<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
WELLS REAL ESTATE INVESTMENT TRUST, INC.
------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
WELLS REAL ESTATE INVESTMENT TRUST, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 16, 1999
- --------------------------------------------------------------------------------
Dear Shareholder:
On Wednesday, June 16, 1999, Wells Real Estate Investment Trust, Inc., a
Maryland corporation, will hold its 1999 Annual Meeting of Shareholders at The
Atlanta Athletic Club, 123 Bobby Jones Drive, Duluth, Georgia 30097. The meeting
will begin at 2:00 p.m. eastern daylight time.
We are holding this meeting to:
1. Elect nine directors to hold office for one year terms expiring in
2000.
2. Approve the Independent Director Stock Option Plan;
3. Approve the appointment of our independent auditors; and
4. Attend to other business properly presented at the meeting.
Your Board of Directors has selected April 30, 1999 as the record date for
determining shareholders entitled to vote at the meeting.
This proxy statement, proxy card and our 1998 Annual Report to Shareholders are
being mailed on or about May 7, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
Brian M. Conlon
Secretary
Atlanta, Georgia
May 7, 1999
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS...................................................... 1
CERTAIN INFORMATION ABOUT THE COMPANY'S MANAGEMENT......................... 4
EXECUTIVE COMPENSATION..................................................... 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................. 9
STOCK OWNERSHIP............................................................ 11
PROPOSALS YOU MAY VOTE ON.................................................. 12
SHAREHOLDER PROPOSALS...................................................... 16
OTHER MATTERS.............................................................. 16
APPENDIX - PROXY CARD...................................................... 17
WELLS REAL ESTATE INVESTMENT TRUST, INC. INDEPENDENT
DIRECTOR STOCK OPTION PLAN......................................... EXHIBIT "A"
</TABLE>
<PAGE>
QUESTIONS AND ANSWERS
Wells Real Estate Investment Trust, Inc. is providing you with this proxy
statement, which contains information about the items to be voted upon at our
Annual Meeting. To make this information easier to understand, we have
presented some of the information below in a question and answer format.
Q: WHY DID YOU SEND ME THIS PROXY STATEMENT?
A: We sent you this proxy statement and the enclosed proxy card because our
Board of Directors is soliciting your proxy to vote your shares at the Annual
Meeting. This proxy statement summarizes information that we are required to
provide to you under the rules of the Securities and Exchange Commission
(SEC) and which is designed to assist you in voting.
Q: WHAT IS A PROXY?
A: A proxy is a person who votes the shares of another person who could not
attend a meeting. The term "proxy" also refers to the proxy card. When you
return the enclosed proxy card, you are giving us your permission to vote
your shares at the Annual Meeting. The people who will vote your shares at
the Annual Meeting are Leo F. Wells, III or Brian M. Conlon. They will vote
your shares as you instruct, unless you return the proxy card and give no
instructions. In this case, they will vote FOR all of the director nominees
and FOR the other proposals to be voted upon. They will not vote your shares
if you do not return the enclosed proxy card. This is why it is important
for you to return the proxy card to us as soon as possible if you do not plan
on attending the meeting.
Q: WHEN IS THE ANNUAL MEETING AND WHERE WILL IT BE HELD?
A: The Annual Meeting will be held on Wednesday, June 16, 1999 at 2:00 p.m. at
The Atlanta Athletic Club, 123 Bobby Jones Drive, Duluth, Georgia 30097.
Q: WHAT MAY I VOTE ON?
A: You may vote on the following proposals:
(1) The election of nominees to serve on the Board of Directors;
(2) The approval of the Independent Director Stock Option Plan;
(3) The approval of the appointment of Arthur Andersen LLP as our independent
auditors for the fiscal year ending December 31, 1999.
Q: HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board of Directors recommends a vote FOR each of the proposals.
<PAGE>
Q: WHO IS ENTITLED TO VOTE?
A: Anyone who owned our common stock at the close of business on April 30, 1999,
the record date, are entitled to vote at the Annual Meeting.
Q: HOW DO I VOTE?
A: You may vote your shares either in person or by proxy. Whether you plan to
attend the meeting and vote in person or not, we urge you to complete the
enclosed proxy card and return it promptly in the enclosed envelope. If you
return your signed proxy card but do not mark the boxes showing how you wish
to vote, your shares will be voted FOR the nominees for director and FOR all
of the other proposals to be voted upon at the Annual Meeting.
Q: WHAT IF I RETURN THE PROXY CARD AND THEN CHANGE MY MIND?
You have the right to revoke your proxy at any time before the meeting by:
(1) notifying the Secretary of the Company;
(2) attending the meeting and voting in person; or
(3) returning another proxy card before the Annual Meeting date that is dated
after the first proxy card.
Q: HOW MANY SHARES CAN VOTE?
A: As of the record date, 6,357,132 shares of our common stock were issued and
outstanding. Every shareholder of our common stock is entitled to one vote
for each share held.
Q: WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares. A quorum may be present
at the meeting or represented by proxy. There must be a quorum for the
meeting to be held, and a proposal must receive more than 50% of the shares
voting to be adopted. If you submit a properly executed proxy card, even if
you abstain from voting, then you will be considered part of the quorum.
However, abstentions are not counted in the tally of votes FOR or AGAINST a
proposal. A WITHHELD vote is the same as an abstention.
Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: Although we do not know of any business to be considered at the Annual
Meeting other than the election of directors and the other proposals
described in this proxy statement, if any other business is properly
presented at the Annual Meeting, your signed proxy card
2
<PAGE>
gives authority to Leo F. Wells, III, President, and Brian M. Conlon,
Secretary, or either of them, to vote on such matters at their discretion.
Q: WHEN ARE THE SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING OF
SHAREHOLDERS DUE?
A: All shareholder proposals to be considered for inclusion in next year's proxy
statement must be submitted in writing to Brian M. Conlon, Secretary, Wells
Real Estate Investment Trust, Inc., 3885 Holcomb Bridge Road, Norcross,
Georgia 30092 by December 31, 1999.
Q: WHO PAYS THE COST OF THIS PROXY SOLICITATION?
A: The Company will pay all the costs of soliciting these proxies. We will also
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their reasonable out-of-pocket expenses for forwarding proxy and solicitation
materials to our shareholders.
Q: IS THIS PROXY STATEMENT THE ONLY WAY THAT PROXIES ARE BEING SOLICITED?
A: No. In addition to mailing proxy solicitation material, our directors and
employees may also solicit proxies in person, by telephone or by other
electronic means of communication.
3
<PAGE>
CERTAIN INFORMATION ABOUT THE COMPANY'S MANAGEMENT
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The entire Board of Directors considers all major decisions concerning the
Company. However, the Board has established an Audit Committee so that this
important area can be addressed in more depth than may be possible in a full
Board meeting.
The Audit Committee will hold its first meeting in June 1999. The Audit
Committee members are John L. Bell, Richard W. Carpenter, Bud Carter, William H.
Keogler, Jr., Donald S. Moss, Walter W. Sessoms and Neil H. Strickland.
