SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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|X| Preliminary Proxy Statement |_| Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UNITED DOMINION REALTY TRUST, INC.
(Name of Registrant as Specified in its Charter)
------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
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previously. Identify the previous filing by registration statement number, or
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<PAGE>
[UNITED DOMINION LOGO]
April , 1998
Fellow Shareholders:
Please accept my personal invitation to attend the Annual
Meeting of Shareholders to be held on Tuesday, May 5, 1998, at 4:00
p.m. at the Omni Richmond Hotel, 12th and Cary Streets, Richmond,
Virginia. The business to be conducted at the meeting is set forth
in the formal notice that follows. At the meeting, management will
review 1997, report on recent financial results and discuss
expectations for the future. The directors and senior management
will be available to answer any questions from the floor. After the
meeting, there will be a reception and you will have the
opportunity to speak informally with the directors, officers and
other management of the Company.
We rely upon all shareholders to execute and return their
proxies promptly in order to avoid costly proxy solicitation.
Therefore, to save the unnecessary expense of further proxy
solicitation, even if you plan to attend the Annual Meeting, please
complete, date and promptly return the enclosed proxy card in the
envelope provided. If you attend the Annual Meeting, as I hope you
do, you may withdraw your proxy at the meeting and vote your shares
in person from the floor. Your vote is important to the Company.
Sincerely,
UNITED DOMINION REALTY TRUST, INC.
/s/ JOHN P. MCCANN
JOHN P. McCANN
Chairman of the Board and President
10 SOUTH SIXTH STREET, RICHMOND, VIRGINIA 23219-3802 / 804-780-2691
<PAGE>
[UNITED DOMINION LOGO]
April , 1998
Notice of Annual Meeting of Shareholders
To Be Held On Tuesday, May 5, 1998
The Annual Meeting of Shareholders (the "Annual Meeting") of United Dominion
Realty Trust, Inc. (the "Company") will be held at the Omni Richmond Hotel,
12th and Cary Streets, Richmond, Virginia, on Tuesday, May 5, 1998 at 4:00
p.m., for the following purposes:
1. To elect twelve directors to serve for the ensuing year.
2. To consider and vote upon amendments of the Company's 1985 Stock Option
Plan (the "Stock Option Plan") which will (i) limit the number of shares
of Common Stock issuable on the exercise of options outstanding at any
time to 8% of the number of shares of Common Stock issued and outstanding
at that time, subject to a maximum aggregate limit of shares that may be
issued upon exercise of options granted under the Stock Option Plan of
10,000,000, and (ii) allow optionees to pay the exercise price of options
in installments.
3. To consider and vote upon amendments of the Articles of Incorporation
(the "Articles") which will (i) increase the number of authorized shares of
Common Stock from 150 million shares to 250 million shares, (ii) create a
new class of equity security ("Classified Common Stock") ranking junior to
the Preferred Stock as to dividends and upon liquidation, issuable in
series, the preferences, limitations and relative rights of which may be
fixed by the Board of Directors, and (iii) conform the voting rights of the
9 1/4% Series A Cumulative Redeemable Preferred Stock (the "Series A
Preferred") and the 8.60% Series B Cumulative Redeemable Preferred Stock
(the "Series B Preferred") to the New York Stock Exchange (the "NYSE")
Listed Company Manual.
4. To transact such other business as may properly come before the meeting.
The holders of shares of Common Stock of record at the close of business on
March 12, 1998 (the "Record Date") are entitled to vote at the Annual Meeting
on all matters described in this Notice. The holders of shares of Series A
Preferred and Series B Preferred at the close of business on the Record Date
are entitled to vote at the Annual Meeting only on the matter described in
paragraph 3(iii). The matters described in paragraph 2 will be voted on as a
unit and the matters described in 3 will be voted on separately. If you are
present at the Annual Meeting, you may vote in person even though you have
previously delivered your proxy.
By Order of the Board of Directors
/s/ KATHERYN E. SURFACE
Katheryn E. Surface
Corporate Secretary
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE>
United Dominion Realty Trust, Inc.
Proxy Statement
April , 1998
General
The enclosed proxy is solicited by the directors of the Company for the
Annual Meeting to be held at the Omni Richmond Hotel, 12th and Cary Streets,
Richmond, Virginia, at 4:00 p.m. on Tuesday, May 5, 1998. The proxy may be
revoked at any time prior to voting thereof by notifying the persons named
therein of intention to revoke or by conduct inconsistent with continued
effectiveness of the proxy, such as delivery of a later dated proxy or
appearance at the Annual Meeting and voting in person the shares to which the
proxy relates. Shares represented by executed proxies will be voted, unless a
different specification is made therein, FOR election as directors of the
persons named therein, FOR approval of the amendments of the Stock Option Plan,
and FOR the amendments of the Articles as each is described herein. This proxy
statement and the enclosed proxy were mailed beginning April , 1998 to
shareholders of record at the close of business on the Record Date. The Company
has mailed each holder of Common Stock of record as of the Record Date an
Annual Report that includes audited financial statements for the year ended
December 31, 1997.
At the close of business on the Record Date, there were 91,886,256 shares
of Common Stock, 4,200,000 shares of Series A Preferred and 6,000,000 shares of
Series B Preferred outstanding and entitled to vote. Each share of Common Stock
has one vote on all matters including those to be acted upon at the Annual
Meeting. Each share of Series A Preferred and each share of Series B Preferred
has one vote on the amendments of the Articles affecting the voting rights of
the holders of the Series A Preferred and the Series B Preferred. The holders
of a majority of the shares of a class or series present at the Annual Meeting
in person or represented by proxies will constitute a quorum of the holders of
such class or series. If a quorum of the holders of the Common Stock is
present, the affirmative vote of (i) a plurality of the shares of Common Stock
voting at the Annual Meeting is required to elect directors, (ii) a majority of
the shares of Common Stock voting at the Annual Meeting is required to approve
amendment of the Stock Option Plan, provided the total number of shares voted
is a majority of the shares outstanding and entitled to vote, and (iii) a
majority of the shares of Common Stock outstanding and entitled to vote is
required to approve the amendments of the Articles increasing the number of
authorized shares of Common Stock and creating the Classified Common Stock. If
quorums of each of the holders of the Common Stock, the holders of the Series A
Preferred and the holders of the Series B Preferred are present, the
affirmative vote of (i) two-thirds of the shares of Series A Preferred
outstanding and entitled to vote, (ii) two-thirds of the shares of Series B
Preferred outstanding and entitled to vote, and (iii) a majority of the shares
of Common Stock outstanding and entitled to vote is required to approve the
amendments of the Articles affecting the voting rights of the Series A
Preferred and the Series B Preferred. If one or more of such quorums is not
present, these amendments will not be submitted to the vote of the
shareholders.
Shareholders who wish to abstain from voting on any matter to be voted on
at the Annual Meeting may do so by specifying that their vote on such matter be
withheld in the manner provided in the enclosed proxy, and the shares otherwise
votable by such shareholders will not be included in determining the number of
shares voted on such matter. The Company will comply with instructions in a
proxy executed by a broker or other nominee shareholder that less than all of
the shares of which such shareholder is the holder of record on the Record Date
are to be voted on a particular matter. All such shares which are not voted
("broker non-votes") will be treated as shares as to which vote has been
withheld.
1
<PAGE>
The mailing address of the Company is 10 South Sixth Street, Richmond,
Virginia 23219-3802. Notices of revocation of proxies should be sent to that
address.
The Company will provide shareholders, without charge, a copy of the
Company's annual report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1997, including financial statements
and schedules thereto, on written request to the mailing address set forth
above, Attention: Investor Services.
Ownership of Equity Securities
"Beneficial ownership" as used herein has been determined in accordance
with the rules and regulations of the Securities and Exchange Commission (the
"Commission") and is not to be construed as an admission that any of such
shares are in fact beneficially owned by any person. As of the Record Date,
there are no shareholders known to the Company who own beneficially 5% or more
of the outstanding shares of Common Stock, Series A Preferred or Series B
Preferred.
Beneficial ownership of shares of Common Stock as of the Record Date by
each director, each Named Executive and all directors and executive officers as
a group of the Company and nominees for election at the Annual Meeting,
including shares deemed owned as a consequence of ownership of stock options
exercisable within 60 days, is indicated in the table below. Except as
otherwise indicated in the footnotes, each person named in the table and
included in the director/officer group has sole voting and investment powers as
to such shares, or shares such powers with his or her spouse and minor
children, if any. No person named in the table or included in the
director/officer group owns any shares of Series A Preferred or Series B
Preferred.
