a highly
talented executive; (ii) encourage the liquification of the assets of the
Trust which had been obtained through foreclosure and workout proceedings;
and (iii) create an inducement to improve the Trust's overall performance,
the Board designed a program under which Mr. Levine earns incentive
compensation based on recoveries of secured and unsecured claims equal to:
(i) 1% of the amount of the secured claims existing as of January 1, 1990,
converted to cash on or after January 1, 1993 and prior to the end of Mr.
Levine's employment; and (ii) 3% of the unsecured claims existing as of
January 1, 1990, converted to cash on or after January 1, 1993 and prior to
the end of Mr. Levine's employment. Mr. Levine also earns incentive
compensation based on the returns achieved, over a "hurdle rate," on the
Investible Cash. The Board has set a "hurdle" rate for each calendar year
<PAGE>
equal to the yield on a five-year Treasury Note as of January 1 of each
calendar year plus 100 basis points (the "Index"). Mr. Levine earns
incentive compensation equal to: (i) $500 for each basis point by which
the Trust's rate of return on the Investible Cash exceeds the Index up to
the Index plus 500 basis points; and (ii) $250 for each basis point by
which the rate of return on the Investible Cash exceeds the Index plus 500
basis points. None of Mr. Levine's incentive compensation is tied to the
Trust's stock performance since the Board believes that the Trust's share
price is not the best measure of management performance. Instead, the
Board has tied Mr. Levine's incentive compensation to performance of the
Trust's portfolio, which, in the Board's view, is a more accurate barometer
of the strength of the Trust's management. The hurdle rate for the year
ended December 31, 1995 was 8.88%.
Twenty percent of the incentive compensation Mr. Levine earns from the
return on the Investible Cash is paid in the form of shares of common stock
in the Trust (the "Award Shares") which are subject to forfeiture under
certain circumstances. The incentive compensation earned in respect to the
Trust's reinvestment activities is calculated on a cumulative basis from
January 1, 1993 through the earlier of December 31, 1997 or Mr. Levine's
termination. If such cumulative incentive compensation for reinvestment
activities results in an amount which is less than the annual incentive
compensation from reinvestment activities previously paid, all or a portion
of the Award Shares previously issued shall be forfeited and returned to
the Trust in order to reconcile the overpayment.
In respect of fringe benefits, the Board has elected to grant to Mr.
Levine such fringe benefits as are available to other employees of the
Trust and Banyan Management Corp. These include life insurance in an
amount not less than twice his base salary. If Mr. Levine becomes disabled
during the employment period, he is to be paid 100% of his salary for six
months following his disability. He is also entitled to any other benefits
which the Trust or Banyan Management Corp. may provide for their other
salaried employees. This package of fringe benefits is, in the Board's
view, in keeping with industry standards.
Other Executive Compensation
- ----------------------------
The Trust does not have any other principal executive officers who
earn base salaries and bonus in excess of $100,000, other than Jay E.
Schmidt, as described above under Executive Compensation. The Board has
not established any long-term incentive plans for Mr. Schmidt or any other
person. Instead, Mr. Levine makes recommendations to the Board regarding
each executive officer's base salary and bonus after considering each
executive's job function and performance. With respect to Mr. Schmidt, his
salary and bonus are adjusted annually based upon (i) the performance of
the Trust's reinvestment portfolio; (ii) a subjective evaluation of Mr.
Schmidt's performance in acquiring appropriate properties for the Trust's
portfolio at the best possible price; and (iii) his overall contribution to
the success of the Trust.
The Board believes its executive compensation policies enable the
Trust to attract, motivate and retain senior management by providing a
competitive total compensation opportunity based upon performance.
Competitive based salaries that reflect the individual's level of
responsibility and annual, variable performance-based cash incentive awards
are important elements of the Trust's cash compensation philosophy. The
Board believes that the proposed 1997 Omnibus Stock and Incentive Plan will
provide the Board with added flexibility in attracting and retaining key
management personnel.
BOARD OF TRUSTEES,
WALTER E. AUCH, SR.
NORMAN M. GOLD
MARVIN A. SOTOLOFF
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total Shareholder return on
the Shares of the Trust for the last five fiscal years with the cumulative
total return on the Standard & Poor's 500 Index and the National
Association of Real Estate Investment Trusts, Inc. ("NAREIT") Equity REIT
Total Return Index for all equity REITs over the same period (assuming the
investment of $100 in the Trust's Shares, the S&P 500 Total Return Index
and the NAREIT Equity REIT Total Return Index on December 31, 1990, and the
reinvestment of all dividends). In the performance graph provided for the
Stockholder Proxy Statement for the year ended December 31, 1994, the Trust
utilized the NAREIT Equity Index for comparison to industry or peer
performance. Pursuant to NAREIT's 1995 inaugural compilation of a Equity
REIT Total Return Index, which excludes REITs operating Health Care
Facilities, management of the Trust has elected to use the NAREIT Equity
REIT Total Return Index, excluding Health Care REITs, for comparison to
industry or peer performance, and believes that it provides a more
meaningful comparison in assessing the Trust's performance for 1995 based
on property type.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE S&P 500 TOTAL RETURN INDEX
AND THE NAREIT EQUITY TOTAL RETURN INDEX
YEAR-END DATA 1992 1993 1994 1995 1996
- ------------- ---- ---- ---- ---- ----
BSRT 95.48 119.89 131.02 148.22 148.62
S&P 500 Index 107.67 118.43 119.97 154.88 202.74
NAREIT Equity Index
(without Health Care) 120.66 143.23 147.52 168.48 229.82
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Administrative costs, primarily salaries and general and
administrative expenses are incurred on the Trust's behalf by Banyan
Management Corp. ("BMC"). BMC is owned by the Trust, Banyan Strategic Land
Fund II and Legend Properties, Inc. (f/k/a Banyan Mortgage Investment Fund)
(the "Banyan Funds"). Mr. Levine is the president of BMC but he receives
no additional compensation for his services to that entity. Messrs.
Teglia, Hansen, Higgins and Schmidt are employees of the Trust but are paid
by BMC. The portion of their time which is allocable to the Trust is
included in the administrative costs for which BMC is reimbursed by the
Trust. The trustees of the Trust, together with Mr. Levine, serve as
directors of BMC but receive no additional compensation. All costs
incurred by BMC on behalf of each entity for which it provides
administrative services are allocable to the Trust and these other entities
based upon the actual number of hours spent by BMC personnel on matters
related to that particular entity. BMC does not "mark-up" or include any
profit component in the costs allocated to the entities including the
Trust. The Trust's allocated share of costs for the years ended December
31, 1996, 1995 and 1994, aggregated $1,275,374, $1,443,434, and $1,185,409,
respectively. As one of its administrative services, BMC serves as the
paying agent for general and administrative costs of the Trust. As part of
providing this payment service, BMC maintains a bank account on behalf of
the Trust. As of December 31, 1996, the Trust had a net payable due to BMC
of $2,845.
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1997 Annual Meeting of Shareholders must
be received by the Trust at its executive office in Chicago, Illinois, on
or prior to January 12, 1998 for inclusion in the Trust's proxy statement
for that meeting. Any Shareholder proposal must meet the requirements set
forth in the rules of the Securities and Exchange Commission relating to
Shareholder proposals.
OTHER MATTERS
As of the date of this Proxy Statement, no business other than that
discussed above is to be acted upon at the Meeting. If other matters not
known to the Board should, however, properly come before the Meeting, the
persons appointed by the signed proxy intend to vote it in accordance with
their best judgment.