The purpose of the Audit Committee is:
. To review the professional services and independence of our independent
auditors;
. To review with our independent accountants the status of our accounts,
accounting procedures and internal controls;
. To recommend to the Board of Directors the firm to be selected as the
independent public accountants for the Company;
. To monitor the performance of the independent public accountants;
. To review and approve the scope of the annual audit;
. To review and evaluate with the independent public accountants our annual
audit and annual consolidated financial statements;
. To review with management the status of internal accounting controls;
. To evaluate problem areas having a potential financial impact on the
Company that may be brought to its attention by management, the
independent public accountants or the Board; and
. To evaluate all public financial reporting documents of the Company.
We do not have a standing Nominating Committee or Compensation Committee. To
the extent necessary, these functions are performed by the Board of Directors
acting as a whole. The Board of Directors met five times during 1998, and of
the nine members of the Board, only William H. Keogler, Jr. attended fewer than
75% of the meetings.
COMPENSATION OF DIRECTORS
We pay directors who are not employees of the Company ("Independent
Directors") $250 for each Board meeting they attend. In addition, we have
reserved 100,000 shares of common stock (if Proposal 2 is approved) for future
issuance upon the exercise of stock options that may be granted to the
Independent Directors. All directors receive reimbursement of reasonable out-
of-pocket expenses incurred in connection with attendance at meetings of the
Board of Directors. If a director also is an officer of the Company, we do not
pay separate compensation for services rendered as a director.
4
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
We have provided below certain information about our executive officers and
nominees for re-election as directors.
<TABLE>
<CAPTION>
Year First
Became a
Name Position(s) Age Director
- ---- ----------- --- --------
<S> <C> <C> <C>
Leo F. Wells, III President and Director (term expiring 55 1998
in 1999; nominee for a term expiring
in 2000)
Brian M. Conlon Executive Vice President, Treasurer, 41 1998
Secretary and Director (term expiring
in 1999; nominee for a term expiring
in 2000)
John L. Bell/(1)/ Director (term expiring in 1999; 58 1998
nominee for a term expiring in 2000)
Richard W. Carpenter/(1)/ Director (term expiring in 1999; 62 1998
nominee for a term expiring in 2000)
Walter W. Sessoms/(1)/ Director (term expiring in 1999; 65 1998
nominee for a term expiring in 2000)
Bud Carter/(1)/ Director (term expiring in 1999; 60 1998
nominee for a term expiring in 2000)
William H. Keogler, Jr./(1)/ Director (term expiring in 1999; 53 1998
nominee for a term expiring in 2000)
Donald S. Moss/(1)/ Director (term expiring in 1999; 63 1998
nominee for a term expiring in 2000)
Neil H. Strickland/(1)/ Director (term expiring in 1999; 63 1998
nominee for a term expiring in 2000)
</TABLE>
_____________________
(1) Messrs. Bell, Carpenter, Sessoms, Carter, Keogler, Moss and Strickland serve
on our Audit Committee.
LEO F. WELLS, III is the President and a director of the Company and the
President and sole director of Wells Capital, Inc. (the "Advisor"). He is also
the sole shareholder and sole director of Wells Real Estate Funds, Inc., the
parent corporation of the Advisor. Mr. Wells is President of Wells &
Associates, Inc., a real estate brokerage and investment company formed in 1976
and incorporated in 1978, for which he serves as principal broker. He is also
the sole director and President of:
. Wells Management Company, Inc., a property management company he
organized in 1983;
5
<PAGE>
. Wells Investment Securities, Inc., a registered securities broker-dealer
he organized in 1984;
. Wells Advisors, Inc., a company he organized in 1991 to act as a non-bank
custodian for IRAs; and
. Wells Development Corporation, a company he organized in 1997 to
temporarily own, operate, manage and develop real properties.
Mr. Wells was a real estate salesman and property manager from 1970 to 1973
for Roy D. Warren & Company, an Atlanta real estate company, and he was
associated from 1973 to 1976 with Sax Gaskin Real Estate Company, during which
time he became a Life Member of the Atlanta Board of Realtors Million Dollar
Club. From 1980 to February 1985 he served as Vice President of Hill-Johnson,
Inc., a Georgia corporation engaged in the construction business. Mr. Wells
holds a Bachelor of Business Administration degree in economics from the
University of Georgia. Mr. Wells is a member of the International Association
for Financial Planning (IAFP) and a registered NASD principal.
Mr. Wells has over 25 years of experience in real estate sales, management
and brokerage services. He is currently a co-general partner in a total of 25
real estate limited partnerships formed for the purpose of acquiring, developing
and operating office buildings and other commercial properties. As of September
30, 1998, these 25 real estate limited partnerships represented investments
totalling over $280,000,000 from approximately 26,000 investors.
BRIAN M.CONLON is the Executive Vice President, Secretary, Treasurer and a
director of the Company. Mr. Conlon also serves as Executive Vice President of
the Advisor, Wells Development Corporation and Wells Real Estate Funds, Inc. He
also serves as Vice President of Wells Investment Securities, Inc. Mr. Conlon
joined the Advisor in 1985 as a Regional Vice President, and served as Vice
President and National Marketing Director from 1991 until April 1996 when he
assumed his current position. Previously, Mr. Conlon was director of Business
Development for Tishman Midwest Management & Leasing Services Corp. where he was
responsible for marketing the firm's property management and leasing services to
institutions. Mr. Conlon also spent two years as an Investment Property
Specialist with Carter & Associates where he specialized in acquisitions and
dispositions of office and retail properties for institutional clients. Mr.
Conlon received a Bachelor of Business Administration degree from Georgia State
University and a Master of Business Administration degree from the University of
Dallas. Mr. Conlon is a member of the IAFP. He is also a general securities
principal and holds a Georgia real estate brokerage license. Mr. Conlon also
holds the certified commercial investment member (CCIM) designation of the
Commercial Investment Real Estate Institute and the certified financial planner
(CFP) designation of the Certified Financial Planner Board of Standards, Inc.
JOHN L. BELL was the owner and Chairman of Bell-Mann, Inc., the largest
commercial flooring contractor in the Southeast ("Bell-Mann") from February 1971
to February 1996. Mr. Bell also served on the Board of Directors of Realty
South Investors, a REIT traded on the American Stock Exchange, and was the
founder and served as a director of both the Chattahoochee Bank and the Buckhead
Bank. In 1997, Mr. Bell initiated and implemented a
6
<PAGE>
"Dealer Acquisition Plan" for Shaw Industries, Inc., a floor covering
manufacturer and distributor, which plan included the acquisition of Bell-Mann.
Mr. Bell currently serves on the advisory boards of Windsor Capital, Mountain
Top Boys Home and the Eagle Ranch Boys Home. Mr. Bell is also extensively
involved in buying and selling real estate both individually and in partnership
with others. Mr. Bell graduated from Florida State University majoring in
accounting and marketing.
RICHARD W. CARPENTER served as General Vice President of Real Estate Finance
of The Citizens and Southern National Bank from 1975 to 1979, during which time
his duties included the supervision and establishment of the co-mingled United
Kingdom Pension Fund, U.K.-American Properties, Inc. established primarily for
investment in commercial real estate within the United States.
