AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 2000
SCHEDULE 14A INFORMATION
(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
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
MACK-CALI REALTY CORPORATION
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(Name of Registrant as Specified In Its Charter)
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:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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MACK-CALI REALTY CORPORATION
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 11, 2000
------------------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Mack-Cali Realty Corporation (the "Company") will be held at
, New Jersey on Monday, September 11, 2000, at 3:00 p.m., local
time, for the following purposes:
1. To elect five persons to the Board of Directors of the Company, each to
serve a three-year term or until their respective successors are elected
and qualified.
2. To consider and vote upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP, independent accountants, as the Company's
independent accountants for the ensuing year.
3. To consider and vote upon a proposal to approve and adopt an amendment
to the charter of the Company to decrease the affirmative stockholder
vote required to approve any extraordinary action from two-thirds to a
majority of all votes entitled to be cast on the action by the holders of
the outstanding shares of stock of the Company.
4. To consider and vote upon a proposal to approve and adopt the 2000
Employee Stock Option Plan.
5. To consider and vote upon a proposal to approve and adopt the 2000
Director Stock Option Plan.
The enclosed Proxy Statement includes information relating to these
proposals. Additional purposes of the Annual Meeting are to receive reports of
officers (without taking action thereon) and to transact such other business as
may properly come before the Annual Meeting.
All stockholders of record as of the close of business on July 24, 2000, are
entitled to notice of and to vote at the Annual Meeting. At least a majority of
the outstanding shares of common stock of the Company present in person or by
proxy is required for a quorum.
By Order of the Board of Directors
/s/ ROGER W. THOMAS
----------------------------------------
Roger W. Thomas
SECRETARY
, 2000
Cranford, New Jersey
THE BOARD OF DIRECTORS APPRECIATES AND ENCOURAGES YOUR PARTICIPATION IN THE
COMPANY'S ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. ACCORDINGLY, PLEASE SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY, IF YOU WISH, AND
VOTE IN PERSON. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET
FORTH IN THE PROXY STATEMENT.
MAILED TO STOCKHOLDERS
ON OR ABOUT , 2000
MACK-CALI REALTY CORPORATION
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of Mack-Cali Realty
Corporation, a Maryland corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company (the "Board of Directors")
of proxies in the accompanying form for use in voting at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on Monday,
September 11, 2000, at 3:00 p.m., local time, at , New Jersey, and
any adjournment or postponement thereof.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised by delivering to the Company (to
the attention of Roger W. Thomas, the Company's Secretary) a written notice of
revocation or a properly executed proxy bearing a later date, or by attending
the Annual Meeting and voting in person.
SOLICITATION AND VOTING PROCEDURES
The solicitation of proxies will be conducted by mail, and the Company will
bear all attendant costs. These costs will include the expense of preparing and
mailing proxy materials for the Annual Meeting and reimbursements paid to
brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's common stock, par value $.01 per share (the "Common Stock"). The
Company may use the services of MacKenzie Partners, Inc., 156 Fifth Avenue,
Suite 110, New York, New York 10010, in soliciting proxies and, in such event,
the Company expects to pay an amount not to exceed $10,000, plus out-of-pocket
expenses, for such services. The Company may conduct further solicitation
personally, telephonically or by facsimile through its officers, directors and
regular employees, none of whom would receive additional compensation for
assisting with the solicitation.
The presence at the Annual Meeting of a majority of the outstanding shares
of Common Stock of the Company, represented either in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting. The
close of business on July 24, 2000, has been fixed as the record date (the
"Record Date") for determining the holders of shares of Common Stock entitled to
notice of and to vote at the Annual Meeting. Each share of Common Stock
outstanding on the Record Date is entitled to one vote on all matters. As of the
Record Date, there were shares of Common Stock outstanding.
Stockholder votes will be tabulated by the persons appointed by the Board of
Directors to act as inspectors of election for the Annual Meeting. The New York
Stock Exchange (the "NYSE") permits member organizations to give proxies,
whether or not instructions have been received from beneficial owners, to vote
as to the election of directors and also on matters of the type contained in
Proposal Nos. 2, 4 and 5, but not as to matters of the type contained in
Proposal No. 3. Shares represented by a properly executed and delivered proxy
will be voted at the Annual Meeting and, when instructions have been given by
the stockholder, will be voted in accordance with those instructions. If no
instructions are given, the shares will be voted FOR the election of each of the
five nominees for director named below and FOR Proposal Nos. 2, 3, 4 and 5.
Abstentions will have the same effect as a negative vote on Proposal Nos. 3, 4
and 5 (unless, with respect to Proposal Nos. 4 and 5, the total votes cast
represent more than 50% in interest of all securities entitled to vote on such
proposal, in which event an abstention will not have any effect on the result of
the vote) but will have no effect on the outcome of the election of directors or
Proposal No. 2. Broker non-votes will have no effect on the outcome of the
election of directors or Proposal No. 2, but will have the same effect as
negative vote on Proposal Nos. 3, 4 and 5 (unless, with respect to Proposal Nos.
4 and 5, the total votes cast represent more than 50% in interest of all
securities entitled to vote on such proposal, in which event a broker non-vote
will not have any effect on the result of the vote). Abstentions and broker
non-votes will each be counted as present for purposes of determining the
presence of a quorum.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth information as of June 30, 2000, with respect
to each person or group who is known by the Company, in reliance on Schedules
13D and 13G filed with the Securities and Exchange Commission (the "SEC"), to
own beneficially more than 5% of the Company's outstanding shares of Common
Stock. Except as otherwise noted below, all shares of Common Stock are owned
beneficially by the individual or group listed with sole voting and/or
investment power.
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT OF SHARES
BENEFICIAL OWNER OWNERSHIP OUTSTANDING (%)(1)
- ---------------- ----------------- ------------------
The Mack Group(2).......................................... 11,413,713 16.34
Cohen & Steers Capital Management, Inc.(3)................. 7,615,700 13.32
LaSalle Investment Management, Inc. and LaSalle Investment
Management (Securities), L.P.(4)......................... 2,951,934 5.10
- ------------------------
(1) The total number of shares outstanding used in calculating this percentage
does not include 14,515,086 shares reserved for issuance upon redemption or
conversion of outstanding units of limited partnership interest, both common
and preferred on an as-converted basis, ("Units") in Mack-Cali Realty, L.P.,
a Delaware limited partnership (the "Operating Partnership") through which
the Company conducts its real estate activities, 2,000,000 shares reserved
for issuance upon exercise of outstanding warrants to purchase Units ("Unit
Warrants") or 5,366,688 shares reserved for issuance upon the exercise of
stock options or warrants granted or reserved for possible grant to certain
employees and directors of the Company, except in all cases where such
Units, Unit Warrants, stock options or warrants are owned by the reporting
person or group. Of the 14,515,086 shares reserved for issuance upon
redemption of outstanding Units, 7,428,184 shares, or 9.2% of the total
number of shares outstanding or reserved for issuance, are reserved for
issuance upon redemption or conversion of outstanding Units that are owned
by executive officers, directors, their immediate family members and related
trusts. Of the 2,000,000 shares reserved for issuance upon the exercise of
Unit Warrants, 1,089,345 shares, or 1.4% of the total number of shares
outstanding or reserved for issuance, are reserved for issuance upon the
exercise of Unit Warrants that are owned by executive officers, directors,
their immediate family members and related trusts. Of the 5,366,688 shares
reserved for issuance upon the exercise of stock options or warrants,
1,070,662 shares, or 1.3% of the total number of shares outstanding or
reserved for issuance, are reserved for the exercise of vested stock options
or warrants held by executive officers and directors. This information is as
of June 30, 2000.
(2) Address: 11 Commerce Drive, Cranford, New Jersey 07016. The Mack Group (not
a legal entity) is composed of certain directors and executive officers of
the Company and their immediate families and related trusts and other
persons. Share information is furnished in reliance on the Schedule 13G
dated February 14, 2000, of the Mack Group filed with the SEC, which
represents holdings as of December 31, 1999. This number represents shares
for which the Mack Group has shared dispositive and voting power, and
includes 9,445,860 Units redeemable or convertible into shares of Common
Stock, 1,681,368 vested Unit Warrants redeemable for shares of Common Stock
and 223,985 vested stock options and warrants to purchase shares of Common
Stock.
2
(3) Address: 757 Third Avenue, New York, New York 10017. Based upon information
provided to the Company by Cohen & Steers Capital Management, Inc.
("Cohen & Steers"), the Company believes that such shares are held for
investment advisory clients and that Cohen & Steers disclaims beneficial
ownership of those shares. Share information is furnished in reliance on the
Schedule 13G dated February 8, 2000 of Cohen & Steers filed with the SEC,
which represents holdings as of December 31, 1999. This number represents
shares for which Cohen & Steers has sole dispositive power, and includes
6,449,000 shares for which Cohen & Steers has sole voting power.
(4) Address: 200 East Randolph Drive, Chicago, IL 60601. LaSalle Investment
Management, Inc. ("LaSalle") and LaSalle Investment Management (Securities),
L.P. ("LISM"), as members of a group, filed with the SEC a Schedule 13G,
which represents holdings as of December 31, 1999. LISM is a Maryland
limited partnership, the limited partner of which is LaSalle and the general
partner of which is LaSalle Investment Management (Securities), Inc., a
Maryland corporation, the sole stockholder of which is LaSalle. Each of
LaSalle and LISM are investment advisers registered under Section 203 of the
Investment Advisers Act of 1940 and have different advisory clients. LaSalle
beneficially owns 734,300 shares, 314,300 shares for which it has sole
voting and dispositive power, and 420,000 shares for which it has shared
dispositive power. LISM beneficially owns 2,217,634 shares, 238,134 shares
for which it has sole voting power, 193,134 shares for which it has sole
dispositive power, 1,852,605 shares for which it has shared voting power and
2,024,500 shares for which it has shared dispositive power. Share
information is furnished in reliance on the Schedule 13G dated February 9,
2000 of LaSalle and LISM filed with the SEC.
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's charter divides the Company's Board of Directors into three
classes, with the members of each such class serving staggered three-year terms.
The Board of Directors presently consists of 13 members as follows: Class I
directors, Brendan T. Byrne, Martin D. Gruss, Vincent Tese and Roy J.
Zuckerberg, whose terms expire in 2001; Class II directors, Nathan Gantcher,
Earle I. Mack, William L. Mack and Alan G. Philibosian, whose terms expire in
2002; and Class III directors, Martin S. Berger, John J. Cali, John R. Cali,
Mitchell E. Hersh and Irvin D. Reid, whose terms expire in 2000 (and if
re-elected at the Annual Meeting, in 2003).
At the Annual Meeting, the stockholders will elect five directors to serve
as Class III directors. The Class III directors who are elected at the Annual
Meeting will serve until the Annual Meeting of Stockholders to be held in 2003
and until such directors' respective successors are elected or appointed and
qualify or until any such director's earlier resignation or removal. The Board
of Directors has nominated Martin S. Berger, John J. Cali, John R. Cali,
Mitchell E. Hersh and Irvin D. Reid for election as Class III directors at the
Annual Meeting. In the event any nominee is unable or unwilling to serve as a
Class III director at the time of the Annual Meeting, the proxies may be voted
for the balance of those nominees named and for any substitute nominee
designated by the present Board of Directors or the proxy holders to fill such
vacancy or for the balance of those nominees named without nomination of a
substitute, or the Board of Directors may be reduced in accordance with the
By-laws of the Company.
MARTIN S. BERGER, director nominee, was appointed as a member of the Board
of Directors of the Company in 1998 and as Chairman of the Strategic Planning
Committee of the Board of Directors of the Company in January 2000. Prior to
joining the Company, Mr. Berger served as co-chairman and general partner of The
Robert Martin Company since its founding in 1957. Mr. Berger is chairman of the
board and chief executive officer of City & Suburban Federal Savings Bank,
president of the Construction Industry Foundation, and a board member of The
White Plains Hospital Medical Center. Mr. Berger holds a B.S. degree in finance
from New York University.
JOHN J. CALI, director nominee, was appointed as Chairman Emeritus of the
Board of Directors of the Company in June 2000, and as a member of the Strategic
Planning Committee of the Board of Directors of the Company in January 2000.
Mr. Cali served as Chairman of the Board of Directors of the Company from 1994
to June 2000, as a member of the Executive Committee of the Board of Directors
of the Company from 1997 to June 2000 and as Chief Executive Officer of the
Company from 1994 to 1995. In addition, Mr. Cali was a principal of Cali
Associates and a member of its Executive and Long Range Planning Committees from
1949 to 1994. Mr. Cali co-founded Cali Associates in 1949. Mr. Cali graduated
from Indiana University. Mr. Cali has been nominated for election as a director
at the Annual Meeting pursuant to an agreement dated as of June 27, 2000, among
the Company and members of the Cali family (the "Cali Agreement"). See
"Employment Contracts; Termination of Employment--Cali Agreement." Mr. Cali is
the uncle of John R. Cali.
JOHN R. CALI, director nominee, was appointed as a member of the Board of
Directors of the Company and as a member of the Executive Committee of the Board
of Directors of the Company in June 2000. Mr. Cali served as Executive Vice
President-Development of the Company until June 2000, and as Chief
Administrative Officer of the Company until December 1997. In addition,
Mr. Cali was a principal of Cali Associates and served as a member of its Long
Range Planning Committee from 1981 to 1994 and its Executive Committee from 1987
to 1994 and was responsible for the development of Cali Associates' office
system and the management of its office personnel. Mr. Cali also developed and
organized the leasing and property management departments of Cali Associates and
he was responsible for directing the development functions of the Company.
Mr. Cali has an M.Ed. degree in counseling, organizational development and
personnel from the University of Missouri. Mr. Cali has been nominated for
election as a director at
4
the Annual Meeting pursuant to the Cali Agreement. See "Employment Contracts;
Termination of Employment--Cali Agreement." Mr. Cali is the nephew of John J.
Cali.
MITCHELL E. HERSH, director nominee, was appointed as a member of the Board
of Directors of the Company and as a member of the Executive Committee of the
Board of Directors of the Company in 1997 and as a member of the Strategic
Planning Committee of the Board of Directors of the Company in January 2000.
Mr. Hersh also serves as Chief Executive Officer of the Company. Mr. Hersh is
responsible for the strategic direction and long-term planning for the Company.
He is also responsible for creating and implementing the Company's capital
markets strategy and overall investment strategy. Previously, Mr. Hersh held the
position of President and Chief Operating Officer of the Company. Prior to
joining the Company, Mr. Hersh served as a partner of the Mack organization
since 1982 and as chief operating officer of the Mack organization since 1990,
where he was responsible for overseeing the development, operations, leasing and
acquisitions of the Mack organization's office and industrial portfolio.
Mr. Hersh has a B.A. degree in architecture from Ohio University.
IRVIN D. REID, director nominee, was appointed as a member of the Board of
Directors of the Company in 1994 and as chairman of the Audit Committee of the
Board of Directors of the Company in 1998. Dr. Reid also serves as president of
Wayne State University in Michigan. Prior to becoming the president of Wayne
State University, Dr. Reid served as president of Montclair State University
(formerly Montclair State College) in New Jersey from 1989 to 1997, and held
positions of dean, School of Business Administration, and John Stagmaier
Professor of Economics and Business Administration at the University of
Tennessee at Chattanooga. Dr. Reid is also a member of the board of directors of
Fleet Bank, N.A. Dr. Reid received his B.S. degree and M.S. degree in general
and experimental psychology from Howard University. He earned his M.A. and Ph.D.
degrees in business and applied economics from The Wharton School of the
University of Pennsylvania.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a plurality of the
votes cast at the Annual Meeting, either in person or by proxy, is required for
the election of a director. For purposes of the election of directors,
abstentions and broker non-votes will have no effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES
NAMED ABOVE.
5
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of June 30, 2000 for (i) the
members of the Board of Directors of the Company, (ii) the executive officers of
the Company and (iii) the directors and executive officers of the Company as a
group.
PERCENT OF
SHARES
PERCENT OF OUTSTANDING
SHARES (CALCULATED ON A
FIRST TERM NUMBER OF OUTSTANDING FULLY-DILUTED
NAME AND POSITION(1) AGE ELECTED EXPIRES SHARES(2) (%)(3) BASIS)(%)(4)
- -------------------- -------- -------- -------- ------------ ----------- ----------------
William L. Mack, Chairman of the
Board(5)............................... 60 1997 2002 4,468,701(12) 7.06 5.71
John J. Cali, Chairman Emeritus(6)(29)... 81 1994 2000 520,342(13) * *
Mitchell E. Hersh, Chief Executive
Officer and Director(5)(6)............. 49 1997 2000 334,784(14) * *
Timothy M. Jones, President.............. 45 -- -- 347,582(15) * *
Barry Lefkowitz, Executive Vice President
and Chief Financial Officer............ 38 -- -- 87,552(16) * *
Roger W. Thomas, Executive Vice
President, General Counsel and
Secretary.............................. 43 -- -- 87,216(17) * *
Martin S. Berger, Director(6)............ 70 1998 2000 534,532(18) * *
Brendan T. Byrne, Director(8)............ 76 1994 2001 20,600(19) * *
John R. Cali, Director(5)(30)............ 53 -- -- 570,279(20) * *
Nathan Gantcher, Director(5)(7)(8)(9).... 60 1999 2002 20,000(21)
Martin D. Gruss, Director(10)............ 57 1997 2001 48,000(22) * *
Earle I. Mack, Director(6)............... 62 1997 2002 2,684,917(23) 4.37 3.43
Alan G. Philibosian, Director(7)(10)..... 47 1997 2002 18,500(24) * *
Irvin D. Reid, Director(8)............... 59 1994 2000 13,000(25) * *
Vincent Tese, Director(7)(10)............ 57 1997 2001 35,000(26) * *
Roy J. Zuckerberg,
Director(5)(6)(8)(11).................. 64 1999 2001 30,000(27)
------------ ----- -----
All directors and executive officers as a
group.................................. 9,821,005(28) 14.36 12.55
============ ===== =====
- ------------------------
* Beneficial Ownership of less than 1.0% is omitted.
(1) Certain executive officers and directors of the Company and various other
persons and entities beneficially own in the aggregate, approximately 10.5%
of the partnership interests in the Operating Partnership in which the
Company has a 80.20% general partnership interest and the aggregate limited
partners' interest is 19.80%. The limited partners of the Operating
Partnership share with the Company, as general partner, in the net income or
loss and any distributions of the Operating Partnership. Pursuant to the
partnership agreement of the Operating Partnership, common Units are
redeemable into shares of Common Stock on a one-for-one basis.
(2) Except as otherwise noted below, all shares of Common Stock are owned
beneficially by the individual listed with sole voting and/or investment
power.
(3) Assumes redemption or conversion of only the Units in the Operating
Partnership and Unit Warrants beneficially owned by such owner into shares
of Common Stock (disregarding any waiting periods before such redemption is
legally permitted) and the exercise of vested options and warrants held only
by such owner.
(4) Assumes redemption or conversion of all outstanding Units in the Operating
Partnership and Unit Warrants into shares of Common Stock (disregarding any
waiting periods before such redemption is legally permitted) and the
exercise of all vested options and warrants.
6
(5) Member of the Executive Committee of the Board of Directors.
(6) Member of the Strategic Planning Committee of the Board of Directors.
(7) Member of the Nominating Committee of the Board of Directors.
(8) Member of the Audit Committee of the Board of Directors.
(9) Elected as a director of the Company at the Company's Annual Meeting of
Shareholders held on May 19, 1999.
(10) Member of the Executive Compensation and Option Committee of the Board of
Directors.
(11) Appointed as a director of the Company upon the resignation of Jeffrey B.
Lane as a member of the Board of Directors of the Company on May 19, 1999.
(12) Includes 2,846,787 shares of Common Stock that may be issued upon the
redemption of all of William L. Mack's limited partnership interests in the
Operating Partnership (433,368 of which result from the exercise of Unit
Warrants), 212,078 shares of Common Stock that may be issued upon the
redemption of all of the limited partnership interests in the Operating
Partnership held by members of William L. Mack's immediate family and trusts
of which he is a trustee (32,518 of which result from the exercise of Unit
Warrants), and vested options to purchase 13,000 shares of Common Stock.
Also includes 983,699 shares of Common Stock that may be issued upon the
redemption of all of the limited partnership interests in the Operating
Partnership (149,930 of which result from the exercise of Unit Warrants)
held by trusts of which Mr. Mack or his wife is a trustee, of which
Mr. Mack disclaims beneficial ownership. Also includes 413,137 shares of
Common Stock that may be issued upon the redemption of all of the limited
partnership interests in the Operating Partnership (63,334 of which results
from the exercise of Unit Warrants) held by a partnership to which Mr. Mack
possesses sole or shared dispositive or voting power.
(13) Includes 290,561 shares of Common Stock that may be issued upon the
redemption of all of John J. Cali's limited partnership interests in the
Operating Partnership and 189,889 shares of Common Stock that may be issued
upon the redemption of all of the limited partnership interests in the
Operating Partnership held by members of John J. Cali's immediate family and
trusts of which he is a trustee. Also includes vested options to purchase
38,741 shares of Common Stock.
(14) Includes 121,424 shares of Common Stock that may be issued upon the
redemption of all of Mitchell E. Hersh's limited partnership interests in
the Operating Partnership. Also includes vested warrants to purchase 203,985
shares of Common Stock.
(15) Includes vested warrants to purchase 170,000 shares of Common Stock and
vested options to purchase 69,177 shares of Common Stock. Also includes
102,280 shares of Common Stock that may be issued upon the redemption of all
of Timothy M. Jones' limited partnership interests in the Operating
Partnership.
(16) Includes vested options to purchase 58,282 shares of Common Stock.
(17) Includes vested options to purchase 58,282 shares of Common Stock.
(18) Includes 521,532 shares of Common Stock that may be issued upon the
redemption of all of Mr. Berger's limited partnership interests in the
Operating Partnership and vested options to purchase 13,000 shares of Common
Stock.
(19) Includes vested options to purchase 20,000 shares of Common Stock.
(20) Includes 164,225 shares of Common Stock that may be issued upon the
redemption of all of John R. Cali's limited partnership interests in the
Operating Partnership. Also includes vested options to purchase 346,195
shares of Common Stock.
7
(21) Includes vested options to purchase 5,000 shares of Common Stock.
(22) Includes 5,000 shares of Common Stock held by trusts of which Mr. Gruss is
a trustee, of which Mr. Gruss disclaims beneficial ownership. Also includes
vested options to purchase 13,000 shares of Common Stock.
