<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
LIBERTY PROPERTY TRUST
- ------------------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
--------------------------------------------------
(2) Aggregate number of securities to which
transaction applies:
--------------------------------------------------
<PAGE>
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
--------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------
(5) Total fee paid:
--------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the form or schedule and the date of its
filing.
(1) Amount Previously Paid:
--------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
--------------------------------------------------
<PAGE>
LIBERTY PROPERTY TRUST
GREAT VALLEY CORPORATE CENTER
65 VALLEY STREAM PARKWAY
SUITE 100
MALVERN, PENNSYLVANIA 19355
------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1997
------
The 1997 ANNUAL MEETING of the shareholders of Liberty Property Trust, a
Maryland real estate investment trust (the "Trust"), will be held at the
Wyndham Franklin Plaza, Horizons Ballroom, 17th and Race Streets,
Philadelphia, Pennsylvania 19103, on Wednesday, May 21, 1997, at 9:00 a.m.,
local time, for the following purposes:
1. To elect three Class III trustees to hold office until the Annual
Meeting of Shareholders to be held in 2000 and until their successors
are duly elected and qualified;
2. To consider and vote on an amendment to the Declaration of Trust of the
Trust to reduce the ownership limitation with respect to shares of
beneficial interest of the Trust from 7.5% to 5.0% and in connection
therewith to conform the restrictive legend appearing on certificates
for shares of beneficial interest of the Trust to reflect such
reduction in the ownership limitation;
3. To consider and vote on an amendment to the Declaration of Trust of the
Trust to permit the Board of Trustees of the Trust to grant certain
exemptions from the ownership limitation with respect to shares of
beneficial interest of the Trust without shareholder approval.
4. To consider and vote on an amendment of the Liberty Property Trust
Amended and Restated Share Incentive Plan to increase the number of
shares available for awards thereunder from 2,100,000 to 4,033,535; and
5. To transact such other business as may properly come before the
meeting.
The Board of Trustees has fixed the close of business on March 25, 1997 as
the record date for the meeting. Only shareholders of record as of that date
are entitled to notice of and to vote at the meeting and any adjournment and
postponement thereof.
The accompanying form of proxy is solicited by the Board of Trustees of
the Trust. Reference is made to the attached Proxy Statement for further
information with respect to the business to be transacted at the meeting.
By Order of the Board of Trustees,
James J. Bowes
Secretary
Malvern, Pennsylvania
April 11, 1997
PLEASE COMPLETE AND RETURN YOUR SIGNED PROXY CARD
Please complete and promptly return your proxy in the envelope provided.
This will not prevent you from voting in person at the meeting. It will,
however, help to assure a quorum and to avoid added proxy solicitation costs.
<PAGE>
LIBERTY PROPERTY TRUST
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1997
GENERAL INFORMATION
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Trustees of Liberty Property Trust, a
Maryland real estate investment trust (the "Trust"), for use at the Trust's
1997 Annual Meeting of Shareholders (the "Meeting") to be held at the Wyndham
Franklin Plaza, Horizons Ballroom, 17th and Race Streets, Philadelphia,
Pennsylvania 19103, on Wednesday, May 21, 1997 at 9:00 a.m., local time, and
any adjournment or postponement thereof, for the purposes set forth in the
foregoing notice and more fully discussed herein. This proxy statement, the
foregoing notice and the enclosed proxy are first being mailed to
shareholders of the Trust on or about April 11, 1997. Only shareholders of
record at the close of business on March 25, 1997 shall be entitled to notice
of and to vote at the Meeting.
If the enclosed proxy is properly executed and received by the Trust prior
to voting at the Meeting, the common shares of beneficial interest, $0.001
par value per share, of the Trust (the "common shares") represented thereby
will be voted in accordance with the instructions marked thereon. In the
absence of instructions, the common shares will be voted FOR the nominees of
the Board of Trustees in the election of trustees, FOR the proposal relating
to the reduction of the ownership limitation in the Declaration of Trust of
the Trust (the "Declaration of Trust"), FOR the proposal relating to the
amendment to the Declaration of Trust regarding exemptions from the ownership
limitation and FOR the proposal relating to the amendment to the Amended and
Restated Share Incentive Plan. Management does not intend to bring any matter
before the Meeting other than as indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before
the Meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such matters.
Any proxy may be revoked at any time prior to its exercise by notifying
the Secretary in writing prior to the time of the Meeting, by delivering a
duly executed proxy bearing a later date or by attending the Meeting and
voting in person.
On the record date, the Trust had 39,459,913 common shares outstanding and
entitled to vote at the Meeting. There must be present at the Meeting in
person or by proxy shareholders entitled to cast a majority of all the votes
entitled to be cast to constitute a quorum for the Meeting. Common shares
represented at the Meeting in person or by proxy but not voted will be
included in determining the presence of a quorum. Each holder of common
shares is entitled to one vote per share held of record by such holder on the
record date. Assuming a quorum is present at the Meeting, a plurality of all
the votes cast at the Meeting shall be sufficient to elect a trustee and to
approve the proposal relating to the Amended and Restated Share Incentive
Plan, and a two-thirds vote of all the common shares then outstanding and
entitled to vote at the Meeting shall be sufficient to approve each of the
proposals relating to the amendments to the Declaration of Trust. There is no
cumulative voting in the election of trustees. A majority of all the votes
cast at the Meeting shall be sufficient to approve any other matter that may
properly come before the Meeting, unless more than a majority of the votes
cast is required by statute or by the Declaration of Trust.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31, 1997
(except as indicated below), regarding the beneficial ownership, as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of common shares by each trustee, each nominee for election
as trustee, each executive officer listed in the Summary Compensation Table
appearing on page ____, all trustees and executive officers as a group, and
each person who is known to the Trust to be the beneficial owner of more than
five percent of the outstanding common shares. Each person named in the table
below has sole voting and investment power with respect to the common shares
listed opposite such person's name, except as otherwise noted.
<TABLE>
<CAPTION>
No. of Shares Percent
Beneficial Owners Beneficially Owned of Class
----------------------------------------------------------- ------------------ ----------
<S> <C> <C>
Willard G. Rouse III ...................................... 586,288(1) 1.5%
Joseph P. Denny ........................................... 330,750(2) *
George F. Congdon ......................................... 389,924(3) 1.0%
Robert E. Fenza ........................................... 230,643(4) *
George J. Alburger, Jr. ................................... 28,292(5) *
Frederick F. Buchholz ..................................... 4,500(6) *
J. Anthony Hayden ......................................... 53,500(6) *
M. Leanne Lachman ......................................... 4,500(6) *
David L. Lingerfelt ....................................... 35,674(7) *
John A. Miller, CLU ....................................... 2,500(8) *
Stephen B. Siegel ......................................... 2,000(8) *
FMR Corp.
82 Devonshire Street, Boston, MA 02109 ................... 4,071,850(9) 10.2%
All trustees and executive officers as a group (13 persons) 1,971,385(10) 4.7%
</TABLE>
- ------
* Represents less than one percent of class.
(1) Includes 70,000 common shares subject to options exercisable within 60
days of the record date for the Meeting, 4,000 common shares issuable
upon exchange of 8% Exchangeable Subordinated Debentures due 2001 (the
"Debentures") of Liberty Property Limited Partnership, a Pennsylvania
limited partnership (the "Operating Partnership" and, together with the
Trust, the "Company") (which, as of March 31, 1997, was 91.54% owned by
the Trust), and 457,665 common shares issuable upon exchange of units of
limited partnership interest ("Units") of the Operating Partnership,
including 3,051 Units which become exchangeable in July 1997.
2
<PAGE>
(2) Includes 67,500 common shares subject to options exercisable within 60
days of the record date for the Meeting and 260,250 common shares
issuable upon exchange of Units.
(3) Includes 35,200 common shares subject to options exercisable within 60
days of the record date for the Meeting and 310,153 common shares
issuable upon exchange of Units, including 61,611 Units which become
exchangeable in July 1997. Includes 2,800 common shares held by Mr.
Congdon or his spouse as custodian for children and other relatives, as
to which Mr. Congdon disclaims beneficial ownership.
(4) Includes 34,900 common shares subject to options exercisable within 60
days of the record date for the Meeting and 195,043 common shares
issuable upon exchange of Units. Also includes 700 common shares, held
by Mr. Fenza as custodian for children, or owned directly by such
children, as to which Mr. Fenza disclaims beneficial ownership.
(5) Includes 22,760 common shares subject to options exercisable within 60
days of the record date for the Meeting.
(6) Includes 3,500 common shares subject to options exercisable within 60
days of the record date for the Meeting.
(7) Includes 1,000 common shares subject to options exercisable within 60
days of the record date for the Meeting, and 30,674 common shares
issuable upon exchange of Units. Also includes 987 common shares held by
trusts for the benefit of Mr. Lingerfelt's children, as to which Mr.
Lingerfelt disclaims beneficial ownership.
(8) Includes 1,000 common shares subject to options exercisable within 60
days of the record date for the Meeting.
(9) Includes 1,639,350 common shares issuable upon exchange of Debentures.
As of December 31, 1996, FMR Corp. had sole dispositive power over
4,071,850 common shares, including 389,650 common shares over which FMR
Corp. had sole voting power. The information relating to FMR Corp. is
based solely on a review of a Schedule 13G filed by FMR Corp. with the
Securities and Exchange Commission.
(10) Includes 273,860 common shares subject to options exercisable within 60
days of the record date for the Meeting, 4,000 common shares issuable
upon exchange of Debentures, and 1,495,458 common shares issuable upon
exchange of Units, including 120,117 Units which become exchangeable in
June 1997.
3
<PAGE>
ELECTION OF TRUSTEES AND CONTINUING TRUSTEES
In accordance with the Declaration of Trust and By-laws, the Board of
Trustees has fixed the total number of trustees at nine. The Board is divided
into three classes serving staggered three-year terms, the term of one class
of trustees to expire in each successive year. Three Class III trustees will
be elected at the Meeting to serve until the Annual Meeting of Shareholders
to be held in 2000 and until their successors are duly elected and qualified.
All of the present nominees for election as trustees currently serve as
trustees of the Trust. A proxy signed in the enclosed form will be voted FOR
the election of the nominees named below, unless a contrary instruction is
given.
Management believes that all of its nominees are willing and able to serve
the Trust as trustees. If any nominee at the time of election is unable or
unwilling to serve or is otherwise unavailable for election, and as a
consequence thereof other nominees are designated, the persons named in the
proxy or their substitutes will have the discretion and authority to vote or
to refrain from voting for other nominees in accordance with their judgment.
The following is a brief description of the nominees for election as
trustees and of the other trustees of Trust.
NOMINEES FOR ELECTION AS CLASS III TRUSTEES WITH TERMS TO EXPIRE IN 2000
Joseph P. Denny, age 50, has served as the President, Chief Operating
Officer and a trustee of the Trust since its inception. Mr. Denny joined
Rouse & Associates in 1979 and served as a Regional Managing General Partner
and, later, as President. In these capacities, he was responsible for
developing approximately one billion dollars of projects, primarily large
urban projects. Mr. Denny is a member of the Board of Directors of Lawrence
Holdings Co. Mr. Denny is a Vice Chairman of the Industrial and Office Park
Council of the Urban Land Institute and serves on the Advisory Board of the
Wharton Business School's Real Estate Center and the NAREIT Legislative
Advisory Council.
David L. Lingerfelt, age 44, has served as a trustee of the Trust since
May 1995. Mr. Lingerfelt is a partner with the law firm of Shewmake, Baronian
and Parkinson. Before joining Shewmake, Baronian and Parkinson in August
1996, Mr. Lingerfelt was Director of Property Administration and Counsel for
Best Products Co., Inc. Previously, Mr. Lingerfelt had been a partner in the
Richmond, Virginia office of the law firm of Coates & Davenport. Mr.
Lingerfelt is a member of the American Bar Association, Real Property Section
and Business Law Section.
John A. Miller, CLU, age 69, has served as a trustee of the Trust since
May 1995. Mr. Miller is presently serving as Chairman of the Board of
Guarantee Reassurance Corp., and in July 1997 will retire from the Board of
Directors of the Provident Mutual Life Insurance Company of Philadelphia
after serving as Director and Chairman of the Investment Committee. Mr.
Miller served Provident Mutual in many capacities over his 25 years there,
including as its President, Chief Operating Officer, Chief Executive Officer
and Chairman of the Board. He has been a member of various Board of
Directors, including BetzDearborn, Bryn Mawr Hospital, CoreStates Financial
Corp. and CoreStates Bank N.A.
4
<PAGE>
CONTINUING CLASS I TRUSTEES WITH TERMS TO EXPIRE IN 1998
Willard G. Rouse III, age 54, has served as Chairman of the Board of
Trustees and Chief Executive Officer of the Trust since its inception. He had
been a General Partner of Rouse & Associates since its founding in 1972. He
serves as a trustee of the Urban Land Institute. Mr. Rouse has served as
Chairman of each of the Pennsylvania Convention Center Authority, the Foundation
for Architecture, We the People 200 and the Philadelphia Children's Network and
as President of the Fellowship Commission.