Mr. Carpenter is currently President and director of Realmark Holdings Corp.,
a residential and commercial real estate developer, and has served in that
position since October 1983. He is also President and director of Leisure
Technology, Inc., a retirement community developer, a position which he has held
since March 1993, Managing Partner of Carpenter Properties, L.P., a real estate
limited partnership, and President and director of the oil storage companies
Wyatt Energy, Inc. and Commonwealth Oil Refining Company, Inc., positions which
he has held since 1995 and 1984, respectively.
Mr. Carpenter also serves as Vice Chairman of the Board of Directors of both
First Liberty Financial Corp. and Liberty Savings Bank, F.S.B. and Chairman of
the Audit Committee of First Liberty Financial Corp. He has been a member of
The National Association of Real Estate Investment Trusts and served as
President and Chairman of the Board of Southmark Properties, an Atlanta based
REIT investing in commercial properties. Mr. Carpenter is a past Chairman of
the American Bankers Association Housing and Real Estate Finance Division
Executive Committee. Mr. Carpenter holds a Bachelor of Science degree from
Florida State University, where he was named the outstanding alumni of the
School of Business in 1973.
WALTER W. SESSOMS was employed by BellSouth Telecommunications, Inc.
("BellSouth") from 1971 until his retirement in June 1997. While at BellSouth,
Mr. Sessoms served in a number of key positions, including Vice President-
Residence for the State of Georgia from June 1979 to July 1981, Vice President-
Transitional Planning Officer from July 1981 to February 1982, Vice President-
Georgia from February 1982 to June 1989, Senior Vice President-Regulatory and
External Affairs from June 1989 to November 1991, and Group President-Services
from December 1991 until his retirement on June 30, 1997.
Mr. Sessoms currently serves as a director of the Georgia Chamber of Commerce
for which he is a past Chairman of the Board, the Atlanta Civic Enterprises and
the Salvation Army's Board of Visitors of the Southeast Region. Mr. Sessoms is
also a past executive advisory council member for the University of Georgia
College of Business Administration and past member of the executive committee of
the Atlanta Chamber of Commerce. Mr. Sessoms is a graduate of Wofford College
where he earned a degree in economics and business administration and is
currently a practitioner/lecturer at the University of Georgia.
7
<PAGE>
BUD CARTER was an award-winning broadcast news director and anchorman for
several radio and television stations in the Midwest for over 20 years. From
1975 to 1980, Mr. Carter served as General Manager of WTAZ-FM, a radio station
in Peoria, Illinois and served as editor and publisher of The Peoria Press, a
weekly business and political journal in Peoria, Illinois. From 1981 until
1989, Mr. Carter was also an owner and General Manager of Transitions, Inc., a
corporate outplacement company in Atlanta, Georgia.
Mr. Carter currently serves as Senior Vice President for The Executive
Committee, a 42-year old international organization established to aid
presidents and CEOs share ideas on ways to improve the management and
profitability of their respective companies. The Executive Committee operates
in numerous large cities throughout the United States, Canada, Australia,
France, Italy, Malaysia, Brazil, the United Kingdom and Japan. The Executive
Committee has more than 6,000 presidents and CEOs who are members. In addition,
Mr. Carter was the first Chairman of the organization recruited in Atlanta and
still serves as Chairman of the first two groups formed in Atlanta, each
comprised of 14 noncompeting CEOs and presidents. Mr. Carter is a graduate of
the University of Missouri where he earned degrees in journalism and social
psychology.
WILLIAM H. KEOGLER, JR. was employed by Brooke Bond Foods, Inc. as a Sales
Manager from June 1965 to September 1968. From July 1968 to December 1974, Mr.
Keogler was employed by Kidder Peabody & Company, Inc. and Dupont, Glore, Forgan
as a corporate bond salesman responsible for managing the industrial corporate
bond desk and the utility bond area. From December 1974 to July 1982, Mr.
Keogler was employed by Robinson-Humphrey, Inc. as the Director of Fixed Income
Trading Departments responsible for all municipal bond trading and municipal
research, corporate and government bond trading, unit trusts and SBA/FHA loans,
as well as the oversight of the publishing of the Robinson-Humphrey Southeast
Unit Trust, a quarterly newsletter. Mr. Keogler was elected to the Board of
Directors of Robinson-Humphrey, Inc. in 1982. From July 1982 to October 1984,
Mr. Keogler was Executive Vice President, Chief Operating Officer, Chairman of
the Executive Investment Committee and member of the Board of Directors and
Chairman of the MFA Advisory Board for the Financial Service Corporation. He
was responsible for the creation of a full service trading department
specializing in general securities with emphasis on municipal bonds and
municipal trusts. Under his leadership, Financial Service Corporation grew to
over 1,000 registered representatives and over 650 branch offices. In March
1985, Mr. Keogler founded Keogler, Morgan & Company, Inc., a full service
brokerage firm, and Keogler Investment Advisory, Inc., in which he served as
Chairman of the Board of Directors, President and Chief Executive Officer. In
January 1997, both companies were sold to SunAmerica, Inc., a publicly traded
New York Stock Exchange company. Mr. Keogler continued to serve as President
and Chief Executive Officer of these companies until his retirement in January
1998.
Mr. Keogler serves on the Board of Trustees of Senior Citizens Services of
Atlanta. He graduated from Adelphi University in New York where he earned a
degree in psychology.
DONALD S. MOSS was employed by Avon Products, Inc. ("Avon") from 1957 until
his retirement in 1986. While at Avon, Mr. Moss served in a number of key
positions, including Vice President and Controller from 1973 to 1976, Group Vice
President of Operations-
8
<PAGE>
Worldwide from 1976 to 1979, Group Vice President of Sales-Worldwide from 1979
to 1980, Senior Vice President-International from 1980 to 1983 and Group Vice
President-Human Resources and Administration from 1983 until his retirement in
1986. Mr. Moss was also a member of the board of directors of Avon Canada, Avon
Japan, Avon Thailand, and Avon Malaysia from 1980-1983.
Mr. Moss is currently a director of The Atlanta Athletic Club. He formerly
was the National Treasurer and a director of the Girls Clubs of America from
1973 to 1976. Mr. Moss graduated from the University of Illinois where he
received a degree in business.
NEIL H. STRICKLAND was employed by Loyalty Group Insurance (which
subsequently merged with America Fore Loyalty Group and is now known as The
Continental Group) as an automobile insurance underwriter. From 1957 to 1961,
Mr. Strickland served as Assistant Supervisor of the Casualty Large Lines
Retrospective Rating Department. From 1961 to 1964, Mr. Strickland served as
Branch Manager of Wolverine Insurance Company, a full service property and
casualty service company, where he had full responsibility for underwriting of
insurance and office administration in the State of Georgia. In 1964, Mr.
Strickland and a non-active partner started Superior Insurance Service, Inc., a
property and casualty wholesale general insurance agency. Mr. Strickland served
as President and was responsible for the underwriting and all other operations
of the agency. In 1967, Mr. Strickland sold his interest in Superior Insurance
Service, Inc. and started Strickland General Agency, Inc., a property and
casualty general insurance agency concentrating on commercial customers. Mr.
Strickland is currently the Senior Operation Executive of Strickland General
Agency, Inc. and devotes most of his time to long-term planning, policy
development and senior administration.