(23) Includes 2,459,811 shares of Common Stock that may be issued upon the
redemption of all of Earle I. Mack's limited partnership interests in the
Operating Partnership (377,678 of which result from the exercise of Unit
Warrants), and 212,106 shares of Common Stock that may be issued upon the
redemption of all of the limited partnership interests in the Operating
Partnership held by members of Earle I. Mack's immediate family and trusts
of which he is a trustee (32,517 of which result from the exercise of Unit
Warrants). Also includes vested options to purchase 13,000 shares of Common
Stock.
(24) Includes 250 shares of Common Stock owned by Mr. Philibosian's family of
which Mr. Philibosian disclaims beneficial ownership. Also includes vested
options to purchase 18,000 shares of Common Stock.
(25) Includes vested options to purchase 13,000 shares of Common Stock.
(26) Includes vested options to purchase 13,000 shares of Common Stock.
(27) Includes vested options to purchase 5,000 shares of Common Stock.
(28) Includes 5,695,574 shares of Common Stock that may be issued upon the
redemption of all of the executive officers' and directors' limited
partnership interests in the Operating Partnership. Includes 1,732,610
shares of the Common Stock that may be issued upon the redemption of all of
the limited partnership interests in the Operating Partnership held by
members of the directors' and executive officers' immediate families, trusts
of which they or their wives are trustees or entities over which they
possess sole or shared dispositive or voting power. Also includes vested
options to purchase 696,677 shares of Common Stock, vested warrants to
purchase 373,985 shares of Common Stock and vested Unit Warrants to purchase
1,089,345 shares of Common Stock.
(29) Resigned as Chairman of the Board as of June 27, 2000.
(30) Resigned as Executive Vice President--Development as of June 27, 2000.
Biographical information concerning the director nominees is set forth above
under the caption "Proposal No. 1--Election of Directors." Biographical
information concerning the remaining directors and executive officers is set
forth below.
TIMOTHY M. JONES serves as President of the Company. He is responsible for
overseeing the portfolio management, leasing, development and operations areas
of the Company. Previously, he served as Executive Vice President and Chief
Investment Officer of the Company. Prior to joining the Company, Mr. Jones
served as executive vice president and chief operating officer of The Robert
Martin Company, where he was responsible for the daily corporate operations and
management of the firm's six-million square foot portfolio in New York and
Connecticut. Prior to joining The Robert Martin Company, Mr. Jones served as a
vice president in Chemical Bank's Real Estate Division, as president of Clifton
Companies in Stamford, Connecticut and president of Federated National Company
in State College, Pennsylvania. Mr. Jones has a B.A. degree in economics from
Yale University and a Masters degree in business from Columbia University.
BARRY LEFKOWITZ serves as Executive Vice President and Chief Financial
Officer of the Company. Mr. Lefkowitz oversees the firm's strategic financial
planning and forecasting, financial accounting and reporting, capital markets
activities and investor relations. Before joining the Company, Mr. Lefkowitz
served as a senior manager with the international accounting firm of Deloitte &
Touche LLP, specializing in real estate, with emphasis on mergers and
acquisitions. In addition to serving as co-chairman of the National Association
of Real Estate Investment Trust (NAREIT) Accounting Committee, he is a member
8
of the American Institute of Certified Public Accountants (AICPA), the New
Jersey Society of Certified Public Accountants (NJSCPA) and the New York State
Society of Certified Public Accountants (NYSSCPA). Mr. Lefkowitz holds a B.S.
degree in accounting from Brooklyn College.
ROGER W. THOMAS serves as Executive Vice President, General Counsel and
Secretary of the Company. Mr. Thomas' responsibilities include structuring and
implementing the Company's acquisitions and mergers, corporate governance,
selecting and supervising outside legal counsel, insuring legal compliance and
the preparation of required disclosure documents. Mr. Thomas also assists the
Company in investment strategies, financial activities and acquisitions. Prior
to joining the Company, Mr. Thomas was a partner at the law firm of Dreyer &
Traub in New York, specializing in real estate and commercial transactions.
Mr. Thomas holds a B.S.B.A. in finance and a J.D. degree from the University of
Denver.
BRENDAN T. BYRNE has served as a member of the Board of Directors of the
Company since 1994 and as a member of the Audit Committee of the Board of
Directors since 1999. Governor Byrne served two consecutive terms as governor of
the State of New Jersey prior to 1982 and has been a senior partner with
Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, a Roseland, New
Jersey law firm, since 1982. Governor Byrne graduated from Princeton
University's School of Public Affairs and received his LL.B from Harvard Law
School.
NATHAN GANTCHER, has served as a member of the Board of Directors of the
Company since 1999, as a member of the Audit Committee of the Board of Directors
of the Company since 1999, and as a member of each of the Nominating Committee
of the Board of Directors and the Executive Committee of the Board of Directors
since June 2000. Mr. Gantcher served as vice chairman of CIBC Oppenheimer Corp.
Prior to becoming vice chairman of CIBC Oppenheimer Corp., Mr. Gantcher served
as co-chief executive officer of Oppenheimer & Co., Inc. Mr. Gantcher currently
serves as chairman of the board of trustees of Tufts University and as a member
of each of the Council of Foreign Relations and the Overseers Committee of the
Columbia University Graduate School of Business. Mr. Gantcher received his A.B.
in economics and biology from Tufts University and his M.B.A. from the Columbia
University Graduate School of Business.
MARTIN D. GRUSS has served as a member of the Board of Directors of the
Company since 1997 and as a member of the Executive Compensation and Option
Committee of the Board of Directors since 1999. Mr. Gruss is the senior partner
of Gruss & Co., a private investment firm. From 1989 to 1993, Mr. Gruss served
as a director of Acme Metals Incorporated. Mr. Gruss currently serves as a
member of the board of overseers of the Wharton School and as a trustee of the
Lawrenceville School. Mr. Gruss has a B.S. degree in economics from the Wharton
School of the University of Pennsylvania and a J.D. degree from New York
University School of Law.
EARLE I. MACK has served as a member of the Board of Directors of the
Company since 1997 and as a member of the Strategic Planning Committee of the
Board of Directors of the Company since January 2000. Prior to joining the
Company, Mr. Mack served as senior partner, chief financial officer and a
director of the Mack organization since 1964 where he pioneered the development
of large, Class A office properties and helped to increase the Mack
organization's portfolio to approximately 20 million square feet. Mr. Mack has a
B.S. degree in business administration from Drexel University and also attended
Fordham Law School. Mr. Mack is the brother of William L. Mack.
WILLIAM L. MACK has served as a member of the Board of Directors of the
Company since 1997, and became its Chairman in June 2000. Mr. Mack also serves
as Chairman of the Company's Executive Committee. Prior to joining the Company,
Mr. Mack served as managing partner of the Mack organization, where he pioneered
the development of large, Class A office properties and helped to increase the
Mack organization's portfolio to approximately 20 million square feet. In
addition, Mr. Mack is a managing partner of Apollo Real Estate Advisors, L.P.
whose investment funds have invested in greater than $10 billion of various
diversified real estate ventures. Mr. Mack also currently serves as a member of
the board of directors of The Bear Stearns Companies, Inc., Metropolis Realty
Trust, Inc., Wyndham
9
International, Inc. and Vail Resorts, Inc. Mr. Mack is a trustee of the North
Shore-Long Island Jewish Health System and the University of Pennsylvania, a
member of the board of overseers of The Wharton School and serves on the
executive committee for the Real Estate Center of The Wharton School. Mr. Mack
attended the Wharton School of Business and Finance at the University of
Pennsylvania and has a B.S. degree in business administration, finance and real
estate from New York University. Mr. Mack is the brother of Earle I. Mack.
ALAN G. PHILIBOSIAN has served as a member of the Board of Directors of the
Company and as a member of the Executive Compensation and Option Committee of
the Board of Directors of the Company since 1997. Mr. Philibosian is an attorney
practicing in Englewood, New Jersey. Mr. Philibosian is currently a commissioner
on The Port Authority of New York and New Jersey, and also serves on the board
of directors of NorCrown Bank, the Armenian Missionary Association of America,
Paramus, New Jersey and John Harms Center for the Arts, Englewood, New Jersey.
Mr. Philibosian graduated from Rutgers College, and received his J.D. degree
from Boston College Law School and his LL.M. degree in taxation from New York
University.
VINCENT TESE has served as a member of the Board of Directors of the Company
since 1997 and as chairman of the Executive Compensation and Option Committee of
the Board of Directors of the Company since 1998. Prior to joining the Company,
Mr. Tese served as New York State Superintendent of Banks from 1983 to 1985,
chairman and chief executive officer of the Urban Development Corporation from
1985 to 1994, director of economic development for New York State from 1987 to
1994 and commissioner and vice chairman of the Port Authority of New York and
New Jersey from 1991 to 1995. Mr. Tese also served as a partner in the law firm
of Tese & Tese, a partner in the Sinclair Group, a commodities trading and
investment management company, and a co-founder of Cross Country Cable TV.
Mr. Tese currently serves as chairman of Wireless Cable International Inc. and
as a member of the board of directors of The Bear Stearns Companies, Inc.,
Allied Waste Industries, Inc., Bowne & Company, Inc., Cablevision, Inc., Key
Span Energy, and as a trustee of New York University School of Law and New York
Presbyterian Hospital. Mr. Tese has a B.A. degree in accounting from Pace
University, a J.D. degree from Brooklyn Law School and an LL.M. degree in
taxation from New York University School of Law.
ROY J. ZUCKERBERG has served as a member of the Board of Directors of the
Company since 1999, as a member of the Audit Committee of the Board of Directors
of the Company since 1999, as a member of the Strategic Planning Committee of
the Board of Directors since January 2000, and as a member of the Executive
Committee of the Board of Directors since June 2000. Mr. Zuckerberg is currently
an advisory director of the Goldman Sachs Group, Inc. Mr. Zuckerberg served as
vice chairman of Goldman, Sachs & Co., a member of its executive committee, and
head of its Equities Division. Mr. Zuckerberg joined Goldman, Sachs & Co. in
1967 in Securities Sales and in 1972 assumed responsibility for developing the
private client business. Mr. Zuckerberg was made a partner of Goldman, Sachs &
Co. in 1977 and served as co-head and then head of its Securities Sales
division. Mr. Zuckerberg remains chairman of the executive committee of the
Goldman Sachs Bank in Zurich. Mr. Zuckerberg served as chairman of the
Securities Industry Association and was a member of the Senior Advisors Group to
the President's Council on Year 2000 Conversion. Mr. Zuckerberg is chairman and
a member of the executive committee of North Shore-Long Island Jewish Health
System, Inc., a trustee of the American Red Cross in Greater New York and a
director of the Brookdale Foundation. He has had a long involvement with the
UJA-Federation and served as chairman of the Wall Street Division. He also
serves as chair of the Investment Committee of the University of Massachusetts
Foundation. Mr. Zuckerberg received a B.S. from Lowell Technological Institute
in 1958 and served in the United States Army.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and executive officers of the Company (or members of their
immediate families or related trusts) and persons who hold more than 5% of the
outstanding shares of Common Stock (or Units
10
in the Operating Partnership) had direct or indirect interests in certain
transactions of the Company or the Operating Partnership in the last fiscal year
as follows:
- In connection with the completion of the Mack transaction in
December 1997 (the "Mack Transaction"), 2,006,432 contingent common Units,
11,895 Series A contingent preferred Units and 7,799 Series B contingent
preferred Units were issued as contingent non-participating Units. Such
contingent Units have no voting, distribution or other rights until such
time as they are redeemed into common Units, Series A preferred Units and
Series B preferred Units, respectively. Redemption of such contingent
Units shall occur upon the achievement of certain performance goals
relating to certain of the properties acquired by the Company in
connection with the Mack Transaction (collectively, the "Mack
Properties"), specifically the achievement of certain leasing activity.
When contingent Units are redeemed for common and preferred Units, an
adjustment to the purchase price of certain of the Mack Properties is
recorded, based on the value of the Units issued. Since certain of the
performance goals were achieved during 1999, the Company redeemed 275,046
contingent common Units and issued an equivalent number of common Units.
There were no contingent preferred Units or contingent common Units
outstanding as of December 31, 1999. In addition, in connection with the
Mack Transaction, the Company contractually agreed for a specified period
of time not to sell or otherwise transfer the properties acquired thereby
in a manner that would adversely affect the tax deferral of certain
principals of the Mack organization, subject to certain exceptions set
forth in the relevant acquisition agreements.
- In March 1999, the Company acquired two office buildings from Pacifica
Holding Company ("Pacifica") as part of the third phase of the portfolio
acquisition of Pacifica (the "Pacifica III Acquisition"), the first two
phases of which (the "Pacifica I Acquisition" and the "Pacifica II
Acquisition," respectively) occurred in 1998. The Pacifica III Acquisition
is comprised of an aggregate of approximately 94,737 square feet and was
acquired for a total cost of approximately $5.7 million. Such funds were
made available from drawing on one of the Company's credit facilities.
William L. Mack, Chairman of the Board of Directors and an equity holder
of the Company, was an indirect owner of an interest in certain of the
buildings contained in the Pacifica portfolio, through his position as a
managing partner of Apollo Real Estate Investment Fund II, L.P.
("Apollo"), one of the sellers in the Pacifica transaction. 478,783 common
Units were issued and approximately $13,126,798 in cash was paid in the
aggregate to Apollo in the Pacifica I, II and III Acquisitions,
approximately $5,094,957 of which cash was paid upon the achievement of
certain performance goals relating to certain of the properties acquired
from Pacifica, specifically the achievement of certain leasing activity.
The 478,783 common Units issued to Apollo were redeemed by Apollo and
converted into 478,783 shares of the Company's Common Stock on June 8,
1999.
- On May 4, 1999, the Company acquired from an entity whose principals
include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg, who are
affiliated with the Company as the President of the Company, a current
member of the Board of Directors and a former member of the Board of
Directors of the Company, respectively, approximately 2.5 acres of vacant
land in the Stamford Executive Park, located in Stamford, Fairfield
County, Connecticut. The Company acquired the land for approximately
$2,181,000. $1,681,000 of the purchase price was funded from the Company's
cash reserves with an additional $500,000 due three years from the closing
date contingent upon certain conditions contained in the acquisition
contract and subject to interest over the term.
- On August 31, 1999, the Company acquired from an entity whose principals
include Brant Cali, who served as Executive Vice President and Chief
Operating Officer of the Company and a member of the Board of Directors of
the Company, and certain members of the immediate family of John J. Cali,
who served as Chairman of the Board of Directors of the Company until
June 2000, and who currently serves as Chairman Emeritus of the Board of
Directors of the Company, approximately 28.1 acres of developable land
adjacent to two of the Company's operating properties located in
11
Roseland, Essex County, New Jersey for approximately $6,097,000. The
acquisition was funded with cash and the issuance of 121,624 common Units
to the seller.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, directors and
persons who beneficially own more than 10% of the Company's Common Stock to file
initial reports of ownership and reports of changes of ownership (Forms 3, 4 and
5) of the Common Stock with the SEC and the NYSE. Executive officers, directors
and greater than 10% holders are required by SEC regulations to furnish the
Company with copies of such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company, the Company believes that for
the fiscal year 1999, all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% beneficial owners were
complied with.
MEETINGS OF COMMITTEES AND THE BOARD OF DIRECTORS
During 1999, the entire Board of Directors met 11 times. With the exception
of Irvin D. Reid and Roy J. Zuckerberg, no director attended fewer than 75% of
the aggregate of the total number of meetings of the Board of Directors (held
during the period for which he has been a director) and the total number of
meetings held by all committees of the Board of Directors on which he served
(during the periods that he served).
The Board of Directors has five committees: the Executive Committee, the
Audit Committee, the Executive Compensation and Option Committee, the Strategic
Planning Committee and the Nominating Committee.
The Executive Committee consists of William L. Mack, chairman, John R. Cali,
Mitchell E. Hersh, Earle I. Mack and Roy J. Zuckerberg. The Executive Committee
acts for the Board of Directors in between regularly scheduled meetings of the
Board within certain parameters prescribed by the Board of Directors.
The Audit Committee consists of Irvin D. Reid, chairman, Brendan T. Byrne,
Nathan Gantcher and Roy J. Zuckerberg, each of whom are independent directors of
the Company. The Audit Committee makes recommendations concerning the engagement
of independent accountants, reviews with the independent accountants the scope
and results of the audit engagement, approves professional services provided by
the independent accountants, reviews the independence of the independent
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. The Audit Committee met
twice during 1999. On June 8, 2000, the Board of Directors, upon the unanimous
recommendation of the Audit Committee, approved and adopted the Mack-Cali Realty
Corporation Audit Committee Charter, a copy of which is attached hereto as
Exhibit A.
The Executive Compensation and Option Committee consists of Vincent Tese,
chairman, Martin D. Gruss and Alan G. Philibosian. The Executive Compensation
and Option Committee establishes remuneration levels for executive officers of
the Company and implements incentive programs, including the Employee Stock
Option Plan and the Director Stock Option Plan. The Executive Compensation and
Option Committee met twice during 1999.
The Strategic Planning Committee consists of Martin S. Berger, chairman,
John J. Cali, Mitchell E. Hersh, Earl I. Mack and Roy J. Zuckerberg. The
Strategic Planning Committee makes recommendations concerning long range
strategic alternatives for the Company. The Strategic Planning Committee was
formed in January 2000, and therefore did not meet during 1999.
12
The Nominating Committee consists of Vincent Tese, chairman, Nathan Gantcher
and Alan G. Philibosian. The Nominating Committee makes recommendations for
nominees to the Board of Directors of the Company. Although there are no formal
procedures for stockholders to make recommendations for committee appointments
or recommendations for nominees to the Board of Directors, the Board of
Directors will consider recommendations from stockholders, which should be
addressed to Roger W. Thomas, the Company's Secretary, at the Company's address
set forth on the first page of this Proxy Statement. The Nominating Committee
was formed in June 2000, and therefore did not meet during 1999.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES. Each non-employee director was paid an annual fee of
$15,000, plus $1,000 per board meeting attended, $500 per committee meeting
attended and $250 per telephonic meeting participation. The Company does not pay
director fees to employee directors, who in fiscal 1999 consisted of Mitchell E.
Hersh, Brant Cali and, prior to his resignation, Thomas A. Rizk. Each director
also was reimbursed for expenses incurred in attending director and committee
meetings. For fiscal 1999, John J. Cali, Martin S. Berger, Brendan T. Byrne,
Nathan Gantcher, Martin D. Gruss, Earle I. Mack, William L. Mack, Alan G.
Philibosian, Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg received
directors' fees or fee equivalents (see "Directors' Deferred Compensation Plan"
below) in the amounts of $17,250, $17,250, $17,750, $11,772, $21,500, $16,750,
$21,000, $19,125, $21,000, $19,000 and $11,522, respectively. In addition,
Jeffrey B. Lane and Paul A. Nussbaum, who resigned and declined renomination to
serve as a director of the Company, respectively, on May 19, 1999, received
directors' fees or fee equivalents (see "Directors' Deferred Compensation Plan"
below) in the amounts of $9,269 and $9,769, respectively, while serving as
directors of the Company during fiscal 1999.
DIRECTORS' DEFERRED COMPENSATION PLAN. Pursuant to the Directors' Deferred
Compensation Plan, effective as of January 1, 1999, each non-employee director
is entitled to defer all or a specified portion of the annual retainer to be
paid to such director. The account of a director who elects to defer such
compensation under the Directors' Deferred Compensation Plan is credited with
the hypothetical number of stock units, calculated to the nearest thousandths of
a unit, determined by dividing the amount of compensation deferred on the
deferral date by the closing market price of the Company's Common Stock as
reported on the Consolidated Tape of NYSE listed shares on the deferral date.
Any stock dividend declared by the Company on its Common Stock results in a
proportionate increase in units in the director's account as if such director
held shares of Common Stock equal to the number of units in such director's
account. Payment of a director's account may only be made in a lump sum in
shares of Common Stock equal to the number of units in a director's account
after either the director's service on the Board of Directors has terminated or
there has been a change in control of the Company. As of December 31, 1999, the
director accounts of Nathan Gantcher, Martin D. Gruss, William L. Mack, Alan G.
Philibosian, Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg were credited
with 363, 576, 576, 288, 576, 576 and 363 stock units, respectively.
DIRECTORS' STOCK OPTION PLAN. Pursuant to the Director Stock Option Plan,
each non-employee director is automatically granted a non-statutory option to
purchase 5,000 shares of Common Stock in connection with the director's initial
election or appointment to the Board of Directors. These grants under the
Director Stock Option Plan are made at an exercise price equal to the "fair
market value" (as defined under the Director Stock Option Plan) at the time of
the grant of the shares of Common Stock subject to such option. The Executive
Compensation and Option Committee may make additional discretionary option
grants to eligible directors, consistent with the terms of the Director Stock
Option Plan. In 1999, 27,000 discretionary options were granted to members of
the Board of Directors. The Board of Directors may amend, suspend or discontinue
the Director Stock Option Plan at any time except that any amendments that would
materially increase the cost of the Director Stock Option Plan to the Company
must be approved by the holders of the majority of issued and outstanding shares
of Common Stock of the Company entitled to vote.
