-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SP4BmAfKq9ni+bqHem99mtwIY2Mj7SetgGKxjBTPEIQzhMRYtLtuKvyTAQL/zbuO T/AV9Q0Koxu3x8Yhy19q6Q== 0000892626-99-000272.txt : 19990503 0000892626-99-000272.hdr.sgml : 19990503 ACCESSION NUMBER: 0000892626-99-000272 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANYAN STRATEGIC REALTY TRUST CENTRAL INDEX KEY: 0000790817 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363375345 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-15465 FILM NUMBER: 99605309 BUSINESS ADDRESS: STREET 1: 150 S WACKER DR STE 2900 STREET 2: SUITE 2900 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3125539800 FORMER COMPANY: FORMER CONFORMED NAME: BANYAN STRATEGIC LAND TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: VMS STRATEGIC LAND TRUST DATE OF NAME CHANGE: 19910325 10-K405/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K405/A AMENDMENT NO. 1 Filed pursuant to Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1998 Commission File Number 0-15465 Banyan Strategic Realty Trust ------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts 36-3375345 ----------------------- ------------------------------------ (State of organization) (I.R.S. Employer Identification No.) 150 South Wacker Drive, Chicago, IL 60606 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (312) 553-9800 The undersigned registrant hereby amends the following sections of its Report for the year ended December 31, 1998 on Form 10-K405 as set forth in the pages attached hereto: PART III Item 10. Trustees and Executive Officers of the Registrant. Page 68. Item 11. Executive Compensation. Page 68. Item 12. Security Ownership of Certain Beneficial Owners and Management. Page 68. Item 13. Certain Relationships and Related Transactions. Page 68. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BANYAN STRATEGIC REALTY TRUST By: /s/ Leonard G. Levine Leonard G. Levine President and Trustee Dated: April 29, 1999 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in, or disagreements with, the accountants on any matter of accounting principles, practices or financial statement disclosure. PART III ITEM 10. OUR TRUSTEES AND EXECUTIVE OFFICERS The trustees and executive officers of the Trust are as follows: Walter E. Auch, Sr. Trustee Norman M. Gold Trustee Marvin A. Sotoloff Trustee Leonard G. Levine President and Trustee Neil D. Hansen First Vice President Robert G. Higgins Vice President and Secretary/ General Counsel Joel L. Teglia Vice President/Chief Financial Officer Jay E. Schmidt Vice President/Investments WALTER E. AUCH, SR. Mr. Auch, age 77, has served as an independent trustee since 1986. Mr. Auch served as the chairman and chief executive officer of the Chicago Board of Options Exchange from 1979 to 1986. Prior to that time, Mr. Auch was executive vice president, director and a member of the executive committee of PaineWebber. Mr. Auch is a director of Pimco Advisors L.P., Geotek Communications, Inc., Smith Barney Concert Series Funds, Smith Barney Trak Fund, The Crimson Partners Funds and the Nicholas Applegate Funds and a trustee of Hillsdale College and the Arizona Heart Institute. Mr. Auch is also a director of Semele Group, Inc. and Legend Properties, Inc. NORMAN M. GOLD. Mr. Gold, age 68, has served as an independent trustee since 1986. Mr. Gold is a partner in the law firm of Altheimer & Gray and has practiced law for over forty years, concentrating in tax, corporate and real estate law. Mr. Gold is also a trustee of New Plan Excel Realty Trust. He is a certified public accountant and a member of the Chicago and American Bar Associations. MARVIN A. SOTOLOFF. Mr. Sotoloff, age 55, has served as an independent trustee since 1986. Mr. Sotoloff has served as the executive managing director of Julien J. Studley, Inc., an international corporate real estate advisory firm, since 1998. Prior to joining Julien J. Studley, Mr. Sotoloff was chief executive officer and chairman of the board of Equity Resources, Inc., a firm that specialized in commercial real estate brokerage and developing and managing commercial real estate. Prior to joining Equity Resources, Mr. Sotoloff was regional vice president of Premisys Real Estate Services, Inc., a subsidiary of the Prudential Realty Group. A licensed real estate broker, Mr. Sotoloff is a past president of the Chicago Office Leasing Brokers Association and is a licensed attorney and a member of the Illinois and Pennsylvania Bar Associations. LEONARD G. LEVINE. Mr. Levine, age 52, has been our president since 1990 and a trustee since 1998. Mr. Levine also served as a trustee from September, 1986 until February 1990. Mr. Levine received a bachelors of science/bachelors of arts degree in accounting from Roosevelt University and a masters degree in taxation from DePaul University. Mr. Levine previously served as president of Legend Properties, Inc. (f/k/a Banyan Mortgage Investment Fund), Banyan Short Term Income Trust and Semele Group, Inc. (f/k/a Banyan Strategic Land Fund II) (collectively, the "Banyan Funds") and BSRT Management Corp. Mr. Levine is a certified public accountant and a licensed real estate broker. Mr. Levine is the father of Adam Levine, one of our employees. 