Mr. Strickland is a past President of the Norcross Kiwanis Club and served as
both Vice President and President of the Georgia Surplus Lines Association. He
also served as President and a director of the National Association of
Professional Surplus Lines Offices. Mr. Strickland currently serves as a
director of First Capital Bank, a community bank located in the State of
Georgia. Mr. Strickland attended Georgia State University where he majored in
business administration. He received his L.L.B. degree from Atlanta Law School.
EXECUTIVE COMPENSATION
The Company's executive officers do not receive compensation directly from
the Company for services rendered to the Company. Both of the Company's
officers are also officers of Wells Capital, Inc. (the "Advisor") and its
affiliates and are compensated by these entities, in part, for their services to
the Company. Please see the discussion of the fees paid to the Advisor and its
affiliates contained in the "Certain Relationships and Related Transactions"
section below.
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Each of the executive officers of the Company are also executive officers of
the Advisor, a wholly owned subsidiary of Wells Real Estate Funds, Inc., of
which Mr. Wells is the sole shareholder and the sole director. In addition,
Messrs. Wells and Conlon are executive officers of Wells Investment Securities,
Inc., the dealer manager of the Company's offering of shares of common stock,
which is also a wholly owned subsidiary of Wells Real Estate Funds, Inc. Mr.
Wells is the sole director of the Advisor and Wells Investment Securities, Inc.
Mr. Wells is an executive officer and the sole director of Wells Management
Company, Inc., the property manager for the Company, which is also a wholly
owned subsidiary of Wells Real Estate Funds, Inc.
Administration of the day-to-day operations of the Company is provided by the
Advisor pursuant to the terms of an advisory agreement (the "Advisory
Agreement"). The Advisor also serves as the Company's consultant in connection
with policy decisions to be made by the Company's Board of Directors and renders
such other services as the Board of Directors deems appropriate. The Advisor
also bears the expense of providing executive personnel and office space to the
Company. The Advisor is at all times subject to the supervision of the Board of
Directors of the Company and only has such authority as the Company may delegate
to it as the Company's agent.
The Advisor is entitled to receive acquisition fees equal to 3% of gross
offering proceeds for services in identifying the properties and structuring the
terms of the acquisition and leasing of the properties, as wells as the terms of
any mortgage loans. In addition, the Advisor is entitled to reimbursement of
acquisition expenses equal to .5% of gross offering proceeds. For the year
ended December 31, 1998, the Company paid $1,103,913 in acquisition fees and
expenses to the Advisor.
The Advisor also is entitled to reimbursement of up to 3% of gross offering
proceeds for organization and offering expenses, including legal, accounting,
printing and other accountable offering expenses. For the year ended December
31, 1998, the Company paid $946,210 to the Advisor as reimbursement for
organization and offering expenses expended by the Advisor on behalf of the
Company.
Wells Investment Securities, Inc. is entitled to receive selling commissions
amounting to 7% of gross offering proceeds for services in connection with the
offering of shares, a substantial portion of which has been or will be reallowed
as commissions to other broker-dealers participating in the offering. In
addition, Wells Investment Securities, Inc. is entitled to receive a marketing
support and due diligence expense reimbursement equal to 2.5% of gross offering
proceeds, a portion of which may be reallowed to participating broker-dealers.
For the year ended December 31, 1998, the Company paid to Wells Investment
Securities, Inc. $2,996,334 in commissions and marketing and due diligence
expense reimbursements, of which approximately $2,444,378 was reallowed by Wells
Investment Securities, Inc. to other participating broker-dealers.
Wells Management Company, Inc. receives management and leasing fees equal to
4.5% of the gross rental income from properties managed on behalf of the
Company. For the year
10
<PAGE>
ended December 31, 1998, the Company paid Wells Management Company, Inc. $5,673
in property management and leasing fees.
The Company also reimburses the Advisor for certain administrative and
operating expenses relating to administration of the Company on an on-going
basis. Pursuant to the Advisory Agreement, the Company may not make
reimbursements for administrative and operating expenses in excess of the
greater of 2% of average invested assets or 25% of net income for such year.
For the year ended December 31, 1998, the Company made administrative and
operating expense reimbursements to the Advisor totalling $17,861. The Company
believes that all amounts paid by it to affiliates are fair and reasonable and
are comparable to amounts that would be paid for similar services provided by
unaffiliated third parties.
STOCK OWNERSHIP
The following table shows, as of February 28, 1999, the amount of common
stock of the Company beneficially owned (unless otherwise indicated) by (1) any
person who is known by us to be the beneficial owner of more than 5% of the
outstanding shares of common stock, (2) our directors, (3) our executive
officers, and (4) all of our directors and executive officers as a group.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
SHARES BENEFICIALLY OWNED
- ----------------------------------------------------------------------
NUMBER PERCENT
- ----------------------------------------------------------------------
<S> <C> <C>
NAME AND ADDRESS OF BENEFICIAL OWNER
- ----------------------------------------------------------------------
Leo F. Wells, III (1) 20,000 *
3885 Holcomb Bridge Road
Norcross, GA 30092
- ----------------------------------------------------------------------
Brian M. Conlon (1) 20,022 *
3885 Holcomb Bridge Road
Norcross, GA 30092
- ----------------------------------------------------------------------
John L. Bell -- --
800 Mt. Vernon Highway, Suite 230
Atlanta, GA 30328
- ----------------------------------------------------------------------
Richard W. Carpenter (Dick) -- --
Realmark Holdings Corporation
P.O. Box 421669 (30342)
5570 Glenridge Drive
Atlanta, GA 30342
- ----------------------------------------------------------------------
Bud Carter -- --
The Executive Committee
100 Mount Shasta Lane
Alpharetta, GA 30022-5440
- ----------------------------------------------------------------------
William H. Keogler, Jr. -- --
469 Atlanta Country Club Drive
Marietta, GA 30067
- ----------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
SHARES BENEFICIALLY OWNED
- ----------------------------------------------------------------------
NUMBER PERCENT
- ----------------------------------------------------------------------
<S> <C> <C>
Donald S. Moss -- --
114 Summerour Vale
Duluth, GA 30097
- ----------------------------------------------------------------------
Walter W. Sessoms -- --
5995 River Chase Circle NW
Atlanta, GA 30328
- ----------------------------------------------------------------------
Neil H. Strickland -- --
Strickland General Agency, Inc.
3109 Crossing Park
P.O. Box 129
Norcross, GA 30091
- ----------------------------------------------------------------------
Michigan National Bank Cust 979,872 19.56%
Macomb County Empl Ret Sys #1571702607
Attn: Jackie Sadler
27777 Inkster Road
PO Box 9088
Farmington Hills, MI 48334
- ----------------------------------------------------------------------
All directors and executive officers 20,022 *
as a group/(1)/
- ----------------------------------------------------------------------
</TABLE>
* Less than 1% of the outstanding common stock.