Banyan Strategic Realty Trust
By the order of the Board of Trustees,
Leonard G. Levine
President
Chicago, Illinois
June 3, 1997
Additional copies of the Banyan Strategic Realty Trust 1996 Annual
Report and Form 10-K filed with the Securities and Exchange Commission will
be supplied to Shareholders without charge. Requests for the Report should
be directed to:
Banyan Strategic Realty Trust
c/o Investor Relations Department
150 S. Wacker Drive, Suite 2900
Chicago, IL 60606
(312) 683-3671
YOUR VOTE IS IMPORTANT. THE PROMPT RETURN OF
PROXIES WILL SAVE THE TRUST THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. PLEASE PROMPTLY
MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
ANNEX A
AMENDMENT
TO
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amendment to Second Amended and Restated Employment Agreement
(this "Amendment") is made and entered into as of March 19, 1997 by and
between Leonard G. Levine (the "Executive") and Banyan Strategic Realty
Trust (the "Fund").
RECITALS:
A. The parties previously entered into a Second Amended and
Restated Employment Agreement made as of December 31, 1992 (the "Employment
Agreement").
B. The parties desire to amend certain provisions of the
Employment Agreement.
NOW THEREFORE, in consideration of the promises, mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Fund and
the Executive agree as follows:
1. AMENDMENT OF EMPLOYMENT AGREEMENT. Subject to the conditions
set forth in Section 2 hereof, the Employment Agreement is amended as
follows:
a. SECTION 6(c) is deleted in its entirety and replaced by
the following:
Payment of the Additional Compensation computed under this
Section 6 shall be made on March 15 of the year following the period for
which the award is made. One hundred percent (100%) of the award shall be
paid in shares of the Fund ("Award Shares"), provided that for fiscal years
ended prior to January 1, 1996, the Additional Compensation shall be paid
80% in cash and 20% in Award Shares. The Award Shares issued pursuant to
this Section 6(c) shall not be transferred prior to the date which is
seventy-five (75) days after the Computation Date (as defined in
Section 6(d) (the "Vesting Date")); provided that eighty percent (80%) of
the Award Shares distributed to the Executive in respect of Additional
Compensation earned for the fiscal year ended December 31, 1996 shall
immediately vest upon Stockholder Approval as defined in SECTION 2 of this
Amendment (the "Additional Incentive Shares") and may be immediately
transferred, pledged or otherwise freely alienated in compliance with the
registration requirements of federal and state securities law or exemptions
therefrom following such Stockholder Approval. The Award Shares, except
for the Additional Incentive Shares, shall be subject to forfeiture in
accordance with the provisions of Section 6(d) and any Certificate
representing all or any portion of the Award Shares shall bear an
appropriate legend and shall be held by the Fund in trust for the Executive
pending the lapse of the forfeiture provisions under Section 6(d). At the
request of Executive, the Additional Incentive Shares may be separately
certificated. The number of Award Shares distributable to the Executive
shall be based upon the average closing price of the Fund's stock for the
five (5) business days ended prior to December 31 of the calendar year for
which the payments are made. Subject to the provisions of Section
2(b)(iii)-(iv) of this Amendment, the Executive shall be entitled to
receive and retain all dividends paid on the Award Shares held by him,
including those shares held in trust by the Fund for the Executive. The
Fund, at its sole cost, shall take all reasonable steps necessary to cause
the filing of a registration statement and listing application
<PAGE>
to be effective as soon after the Vesting Date as practical,
with respect to the Award Shares, with the appropriate regulatory bodies,
on terms more fully set forth in the Registration Rights Agreement to be
entered into pursuant to the provisions of Section 3 of this Amendment.
b. SECTION 6(d) shall be amended and restated in its
entirety as follows:
(d) As soon as practicable after December 31, 1997, or, if
earlier, upon the termination of the Executive's employment ("Computation
Date") the computation provided in Section 6(b) will be computed on a
cumulative basis covering the period January 1, 1993 through the
Computation Date; provided, however, that for such computation the Adjusted
Cash Flow shall also include all unrealized profits and gains generated in
connection with Reinvestment Activities. In connection therewith, the
parties further agree that the definition of "Net Income" in Section 6(a)
of the Employment Agreement shall exclude the financial accounting effect
of straight lining rents.
(i) In the event that the total cumulative Additional
Compensation as recomputed at the Computation Date exceeds the aggregate
Additional Compensation paid to the Executive, the Fund shall award to the
Executive, no later than the Vesting Date, a number of Award Shares equal
in value to this excess (the "Final Award Shares").
(ii) In the event that the cumulative Additional
Compensation as recomputed at the Computation Date is less than the
aggregate amount of the Additional Compensation paid to the Executive, all
or a portion of the Award Shares, except for the Additional Incentive
Shares (the "Forfeitable Shares"), shall be forfeited and returned to the
Fund. In determining the amount of the Forfeitable Shares, each Award
Share shall be valued at the average price at which the Shares were valued
when issued to the Executive under Section 6(c). For example, if the
Executive holds 100,000 Award Shares with an average value determined under
Section 6(c) at the time of issue of $3.00 and the cumulative Additional
Compensation at the Computation Date is determined to be $45,000 less than
the amount actually paid to the Executive, the Executive shall return up to
15,000 Forfeitable Shares to the Fund without regard to the actual current
value of those shares. Certificates representing the balance of any Award
Shares shall be delivered to the Executive promptly after the Vesting Date.
(iii) Payment of the Additional Compensation computed
under this Section 6(d) shall be made no later than the Vesting Date.
Except as provided herein, all of the Additional Compensation under this
Section 6(d) shall be payable in Award Shares. The number of Final Award
Shares to be issued pursuant to Section 6(d)(i) above shall be calculated
by dividing the Additional Compensation computed under Section 6(d) by
$3.75; provided, however, that if at any time the Fund issues or sells any
shares of its common stock in exchange for consideration less than $3.75
per share, (or issues any warrant, option or other security permitting the
holder to acquire any share in exchange for consideration less than $3.75),
except for options, warrants or other awards under the Fund's 1997 Omnibus
Stock and Incentive Plan, then the number of Final Award Shares issuable
pursuant to Section 6(d)(i) to the Executive shall be automatically
increased such that the product of the number of Final Award Shares
immediately after such sale, transfer or issuance, multiplied by the
Diluted Value, is equal to the product of the number of the Final Award
Shares immediately before such sale, transfer or issuance, multiplied by
$3.75. For purposes of this provision, "Diluted Value" shall mean the
lowest price per share consideration at which the Fund issues, transfers or
sells, or agrees to issue, transfer or sell, any of its Shares. For these
purposes, consideration shall include both cash and the fair market value
of any property actually received or to be received as consideration by the
Fund upon such sale, transfer or issuance, PROVIDED, however, that if any
adjustment is made pursuant to this section upon issuance of any such
option, warrant or other security, and if such option, warrant or right to
<PAGE>
acquire shares expires unexercised or unconverted, then such adjustment
shall be promptly cancelled and reversed. The Fund shall notify the
Executive promptly and in any event within seven (7) days of any adjustment
(or cancellation thereof) required to be made pursuant to this section.