13
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the chief executive officer and the four most highly compensated
executive officers of the Company other than the chief executive officer
(collectively, the "Named Executive Officers") for each of the Company's last
three fiscal years:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(2)
- --------------------------- -------- --------- --------- ------------------
Mitchell E. Hersh............................... 1999 1,050,000 440,000 0
Chief Executive Officer 1998 1,090,385 440,000 2,179
1997 28,269 0 0
Timothy M. Jones................................ 1999 421,462 275,000 0
President 1998 337,500 170,000 2,179
1997 202,885 1,575,000 0
Barry Lefkowitz................................. 1999 360,385 225,000 0
Executive Vice President and Chief Financial 1998 311,538 205,000 2,179
Officer 1997 155,769 1,125,222 0
Brant Cali (3).................................. 1999 335,154 185,000 0
Chief Operating Officer, Executive Vice 1998 337,500 170,000 2,179
President--Operations, Leasing and Marketing 1997 228,846 175,000 0
and Assistant Secretary
John R. Cali (4)................................ 1999 325,000 185,000 0
Executive Vice President--Development 1998 337,500 170,000 2,179
1997 228,846 175,000 0
Thomas A. Rizk (5).............................. 1999 302,885 0 0
1998 1,090,385 440,000 2,179
1997 473,077 1,950,000 0
(TABLE CONTINUED ON FOLLOWING PAGE)
14
LONG-TERM COMPENSATION
------------------------------------------------
AWARDS PAYOUTS
------------------------------------ ---------
RESTRICTED SECURITIES LTIP
STOCK UNDERLYING PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR AWARD(S)($)(6) OPTIONS/WARRANTS(#) ($)(10) COMPENSATION($)
- --------------------------- -------- -------------- ------------------- --------- ---------------
Mitchell E. Hersh.................. 1999 0 0 0 0
Chief Executive Officer 1998 0 0 0 0
1997 0 339,976(7) 0 0
Timothy M. Jones................... 1999 0 0 0 0
President 1998 0 15,000(8) 0 0
1997 0 290,295(9) 0 0
Barry Lefkowitz.................... 1999 0 0 0 0
Executive Vice President and 1998 0 0 0 0
Chief Financial Officer 1997 505,596 97,137(7) 739,542 0
Brant Cali(3)...................... 1999 0 0 0 0
Chief Operating Officer, Executive 1998 0 0 0 0
Vice President-- 1997 3,033,303 105,295(7) 0 5,681,635(11)
Operations, Leasing and
Marketing and Assistant Secretary
John R. Cali(4).................... 1999 0 0 0 0
Executive Vice President-- 1998 0 0 0 0
Development 1997 3,033,303 105,295(7) 0 5,681,635(11)
Thomas A. Rizk(5).................. 1999 0 0 0 14,490,000(12)
1998 0 0 0 0
1997 3,033,303 339,976(7) 4,437,247 9,103,269(11)
- ------------------------
(1) The annual compensation portion of this table includes the dollar value of
regular annual payments of base salary, bonus & any other annual
compensation earned by each Named Executive Officer during the stated fiscal
year. Certain base salaries appear slightly higher than the contractual
amounts due to when pay periods accrued during fiscal year 1999.
(2) The $2,179 in 1998 represents the value of 10 shares of preferred stock of
Mack-Cali Property Trust issued in January 1998 and $1,179 in tax gross-up
payments relating thereto.
(3) Brant Cali resigned as a director of the Company and from his positions as
Chief Operating Officer, Executive Vice President--Operations, Leasing and
Marketing and Assistant Secretary of the Company, effective as of June 27,
2000.
(4) John R. Cali resigned from his position as Executive Vice
President--Development, effective as of June 27, 2000.
(5) Thomas A. Rizk resigned from his position as Chief Executive Officer of the
Company, effective as of April 18, 1999.
(6) On August 31, 1994, in connection with the consummation of the Company's
initial public offering, the Company entered into employment agreements with
each of Thomas A. Rizk, John R. Cali and Brant Cali. On January 21, 1997,
the Company entered into amended and restated employment agreements with
each of Messrs. Rizk, John R. Cali and Brant Cali, and an employment
agreement with Barry Lefkowitz. Pursuant to each such employment agreement,
Messrs. Rizk, John R. Cali, Brant Cali and Lefkowitz were issued 55,555,
55,555, 55,555 and 9,260 restricted shares of Common Stock (the "Restricted
Stock"), respectively. On the date of any vesting of the Restricted Stock,
each
15
of Messrs. Rizk, John R. Cali, Brant Cali and Lefkowitz were entitled to
receive tax gross-up payments as compensation for the additional income
taxes which would be required to be paid. The employment agreements provided
that the vesting of the Restricted Stock would be accelerated upon a change
in control and, in the case of Mr. Rizk, John R. Cali and Brant Cali, upon
termination of employment by the Company other than for cause or by such
individual for good reason. Upon the closing of the Mack Transaction in
December 1997, certain conditions in the employment agreements of each of
the aforementioned senior executives were triggered, thereby resulting in,
among other things, the acceleration of the vesting of the Restricted Stock,
including the payment of the tax gross-up amounts relating thereto. The
value of accelerated vesting in Restricted Stock and the tax gross-up
payments relating thereto under such employment agreement for each executive
upon consummation of the Mack Transaction, based on a $39.00 stock price,
which price approximated the market price of the Company's Common Stock at
the close of business on or about the date of closing of the Mack
Transaction, is reflected in the table for 1997. In July 1999, the Company
entered into amended and restated employment agreements with each of
Mitchell E. Hersh, Timothy M. Jones, Barry Lefkowitz, Brant Cali and John R.
Cali, pursuant to which, Mr. Hersh, Mr. Jones, Mr. Lefkowitz, Mr. Brant Cali
and Mr. John R. Cali were issued 62,500, 37,500, 26,094, 23,437 and 22,031
shares of Restricted Stock, respectively, the vesting of which is contingent
upon the satisfaction of certain performance requirements. There are certain
tax gross-up payments that will be made upon such vesting. Since the
Restricted Stock granted is performance based with vesting commencing
January 1, 2000, the Company has elected to report such awards as Long-Term
Incentive Plan Awards. See "Long-Term Incentive Plans--Awards in Last Fiscal
Year." In addition, Brant Cali's and John R. Cali's remaining unvested
Restricted Stock vested in June 2000 pursuant to the Cali Agreement. The
1999 amended and restated employment agreements superceded, amended and
restated the employment agreements between the Company and each of the
aforementioned executives entered into in December 1997. Pursuant to the
Cali Agreement, the Amended and Restated B. Cali Agreement and the Amended
and Restated J.R. Cali Agreement (each as hereinafter defined under
"Employment Contracts; Termination of Employment") were terminated as of
June 27, 2000.
(7) Represents an option to purchase shares of Common Stock at an exercise price
of $38.75 per share.
(8) Represents an option to purchase shares of Common Stock at an exercise price
of $37.3125.
(9) Represents an option to purchase 15,000 shares of Common Stock at an
exercise price of $30.25, an option to purchase 105,295 shares of Common
Stock at an exercise price of $38.75 and warrants to purchase 170,000 shares
of Common Stock at an exercise price of $33.00.
(10) In connection with their respective January 21, 1997 employment agreements,
the Company made non-recourse stock acquisition loans (the "Stock
Acquisition Loans") to Mr. Rizk and Mr. Lefkowitz in the amounts of
$3,000,000 and $500,000, respectively, the proceeds of which were
simultaneously used by each of Mr. Rizk and Mr. Lefkowitz to purchase 96,000
and 16,000 shares of Common Stock, respectively, from the Company, pursuant
to the terms of each loan. The Stock Acquisition Loans (and the interest
thereon) were to be forgiven under certain terms and conditions. On the date
of forgiveness of the Stock Acquisition Loans, each of Messrs. Rizk and
Lefkowitz were entitled to receive tax gross-up payments as compensation for
the additional income taxes which would be required to be paid. Such
employment agreements provided that the forgiveness of the Stock Acquisition
Loans would be accelerated upon a change in control and, in the case of
Mr. Rizk, upon termination of his employment by the Company other than for
cause or by him for good reason. Upon the closing of the Mack Transaction in
December 1997, certain conditions in the employment agreements of each of
the aforementioned senior executives were triggered, thereby resulting in,
among other things, the acceleration of the forgiveness of the Stock
Acquisition Loans, including interest thereon, and the payment of the tax
gross-up amounts relating thereto. The value of the accelerated Stock
Acquisition Loan forgiveness and the interest and tax gross-up payments
relating
16
thereto determined to be payable to each executive upon consummation of the
Mack Transaction is reflected in the table for 1997.
(11) Under each of Messrs. Rizk's, Brant Cali's and John R. Cali's January 1997
employment agreements with the Company, each executive was entitled under
certain circumstances to receive certain severance payments in the event he
terminated his employment with the Company for good reason. Furthermore,
upon a resignation for good reason, each such executive could immediately
compete directly with the Company. In light of the significant changes in
the overall authority, duties and responsibilities of these individuals
resulting from the Mack Transaction, the Executive Compensation and Option
Committee determined and the Board of Directors of the Company concurred
that consummation of the Mack Transaction would have entitled each of these
senior executives to terminate his employment for good reason, receive such
payments and thereafter not be subject to the non-competition provisions of
his employment agreement. However, the Executive Compensation and Option
Committee and the Board of Directors concluded that the continued employment
of and lack of competition by these senior executives is essential to the
continued success of the Company's business and in the best interests of the
Company and its stockholders. Therefore, the Board of Directors, in its
discretion, authorized the Company to enter into new employment agreements
with these senior executives, effective upon the consummation of the Mack
Transaction, pursuant to which, among other things, the senior executives
were paid the amounts referenced in the table in cancellation of their
January 21, 1997 employment agreements and for the re-affirmation of their
agreements not to compete directly with the Company. Each of these senior
executives on December 11, 1997 entered into a new employment agreement with
the Company pursuant to which each of the senior executives waived any right
he may have had to sever employment and to compete with the Company as a
result of the Mack Transaction. These agreements were superceded in the case
of Messrs. John R. Cali and Brant Cali by new employment agreements dated
July 1, 1999. Pursuant to the Cali Agreement, the Amended and Restated B.
Cali Agreement and the Amended and Restated J.R. Cali Agreement (each as
hereinafter defined under "Employment Contracts; Termination of Employment")
were terminated as of June 27, 2000. For a description of the existing
employment agreements see "Employment Contracts; Termination of Employment."
(12) Includes payments made to Thomas A. Rizk in connection with his resignation
as Chief Executive Officer of the Company, effective as of April 18, 1999.
See "Employment Contracts; Termination of Employment--Thomas A. Rizk
Termination Agreement."
17
OPTION PLANS
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
INDIVIDUAL GRANTS
-----------------------------------------------
PERCENT OF
NUMBER OF TOTAL GRANT DATE
SECURITIES OPTIONS VALUE
UNDERLYING GRANTED TO EXERCISE ----------
OPTIONS EMPLOYEES OR BASE GRANT DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT
NAME (#)(2) 1999(%) ($/SH) DATE VALUE($)
- ---- ---------- ---------- -------- ---------- ----------
Mitchell E. Hersh.......................... 0 -- -- -- --
Chief Executive Officer
Timothy M. Jones........................... 0 -- -- -- --
President
Barry Lefkowitz............................ 0 -- -- -- --
Executive Vice President and Chief
Financial Officer
Brant Cali(3).............................. 0 -- -- -- --
Chief Operating Officer, Executive Vice
President--Operations, Leasing and
Marketing and Assistant Secretary
John R. Cali(4)............................ 0 -- -- -- --
Executive Vice President--Development
Thomas A. Rizk(5).......................... 0 -- -- -- --
- ------------------------
(1) The Company has not, to date, granted any stock appreciation rights under
the Employee Stock Option Plan.
(2) The Company has established the Director and Employee Stock Option Plans for
the purpose of attracting and retaining officers, directors and employees.
Options granted under the Director and Employee Stock Option Plans are
exercisable for shares of Common Stock.
(3) Brant Cali resigned as a director of the Company and from his positions as
Chief Operating Officer, Executive Vice President--Operations, Leasing and
Marketing and Assistant Secretary of the Company, effective as of June 27,
2000.
(4) John R. Cali resigned from his position as Executive Vice
President--Development, effective as of June 27, 2000.
(5) Thomas A. Rizk resigned from his position as Chief Executive Officer of the
Company, effective as of April 18, 1999.
18
AGGREGATED OPTION/WARRANT/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/WARRANTS/SARS AT OPTIONS/WARRANTS/SARS AT
ACQUIRED VALUE FISCAL YEAR-END(#) FISCAL YEAR END($)
ON REALIZED --------------------------- ---------------------------------
NAME EXERCISE(#) $ EXERCISABLE UNEXERCISABLE EXERCISABLE($) UNEXERCISABLE($)
- ---- ----------- -------- ----------- ------------- -------------- ----------------
Mitchell E. Hersh.............. 0 0 203,985 135,991 0 0
Timothy M. Jones............... 0 0 239,177 51,118 0 0
Barry Lefkowitz................ 0 0 58,282 38,855 0 0
Brant Cali..................... 0 0 388,177 42,118 1,762,500 0
John R. Cali................... 1,300 13,204 304,077 42,118 1,021,369 0
Thomas A. Rizk................. 0 0 0 0 0 0
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL -------------------------------
OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) PAYOUT(1) ($ OR #) ($ OR #) ($ OR #)
- ---- --------- --------------- --------- -------- --------
Mitchell E. Hersh...................... 62,500 January 1, 2006 -- -- --
Timothy M. Jones....................... 37,500 January 1, 2006 -- -- --
Barry Lefkowitz........................ 26,094 January 1, 2006 -- -- --
Brant Cali(2).......................... 23,437 January 1, 2006 -- -- --
John R. Cali(3)........................ 22,031 January 1, 2006 -- -- --
Thomas A. Rizk(4)...................... 0 -- -- -- --
- ------------------------
(1) In July 1999, the Company entered into amended and restated employment
agreements with each of Mitchell E. Hersh, Timothy M. Jones, Barry
Lefkowitz, Brant Cali and John R. Cali, pursuant to which, Mr. Hersh,
Mr. Jones, Mr. Lefkowitz, Mr. Brant Cali and Mr. John R. Cali were issued
62,500, 37,500, 26,094, 23,437 and 22,031 shares of Restricted Stock,
respectively, the vesting of which is contingent upon the satisfaction of
certain performance requirements. There are certain tax gross-up payments
that will be made upon such vesting. See "Employment Contracts; Termination
of Employment." The shares of Restricted Stock vest with respect to the
recipient on either an annual basis over a five year vesting period or on a
cumulative basis over a seven year maximum vesting period. The number of
shares of Restricted Stock scheduled to be vested and earned on each vesting
date on an annual basis, provided certain performance requirements set forth
in the following sentence are satisfied, generally is equal to 15% of the
Restricted Stock on the vesting date in year one, 15% of the Restricted
Stock on the vesting date in year two, 20% of the Restricted Stock on the
vesting date in year three, 25% of the Restricted Stock on the vesting date
in year four and 25% of the Restricted Stock on the vesting date in year
five. Vesting of the Restricted Stock on an annual basis commences
January 1, 2000, provided one of the following financial tests is met for
the measurement period ending on the last day of the Company's fiscal year
immediately preceding such vesting date: (A) the Company achieves an eight
percent (8%) increase in its funds from operations per common share or
(B) shareholders achieve a twelve and three quarters percent (12.75%) total
return (dividends, assuming reinvestment upon applicable payment date, plus
stock appreciation per share of Common Stock). The Company met the first of
such tests for the measurement period ended December 31, 1999. Pursuant to
the Cali Agreement, the unvested Restricted Stock awarded to Brant Cali and
John R. Cali vested in June 2000.
19
(2) Brant Cali resigned as a director of the Company and from his positions as
Chief Operating Officer, Executive Vice President-Operations, Leasing and
Marketing and Assistant Secretary of the Company, effective as of June 27,
2000.
(3) John R. Cali resigned from his position as Executive Vice
President-Development of the Company, effective as of June 27, 2000.
(4) Thomas A. Rizk resigned from his position as Chief Executive Officer of the
Company, effective as of April 18, 1999.
EMPLOYMENT CONTRACTS; TERMINATION OF EMPLOYMENT
MITCHELL E. HERSH EMPLOYMENT AGREEMENT. On July 1, 1999, following the
appointment of Mitchell E. Hersh as Chief Executive Officer of the Company on
April 18, 1999, the Company and Mr. Hersh amended and restated Mr. Hersh's
employment agreement with the Company (the "Amended and Restated Hersh
Agreement"), providing for a constant 4 year term. Mr. Hersh's initial annual
base salary is $1,050,000, with annual increases within the discretion of the
Executive Compensation and Option Committee. Mr. Hersh also is eligible to
receive an annual bonus, restricted share awards and options within the
discretion of the Board or the Executive Compensation and Option Committee, as
the case may be. Pursuant to the Employee Stock Option Plan, Mr. Hersh was
awarded 62,500 shares of Restricted Stock as of July 1, 1999, and with respect
to each tax year in which such shares of Restricted Stock vest and are
distributed to him, Mr. Hersh shall be entitled to receive a tax gross-up
payment from the Company equal to forty-three percent (43%) of the fair market
value of such restricted shares at the time of vesting, exclusive of dividends
(the "Tax Gross-Up Payments"). Mr. Hersh is required to devote substantially all
of his business time to the affairs of the Company and, subject to certain
excluded activities, generally is restricted during the term of his employment
and in the event his employment is terminated by the Company for cause (as
defined in the Amended and Restated Hersh Agreement) or by him without good
reason (as defined in the Amended and Restated Hersh Agreement), for a period of
one year thereafter, from conducting any office-service, flex or office property
development, acquisition or management activities within the continental United
States. Mr. Hersh is entitled to (i) receive the aggregate of a cash payment of
$8,000,000 (the "Fixed Amount"), reimbursement of expenses incurred prior to the
date of termination, and the Tax-Gross-Up Payments applicable to any vested
shares of Restricted Stock, (ii) immediate vesting of all options and incentive
compensation payments or programs otherwise subject to a vesting schedule,
(iii) require the Company to repurchase his vested options, (iv) receive
continuation of health coverage through the end of his unexpired employment
period should his employment be terminated by the Company without cause, by him
for good reason or on account of his disability (as defined in the Amended and
Restated Hersh Agreement) or death. Should Mr. Hersh terminate his employment on
or within six months following a change in control (as defined in the Amended
and Restated Hersh Agreement), Mr. Hersh's termination shall be treated as a
termination for good reason. In addition, upon a change in control, the vesting
of all options and other incentive compensation shall be accelerated and
Mr. Hersh would be entitled to receive a tax gross-up payment to cover any
excise taxes payable due to the change in control.
TIMOTHY M. JONES EMPLOYMENT AGREEMENT. On July 1, 1999, following the
appointment of Timothy M. Jones as President of the Company on April 18, 1999,
the Company and Mr. Jones amended and restated Mr. Jones' employment agreement
with the Company (the "Amended and Restated Jones Agreement"). The terms and
conditions of the Amended and Restated Jones Agreement are generally similar to
those of the Amended and Restated Hersh Agreement, except that (i) Mr. Jones'
initial base salary is $515,000, with annual increases within the sole
discretion of the Chief Executive Officer, (ii) Mr. Jones was awarded 37,500
shares of Restricted Stock, and (iii) the Fixed Amount Mr. Jones will receive is
$2,700,000.
BARRY LEFKOWITZ EMPLOYMENT AGREEMENT. On July 1, 1999, the Company and
Barry Lefkowitz amended and restated Mr. Lefkowitz's employment agreement with
the Company (the "Amended and
20
Restated Lefkowitz Agreement"). The terms and conditions of the Amended and
Restated Lefkowitz Agreement are generally similar to those of the Amended and
Restated Jones Agreement, except that (i) Mr. Lefkowitz's initial base salary is
$385,000, (ii) Mr. Lefkowitz was awarded 26,094 shares of Restricted Stock and
(iii) the Fixed Amount Mr. Lefkowitz will receive is $2,500,000.
BRANT CALI EMPLOYMENT AGREEMENT. On July 1, 1999, following the appointment
of Brant Cali as Chief Operating Officer on April 18, 1999, the Company and
Brant Cali amended and restated Mr. Cali's employment agreement with the Company
(the "Amended and Restated B. Cali Agreement"). The other terms and conditions
of the Amended and Restated B. Cali Agreement are generally similar to those of
the Amended and Restated Jones Agreement, except that (i) Mr. Cali's initial
annual base salary is $345,000, (ii) Mr. Cali was awarded 23,437 shares of
Restricted Stock, and (iii) the Fixed Amount Mr. Cali will receive is
$2,500,000. Mr. Cali's Amended and Restated B. Cali Agreement was terminated as
of June 27, 2000 pursuant to the Cali Agreement.
JOHN R. CALI EMPLOYMENT AGREEMENT. On July 1, 1999, the Company and John R.
Cali amended and restated Mr. Cali's employment agreement with the Company (the
"Amended and Restated J.R. Cali Agreement"). The terms and conditions of the
Amended and Restated Cali Agreement are generally similar to those of the
Amended and Restated Jones Agreement, except that (i) Mr. Cali's initial annual
base salary is $325,000, (ii) Mr. Cali was awarded 22,031 shares of Restricted
Stock, and (iii) the Fixed Amount Mr. Cali will receive is $2,500,000.
Mr. Cali's Amended and Restated J.R. Cali Agreement was terminated as of
June 27, 2000 pursuant to the Cali Agreement.
THOMAS A. RIZK TERMINATION OF EMPLOYMENT AGREEMENT. On April 18, 1999, the
Company and Thomas A. Rizk entered into an agreement (the "Rizk Termination
Agreement") to, among other things, terminate Mr. Rizk's employment with the
Company as Chief Executive Officer and his position as a member of the Board of
Directors of the Company and a member of the Executive Committee of the Board of
Directors. Pursuant to the terms and conditions of the Rizk Termination
Agreement, all of Mr. Rizk's options were canceled, and the Company agreed to
pay Mr. Rizk $18,525,000, reduced by $2,535,000 as required by a settlement
agreement entered in the Circuit Court for Baltimore City, of which $14,490,000,
less applicable taxes, was paid upon execution of the Rizk Termination Agreement
and the remainder of which was placed in a "Rabbi Trust" so that on each of
April 20, 2000, 2001 and 2002, the trustee shall make payments from the Rabbi
Trust to Mr. Rizk in the amount of $500,000, less applicable taxes. In addition,
in accordance with the terms and conditions of the Rizk Termination Agreement,
the Company converted Mr. Rizk's 141,383 Units into 141,383 shares of Common
Stock. At the date of the Rizk Termination Agreement, Mr. Rizk held 151,555
vested shares of Restricted Stock. In April 1999, subsequent to the termination
of his employment with the Company, Mr. Rizk sold all 292,938 shares in various
transactions, most of which was sold in a block sale at a price of $29.50 per
share.
CALI AGREEMENT. Pursuant to the Cali Agreement, effective in June 2000,
both Brant Cali and John R. Cali resigned their positions as officers of the
Company, and Brant Cali resigned as a director of the Company. As required by
the Amended and Restated B. Cali Agreement and the Amended and Restated J.R.
Cali Agreement, respectively, under the Cali Agreement, (i) the Company made
severance payments to Brant Cali and John R. Cali in the amount of $2,820,156
and $2,805,576, respectively, (ii) the Company will permit Brant Cali and John
R. Cali (and their dependents) to participate in the health and disability
insurance programs of the Company for a period of four years and (iii) all
options to acquire shares of the Company's common stock and shares of restricted
stock held by Brant Cali and John R. Cali became fully vested on the effective
dates of their resignations from the Company. Pursuant to the Cali Agreement,
Brant Cali and John R. Cali will remain bound by the non-compete provisions of
the Amended and Restated B. Cali Agreement and the Amended and Restated J.R.