(1) Includes 20,000 Shares owned by the Advisor. The Advisor is a wholly-owned
subsidiary of Wells Real Estate Funds, Inc. Messrs. Wells and Conlon are
both control persons of the Advisor, and Mr. Wells is a control person of
Wells Real Estate Funds, Inc. Mr. Conlon disclaims beneficial ownership of
the Shares owned by the Advisor.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Under U.S. securities laws, directors, certain executive officers and
persons holding more than 10% of our common stock must report their initial
ownership of the common stock and any changes in that ownership to the
Securities and Exchange Commission. The Securities and Exchange Commission has
designated specific due dates for these reports and we must identify in this
proxy statement those persons who did not file these reports when due. Based
solely on our review of copies of the reports filed with the Securities and
Exchange Commission and written representations of our directors and executive
officers, we believe all persons subject to reporting filed the required reports
on time in 1998.
12
<PAGE>
PROPOSALS YOU MAY VOTE ON
PROPOSAL 1. RE-ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
At the Annual Meeting, you and the other shareholders will elect all nine
members of our Board of Directors. Those persons elected will serve as
directors until the 2000 annual meeting or until they are otherwise removed from
the Board. The Board of Directors has nominated the following people for
election:
. Leo F. Wells, III
. Brian M. Conlon
. John L. Bell
. Richard W. Carpenter
. Walter W. Sessoms
. Bud Carter
. William H. Keogler, Jr.
. Donald S. Moss
. Neil H. Strickland
Each of the nominees for director is a current member of the Board of
Directors. Detailed information on each nominee is provided on pages 5 through
9.
If you return a properly executed proxy card, unless you direct them to
withhold your votes, the individuals named as proxies will vote your shares FOR
the election of the nominees listed above. If any nominee becomes unable or
unwilling to stand for election, the Board may reduce its size or designate a
substitute. If a substitute is designated, proxies voting on the original
nominee will be cast for the substituted nominee.
VOTE REQUIRED; RECOMMENDATION
- --------------------------------------------------------------------------------
Each of the nine nominees for re-election as a director will be elected at
the Annual Meeting by a plurality of all the votes cast at the meeting, meaning
that the nine nominees for director who receive the most votes will be elected.
A properly executed proxy marked "WITHHOLD AUTHORITY" with respect to the
election of one or more directors will not be voted with respect to the director
or directors indicated, although it will be counted for purposes of determining
whether there is a quorum. In an uncontested election for directors, the
plurality requirement is not a factor. Your Board of Directors unanimously
recommends a vote FOR each of the nominees for re-election as director.
PROPOSAL 2. APPROVAL OF THE INDEPENDENT DIRECTOR STOCK OPTION PLAN
- --------------------------------------------------------------------------------
On March 17, 1999, the Board of Directors adopted the Wells Real Estate
Investment Trust, Inc. Independent Director Stock Option Plan ("Plan"). The
purpose of the Plan is to foster and promote the long-term financial success of
the Company by providing an incentive to persons not affiliated with the Company
or its affiliates to serve as directors through stock
13
<PAGE>
ownership in the Company. We believe that the Plan will allow us to attract as
independent directors qualified persons with the expertise and business judgment
necessary to effectively operate the Company. The Plan will not grant options
to Messrs. Wells or Conlon who serve as officers of the Company.
At the Annual Meeting, you will be asked to approve the Plan. Approval of
the Plan is required if directors who receive options are to be eligible for the
exemption provided by Rule 16b-3 promulgated under Section 16(b) of the
Securities Exchange Act of 1934. The Plan will not become effective unless it
is approved by the holders of record of a majority of the shares of our common
stock present in person or represented by proxy at the Annual Meeting. Unless
otherwise instructed, it is the intention of the persons named in the proxy to
vote the shares represented thereby in favor of the Plan.
The following is a brief discussion of the material features of the Plan.
If you want to read more about the Plan, please see the copy of the Plan
attached to this proxy statement as Exhibit "A."
SUMMARY OF THE PLAN
- --------------------------------------------------------------------------------
The Plan provides for the initial grant of non-qualified stock options to
purchase 2,500 shares ("Initial Options") to each Independent Director following
such individual's becoming an independent director and approval of the Plan, and
for subsequent grants of options to purchase 1,000 shares ("Subsequent Options")
to each Independent Director then in office on the date of each annual
stockholder's meeting beginning with the annual meeting to be held in Year 2000.
The Initial Options and the Subsequent Options are collectively referred to as
the "Options." However, Options may not be granted at any time when the grant,
along with grants to other Independent Directors, would exceed 10% of our issued
and outstanding shares. The option price for the Initial Options will be $12.00
per share. The option price for the Subsequent Options shall be the greater of
(1) $12.00 per share or (2) the fair market value of the shares as defined in
Section 3.5 of the Plan.
One-fifth of the Initial Options are exercisable beginning on the date of
their grant and an additional one-fifth of the Initial Options will become
exercisable on each anniversary of the date of their grant for a period of four
years until 100% of the shares become exercisable. The Subsequent Options
granted under the Plan will become exercisable on the second anniversary of the
date of their grant.
A total of 100,000 shares have been authorized and reserved for issuance
under the Plan. If the number of outstanding shares is changed into a different
number or kind of our shares or securities through a reorganization or merger in
which the Company is the surviving entity, or through a combination,
recapitalization or otherwise, an appropriate adjustment will be made in the
number and kind of shares that may be issued pursuant to the Options. A
corresponding adjustment to the exercise price of the Options granted prior to
any change will also be made. Any such adjustment, however, will be made
without change in the total payment, if any, applicable to the portion of the
Options not exercised but with a corresponding adjustment in the exercise price
for each share.
14
<PAGE>
Options granted under the Plan shall lapse on the first to occur of (1) the
tenth anniversary of the date of grant, (2) the removal for cause of the
Independent Director as a member of the Board of Directors, or (3) three months
following the date the Independent Director ceases to be a director for any
reason other than death or disability, and may be exercised by payment of cash
or through the delivery of common stock. Options granted under the Plan are
generally exercisable in the case of death or disability for a period of one
year after death or the disabling event. No Option issued may be exercised if
such exercise would jeopardize the Company's status as a REIT under the Internal
Revenue Code.
No Option may be sold, pledged, assigned or transferred by an Independent
Director in any manner other than by will or the laws of descent or
distribution.
Upon the dissolution or liquidation of the Company or upon the
reorganization, merger or consolidation with one or more corporations as a
result of which the Company is not the surviving corporation or upon sale of all
or substantially all of our properties, the Plan will terminate, and any
outstanding Options will terminate and be forfeited. The Board of Directors may
provide in writing in connection with any such transaction for any or all of the
following alternatives: (1) for the assumption by the successor corporation of
the Options granted or the substitution by such corporation for such Options of
options covering the stock of the successor corporation, or a parent or
subsidiary of such corporation, with appropriate adjustments as to the number
and kind of shares and exercise prices; (2) for the continuance of the Plan by
such successor corporation in which event the Plan and the Options will continue
in the manner and under the terms so provided; or (3) for the payment in cash or
shares of common stock in lieu of and in complete satisfaction of such Options.
VOTE REQUIRED; RECOMMENDATION
- --------------------------------------------------------------------------------
The affirmative vote of a majority of the shares of common stock present and
entitled to vote at the Annual Meeting is required for approval. Neither
abstentions nor broker non-votes are counted in determining whether this
proposal has been approved. Your Board of Directors unanimously recommends a
vote FOR this proposal.