68 (a) NEIL D. HANSEN. Mr. Hansen, age 52, has been our first vice president since 1991 and oversees our asset management group. Mr. Hansen received a B.S. degree in finance from the University of Illinois and a master of management degree from Northwestern University. Mr. Hansen previously served as First Vice President of each of the Banyan Funds and BSRT Management Corp. Mr. Hansen is a certified public accountant. ROBERT G. HIGGINS. Mr. Higgins, age 47, has served as our vice president and general counsel since 1992 and as secretary since 1995. Mr. Higgins received a B.A. degree in government from the University of Notre Dame and a J.D. degree from Loyola University of Chicago. Mr. Higgins concentrates his practice in the areas of real estate development, finance, acquisition, land use, sales, lending and general corporate business practice. Mr. Higgins previously served as vice president, general counsel and secretary of each of the Banyan Funds and BSRT Management Corp. Mr. Higgins is admitted to the bar in the States of Illinois, Minnesota and Texas. Mr. Higgins practices law as a sole practitioner. JOEL L. TEGLIA. Mr. Teglia, age 37, has served as our vice president and chief financial officer since 1994. Prior to his appointment, Mr. Teglia provided various services to us in his capacity as controller for BSRT Management Corp. (f/k/a Banyan Management Corp.), a position that he held from 1991 to 1994. He received a B.A. degree in accounting from the University of Notre Dame. Mr. Teglia previously served as vice president and chief financial officer of each of the Banyan Funds and BSRT Management Corp. Mr. Teglia is a certified public accountant. JAY E. SCHMIDT. Mr. Schmidt, age 48, has served as our vice president of investments since 1995. From 1992 to 1995, he served as vice president of investments for BSRT Management Corp. Mr. Schmidt received a B.A. degree from Franklin and Marshall College and a J.D. degree from the University of Wisconsin. He is a licensed real estate broker and an attorney admitted to the bar in the State of Wisconsin. ITEM 11. EXECUTIVE COMPENSATION A. INDEPENDENT TRUSTEE COMPENSATION Each independent trustee is paid an annual fee of $20,000, payable quarterly, plus $1,000 for each board meeting, including meetings of board committees, attended in person and $500 an hour for each Board meeting, including committee meetings held by telephonic conference call. Each independent trustee is also reimbursed for out-of-pocket expenses incurred in attending board meetings. We also award each person serving as an independent trustee an option to purchase 2,000 of our common shares ten days after each annual meeting. All options granted to the independent trustees vest and become exercisable in the following installments: (1) 50% on the first anniversary of the grant; and (2) 50% on the second anniversary of the grant. B. EXECUTIVE COMPENSATION This table shows compensation paid to our chief executive officer and our next three most highly compensated executive officers during the last three years. 68 (b)
Long-Term Compensation ------------------------------------ Annual Compensation Awards Payouts ------------------------------- ------------------------ --------- (a) (b) (c) (d) (e) (f) (g) (h) (i) Securities Other Under- All Annual Restricted lying Other Salary Compen- Stock Options/ LTIP Compen- Name Year (2) Bonus sation Award(s) SARS(#) Payouts sation - ---- ---- ------ ----- ------- ---------- ---------- ------- ------- Leonard G. Levine, President and Chief Executive Officer 1998 $206,100 $146,382 1997 $195,540 $2,319,292 1996 $189,247 $7,700 $66,985 Jay E. Schmidt Vice President- Investments 1998 $170,307 $41,908 1997 $165,281 $35,000 1996 $154,615 $35,000 Neil D. Hansen First Vice President 1998 $205,860 $48,990 1997 $192,546 $20,000 1996 Joel L. Teglia Vice President and Chief Financial Officer 1998 $126,825 $30,755 1997 $95,160 $10,000 1996 (1) As of the fiscal year ended December 31, 1998, Mr. Levine owned 512,504 shares of beneficial interest which he is restricted from transferring except in compliance with the registration requirements of federal and state securities law. The value of these shares as of December 31,1998, without any discount for the transfer restrictions was $2,882,835. (2) Includes the lesser of 3% of base compensation or $4,800 which was contributed by us to each employee's 401(k) plan.
