<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
JDN REALTY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
JDN REALTY CORPORATION
359 EAST PACES FERRY ROAD
SUITE 400
ATLANTA, GEORGIA 30305
April 20, 1999
TO THE SHAREHOLDERS OF
JDN REALTY CORPORATION:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders of JDN Realty Corporation, to be held on Wednesday, May 19, 1999,
at 9:00 a.m. (Atlanta Time) at the Grand Hyatt Atlanta, Atlanta, Georgia 30305.
Please read the enclosed Annual Report to Shareholders and Proxy
Statement for the 1999 Annual Meeting of Shareholders. Whether or not you plan
to attend the meeting, please sign, date and return the enclosed proxy card as
soon as possible so that your vote will be recorded. If you attend the meeting,
you may withdraw your proxy and vote your shares personally.
Sincerely,
/s/ J. Donald Nichols
------------------------------------------
J. Donald Nichols
Chairman and Chief Executive Officer
IMPORTANT
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY.
<PAGE> 3
JDN REALTY CORPORATION
359 EAST PACES FERRY ROAD
SUITE 400
ATLANTA, GEORGIA 30305
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
---------------
TO THE SHAREHOLDERS OF
JDN REALTY CORPORATION:
The Annual Meeting of Shareholders of JDN Realty Corporation will be
held on Wednesday, May 19, 1999, at 9:00 a.m. (Atlanta Time) at the Grand Hyatt
Atlanta, Atlanta, Georgia 30305, for the following purposes:
(1) The election of two nominees as Class II Directors;
(2) The approval of the amendment and restatement of the JDN
Realty Corporation 1993 Non-Employee Director Stock Option
Plan;
(3) The approval of the amendment and restatement of the JDN
Realty Corporation 1995 Employee Stock Purchase Plan;
(4) The adoption of the JDN Realty Corporation Long-Term Incentive
Plan;
(5) The approval of the amendment to increase the number of shares
reserved for issuance under the JDN Realty Corporation 1993
Incentive Stock Plan;
(6) The ratification of the appointment of Ernst & Young LLP as
independent auditors of the Company and its subsidiaries for
the Company's 1999 fiscal year; and
(7) The transaction of such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 18,
1999, as the record date for determining shareholders entitled to notice of and
to vote at the Annual Meeting or any adjournment thereof.
By order of the Board of Directors,
/s/ William J. Kerley
------------------------------------------
William J. Kerley
Corporate Secretary
Atlanta, Georgia
April 20, 1999
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, TO
ASSURE THE PRESENCE OF A QUORUM, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE FURNISHED FOR THAT PURPOSE. IF
YOU ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY
DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
<PAGE> 4
JDN REALTY CORPORATION
359 EAST PACES FERRY ROAD
SUITE 400
ATLANTA, GEORGIA 30305
---------------
PROXY STATEMENT
--------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board of Directors") of JDN Realty
Corporation (the "Company"), to be voted at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held at the Grand Hyatt Atlanta, Atlanta, Georgia
30305, on May 19, 1999, at 9:00 a.m. (Atlanta Time), or at any adjournment
thereof, for the purposes set forth in the accompanying notice. This Proxy
Statement and the accompanying form of proxy are first being mailed or given to
shareholders of the Company on or about April 20, 1999.
If the enclosed proxy is properly executed, returned and not revoked,
it will be voted in accordance with the instructions, if any, given by the
shareholder, and if no instructions are given, will be voted in the following
manner:
(1) FOR the election of two nominees as Class II Directors;
(2) FOR the approval of the amendment and restatement of the JDN
Realty Corporation 1993 Non-Employee Director Stock Option
Plan (the "Director Plan");
(3) FOR the approval of the amendment and restatement of the JDN
Realty Corporation 1995 Employee Stock Purchase Plan (the
"ESPP");
(4) FOR the adoption of the JDN Realty Corporation Long-Term
Incentive Plan (the "LTIP");
(5) FOR the approval of the amendment to increase the number of
shares reserved for issuance under the JDN Realty Corporation
1993 Incentive Stock Plan (the "Incentive Plan");
(6) FOR the ratification of the appointment of Ernst & Young LLP
as independent auditors of the Company and its subsidiaries
for the Company's 1999 fiscal year; and
(7) In accordance with the recommendations of the Board of
Directors on any other proposal that may properly come before
the Annual Meeting.
The persons named as proxies on the enclosed form of proxy were
selected by the Board of Directors. Shareholders who sign proxies have the right
to revoke them at any time before they are voted by notifying the Company in
writing prior to the date of the Annual Meeting or by voting by ballot at the
Annual Meeting.
The Board of Directors has fixed the close of business on March 18,
1999 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting. As of the close of business on the record
date, the Company had authorized 150,000,000 shares of common stock, $.01 par
value per share (the "Common Stock"), of which 33,231,247 shares were
outstanding and entitled to vote. The Common Stock is the Company's only
outstanding class of voting securities entitled to be voted at the Annual
Meeting.
<PAGE> 5
PROPOSAL 1: ELECTION OF DIRECTORS
INTRODUCTION
The Amended and Restated Bylaws of the Company (the "Bylaws") provide
that the Board of Directors is to be comprised of no less than three and no more
than nine Directors, as determined within that range by the Board of Directors.
On February 27, 1998, the Board of Directors increased the size of the Board of
Directors from six to seven members and named William G. Byrnes as a Class I
Director to fill the vacancy created by the increase. Effective March 31, 1999,
Robert P. Corker, Jr. resigned his position as a Class I Director, thereby
creating a vacancy on the Board of Directors that has not yet been filled.
The Bylaws provide that the Board of Directors is to be divided into
three classes of as nearly equal size as possible. The current Board of
Directors has been divided into three classes of two Directors each. The Board
of Directors nominates and shareholders vote on one class of Directors at each
year's annual meeting of shareholders. The terms of the Company's current Class
II Directors, Elizabeth L. Nichols and Haywood D. Cochrane, Jr., expire at the
Annual Meeting.
The Board of Directors has nominated Ms. Nichols and Mr. Cochrane for
election at the Annual Meeting as Class II Directors to serve until the annual
meeting of shareholders in 2002 and until their successors have been elected and
qualified. Ms. Nichols and Mr. Cochrane have consented to be candidates and to
serve as Directors if elected.
Unless a proxy specifies otherwise, the persons named in the proxy will
vote the shares covered thereby for the individuals nominated by the Board of
Directors. Should any nominee become unavailable for election, shares covered by
a proxy will be voted for a substitute nominee that the current Board of
Directors selects.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF THE FOLLOWING NOMINEES:
CLASS II NOMINEES
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DIRECTOR SINCE
- ---- --- ------------------- --------------
<S> <C> <C> <C>
Elizabeth L. Nichols 45 President, JDN Realty Corporation (December December 1993
1993 - Present); Director, Ruby Tuesday,
Inc. (Present)
Haywood D. Cochrane, Jr. 50 President and Chief Executive Officer, December 1993
Meridian Corporate Healthcare, Inc.
(February 1997 - Present); Chief Financial
Officer, Laboratory Corp. of America
Holdings, Inc. (April 1995 - October 1996);
National Health Laboratories, Inc. (June
1994 - April 1995); President, Chief
Executive Officer and Director, Allied
Clinical Laboratories, Inc. (1989 - June
1994)
</TABLE>
REQUIRED VOTE
In accordance with the Bylaws, the election of the Class II nominees
named above requires the affirmative vote of a majority of all the votes cast
(in person or by proxy) at a meeting of shareholders at which a quorum is
present. The Company's Charter does not provide for cumulative voting and,
accordingly, the holders of Common Stock do not have cumulative voting rights
with respect to the election of Directors. Consequently, each shareholder may
cast only one vote per share for each of the nominees.
2
<PAGE> 6
CONTINUING DIRECTORS
The persons named below will continue to serve as Directors until the
annual meeting of shareholders in the years indicated and until their successors
are elected and qualified. Shareholders are not voting on the election of the
Class III and the Class I Directors. The following table shows the names, ages
and business experience during the past five years (including all positions held
with the Company) of each continuing Director, and the month and year in which
each was first elected to the Board of Directors. Mr. Nichols and Ms. Nichols
are husband and wife.
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DIRECTOR SINCE
- ---- --- ------------------- --------------
<S> <C> <C> <C>
CLASS III DIRECTORS (2000)
J. Donald Nichols 58 Chairman of the Board and Chief Executive December 1993
Officer, JDN Realty Corporation (December
1993 - Present)
Craig Macnab 43 President, Tandem Capital (1997 - Present); December 1993
General Partner, MacNiel Advisors (1993 -
1996); Director, Environmental Tectonics,
Teltronics, Smart Choice Automotive Group and
Clinicor (Present)
CLASS I DIRECTORS (2001)
William B. Greene 61 Chairman of the Board, Bank of Tennessee, December 1993
BancTenn Corporation, Carter County Bancorp
and Carter County Bank (1964 - Present)
William G. Byrnes 48 Distinguished Teaching Professor of Finance, February 1998
McDonough School of Business, Georgetown
University, Washington, D.C. (August 1998 -
Present); Managing Director, BT Alex. Brown
Incorporated (1981 - February 1998);
Director, Meditrust Operating Company (April
1998 - Present); Director, Security Capital
Preferred Growth Incorporated (June 1998 -
Present)
</TABLE>
3
<PAGE> 7
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During 1998, the Board of Directors held four meetings and took various
actions by written consent. All Directors attended at least 75% of the meetings
of the Board of Directors and its committees held while they were Directors. The
Board of Directors has established the standing committees described below.
The Executive Committee acts on behalf of the Board of Directors on
certain matters concerning the management and conduct of the business and
affairs of the Company other than those matters that cannot by law be delegated
by the Board of Directors. The Executive Committee is currently comprised of
Messrs. Nichols, Byrnes and Macnab and Ms. Nichols. The Executive Committee held
no meetings during 1998, instead taking various actions by unanimous written
consent.
The Audit Committee selects and engages on behalf of the Company,
subject to shareholder ratification, and fixes the compensation of, a firm of
certified public accountants whose responsibility it is to audit the financial
statements of the Company and its subsidiaries for the fiscal year in which they
are appointed, and to report its findings to the Audit Committee. The Audit
Committee confers with the auditors and determines the scope of the auditing of
the financial statements of the Company and its subsidiaries. The Audit
Committee is also responsible for determining that the business practices and
conduct of employees and other representatives of the Company and its
subsidiaries comply with the Company's policies and procedures. None of the
members of the Audit Committee may be officers or employees of the Company. The
Audit Committee is currently comprised of Messrs. Cochrane and Macnab. Mr.
Greene served as a member of the Audit Committee until the Board's meeting in
May 1998. Mr. Corker served as a member of the Audit Committee from the Board's
meeting in May 1998 until his resignation from the Board of Directors effective
March 31, 1999. The Audit Committee held one meeting during 1998.
The Compensation Committee is responsible for establishing a general
compensation policy for the Company and has the responsibility for the approval
of increases in Director fees and in salaries paid to officers and senior
employees earning an annual base salary in excess of $150,000. The Compensation
Committee also possesses all of the powers of administration under the Company's
employee benefit plans, including any stock option plans, bonus plans,
retirement plans, stock purchase plans and medical, dental and insurance plans.
In connection therewith, the Compensation Committee determines, subject to the
provisions of the Company's plans, the persons eligible to participate in any of
the plans, the extent of such participation and the terms and conditions under
which benefits may be vested, received or exercised. The Compensation Committee
is currently comprised of Messrs. Greene and Byrnes. Mr. Macnab served as a
member of the Compensation Committee until the Board's meeting in May 1998. The
Compensation Committee held no meetings during 1998, instead taking various
actions by unanimous written consent.
The Board of Directors has no standing nominating committee.
4
<PAGE> 8
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors or any committee of the Board
of Directors. Directors who are not employees of the Company or its affiliates
are paid annual compensation as provided below. All Directors receive
reimbursement for any reasonable expenses incurred in attending Board of
Directors or committee meetings.
The Director Plan, as amended and restated in the manner described
under Proposal 2, provides that Directors who are not employees of the Company
or its affiliates will automatically receive options to purchase 15,000 shares
of Common Stock on January 1 of each year at an exercise price equal to the fair
market value of the Common Stock on the date of grant. The options (one-third of
which may be exercised starting six months from the date of grant, an additional
one-third starting 18 months from the date of grant and an additional one-third
starting 30 months from the date of grant) expire ten years after the date of
grant. The Director Plan further provides that Directors who are not employees
of the Company will automatically receive $10,000 in aggregate value of Common
Stock (each a "Stock Award") on the first day of each calendar quarter. Pursuant
to the terms of the Director Plan, shares of Common Stock received by Directors
pursuant to a Stock Award are not transferable for a period of six months after
the award is made.
The following table sets forth the number of shares of Common Stock
underlying options that have been granted and the Stock Awards that have been
made to non-employee Directors pursuant to the Director Plan as of March 24,
1999:
<TABLE>
<CAPTION>
NUMBER OF SHARES STOCK AWARDS
NAME UNDERLYING OPTIONS (NUMBER OF SHARES)(1)
- ----------------------------- ------------------ ---------------------
<S> <C> <C>
William G. Byrnes 15,000(2) 464
Haywood D. Cochrane, Jr. 37,500(3) 464
Robert P. Corker, Jr. 24,000(4) 464
William B. Greene 37,500(3) 464
Craig Macnab 34,500(5) 464
------- -----
Total 148,500 2,320
======= =====
</TABLE>
- -------------
(1) Represents Stock Awards made on January 1, 1999.
(2) Represents options to purchase 15,000 shares of Common Stock at $21.56
per share.
(3) Represents options to purchase 4,500 shares of Common Stock at $14.67
per share, 4,500 shares of Common Stock at $13.33 per share, 4,500
shares of Common Stock at $14.92 per share, 4,500 shares of Common
Stock at $18.42 per share, 4,500 shares of Common Stock at $21.58 per
share and 15,000 shares of Common Stock at $21.56 per share.
(4) Represents options to purchase 4,500 shares of Common Stock at $18.42
per share, 4,500 shares of Common Stock at $21.58 per share and 15,000
shares of Common Stock at $21.56 per share. Mr. Corker resigned from
the Board of Directors effective March 31, 1999.
(5) Represents options to purchase 4,500 shares of Common Stock at $14.67
per share, 1,500 shares of Common Stock at $13.33 per share, 4,500
shares of Common Stock at $14.92 per share, 4,500 shares of Common
Stock at $18.42 per share, 4,500 shares of Common Stock at $21.58 per
share and 15,000 shares of Common Stock at $21.56 per share.
-----------------------------------------------------------------------
ALL SHARES OF COMMON STOCK AND OPTIONS TO ACQUIRE SHARES OF
COMMON STOCK (AND RELATED PER SHARE AMOUNTS) ARE PRESENTED THROUGHOUT
THIS PROXY STATEMENT AS ADJUSTED TO REFLECT THE COMPANY'S THREE-FOR-TWO
STOCK SPLIT EFFECTED IN THE FORM OF A STOCK DIVIDEND ON JUNE 30, 1998.
-----------------------------------------------------------------------
5
<PAGE> 9
PROPOSAL 2: APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF THE JDN REALTY CORPORATION
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Board of Directors has adopted an amendment and restatement of the
JDN Realty Corporation 1993 Non-Employee Director Stock Option Plan (the
"Director Plan"). The following is a brief description of the material terms of
the Director Plan and the proposed amendment. This description is qualified in
its entirety by reference to the full text of the Director Plan, a copy of which
is attached hereto as Appendix A.
SUMMARY OF CHANGES
The amendment to the Director Plan is in the form of a complete
restatement of the Director Plan. The amendment (i) eliminates the requirement
that shareholders approve certain types of amendments to the Director Plan, (ii)
provides that the term of the Director Plan will continue indefinitely unless
terminated by the Board of Directors, (iii) provides for automatic grants of
Stock Awards, (iv) modifies the automatic grant and exercise periods for stock
options (collectively, Stock Awards and option grants made pursuant to the
Director Plan are referred to as "Awards"), (v) allows the transfer of options
in limited circumstances, and (vi) eliminates the requirement that a
non-employee Director agree to continue in service in order to receive an Award.