2
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership (1)
-----------------------------------------
Shares for which
Shares Beneficial Ownership Total
Name of Beneficially can be Acquired Beneficial Percent
Beneficial Owner Owned (1) within 60 Days (2) Ownership of Class
- --------------------------------------------------- ---------------- ---------------------- ------------ ---------
<S> <C> <C> <C> <C>
Jeff C. Bane ...................................... 105,739(3) 10,000 115,739 .1
R. Toms Dalton, Jr ................................ 37,000 8,000 45,000 .1
James Dolphin ..................................... 158,354 113,500(7) 271,854 .3
David L. Johnston(4) .............................. 43,163 30,000(7) 73,163 .1
Jon A. Grove(5) ................................... -- -- -- --
Barry M. Kornblau ................................. 267,335 73,221(7) 340,556 .4
John C. Lanford ................................... 12,323 10,000 22,323 --
John P. McCann .................................... 383,400(3) 348,124(7) 731,524 .8
H. Franklin Minor ................................. 59,700 10,000 69,700 .1
Lynne B. Sagalyn .................................. 1,000 9,000 10,000 --
Mark J. Sandler ................................... 55,280 2,000 57,280 .1
Robert W. Scharar ................................. 33,172 2,000 35,172 --
John S. Schneider ................................. 433,937 30,000(7) 463,937 .5
Robert F. Sherman(6) .............................. 169,979 30,000(6) 199,979 .2
C. Harmon Williams, Jr ............................ 99,994(3) 10,000 109,994 .1
All directors and Named Executives
as a group (15 persons) ........................ 1,785,376 685,845(7) 2,471,221 2.7
All directors and executive officers as a group (20
persons) ....................................... 1,998,232 839,406 2,837,638 3.1
All directors, executive officers
and officers as a group
(59 persons) ................................... 2,334,792 1,203,353 3,538,145 3.9
</TABLE>
- ----------
(1) Includes shares owned pursuant to the Officers' Stock Purchase and Loan
Plan
(2) Assumes exercise in full of all options exercisable within 60 days.
(3) Includes, in the case of Messrs. McCann, Bane and Williams and all
directors and officers as a group, 37,500 shares owned by Planned Property
Realty Corp., of which Mr. McCann is President and 50% shareholder and of
which Messrs. Bane and Williams are each 25% shareholders.
(4) Effective January 31, 1998, Mr. Johnston was no longer employed by the
Company.
(5) Under the terms of the Company's agreement (the "ASR Merger Agreement")
for the acquisition of ASR Investments Corporation ("ASR"), Mr. Grove, the
former Chairman of the Board, President and Chief Executive Officer of
ASR, was appointed to the Board of Directors at the closing of the
acquisition on March 27, 1998. Shares of Common Stock beneficially owned
by Mr. Grove as reported in the table do not include 197,036 shares of
Common Stock issuable to Mr. Grove pursuant to the ASR Merger Agreement in
exchange for common stock of ASR ("ASR Common Stock") beneficially owned
by him, or 170,911 shares of Common Stock issuable on exercise of ASR
options to purchase ASR Common Stock exercisable within 60 days, which
will be assumed by the Company as options to purchase Common Stock of the
Company pursuant to the ASR Merger Agreement.
(6) Effective December 31, 1997, Mr. Sherman was no longer employed by the
Company.
(7) Does not include 183,224 shares, 57,488 shares, 226,076 shares, 120,000
shares and 995,205 shares issuable upon exercise of options granted to
Messrs. Dolphin, Kornblau, McCann and Schneider and all directors and
executive officers as a group, respectively, which are not exercisable
within 60 days.
3
<PAGE>
Election of Directors
At the Annual Meeting twelve directors are to be elected, each to hold
office until the next Annual Meeting of Shareholders and until his or her
successor is duly elected and qualified, except in the event of death,
resignation or removal. Unless otherwise specified, proxies solicited hereby
will be voted FOR election of the nominees listed below, except that in the
event any of those named should not continue to be available for election,
discretionary authority may be exercised to vote for a substitute. No
circumstances are presently known that would render any nominee named herein
unavailable. All of the nominees, except Mr. Grove, are now members of the
Board of Directors and were elected at the 1997 Annual Meeting of Shareholders.
Mr. Grove was appointed to the Board at the closing of the acquisition of ASR
as required by the ASR Merger Agreement, which also requires that Mr. Grove be
nominated for reelection at the Annual Meeting of Shareholders in 1999. John C.
Lanford, a director of the Company since 1973, will retire from the Board at
the Annual Meeting.
The nominees, their ages, the year of election of each to the Board, their
principal occupations during the past five years or more, and directorships of
each in other companies, are as follows:
Jeff C. Bane, 68, is President of Blake & Bane Inc., Richmond, Virginia,
real estate brokers. He is a director of F&M Bank, Richmond, Virginia. He was
first elected to the Board in 1972.
R. Toms Dalton, Jr., 65, is a partner with Allen & Carwile, Waynesboro,
Virginia, attorneys. He is a director of First Virginia Bank of Augusta,
Waynesboro, Virginia. He was first elected to the Board in 1973.
James Dolphin, 48, is Executive Vice President and Chief Financial Officer
of the Company. He was first elected to the Board in 1988.
Jon A. Grove, 54, was the Chairman of the Board, President and Chief
Executive Officer of ASR since its organization in 1987 until its acquisition
by the Company. He is also a director of American Southwest Holdings, Inc., in
Phoenix, Arizona.
Barry M. Kornblau, 48, is Senior Vice President of the Company and was the
Director of Apartments/Eastern Division until April 18, 1997. He is also a
director of Community Bankshares, of Richmond, Virginia. He was first elected to
the Board in 1993.
John P. McCann, 53, is Chairman of the Board, President, and Chief
Executive Officer of the Company. He is a director of Crestar Bank, Capitol
Region, Richmond, Virginia, LandAmerica Financial Group, Inc. (formerly Lawyers
Title Insurance Corporation), Richmond, Virginia, and Storage USA, Inc.,
Memphis, Tennessee. He was first elected to the Board in 1978.
H. Franklin Minor, 64, is an attorney-at-law and real estate broker in
Richmond, Virginia. He was first elected to the Board in 1974.
Lynne B. Sagalyn, Ph.D., 50, has been professor and the coordinator of the
Real Estate Program at the Columbia University Graduate School of Business
since 1992. From 1991 to 1992, she was a visiting professor at Columbia. From
1987 to 1991, she was an associate professor of Planning and Real Estate
Development at Massachusetts Institute of Technology. Dr. Sagalyn is a trustee
of Capital Trust, a public real estate company that specializes in real estate
lending, and a director of The Retail Initiative for a Competitive Inner City.
She was first elected to the Board in 1996.
Mark J. Sandler, 55, was a senior managing director of Bear, Stearns &
Co., Inc., an investment banking firm, in charge of its real estate operations
from prior to 1987 until his retirement in October 1988. Since that time, Mr.
Sandler has managed his personal and family investments. Mr. Sandler, a
director of South West Property Trust Inc. ("South West") at the time it was
acquired by the Company, was first elected to the Board of the
4
<PAGE>
Company at the special meeting of shareholders of the Company held December 10,
1996 (the "1996 Special Meeting") at which the acquisition of South West was
approved
Robert W. Scharar, 49, is President and a director of FCA Corp., a
registered investment advisor which he founded in 1983. He is also president
and a director of FCA Investment Company, a small business investment company,
and serves as a trustee of First Commonwealth Mortgage Trust and of United
Investors Realty Trust, both of which are REITs. Mr. Scharar is also past
president of the American Association of Attorneys -- CPAs. Mr. Scharar, a
director of South West at the time it was acquired by the Company, was first
elected to the Board of the Company at the 1996 Special Meeting.
John S. Schneider, 59, is the Chief Operations Officer and an Executive
Vice President of the Company and the Vice Chairman of the Board. He was the
former Chief Executive Officer and Chairman of the Board of South West or a
predecessor from 1973 through 1996. Mr. Schneider graduated from the Harvard
Business School in 1967 and was employed by the investment banking firm of
Donaldson, Lufkin and Jenrette until 1973, when he cofounded a predecessor firm
to South West. Mr. Schneider was first elected to the Board at the 1996 Special
Meeting.
C. Harmon Williams, Jr., 66, is a real estate broker in Charlottesville,
Virginia. He was first elected to the Board in 1972 and served as Chairman of
the Board from 1977 until 1996.
Committees of the Board
The Board has established a Compensation Committee and an Audit Committee
as its standing committees. The Compensation Committee sets directors' fees,
the compensation of the President and approves the compensation of the
Company's Executive and Senior Vice Presidents, who are in charge of the its
business divisions and/or functions. It also administers the contributions and
awards, if any, under employee benefit plans and management incentive programs,
and other management compensation, if any. Additionally, the Compensation
Committee approves the calculation of incentive/bonus compensation under the
employment agreements described in "Employment Agreements" below. The members
of the Compensation Committee during 1997 are identified below under
"Compensation Committee Interlocks and Insider Participation." The Audit
Committee reviews the financial reporting practices of the Company and the
external audit function. Messrs. Bane, Minor and Scharar and Dr. Sagalyn were
the members of the Audit Committee during 1997.
During 1997, the Board held 12 meetings (including 3 special meetings),
the Compensation Committee held 4 meetings and the Audit Committee held 5
meetings. Each director attended at least 75% of the meetings of the Board and
of the committee to which he or she was assigned.
Compensation Committee Interlocks and Insider Participation
During 1997, the Compensation Committee consisted of Messrs. Dalton,
Lanford, Sandler and Williams. As described under "Compensation Committee
Report on Executive Compensation," Mr. McCann recommends the base and incentive
compensation of the Company's other executive officers.
Indebtedness of Management to the Company
The directors and executive officers of the Company listed in the table
below are indebted to the Company for Common Stock purchased pursuant to the
Company's 1991 Stock Purchase and Loan Plan (the "Stock Purchase Plan"). The
table indicates the largest amount of the indebtedness outstanding since the
beginning of fiscal year 1997 and the amount outstanding at March 31, 1998. As
provided in the Stock Purchase Plan, such indebtedness bears interest at 7% per
annum.