The Final Award Shares shall: (A) bear appropriate legends; and (B) be
transferrable only in compliance with the registration requirements of
federal and state securities law or exemptions therefrom.
c. SECTION 17(a) is deleted in its entirety and replaced by
the following:
(a) NOTICE. Any notice required or permitted hereunder
shall be made in writing (i) either by actual delivery of the notice into
the hands of the party thereunder entitled, or (ii) by the mailing of the
notice in the United States mail, certified or registered mail, return
receipt requested, all postage prepaid and addressed to the party to who
the notice is to be given at the party's respective address set forth
below, or such other address as the parties may from time to time designate
by written notice as herein provided.
As addressed to the Fund:
Banyan Strategic Realty Trust
Suite 2900
150 South Wacker Drive
Chicago, Illinois 60606
With a copy to:
Shefsky & Froelich Ltd.
444 North Michigan Avenue
Suite 2500
Chicago, Illinois 60611
Attention: Michael J. Choate
As addressed to the Executive:
Leonard G. Levine
1630 Sylvester Place
Highland Park, Illinois 60035
With a copy to:
Saitlin Patzik Frank & Samotny Ltd.
150 S. Wacker Drive
Suite 900
Chicago, Illinois 60606
Attention: Alan B. Patzik
The notice shall be deemed to be received in case (i) on the date of
its actual receipt by the party entitled thereto and in case (ii) on the
date of its mailing.
<PAGE>
2. APPROVALS.
a. Effectiveness of the Amendment is subject, to the extent
required, to: (i) approval of the Fund's stockholders on or before thirty
days after the Fund's Annual Meeting, including any adjournments or
postponements thereof (the "Final Approval Date"), at which the issuance of
the Award Shares is submitted to a vote of the Fund's Stockholders
("Stockholder Approval"), unless extended by agreement of the parties; and
(ii) approval of the Nasdaq of the inclusion of the Award Shares and the
Final Award Shares in the Nasdaq National Market System ("Nasdaq
Approval"). The Fund shall use its best efforts to promptly obtain
Stockholder Approval and Nasdaq Approval, as well as any other consents or
approvals which may be required. Pending Stockholder Approval and Nasdaq
Approval, the Fund shall issue the Award Shares issuable in respect of the
Additional Compensation for the year ended December 31, 1996 into escrow to
be held for the Executive's benefit pending such approvals. The Executive
shall be entitled to all distributions paid by the Fund in respect of the
shares held in escrow. If Stockholder Approval and NASDAQ Approval is
obtained by the Final Approval Date, the Fund shall release the Additional
Incentive Shares from escrow to the Executive as soon as practicable, but
in no event later than five (5) business days after receipt of the last
approval. These shares may not be transferred by the Executive except in
compliance with federal and state securities law or an exemption therefrom.
These shares shall have the benefit of the Registration Rights Agreement
described in Section 3 hereof.
b. If either Stockholder Approval or Nasdaq Approval is not
obtained by the Final Approval Date then: (i) the amendments contemplated
by SECTION 1 hereof shall be null and void and the terms and conditions of
the Employment Agreement shall remain in full force and effect unless
amended, waived or altered by the parties; (ii) the Additional Incentive
Shares shall be immediately cancelled (the "Cancelled Shares");
(iii) Executive shall be paid, in cash, an amount equal to the Additional
Compensation which had been previously paid through the issuance of the
Cancelled Shares, and thereafter, all Additional Compensation due in
connection with the Agreement shall be paid 20% in the form of Award Shares
and 80% in cash; and (iv) Executive shall be entitled to be paid interest
on the Additional Compensation paid to it pursuant to (iii) above in
respect of the Cancelled Shares at the same rate as dividends are then
being paid in respect of the Fund's shares, with any dividends theretofore
received in respect of the Cancelled Shares credited against the interest
due. For purposes of this paragraph, the rate at which dividends are then
being paid on the Fund's shares shall be deemed to be the percentage which
the dividend payable with respect to the Cancelled Shares bears to the cash
value. For this purpose, cash value shall mean eighty percent (80%) of the
Additional Compensation payable under SECTION 6(c).
c. If the Executive is not employed by the Fund on
January 1, 1998, pursuant to a new Employment Agreement with the Fund
acceptable to Executive, then, notwithstanding the provisions of
SECTION 6(d), as amended, the Executive shall have the option, exercisable
in his sole discretion, to require the Fund to pay the Executive 80% of the
Additional Compensation for the fiscal year ended December 31, 1997 and/or
all of the Additional Compensation due Executive under SECTION 6(c) AND
6(d) in cash no later than the Vesting Date.
<PAGE>
3. REGISTRATION RIGHTS. Subject to the provisions of
SECTION 6(c), as soon as practicable, the parties shall enter into a
registration rights agreement on usual and customary terms and conditions
granting the Executive the right to cause the Fund to register any or all
of the Award Shares or the Final Award Shares for resale by the Executive.
The Registration Rights Agreement shall generally provide for the
following:
a. Each registration shall be effected by the Fund at its
expense;
b. The Executive shall be entitled to a separate
registration statement with regard to the shares issued under each of (i)
Section 6(c) hereof in 1997 and relating to the Fund's 1996 performance and
(ii) Section 6(c) issued in 1998 and relating to the Fund's 1997
performance and shares issued under Section 6(d);
c. The Executive shall have reasonable piggyback rights; and
d. The Fund shall maintain these registration statements in
effect, and update registration statements as required, to enable Executive
to periodically sell, in his discretion, shares thereunder until such time
as the subject shares are freely saleable pursuant to the provisions of
Rule 144 promulgated under the Securities Act of 1933, as amended.
In the event the parties hereto fail to enter into a mutually
agreeable Registration Rights Agreement by the Final Approval Date,
Executive may, at its option, elect to treat this Amendment as if one of
the approvals required by Section 2(b) hereof had not been received and
effect a termination of this Amendment as set forth therein.
4. AGREEMENTS AS TO PAST CALCULATIONS AND METHODOLOGIES.
a. PREVIOUS CALCULATIONS AND METHODOLOGIES. The parties
hereto agree and acknowledge that each has been represented by competent
professionals and together with these professionals has had an opportunity
to review the formulas set forth in the Employment Agreement for use in
calculating the compensation payable to Executive pursuant to Sections 5
and 6, thereunder, the methodology pursuant to which those formulas have
been applied to calculate the compensation and the amounts determined to be
due to Executive through the date hereof as a result of such formulas and
the applied methodology. In connection therewith, the parties hereto
acknowledge and agree that the formulas set forth in the Agreement for
calculating the compensation, the methodology applied (to date) in
calculating the amounts due pursuant to those formulas and the amounts
calculated to date have been due and payable to Executive through the date
hereof are accurate and each waives any and all rights he or it may have to
recalculate the formulas, modify the methodology applied in the calculation
or alter the amount of the compensation heretofore paid.
b. FUTURE CALCULATIONS AND METHODOLOGIES. The parties
hereto acknowledge and agree that the formulas set forth in the Agreement
for purposes of determining the compensation payable to Executive pursuant
to Sections 5 and 6 of the Employment Agreement and the methodology applied
by the Fund in its prior calculations of the amounts due is appropriate and
the parties hereto further agree and acknowledge that all future
calculations of amounts due Executive for additional compensation pursuant
to Sections 5 and 6 of the Employment Agreement shall be calculated using
the formula set forth therein, applying the methodology utilized in the
past as modified by this Amendment to the Employment Agreement. In
connection therewith, the parties hereto specifically acknowledge the
existence of a memo dated October 17, 1996 from
<PAGE>
Joel L. Teglia to the Board of Trustees of the Fund and agree
that the methodology and calculations set forth therein are appropriate and
shall be applied, on a consistent basis, in all future calculations of
amounts due as compensation pursuant to the Sections 5 and 6 of the
Employment Agreement.