REASONS FOR CHANGES
Shareholder Approval Requirements. Shareholder approval was, and
continues to be, required for amendments to the Director Plan that increase the
number of shares of Common Stock reserved for issuance under the Director Plan.
Prior to the amendment, shareholder approval was also required for amendments
that could materially increase benefits accruing under Awards pursuant to the
Director Plan. In many situations, the broad definition of "materially" would
necessitate approval for purely administrative amendments. The Board of
Directors believes that the cost and time required to obtain shareholder
approval in many instances far outweigh any value shareholders may derive from
reviewing such amendments. The current restrictions preserve shareholder rights
to review amendments on matters that are of the most significance to
shareholders. These changes are possible because Rule 16b-3 ("Rule 16b-3"), as
promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934 (the "Exchange Act") has been revised to
eliminate shareholder approval as a requirement. The shareholder approval
provisions in the amended Director Plan are consistent with the requirements of
the New York Stock Exchange.
Term of Plan. Prior to the amendment, the Board of Directors could
terminate the Director Plan at any time and the Director Plan would
automatically terminate ten years after the Company's initial public offering.
There is no legal requirement for the ten-year expiration provision. Rather than
stating a specific termination date, the Director Plan as amended will continue
unless it is terminated by the Board of Directors. The prior practice of
terminating an option plan and establishing a new plan every ten years would
create administrative complexities and does not protect any significant
shareholder interest. Accordingly, the Board of Directors believes that this
change is an important enhancement to the administration of the Director Plan.
Stock Awards. The amendment provides for Stock Awards to be made
automatically at the beginning of each calendar quarter in lieu of quarterly
cash compensation paid to non-employee Directors for services to the Company.
Under the terms of the amendment, each non-employee Director is awarded a number
of whole shares of Common Stock with a fair market value of $10,000 on the date
of the award. Common Stock received pursuant to Stock Awards is not transferable
for a period of six months after the award is made.
Stock Awards are a substitute for the cash compensation that was
previously paid to non-employee Directors for service to the Company. Prior to
the amendment, Directors who were not employees of the Company were paid annual
compensation of $12,000, a meeting fee of $1,000 for each Board of Directors or
committee meeting attended and the option awards described below. The
6
<PAGE> 10
Board of Directors believes that Stock Awards are preferable to paying cash
compensation in that they enable the Company both to attract and retain
qualified non-employee Directors by fairly compensating them for their services
and to align the interests of these Directors with those of shareholders.
Modified Option Grant and Exercise Periods. Prior to the amendment, the
Director Plan provided an automatic grant of options to each non-employee
Director on each January 1 to purchase 4,500 shares of Common Stock. Options
became exercisable in one-third increments over a three-year period beginning
two years after the date of grant. As amended, the Director Plan provides an
automatic option grant to each non-employee Director on each January 1 to
purchase 15,000 shares of Common Stock. These options are exercisable in
one-third increments six months, 18 months and 30 months after the date of
grant. The Board of Directors believes that the increased number of options is
desirable in order to attract and retain qualified non-employee Directors. The
modified exercise periods are designed to permit non-employee Directors to
exercise their options sooner, further aligning the interests of these Directors
with those of shareholders.
Option Transfer Restrictions. Prior to the amendment, a recipient of
options under the Director Plan was not permitted to transfer options at any
time prior to death. The Director Plan retains this transfer restriction as a
general rule, but allows for transfers of options in individual situations as
provided in the agreements between the Company and each non-employee Director.
This flexibility on transfers is possible as a result of the amendments to Rule
16b-3 described above. The Board of Directors believes that there are relatively
few situations in which option transfers should be permitted, but has adopted
this change to provide option recipients with flexibility in financial, estate
and tax planning.
Elimination of Agreements to Continue in Service. Prior to the
amendment, the Director Plan required that each non-employee Director, in order
to receive an option, agree to remain in the service of the Company for a period
of at least one year. The amendment eliminates this feature because the Board of
Directors has determined that such agreements are unnecessary and duplicative of
the service requirements inherent in the mandatory option vesting schedule.
GENERAL DESCRIPTION OF THE DIRECTOR PLAN, AS AMENDED
The purposes of the Director Plan are to provide performance incentives
to non-employee Directors, encourage Common Stock ownership by non-employee
Directors, maintain the Company's ability to attract and retain the services of
experienced and highly qualified non-employee Directors and enhance long-term
shareholder value by more closely aligning the interests of non-employee
Directors with those of the Company and its shareholders.
Each Director who is not an employee of the Company or its affiliates
receives an automatic grant of options on each January 1 to purchase 15,000
shares of Common Stock which is exercisable in one-third increments six months,
18 months and 30 months after the date of grant. These options expire ten years
after the date of grant, unless canceled sooner as a result of termination of
service or death. In addition, each non-employee Director receives a Stock Award
at the beginning of each calendar quarter that is calculated as the number of
whole shares of Common Stock with a fair market value of $10,000 on the date of
the award. The Common Stock received pursuant to Stock Awards may not be
transferred for a period of six months after the award is made. As of April 1,
1999 there were four non-employee Directors who were eligible to participate in
the Director Plan.
As of March 24, 1999, there were options outstanding to purchase
148,500 shares of Common Stock under the Director Plan. The exercise price for
these options is the fair market value of the Company's Common Stock on the date
of grant. As of March 24, 1999, 2,320 shares of Common Stock had been issued as
Stock Awards under the Director Plan. Based on the closing sale price of the
Common Stock on March 24, 1999, the aggregate market value of the 148,500 shares
of Common Stock underlying outstanding options granted pursuant to the Director
Plan was approximately $2,942,156 and the aggregate market value of the 2,320
shares of Common Stock issued as Stock Awards was approximately $45,966.
7
<PAGE> 11
Once an option becomes exercisable, the option holder may purchase
shares of Common Stock from the Company by paying the exercise price in cash,
shares of Common Stock or other consideration acceptable to the Board of
Directors. Subject to limitations on "golden parachute" payments described in
Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), options become fully vested upon the occurrence of a merger or certain
other corporate events in which the control of the Company is changed.
The following table sets forth information regarding Awards which would
be received, assuming five non-employee Directors participating under the
Director Plan in 1999, if the proposed amendment and restatement of the Director
Plan is approved:
NEW PLAN BENEFITS
DIRECTOR PLAN
<TABLE>
<CAPTION>
PROJECTED NUMBER OF
NUMBER OF SHARES SHARES
GRANTED AS UNDERLYING
DOLLAR VALUE STOCK STOCK
NAME AND POSITION (1) OF STOCK AWARDS AWARDS(2) OPTIONS
- ------------------------------ ------------------- ----------------- ---------------
<S> <C> <C> <C>
Non-Employee Director Group (5 persons) $200,000 10,095 75,000
</TABLE>
- ---------------
(1) Neither the Named Executive Officers nor any other employees is
eligible to participate in the Director Plan.
(2) The number of shares represented by the Stock Awards is based on the
closing sale price of the Common Stock on the New York Stock Exchange
on March 24, 1999, which was $19.8125 per share.
FEDERAL INCOME TAX CONSEQUENCES
Generally, an individual will not recognize any income, and the Company
will not be entitled to any deduction, upon the grant of Awards under the
Director Plan. Upon the exercise of an option under the Director Plan, the
individual will recognize ordinary income in an amount equal to the excess of
the fair market value of the Common Stock above the exercise price of the option
on the date of exercise. The Company will then be entitled to a tax deduction in
an amount equal to the ordinary income recognized by the individual. The
individual will have a tax basis in the Common Stock equal to the fair market
value of the Common Stock at the time of exercise. Any additional gain or loss
realized by the individual on disposition of the Common Stock will be capital
gain or loss to the individual and will not result in any additional tax
deduction to the Company. Reduced capital gains rates apply if the Common Stock
is held for at least twelve months after exercise. For options exercised after
December 31, 2000, a further capital gains rate reduction will apply if the
Common Stock has been held for at least five years.
With respect to Stock Awards, an individual will recognize ordinary
income on the fair market value of the Common Stock on the date of vesting. An
individual may, however, within 30 days of the date of the Stock Award, make an
election under Section 83(b) of the Code to be taxed on the fair market value of
the Common Stock on the date of grant. In either case, the Company is generally
entitled to deduct the amount recognized by the individual for tax purposes. The
individual is subject to capital gains treatment on the subsequent sale of the
Common Stock acquired through a Stock Award. For this purpose, the individual's
basis in the Common Stock is his or her fair market value at the time of vesting
(or transfer, if an election under Section 83(b) is made).
REGISTRATION UNDER THE SECURITIES ACT OF 1933
The Company has previously registered the shares of Common Stock
authorized for issuance under the Director Plan in a Registration Statement on
Form S-8 filed with the SEC.
8
<PAGE> 12
REQUIRED VOTE
Approval of the proposed amendment and restatement of the Director Plan
requires the affirmative vote of a majority of the votes cast (in person or by
proxy) by the holders of Common Stock entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE JDN REALTY
CORPORATION 1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
9
<PAGE> 13
PROPOSAL 3: APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF THE JDN REALTY CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has adopted an amendment and restatement of the
JDN Realty Corporation 1995 Employee Stock Purchase Plan (the "ESPP"). The
following is a brief description of the material terms of the ESPP and the
proposed amendment. This description is qualified in its entirety by reference
to the full text of the ESPP, a copy of which is attached hereto as Appendix B.
SUMMARY OF CHANGES
The amendment to the ESPP is in the form of a complete restatement of
the ESPP. The amendment (i) permits the Company to designate which of its
subsidiaries may participate in the ESPP and (ii) eliminates the requirement
that shareholders approve certain types of amendments to the ESPP.
REASONS FOR CHANGES
Participating Employer Procedure. Prior to the amendment, employees of
all corporations in a parent or subsidiary relationship with the Company were
automatically eligible to participate in the ESPP. A subsidiary is a corporation
in which the Company owns at least 50% of the voting stock. A parent is a
corporation that owns at least 50% of the voting stock of the Company. The
amendment provides that employees of a parent or subsidiary may participate in
the ESPP only if the Compensation Committee of the Board of Directors designates
the corporation as a participating parent or subsidiary. While the Board of
Directors believes that encouraging Common Stock ownership through the ESPP is
desirable, the Board of Directors also believes it is in the best interest of
the Company and its shareholders to preserve flexibility in this regard.
Shareholder Approval Requirements. Shareholder approval was, and
continues to be, required for amendments to the ESPP that increase the number of
shares of Common Stock reserved for issuance under the ESPP, change the class of
employees eligible to participate in the ESPP or reduce the Issue Price (as
defined in the ESPP) per share. Prior to the amendment, shareholder approval was
also required for amendments that could materially increase benefits accruing
under awards pursuant to the ESPP. In many situations, the broad definition of
"materially" would necessitate approval for purely administrative amendments.
The Board of Directors believes that the cost and time required to obtain
shareholder approval in many instances far outweigh any value shareholders may
derive from reviewing such amendments. The current restrictions preserve
shareholder rights to review amendments on matters that are of the most
significance to shareholders. These changes are possible because Rule 16b-3 has
been revised to eliminate shareholder approval as a requirement. The shareholder
approval provisions in the amended ESPP are consistent with the requirements of
the New York Stock Exchange and the requirements under Section 423 of the Code
that apply to the ESPP (as discussed below).
GENERAL DESCRIPTION OF THE ESPP, AS AMENDED
The purpose of the ESPP is to provide an opportunity for employees of
the Company and its designated subsidiaries to share in the growth and
prosperity of the Company by acquiring a proprietary interest in the Company
through the acquisition of Common Stock. The Board of Directors intends for the
ESPP to qualify as an employee stock purchase plan under Section 423 of the
Code.
On March 1 of each year (the "Grant Date"), each eligible employee is
granted an option to purchase shares of Common Stock on the last day of February
in the following year (the "Exercise Date"). The purchase price of the Common
Stock under the option is 85% of the fair market value of the Common Stock on
either the Grant Date or the Exercise Date, whichever is lower. This right to
purchase Common Stock is limited to the lesser of (i) the number of shares that
may be purchased with 10% of the eligible employee's compensation during the
year or (ii) $25,000 per calendar year, based on the fair market value of the
Common Stock on the Grant Date. In order to exercise the
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<PAGE> 14
option granted under the ESPP, an employee must authorize the Company to deduct
a portion of the employee's regular pay for the purchase of Common Stock. On
each Exercise Date, the funds deducted are used to purchase shares of Common
Stock for each participating employee. Options that are not exercised by
participating employees terminate on the Exercise Date.
The Compensation Committee of the Board of Directors administers the
ESPP. No member of the Compensation Committee is eligible to participate in the
ESPP. As of March 24, 1999, a total of 5,161 shares of Common Stock had been
issued under the ESPP. Based on the closing sale price of the Common Stock on
March 24, 1999, the aggregate market value of the 5,161 shares of Common Stock
issued under the ESPP was approximately $102,252.
All employees of the Company and its designated subsidiaries are
eligible to participate in the ESPP beginning on the first day of the Plan Year
(as defined in the ESPP) following the commencement of employment, except: (i)
employees who are regularly scheduled to work less than 20 hours per week; (ii)
employees who are regularly scheduled to work fewer than five months during the
year; or (iii) employees who own 5% or more of the voting power or the value of
all classes of the Company's capital stock. As of March 24, 1999, approximately
53 employees of the Company were eligible to participate in the ESPP.
In general, an employee's right to participate in the ESPP expires
immediately upon termination of employment. At that time, all payroll amounts
that have been withheld and have not been used to purchase Common Stock are
refunded to the employee without interest. If termination is due to death,
disability or retirement, however, the employee (or the personal representative
of his or her estate) may elect for amounts previously withheld to be used to
purchase Common Stock at the next Exercise Date.
FEDERAL INCOME TAX CONSEQUENCES
Generally, neither the grant nor the exercise of the options under the
ESPP results in taxable income to a participating employee or a tax deduction
for the Company if the Common Stock purchased under the ESPP is held for at
least two years after the Grant Date and one year after the Exercise Date. If
the employee sells the Common Stock after satisfying this holding period, the
employee will recognize ordinary income equal to the fair market value of the
Common Stock at the time of sale, or, if less, the fair market value at the
Grant Date, minus the price paid to purchase the Common Stock. Any additional
gain or loss realized by the employee on the disposition of Common Stock will be
subject to capital gains tax treatment. The employee's tax basis for calculating
capital gains will consist of the purchase price paid to acquire the Common
Stock plus the amount of ordinary income recognized on the disposition.
Disposition of the Common Stock before the holding periods described
above are satisfied is a "disqualifying disposition" and causes recognition of
ordinary income on the difference between the price paid to acquire the Common
Stock and its fair market value at the time of purchase. The employee's basis in
the Common Stock after a disqualifying disposition is its fair market value at
the time of exercise. The employee will also be subject to tax on capital gain,
if any, upon the sale of the Common Stock on the amount realized in excess of
the basis. Generally, the Company is entitled to a tax deduction only upon the
occurrence of a disqualifying disposition for the amount of ordinary income
recognized by the employee.
REGISTRATION UNDER THE SECURITIES ACT OF 1933
The Company has previously registered the shares of Common Stock
authorized for issuance under the ESPP in a Registration Statement on Form S-8
filed with the SEC.
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<PAGE> 15
REQUIRED VOTE
Approval of the proposed amendment and restatement of the ESPP requires
the affirmative vote of a majority of the votes cast (in person or by proxy) by
the holders of Common Stock entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE JDN REALTY
CORPORATION 1995 EMPLOYEE STOCK PURCHASE PLAN.