Cali Agreement, respectively, until December 27, 2000.
Pursuant to the Cali Agreement, the Company has agreed to nominate John J.
Cali and John R. Cali for election as directors at the Annual Meeting. If either
John J. Cali or John R. Cali refuse to stand for
21
election or fail to be elected to the Board of Directors, or resign or are
removed from the Board of Directors during their term, the members of the Cali
family are entitled to designate a successor to John J. Cali, John R. Cali, or
both. Any such successor will be subject to the prior approval of the Board of
Directors, which approval shall not be unreasonably withheld. In addition, for
as long as members of the Cali family (or entities wholly owned by the Cali
family, Cali family trusts or the heirs of any member of the Cali Group (as
defined in the Cali Agreement)) maintain at least the "Minimum Percentage" (as
defined below) of the Cali family's aggregate equity position in the Units in
the Operating Partnership (measured exactly as it existed on June 27, 2000), the
Company has agreed to nominate one designee of the Cali family for election to
the Board of Directors for a second and third three-year term, provided such
person shall be subject to the prior approval of the Board of Directors, which
approval shall not be unreasonably withheld. Accordingly, the members of the
Cali family who are parties to the Cali Agreement (who in the aggregate are the
beneficial owners of 3.24% of the outstanding common stock of the Company,
calculated on a fully-diluted basis) have a substantial interest in the election
of John J. Cali and John R. Cali to the Board of Directors. For purposes of the
Cali Agreement, "Minimum Percentage" shall mean (i) 90% or (ii) 87.5%, if the
Cali family's aggregate equity position in the Units in the Operating
Partnership is reduced below 90% solely as a result of sales of Units to the
Company.
For as long as (i) the Cali family is represented on the Board of Directors,
(ii) the Cali family (or entities wholly owned by the Cali family, Cali family
trusts, or the heirs of any member of the Cali Group) maintains at least the
Minimum Percentage of the Cali family's aggregate equity position in the Units
of the Operating Partnership (measured exactly as it existed on June 27, 2000)
and (iii) the Board of Directors determines in its reasonable discretion to
continue the Executive Committee of the Board of Directors, the Cali family
shall be entitled to designate John R. Cali or another Cali-designated board
member to serve as a member of the Executive Committee of the Board of
Directors, provided such person shall be subject to the prior approval of the
Board of Directors, which approval may not be unreasonably withheld.
Pursuant to the Cali Agreement, members of the Cali Group were granted
certain limited tax protection with respect to the properties that they
initially contributed to the Company upon its formation. Such limited tax
protection is similar to that which was granted to members of the Mack Group
with respect to the properties that they contributed to the Company. Pursuant to
the Cali Agreement, John J. Cali will serve as a consultant to the Company for
three years and be paid an annual salary of $150,000.
EXECUTIVE COMPENSATION AND OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocking relationships involving the Company's Board which
require disclosure under the executive compensation rules of the SEC.
BOARD EXECUTIVE COMPENSATION AND OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report and the Performance Graph which follows
shall not be deemed to be incorporated by reference into any such filings.
EXECUTIVE COMPENSATION PHILOSOPHY. The Executive Compensation and Option
Committee will annually consider the appropriate combination of cash and
option-based compensation and weigh the competitiveness of the Company's overall
compensation arrangements in relation to comparable real estate investment
trusts. From time to time the Executive Compensation and Option Committee may
retain compensation and other management consultants to assist with, among other
things, structuring the Company's various compensation programs and determining
appropriate levels of salary, bonus and other compensatory awards payable to the
Company's executive officers and key employees, as well as to guide
22
the Company in the development of near-term and long-term individual performance
objectives necessary to achieve long-term profitability.
The Executive Compensation and Option Committee believes that a fundamental
goal of the Company's executive compensation program should be to provide
incentives to create value for the Company's stockholders.
BASE SALARIES. The base compensation levels for the Company's executive
officers in 1999 were set to compensate the executive officers for the functions
they will perform as well as to be consideration for certain non-competition
provisions in the agreements, and were based on the employment agreements
entered into in December 1997, as amended and restated in July 1999. The Company
believes that the base salaries generally are appropriate as base compensation
to compensate the Company's executive officers for the functions they perform
and other considerations. Base salaries will be reviewed annually and may be
increased by the Executive Compensation and Option Committee or the Chief
Executive Officer, as the case may be, in accordance with certain criteria
determined primarily on the basis of growth of revenues and funds from
operations per share of Common Stock and on the basis of certain other factors,
which include (i) individual performance, (ii) the functions performed by the
executive officer, and (iii) changes in the compensation peer group in which the
Company competes for executive talent. The weight given such factors by the
Executive Compensation and Option Committee may vary from individual to
individual.
ANNUAL BONUS COMPENSATION. The Company's policy of awarding annual cash
bonuses is designed to specifically relate executive pay to Company and
individual performance. As a pay-for-performance program, cash bonuses provide
financial rewards for the achievement of substantive Company and personal
objectives. Actual awards paid are based primarily on actual Company
performance. During 1999, discretionary incentive and merit cash bonuses in
recognition of services performed during fiscal 1999 were awarded as follows:
$440,000 to Mitchell E. Hersh, $275,000 to Timothy M. Jones, $225,000 to Barry
Lefkowitz, $185,000 to Brant Cali, $185,000 to John R. Cali and $185,000 to
Roger W. Thomas.
EMPLOYEE STOCK OPTION PLAN. Awards are granted under the Employee Stock
Option Plan based on a number of factors, including (i) the executive officer's
or key employee's position in the Company, (ii) his or her performance and
responsibilities, (iii) the extent to which he or she already holds an equity
stake in the Company, (iv) equity participation levels of comparable executives
and key employees at other companies in the compensation peer group and
(v) individual contribution to the success of the Company's financial
performance. However, the Employee Stock Option Plan does not provide any
formulated method for weighing these factors, and a decision to grant an award
is based primarily upon the Executive Compensation and Option Committee's
evaluation of the past as well as the future anticipated performance and
responsibilities of the individual in question. During 1999, performance based
restricted share awards were granted to Mitchell E. Hersh (62,500), Timothy M.
Jones (37,500), Barry Lefkowitz (26,094), Brant Cali (23,437), John R. Cali
(22,031) and Roger W. Thomas (22,031), subject to a multi-year vesting schedule.
No options or other stock based awards were granted to executive officers of the
Company.
The Company's Employee Stock Option Plan relates closely to traditional
forms of equity oriented compensation in the commercial real estate industry.
The purpose of the option and other stock based grants is to aid the Company in
attracting and retaining quality employees, all advancing the interest of the
Company's stockholders by offering employees an incentive to maximize their
efforts to promote the Company's economic performance. In addition, to assist
the Company in retaining employees and encouraging them to seek long-term
appreciation in the value of the Company's stock, awards generally are not
exercisable immediately upon grant, but instead vest over a period of years.
Accordingly, an employee must remain with the Company for a period of years to
enjoy the full economic benefit of an award.
23
401(K) SAVINGS PLAN. The Company also maintains a tax-qualified 401(k)
savings plan for its eligible employees known as the "Mack-Cali Realty
Corporation 401(k) Savings/Retirement Plan" ("401(k) Plan"). Employees who have
attained age 21 and completed one-half year of service with the Company are
eligible to participate and may elect to defer up to 15% of their base pay on a
pre-tax basis to the 401(k) Plan. The Company may make discretionary matching or
profit sharing contributions to the 401(k) Plan on behalf of eligible
participants in any plan year. Participants are always 100% vested in their
pre-tax contributions and will begin vesting in any matching or profit sharing
contributions made on their behalf after two years of service with the Company
at a rate of 20% per year becoming 100% vested after a total of six years of
service with the Company. The assets of the 401(k) Plan are held in trust and a
separate account is established for each participant. A participant may receive
a distribution of his vested account balance in the 401(k) Plan in a single sum
or installment payment or in the form of an annuity upon his termination of
service with the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mitchell E. Hersh, the Chief
Executive Officer of the Company, received a base salary during 1999 of
$1,050,000 pursuant to the employment agreement entered into in December 1997,
as amended and restated in July 1999. Mr. Hersh also was paid a cash bonus of
$440,000 in recognition of services performed during fiscal 1999. Mr. Hersh
received no fees for his service as a Director of the Company during fiscal
1999. During 1999, Mr. Hersh was granted 62,500 performance based restricted
share awards, subject to a multi-year vesting schedule. The Executive
Compensation and Option Committee recognizes Mr. Hersh's contributions to the
Company's operations and attempts to ensure that the Chief Executive Officer's
compensation is commensurate with the compensation of chief executive officers
of comparable corporations. The Board of Directors deemed such bonus and
Mr. Hersh's total compensation appropriate in light of Mr. Hersh's substantial
contribution to the Company's growth and success in 1999.
EXECUTIVE COMPENSATION AND OPTION
COMMITTEE OF THE BOARD OF DIRECTORS
Vincent Tese
Martin D. Gruss
Alan G. Philibosian
24
PERFORMANCE GRAPH
The following graph compares total stockholder returns from December 31,
1994 through December 31, 1999 to the Standard & Poor's 500 Stock Index ("S&P
500") and to the National Association of Real Estate Investment Trusts, Inc.'s
Equity REIT (excluding Health Care REITs) Total Return Index ("NAREIT"). The
graph assumes that the value of the investment in the Company's Common Stock and
in the S&P 500 and NAREIT indices was $100 at December 31, 1994 and that all
dividends were reinvested. The Company's Common Stock's price on December 31,
1994 (on which the graph is based) was $16.00.
The stockholder return shown on the following graph is not necessarily
indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG MACK-CALI REALTY CORPORATION,
THE S&P 500 INDEX AND THE NAREIT EQUITY REIT INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
MACK-CALI REALITY CORPORATION S&P NAREIT
12/31/94 100 100 100
12/31/95 149.73 137.43 115.27
12/31/96 227.49 168.98 155.92
12/31/97 319.15 225.37 187.51
12/31/98 254.9 289.78 154.69
12/31/99 232.66 350.71 147.55
25
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Company's independent accountants
for the fiscal year ended December 31, 1999, and has been appointed by the Board
of Directors to continue as the Company's independent accountants for the fiscal
year ending December 31, 2000. In the event that ratification of this
appointment of auditors is not approved by the affirmative vote of a majority of
votes cast on the matter, then the appointment of independent accountants will
be reconsidered by the Board of Directors. Unless marked to the contrary,
proxies received will be voted for RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2000.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the annual meeting. The representative will have an opportunity to make a
statement and will be able to respond to appropriate questions.
Your ratification of the appointment of PricewaterhouseCoopers LLP as the
independent accountants for the fiscal year ending December 31, 2000, does not
preclude the Board of Directors of the Company from terminating its engagement
of PricewaterhouseCoopers and retaining a new independent accountant, if it
determines that such an action would be in the best interests of the Company. If
the Company elects to retain a new independent accountant, such accountant will
be another "Big 5" accounting firm.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a majority of the
votes cast at the Annual Meeting, either in person or by proxy, is required for
approval of this proposal. Abstentions and broker non-votes will have no effect
on the outcome of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
26
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE CHARTER OF THE COMPANY TO DECREASE THE
AFFIRMATIVE STOCKHOLDER VOTE REQUIRED TO APPROVE ANY EXTRAORDINARY ACTION FROM
TWO-THIRDS TO A MAJORITY OF ALL VOTES ENTITLED TO BE CAST ON THE ACTION BY THE
HOLDERS OF THE OUTSTANDING SHARES OF STOCK OF THE COMPANY.
The Maryland General Corporation Law (the "MGCL") requires that a charter
amendment or an extraordinary action such as a merger, consolidation, transfer
of substantially all of the assets or dissolution of a Maryland corporation, be
approved by the stockholders of the corporation by the affirmative vote of
two-thirds of all votes entitled to be cast on the matter. The MGCL also
provides, however, that a corporation's charter may include a provision which
reduces the affirmative vote of stockholders required to effectuate a charter
amendment or an extraordinary action from two-thirds to a lesser proportion, but
not less than a majority of all votes entitled to be cast on the matter. The
Company's Articles of Restatement (the "Charter") already contains such a
provision, whereby charter amendments can now be effectuated by a majority of
all votes entitled to be cast on the matter.
The Board of Directors deems it advisable that the Company's Charter be
amended to decrease the affirmative stockholder vote required to effectuate an
extraordinary action from two-thirds to a majority of all votes entitled to be
cast by the Company's stockholders on the matter. The Board of Directors
believes the adoption of the following amendment is advisable because it will
allow the Company to act pursuant to the affirmative vote of a majority of its
stockholders. Pursuant to the Company's current Charter provisions, a minority
one-third (plus one) vote or non-response could prevent the Company from
pursuing opportunities or taking actions that the majority of the stockholders
of the Company vote in favor of pursuing. The following amendment will bring the
Company in line with other similar real estate investment trusts, in particular,
and with other public companies, in general, where only a majority in interest
of the stock is required to approve an extraordinary action such as a merger. In
addition, this amendment will bring the Charter provisions on extraordinary
actions in line with the current provisions in the Charter which state that
amendments to the Charter require only a majority vote.
The Board of Directors unanimously recommends a vote FOR approval of the
amendment of Article VII of the Company's Charter so that, as amended, it shall
read as follows:
"ARTICLE VII
AMENDMENTS AND OTHER EXTRAORDINARY ACTIONS
Section 1. GENERAL POWER TO AMEND CHARTER. The Corporation
reserves the right from time to time to make any amendment to its
charter, now or hereafter authorized by law, including any amendment
altering the terms or contract rights, as expressly set forth in this
charter, of any shares of outstanding stock. All rights and powers
conferred by the charter of the Corporation on stockholders, directors
and officers are granted subject to this reservation.
Section 2. VOTE REQUIRED. Except as specifically required in
Article V, Section 2 of the charter of the Corporation, notwithstanding
any provision of law requiring a greater proportion of the votes
entitled to be cast by the stockholders in order to take or approve any
action, such action shall be valid and effective if taken or approved by
the affirmative vote of at least a majority of all votes entitled to be
cast by the stockholders on the matter."
On June 27, 2000, the Company, the Operating Partnership, Prentiss
Properties Trust, a Maryland real estate investment trust ("Prentiss"), and
Prentiss Properties Acquisition Partners, L.P., a Delaware limited partnership
of which Prentiss (through a wholly-owned direct subsidiary) is the sole general
partner ("Prentiss Partnership"), entered into an Agreement and Plan of Merger
(the "Merger Agreement"). The Merger Agreement provides for a merger of Prentiss
with and into the Company (the "Merger"), with the Company being the surviving
corporation and, immediately prior to the Merger, a merger of Prentiss
27
Partnership with and into the Operating Partnership (or a limited liability
company or limited partnership owned entirely directly or indirectly by the
Operating Partnership) (the "Partnership Merger," and, together with the Merger,
the "Mergers"). Under the terms of the Merger Agreement, Prentiss common shares
will be exchanged for shares of the Company's Common Stock at a fixed exchange
ratio of 0.956 share of Mack-Cali Common Stock for every one Prentiss common
share. If this Proposal No. 3 is approved and adopted, then the affirmative vote
of a majority of the outstanding shares of Common Stock (rather than the
affirmative vote of two-thirds of the outstanding shares of Common Stock) will
be necessary to approve the Merger. A special meeting of stockholders expected
to be held later in calendar year 2000 will be called by the Company to vote
upon the Merger, and the Company will mail a separate proxy statement relating
to the Merger in connection with such special meeting.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote, either in person or by
proxy, of a majority of all the votes of stockholders entitled to be cast at the
Annual Meeting on this proposal is required for the approval of this proposal.
Abstentions and broker non-votes will have the same effect as a negative vote on
this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE CHARTER OF THE COMPANY.
28
PROPOSAL NO. 4
APPROVAL OF THE ADOPTION OF THE 2000 EMPLOYEE STOCK OPTION PLAN.
At its meeting on June 27, 2000, the Board of Directors of the Company
adopted the 2000 Employee Stock Option Plan (the "2000 Employee Stock Option
Plan") (a copy of which is attached hereto as Exhibit B) and directed that the
2000 Employee Stock Option Plan be submitted to the stockholders for their
approval. The Board of Directors believes that adoption of the 2000 Employee
Stock Option Plan is in the best interests of the Company and its stockholders
because the ability to grant stock options and make other stock-based awards
under the 2000 Employee Stock Option Plan is an important factor in attracting,
motivating and retaining qualified personnel essential to the success of the
Company.
SUMMARY OF THE PROVISIONS OF THE 2000 EMPLOYEE STOCK OPTION PLAN.
The following summary of the 2000 Employee Stock Option Plan is qualified in
its entirety by the specific language of the plan, a copy of which is attached
hereto as Exhibit B.
GENERAL. The purposes of the 2000 Employee Stock Option Plan are to attract
and retain the best personnel for positions of substantial responsibility and to
provide additional incentives to key employees, officers, consultants and other
persons whose efforts are deemed worthy of encouragement to promote the growth
and success of the Company. The 2000 Employee Stock Option Plan provides for the
grant of incentive stock options, within the meaning of Section 422 of the Code
to employees of the Company and for the grant of nonstatutory stock options,
stock appreciation rights ("SARs") and Restricted Stock to employees,
consultants and advisors of the Company. The Board has authorized, subject to
shareholder approval, 2,500,000 shares of Common Stock for issuance under the
2000 Employee Stock Option Plan. In the event of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, exchange of
shares, combination, or like change in the capital structure of the Company,
appropriate adjustments will be made to the shares subject to the 2000 Employee
Stock Option Plan and to any outstanding awards. To the extent any outstanding
option under the 2000 Employee Stock Option Plan expires or terminates prior to
its exercise in full, or if any shares of Restricted Stock or SARs are
forfeited, the shares of Common Stock no longer subject to the option, SARs or
restrictions will be returned to the 2000 Employee Stock Option Plan and made
available for future grants.
ADMINISTRATION. The 2000 Employee Stock Option Plan is administered by the
Executive Compensation and Option Committee of the Board of Directors of the
Company. With respect to the participation of individuals who are subject to
Section 16 of the Exchange Act, the 2000 Employee Stock Option Plan is
administered in compliance with the requirements of Rule 16b-3 under the
Exchange Act. Subject to the provisions of the 2000 Employee Stock Option Plan,
the Executive Compensation and Option Committee determines the persons to whom
grants of options, SARs, and shares of Restricted Stock are to be made, the
number of shares of Common Stock to be covered by each grant and all other terms
and conditions of the grant. If an option is granted, the Executive Compensation
and Option Committee determines whether the option is an incentive stock option
or a nonstatutory stock option, the option's term, vesting and exercisability,
the amount and type of consideration to be paid to the Company upon the option's
exercise and the other terms and conditions of the grant. The terms and
conditions of Restricted Stock and SAR awards are also determined by the
Executive Compensation and Option Committee. The Executive Compensation and
Option Committee has the responsibility to interpret the 2000 Employee Stock
Option Plan and to make determinations with respect to all awards granted under
the 2000 Employee Stock Option Plan. All determinations of the Executive
Compensation and Option Committee are final and binding on all persons having an
interest in the 2000 Employee Stock Option Plan or in any award made under the
2000 Employee Stock Option Plan. The costs and expenses of administering the
2000 Employee Stock Option Plan are borne by the Company.
29
ELIGIBILITY. All employees, consultants and advisors who in the judgment of
the Executive Compensation and Option Committee, are considered important to the
future of the Company (including officers and directors of the Company who are
also employees) are eligible to participate in the 2000 Employee Stock Option
Plan. Non-employee directors of the Company may not participate.
TERMS AND CONDITIONS OF OPTION GRANTS. Each option granted under the 2000
Employee Stock Option Plan is evidenced by a written agreement between the
Company and the optionee specifying the number of shares of the Company's Common
Stock subject to the option and all of the other terms and conditions of the
option, consistent with the requirements of the 2000 Employee Stock Option Plan.
The per share exercise price of an incentive stock option may not be less than
100% of the fair market value of a share of Common Stock on the date of the
option's grant and the term of any such option shall expire on the tenth
anniversary of the date of the option's grant. In addition, the per share
exercise price of any option granted to a person who at the time of the grant
owns stock possessing more than 10% of the total combined voting power or value
of all classes of stock of the Company must be at least 110% of the fair market
value of a share of the Company's Common Stock on the date of grant (but in no
event less than the par value of a share) and such option shall expire on the
fifth anniversary of the date of the option's grant. After the Company grants an
option pursuant to the 2000 Employee Stock Option Plan, such option may not be
re-priced by the Company.
Generally, options may be exercised by the payment of the exercise price in
cash, certified check or wire transfer, or, subject to the approval of the
Executive Compensation and Option Committee, in cash equivalents, such as
through the tender of shares of the Company's Common Stock owned by the optionee
having a fair market value not less than the exercise price, by the assignment
of the proceeds of a sale of some or all of the shares of Common Stock being
acquired upon the exercise of the option, by way of a loan or in any combination
of these methods.
Options granted under the 2000 Employee Stock Option Plan will become
exercisable at such times as may be specified by the Executive Compensation and
Option Committee, and generally become exercisable in five equal annual
installments subject to the optionee's continued employment or service with the
Company. The maximum term of options granted under the 2000 Employee Stock
Option Plan is ten years. Options are generally nontransferable by the optionee
other than by will or by the laws of descent and distribution and are
exercisable during the optionee's lifetime only by the optionee, or his guardian
or legal representative, except that, subject to certain restrictions, in
respect of incentive options, an optionee may, if permitted by the Executive
Compensation and Option Committee in its discretion, transfer an award or any
portion thereof, to one or more members of the optionee's immediate family.
TERMS AND CONDITIONS OF OTHER AWARDS. Each SAR or Restricted Stock award
made under the 2000 Employee Stock Option Plan is also evidenced by a written
agreement between the Company and the award holder specifying the number of
shares of Common Stock subject to the award and the other necessary terms and
conditions, consistent with the requirements of the 2000 Employee Stock Option
Plan. A SAR or Restricted Stock award may be granted separately or in
conjunction with the grant of an option. The terms included in the written
agreements evidencing these awards are summarized below.
If a SAR is granted, the written agreement will specify if the SAR is being
granted separately or with respect to an outstanding option. In general, if a
SAR is granted with respect to an option, the exercise of the option will cancel
the SAR and the exercise of the SAR will cancel the option. An agreement
evidencing the SAR will also describe when the SAR will become vested and
exercisable, subject to the award holder's continued employment by the Company,
and the per share grant price. Upon settlement of the SAR award, occurring at
exercise, the award holder will receive a cash distribution of the difference
between the grant price of the Common Stock underlying the SAR and its fair
market value on the date of exercise.