M. Leanne Lachman, age 54, has served as a trustee of the Trust since June
1994. Ms. Lachman is Managing Director of Schroder Real Estate Associates
("Schroder"). which specializes in real estate management for institutional
investors, managing approximately $1.0 billion invested in shopping centers
and office buildings across the country. Prior to joining Schroder, Ms.
Lachman was affiliated for 26 years with Real Estate Research Corporation, the
last eight serving as its President and Chief Executive Officer. Ms. Lachman is
a director of Lincoln National Corporation and Chicago Title & Trust Company,
and is an Executive Committee Member and Trustee of the Urban Land Institute and
Urban Land Foundation.
J. Anthony Hayden, age 52, has served as a trustee of the Trust since June
1994. Mr. Hayden is the President of Hayden Real Estate, Inc. From 1990
through February 1996, he served as Executive Director and a member of the
Board of Directors for Cushman & Wakefield, for whom he had worked since
1975. From 1981 to 1990 he served as its Mid-Atlantic/Midwest Regional
Director, and was responsible for the operations and management of the
Boston, Chicago, Detroit, Philadelphia, Pittsburgh, St. Louis, and
Washington, DC offices. Mr. Hayden is also a member of the Society of
Industrial & Office Realtors, serving in 1982 as President of the
Philadelphia Chapter. He is also a member of the Philadelphia Board of
Realtors and was President in 1985. Other memberships include the National
Association of Real Estate Boards and the Urban Land Institute.
CONTINUING CLASS II TRUSTEES WITH TERMS TO EXPIRE IN 1999
George F. Congdon, age 54, has served as a trustee of the Trust since its
inception and as an Executive Vice President of the Trust since April 1995.
Previously, Mr. Congdon served as Treasurer and Chief Financial Officer of
the Trust. Mr. Congdon had been a General Partner of Rouse & Associates, the
Trust's predecessor, since its founding in 1972. He is a member of the Board
of Directors of the People's Light and Theater Company and Historic Yellow
Springs, Inc.
Frederick F. Buchholz, age 51, has served as a trustee of the Trust since
June 1994. Mr. Buchholz has been affiliated with Equitable Real Estate or its
predecessor ("Equitable") since 1968. He was appointed Senior Vice President
in December 1990 and Executive Vice President in 1992, and is the officer in
charge of Equitable's New York and Philadelphia regions, supervising new
business, asset management and restructuring/workout activities on behalf of
a total mortgage and equity portfolio which exceeds $5.0 billion. Mr.
Buchholz is a member of the Appraisal Institute, the Philadelphia Board of
Realtors and the Philadelphia Chamber of Commerce.
5
<PAGE>
Stephen B. Siegel, age 52, has served as a trustee of the Trust since May
1995. Mr. Siegel has been president of Insignia/Edward S. Gordon Co., Inc.
and its predecessor ("ESG"), the fourth largest commercial real estate
company in the United States, since March 1992. Prior to joining ESG, Mr.
Siegel spent more than 27 years at Cushman & Wakefield, ascending to Chief
Executive Officer. Mr. Siegel left Cushman & Wakefield in late 1988 and
entered a joint venture with the Chubb Corporation where he worked for
several years to develop and acquire investment-grade office buildings
throughout the United States. Mr. Siegel is the general chairman of the
Association for the Help of Retarded Children (AHRC) and a trustee of the
National Jewish Center for Immunology and Respiratory Medicine. In addition,
he serves on the advisory board of the Wharton Business School's Real Estate
Center and New York University's Real Estate Council and is active in the
Urban Land Institute, the Real Estate Board of New York and the Young
Men's/Women's Real Estate Association.
COMMITTEES OF THE BOARD OF TRUSTEES
The Board's Audit Committee makes recommendations concerning the
engagement of independent public accountants for the Trust, reviews with such
accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants and fees
therefor and reviews the adequacy of the Trust's internal accounting
controls. The Audit Committee consists of at least two independent trustees,
with the independent trustees constituting a majority of the Committee
members. The Audit Committee currently includes no officers or employees of
the Trust or the Operating Partnership. Members of the Audit Committee are
Messrs. Buchholz (Chair), Hayden and Siegel and Ms. Lachman. The Committee
met once during the last fiscal year.
The Board's Compensation Committee is empowered to determine compensation
for the Trust's executive officers and to administer the Trust's Amended and
Restated Share Incentive Plan. Members of the Compensation Committee are
Messrs. Miller (Chair), Buchholz and Lingerfelt. See "Report of the
Compensation Committee on Executive Compensation." The Compensation Committee
met once during the last fiscal year.
The Board's Corporate Governance and Nominating Committee consists of Ms.
Lachman (Chair) and Messrs. Rouse, Hayden and Miller. The Corporate
Governance and Nominating and Committee makes recommendations to the Board
regarding nominees for positions on the Board. The Corporate Governance and
Nominating Committee will consider candidates proposed by shareholders in
accordance with the following procedure. Such nominations should be sent to
the attention of the Trust's Secretary at its principal executive office,
describe the candidate's qualifications and be accompanied by the candidate's
written statement of willingness and affirmative desire to serve representing
the interest of all shareholders. Shareholders may also make nominations
directly by following the procedure specified in the Trust's Bylaws. The
Corporate Governance and Nomination Committee met once during the last fiscal
year.
6
<PAGE>
TRUSTEES' ATTENDANCE AT MEETINGS
The Board of Trustees held eight meetings during the last fiscal year.
Each incumbent trustee of the Trust attended at least 75% of the meetings of
the Board of Trustees and meetings held by all committees on which such
trustee served.
TRUSTEES' COMPENSATION
Each trustee who is not also an officer and full-time employee of the
Trust or the Operating Partnership receives an annual trustee fee in the
amount of $18,000 plus a fee of $1,000 for each meeting attended. Trustees
who are officers and full-time employees of the Trust or the Operating
Partnership receive no separate compensation for service as a trustee or
committee member. Additionally, all trustees are reimbursed for travel and
lodging expenses associated with attending Board and committee meetings. On
June 23 of each year, each non-employee trustee is entitled to receive a
10-year option to purchase 5,000 common shares, exercisable at a price equal
to the fair market value on the date of the grant. Such options are
exercisable with respect to 20% of the covered shares after the first
anniversary of the grant date, exercisable with respect to 50% of the covered
shares after the second anniversary of the grant date and fully exercisable
after the third anniversary of the grant date.
PROPOSALS TO AMEND THE DECLARATION OF TRUST
NATURE OF PROPOSED AMENDMENTS
At a meeting held on February 26, 1997, the Board of Trustees unanimously
adopted, and recommends for approval by the shareholders at the Meeting,
certain amendments to the Declaration of Trust. If these amendments are
approved by shareholders at the Meeting, the Declaration of Trust will be
amended (a) to reduce the ownership limitation from 7.5% to 5.0% and conform
the legend required to appear on certificates for shares of beneficial
interest (which include the common shares and any preferred shares of
beneficial interest that may be issued in the future) of the Trust to reflect
the reduction in the ownership limitation; and (b) to allow the Board of
Trustees flexibility to grant exemptions from the ownership limitation. THE
AMENDMENTS TO THE DECLARATION OF TRUST REGARDING THE REDUCTION IN THE
OWNERSHIP LIMITATION AND THE CONFORMING CHANGES TO THE RESTRICTIVE LEGEND
APPEARING ON THE SHARE CERTIFICATES ARE CONDITIONED UPON THE APPROVAL OF THE
AMENDMENT TO THE DECLARATION OF TRUST REGARDING EXEMPTIONS FROM THE OWNERSHIP
LIMITATION, AND WILL NOT BE EFFECTED UNLESS THE AMENDMENT REGARDING
EXEMPTIONS FROM THE OWNERSHIP LIMITATION IS APPROVED BY SHAREHOLDERS AT THE
MEETING.
If adopted, the proposed amendments will amend (a) Section 7.12 of the
Declaration of Trust to afford the Board of Trustees authority to grant
exemptions from the "Ownership Limit" in the Declaration of Trust, without
also obtaining the affirmative vote of not less than two-thirds of the shares
of beneficial interest then outstanding and entitled to vote, under
circumstances in which the aggregate ownership limitations in the Declaration
of Trust designed to protect the tax status of the Trust as a real estate
investment trust (the "REIT Status") would not otherwise be breached and
Section 7.13 of the Declaration of Trust to conform the legend required to
appear on certificates for shares of beneficial interest of the Trust to
reflect the aforementioned reduction in the ownership limitation; and (b)
Section 7.1 of the Declaration of Trust to reduce the percentage of shares of
beneficial interest of the Trust referred to in the definition of the term
"Ownership Limit" from 7.5% to 5.0%.
7
<PAGE>
REASONS FOR AND EFFECTS OF PROPOSED AMENDMENTS
In order for the Trust to maintain its REIT Status, among other
requirements, no five or fewer beneficial owners of the shares of beneficial
interest may, at any one time, beneficially own in the aggregate more than
50% in number or value of the outstanding shares. In this regard, Article VII
of the Declaration of Trust contains various provisions designed to ensure
that such aggregate ownership limit is not breached. Among such limitations
is an ownership limit, which presently mandates that no shareholder may,
unless pursuant to an exemption obtained in accordance with Section 7.12 of
the Declaration of Trust, beneficially own more than that number of shares
that equals the lesser of (a) 7.5% of the number of outstanding shares and
(b) 7.5% of the value of outstanding shares.
BOARD AUTHORITY TO GRANT EXEMPTIONS
As the Declaration of Trust is presently constituted, these percentages may
be adjusted by the Board of Trustees only upon the affirmative vote of not less
than two-thirds of the shares then outstanding and entitled to vote.
Accordingly, even under circumstances where the Board of Trustees determines to
grant an exemption to the ownership limit in order to facilitate a transaction,
the exemption will not be effective until the holders of two-thirds of the
outstanding shares affirm such exemption. Given the period of time required to
seek shareholder approval of such an action, the usefulness of the Board's
ability to grant exemptions is limited. The Board of Trustees believes that
adoption of the proposed amendments would enhance its ability to grant
exemptions in appropriate cases, thereby facilitating certain equity investments
in the Company. Specifically, the Board of Trustees believes that the ability to
grant exemptions would facilitate investments by certain types of institutional
investors, such as pension funds and mutual funds, that may be willing to make
direct equity investments but require, as a practical matter, that the dollar
amount of the investment be larger than the dollar amount that can currently be
accommodated without a waiver.
The proposed amendment to the Declaration of Trust would vest in the Board
of Trustees the discretion to grant exemptions from the ownership limit. As a
result, the Board of Trustees would, consistent with its fiduciary duties to
the shareholders, be able to determine the investors for whom exemptions from
the ownership limit would be granted. By removing the need for shareholder
approval, the amendment could have the effect of preventing shareholders from
voting on certain transactions that could effect a change of control.
Management has no knowledge of any effort by any person to accumulate the
Trust's securities or to otherwise seek to obtain control of the Trust
through a merger, tender offer, proxy solicitation in opposition to
management or any other means, and such transactions are impeded by certain
provisions of the Declaration of Trust which provide a limitation on share
ownership and require that no five or fewer persons may own more than 49% in
number or value of the outstanding shares of beneficial interest. However, if
the amendment to the Declaration of Trust regarding exemptions from the
ownership limitations is adopted, the Board of Trustees would have
discretion, without seeking shareholder approval, in the context of a
transaction of this type, to grant an exemption from the ownership limitation
to a person that might be viewed as friendly to management, which would not
necessarily be the person offering the highest price to shareholders in the
control contest.
8
<PAGE>
The adoption of the amendments to the Declaration of Trust regarding the
reduction in the ownership limitation and the conforming changes to the
restrictive legend appearing on the share certificates would have a similar
result in a control contest except that no person could acquire more than
5.0% (rather than 7.5%) of the shares.
It is anticipated that in determining whether to grant exemptions from the
ownership limitation, the Board of Trustees will consider the Trust's capital
needs, operations and financial condition, alternative financing sources, the
identity and nature of persons to whom an exemption may be granted and other
factors deemed relevant. Depending on the Trust's financial or operational
condition and other factors at the time it is considering granting a specific
exemption, the Board of Trustees may be more or less inclined to grant a
particular exemption.