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<PAGE> 16
PROPOSAL 4: ADOPTION OF THE JDN REALTY CORPORATION
LONG-TERM INCENTIVE PLAN
The Board of Directors has approved the adoption of the JDN Realty
Corporation Long-Term Incentive Plan (the "LTIP"). The following is a brief
description of the material terms of the LTIP. This description is qualified in
its entirety by reference to the full text of the LTIP, a copy of which is
attached hereto as Appendix C.
The Board of Directors is seeking shareholder approval of the LTIP in
order that compensation attributable to equity-based awards under the LTIP will
qualify as "performance-based compensation," which preserves the deductibility
of such awards under Section 162(m) of the Code ("Section 162(m)"). Section
162(m) establishes a limit of $1 million per year for the deduction allowed for
federal income tax purposes for compensation paid to the Chief Executive Officer
and the four other most highly compensated executive officers of a public
company (the "Deduction Limit"). The Deduction Limit, which became effective in
1994, applies to compensation which does not qualify for any of the limited
number of exceptions provided for under Section 162(m). The Deduction Limit does
not apply to compensation paid under a plan that meets certain requirements for
performance-based compensation. It is the Company's intent to generally
structure awards granted under the LTIP to satisfy the requirements for the
performance-based compensation exception to the Deduction Limit and, therefore,
to preserve the full deductibility of all compensation paid under the LTIP to
the extent practicable.
GENERAL DESCRIPTION OF THE LTIP
The primary purpose of the LTIP is to further the long-term stability
and financial success of the Company by establishing a performance-based
compensation program that provides meaningful economic incentives to attract and
retain key employees and encourage their outstanding performance, thereby
aligning the economic interests of such key employees with those of
shareholders.
The LTIP is comprised of the following components: (a) annual cash
incentives ("Incentive Payments"), (b) performance share grants ("Performance
Shares") and (c) options to purchase shares of Common Stock from the Company
("Stock Options") (collectively, the Incentive Payments, the Performance Shares
and the Stock Options are referred to as "LTIP Awards").
Incentive Payments. The Compensation Committee may make LTIP Awards in
the form of cash bonuses, including cash bonuses referenced in employment
agreements, and determine when and to whom such Incentive Payments will be made.
The amount of the Incentive Payments may be stated as a fixed amount or as an
objective formula for computing the amount of compensation payable if the
performance goal is obtained. A formula for computing compensation may be
expressed as a percentage of base compensation or on any other basis that yields
a determinable amount of compensation. The maximum annual Incentive Payment that
any eligible employee may receive pursuant to the LTIP is $1 million.
Performance Shares. The Compensation Committee may make an LTIP Award
in the form of Performance Shares, which are shares of the Company's Common
Stock that are subject to a substantial risk of forfeiture but become vested
upon satisfaction of the criteria stated in the LTIP Award. The Compensation
Committee will determine when and to whom such grants will be made, the number
of shares to be awarded, the date or dates upon which Performance Shares will
vest, the time or times within which such Performance Shares may be subject to
forfeiture, and all other terms and conditions of such Performance Shares. The
Performance Shares are issued as "restricted stock" under the Incentive Plan.
Stock Options. The Compensation Committee may make an LTIP Award in the
form of Stock Options, which are options to purchase shares of Common Stock from
the Company at a price set forth in the LTIP Award. The Compensation Committee
will determine when and to whom such grants will be made, the number of Stock
Options to be awarded, the date or dates upon which Stock Options will
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<PAGE> 17
vest and all other terms and conditions of such Stock Options. The Stock Options
will be issued pursuant to the Incentive Plan.
Performance Goals for LTIP Awards. Objective performance goals will be
determined by the Compensation Committee from time to time in its sole
discretion. A performance goal can be based on the performance of an individual,
a business unit of the Company, or the Company as a whole. The goals may be
based on increases in performance over a prior period, but may also be based on
maintaining status quo or limiting losses or decreases in performance, as is
appropriate in view of the business conditions of the Company, its industry or
the market in which its securities are traded at the time of the LTIP Award.
Performance goals may be based on one or more of the criteria specified below,
or on a combination thereof:
(a) Targeted levels of "funds from operations" per share of
Common Stock ("FFO"). The performance goal may be stated as the
attainment of a specified amount of FFO for a period or as a percentage
change in FFO from a prior period.
(b) Targeted levels of total return to shareholders. Total
return to shareholders is determined by the amount of distributions
paid during a period to shareholders, plus an increase in the market
value of the Common Stock. The performance goal may be expressed as the
attainment of a specified total return amount for a period or as a
percentage change in the total return from a prior period.
(c) Targeted levels of market value of the Common Stock. The
performance goal may be stated as the attainment of a specified market
value during a specified period or as a percentage change in market
value from a prior period.
(d) Targeted levels of distributions. The performance goal may
be stated as the attainment of a specified rate of distributions during
a specified period or as a percentage or dollar amount change in
distributions from a prior period.
Payment of LTIP Awards. Payment of Incentive Payments will occur if the
performance goals specified in the LTIP Award have been satisfied. The
Compensation Committee may condition vesting or the timing of vesting of
Performance Shares and Stock Options on the attainment of the performance goals
specified in the LTIP Award. Awards of Performance Shares and Stock Options will
be subject to forfeiture or termination prior to the attainment of performance
goals based on predetermined events specified in the LTIP Awards. Payment or
vesting under an LTIP Award will not occur until the Compensation Committee has
certified in writing that the performance goals have been achieved. Such
certification is not required, however, if the performance goal is based solely
on the increase in the market value of the Common Stock for a specified period.
Subject to the conditions of the LTIP, cash compensation amounts that become
payable after attainment of performance goals will be paid at the time specified
in an LTIP Award or, if no time is specified, as soon as administratively
feasible after attainment of the performance goals. No more than an aggregate of
500,000 shares of Common Stock, in the form of Performance Shares or shares
underlying Stock Options, may be awarded under the LTIP to an eligible employee
during a calendar year.
Shareholder Approval Requirements. Shareholder approval is required for
amendments to the LTIP that modify the material terms of the performance goals
specified above.
ADMINISTRATION
The Compensation Committee is authorized to administer the LTIP and to
grant LTIP Awards to key employees of the Company. The Compensation Committee
will determine which individuals are to receive LTIP Awards, the type of LTIP
Award to be granted and any applicable vesting schedules for the Performance
Shares and the Stock Options. These and other terms will be established by the
Committee in writing (i) within 90 days of the beginning of the period upon
which performance will be measured, and (ii) prior to the lapse of 25% of such
performance period. Four executive officers of the Company have been selected by
the Compensation Committee to participate in the LTIP in 1999. See "Compensation
Committee Report on Executive Compensation."
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<PAGE> 18
The terms of LTIP Awards are subject to the discretion of the
Compensation Committee and, therefore, the dollar value of LTIP Awards cannot be
determined prior to the date the award is made. Management believes that it is
in the Company's best interest to provide the Compensation Committee with the
flexibility under appropriate circumstances to grant LTIP Awards.
FEDERAL INCOME TAX CONSEQUENCES
Generally, an individual will not recognize any income, and the Company
will not be entitled to any deduction, upon the grant of LTIP Awards. Otherwise,
the tax consequences will vary, depending upon the type of LTIP Award.
For Performance Shares, an individual will recognize ordinary income on
the fair market value of the Common Stock represented by the LTIP Award on the
date of vesting. An individual may, however, within 30 days of the date of the
LTIP Award, make an election under Section 83(b) of the Code to be taxed on the
fair market value of the Common Stock on the date the award is made. In either
case, the Company is generally entitled to deduct the amount recognized by the
individual for tax purposes. The individual is also subject to capital gains
treatment on the subsequent sale of the Common Stock acquired through the LTIP
Award. For this purpose, the basis in the Common Stock is its fair market value
at the time of vesting (or transfer, if an election under Section 83(b) is
made). Any additional gain or loss realized by the individual on disposition of
the Common Stock will not result in any additional tax deduction to the Company.
For Performance Shares acquired after December 31, 2000, a capital gains rate
reduction will apply if the Common Stock has been held for at least five years.
For a discussion of the federal income tax consequences relating to the
Stock Options, see the discussion under "Proposal 5: Approval of the Amendment
of the JDN Realty Corporation 1993 Incentive Stock Plan" entitled "Federal
Income Tax Consequences."
For Incentive Payments, an individual will recognize compensation
income at the time the performance criteria stated in the LTIP Award are
satisfied and the Company makes Incentive Payments to the individual. The
Company will be entitled to an income tax deduction to the extent of the income
recognized by the individual.
While the LTIP is designed to comply with Section 162(m), any portion
of an LTIP Award that does not qualify as performance-based compensation under
Section 162(m) may not be deductible to the extent that compensation paid to an
individual exceeds the Deduction Limit.
REGISTRATION UNDER THE SECURITIES ACT OF 1933
The Company has previously registered the shares of Common Stock
authorized for issuance under the LTIP (pursuant to the Incentive Plan) in a
Registration Statement on Form S-8.
REQUIRED VOTE
Approval of the adoption of the LTIP requires the affirmative vote of a
majority of the votes cast (in person or by proxy) by the holders of Common
Stock entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ADOPTION OF THE JDN
REALTY CORPORATION LONG-TERM INCENTIVE PLAN.
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<PAGE> 19
PROPOSAL 5: APPROVAL OF THE AMENDMENT
OF THE JDN REALTY CORPORATION
1993 INCENTIVE STOCK PLAN
The Board of Directors has adopted an amendment to the JDN Realty
Corporation 1993 Incentive Stock Plan (the "Incentive Plan") to increase the
number of shares reserved for issuance under the Incentive Plan from 3,623,698
shares to 3,988,043 shares. The following is a brief description of the material
terms of the Incentive Plan and the proposed amendment. This description is
qualified in its entirety by reference to the full text of the Incentive Plan, a
copy of which is attached hereto as Appendix D.
SUMMARY OF CHANGE
The amendment to the Incentive Plan increases the number of shares
reserved for issuance under the Incentive Plan from 3,623,698 shares
(approximately 10.9% of the outstanding Common Stock as of March 31, 1999) to
3,988,043 shares (approximately 12.0% of the outstanding Common Stock as of
March 31, 1999).
GENERAL DESCRIPTION OF THE INCENTIVE PLAN
The purpose of the Incentive Plan is to provide a performance incentive
and to encourage Common Stock ownership by officers, directors, consultants and
advisors of the Company and its affiliates. The Compensation Committee is
authorized to administer the Incentive Plan and to grant awards to Company
employees and to certain others who provide significant services to the Company.
The Incentive Plan provides for the award of "incentive stock options" ("ISOs")
described in Section 422 of the Code, non-qualified stock options, which are not
qualified as ISOs under the Code ("NQSOs"), shares of Common Stock subject to
restrictions on transferability prior to vesting ("Restricted Stock") and stock
appreciation rights ("SARs") (collectively, "Incentive Award" or "Incentive
Awards"). ISOs may be granted only to employees of the Company and its
subsidiaries.
The Compensation Committee determines which individuals are to receive
Incentive Awards under the Incentive Plan, the type of award to be granted and
the exercise prices and vesting dates of each Incentive Award. The exercise
price of ISOs may not be less than 100% of the fair market value of the Common
Stock on the date of grant (110% for individuals who own more than 10% of the
total outstanding Common Stock). These and other terms are set forth in a
written agreement between the Company and the individual receiving the Incentive
Award. The aggregate fair market value of Common Stock with regard to which ISOs
are exercisable by an individual for the first time during any calendar year may
not exceed $100,000. No award will be exercisable after the expiration of ten
years from the date it is granted (five years for ISOs granted to individuals
who own more than 10% of the total outstanding shares of Common Stock).
Once an option has become exercisable, the individual may purchase
shares of Common Stock from the Company by paying the exercise price in cash,
shares of Common Stock or in other consideration acceptable to the Compensation
Committee. Subject to limitations on "golden parachute" payments described in
Sections 280G and 4999 of the Code, Incentive Awards become fully vested upon
the occurrence of a merger or certain other corporate events in which the
control of the Company is changed. The amount of any Incentive Award under the
Incentive Plan is subject to the discretion of the Compensation Committee and,
therefore, cannot be determined in advance. Management believes that it is in
the Company's best interest to provide the Company's Compensation Committee with
the flexibility under appropriate circumstances to award additional stock
options, Restricted Stock and/or SARs under the Incentive Plan.
As of March 31, 1999, 2,674,970 shares, or approximately 8.0% of the
number of outstanding shares of Common Stock as of that date, were subject to
outstanding options which have been granted under the Incentive Plan. Based upon
the closing sale price on March 31, 1999 of $19.875 per share of Common Stock as
reported on the New York Stock Exchange, the aggregate market value of the
shares underlying the options granted under the Incentive Plan was approximately
$53,165,029. As of March 31, 1999, 24 employees of the Company and JDN
Development Company,
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<PAGE> 20
Inc. ("JDN Development"), excluding executive officers, had received options to
purchase an aggregate of 213,000 shares of Common Stock and nine executive
officers had received options to purchase an aggregate of 2,553,470 shares of
Common Stock under the Incentive Plan. No Director of the Company has received
any Incentive Awards pursuant to the Incentive Plan.
Shareholder approval is required for amendments to the Incentive Plan
that (i) increase the aggregate number of shares of Common Stock that may be
issued under ISOs or change the employees (or class of employees) eligible to
receive ISOs, (ii) change the number of shares of Common Stock in the aggregate
that may be issued pursuant to Incentive Awards or the maximum number of shares
with respect to which any individual may receive options in any calendar year
except as otherwise provided in the Incentive Plan, and (iii) increase the
period during which Incentive Awards may be granted or exercised.
FEDERAL INCOME TAX CONSEQUENCES
Generally, a participant will not recognize income, and the Company is
not entitled to take a deduction, upon the grant of an ISO, NQSO, Restricted
Stock, or SAR under the Incentive Plan. Otherwise, the tax consequences to the
Company and to individuals receiving Incentive Awards will vary with the type of
Incentive Award.
An individual who exercises an ISO will not recognize income on its
exercise if he or she does not sell the shares of Common Stock acquired thereby
for at least two years after the date of grant and one year after exercising the
ISO. Any gain or loss on the sale of the Common Stock after these statutory
holding periods will be subject to capital gains treatment. The exercise price
of the ISO is the basis for purposes of determining capital gains. An individual
who disposes of the Common Stock before the statutory holding periods are
satisfied will have engaged in a "disqualifying disposition" and will recognize
ordinary compensation income on the difference between the exercise price of the
ISO and the fair market value of the Common Stock at the time the ISO was
exercised. The individual's basis in the Common Stock after a disqualifying
disposition is its fair market value at the time of exercise. The individual
will also be subject to tax on capital gain, if any, upon the sale of the Common
Stock on the amount realized in excess of the basis. Reduced capital gains rates
apply for Common Stock that is acquired after December 31, 2000, if the shares
are held for at least five years.
Generally, the Company is not entitled to a tax deduction upon the
grant of an option or the exercise of an ISO. However, if the individual engaged
in a disqualifying disposition, the Company may take a tax deduction for the
amount of ordinary income recognized by the individual.
Upon exercise of a NQSO, the individual recognizes ordinary income on
the difference between the fair market value of the Common Stock and the
exercise price paid under the NQSO. Upon exercise of a SAR, the individual
recognizes ordinary income on the value of the SAR realized on exercise. Unless
an individual makes an election under Section 83(b) of the Code to be taxed at
the time of grant, he or she will recognize ordinary income on the fair market
value of the Common Stock at the time shares of Restricted Stock become vested.
In all such cases, the Company is generally entitled to deduct the amount
recognized by the individual for tax purposes. The individual is also subject to
capital gains treatment on the subsequent sale of any Common Stock acquired
through an Incentive Award. For this purpose, the individual's basis in the
Common Stock is its fair market value at the time the NQSO is exercised or the
Restricted Stock becomes vested (or transferred, if an election under Section
83(b) is made). Reduced capital gains rates apply for Common Stock that is
acquired after December 31, 2000, if the shares are held for at least five
years.