5. MISCELLANEOUS PROVISIONS.
a. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws (and not the law of
conflicts) of the State of Illinois.
b. Further Assurances. Each party agrees to execute and
deliver such additional instruments and documents and to take all such
other actions as any of the other parties may reasonably request from time
to time in order to effect the provisions, purposes and intent of this
Amendment.
c. ENTIRE AGREEMENT; EFFECT ON OTHER AGREEMENTS. This
Amendment constitutes the entire understanding of the parties with respect
to the amendment of the Employment Agreement and may be modified only in
accordance with the provision of the Employment Agreement governing
amendments. Upon execution of this Amendment, all references in the
Employment Agreement, and any document executed or delivered in connection
therewith, shall be deemed to be references to the Employment Agreement as
amended, supplemented or modified by this Amendment.
d. SEVERABILITY. If any provision of this Amendment shall,
for any reason, be held unenforceable, such provision shall be severed from
this Amendment unless, as a result of such severance, this Amendment fails
to reflect the basic intent of the parties. If this Amendment continues to
reflect the basic intent of the parties, then the invalidity of such
specific provision shall not affect the enforceability of any other
provision herein, and the remaining provisions shall remain in full force
and effect.
e. COUNTERPARTS. This Amendment may be executed in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute
one and the same Amendment.
f. HEADINGS. The descriptive headings of this Amendment are
inserted for convenience only and do not constitute a part of this
Amendment.
g. NO STRICT CONSTRUCTION. This Amendment has been mutually
negotiated and drafted by the parties and no presumption or rule of
contract construction or interpretation by or against a party shall be made
on the basis of the party which might otherwise be charged with drafting
this Amendment.
h. REFERENCES. As used herein, all provisions shall include
the masculine, feminine, neuter, singular and plural thereof, wherever the
context and facts require such construction.
i. RECITALS. The recitals set forth in this Amendment are
incorporated by reference herein and made a part hereof, as if fully
rewritten.
<PAGE>
IN WITNESS WHEREOF, this Amendment is entered into on the day and year
first written above.
BANYAN STRATEGIC REALTY TRUST
By: /s/ Robert G. Higgins
Name: Robert G. Higgins
Title: Vice President General Counsel
EXECUTIVE:
/s/ Leonard G. Levine
Leonard G. Levine
<PAGE>
ANNEX B
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED DECLARATION OF TRUST
BANYAN STRATEGIC REALTY TRUST (the "Trust"), a Massachusetts business
trust organized and existing under and by virtue of the laws of the
Commonwealth of Massachusetts, DOES HEREBY CERTIFY:
FIRST: That on May 14, 1997, the Board of Trustees of the Trust duly
adopted the following resolution setting forth a proposed amendment to the
Trust's Amended and Restated Declaration of Trust declaring the amendment
to be advisable. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the first sentence of Section 3.3 of the Trust's
Amended and Restated Declaration of Trust be, and hereby is, deleted in its
entirety and replaced with the following:
"The Class A Trustees shall be entitled to receive $20,000 per year
for their services as Trustees plus $1,000 for each meeting of the Board
attended in person and $500 for each meeting of the Board attended via
telephonic conference call."
<PAGE>
ANNEX C
BANYAN STRATEGIC REALTY TRUST (the "Company")
1997 OMNIBUS STOCK AND INCENTIVE PLAN
I. GENERAL.
The purpose of this 1997 Omnibus Stock and Incentive Plan (the
"Plan") is to link the personal interests of participants in the Plan to
those of the Company's stockholders by granting participants nonqualified
stock options, incentive stock options, stock appreciation rights,
restricted stock, performance shares and performance units. By doing so,
the Company believes it will be able to retain and attract those highly
competent individuals upon whose judgment, initiative and leadership the
Company's success in large measure depends. Subject to approval by the
holders of the Company's shares of beneficial interest, the Plan shall
become effective June 26, 1997 (the "Effective Date") and will remain in
effect, subject to the Board's right to terminate or amend at any time
until all the Shares subject to the Plan have been purchased or acquired,
but in no event may an award be granted on or after June 26, 2007.
II. ADMINISTRATION.
The Board shall have plenary authority in its discretion, but subject
to the express provisions of the Plan, to administer the Plan, including:
(i) determining the size and types of Awards as well as the terms and
conditions of each Award; (ii) determining which Persons may participate in
the Plan; (iii) prescribing, amending or rescinding rules and regulations
relating to the Plan; (iv) determining the terms and provisions (and
amendments thereof) of the respective Plan Agreements (which need not be
identical), including the terms and provisions (and amendments) as required
in the Board's judgment to conform to any change in law or regulation
applicable thereto; and (v) making all other determinations deemed
necessary or advisable for administrating the Plan. The Board may form a
committee to exercise its authority hereunder provided that the committee
must be comprised of no less than three Persons, all of whom must be
Independent Trustees.
Each Award granted hereunder must be evidenced by minutes of a
meeting or the unanimous written consent of the Board. Except for Awards
granted to the Independent Trustees, the Board may at any time, and from
time to time, amend or suspend the Plan. Except as otherwise provided in
the Plan, the Board may modify, extend, replace or renew outstanding Awards
under the Plan, or accept the surrender of outstanding Awards (to the
extent not yet otherwise exercised) and grant new Awards in substitution
therefore. Notwithstanding the foregoing, no amendment or suspension of
the Plan without the written consent of a Participant may alter or impair
the rights of the Participant under any Award previously granted to the
Participant. The Board's determination on the foregoing matters will be
conclusive.
III. ELIGIBILITY.
Except as provided herein, all Employees or Trustees of the Company
are eligible to participate in the Plan. The Board shall select, from
among the eligible Trustees and Employees, those Persons to whom Awards may
be granted.
<PAGE>
IV. TYPES OF AWARDS.
(A) STOCK OPTIONS
(i) GRANT/EXERCISE. The Board may grant Options to
Participants in number and on terms determined by the Board; provided,
however, that each Person serving as an Independent Trustee on the tenth
business day after final adjournment of the Company's annual meeting
convened on June 25, 1997 shall receive an Option to acquire 2,000 Shares,
and provided further that each Person serving as an Independent Trustee ten
business days after the final adjournment of each succeeding annual meeting
will be granted an Option to purchase 2,000 Shares.
Each grant of an Option must be evidenced by a Plan Agreement
specifying the Exercise Price, the duration of the Option, the number of
Shares to which the Option pertains, and such other provisions as the Board
determines. The Plan Agreement will also specify whether the Option is
intended to be an ISO within the meaning of Code Section 422, or
alternatively an NQSO not covered by Code Section 422; provided that an ISO
may only be granted to Employees. The Exercise Price for each grant of an
Option under this Plan may not be less than one hundred percent (100%) of
the Fair Market Value of a Share on the date of grant and provided further
that: (i) the Fair Market Value with respect to an ISO may not exceed the
maximum limitation in Section 422 of the Code in the first year that the
option may be exercised; provided that the incentive options exceeding the
limitations will be treated as non-qualified stock options; (ii) the
exercise price may not be less than 100% of Fair Market Value on the date
of grant with respect to an ISO granted to any individual who at the time
of grant owns more than 10% of the total voting power of the Company (a
"10% Owner").