5
<PAGE>
<TABLE>
<CAPTION>
Maximum Indebtedness Maximum
Since January 1, Indebtedness
Name 1997 at March 31, 1998
- -------------------------------------------------- --------------------- ------------------
<S> <C> <C>
John P. McCann ................................ $1,696,301 $1,657,011
John S. Schneider. ............................ 157,304 155,519
James Dolphin. ................................ 858,981 841,045
Richard A. Giannotti .......................... 613,993 601,460
Katheryn E. Surface ........................... 343,220 338,199
---------- ----------
Robert F. Sherman (1) ......................... 157,304 --
David L. Johnston (2) ......................... -- --
Curtis W. Carter .............................. 527,125 515,748
Robert L. Landis .............................. 187,876 185,767
Walter J. Lamperski ........................... 180,113 177,727
All directors and executive officers as a group
(20 persons) ................................ 5,392,332 5,123,026
---------- ----------
</TABLE>
- ----------
(1) Effective December 31, 1997, Mr. Sherman was no longer employed by the
Company.
(2) Effective January 31, 1998, Mr. Johnston was no longer employed by the
Company.
Compensation of Directors
For 1997, directors were paid retainer fees of $13,500 plus $1,000 for
each regular meeting attended. During 1997, the directors as a group (other
than Messrs. McCann, Dolphin, Kornblau and Schneider, who received no
additional compensation for serving as directors) received fees of $183,313.
Each independent director also receives an automatic annual grant of 2,000
stock options. Also, any independent director retiring from the Board after at
least twenty years of service will receive $5,000 per year for the five years
following retirement.
6
<PAGE>
Compensation of Executive Officers
The following table presents information relating to total compensation
during the fiscal years ended December 31, 1997, 1996 and 1995, of the chief
executive officer and the persons who were the four executive officers serving
at the end of fiscal 1997 who were most highly compensated for that year or who
served as executive officers during 1997 and would have been among the four
most highly compensated executive officers serving at 1997 year end if they
were then serving as executive officers (collectively, the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------
Awards Payouts
Other Restrictedecurities --------- All
Name and Base Annual Stock Underlying LTIP Other
Principal Position Year Salary Bonus Compensation Awards Options Payouts Compensation (1)
- --------------------------- ------ ------------ ------------ -------------- -------- ------------ --------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John P. McCann 1997 $ 363,000 $ 119,400 -- -- 160,000 -- $ 805
President and Chief 1996 335,000 53,626 -- -- 65,000 -- 2,590
Executive Officer 1995 320,000 83,904 -- -- 60,000 -- 2,887
John S. Schneider (2) 1997 $ 258,300 $ 107,100 -- -- 150,000 -- $ 805
Executive Vice President 1996 -- -- -- -- -- -- --
and Chief Operating 1995 -- -- -- -- -- -- --
Officer
James Dolphin 1997 $ 223,300 $ 68,000 -- -- 120,000 -- $ 805
Executive Vice President 1996 186,000 35,000 -- -- 32,500 -- 2,590
and Chief Financial 1995 176,000 46,147 -- -- 30,000 -- 2,887
Officer
Barry M. Kornblau (3) 1997 $ 208,300 $ 41,200 -- -- -- -- $ 805
Senior Vice President 1996 186,000 19,850 -- -- 32,500 -- 2,590
1995 176,000 46,147 -- -- 30,000 -- 2,887
Robert F. Sherman (2) (4) 1997 $ 194,300 $ 89,090 -- -- 30,000 -- $ 805
Senior Vice President and 1996 -- -- -- -- -- -- --
Director of Apartment 1995 -- -- -- -- -- -- --
Operations/West
David L. Johnston (2) (5) 1997 $ 194,300 $ 54,100 -- -- 30,000 -- $ 805
Senior Vice President 1996 -- -- -- -- -- -- --
and Director of 1995 -- -- -- -- -- -- --
Acquisitions/West
</TABLE>
- ----------
(1) Represents contributions to the Profit Sharing Plan for each of the Named
Executives. Messrs. McCann and Dolphin were, until June 30, 1997, trustees
of, and are participants in, the Profit Sharing Plan.
(2) Messrs. Schneider, Johnston and Sherman became executive officers of the
Company at the effective time of the acquisition of South West on December
31, 1996.
(3) Mr. Kornblau resigned his position as Director of Operations/East on April
18, 1997, and was not an executive officer at 1997 year end.
(4) Effective December 31, 1997, Mr. Sherman was no longer employed by the
Company.
(5) Effective January 31, 1998, Mr. Johntson was no longer employed by the
Company.
7
<PAGE>
Employment Agreements
In October, 1982, the Company entered into employment agreements with
Messrs. McCann and Dolphin. The employment agreements, which expire annually on
December 31 but renew automatically for successive one year periods unless
sooner terminated and are on substantially similar terms except for base
compensation terms, provide annual base salaries for the executives, subject to
increase at the discretion of the Board of Directors. The annual base salaries
for the employees for 1997 are disclosed above in the Summary Compensation
Table. The agreements also provide for annual incentive/bonus compensation, as
described in the "Compensation Committee Report on Executive Compensation"
which was adopted by the Compensation Committee of the Board of Directors for
1997 compensation. Either the Company or the employee may terminate the
agreement by 90 days' notice or in the event that the Company is sold, merged
or otherwise liquidated. The agreements provide that the employee is entitled
to severance pay equal to his then current annual base salary plus a pro-rata
portion of any incentive/bonus compensation payable for that year.
In December of 1996, the Company entered into an employment agreement with
Mr. Schneider. The employment agreement expires annually on December 31 but
renews automatically for successive one year periods unless sooner terminated,
and provides annual base salary, subject to increase at the discretion of the
Board of Directors. Mr. Schneider's base salary for 1997 is disclosed above in
the Summary Compensation Table. The agreement also provides for the payment of
an incentive/bonus based upon individual and corporate performance objectives
and for participation in the Stock Purchase Plan and the Stock Option Plan.
Either the Company or the employee may terminate the agreement if the Company
is merged, sold or consolidated and the Company is not the survivor, the
Company is otherwise liquidated or there is a change of control. The agreements
may also be terminated (i) by the employee by the giving of 90 days prior
notice, or (ii) by the Company prior to October 1 of each year, with the
effective date being December 31 of such year. Mr. Schneider is entitled to
severance compensation equal to (i) 13 weeks of his then current annual base
salary if the termination is prior to January 1, 2000, which increases to 26
weeks on January 1, 2000, and 52 weeks on January 1, 2007, plus (ii) a pro rata
portion of incentive/bonus compensation. The Company may terminate the
agreement at any time for cause, in which event the employee is not entitled to
any severance compensation.
Stock Options
The following tables present information concerning stock options granted
to and exercised by the chief executive officer and the other Named Executives
of the Company during 1997. The Company does not grant stock appreciation
rights.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year (Note 1)
----------------------------------------------------------------------
Potential Realizable
Individual Grants Value at Assumed Annual
Number Of Securities Percent of Total Rates of Share Price
Underlying Options/SAR's Granted Appreciation for Option
Options/SAR's to Employees in Exercise or Term
Granted (#) Fiscal Year Base Price Expiration ---------------------------
Name (1) (2) ($/Share) Date 5% ($) 10% ($)
- ------------------- ---------------------- ---------------------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John P. McCann 160,000 8.69% $ 14.250 12/9/07 $1,619,574 $4,225,106
John S. Schneider 120,000 6.52% $ 14.250 12/9/07 $1,214,680 $3,168,830
John S. Schneider 30,000 1.63% $ 15.375 1/2/07 $ 327,644 $ 854,750
James Dolphin 120,000 6.52% $ 14.250 12/9/07 $1,214,680 $3,168,830
Barry M. Kornblau -- -- -- -- $ -- $ --
David L. Johnston 30,000 1.63% $ 15.375 1/2/07 $ 327,644 $ 854,750
Robert F. Sherman 30,000 1.63% $ 15.375 1/2/07 $ 327,644 $ 854,750
</TABLE>
8
<PAGE>
- ----------
(1) Stock options granted to employees on December 9, 1997, were granted at an
exercise price of $14.25, which was the fair market value as of the date
of the grant. One-third of the options vest as of December 31, 1998 and
two-thirds vest as of December 31, 1999. The options may not be exercised
until, at the earliest, January 1, 1999, and expire on December 9, 2007
(the tenth anniversary of the date of grant).
(2) A total of 1,841,000 employee stock options were granted during 1997.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised Options In-the-Money Options
Acquired Value At Fiscal Year End (1) at Fiscal Year End (2)
Name On Exercise Realized (2) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------- ------------- -------------- -------------------------------- --------------------------
<S> <C> <C> <C> <C>
John P. McCann 14,244 $95,237 289,459/290,633 $463,392/$23,317
John S. Schneider -- -- 0 /150,000 $ 0/$(80,625)
James Dolphin 13,444 $96,629 78,909/217,815 $167,081/$30,219
Barry M. Kornblau 4,603 $12,969 38,638/92,071 $4,182/$(12,341)
David L.Johnston -- -- 0/30,000 $ 0/$(43,125)
Robert F. Sherman -- -- 0/30,000 $ 0/$(43,125)
</TABLE>
- ----------
(1) Includes unvested options for 160,000 shares, 120,000 shares, 120,000
shares, granted to Messrs. McCann, Schneider and Dolphin, respectively.