REGISTRATION UNDER THE SECURITIES ACT OF 1933
The Company intends to register additional shares of Common Stock
authorized for issuance under the Incentive Plan in a Registration Statement on
Form S-8 as soon as practicable after approval of the amendment of the Incentive
Plan by the shareholders of the Company.
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<PAGE> 21
REQUIRED VOTE
Approval of the proposed amendment of the Incentive Plan requires the
affirmative vote of a majority of the votes cast (in person or by proxy) by the
holders of Common Stock entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE AMENDMENT OF THE JDN REALTY CORPORATION
1993 INCENTIVE STOCK PLAN.
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<PAGE> 22
PROPOSAL 6: RATIFICATION OF APPOINTMENT OF AUDITORS
The Audit Committee of the Board of Directors has selected the firm of
Ernst & Young LLP as independent auditors of the Company and its subsidiaries
for the Company's 1999 fiscal year, subject to ratification by shareholders.
Ernst & Young LLP has served as the independent auditors of the Company since
the Company's formation in December 1993. One or more representatives of Ernst &
Young LLP are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if he or she desires, and will be available to
respond to appropriate questions.
REQUIRED VOTE
Ratification of the appointment of Ernst & Young LLP as independent
auditors of the Company and its subsidiaries for the Company's 1999 fiscal year
requires the affirmative vote of a majority of the votes cast (in person or by
proxy) by the holders of Common Stock entitled to vote at the Annual Meeting. If
the appointment is not ratified, the matter will be referred to the Audit
Committee for further review.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP.
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<PAGE> 23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information with respect to ownership of
Common Stock as of March 24, 1999 by (i) each person known by the Company, based
solely on a review of electronic filings made with the SEC, to be a beneficial
owner of more than 5% of the outstanding shares of Common Stock, (ii) each of
the Company's Directors and nominees for Director, (iii) each of the executive
officers named in the Summary Compensation Table, and (iv) all Directors and
executive officers of the Company as a group. Unless otherwise indicated, each
shareholder listed below has sole voting and investment power with respect to
the shares beneficially owned.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT OF COMMON STOCK
BENEFICIAL OWNER BENEFICIAL OWNERSHIP BENEFICIALLY OWNED (1)
- ---------------- -------------------- ----------------------
<S> <C> <C>
J. Donald Nichols ................................. 2,077,634(2) 6.0%
JDN Realty Corporation
3814 Cleghorn Avenue
Nashville, Tennessee 37215
Nike Securities L.P................................ 1,717,578 5.2%
First Trust Advisors L.P.
Nike Securities Corporation
1001 Warrenville Road
Lisle, Illinois 60532
Elizabeth L. Nichols............................... 678,386(3) 2.0%
William J. Kerley.................................. 228,118(4) *
C. Sheldon Whittelsey, IV.......................... 87,336(5) *
Jeb L. Hughes...................................... 117,081(6) *
William G. Byrnes.................................. 18,333 *
Haywood D. Cochrane, Jr............................ 18,464(7) *
Robert P. Corker, Jr............................... 3,464(8) *
William B. Greene.................................. 15,464(9)(10) *
Craig Macnab....................................... 13,964(11) *
All Executive Officers and Directors
as a Group (14 persons)............................ 3,413,296 9.7%
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Pursuant to the rules of the SEC, shares of Common Stock which
beneficial owners set forth in this table have a right to acquire
within 60 days of the date indicated are deemed to be outstanding for
the purpose of computing the percent of Common Stock beneficially owned
by that owner but are not deemed outstanding for the purpose of
computing percentage ownership of any other beneficial owner shown in
the table.
(2) Includes options currently exercisable to purchase 569,049 shares at an
exercise price of $14.67 per share, 267,000 shares at an exercise price
of $13.50 per share (the vesting of which was accelerated to June 30,
1998, as a result of achieving a predetermined FFO per share target)
and 300,000 shares at an exercise price of $20.75 per share. Mr.
Nichols has disclaimed beneficial ownership of shares beneficially
owned by Ms. Nichols.
(3) Includes options currently exercisable to purchase 165,209 shares at an
exercise price of $14.67 per share, 75,000 shares at an exercise price
of $13.50 per share (the vesting of which was accelerated to June 30,
1998, as a result of achieving a predetermined FFO per share target)
and 150,000 shares at an exercise price of $20.75 per share. Ms.
Nichols has disclaimed beneficial ownership of shares beneficially
owned by Mr. Nichols.
(4) Includes options currently exercisable to purchase 67,962 shares at an
exercise price of $14.67 per share, 33,000 shares at an exercise price
of $13.50 per share (the vesting of which was accelerated to June 30,
1998, as a result of achieving a predetermined FFO per share target)
and 100,000 shares at an exercise price of $20.75 per share.
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<PAGE> 24
(5) Includes options currently exercisable to purchase 75,000 shares at an
exercise price of $20.75 per share.
(6) Includes options currently exercisable to purchase 100,000 shares at an
exercise price of $20.75 per share.
(7) Includes options currently exercisable to purchase 4,500 shares at an
exercise price of $14.67 per share, 4,500 shares at an exercise price
of $13.33 per share, 3,000 shares at an exercise price of $14.92 per
share and 1,500 shares at an exercise price of $18.42 per share.
(8) Includes options currently exercisable to purchase 1,500 shares at an
exercise price of $18.42 per share. Mr. Corker resigned from the Board
of Directors effective March 31, 1999.
(9) Includes options currently exercisable to purchase 4,500 shares at an
exercise price of $14.67 per share, 4,500 shares at an exercise price
of $13.33 per share, 3,000 shares at an exercise price of $14.92 per
share and 1,500 shares at an exercise price of $18.42 per share.
(10) Includes 1,500 shares held by the William B. Greene Trust, of which Mr.
Greene serves as a trustee.
(11) Includes options currently exercisable to purchase 4,500 shares at an
exercise price of $14.67 per share, 1,500 shares at an exercise price
of $13.33 per share, 3,000 shares at an exercise price of $14.92 per
share and 1,500 shares at an exercise price of $18.42 per share.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors,
executive officers and persons who own more than 10% of the Common Stock to file
with the SEC initial reports of ownership and reports of changes in ownership of
Common Stock. These officers, Directors and shareholders are also required by
SEC rules to furnish the Company with copies of all Section 16(a) reports they
file. There are specific dates by which these reports are to be filed and the
Company is required to report in this Proxy Statement any failure to file
reports as required during 1998.
Based solely upon its review of the copies of reports furnished to the
Company and written representations from certain of the Company's Directors and
executive officers that no other reports were required, the Company believes
that all Section 16(a) reporting and filing requirements relating to ownership
of Common Stock were complied with during 1998.
21
<PAGE> 25
EXECUTIVE COMPENSATION
SUMMARY ANNUAL COMPENSATION
The following table reflects the compensation of the Company's Chief
Executive Officer and the four other most highly compensated executive officers
whose total annual salary and bonus exceeded $100,000 in 1998 (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- -------------------
Securities
Restricted Underlying
Stock Options
Annual Other Annual Awards(1) (No. of All Other
Name and Principal Position Year Salary Bonus Compensation (No.of Shares) Shares) Compensation(2)
- --------------------------- ---- ------ ----- ------------ --------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Donald Nichols, 1998 $385,000 $392,000 -- -- -- $12,841
Chief Executive Officer 1997 325,000 (1) -- 22,263 450,000 5,333
1996 300,000 150,000 -- -- -- 4,750
Elizabeth L. Nichols, 1998 302,500 308,000 -- -- -- 10,138
President 1997 223,750 (1) -- 17,493 225,000 3,877
1996 172,500 100,000 -- -- -- 6,777
Jeb L. Hughes, 1998 220,000 241,000 -- -- -- 5,578
Senior Vice President of 1997 154,300 (1) -- 18,743 150,000 2,386
Development, JDN 1996 108,600 150,000 $25,834(3) -- -- 453
Development Company, Inc.
William J. Kerley, 1998 220,000 224,000 -- -- -- 10,334
Chief Financial Officer (4) 1997 170,000 (1) -- 12,722 150,000 10,058
1996 140,000 75,000 -- -- -- 7,416
C. Sheldon Whittelsey, IV 1998 176,000 207,200 -- -- -- 6,320
Vice President, 1997 130,000 (1) -- 13,535 112,500 2,250
Development 1996 100,000 100,000 -- -- -- 2,000
</TABLE>
- ---------------
(1) Based on a deferred bonus plan adopted by the Board of Directors for
1997, the Named Executive Officer was awarded Restricted Stock in lieu
of cash bonuses for 1997. The number of shares of Restricted Stock
awarded represents twice the dollar amount of cash bonus deferred by
the Named Executive Officer divided by the closing price of the
Company's Common Stock on February 27, 1998, which was $22.18 per
share. The Named Executive Officers received an aggregate of 84,486
shares of Restricted Stock (25% of which vests each February 27
beginning in 1999) with an aggregate market value as of December 31,
1998 of $1,821,518. Dividends are paid to each Named Executive Officer
on his or her shares of Restricted Stock.
(2) Represents (a) contributions by the Company to its Savings and Profit
Sharing Plan (a 401(k) plan) allocated to the account of the Named
Executive Officer and (b) the portion of automobile lease payments made
by the Company that have been allocated to non-business uses by the
Named Executive Officer.
(3) Represents commissions paid to the Named Executive Officer for leasing
services.
(4) Mr. Kerley has elected to participate in the ESPP, which permits
eligible employees to purchase Common Stock at a discount.
STOCK OPTION AND SAR GRANTS
The Company granted no stock options or SARs to the Named Effective
Officers in 1998.
22
<PAGE> 26
OPTION EXERCISES AND YEAR-END VALUES
The following table provides certain information with respect to the
Named Executive Officers concerning the exercise of options during 1998 and with
respect to unexercised options at December 31, 1998. No stock appreciation
rights were outstanding in 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE ---------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Donald Nichols......... -- -- 986,049 300,000 $6,196,733 $243,750
Elizabeth L. Nichols...... -- -- 315,209 150,000 1,804,325 121,875
William J. Kerley......... -- -- 150,962 100,000 775,116 81,250
Jeb L. Hughes............. -- -- 50,000 100,000 40,625 81,250
C. Sheldon
Whittelsey, IV............ -- -- 37,500 75,000 30,469 60,938
</TABLE>
- ---------------
(1) Based upon the closing price of the Common Stock of $21.5625 per share as
reported on the New York Stock Exchange on December 31, 1998, less the
exercise price of the options.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company's current employment agreements with Mr. Nichols, Ms.
Nichols, and Mr. Kerley became effective on December 1, 1996. Neither Mr. Hughes
nor Mr. Whittelsey has an employment contract with the Company or JDN
Development. Mr. Nichols' employment agreement, pursuant to which he serves as
Chairman of the Board and Chief Executive Officer of the Company, has a
three-year term which is automatically renewed each year. Under his employment
agreement, Mr. Nichols receives an annual base salary of $350,000, subject to
cost-of-living adjustments and annual increases at the discretion of the
Compensation Committee of the Board of Directors, and is entitled to participate
in the Company's stock option plans and all other benefit programs generally
available to executive officers of the Company. Mr. Nichols is also entitled to
receive an annual bonus at the discretion of the Compensation Committee of the
Board of Directors.
If the Company terminates Mr. Nichols' employment without cause, he is
entitled to receive his accrued salary, earned bonus, vested deferred
compensation (other than plan benefits which will be paid in accordance with the
applicable plan), and other benefits through the date of termination. In
addition, Mr. Nichols will receive as severance compensation his base salary for
the remaining term of his employment agreement and for a period of one year
thereafter and an amount equal to his average annual bonus during the two years
immediately preceding his termination. At Mr. Nichols' election, he may receive
a lump sum severance amount equal to the present value of such severance
payments (using a discount rate equal to the 90-day Treasury bill interest rate
in effect on the date of delivery of such election notice).
If a "change-in-control" (as defined in the employment agreement)
occurs, Mr. Nichols may terminate his agreement and receive his accrued base
salary and other benefits described above through the remaining term of the
agreement and a period of one year thereafter, and an amount equal to his
average annual bonus during the two years immediately preceding the termination.
Mr. Nichols may elect to receive from the Company a lump sum severance payment
(calculated as provided above). Notwithstanding the foregoing, amounts payable
under the employment agreement are subject to certain "parachute payment" (as
defined in the employment agreement) reductions.
23
<PAGE> 27
The Company may terminate Mr. Nichols' agreement for "cause," which is
defined to include willful dishonesty towards, fraud upon, or deliberate injury
or attempted injury to the Company or Mr. Nichols' willful material breach of
the agreement which has resulted in material injury to the Company. In the event
of Mr. Nichols' termination for cause, he shall receive all accrued salary,
earned bonus compensation, vested deferred compensation (other than plan
benefits which will be payable in accordance with the applicable plan), and
other benefits through the date of termination, but shall receive no other
severance benefits. Mr. Nichols' agreement may also be terminated if Mr. Nichols
dies or becomes disabled and his disability continues for a period of 12
consecutive months. In the event of termination of the agreement because of Mr.
Nichols' death or disability, Mr. Nichols (or his estate) shall receive these
same payments but no additional severance benefits except that, if Mr. Nichols
becomes disabled, the Company will maintain his insurance benefits for the
remaining term of his agreement.
The Company has agreed to indemnify Mr. Nichols for certain liabilities
arising from actions taken within the scope of his employment. Mr. Nichols'
employment agreement contains restrictive covenants pursuant to which Mr.
Nichols has agreed not to compete with the Company during the period of Mr.
Nichols' employment and any period following termination of his employment
during which he is receiving severance payments if terminated other than for
cause, and for a period of one year if terminated upon a "change in control" (as
defined in the employment agreement).
The employment agreement with Ms. Nichols, pursuant to which she serves
as President of the Company, is identical to Mr. Nichols' agreement, except that
Ms. Nichols' agreement provides for an annual base salary of $275,000.
The employment agreement with Mr. Kerley, pursuant to which he serves
as the Company's Chief Financial Officer, Secretary and Treasurer, is identical
to Mr. Nichols' employment agreement, except that the term of Mr. Kerley's
agreement is two years which is automatically renewed each year, and provides
for an annual base salary of $200,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors
until the Board's meeting in May 1998 were Messrs. Greene and Macnab. At the
Board's meeting in May 1998, Messrs. Greene and Byrnes were appointed as members
of the Compensation Committee. There are no interlocks among the members of the
Compensation Committee.
24
<PAGE> 28
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The following Compensation Committee Report on Executive Compensation
and the Performance Graph included in this Proxy Statement shall not be deemed
to be incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
or the Exchange Act, except to the extent the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
COMPENSATION COMMITTEE OVERVIEW
The Compensation Committee has the responsibility for establishing and
administering a general compensation policy and program for the Company. The
Compensation Committee is responsible for administering all of the Company's
employee benefit plans, including all stock option plans, stock purchase plans,
bonus plans, retirement plans, and medical, dental and insurance plans. Subject
to the provisions of these employee benefit plans, the Compensation Committee
must determine the individuals eligible to participate in each of the plans, the
extent of such participation and the terms and conditions under which benefits
may be vested, received or exercised.
The Compensation Committee is comprised of independent Directors,
neither of whom is or has been an employee of the Company. The Compensation
Committee has from time to time utilized an independent compensation consultant
to provide information in connection with its deliberations.
The Compensation Committee intends for the Company's executive
compensation program to attract, motivate and retain key employees of the
Company, its subsidiaries and affiliated entities, and to provide for (i) base
salaries competitive with those paid by comparable companies, (ii) variable
annual incentives which would reflect contributions by key employees to the
Company's annual performance objectives and (iii) a variable long-term incentive
program utilizing equity ownership in the Company which would reflect
contributions by key employees to the Company's achievement of longer-term
goals.