REDUCTION IN OWNERSHIP LIMIT TO FIVE PERCENT
Section 7.11 of the Declaration of Trust also includes a provision to the
effect that an exemption from the ownership limit cannot be granted if, after
giving effect to such exemption, the aggregate ownership by any five beneficial
owners could exceed 49.0%. Consistent with Section 7.11, in considering the
grant of an exemption to the ownership limit, it must be assumed that if the
exemption were granted, (i) the shareholder to which the exemption is proposed
to be granted would beneficially own the maximum number of shares permitted to
be beneficially owned under such exemption and (ii) each of four other
shareholders would beneficially own 7.5%, or such higher percentage as might
previously have been achieved by waiver, of the outstanding shares, the maximum
number of shares permitted to be beneficially owned without an exemption, or
30.0% of the outstanding shares in the aggregate. Accordingly, under these
circumstances, if no other exemptions were granted, an exemption could be
granted permitting one shareholder to beneficially own not more than 19.0% of
the outstanding shares.
Prior to the Trust's initial public offering, an exemption to the
ownership limit was granted to permit the beneficial ownership by an investor
of up to 13.0% of the outstanding shares (the "13.0% Shareholder").
Accordingly, if the 7.5% ownership limit is retained, additional exemptions
from the ownership limit will be limited to an aggregate of 6.0% of the
outstanding shares. If the entire availability for additional exemptions were
concentrated on one shareholder (other than the 13.0% Shareholder), based on
a 7.5% ownership limit, such shareholder could be permitted to beneficially
own 13.5% of the outstanding shares. The Board of Trustees believes that this
construct results in a limitation upon the Company's ability to facilitate
large equity investments in the Company.
If the ownership limit provided in the Declaration of Trust is reduced to
5.0% of the outstanding shares, as is proposed, then after taking into
account the exemption previously granted to the 13.0% Shareholder, the
percentage of the outstanding shares with respect to which the Board of
Trustees could grant to shareholders additional exemptions from the ownership
limit would increase from an aggregate of 6.0% to an aggregate of 16.0% of
the outstanding shares. If the entire availability for additional exemptions
were concentrated on one shareholder (other than the 13.0% Shareholder),
based on a 5.0% ownership limit, such shareholder could be permitted to
beneficially own 21.0% of the outstanding shares. To illustrate the benefit
to the Trust in reducing the ownership limit, with a 7.5% ownership limit, if
the availability for exemption were concentrated on the 13.0% Shareholder and
one other shareholder, such other shareholder could be permitted to
beneficially own 13.5% of the outstanding shares, whereas with a 5.0%
ownership limit, such two shareholders could be permitted to beneficially own
the same amounts and, in addition, another shareholder could be permitted to
beneficially own 12.5% of the outstanding shares.
9
<PAGE>
The Board of Trustees believes that adoption of the amendment to the
Declaration of Trust regarding the reduction of the ownership limitation and
the conforming changes to the restrictive legend appearing on the share
certificate will enhance the Board's ability to use such exemptions to
facilitate large equity investments in the Company. The Board of Trustees
believes that the continued growth of the Trust, as a real estate investment
trust, is dependent on its ability to execute its acquisition strategy which,
in turn, is dependent on its ability to raise substantial equity capital.
While there are a variety of alternatives that may be available to the Trust
in this regard, the Board of Trustees believes that institutional equity
investors constitute an important source of capital and that the Trust's
financing strategy should be designed to afford the Trust the ability to
attract capital from this source.
As a result of the reduction in the ownership limit, the restrictions in
the Declaration of Trust on share ownership will be imposed on beneficial
owners of more than 5.0% of the outstanding shares. Presently, such
restrictions are not imposed unless beneficial ownership exceeds 7.5% of the
outstanding shares. However, based on Schedules 13G filed with the Securities
and Exchange Commission, since the Trust's initial public offering,
management believes that only one shareholder, other than the 13.0%
Shareholder, had, at any time, beneficially owned in excess of 5.0% of the
outstanding common shares. Moreover, on the same basis, management believes
that no shareholder, other than the 13.0% Shareholder, has beneficially owned
more than 5.0% of the outstanding common shares since approximately December
31, 1995. Accordingly, management does not believe that the reduction of the
ownership limit will unduly restrict share ownership in the Trust. Moreover,
management believes that the reduction in the ownership limit, coupled with
the ability of the Board of Trustees to grant exemptions from the ownership
limit without further shareholder approval, will facilitate the Trust's
formation of capital.
Shareholders should carefully consider the proposed amendments to the
Declaration of Trust. Management believes that the effect of the proposed
amendments would be to grant the Board of Trustees greater flexibility in
attracting equity capital to the Trust from institutional investors.
TEXT OF PROPOSED AMENDMENTS
Amendments Regarding Reduction of Ownership Limitation. The text of the
definition of "Ownership Limit," set forth in Section 7.1 of the Declaration
of Trust, as proposed to be amended, is set forth below. The proposed
amendments to the definition have been marked by underlining the text to be
added and striking through the text to be deleted.
10
<PAGE>
"Ownership Limit" shall (initially deleted) mean that number of Shares
which equals the lesser of (a) (begin underline) 5.0% (end underline)
(7.5% deleted) of the number of outstanding Equity Shares and (b) (begin
underline) 5.0% (end underline) (7.5% deleted) of the value of
outstanding Equity Shares, and after any adjustment as set forth in
Section 7.10, shall mean such greater percentage of the outstanding
Equity Shares as so adjusted. The number and value of outstanding Equity
Shares shall be determined by the Board of Trustees in good faith, which
determination shall be conclusive for all purposes hereof.
The text of the legend required to be borne by all certificates for shares
of beneficial interest in the Trust, set forth in Section 7.13 of the
Declaration of Trust, as proposed to be amended, is set forth below. The
proposed amendments to the legend have been marked by underlining the text to
be added and striking through the text to be deleted.
The securities represented by this certificate are subject to
restrictions on transfer for the purpose of the Trust's maintenance of
its status as a real estate investment trust under the Internal Revenue
Code of 1986, as amended. Except as otherwise provided pursuant to the
Declaration of Trust, no Person (unless such Person is an Existing
Holder) may Beneficially Own Shares in excess of that number of Shares
which equals the lesser of (begin underline) 5.0% (end underline) (7.5%
deleted) (or such greater percentage as may be determined by the Board of
Trustees) of (a) the number of outstanding Equity Shares of the Trust and
(b) the value of outstanding Equity Shares of the Trust. Any Person who
attempts or proposes to beneficially own Shares in excess of the above
limitations must notify the Trust in writing at least 15 days prior to
such proposed or attempted Transfer. All capitalized terms in this legend
have the meanings defined in the Declaration of Trust of the Trust, a
copy of which will be sent without charge to each Shareholder who so
requests. If the restrictions on transfer are violated, the securities
represented hereby will be designated and treated as Excess Shares which
will be held in the Charitable Trust by the Trust.
Amendment Regarding Exemptions from the Ownership Limitation. The text of
Section 7.12 of the Declaration of Trust, as proposed to be amended, is set
forth below. The proposed amendments to the Section have been marked by
underlining the text to be added.
SECTION 7.12 Exemptions by Board. The Board of Trustees, upon
receipt of a ruling from the Internal Revenue Service or an
opinion of counsel or other evidence satisfactory to the Board
of Trustees, and upon at least 15 days written notice from a
Transferee prior to the proposed Transfer which, if consummated,
would result in the intended Transferee owning Shares in excess
of the Ownership Limit or Existing Holder Limit, as the case may
be, and upon such other conditions as the Board of Trustees may
direct, may exempt a Person from the Ownership Limit or the
Existing Holder Limit, as the case may be; provided, however,
that no exemption from the Ownership Limit or the Existing
Holder Limit shall be effective without the prior affirmative
vote of not less than two-thirds of the Shares then outstanding
and entitled to vote (begin underline) if, after giving effect to such
exemption, five Beneficial Owners of Common Shares (assuming each such
Beneficial Owner Beneficially Owns the greater of (i) the Ownership Limit
or (ii) the greatest number or percentage of Shares such Beneficial Owner
is permitted to own pursuant to this Section 7.12 or any other provision
hereof) would Beneficially Own, in the aggregate, more than 49% in number
or value (determined as provided in the definition of "Ownership Limit"
in Section 7.1) of the outstanding Equity Shares. (end underline)
11
<PAGE>
RECOMMENDATION AND REQUIRED VOTE
The Board of Trustees has unanimously approved and recommends a vote FOR
approval of the above proposals. Approval of each of the above proposals
requires the affirmative vote of the holders of not less than two-thirds of
the common shares outstanding and entitled to vote at the Meeting.
PROPOSAL TO AMEND THE LIBERTY PROPERTY TRUST
AMENDED AND RESTATED SHARE INCENTIVE PLAN
SUMMARY OF THE PLAN
The Trust's Board of Trustees adopted the Liberty Property Trust Amended
and Restated Share Incentive Plan (the "Plan") effective upon completion of
the initial public offering of the common shares. At a meeting held on
February 26, 1997, the Board of Trustees unanimously adopted, and recommend
for approval by the shareholders at the Meeting, an amendment to the Plan.
Upon adoption, this amendment will increase the number of common shares
available for awards under the Plan from 2,100,000 to 4,033,535. The
following is a brief summary of the Plan, as modified by the proposed
amendment, which is qualified in all respects by the text of the Plan,
attached hereto as Exhibit A.
Under the Plan the Trust may grant options to purchase shares or may make
grants of restricted shares to certain participants. Options granted under
the Plan may be either non-qualified share options ("Non-Qualified Options")
or options intended to qualify as "incentive stock options" under Section 422
of the Internal Revenue Code of 1986 (the "Code"), as amended ("Incentive
Options" and, together with the Non-Qualified Options, the "Options").
PURPOSE OF THE PLAN
The purpose of the Plan is to advance the interests of the Trust, its
shareholders and its subsidiaries by providing selected trustees, employees,
consultants and advisors, upon whom the Trust's sustained growth and
financial success depend, to acquire or increase their proprietary interest
in the Trust through receipt of rights to acquire common shares and through
transfers of restricted shares.
12
<PAGE>
AMOUNT OF COMMON SHARES SUBJECT TO OPTIONS AND GRANTS OF RESTRICTED SHARES
UNDER THE PLAN
The Plan provides for the grant of Options and restricted shares covering
an aggregate of 2,100,000 shares. If the proposed amendment to the Plan is
approved by the shareholders, the maximum aggregate number of common shares
available for the grant of Options and restricted shares would increase by
1,933,535 to 4,033,535. The number of common shares subject to Options and
grants of restricted shares is subject to adjustment to reflect changes in
the Trust's capitalization. Any Option that is not exercised prior to
expiration or that otherwise terminates will thereafter be available for
further grant under the Plan. As of March 31, 1997, grants of Options and
restricted shares covering 2,065,968 shares had been made under the Plan.
ADMINISTRATION OF THE PLAN
The Plan is administered by a committee or committees designated by the
Board of Trustees (the "Share Option Committee"). Options and grants of
restricted shares may be granted under the Plan to members of the Share
Option Committee only pursuant to automatic grants under a specified formula
stated in the Plan. Subject to the conditions set forth in the Plan, the
Share Option Committee has full and final authority to determine the number
of Options or restricted shares granted, the individuals to whom and the time
or times at which such Options or restricted shares shall be granted and be
exercisable, the exercise prices (including vesting) and the terms and
provisions of the respective agreements to be entered into at the time of
grant, which may vary; provided, that no more than 250,000 common shares may
be subject to Options granted to any individual employee in any one calendar
year. The Plan is intended to be flexible, and a significant amount of
discretion is vested in the Share Option Committee with respect to all
aspects of the Options and restricted shares to be granted under the Plan.
PARTICIPANTS
Options and restricted shares may be granted under the Plan to any person
who is or who agrees to become a trustee, employee, consultant or advisor of
the Trust, its subsidiaries and designated affiliates. As of March 31, 1997,
the Trust, its subsidiaries and designated affiliates had nine trustees,
approximately 202 employees.
EXERCISE PRICE
The exercise price of each Non-Qualified Option granted under the Plan
shall be determined by the Share Option Committee. The exercise price of each
Incentive Option granted under the Plan shall be determined by the Share
Option Committee and shall be 100% of the fair market value of a common share
on the date the Option is granted (or at least 110% if the recipient owns,
directly or by attribution under the Code, common shares having 10% of the
total combined voting power of all classes of shares of the Trust ("10%
Shareholder") or any subsidiary of the Trust). The payment of the exercise
price of an Option may be made in cash or shares, as more fully described
under "Exercise of Options."
13
<PAGE>
Fair market value shall be determined by the Share Option Committee in
accordance with the Plan and such determination shall be binding upon the
Trust and upon the holder. The closing sale price of the common shares on the
New York Stock Exchange on April 8, 1997 was $24 5/8 per share.
TERM OF OPTIONS
Incentive Options may be granted for a term of up to 10 years (five years
in the case of a grant to a 10% Shareholder), which may extend beyond the
term of the Plan.
EXERCISE OF OPTIONS
The terms governing exercise of Options granted under the Plan shall be
determined by the Share Option Committee, which may limit the number of
Options exercisable in any period.