(2) These values are calculated based on the difference between the exercise
price(s) and the fair market value of the stock, as determined by reference
to the closing sale prices on the NYSE as of the exercise date(s) or
December 31, 1997, as appropriate.
Compensation Committee Report on Executive Compensation
The Board has delegated to the Compensation Committee responsibility for
developing and applying programs for compensating certain of the Company's
executive officers. During 1997, the Compensation Committee consisted of
Messrs. Dalton, Lanford, Sandler and Williams. In addition, as described below,
John P. McCann, President of the Company, participates by recommending the
compensation of the other executive officers.
The Compensation Committee attempts to design, develop and apply executive
compensation programs that will (i) provide appropriate incentives for the
executives while aligning their interests with those of the Company's
shareholders, (ii) attract and retain management talent, and (iii) to focus key
associates on business objectives and critical issues. The Company's executive
compensation consists of base salary, annual incentives and long term
incentives. Each of the elements and the process is described below.
Base Salary
The President consults with the Compensation Committee as to the amount of
his proposed base salary and that of the other executive officers. After
consulting with the President, and considering the factors discussed below, the
Compensation Committee sets the base salaries. Factors considered by the
Compensation Committee in setting base salaries include salaries paid for
similar positions within the real estate and REIT industry (with emphasis on
the multi-family sector) as published in industry statistical surveys, any
planned change of responsibility for the forthcoming year, and proposed base
salary relative to that of the other executive officers, with no one factor
being given more weight than any of the other factors. In setting the salaries
for the executive
9
<PAGE>
officers that joined the Company after the South West Merger, the base salaries
of the executive officers while with South West were also considered.
Annual Incentives
In October 1996, the Company engaged CEL & Associates, Inc. (the
"Consultant") to assist with creating an annual incentive compensation
structure for key executives with varying responsibilities. The Consultant,
working with the President, assisted in establishing performance measures and
targets for each of the key executives and weighting among departmental and
personal performance objectives depending upon the particular executive's
responsiblities. The targets were used to focus the executive's attention on
key business issues and objectives. The structure was used for the first time
in 1997.
The most important factor, to a maximum of 50% of annual incentive
compensation for each the top three Named Executives, was growth in funds from
operations ("FFO"). The actual amount of this component of the annual incentive
was a function of the rate of FFO per share growth, with none of the executives
receiving this component of annual incentive compensation if FFO growth were
below 4% per share. The remaining targets were focused on individual and
departmental goals for each executive, such as strategic Company objectives and
merger integration for the President, financing objectives for Mr. Dolphin,
property performance growth objectives for Messrs. Schneider and Sherman, and
acquisition and development goals for Mr. Johnston.
Long Term Incentives
The Compensation Committee also awards options and approves loans under
the stock purchase and loan plan. Participants in these plans are all key
employees in addition to the executive officers. These plans are the principal
long term compensation vehicles, and are designed to promote the alignment of
key employeess and the interests of the shareholders. In selecting recipients
and the size of their awards, the Compensation Committee considers their
positions with the Company, their long term potential and prior awards. The
Compensation Committee granted options in 1997 that vest one-third at the end
of 1998 and two-thirds at the end of 1999. The Committee believes that
long-term incentive compensation should vest over a multi-year period to help
bind key associates to the Company. Except in special situations such as new
associates and for promotions, the Committee does not plan to grant additional
options to executive officers in 1998.
Compensation Committee
R. Toms Dalton, Jr. John C. Lanford C. Harmon Williams, Jr.
Mark J. Sandler
President
John P. McCann
10
<PAGE>
Proposed Amendments of Stock Option Plan
The Board has adopted and recommends that the shareholders approve
amendments of the Stock Option Plan, which will (i) limit the number of shares
of Common Stock issuable on exercise of options outstanding at any time to 8%
of the number of shares of Common Stock issued and outstanding at that time,
subject to a maximum aggregate number of shares that may be issued pursuant to
the Plan of 10,000,000, and (ii) authorize the Company to permit any optionee
who is employed by the Company at the date of exercise of options to pay the
option price in installments.
If the amendments are approved by the shareholders, based on the number of
shares of Common Stock outstanding at , 1998 ( shares), the
maximum number of optionable shares will be (8% of the number of
shares outstanding, less the total number of shares currently issuable upon
exercise of outstanding options). If the amendments are approved, any future
issuance of Common Stock for any purpose, including but not limited to
issuances upon exercise of options, will automatically increase the number of
shares available for options. In determining the number of shares of Common
Stock outstanding, no adjustment will be made for reacquisitions of issued
shares by the Company.
In 1996, the shareholders approved an increase in the number of shares of
Common Stock covered by the Stock Option Plan from 2,400,000 to 4,200,000.
Giving effect to that increase, the number of shares of Common Stock available
for options under the Stock Option Plan, was 2,400,000. Since 1996, the net
effect of option grants, exercises and terminations has been to reduce the
number of shares available for future options to only 180,040. Moreover, the
number of potential optionees has increased from 1,100 in 1996 to , and
it is likely to increase further as the Company adds multiple properties to its
own portfolio through business combinations and portfolio acquisitions, and
potential optionees to its work force. The Board continues to believe that the
Stock Option Plan is an effective incentive and long term compensation vehicle
for key employees which is critical in motivating and retaining key employees
by aligning their interests with those of the shareholders. Increasing the
number of shares available for options under the Stock Option Plan and
providing for automatic increases in the future is expected to assure an
adequate reservation for annual grant of options to key employees until the
Stock Option Plan terminates in 2002, and to make additional shareholder
solicitations unnecessary.
If the amendments are approved, and if the Company permits installment
payment, it will lend the optionee an amount not exceeding 90% of the option
price. The loan will be evidenced by the optionee's promissory note payable in
five equal annual installments or in equal quarterly installments over a period
of five years, depending on the maximum loan value of the shares purchased. The
promissory note will bear interest at the minimum rate necessary to avoid
imputed interest or original issue discount under the Internal Revenue Code
(currently %), and will be secured by a pledge of the purchased shares. So
long as there is no default under the loan, the optionee may receive dividends
on and vote the pledged shares.
The Board believes that permitting installment purchases of shares on
exercise of options will facilitate option exercises and thus increase the
attractiveness of options granted under the Stock Option Plan as items of
incentive and long term compensation.
The amendments will be voted on as a unit.
11
<PAGE>
Summary of Stock Option Plan
A summary of the material provisions of the Stock Option Plan as currently
in effect and certain additional information relating to options granted under
the Stock Option Plan are set forth below.
General
The Stock Option Plan reserves a total of 4,200,000 shares of Common Stock
(subject to adjustment pursuant to customary antidilution provisions) for
issuance upon exercise of options granted under the Stock Option Plan. The
Company has issued 571,239 shares upon exercise of options previously granted
and options for 3,448,721 shares (net of terminations of options for 189,140
shares reallocated to the Stock Option Plan as providede therein) are
outstanding, leaving 180,040 shares currently available for options. The market
value of the shares subject to outstanding options and reserved for future
options under the Stock Option Plan was $ based on the closing sale
price of the Common Stock on the NYSE on March , 1998. Unless sooner
terminated by the Board, the Stock Option Plan will terminate on December 31,
2002.
The Stock Option Plan is intended to assist the Company in recruiting and
retaining directors and key employees with ability and initiative by enabling
directors and employees who contribute significantly to the Company to
participate in its future success and to associate their interests with those
of the Company. The Compensation Committee designates employees, including
employees who are directors, to whom options are to be granted. Non-employee
directors are granted options upon first being elected to the Board and
annually as described under "Options -- Non-employee Directors." Options
granted under the Stock Option Plan may be incentive stock options ("ISOs")
qualifying for favorable federal income tax treatment under Section 422A of the
Internal Revenue Code of 1981, as amended, or nonqualified stock options
("NQOs"), as determined by the Compensation Committee. Only NQOs may be granted
to directors who are not also employees. All options granted under the Stock
Option Plan are evidenced by agreements ("Option Agreements") between the
Company and the Stock Option Plan participants that specify the terms and
conditions of the options consistent with the provisions of the Stock Option
Plan.
Administration
The Compensation Committee administers the Stock Option Plan. Members of
the Compensation Committee, like other members of the Board who are not
employees, will be granted options as described under "Options -- Non-employee
Directors."
Options
Options granted under the Stock Option Plan are not transferable except at
death. Options may be exercised in accordance with the Stock Option Plan and
such other terms and conditions not prescribed by the Stock Option Plan as the
Compensation Committee may prescribe in Option Agreements. No option will be
exercisable after 10 years from the date the option was granted.
Employees. Any employee of the Company, including any executive officer of
the Company and any employee who is a director, who, in the judgment of the
Compensation Committee, has contributed or can be expected to contribute to the
profits or growth of the Company, may be granted one or more options under the
Stock Option Plan. The Compensation Committee determines the number of shares
subject to each option granted by it.