PROPOSAL 3. APPROVAL OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has approved the appointment of Arthur Andersen LLP
as our independent auditors for 1999. Arthur Andersen LLP has served as
independent auditors of Well Capital, Inc., the Advisor, and its affiliates
since 1995. They have unrestricted access to the Audit Committee to discuss
audit findings and other financial matters. Representatives of Arthur Andersen
LLP will attend the Annual Meeting to answer appropriate questions. They may
also make a statement.
Audit services provided by Arthur Andersen LLP during 1998 included an audit
of our financial statements, audits of financial statements for certain
properties we acquired during
15
<PAGE>
1998 and a review of our Annual Report and certain other filings with the
Securities and Exchange Commission and certain other governmental agencies.
The Board of Directors believes that Arthur Andersen LLP is knowledgeable
about our operations and accounting practices and is well qualified to act in
the capacity of the Company's principal independent public accountants.
Therefore, the Board of Directors has selected Arthur Andersen LLP to act as the
Company's principal independent public accountants to examine our financial
statements during 1999.
VOTE REQUIRED; RECOMMENDATION
- --------------------------------------------------------------------------------
The affirmative vote of a majority of the shares of common stock present and
entitled to vote at the Annual Meeting is required for approval. Neither
abstentions nor broker non-votes are counted in determining whether this
proposal has been approved. Your Board of Directors unanimously recommends a
vote FOR this proposal.
SHAREHOLDER PROPOSALS
Shareholders interested in presenting a proposal for consideration at our
annual meeting of shareholders in 2000 may do so by following the procedures
prescribed in Rule 14a-8 under the Securities Exchange Act of 1934 and our
Articles of Incorporation and Bylaws. To be eligible for inclusion, shareholder
proposals must be received by Brian M. Conlon, as Secretary of the Company, no
later than December 31, 1999.
OTHER MATTERS
As of the date of this proxy statement, we know of no business that will be
presented for consideration at the Annual Meeting other than the items referred
to above. If any other matter is properly brought before the meeting for action
by shareholders, proxies in the enclosed form returned to us will be voted in
accordance with the recommendation of the Board of Directors or, in the absence
of such a recommendation, in accordance with the judgment of the proxy holder.
16
<PAGE>
PROXY
WELLS REAL ESTATE INVESTMENT TRUST, INC.
ANNUAL MEETING OF SHAREHOLDERS
JUNE 16, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder hereby appoints Leo F. Wells, III or Brian M.
Conlon, or either of them, as proxy and attorney-in-fact, each with the power to
appoint his substitute, on behalf and in the name of the undersigned to
represent the undersigned at the Annual Meeting of Shareholders of WELLS REAL
ESTATE INVESTMENT TRUST, INC. (the "Company") to be held on June 16, 1999, and
at any adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if personally present, as indicated on the
reverse side of this card. The undersigned acknowledges receipt of the Notice
of Annual Meeting of Shareholders, the Proxy Statement and the Annual Report
furnished herewith.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL OF THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. IN THEIR
DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
(CONTINUED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ALL OF THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3
1. ELECTION OF DIRECTORS.
[_] FOR ALL NOMINEES LISTED BELOW
[_] WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: Leo F. Wells, III, Brian M. Conlon, John L. Bell, Richard W.
Carpenter, Walter W. Sessoms, Bud Carter, William H. Keogler,
Jr., Donald S. Moss and Neil H. Strickland
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:
________________________________________________________________________
2. PROPOSAL TO APPROVE THE WELLS REAL ESTATE INVESTMENT TRUST, INC.
INDEPENDENT DIRECTOR STOCK OPTION PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR 1999.
[_] FOR [_] AGAINST [_] ABSTAIN
Date:__________________ _______________________
Signature
Date:__________________ _______________________
Signature
[Insert ID Label]
Please sign exactly as name appears on this proxy. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
EXHIBIT "A"
WELLS REAL ESTATE INVESTMENT TRUST, INC.
INDEPENDENT DIRECTOR STOCK OPTION PLAN
ARTICLE I.
GENERAL
1.1. PURPOSE:
Wells Real Estate Investment Trust, Inc., a Maryland corporation (the
"Company"), hereby adopts this Independent Director Stock Option Plan (the
"Plan"). The purpose of the Plan is to foster and promote the long-term
financial success of the Company by attracting and retaining outstanding non-
employee directors by enabling them to participate in the Company's growth
through the granting of Options (as defined in Article II) which entitle them to
purchase shares of the Company's common stock, par value $.01 per share
("Shares").
1.2. PARTICIPATION:
Only directors of the Company who at the time an Option is granted are
"Non-Employee Directors" as such term is defined in Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended ("Rule 16b-3"), or any similar
rule which may subsequently be in effect (the "Independent Directors") shall
receive an Option under the Plan.
1.3. SHARES SUBJECT TO THE PLAN:
Shares to be issued upon exercise of Options granted under the Plan may be
in whole or in part from authorized but unissued Shares or treasury Shares of
the Company. A maximum of 100,000 Shares (the "Plan Maximum") may be issued for
all purposes under the Plan (subject to adjustment pursuant to Section 3.2), and
the Company shall reserve 100,000 authorized but unissued Shares as of the date
this Plan is established for issuance upon exercise of Options granted under the
Plan. Any Shares reserved for issuance under Options which for any reason are
canceled or terminated without having been exercised shall not be counted in
determining whether the Plan Maximum has been reached. Options for fractional
shares shall not be granted.
1.4. GENDER AND NUMBER:
Except when otherwise indicated by the context, words in the masculine
gender when used in the Plan shall include the feminine gender, the singular
shall include the plural, and the plural shall include the singular.
<PAGE>
ARTICLE II.
STOCK OPTION AWARDS
2.1. AWARD OF STOCK OPTIONS:
(a) Effective on the later of (i) the date on which an Independent
Director becomes a member of the Board of Directors of the Company or (ii) the
date this Plan is adopted by the stockholders of the Company, each Independent
Director who satisfies the conditions set forth in Section 1.2 will
automatically be awarded a stock option (an "Initial Option") under the Plan to
purchase 2,500 Shares (subject to adjustment pursuant to Section 3.2). Effective
on the date of each Annual Meeting of Stockholders of the Company (an "Annual
Meeting"), commencing with the Company's Annual Meeting in 2000, each
Independent Director then in office who satisfies the conditions set forth in
Section 1.2 will automatically be awarded a stock option (a "Subsequent Option"
or the "Subsequent Options," collectively with the "Initial Options" referred to
herein as an "Option" or "Options") to purchase 1,000 Shares (subject to
adjustment pursuant to Section 3.2). The Options are not intended to qualify as
"incentive stock options" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
(b) Notwithstanding any other provision of this Plan, no Options
shall be issued pursuant to Section 2.1(a) to the extent that the issuance of
such Options would (i) enable the Independent Directors as a group to hold more
than 10% of the outstanding Shares if such Options were exercised; (ii) result
in the Company being "closely-held" within the meaning of Code Section 856(h);
(iii) cause the Company to own, directly or constructively, 10% or more of the
ownership interests in a tenant of the property of the Company (or of the
property of one or more partnerships in which the Company is a partner), within
the meaning of Code Section 856(d)(2)(B); or (iv) cause, in the opinion of
counsel to the Company, the Company to fail to qualify (or create, in the
opinion of counsel to the Company, a material risk that the Company would no
longer qualify) as a real estate investment trust within the meaning of Code
Section 856. To the extent that the issuance of Options pursuant to Section
2.1(a) would violate any of these limitations, the number of Shares that may be
purchased under the Options to be issued to each of the Independent Directors
shall be reduced pro rata. To the extent that the number of Shares which may be
purchased under Options issued to an Independent Director is reduced in any year
as a result of the application of these limitations, Options to purchase such
Shares shall be issued to the Independent Director in any subsequent year in
which issuance of such Options, after taking into account the Options to be
issued to the Independent Directors in such subsequent year under Section
2.1(a), would not violate the limitations imposed by this Section 2.1(b). To the
extent that the issuance of an Option is delayed until a subsequent year under
this Section 2.1, the Option shall be treated for all purposes under this Plan
as having been issued in such subsequent year.