Payment of the exercise price upon exercise of an Option may be made in
any combination of cash and common shares, including the automatic
application of common shares received upon exercise of an Option to satisfy
the exercise price of additional Options (unless the Share Option Committee
provides otherwise). Where payment is made in common shares, such common
shares shall be valued for such purpose at the fair market value of such
common shares on the date of delivery. In no event shall an Option granted
under the Plan be exercisable prior to the date of shareholder approval of
the Plan.
NON-TRANSFERABILITY
Options granted under the Plan are not transferable other than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order.
TERMINATION OF RELATIONSHIP
Except as the Share Option Committee may expressly determine otherwise, if
the holder of an Option ceases to be employed by or to have another
qualifying relationship (such as that of trustee, employee, consultant or
advisor) with the Trust, any of its subsidiaries or a designated affiliate
other than by reason of the holder's death or permanent disability (as
defined in the Plan), all Options granted to such holder under the Plan shall
terminate immediately, except for Options that were exercisable on the date
of such termination of relationship, which Options shall terminate three
months after the date of such termination of relationship unless such Options
expire or terminate earlier. In the event of the death or permanent
disability of the holder of an Option, except as the Share Option Committee
may expressly determine otherwise, Options may be exercised to the extent
that the holder might have exercised the Options on the date of death or
permanent disability.
14
<PAGE>
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Trustees may at any time and from time to time amend, suspend
or terminate the Plan, but may not, without the approval of the shareholders
of the Trust representing a majority of the voting power, increase the
maximum number of shares subject to Options that may be granted under the
Plan or change the class of individuals eligible to receive an Incentive
Option. No amendment, suspension or termination of the Plan by the Board of
Trustees may alter or impair any of the rights under any Option granted under
the Plan without the holder's consent.
The Plan makes it clear that the Share Option Committee may amend any
award under the Plan (provided that any such amendment that would impair the
rights or interests of a participant must have the written consent of the
participant, except if such amendment is to enable the Plan to qualify for an
exemption under Rule 16b-3 of the Securities Exchange Act of 1934, as
amended) to include any provision that, at the time of such amendment, is
authorized under the Plan.
CHANGE IN CONTROL
In the event of a change in control, as defined in the Plan, Options to
the extent not then vested will be fully exercisable.
EFFECTIVE DATE AND TERM OF THE PLAN
Options may be granted after the date that is the tenth anniversary of the
earlier of the date on which the Plan is adopted or is approved by the
shareholders.
TERMS OF RESTRICTED SHARES
The Committee will determine the terms and conditions applicable to awards
of restricted shares, including a period during which the restricted shares
may not be sold, assigned, transferred, pledged or otherwise encumbered.
Unless otherwise determined by the Committee, a recipient of a restricted
share award will have the same rights as an owner of common shares, including
the right to receive cash distributions and to vote the common shares. Unless
otherwise specified in an award, upon termination of employment a participant
will forfeit all restricted shares as to which the restrictions had not
lapsed at time of the termination of employment.
REGISTRATION OF SHARES SUBJECT TO THE PLAN
The 2,100,000 common shares available under the Plan as currently
constituted were registered under a Form S-8 Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), which was filed
with the Securities and Exchange Commission (the "Commission") on ________,
199__ and became effective on _________, 199__.
If the proposed amendment is adopted, the 1,933,535 additional common
shares that will be available under the Plan will be registered under a Form
S-8 Registration Statement under the Securities Act, to be filed with the
Commission within 12 months after the date of the Meeting.
15
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Incentive Options. The Trust believes that with respect to Incentive
Options granted under the Plan, no income generally will be recognized by an
optionee for federal income tax purposes at the time such an Option is
granted or at the time it is exercised. If the optionee makes no disposition
of the common shares so received within two years from the date the Incentive
Option was granted and one year from the receipt of the common shares
pursuant to the exercise of the Incentive Option, he will generally recognize
long-term capital gain or loss upon disposition of the common shares.
If the optionee disposes of common shares acquired by exercise of an
Incentive Option before the expiration of the applicable holding period, any
amount realized from such a disqualifying disposition will be taxable as
ordinary income in the year of disposition generally to the extent that the
lesser of the fair market value of the common shares on the date the Option was
exercised or the fair market value at the time of such disposition exceeds the
exercise price. Any amount realized upon such a disposition in excess of the
fair market value of the common shares on the date of exercise generally will be
treated as long-term or short-term capital gain, depending on the holding period
of the common shares. A disqualifying disposition will include the use of common
shares acquired upon exercise of an Incentive Option in satisfaction of the
exercise price of another Option prior to the satisfaction of the applicable
holding period.
The Trust will not be allowed a deduction for federal income tax purposes
at the time of the grant or exercise of an Incentive Option. At the time of a
disqualifying disposition by an optionee, the Trust generally will be
entitled to a deduction for federal income tax purposes equal to the amount
taxable to the optionee as ordinary income in connection with such
disqualifying disposition (assuming that such amount constitutes reasonable
compensation).
Non-qualified Options. The Trust believes that the grant of a
Non-Qualified Option under the Plan will not be subject to federal income
tax. Upon exercise, the optionee generally will recognize ordinary income in
an amount equal to the excess of the fair market value of the common shares
on the date of exercise over the exercise price. Gain or loss on the
subsequent sale of common shares received on exercise of a Non-Qualified
Option generally will be long-term or short-term capital gain or loss,
depending on the holding period of the common shares.
Upon exercise of a Non-Qualified Option, the Trust generally will be
entitled to a compensation deduction for federal income tax purposes in the
year and in the same amount as the optionee or grantee is considered to have
recognized ordinary income (assuming that such compensation is reasonable and
that provision is made for withholding of federal income taxes, where
applicable). In general, under Section 162(m) of the Code (the "Million
Dollar Cap"), no deduction is allowed for remuneration in excess of
$1,000,000 paid by the Trust during any taxable year to any of the Chief
Executive Officer or the four
16
<PAGE>
highest compensated executive officers (other than the Chief Executive Officer).
Remuneration for this purpose excludes certain performance-based compensation.
The Trust believes that all general requirements applicable to the Plan under
the performance-based compensation rules have been met in order for specific
Option grants to be treated as giving rise to performance-based compensation. It
is anticipated that the Plan will be administered so that all Non-Qualified
Options will in fact qualify as performance-based and any income recognized on
their exercise will be exempt from the Million Dollar Cap.
ACCOUNTING CONSEQUENCES
The accounting treatment of Options selected by the Trust provides that no
amount is accrued as compensation and thus charged against earnings unless
the Options were granted at below the market price. In the latter
circumstance, the excess of such market price over the exercise price is
fixed at the date of grant and is amortized, through a charge against
earnings, over the period to which the compensation represented by the
Options is deemed attributable. This is typically the vesting period of the
Options.
RECOMMENDATION AND REQUIRED VOTE
The Board of Trustees recommends a vote FOR approval of the above
proposal. Approval of the above proposal requires the affirmative vote of the
holders of a majority of the common shares represented at the Meeting.
17
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for the years ended December 31, 1996, 1995 and
1994, the compensation paidor accrued by the Trust and its subsidiaries,
including the Operating Partnership, to the Trust's Chief Executive Officer
and to the four other most highly compensated executive officers, determined
as of December 31, 1996 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
------------------------------ -------------------------- ----------
Other
Annual Restricted Securities All
Compensa- Stock Underlying Other
tion ($) Awards ($) Options/ LTIP Compen-
Name and Principal Positions Year(1) Salary($) Bonus($) (2) (3) SARs(#) Payouts($) sation ($)
---------------------------- ------- ---------- ---------- ----------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Willard G. Rouse III....... 1996 $220,470 $104,850 -- $ 60,000 77,175 -- --
Chairman and 1995 $210,000 $200,500 -- -- 100,000 -- --
Chief Executive Officer 1994 $113,750 $ 500 -- -- 100,000 -- --
Joseph P. Denny............ 1996 $183,750 $129,215 -- -- 64,313 -- --
President and 1995 $175,000 $175,500 -- -- 87,500 -- --
Chief Operating Officer 1994 $ 94,791 $ 500 -- -- 100,000 -- --
George F. Congdon.......... 1996 $178,500 $ 500 -- $ 89,964 37,485 -- --
Executive Vice President 1995 $170,000 $ 51,500 -- $ 61,200 51,000 -- --
1994 $ 92,083 $ 500 -- -- 50,000 -- --
Robert E. Fenza............ 1996 $173,250 $ 73,265 -- -- 36,383 -- --
Executive Vice President 1995 $165,000 $ 99,500 -- -- 49,500 -- --
1994 $ 89,375 500 -- -- 50,000 -- --
George J. Alburger, Jr..... 1996 $168,000 $ 500 -- $100,800 42,000 -- --
Chief Financial Officer 1995 $104,849 $ 375 -- $ 63,135 76,300 -- --
1994 $ -- $ -- -- -- -- -- --
</TABLE>
- ------
(1) Amounts for 1994 represent amounts paid from June 16, 1994 (the effective
date of the Trust's initial public offering) through December 31, 1994.
Annual salary rates during such period were: Mr. Rouse-- $210,000; Mr.
Denny-- $175,000; Mr. Congdon - $170,000; and Mr. Fenza-- $165,000. For
the period January 1 through June 15, 1994, Messrs. Rouse, Denny,
Congdon, and Fenza received aggregate salaries of $25,208, $102,500,
$25,208 and $75,625, and aggregate bonuses of $4,038, $3,365, $3,269 and
$3,173, respectively, from the Trust's predecessors. Messrs. Rouse and
Congdon also received distributions as partners of various predecessor
partnerships during this period.
(2) Did not exceed the lesser of $50,000 or 10% of the total annual salary
and bonus for any Named Executive Officer.
(3) Consistent with a policy adopted by the Trust's compensation committee
with respect to employee bonus compensation, Messrs. Rouse, Congdon and
Alburger elected to receive common shares in lieu of cash for all or part
of their bonus compensation for 1996, at the rate of shares equal to 120%
of the cash value of such bonus or portion thereof (the "Bonus Value").
See "Report of the Compensation Committee on Executive Compensation."
Pursuant to such elections, in March 1997, Messrs. Rouse, Congdon and
Alburger were awarded 1,522 shares, 2,292 shares and 2,554 shares,
respectively. Each executive received the number of shares able to be
purchased with the dollar amount of the Bonus Value, less applicable
withholding, based on the closing price per share of the common shares on
February 28, 1997. The dollar amounts of Bonus Values are not reflected
under the Bonus column. Dividends will be paid on the shares issued
pursuant to such awards, and such awards will vest on March 1, 1998.
18
<PAGE>
SHARE OPTION GRANTS, EXERCISES AND HOLDINGS
The following tables set forth certain information concerning options to
purchase shares that were granted to the Named Executive Officers with
respect to the fiscal year ended December 31, 1996, options exercised by the
Named Executive Officers during such period and the number and value of
options held by such persons as of the end of such period. The Trust does not
have any outstanding stock appreciation rights.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------------ Potential Realizable Value at
Number of Percent of Total Assumed Annual Rates of
Securities Options/SARs Share Price Appreciation
Underlying Granted to Exercise or for Option Term(3)
Options/SARs Employees in Base Price Expiration --------------------------------
Name Granted (#) (1) Fiscal Year ($ per Share) (2) Date 5% ($) 10% ($)
- --------------------------- ---------------- -------------------- ----------------- -------------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Willard G. Rouse III -- -- -- -- $ -- $ --
Joseph P. Denny -- -- -- -- $ -- $ --
George F. Congdon -- -- -- -- $ -- $ --
Robert E. Fenza -- -- -- -- $ -- $ --
George J. Alburger, Jr. -- -- -- -- $ -- $ --
</TABLE>
AGGREGATED OPTION/SAR EXERCISES
AND FISCAL YEAR-END OPTION/SAR VALUE TABLES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Acquired Value Fiscal Year-End (#) Fiscal Year-End ($) (1)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
----------------------- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Willard G. Rouse III -- -- 70,000/207,175 $387,500/$687,500
Joseph P. Denny -- -- 67,500/184,313 $375,000/$637,500
George F. Congdon -- -- 35,200/103,285 $194,750/$347,750
Robert E. Fenza -- -- 34,900/100,983 $193,250/$341,750
George J. Alburger, Jr. -- -- 22,760/95,540 $123,175/$277,075
</TABLE>
- ------
(1) Value is reported net of option exercise price, but before taxes
associated with exercise.
