<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ALEXANDER HAAGEN PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ALEXANDER HAAGEN PROPERTIES, INC.
3500 SEPULVEDA BOULEVARD
MANHATTAN BEACH, CALIFORNIA 90266
________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
The Annual Meeting of Stockholders of Alexander Haagen Properties, Inc.
(the "Company") will be held at The Radisson Hotel, Suite 236, 1400 Parkview
Avenue, Manhattan Beach, California, on Thursday, May 15, 1997, at 4:00 p.m.,
for the purposes of (1) electing three directors to serve until the 2000 annual
meeting of stockholders and until their successors are elected and have
qualified, (2) approving the Amended and Restated 1993 Stock Option and
Incentive Plan, as amended by the First and Second Amendments thereto, and (3)
transacting such other business as may properly come before the Annual Meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on March 31, 1997 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting or any adjournments thereof.
In order to ensure your representation at the Annual Meeting, you are
requested to sign and date the enclosed proxy as promptly as possible and return
it in the enclosed envelope. If you attend the Annual Meeting and vote your
shares in person or file with the Secretary of the Company an instrument
revoking your proxy or a duly executed proxy bearing a later date, your proxy
will not be used.
All stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors,
/s/ Steven Jaffe
STEVEN JAFFE
Secretary
Manhattan Beach, California
April 14, 1997
<PAGE>
ALEXANDER HAAGEN PROPERTIES, INC.
________________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1997
This Proxy Statement is furnished to stockholders of Alexander Haagen
Properties, Inc., a Maryland corporation (the "Company"), in connection with the
solicitation of proxies in the form enclosed herewith for use at the Annual
Meeting of Stockholders (the "Annual Meeting") of the Company to be held on
Thursday, May 15, 1997 at 4:00 p.m. Such proxies will be used for the following
purposes: (1) electing three directors to serve until the 1999 annual meeting of
stockholders; (2) approving the Amended and Restated 1993 Stock Option and
Incentive Plan, as amended by the First and Second Amendments thereto; and (3)
transacting such other business as may properly come before the Annual Meeting.
The approximate date on which this Proxy Statement and accompanying form of
proxy will first be sent to the Company's stockholders is April 14, 1997.
This solicitation is made on behalf of the Board of Directors of the
Company. Costs of the solicitation will be borne by the Company. Directors,
officers and employees of the Company and its affiliates may also solicit
proxies by telephone, telegraph, fax or personal interview. The Company has
retained the services of Corporate Investor Communications, Inc., for a fee
estimated at $3,000 plus out-of-pocket expenses, to assist in the solicitation
of proxies. The Company will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy material to stockholders.
Holders of record of common stock, par value $.01 per share (the "Common
Stock"), of the Company as of the close of business on March 31, 1997 are
entitled to receive notice of, and to vote at, the Annual Meeting. The
outstanding Common Stock constitutes the only class of securities of the Company
entitled to vote at the Annual Meeting, and each share of Common Stock entitles
the holder thereof to one vote. Stockholders are not permitted to cumulate
their shares for the purpose of electing directors or otherwise. At the close
of business on March 31, 1997, there were 12,024,522 shares of Common Stock
issued and outstanding.
Unless contrary instructions are indicated on the proxy, all shares
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted at the Annual Meeting for the
nominees named below for election as Directors. With respect to any other
business which may properly come before the Annual Meeting and be submitted to a
vote of stockholders, proxies received by the Board of Directors will be voted
in accordance with the best judgment of the designated proxy holders. A
stockholder may revoke his or her proxy at any time before exercise by
delivering to the Secretary of the Company a written notice of such revocation,
by filing with the Secretary of the Company a duly executed proxy bearing a
later date, or by voting in person at the Annual Meeting.
Shares represented by proxies that reflect abstentions or "broker non-
votes" (i.e., shares held by a broker or nominee which are represented at the
Annual Meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Directors will be elected by a favorable vote of a majority of the
shares cast at the Annual Meeting, providing that a quorum is present. All
other proposals to come before the Annual Meeting require the approval of a
majority of the votes cast regarding the proposal. Therefore, as to any
particular proposal, including the election of directors, abstentions will have
the same effect as a vote against that proposal and broker non-votes will not be
counted as votes for or against the proposal, and will not be included in
counting the number of votes necessary for approval of the proposal.
The principal executive offices of the Company are located at 3500
Sepulveda Boulevard, Manhattan Beach, California 90266. The Company's telephone
number is (310) 546-4520.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Company is currently comprised of ten members
divided into three classes serving staggered terms of three years each. Pursuant
to the Company's Charter and Bylaws, the term of office of one class of
directors expires each year and at each annual meeting the successors of the
class whose term is expiring in that year are elected to hold office for a term
of three years and until their successors are elected and have qualified. The
current terms of three directors expire in 1997, three expire in 1998 and three
expire in 1999.
In the absence of instructions to the contrary, the persons named as proxy
holders in the accompanying proxy intend to vote in favor of the election of the
three nominees designated below, all of whom are currently directors of the
Company, to serve until the 2000 annual meeting of stockholders and until their
respective successors shall have been elected and qualified. The Board of
Directors expects that each of the nominees will be available to serve as a
director, but if any such nominee should become unavailable for election, it is
intended that the shares represented by the proxy will be voted for such
substitute nominee as may be designated by the Board of Directors.
Under the Company's Bylaws, nominations of persons for election to the
Board, other than those made by or at the direction of the Board, may be made at
the Annual Meeting only if pursuant to a timely notice delivered or mailed to
the Secretary of the Company. To be timely, a stockholder's notice must be
delivered to or mailed and received at the Company's principal executive offices
not more than 90, nor less than 60 days prior to the Annual Meeting or the tenth
day following the day on which public disclosure of the Annual Meeting date was
made, whichever is later. A notice of nomination must set forth certain
information as required under the Company's Bylaws.
NOMINEES FOR ELECTION AS DIRECTOR
<TABLE>
<CAPTION>
NAME AGE PRESENT POSITION WITH THE COMPANY DIRECTOR SINCE
- ---- --- --------------------------------- --------------
<S> <C> <C> <C>
Alexander Haagen, Sr. 77 Chief Executive Officer, 1993
President, Chairman of the
Board and Director
James Hankla 57 Director 1996
Fred L. Riedman 66 Director 1994
</TABLE>
ALEXANDER HAAGEN, SR. has served as Chief Executive Officer, President and
Chairman of the Board of the Company since its formation in September 1993. Mr.
Haagen has served as Chairman of the Board and Chief Executive Officer of The
Alexander Haagen Company, Inc. since 1963. He is also the Chief Executive
Officer, President and Chairman of the Board of Haagen Property Management,
Inc., a property management company which provides services to the Company. Mr.
Haagen served as a member of the board of directors of the California Museum of
Science and Industry from 1983 to 1995 and was a Commissioner of the Los Angeles
Memorial Coliseum Commission from 1985 to 1988.
JAMES HANKLA has served as a Director of the Company since his appointment
on October 7, 1996. Mr. Hankla has served as Long Beach city manager since
1987. Mr. Hankla served as chief administrative officer of Los Angeles County
from 1985 to 1987 and as chief of the Los Angeles County Community Development
Commission from 1982 to 1985. Mr. Hankla serves on the Boards of the Western
Governmental Research Association, the Los Angeles County Economic Development
Corporation, the Western Region Boy Scouts of America, the National Eagle Scout
Association, and the Boys' and Girls' Club Foundation. Mr.
2
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Hankla is a member and past president of the National Council for Urban Economic
Development, a member of the Urban Land Institute, a member of the National
Association of Review Appraisers and Mortgage Underwriters, and a member of
Lambda Alpha, an honorary real estate society.
FRED L. RIEDMAN has served as a Director of the Company since February,
1994. Mr. Riedman has been a partner with the law firm of Riedman, Dalessi &
Dybens for more than the last five years. Mr. Riedman is a trustee and member
of the Executive Committee of the California Museum Foundation. Mr. Riedman has
also served on the Board of Directors of the Aquarium of the Pacific at Long
Beach, California since 1995.
<TABLE>
<CAPTION>
DIRECTORS CONTINUING IN OFFICE
DIRECTOR TERM
NAME AGE SINCE EXPIRES
- ---- --- -------- -------
<S> <C> <C> <C>
R. Bruce Andrews................. 56 1994 1998
Tom Bradley...................... 79 1994 1999
Fred W. Bruning.................. 46 1993 1999
Warren D. Fix.................... 58 1994 1998
Alexander Haagen, III............ 54 1993 1998
Warner Heineman.................. 74 1994 1999
</TABLE>
R. BRUCE ANDREWS has served as a Director of the Company since February
1994. Mr. Andrews has been the President and Chief Executive Officer of
Nationwide Health Properties, a REIT specializing in health care properties,
since September 1989. He served as Chief Financial Officer, Chief Operating
Officer and a Director of American Medical International, Inc., an operator of
health care facilities, from 1970 to 1986. Mr. Andrews is director of ARV
Assisted Living Inc.
TOM BRADLEY has served as a Director of the Company since February 1994.
Mr. Bradley served as Mayor of the City of Los Angeles from 1972 to 1992 and is
presently of counsel to the law firm of Brobeck, Phleger & Harrison.
FRED W. BRUNING has served as Senior Vice President Major Tenant Leasing
and Development, since the formation of the Company in September 1993. He also
serves as Senior Vice President of Haagen Property Management, Inc. Mr. Bruning
served as Chief of Staff of The Alexander Haagen Company, Inc. from 1985 to
1993. Prior to that time, Mr. Bruning was Vice President of Development for
Price Development Company, a developer of regional and community shopping
centers in the western United States, from 1984 to 1985. Mr. Bruning served as
Vice President of Development for the Torrance Company from 1983 to 1984 and as
Territorial Real Estate Director for Sears Roebuck & Co. from 1980 to 1983. Mr.
Bruning is a member of the California Bar Association, the International Council
of Shopping Centers and Lambda Alpha, an honorary real estate society.
WARREN D. FIX has served as a Director of the Company since February 1994.
Mr. Fix currently serves as Executive Vice President, Chief Financial Officer
and a Director of Candlewood Hotel Company, Inc. From 1992 to 1995, Mr. Fix was
a partner with The Contrarian Group, a private investment and management
company. Mr. Fix was the President/Chief Operating Officer of The Pacific
Company, a real estate company, from 1989 to 1992 and Senior Vice
President/Chief Financial Officer of The Irvine Company from 1964 to 1989. Mr.
Fix is a member of American and California Societies of Certified Public
Accountants, the Financial Executives Institute and the Urban Land Institute.
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ALEXANDER HAAGEN III has served as Vice Chairman of the Company since its
formation in September 1993. He also serves as Vice Chairman of Haagen Property
Management, Inc. Mr. Haagen was a Vice President and director of The Alexander
Haagen Company, Inc. from 1963 where he was primarily responsible for
architecture, construction and property management functions. Mr. Haagen served
on the Lake Tahoe Regional Planning Agency from 1983 to 1988, and the San
Jacinto Winter Park and Tram Commission from 1990 to 1992, and has served on the
Advisory Board of the Gene Autry Western Heritage Museum since 1991. Mr. Haagen
is the son of Alexander Haagen, Sr. and Charlotte Haagen.
WARNER HEINEMAN has served as a Director of the Company since February,
1994. Mr. Heineman has been a Senior Advisor, 1st Business Bank, Los Angeles
since 1992. Mr. Heineman served as Senior Vice President of Bank of Los Angeles
from 1989 to 1992, as Senior Vice President of City National Bank from 1981 to
1988, and as Vice Chairman and a director of Union Bank, Los Angeles from 1943
to 1981. Mr. Heineman is a Trustee of Southwestern University School of Law, a
member of the Board of Advisors of the University of California Los Angeles
Medical Center and a member of the Board of Visitors of the University of
California Los Angeles School of Medicine.
BOARD MEETINGS; COMMITTEES AND COMPENSATION
Prior to February 9, 1994, the Board of Directors consisted of four
persons: Messrs. Haagen, Sr., Haagen III, and Bruning and Seymour Kreshek. Upon
recommendation of the Board of Directors, on December 9, 1993 the stockholders
of the Company approved the Amended and Restated Charter of the Company which,
among other things, increased the size of the Board to nine members divided into
three equal classes. As of February 9, 1994, the vacancies resulting from the
increased size of the Board were filled by Messrs. Andrews, Bradley, Fix,
Heineman and Riedman (the "Independent Directors"). On August 12, 1996, the size
of the Board was increased to ten members, and on October 7, 1996, Mr. Hankla
(another "Independent Director") was appointed to fill the resulting vacancy. In
February, 1997, Mr. Kreshek, who had served as Senior Vice President--Chief
Financial Officer, Treasurer and Director of the Company, resigned.
Any transactions between the Company and its affiliates, including the
predecessor affiliate partnerships which transferred properties to the Company
as part of its formation in December 1993, require the approval of the
Independent Directors. See "Certain Relationships and Related Transactions."
Certain other significant actions of the Company, including transactions
involving a change of control of the Company, amendments to the Company's
Charter or Bylaws or the issuance of securities or rights with certain special
voting or other rights, require the approval of a minimum of one more than a
majority of all directors.
The Board of Directors met five times during the year ended December 31,
1996. The Board of Directors has an Audit Committee, an Executive Committee and
a Compensation Committee. There is no standing Nominating Committee.