2
<PAGE>
2.2. STOCK OPTION CERTIFICATES:
The award of an Option shall be evidenced by a certificate executed by an
officer of the Company.
2.3. OPTION PRICE:
The purchase price of a Share (the "Option Price") under each Initial
Option granted shall be $12.00 per Share, and the Option Price under each
Subsequent Option granted shall be the greater of (i) $12.00 per Share, or (ii)
the Fair Market Value (as defined in Section 3.5) of a Share on the last
business day preceding the date of any Annual Meeting.
2.4. EXERCISE AND TERM OF OPTIONS:
(a) Options may be exercised by the delivery of written notice of exercise
and payment of the aggregate Option Price for the Shares to be purchased to the
Secretary of the Company. The Option Price may be paid in cash (including check,
bank draft or money order) or, unless in the opinion of counsel to the Company
doing so may result in a possible violation of law, by delivery of Shares
already owned by the Independent Director, valued at Fair Market Value on the
date of the exercise. As soon as practicable after receipt of each notice and
full payment, the Company shall deliver to the Independent Director a
certificate or certificates representing the purchased Shares. An Independent
Director shall have none of the rights of a shareholder until a certificate or
certificates for Shares underlying the Option(s) exercised are issued and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such certificate or certificates are issued.
(b) Each certificate for Shares issued upon exercise of an Option, unless
at the time of exercise such Shares are registered with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
shall bear the following legend:
"NO SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THESE SHARES
SHALL BE MADE EXCEPT PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the Act of
the securities represented thereby) shall also bear the above legend unless, in
the opinion of such counsel as shall be reasonably approved by the Company, the
securities represented thereby no longer need be subject to such restrictions.
3
<PAGE>
Each certificate for Shares issued upon exercise of an Option shall also
bear any legends required by the Company's Articles of Incorporation and the
transferability of the certificate and the Shares represented thereby shall be
subject to the restrictions contained in the Company's Articles of
Incorporation.
(c) Options granted hereunder shall lapse on the first to occur of (i) the
tenth (10th) anniversary of the date of grant, (ii) the removal for cause of the
Independent Director as a Director of the Company, or (iii) three (3) months
following the date the Independent Director ceases to be a Director of the
Company for any reason, except death or disability, as provided below. In the
event such Option or Options have not lapsed prior thereto due to occurrence of
one of the foregoing events, an Independent Director's Initial Option shall
(subject to Section 3.1) become exercisable as follows: (i) 20% of the shares on
the date of grant, (ii) an additional 20% of the shares on each anniversary
following the date of grant for a period of four (4) years until 100% of the
shares become exercisable. In the event such Options have not lapsed prior
thereto, an Independent Director's Subsequent Options shall (subject to Section
3.1) become fully exercisable on the second (2nd) anniversary of the date on
which each such Subsequent Option was granted. Options shall continue to be
exercisable until the first to occur of (i) the tenth (10th) anniversary of the
date of grant, (ii) the removal for cause of the Independent Director as a
Director of the Company, or (iii) three (3) months following the date the
Independent Director ceases to be a Director of the Company for any reason,
except death or disability. Notwithstanding the foregoing, Options granted under
this Plan shall continue to be exercisable in the case of death or disability
for a period of one (1) year after death or the disabling event, provided that
the death or disabling event occurs while the person is an Independent Director
and prior to his or her removal for cause, resignation or ceasing to be a
Director of the Company for any other reason and the Option is otherwise
exercisable on the date of the death or disabling event; PROVIDED, HOWEVER, if
the Option is exercised within the first six (6) months after it becomes
exercisable, any Shares issued pursuant to such exercise may not be sold until
the six (6) month anniversary of the date of the grant of the Option. An
Independent Director is removed "for cause" for gross negligence or willful
misconduct in the execution of his duties; or for conviction of, or entry of a
plea of guilty or nolo contendere to, any felony or any act of fraud,
embezzlement, misappropriation, or a crime involving moral turpitude.
(d) Notwithstanding any other terms or provisions herein to the contrary,
no Option may be exercised if, in the opinion of the Company's counsel, such
exercise would jeopardize the Company's status as a real estate investment trust
under the Code.
4
<PAGE>
ARTICLE III.
3.1. NONTRANSFERABILITY; BENEFICIARIES:
No Option awarded under the Plan shall be transferable by the Independent
Director otherwise than by will or, if the Independent Director dies intestate,
by the laws of descent and distribution. All Options exercised during the
Independent Director's lifetime shall be exercised only by the Independent
Director or his legal representative. Any transfer contrary to this Section 3.1
will nullify the Option. Notwithstanding any other provisions of this Plan,
Options granted under this Plan shall continue to be exercisable in the case of
death or disability for a period of one (1) year after death or the disabling
event, provided that the death or disabling event occurs while the person is an
Independent Director and prior to his or her removal for cause, resignation or
ceasing to be an Independent Director for any other reason and the Option is
exercisable on the date of the Independent Director's death or disabling event;
PROVIDED, HOWEVER, if the Option is exercised within the first six (6) months
after it becomes exercisable, any Shares issued on such exercise may not be sold
until the six (6) month anniversary of the date of the grant of the Option. Each
Independent Director may name, from time to time, any beneficiary or
beneficiaries (who may be named contingently or successively) who may exercise
such Options. Each designation will revoke all prior designations by such
Independent Director, must be in writing and will be effective only when filed
with the Executive Vice President of the Company during his lifetime.
3.2. ADJUSTMENT UPON CERTAIN CHANGES:
(a) If the outstanding Shares are (i) increased, decreased, or (ii)
changed into, or exchanged for, a different number or kind of shares or
securities of the Company, through a reorganization or merger in which the
Company is the surviving entity, or through a combination, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
an appropriate adjustment shall be made in the number and kind of Shares that
may be issued pursuant to an Option and in the minimum number of Shares that
must be issued and outstanding prior to the issuance of the Initial Options
pursuant to Section 2.1(a)(iii). A corresponding adjustment to the consideration
payable with respect to all Options granted prior to any such change shall also
be made. Any such adjustment, however, shall be made without change in the total
payment, if any, applicable to the portion of the Option not exercised but with
a corresponding adjustment in the Option Price for each Share.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon sale of all or substantially all of the Company's property, the Plan
shall terminate, and any outstanding Options shall terminate and be forfeited.