The price per share payable upon exercise of any option granted to an
employee under the Stock Option Plan will be determined by the Compensation
Committee but in the case of an ISO will not be less than the "Fair Market
Value" of the Common Stock on the date of grant, which is the closing sale
price of the Common
12
<PAGE>
Stock on the NYSE on such date, or, if the NYSE shall be closed on such date,
or if the Common Stock is not traded on such date, the next preceding date on
which the NYSE shall have been open and the Common Stock traded thereon. If an
ISO is granted to an employee who owns, directly or by attribution, more than
ten percent of the total combined voting power of all classes of stock of the
Company, the option price per share may not be less than 110% of the per share
fair market value of the Common Stock on the date of grant.
An employee may not be granted ISOs that first become exercisable in a
calendar year for Common Stock with a fair market value (determined as of the
date of grant) that exceeds $100,000.
An employee exercising an option may pay the purchase price in cash or a
cash equivalent acceptable to the Compensation Committee. If the Option
Agreement so provides, payment of all or part of the option price also may be
made by surrendering shares of Common Stock to the Company provided the shares
surrendered have a fair market value that is not less than the option price or
part thereof in payment of which such shares are surrendered.
Non-Employee Directors. Each director who is not an employee of the
Company will be granted options to purchase 2,000 shares of Common Stock on
each date each director is elected or re-elected to the Board. The option price
will in each case be the "Fair Market Value," as defined in the Stock Option
Plan, of the Common Stock on the date of grant, and will be payable only in
cash. Such options will be exercisable for a period of ten years from the date
of grant (subject to earlier termination as described below) and will be
immediately exercisable in whole or from time to time in part.
In addition, on the date of his or her first being elected to the Board, a
non-employee director will be granted options to purchase 5,000 shares of
Common Stock at the Fair Market Value of the Common Stock on the date of grant.
The option price of such options will be payable only in cash; such options
will be exercisable for a period of five years from the date of grant (subject
to earlier termination as described below) and will be immediately exercisable
in whole or from time to time in part. If a director is first elected to the
Board as a result of an acquisition of assets, by merger or otherwise, options
will not be granted upon first being elected but options to purchase 2,000
shares of Common Stock will be granted upon re-election to the Board.
Options granted to a non-employee director will terminate 30 days after
the director resigns or is removed from the Board, or 30 days after the annual
meeting of shareholders at which the director's term expires, if the director
does not stand or is not nominated for re-election or retires at that meeting.
Options held by directors leaving the Board after at least ten years of service
on the Board will terminate upon the earlier to occur of (i) the stated
termination date of the option, or (ii) the second anniversary of termination
of service on the Board
Amendment of the Stock Option Plan
The Board may amend the Stock Option Plan in such respects as it deems
advisable, but the shareholders must approve any amendment that would (i)
increase the aggregate number of shares that may be issued under options, (ii)
change the class of persons eligible to participate in the Stock Option Plan,
or (iii) otherwise materially increase the benefits accruing to participants in
the Stock Option Plan. In addition, without a participant's consent, no
amendment may adversely affect the rights of such participant under any option
outstanding at the time the amendment is made.
Federal Income Tax Consequences
The following discussion summarizes the Company's understanding of the
more significant federal income tax consequences associated with the Stock
Option Plan.
13
<PAGE>
The Company has been advised by counsel that, for federal income tax
purposes, no income will be recognized by a participant when an option is
granted. If an option is exercised, the federal income tax consequences will
depend upon whether the option is an ISO or an NQO.
No income will be recognized by a participant upon the exercise of an ISO
(although the difference between the fair market value of the Common Stock on
the date of exercise and the option price is an adjustment to income for
purposes of determining the participant's alternative minimum taxable income).
A participant will recognize income if and when he disposes of the shares
acquired under the ISO. If the disposition occurs more than two years after the
grant of the ISO and more than one year after the shares were transferred to
him (the "ISO holding period"), the gain realized on such disposition will be
characterized as long-term capital gain. If the disposition occurs prior to
expiration of the ISO holding period, the participant will recognize, as
ordinary income, the difference between the fair market value of the Common
Stock on the date of exercise and the option price.
The Company will not be entitled to a federal income tax deduction with
respect to the grant or exercise of an ISO unless the participant disposes of
Common Stock acquired thereunder prior to the expiration of the ISO holding
period. In that event, the Company generally will be entitled to a deduction
equal to the amount of ordinary income recognized by the participant.
Upon the exercise of an NQO, the participant will recognize, as ordinary
income, the difference between the option price and the fair market value of
the Common Stock on the date the option is exercised. Any gain or loss that a
participant realizes on a subsequent disposition of Common Stock acquired upon
the exercise of an NQO will be treated as long-term or short-term capital gain
or loss, depending on the period during which the participant held such shares.
The exercise of an NQO generally will entitle the Company to claim a federal
income tax deduction equal to the amount of income recognized by the
participant.
A participant's tax basis in Common Stock acquired under an ISO or NQO
will equal the sum of (i) the option price that is paid to acquire such stock
and (ii) any amount that the participant is required to include in income upon
the exercise of such right.
14
<PAGE>
Options Granted Pursuant to the Stock Option Plan
Options have been granted pursuant to the Stock Option Plan since its
inception as follows:
<TABLE>
<CAPTION>
Number of
Shares (1)
-----------
<S> <C>
John P. McCann, President and Chief Executive Officer
and Chairman of the Board of Directors. ........................... 675,000
James Dolphin, Executive Vice President, Chief Financial
Officer and Director. ............................................. 350,500
Barry M. Kornblau, Senior Vice President
and Director. ..................................................... 176,500
John S. Schneider, Executive Vice President, Chief Operating Officer
and Vice Chairman of the Board of Directors ....................... 150,000
David L. Johnston, Senior Vice President
and Director of Acquisitions/West ................................. 30,000
Robert F. Sherman, Senior Vice President
and Director of Apartments/West ................................... 30,000
All Named Executives as a group .................................... 1,412,000
All non-employee directors as a group .............................. 85,000
All employees as a group. .......................................... 3,744,100
</TABLE>
- ----------
(1) For additional information, see "Ownership of Equity Securities" and
"Stock Options."
Proposed Amendments of Articles of Incorporation
The Board has proposed and is recommending to the shareholders amendments
of the Articles which will (i) increase the number of authorized shares of
Common Stock from 150 million shares to 250 million shares, (ii) create the
Classified Common Stock and (iii) conform the voting rights of the Series A
Preferred and the Series B Preferred to the NYSE Listed Company Manual. The
texts of the proposed amendments are set forth in Appendix A.
Increase in Number of Authorized Common Shares
Increasing the number of authorized shares of Common Stock is believed to
be in the best interests of the Company because at present the total number of
outstanding shares, shares issuable pursuant to employee benefit plans, shares
issuable upon redemption of outstanding units of limited partnership interest
in the Company's operating partnership ("OP Units"), and shares issuable in
connection with pending portfolio acquisition transactions (including shares
issuable in respect of options and OP Units to be issued, and convertible
securities to be assumed, in these transactions) is approximately ,
leaving only shares available under the current authorization for
such purposes as equity financings and acquisitions. The Company has no present
plans to issue any shares of Common Stock except in the portfolio transactions
referred to above. However, the Company has used and expects to continue to use
Common Stock as a means to finance growth and where appropriate as
consideration for property acquisitions. Although this experience is not
necessarily indicative of future requirements for Common Stock, in the
preceding 24 months, the Company has issued approximately 32.8 million shares
of Common Stock in financing transactions and has issued or committed to issue
shares in acquisitions, including the acquisition of ASR.
The increase in authorized Common Stock is being proposed at this time
because postponing it until it becomes necessary or desirable to issue more
shares than are now available would result in delay occasioned by
15
<PAGE>
the requirement of a special shareholders' meeting and the additional expense
of such a meeting. If the shareholders approve the increase, their vote on
issuance of the newly-authorized shares will not be required or solicited, but
such shares may be issued whenever and for whatever consideration the Board of
Directors deems appropriate.
Creation of Classified Common Stock
If this amendment is approved by the shareholders, Classified Common Stock
could be issued, without the vote of holders of Common Stock, for any corporate
purpose and for whatever consideration the Board of Directors deems
appropriate, in one or more series having varying voting rights, dividend
rates, redemption and conversion features, distribution (including liquidating
distribution) rights and preferences, and other rights, including rights of
approval of specified transactions, all as determined by the Board of
Directors. The fundamental characteristic of the Classified Common Stock is
that it ranks junior to all series of Preferred Stock in respect of dividends
and upon liquidation. A series of Classified Common Stock could, but need not,
rank senior to the Common Stock in these respects. Such a series could be on a
complete parity with the Common Stock in all respects and could be a nonvoting
security, but it could also be given more than one vote per share, and a series
having preferential dividend and distribution rights could limit Common Stock
dividends and reduce the amount holders of Common Stock would otherwise receive
on dissolution of the Company.
The Board of Directors recommends the amendment because the Board believes
it will provide equity financing and portfolio acquisition capabilities the
Company does not now have. At present, the Board has approved no specific
financing or acquisition plans involving the issuance of Classified Common
Stock and does not propose to fix the characteristics of any series in
anticipation of issuing shares of that series.