Audit Committee. The Audit Committee consists of three Independent
Directors. Messrs. Fix (Chairman), Andrews and Heineman are the current members
of the Audit Committee. The Audit Committee was established to make
recommendations concerning the engagement of independent auditors, review with
independent auditors the plans and results of the audit engagement, approve
professional services provided by the independent auditors, review the
independence of the independent auditors, consider the range of audit and non-
audit fees, and to review the adequacy of the Company's internal accounting
controls. The Audit Committee was created in February 1994 and held two meetings
in 1996.
Executive Committee. Messrs. Andrews (Chairman), Haagen, Sr., Bruning and
Heineman currently serve on the Executive Committee. Subject to the Company's
conflict of interest policies and certain other limitations, the Executive
Committee has been granted the authority to acquire and dispose of real property
4
<PAGE>
and the power to authorize, on behalf of the full Board of Directors, the
execution of certain contracts and agreements. The Executive Committee was
created in February 1994 and did not meet separately in 1996.
Compensation Committee. Prior to February 25, 1994, the Compensation
Committee consisted of Alexander Haagen, Sr., Seymour Kreshek and Alexander
Haagen III. On February 25, 1994, such persons resigned and were replaced by
Messrs. Heineman (Chairman), Bradley and Riedman. On February 27, 1997, R.
Bruce Andrews was appointed to replace Mr. Bradley on the Compensation
Committee. The Compensation Committee determines compensation for the Company's
executive officers and administers grants of stock options pursuant to the
Amended and Restated 1993 Stock Option and Incentive Plan for Officers,
Directors and Key Employees of Alexander Haagen Properties, Inc., Alexander
Haagen Properties Operating Partnership, L.P. and Haagen Property Management,
Inc. (the "Restated Plan"). The Compensation Committee held one meeting in
1996.
The Company pays Independent Directors an annual fee of $12,000 plus a fee
of $1,000 for attendance at each meeting of the Board of Directors, but not for
committee meetings. Each Independent Director is also reimbursed for expenses
incurred in attending meetings (including committee meetings). Officers of the
Company who are directors are not paid any director fees. Pursuant to the
Restated Plan, upon initial election to the Board of Directors, each Independent
Director of the Company receives an initial grant of options to purchase 3,000
shares of Common Stock having an exercise price equal to the fair market value
on the date of grant, and on each January 1st during the term of the Restated
Plan, each then serving Independent Director automatically receives a grant of
options to purchase 1,000 shares of Common Stock at an exercise price equal to
fair market value on the date of grant. Subject to stockholder approval, on
February 27, 1997, each then current Independent Director received 1,000 shares
of restricted stock having a purchase price of $.01 per share.
PROPOSAL NO. 2
APPROVAL OF
AMENDED AND RESTATED 1993 STOCK OPTION AND INCENTIVE PLAN,
AS AMENDED BY FIRST AND SECOND AMENDMENTS THERETO
On September 21, 1993, the Company's Board of Directors adopted The 1993
Stock Option and Incentive Plan for Officers, Directors and Key Employees of
Alexander Haagen Properties, Inc., Alexander Haagen Properties Operating
Partnership, L.P. and Haagen Property Management, Inc. (the "1993 Plan"). The
1993 Plan was amended on August 14, 1995, subject to stockholder approval, and
was amended and restated on February 28, 1996, subject to stockholder approval,
in the form of the Restated Plan. The Restated Plan was approved by
stockholders on May 24, 1996. The Restated Plan was amended on November 19,
1996 in the form of the First Amendment to the Restated Plan (the "First
Amendment") and the Restated Plan was amended on February 27, 1997, subject to
stockholder approval, in the form of the Second Amendment to the Restated Plan
(the "Second Amendment"). The First and Second Amendments are summarized below.
The summary of the Restated Plan below, which incorporates the changes made
pursuant to the First and Second Amendments, is qualified by reference to the
Restated Plan itself. The summary of the First Amendment below is qualified by
reference to the First Amendment itself. The summary of the Second Amendment
below is qualified in its entirety by reference to the Second Amendment itself,
which appears as Exhibit "A" to this proxy statement. Copies
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<PAGE>
of the Second Amendment will be available at the Annual Meeting and can also be
obtained by making a written request to the Company's Secretary.
The Board recommends the approval of the Restated Plan, as amended by the
First and Second Amendments thereto. If the Restated Plan, as so amended, is
not approved by stockholders, the Restated Plan, as amended by the First
Amendment, shall continue in effect as it existed immediately prior to the
Second Amendment.
REASONS FOR ADOPTION OF THE SECOND AMENDMENT
The Compensation Committee has determined that it is advisable to provide
non-employee directors of the Company (for the purposes of this Proposal 2,
"Independent Directors") with additional incentive and to retain the services of
the Independent Directors by offering them additional opportunity to own stock
in the Company. The Compensation Committee has also determined that it is
advisable to continue to provide stock-based compensation to key employees and
directors, thereby providing such employees and directors with additional
incentive to further the growth, development and financial success of the
Company and to enable the Company, Alexander Haagen Properties Operating
Partnership, L.P. (the "Operating Partnership"), Haagen Property Management,
Inc. ("HPMI") and their respective subsidiaries to obtain and retain the
services of such key employees and directors. Accordingly, on February 27,
1997, the Compensation Committee, subject to stockholder approval, amended the
Restated Plan (i) to increase the number of shares subject to the Restated Plan
by 500,000 shares, (ii) to provide each Independent Director 1,000 shares of
restricted stock which vest in three installments on February 27, 1998, February
27, 1999 and February 27, 2000, subject to continued service as a member of the
Board of Directors and (iii) to provide that the Board in its sole and absolute
discretion may grant restricted stock to Independent Directors and may determine
the number of shares to be subject thereto and the terms and conditions thereof,
consistent with the Restated Plan. Therefore, the Board recommends that the
Restated Plan, as amended by the First and Second Amendments thereto, be
approved.
DESCRIPTION OF THE SECOND AMENDMENT TO THE RESTATED PLAN
Subject to shareholder approval, the Second Amendment to the Restated Plan
(i) increases the number of shares subject to the Restated Plan by 500,000, (ii)
provides each Independent Director 1,000 shares of restricted stock as of
February 27, 1997 which vest in three installments on February 27, 1998,
February 27, 1999 and February 27, 2000, subject to continued service as a
member of the Board of Directors, and (iii) provides that the Board in its sole
and absolute discretion may grant restricted stock awards to Independent
Directors and may determine the number of shares to be subject thereto and the
terms and conditions thereof, consistent with the Restated Plan.
Pursuant to the Second Amendment to the Restated Plan, restricted stock may
be sold to Independent Directors at various prices (but not below par value
unless otherwise permitted by applicable state law); provided, however, that the
purchase price of each share of restricted stock awarded to Independent
Directors on February 27, 1997 is $.01 per share. Restricted stock may be made
subject to such restrictions as may be determined by the Board; provided,
however, that each share of restricted stock awarded to Independent Directors on
February 27, 1997 (including any shares received by holders thereof with respect
to such shares of Restricted Stock as a result of stock dividends, stock splits
or any other form of recapitalization) shall be subject to the following
restrictions until such restrictions lapse: Neither the restricted stock nor any
interest or right therein or part thereof shall be liable for the debts,
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<PAGE>
contracts, or engagements of the restricted stockholder or his successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy) and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that, subject to the Ownership Limit
(i.e., the limit set forth in the Company's Amended and Restated Charter which
---
provides that no person may own more than 9.8% (in value or in number of shares,
whichever is more restrictive) of the outstanding Common Stock (as defined in
the Company's Amended and Restated Charter) of the Company), such restrictions
shall not prevent transfers by will or by the applicable laws of descent and
distribution. Such restrictions on each share of restricted stock awarded to an
Independent Director on February 27, 1997 (including any shares received by
holders thereof with respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization) shall lapse in
the following cumulative installments, provided that the Independent Director
has not had a Termination of Directorship prior to the relevant vesting date:
(i) with respect to 333 of such shares on February 27, 1998, (ii) with respect
to 333 of such shares on February 27, 1999, and (iii) with respect to 334 of
such shares on February 27, 2000. Restricted Stock may not be sold or
encumbered until restrictions are terminated, expire or lapse with respect to
the restricted stock to be sold or encumbered.
DESCRIPTION OF THE FIRST AMENDMENT TO THE RESTATED PLAN
The First Amendment to the Restated Plan amended the provisions of the
Restated Plan regarding the composition of the committee that administers the
Restated Plan to provide that such committee shall consist solely of two or more
directors appointed by and holding office at the pleasure of the Board, each of
whom is both a "non-employee director" as defined by Rule 16b-3 of the
Securities Exchange Act of 1934 ("Rule 16b-3") and an "outside director" for
purposes of Section 162(m) of the Code. The First Amendment also revised the
provisions regarding the transfer of shares upon the exercise of an option by an
employee of HPMI, the Operating Partnership or their respective subsidiaries, or
by an HPMI Director and the Company's contributions to the Operating Partnership
with respect to the exercise of options (such provisions are described below
under the heading "Exercise of Options"). In addition, the First Amendment
revised certain timing requirements with respect to the payment of the exercise
price or withholding taxes with Common Stock issuable upon the exercise of an
option so that such requirements do not apply to awards granted on or after
November 19, 1996; such requirements are no longer required pursuant to Rule
16b-3.
DESCRIPTION OF THE AMENDED AND RESTATED 1993 OPTION AND INCENTIVE PLAN
The Restated Plan consists of three plans: (i) one for the benefit of the
key employees of the Company and its subsidiaries; (ii) one for the benefit of
Independent Directors and (iii) one for the benefit of key employees of the
Operating Partnership and its subsidiaries, the key employees of HPMI and its
subsidiaries and the directors of HPMI ("HPMI Directors").
The principal purposes of the Restated Plan are to provide incentives for
officers, key employees and directors of the Company, the Operating Partnership
and HPMI and their respective subsidiaries through granting of options and
restricted stock thereby providing them with incentive to further the Company's
development and financial success, and to enable the Company, HPMI and the
Operating Partnership to obtain and retain the services of directors and key
employees considered essential to the long range success of the Company.
7
<PAGE>
Under the Restated Plan prior to the Second Amendment, not more than
850,000 shares of Common Stock (initially shares of the Company's common stock,
par value $.01 per share, as presently constituted) are authorized for issuance
upon exercise of options or as restricted stock awards. The Second Amendment,
if approved by stockholders, would increase the number of shares so authorized
by 500,000, bringing the total number of shares so authorized to 1,350,000.
Furthermore, the maximum number of shares which may be subject to options
granted under the Restated Plan to any individual in any three-year period
cannot exceed 270,000 (the "Award Limit"). As of December 31, 1996, 245,396
shares remained available for future awards under the Restated Plan. As of
December 31, 1996, a total of 604,268 shares were subject to outstanding stock
options held by approximately 113 officers, directors, and key employees, of
which 297,449 were exercisable. As of December 31, 1996, 336 shares were
exercised. Such options are currently outstanding under the Restated Plan.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
Amended and Restated 1993
Option and Incentive Plan
-------------------------
Name and Position Dollar Value ($) (a) Number of Units(#)
- ----------------- ------------------- -----------------
<S> <C> <C>
ALEXANDER HAAGEN, SR.(b) - -
Chairman, Chief Executive Officer
and President
ALEXANDER HAAGEN III (b) - -
Vice Chairman
FRED W. BRUNING (b) - -
Senior Vice President--Major Tenant
Leasing and Development
STUART J.S. GULLAND (b) - -
Senior Vice President -- Chief
Financial Officer and Treasurer
STEVEN M. JAFFE (b) - -
Senior Vice President
and General Counsel
CHARLOTTE HAAGEN (b) - -
Vice President
SEYMOUR KRESHEK (b)(c) - -
Former Senior Vice President -- Chief
Financial Officer and Treasurer
Executive Group (b) - -
Non-Executive Director (b) - 83,000 (d)
Group
Non-Executive Officer (b) - -
Employee Group
</TABLE>
_________________________
8
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(a) The dollar value of the benefits is not determinable and depends on the fair
market value of the Company's Common Stock on the date of exercise of the
option or vesting of the restricted stock as compared to the fair market
value of the Company's Common Stock on the date of grant.
(b) Except with respect to the Non-Executive Director Group, the benefits or
amounts to be received under the Restated Plan by such individual or group
are not determinable. The benefits or amounts to be received by the Non-
Executive Director Group are determinable only to the extent the Restated
Plan provides for automatic grants to such individuals; such individuals may
also receive discretionary grants of restricted stock, the benefits or
amounts of which are not determinable.
(c) Mr. Kreshek resigned from the Company effective February 28, 1997.
(d) Options for 15,000 shares (3,000 per Independent Director) having an
exercise price of $18 per share were granted on February 9, 1994, at which
time the fair market value of the Common Stock was less than $18 per share.
Options for 1,000 shares (200 per Independent Director) having an exercise
price of $15.875 per share were granted on January 1, 1995, at which time
the fair market value of the Common Stock was $15.875 per share. Options for
50,000 shares (10,000 per Independent Director) having an exercise price of
$11.625 per share were granted on August 14, 1995, at which time the fair
market value of the Common Stock was $11.625 per share. Options for 5,000
shares (1,000 per Independent Director) having an exercise price of $12.25
per share were granted on January 1, 1996, at which time the fair market
value of the Common Stock, for purposes of the Restated Plan, was $12.25 per
share. Options for 6,000 shares (1,000 per Independent Director) having an
exercise price of $14.75 per share were granted to Independent Directors on
January 1, 1997, at which time the fair market value of the Common Stock,
for purposes of the Restated Plan, was $14.75 per share. Subject to
stockholder approval, 6,000 shares (1,000 per Independent Director) of
restricted stock having a purchase price of $.01 per share were granted to
Independent Directors on February 27, 1997 at which time the fair market
value of the Common Stock, for purposes of the Restated Plan was $15.50.