19
<PAGE>
EMPLOYMENT AGREEMENTS
Messrs. Rouse, Denny and Congdon have entered into employment agreements
with the Trust and the Operating Partnership, each dated June 23, 1994. Each
agreement has a three-year term, subject to certain termination provisions
and subject to extension if the executive and the Trust so agree. The initial
base salary for each executive is specified in the agreements; for the base
salaries paid in 1996, 1995 and 1994, see the Summary Compensation Table
above. The agreements provide that bonuses, incentive compensation and any
annual increases in base salary shall be determined by the Compensation
Committee of the Board of Trustees. Pursuant to the employment agreements,
each executive has agreed that, during the Restriction Period (defined
below), the executive will not engage in any activities or businesses
relating to the commercial real estate industry, either directly or
indirectly, unless the consent of a majority of the independent trustees of
the Trust is first obtained. The Restriction Period shall expire on the
earlier of June 23, 2000 or the date of the executive's termination, unless
the termination is caused by any violation of these restrictions. Each
executive is permitted to continue to engage in certain business activities
in addition to those conducted by the Trust or the Operating Partnership. If
an executive's employment with the Trust is terminated by the Trust as a
result of the executive's disability, or by the executive for any reason in
accordance with the provisions of the agreement, then in addition to base
salary and any incentive compensation payable through the date of such
termination, the executive shall be entitled to a lump sum payment equal to
the greater of 12 months' base salary or the base salary payable for the
remainder of the then-current term of the executive's employment agreement.
In such event the executive shall also continue to receive employee and
dependent benefits for the remaining portion of the then-current term of the
employment agreement. Each employment agreement also provides that the
executive will be nominated for election as a trustee during the term
thereof.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Exchange Act, the Trust's executive
officers and trustees, and persons beneficially owning more than 10% of the
common shares, are required to file with the Securities and Exchange
Commission reports of their initial ownership and changes in ownership of
common shares. The Trust believes that for 1996, its executive officers and
trustees who were required to file reports under Section 16(a) complied with
such requirements in all material respects.
CERTAIN TRANSACTIONS
Executive officers of the Trust and their affiliates who were partners in
58 property- owning partnerships in existence prior to the formation of the
Trust in 1994 (the "Pre-Existing Partnerships") retained a minor portion of
their interest in the Pre-Existing Partnerships, in order to eliminate an
adverse tax consequence to the Trust in its formation. The Operating
Partnership acquired all of the other interests in the Pre-Existing
Partnerships in the formation. As part of the formation, these executive
officers and affiliates entered into
20
<PAGE>
an agreement with the Operating Partnership under which such remaining interests
will be exchanged, subject to $23.9 million of indebtedness of the partners
(Willard G. Rouse III, $592,054; George F. Congdon, $10,282,027; David C.
Hammers $10,105,520; affiliates $2,939,848) due to the Trust (which will be
assumed by the Operating Partnership), for 120,117 additional Units. The
exchange will take place in December 1997, at which time the transferor partners
will be released from liability with respect to such indebtedness. The
indebtedness was created at the time of the formation and the proceeds were used
by the partners to make capital contributions to the Pre-Existing Partnerships.
Such capital contributions were used to eliminate encumbrances on the
partnerships' properties at the time of the Trust's formation. Such arrangements
will not confer any Units or other economic benefits on the Trust's executives
in excess of the benefits they would have received, or involve expenditure by
the Trust or Operating Partnership of any sums in excess of the sums that would
have been expended, if the Trust's executives had conveyed their entire interest
in the Pre-Existing Partnerships to the Operating Partnership at the time of the
Trust's formation. The shareholding information of the executive officers given
above treats the Units to be received by them in the anticipated exchange (and
the common shares for which they may be exchanged) as being owned beneficially
indirectly by such persons at this time.
The founding partners of Rouse & Associates, the Company's predecessor,
also owned all of The Norwood Company ("Norwood"), a construction company
that performed much but not all of the construction for Rouse & Associates.
After the Trust's formation in 1994, the independent trustees of the Trust's
Board of Trustees determined that it would be in the best interests of the
Trust for Norwood to continue to perform construction for the Trust provided
it was not receiving a greater profit on Trust jobs than it was making on
jobs with third parties not related to the Trust. An agreement was reached
with Norwood that at the end of each fiscal year, it would calculate the
profit it made on each Trust job and compare it with its average profit on
non-Trust jobs for that year and refund any profit that exceeded the average
profit. In January 1995, the owners of Norwood sold the company to certain of
its employees, none of whom is a Trust employee, taking back notes which are
non-recourse to the buyers. Under those circumstances, the independent
trustees determined it was appropriate to keep the profit limitation on
Norwood jobs for another year.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Trustees, composed of
independent trustees of the Board of Trustees of the Trust, reviews the
performance of the Trust's executive officers, fixes the base compensation of
executive officers and awards appropriate bonuses, grants, shares, and
options and determines the number of common shares to which such options
should be subject. The Committee has access to independent compensation data
and is authorized, if determined appropriate in any particular case, to
engage outside compensation consultants.
The objectives of the Committee are to support the achievement of desired
Trust performance, to provide compensation and benefits that will attract and
retain superior talent, to reward performance and to relate a portion of
compensation to the outcome of the Trust's performance.
21
<PAGE>
The executive compensation program is comprised generally of base salary,
performance bonuses and long-term incentives in the form of share options.
The compensation program may also include various benefits, including health
insurance plans and pension, profit sharing and retirement plans in which
substantially all of the Trust's employees participate. At the present time,
the only plans in effect are health, life and disability insurance plans, a
cafeteria plan and a 401(k) plan.
In connection with the initial public offering of the Trust, Messrs. Rouse
(the Chairman and Chief Executive Officer), Denny (the President and Chief
Operating Officer), and Congdon (Executive Vice President), respectively,
entered into three-year employment contracts through June 22, 1997, which
provided for base salary and benefits which were negotiated with the
underwriters of the Trust's initial public offering, on the basis of
comparable employment compensation arrangements provided to other public real
estate investment trusts at the time of the offering. Annual increases,
bonuses and incentive compensation are to be determined by the Compensation
Committee at the end of each calendar year, subject to the express provisions
of the employment contracts. The salaries for 1997 will be increased by four
percent of the 1996 amount. The Compensation Committee determined that a four
percent increase for 1997 was an appropriate adjustment taking into account
the inflation rate and other factors. The bonuses for the Named Executive
Officers and the Chief Financial Officer are determined by the increase in
the Trust's funds from operations. Such bonuses could range from 0% to 100%
of base salary based on increases in funds from operations of less than 10%
to increases of 13.5% or more. The actual bonuses of these executive officers
for fiscal year 1996 ranged from $73,265 to $154,850. Consistent with a
policy adopted by the Compensation Committee for all employees, an Executive
Officer has the option of taking stock in lieu of a cash bonus at the rate of
shares equal to 120% of the cash value of the bonus. Base salary levels for
the Trust's other executive officers are generally the median of salaries of
officers of companies comparable in business, size and location, as adjusted
to take into account individual experience and performance specific to the
Trust. Because the companies used for comparative purposes are generally
local to the markets served by the Company, they do not overlap completely
the companies in the NAREIT Index referred to in the performance graph under
"Share Price Performance Graph."
The Compensation Committee determines the bonuses for executive officers
other than the Named Executive Officers based upon attainment of certain
performance goals relating to each participant's duties to the Trust and as
established annually by the Trust's Chief Operating Officer, which may
include growth in funds from operations.
The Compensation Committee believes that employee equity ownership
provides significant additional motivation to employees to maximize value for
the Trust's shareholders and, therefore, grants share options to certain of
the Trust's employees, including executive officers. It is anticipated that
options will be exercisable at the prevailing market price of the common
shares at the time of grant and, therefore, will have value only if the
Trust's share price increases over the exercise price after the option is
granted. The Committee believes that the grant of share options provides a
long-term incentive to the grantees to contribute to the growth of the Trust
and establishes a direct link between compensation and shareholder return.
The terms of options, including vesting, exercisability and term, are
determined by
22
<PAGE>
the Compensation Committee, subject to requirements imposed by the Trust's
Amended and Restated Share Incentive Plan under which such options may be
granted. The decisions are based upon relative position and responsibilities of
each employee, historical and expected contributions of each employee to the
Trust, previous grants to each employee under the Plan and a review of
competitive equity compensation for employees of similar rank in companies that
are comparable to the Trust's industry, geographic location and size. For
information regarding recent options granted to the Trust's Named Executive
Officers, reference is made to the tables set forth in this Proxy Statement
under the caption "Compensation of Executive Officers."
Compensation Committee
John A. Miller (Chair)
Frederick F. Buchholz
David L. Lingerfelt
23
<PAGE>
SHARE PRICE PERFORMANCE GRAPH
The following table compares the cumulative total shareholder return on
the common shares for the period beginning June 30, 1994 and ending December
31, 1996 with the cumulative total return on the Standard & Poor's 500 Stock
Index ("S&P 500") and the NAREIT Equity REIT Total Return Index ("NAREIT
Index") over the same period. Total return values for the S&P 500, the NAREIT
Index and the common shares were calculated based on cumulative total return
assuming the investment of $100 in the NAREIT Index, the S&P 500 and the
common shares on June 30, 1994, and assuming reinvestment of dividends. The
shareholder return shown on the graph below is not necessarily indicative of
future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
LIBERTY PROPERTY TRUST COMMON SHARES, NAREIT EQUITY REIT
TOTAL RETURN INDEX AND S&P 500 INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$200.00 |----------------------------------------------------------------------------------------------------------|
| |
| |
| # |
| |
| # |
$150.00 |----------------------------------------------------------------------#-----------------------------------|
| # &*|
| # |
| # & |
| # * *& |
| * * |
$100.00 |--#*&--------------------------------&--------------------------------------------------------------------|
| & |
| |
| |
| |
| |
$0.0 |----------------------------------------------------------------------------------------------------------|
30-Jun-94 30-Sep-94 31-Dec-94 31-Mar-95 30-Jun-95 30-Sep-95 31-Dec-95 31-Mar-96 30-Jun-96 30-Sep-96 31-Dec-96
*=Liberty Property Trust &=NAREIT Index (1) #=S&P 500
</TABLE>
<TABLE>
<CAPTION>
1994 1995 1996
--------------------------------------------------------------------------------------------------------------------
June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liberty
Property
Trust...... 100.00 99.38 100.52 101.19 104.61 115.52 115.12 114.42 112.40 125.48 151.37
- -----------------------------------------------------------------------------------------------------------------------------------
NAREIT
Index (1).. 100.00 97.95 97.97 97.80 103.56 108.43 112.93 115.50 120.63 128.53 152.75
- -----------------------------------------------------------------------------------------------------------------------------------
S&P 500.... 100.00 104.92 104.90 115.11 126.03 136.05 144.16 151.90 158.71 163.61 177.30
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------
(1) The NAREIT Index (consisting of 166 real estate investment trusts with a
total market capitalization of $78.3 billion at December 31, 1996) is
maintained by the National Association of Real Estate Investment Trusts,
Inc., is published monthly, and is based on the last closing prices of
the preceding month.
24
<PAGE>
PROPOSALS OF SECURITY HOLDERS
All proposals of any shareholder of the Trust that such holder wishes to
be presented at the next Annual Meeting of Shareholders and included in the
proxy statement and form of proxy prepared for that meeting must be received
by the Trust at its principal executive offices no later than November 21,
1997. All such proposals must be submitted in writing to the Secretary of the
Trust at the address appearing on the notice accompanying this proxy
statement.
INDEPENDENT AUDITORS
Ernst & Young LLP performed the customary auditing services for the fiscal
year ended December 31, 1996. The Trust has selected Ernst & Young LLP as its
independent auditors to perform these services for the next fiscal year. A
representative of Ernst & Young LLP is expected to be present at the Meeting.
Such representative will be available to respond to questions from the floor
and will be afforded an opportunity to make any statement which he or she may
deem appropriate.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies will be borne by the Trust. In
addition to the use of the mails, solicitations may be made by telephone and
personal interviews by officers, directors and regularly engaged employees of
the Trust. The Trust has engaged Corporate Investor Communications, Inc.
("CIC") to distribute the Trust's shareholder materials and solicit proxies.
The Trust has agreed to pay CIC a fee of approximately $6,000 and reimburse
CIC for all reasonable disbursements. Brokerage houses, custodians, nominees
and fiduciaries will be requested to forward this proxy statement to the
beneficial owners of the stock held of record by such persons, and the Trust
will reimburse them for their charges and expenses in this connection.
ANNUAL REPORT ON FORM 10-K
The Trust will provide without charge to each person solicited by this
Proxy Statement, at the written request of any such person, a copy of the
Trust's Annual Report on Form 10-K (including the financial statements and
the schedules thereto) as filed with the Securities and Exchange Commission
for its most recent fiscal year. Such written requests should be directed to
the Director of Investor Relations at the address of the Trust appearing on
the first page of this Proxy Statement.