If shares of Restricted Stock are awarded, the agreement will specify the
per share grant price of the Common Stock subject to the restrictions, the
conditions that will result in the automatic and complete
30
forfeiture of the shares and the time and manner in which the restrictions will
lapse, subject to the award holder's continued employment by the Company. Upon
settlement of the Restricted Stock award, occurring upon the lapse of the
restrictions, the shares of Common Stock subject to the award will become
immediately distributable to the participant.
CHANGE OF CONTROL PROVISIONS. In general, a "Change of Control" will be
deemed to occur upon any of the following events in which the stockholders of
the Company do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company or its successor:
(i) the direct or indirect sale or exchange by the shareholders of the Company
of all or substantially all of the stock of the Company, (ii) a merger in which
the Company is a party, or (iii) the sale, exchange or transfer of all or
substantially all of the assets of the Company. If a participant terminates
employment within six months following a "Change of Control," all of the options
previously granted to him shall automatically become vested and immediately
exercisable; restrictions in Restricted Stock awards will also automatically
lapse upon a termination following a "Change of Control" and the Common Stock
subject to the award will become immediately distributable to the participant.
TERMINATION OR AMENDMENT OF THE 2000 EMPLOYEE STOCK OPTION PLAN. Unless
sooner terminated, no awards may be granted under the 2000 Employee Stock Option
Plan after May 16, 2010. The Board of Directors may terminate or amend the 2000
Employee Stock Option Plan at any time, but the Board of Directors may not amend
the 2000 Employee Stock Option Plan to increase the total number of shares of
Common Stock reserved for issuance of awards or adopt any amendment that would
materially increase the cost of the 2000 Employee Stock Option Plan to the
Company without shareholder approval. No amendment may be adopted that would
adversely affect an outstanding option or award without the participant's
consent.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE 2000 EMPLOYEE STOCK OPTION
PLAN
The following summary is intended only as a general guide as to the federal
income tax consequences under current law with respect to participation in the
2000 Employee Stock Option Plan and does not attempt to describe all possible
federal or other tax consequences of such participation. Furthermore, the tax
consequences of awards made under the 2000 Employee Stock Option Plan are
complex and subject to change, and a taxpayer's particular situation may be such
that some variation of the described rules is applicable.
INCENTIVE STOCK OPTIONS. Options designated as incentive stock options are
intended to fall within the provisions of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). An optionee recognizes no taxable income
for regular income tax purposes as the result of the grant or exercise of such
an option. If an optionee does not dispose of his shares for two years following
the date the option was granted or within one year following the transfer of the
shares upon exercise of the option, the gain on the sale of the shares (which is
the difference between the sale price and the purchase price of the shares) will
be taxed as long-term capital gain. If an optionee satisfies such holding
periods, upon a sale of the shares, the Company will not be entitled to any
deduction for federal income tax purposes. If an optionee disposes of the shares
within two years after the date of grant or within one year from the date of
exercise (a "disqualifying disposition"), the difference between the fair market
value of the shares on the date of exercise and the option exercise price (not
to exceed the gain realized on the sale if the disposition is a transaction with
respect to which a loss, if sustained, would be recognized) will be taxed as
ordinary income at the time of the disqualifying disposition. Any gain in excess
of that amount will be a capital gain. If a loss is recognized, there will be no
ordinary income, and such loss will be a capital loss. A capital gain or loss
will be long-term if the optionee's holding period is more than 12 months. Any
ordinary income recognized by the optionee upon the disqualifying disposition of
the shares should be deductible by the Company for federal income tax purposes,
except to the extent such deduction is limited by Section 162(m) of the Code.
31
This Section of the Code disallows a public company's deductions for certain
employee remuneration exceeding $1,000,000 per year.
NONSTATUTORY STOCK OPTIONS. Options that do not qualify as incentive stock
options are nonstatutory stock options and have no special tax status. An
optionee generally recognizes no taxable income as the result of the grant of
such an option.
Upon the exercise of a nonstatutory stock option, the optionee normally
recognizes ordinary income in the amount of the difference between the option
exercise price and the fair market value of the shares on the determination date
(which is generally the date of exercise). If the optionee is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. The "determination date" is the date on which the option is exercised
unless the sale of the shares at a profit would subject the optionee to suit
under Section 16(b) of the Exchange Act, in which case the determination date is
the date the sale of the shares at a profit would no longer subject the optionee
to suit under Section 16(b) of the Exchange Act. (Section 16(b) of the Exchange
Act generally is applicable only to officers, directors and beneficial owners of
more than 10% of the Common Stock of the Company.) Upon the sale of stock
acquired by the exercise of a nonstatutory stock option, any gain or loss, based
on the difference between the sale price and the fair market value on the date
of recognition of income, will be taxed as capital gain or loss. A capital gain
or loss will be long-term if the optionee's holding period is more than
12 months. No tax deduction is available to the Company with respect to the
grant of a nonstatutory option or the sale of the stock acquired pursuant to
such grant. The Company should be entitled to a deduction equal to the amount of
ordinary income recognized by the optionee as a result of the exercise of a
nonstatutory option, except to the extent such deduction is limited by
Section 162(m) of the Code.
SARS AND RESTRICTED STOCK AWARDS. A participant will not be required to
recognize any income for federal income tax purposes upon the grant of a SAR or
shares of Restricted Stock. However, upon settlement of the SAR award (the date
of its exercise), the participant will be required to recognize as ordinary
income the difference between the strike price and the fair market value on the
date of its exercise of the shares of Common Stock on which the SAR award is
based. This amount will be taxed at ordinary federal income tax rates. Upon
settlement of the Restricted Stock award (the date the shares become
distributable), the participant will be required to recognize as ordinary income
the fair market value of the shares of Common Stock on such date. The Company
should be entitled to a deduction equal to the amount of the ordinary income
recognized by the participant upon the settlement of the SAR or Restricted Stock
award to the extent permitted by Section 162(m) of the Code.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
Assuming a quorum is present, the affirmative vote of a majority of the
votes cast on this proposal at the Annual Meeting is required for approval of
this Proposal No. 4, provided that the total votes cast on this proposal
represent over 50% in interest of all securities entitled to vote on this
proposal. For purposes of the vote on this Proposal No. 4, an abstention or a
broker non-vote will have the effect of a vote against this proposal unless the
total votes cast on this proposal represent more than 50% in interest of all
securities entitled to vote on this proposal, in which event neither an
abstention nor a broker non-vote will have any effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ADOPTION OF THE
2000 EMPLOYEE STOCK OPTION PLAN.
32
PROPOSAL NO. 5
APPROVAL OF THE ADOPTION OF THE 2000 DIRECTOR STOCK OPTION PLAN.
At its meeting on June 27, 2000, the Board of Directors of the Company
adopted the 2000 Director Stock Option Plan (the "2000 Director Stock Option
Plan") (a copy of which is attached hereto as Exhibit C) and directed that the
2000 Director Stock Option Plan be submitted to the shareholders for their
approval. The Board of Directors believes that the adoption of the 2000 Director
Stock Option Plan is in the best interests of the stockholders and the Company
because the ability to grant options thereunder is an important factor in
attracting, motivating and retaining distinguished personnel with proven ability
and vision to serve on the Board of Directors and the Advisory Board and chart
the Company's course towards continued growth and financial success.
SUMMARY OF THE PROVISIONS OF THE 2000 DIRECTOR STOCK OPTION PLAN.
The following summary of the 2000 Director Stock Option Plan is qualified in
its entirety by the specific language of the plan, a copy of which is attached
hereto as Exhibit C.
GENERAL. The 2000 Director Stock Option Plan is designed to enable the
Company to attract and retain persons of outstanding competence to serve as
members of the Board of Directors and the Advisory Board of the Company and to
provide a direct link between directors' or Advisory Board members' compensation
and shareholder value. Participation in the 2000 Director Stock Option Plan
initially will be restricted to non-employee directors and Advisory Board
members and only nonstatutory options to purchase shares of Common Stock will be
granted. The 2000 Director Stock Option Plan also provides that in the event of
any stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, exchange of shares, combination, or like change in the capital
structure of the Company, appropriate adjustments will be made to the shares of
Common Stock subject to the 2000 Director Stock Option Plan and to any
outstanding awards. To the extent any outstanding option expires or terminates
prior to its exercise in full, the shares of Common Stock no longer subject to
the option will be returned to the 2000 Director Stock Option Plan and made
available for future grants.
ADMINISTRATION. The 2000 Director Stock Option Plan is administered by the
Executive Compensation and Option Committee of the Board of Directors of the
Company in compliance with the requirements of Rule 16b-3 of the Exchange Act.
Initial stock option grants, including all conditions of such grants, that are
made to eligible non-employee directors under the 2000 Director Stock Option
Plan are non-discretionary and are dictated by the written terms of the 2000
Director Stock Option Plan. Under the 2000 Director Stock Option Plan, upon an
eligible director's initial election or appointment to the Board of Directors of
the Company, the director is automatically granted a non-statutory stock option
to purchase 5,000 shares of Common Stock at its fair market value on the date of
grant. The Executive Compensation and Option Committee may make additional
discretionary options grants to eligible directors and Advisory Board members,
consistent with the terms of the 2000 Director Stock Option Plan. All options
granted under the 2000 Director Stock Option Plan are non-statutory stock
options. Subject to certain specific limitations and restrictions set forth in
the 2000 Director Stock Option Plan, the Executive Compensation and Option
Committee has the authority to interpret the 2000 Director Stock Option Plan, to
prescribe, amend and rescind rules and regulations, if any, relating to the 2000
Director Stock Option Plan and to make all determinations necessary or advisable
for the administration of the 2000 Director Stock Option Plan. The costs and
expenses of administering the 2000 Director Stock Option Plan are paid by the
Company.
ELIGIBILITY. Participation in the 2000 Director Stock Option Plan is
limited to persons who serve as members of the Board of Directors and the
Advisory Board of the Company and who, at the time of the option grant, are not
employees of the Company. For purposes of determining the exercise period of
prior grants under the 2000 Director Stock Option Plan, any member of the Board
of Directors who resigns as a
33
director in order to become a member of the Advisory Board shall be deemed
during his period of service as a member of the Advisory Board to be a
continuing member of the Board of Directors and any member of the Advisory Board
who resigns as a member of the Advisory Board to become a member of the Board of
Directors shall be deemed during his period of service as a member of the Board
of Directors to be a continuing member of the Board of Directors.
TERMS AND CONDITIONS OF OPTION GRANTS. The 2000 Director Stock Option Plan
provides for each non-employee director automatically to receive, upon election
to office or appointment to the Board of Directors, an option to acquire 5,000
shares of Common Stock at a price equal to the fair market value at the date of
the grant of the shares of Common Stock subject to such option. Pursuant to the
terms of the 2000 Director Stock Option Plan, each automatic option shall become
vested and exercisable on the earlier of (i) the first anniversary of the grant
date, provided the director remains in the continuous service of the Board of
Directors, during such period, (ii) upon the director's termination of Board of
Directors service due to retirement, death or disability, or (iii) the period,
if any, determined by the Executive Compensation and Option Committee in its
sole discretion. If a director's service is terminated for "cause" all awards
granted to the director under the 2000 Director Stock Option Plan will
automatically be forfeited. In the event a director's service on the Board of
Directors terminates before the options have vested, any unvested option shall
be canceled and the director shall have no further right or interest in the
forfeited option. The 2000 Director Stock Option Plan does not provide for the
vesting of outstanding options to be accelerated upon a "Change of Control" of
the Company. Each option shall remain outstanding until the tenth anniversary of
the grant date.
All of the terms and conditions of option grants are specified in a written
agreement between the Company and the optionee. In addition, the Executive
Compensation and Option Committee may make additional discretionary option
grants to eligible directors and members of the Advisory Board the terms of
which shall be determined by the Executive Compensation and Option Committee,
consistent with the provisions of the 2000 Director Stock Option Plan and
specified in a written agreement. Neither the existence of the 2000 Director
Stock Option Plan, nor the granting of an option thereunder, will be construed
to limit, in any way, the right of the Company or its shareholders to elect a
person to serve as a director or the right of the Board of Directors to appoint
a person to serve as a member of the Advisory Board. In addition, nothing in the
2000 Director Stock Option Plan shall be construed to give any director or
Advisory Board member the right to a grant of an option under the 2000 Director
Stock Option Plan unless the express terms and conditions of the 2000 Director
Stock Option Plan are satisfied.
Options may be exercised by the payment of the exercise price in cash,
certified check or wire transfer or, subject to the approval of the Executive
Compensation and Option Committee, in cash equivalents, such as through the
tender of shares of the Company's Common Stock owned by the optionee having a
fair market value not less than the exercise price, by the assignment of the
proceeds of a sale of some or all of the shares of Common Stock being acquired
upon the exercise of the option, by way of a loan or in any combination of these
methods. Options are generally nontransferable by the optionee other than by
will or by the laws of descent and distribution and are exercisable during the
optionee's lifetime only the optionee.
TERMINATION OR AMENDMENT OF THE 2000 DIRECTOR STOCK OPTION PLAN. Unless
sooner terminated, no awards may be granted under the 2000 Director Stock Option
Plan after May 16, 2010. The Board of Directors may terminate or amend the 2000
Director Stock Option Plan at any time, but the Board of Directors may not amend
the 2000 Director Stock Option Plan to increase the total number of shares of
Common Stock reserved for issuance of awards or adopt any amendment that would
materially increase the cost of the 2000 Director Stock Option Plan to the
Company without shareholder approval. No amendment may be adopted that would
adversely affect an outstanding option or award without the participant's
consent.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE 2000 DIRECTOR STOCK OPTION
PLAN. In general, no gain or loss is recognized by the option holder at the
time an option is granted under the 2000 Director
34
Stock Option Plan. Upon the exercise of an option, the difference between the
fair market value of the Common Stock on the date of exercise and the option
price will be taxable as compensation income to the option holder and the
Company would be entitled to a deduction for federal income tax purposes for the
same amount. Upon a subsequent sale or exchange of stock acquired pursuant to
the exercise of an option, the option holder would have taxable gain or loss,
measured by the difference between the amount realized on the disposition and
the tax basis of such shares. The foregoing statements are intended to summarize
the general principles of current federal income tax law applicable to options
that may be granted under the 2000 Director Stock Option Plan. The tax
consequences of awards made under the 2000 Director Stock Option Plan are
complex, subject to change, and may vary depending on the taxpayer's particular
circumstances.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION.
Assuming a quorum is present, the affirmative vote of a majority of the
votes cast on this proposal at the Annual Meeting is required for approval of
this Proposal No. 5, provided that the total votes cast on this proposal
represent over 50% in interest of all securities entitled to vote on this
proposal. For purposes of the vote on this Proposal No. 5, an abstention or a
broker non-vote will have the effect of a vote against this proposal unless the
total votes cast on this proposal represent more than 50% in interest of all
securities entitled to vote on this proposal, in which event neither an
abstention nor a broker non-vote will have any effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ADOPTION OF THE
2000 DIRECTOR STOCK OPTION PLAN.
35
STOCKHOLDERS PROPOSALS
To be considered for presentation at the annual meeting of the Company's
stockholders to be held in 2001, a stockholder proposal must be received by
Roger W. Thomas, Secretary, Mack-Cali Realty Corporation, 11 Commerce Drive,
Cranford, New Jersey 07016, no later than .
OTHER MATTERS
The Board of Directors knows of no other business which will be presented at
the Annual Meeting. If any other business is properly brought before the Annual
Meeting, it is intended that proxies in the enclosed form will be voted in
respect thereof and accordance with the judgments of the persons voting the
proxies.
It is important that the proxies be returned promptly and that your shares
be represented. Stockholders are urged to mark, date, execute and promptly
return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ ROGER W. THOMAS
-----------------------------------------
Roger W. Thomas
SECRETARY
Date: ______________, 2000
Cranford, New Jersey
36
EXHIBIT A
MACK-CALI REALTY CORPORATION AUDIT COMMITTEE CHARTER
PURPOSE
There shall be an Audit Committee (the "Committee") of the Board of
Directors (the "Board") of Mack-Cali Realty Corporation, a Maryland corporation
(the "Company"). The primary function of the Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities, primarily through:
1) overseeing management's conduct of the Company's financial reporting process
and systems of internal accounting and financial controls; 2) monitoring the
independence and performance of the Company's outside auditors; and
3) providing an avenue of communication among the outside auditors, management
and the Board.
COMPOSITION AND MEETINGS
The Committee shall have at least three (3) members at all times, each of
whom must be independent of management and the Company. Members of the Committee
shall be considered independent if: 1) in the sole discretion of the Board, it
is determined that they have no relationship that may interfere with the
exercise of their independent judgment; and 2) they meet the New York Stock
Exchange rules regarding independence of audit committee members. Members of the
Committee shall be appointed by the Board and shall serve until the earlier to
occur of the date on which he or she shall: 1) be replaced by the Board;
2) resign from the Committee; or 3) resign from the Board. All members of the
Committee shall have a basic understanding of finance and accounting and be able
to read and understand fundamental financial statements or be able to do so
within a reasonable period of time after appointment to the Committee, and at
least one member of the Committee shall have accounting or related financial
management expertise.
The Committee shall meet as frequently as circumstances dictate, but no less
than four times annually. The Board shall name a chairperson of the Committee,
who shall prepare and/or approve an agenda in advance of each meeting. A
majority of the members of the Committee shall constitute a quorum.
RESPONSIBILITIES AND DUTIES
The Committee's principal responsibility is one of oversight. The Company's
management is responsible for preparing the Company's financial statements and
the outside auditors are responsible for auditing and/or reviewing those
financial statements. In carrying out these oversight responsibilities, the
Committee is not providing any expert or special assurance as to the Company's
financial statements or any professional certification as to the outside
auditors' work. The Committee's specific responsibilities are as follows:
GENERAL
1. The Committee shall have the power to conduct or authorize investigations
into any matters within the Committee's scope of responsibilities. The
Committee shall be empowered to retain independent counsel, accountants, or
others to assist it in the conduct of any investigation. The Committee shall
have unrestricted access to members of management and all information
relevant to its responsibilities.
2. The Committee shall meet at least four (4) times per year, or more
frequently as circumstances may require.
3. The Committee shall report through its chairperson to the Board following
the meetings of the Committee.
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4. The Committee shall review this charter and the powers and responsibilities
of the Committee at least annually and report and make recommendations to
the Board with respect to these powers and responsibilities.
5. The Committee shall maintain minutes or other records of meetings and
activities of the Committee.
6. The Committee shall prepare annual Committee reports for inclusion in the
proxy statements for the Company's annual meetings, as required by rules
promulgated by the Securities and Exchange Commission (the "SEC").
7. The Committee shall, in addition to the performance of the duties described
herein, undertake such additional duties as may from time to time be
delegated to it by the Board.
INTERNAL CONTROLS AND RISK ASSESSMENT
1. The Committee shall consider and review with management and the outside
auditors the effectiveness of or weaknesses in the Company's internal
controls, including computerized information system controls and security,
the overall control environment and accounting and financial controls.
2. The Committee shall obtain from the outside auditors their recommendations
regarding internal controls and other matters relating to the accounting
procedures and the books and records of the Company and its subsidiaries and
reviewing the correction of controls deemed to be deficient.
OUTSIDE AUDITOR
1. The outside auditors are ultimately accountable to the Board and the
Committee, as the representatives of the stockholders. The Board and the
Committee shall have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the outside auditor (or to nominate
the outside auditor to be proposed for shareholder approval in any proxy
statement). In this regard, the Committee shall recommend to the Board the
outside auditor to be nominated.
2. The Committee shall confer with the outside auditors concerning the scope of
their examinations of the books and records of the Company and its
subsidiaries; review and approve the Company's annual audit plans; direct
the special attention of the outside auditors to specific matters or areas
deemed by the Committee or the outside auditors to be of special
significance; and authorize the outside auditors to perform such
supplemental reviews or audits as the Committee may deem desirable.
3. The Committee shall receive from the outside auditor on a periodic basis a
formal written statement delineating all relationships between the outside
auditor and the Company, consistent with applicable standards. The statement
shall include a description of all services provided by the auditor and the
related fees. The Committee shall review costs of all audit and other
services performed by the outside auditors.
4. The Committee shall take, or recommend that the Board take, appropriate
action to monitor the independent status of the outside auditors.
FINANCIAL REPORTING
1. The Committee shall review and discuss with the outside auditors and
management the Company's audited annual financial statements that are to be
included in the Company's Annual Report on Form 10-K and the outside
auditors' opinion with respect to such financial statements, including
reviewing the nature and extent of any significant changes in accounting
principles or the application thereof; and determine whether to recommend to
the Board that the financial statements be included in the Company's
Form 10-K for filing with the SEC.
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2. The Committee shall review and discuss with the outside auditors and
management, and require the outside auditors to review, the Company's
interim financial statements to be included in the Company's Quarterly
Reports on Form 10-Q prior to the filing thereof with the SEC.
3. The Committee shall review the existence of significant estimates and
judgements underlying the financial statements, including the rationale
behind those estimates as well as the details on material accruals and
reserves and the Company's accounting principles.
4. The Committee shall review and consider other matters in relation to the
financial affairs of the Company and its accounts, and in relation to the
internal and external audit of the Company as the Committee may, in its
discretion, determine to be advisable.
COMPLIANCE WITH LAWS, REGULATIONS AND POLICIES
1. The Committee shall review with management actions taken to ensure
compliance with any code or standards of conduct for the Company which may
be established by the Board.
2. The Committee shall review with the Company's counsel and others any legal,
tax or regulatory matters that may have a material impact on the Company's
operations and the financial statements, related Company compliance programs
and policies, and programs and reports received from regulators, and shall
monitor the results of the Company's compliance efforts.
3. The Committee shall periodically review the rules promulgated by the SEC and
the New York Stock Exchange relating to the qualifications, activities,
responsibilities and duties of audit committees and shall take, or recommend
that the Board take, appropriate action to comply with such rules.
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EXHIBIT B
2000 EMPLOYEE STOCK OPTION PLAN
SECTION 1. INTRODUCTION.
1.1 PURPOSE. The purpose of the 2000 Employee Stock Option Plan (the
"Plan") is to advance and promote the interests of Mack-Cali Realty Corporation
(the "Corporation") and its Subsidiaries by providing employees, consultants and
advisors of the Corporation or its Subsidiaries with an incentive to achieve
corporate objectives, to attract and retain employees, consultants and advisors
of outstanding competence and to provide such individuals with an equity
interest in the Corporation through the acquisition of Common Stock and by
providing for payments to such individuals based on the appreciation in value or
value of such Common Stock. The Plan is intended to be construed as an employee
benefit plan that satisfies the requirements for exemption from the restrictions
of Section 16(b) of the Securities Exchange Act of 1934, as amended, pursuant to
the applicable rules promulgated thereunder.