The options and shares of restricted stock received by each of the
following individuals and groups of individuals under the Restated Plan since
its adoption are as follows:
(1) Each of the following Named Executive Officers have received
aggregate options for 82,500 shares: Mr. Alexander Haagen, Sr.,
Chairman, Chief Executive Officer and President; Mr. Alexander Haagen
III, Vice Chairman; Seymour Kreshek, Former Senior Vice President-
Chief Financial Officer and Treasurer(a); Fred W. Bruning, Senior Vice
President-Major Tenant Leasing and Development; Edward Krasnove,
Former Senior Vice President, General Counsel and Secretary(b);
Charlotte Haagen, Vice President; and Stuart J.S. Gulland Senior Vice
President-Chief Financial Officer and Treasurer. In addition,
Alexander Haagen, Sr. received 30,000 shares of restricted stock;
Alexander Haagen III received 20,000 shares of restricted stock; Fred
W. Bruning received 5,000 shares of restricted stock; Charlotte Haagen
received 10,000 shares of restricted stock; and Stuart J.S. Gulland
received 5,000 shares of restricted stock;
(2) Steven M. Jaffe, Senior Vice President, General Counsel and
Secretary, has received options for 29,430 shares and 5,000 shares of
restricted stock;
(3) all current executive officers as a group have received aggregate
options for 441,930 shares;
(4) all current directors who are not officers as a group have
received aggregate options for 83,000 and 6,000 shares of restricted
stock;
(5) all employees other than executive officers have received
aggregate options for 57,972 shares.
_______________
(a) Mr. Kreshek resigned from the Company effective February 28, 1997, and his
options, if not exercised, will expire 90 days thereafter.
(b) Mr. Krasnove resigned from the Company and HPMI effective April 5, 1996 to
return to private practice, and his options have expired.
On May 5, 1995, options for 20,000 shares were granted to non-officer
employees (such options are included in the options set forth in item (5)
above). On August 14, 1995, options for 192,500 shares were
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granted to seven officers of the Company (such options are included in the
options set forth in items (1) and (3) above) and options previously granted to
non-officer employees on December 30, 1994 were repriced. No options were
granted in 1996. On April 3, 1997, the closing price of a share of the Company's
Common Stock on the American Stock Exchange was $14.125.
The shares available under the Restated Plan upon exercise of stock
options, and for issuance as restricted stock, may be either previously unissued
shares or treasury shares, and may be equity securities of the Company other
than Common Stock, excluding any preferred stock and any warrants, options or
other rights to purchase Common Stock. Initially, such Common Stock shall be
shares of the Company's common stock, par value $.01 per share. Subject to
certain limitations, the Restated Plan provides for appropriate adjustments in
the number and kind of shares issuable under the Restated Plan, under the Award
Limit and subject to outstanding grants under the Restated Plan, and to the
exercise price of options, in the event that the Compensation Committee (or the
Board, in the case of awards granted to Independent Directors) determines that
any dividend or other distribution (whether in the form of cash, Common Stock,
other securities, or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event, in
the Committee's discretion (or in the case of awards granted to Independent
Directors, the Board's discretion), affects the Common Stock such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Restated Plan or with respect to an option or
restricted stock award.
Subject to the Restated Plan's limit on the maximum number of shares which
may be issued under the Plan, the following shares shall continue to be, or
shall again become, available for issuance under the Restated Plan: (i) any
shares which were subject to the unexercised portion of a stock option that
expires or is cancelled; (ii) any shares of restricted stock that are forfeited
by the grantee or repurchased by the Company; (iii) shares of Common Stock which
are delivered to or withheld by the Company upon the exercise of any option, in
payment of the exercise price thereof, and (iv) any shares subject to options
which are adjusted pursuant to certain corporate transactions or events and
become exercisable with respect to shares of stock of another corporation;
provided, however, that no shares shall again be available for issuance if such
action would cause an option intended to be an incentive stock option under
Section 422 of the Code to fail to so qualify.
ADMINISTRATION
As amended by the First Amendment, the Restated Plan is administered by the
Compensation Committee, or another committee or a subcommittee of the Board
assuming the functions of the Compensation Committee under the Restated Plan,
(any such committee administering the Restated Plan is hereinafter referred to
as the "Committee") consisting solely of two or more directors appointed by and
holding office at the pleasure of the Board, each of whom is both a "non-
employee director" as defined by Rule 16b-3 and an "outside director" for
purposes of Section 162(m) of the Code.
The Committee is authorized to select from among the eligible employees and
HPMI Directors the individuals to whom options and restricted stock are to be
granted and to determine the number of shares to be subject thereto and the
terms and conditions thereof, consistent with the Restated Plan.
Subject to stockholder approval, pursuant to the Second Amendment, the
Board is authorized to select from the Independent Directors the individuals to
whom restricted stock is to be granted and to determine the
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number of shares to be subject to such awards and the terms and conditions
thereof, consistent with the Restated Plan.
The Committee is also authorized to interpret the Restated Plan and the
options and restricted stock thereunder, to adopt such rules for the
administration, interpretation and application of the Restated Plan as are
consistent therewith and to interpret, amend or revoke any such rules. The Board
shall conduct the general administration of the Restated Plan with respect to
awards granted to Independent Directors. In addition, the Board, in its absolute
discretion, may at any time exercise any and all rights or duties of the
Committee under the Restated Plan except with respect to matters which under
Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the sole and absolute discretion of
the Committee.
Members of the Committee will receive such compensation for their services
as may be determined by the Board. All expenses and liabilities that the
members of the Committee incur in connection with the administration of the
Restated Plan will be borne by the Company.
ELIGIBILITY TO RECEIVE OPTIONS AND RESTRICTED STOCK
Subject to the Award Limit and the Ownership Limit, HPMI Directors are
eligible to receive options and officers and other employees of the Company,
HPMI, the Operating Partnership or any of their respective subsidiaries who are
determined by the Committee to be key employees are eligible to receive options
and restricted stock grants under the Restated Plan. If the Property Management
Agreement between the Operating Partnership and HPMI, or any successor agreement
thereto, is terminated, HPMI Directors and employees of HPMI will no longer be
eligible to receive awards under the Restated Plan. Subject to the Award Limit
and the Ownership Limit, each Independent Director of the Company shall be
eligible to be granted options as described below. Subject to stockholder
approval, pursuant to the Second Amendment subject to the Award Limit and the
Ownership Limit, each Independent Director of the Company shall be eligible to
be awarded restricted stock and each Independent Director as of February 27,
1997 shall receive 1,000 shares of restricted stock.
The approximate number of individuals in each class eligible to participate
in the Restated Plan is as follows: (i) seven officers and other employees of
the Company and its subsidiaries (except the Operating Partnership and HPMI);
(ii) 107 officers and other employees of HPMI and its subsidiaries; (iii) 5 HPMI
Directors; (iv) zero officers and other employees of the Operating Partnership
and its subsidiaries (except HPMI); and (v) six Independent Directors.
More than one option may be granted to a key employee or HPMI Director, but
the options granted may not exceed the Award Limit or the Ownership Limit and
the restricted stock granted may not exceed the Ownership Limit. Subject to
stockholder approval, pursuant to the Second Amendment, more than one award of
restricted stock may be granted to an Independent Director but such awards may
not exceed the Ownership Limit.
AWARDS UNDER THE RESTATED PLAN
Awards to Employees and HPMI Directors
The Restated Plan provides that, subject to the Award Limit and the
Ownership Limit, the Committee may grant or issue stock options or restricted
stock, or any combination thereof, to any eligible employee whom the Committee
determines is a key employee and may grant options to any HPMI Director. Each
grant or issuance will be set forth in a separate agreement between the person
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<PAGE>
receiving the award and the Company and will indicate the type, terms and
conditions of the award, as determined by the Committee consistent with the
Restated Plan.
Options granted to employees of the Company may be either nonqualified
stock options ("NQSOs") or incentive stock options ("ISOs"). Any option granted
to any employee of HPMI or its subsidiaries, any HPMI Director or any employee
of the Operating Partnership or its subsidiaries shall be a NQSO.
NQSOs will provide for the right to purchase Common Stock at a specified
price which may be less than fair market value on the date of grant (but not
less than par value unless otherwise permitted by applicable state law (if state
law permits, the exercise price may be zero)). NQSOs may be granted for any
term specified by the Committee.
The exercise price per share of Common Stock subject to options intended to
qualify as performance-based compensation for purposes of Section 162(m) of the
Code shall not be less than 100% of the fair market value of a share of Common
Stock on the date the Option is granted.
ISOs will be designed to comply with the applicable provisions of the Code
and will be subject to restrictions contained in the Code but may be
subsequently modified to disqualify them from treatment as an ISO. The exercise
price of an ISO shall equal at least 100% of fair market value of Common Stock
on the grant date; provided, however, in the case of an ISO granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of the Company's
stock (or the stock of any subsidiary or any parent corporation of the Company),
the price per share must be at least 110% of the fair market value of such share
on the date the option is granted. The term of ISOs shall not be more than ten
years from the date granted, or five years from such date if the ISO is granted
to an individual then owning more than 10% of the total combined voting power
described in the preceding sentence.
Options usually will become exercisable (in the discretion of the
Committee) in one or more installments after the grant date. Unless the
Committee otherwise provides, no option held by an employee or HPMI Director
subject to Section 16 of the Securities Exchange Act of 1934 ("Section 16") may
be exercised during the first six months and one day after such option is
granted. The Committee may accelerate the time at which options granted to
employees and HPMI Directors become exercisable.
Each option granted with an exercise price equal to or greater than fair
market value on the date of grant is intended to qualify as "qualified
performance-based compensation" for purposes of Section 162(m) of the Code,
unless the Committee determines that an option shall not so qualify.
Restricted stock may be sold to eligible employees (but not to HPMI
Directors) at various prices (but not below par value unless otherwise permitted
by applicable state law (if state law permits, the exercise price may be zero)).
Restricted stock may be made subject to such restrictions as may be determined
by the Committee. Unless the Committee otherwise provides, no share of
restricted stock granted to a person subject to Section 16 shall be sold,
assigned or otherwise transferred until at least six months and one day have
elapsed from the date on which the restricted stock was issued. Restricted
stock, typically, may be repurchased by the Company immediately upon a
restricted stockholder's termination of employment at the original purchase
price if the conditions or restrictions are not then met. In addition, unless
provided otherwise by the Committee, if no consideration was paid by the
restricted stockholder upon issuance, a restricted stockholder's rights in
unvested restricted stock shall lapse upon termination of employment. In
general, restricted stock may not be sold, or otherwise transferred or
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<PAGE>
hypothecated, until restrictions are removed or expire. Unless otherwise
provided by the Committee, purchasers of restricted stock, unlike recipients of
options, will have voting rights and will receive dividends prior to the time
when the restrictions lapse, subject to the restrictions in his or her
restricted stock agreement, except that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions applicable to the restricted stock.
Awards to Independent Directors
Independent Directors receive options pursuant to the formula provisions of
the Restated Plan. All options granted to Independent Directors are NQSOs.
Subject to the Award Limit and the Ownership Limit, when a person is initially
elected to the Board and is then an Independent Director, he or she
automatically receives an option to purchase 3,000 shares of Common Stock
(subject to adjustments as described above) on the date of his or her election
to the Board. During the term of the Restated Plan, each Independent Director
automatically receives, on January 1 of each year, an option to purchase 1,000
shares of Common Stock (subject to adjustments as described above). In addition,
on August 14, 1995 each then current Independent Director received an option to
purchase 10,000 shares of Common Stock (subject to adjustment as described
above). Members of the Board who are employees of the Company who subsequently
retire from the Company and remain on the Board will not receive an option grant
provided to Independent Directors upon their initial election to the Board, but
to the extent that they are otherwise eligible, will receive, after retirement
from employment with the Company, annual option grants and, if such a member was
an Independent Director on August 14, 1995, such member received on such date
options issued to Independent Directors on such date.
The exercise price of options granted to Independent Directors equals 100%
of the fair market value of a share of Common Stock on the date the option is
granted, except that the price of each option granted to the Independent
Directors upon their election to the Board shortly after the initial public
offering of the Common Stock was $18.00 per share.
The term of options granted to Independent Directors is ten years from the
date the option is granted and options granted to Independent Directors become
exercisable in cumulative annual installments of 25% on each of the first,
second, third and fourth anniversaries of the date of option grant, without
variation or acceleration except as described below with respect to certain
corporate transactions.