25
<PAGE>
LIBERTY PROPERTY TRUST
AMENDED AND RESTATED SHARE INCENTIVE PLAN
1. Purpose. Liberty Property Trust (the "Company") hereby amends and
restates the Liberty Property Trust Share Incentive Plan (the "Plan") as set
forth herein. The Plan is intended to recognize the contributions made to the
Company by key employees, consultants and advisors of the Company or an
Affiliate (including employees who are members of the Board of Trustees) of
the Company or any Affiliate, to provide such persons with additional
incentive to devote themselves to the future success of the Company or an
Affiliate, and to improve the ability of the Company or an Affiliate to
attract, retain, and motivate individuals upon whom the Company's sustained
growth and financial success depend, by providing such persons with an
opportunity to acquire or increase their proprietary interest in the Company
through receipt of rights to acquire common shares of beneficial interest,
$.001 par value per share (the "Shares"), in the Company, and through
transfers of Shares subject to conditions of forfeiture. In addition, the
Plan is intended as an additional incentive to members of the Board of
Trustees (the "Trustees") who are not employees of the Company or an
Affiliate to serve on the Board of Trustees and to devote themselves to the
future success of the Company by providing them with an opportunity to
acquire or increase their proprietary interest in the Company through the
receipt of Options to acquire Shares.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
(a) "Affiliate" means a corporation which is a parent corporation or a
subsidiary corporation with respect to the Company within the meaning of
Section 424(e) or (f) of the Code. In addition, "Affiliate" means any
other entity in which the Company owns an interest which would be an
Affiliate as defined in the preceding sentence but for the fact that such
entity is not a corporation. Employees of any such non-corporate affiliate
shall not be granted ISOs under the Plan.
(b) "Award" means a grant of Shares subject to conditions of forfeiture
made pursuant to the terms of the Plan.
(c) "Award Agreement" means the agreement between the Company and a
Grantee with respect to an Award made pursuant to the Plan.
(d) "Awardee" means a person to whom an Award has been granted pursuant
to the Plan.
(e) "Board of Trustees" means the Board of Trustees of the Company.
(f) "Change of Control" has the meaning as set forth in Section 10 of
the Plan.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" has the meaning set forth in Section 3 of the Plan.
(i) "Company" means Liberty Property Trust, a Maryland real estate
investment trust.
(j) "Disability" has the meaning set forth in Section 22(e)(3) of the
Code.
(k) "Fair Market Value" has the meaning set forth in Subsection 8(b) of
the Plan.
(l) "Grantee" means a person to whom an Option or an Award has been
granted pursuant to the Plan.
(m) "ISO" means an Option granted under the Plan which is intended to
qualify as an "incentive stock option" within the meaning of Section
422(b) of the Code.
(n) "Non-employee Trustee " means a member of the Board of Trustees who
is not an employee of the Company or an Affiliate and who qualifies both
as a "non-employee director" as that term is used in Rule 16b-3 and as an
"outside director" as that term is used in applicable IRS regulations
promulgated under Code Section 162(m).
26
<PAGE>
(o) "Non-qualified Stock Option" means an Option granted under the Plan
which is not intended to qualify, or otherwise does not qualify, as an
"incentive stock option" within the meaning of Section 422(b) of the Code.
(p) "Option" means either an ISO or a Non-qualified Stock Option
granted under the Plan.
(q) "Optionee" means a person to whom an Option has been granted under
the Plan, which Option has not been exercised and has not expired or
terminated.
(r) "Option Document" means the document described in Section 8 or
Section 9 of the Plan, as applicable, which sets forth the terms and
conditions of each grant of Options.
(s) "Option Price" means the price at which Shares may be purchased
upon exercise of an Option, as calculated pursuant to Subsection 8(b) or
Subsection 9(a) of the Plan.
(t) "Restricted Share" means a Share subject to conditions of
forfeiture and transfer granted to any person pursuant to an Award under
the Plan.
(u) "Retirement" shall mean a termination of an Optionee's employment
or services for the Company or an Affiliate at any time after such
Optionee has reached age 65.
(v) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or any successor rule.
(w) "Section 16 Officer" means any person who is an "officer" within
the meaning of Rule 16a-1(f) promulgated under the Securities Exchange Act
of 1934, as amended, or any successor rule.
(x) "Shares" means the shares of beneficial interest, $.01 par value
per share, of the Company.
(y) "Trustee" means a member of the Board of Trustees.
3. Administration of the Plan. The Plan shall be administered by the Board
of Trustees of the Company if all members of the Board of Trustees are
Non-employee Trustees; provided, however, that the Board of Trustees may
designate a committee or committee(s) of the Board of Trustees composed of
two or more of its Trustees to administer the Plan in its stead. If any
member of the Board of Trustees is not a Non-employee Trustee, the Board of
Trustees shall (i) designate a committee composed of two or more Trustees,
each of whom is a Non-employee Trustee (the "Non-employee Trustee
Committee"), to operate and administer the Plan in its stead, (ii) designate
two committees to operate and administer the Plan in its stead, one of such
committees composed of two or more of its Non-employee Trustees (the
"Non-employee Trustee Committee") to operate and administer the Plan with
respect to the Company's Section 16 Officers and the Trustees who are not
members of the Non-employee Trustee Committee, and another committee composed
of two or more Trustees (which may include Trustees who are not Non-employee
Trustees) to operate and administer the Plan with respect to persons other
than Section 16 Officers or Trustees or (iii) designate only one committee
composed of two or more Non-employee Trustees (the "Non-employee Trustee
Committee") to operate and administer the Plan with respect to the Company's
Section 16 Officers and Trustees (other than those Trustees serving on the
Non-employee Trustee Committee) and itself operate and administer the Plan
with respect to persons other than Section 16 Officers or Trustees. Any of
such committees designated by the Board of Trustees, and the Board of
Trustees itself in its administrative capacity with respect to the Plan, is
referred to as the "Committee." With the exception of the timing of grants of
Options, the price at which Shares may be purchased, and the number of Shares
covered by Options granted to each member of the Non-employee Trustee
Committee, all of which shall be as specifically set forth in Section 9, the
other provisions set forth herein, as it pertains to members of the
Non-employee Trustee Committee, shall be administered by the Board of
Trustees.
(a) Meetings. The Committee shall hold meetings at such times and
places as it may determine. Acts approved at a meeting by a majority of
the members of the Committee or acts approved in writing by the unanimous
consent of the members of the Committee shall be the valid acts of the
Committee.
(b) Grants and Awards. Except with respect to Options granted under
Subsection 8(j) and to Non-employee Trustee Committee Members pursuant to
Section 9, the Committee shall from time to time
27
<PAGE>
at its discretion direct the Company to grant Options and Awards pursuant
to the terms of the Plan. The Committee shall have plenary authority to
(i) determine the persons to whom, and the times at which Options and
Awards are to be granted as well as the terms applicable to Options and
Awards, (ii) determine the type of Option to be granted and the number of
Shares subject thereto, (iii) determine the Awardees to whom, and the
times at which, Restricted Shares are granted, the number of Shares
awarded, and the purchase price per Share, if any, and (iv) approve the
form and terms and conditions of the Option Documents and Award
Agreements; all subject, however, to the express provisions of the Plan.
In making such determinations, the Committee may take into account the
nature of the Grantee's services and responsibilities, the Grantee's
present and potential contribution to the Company's success and such other
factors as it may deem relevant. Notwithstanding the foregoing, grants of
Options to Non-employee Trustee Committee Members shall be made
exclusively in accordance with Section 9 and such other provisions of the
Plan that specifically apply to such Options. The interpretation and
construction by the Committee of any provisions of the Plan or of any
Option or Award granted under it shall be final, binding and conclusive.
(c) Exculpation. No member of the Committee shall be personally liable
for monetary damages as such for any action taken or any failure to take
any action in connection with the administration of the Plan or the
granting of Options or Awards thereunder unless (i) the member of the
Committee has breached or failed to perform the duties of his office under
applicable law and (ii) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness; provided, however, that
the provisions of this Subsection 3(c) shall not apply to the
responsibility or liability of a member of the Committee pursuant to any
criminal statute or to the liability of a member of the Committee for the
payment of taxes pursuant to local, state or federal law.
(d) Indemnification. Service on the Committee shall constitute service
as a member of the Board of Trustees. Each member of the Committee shall
be entitled without further act on his part to indemnity from the Company
to the fullest extent provided by applicable law and the Company's
Declaration of Trust and/or By-laws in connection with or arising out of
any action, suit or proceeding with respect to the administration of the
Plan or the granting of Options or Awards thereunder in which he or she
may be involved by reason of his or her being or having been a member of
the Committee, whether or not he or she continues to be such member of the
Committee at the time of the action, suit or proceeding.
4. Grants and Awards under the Plan. Options under the Plan may be in the
form of a Non-qualified Stock Option, an ISO, or Awards of Restricted Shares,
or any combination thereof, at the discretion of the Committee.
5. Eligibility. All key employees, consultants and advisors of the Company
or an Affiliate and members of the Board of Trustees shall be eligible to
receive Options and Awards hereunder. The Committee, in its sole discretion,
shall determine whether an individual qualifies as a key employee.
Notwithstanding anything to the contrary contained herein, consultants and
advisors shall only be eligible to receive Options or Awards provided bona
fide services shall be rendered by such persons, and such services are not in
connection with a capital raising transaction.
6. Shares Subject to Plan. The aggregate maximum number of Shares for
which Options or Awards may be granted pursuant to the Plan (including Shares
for which Options or Awards were granted under the Plan prior to this
restatement) is four million thirty-three thousand five hundred thirty-five
(4,033,535), subject to adjustment as provided in Section 11 of the Plan. The
Shares shall be issued from authorized and unissued Shares or Shares held in
or hereafter acquired for the treasury of the Company. If an Option
terminates or expires without having been fully exercised for any reason, or
if Shares granted pursuant to an Award have been conveyed back to the Company
pursuant to the terms of an Award Agreement, the Shares for which the Option
was not exercised or the Shares that were conveyed back to the Company may
again be the subject of one or more Options or Awards granted pursuant to the
Plan.
7. Term of the Plan. The amended and restated Plan is effective as of
February 26, 1997, the date of its adoption by the Board of Trustees (the
"Approval Date"), subject to the approval of the amended and restated Plan
within twelve months of the Approval Date by a majority of the votes cast at
a duly called meeting of
28
<PAGE>
the shareholders at which a quorum representing a majority of all outstanding
voting interests of the Company is, either in person or by proxy, present and
voting, or by a method and in a degree that would be treated as adequate
under applicable state law in the case of an action requiring shareholder
approval. No Option or Award may be granted under the Plan ten years after
the Approval Date. If the Plan is not approved by shareholder vote as
described above, all Options and Awards granted under the Plan as amended and
restated that could not have been granted under the Plan as in effect without
regard to this Amended and Restated Plan shall be null and void.
8. Option Documents and Terms. Each Option granted under the Plan shall be
a Non-qualified Stock Option unless the Option shall be specifically
designated at the time of grant to be an ISO for federal income tax purposes.
To the extent any Option designated an ISO is determined for any reason not
to qualify as an incentive stock option within the meaning of Section 422 of
the Code, such Option shall be treated as a Non- qualified Stock Option for
all purposes under the provisions of the Plan. Options granted pursuant to
the Plan shall be evidenced by the Option Documents in such form as the
Committee shall from time to time approve, which Option Documents shall
comply with and be subject to the following terms and conditions and such
other terms and conditions as the Committee shall from time to time require
which are not inconsistent with the terms of the Plan. However, the
provisions of this Section 8 shall not be applicable to Options granted to
non-employee members of the Board of Trustees, except as otherwise provided
in Subsection 9(c).
(a) Number of Option Shares. Each Option Document shall state the
number of Shares to which it pertains. An Optionee may receive more than
one Option, which may include Options which are intended to be ISO's and
Options which are not intended to be ISO's, but only on the terms and
subject to the conditions and restrictions of the Plan. Notwithstanding
anything to the contrary contained herein, no employee shall be granted
Options to acquire more than two hundred fifty thousand (250,000) Shares
during any calendar year.
(b) Option Price. Each Option Document shall state the Option Price
which, for a Non-qualified Stock Option, may be less than, equal to, or
greater than the Fair Market Value of the Shares on the date the Option is
granted and, for an ISO, shall be at least 100% of the Fair Market Value
of the Shares on the date the Option is granted as determined by the
Committee in accordance with this Subsection 8(b); provided, however, that
if an ISO is granted to an Optionee who then owns, directly or by
attribution under Section 424(d) of the Code, interests in the Company or
any parent or subsidiary corporation possessing more than ten percent of
the total combined voting power of all classes of interests of the Company
or such parent or subsidiary, then the Option Price shall be at least 110%
of the Fair Market Value of the Shares on the date the Option is granted.
If the Shares are traded in a public market, then the Fair Market Value
per Share shall be, if the Shares are listed on a national securities
exchange or included in the NASDAQ National Market System, the last
reported sale price thereof on the relevant date, or, if the Shares are
not so listed or included (or if there was no reported sale on the
relevant date), the mean between the last reported "bid" and "asked"
prices thereof on the relevant date, as reported on NASDAQ or by the
exchange, as applicable, or, if not so reported, as reported by the
National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable, or, in the event such method
of determination of fair market value is determined to be inaccurate or
such information as is needed for such determination as set forth above is
not available, as the Committee determines in good faith.