68 (c) EMPLOYMENT AGREEMENTS. MR. LEVINE. We have entered into an employment agreement with Mr. Levine, our president and chief executive officer. This contract has a term expiring on December 31, 2001. The agreement, was signed on March 11, 1998, but became retroactively effective as of October 1, 1997. Under the agreement, we pay Mr. Levine a base salary equal to $200,000 per year through December 31, 1999 increasing to $210,000 per year during the last two years of the agreement. In addition, Mr. Levine may earn incentive compensation during each year of the agreement equal to 62.5% of the base salary for that year, subject to us achieving certain predetermined levels of "funds from operations" increased by .03 for each one percentage point that our actual per share "funds from operations" exceed the target and decreased (but not below zero) by .04 for each one percentage point our actual per share "funds from operations" is below the target amount. The first period for which this incentive compensation was earned was the fifteen months from October 1, 1997 through December 31, 1998. For the fifteen months ended December 31,1998, this target was $0.95 per share. Our actual "funds from operations" for this period was $0.935 per share. For this first period, the base salary used in calculating the bonus was $250,000 comprised of $50,000 for the last three months of 1997 and $200,000 for 1998. Thus, Mr. Levine earned incentive compensation equal to $146,382 for the fifteen months ended December 31,1998. We have also granted Mr. Levine non-qualified stock options to purchase an aggregate of 350,000 shares of our common shares of beneficial interest at an exercise price equal to $5.50 per share. Options to purchase 100,000 of these shares vested and became exercisable when we signed the agreement with Mr. Levine. Options to purchase an additional 100,000 shares will vest and become exercisable in 25,000 share increments at the end of each calendar year of the agreement with the first increment of 25,000 shares having vested and become exercisable on December 31, 1998 and the second increment will vest and become exercisable on December 31,1999. Options to purchase an additional 50,000 shares will vest and become exercisable if, during any consecutive thirty (30) trading days during the term of the agreement, the closing price of our common shares averages at least $8.50 per share. Options to purchase an additional 100,000 shares will vest and become exercisable on a proportionate basis if, during any thirty (30) consecutive trading days during the term of the agreement, the closing price of the our shares averages more than $8.50 per share with full vesting occurring with respect to 75,000 shares if the closing price averages $9.00 per share, and $10.00 per share with respect to the other 25,000 shares. As of December 31,1998, none of the options subject to the performance of our share price has vested. The number of shares underlying the options and the exercise price of each option are subject to adjustment from time to time if we: (i) issue or sell additional common shares in exchange for consideration at a price less than the prevailing market price of our shares; (ii) issue or sell warrants with exercise prices less than the prevailing market price; (iii) declare a dividend or otherwise make a distribution to our shareholders in the form of additional common shares; (iv) subdivide our outstanding common shares into a larger number of common shares; or (v) combine our outstanding common shares into a smaller number of common shares. Mr. Levine must exercise the options by October 1, 2007, except that if he dies or becomes permanently disabled during the term of the agreement, then all options which have vested must be exercised within one year of death or permanent disability. Upon Mr. Levine's death or permanent disability, all options not yet vested, but which would vest within six months either by passage of time or satisfaction of the various performance standards, will be deemed vested and become exercisable within the same one-year time period. 68 (d) The agreement also requires us to provide Mr. Levine with both life and disability insurance benefits during the term of the agreement, as well as all non-wage benefits we provide to our other salaried employees. We have the right to terminate Mr. Levine's employment within thirty (30) calendar days after we file our annual report on Form 10-K with the Securities and Exchange Commission for the preceding year if we do not achieve certain earnings before interest, taxes, depreciation and amortization, or EBITDA for short, targets for that year. For the fifteen months ended December 31,1998, this earnings target was $1.54 per basic common share. Our actual EBIDTA for this period was $1.94 per share. We may also terminate Mr. Levine for "Just Cause." For purposes of the agreement, "Just Cause" exists if Mr. Levine is convicted of, or has a civil judgment rendered against him for theft or embezzlement of our property, is convicted of a felony resulting in injury to our business property or reputation, or if a