Pursuant to the Second Amendment, restricted stock may be sold to
Independent Directors at various prices (but not below par value unless
otherwise permitted by applicable state law (if state law permits, the exercise
price may be zero)); provided, however, that the purchase price of each share of
restricted stock awarded to an Independent Director on February 27, 1997 shall
be $.01 per share. Restricted stock may be made subject to such restrictions as
may be determined by the Board; provided, however that each share of restricted
stock awarded to Independent Directors on February 27, 1997 (including any
shares received by holders thereof with respect to shares of Restricted Stock as
a result of stock dividends, stock splits or any other form of recapitalization)
shall be subject to the following restrictions until such restrictions lapse:
Neither the restricted stock nor any interest or right therein or part thereof
shall be liable for the debts, contracts, or engagements of the restricted
stockholder or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that, subject to the
Ownership Limit, such restrictions shall not prevent transfers by
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<PAGE>
will or by the applicable laws of descent and distribution. Such restrictions on
each share of restricted stock awarded to Independent Directors on February 27,
1997 (including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall lapse in the following cumulative installments
provided that the Independent Director has not had a Termination of Directorship
prior to the relevant vesting date: (i) with respect to 333 of such shares on
February 27, 1998, (ii) with respect to 333 of such shares on February 27, 1999,
and (iii) with respect to 334 of such shares on February 27, 2000. Unless the
Board otherwise provides, no share of restricted stock granted to an Independent
Director shall be sold, assigned or otherwise transferred until at least six
months and one day have elapsed from the date on which the restricted stock was
issued. Restricted stock, typically, may be repurchased by the Company
immediately upon a restricted stockholder's termination of employment at the
original purchase price if the conditions or restrictions are not then met. In
addition, unless provided otherwise by the Board, if no consideration was paid
by the Independent Director upon issuance, a restricted stockholder's rights in
unvested restricted stock shall lapse upon termination of employment. In
general, restricted stock may not be sold, or otherwise transferred or
hypothecated, until restrictions are removed or expire. Unless otherwise
provided by the Board, purchasers of restricted stock, unlike recipients of
options, will have voting rights and will receive dividends prior to the time
when the restrictions lapse, subject to the restrictions in his or her
restricted stock agreement, except that in the discretion of the Board, any
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions applicable to the restricted stock.
CONSIDERATION
Except as the Committee (or the Board in the case of awards to Independent
Directors) may otherwise provide, in consideration of the granting of a stock
option or restricted stock, the employee, HPMI Director or Independent Director
must agree in the written award agreement to remain in the employ of, or to
continue as a director for, the Company, HPMI, or the Operating Partnership, or
a subsidiary thereof, for at least one year (or such shorter period as may be
fixed in the agreement or by actions of the Committee or the Board following the
grant) after the award is granted (or until the next annual meeting of the
stockholders of the Company, in the case of an Independent Director or HPMI
Director).
EXERCISE OF OPTIONS
Options may be exercised only on the first business day of every month. An
option is not exercisable if, in the sole and absolute discretion of the
Committee, the exercise of such option would likely result in any of the
following: (i) the optionee's ownership of Common Stock in violation of the
Ownership Limit; (ii) income to the Company that could impair the Company's
status as a real estate investment trust, within the meaning of Sections 856
through 860 of the Code; or (iii) a transfer, at any one time, of more than .1%
(measured in value or in number of shares, whichever is more restrictive) of the
Company's total Common Equity Stock (as defined in the Company's Amended and
Restated Charter) from the Company to the Operating Partnership pursuant to the
provisions of the Restated Plan
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regarding the transfer of shares to employees of HPMI and the Operating
Partnership and to HPMI Directors. In addition, optionees have no rights under
the Restated Plan to acquire Common Stock which would otherwise be prohibited
under the Company's Amended and Restated Charter.
To the extent that the aggregate fair market value of stock with respect to
which ISOs are first exercisable during any calendar year (and all other
incentive stock option plans of the Company, any subsidiary and any parent
corporation) exceeds $100,000, such options shall be treated as NQSOs. The rule
set forth in the preceding sentence shall be applied by taking options into
account in the order in which they were granted. For this purpose, the fair
market value of the stock shall be determined as of the time the option with
respect to such stock is granted.
Options may be exercised by compliance with certain prescribed procedures.
The option price must be paid in cash unless the Committee (or the Board, in the
case of options granted to Independent Directors) in its discretion allows
payment through delivery of shares of Common Stock with a fair market value on
the date of delivery equal to the aggregate option price or (subject to certain
timing requirements if the option was granted prior to November 19, 1996)
through the surrender of shares issuable upon exercise of the option. In
addition, in the case of options granted to employees, the Committee may allow a
delay in payment for up to thirty days or through the delivery of other property
or by a combination of these methods. The Committee may make loans to employees
in connection with the exercise or receipt of options or the issuance of
restricted stock.
The Committee (or the Board, in the case of options granted to Independent
Directors) may, as a condition of the exercise of any option, require that the
optionee deliver such representations and documents as it deems necessary to
effect compliance with applicable federal and state securities laws and
regulations. The Committee or Board may also take whatever action it deems
appropriate to effect such compliance.
Upon the exercise of an option by an employee of HPMI, the Operating
Partnership or their respective subsidiaries, or by an HPMI Director, the
Company will transfer to such optionees only a number of shares with an
aggregate fair market value equal to the exercise price paid by the optionee.
Pursuant to the First Amendment, the Company will sell to the Operating
Partnership the remainder of shares subject to the portion of the option being
exercised. If the optionee at issue is an employee of the Operating Partnership
or its subsidiaries, the Operating Partnership shall transfer such shares to the
optionee at no additional cost, as additional compensation. If the optionee at
issue is an employee of HPMI or its subsidiaries or is an HPMI Director, the
Operating Partnership shall transfer such shares to HPMI, and HPMI shall
transfer such shares to the optionee at no additional cost, as additional
compensation. The value of any options, restricted stock and other benefits
provided by the Operating Partnership to HPMI under the Restated Plan are deemed
to constitute an additional management fee to HPMI from the Operating
Partnership under the Property Management Agreement between the Operating
Partnership and HPMI equal to the value of such options, restricted stock and
other benefits.
Pursuant to the First Amendment, as soon as practicable after receipt by
the Company of certain payments with respect to the exercise of an option, the
Company may contribute to the Operating Partnership an amount of cash equal to
such payment and the Operating Partnership shall issue an additional General
Partnership Interest (i.e. an ownership interest in the Operating Partnership
---
that is a general partnership interest and includes any and all benefits to
which the holder of such an interest may be entitled as provided in the
Agreement of Limited Partnership of Alexander Haagen Properties Operating
Partnership, L.P., together with all obligations of such holder to comply with
the terms and provisions of such agreement) to the Company on the terms set
forth in the Partnership Agreement.
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No option granted to any Independent Director may be exercised to any
extent by anyone after the first to occur of the following events: (i) ten years
from the date of option grant, or (ii) three months from the date of termination
of directorship (for any reason other than death or disability), or (iii) one
year from the date of such Independent Director's death or disability. The
Committee shall provide, in the terms of each individual option granted to an
employee or HPMI Director, when such option expires and becomes unexercisable
and, except as limited by the Code and the regulations and rulings thereunder
with respect to ISOs, the Committee may expand the term of any option granted to
an employee or HPMI Director.
ACCELERATION AND TERMINATION UPON CORPORATE EVENTS AND TRANSACTIONS
In the event of any corporate transaction or other event described above
with respect to the adjustment provisions of the Restated Plan or any unusual or
nonrecurring transactions or events affecting the Company, any affiliate of the
Company, or the financial statements of the Company or any affiliate, or of
changes in applicable laws, regulations, or accounting principles, the Committee
(or the Board, in the case of awards granted to Independent Directors) may take
any one or more of the following actions whenever the Committee (or the Board,
in the case of awards granted to Independent Directors) determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Restated
Plan or with respect to any option, or restricted stock, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or
principles:
(i) Provide for either the purchase of any such option or restricted
stock for an amount of cash equal to the amount that could have been
attained upon the exercise of such option or award or realization of the
optionee's rights had such option or award been currently exercisable or
the replacement of such option or award with other rights or property
selected by the Committee (or the Board, in the case of awards granted to
Independent Directors) in its sole discretion;
(ii) Provide that the option or restricted stock cannot vest or be
exercised after such event;
(iii) Provide that for a specified period of time prior to such
transaction or event, such option shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in the provisions
of the Restated Plan or such option regarding the exercisability of the
option;
(iv) Provide that upon such event, such option or award be assumed by
the successor or survivor corporation, or a parent or subsidiary thereof,
or shall be substituted for by similar options or awards covering the stock
of the successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares
and prices; and
(v) Make adjustments in the number and type of shares of Common
Stock (or other securities or property) subject to outstanding options, and
in the number and kind of outstanding restricted stock and/or in the terms
and conditions of (including the exercise price), and the criteria included
in, outstanding options and restricted stock and options and restricted
stock which may be granted in the future.
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(vi) Provide that for a period prior to such event, the restrictions
imposed upon some or all shares of restricted stock terminate, and that
some or all shares of such restricted stock cease to be subject to
repurchase or forfeiture after such transaction or event.
None of the foregoing discretionary terms of the Restated Plan, however,
are permitted with respect to options and restricted stock granted to
Independent Directors to the extent that such discretion would be inconsistent
with the applicable exemptive conditions of Rule 16b-3. In the event of a
"Change in Control" or a "Corporate Transaction" (each defined below), to the
extent that the Board does not have the ability under Rule 16b-3 to take or to
refrain from taking the discretionary actions set forth in item (iii) above,
each option granted to an Independent Director shall be exercisable as to all
shares covered thereby upon such Change in Control or during the five days
immediately preceding the consummation of such Corporate Transaction and subject
to such consummation, notwithstanding anything to the contrary in the Restated
Plan or options regarding the vesting schedule of such options. In the event of
a "Corporate Transaction," to the extent that the Board does not have the
ability under Rule 16b-3 to take or to refrain from taking the discretionary
actions set forth in item (ii) above, no option granted to an Independent
Director may be exercised following such Corporate Transaction; provided,
however, that such termination shall not occur if, in connection with the
Corporate Transaction, such option is either assumed by the successor or
survivor corporation (or parent or subsidiary thereof) or replaced with a
comparable right with respect to shares of the capital stock of the successor or
survivor corporation (or parent or subsidiary thereof).
For purposes of the Restated Plan, "Corporate Transaction" means any of the
following stockholder-approved transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the surviving entity,
except for a transaction the principal purpose of which is to change the state
in which the Company is incorporated, form a holding company or effect a similar
reorganization as to form whereupon the Restated Plan and all options are
assumed by the successor entity; (ii) the sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, in
complete liquidation or dissolution of the Company in a transaction not covered
by the exceptions to clause (i), above; or (iii) any reverse merger in which the
Company is the surviving entity but in which securities possessing more than 50%
of the total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger. For purposes of the Restated Plan, "Change in
Control" shall mean a change in ownership or control of the Company effected
through either of the following transactions: (a) any person or related group
of persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company)
directly or indirectly acquires beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of securities possessing more than 50% of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which the
Board does not recommend such stockholders to accept or (b) there is a change in
the composition of the Board over a period of thirty-six consecutive months (or
less) such that a majority of the Board members (rounded up to the nearest whole
number) ceases, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (1) have been Board
members continuously since the beginning of such period or (2) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (1) who were still in office
at the time such election or nomination was approved by the Board.
With respect to ISOs and options intended to qualify as performance-
based compensation under Section 162(m) of the Code, no adjustment or action
described above or in any other provision of the Restated Plan shall be
authorized to the extent that such adjustment or action would cause the Restated
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Plan to violate Section 422(b)(1) of the Code or would cause such option to fail
to so qualify under Section 162(m). Furthermore, no such adjustment or action
shall be authorized to the extent such adjustment or action would result in
short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Committee (or the Board, in the case of
awards granted to Independent Directors) determines that the option or
restricted stock is not to comply with such exemptive conditions.
MISCELLANEOUS PROVISIONS
For purposes of the Restated Plan, if Common Stock is traded on an
exchange, the fair market value of a share of the Common Stock as of a given
date will be the closing price of a share of Common Stock on the principal
exchange on which such shares are then trading, or as reported on any composite
index which includes such principal exchange, on such date, or, if the shares
are not traded on such date, then on the next preceding trading date on which a
trade occurred. The Restated Plan provides for alternative definitions of fair
market value of Common Stock in the event that the Common Stock ceases to be
traded on an exchange.
No option or restricted stock granted under the Restated Plan may be
assigned or transferred by the grantee, except by will or the laws of descent
and distribution or pursuant to a "qualified domestic relations order," although
the shares underlying restricted stock may be transferred if all applicable
restrictions have lapsed. During the lifetime of the optionee, the option may be
exercised only by the optionee unless such option has been disposed of pursuant
to a "qualified domestic relations order." No option or interest or right
therein or part thereof will be liable for the debts, contracts or engagements
of the optionee or the optionee's successors in interest or will be subject to
disposition by transfer, alienation, pledge, encumbrance, assignment or any
other means, whether voluntary, involuntary or by operation of law.
Optionees will not be, nor have any of the rights or privileges of, a
stockholder of the Company as to shares covered by the option until such shares
are issued by the Company and delivered to such optionees.
Restricted Stock and shares acquired through the exercise of an option
shall be subject to the restrictions on ownership and transfer set forth in the
Company's Amended and Restated Charter. The Committee (or the Board, in the case
of awards to Independent Directors), in its discretion, may impose such
restrictions on the transferability of shares purchasable upon exercise of an
option as it deems appropriate. Any such restriction shall be set forth in the
respective stock option agreement and may be referred to on the certificates
evidencing such shares. The Committee may require the employee to give prompt
notice of any disposition of shares of Common Stock, acquired by exercise of an
ISO, within two years from the date of granting such option or one year after
the transfer of such shares to such employee.