(c) Exercise. No Option shall be deemed to have been exercised prior to
the receipt by the Company of written notice of such exercise and of
payment in full of the Option Price for the Shares to be purchased. Each
such notice shall specify the number of Shares to be purchased and shall
(unless the Shares are covered by a then current registration statement or
qualified Offering Statement under Regulation A under the Securities Act
of 1933, as amended (the "Act"), contain the Optionee's acknowledgment in
form and substance satisfactory to the Company that (a) such Shares are
being purchased for investment and not for distribution or resale (other
than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the
registration provisions of the Act), (b) the Optionee has been advised and
understands that (i) the Shares have not been registered under the Act and
are "restricted securities" within the meaning of Rule 144 under the
29
<PAGE>
Act and are subject to restrictions on transfer and (ii) the Company is
under no obligation to register the Shares under the Act or to take any
action which would make available to the Optionee any exemption from such
registration, (c) such Shares may not be transferred without compliance
with all applicable federal and state securities laws, and (d) an
appropriate legend referring to the foregoing restrictions on transfer and
any other restrictions imposed under the Option Documents may be endorsed
on the certificates. Notwithstanding the foregoing, if the Company
determines that issuance of Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate
exemption from such registration is available, (C) the listing or
inclusion of the Shares on any securities exchange or an automated
quotation system or (D) the consent or approval of any governmental
regulatory body whose consent or approval is deemed necessary in
connection with the issuance of such Shares, the Company may defer
exercise of any Option granted hereunder until any of the events described
in this sentence has occurred.
(d) Medium of Payment. An Optionee shall pay for Shares (i) in cash,
(ii) by certified or cashier's check payable to the order of the Company,
or (iii) by such other mode of payment as the Committee may approve,
including payment through a broker in accordance with procedures permitted
by Regulation T of the Federal Reserve Board. Furthermore, the Committee
may provide in an Option Document that payment may be made in whole or in
part in Shares held by the Optionee. If payment is made in whole or in
part in Shares, then the Optionee shall deliver to the Company
certificates registered in the name of such Optionee representing the
Shares owned by such Optionee, free of all liens, claims and encumbrances
of every kind and having an aggregate Fair Market Value on the date of
delivery that is at least as great as the Option Price of the Shares (or
relevant portion thereof) with respect to which such Option is to be
exercised by the payment in Shares, endorsed in blank or accompanied by
stock powers duly endorsed in blank by the Optionee. In the event that
certificates for Shares delivered to the Company represent a number of
Shares in excess of the number of Shares required to make payment for the
Option Price of the Shares (or relevant portion thereof) with respect to
which such Option is to be exercised by payment in Shares, the certificate
or certificates issued to the Optionee shall represent (i) the Shares in
respect of which payment is made, and (ii) such excess number of Shares.
Notwithstanding the foregoing, the Committee may impose from time to time
such limitations and prohibitions on the use of Shares to exercise an
Option as it deems appropriate.
(e) Termination of Options.
(i) No Option shall be exercisable after the first to occur of the
following:
(A) Expiration of the Option term specified in the Option
Document, which, in the case of an ISO, shall not occur after (1)
ten years from the date of grant, or (2) five years from the date
of grant of an ISO if the Optionee on the date of grant owns,
directly or by attribution under Section 424(d) of the Code,
interests in the Company or any parent or subsidiary corporation
possessing more than ten percent (10%) of the total combined voting
power of all classes of interests of the Company or such parent or
subsidiary;
(B) The third month anniversary of the date of termination of the
Optionee's services or employment with the Company or an Affiliate
for any reason other than death, Disability or Retirement.
(C) A finding by the Committee, after full consideration of the
facts presented on behalf of both the Company and the Optionee,
that the Optionee has breached his or her employment or service
contract with the Company or an Affiliate, or has been engaged in
disloyalty to the Company or an Affiliate, including, without
limitation, fraud, embezzlement, theft, commission of a felony or
proven dishonesty in the course of his or her employment or
service, or has disclosed trade secrets or confidential information
of the Company or an Affiliate. In such event, in addition to
immediate termination of the Option, the Optionee shall
automatically forfeit all Shares for which the Company has not yet
delivered the Share certificates upon refund by the Company of the
Option Price. Notwithstanding anything herein to the contrary, the
Company may withhold delivery of Share certificates pending the
resolution of any inquiry that could lead to a finding resulting in
a forfeiture;
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(D) The date, if any, set by the Board of Trustees as an
accelerated expiration date in the event of the liquidation or
dissolution of the Company; or
(E) The occurrence of such other event or events as may be set
forth in the Option Document as causing an accelerated expiration
of the Option.
(ii) Notwithstanding the foregoing, the Committee may extend the
period during which all or any portion of an Option may be exercised to
a date no later than the Option term specified in the Option Document
pursuant to Subsection 8(e)(i)(A), provided that any change pursuant to
this Subsection 8(e)(ii) which would cause an ISO to become a
Non-qualified Stock Option may be made only with the consent of the
Optionee.
(iii) The terms of an executive severance agreement or other
agreement between the Company and an Optionee, approved by the
Committee, whether entered into prior or subsequent to the grant of an
Option, which provide for Option exercise dates later than those set
forth in Subsection 8(e)(i) but permitted by this Subsection 8(e)(ii)
shall be deemed to be Option terms approved by the Committee and
consented to by the Optionee.
(iv) Unless otherwise expressly permitted in the Option Document, no
Option granted pursuant to this Section 8 shall be exercisable
following the termination of the Optionee's services as a member of the
Board of Trustees or employment with the Company or any Affiliate with
respect to any Shares in excess of those which could have been acquired
by exercise of the Option on the date of such termination of services
or employment.
(f) Transfers. No Option granted under the Plan may be transferred,
except by will or by the laws of descent and distribution. During the
lifetime of the person to whom an Option is granted, such Option may be
exercised only by such person. Notwithstanding the foregoing, (1) a
Non-qualified Stock Option may be transferred pursuant to the terms of a
"qualified domestic relations order," within the meaning of Sections
401(a)(13) and 414(p) of the Code or within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, as amended, and (2) the
Committee may provide, in an Option Document, that an Optionee may
transfer Options to his or her children, grandchildren or spouse or to one
or more trusts for the benefit of such family members or to partnerships
in which such family members are the only partners (a "Family Transfer"),
provided that the Optionee receives no consideration for such Family
Transfer and the Option Documents relating to Options transferred in such
Family Transfer continue to be subject to the same terms and conditions
that were applicable to such Options immediately prior to the Family
Transfer.
(g) Limitation on ISO Grants. In no event shall the aggregate Fair
Market Value of the Shares with respect to which ISOs issued under the
Plan and incentive stock options issued under any other incentive stock
option plans of the Company or its Affiliates which are exercisable for
the first time by the Optionee during any calendar year exceed $100,000.
Any ISOs issued in excess of this limitation shall be treated as
Non-qualified Stock Options issued under the Plan. For purposes of this
subsection 8(g), the Fair Market Value of Shares shall be determined as of
the date of grant of the ISO or other incentive stock option.
(h) Other Provisions. Subject to the provisions of the Plan, the Option
Documents shall contain such other provisions including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the
Plan, additional restrictions upon the exercise of the Option or
additional limitations upon the term of the Option, as the Committee shall
deem advisable.
(i) Amendment. Subject to the provisions of the Plan, the Committee
shall have the right to amend Option Documents issued to an Optionee,
subject to the Optionee's consent if such amendment is not favorable to
the Optionee, except that the consent of the Optionee shall not be
required for any amendment made pursuant to Subsection 8(e)(i)(C) or
Section 10 of the Plan, as applicable.
(j) No Options shall be granted under the Plan if, taking into account
the grant of such options, five or fewer individuals would own more than
50% of the outstanding Shares, as computed for purposes of Code Section
856(h).
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9. Special Provisions Relating to Grants of Options to Non-employee
Members of the Board of Trustees. Options granted pursuant to the Plan to
non-employee members of the Board of Trustees shall be granted, without any
further action by the Committee, in accordance with the terms and conditions
set forth in this Section 9. Options granted pursuant to this Section 9 shall
be evidenced by Option Documents in such form as the Committee shall from
time to time approve, which Option Documents shall comply with and be subject
to the following terms and conditions and such other terms and conditions as
the Committee shall from time to time require which are not inconsistent with
the terms of the Plan and would not cause a Non-employee Trustee to lose his
or her status as a "non-employee director" (as that term is used for purposes
of Rule 16b-3) due to the grant of Options to such person pursuant to this
Section 9.
(a) Timing of Grants; Number of Shares Subject of Options;
Exercisability of Options; Option Price. Each non-employee member of the
Board of Trustees shall be granted annually, commencing on the date of the
initial public offering of Shares, and on each anniversary of such date
thereafter, an Option to purchase five thousand (5,000) Shares provided
such person is a member of the Board of Trustees on such grant date. Each
such Option shall be a Non-qualified Stock Option exercisable with respect
to twenty percent (20%) of the Shares subject to such Option after the
first anniversary of the date of grant, exercisable with respect to fifty
percent (50%) of the Shares after the second anniversary of the date of
grant, and fully exercisable after the third anniversary of the date of
grant. The Option Price shall be equal to the Fair Market Value of the
Shares on the date the Option is granted.
(b) Termination of Options Granted Pursuant to Section 9. No Option
granted pursuant to this Section 9 shall be exercisable after the first to
occur of the following:
(i) The tenth anniversary of the date of grant.
(ii) The third month anniversary of the date of termination of the
Optionee's services as a member of the Board of Trustees for any reason
other than death, Disability or Retirement.
Notwithstanding anything to the contrary contained herein, no Option granted
pursuant to this Section 9 shall be exercisable following the termination of the
Optionee's services as a member of the Board of Trustees with respect to any
Shares in excess of those which could have been acquired by exercise of the
Option on the date of such termination of services. (c) Applicability of Section
8 to Options Granted Pursuant to Section 9. The following provisions of Section
8 shall be applicable to Options granted pursuant to this Section 9: Subsection
8(a) (provided that all Options granted pursuant to this Section 9 shall be
Non-qualified Stock Options); the last sentence of Subsection 8(b); Subsection
8(c); Subsection 8(d) (provided that Option Documents relating to Options
granted pursuant to this Section 9 shall provide that payment may be made in
whole or in part in Shares); and Subsection 8(f) (provided that Option Documents
relating to Options granted pursuant to this Section 9 shall not permit Family
Transfers).
10. Change of Control. In the event of a Change of Control, the Committee
may take whatever action it deems necessary or desirable with respect to the
Options and Awards outstanding (other than Options granted pursuant to
Subsection 8(j) and Section 9), including, without limitation, accelerating
the expiration or termination date in the respective Option Documents to a
date no earlier than thirty (30) days after notice of such acceleration is
given to the Optionees. In addition to the foregoing, in the event of a
Change of Control, Options granted pursuant to the Plan and held by Optionees
who are employees of the Company or an Affiliate or members of the Board of
Trustees at the time of a Change of Control shall become immediately
exercisable in full and the restrictions applicable to Restricted Shares
awarded to Awardees who are employees of the Company or an Affiliate or
members of the Board of Trustees at the time of a Change of Control shall
immediately lapse. Any amendment to this Section 10 which diminishes the
rights of Optionees, shall not be effective with respect to Options
outstanding at the time of adoption of such amendment, whether or not such
outstanding Options are then exercisable.
A "Change of Control" shall be deemed to have occurred upon the earliest
to occur of the following events: (i) the date the shareholders of the
Company (or the Board of Trustees, if shareholder action is not required)
approve a plan or other arrangement pursuant to which the Company will be
dissolved or liquidated, or (ii) the date the shareholders of the Company (or
the Board of Trustees, if shareholder action is not
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required) approve a definitive agreement to sell or otherwise dispose of
substantially all of the assets of the Company, or (iii) the date the
shareholders of the Company (or the Board of Trustees, if shareholder action
is not required) and the shareholders of the other constituent corporation or
entity (or its board of directors or trustees if shareholder action is not
required) have approved a definitive agreement to merge or consolidate the
Company with or into such other corporation or other entity, other than, in
either case, a merger or consolidation of the Company in which holders of
Shares immediately prior to the merger or consolidation will have at least a
majority of the ownership of interests of the surviving corporation or entity
(and, if one class of common stock or other equity interest is not the only
class of voting securities entitled to vote on the election of directors or
trustees of the surviving entity, a majority of the voting power of the
surviving entity's voting securities) immediately after the merger or
consolidation, which equity interest (and, if applicable, voting securities)
is to be held in the same proportion as such holders' ownership of Shares
immediately before the merger or consolidation, or (iv) the first day, after
the date this Plan is effective on which there has occurred a change in the
majority of the positions on the Board of Trustees or if any person (or any
group of associated persons acting in concert) acquires, directly or
indirectly, more than a percentage of the voting stock of the Trust in excess
of that held by the "Senior Executives" (as defined in the Registration
Statement) in the aggregate as of the date of the closing of the initial
public offering of the Common Shares, in either case without the advance
written consent of the current Board of Trustees.