civil judgment is rendered that Mr. Levine breached his duty of loyalty to us or if an arbitrator determines that Mr. Levine has refused to perform, or willfully failed to perform, his material duties under the agreement or committed intentional acts that caused material damage to our business or properties or performed his material duties in a manner that constituted gross negligence. Mr. Levine has the right to terminate the agreement upon ninety (90) days' notice to us for any reason (the "Notice Termination"), or upon a "Change of Control" or "Constructive Termination." For these purposes, a "Change of Control" occurs if the members of our board as of October 1, 1997 fail to constitute a majority of the members of the board, except for individuals consented to by Mr. Levine, or if our shareholders adopt a plan of liquidation or take other action having the effect of a plan of liquidation without the recommendation and approval of our board. A "Constructive Termination" occurs if Mr. Levine's authority is materially reduced or if there is a material adverse change in his working conditions or we require him to relocate from the Chicago metropolitan area. If Mr. Levine terminates the agreement upon a "Change of Control" or is deemed to suffer a "Constructive Termination," we will be obligated to pay Mr. Levine all amounts that could have been paid under the agreement including all incentive compensation. Additionally, all of the options that we granted to Mr. Levine when we signed the agreement will become vested and immediately exercisable. If Mr. Levine is not in our employ on January 1, 2002 pursuant to a written employment agreement, and has not then died or become permanently disabled, we are obligated to pay Mr. Levine $210,000, unless we had previously terminated the agreement either due to our failing to achieve certain performance standards or for "Just Cause" or if the agreement is terminated by Mr. Levine by a "Notice Termination." MESSRS. HANSEN, SCHMIDT AND TEGLIA. We have also entered into employment agreements with each of Messrs. Hansen, Schmidt and Teglia. These agreements were signed on March 4, 1999 but became effective as of December 31, 1998. Pursuant to these agreements, we will pay Mr. Hansen an annual base salary of $213,040; we will pay Mr. Schmidt an annual base salary of $176,680; and we will pay Mr. Teglia an annual base salary of $138,240. We may award each executive a bonus, or other compensation, but are under no obligation to do so. Each executive is eligible for all non- wage benefits we offer to our salaried employees and will be reimbursed for reasonable business expenses. Additionally, pursuant to each agreement, we will indemnify and hold harmless each executive from liabilities each may incur as a result of performing his duties under their respective employment agreements. Each employment agreement expires on December 31, 1999 but is automatically renewed for successive one-year periods unless either party delivers at least ninety (90) days' written notice to the contrary. We have the option of terminating each agreement if we undergo a "Change in Control." We may also terminate each executive for "Just Cause." For purposes of these agreements, these terms have the same meaning ascribed to these terms under Mr. Levine's agreement. Each of Messrs. Hansen, Schmidt and Teglia may terminate his respective employment agreement at any time by giving us at least ninety (90) days' written notice. 68 (e) If we terminate an employment agreement for "Just Cause" or if any of Messrs. Hansen, Schmidt or Teglia exercises his right to terminate the agreement, we will have no further obligations under the terminated agreement. If, however, we terminate an agreement other than for "Just Cause" or the expiration of the term, we are required to pay the terminated executive the salary he was due to earn during the remainder of his term plus the salary he would have earned for the twelve months following the expiration of the term. Additionally, we are required to provide the terminated executive coverage, at our expense, under our group health and life insurance policies for the same period. Further, if we terminate an employment agreement due to a "Change in Control," we are required to pay the terminated executive an amount equal to the executive's incentive bonus (if any) for our most recently completed fiscal year. If we do not renew an employment agreement, we are required to pay the executive severance in an amount equal to one-half of the executive's salary. Stock Option Grants This table shows options to purchase shares of beneficial interest we granted during 1998 to our chief executive officer and our three most highly compensated executive officers. 68 (f) STOCK OPTION GRANTS IN 1998 FISCAL YEAR ---------------------------------------