The Company requires participants to discharge withholding tax obligations
in connection with the exercise of any option granted under the Restated Plan,
or the lapse of restrictions on restricted stock, as a condition to the issuance
or delivery of stock or payment of other compensation pursuant thereto. Shares
held by or to be issued to a participant may also be used to discharge tax
withholding obligations related to exercise of options or receipt of other
awards, subject to the discretion of the Committee to disapprove such use and
certain other conditions.
18
<PAGE>
AMENDMENT AND TERMINATION
Generally, the Restated Plan can be amended, modified, suspended or
terminated by the Board or the Committee. Without approval of the Company's
stockholders given within twelve months before or after the action by the
Committee or the Board, however, no action of the Committee or the Board may
increase the limits imposed on the maximum number of shares which may be issued
under the Restated Plan or modify the Award Limit (except for adjustments as
described above), and no action of the Committee or the Board may be taken that
would otherwise require stockholder approval as a matter of applicable law,
regulation or rule. In addition, except as permitted by the applicable
exemptive conditions of Rule 16b-3, the provisions of the Restated Plan relating
to the formula option grants to Independent Directors, including the amount,
price and timing thereof, may not be amended more than once in any six-month
period other than to comport with changes in the Code, the Employee Retirement
Income Security Act, as amended, or the respective rules thereunder, and such
amendments must be adopted by action of the Board. Amendments to the Restated
Plan will not, without the consent of the participant, affect such person's
rights under an award previously granted, unless the award itself otherwise
expressly so provides. No termination date is specified for the Restated Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of the material U.S. federal
income tax consequences to U.S. participants in the Restated Plan, and is
intended for general information only. The discussion is based on the Code,
regulations thereunder, rulings and decisions now in effect, all of which are
subject to change. Alternative minimum tax and state and local income taxes are
not discussed, and may vary depending on individual circumstances and from
locality to locality. Depending on the interaction of Section 83(a) of the Code
with the provisions of Rule 16b-3 which apply to the Restated Plan at the time
of the grant of options and restricted stock, the tax consequences to persons
subject to Section 16 of the Exchange Act may be different from the general
consequences described below.
Section 162(m). Under Section 162(m) of the Code, income tax deductions of
publicly-traded companies may be limited to the extent total annual compensation
for certain executive officers exceeds $1 million (less the amount of any
"excess parachute payments" as defined in Section 280G of the Code) in any one
year. However, under Section 162(m), the deduction limit does not apply to
certain "qualified performance-based compensation" established by an independent
compensation committee which is adequately disclosed to, and approved by,
stockholders. In particular, stock options will satisfy the performance-based
exception if the awards are made by a qualifying compensation committee under a
plan that has been approved by the Company's stockholders, the plan sets the
maximum number of shares that can be granted to any particular employee within a
specified period and the compensation is based solely on an increase in the
stock price after the grant date (i.e. the option exercise price is equal to or
greater than the fair market value of the stock subject to the award on the
grant date). Restricted stock granted under the Restated Plan will not qualify
as "qualified performance-based compensation" for purposes of Section 162(m)
unless such restricted stock vests upon preestablished objective performance
goals, the material terms of which are disclosed to and approved by the
stockholders of the Company. Thus, the Company expects that restricted stock
granted under the Restated Plan will not constitute "qualified performance-based
compensation" for purposes of Section 162(m).
It is the practice of the Committee to attempt to have all compensation
treated as tax-deductible compensation wherever, in the judgment of the
Committee, to do so would be consistent with the objectives of the compensation
plan under which the compensation is paid. Accordingly, the Board of Directors
is asking stockholders to approve the Restated Plan in compliance with
requirements of Section
19
<PAGE>
162(m). In general, the Company intends to comply with other requirements of
the performance-based compensation exclusion under Section 162(m) with respect
to option grants, including option pricing requirements and requirements
governing the administration of the Restated Plan, so that, upon stockholder
approval of the Restated Plan, the deductibility of compensation paid to top
executives pursuant to options issued thereunder is not expected to be
disallowed.
Nonqualified Stock Options. For federal income tax purposes, the recipient
of NQSOs granted under the Restated Plan will not have taxable income upon the
grant of the option, nor will the Company then be entitled to any deduction.
Generally, upon exercise of NQSOs the optionee will realize ordinary income, in
an amount equal to the difference between the option exercise price and the fair
market value of the stock at the date of exercise. Subject to the deductibility
limits of Section 162(m), upon exercise of a NQSO by an employee of the Company
or a Company Subsidiary or by an Independent Director, the Company will be
entitled to a deduction in an amount equal to such difference. An optionee's
basis for the stock for purposes of determining his gain or loss on his
subsequent disposition of the shares generally will be the fair market value of
the stock on the date of exercise of the NQSO.
The tax consequence resulting from the exercise of a NQSO through delivery
of already-owned Company shares are not completely certain. In published
rulings, the Internal Revenue Service has taken the position that, to the extent
an equivalent value of shares is acquired, the optionee will recognize no gain
and the employee's basis in the stock acquired upon such exercise is equal to
the employee's basis in the surrendered shares, that any additional shares
acquired upon such exercise are compensation to the employee taxable under the
rules described above and that the employee's basis in any such additional
shares is their then-fair market value.
Incentive Stock Options. There is no taxable income to an optionee when an
ISO is granted to him or when that option is exercised; provided, however, that
upon exercise the optionee's alternative minimum taxable income will generally
include an amount equal to the difference between the option exercise price and
the fair market value at the time of exercise. Gain realized by an optionee
upon sale of stock issued on exercise of an ISO is taxable at capital gains
rates, and no tax deduction is available to the Company, unless the optionee
disposes of the shares within two years after the date of grant of the option or
within one year of the date the shares were transferred to the optionee. In
such event, the difference between the option exercise price and the fair market
value of the shares on the date of the option's exercise will be taxed at
ordinary income rates, and, subject to the deductibility limits of Section
162(m), the Company will be entitled to a deduction to the extent the employee
must recognize ordinary income. An ISO exercised more than three months after
an optionee's termination of employment, other than by reason of death or
disability, will be taxed as a NQSO, with the optionee deemed to have received
income upon such exercise taxable at ordinary income rates. Subject to the
deductibility limits of Section 162(m), the Company will be entitled to a tax
deduction equal to the ordinary income, if any, realized by the optionee.
The tax consequences resulting from the exercise of an ISO through delivery
of already-owned shares of Common stock are not completely certain. In
published rulings and proposed regulations, the Internal Revenue Service has
taken the position that generally the employee will recognize no income upon
such stock-for-stock exercise, that, to the extent an equivalent number of
shares is acquired, the employee's basis in the shares acquired upon such
exercise is equal to the employee's basis in the surrendered shares increased by
any compensation income recognized by the employee, that the employee's basis in
any additional shares acquired upon such exercise is zero and that any sale or
other disposition of the acquired shares within the one- or two-year period
described above will be viewed first as a disposition of the shares with the
lowest basis.
20
<PAGE>
Restricted Stock. An employee or Independent Director to whom restricted
stock is issued will not have taxable income upon issuance and the Company will
not then be entitled to a deduction. However, when restrictions on shares of
restricted stock lapse, such that the shares are no longer subject to repurchase
by the Company, the grantee will realize ordinary income and, subject to the
deductibility limits of Section 162(m), the Company will be entitled to a
deduction in an amount equal to the fair market value of the shares at the date
such restrictions lapse, less the purchase price therefor. Grantees of
restricted stock may not make an election under Section 83(b) of the Code.
REQUIRED VOTE FOR APPROVAL AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Annual Meeting is required to approve the Restated Plan,
as amended by the First and Second Amendments thereto. Your Board of Directors
recommends a vote FOR approval of the Restated Plan, as amended by the First and
Second Amendments thereto.
21
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 31, 1996
regarding beneficial ownership of the Common Stock of the Company by (1) each
person known by the Company to be the beneficial owner of 5% or more of the
Company's Common Stock, (2) each director of the Company, (3) the Chief
Executive Officer and other executive officers of the Company, and (4) the
Company's executive officers and directors as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
----------------------------------------------
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(A)(B) CLASS(C)
- ------------------------ ------------------------- ----------
<S> <C> <C>
Merrill Lynch & Co., Inc.
World Financial Center, North Tower
250 Vesey Street, New York, NY 10281 1,645,225(d)(l) 12.2%
Prudential Insurance Company of America
Prudential Plaza
Newark, New Jersey 07102-3777 1,139,094(n) 9.5%
Alex Brown Investment Management
1345 East Baltimore Street
Baltimore, MD 21202 1,063,600(e) 8.8%
Fidelity Management & Research Company
82 Devonshire
Boston, MA 02110 792,400(f) 6.6%
Morgan Stanley Group, Inc.
1585 Broadway
New York, NY 10036 670,600(o) 5.6%
BEA Associates
153 East 53rd Street
One Citicorp Center, New York, NY 10022 677,415(g)(m) 5.6%
Alexander Haagen, Sr. 1,676,233(b)(h) 12.2%
Charlotte Haagen 1,653,323(b)(h) 12.1%
Alexander Haagen III 221,500(b)(h) 1.8%
Fred W. Bruning 310,458(b)(h) 2.5%
Stuart J.S. Gulland 20,625(i) *
Steven M. Jaffe 807(j) *
Seymour Kreshek 583,729(b)(h) 4.6%
R. Bruce Andrews 12,050(k) *
Tom Bradley 5,050(k) *
Warren D. Fix 9,050(k) *
James Hankla 0 *
</TABLE>
22
<PAGE>
<TABLE>
<S> <C> <C>
Warner Heineman 14,050(k) *
Fred L. Riedman 7,050(k) *
All Directors and Executive 4,528,919(b)(h)(i)(j) (k) 27.4%
Officers as a group (12 persons)
- -----------------------
</TABLE>
* Less than 1%
(a) For purposes of this Proxy Statement, beneficial ownership of securities is
defined in accordance with the rules of the Securities and Exchange
Commission and means generally the power to vote or exercise investment
discretion with respect to securities, regardless of any economic interests
therein. Except as otherwise indicated, the Company believes that the
beneficial owners of shares of Common Stock listed in this table have sole
investment and voting power with respect to such shares, subject to
community property laws where applicable.
(b) Includes shares of Common Stock issuable upon exchange of partnership units
("OP Units") in Alexander Haagen Properties Operating Partnership, L.P.
which are exchangeable within 60 days. As of December 31, 1996, the number
of OP Units owned by the executive officers of the Company was as follows:
Alexander Haagen, Sr.--1,419,642, Alexander Haagen III--140,664, Charlotte
Haagen--1,419,642, Seymour Kreshek--416,993, and Fred W. Bruning--262,333.
(c) Based on 12,024,378 shares of Common Stock outstanding as of December 31,
1996.
(d) The Schedule 13G filed by the stockholder indicates shared investment and
dispositive power with respect to all shares.
(e) Although the stockholder has not filed a Schedule 13G, the Company believes
that the stockholder owns the number of shares indicated and has sole voting
and dispositive power with respect to a majority of such shares.
(f) The Schedule 13G filed by the stockholder indicates sole voting power with
respect to 31,400 shares and sole dispositive power with respect to all
792,400 shares.
(g) The Schedule 13G filed by the stockholder indicates shared investment power
and sole dispositive power with respect to all shares.
(h) Includes options to purchase 48,125 shares of Common Stock which are
exercisable within 60 days, but does not include options to purchase 34,375
shares of Common Stock outstanding as of December 31, 1996 which are not
exercisable within 60 days.
(i) Includes options to purchase 20,625 shares which are exercisable within 60
days, but does not include options to purchase 61,875 shares of Common Stock
outstanding as of December 31, 1996 which are not exercisable within 60
days.
(j) Includes options to purchase 807 shares of Common Stock which are
exercisable within 60 days, but does not include options to purchase 1,123
shares of Common Stock which are not exercisable within 60 days.
(k) Includes options to purchase 4,050 shares of Common Stock which are
exercisable within 60 days. Does not include options to purchase 10,150
shares of Common Stock which are not exercisable within 60 days.
(l) Includes shares that the holder has the right to acquire through the
exchange of 7 1/4% exchangeable subordinated debentures due in 2003.
(m) Includes shares that the holder has the right to acquire through the
exchange of 7 1/2% convertible subordinated debentures due in 2001.
(n) The Schedule 13G filed by the stockholder indicates 1,139,094 shares
beneficially owned, and voting and dispositive power with respect to 944,650
shares.
(o) The Schedule 13G filed by the stockholder indicates shared voting power with
respect to 126,200 shares and shared dispositive power with respect to all
670,600 shares.
23
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of each of the
Company's executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Alexander Haagen, Sr. 77 Chairman of the Board, Chief Executive
Officer and President
Alexander Haagen III 54 Vice Chairman and Director
Fred W. Bruning 46 Senior Vice President--Major Tenant Leasing
and Development and Director
Stuart J.S. Gulland 35 Senior Vice President, Chief Financial
Officer and Treasurer
Steven Jaffe 35 Senior Vice President, General Counsel and
Secretary
Charlotte Haagen 81 Vice President
</TABLE>
In addition to Mr. Haagen, Sr., Mr. Bruning and Mr. Haagen III, whose
biographies appear above, the following persons are executive officers of the
Company:
STUART J.S. GULLAND, Senior Vice President, Chief Financial Officer and
Treasurer, joined the Company in April 1995. He also serves as Senior Vice
President, Chief Financial Officer and Treasurer of Haagen Property Management,
Inc. Previously, Mr. Gulland specialized in serving real estate investment
trusts with Deloitte and Touche's Real Estate Services Group and was
instrumental in assisting Alexander Haagen Properties in the structuring,
formation and completion of its initial public offering in December 1993. Mr.