Options granted hereunder will be exercisable at such times and
be subject to such restrictions and conditions as the Board may determine
in each instance. These terms and conditions need not be the same for each
grant or for each Participant. Each Option granted to an Employee will
expire at the time determined by the Board at the time of the grant;
provided, however, that no Option may be exercised later than the tenth
(10th) anniversary date of its grant, or in the case of ISOs granted to a
10% Owner, five (5) years.
(ii) PAYMENT. Options must be exercised by the delivery of a
written notice of exercise to the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by
full payment for the Shares. The Exercise Price must be paid in either:
(a) cash or its equivalent; (b) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the
total Exercise Price (provided that the Shares which are tendered must have
been held by the Participant for at least six (6) months prior to their
tender to satisfy the Option Price); or (c) by a combination of (a) and
(b). The Board also may allow cashless exercise as permitted under the
Federal Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Board determines to be
consistent with the Plan's purpose and applicable law. Subject to any
governing rules or regulations, as soon as practicable after receipt of a
written notification of exercise and full payment, the Company will deliver
Share certificates in an appropriate amount based upon the number of Shares
purchased under the Option(s) to the Participant, in the Participant's
name.
<PAGE>
(iii) RESTRICTIONS ON TRANSFERABILITY. The Board, in its sole
discretion, may impose restrictions on the transfer of any Shares acquired
pursuant to the exercise of an Option. Further, no ISO granted under the
Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. All ISOs granted to a Participant under the Plan will be
exercisable during the lifetime of the Participant, only by the Participant
or in the event of Disability by the Participant's legal representative.
Except as otherwise provided in a Participant's Plan Agreement, no NQSO
granted hereunder may be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. All NQSOs granted to a Participant hereunder will be
exercisable during the lifetime of the Participant, only the Participant or
in the event of Disability by the Participant's legal representative.
(iv) TERMINATION. Each Plan Agreement will set forth the
extent to which the Participant may exercise Options following termination
of the Participant's employment or trusteeship with the Company. These
provisions need not be uniform among all Plan Agreements and may reflect
distinctions based on the reasons for termination, all in the Board's
discretion.
(b) STOCK APPRECIATION RIGHTS
(i) GRANT/EXERCISE. The Board may grant SARs to any Employee
Participants in number and on terms and conditions determined by the Board.
The Board may grant Freestanding SARs, Tandem SARs or any combination of
these forms. The grant price of a Freestanding SAR will be equal to the
Fair Market Value of a Share on the date of grant of the SAR. The grant
price of Tandem SARs will be equal to the Exercise Price of the related
Option. Tandem SARs may be exercised for all or part of the Shares subject
to the related Option upon the surrender of the right to exercise the
equivalent portion of the related Option. A Tandem SAR may be exercised
only with respect to the Shares for which its related Option is then
exercisable. Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection with an ISO:
(a) the Tandem SAR will expire no later than the expiration of the
underlying ISO; (b) the value of the payout with respect to the Tandem SAR
may not exceed one hundred percent (100%) of the difference between the
Exercise Price of the underlying ISO and the Fair Market Value of the
Shares subject to the underlying ISO at the time the Tandem SAR is
exercised; and (c) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Exercise Price of
the ISO. Freestanding SARs may be exercised on terms and conditions set
forth by the Board. Each grant of an SAR will be evidenced by a Plan
Agreement specifying the grant price, the term of the SAR, and such other
provisions as the Board determines. The term of an SAR granted under the
Plan as determined by the Board, in it sole discretion, may not, in any
event, exceed ten (10) years.
(ii) PAYMENT. Upon exercise of an SAR, the Company will pay
the Participant an amount determined by multiplying:
(a) the difference between the Fair Market Value of a
Share on the date of exercise over the grant price; by
(b) the number of Shares with respect to which the SAR
is exercised.
At the Board's discretion, the Company may pay amounts due a
Participant on exercise of any SAR in cash, Shares of equivalent value, or
in some combination thereof. The Board's determination regarding the form
of SAR payout will be set forth in the Plan Agreement pertaining to the
grant of the SAR.
<PAGE>
(iii) TERMINATION. Each Plan Agreement relating to an SAR will
set forth the extent to which a Participant may exercise the SAR following
termination of the Participant's employment or trusteeship with the Company
and/or its Subsidiaries. These provisions will be determined in the
Board's discretion and need not be uniform among all SARs issued pursuant
to the Plan and may reflect distinctions based on the reasons for
termination.
(iv) RESTRICTIONS ON TRANSFERABILITY. Unless provided
otherwise in a Participant's Plan Agreement, no SAR granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. All SARs granted to a Participant under the Plan will be
exercisable during the Participant's lifetime, only by the Participant or
in the event of Disability by the Participant's legal representative.
(c) RESTRICTED STOCK
(i) GRANT. The Board may grant Shares of Restricted Stock to
any Employee Participants in amounts determined by the Board. Each grant
of Restricted Stock must be evidenced by a Plan Agreement specifying the
Restricted Period, the number of Shares of Restricted Stock granted, and
such other provisions as determined by the Board.
(ii) RESTRICTIONS. Except as provided in the Participant's
Plan Agreement, the Shares of Restricted Stock granted hereunder may not be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Restricted Period established
by the Board. All rights with respect to the Restricted Stock granted to a
Participant under the Plan will be available during the Participant's
lifetime, and only to the Participant. The Board may also impose such
other conditions and/or restrictions on any Shares of Restricted Stock as
it deems advisable, including requiring that Participants pay a stipulated
purchase price for each Share of Restricted Stock or that the Company or
individual achieve certain performance goals or other restrictions under
applicable federal or state securities laws. The Company may retain the
certificates representing Shares of Restricted Stock in the Company's
possession until all of the conditions and/or restrictions applicable to
these Shares have been satisfied.
Except as provided in the Participant's Plan Agreement, the
Shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan will become freely transferable by the Participant after the
last day of the applicable Restricted Period.
(iii) VOTING RIGHTS/DISTRIBUTIONS. Participants holding Shares
of Restricted Stock granted hereunder may be granted the right to exercise
full voting rights with respect to those Shares during the Restricted
Period. During this time, Participants holding Shares of Restricted Stock
may be credited with regular cash dividends paid in respect of the
underlying Shares. The Board may apply any restrictions to the dividends
that it deems appropriate. Without limiting the generality of the
preceding sentence, if the grant or vesting of Restricted Shares granted to
a Covered Employee is designed to comply with the requirements of the
Performance-Based Exception, the Board may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to the
Restricted Stock, such that the dividends and/or the Restricted Stock
maintain eligibility for the Performance-Based Exception.
<PAGE>
(iv) TERMINATION. Each Plan Agreement will set forth the
extent to which the Participant may receive unvested Restricted Stock
following termination of the Participant's employment or trusteeship with
the Company. These provisions will be determined in the Board's
discretion, need not be uniform among all Shares of Restricted Stock issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination; provided, however, that, except in the cases of terminations
connected with a Change in Control and terminations by reason of death or
disability, the vesting of Shares of Restricted Stock which qualify for the
Performance-Based Exception and which are held by Covered Employees will
occur at the time they otherwise would have, but for the termination.