Amendment of Voting Rights of Series A and Series B Preferred
Under the current designation of the Series A Preferred in the Articles,
holders of the Series A Preferred (together with the holders of other series of
Preferred Stock of the Company having like voting rights) have the right to
elect two directors to the Company's Board of Directors if dividends on the
Series A Preferred are in arrears for six consecutive quarterly periods. The
NYSE approved the Series A Preferred for listing notwithstanding a provision in
its Listed Company Manual to the effect that the right of preferred
shareholders to elect directors under such circumstances should accrue
regardless of whether defaulted dividends occurred in consecutive periods.
Under the current designation of the Series B Preferred in the Articles, the
holders of the Series B Preferred also currently have voting rights that are
identical to those of holders of the Series A Preferred. When the Company
applied to the NYSE for listing of the Series B Preferred, its application was
granted based on its representation that it would submit to the shareholders an
amendment of the Articles that would conform the Series B Preferred voting
rights provisions to the Listed Company Manual.
Although the Company made no representation to the NYSE as to the Series A
Preferred, the Board of Directors believes that it is important that the
language of the voting rights provisions of both series of Preferred Stock be
substantially identical, as it is now. Therefore, the Board is recommending
amendments of the designations of the Series A and Series B Preferred in the
Articles that will provide in effect that holders of the Series A Preferred,
holders of the Series B Preferred and holders of other series of Preferred
Stock of the Company having like voting rights shall have the right to elect
two directors to the Company's Board of Directors if dividends on the Series A
Preferred, the Series B Preferred and such other series of Preferred Stock are
in arrears for six quarterly periods, which need not be consecutive.
The amendments of the designations of the Series A and Series B Preferred
will be voted on as a unit and not separately. As stated above under "General,"
the affirmative votes of the holders of two-thirds of the
16
<PAGE>
Series A Preferred outstanding and entitled to vote, the holders of two-thirds
of the Series B Preferred outstanding and entitled to vote and the holders of a
majority of the Common Stock outstanding and entitled to vote are required for
approval of the amendments.
The amendments may be considered advantageous to the holders of the Series
A and Series B Preferred because they will eliminate a condition,
consecutiveness, now required in order for dividend defaults to give such
holders a voice in management of the Company. Conversely, the amendments, by
eliminating that condition, increase the possibility of loss by the holders of
the Common Stock of exclusive representation on of the Board, although
notwithstanding any such loss, the holders of the Common Stock will continue to
control the Board. The Board recommends approval of the amendments because (i)
the Company may issue additional series of Preferred Stock to finance its
activities and that such series will be listed on the NYSE, (ii) it is likely
that the NYSE will require as a condition of listing such series that the
voting rights provisions applicable to such series be the same as those
contained in the amendments, and (iii) it will be important for purposes of
marketing such series that the voting rights of the holders of such series and
other similar series (including the Series A Preferred and the Series B
Preferred) be substantially identical.
Independent Public Accountants
The Company from its inception has engaged the firm of Ernst & Young, LLP
or a predecessor as its independent public accountants, and the Board selected
Ernst & Young, LLP as auditors for 1998.
Representatives of Ernst & Young, LLP will be present at the meeting, will
be given the opportunity to make any statement they desire to make and will be
available to respond to questions.
17
<PAGE>
Performance Graph
The following graph indicates appreciation of $100 invested on December
31, 1991, in Company Common Stock ("UDR") and S&P 500 and NAREIT Equity REIT
Total Return Index securities (excluding health care), assuming full
reinvestment of dividends.
[GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C>
United Dominion Realty Trust 100 118.59 126.35 140.3 154.86 149.23
NAREIT Equity 100 119.65 123.45 142.3 192.48 231.47
S&P 500 100 110 111.43 153.14 188.35 251.19
</TABLE>
The NAREIT Equity REIT Total Return Index (excluding health care) is
published by the National Association of Real Estate Investment Trusts, Inc.
Index data reflect monthly reinvestment of dividends and are based upon the
monthly closing prices of shares of all tax-qualified equity REITs (real estate
investment trusts at least 75% of whose gross invested assets are invested in
real estate equities, excluding health care), including the Company, listed on
the NYSE and the American Stock Exchange and traded in NASDAQ National Market
System. At December 31, 1997, this Index included 176 equity REITs with a total
market capitalization of $127.8 billion.
18
<PAGE>
Matters to be Presented at the 1999 Annual Meeting of Shareholders
Any qualified shareholder wishing to make a proposal to be acted upon at
the Annual Meeting of Shareholders in 1999 must submit such proposal, to be
considered by the Company for inclusion in the proxy statement, to the Company
at its principal office in Richmond, Virginia, no later than December 15, 1998.
Other Matters
Management knows of no matters other than those stated above likely to be
brought before the Annual Meeting. However, if any matters not now known come
before the Annual Meeting, the persons named in the enclosed proxy are expected
to vote the shares represented by such proxy on such matters in accordance with
their best judgment.
THE COMPANY DEPENDS UPON ALL SHAREHOLDERS PROMPTLY SIGNING AND RETURNING
THE ENCLOSED PROXY TO AVOID COSTLY SOLICITATION. YOU CAN SAVE THE COMPANY
CONSIDERABLE EXPENSE BY SIGNING AND RETURNING YOUR PROXY AT ONCE.
19
<PAGE>
Appendix A
1. Delete the first paragraph of Article 3 of the current Articles of
Incorporation and substitute the following therefor:
The corporation shall have authority to issue 250,000,000 shares of common
stock having a par value of $1.00 per share and 25,000,000 shares of preferred
stock without par value. The Board of Directors of the corporation, by adoption
of an amendment of these Articles of Incorporation, may fix in whole or in part
the preferences, limitations and relative rights, within the limits set forth
in the Act, of any series within the preferred stock before the issuance of any
shares of that series. Stockholders shall not have preemptive rights to acquire
unissued shares of the corporation.
2. Delete the first paragraph of Article 3 of the current Articles of
Incorporation and substitute the following therefor:
The corporation shall have authority to issue 150,000,000 shares of common
stock having a par value of $1.00 per share, 25,000,000 shares of preferred
stock without par value and 25,000,000 shares of classified common stock
without par value, which shall be junior to the preferred stock in respect of
rights to receive dividends and to participate in distributions or payments in
the event of any liquidation, dissolution or winding up of the corporation. The
Board of Directors of the corporation, by adoption of an amendment of these
Articles of Incorporation, may fix in whole or in part the preferences,
limitations and relative rights, within the limits set forth in the Act, of any
series within the preferred stock or the classified common stock before the
issuance of any shares of that series. Stockholders shall not have preemptive
rights to acquire unissued shares of the corporation.
(NOTE: If the amendments set forth in both paragraph 1 and paragraph 2 are
approved, the first paragraph of Article 3 of the current Articles of
Incorporation will be deleted and the following substituted therefor:
The corporation shall have authority to issue 250,000,000 shares of common
stock having a par value of $1.00 per share, 25,000,000 shares of preferred
stock without par value and 25,000,000 shares of classified common stock
without par value, which shall be junior to the preferred stock in respect of
rights to receive dividends and to participate in distributions or payments in
the event of any liquidation, dissolution or winding up of the corporation. The
Board of Directors of the corporation, by adoption of an amendment of these
Articles of Incorporation, may fix in whole or in part the preferences,
limitations and relative rights, within the limits set forth in the Act, of any
series within the preferred stock or the classified common stock before the
issuance of any shares of that series. Stockholders shall not have preemptive
rights to acquire unissued shares of the corporation.)
3. Delete paragraph 3(a)(6)(A) of the current Articles of Incorporation and
substitute the following therefor:
(A) Whenever dividends on any shares of Series A Preferred shall be in
arrears for six or more quarterly periods, which need not be
consecutive, the holders of such shares of Series A Preferred (voting
separately as a class with all other series of preferred stock upon
which like voting rights have been conferred and are exercisable) will
be entitled to vote for the election of two additional directors of the
corporation at a special meeting called by the holders of record of at
least 10% of the Series A Preferred or the holders of any other series
of preferred stock so in arrears (unless such request is received less
than 90 days before the date fixed for the next annual or special
meeting of the shareholders) or at the next annual meeting of
shareholders, and at each subsequent annual meeting until all dividends
accumulated on such shares of Series A Preferred for the past Dividend
Periods and the then current Dividend Period shall have been fully paid
or declared and a sum sufficient for the payment thereof set aside for
payment. In such case, the entire Board of Directors of the corporation
will be increased by two directors.
20
<PAGE>
and delete paragraph 3(b)(6)(A) of the current Articles of incorporation
and substitute the following therefor:
(A) Whenever dividends on any shares of Series B Preferred shall be in
arrears for six or more quarterly periods, which need not be
consecutive, the holders of such shares of Series B Preferred (voting
separately as a class with all other series of preferred stock upon
which like voting rights have been conferred and are exercisable) will
be entitled to vote for the election of two additional directors of the
corporation at a special meeting called by the holders of record of at
least 10% of the Series B Preferred or the holders of any other series
of preferred stock so in arrears (unless such request is received less
than 90 days before the date fixed for the next annual or special
meeting of the shareholders) or at the next annual meeting of
shareholders, and at each subsequent annual meeting until all dividends
accumulated on such shares of Series B Preferred for the past Dividend
Periods and the then current Dividend Period shall have been fully paid
or declared and a sum sufficient for the payment thereof set aside for
payment. In such case, the entire Board of Directors of the corporation
will be increased by two directors.