Gulland is a Certified Public Accountant and a Chartered Accountant and is a
member of the American Institute of Certified Public Accountants, the California
Society of Certified Public Accountants, and the Institute of Chartered
Accountants in England and Wales. Mr. Gulland is a graduate of the University
of Cambridge, England, from which he holds a Master of Arts degree in Law.
STEVEN M. JAFFE, Senior Vice President, General Counsel, and Secretary of the
Company, has been with the Company since September 1993. He also serves as
Senior Vice President, General Counsel, and Secretary of Haagen Property
Management, Inc. Mr. Jaffe has served as counsel for The Alexander Haagen
Company since 1990. Prior to his employment with The Alexander Haagen Company,
Mr. Jaffe was an associate with the Los Angeles law firm of Pircher, Nichols and
Meeks. Mr. Jaffe is a graduate of the University of California at Berkeley and
Hastings College of the Law.
CHARLOTTE HAAGEN has served as Vice President of the Company since September
1993. She also presently serves as the Vice President of Haagen Property
Management, Inc. Mrs. Haagen has been Vice President -Leasing of The Alexander
Haagen Company, Inc. since 1963, and was responsible for heading up its leasing
activities. Mrs. Haagen is the wife of Alexander Haagen Sr. and the mother of
Alexander Haagen III.
24
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
awarded to, earned by or paid during the fiscal years ended December 31, 1994,
1995 and 1996 to the Company's Chief Executive Officer and to the six other
executive officers of the Company for the fiscal year ended December 31, 1996
(the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR (A) SALARY($) BONUS($) OPTIONS (#)(A) COMPENSATION
------------------ ------- -------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
ALEXANDER HAAGEN, SR.
Chairman, Chief Executive Officer 1996 24,800(b)(c) 0(d) 0 0
and President 1995 24,600 0 27,500 0
1994 24,000 0 0 0
ALEXANDER HAAGEN III
Vice Chairman 1996 24,800(b)(e) 0(d) 0 0
1995 24,600 0 27,500 0
1994 24,000 0 0 0
FRED W. BRUNING
Senior Vice President--Major 1996 339,700 108,900(b) 0 0
Tenant Leasing and Development 1995 211,600 141,100 27,500 0
1994 204,800 15,200 0 0
STUART J.S. GULLAND
Senior Vice President--Chief 1996 138,000 50,000(b) 0 0
Financial Officer and Treasurer 1995 100,000 0 82,500 0
1994 N/A N/A N/A N/A
STEVEN M. JAFFE
Senior Vice President, General 1996 171,657 0 0 0
Counsel and Secretary 1995 141,301 0 1,293 0
1994 133,784 0 637 0
CHARLOTTE HAAGEN
Vice President 1996 24,800(b) 0 0 0
1995 24,600 0 27,500 0
1994 24,600 0 0 0
SEYMOUR KRESHEK(f)
Former Senior Vice 1996 24,800(d) 0 0 0
President--Chief Financial Officer 1995 24,600 0 27,500 0
and Treasurer 1994 24,000 0 0 0
- ----------------
</TABLE>
(a) Represents options to purchase Common Stock granted under the Restated Plan.
The options vest over a four-year period and are exercisable in cumulative
25% installments commencing one year from the date of grant at $11.625 to
$18.00 per share. See "-- Aggregated Option Exercises and Fiscal Year-End
Option Value Table."
(b) See "Employment and Change-in-Control Agreements."
(c) Mr. Haagen, Sr.'s salary has been raised to $200,000 a year effective July
1, 1997.
(d) The Company does not contemplate awarding cash bonuses to such executive
officers during the initial term of their employment contracts with the
Company, and any change to this policy will be subject to approval by the
Independent Directors.
(e) Mr. Haagen III's salary has been raised to $100,000 a year effective July 1,
1997.
(f) Mr. Kreshek resigned from the Company and HPMI effective February 28, 1997.
25
<PAGE>
OPTION GRANTS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ----------------------------------------------------------------------------------------- ANNUAL RATES OF ALTERNATIVE
PERCENT OF STOCK PRICE TO AND
TOTAL APPRECIATION FOR GRANT DATE
NUMBER OF OPTIONS/SARS OPTION TERM VALUE
SECURITIES GRANTED TO ---------------------------------
UNDERLYING EMPLOYEES IN EXERCISE OF GRANT DATE
OPTION/SARS FISCAL YEAR BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#) (a) ($/SH) DATE 5%($) 10%($) VALUE $
---- ----------- ------------ ---------- ---------- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ALEXANDER HAAGEN, SR......... 0 N/A N/A N/A N/A N/A N/A
Chairman, Chief Executive
Officer and President
ALEXANDER HAAGEN III......... 0 N/A N/A N/A N/A N/A N/A
Vice Chairman
FRED W. BRUNING.............. 0 N/A N/A N/A N/A N/A N/A
Senior Vice President--Major
Tenant Leasing and
Development
STUART J.S. GULLAND.......... 0 N/A N/A N/A N/A N/A N/A
Senior Vice President-Chief
Financial Officer and
Treasurer
STEVEN M. JAFFE.............. 0 N/A N/A N/A N/A N/A N/A
Senior Vice President and
General Counsel
CHARLOTTE HAAGEN............. 0 N/A N/A N/A N/A N/A N/A
Vice President
SEYMOUR KRESHEK (B).......... 0 N/A N/A N/A N/A N/A N/A
Former Senior Vice
President--Chief Financial
Officer and Treasurer
</TABLE>
- ----------------------------------------
(a) No options were granted to employees in 1996.
(b) Mr. Kreshek resigned from the Company effective as of February 28, 1997.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information related to the exercise of stock
options during the year ended December 31, 1996 by each of the Named Executive
Officers and the 1996 fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END OPTIONS AT FY-END
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED($) UNEXERCISABLE(#) UNEXERCISABLE($)
---- ---------------- ----------------- ------------------ --------------------
<S> <C> <C> <C> <C>
Alexander Haagen, Sr. 0 0 48,125/34,375 $21,484/$64,453
Alexander Haagen III 0 0 48,125/34,375 $21,484/$64,453
Fred W. Bruning 0 0 48,125/34,375 $21,484/$64,453
Stuart J.S. Gulland 0 0 20,625/61,875 $21,484/$64,453
Steven M. Jaffe 0 0 807/1,123 $ 2,502/$3,450
Charlotte Haagen 0 0 48,125/34,375 $21,484/$64,453
Seymour Kreshek (a) 0 0 48,125/34,375 $21,484/$64,453
</TABLE>
- ------------------
(a) Mr. Kreshek resigned from the Company effective as of February 28, 1997,
and his options, if unexercised, will expire 90 days thereafter.
26
<PAGE>
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
Each of Alexander Haagen, Sr., Alexander Haagen III and Charlotte Haagen
have entered into employment agreements with the Company providing for their
continued employment until December 1997 and limiting them in competing,
directly or indirectly, with the Company during the term of such employment and
for one year after termination of employment. None of these individuals intends,
or will be permitted, to engage while serving as an officer or director of the
Company (and for one year thereafter, as applicable) in the acquisition,
development or management of commercial real estate (other than certain
specified properties) except through the Company. Each of Alexander Haagen, Sr.,
Alexander Haagen III and Charlotte Haagen is currently paid a salary at the
annual rate of $24,800, which under the terms of their employment contracts, may
be increased by the Board of Directors. The Board of Directors has increased
Alexander Haagen, Sr.'s salary to $200,000 and Alexander Haagen III's salary to
$100,000, each effective as of July 1, 1997. The Company does not contemplate
awarding cash bonuses to these executive officers during the period of the
employment agreements and any change to this policy will be subject to the
approval of the Independent Directors.
Fred W. Bruning has entered into an employment agreement with the Company
providing for his continued employment until December 1995 as Senior Vice
President--Major Tenant Leasing and Development. Mr. Bruning's employment
agreement was amended to provide for continued employment until December, 1997.
Mr. Bruning's employment agreement prohibits him from competing, directly or
indirectly, with the Company during the term of such employment. Mr. Bruning
does not intend, and will not be permitted, to engage while he is an officer or
director of the Company, as applicable, in the acquisition, development or
management of commercial real estate (other than certain specified properties)
except through the Company. During the term of such contract, compensation will
be paid to Fred W. Bruning at the annual rate of $300,000 or should the Board of
Directors increase such salary, at the then present salary. Mr. Bruning's
employment contract also provides for an incentive bonus based upon the success
of leasing at the properties in the Company's portfolio. Such incentive bonus
will be in an amount equal to $0.50 per square foot of gross leasable area
leased or re-leased at the Company's properties in any given year, not to exceed
100% of Mr. Bruning's base salary in such year.
The Named Executive Officers are employed by both the Company and Haagen
Property Management, Inc. ("HPMI"). Such executives are compensated by HPMI,
which receives a credit for the executives' time allocated to the Company and
Alexander Haagen Properties Operating Partnership, L.P. (the "Operating
Partnership"). The Company believes that the effective allocation of such
executives compensation as among such entities will reflect the services
provided by such executives with respect to each entity.
The Bylaws of the Company provide for indemnification of the officers,
directors, employees and agents of the Company pursuant to the Maryland General
Corporation Law. The Maryland General Corporation Law permits the
indemnification of any officer, director, employee or agent of the Company
against expenses and liabilities in any action arising out of such person's
activities on behalf of the Company, if such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company or in a manner he had no reasonable cause to believe was unlawful.
27
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares cumulative total return of the Company, the S&P 500
Index and the Retail REIT Index(*) from December 31, 1995 to December 31, 1996.
The comparison assumes $100 was invested on December 17, 1993 in the Company's
Common Stock and each of the foregoing indices and assumes reinvestment of
Dividends before consideration of income taxes.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PERIOD ENDING
12/17/93 06/30/94 12/31/94 06/30/95 12/31/95 6/30/96 12/31/96
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alex Haagen Pptys 100.00 105.43 97.88 74.99 84.99 93.79 114.01
S&P 500 Total Return 100.00 96.71 101.42 121.92 139.54 153.61 171.44
Retail REITs 100.00 107.93 105.08 109.67 111.63 120.30 150.13
</TABLE>
* The Retail REIT Index is a peer group index comprised of the following
companies: Agree Realty Corporation, Alexander Haagen Properties, Inc., Arbor
Property Trust, Atlantic Realty Trust, Bradley Real Estate, Inc., Burnham
Pacific Properties, CBL & Associates Properties, Chelsea GCA Realty, Inc.,
Commercial Net Lease Realty, Crown American Realty Trust, DeBartolo Realty
Corporation, Developers Diversified Realty, EQK Realty Investors, Excel Realty
Trust, Inc., FAC Realty, Inc., Federal Realty Investment, First Union Real
Estate, First Washington Realty Trust, General Growth Properties, Glimcher
Realty Trust, Horizon Group, Inc., HRE Properties, IRT Property Company, JDN
Realty Corp., JP Realty, Inc., Kimco Realty Corporation, Kranzco Realty Trust,
The Macerich Company, Malan Realty Investors, Inc., Mark Centers Trust, Mid-
America Realty Investments, Mid-Atlantic Realty Trust, The Mills Corporation,
New Plan Realty Trust, One Liberty Properties, Price REIT, Inc., Prime Retail,
Inc., Ramco-Gershenson Properties, Realty Income Corporation, Regency Realty
Corp., Royale Investments, Inc., Saul Centers, Inc., Simon DeBartolo Group,
Sizeler Property Investors, Tanger Factory Outlet Centers, Taubman Centers,
Inc., Urban Shopping Centers, Inc., USP Real Estate Investment, Vornado Realty
Trust, Weingarten Realty Investors and Western Investment.
28
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to February 25, 1994, the Compensation Committee consisted of
Alexander Haagen, Sr., Alexander Haagen III and Seymour Kreshek, each of whom
was an executive officer and director of the Company and HPMI. On February 25,
1994, such persons resigned and were replaced by Messrs. Heineman (Chairman),
Riedman, and Bradley (who was replaced by Mr. Andrews on February 28, 1997),
none of whom is or has been an officer or employee of the Company. The
Compensation Committee took no action between December 16, 1993, which was prior
to the Company's initial public offering, and February 25, 1994. For a
description of the background of each of these individuals, see "Election of
Directors." For a discussion of interrelationships involving members of the
Compensation Committee or other directors of the Company, see "Certain
Relationships and Related Transactions."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The information set forth below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or under
the Securities Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
Compensation and benefit practices of the Company are established and
governed by the Compensation Committee, which is made up entirely of Independent
Directors. The Compensation Committee establishes the general compensation
policy of the Company, approves compensation of the senior executive officers of
the Company and administers the Restated Plan and any other stock option or
employee benefit plans which may be established by the Company.
The Company's compensation program will look both to the short and long
term, balancing compensation to reward past performance and give incentives for
superior performance over the long term. The Compensation Committee will
utilize base salary, cash bonuses, stock options and other performance based
compensation as part of its program. The Compensation Committee believes in
working with management to design compensation structures which will best serve
these goals. The Compensation Committee will establish specific compensation
policies prior to any future executive compensation determinations.