(d) PERFORMANCE UNITS AND PERFORMANCE SHARES
(i) GRANT/VALUE. The Board may grant Performance Units
and/or Performance Shares to any Employee Participant in such amounts and
upon such terms as determined by the Board. Each Performance Unit will
have an initial value that is established by the Board at the time of
grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant. The Board will set
performance goals in its discretion which will determine the number and/or
value of Performance Units/Shares paid to a Participant. For these
purposes, the time period during which the performance goals must be met
will be called a "Performance Period."
(ii) EARNING OF PERFORMANCE UNITS/SHARES. After the
applicable Performance Period has ended, the holder of Performance
Units/Shares will be entitled to receive a payout on the number and value
of Performance Units/Shares earned by the Participant over the Performance
Period.
(iii) TIME AND FORM OF PAYMENT. Payment of Performance
Units/Shares earned by a Participant will be made in a single lump sum
following the close of the applicable Performance Period. The Board, in
its sole discretion, may cause the Company to pay any Performance
Units/Shares in the form of cash or in Shares (or in a combination thereof)
which have an aggregate Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable Performance Period.
Any such Shares may be granted subject to any restrictions deemed
appropriate by the Board. The determination of the Board with respect to
the form of payout will be set forth in the Participant's Plan Agreement.
At the Board's discretion, Participants may be entitled to
receive any dividends declared with respect to Shares which have been
earned in connection with the grant of Performance Units/Shares which have
been earned, but not yet distributed to Participants, provided that these
dividends will be subject to the same accrual, forfeiture, and payout
restrictions applicable to dividends earned in respect of Shares of
Restricted Stock. In addition, Participants may, at the discretion of the
Board, be entitled to exercise voting rights with respect to these Shares.
(iv) TERMINATION. Unless determined otherwise by the Board,
if a Participant is terminated by reason of death, disability, or
retirement during a Performance Period, the Participant will receive a
payout of the Performance Units/Shares which is prorated, as specified by
the Board in its discretion. If a Participant is terminated for any
reason, all Performance Units/Shares will be forfeited by the Participant
to the Company unless determined otherwise by the Board. Generally,
payment of Performance Units/Shares earned by a Participant will be made at
a time specified by the Board in its sole discretion and set forth in the
Participant's Plan Agreement. Notwithstanding the foregoing, with respect
to Covered Employees who retire during a Performance Period, payments will
be made at the same time as payments are made to Participants who did not
terminate employment during the applicable Performance Period.
<PAGE>
(v) RESTRICTIONS ON TRANSFER. Except as otherwise provided
in a Participant's Plan Agreement, Performance Units/Shares may not be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. All SARs granted to a Participant under the Plan will be
exercisable during the Participant's lifetime, only by the Participant or
in the event of Disability by the Participant's legal representative.
V. SHARES SUBJECT TO THE PLAN, MAXIMUM AWARDS, RESTRICTIONS AND
VALUATION.
(a) NUMBER OF SHARES
The stock subject to the Awards granted under this Plan will be the
Company's shares of beneficial interest, par value $0.01, and any other
stock or security resulting from the adjustment thereof or substitution
therefor. There shall be 1.0 million Shares reserved and available for
Awards granted hereunder. The Shares issued upon exercise of an Award may
be authorized and unissued Shares, or Shares issued and reacquired by the
Company.
(b) RELEASE OF SHARES
If any Award granted hereunder is cancelled, expires or terminates
for any reason without having been exercised in full, the Shares subject to
the Award will not thereafter be available for grant under this Plan except
if and to the extent issued to a Participant under the Plan in replacement
for outstanding Awards surrendered by the Participant.
(c) ADDITIONAL RESTRICTIONS ON SHARES
In addition to the restrictions on transfer which the Board may
impose on the Shares issuable on exercise of an Award or on the Award
itself, all Shares issued upon the exercise of an Award and the Awards will
be subject to applicable federal and state laws, rules and regulations
including, as may be required, approval by any government or regulatory
agency. The Company may cause any Shares or Awards to be properly marked
with a legend or other notation reflecting the limitations on transfer.
Fractional Shares will not be delivered, but will be rounded to the next
lower number of Shares.
(d) STOCK VALUATION
Any determination of the value or closing price of the Shares
required by the Plan shall be determined in accordance with the following
provisions, as applicable (which value or closing price shall be referred
to herein as the "Fair Market Value per Share," or for a group of Shares a
total "Fair Market Value"):
(i) if, on the relevant date, the Shares are traded on a
national or regional securities exchange or on the NASDAQ National Market,
on the basis of the closing sale price on the principal securities exchange
on which the Shares may then be traded or, if there is no sale on the
relevant date, then on the last previous day on which a sale was reported;
(ii) if, on the relevant date, the Shares are not listed on
any securities exchange or traded on the NASDAQ National Market, but
otherwise are publicly-traded and reported on NASDAQ, on the basis of the
mean between the closing bid and asked quotations in the over-the-counter
market as reported by NASDAQ; but if there are no bid and asked quotations
in the over-the-counter market as reported by NASDAQ on that date, then the
mean between the closing bid and asked quotations in the over-the-counter
market as reported by NASDAQ on the last previous day any bid and asked
prices were quoted; and
(iii) if, on the relevant date, the Shares are not publicly-
traded as described in (i) or (ii), in good faith by the Board.
<PAGE>
VI. PLAN AGREEMENTS, VESTING AND CANCELLATION PROVISIONS.
(a) PLAN AGREEMENTS
Each Award granted hereunder will be evidenced by a written Plan
Agreement specifying, among other things, the period for which the Award is
granted, the number of Shares covered by the Award, the Exercise Price and
the exercise schedule. The grant and exercise of Awards hereunder are sub-
ject to all applicable federal, state and local laws, rules and regulations
and, if required, any approvals by any government or regulatory agency.
(b) EXERCISE OF AWARDS
Except for Stock Options awarded to the Independent Trustees, Awards
granted hereunder will generally vest and be exercisable in installments as
follows: (i) to the extent of 33.3% of the number of Shares commencing on
the first anniversary of the date of grant; (ii) to the extent of an
additional 33.3% of Shares commencing on the second anniversary of the date
of grant; and (iii) to the extent of an additional 33.4% of Shares
commencing on the third anniversary of the date of grant; provided that the
Board may accelerate vesting in the event of a participant's death,
permanent disability or retirement in accordance with the Company's
retirement policy or where acceleration of vesting is, in the Board's
judgment, in the Company's best interest provided further that no Award
will vest if, to do so, would create a situation in which would result in
an "excess parachute payment" within the meaning of Section 280G of the
Code. Stock Options granted to the Independent Trustees hereunder will
vest and be exercisable in installments as follows: (i) to the extent of
50.0% of the number of Shares commencing on the first anniversary of the
date of grant; and (ii) to the extent of 50.0% of the number of Shares
commencing on the second anniversary of the date of grant. If the
Participant does not, in any given period, purchase all of the Shares
subject to the Award, the Participant's right to purchase any Shares not
purchased in the period will continue until the expiration or sooner
termination of the Award, except to the extent provided otherwise in the
Plan Agreement. Except as otherwise provided herein or in a Plan
Agreement, as a condition to the grant of an award to any Employee, the
Participant must remain in the continuous employ of the Company or its
subsidiaries for the period of time specified by the Board in the Plan
Agreement. To exercise an Award, the Participant must give written notice
to the Company's Vice President General Counsel at the Company's office at
Suite 2900, 150 South Wacker Drive, Chicago, Illinois 60606 (or the office
which is the successor main office or which is otherwise designated as the
office to which notice is to be given) of the number of Shares to be
acquired and make any arrangements with the Vice President General Counsel
as are acceptable to the Vice President General Counsel to satisfy the
Participant's federal, state and local tax withholding obligations and
satisfy the Participant's obligation under the Plan and the Plan Agreement.