1.2 DEFINITIONS. The following definitions are applicable to the Plan:
(a) Award.
"Award" means Options, Restricted Stock, Stock Appreciation Rights (SARs) or
any combination thereof, granted under the Plan.
(b) Award Agreement.
"Award Agreement" means the written agreement by which an Award shall be
evidenced.
(c) Beneficiary.
"Beneficiary" means the beneficiary or beneficiaries designated in
accordance with Section 5.8 hereof to receive the amount, if any, payable under
the Plan upon the death of a Participant.
(d) Board.
"Board" means the Board of Directors of the Corporation.
(e) Change in Control.
"Change in Control" means that any of the following events has occurred:
(i) any "person" or "group" of persons, as such terms are used in
Sections 13 and 14 of the Exchange Act, other than the Corporation,
any of its Subsidiaries, or any employee benefit plan sponsored by
the Corporation or any of its Subsidiaries, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Exchange
Act) of thirty percent (30%) or more of the Common Stock issued and
outstanding immediately prior to such acquisition;
(ii) any Common Stock is purchased pursuant to a tender or exchange
offer other than an offer by the Corporation; or
(iii) the dissolution or liquidation of the Corporation or the
consummation of any merger or consolidation of the Corporation or
any sale or other disposition of all or substantially all of its
assets, if the shareholders of the Corporation immediately before
such transaction own, immediately after consummation of such
transaction, equity securities (other than options and other rights
to acquire equity securities) possessing less than thirty percent
(30%) of the voting power of the surviving or acquiring
corporation.
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PROVIDED, HOWEVER, that notwithstanding anything in the Plan to the contrary, no
Change in Control shall be deemed to have occurred and no rights arising upon a
Change in Control described in Sections 2.2(f) and 4.7 hereof shall exist unless
(i) on a Plan wide basis, the Board directs to the contrary by resolution
adopted prior to the Change in Control or (ii) on a Participant by Participant
basis with respect to individual Participants who have employment or other
agreements with the Corporation or any Subsidiary which contain a definition of
change in control, the definition of change in control is met under such
employment or other agreement and such employment or other agreement specifies
that a change in control under such other employment or other agreement will be
considered a Change in Control for purposes of the Plan. Any resolution of the
Board adopted in accordance with the provisions of this Section directing that
this Section and Sections 2.2(f) and 4.7 hereof or any of such Sections become
ineffective may be rescinded or countermanded at any time with or without
retroactive effect by such Board.
(f) Code.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(g) Committee.
"Committee" means the committee appointed pursuant to Section 1.3 hereof or
if no such Committee is appointed, the Board.
(h) Common Stock.
"Common Stock" means the common stock, $.01 par value per share, of the
Corporation.
(i) Corporation.
"Corporation" means Mack-Cali Realty Corporation.
(j) Effective Date.
"Effective Date" means September 11, 2000.
(k) Eligible Individual.
"Eligible Individual" means any Key Employee, consultant or advisor of the
Corporation or any Subsidiary.
(l) Exchange Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under the Exchange Act include
references to successor provisions.
(m) Fair Market Value.
"Fair Market Value" means the fair market value of the Common Stock based
upon the closing price of a Share as quoted on the New York Stock Exchange at
the end of the last business day preceding the Grant Date or other date of
determination, as reported in the New York edition of The Wall Street Journal.
(n) Incentive Stock Option.
"Incentive Stock Option" means an Option to purchase Common Stock that
qualifies as an incentive stock option within the meaning of Section 422 of the
Code.
(o) Immediate Family.
"Immediate Family" means, with respect to a particular Participant, the
Participant's spouse, children and grandchildren.
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(p) Key Employee.
"Key Employee" means any employee of the Corporation or any of its
Subsidiaries, including any officer or director who is also an employee, who, in
the judgment of the Committee, is considered important to the future of the
Corporation. Nothing shall limit the Board from designating all or substantially
all employees as eligible for grants.
(q) Mature Shares.
"Mature Shares" means Shares for which the holder thereof has good title,
free andclear of all liens and encumbrances, and which such holder either
(i) has held for at least six (6) months or (ii) has purchased from the open
market.
(r) Non-qualified Stock Option.
"Non-qualified Stock Option" means an Option to purchase Common Stock that
does not qualify as an Incentive Stock Option.
(s) Option.
"Option" means an Incentive Stock Option or a Non-qualified Stock Option
granted under the Plan.
(t) Option Price.
"Option Price" means the purchase price per Share of an Option.
(u) Option Term.
"Option Term" means the period beginning on the Grant Date of an Option and
ending on the expiration date of such Option, as specified in the Award
Agreement for such Option and as may, in the discretion of the Committee, and
consistent with the provisions of the Plan, be extended from time to time.
(v) Participant.
"Participant" means an Eligible Individual who has been granted an Award or
a Permitted Transferee.
(w) Permitted Transferee.
"Permitted Transferee" means a person to whom an Award may be transferred or
assigned in accordance with Section 5.8 hereof.
(x) Plan.
"Plan" means the 2000 Employee Stock Option Plan, as the same may be amended
from time to time.
(y) Restricted Stock.
"Restricted Stock" means Shares which are subject to forfeiture if the
Participant does not satisfy the Restrictions specified in the Award Agreement
applicable to such Restricted Stock.
(z) Restricted Period.
"Restricted Period" means the period of time Restricted Stock are subject to
the Restrictions specified in the Award Agreement applicable to such Restricted
Stock.
(aa) Restrictions.
"Restrictions" means those restrictions and conditions placed upon
Restricted Stock as determined by the Board in accordance with Section 4.2
hereof.
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(bb) Rule 16b-3.
"Rule 16b-3" means Rule 16b-3 of the SEC under the Exchange Act, as amended
from time to time, together with any successor rule.
(cc) SEC.
"SEC" means the Securities and Exchange Commission.
(dd) Section 16 Participant.
"Section 16 Participant" means a Participant who is subject to potential
liability under Section 16(b) of the Exchange Act with respect to transactions
involving equity securities of the Corporation.
(ee) Share.
"Share" means a share of Common Stock.
(ff) Stock Appreciation Right or SAR.
"Stock Appreciation Right" or "SAR" means a right granted under the Plan in
connection with an Option, or separately, to receive the appreciation in value
of Shares.
(gg) Subsidiary.
"Subsidiary" means, for purposes of grants of Incentive Stock Options, a
corporation as defined in Section 424(f) of the Code (with the Corporation
treated as the employer corporation for purposes of this definition) and, for
all other purposes, a corporation or other entity with respect which the
Corporation (i) owns, directly or indirectly, fifty percent (50%) or more of the
then outstanding common stock in any corporation or (ii) has a fifty percent
(50%) or more ownership interest in any other entity.
(hh) 10% Owner.
"10% Owner" means a person who owns capital stock (including stock treated
as owned under Section 424(d) of the Code) possessing more than ten percent
(10%) of the combined voting power of all classes of capital stock of the
Corporation or any Subsidiary where "voting power" means the combined voting
power of the then outstanding securities of a corporation entitled to vote
generally in the election of directors.
1.3 ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee), which shall consist of two or more directors of the Corporation,
all of whom qualify as "Non Employee Directors" as defined in Rule 16b-3. The
number of members of the Committee shall from time to time be increased or
decreased, and shall be subject to such conditions, in each case as the Board
deems appropriate to permit transactions in Shares pursuant to the Plan to
satisfy such conditions of Rule 16b-3 as then in effect. In the event that the
Compensation Committee of the Board (the "Compensation Committee) meets the
requirements set forth in this Section 1.3 hereof, such Compensation Committee
shall be the Committee hereunder unless otherwise determined by the Board.
A majority of the members of the Committee shall constitute a quorum. The
Committee may act at a meeting, including a telephonic meeting, by action of a
majority of the members present, or without a meeting by unanimous written
consent.
Subject to the express provisions of the Plan, the Committee shall have full
and final authority and discretion as follows:
(i) to select the Participants from Eligible Individuals;
(ii) to grant Options and/or Restricted Stock to Participants in such
combination and in such amounts as it shall determine and to
determine the terms and conditions applicable to each such Award,
including the benefit payable under any SAR, and whether or not
specific
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Awards shall be identifiable with other specific Awards, and if so
whether they shall be exercisable cumulatively with, or
alternatively to, such other specific Award;
(iii) to determine the amount, if any, that a Participant shall pay for
Restricted Stock, the nature of the Restrictions applicable to the
Restricted Stock, and the duration of the Restricted Period
applicable to the Restricted Stock;
(iv) to determine the actual amount earned by each Participant with
respect to such Awards, the terms and conditions of all Award
Agreements (which need not be identical) and with the consent of
the Participant, to amend any such Award Agreement at any time,
among other things, to permit transfers of such Awards to the
extent permitted by the Plan, except that consent of the
Participant shall not be required for any amendment which (A) does
not adversely affect the rights of the Participant or (B) is
necessary or advisable (as determined by the Committee) to carry
out the purpose of the Award as a result of any change in
applicable law; PROVIDED, HOWEVER, that the Committee shall not
have the authority and discretion to re-price any Award;
(v) to determine consistent with the Code whether an Option that is
granted to a Participant is a Non-qualified Stock Option or an
Incentive Stock Option, the number of Shares to be covered by each
such Option and the time or times when and the manner in which each
Option shall be exercisable;
(vi) to amend any Incentive Stock Option with the consent of the
Participant so as to make it a Non-qualified Stock Option;
(vii) to grant a SAR in connection with the grant of an Option or
separately;
(viii) to accelerate the exercisability (including exercisability within a
period of less than one year after the Grant Date) of, and to
accelerate or waive any or all of the terms and conditions
applicable to, any Award or any group of Awards for any reason and
at any time, including in connection with a termination of
employment or consultancy;
(ix) subject to the provisions of the Plan, to extend the time during
which any Award or group of Awards may be exercised;
(x) to treat all or any portion of any period during which a Participant
is on military leave or on an approved leave of absence from the
Corporation or a Subsidiary as a period of employment or service of
such Participant by the Corporation or any Subsidiary for purposes
of accrual of his or her rights under his or her Awards;
(xi) to interpret the Plan and make all determinations necessary or
advisable for the administration of the Plan including the
establishment, amendment or revocation from time to time of
guidelines or regulations for the administration of the Plan, to
cause appropriate records to be established, and to take all other
actions considered necessary or advisable for the administration of
the Plan; and
(xii) to take any other action with respect to any matters relating to
the Plan for which it is responsible.
All decisions, actions or interpretations of the Committee on all matters
relating to the Plan or any Award Agreement shall be final, binding and
conclusive upon all parties. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Award.
1.4 PARTICIPATION. The Committee may, in its discretion, grant Awards to
any Eligible Individual, whether or not he or she has previously received an
Award. Participation in the Plan shall be limited to those Key Employees,
consultants and advisors who have received written notification from the
Committee, or from a person designated by the Committee, that they have been
selected to participate in the Plan.
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No such Eligible Individuals shall at any time have the right to be a
Participant unless selected by the Committee pursuant to the Plan. No
Participant, having been granted an Award, shall have the right to an additional
Award in the future unless such Award is granted by the Committee.
1.5 MAXIMUM NUMBER OF SHARES AVAILABLE FOR AWARDS. Subject to adjustment
in accordance with Section 5.2 hereof, the maximum number of Shares for which
grants under the Plan shall be available is 2,500,000. In addition, the
Administrative Committee shall have the authority, in its sole discretion, to
grant additional Non-qualified Stock Options to a Participant who exercises an
Option and pays the exercise price in Common Stock, in a quantity equal to the
number of Common Stock delivered to the Corporation upon such exercise. In the
event any Awards granted under the Plan shall be forfeited, terminate or expire,
the number of Shares subject to such Award, to the extent of any such
forfeiture, termination or expiration, shall thereafter again be available for
grant under the Plan. The Common Stock distributed under the Plan may be
authorized and unissued shares, shares held in the treasury of the Corporation,
or shares purchased on the open market by the Corporation (at such time or times
and in such manner as it may determine). The Corporation shall be under no
obligation to acquire Common Stock for distribution to Participants before such
Common Stock is due and distributable.
1.6 GENERAL CONDITIONS TO GRANTS. The Grant Date of an Award shall be the
date on which the Committee grants the Award or such later date as specified in
advance by the Committee. All Awards shall be evidenced by an Award Agreement
and any terms and conditions of an Award not set forth in the Plan shall be set
forth in the Award Agreement related to that Award or in the Participant's
employment or other agreement with the Corporation or any Subsidiary.
SECTION 2. OPTIONS.
2.1 AWARDS OF OPTIONS. Subject to the provisions of the Plan, the
Committee shall determine and designate from time to time those Eligible
Individuals to whom Incentive Stock Options, or Non-qualified Stock Options, or
both, shall be granted and the number of Shares to be granted to each such
Eligible Individual; PROVIDED, HOWEVER, that only Key Employees may receive
Incentive Stock Options and the aggregate fair market value (determined at the
time the Option is granted) of the shares with respect to which any incentive
stock options are exercisable for the first time by any Key Employee during any
calendar year under all incentive stock option plans of the Corporation and any
Subsidiary shall not exceed one hundred thousand dollars ($100,000) or such
other limit set forth in Section 422 of the Code (the "Limitations of the
Code"). If the aggregate fair market value of such shares exceeds the
Limitations of the Code, the excess Shares will be treated as Non-qualified
Options under this Plan. In reducing the number of Incentive Stock Options to
meet the Limitations of the Code, the most recently granted Incentive Stock
Options shall be reduced first. If a reduction of simultaneously granted Options
is necessary to meet the Limitations of the Code, the Committee may designate
which Shares are to be treated as Shares acquired pursuant to an Incentive Stock
Option. In the event that any Incentive Stock Options granted under the Plan
fail to meet the requirements for Incentive Stock Options as set forth in the
Code, such Incentive Stock Options will be treated as Non-qualified Stock
Options under the Plan. In determining the Eligible Individuals who will be
granted Options under the Plan, the Committee may consider such individuals'
responsibilities, service, present and future value to the Corporation or any
Subsidiary and other factors it considers relevant.
2.2 TERMS AND CONDITIONS OF OPTIONS. Except as otherwise provided in a
Participant's employment or other agreement with the Corporation or any
Subsidiary or in an Award Agreement, each Option shall be subject to the
following express terms and conditions and to such other terms and conditions as
the Committee may deem appropriate as set forth in the Award Agreement or the
Participant's employment or other agreement with the Corporation or any
Subsidiary:
(a) OPTION TERM. Each Option shall expire on the tenth (10(th))
anniversary of the Grant Date (or in the case of an Incentive Stock Option
granted to a 10% Owner, on the fifth (5(th)) anniversary of the
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Grant Date) or such earlier period specified in the Participant's Award
Agreement or employment or other agreement with the Corporation or any
Subsidiary. The Committee may extend such Option Term; PROVIDED, HOWEVER,
that (i) such extension shall not in any way disqualify the Option as an
Incentive Stock Option and (ii) the Option Term, including any such
extensions, shall not exceed ten (10) years.
(b) OPTION PRICE. The Option Price per Share shall be determined by the
Committee no later than the Grant Date of any Option; PROVIDED, HOWEVER,
(i) in the case of an Incentive Stock Option, the Option Price shall not be
less than the Fair Market Value of a Share on the Grant Date, and (ii) in
the case of an Incentive Stock Option granted to a 10% Owner, the Option
Price shall not be less than one hundred ten percent (110%) of the Fair
Market Value of a Share on the Grant Date, (but in no event less than the
par value of a Share).
(c) EXERCISE OF OPTION. The exercisability of an Option shall be
determined by the Committee. Subject to acceleration or early expiration as
provided elsewhere in the Plan or in a Participant's employment or other
agreement with the Corporation or any Subsidiary, the vesting of any Option
granted under the Plan shall be subject to the Participant remaining in the
employ of or maintaining a consultancy with the Corporation or any of its
Subsidiaries and shall vest (i) in five (5) equal installments of twenty
percent (20%) of the amount granted, with the first installment vesting on
the December 31(st) next following the Grant Date and each other installment
vesting on each of the next four December 31(st) thereafter or (ii) in such
other amounts over such period of time after the Grant Date as the Committee
may designate.
(d) DISQUALIFYING DISPOSITION. The Award Agreement shall require any
Participant who is granted an Incentive Stock Option to notify the
Corporation of any disposition of such Shares issued upon the exercise of
such Incentive Stock Option under the circumstances described in
Section 421(b) of the Code (relating to certain disqualifying dispositions)
(a "Disqualifying Disposition", within ten (10) business days after such
Disqualifying Disposition.
(e) PAYMENT OF PURCHASE PRICE UPON EXERCISE. The purchase price as to
which an Option shall be exercised shall be paid to the Corporation at the
time of exercise either (i) in cash, certified check or wire transfer,
(ii) in such other consideration as the Committee deems appropriate,
including, but not limited to, loans from the Corporation or a third party,
(iii) subject to the approval of the Committee, in Mature Shares already
owned by the Participant having a total fair market value, as determined by
the Committee, equal to the purchase price, or a combination of cash and
Mature Shares having a total fair market value, as so determined, equal to
the purchase price, (iv) subject to the approval of the Committee, in its
sole discretion, by delivering a properly executed exercise notice in a form
approved by the Committee, together with an irrevocable notice of exercise
and irrevocable instructions to a broker to promptly deliver to the
Corporation the amount of applicable sale or loan proceeds sufficient to pay
the purchase price for such Shares, together with the amount of federal,
state and local withholding taxes payable by Participant by reason of such
exercise, or (v) a combination of the foregoing.
(f) EXERCISE IN THE EVENT OF TERMINATION OR CHANGE IN CONTROL. Unless
otherwise provided in a Participant's employment or other agreement with the
Corporation or any Subsidiary or Award Agreement, the following provisions
shall apply upon termination of a Participant's employment or consultancy
with the Corporation or any Subsidiary:
(i) UPON TERMINATION FOR ANY REASON OTHER THAN DUE TO DEATH. If a
Participant's employment or consultancy with the Corporation or any
Subsidiary shall terminate for any reason other than by reason of
his or her death, such Participant may exercise his or her Options,
to the extent that such Participant shall have been entitled to do
so on the date of such termination, at any time, or from time to
time, but not later than (x) the expiration date specified in
Subsection 2.2(a) hereof or (y) three (3) months after the date of
such termination, whichever date is
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earlier and any portion of any Option granted hereunder that is not
vested and exercisable as of the date of the Participant's
termination of employment shall automatically expire and be
forfeited as of such date of termination.
(ii) UPON TERMINATION DUE TO DEATH. In the event a Participant's
employment or consultancy shall terminate by reason of his or her
death, such Participant's Beneficiary, heirs or estate may exercise
his or her Options, to the extent that such Participant, if such
Participant had not died, would have been entitled to do so within
the calendar year following such Participant's death, at any time,
or from time to time, but not later than (x) the expiration date
specified in Subsection 2.2(a) hereof or (y) one year after the
date of death, whichever is earlier and any portion of any Option
granted hereunder that would not have vested and been exercisable
within the calendar year following such Participant's death if such
Participant had not died shall automatically expire and be
forfeited as of the date of such Participant's death.
(iii) UPON A CHANGE IN CONTROL. In the event a Participant's employment
or consultancy shall terminate within six (6) months following a
Change in Control, all Options granted under the Plan which the
Participant shall not then have been entitled to exercise shall be
accelerated as of the date of such termination and the Participant
may exercise all such Options at any time, or from time to time,
but not later than (x) the expiration date specified in Subsection
2.2(a) hereof or (y) three (3) months after such termination,
whichever is earlier.
(g) TRANSFERABILITY OF INCENTIVE STOCK OPTIONS. No Incentive Stock
Option granted under the Plan shall be transferable other than by will or by
the laws of descent and distribution and during the lifetime of the
Participant, shall be exercisable only by the Participant or his or her
guardian or legal representative.
(h) INVESTMENT REPRESENTATION. Each Award Agreement for an Option shall
provide that, upon demand by the Committee for such a representation, the
Participant (or any person acting under Subsection 2.2(e) hereof) shall
deliver to the Committee, at the time of any exercise of an Option or
portion thereof, a written representation that the Shares to be acquired
upon such exercise are to be acquired for investment and not for resale or
with a view to the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any Common Stock issued upon
exercise of an Option and prior to the expiration of the Option Term shall
be a condition precedent to the right of the Participant or such other
person to purchase any Common Stock. In the event certificates for Common
Stock are delivered under the Plan with respect to which such an investment
representation has been obtained, the Committee may cause a legend or
legends to be placed on such certificates to make appropriate reference to
such representations and to restrict transfer in the absence of compliance
with applicable federal or state securities laws.
(i) PARTICIPANTS TO HAVE NO RIGHTS AS SHAREHOLDERS. No Participant
shall have any rights as a shareholder with respect to any Common Stock
subject to his or her Option prior to the date of issuance to him or her of
such Common Stock.
(j) OTHER OPTION PROVISIONS. The Committee may require a Participant to
agree, as a condition to receiving an Option under the Plan, that part or
all of any Options previously granted to such Participant under the Plan or
any prior plan of the Corporation be terminated.
2.3 EXERCISE OF OPTIONS. An Option shall be exercised by the delivery to
the Corporation during the Option Term of (x) written notice of intent to
purchase a specific number of Shares subject to the Option and (y) payment in
full of the Option Price of such specific number of Shares.
SECTION 3. STOCK APPRECIATION RIGHTS.
3.1 AWARD OF STOCK APPRECIATION RIGHTS. Subject to the provisions of the
Plan, the Committee shall determine and designate from time to time those
Eligible Individuals to whom SARs shall be granted and
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the number of Shares to be granted to each such Eligible Individual. When
granted SARS may, but need not, be identified with a specific Option (including
any Option granted on or before the Grant Date of the SARs) in a number equal to
or different from the number of SARs so granted. If SARs are identified with
Shares subject to an Option, then, unless otherwise provided in the applicable
Award Agreement, the Participant's associated SARs shall terminate upon (x) the
expiration, termination, forfeiture or cancellation of such Option, or (y) the
exercise of such Option.