11. Adjustments on Changes in Capitalization.
(a) Corporate Transactions. In the event that the outstanding Shares
are changed by reason of a reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination or
exchange of shares and the like (not including the issuance of Shares on
the conversion of other securities of the Company which are outstanding on
the date of grant and which are convertible into Shares) or dividends
payable in Shares, an equitable adjustment shall be made by the Committee
in the aggregate number of Shares available under the Plan and in the
number of Shares and price per Share subject to outstanding Options.
Unless the Committee makes other provisions for the equitable settlement
of outstanding options, if the Company shall be reorganized, consolidated,
or merged with another corporation, or if all or substantially all of the
assets of the Company shall be sold or exchanged, an Optionee shall at the
time of issuance of the Shares under such corporate event be entitled to
receive upon the exercise of his or her Option the same number and kind of
shares or the same amount of property, cash or securities as he or she
would have been entitled to receive upon the occurrence of any such
corporate event as if he or she had been, immediately prior to such event,
the holder of the number of shares covered by his or her Option.
(b) Proportionate Application. Any adjustment under this Section 11 in
the number of Shares subject to Options shall apply proportionately to
only the unexercised portion of any Option granted hereunder. If fractions
of a Share would result from any such adjustment, the adjustment shall be
revised to the next lower whole number of Shares.
(c) Committee Authority. The Committee shall have authority to
determine the adjustments to be made under this Section, and any such
determination by the Committee shall be final, binding and conclusive.
12. Terms and Conditions of Awards. Awards granted pursuant to the Plan
shall be evidenced by written Award Agreements in such form as the Committee
shall from time to time approve, which Award Agreements shall comply with and
be subject to the following terms and conditions and such other terms and
conditions which the Committee shall from time to time require which are not
inconsistent with the terms of the Plan. The Committee may, in its sole
discretion, shorten or waive any term or condition with respect to all or any
portion of any Award. Notwithstanding the foregoing, all restrictions shall
lapse or terminate with respect to Restricted Shares upon the death or
Disability of the Awardee.
(a) Number of Shares. Each Award Agreement shall state the number of
Shares to which it pertains.
(b) Purchase Price. Each Award Agreement shall specify the purchase
price, if any, which applies to the Award. If the Board of Trustees
specifies a purchase price, the Awardee shall be required to make payment
on or before the date specified in the Award Agreement. An Awardee shall
pay for such Shares (i) in cash, (ii) by certified check payable to the
order of the Company, or (iii) by such other mode of payment as the
Committee may approve.
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<PAGE>
(c) Restrictions on Transfer and Forfeitures. A share certificate
representing the Restricted Shares granted to an Awardee shall be
registered in the Awardee's name but shall be held in escrow by the
Company or an appropriate officer of the Company, together with an undated
share transfer power executed by the Awardee with respect to each share
certificate representing Restricted Shares in such Awardee's name. The
Awardee shall generally have the rights and privileges of a shareholder as
to such Restricted Shares including the right to vote such Restricted
Shares and to receive and retain all cash dividends with respect to such
Shares, except that the following restrictions shall apply: (i) the
Awardee shall not be entitled to delivery of the certificate until the
expiration or termination of any period designated by the Committee
("Restricted Period") and the satisfaction of any other conditions
prescribed by the Committee; and (ii) all distributions with respect to
the Restricted Shares other than cash dividends, such as share dividends,
share splits or distributions of property, and any distributions (other
than cash dividends) subsequently made with respect to other
distributions, shall be delivered to the Company or an appropriate officer
of the Company, together with appropriate share transfer powers or other
instruments of transfer signed and delivered to the Company or appropriate
officer of the Company by the Awardee, to be held by the Company or
appropriate officer of the Company and released to either the Awardee or
the Company, as the case may be, together with the Shares to which they
relate; (iii) the Awardee will have no right to sell, exchange, transfer,
pledge, hypothecate or otherwise dispose of any of the Restricted Shares
or distributions (other than cash dividends) with respect thereto; and
(iv) all of the Restricted Shares shall be forfeited and all rights of the
Awardee with respect to such Restricted Shares shall terminate without
further obligation on the part of the Company unless the Awardee has
remained a regular full-time employee of the Company or an Affiliate, any
of its subsidiaries or any parent or any combination thereof until the
expiration or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Committee applicable to such
Restricted Share. Upon the forfeiture of any Restricted Share, such
forfeited shares shall be transferred to the Company without further
action by the Awardee.
(d) Lapse of Restrictions. Upon the expiration or termination of the
Restricted Period and the satisfaction of any other conditions prescribed
by the Committee as provided for in the Plan, the restrictions applicable
to the Restricted Share shall lapse and a stock certificate for the number
of shares of Common Stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions, except any that
may be imposed by law, to the Awardee or the beneficiary or estate, as the
case may be. The Company shall not be required to deliver any fractional
share of Common Stock but will pay, in lieu thereof, the fair market value
(determined as of the date the restrictions lapse) of such fractional
share to the Awardee or the Awardee's beneficiary or estate, as the case
may be. The Award may provide for the lapse of restrictions on transfer
and forfeiture conditions in installments. Notwithstanding the foregoing,
unless the Shares are covered by a then current registration statement or
a Notification under Regulation A under the Act, the Company may require
as a condition to the transfer of Share certificates to an Awardee under
this Subsection 12(d) that the Awardee provide the Company with an
acknowledgment in form and substance satisfactory to the Company that (a)
such Shares are being purchased for investment and not for distribution or
resale (other than a distribution or resale which, in the opinion of
counsel satisfactory to the Company, may be made without violating the
registration provisions of the Act), (b) the Optionee has been advised and
understands that (i) the Shares have not been registered under the Act and
are "restricted securities" within the meaning of Rule 144 under the Act
and are subject to restrictions on transfer and (ii) the Company is under
no obligation to register the Shares under the Act or to take any action
which would make available to the Optionee any exemption from such
registration, (c) such Shares may not be transferred without compliance
with all applicable federal and state securities laws, and (d) an
appropriate legend referring to the foregoing restrictions on transfer may
be endorsed on the certificates. Notwithstanding the foregoing, if the
Company determines that the transfer of Share certificates should be
delayed pending (A) registration under federal or state securities laws,
(B) the receipt of an opinion of counsel satisfactory to the Company that
an appropriate exemption from such registration is available, (C) the
listing or inclusion of the Shares on any securities exchange or an
automated quotation system or (D) the consent or approval of any
governmental regulatory body whose consent or approval is necessary in
connection with the issuance of such Shares, the Company may defer
transfer of Share certificates hereunder until any of the events described
in this sentence has occurred.
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<PAGE>
(e) Section 83(b) Election. An Awardee who files an election with the
Internal Revenue Service to include the fair market value of any
Restricted Share in gross income while they are still subject to
restrictions shall promptly furnish the Company with a copy of such
election together with the amount of any federal, state, local or other
taxes required to be withheld to enable the Company to claim an income tax
deduction with respect to such election.
(f) Rights as Shareholder. Upon payment of the purchase price, if any,
for Shares covered by an Award and compliance with the acknowledgment
requirement of subsection 12(d), the Grantee shall have all of the rights
of a shareholder with respect to the Shares covered thereby, including the
right to vote the Shares and receive all dividends and other distributions
paid or made with respect thereto, except to the extent otherwise provided
by the Committee or in the Award Agreement.
(g) Amendment. Subject to the provisions of the Plan, the Committee
shall have the right to amend Awards issued to an Awardee, subject to the
Awardee's consent if such amendment is not favorable to the Awardee,
except that the consent of the Awardee shall not be required for any
amendment made pursuant to Section 10 of the Plan.
13. Amendment of the Plan. The Board of Trustees of the Company may amend
the Plan from time to time in such manner as it may deem advisable.
Nevertheless, the Board of Trustees of the Company may not change the class
of individuals eligible to receive an ISO or increase the maximum number of
Shares as to which Options or Awards may be granted without obtaining
approval, within twelve months before or after such action, by vote of a
majority of the votes cast at a duly called meeting of the shareholders at
which a quorum representing a majority of all outstanding voting interests of
the Company is, either in person or by proxy, present and voting on the
matter, or by a method and in a degree that would be treated as adequate
under applicable state law in the case of an action requiring shareholder
approval. No amendment to the Plan shall adversely affect any outstanding
Option or Award, however, without the consent of the Grantee.
14. No Commitment to Retain. The grant of an Option or an Award pursuant
to the Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of the Company or any Affiliate to
retain the Grantee in the employ of the Company or an Affiliate and/or as a
member of the Company's Board of Trustees or in any other capacity.
15. Withholding of Taxes. Whenever the Company proposes or is required to
deliver or transfer Shares in connection with an Award or the exercise of an
Option, the Company shall have the right to (a) require the recipient to
remit or otherwise make available to the Company an amount sufficient to
satisfy any federal, state and/or local withholding tax requirements prior to
the delivery or transfer of any certificate or certificates for such Shares
or (b) take whatever other action it deems necessary to protect its interests
with respect to its tax liabilities. The Company's obligation to make any
delivery or transfer of Shares shall be conditioned on the Grantee's
compliance, to the Company's satisfaction, with any withholding requirement.
16. Interpretation. The Plan is intended to enable transactions under the
Plan with respect to Trustees and officers (within the meaning of Section
16(a) under the Securities Exchange Act of 1934, as amended) to satisfy the
conditions of Rule 16b-3; to the extent that any provision of the Plan would
cause a conflict with such conditions or would cause the administration of
the Plan as provided in Section 3 to fail to satisfy the conditions of Rule
16b-3, such provision shall be deemed null and void to the extent permitted
by applicable law. This section shall not be applicable if no class of the
Company's equity securities is then registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended.
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<PAGE>
P LIBERTY PROPERTY TRUST
R GREAT VALLEY CORPORATE CENTER
O 65 VALLEY STREAM PARKWAY
X SUITE 100
Y MALVERN, PENNSYLVANIA 19355
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder of LIBERTY PROPERTY TRUST (the "Trust") hereby
appoints Willard G. Rouse III and Joseph P. Denny, and each of them acting
individually, as the attorney and proxy of the undersigned, with the powers
the undersigned would possess if personally present, and with full power of
substitution, to vote all shares of beneficial interest of the Trust at the
annual meeting of shareholders of the Trust to be held on Wednesday, May 21,
1997 at 9:00 a.m., local time, at the Wyndham Franklin Plaza, Horizons
Ballroom, 17th and Race Streets, Philadelphia, Pennsylvania 19103, and any
adjournment or postponement thereof, upon all subjects that may properly come
before the meeting, including the matters described in the proxy statement
furnished herewith, subject to any directions indicated on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, this proxy will be
voted "FOR" all of the nominees of the Board of Trustees in the election of
trustees, "FOR" the amendments to the Declaration of Trust regarding the
reduction of the ownership limitation, "FOR" the amendment to the Declaration of
Trust regarding exemptions from the ownership limitation and "FOR" the amendment
of the Liberty Property Trust Amended and Restated Share Incentive Plan. This
proxy also delegates discretionary authority to the proxies to vote with respect
to any other business that may properly come before the meeting or any
adjournment or postponement thereof.
The Board of Trustees recommends a vote "FOR" all of the nominees of the Board
of Trustees in the election of trustees, "FOR" the amendments to the Declaration
of Trust regarding the reduction of the ownership limitation, "FOR" the
amendment to the Declaration of Trust regarding exemptions from the ownership
limitation and "FOR" the amendment of the Liberty Property Trust Amended and
Restated Share Incentive Plan.
1. Election of three Class III trustees to hold office until 2000.
Nominees:
Joseph P. Denny,
David L. Lingerfelt FOR WITHHOLD
and John A. Miller, [ ] [ ]
CLU
- ------------
FOR ALL NOMINEES, EXCEPT WITHHOLD FOR THOSE
WHOSE NAMES ARE HAND WRITTEN IN THE SPACES ABOVE.
2. Amendments to the Declaration of Trust regarding the reduction of the
ownership limitation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Amendment to the Declaration of Trust regarding exemptions from the ownership
limitation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Amendment of Liberty Property Trust Amended and Restated Share Incentive
Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |B|
The undersigned hereby acknowledges receipt of the notice of annual meeting, the
proxy statement furnished in connection therewith and the annual report to
shareholders and hereby ratifies all that the said attorneys and proxies may do
by virtue hereof.
NOTE: Please mark, date and sign this proxy card and return it in the enclosed
envelope. Please sign as your name appears hereon. If shares are registered in
more than one name, all owners should sign. If signing in a fiduciary or
representative capacity, please give full title and attach evidence of
authority. Corporations please sign will full corporate name by a duly
authorized officer and affix corporate seal.
Signature:__________________________ Date:____________
Signature:__________________________ Date:____________
36