Potential Realized Value at Assumed Annual Rates of Stock Price Appreciations for Option Term ----------------------- (a) (b) (c) (d) (e) (f) (g) Number of % of Securities Total Options Underlying Granted to Options Employees in Exercise or Name Granted Fiscal Year Base Price Expiration Date 5% 10% - ---- ---------- ------------- ------------ --------------- -------- -------- Leonard G. Levine. . . . -- -- -- -- -- -- Jay E. Schmidt . . . . . 16,000 14% $5.375 Dec. 1, 2008 $54,085 $137,062 Neil D. Hansen . . . . . 16,000 14% $5.375 Dec. 1, 2008 $54,085 $137,062 Joel L. Teglia . . . . . 14,000 12% $5.375 Dec. 1, 2008 $47,324 $119,929
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE ------------------------------------------------------------
(a) (b) (c) (d) (e) Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options/SARS at Options/SARs at FY-End (#) FY-End ($) Shares Acquired on Value Exercisable/ Excisable/ Name Exercise Realized Unexercisable Unexercisable - ---- ----------- --------- ------------- ------------- Leonard G. Levine -- -- -- -- Jay E. Schmidt 1,665 $4,444 6,667/ $0/ 32,668 $9,153 Neil D. Hanson 1,665 $3,820 6,667/ $0/ 32,668 $9,153 Joel L. Teglia 1,665 $3,820 5,000/ $0/ 27,335 $8,653
68 (g) ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as of April 29, 1999 regarding the number and percentage of our outstanding common shares beneficially owned by: (i) each trustee; (ii) each executive officer; and (iii) all trustees and executive officers as a group. The table also sets forth information as of December 31, 1998 with respect to any person known to us to be the beneficial owner of more than five percent of our outstanding common shares. Information with respect to Morgens Waterfall Income Partners, L.P., Magten Asset Management Corp. and FMR Corp. listed in the table below, including the notes, is based solely on copies of statements filed under Section 13(d) or 13(g) of the Exchange Act, and we have not independently confirmed this information. Share amounts and percentages shown for each person or entity are adjusted to give effect to common shares that are not outstanding but may be acquired by a person or entity upon exercise of all options exercisable by such entity or person within sixty days of the date of the date hereof. However, those common shares are not deemed to be outstanding for the purpose of computing the percentage of outstanding common shares beneficially owned by any other person. Number of Common Shares Name and Address of Beneficially Percent Beneficial Owner Owner of Class - ------------------- ------------- --------- Morgens Waterfall Income Partners, 2,192,501 16.4% L.P. (1) Restart Partners, L.P. Restart Partners II, L.P. Restart Partners III, L.P. Restart Partners IV, L.P. Restart Partners V, L.P. Endowment Restart, L.L.C. 10 East 50th Street New York, NY 10022 Magten Asset Management Corp. (2) 1,164,500 8.7% Mellon Bank, N.A. as Trustee for the General Motors Employees Domestic Group Pension Trust General Motors Investment Management Corporation 350 East 21st Street New York, New York 10010 FMR Corp. (3) 1,038,050 7.8% Fidelity Management & Research Company Fidelity Low-Priced Stock Fund Fidelity Management Trust Company Edward C. Johnson 3d Abigail P. Johnson 82 Devonshire St., Boston, MA 02109 Leonard G. Levine, 637,504 4.7% President (4) (5) Neil D. Hansen, 17,578 * First Vice President (4) Jay E. Schmidt, 5,981 * Vice President (4) Robert G. Higgins, 6,175 * Vice President, General Counsel and Secretary (4) (6) 68 (h) Number of Common Shares Name and Address of Beneficially Percent Beneficial Owner Owner of Class - ------------------- ------------- --------- Joel L. Teglia, 3,609 * Chief Financial Officer (4) Walter E. Auch, Sr. 1,000 * Norman M. Gold 1,000 * Marvin A. Sotoloff 1,000 * All Trustees and Executive 673,847 5.0% Officers of the Trust, as a group (eight persons) (5) * less than 1% (1) Does not include the conversion of a $7.4 million loan which is outstanding and is convertible into shares of our convertible preferred stock at a price of $100 per share, which may, in turn, be converted into our common shares at a price of $5.15 per share. Certain affiliates of Morgens Waterfall Income Partners, L.P. have filed reports with the SEC pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") indicating combined ownership of five percent (5%) or more of the outstanding common shares. As of the date of this prospectus: (i) Morgens Waterfall Income Partners, L.P. owns 83,315 common shares; (ii) Restart Partners, L.P. owns 418,768 common shares; (iii) Restart Partners II, L.P. owns 692,830 common shares; (iv) Restart Partners III, L.P. owns 482,350 common shares; (v) Restart Partners IV, L.P. owns 304,758 common shares; (vi) Restart Partners V, L.P. owns 100,855 common shares; (vii) Endowment Restart, L.L.C. owns 109,625 common shares. Although John C. Waterfall and Edwin H. Morgens do not directly own any common shares, each of them may be deemed an indirect beneficial owner of 2,192,501 common shares by virtue of their effective control over the operation of each of the affiliated entities listed above. Furthermore, Morgens Waterfall Capital, L.L.C. may be deemed an owner of 83,315 common shares by virtue of its position as general partner of Morgens Waterfall Income Partners, L.P. (2) According to filings made with the SEC, Magten Asset Management Corp. ("Magten") is an investment advisor