EXECUTIVE COMPENSATION FOR 1998
Executive compensation for the Company in 1998 was comprised of two
elements: base salaries and cash bonus awards. In addition, Restricted Stock
awards were granted to certain key employees under a deferred bonus plan adopted
in 1998 for services performed in 1997 as described below.
Base Salaries. The Compensation Committee approves all increases in
salaries paid to officers and senior employees of the Company who earn an annual
base salary in excess of a threshold amount established in the Company's Bylaws.
The threshold amount established in the Company's current Bylaws is $150,000.
Salaries paid to Mr. Nichols, Ms. Nichols and Mr. Kerley have been
established pursuant to employment agreements approved by the Board of
Directors, which were entered into in December 1996. Each such employment
agreement provides automatic annual cost-of-living increases to base salary.
Additional base salary adjustments must be determined by the Compensation
Committee on an annual basis. In addition, the Company has entered into
employment agreements with David L. Henzlik, Vice President, Director of
Leasing, John D. Harris, Jr., Vice President, Controller and Assistant
Secretary, and Leilani L. Jones, Vice President and Director of Property
Management and Assistant Secretary, under each of which the base salary is
subject to adjustment by the Compensation Committee on an annual basis. In 1998,
the Compensation Committee approved adjustments to the annual base salaries of
those executive officers whose base salaries exceeded the $150,000 threshold
amount based on management's recommendations, which in turn were based on
qualitative performance reviews of these individuals in light of the nature and
significance of their positions, their experience in performing the tasks
assigned to them, and their tenure with and general contributions to the
Company.
25
<PAGE> 29
Cash Bonus Awards. The Company awarded cash bonuses in February 1999 to
each executive officer of the Company based on 1998 performance. The bonus
criteria were established by the Compensation Committee in 1997 based on a
review of the Company's executive compensation program at that time in
consultation with an outside compensation consultant. The bonuses awarded to Mr.
Nichols, Ms. Nichols and Mr. Kerley were based on the Company's having exceeded
a predetermined level of rate of growth in FFO in 1998. The bonuses awarded to
the remaining executive officers were based upon the results achieved in 1998 in
three categories, weighted as follows: (1) corporate performance (weighted 75%
on a predetermined level of rate of growth in FFO and 25% on a predetermined
level of total return to shareholders)--30%; (2) business unit (departmental)
performance--50%; and (3) individual performance--20%.
Deferred Bonus Plan. In February 1998, the Compensation Committee
adopted a deferred bonus plan that permitted executive officers and certain
senior employees of the Company and JDN Development to elect to receive two
times the value of their cash bonus in the form of Restricted Stock in lieu of
all or a portion (but no less than 25%) of their cash bonuses awarded in
February 1998. Pursuant to this deferred bonus plan, the following executive
officers elected to receive awards of Restricted Stock in the amounts indicated:
J. Donald Nichols, 22,263 shares; Elizabeth L. Nichols, 17,493 shares; William
J. Kerley, 12,722 shares; John D. Harris, Jr., 3,710 shares; Laurie A. Farris,
3,665 shares; Leilani L. Jones, 1,356 shares; Jeb L. Hughes, 18,743 shares; and
C. Sheldon Whittelsey IV, 13,535 shares. No awards were made under the deferred
bonus plan in 1999.
CHIEF EXECUTIVE OFFICER COMPENSATION
As Chairman of the Board and Chief Executive Officer of the Company,
Mr. Nichols was paid a salary in 1998 of $385,000. Mr. Nichols' annual base
salary was set under his 1996 employment agreement based on the Compensation
Committee's review of a report on executive compensation for other REITs
prepared by an outside compensation consultant. Under the terms of his
employment agreement, Mr. Nichols is entitled to an annual bonus at the
discretion of the Compensation Committee, and is entitled to participate in the
Company's stock option plans and other benefit programs generally available to
executive officers of the Company. In March 1999, the Compensation Committee
authorized the award and payment of a bonus to Mr. Nichols based on 1998
performance in the amount of $392,000. Such bonus was based on the Company's
having exceeded a predetermined target for growth in FFO in 1998.
COMPENSATION PLANNING FOR 1999
Management of the Company engaged an independent compensation
consultant to provide recommendations for a comprehensive compensation policy in
light of the Company's strategic plan with the goal of adopting a
performance-based compensation program specifically related to criteria that
reflect the Company's performance using quantifiable measures. The Compensation
Committee reviewed with management the recommendations contained in the report
prepared by the consultant with the goal of implementing a compensation policy
providing for salary increases, cash bonuses and non-cash incentive awards based
on both qualitative and quantitative measures of executives' performance within
the framework of the Company's strategic plan. As a result of this review, the
Compensation Committee recommended the adoption of an executive compensation
program based on the performance measures outlined below. Based on the
Compensation Committee's recommendation, the Board of Directors has adopted a
long-term executive compensation program which for 1999 will include the
following elements:
Base Salary. The Compensation Committee has considered market data
provided by the outside compensation consultant on real estate investment trusts
considered comparable to the Company in terms of industry, size and success in
determining appropriate 1999 base salary levels for Messrs. Nichols, Kerley and
Hughes and Ms. Nichols, whose base salaries are intended to be competitive based
on this market data and on specific job performance by these individuals.
26
<PAGE> 30
Long-Term Incentive Plan.
Annual Cash Bonus. Each of Messrs. Nichols, Kerley and Hughes
and Ms. Nichols will be eligible to receive cash bonus awards based on
performance in 1999, a portion of which will be tied to predetermined levels of
rate of growth in diluted FFO ("FFO Growth Rate"), and a portion of which will
be determined in the discretion of the Compensation Committee. If the
predetermined levels of FFO Growth Rate are achieved, cash bonuses as a
percentage of the executive's salary will be awarded.
Incentive Plan Awards. Each of the above-named executive
officers will be eligible to receive awards of Restricted Stock and Stock
Options under the Incentive Plan based on performance in 1999. The vesting
schedule for these awards will be based on a combination of years of service by
the individual and the Company's achieving predetermined levels of performance.
Performance will be measured based in part on FFO Growth Rate and in part on
total return to shareholders. Performance will be further weighted based in part
on Company levels of performance ("Absolute Performance") and in part on the
performance of the Company against an identified peer group of retail real
estate investment trusts ("Peer Group Performance").
Executive Stock Purchase Loan Guaranty Program. The Compensation
Committee may identify executive officers eligible to participate in the
Company's Executive Stock Purchase Loan Guaranty Program adopted by the Board of
Directors. Under this program, the Company may guaranty loans by one or more
third-party lenders to enable key executive officers to purchase additional
shares of Common Stock, either through the exercise of outstanding options or
otherwise.
SECTION 162(M)
Section 162(m) of the Code, enacted in 1993, generally disallows a tax
deduction by a public company for compensation in excess of $1 million dollars
paid to the company's chief executive officer and four other most highly
compensated executive officers. Qualifying performance-based compensation is not
subject to the limitation on deductibility if certain requirements are met. In
1998, no executive named in the Summary Compensation Table above received
compensation exceeding the threshold for deductibility under Section 162(m).
Generally, the Compensation Committee intends to structure the
performance-based portion of the compensation of the Company's executive
officers in a manner that complies with Section 162(m) to the extent necessary
to maximize the corporate tax deduction while enabling the Company to attract
and retain qualified executives. The Compensation Committee does, however, have
the authority and reserves the discretion to authorize non-deductible
compensation to reward performance that increases the long-term value of the
Company.
COMPENSATION COMMITTEE
William B. Greene, Chairman
William G. Byrnes
27
<PAGE> 31
COMPARATIVE PERFORMANCE GRAPH
Rules promulgated by the SEC require that the Company include in this
Proxy Statement a line graph that compares the yearly percentage change in
cumulative total shareholder return on the Common Stock with (a) the performance
of a broad equity market indicator and (b) the performance of a published
industry index or peer group index. The following graph compares the yearly
percentage change in the return on the Common Stock since March 22, 1994 with
the cumulative total return on the Standard and Poor's 500 Index and the Total
Return Index for Equity REITs, published by The National Association of Real
Estate Investment Trusts, Inc. ("NAREIT"). The graph assumes the investment of
$100 on March 22, 1994 and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
FOR THE PERIOD ENDING DECEMBER 31, 1998
[GRAPH]
<TABLE>
<CAPTION>
3/22/94 12/94 12/95 12/96 12/97 12/98
------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
JDN REALTY CORPORATION 100 97 118 158 197 211
S&P 500 100 101 139 170 227 292
NAREIT EQUITY 100 96 111 150 180 149
</TABLE>
28
<PAGE> 32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1994, JDN Development was formed to develop retail shopping
center properties. The Company owns 100% of the non-voting common stock and 1%
of the voting common stock of JDN Development, and receives 99% of any dividends
or other distributions paid by JDN Development. Mr. Nichols, the Chairman and
Chief Executive Officer of the Company, is the sole member of JDN Development's
board of directors. Mr. Nichols has the ability to elect future boards of
directors and to effectively control JDN Development. Mr. Nichols owns 99% of
the voting common stock of JDN Development and receives 1% of any dividends or
other distributions paid by JDN Development. As of December 31, 1998, the
Company had contributed, loaned or advanced approximately $151.0 million to JDN
Development. The shareholders of JDN Development also make capital contributions
to JDN Development as needed for development projects. The Company has
guaranteed all or portions of three loans of JDN Development or its consolidated
subsidiaries in the amount of approximately $21.0 million as of December 31,
1998, secured by shopping center projects located in Canton, Georgia, Warner
Robins, Georgia, and Conyers, Georgia. These loans bear interest at rates
ranging from LIBOR plus 1.40% to LIBOR plus 1.50% (weighted average rate of
6.86% at December 31, 1998) and mature in 1999.
Jeb L. Hughes, Vice President, Development of JDN Development, was the
President and a 50% shareholder of Fast Rental, Inc. until that company's sale
in July 1998. Prior to its sale, Fast Rental was a tenant in three of the
Company's shopping center properties. During 1998, the Company received
approximately $58,333 in base rental revenue from Fast Rental.
29
<PAGE> 33
GENERAL INFORMATION
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
All shareholder proposals to be considered for inclusion in the
Company's proxy statement next year must, in addition to meeting the
requirements of SEC Rule 14a-8, be submitted in writing to the Company at its
executive offices at 359 East Paces Ferry Road, Suite 400, Atlanta, Georgia
30305, not later than December 22, 1999. Additionally, the proxy for next year's
annual meeting will confer discretionary authority to vote any shareholder
proposal which the Company receives notice of later than March 6, 2000.
COUNTING OF VOTES
All matters specified in this Proxy Statement that are to be voted on
at the Annual Meeting will be by written ballot or proxy. Inspectors of election
will be appointed to, among other things, determine the number of shares
outstanding, the shares represented at the Annual Meeting, the existence of a
quorum and the authenticity, validity and effect of proxies, to receive votes by
ballots, to hear and determine all challenges and questions in any way arising
in connection with the right to vote, to count and tabulate all votes and to
determine the result. Each proposal presented herein to be voted on at the
Annual Meeting must be approved by the affirmative vote of the holders of the
number of shares described under each such proposal.
The inspectors of election will treat shares represented by proxies
that reflect abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. Abstentions do not, however,
constitute a vote "for" or "against" any matter and thus will be disregarded in
the calculation of "votes cast."
The inspectors of election will treat shares represented by proxies
that reflect "broker non-votes" as shares that are present and entitled to vote
for purposes of determining the presence of a quorum. For purposes of
determining the outcome of any matter as to which the broker has indicated on
the proxy that it does not have discretionary authority to vote, however, those
shares will be treated as not present and not entitled to vote with respect to
that matter (even though those shares are considered entitled to vote for quorum
purposes and may be entitled to vote on other matters).
MISCELLANEOUS
The Company will bear the cost of printing, mailing and other expenses
in connection with this solicitation of proxies and will also reimburse brokers
and other persons holding shares in their names or in the names of nominees for
their expenses in forwarding this proxy material to the beneficial owners of
such shares. Certain of the Directors, officers and employees of the Company
may, without any additional compensation, solicit proxies in person or by
telephone.
Management of the Company is not aware of any matters other than those
described above which may be presented for action at the Annual Meeting. If any
other matters properly come before the Annual Meeting, it is intended that the
proxies will be voted with respect thereto in accordance with the judgment of
the person or persons voting such proxies subject to the direction of the Board
of Directors.
A copy of the Company's 1998 Annual Report to Shareholders is being
mailed with this Proxy Statement.
30
<PAGE> 34
FOR INFORMATION CONCERNING THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1998 AS FILED WITH THE SEC, AVAILABLE TO
SHAREHOLDERS FREE OF CHARGE, PLEASE WRITE: CHARLES N. TALBERT, INVESTOR
RELATIONS, JDN REALTY CORPORATION, 359 EAST PACES FERRY ROAD, SUITE 400,
ATLANTA, GEORGIA 30305.
By order of the Board of Directors,
/s/ William J. Kerley
-------------------------------------------
William J. Kerley
Corporate Secretary
April 20, 1999
31
<PAGE> 35
APPENDIX A
JDN REALTY CORPORATION
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
EFFECTIVE DECEMBER 17, 1993
AMENDED AND RESTATED
NOVEMBER 24, 1998
<PAGE> 36
JDN REALTY CORPORATION
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
PREAMBLE
WHEREAS, effective December 17, 1993, JDN Realty Corporation (the
"Company") has established the JDN Realty Corporation 1993 Non-Employee Director
Stock Option Plan which provides for the automatic grant of options to purchase
the common stock, $.01 par value, of the Company ("Stock") to members of the
board of directors of the Company who are not employees of the Company;
WHEREAS, the Company also provides cash compensation to its directors
for services rendered to the Company in such capacity, and desires to provide
compensation for such services in the form of Stock in lieu of cash
compensation;
WHEREAS, the Company desires to amend and restate the JDN Realty
Corporation 1993 Non-Employee Director Stock Option Plan to, among other things,
provide for the automatic grant of Stock Awards (as hereinafter defined)
hereunder; and
WHEREAS, the Company intends that the JDN Realty Corporation 1993
Non-Employee Director Stock Option Plan, as amended and restated (the "Plan"),
and the awards granted hereunder will conform to the provisions of Securities
and Exchange Commission Rule 16b-3, as amended through the date hereof, and that
the references to a quantity of shares of Stock will reflect the effect of the
Company's three-for-two Stock split that occurred prior to the effective date of
this restatement;
NOW, THEREFORE, the Company hereby amends and restates the Plan,
effective November 24, 1998:
ARTICLE I. DEFINITIONS
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company.
1.2 Agreement. A written agreement (including any amendment or
supplement thereto) between the Company or an Affiliate and a Participant
specifying the terms and conditions of an Award granted to such Participant.
1.3 Award. A right that is granted under the Plan to a Participant by
the Company, including Options and Stock Awards.
1.4 Board. The board of directors of the Company.
1.5 Code. The Internal Revenue Code of 1986, as amended.
A-1
<PAGE> 37
1.6 Committee. A committee composed of at least two individuals (or
such other number that satisfies Rule 16b-3 of the Exchange Act) who are members
of the Board and are not employees of the Company or an Affiliate, and who are
designated by the Board as the "Compensation Committee" or are otherwise
designated to administer the Plan. In the absence of a designation of a
Committee by the Board, the Board shall be the Committee.