3.2 STRIKE PRICE. The strike price ("Strike Price") of any SAR shall
equal, for any SAR that is identified with an Option, the Option Price of such
Option, or for any other SAR, 100% of the Fair Market Value of a Share on the
Grant Date of such SAR; except that the Committee may (x) specify a higher
Strike Price in the Award Agreement or (y) provide that the benefit payable upon
exercise of any SAR shall not exceed a percentage of Fair Market Value of a
Share on such Grant Date as the Committee shall specify.
3.3 VESTING OF SARS. Unless otherwise specified in the applicable Award
Agreement or in the Participant's employment or other agreement with the
Corporation or any Subsidiary, (x) each SAR not identified with any other Award
shall become exercisable with respect to 20% of the Shares subject thereto on
each of the first five December 31(st) following the Grant Date of such SAR or
in such other amounts and over such other time period as may be determined by
the Committee and (y) each SAR which is identified with any other Award shall
become exercisable as and to the extent that the Option with which such SAR is
identified may be exercised.
3.4 EXERCISE OF SARS. SARs shall be exercised by delivery to the
Corporation of written notice of intent to exercise a specific number of SARs.
Unless otherwise provided in the applicable Award Agreement or a Participant's
employment or other agreement with the Corporation or any Subsidiary, the
exercise of SARs which are identified with Shares subject to an Option shall
result in the cancellation or forfeiture of such Option, to the extent of such
exercise and any such Shares so canceled or forfeited shall not thereafter again
become available for grant under the Plan. The benefit for each SAR shall be
equal to (x) the Fair Market Value of the Share on the date of such exercise,
minus (y) the Strike Price of such SAR. Such benefit shall be payable in cash
(subject to applicable withholding), except that the Committee may provide in
the applicable Award Agreement that benefits may be paid wholly or partly in
Shares.
3.5 NO RIGHTS AS SHAREHOLDERS. No Participant shall have any rights as a
shareholder with respect to any Common Stock subject to his or her SAR.
3.6 EXERCISE IN THE EVENT OF TERMINATION OR CHANGE IN CONTROL. Unless
otherwise provided in a Participant's employment or other agreement with the
Corporation or any Subsidiary or Award Agreement, the following provisions shall
apply upon termination of a Participant's employment or consultancy with the
Corporation or any Subsidiary:
(i) UPON TERMINATION FOR ANY REASON OTHER THAN DUE TO DEATH. If a
Participant's employment or consultancy with the Corporation or any
Subsidiary shall terminate for any reason other than by reason of
his or her death, such Participant may exercise his or her SARs, to
the extent that such Participant shall have been entitled to do so
on the date of such termination, at any time, or from time to time,
but not later than (x) the expiration date specified in Subsection
2.2(a) hereof or (y) three (3) months after the date of such
termination, whichever date is earlier and any SARs granted
hereunder that are not vested and exercisable as of the date of the
Participant's termination of employment shall automatically expire
and be forfeited as of such date of termination.
(ii) UPON TERMINATION DUE TO DEATH. In the event a Participant's
employment or consultancy shall terminate by reason of his or her
death, such Participant's Beneficiary, heirs or estate may exercise
his or her SARs, to the extent that such Participant, if such
Participant had not died, would have been entitled to do so within
the calendar year following such Participant's
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death, at any time, or from time to time, but not later than
(x) the expiration date specified in Subsection 2.2(a) hereof or
(y) one year after the date of death, whichever is earlier and any
SARs granted hereunder that would not have vested and been
exercisable within the calendar year following such Participant's
death if such Participant had not died shall automatically expire
and be forfeited as of the date of such Participant's death.
(iii) UPON A CHANGE IN CONTROL. In the event a Participant's employment
or consultancy shall terminate within six (6) months following a
Change in Control, all SARs granted under the Plan which the
Participant shall not then have been entitled to exercise shall be
accelerated as of the date of such termination and the Participant
may exercise all such SARs at any time, or from time to time, but
not later than (x) the expiration date specified in Subsection
2.2(a) hereof or (y) three (3) months after such termination,
whichever is earlier.
SECTION 4. RESTRICTED STOCK.
4.1 AWARDS OF RESTRICTED STOCK. Restricted Stock awarded under this Plan
shall be subject to certain Restrictions as provided below. All Restrictions
imposed on any such Award of Restricted Stock shall be made by and at the
discretion of the Committee, subject to the provisions of the Plan, and are
binding on the Corporation and the Participants, their Beneficiaries and legal
representatives.
4.2 RESTRICTED PERIOD/RESTRICTIONS. At the time each Award of Restricted
Stock is granted, the Committee (i) shall establish a Restricted Period within
which Restricted Stock awarded to the Participants may not be sold, assigned,
transferred, made subject to gift, or otherwise disposed of, mortgaged, pledged
or otherwise encumbered, if any and (ii) may impose such other Restrictions on
any Restricted Stock as it may deem advisable.
4.3 RIGHTS AS STOCKHOLDERS. Except for the conditions outlined in
Section 4.2 hereof, and the forfeiture conditions described in Section 4.5
hereof, each Participant shall have all rights of a holder of Common Stock,
including the right to receive all dividends or other distributions made or paid
in respect of such Shares and the right to vote such Shares at regular or
special meetings of the shareholders of the Corporation.
4.4 DELIVERY OF SHARES. The certificates for any Restricted Stock awarded
to an Eligible Individual under the Plan shall be held (together with a stock
power executed in blank by the Eligible Individual) in escrow by the Secretary
of the Corporation under the Participant's name in an account maintained by the
Corporation until such Shares of Restricted Stock become nonforfeitable or are
forfeited. At the conclusion of the Restricted Period or the expiration or
attainment of such other Restrictions imposed on any Restricted Stock granted to
a Participant, or upon the prior approval of the Committee as described in
Section 4.5 hereof, and subject to the satisfaction of the Corporation's
withholding obligations described in Section 5.8 hereof, certificates
representing such Shares of Restricted Stock shall be delivered to the
Participant, or the Beneficiary or legal representative of the Participant, free
of the Restrictions set forth in the Award Agreement pursuant to Section 4.2
hereof.
4.5 TERMINATION OF A PARTICIPANT' S EMPLOYMENT OR CONSULTANCY. Unless
otherwise provided in the Award Agreement or in the Participant's employment or
other agreement with the Corporation or any Subsidiary, the following provisions
shall apply upon termination of a Participant's employment or consultancy with
the Corporation or any Subsidiary:
(i) UPON TERMINATION FOR ANY REASON OTHER THAN DUE TO DEATH. If a
Participant's employment or consultancy with the Corporation or any
Subsidiary is terminated, except termination due to death, all
Restricted Stock awarded under the Plan which are then subject to a
Restricted Period or other Restrictions will be forfeited and become
the property of the Corporation on the date of such termination.
However, the Committee may, if it, in its sole discretion,
determines that the circumstances warrant such action, approve the
release of all or any part
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of the Restricted Stock which would otherwise be forfeited pursuant
to this Section, upon such conditions as it shall determine.
(ii) UPON DUE TO DEATH. If a Participant's employment or consultancy
with the Corporation or a Subsidiary is terminated due to death,
all Shares of Restricted Stock awarded under the Plan which are
then subject to a Restricted Period or other Restrictions and which
would have been released, if the Participant had not died, within
the calendar year following the Participant's death shall be
released on the date of such termination as if with respect to such
Shares the Restricted Period had ended and the other Restrictions
had lapsed and certificates representing such Shares of Restricted
Stock shall be delivered to the Participant's Beneficiary or legal
representative free from such Restrictions as soon as practicable
following such termination and all other Shares of Restricted Stock
which would not have been released, if the Participant had not
died, within the calendar year following the Participant's death
will be forfeited and become the property of the Corporation on the
date of such termination.
4.6 SECTION 83(B) ELECTIONS. A Participant who files an election permitted
under Section 83(b) of the Code with the Internal Revenue Service to include the
fair market value of any Restricted Stock in gross income while they are still
subject to a Restricted Period or other Restrictions shall notify the
Corporation of such election within ten (10) days of making such election and
promptly furnish the Corporation 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 Corporation to claim an income tax deduction with respect to such
election.
4.7 CHANGE IN CONTROL. In the event of a Change in Control, all Restricted
Periods shall end, the Restricted Period or other Restrictions applicable to all
previously granted Awards of Restricted Stock shall end or lapse, as the case
may be, and such Shares shall be released and certificates representing such
Shares of Restricted Stock shall be delivered to the Participants free from such
Restrictions as soon as practicable following such Change in Control.
SECTION 5. GENERAL PROVISIONS.
5.1 GENERAL CREDITOR STATUS. Participants shall have no right, title, or
interest whatsoever in or to any investments which the Corporation may make to
aid it in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Corporation
and any Participant, Beneficiary, legal representative or any other person. To
the extent that any person acquires a right to receive payments from the
Corporation under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Corporation. All payments to be made hereunder
shall be paid from the general funds of the Corporation and no special or
separate fund shall be established and no segregation of assets shall be made to
assure payment of such amounts except as expressly set forth in the Plan;
PROVIDED, HOWEVER, that in its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or pay cash; PROVIDED, FURTHER, HOWEVER, that,
unless the Committee otherwise determines with the consent of the affected
Participant, the existence of such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan.
5.2 CERTAIN ADJUSTMENTS TO SHARES. In the event of any change in the
Common Stock by reason of any stock dividend, recapitalization, reorganization,
spin-off, split-off, merger, consolidation, stock split, reverse stock split,
combination or exchange of shares, or any rights offering to purchase Common
Stock at a price substantially below fair market value, or of any similar change
affecting the Common Stock of or by the Corporation, the number and kind of
Shares available for Awards under the Plan and the number and kind of Shares
subject to a Restricted Period or other Restrictions or subject to Options in
outstanding Awards and the Option Price or purchase price per Share thereof
shall be appropriately adjusted consistent with such change in such manner as
the Committee may deem equitable to prevent substantial
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dilution or enlargement of the rights granted to, or available for, the
Participants hereunder. Any adjustment of an Incentive Stock Option pursuant to
this Section shall be made only to the extent not constituting a "modification"
within the meaning of Section 424(h)(3) of the Code, unless the holder of such
Option shall agree otherwise. The Committee shall give notice to each
Participant of any adjustment made pursuant to this Section and, upon notice,
such adjustment shall be effective and binding for all purposes of the Plan.
5.3 SUCCESSOR CORPORATION. The obligations of the Corporation under the
Plan shall be binding upon any successor corporation or organization resulting
from the merger, consolidation or other reorganization of the Corporation, or
upon any successor corporation or organization succeeding to substantially all
of the assets and business of the Corporation. The Corporation agrees that it
will make appropriate provision for the preservation of Participants' rights
under the Plan in any agreement or plan which it may enter into or adopt to
effect any such merger, consolidation, reorganization or transfer of assets.
5.4 NO CLAIM OR RIGHT UNDER THE PLAN. Neither the Plan nor any action
taken thereunder shall be construed as giving any employee, consultant or
advisor any right to be retained in the employ of or by the Corporation.
5.5 AWARDS NOT TREATED AS COMPENSATION UNDER BENEFIT PLANS. No Award shall
be considered as compensation under any employee benefit plan of the
Corporation, except as specifically provided in any such plan or as otherwise
determined by the Board.
5.6 LISTING AND QUALIFICATION OF COMMON STOCK. The Corporation, in its
discretion, may postpone the issuance or delivery of Common Stock upon any
exercise of an Option or pursuant to an Award of Restricted Stock until
completion of such stock exchange listing or other qualification of such shares
under any state or federal law, rule or regulation as the Corporation may
consider appropriate, and may require any Participant, Beneficiary or legal
representative to make such representations and furnish such information as it
may consider appropriate in connection with the issuance or delivery of the
shares in compliance with applicable laws, rules and regulations.
5.7 WITHHOLDING TAXES. The Corporation may make such provisions and take
such steps as it may deem necessary or appropriate for the withholding of all
federal, state and local taxes required by law to be withheld with respect to
Awards granted pursuant to the Plan including, but not limited to (i) accepting
a remittance from the Participant in cash, or in the Committee's discretion in
Mature Shares (ii) deducting the amount required to be withheld from any other
amount then or thereafter payable by the Corporation or Subsidiary to a
Participant, Beneficiary or legal representative or from any Shares due to the
Participant under the Plan, (iii) requiring a Participant, Beneficiary or legal
representative to pay to the Corporation the amount required to be withheld as a
condition of releasing Common Stock or (iv) any combination of the foregoing. In
addition, subject to such rules and regulations as the Committee shall from time
to time establish, Participants shall be permitted to satisfy federal, state and
local taxes, if any, imposed upon the payment of Awards in Common Stock at a
rate up to such Participant's maximum marginal tax rate with respect to each
such tax by (i) irrevocably electing to have the Corporation deduct from the
number of Shares otherwise deliverable in payment of an Award such number of
Shares as shall have a value equal to the amount of tax to be withheld,
(ii) delivering to the Corporation such portion of the Common Stock delivered in
payment of the Award as shall have a value equal to the amount of tax to be
withheld, or (iii) delivering to the Corporation such number of Mature Shares or
combination of Mature Shares and cash as shall have a value equal to the amount
of tax to be withheld.
5.8 NON-TRANSFERABILITY/DESIGNATION AND CHANGE OF BENEFICIARY.
(a) An Award granted hereunder shall not be assignable or transferable
other than by will or by the laws of descent and distribution and may be
exercised during the Participant's lifetime only by the Participant or his
or her guardian or legal representative, except that, subject to
Section 2.2(f) hereof, in respect of Incentive Stock Options, a Participant
may, if permitted by the Committee, in its
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discretion, transfer an Award, or any portion thereof, to one or more
members of the Participant's Immediate Family.
(b) Each Participant shall file with the Committee a written
designation of one or more persons as the Beneficiary who shall be entitled
to receive the amount, if any, payable under the Plan upon his or her death.
A Participant may, from time to time, revoke or change his or her
Beneficiary designation without the consent of any prior Beneficiary by
filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; PROVIDED, HOWEVER, that no
designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt.
5.9 PAYMENTS TO PERSONS OTHER THAN A PARTICIPANT. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his or her affairs because of illness or accident, or is a minor, or
has died, then any payment due to such person or his or her estate (unless a
prior claim therefor has been made by a duly appointed legal representative),
may, if the Committee so directs the Corporation, be paid to his or her spouse,
a child, a relative, an institution maintaining or having custody of such
person, or any other person deemed by the Committee to be a proper recipient on
behalf of such person otherwise entitled to payment. Any such payment shall be a
complete discharge of the liability of the Committee and the Corporation
therefor.
5.10 NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall
be personally liable by reason of any contract or other instrument executed by
such member or on his or her behalf in his or her capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and the
Corporation shall indemnify and hold harmless each employee, officer or director
of the Corporation to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Board) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or bad faith. The indemnification provided for in this Section 5.10
shall be in addition to any rights of indemnification such Committee member has
as a director or officer pursuant to law, under the Certificate of Incorporation
or By-Laws of the Corporation.
5.11 AMENDMENT OR TERMINATION. Except as to matters that in the opinion of
the Corporation's legal counsel require stockholder approval, any provision of
the Plan may be modified as to a Participant by an individual agreement approved
by the Committee. The Board may, with prospective or retroactive effect, amend,
suspend or terminate the Plan or any portion thereof at any time; PROVIDED,
HOWEVER, that (i) no amendment that would materially increase the cost of the
Plan to the Corporation may be made by the Board without the approval of the
stockholders of the Corporation and (ii) no amendment, suspension or termination
of the Plan shall deprive any Participant of any rights to Awards previously
made under the Plan without his or her written consent. Subject to earlier
termination pursuant to the provisions of this Section, and unless the
stockholders of the Corporation shall have approved an extension of the Plan
beyond such date, the Plan shall terminate and no further Awards shall be made
under the Plan after the tenth (10(th)) anniversary of the Effective Date of the
Plan specified in Section 5.15 hereof.
5.12 UNFUNDED PLAN. The Plan is intended to constitute an unfunded
deferred compensation arrangement.
5.13 GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Maryland, without reference to the
principles of conflicts of law thereof.
5.14 NON-UNIFORM DETERMINATIONS. The Committee's determinations under the
Plan need not be uniform and may be made by the Committee selectively among
persons who receive, or are eligible to receive, Awards whether or not such
persons are similarly situated. Without limiting the generality of the
foregoing, the Committee shall be entitled, to enter into non-uniform and
selective Award Agreements as
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to (a) the identity of the Participant, (b) the terms and provisions of Awards,
and (c) the treatment of termination of employment or consultancies.
5.15 EFFECTIVE DATE. The Plan is effective September 11, 2000.
5.16 NO ILLEGAL TRANSACTIONS. The Plan and all Awards granted pursuant to
it are subject to all applicable laws and regulations. Notwithstanding any
provision of the Plan or any Award, Participants shall not be entitled to
exercise or receive benefits under, any Award, and the Corporation shall not be
obligated to deliver any Shares or deliver any benefits to a Participant, if
such exercise or delivery would constitute a violation by the Participant or the
Corporation of any applicable law or regulation.
5.17 SEVERABILITY. If any part of the Plan is declared by any court of
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in manner which will give effect to the terms of such Section to the
fullest extent possible while remaining lawful and valid.
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EXHIBIT C
2000 DIRECTOR STOCK OPTION PLAN
SECTION 1. PURPOSE.
The purpose of the 2000 Director Stock Option Plan ("Plan") is to promote
the growth and profitability of Mack-Cali Realty Corporation (the "Corporation")
by providing directors and Advisory Board members of the Corporation, or its
Subsidiaries if so designated, with an incentive to achieve corporate
objectives, to attract and retain directors and Advisory Board members of
outstanding competence and to provide such individuals with an equity interest
in the Corporation. The Plan is intended to be construed as an employee benefit
plan that satisfies the requirements for exemption from the restrictions of
Section 16(b) of the Securities Exchange Act of 1934, as amended, pursuant to
the applicable rules promulgated thereunder.
SECTION 2. DEFINITIONS.
The following definitions are applicable to the Plan:
2.1 ADMINISTRATIVE COMMITTEE.
"Administrative Committee" means the committee appointed pursuant to
Section 3 hereof or, if no such committee is appointed, the Board.
2.2 ADVISORY BOARD.
"Advisory Board" shall mean the Advisory Board of the Corporation which was
established in December 1997.
2.3 BENEFICIARY.
"Beneficiary" means the beneficiary or beneficiaries designated by a
Participant in accordance with Section 7.8 hereof to receive the amount, if any,
payable under the Plan upon the death of such Participant.
2.4 BOARD.
"Board" means the Board of Directors of the Corporation.
2.5 CAUSE.
"Cause" means termination for fraud or willful misconduct as determined by
the Administrative Committee or the Board.
2.6 CODE.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.7 COMMON STOCK.
"Common Stock" means the shares of common stock, $.01 par value per share,
of the Corporation.
2.8 CORPORATION.
"Corporation" means Mack-Cali Realty Corporation.
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2.9 DIRECTOR'S OPTION.
"Director's Option" means a Non-qualified Stock Option granted pursuant to
Section 6.2 hereof.
2.10 DISABILITY.
"Disability" means a mental or physical condition rendering a Participant
unable to perform his or her regular duties as determined by the Administrative
Committee or the Board.
2.11 DISCRETIONARY OPTION.
"Discretionary Option" means a Non-qualified Stock Option granted pursuant
to Section 6.3 hereof.
2.12 ELIGIBLE ADVISORY BOARD MEMBERS.
"Eligible Advisory Board Members" means non-employee members of the Advisory
Board.
2.13 ELIGIBLE DIRECTORS.
"Eligible Directors" means a non-employee members of the Board. In addition,
Eligible Director shall include any non-employee members of the Board of
Directors of a Subsidiary of the Company, if and only if, and only to the
extent, such Board of Directors is designated by the Board as eligible to
participate in the Plan.
2.14 EXCHANGE ACT.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under the Exchange Act include
references to successor provisions.
2.15 FAIR MARKET VALUE.
"Fair Market Value" means the closing price as quoted on the New York Stock
Exchange at the end of the last business day preceding the Grant Date or other
date of determination as reported in the New York Edition of the WALL STREET
JOURNAL.
2.16 INCENTIVE STOCK OPTION.
"Incentive Stock Option" means an option to purchase Common Stock that
satisfies the requirements of Section 422 of the Code.
2.17 IMMEDIATE FAMILY.
"Immediate Family" means, with respect to a particular Participant, the
Participant's spouse, children and grandchildren.
2.18 MATURE SHARES.
"Mature Shares" means Shares for which the holder thereof has good title,
free and clear of all liens and encumbrances, and which such holder either
(i) has held for at least six (6) months or (ii) has purchased from the open
market.
2.19 NON-QUALIFIED STOCK OPTION.
"Non-qualified Stock Option" means an option to purchase Common Stock that
does not qualify as an Incentive Stock Option.
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2.20 OPTION.
"Option" means a Director's Option or Discretionary Option granted under the
Plan.
2.21 OPTION AGREEMENT.
"Option Agreement" means the written agreement by which an Option shall be
evidenced.
2.22 OPTION PRICE.
"Option Price" means the purchase price per Share of an Option.
2.23 OPTION TERM.
"Option Term" means the period beginning on the Grant Date of an Option and
ending on the expiration date of such Option, as specified in the Option
Agreement for such Option and as may, in the discretion of the Administrative
Committee, and consistent with the provisions of the Plan, be extended from time
to time.
2.24 PARTICIPANT.
"Participant" means an Eligible Director or Eligible Advisory Board Member
who has been granted an Award or a Permitted Transferee.
2.25 PERMITTED TRANSFEREE.
"Permitted Transferee" means a person to whom an Option may be transferred
or assigned in accordance with Section 7.8 hereof.
2.26 PLAN.
"Plan" means the 2000 Director Stock Option Plan, as the same may be amended
from time to time.
2.27 RETIREMENT.
"Retirement" means separation from service as a director or member of the
Advisory Board on or after age 65 or at such other time as the Board may
designate.
2.28 RULE 16B-3.
"Rule 16b-3" means Rule 16b-3 of the SEC under the Exchange Act, as amended
from time to time, together with any successor rule.
2.29 SEC.
"SEC" means the Securities and Exchange Commission.
2.30 SHARE.
"Share" means a share of Common Stock.
2.31 SUBSIDIARY.
"Subsidiary" means a corporation or other entity with respect which the
Corporation (i) owns, directly or indirectly, fifty percent (50%) or more of the
then outstanding common stock in any corporation or (ii) has a fifty percent
(50%) or more ownership interest in any other entity.
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SECTION 3. ADMINISTRATION.