21
<PAGE>
UNITED DOMINION REALITY TRUST, INC. 1985 STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
1.01 Affiliate means any "subsidiary" or "parent" corporation (within the
meaning of Section 422A of the Code) of the Company.
1.02 Agreement means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and
conditions of an Option granted to such Participant.
1.03 Board means the Board of Directors of the Company.
1.04 Code means the Internal Revenue Code of 1954, as amended, and the Internal
Revenue Code of 1986, as amended.
1.05 Committee means the Compensation Committee of the Board.
1.06 Common Stock means the Common Stock of the Company.
1.07 Company means United Dominion Realty Trust, Inc.
1.08 Director means a member of the Board who is not employed by the Company or
an Affiliate.
1.09 Director Option means an Option granted to a Director.
1.10 ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
1.11 Fair Market Value means, on any given date, the closing sale price of the
Common Stock on the NYSE on such date, or, if the NYSE shall be closed on such
date, or if the Common Stock is not traded on the NYSE on such date, the next
preceding date on which the NYSE shall have been open and the Common Stock
traded thereon.
1.12 NYSE means the New York Stock Exchange.
1.13 Option means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock, at the price set forth in an
Agreement.
1.14 Participant means an employee of the Company or an Affiliate, including
such an employee who is also a member of the Board, who satisfies requirements
of Article IV and is selected by the Committee to receive an Option.
1.15 Plan means the United Dominion Realty Trust, Inc. 1985 Stock Option Plan.
1.16 Stated Termination Date means the date specified in or determined pursuant
to an Agreement on which the Option which is the subject of such Agreement
terminates.
1.17 Ten Percent Shareholder means any individual owning more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of an Affiliate. An individual shall be considered to own any voting stock
owned (directly or indirectly) by or for brothers, sisters, spouse, ancestors or
lineal descendants and shall be considered to own proportionately any voting
stock owned (directly or indirectly) by or for a corporation, partnership,
estate or trust of which such individual is a shareholder, partner or
beneficiary.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company in recruiting and retaining Directors
and key employees with ability and initiative by enabling Directors and
employees who contribute significantly to the Company or an Affiliate to
participate in its future success and to associate their interests with those of
the Company. It is further intended that Options granted under the Plan shall
constitute "incentive stock options" within the meaning of Section 422A of the
Code, but no Option shall be invalid for failure to qualify as an incentive
stock option. The proceeds received by the Company from the sale of Common Stock
pursuant to the Plan shall be used for general corporate purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
authority to grant Options upon such terms (not inconsistent with the provisions
of the Plan) as it may consider appropriate. Such terms may include conditions
(in addition to those contained in the Plan) upon the exercisability of all or
any part of an Option. Notwithstanding any such conditions, the Committee, in
its discretion, may accelerate the time at which any Option, other than a
Director Option, may be exercised; provided, however, that no acceleration shall
affect the applicability of Section 7.04 (relating to the order in which
incentive stock options may be exercised) or Section 4.02 (relating to the
maximum number of shares for which an incentive stock option may be exercisable
in any calendar year). In addition, the Committee shall have complete authority
to interpret all provisions of the Plan; to prescribe the form of Agreements; to
adopt, amend, and rescind rules and regulations pertaining to the administration
of the Plan; and to make all other determinations necessary or advisable for the
administration of the Plan. The express grant in the Plan of any specific power
to the Committee shall not be construed as limiting the power or authority of
the Committee. Any decision made, or action taken, by the Committee in
connection with the administration of the Plan shall be final and conclusive. No
member of the Committee shall be liable for any act done in good faith with
respect to the Plan or any Agreement or Option. All expenses of administering
the Plan shall be borne by the Company.
ARTICLE IV
ELIGIBILITY
4.01 General. Any employee (including an employee who is a member of the
Board)of the Company or of any Affiliate (including any corporation that becomes
an Affiliate after the adoption of the Plan) who, in the judgment of the
Committee, has contributed or can be expected to contribute to the profits or
growth of the Company or such Affiliate may, and each Director will, be granted
one or more Options. All Options granted under the Plan shall be evidenced by
Agreements that shall be subject to applicable provisions of the Plan and to
such other provisions consistent with the Plan as the Committee may adopt. No
Participant may be granted incentive stock options (under all incentive stock
option plans of the Company and Affiliates) which are first exercisable in any
calendar year for stock having an aggregate fair market value (determined as of
the date an option is granted) exceeding $100,000.
4.02 Grants to Employees. The Committee will designate employees to whom Options
are to be granted and will specify the number of shares of Common Stock subject
to each grant.
4.03 Director Options. Each Director will be granted Options to purchase 2,000
shares of Common Stock on each date each director is elected or re-elected to
the Board. The option price of such Director Options will in each case be the
Fair Market Value on the date of grant and will be payable only in cash. Such
Director Options will be exercisable for a period of ten (10) years from the
date of grant (subject to earlier termination as described below) and will be
immediately exercisable in whole or from time to time in part.
In addition, on the date of his or her first being elected to the Board, a
Director will be granted options to purchase 5,000 shares of Common Stock at the
Fair Market Value on the date of grant. The option price of such Director
Options will be payable only in cash; such Director Options will be exercisable
for a period of five (5) years from the date of grant (subject to earlier
termination as described below) and will be immediately exercisable in whole or
from time to time in part.
Notwithstanding anything to the contrary in this Section 4.03, a Director first
elected to the Board pursuant to any agreement relating to the acquisition, by
merger or otherwise, of assets by the Company or any Affiliate or to the sale by
the Company of its securities will not be granted Options upon being first
elected, but such Director will be granted Options to purchase 2,000 shares of
Common Stock as provided herein upon being re-elected to the Board.
Options granted to a Director will terminate 30 days after the Director resigns
or is removed from the Board, or 30 days after the annual meeting of
shareholders at which the Director's term expires, if the Director does not
stand or is not nominated for re-election or retires at that meeting.
Notwithstanding the foregoing, if, at the date of such resignation or removal or
at the date of such annual meeting of shareholders, as the case may be, such
Director has completed at least ten (10) years of service on the Board
(including, as such service, service as a director of a corporation whose assets
are acquired by the Company, by merger or otherwise), Options held by such
Director on such date will terminate upon the earlier of (i) the second
anniversary of such date or (ii) the Termination Date of such Options.
The provisions of this Section 4.03 will control in the event of any
inconsistency with other provisions of the Plan and may not be varied by the
Committee in any Agreement.
ARTICLE V
STOCK SUBJECT TO OPTIONS
The maximum number of shares of Common Stock that may be issued pursuant to
exercise of Options outstanding at any time is 8% of the number of shares of
Common Stock issued and outstanding at that time, provided that the maximum
aggregate number of shares of Common Stock that may be issued pursuant to
Options granted under the Plan is 12,000,000 (subject to adjustment as provided
in Article IX). If an Option is terminated, in whole or in part, for any reason
other than its exercise, the number of shares of Common Stock allocated to the
Option or portion thereof may be reallocated to other Options to be granted
under the Plan.
ARTICLE VI
OPTION PRICE
The price per share for Common Stock purchased by the exercise of any Option
granted under the Plan shall be determined by the Committee on the date the
Option is granted; provided, however, that the price per share shall not be less
than the Fair Market Value on the date of grant in the case of Option that is an
incentive stock option, and that in the case of a Director Option the price per
share shall be the Fair Market Value. In addition, the price per share shall not
be less than 110% of such Fair Market Value in the case of an Option that is an
incentive stock granted to a Participant who is a Ten Percent Shareholder on the
date the Option is granted.
ARTICLE VII
EXERCISE OF OPTIONS
7.01 Maximum Option Period. No Option shall be exercisable after the expiration
of ten years from the date the Option was granted. The terms of any Option not
prescribed by the Plan may provide that it is exercisable for a period less than
such maximum period.
7.02 Nontransferability. Any Option granted under the Plan shall be
nontransferable except by will or by the laws of descent and distribution and,
during the lifetime of the Participant to whom the Option is granted, may be
exercised only by the Participant. No right or interest of a Participant in any
Option shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.
7.03 Employee Status. For purposes of determining the applicability of Section
422A of the Code and Section 7.01, the Board may decide in each case to what
extent leaves of absence for governmental or military service, illness,
temporary disability, or other reasons shall not be deemed interruptions of
continuous employment.
7.04 Nonexercisability While Previously Granted Option Outstanding. No Option
which is an incentive stock option and which was granted before January 1, 1987
shall be exercisable by a Participant while that Participant has outstanding
(within the meaning of Subsection 422A(c)(7) of the Code) any option which was
granted before the Option was granted and which is an incentive stock option to
purchase stock in the Company, in a corporation that (at the time the Option was
granted) was an Affiliate, or in a predecessor of any of such corporations.
ARTICLE VIII
METHOD OF EXERCISE
8.01 Exercise. Subject to the provisions of Articles VII and X, an Option other
than a Director Option may be exercised in whole at any time or in part from
time to time at such times and in compliance with such requirements as the
Committee shall determine. An Option granted under the Plan may be exercised
with respect to any number of whole shares less than the full number for which
the Option could be exercised. Such partial exercise of an Option shall not
affect the right to exercise the Option from time to time in accordance with the
Plan with respect to remaining shares subject to the Option.