1.7 Company. JDN Realty Corporation and its successors.
1.8 Exchange Act. The Securities Exchange Act of 1934, as amended.
1.9 Fair Market Value. On any given date, Fair Market Value shall be
the applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):
(a) If the Stock is traded on the New York Stock Exchange or the
American Stock Exchange, the closing price of the Stock on
such exchange on which such Stock is traded on the trading day
immediately preceding the date as of which Fair Market Value
is being determined, or on the next preceding day on which
such Stock is traded if no Stock was traded on such trading
day;
(b) If the Stock is not traded on the New York Stock Exchange or
the American Stock Exchange, but is reported on the Nasdaq
National Market or another Nasdaq automated quotation system
and market information is published on a regular basis, then
Fair Market Value shall be the closing price of the Stock, as
so published, on the trading day immediately preceding the
date as of which Fair Market Value is being determined, or the
closing price on the next preceding trading day on which such
prices were published if no Stock was traded on such trading
day;
(c) If market information is not so published on a regular basis,
then Fair Market Value shall be the average of the high bid
and low asked prices of the Stock in the over-the-counter
market over a period of trading days that is reasonably
representative of the normal trading of the Stock immediately
preceding the date on which Fair Market Value is being
determined, as reported by a generally accepted reporting
service; or
(d) If the Stock is not publicly traded, Fair Market Value shall
be the value determined in good faith by the Committee. Such
determination shall not, however, take into account any
restriction on the Stock, except for a restriction which by
its terms will never lapse.
1.10 Grant Date. With respect to Options, each January 1 during the
term of the Plan. With respect to Stock Awards, the first day of each calendar
quarter during the term of the Plan.
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1.11 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement.
1.12 Participant. Each Board member who, on a respective Grant Date, is
not an employee of the Company or any of its Affiliates and who otherwise
satisfies the requirements of Article IV to receive an Award.
1.13 Plan. The JDN Realty Corporation 1993 Non-Employee Director Stock
Option Plan, as amended and restated.
1.14 Stock Award. A grant of Stock that is described in Section 4.3.
1.15 Stock. The common stock, $.01 par value, of the Company.
ARTICLE II. PURPOSE OF PLAN
The purpose of this Plan is to provide a performance incentive and to
encourage Stock ownership by the Participants, and to align the interests of
such individuals with those of the Company, its Affiliates and its stockholders.
It is intended that Participants may acquire or increase their proprietary
interests in the Company and be encouraged to remain as directors of the
Company. Any proceeds received by the Company from the sale of Stock pursuant to
this Plan may be used for general corporate purposes.
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. This Plan shall be administered by the
Committee. The express grant in this Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or action taken by the Committee to administer this Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement or Award. The
Company shall bear all expenses of Plan administration. In addition to all other
authority vested with the Committee under this Plan, the Committee shall have
complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend, and rescind rules for Plan administration; and
(e) Make all determinations it deems advisable for the
administration of this Plan.
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3.2 Authority to Issue Awards. The Committee shall have the authority
to issue Awards upon such terms as the Committee deems appropriate and that are
not inconsistent with the provisions of this Plan.
3.3 Persons Subject to Section 16(b). Notwithstanding anything herein
to the contrary, the Committee, in its absolute discretion, may bifurcate this
Plan so as to restrict, limit or condition the use of any provision of this Plan
to Participants who are subject to section 16(b) of the Exchange Act, without so
restricting, limiting or conditioning the Plan with respect to other
Participants.
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation. Awards shall be granted hereunder to Participants
who qualify therefor on each Grant Date. At the determination of the Committee,
Awards may be evidenced by Agreements which shall be subject to applicable
provisions of this Plan or such other provisions as the Committee may adopt that
are not inconsistent herewith. Such provisions may include, by way of example
and not limitation, provisions for cash or other compensation to be paid in
combination with Awards. An Award may be deemed to be granted prior to the
approval of this Plan by the stockholders of the Company and prior to the time
that an Agreement is executed by the Participant and the Company.
4.2 Grant of Options. Options shall be granted automatically to each
Participant on each Grant Date. Notwithstanding anything herein to the contrary,
the Board may revoke on or before a Grant Date the grant of Options that is
otherwise provided for herein if no options have been granted to employees since
the preceding Grant Date under the Company's 1993 Incentive Stock Plan or any
other employee stock option plan of the Company. All Options granted hereunder
shall be subject to the following terms and conditions:
(a) Number. Each Participant shall receive an Option to purchase
15,000 shares of Stock (as adjusted pursuant to Article VII).
However, if fewer than 15,000 shares of Stock (as adjusted
pursuant to Article VII), multiplied by the number of
Participants, remain available for issuance under the Plan on
any Grant Date, Options shall be awarded by allocating the
remaining shares of Stock pro rata thereto.
(b) Price. Stock may be purchased through an Option by payment of
the Fair Market Value of the Stock as determined on the Grant
Date thereof.
(c) Option Period. Each Option shall expire ten years after the
Grant Date thereof (the "Option Period"), unless the Option is
terminated sooner pursuant to Section 4.2(d) below.
(d) Termination of Service, Death, Etc. Options that have not yet
expired pursuant to Section 4.2(c) will sooner terminate if
the Participant ceases to be a member of the Board under any
of the conditions described in this Section. In no event shall
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the Option Period described in Section 4.2(c) be extended by
any of the events described below:
(i) All outstanding Options shall immediately terminate
if Board membership terminates due to fraud,
dishonesty or other acts detrimental to the interests
of the Company, its Affiliates, or any direct or
indirect majority-owned subsidiary or business entity
of the Company.
(ii) Options that have not otherwise terminated will
terminate twelve months following the death of a
Participant. After death, the Option may be exercised
by the executor or administrator of the estate of
Participant, or by any persons who have acquired the
Option by bequest or inheritance.
(iii) All outstanding Options will terminate three months
after the date that a Participant ceases to be a
member of the Board for any reason that is not
described in paragraphs (i) and (ii) of this Section.
(e) Vesting Dates. Each Option shall become exercisable with
respect to one-third of the shares subject to the Option
beginning six months after the Grant Date, and with respect to
two-thirds of such shares beginning 18 months after the Grant
Date, and will become fully exercisable 30 months after the
Grant Date; provided, however, that the Participant's vested
right to exercise Options shall not be increased under this
Section at the time the Participant is no longer a member of
the Board.
(f) Transferability. Generally, any Option granted under this Plan
shall not be transferable except by will or by the laws of
descent and distribution, and shall be exercisable during the
lifetime of the Participant only by the Participant. An Option
may be transferable, however, to the extent provided in the
Agreement. No right or interest of a Participant in any Award
shall be liable for, or subject to, any lien, obligation or
liability of such Participant.
4.3 Stock Award. Stock Awards shall be made automatically to each
Participant on each Grant Date. An award of Stock shall be made on each Grant
Date to each Participant. The number of shares to be awarded shall be calculated
as the number of whole shares that is equal to $10,000 divided by the Fair
Market Value of Stock per share on the Grant Date, rounded to the nearest whole
share. Shares awarded under this Section shall not be transferable for a period
of six months after the Grant Date.
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option or the grant of a
Stock Award, the Company shall deliver to the Participant authorized but
unissued Stock.
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5.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to the exercise of Awards is 450,000, subject
to increases and adjustments as provided in Article VII.
5.3 Forfeitures. If any Option granted hereunder expires or
terminates for any reason without having been exercised in full, the shares of
Stock subject thereto shall again be available for issuance of an Award under
this Plan.
ARTICLE VI. EXERCISE OF OPTIONS
6.1 Exercise Subject to the limitations described in this Plan, an
Option may be exercised in whole or in part at such times and in compliance with
such requirements as the Committee shall determine. An Option shall be treated
as exercised hereunder on the date that the Company accepts tender of the
exercise price of an Option.
6.2 Method of Payment. Unless otherwise provided by the Agreement,
payment of the Option price shall be made in cash or, to the extent approved by
the Committee, Stock that was acquired prior to the exercise of the Option,
other consideration acceptable to the Committee, or a combination thereof.
6.3 Federal Withholding Tax Requirements. Upon exercise of an Option or
receipt of a Stock Award, a Participant shall, upon notification of the amount
due and prior to or concurrently with the delivery of the shares, pay to the
Company amounts necessary to satisfy applicable federal, state and local
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements.
6.4 Stockholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to Options prior to the exercise
thereof and payment of the Option price therefor. Participants shall have all
rights as stockholders through the grant of a Stock Award on the date that the
shares of Stock are transferred to the Participant, subject to the restrictions
on transferability set forth in Section 4.2.
6.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
Stock Awards or the exercise of Options hereunder shall be delivered to
Participants by the Company (or its transfer agent) as soon as administratively
feasible after a Participant exercises an Option hereunder, or is granted a
Stock Award, and executes any applicable stockholder agreement or agreement
described in Section 8.2 that the Company requires at the time of exercise.
ARTICLE VII. ADJUSTMENT UPON CORPORATE CHANGES
7.1 Adjustments to Shares. The maximum number of shares of Stock with
respect to which Awards hereunder may be granted and which are the subject of
outstanding Awards, and the exercise price of Options granted hereunder, shall
be adjusted as the Committee determines in its sole discretion to be
appropriate, in the event that:
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(a) the Company or an Affiliate effects one or more stock
dividends, stock splits, reverse stock splits, subdivisions,
consolidations or other similar events;
(b) the Company or an Affiliate engages in a transaction to which
section 424 of the Code applies; or
(c) there occurs any other event which in the judgment of the
Committee necessitates such action;
provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Awards specified in
Article IV that are proportionate to the modifications of the Stock that are on
account of such corporate changes. Notwithstanding the foregoing, the Committee
may not modify the Plan or the terms of any Awards then outstanding or to be
granted hereunder to provide for the issuance under the Plan of a different
class of stock or kind of securities.
7.2 Substitution of Awards on Merger or Acquisition. The Committee may
grant Awards in substitution for stock awards, stock options, stock appreciation
rights or similar awards held by an individual who becomes an employee of the
Company or an Affiliate in connection with a transaction to which section 424(a)
of the Code applies. The terms of such substituted Awards shall be determined by
the Committee in its sole discretion, subject only to the express limitations on
Awards contained herein.
7.3 Effect of Certain Transactions. Upon a merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation of
the Company, as a result of which the stockholders of the Company receive cash,
stock or other property in exchange for their shares of Stock (but not a public
offering of Stock by the Company), and the Company is not the surviving entity
(even though it may survive as a subsidiary corporation), any Option granted
hereunder shall terminate, provided that the Participant shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise his or her Options
in whole or in part, without regard to any vesting requirements and provided
further that such Options shall not terminate if the Committee elects to convert
all Options hereunder into stock incentive awards of an acquiring corporation.
Notwithstanding the foregoing, a portion of the acceleration of exercisability
of Options shall not occur with respect to any holder to the extent that such
portion of acceleration would cause the Participant or holder of such Option to
be liable for the payment of taxes pursuant to section 4999 of the Code. If the
Committee elects to convert the Options, the amount and price of such converted
options shall be determined by adjusting the amount and price of the Options
granted hereunder in the same proportion as used for determining the number of
shares of stock of the acquiring corporation the holders of the Stock receive in
such merger, consolidation, acquisition of property or stock, separation or
reorganization.
7.4 No Adjustment Upon Certain Transactions. 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 rendered,
either upon direct sale or upon the exercise of rights
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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,
outstanding Awards.
7.5 Fractional Shares. Only whole shares of Stock may be acquired
through an Award. Any amounts tendered in the exercise of an Option remaining
after the maximum number of whole shares have been purchased will be returned to
the Participant.
ARTICLE VIII. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
8.1 General. No Award shall be exercisable, no Stock shall be
issued, no certificates for shares of Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all federal or state
laws and regulations (including, without limitation, withholding tax
requirements), federal and state securities laws and regulations and the rules
of all securities exchanges on which the Company's securities may be listed, or
national securities associations through which the Company's securities may be
quoted, and until the Company has obtained such consent or approval as the
Committee may deem advisable from any regulatory bodies having jurisdiction over
such matters. The Company shall have the right to rely on an opinion of its
counsel as to such compliance. Any certificate issued to evidence shares of
Stock pursuant to an Award may bear such legends and statements as the Committee
upon advice of counsel may deem advisable to assure compliance with federal or
state laws and regulations.
8.2 Representations by Participants. As a condition to the issuance of
a Stock Award or the exercise of an Option, the Company may require a
Participant to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares, if, in the opinion of counsel for the
Company, such representation is required by any relevant provision of the laws
referred to in Section 8.1. At the option of the Company, a stop transfer order
against any shares of Stock may be placed on the official Stock books and
records of the Company, and a legend indicating that the Stock may not be
pledged, sold or otherwise transferred unless an opinion of counsel was provided
(concurred in by counsel for the Company) and stating that such transfer is not
in violation of any applicable law or regulation may be stamped on the
certificate evidencing such Stock in order to assure exemption from
registration. The Committee may also require such other action or agreement by
the Participants as may from time to time be necessary to comply with federal or
state securities laws. This provision shall not obligate the Company or any
Affiliate to undertake registration of Options or Stock hereunder.
ARTICLE IX. GENERAL PROVISIONS
9.1 Unfunded Plan. This 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 this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. 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.
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9.2 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. 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.
9.3 Governing Law. The internal laws of the State of Maryland shall
apply to all matters arising under this Plan, except to the extent that Maryland
law is preempted by federal law.
9.4 Compliance With Section 16 of the Exchange Act. With respect to
persons subject to liability under section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 (or successor provisions) under the Exchange Act. To the extent any
provision of this Plan or action by Committee fails to so comply, it shall be
deemed null and void to the extent permitted by law and deemed advisable by the
Committee.
9.5 Amendment; Termination. The Board may amend or terminate this Plan
at any time; provided, however, an amendment that would have a material adverse
effect on the rights of a Participant under an outstanding Award is not valid
with respect to such Award without the Participant's consent, and provided,
further, that the stockholders of the Company must approve, in general meeting
before the effective date thereof, any amendment that changes the number of
shares in the aggregate which may be issued pursuant to Awards granted under
this Plan, except pursuant to Article VII. Generally, stockholder approval shall
not be required for amendments to this Plan pursuant to Section 3.1 hereof
intended to benefit the administration of this Plan, for amendments necessitated
by changes in legislation or administrative rules governing this Plan, or for
amendments that the Board deems necessary to obtain or maintain favorable tax,
securities exchange or regulatory treatment of this Plan for future
Participants.
9.6 Effective Date of Plan. The JDN Realty Corporation 1993
Non-Employee Director Stock Option Plan was originally effective December 17,
1993, and was approved by the stockholders of the Company thereafter. This
amendment and restatement shall be effective on January 1, 1999. Awards may be
granted hereunder at any time after the adoption of this or any other amendment
to the Plan which increases the number of shares of Stock available for Awards.
IN WITNESS WHEREOF, the undersigned officer of the Company has executed
this instrument, pursuant to authorization of the Board, on this the 24th day of
November, 1998, but to be effective as provided in Section 9.6.
JDN REALTY CORPORATION
By: /s/ William J. Kerley
--------------------------
Its: Chief Financial Officer
--------------------------
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APPENDIX B
JDN REALTY CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
As amended and restated effective March 1, 1999
RECITALS:
WHEREAS, JDN Realty Corporation, a Maryland corporation, adopted the
JDN Realty Corporation 1995 Employee Stock Purchase Plan (the "Plan") for the
benefit of its eligible employees and eligible employees of its subsidiaries,
effective March 1, 1996, in order to provide an opportunity for eligible
employees to share in the growth and prosperity of the Sponsoring Employer (as
defined in Section 1.18) and its subsidiaries by acquiring a proprietary
interest in the Sponsoring Employer through acquisition of shares of the
Sponsoring Employer's common stock;
WHEREAS, the Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423(b) of the Internal Revenue Code of 1986,
as amended (the "Code"); and
WHEREAS, the Sponsoring Employer desires to amend the Plan to conform
the Plan with changes to Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 and to modify the method by which employees of subsidiaries of the
Sponsoring Employer become eligible to participate in the Plan;
NOW, THEREFORE, the Plan is amended and restated, effective March 1,
1999, as follows:
ARTICLE I
DEFINITIONS
As used herein, the following words and phrases shall have the meanings
specified below, unless a different meaning is plainly required by the context:
1.1. "Anniversary Date" shall mean March 1 of each year.
1.2. "Board of Directors" shall mean the Board of Directors of JDN
Realty Corporation.
1.3. The "Committee" shall mean the Compensation Committee of the
Sponsoring Employer's Board of Directors.