The Plan shall be administered by a committee (the "Administrative
Committee), which shall consist of two or more directors of the Corporation, all
of whom qualify as "Non-Employee Directors" as defined in Rule 16b-3 of the
Exchange Act. The number of members of the Administrative Committee shall from
time to time be increased or decreased, and shall be subject to such conditions,
in each case as the Board deems appropriate to permit transactions in Shares
pursuant to the Plan to satisfy such conditions of Rule 16b-3 as then in effect.
In the event that the Compensation Committee of the Board (the "Compensation
Committee) meets the requirements set forth in this Section 3 hereof, such
Compensation Committee shall be the Administrative Committee hereunder unless
otherwise determined by the Board.
A majority of the members of the Administrative Committee shall constitute a
quorum. The Administrative Committee may act at a meeting, including a
telephonic meeting, by action of a majority of the members present, or without a
meeting by unanimous written consent.
Subject to the express provisions of the Plan, the Committee shall have full
and final authority and discretion as follows:
(i) select the Eligible Directors and Eligible Advisory Board Members
entitled to receive Discretionary Options pursuant to Section 6.3
hereof;
(ii) grant Discretionary Options to those Participants it selects in such
amounts as it shall determine, subject to the terms and conditions of
the Plan;
(iii) determine the number of Shares to be covered by each Discretionary
Option granted under the Plan and the time or times when and the manner
in which such Discretionary Option shall be exercisable;
(iv) to accelerate the exercisability (including exercisability within a
period of less than one year after the Grant Date) of, and to
accelerate or waive any or all of the terms and conditions applicable
to, any Option or any group of Options for any reason and at any time,
including in connection with a termination of service (other than for
Cause);
(v) subject to the provisions of the Plan, to extend the time during which
any Option or group of Options may be exercised;
(vi) to interpret the Plan and make all determinations necessary or
advisable for the administration of the Plan including the
establishment, amendment or revocation from time to time of guidelines
or regulations for the administration of the Plan, to cause appropriate
records to be established, and to make all determinations and take all
other actions considered necessary or advisable for the administration
of the Plan; and
(vii) to take any other action with respect to any matters relating to the
Plan for which it is responsible.
All decisions, actions or interpretations of the Administrative Committee on
all matters relating to the Plan or any Option Agreement shall be final, binding
and conclusive upon all parties. No member of the Administrative Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any Option.
SECTION 4. PARTICIPATION.
4.1 DIRECTOR'S OPTIONS.
All Eligible Directors shall automatically be eligible to receive Director's
Options under the Plan.
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4.2 DISCRETIONARY OPTIONS.
The Administrative Committee, may, in its discretion grant Discretionary
Options to any Eligible Director or Eligible Advisory Board Member, whether or
not he or she has previously received an Option. No such Eligible Directors or
Eligible Advisory Board Members shall at any time have the right to receive a
Discretionary Option unless selected by the Administrative Committee pursuant to
the Plan. No Participant, having been granted an Option, shall have the right to
an additional Option in the future unless such Option is granted by the
Administrative Committee.
SECTION 5. MAXIMUM NUMBER OF SHARES AVAILABLE FOR OPTIONS.
Subject to adjustment in accordance with Section 7.2 hereof, the maximum
number of Shares for which grants under the Plan shall be available is 200,000.
In the event any Options granted under the Plan shall be forfeited, terminate or
expire, the number of Shares no longer subject to such Option, to the extent of
such forfeiture, termination or expiration, shall thereafter again be available
for grant under the Plan. The Common Stock distributed under the Plan may be
authorized and unissued shares, shares held in the treasury of the Corporation,
or shares purchased on the open market by the Corporation (at such time or times
and in such manner as it may determine). The Corporation shall be under no
obligation to acquire Common Stock for distribution to Participants before
payment in Common Stock is due and distributable.
SECTION 6. GRANTS OF OPTIONS.
6.1 GENERAL CONDITIONS TO GRANTS.
The Grant Date of a Director's Option shall be the date on which the
Eligible Director is initially elected or appointed to the Board and the Grant
Date of a Discretionary Option shall be the date on which the Administrative
Committee grants the Option or such later date as specified in advance by the
Administrative Committee. All Options shall be evidenced by an Option Agreement
and any terms and conditions of an Option not set forth in the Plan shall be set
forth in the Option Agreement related to that Option. All Options granted under
this Plan shall be Non-qualified Stock Options.
6.2 GRANT OF DIRECTORS' OPTIONS.
Each Eligible Director shall be granted, upon his or her initial election or
appointment to the Board, a Non-qualified Stock Option to purchase 5,000 Shares
(a "Director's Option"). The grant of a Director's Option shall not be subject
to the discretion of the Administrative Committee.
6.3 GRANT OF DISCRETIONARY OPTIONS.
Subject to the limitations of the Plan, the Administrative Committee may, in
its discretion, grant an Eligible Director or Eligible Advisory Board Member a
Non-qualified Stock Option to purchase such amount of Shares as shall be
determined by the Administrative Committee in its sole discretion (a
"Discretionary Option"). A Discretionary Option granted under this Section 6.3
may be in addition to the Director's Option granted to an Eligible Director
pursuant to Section 6.2 hereof.
6.4 TERMS AND CONDITIONS OF OPTIONS.
Except as otherwise provided in a Participant's Option Agreement, each
Option granted under the Plan shall be subject to the following express terms
and conditions and to such other terms and conditions consistent therewith as
the Administrative Committee may deem appropriate.
(a) OPTION TERM. The Option Term for each Option granted under the Plan
shall be ten (10) years and each Option shall automatically expire on the
tenth (10(th)) anniversary of the Grant Date.
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(b) OPTION PRICE. The Option Price of each Share as to which an Option may
be exercised shall be the Fair Market Value of the Share of the Grant
Date.
(c) EXERCISE OF OPTION. Except as otherwise provided under the Plan, no part
of any Option may be exercised until the Participant shall have remained
a member of the Board or Advisory Board, as the case may be, for the
periods set forth below:
(i) DIRECTOR'S OPTIONS. One year from the Grant Date.
(ii) DISCRETIONARY OPTIONS. The period, if any, determined by the
Administrative Committee in its sole discretion.
(d) PAYMENT OF PURCHASE PRICE UPON EXERCISE. Each Option shall provide that
the Option Price of the Shares as to which an Option shall be exercised
shall be paid to the Corporation at the time of exercise either (i) in
cash, certified check or wire transfer, or (ii) in such other
consideration as the Administrative Committee deems appropriate
including, but not limited to, loans from the Corporation or a third
party, (iii) subject to approval of the Administrative Committee, in
Mature Shares having a total fair market value, as determined by the
Administrative Committee, equal to the Option Price for such Shares, or a
combination of cash and Mature Shares having a total fair market value,
as so determined, equal to the Option Price for such Shares,
(iv) subject to the approval of the Administrative Committee, in its sole
discretion, by delivering a properly executed exercise notice in a form
approved by the Administrative Committee, together with an irrevocable
notice of exercise and irrevocable instructions to a broker to promptly
deliver to the Corporation the amount of applicable sale or loan proceeds
sufficient to pay the purchase price for such Shares, together with the
amount of federal, state and local withholding taxes payable by
Participant by reason of such exercise or (v) any combination of the
foregoing.
(e) EXERCISE IN THE EVENT OF DEATH, DISABILITY, RETIREMENT OR OTHER
TERMINATION OF SERVICE. Subject to Subsection 6.4(f) hereof, the
following provisions shall apply upon termination of a Participant's
status as a member of the Board or Advisory Board:
(i) UPON TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. If
Participant's status as a member of the Board or the Advisory Board
shall terminate because of his or her death, Disability or
Retirement, the Participant, Beneficiary or legal representative
shall have the right to exercise all Options regardless of whether
such Options are vested, at any time and from time to time, but not
later than (x) one year following the date of death or Disability,
(ii) one year following the date of Retirement, or (iii) the
expiration date specified in Section 6.4(a) hereof, whichever is
earlier.
(ii) UPON TERMINATION FOR ANY REASON OTHER THAN DUE TO DEATH,
DISABILITY, RETIREMENT OR FOR CAUSE. If a Participant' s status as
a member of the Board or Advisory Board shall terminate for any
reason other than due to the Participant's death, Disability,
Retirement or termination for Cause, such Participant shall have
the right to exercise his or her Options, to the extent that such
Participant shall have been entitled to do so on the date of such
termination, at any time and from time to time, but not later than
(i) on the expiration date specified in Section 6.4(a) hereof or
(ii) three (3) months after the date of such termination of
service, whichever date is earlier and the portion of any Option
granted hereunder that is not vested and exercisable as of the date
of such termination of service shall automatically expire and be
forfeited as of the date of such termination of service.
(iii) UPON TERMINATION FOR CAUSE. If a Participant's status as a member
of the Board or Advisory Board shall terminate for Cause, all
Options regardless of whether such Options are vested or not shall
be forfeited and canceled on the date of such termination.
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(f) TRANSFER OF SERVICE FROM BOARD TO ADVISORY BOARD OR VICE VERSA. For
purposes of determining the exercise period and vesting of Options
granted hereunder, (i) a Participant who resigns as a member of the Board
in order to become a member of the Advisory Board shall be deemed during
his or her period of service as a member of the Advisory Board to be a
continuing member of the Board and (ii) a Participant who resigns as a
member of the Advisory Board in order to become a member of the Board
shall be deemed during his or her period of service as a member of the
Board to be a continuing member of the Advisory Board.
(g) TRANSFERABILITY OF OPTIONS. Subject to Section 7.8 hereof, no Options
granted under the Plan shall be transferable other than by will or by the
laws of descent and distribution. During the lifetime of the Participant,
an Option shall be exercisable only by such Participant.
(h) PARTICIPANTS TO HAVE NO RIGHTS AS STOCKHOLDERS. No Participant shall
have any rights as a stockholder with respect to any Common Stock subject
to his or her Option prior to the date of issuance to him or her of such
Common Stock.
(i) INVESTMENT REPRESENTATION. Each Option Agreement for an Option shall
provide that, upon demand by the Administrative Committee for such a
representation, the Participant (or any person acting under Subsection
6.4(e) hereof) shall deliver to the Administrative Committee, at the time
of any exercise of an Option or portion thereof, a written representation
that the Shares to be acquired upon such exercise are to be acquired for
investment and not for resale or with a view to the distribution thereof.
Upon such demand, delivery of such representation prior to the delivery
of any Common Stock issued upon exercise of an Option and prior to the
expiration of the Option Term shall be a condition precedent to the right
of the Participant or such other person to purchase any Common Stock. In
the event certificates for Common Stock are delivered under the Plan with
respect to which such an investment representation has been obtained, the
Administrative Committee may cause a legend or legends to be placed on
such certificates to make appropriate reference to such representations
and to restrict transfer in the absence of compliance with applicable
federal or state securities laws.
(j) OTHER OPTION PROVISIONS. The Administrative Committee may require a
Participant to agree, as a condition to receiving an Option under the
Plan, that part or all of any Options previously granted to such
Participant under the Plan be terminated.
6.5 EXERCISE OF OPTIONS.
An Option shall be exercised by the delivery to the Corporation during the
Option Term of (x) written notice of intent to purchase a specific number of
Shares subject to the Option and (y) payment in full of the Option Price of such
specific number of Shares.
SECTION 7. GENERAL PROVISIONS.
7.1 GENERAL CREDITOR STATUS.
Participants shall have no right, title, or interest whatsoever in or to any
investments which the Corporation may make to aid it in meeting its obligations
under the Plan. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Corporation and any Participant, Beneficiary,
legal representative or any other person. To the extent that any person acquires
a right to receive payments from the Corporation under the Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Corporation. All payments to be made hereunder shall be paid from the general
funds of the Corporation and no special or separate fund shall be established
and no segregation of assets shall be made to assure payment of such amounts
except as expressly set forth in the Plan; PROVIDED, HOWEVER, that in its sole
discretion, the Administrative Committee may authorize the creation of trusts or
other arrangements to
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meet the obligations created under the Plan to deliver Common Stock; PROVIDED,
FURTHER, HOWEVER, that, unless the Administrative Committee otherwise determines
with the consent of the affected Participant, the existence of such trusts or
other arrangements shall be consistent with the "unfunded" status of the Plan.
7.2 CERTAIN ADJUSTMENTS TO SHARES.
In the event of any change in the Common Stock by reason of any stock
dividend, recapitalization, reorganization, spin-off, split-off, merger,
consolidation, stock split, reverse stock split, combination or exchange of
shares, or any rights offering to purchase Common Stock at a price substantially
below fair market value, or of any similar change affecting the Common Stock of
or by the Corporation, the number and kind of Shares available for Options under
the Plan and the Option Price per Share thereof shall be appropriately adjusted
consistent with such change in such manner as the Administrative Committee may
deem equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, the Participants hereunder. The Administrative
Committee shall give notice to each Participant of any adjustment made pursuant
to this Section and, upon notice, such adjustment shall be effective and binding
for all purposes of the Plan.
7.3 SUCCESSOR CORPORATION.
The obligations of the Corporation under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Corporation, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Corporation. The Corporation agrees that it will make appropriate provision for
the preservation of Participants' rights under the Plan in any agreement or plan
which it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.
7.4 NO CLAIM OR RIGHT UNDER THE PLAN.
Neither the Plan nor any action taken thereunder shall be construed as
giving any director or Advisory Board member any right to a continuation of
membership on the Board or the Advisory Board, as applicable.
7.5 OPTIONS NOT TREATED AS COMPENSATION UNDER BENEFIT.
No Option shall be considered as compensation under any employee benefit
plan of the Corporation, except as specifically provided in any such plan or as
otherwise determined by the Board.
7.6 LISTING AND QUALIFICATION OF COMMON STOCK.
The Corporation, in its discretion, may postpone the issuance or delivery of
Common Stock upon any exercise of an Option until completion of such stock
exchange listing or other qualification of such shares under any state or
federal law, rule or regulation as the Corporation may consider appropriate, and
may make such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the Shares in
compliance with applicable laws, rules and regulations.
7.7 WITHHOLDING TAXES.
The Corporation may make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of all federal, state and local
taxes required by law to be withheld with respect to Options granted pursuant to
the Plan including, but not limited to (i) accepting a remittance from the
Participant in cash, or in the Administrative Committee's discretion in Mature
Shares, (ii) deducting the amount required to be withheld from any other amount
then or thereafter payable by the Corporation to a Participant, Beneficiary or
legal representative or from any Shares due to the Participant
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under the Plan, (iii) requiring a Participant, Beneficiary or legal
representative to pay to the Corporation the amount required to be withheld as a
condition of releasing Common Stock or (iv) any combination of the foregoing. In
addition, subject to such rules and regulations as the Administrative Committee
shall from time to time establish, Participants shall be permitted to satisfy
federal, state and local taxes, if any, imposed upon the payment of Options in
Common Stock at a rate up to such Participant's maximum marginal tax rate with
respect to each such tax by (i) irrevocably electing to have the Corporation
deduct from the number of Shares otherwise deliverable in payment of an Option
such number of Shares as shall have a value equal to the amount of tax to be
withheld, (ii) delivering to the Corporation such portion of the Common Stock
delivered in payment of the Option as shall have a value equal to the amount of
tax to be withheld, or (iii) delivering to the Corporation such number of Mature
Shares or combination of Mature Shares and cash as shall have a value equal to
the amount of tax to be withheld.
7.8 NON-TRANSFERABILITY/DESIGNATION AND CHANGE OF BENEFICIARY.
(a) An Option granted hereunder shall not be assignable or transferable
other than by will or by the laws of descent and distribution and may be
exercised during the Participant's lifetime only by the Participant or
his or her guardian or legal representative, except that a Participant
may, if permitted by the Administrative Committee, in its discretion,
transfer an Option, or portion thereof, to one or more members of the
Participant's Immediate Family.
(b) Each Participant shall file with the Administrative Committee a written
designation of one or more persons as the Beneficiary who shall be
entitled to receive the amount, if any, payable under the Plan upon his
or her death. A Participant may, from time to time, revoke or change his
or her Beneficiary by filing a new designation with the Administrative
Committee. The last such designation received by the Administrative
Committee shall be controlling; PROVIDED, HOWEVER, that no designation,
or change or revocation thereof, shall be effective unless received by
the Administrative Committee prior to the Participants' death, and in no
event shall it be effective as of a date prior to such receipt.
7.9 PAYMENTS TO PERSONS OTHER THAN A PARTICIPANT.
If the Administrative Committee shall find that any person to whom any
amount is payable under the Plan is unable to care for his or her affairs
because of illness or accident, or is a minor, or has died, then any payment due
to such person or his or her estate (unless a prior claim therefor has been made
by a duly appointed legal representative), may, if the Administrative Committee
so direct the Corporation, be paid to his or her spouse, a child, a relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Administrative Committee to be a proper recipient on behalf of
such person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Administrative Committee and the Corporation
thereof.
7.10 NO LIABILITY OF ADMINISTRATIVE COMMITTEE MEMBERS.
No member of the Administrative Committee shall be personally liable by
reason of any contract or other instrument executed by such member or on his or
her behalf in his or her capacity as a member of the Administrative Committee
nor for any mistake of judgment made in good faith, and the Corporation shall
indemnify and hold harmless each employee, officer or director of the
Corporation to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Board of Directors) arising out
of any act or omission to act in connection with the Plan unless arising out of
such person's own fraud or bad faith. The indemnification provided for in this
Section 7.10 shall be in addition to any rights of indemnification such
Administration Committee member has as a director of officer pursuant to law,
under the Certificate of Incorporation or By-Laws of the Corporation.
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7.11 AMENDMENT OR TERMINATION.
Except as to matters that in the opinion of the Corporation's legal counsel
require stockholder approval, any provision of the Plan may be modified as to a
Participant by an individual agreement approved by the Administrative Committee.
The Board may, with prospective or retroactive effect, amend, suspend or
terminate the Plan or any portion thereof at any time; PROVIDED, HOWEVER, that
(i) no amendment that would materially increase the cost of the Plan to the
Corporation may be made by the Board without the approval of the stockholders of
the Corporation and (ii) no amendment, suspension or termination of the Plan
shall deprive any Participant of any rights to Options previously made under the
Plan without his or her written consent. Subject to earlier termination pursuant
to the provisions of this Section, and unless the stockholders of the
Corporation shall have approved an extension of the Plan beyond such date, no
further Options shall be made under the Plan after the tenth (10(th))
anniversary of the Effective Date of the Plan specified in Section 7.15 hereof.
7.12 UNFUNDED PLAN.
The Plan is intended to constitute an unfunded deferred compensation
arrangement.
7.13 GOVERNING LAW.
The Plan shall be governed by and construed in accordance with the laws of
the State of Maryland, without reference to the principles of conflicts of law
thereof.
7.14 NON-UNIFORM DETERMINATIONS.
The Administrative Committee's determinations under the Plan need not be
uniform and may be made by the Administrative Committee selectively among
persons who receive, or are eligible to receive Discretionary Options, whether
or not such persons are similarly situated. Without limiting the generality of
the foregoing, the Administrative Committee shall be entitled, to enter into
non-uniform and selective Option Agreements as to (a) the identity of the
Participant, (b) the terms and provisions of Options, and (c) the treatment of
termination of service.
7.15 EFFECTIVE DATE.
The Plan is effective September 11, 2000.
7.16 NO ILLEGAL TRANSACTIONS.
The Plan and all Options granted pursuant to it are subject to all
applicable laws and regulations. Notwithstanding any provision of the Plan or
any Option, Participants shall not be entitled to exercise or receive benefits
under, any Option, and the Corporation shall not be obligated to deliver any
Shares or deliver any benefits to a Participant, if such exercise or delivery
would constitute a violation by the Participant or the Corporation of any
applicable law or regulation.
7.17 SEVERABILITY.
If any part of the Plan is declared by any court of governmental authority
to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate
any other part of the Plan. Any Section or part of a Section so declared to be
unlawful or invalid shall, if possible, be construed in manner which will give
effect to the terms of such Section to the fullest extent possible while
remaining lawful and valid.
C-10
MACK-CALI REALTY CORPORATION
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Mitchell E. Hersh, Timothy M. Jones, Roger
W. Thomas and Barry Lefkowitz, or any of them, lawful attorneys and proxies
of the undersigned, with full power of substitution, for and in the name,
place and stead of the undersigned to attend the Annual Meeting of
Stockholders of Mack-Cali Realty Corporation to be held at _______________,
New Jersey on Thursday, September 11, 2000, at 3:00 p.m., local time, and any
adjournment(s) or postponement(s) thereof, with all powers the undersigned
would possess if personally present, and to vote the number of shares the
undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DESCRIBED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5. ANY PRIOR PROXY IS HEREBY
REVOKED.
TO BE SIGNED ON THE OTHER SIDE
Has your address changed? Do you have any comments?
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
/X/ PLEASE MARK YOUR VOTES AS
INDICATED IN THIS EXAMPLE.
The Board of Directors recommends a vote "FOR" proposals
number 1, 2, 3 ,4 and 5.
___________________ WITHHOLD
MACK-CALI REALTY For all nominees AUTHORITY
CORPORATION listed above (except to vote for all nominees
__________________ as marked to the contrary) listed above
PROPOSAL 1: The Election of Directors: Martin S. Berger, John J. Cali, / / / /
John R. Cali, Mitchell E. Hersh and Irvin D. Reid.
Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name here:
- ------------------------------------------
RECORD DATE SHARES:
FOR AGAINST ABSTAIN
PROPOSAL 2: Ratification of the appointment of / / / / / /
PricewaterhouseCoopers LLP as the independent
accountants of the Company.
PROPOSAL 3: Approval and adoption of an amendment / / / / / /
to the Charter of Mack-Cali Realty Corporation to
decrease the affirmative stockholder vote required to
approve any extraordinary action from two-thirds to a
majority of all votes entitled to be cast on the action by
the holders of the outstanding shares of stock of Mack-
Cali Realty Corporation.
PROPOSAL 4: Approval and adoption of the 2000 / / / / / /
Employee Stock Option Plan.
PROPOSAL 5: Approval and adoption of the 2000 / / / / / /
Director Stock Option Plan.
In accordance with their discretion, said Attorneys and Proxies are
authorized to vote upon such other matters or proposals not known at the time
of solicitation of this proxy which may properly come before the meeting.
Please sign exactly as your name appears at the left. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or corporation, please sign in full corporate name by
president or other authorized person. If a partnership, please sign in
partnership name by authorized person.
-----------
Please be sure to sign and date this Proxy. Date
- ---------------------------------------------------------
Shareholder sign here Co-owner sign here
- ---------------------------------------------------------
- --------------------------------------------------------------------------------
DETACH CARD DETACH CARD
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE, THANK YOU