registered under the Investment Advisors Act of 1940. Magten has filed reports with the SEC pursuant to Section 13(d) of the Exchange Act, indicating ownership of five percent (5%) or more of the outstanding common shares. Magten has shared dispositive power over 1,897,605 common shares, and shared voting power over 1,436,005 common shares. The General Motors Employees Domestic Group Pension Trust (the "GM Trust") receives investment management services from General Motors Investment Management Corporation (the "GM Advisor"), an investment advisor registered under the Investment Advisors Act of 1940. Magten provides investment management services to the GM Trust. The GM Trust and the GM Advisor have shared voting and dispositive power over 651,055 common shares, or 4.9% of the outstanding common shares. Each of the GM Trust and the GM Advisor disclaims beneficial ownership of these common shares. (3) FMR Corp., Edward C. Johnson 3d and Abigail P. Johnson (who together with other members of the Johnson family may be deemed to form a controlling group with respect to FMR Corp.) have filed reports with 68 (i) the SEC pursuant to Section 13(d) of the Exchange Act, indicating combined ownership of five percent (5%) or more of the outstanding common shares. As of the date of this prospectus, Fidelity Management & Research Company, an investment advisor registered under the Investment Advisors Act of 1940, and Fidelity Low-Priced Stock Fund, an investment company which Fidelity Management & Research Company serves as investment advisor, owned 991,750 common shares or 7.47% of the outstanding common shares. Edward C. Johnson 3d and FMR Corp. each has sole dispositive power over these 991,750 common shares, but neither has sole voting power over these common shares. As of the date of this prospectus, Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp., owned 118,800 common shares or .9% of the outstanding common shares as a result of serving as investment manager of institutional accounts. Edward C. Johnson 3d and FMR Corp. each has voting and dispositive power over these 118,800 common shares. (4) The business address for each of Messrs. Hansen, Higgins, Levine, Schmidt and Teglia is 150 S. Wacker Drive, Suite 2900, Chicago, Illinois 60606. (5) Includes options to purchase 125,000 common shares. (6) Includes 879 common shares owned by Mr. Higgins' daughter. Mr. Higgins disclaims beneficial ownership of these common shares. Based on Schedules 13D as filed with the Securities and Exchange Commission, Morgens and Magten have decided to solicit the support of our Trustees and management to identify and pursue strategic alternatives for our company, including holding joint discussions with our Trustees and management for this purpose. Morgens and Magten may hold discussions, individually or jointly, with other of our shareholders as well. If Morgens and Magten are not satisfied with the results of their discussions with our management and Trustees, Morgens and Magten will consider what further actions, if any, they will take. Such further actions could include working together to propose and solicit proxies in favor of a slate of candidates to stand for election at our upcoming 1999 Annual Meeting of Shareholders in opposition to the slate nominated by our Trustees. These candidates would promise to seek strategic alternatives for our company (including a merger, stock or asset sale or liquidation) if elected. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the fiscal year ended December 31, 1998, we paid no salary to, but purchased legal services from, Robert G. Higgins, our vice president, secretary and general counsel, in the aggregate amount of $391,400. We also provide Mr. Higgins with office space and equipment. Mr. Higgins does not pay any rent for the use of office space and equipment. Instead, Mr. Higgins provides us with a 20% discount for all time Mr. Higgins and his employees bill to us. Mr. Higgins also reimburses us for the cost of two full-time and certain part-time employees. For the fiscal year ended December 31, 1998, Mr. Higgins reimbursed us for a total of $161,129. In addition, during the fiscal year ended December 31, 1998, we paid Adam Levine, the son of our president, chief executive officer and trustee, Leonard G. Levine, $71,415 plus options, exercisable for ten years, to purchase 6,000 shares at $5.375 per share for services rendered to us as an employee. We also provided Adam Levine with benefits customarily provided to our other employees. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) (1) Financial Statements of the Company are set forth in this report in Item 8. 68 (j) (2) Financial Statement Schedule is set forth in this report in Item 8. (b) Report on Form 8-KA dated October 1, 1998 was filed to provide the Financial Statements and related pro forma information required by Item 7 of Form 8-K in connection with the Trust's acquisition of the properties known as Technology Park and Johns Creek Office and Industrial Park. (c) Exhibits (see Exhibit Index included elsewhere herein). (d) None. 68 (k) -----END PRIVACY-ENHANCED MESSAGE-----