The compensation paid to the Company's Chief Executive Officer and other
executive officers is consistent with the policies of the Company's current
compensation program. The cash salaries paid to Alexander Haagen, Sr.,
Alexander Haagen III and Charlotte Haagen are substantially less than the
salaries paid to the other executive officers because it is believed that such
officers' significant equity ownership in the Company currently provides
appropriate performance incentives.
During 1993, the Internal Revenue Code of 1986 was amended to include a
provision which denies a deduction to any publicly held corporation for
compensation paid to any "covered employee" (which are defined as the chief
executive officer and the Company's other four most highly compensated officers,
as of the end of a taxable year) to the extent that the compensation exceeds $1
million in any taxable year of the corporation beginning after 1993.
Compensation which is payable pursuant to written binding agreements entered
into before February 18, 1993 and compensation which constitutes "performance
based compensation" is excludable in applying the $1 million limit. Generally,
it is the Company's policy to qualify compensation (other than restricted stock)
paid to its top executives for deductibility under Section 162(m) in order to
maximize the Company's income tax deductions. Based upon the Internal Revenue
Service's regulations and
29
<PAGE>
the compensation paid to the Company's "covered employees" for the 1996 taxable
year, all compensation payable by the Company in 1996 to such covered employees
should be deductible by the Company.
The current Compensation Committee was appointed in February 1994. No
executive compensation was paid by the Company for the period from the Company's
formation through December 31, 1993. Base salaries and bonus eligibility for
1994, 1995 and 1996 for the Named Executive Officers (except Stuart J.S. Gulland
and Steven M. Jaffe), including the Chief Executive Officer, were determined in
connection with the Company's initial public offering of Common Stock and the
formation of the Company, and not by the Compensation Committee, except that
such agreement with Fred Bruning terminated in 1995 and was renegotiated and
approved by the Compensation Committee. Such executive compensation will be paid
in accordance with the terms of the employment contracts described above. The
options to purchase 55,000 shares of Common Stock granted in December 1993 to
each of the Named Executive Officers were granted by the Board prior to the
initial public offering of the Company's Common Stock, except that Stuart J.S.
Gulland's options to purchase 55,000 shares of Common Stock was granted in
April, 1995 and Steven M. Jaffe's options to purchase 27,500 shares of Common
Stock was granted on February 27, 1997. On August 14, 1995, each of the Named
Executive Officers then serving were granted an option to purchase 27,500 shares
of Common Stock. On February 27, 1997, each of the Named Executive Officers were
granted restricted shares, which vest over a three year period, in the following
amounts: Alexander Haagen, Sr.-30,000 shares; Alexander Haagen III-20,000
shares; Charlotte Haagen-10,000 shares; Fred W. Bruning-5,000 shares; Stuart
J.S. Gulland-5,000 shares; and Steven M. Jaffe-5,000 shares. Subject to
shareholder approval, on February 27, 1997 each Independent Director was granted
1,000 shares of restricted stock which vest over a three-year period. The
Compensation Committee believes that significant equity interests in the Company
held by the Company's management serve to retain and motivate management.
Date: April 14, 1997 Warner Heineman (Chairman)
R. Bruce Andrews
Fred L. Riedman
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an agreement among the Operating Partnership and certain
limited partners that transferred Media City Center, Baldwin Hills Crenshaw
Plaza, Empire Center, Montebello Town Square and The City Center (the
"Development Properties") to the Operating Partnership such OP limited partners
had the right to receive additional partnership units in the Operating
Partnership ("OP Units") based upon an increase in net annualized cash flow from
the Development Properties between October 31, 1993 and on or before the
expiration of the applicable lease-up period for each development property. The
increase in net annualized cash flow was based on leases signed by March 31 with
the tenant open and paying rent by June 30 of the respective lease-up periods.
The lease-up period for Montebello Town Square and The City Center expired
on March 31, 1995 and resulted in the issuance of an additional 113,506 OP Units
to the OP Limited Partners. In connection with this issuance of additional OP
Units, all of the leases were executed by March 31, 1995, with tenants paying
rent by June 30, 1995, including certain leases where tenants were not open by
June 30, 1995. The Independent Directors determined that it was appropriate to
issue additional OP Units for all of these leases.
The lease-up period for Media City Center, Baldwin Hills Crenshaw Plaza and
Empire Center expired on March 31, 1996. During the year ended December 31,
1996, the opening of approximately 38,000 square feet of retail and restaurant
space at Media City Center, principally comprising a 30,000 square foot Virgin
Megastore, and the 57,000 square foot Sony/Magic Johnson Theatres at Baldwin
Hills Crenshaw Plaza,
30
<PAGE>
represented expansion of the Development Properties not contemplated at the IPO
and therefore no additional OP Units were issued in connection with such
developments.
Effective July 1, 1996, 3,242,379 additional OP Units were issued in
connection with the final earnout, thereby reducing the Company's interest in
the Operating Partnership from 92% to 73.7%. The number of additional OP Units
that were issued was based on the increase in net annualized cash flow from new
leases signed through March 31, 1996 and open and paying rent by June 30, 1996.
Such increases in cash flow were not fully realized until the second and third
quarters of 1996. The issuance of additional OP Units in the third quarter of
1996 did not have a dilutive effect on future net income or funds from
operations per share. Such leasing plans were based on management's evaluation
of current market conditions and the potential of the Development Properties.
Certain of the Named Executive Officers had a substantial economic interest
in such properties and, received additional OP Units as follows: Alexander
Haagen, Sr. and Charlotte Haagen, as co-trustees,-2,633,194, Seymour Kreshek--
163,860, and Fred Bruning--255,666.
An agreement existed between Baldwin Hills Associates (a predecessor
affiliate) and the Community Redevelopment Agency of the City of Los Angeles
("LACRA") in connection with the development of Baldwin Hills Crenshaw Plaza
which provided for the LACRA to participate in net cash flows from operations
and net sales proceeds. Upon transfer of property to the Operating Partnership,
the LACRA's participation rights under the agreement were terminated. No
payments under such agreement were made through December 27, 1993. The LACRA and
Baldwin Hills Associates have settled a dispute as to the LACRA's portion of the
proceeds received by Baldwin Hills Associates upon sale of the property to the
Operating Partnership. The settlement has no impact on the Company and is
confined to resolution between the LACRA and Baldwin Hills Associates. Certain
executive officers and directors of the Company, including Alexander Haagen,
Sr., Charlotte Haagen, Seymour Kreshek and Fred Bruning, are partners in Baldwin
Hills Associates.
Under the terms of the current ground lease with respect to Media City
Center with the Burbank Agency, the Company is obligated to pay fixed base rent
of $1,000 per year. The Burbank Agency was also entitled to receive certain net
cash flows from operations and certain net proceeds upon any future sale or
transfer of the Property. However, in November 1994, the Company and the
Burbank Agency entered into agreements, which (i) terminated the Burbank
Agency's rights to participate in net cash flows and net sales or financing
proceeds from Media City Center, (ii) eliminated the Burbank Agency's consent
rights with respect to encumbrances on the property, and (iii) changed the
zoning restrictions on two adjacent parcels to permit retail development on
these parcels. In consideration, the Operating Partnership paid $5.0 million to
the Burbank Agency. The two adjacent parcels were previously owned by Haagen-
Burbank Partnership (a predecessor affiliate), which contributed its rights to
such parcels to the Company without remuneration. Under the revised use
restrictions, the City of Burbank will permit up to 50,000 square feet of
development on the two parcels provided that there is at least one retail tenant
of 25,000 square feet of gross leasable area. Certain officers and directors of
the Company, including Alexander Haagen, Sr., Charlotte Haagen, Seymour Kreshek
and Fred Bruning are partners in Haagen-Burbank Partnership.
HPMI manages for a fee all of the Company's properties pursuant to
Management Agreements dated as of December 27, 1993, except for six (6)
properties which HPMI manages pursuant to Management Agreements dated March 14,
1995. HPMI also manages for a fee certain properties not owned by the Company.
HPMI received approximately $4,067,000 in executive and property management
fees, $2,508,000 in leasing and legal fees and $622,000 in financing and
construction fees from the Operating Partnership but realized no material income
for the year ended December 31, 1996. The Company is the holder of all of the
issued and outstanding non-voting preferred stock of HPMI, with a 95% economic
interest therein, and the holders of all of the issued and outstanding voting
common stock of HPMI, with a 5% economic interest therein, are Alexander Haagen,
Sr., Alexander Haagen III, Charlotte Haagen and Seymour Kreshek, the
31
<PAGE>
Chairman and Chief Executive Officer, Vice Chairman, Vice President, and Former
Senior Vice President-Chief Financial Officer of the Company, respectively. As a
result, certain conflicts of interest may arise between such officers' duties
and responsibilities to the Company and their duties and responsibilities to
HPMI. In addition, conflicts of interest may arise over the allocation of
management resources between the Company's properties and properties not owned
by the Company. To minimize potential conflicts of interest, all significant
transactions between the Company and HPMI will be approved by the Independent
Directors.
The Company's headquarters in Manhattan Beach, California are owned by a
partnership in which Alexander Haagen, Sr., Charlotte Haagen, Alexander Haagen
III and Seymour Kreshek are partners. At the time of the Company's initial
public offering, the current lease on the headquarters was assigned from The
Alexander Haagen Company, Inc. to HPMI, which subleases space to the Company and
the Operating Partnership. The terms of the lease and the sublease were not
negotiated on an arms' length basis, however, the Company believes that the
terms of such leases are at least as favorable as those that could be attained
for similar space from third parties. HPMI paid $399,509 pursuant to such lease
for the year ended December 31, 1996.
32
<PAGE>
INDEPENDENT AUDITORS
Deloitte & Touche L.L.P. audited the Company's financial statements for the
fiscal year ended December 31, 1996, and has been the Company's independent
auditors since June 1992. The Board of Directors has selected Deloitte & Touche
L.L.P. to serve as independent auditors for the Company for the fiscal year
ending December 31, 1998. A representative of Deloitte & Touche L.L.P. is
expected to be present at the Annual Meeting and will be given the opportunity
to make a statement if he desires to do so, and it is expected that such
representative will be available to respond to appropriate questions from the
stockholders at the Annual Meeting.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
FOR 1998 ANNUAL MEETING
Any stockholder intending to submit to the Company a proposal for inclusion
in the Company's proxy materials relating to the 1998 Annual Meeting must submit
such proposal so that it is received by the Company no later than December 5,
1997.
OTHER MATTERS
The Company is not aware of any matters that may be presented for action by
the stockholders at the Annual Meeting other than those set forth above. If any
other matter shall properly come before the Annual Meeting, the persons named in
the accompanying form of proxy intend to vote thereon in accordance with their
best judgment.
The Company's Annual Report to Stockholders, including the Company's
audited financial statements for the year ended December 31, 1996, is being
mailed herewith to all stockholders of record. THE COMPANY WILL PROVIDE WITHOUT
CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN REQUEST OF ANY SUCH
PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH
REQUESTS SHOULD BE DIRECTED TO THE SECRETARY OF THE COMPANY, AT 3500 SEPULVEDA
BOULEVARD, MANHATTAN BEACH, CALIFORNIA 90266.
STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
By Order of the Board of Directors,
/s/ STEVEN JAFFE
STEVEN JAFFE
Secretary
April 14, 1997
Manhattan Beach, California
33
<PAGE>
EXHIBIT A
SECOND AMENDMENT TO THE AMENDED AND RESTATED 1993 STOCK OPTION AND INCENTIVE
PLAN FOR OFFICERS, DIRECTORS AND
KEY EMPLOYEES OF ALEXANDER HAAGEN PROPERTIES, INC.,
ALEXANDER HAAGEN PROPERTIES OPERATING PARTNERSHIP, L.P.
AND
HAAGEN PROPERTY MANAGEMENT, INC.
Alexander Haagen Properties, Inc., a Maryland corporation, Alexander
Haagen Properties Operating Partnership, L.P., a California limited partnership,
and Haagen Property Management, Inc., a California corporation, adopted The 1993
Stock Option and Incentive Plan for Officers, Directors and Key Employees of
Alexander Haagen Properties, Inc., Alexander Haagen Properties Operating
Partnership, L.P. and Haagen Property Management, Inc., effective December 10,
1993, for the benefit of their eligible employees and directors. Such plan was
amended on August 14, 1995 and was amended and restated on February 28, 1996
(such amended and restated plan is hereinafter referred to as the "Plan"). An
amendment to the Plan was authorized by a resolution of the Board of Directors
of the Company on November 19, 1996 (such amendment to the Plan is hereinafter
referred to as the "First Amendment"). The Plan consists of two plans, one for
the benefit of the employees and directors of Alexander Haagen Properties, Inc.
and one for the employees of Alexander Haagen Properties Operating Partnership,
L.P. and the employees and directors Haagen Property Management, Inc.
As allowed by Section 9.2 of the Plan, this amendment to the Plan (the
"Second Amendment") was authorized by a resolution of the Compensation Committee
of the Board of Directors of the Company on February 27, 1997, subject to and
effective upon stockholder approval. This Second Amendment, together with the
Plan and the First Amendment to the Plan, constitutes the entire Plan as amended
to date.
1. Section 1.35 of the Plan is hereby amended to read in its
entirety as follows:
1.35 Restricted Stockholder
----------------------
"Restricted Stockholder" shall mean an Employee or Independent
Director to whom Restricted Stock has been awarded under this Plan.