1.4. "Continuous Service" shall mean the number of full years and
completed months of continuous employment with an Employer calculated from an
Employee's last hire date to the Employee's date of severance of employment for
any reason. Continuous Service shall not be broken and shall be credited for
absences due to vacation, temporary sickness or injury, other paid leaves of
absence authorized by an Employer, and leaves of absence which would not cause
an individual to cease to be an Employee.
1.5. "Contribution Account" shall mean the account recorded on the
records of the Sponsoring Employer established on behalf of a Member to which
the amount of the Member's contributions made pursuant to Article IV shall be
credited.
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1.6. "Effective Date" shall mean March 1, 1996.
1.7. "Employee" shall mean each current or future employee of an
Employer as defined in Treasury Regulation Section 1.423-2(b), Section
1.421-7(h) and any other Regulations later finalized.
1.8. "Employer" shall mean the Sponsoring Employer, and its successors.
Employer shall also include any present or future parent (as defined in Section
424(e) of the Code) and any present or future subsidiary (as defined in Section
424(f) of the Code) of the Sponsoring Employer that is from time to time
designated by the Committee as a participating Employer. Such designation may be
by a resolution of the Committee or any other writing that is duly adopted by
the Committee for such purpose.
1.9. "Exercise Date" shall mean the last trading date during each Plan
Year of the exchange on which the Sponsoring Employer Stock is traded.
1.10. "Grant Date" shall mean the first trading date during the Plan
Year of the exchange on which the Sponsoring Employer Stock is traded.
1.11. "Issue Price" shall mean the purchase price of the Sponsoring
Employer Stock to be charged to participating Members on the Exercise Date. The
Issue Price shall be subject to a Minimum Issue Price as outlined in Section 5.2
herein.
1.12. "Market Price" shall mean the closing sales price for the day
upon which the Market Price is to be determined or, if there are no sales on
such date, the sales price for the most recent day preceding such date, in
either case as reported on the New York Stock Exchange or any other exchange on
which the Sponsoring Employer Stock is traded or automated interdealer quotation
system sponsored by a registered national securities association on which the
Sponsoring Employer Stock is quoted. Notwithstanding the foregoing, if there
shall be any material alteration in the present system of reporting sales prices
of the Sponsoring Employer Stock, or if the Sponsoring Employer Stock shall no
longer be listed on a national securities exchange or quoted on an automated
interdealer quotation system sponsored by a registered national securities
association, the Market Price of the Sponsoring Employer Stock as of a
particular date shall be determined using such method as shall be determined by
the Committee provided such method is appropriate to qualify the Plan as an
employee stock purchase plan under Section 423 of the Code.
1.13. "Member" shall mean any Employee of an Employer who has met the
conditions and provisions for becoming a Member as provided in Article III.
1.14. "Member's Contribution Rate" shall be an exact number of dollars
or percentage of pay elected by the Member to be contributed by regular payroll
deductions to his Contribution Account as outlined in Section 4.1.
1.15. "Normal Monthly Pay" for purposes of determining the amount of a
Member's contributions for any Plan Year shall be (i) for hourly paid Employees,
an amount computed by adding (a) the Member's hourly base pay multiplied by the
Member's regular scheduled hours of work for the calendar year immediately
preceding the first day of the Plan Year divided by 12 and (b) the amount
obtained from dividing the amount of all commissions paid to the Member in the
calendar year immediately preceding the first day of the Plan Year by 12, and
(ii) for salaried employees, an amount computed by adding (a) the Member's
monthly base pay for the calendar month immediately preceding the first day of
the Plan Year and (b) the amount obtained from
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dividing the amount of all commissions paid to the Member in the calendar year
immediately preceding the first day of the Plan Year by 12; provided, however,
that with respect to any Member who on the Effective Date has been employed for
less than the applicable time periods set forth above, the Sponsoring Employer
may calculate "Normal Monthly Pay" by any reasonable method consistently applied
to all such Members.
1.16. "Plan" shall mean the JDN Realty Corporation 1995 Employee Stock
Purchase Plan as set forth herein and all subsequent amendments hereto.
1.17. "Plan Year" shall mean a 12 month period beginning on the first
day of March and ending on the last day of February of each year; provided,
however, in the first Plan Year following the Effective Date of the Plan, the
first day of the Plan Year shall be May 1.
1.18. "Sponsoring Employer" shall mean JDN Realty Corporation, a
Maryland corporation, or its successors, the Plan sponsor for all purposes.
1.19. "Sponsoring Employer Stock" shall mean, subject to adjustment as
provided in Article X, those shares of the Sponsoring Employer's Common Stock,
$.01 par value, which pursuant to Article II are reserved for issuance upon the
exercise of the options granted under this Plan.
ARTICLE II
ISSUANCE OF STOCK
The Sponsoring Employer hereby reserves 150,000 shares of Sponsoring
Employer Stock for issuance upon the exercise of the options granted hereunder;
provided, that the class and aggregate number of shares which may be issued upon
exercise of options granted hereunder shall be subject to adjustment in
accordance with the provisions of Article X of the Plan. These shares may be
authorized and unissued shares, issued shares held in or acquired for the
treasury of the Sponsoring Employer, or shares of stock reacquired by the
Sponsoring Employer upon purchase in the open market or otherwise.
ARTICLE III
ELIGIBILITY
3.1. Every Employee whose customary employment is at least 20 hours per
week and more than five months in a calendar year shall be eligible to
participate in the Plan on the first day of the Plan Year coincident with or
following the commencement of such eligible employment. An Employee shall not be
eligible to participate, however, if immediately after the options are granted
such Employee would own stock possessing 5% or more of the total combined voting
power or value of all classes of the Sponsoring Employer or a subsidiary
corporation or parent corporation (as those terms are defined in Section 424(e)
and (f) of the Code). For purposes of this paragraph, the ownership attribution
rules of Section 424(d) of the Code shall apply in determining the stock
ownership of an Employee and stock which the Employee may purchase under
outstanding options (under this or any other agreement) shall be treated as
stock owned by the Employee.
3.2. Upon becoming a Member, the Employee shall be bound by the terms
of this Plan, including any amendments hereto. An Employee's election to
participate for any Plan Year must be in writing in the form and manner
specified by the Committee. The completed request for
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participation shall indicate the amount of the Member's Contribution Rate
authorized by the Member in accordance with Section 4.1. If any Employee does
not elect to participate in any given Plan Year he or she may elect to
participate as of any future Anniversary Date if he or she continues to meet the
eligibility requirements therefor.
ARTICLE IV
CONTRIBUTIONS
4.1. In order to participate in this Plan and be granted an option
hereunder, a Member must file with the Employer an election to participate in
accordance with Section 3.2 and must authorize his Employer to deduct through a
payroll deduction an exact number of dollars per month, but not less than $10.00
per month, being the Member's "Contribution Rate". The maximum deduction which a
Member may authorize shall be 10% of the Member's Normal Monthly Pay. Such
authorization shall be in writing and on such forms as provided by the
Committee. Payroll deductions shall begin as of the first pay period on or after
the first day of the Plan Year. For all purposes of this Plan, a Member's
contributions shall be allocated to and deemed a part of the Member's
Contribution Account. Member contributions will not be permitted to begin at any
time other than the beginning of a Plan Year. The Employers shall transfer all
withheld amounts to the Sponsoring Employer which may use such amounts for any
valid corporate purposes. No interest shall accrue or be paid on any amounts
withheld under this Plan.
4.2. The Member's Contribution Rate, once established, shall remain in
effect for all Plan Years unless changed by the Member in writing and filed with
the Employer in the form and in the manner specified by the Committee .
4.3. At any time during the Plan Year, a Member may notify the Employer
that he wishes to discontinue his contributions. This notice shall be in writing
and on such forms as provided by the Committee and shall become effective as of
a date not more than 30 days following its receipt by the Employer.
4.4. Members may elect to withdraw any or all of their contributions at
any time during the Plan Year except on the Exercise Date. Any such withdrawal
will be made by request in writing on such forms as provided by the Committee.
If contributions are withdrawn during the Plan Year, however, no further
contributions will be permitted during that Plan Year.
ARTICLE V
GRANT OF OPTIONS
5.1. Every participating Member shall be granted in each Plan Year
options to purchase that number of whole shares of Sponsoring Employer Stock for
the Plan Year that have a value on the Grant Date of $25,000. Options granted
under this Plan shall be subject to such amendments or modifications as the
Sponsoring Employer shall deem necessary to comply with any applicable law or
regulation, and shall contain such other provisions as the Sponsoring Employer
shall from time to time approve and deem necessary. Options not exercised
pursuant to Section 6.1 shall terminate at 11:59 p.m. (Eastern Time) on the
Exercise Date. In the event an outstanding option shall for any reason expire,
the shares of Sponsoring Employer Stock allocable to the unexercised portion of
such option may again be subject to option under the Plan.
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5.2. The Issue Price of the Sponsoring Employer Stock under this Plan
shall be equal to the lesser of: (i) 85% of the Market Price on the Exercise
Date of each Plan Year; or (ii) 85% of the Market Price on the Grant Date of
each Plan Year. The issue price is subject, however, to a "Minimum Issue Price"
for each Plan Year. The "Minimum Issue Price" for any Plan Year shall be the
book value of the Sponsoring Employer Stock as of December 31 for the calendar
year preceding the calendar year during which the Grant Date for the Plan Year
occurs. Notwithstanding any provision to the contrary, if the Issue Price for
any Plan Year is less than the Minimum Issue Price, the options granted for that
Plan Year shall be considered null and void and the payroll deductions credited
to the Member's Contribution Account shall be returned to the Member.
5.3. Notwithstanding any provision of this Plan, no Employee shall
receive options to purchase Sponsoring Employer Stock which permit the rights of
an Employee to purchase stock under all "employee stock purchase plans" of the
Sponsoring Employer and its parent corporation and subsidiary corporation (as
the terms "parent corporation" and "subsidiary corporation" are defined in
Section 424(e) and (f) of the Code) to accrue at a rate which exceeds $25,000 of
fair market value of such stock (determined at the time the option is granted)
for each calendar year in which the option is outstanding at any time. For
purposes of this Section 5.3 (i) the right to purchase stock under an option
accrues when the option (or any portion thereof) first becomes exercisable
during the calendar year, (ii) the right to purchase stock under an option
accrues at the rate provided in the option but in no case may such rate exceed
$25,000 of fair market value of such stock (determined at the time such option
is granted) for any one calendar year, and (iii) a right to purchase stock which
has accrued under one option granted pursuant to the Plan may not be carried
over to any other option.
ARTICLE VI
EXERCISE OF OPTIONS
6.1. On each Exercise Date, the Member's Contribution Account shall be
used to purchase the maximum number of whole shares of Sponsoring Employer Stock
determined by dividing the Issue Price into the balance of the Member's
Contribution Account (subject to the limitations set forth in Section 5.3). Any
money remaining in a Member's Contribution Account after the Exercise Date which
was not needed to exercise the Member's option to the fullest extent as
calculated pursuant to Section 5.1 shall be returned to the Member. Any money
remaining in a Member's Contribution Account solely as a result of an amount
representing a fractional share, however, shall remain in the Member's
Contribution Account unless the return of such amount is requested by the Member
in writing on a form supplied by the Committee. If such return is not requested,
the balance will remain in the Member's Contribution Account to be used in the
next Plan Year along with new contributions made in that Plan Year.
If the total number of shares to be purchased under option by all
Members exceeds the number of shares authorized under Article II of this Plan, a
pro-rata allocation of the available shares will be made among all Members
authorizing such payroll deductions based on the amount of their respective
payroll deductions through the Exercise Date.
6.2. The certificates for Sponsoring Employer Stock purchased through
the exercise of the option granted hereunder shall be issued as soon as
practicable after the Exercise Date.
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ARTICLE VII
TERMINATION OF EMPLOYMENT
7.1. Any Employee whose employment with all Employers is terminated for
any reason, except death or retirement, during the Plan Year shall cease being a
Member immediately. The balance of the Member's Contribution Account shall be
paid to such Member, or to such Member's legal representative, as soon as
practicable after such Member's termination. Any right to purchase Sponsoring
Employer Stock under the option granted to such Member by participation in this
Plan shall be deemed null and void.
7.2. If a Member dies during a Plan Year no further contributions on
behalf of the deceased Member shall be accepted under the Plan. The personal
representative of the estate of the deceased Member may elect to withdraw the
balance in the Member's Contribution Account by notifying the Committee in
writing prior to the Exercise Date. In the event no election to withdraw has
been made before the Exercise Date, the balance accumulated in the deceased
Member's Contribution Account shall be used to purchase Sponsoring Employer
Stock in accordance with Article VI.
7.3. If a Member retires for reasons of age or disability under the
then established rules of the Employer during a Plan Year, no further
contributions on behalf of the retired Member shall be accepted under the Plan.
The Member may elect to withdraw the balance in his Contribution Account by
notifying the Committee in writing prior to the Exercise Date. In the event no
election to withdraw has been made before the Exercise Date, the balance
accumulated in the retired Member's Contribution Account shall be used to
purchase Sponsoring Employer's Stock in accordance with Article VI.
ARTICLE VIII
DISPOSITION OF STOCK
If a Member or former Member disposes of any shares of Sponsoring
Employer Stock obtained under this Plan (i) prior to two years after the Grant
Date of such share, or (ii) prior to one year after the Exercise Date of such
share, that Member or former Member must notify the Committee immediately of
such disposition in writing. All dispositions of Sponsoring Employer Stock shall
be made in compliance with applicable federal and state securities laws.
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ARTICLE IX
ADMINISTRATION
The Plan shall be administered by the Committee. No member of the
Committee shall be eligible to participate in the Plan while a member of the
Committee. Meetings shall be held at such times and places as shall be
determined by the Committee. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of those members present at any meeting shall decide any question brought under
the Plan. No member of the Committee shall be liable for any act or omission of
any other member of the Committee or for any act or omission on his own part
related to the Plan, including but not limited to the exercise of any power or
discretion given to him under the Plan, except those resulting from his own
gross negligence or willful misconduct. All questions of interpretation and
application of the Plan, or of options granted hereunder, shall be subject to
the determination, which shall be final and binding, of a majority of the whole
Committee. The Plan shall be administered in order to qualify the options
granted hereunder as options granted pursuant to an "employee stock purchase
plan" described in Section 423 of the Code.
ARTICLE X
CHANGES IN COMPANY'S CAPITAL STRUCTURE
10.1. The existence of this Plan shall not affect in any way the right
or power of the Sponsoring Employer or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Sponsoring Employer's capital structure or its business, or any merger or
consolidation of the Sponsoring Employer, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Sponsoring
Employer Stock or rights thereof, or the dissolution or liquidation of the
Sponsoring Employer, or any sale or transfer of all or part of its assets or
business, or any other corporate act or proceeding, whether of similar character
or otherwise.
10.2. In the event of a subdivision or consolidation of shares or other
capital readjustment, the payment of a stock dividend or other increase or
decrease of the number of shares of the Sponsoring Employer's Stock outstanding
without receiving compensation in money, services, or property, then the class
of shares of the Sponsoring Employer's Stock set forth in Section 1.19 of the
Plan, the number of shares of stock reserved pursuant to Article II, and the
number of options granted a Member shall be appropriately adjusted as determined
by the Committee. The Committee's determination shall be final, binding, and
conclusive, provided that each option granted pursuant to this Plan shall not be
adjusted in a manner that causes the option to fail to continue to qualify as an
option issued pursuant to an "employee stock purchase plan" within the meaning
of Section 423 of the Code.
10.3. Subject to any required action by the stockholders, if the
Sponsoring Employer is the surviving corporation in any merger or consolidation,
each outstanding option shall pertain to and apply to the securities to which a
holder of the number of shares of Sponsoring Employer Stock subject to the
option would have been entitled. Unless adopted by the surviving corporation, a
dissolution or liquidation of the Sponsoring Employer or a merger or
consolidation in which the Sponsoring Employer is not the surviving corporation,
shall cause each outstanding option to terminate; provided that the Committee in
its sole discretion, immediately prior to such dissolution or liquidation, or
merger or consolidation in which the Corporation is not the surviving
corporation, may direct that the Plan Year end on a date immediately prior to
the effective date of such event.