(k) CANCELLATION OF AWARDS
Except as otherwise provided, Awards granted to Employees are
exercisable only prior to "termination of employment" as defined herein. A
Person will be considered to incur a "termination of employment" on the
latest date on which the Person no longer is, for whatever reason, an
officer or Employee of the Company or its subsidiaries ("Termination of
Employment"). Notwithstanding anything herein to the contrary, if a
Participant incurs a Termination of Employment due to death or permanent
and total disability or retirement in accordance with the Company's
retirement policy, all Awards granted under the Plan and outstanding on the
date of the Termination of Employment will be exercisable to the extent
provided in the Participant's Plan Agreement. Stock options granted to an
Independent Trustee are exercisable only so long as the individual con-
tinues to hold office; provided, however, that if the individual ceases to
hold office due to death, permanent and total disability or expiration of
the individual's term of office after the individual attains his 75th
birthday, all Awards granted under the Plan will be exercisable in
accordance with the individual's Plan Agreement.
<PAGE>
VII. PROVISIONS APPLICABLE TO THE PLAN.
(a) INVESTMENT REPRESENTATION
If the disposition of Shares acquired on exercise of any Award is not
covered by a then current registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), and is not otherwise exempt
from registration, the Shares will be restricted against transfer to the
extent required by the Securities Act or regulations thereunder. Each Plan
Agreement will contain a requirement that, on demand by the Board, the
individual exercising an Award will state in writing, as a condition
precedent to each exercise, that the Participant is acquiring the Shares
for investment only and not for resale or with a view to distribution. The
Board may set forth in a Plan Agreement other terms and conditions relating
to the registration or qualification of the Shares under federal or state
securities laws as it desires.
(b) EFFECT OF CERTAIN CHANGES
(i) ADJUSTMENTS. If the Company declares a stock dividend,
stock split, combination or exchange of shares, recapitalization or other
change in the capital structure (including, but not limited to, a split-up,
spin-off, split-off or distribution to Company stockholders other than a
normal cash dividend), sells all or a substantial portion of its assets (if
measured on either a stand-alone or consolidated basis), undertakes a
reorganization, rights offering, share offering, partial or complete
liquidation, or any other corporate transaction or event involving the
Company and having an effect similar to any of the foregoing, then the
Board may adjust or substitute, as the case may be, the number of Shares
available for Awards under the Plan, the number of Shares covered by
outstanding Awards, the exercise price per Share of outstanding Awards, any
target Fair Market Value per Share that the Shares are required to reach
for all or a portion of any Awards to vest, and any other characteristics
or terms of the Awards as the Board deems necessary or appropriate to
equitably reflect the effects of those changes to the Award holders;
provided, however, that any fractional Shares resulting from the adjustment
shall be eliminated by rounding to the next lower whole number of Shares
with appropriate payment for the fractional Shares as determined by the
Board. The Board may waive any limitations set forth in or imposed
pursuant to the terms and conditions of the Plan or a Plan Agreement so
that all Awards, from and after a date prior to the effective date of an
event specified above or a Change in Control (as defined herein), will be
exercisable in full.
(ii) DISSOLUTION, LIQUIDATION, TRUST SEPARATION OR DIVISION.
If the Board proposes to dissolve or liquidate the Company or the Company
is involved in any other corporate transaction or event and having effects
on the Awards similar to any of the foregoing, the Board may terminate each
outstanding Award granted under the Plan as of a date fixed by the Board;
provided, however, that not less than thirty (30) days prior written notice
of the date so fixed shall be given to each Participant (or Beneficiary),
who shall have the right, during the thirty (30) days preceding such date,
to exercise all Awards, whether or not otherwise exercisable, as to all or
any part of the Shares covered thereby.
(iii) MERGER, CONSOLIDATION, OR SALE OF ASSETS. If the Company
is merged into or consolidated with another entity under circumstances
where the Company is not the surviving corporation, or the Company sells or
otherwise disposes of all or a substantial portion of its assets or is
involved in any other transaction or event which has an effect on the
Shares or Awards similar to the foregoing, then all Awards outstanding
under the Plan will immediately vest and become exercisable at that time
and the Board may cancel all outstanding Awards as of the effective date of
any
<PAGE>
transaction or event; provided that not less than thirty (30) days
prior written notice of the date so fixed for cancellation shall be given
to each Participant (or Beneficiary), who shall have the right, during the
thirty (30) days preceding the effective date of the transaction or event,
to exercise all Awards, whether or not otherwise exercisable, as to all or
any part of the Shares covered thereby.
(iv) CERTAIN MERGERS AND CONSOLIDATIONS. The provisions of
this Section VII(b) will not apply to a merger or consolidation in which
the Company is the surviving entity and Shares are not converted into or
exchanged for stock, securities of any other entity, cash or any other
thing of value.
(v) DEFINITION OF SHARES. In the event of a change in the
Company's Shares as presently constituted, the Shares resulting from any
change shall be deemed to be the Shares within the meaning of the Plan.
(vi) DETERMINATION OF THE BOARD. The Board shall make all
adjustments required under this Section VII(b). All adjustments shall be
final, binding and conclusive.
(vii) LIMITATIONS. The grant of an Award pursuant to the Plan
will not in any way affect the Company's right or power to make
adjustments, reclassifications, reorganizations or changes to its capital
or business structures or to merge or to consolidate or to dissolve,
liquidate, sell or transfer all or part of its business or assets.
(c) WITHHOLDING OBLIGATIONS
The Participant or Beneficiary may satisfy any withholding obligation
under the Plan or a Plan Agreement by requesting the Company to withhold
and not transfer or issue Shares with a Fair Market Value equal to the
withholding obligation, otherwise issuable or transferable to the
Participant pursuant to the exercise of an Award. The provisions of this
Section VII(c) will apply and be available to any Participant who, on the
date of exercise of an Award may be subject, in the Company's opinion, to
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder (a "Section 16(b)
Optionee") only if, and to the extent that: (i) the Participant requests
withholding of the Shares not earlier than six (6) months subsequent to the
date of the grant of the Participant; or (ii) the election by the
Participant otherwise complies with the exemptive provisions of Rule 16b-3
under the Exchange Act as determined in the sole opinion of the Company's
General Counsel. If a Participant is issued Shares without making an
election as described in this Section VII(b) and if the date on which the
amount of tax withholding is determined is deferred until at least six
months after the exercise date of the Award, the Board may require as a
condition to issuance of Shares that the Participant tender to the Company
the proper number of Shares to satisfy the withholding obligation on the
date the tax withholding is determined. Any right or election of a
Participant under this Section VII(b) will be subject to the approval of
the Board. With respect to persons subject to Section 16 of the Exchange
Act, transitions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of this Plan or any action by the Board fails to so
comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Board.
(d) RIGHTS WITH RESPECT TO CONTINUANCE OF EMPLOYMENT
The Plan and any Award granted under the Plan will not confer upon
any Participant any right to continued employment by the Company or its
subsidiaries, nor shall the Plan or any Plan Agreement interfere in any way
with the right of the Company or its subsidiaries, subject to other
agreements with the Participant, to terminate a Participant's employment at
any time.