2. Section 2.1(a) of the Plan is hereby amended and restated in
its entirety as follows:
(a) The shares of stock subject to Options or Restricted Stock
Awards shall be Common Stock, initially shares of the Company's common stock,
par value $.01 per share, as presently constituted, and the aggregate number of
such shares which may be issued upon exercise of such Options or upon any such
awards under the Plan shall not exceed 1,350,000, (which amount includes the
original 850,000 shares authorized to be issued upon exercise of such Options or
upon any such awards under the Plan and an additional 500,000 shares authorized
to be issued upon exercise of such Options or upon any such awards under the
Plan by a resolution of the Committee on February 27, 1997). The shares of
Common Stock issuable upon exercise or grant of an Option, or as Restricted
Stock, may be either previously authorized but unissued shares or treasury
shares.
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<PAGE>
3. Article VI of the Plan is hereby amended and replaced in its
entirety as follows:
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Eligibility
-----------
Subject to the Award Limit and the Ownership Limit, Restricted Stock
may be awarded to any Employee whom the Committee, pursuant to Section
3.4(a)(i), determines is a key Employee and to any Independent Director as the
Board, in its sole and absolute discretion, and subject to applicable
limitations of this Plan, deems appropriate. Subject to the Award Limit and the
Ownership Limit, each Independent Director shall also be eligible to be awarded
Restricted Stock at the time and in the manner set forth in Section 6.2(d) of
this Plan.
6.2 Award of Restricted Stock
-------------------------
(a) The Committee (or the Board in the case of Independent Directors)
may from time to time, in its sole and absolute discretion:
(i) Select from among the Independent Directors and key Employees
(including Independent Directors and Employees to whom Options have
previously been granted and/or shares of Restricted Stock have previously
been issued) such of them as in its opinion should be awarded Restricted
Stock; and
(ii) Determine the purchase price, if any, and other terms and
conditions applicable to such Restricted Stock, consistent with this Plan.
(b) The Committee (or the Board in the case of Independent Directors)
shall establish the purchase price, if any, and form of payment for Restricted
Stock; provided, however, that such purchase price shall be no less than the par
-------- -------
value of the Common Stock to be purchased, unless otherwise permitted by
applicable state law; provided, further, that the purchase price of each share
-------- -------
of Restricted Stock awarded to an Independent Director pursuant to Section
6.2(d) of the Plan shall be $.01 per share. In all cases, legal consideration
shall be required for each issuance of Restricted Stock.
(c) Upon the selection of a key Employee or Independent Director to be
awarded Restricted Stock, the Committee (or the Board in the case of Independent
Directors) shall instruct the Secretary of the Company to issue such Restricted
Stock and may impose such conditions on the issuance of such Restricted Stock as
it deems appropriate; provided, however, that each share of restricted stock
-------- -------
awarded to an Independent Director pursuant to Section 6.2(d) of the Plan shall
be subject to the restrictions set forth in Section 7.4(b) of the Plan.
(d) On February 27, 1997, subject to stockholder approval and the
Award Limit and the Ownership Limit, each then current Independent Director
shall automatically be granted 1,000 shares of Restricted Stock (subject to
adjustment as provided in Section 9.3).
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<PAGE>
4. Article VII is hereby amended and replaced in its entirety as
follows:
ARTICLE VII
TERMS OF RESTRICTED STOCK
7.1 Restricted Stock Agreement
--------------------------
Restricted Stock shall be issued only pursuant to a written Restricted
Stock Agreement, which shall be executed by the Restricted Stockholder and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board in the case of Independent Directors)
shall determine, consistent with this Plan.
7.2 Consideration to the Company
----------------------------
As consideration for the issuance of Restricted Stock, in addition to
payment of any purchase price, the Restricted Stockholder shall agree, in the
written Restricted Stock Agreement, to remain in the employ of the Company,
Company Subsidiary, HPMI, an HPMI Subsidiary, the Operating Partnership or an
Operating Partnership Subsidiary (or to serve as an Independent Director of the
Company) for a period of at least one year after the Restricted Stock is issued
(or such shorter period as may be fixed in the Restricted Stock Agreement or by
action of the Committee (or the Board in the case of Independent Directors)
following grant of the Restricted Stock) or until the next annual meeting of the
stockholders of the Company, in the case of an Independent Director. Nothing in
this Plan or in any Restricted Stock Agreement hereunder shall confer on any
Restricted Stockholder any right to continue in the employ of the Company, any
Company Subsidiary, HPMI, any HPMI Subsidiary, the Operating Partnership or any
Operating Partnership Subsidiary or as a director of the Company or shall
interfere with or restrict in any way the rights of the Company, any Company
Subsidiary, HPMI, any HPMI Subsidiary, the Operating Partnership or any
Operating Partnership Subsidiary, which are hereby expressly reserved, to
discharge any Restricted Stockholder at any time for any reason whatsoever, with
or without good cause.
7.3 Rights as Stockholders
----------------------
Upon delivery of the shares of Restricted Stock to the escrow holder
pursuant to Section 7.6, the Restricted Stockholder shall have, unless otherwise
provided by the Committee (or the Board in the case of Independent Directors),
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his Restricted Stock Agreement, including the right to receive
all dividends and other distributions paid or made with respect to the shares;
provided, however, that in the sole and absolute discretion of the Committee (or
- -------- -------
the Board in the case of Independent Directors), any extraordinary distributions
with respect to the Common Stock shall be subject to the restrictions set forth
in Section 7.4(a) or 7.4(b), as applicable. All shares of Restricted Stock
shall be subject to the restrictions on ownership and transfer set forth in the
Company's Amended and Restated Charter.
7.4 Restriction
-----------
(a) All shares of Restricted Stock issued under this Plan (including
any shares received by holders thereof with respect to shares of Restricted
Stock as a result of stock dividends, stock splits or any other form of
recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee (or the Board in the
case of Independent Directors) shall provide, which restrictions may include,
without limitation, restrictions concerning voting rights and transferability
and restrictions based on duration of employment with the Company, Company
performance
36
<PAGE>
and individual performance; provided, however, that, unless the Committee (or
-------- -------
the Board in the case of Independent Directors) otherwise provides in the terms
of the Restricted Stock Agreement or otherwise, no share of Restricted Stock
granted to a person subject to Section 16 of the Exchange Act shall be sold,
assigned or otherwise transferred until at least six months and one day have
elapsed from the date on which the Restricted Stock was issued; and provided,
--------
further, that by action taken after the Restricted Stock is issued, the
- -------
Committee (or the Board in the case of Independent Directors) may, on such terms
and conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Restricted Stock Agreement. Restricted
Stock may not be sold or encumbered until all restrictions are terminated or
expire.
(b) Notwithstanding any provision of this Section 7.4 to the
contrary, each share of Restricted Stock awarded to an Independent Director
pursuant to Section 6.2(d) of the Plan (including any shares received by holders
thereof with respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization) shall be subject
to the following restrictions until such restrictions lapse in accordance with
Section 7.4(c): Neither the Restricted Stock nor any interest or right therein
or part thereof shall be liable for the debts, contracts, or engagements of the
Restricted Stockholder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy) and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that, subject to the Ownership Limit (as defined in the organizational
documents of the Company), such restrictions shall not prevent transfers by will
or by the applicable laws of descent and distribution. Restricted Stock may not
be sold or encumbered until all restrictions are terminated, expire or lapse.
(c) Notwithstanding any provision of this Section 7.4 to the
contrary, the restrictions imposed pursuant to Section 7.4(b) on each share of
Restricted Stock awarded to an Independent Director pursuant to Section 6.2(d)
of the Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall lapse in the following cumulative
installments: (i) such restrictions shall lapse with respect to 333 of such
shares on February 27, 1998, provided that the Independent Director has not had
a Termination of Directorship prior to such date, (ii) such restrictions shall
lapse with respect to 333 of such shares on February 27, 1999, provided that the
Independent Director has not had a Termination of Directorship prior to such
date, and (iii) such restrictions shall lapse with respect to 334 of such shares
on February 27, 2000, provided that the Independent Director has not had a
Termination of Directorship prior to such date.
(d) Unless provided otherwise by the Committee (or the Board in the
case of Independent Directors), if no consideration was paid by the Restricted
Stockholder upon issuance, a Restricted Stockholder's rights in unvested
Restricted Stock shall lapse upon Termination of Employment or Termination of
Directorship.
7.5 Repurchase of Restricted Stock
------------------------------
The Committee (or the Board in the case of Independent Directors)
shall provide in the terms of each individual Restricted Stock Agreement that
the Company shall have the right to repurchase from the Restricted Stockholder
the Restricted Stock then subject to restrictions under the Restricted Stock
Agreement immediately upon a Termination of Employment or Termination of
Directorship for any reason at a cash price per share equal to the price paid by
the Restricted Stockholder for such Restricted Stock; provided, however, that in
-------- -------
the sole and absolute discretion of the Committee (or the Board in the case of
Independent Directors) provision may be made that no such right of repurchase
shall exist in the event of a Termination of Employment or Termination of
Directorship without cause, or following a change in
37
<PAGE>
control of the Company or because of the Restricted Stockholder's retirement,
death or disability, or otherwise.
7.6 Escrow
------
The Secretary of the Company or such other escrow holder as the
Committee (or the Board in the case of Independent Directors) may appoint shall
retain physical custody of each certificate representing Restricted Stock until
all of the restrictions imposed under the Restricted Stock Agreement with
respect to the shares evidenced by such certificate expire or shall have been
removed.
7.7 Legend
------
In order to enforce the restrictions imposed upon shares of Restricted
Stock hereunder, the Committee (or the Board in the case of Independent
Directors) shall cause a legend or legends to be placed on certificates
representing all shares of Restricted Stock that are still subject to
restrictions under Restricted Stock Agreements, which legend or legends shall
make appropriate reference to the conditions imposed thereby.
7.8 Section 83(b)
-------------
A Restricted Stockholder may not make an election under Section 83(b)
of the Code or any other analogous state or local law, regulation or other
provision with respect to the receipt of any share of Restricted Stock.
5. Sections 1.17, 9.3 (except 9.3(b)(iii)), 9.5 and 9.7 of the Plan
are hereby amended to replace the parenthetical "(or the Board, in the case of
Options granted to Independent Directors)" set forth therein with the
parenthetical "(or the Board, in the case of Options and Restricted Stock
granted to Independent Directors)."
6. The third sentence of Section 8.2 is hereby amended to read in its
entirety as follows:
"Notwithstanding the foregoing, the full Board, acting by a majority
of its members in office, shall conduct the general administration of the
Plan with respect to Options and Restricted Stock granted to Independent
Directors."
7. The reference to "Section 7.4" in Section 9.3(b)(vi) is hereby
amended to refer instead to "Section 7.4(d)."
8. The first sentence of Section 9.3(b)(vii) is hereby amended to
read in its entirety as follows:
None of the foregoing discretionary terms of this Section 9.3(b) shall
be permitted with respect to Options granted under Section 3.4(d) to
Independent Directors and Restricted Stock granted to Independent Directors
to the extent that such discretion would be inconsistent with the
applicable exemptive conditions of Rule 16b-3.
38
<PAGE>
Executed at Manhattan Beach, California, this ____ day of __________, 1997.
By
----------------------------------
President
By
----------------------------------
Secretary
39
<PAGE>
ALEXANDER HAAGEN PROPERTIES, INC.
P ANNUAL MEETING OF STOCKHOLDERS--MAY 15, 1997
R
O THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X
Y The undersigned stockholder of Alexander Haagen Properties, Inc. does
hereby nominate, constitute and appoint Alexander Haagen III and Steven
Jaffe or either of them, the true and lawful proxies, agents and attorneys
of the undersigned, with full power of substitution, to vote for the
undersigned all of the common stock of said corporation standing in the
name of the undersigned on its books at the close of business on March 31,
1997 at the Annual Meeting of Stockholders to be held at The Radisson
Hotel, Suite 236, 1400 Parkview Avenue, Manhattan Beach, California, on May
15, 1997 or at any adjournment thereof, with all of the powers which would
be possessed by the undersigned if personally present as follows on the
reverse side.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE. SEE REVERSE
SIDE
-----------
<PAGE>
[X] Please mark votes as in this example.
IF NO CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF MANAGEMENT'S THREE NOMINEES AS DIRECTORS AND FOR THE APPROVAL OF THE
AMENDED AND RESTATED 1993 STOCK OPTION AND INCENTIVE PLAN, AS AMENDED BY THE
FIRST AND SECOND AMENDMENTS THERETO.
1. Election of Directors:
NOMINEES Alexander Haagen, Sr.,
James C. Hankla
and Fred L. Riedman
FOR AGAINST
[_] [_]
[_] __________________________________
For all nominees except as noted above
2. Approval of the Amended and Restated 1993 Stock Option and Incentive Plan,
as amended by the First and Second Amendments thereto
FOR AGAINST
[_] [_]
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Mark here for address change
and note below [_]
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders dated April 14, 1997 and the Proxy Statement furnished therewith.
NOTE: Please sign name exactly as your name (or names) appear on the stock
certificate. When signing as attorney, executor, administrator, trustee or
guardian please give full title. If more than one trustee, all should sign. All
joint owners must sign.
Signature: ______________________________ Date: _________________
Signature: ______________________________ Date: _________________