However, holders of Options may exercise any Options that are otherwise
exercisable immediately prior to the dissolution, liquidation, consolidation or
merger.
5
<PAGE>
Notwithstanding the foregoing, the Board of Directors may provide in writing in
connection with, or in contemplation of, any such transaction for any or all of
the following alternatives (separately or in combinations): (i) for the
assumption by the successor corporation of the Options theretofore granted or
the substitution by such corporation for such Options of awards covering the
stock of the successor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; (ii) for
the continuance of the Plan by such successor corporation in which event the
Plan and the Options shall continue in the manner and under the terms so
provided; or (iii) for the payment in cash or Shares in lieu of and in complete
satisfaction of such Options.
3.3. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN:
The Board of Directors may suspend or terminate the Plan or any portion
thereof at any time and may amend it from time to time in such respects as the
Board of Directors may deem advisable in order that any Options thereunder shall
conform to or otherwise reflect any change in applicable laws or regulations, or
to permit the Company or the Independent Directors to enjoy the benefits of any
change in applicable laws or regulations, or in any other respect the Board of
Directors may deem to be in the best interests of the Company; provided,
however, that no such amendment shall without stockholder approval to the extent
required by law, or any agreement or the rules of any stock exchange upon which
the Shares may be listed or of any national market system on which Shares may be
traded: (a) except as provided in Section 3.2, materially increase the number of
Shares which may be issued under the Plan; (b) materially modify the
requirements as to eligibility for participation in the Plan; (c) materially
increase the benefits accruing to Independent Directors under the Plan; or (d)
extend the termination date of the Plan. No such amendment, suspension or
termination shall: (x) impair the rights of Independent Directors affected
thereby; or (y) make any change that would disqualify the Plan, or any other
plan of the Company intended to be so qualified, from the exemption provided by
Rule 16b-3.
3.4. TAX WITHHOLDING:
(a) The Company shall have the power to withhold, or require an
Independent Director to remit to the Company, an amount sufficient to satisfy
any withholding or other tax due from the Company with respect to any amount
payable and/or Shares issuable under the Plan, and the Company may defer such
payment or issuance unless indemnified to its satisfaction.
(b) Subject to the consent of the Board of Directors of the Company, due to
the exercise of an Option, an Independent Director may make an irrevocable
election (an "Election") to: (a) have Shares otherwise issuable hereunder
withheld; or (b) tender back to the Company Shares received; or (c) deliver back
to the Company previously acquired Shares of the Company having a Fair Market
Value sufficient to satisfy all or part of the Independent Director's
6
<PAGE>
estimated tax obligations associated with the transaction. Such Election must be
made by an Independent Director prior to the date on which the relevant tax
obligation arises. The Board of Directors of the Company may disapprove of any
Election, may suspend or terminate the right to make Elections, or may provide
with respect to any Option under this Plan that the right to make Elections
shall not apply to such Option.
3.5. DEFINITION OF FAIR MARKET VALUE:
"Fair Market Value" on any date shall mean the average of the Closing
Price (as defined below) per Share for the five (5) consecutive Trading Days (as
defined below) ending on such date. The "Closing Price" on any date shall mean
the last sale price, regular way (as defined below), or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the Shares are
listed or admitted to trading or, if the Shares are not listed or admitted to
trading on any national securities exchange, the last quoted price, or if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by The NASDAQ Stock Market, Inc. ("NASDAQ") or, if NASDAQ is
no longer in use, the principal; automated quotation system that may then be in
use or, if the Shares are not quoted by any such organization, the average of
the closing bid and asked prices as selected by the Board or, if there is no
professional market maker making a market in the Shares, the average of the last
ten (10) sales pursuant to the IPO if the IPO has not concluded, or, if the IPO
has concluded, the average of the last ten (10) purchases by the Company
pursuant to its Share Repurchase Program ("SRP"), then the average of such
lesser number of purchases, or, if the SRP is not then in existence, the price
at which the Company is then offering Shares to the public if the Company is
then engaged in a public offering of Shares, or if the Company is not then
offering Shares to the public, the price pr share at which a Stockholder may
purchase Shares pursuant to the Company's Distribution Reinvestment Program (the
"DRP") if such DRP is then in existence, or if the DRP is not then in existence,
the fair market value of a Share as determined by the Company, in its sole
discretion. "Trading Day" shall mean a day on which the principal national
securities exchange or national automated quotation system on which the Shares
are listed or admitted to trading is open for the transaction of business or, if
the Shares are not listed or admitted to trading on any national securities
exchange or national automated quotation system, shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in the State of
Georgia are authorized or obligated by law or executive order to close.
The term "regular way" means a trade that is effected in a recognized
securities market for clearance and settlement pursuant to the rules and
procedures of the National Securities Clearing Corporation, as opposed to a
trade effect "ex-clearing" for same day or next day settlement.
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3.6. PLAN NOT EXCLUSIVE:
The adoption of the Plan shall not preclude the adoption by appropriate
means of any other stock option or other incentive plan for Independent
Directors or other Directors of the Company.
3.7. LISTING, REGISTRATION AND LEGAL COMPLIANCE:
Each Option shall be subject to the requirement that if at any time
counsel to the Company shall determine that the listing, registration or
qualification thereof or of any Shares or other property subject thereto upon
any securities exchange or under any foreign, federal or state securities or
other law or regulation, or the consent or approval of any governmental body or
the taking of any other action to comply with or otherwise, with respect to any
such law or regulation, is necessary or desirable as a condition to or in
connection with the aware of such Option or the issue, delivery or purchase of
Shares or other property thereunder, no such Option may be exercised or paid in
Shares or other property unless such listing, registration, qualification,
consent, approval or other action shall have been effected or obtained free of
any conditions not acceptable to the Company, and the holder of the award will
supply the Company with such certificates, representations and information as
the Company shall request and shall otherwise cooperate with the Company in
effecting or obtaining such listing, registration, qualification, consent,
approval or other action. The Company may at any time impose any limitations
upon the exercise, delivery or payment of any Option which, in the opinion of
the Board of Directors of the Company, are necessary or desirable in order to
cause the Plan or any other plan of the Company to comply with Rule 16b-3. If
the Company, as part of an offering of securities or otherwise, finds it
desirable because of foreign, federal or state legal or regulatory requirements
to reduce the period during which Options may be exercised, the Board of
Directors of the Company may, without the holders' consent, so reduce such
period on not less than 15 days written notice to the holders thereof.
3.8. RIGHTS OF INDEPENDENT DIRECTORS:
Nothing in the Plan shall confer upon any Independent Director any right
to serve as an Independent Director for any period of time or to continue
serving at his present or any other rate of compensation.
3.9. NO OBLIGATION TO EXERCISE OPTION:
The granting of an Option shall impose no obligation upon the Independent
Director to exercise such Option.
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3.10. REQUIREMENTS OF LAW; GOVERNING LAW:
The granting of Options under this Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. The
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Georgia. The provisions of this Plan shall
be interpreted so as to comply with the conditions or requirements of Rule 16b-
3, unless a contrary interpretation of any such provision is otherwise required
by applicable law.
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