<PAGE>
(e) NOTICE TO THE COMPANY OF OPTIONEE'S ELECTION
Any Participant exercising an election under Section 83 of the Code
to have the receipt of Shares hereunder taxed currently, without regard to
the restrictions imposed under the Plan or a Plan Agreement or law, must
give notice to the Company of the election immediately upon making the
election.
(f) INDEMNIFICATION OF THE BOARD
In addition to such other rights of indemnification as they may have
as Board members, and to the extent permitted by law, the members of the
Board shall be indemnified and held harmless by the Company and each direct
or indirect subsidiary of the Company against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with
any appeal thereof, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan
or any Award granted thereunder, and against all amounts paid by them in
settlement thereof (provided the settlement is approved by the Company's
legal counsel) or paid by them in satisfaction of a judgment in any action,
suit or proceeding, except if the Board member is found, in a non-
appealable decision, to have been grossly negligent in performing its
duties or where the Board member's misconduct is found to be gross, wanton
or willful; provided that within sixty (60) days after institution of any
action, suit or proceeding a Board member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the
action.
(g) BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of
the Participant's death before the Participant receives any or all of the
benefits. Each designation will revoke all prior designations by the same
Participant, and must be in a form prescribed by the Company and will be
effective only when filed by the Participant in writing with the Company
during the Participant's lifetime. In the absence of any designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate.
(h) DEFERRALS
The Board may permit or require a Participant to defer the receipt of
cash or the delivery of Shares that would otherwise be due to the
Participant by virtue of the exercise of an Option or SAR, the lapse or
waiver of restrictions with respect to Restricted Stock, or the
satisfaction of any requirements or goals with respect to Performance
Units/Shares. If a Participant makes any deferral, the Board shall, in its
discretion, establish rules and procedures before paying the deferred
amounts.
(i) AMENDMENT, MODIFICATION AND TERMINATION
Subject to the terms of the Plan, the Board may alter, amend, suspend
or terminate the Plan in whole or in part. The Board may make adjustments
in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations or accounting principles, whenever the Board determines that
such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan; provided that no such adjustment may be
authorized to the extent that such authority would be inconsistent with the
requirements of Section 162(m) of the Code, as from time to time amended.
No termination, amendment or modification of the Plan shall adversely
affect in any material way any Award previously granted under the Plan,
without the written consent of the Participant holding the Award.
<PAGE>
(j) COMPLIANCE WITH CODE SECTION 162(m)
At all times when Code Section 162(m) is applicable, all Awards
granted under this Plan must comply with the requirements of Code
Section 162(m); provided, however, that if the Board determines that
compliance is not desired with respect to any Award or Awards available for
grant under the Plan, then compliance with Code Section 162(m) will not be
required. In addition, if changes are made to Code Section 162(m) to
permit greater flexibility with respect to any Award or Awards available
under the Plan, the Board may, subject to this Article 15, make any
adjustments it deems appropriate.
(k) PLAN BINDING ON SUCCESSORS
Except as provided herein, the Plan shall be binding on the
successors and assigns of the Company.
(l) INTERPRETATION AND GOVERNING LAW
Whenever necessary or appropriate in this Plan and where the context
admits, the singular term and the related pronouns shall include the plural
and the masculine and feminine gender. The Plan shall be construed and
enforced according to the internal laws of the State of Delaware.
VIII. DEFINITIONS
(a) "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations of the Exchange Act.
(b) "Award" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares or Performance
Units.
(c) "Beneficial Owner" or "Beneficial Ownership" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.
(d) "Board" or "Board of Trustees" means the Board of Trustees of
the Company.
(e) "Change of Control" shall mean that the members of the Board of
Trustees of the Company as of the date of the relevant Plan Agreement fail
to constitute a majority of the members of the Board of Trustees of the
Company; provided, however, that if a Participant has consented to the
appointment or election of an individual who becomes a new member of the
Board of Trustees, for purposes of this definition, the new member shall be
treated as if he were a member of the Board of Trustees as of the date of
the Plan Agreement.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" means any committee appointed by the Board to
administer Awards to Participants. Any such committee shall be comprised
entirely of Trustees.
(h) "Company" means Banyan Strategic Realty Trust, a Massachusetts
business trust, including any and all Subsidiaries and Affiliates, and any
successor thereto as provided herein.
(i) "Covered Employee" means a Participant who, as of the date of
vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.
<PAGE>
(j) "Disability" shall have the meaning ascribed to such term in
the Participant's governing long-term disability plan or, if no such plan
exists, at the discretion of the Board.
(k) "Effective Date" shall have the meaning ascribed to such term
in Section I hereof.
(l) "Employee" means any employee of the Company or its
Subsidiaries or Affiliates. Trustees who are employed by the Company shall
be considered Employees under this Plan.
(m) "Employee Participant" shall mean any Participant who is an
Employee.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.
(o) "Exercise Price" means the price at which a Share may be
purchased by a Participant pursuant to an Award.
(p) "Fair Market Value" shall have the meaning set forth in
Section V(D) hereof.
(q) "Freestanding SAR" means an SAR that is granted independently
of any Options.
(r) "Incentive Stock Option" or "ISO" means an option to purchase
Shares and which is designated as an Incentive Stock Option intended to
meet the requirements of Code Section 422.
(s) "Independent Trustee" shall mean a member of the Board who is
not an Employee or officer of the Company or its Subsidiaries and who is
not an Affiliate of the Company or its Subsidiaries except by virtue of
being a member of the Board.
(t) "Insider" shall mean an individual who is, on the relevant
date, an officer, trustee or ten percent (10%) beneficial owner of any
class of the Company's equity securities that is registered pursuant to
Section 12 of the Exchange Act, all as defined under Section 16 of the
Exchange Act.
(u) "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares which is not intended to meet the requirements of Code
Section 422.
(v) "Option" means an Incentive Stock Option or Nonqualified Stock
Option.
(w) "Participant" means an Employee or Trustee who has been
selected to receive an Award or who has outstanding an Award granted under
the Plan.
(x) "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).
(y) "Performance Share" means an Award of Shares subject to
performance standards.
(z) "Performance Unit" means an Award of Shares, options or other
securities subject to performance standards granted to a Participant.
(aa) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
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(bb) "Plan Agreement" means the individual agreements entered into
between the Company and each Participant receiving grants hereunder and
setting forth the terms and conditions applicable to the relevant Award.
(cc) "Restricted Period" means the period during which the transfer
of Shares of Restricted Stock is limited in some way and the Shares are
subject to a substantial risk of forfeiture, as provided herein.
(dd) "Restricted Stock" means an Award Shares subject to
restrictions on transfer granted to a Participant.
(ee) "Retirement" shall have the meaning ascribed to such term in
the Company's tax-qualified retirement plan or as determined by the Board.
(ff) "Shares" means the shares of beneficial interest of the
Company.
(gg) "Stock Appreciation Right" or "SAR" means an Award, granted
alone or in connection with a related Option, designated as an SAR.
(hh) "Subsidiary" means any corporation, partnership, joint venture,
or other entity in which the Company has a majority voting interest.
(ii) "Tandem SAR" means an SAR that is granted in connection with a
related Option, the exercise of which requires forfeiture of the right to
purchase a Share under the related Option (and when a Share is purchased
under the Option, the Tandem SAR shall similarly be canceled).
(jj) "Trustee" shall mean a member of the Company's Board of
Trustees.