8.02 Payment. Payment of the Option price shall be made in cash or, in the case
of Options other than Director Options, a cash equivalent acceptable to the
Committee. If the Agreement provides, payment of all or a part of the Option
price may be made by surrendering shares of Common Stock to the Company. If
Common Stock is used to pay all or part of the Option price, the shares
surrendered must have a Fair Market Value (determined as of the day preceding
the date of exercise) that is not less than such price or part thereof.
8.03 Installment Payment. If the Agreement provides, and if the Participant is
employed by the Company on the date the Option is exercised, payment of all or
part of the Option price may be made in installments. In that event, the Company
shall lend the Participant an amount equal to not more than ninety percent (90%)
of the Option price of the shares acquired by the exercise of the Option. This
amount shall be evidenced by the Participant's promissory note and shall be
payable in not more than five equal annual installments, unless the amount of
the loan exceeds the maximum loan value for the shares purchased, which value
shall be established from time to time by regulations of the Board of Governors
of the Federal Reserve System (the "Fed"). In that event, the note shall be
payable in equal quarterly installments over a period of time not to exceed five
years. The Committee, however, may vary such terms and make such other
provisions concerning the unpaid balance of such purchase price in the case of
hardship, subsequent termination of employment, absence on military or
government service, or subsequent death of the Participant as in its discretion
are necessary or advisable in order to protect the Company, promote the purposes
of the Plan and comply with regulations of the Fed relating to securities credit
transactions.
The Participant shall pay interest on the unpaid balance at the minimum rate
necessary to avoid imputed interest or original issue discount under the Code.
All shares acquired with cash borrowed from the Company shall be pledged to the
Company as security for the repayment thereof. In the discretion of the
Committee, shares may be released from such pledge proportionately as payments
on the note (together with interest) are made, provided the release of such
shares complies with the regulations of the Fed relating to securities credit
transactions then applicable. While shares are so pledged, and so long as there
has been no default in the installment payments, such shares shall remain
registered in the name of the Participant, and he shall have the right to vote
such shares and to receive all dividends thereon.
8.04 Shareholders' Rights. No Participant shall, as a result of receiving any
Option, have any rights as a shareholder until the date he exercises such
Option.
ARTICLE IX
ADJUSTMENT UPON CHANGE IN COMMON STOCK
Should the Company effect one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares, or other similar changes in
capitalization, the maximum number of shares as to which Options may be granted
under the Plan shall be proportionately adjusted and the terms of options shall
be adjusted as the Board shall determine to be equitably required. Any
determination made under this Article IX by the Board shall be final and
conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property or for labor
or services, either upon direct sale or upon the exercise of rights or warrants
to subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not affect, and
no adjustment by reason thereof shall be made with respect to, Options.
ARTICLE X
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued, no certificates
for shares of Common Stock shall be delivered, and no payment shall be made
under the Plan except in compliance with all applicable federal and state laws
and regulations and rules of all domestic stock exchanges on which the Common
Stock may be listed. The Company shall have the right to rely on the opinion of
its counsel as to such compliance. Any share certificate issued to evidence
Common Stock for which an Option is exercised may bear such legends and
statements as the Board may deem advisable to assure compliance with federal and
state laws and regulations. No Option shall be exercised, no Common Stock shall
be issued, no certificate for shares shall be delivered, and no payment shall be
made under the Plan until the Company has obtained such consent or approval as
the Board may deem advisable from regulatory bodies having jurisdiction over
such matters.
ARTICLE XI
GENERAL PROVISIONS
11.01 Effect on Employment. Neither the adoption of the Plan, its operation, nor
any documents describing or referring to the Plan (or any part thereof) shall
confer upon any Board member any right to continue on the Board or to confer
upon any employee any right to continue in the employ of the Company or an
Affiliate or in any way affect any right and power of the Company or an
Affiliate to remove any Board member or terminate the employment of any employee
at any time with or without assigning a reason thereof.
11.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under the Plan. Any liability of the
Company to any person with respect to any grant under the Plan shall be based
solely upon any contractual obligations that may be created pursuant to the
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
11.03 Rules of Construction. Headings are given to the articles and sections of
the Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
ARTICLE XII
AMENDMENT
The Board may amend or terminate the Plan from time to time; provided, however,
that no amendment may become effective until shareholder approval is obtained if
the amendment (i) increases the aggregate number of shares that may be issued
under Options or (ii) changes the class of persons eligible to become
Participants or (iii) otherwise materially increase the benefits accruing to
Participants. No amendment shall, without a Participant's consent, adversely
affect any rights of such Participant under any Option outstanding at the time
such amendment is made.
ARTICLE XIII
DURATION OF PLAN
No Option may be granted under the Plan after December 31, 2002. Options granted
before such date shall remain valid in accordance with their terms.
ARTICLE XIV
EFFECTIVE DATE OF PLAN
Options may be granted under the Plan upon its adoption by the Board, provided
that no Option will be effective unless the Plan is approved (at a duly held
shareholders' meeting within twelve months of such adoption) by shareholders
holding a majority of the Company's outstanding voting stock.
<PAGE>
Proxy Solicited by the Shares of Common Stock
Board of Directors
United Dominion Realty Trust, Inc.
ANNUAL MEETING OF SHAREHOLDERS
May 5, 1998
The undersigned hereby appoints John P. McCann and John S. Schneider as proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote all shares of Common Stock of the undersigned in United
Dominion Realty Trust, Inc. at the Annual Meeting of Shareholders to be held on
May 5, 1998, and at any and all adjournments thereof:
(Please date and sign on the reverse side)
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 election of all nominees for the Board of Directors who are listed, FOR the
amendments of the 1985 Stock Option Plan, and FOR the amendments of the Articles
of Incorporation, all as described in the Proxy Statement dated April , 1998,
receipt of a copy of which is acknowledged by execution of this proxy.
<PAGE>
1. ELECTION OF DIRECTORS
FOR all nominees listed (excepted as written to the contrary) [ ]
Vote withheld for all nominees listed [ ]
Nominees: Jeff C. Bane, R. Toms Dalton, Jr., James Dolphin,
Jon A. Grove, Barry M. Kornblau, John C. Lanford,
John P. McCann, H. Franklin Minor, Lynne B. Sagalyn,
Mark J. Sandler, Robert W. Scharar, John S. Schneider and
C. Harmon Williams, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
2. AMENDMENTS OF 1985 STOCK OPTION PLAN FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. AMENDMENTS OF ARTICLES OF INCORPORATION
(i) increasing number of authorized shares of Common Stock
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE>
(ii) creating Classified Common Stock
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(iii) amending voting rights of Series A and Series B Preferred FOR
AGAINST ABSTAIN [ ] [ ] [ ]
Dated: ___________________________________ , 1998
(Signature)
Please sign exactly as your name(s) appear(s) on this proxy. Only one owner of
jointly owned shares need sign. When signing in a representative capacity,
please give title. PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY USING
THE ENCLOSED ENVELOPE.
<PAGE>
Proxy Solicited by the Shares of 9 1/4% Series A
Board of Directors Cumulative Redeemable
Preferred Stock
United Dominion Realty Trust, Inc.
ANNUAL MEETING OF SHAREHOLDERS
May 5, 1998
The undersigned hereby appoints John P. McCann and John S. Schneider as proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote all shares of 9 1/4% Series A Cumulative Redeemable
Preferred Stock of the undersigned in United Dominion Realty Trust, Inc. at the
Annual Meeting of Shareholders to be held on May 5, 1998, and at any and all
adjournments thereof:
(Please date and sign on the reverse side)
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 the amendments of the Articles of Incorporation amending the voting rights
of the Series A Preferred and the Series B Preferred, all as described in the
Proxy Statement dated April , 1998, receipt of a copy of which is acknowledged
by execution of this proxy.
<PAGE>
AMENDMENTS OF ARTICLES OF INCORPORATION
amending voting rights of Series A
and Series B Preferred
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: ___________________________________ , 1998
(Signature)
Please sign exactly as your name(s) appear(s) on this proxy. Only one owner of
jointly owned shares need sign. When signing in a representative capacity,
please give title. PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY USING
THE ENCLOSED ENVELOPE.
<PAGE>
Proxy Solicited by the Shares of 8.60% Series B
Board of Directors Cumulative Redeemable
Preferred Stock
United Dominion Realty Trust, Inc.
ANNUAL MEETING OF SHAREHOLDERS
May 5, 1998
The undersigned hereby appoints John P. McCann and John S. Schneider as proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote all shares of 8.60% Series B Cumulative Redeemable
Preferred Stock of the undersigned in United Dominion Realty Trust, Inc. at the
Annual Meeting of Shareholders to be held on May 5, 1998, and at any and all
adjournments thereof:
(Please date and sign on the reverse side)
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 the amendments of the Articles of Incorporation amending the voting rights
of the Series A Preferred and the Series B Preferred, all as described in the
Proxy Statement dated April , 1998, receipt of a copy of which is acknowledged
by execution of this proxy.
<PAGE>
AMENDMENTS OF ARTICLES OF INCORPORATION
amending voting rights of Series A
and Series B Preferred
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: ___________________________________ , 1998
(Signature)
Please sign exactly as your name(s) appear(s) on this proxy. Only one owner of
jointly owned shares need sign. When signing in a representative capacity,
please give title. PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY USING
THE ENCLOSED ENVELOPE.