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ARTICLE XI
MISCELLANEOUS
11.1. Each Member, former Member, or any other person who shall claim a
right or benefit under this Plan, shall be entitled only to look to such
Member's Employer for such benefit.
11.2. The Board of Directors may at any time or from time to time amend
the Plan in any respect, except that, without approval of the stockholders of
the Sponsoring Employer within 12 months prior to or after the date the
amendment is adopted by the Board of Directors, no amendment may (i) increase
the number of shares reserved under the Plan other than as provided in Article
X, (ii) modify the class of employees eligible to participate in the Plan, or
(iii) reduce the Issue Price per share as defined herein. The Sponsoring
Employer may terminate the Plan at any time. If the Plan is terminated, the date
of termination shall be treated as the Exercise Date and all funds in a Member's
Contribution Account not expended to purchase Sponsoring Employer Stock shall be
refunded to the Member.
11.3. The Employers will pay all expenses that may arise in connection
with the administration of this Plan.
11.4. Any headings or subheadings in this Plan are inserted for
convenience of reference only and are to be disregarded in the construction of
any provisions hereof. All references in this Plan to Articles and Sections are
to Articles and Sections of this Plan unless specified otherwise.
11.5. This Plan shall be construed in accordance with the laws of the
state of incorporation of the Sponsoring Employer to the extent federal law does
not supersede and preempt such law.
11.6. A misstatement in the age, length of Continuous Service, date of
employment or any other such matter shall be corrected when it becomes known
that any such misstatement of fact has occurred.
11.7. The option to purchase Sponsoring Employer Stock arising by
participation in this Plan is not transferable by a Member other than by will or
the laws of descent and distribution and is exercisable during his lifetime only
by him.
11.8. This Plan will not be deemed to constitute a contract between an
Employer and any Member or to be in consideration of or an inducement for the
employment of any Member or Employee. Nothing contained in this Plan shall be
deemed to give any Member or Employee the right to be retained in the service of
an Employer or to interfere with the right of an Employer to discharge any
Member or Employee at any time regardless of the effect which such discharge
shall have upon him as a Member of the Plan.
11.9. No liability whatsoever shall attach to or be incurred by any
past, present or future stockholders, officers, or directors, as such, of an
Employer, under or by reason of any of the terms, conditions, or agreements
contained in this Plan or implied therefrom, and any and all liabilities of, and
any and all rights and claims against an Employer, or any stockholder, officer,
or director, as such, whether arising at common law or in equity or created by
statute or constitution or otherwise, pertaining to this Plan, are hereby
expressly waived and released by every Member, as a part of the consideration
for any benefits provided by the Employers under this Plan.
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11.10. With respect to administration of the Plan, the Sponsoring
Employer shall indemnify each present and future member of the Committee and the
Board of Directors against, and each member of the Committee and the Board of
Directors shall be entitled without further act on his or her part to indemnity
from the Sponsoring Employer, for all expenses (including the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Sponsoring
Employer itself) reasonably incurred by him or her in connection with or arising
out of any action, suit or proceeding in which he or she may be involved by
reason of his or her being or having been a member of the Committee and the
Board of Directors, whether or not he or she continues to be such a member of
the Committee and the Board of Directors at the time of incurring such expenses;
provided, however, that such indemnity shall not include any expenses incurred
by any such member of the Committee and the Board of Directors (a) in respect of
matters as to which he shall be finally adjudged in any such action, suit, or
proceeding to have been guilty of gross negligence or willful misconduct in the
performance of his or her duty as such a member of the Committee and the Board
of Directors, or (b) in respect of any matter in which any settlement is
effected, to an amount in excess of the amount approved by the Sponsoring
Employer on the advice of its legal counsel; and provided further, that no right
of indemnification under the provisions set forth herein shall be available to
or enforceable by any such member of the Committee and the Board of Directors
unless, within 60 days after institution of any such action, suit, or
proceeding, he or she shall have offered the Sponsoring Employer, in writing,
the opportunity to handle and defend same at its own expense. The foregoing
right of indemnification shall inure to the benefit of the heirs, executors, or
administrators of each such member of the Committee and the Board of Directors
and shall be in addition to all other rights to which such member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.
11.11. The Sponsoring Employer's obligation to sell and deliver stock
under the Plan is at all times subject to all approvals of any governmental
authorities required in connection with the authorization, issuance, offer,
sale, or delivery of such stock and compliance with applicable state and federal
securities laws.
11.12. Whenever any notice is required or permitted hereunder, such
notice must be in writing and personally delivered or sent by mail. Any notice
required or permitted to be delivered hereunder shall be deemed to be delivered
on the date which it is personally delivered, or, whether actually received or
not, on the third business day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address which such person has theretofore specified by written
notice delivered in accordance herewith. Notwithstanding any of the foregoing,
any notice required or permitted to be given by or on behalf of a Member under
Section 7.2 or Article IV hereof, shall only be effective as of the date of its
actual receipt. Any party may change, at any time and from time to time, by
written notice to the other, the address which it or he had theretofore
specified for receiving notices. Until changed in accordance herewith, the
Sponsoring Employer shall be entitled to use the address of a Member in the
Employer's records. Any person entitled to notice hereunder may waive such
notice.
11.13. This Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423(b) of the Code. In the event the
Sponsoring Employer should receive notice that this Plan fails to qualify as an
"employee stock purchase plan" under Section 423 of the Code, the Sponsoring
Employer shall have the option of returning all then existing Members'
Contribution Accounts to the Members and terminating the Plan.
11.14. Any words herein used in the masculine shall be read and
construed in the feminine where they would so apply. Words in the singular shall
be read and construed as though in the
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plural in all cases where they would so apply.
11.15. This Plan is intended to be a "stock purchase plan" as defined
in Rule 16b-3, promulgated under the Securities Exchange Act of 1934, and all
grants and awards made hereunder are intended to be exempt under Rule 16b-3, and
the terms hereof shall be interpreted in a manner that is consistent with such
Rule 16b-3.
IN WITNESS WHEREOF, pursuant to action taken by the Board of Directors,
the undersigned authority has executed this instrument on this the 1st day of
March, 1999, to be effective as of March 1, 1999.
JDN REALTY CORPORATION
By: /s/ William J. Kerley
------------------------------
Its: Chief Financial Officer
------------------------------
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Appendix C
JDN REALTY CORPORATION
LONG-TERM INCENTIVE PLAN
EFFECTIVE JULY 1, 1999
<PAGE> 56
JDN REALTY CORPORATION LONG-TERM INCENTIVE PLAN
THIS INSTRUMENT is adopted by JDN Realty Corporation (the "Company") as
the JDN Realty Corporation Long-Term Incentive Plan (the "LTIP") to be effective
as of July 1, 1999.
RECITALS:
WHEREAS, the Company has reviewed its executive compensation programs
and policies and has determined that a portion of the compensation paid to key
employees should be based on their performance;
WHEREAS, the Company therefore desires to establish a compensation
program that provides meaningful economic incentives to encourage outstanding
performance by key employees;
WHEREAS, the Company further desires that the performance goals be
established in such a manner so that the economic interests of the key employees
are aligned with the economic interests of the shareholders of the Company; and
WHEREAS, the Company intends that all compensation payable and awards
granted hereunder will qualify as "performance-based compensation" described in
section 162(m)(4)(C) of the Code (as hereinafter defined), and that this LTIP be
approved by the shareholders of the Company before the compensation amounts
described hereunder are paid by the Company;
NOW, THEREFORE, this instrument is hereby adopted as the LTIP that has
been established by the Company for the purposes stated herein:
ARTICLE I. DEFINITIONS
1.1 Award. A performance incentive issued hereunder to a Participant.
Awards may be made in the form of (i) Performance Shares or Performance Options
that become vested in accordance with the performance criteria stated in an
Award, or (ii) cash bonuses that become payable when the performance criteria
stated in an Award are achieved.
1.2 Board. The board of directors of the Company.
1.3 Code. The Internal Revenue Code of 1986, as amended.
1.4 Committee. A committee of Board members that is designated by the
Board to serve as the administrator of the LTIP, provided that the Committee
shall be composed of at least two individuals (or such number that satisfies
section 162(m)(4)(C) of the Code) who are members of the Board and are not
employees of the Company or an affiliate, and who are designated by the Board as
the "compensation committee" or are otherwise designated to administer the LTIP.
1.5 Company. JDN REALTY CORPORATION and its successors.
1.6 LTIP. The JDN REALTY CORPORATION LONG-TERM INCENTIVE PLAN.
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1.7 Participant. Individuals who have been designated to receive Awards
hereunder and who the Committee anticipates will be key employees of the Company
at the time Awards are granted or paid.
1.8 Performance Option. An award under the JDN Realty Corporation 1993
Incentive Stock Plan of a right to purchase from the Company a stated number of
shares of Stock at the price and subject to the performance criteria stated in
an Award issued hereunder.
1.9 Performance Share. An award of common stock of the Company made
under the JDN Realty Corporation 1993 Incentive Stock Plan that is identified
therein as "Restricted Stock" and is subject to the performance criteria stated
in an Award issued hereunder.
1.10 Stock. The common stock of the Company.
ARTICLE II. ADMINISTRATION
2.1 Administration of the LTIP. The LTIP shall be administered by the
Committee. The express grant in the LTIP of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or action taken by the Committee to administer the LTIP shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this LTIP or any Award. The Company shall
bear all expenses of LTIP administration. In addition to all other authority
vested with the Committee under the LTIP, the Committee shall have complete
authority to:
(a) Interpret all provisions of this LTIP;
(b) Prescribe the form of any Award and notice and manner for
executing or giving the same;
(c) Make amendments to any agreement with a Participant underlying
an Award; provided, however, that an amendment to an agreement that
reduces the Participant's rights shall not be effective without the
Participant's consent (except as provided in Section 3.1);
(d) Adopt, amend, and rescind rules for LTIP administration; and
(e) Make all determinations it deems advisable for the
administration of this LTIP.
2.2 Authority to Grant Awards. The Committee shall have authority to
grant Awards upon such terms as the Committee deems appropriate and that are not
inconsistent with the provisions of this LTIP.
ARTICLE III. AWARD ELIGIBILITY AND LIMITATIONS
3.1 Terms of Awards. All Awards must be established by the Committee in
writing (i) within 90 days of the beginning of the period upon which performance
will be measured, and (ii) prior to the lapse of 25% of such performance period.
Payment of compensation under an Award shall be based on account of the
attainment of one or more preestablished objective performance
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goals that are based on the criteria described in Section 3.4. An Award must
identify the Participant to whom the Award has been granted, whether the Award
is to be in the form of a cash bonus, Performance Shares or Performance Options,
the amount of compensation payable under the Award, and the performance goals
upon which the Participant's right to receive compensation under the Award is
conditioned. Neither the Company nor the Committee shall have the discretion to
increase the amount payable under an Award that would otherwise be due upon the
attainment of the performance goals stated in the Award. Except as provided in
an agreement with a Participant underlying an Award, the Committee shall retain
the right to reduce or eliminate the amount that is payable under the Award.
3.2 Cash Bonuses. An Award may be paid in the form of a cash bonus to a
Participant, including any cash bonus that is referenced in the employment
agreement between the Company and the Participant. The amount of the cash bonus
shall be stated as a fixed amount or as an objective formula for computing the
amount of compensation payable if the performance goal is obtained. A formula
for computing compensation may be expressed as a percentage of base compensation
payable to a Participant or on any other basis that yields a determinable amount
of compensation. The maximum amount of compensation that is payable under all
Awards in the form of a cash bonus made to a Participant during a calendar year
is $1,000,000.
3.3 Performance Shares and Performance Options. An Award of Performance
Shares or Performance Options shall state the number of shares or options
subject to the Award. Performance Shares shall be transferred to the Participant
on the date of grant but shall contain restrictions so that the Performance
Shares are subject to forfeiture prior to the achievement of performance goals
based on predetermined events as specified in the Award. Performance Options are
subject to termination prior to the achievement of performance goals based on
predetermined events, as specified in the Award. No more than an aggregate of
500,000 shares of Stock, in the form of Performance Shares or shares underlying
Performance Options, may be awarded hereunder to a Participant during a calendar
year.
3.4 Performance Criteria of Awards. Subject to the terms hereof,
performance goals shall be determined in the sole and absolute discretion of the
Committee, provided that the goals must be such that whether or not the
performance goal will be achieved is substantially uncertain at the time the
Award is granted. Performance goals can be based on the performance of an
individual, a business unit of the Company, or upon the Company as a whole. The
goals may be based upon increases in performance over a prior period, but may
also be based on maintaining status quo or limiting losses or decreases in
performance, as is appropriate in view of the business conditions of the
Company, its industry or the market in which its securities are traded at the
time that an Award is made. Performance goals shall be based on one or more of
the criteria specified below, or on a combination thereof:
(a) Targeted levels of "funds from operations" per share of Stock
("FFO"). The performance goal may be stated as the attainment of a
specified amount of FFO for a period or as a percentage change in FFO
from a prior period.
(b) Targeted levels of total return to shareholders. Total return
to shareholders shall be determined by the amount of distributions paid
during a period to shareholders, plus an increase in the market value
of Stock. The performance goal may be expressed as the attainment of a
specified total return amount for a period or as a percentage change in
the total return from a prior period.
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(c) Targeted levels of market value of Stock. The performance goal
may be stated as the attainment of a specified market value during a
specified period or as a percentage change in market value from a prior
period.
(d) Targeted levels of distributions. The performance goal may be
stated as the attainment of a specified rate of distributions during a
specified period or as a percentage or dollar amount change in
distributions from a prior period.
ARTICLE IV. PAYMENT OF COMPENSATION UNDER AWARD
4.1 Achievement of Performance Goals. Payment of cash bonuses or
vesting of Performance Shares or Performance Options under an Award shall only
occur if the performance goals specified in the Award have been satisfied.
Moreover, such payment or vesting under an Award shall not occur until the
Committee has certified in writing that the performance goals have been
achieved. For this purpose, approved minutes of the meeting or action by
unanimous written consent of the Committee by which certification is made shall
be treated as a written certification. However, such certification is not
required if the performance goal is based solely on the increase in the market
value of Stock for a specified period.
4.2 Payment of Cash Compensation. Subject to the conditions of Section
4.1, cash compensation amounts that become payable after attainment of
performance goals shall be paid at the time specified in an Award or, if no time
is specified, as soon as administratively feasible after attainment of the
performance goals.
4.3 Issuance and Delivery of Shares. Shares of Restricted Stock that
become issuable or that are vested pursuant to an Award issued hereunder shall
be issued pursuant to the JDN Realty Corporation 1993 Incentive Stock Plan, or
any other plan or arrangement of the Company.
4.4 Federal and State Withholding Tax Requirements. Amounts paid
hereunder shall be subject to applicable federal, state and local withholding
tax requirements.
ARTICLE V. ADJUSTMENT UPON CHANGE IN CONTROL
5.1 Effect of Certain Transactions. The provisions of this Section
shall apply to the extent that the terms of an Award do not otherwise expressly
address the matters contained herein. If the Company experiences an event which
results in a "Change in Control," as defined in Section 5.1(a), whether or not
the performance requirements set forth in any Award have been satisfied, all
payments potentially due under Awards that are outstanding at the time of the
Change in Control shall become fully payable upon the occurrence of the Change
in Control event.
(a) A Change in Control will be deemed to have occurred for
purposes hereof, if:
(1) any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
a corporation controlling the Company or owned directly or
indirectly by the shareholders of the Company in substantially the
same proportions as their ownership of securities of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
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Act), directly or indirectly, of securities of the Company
representing more than 40% of the total voting power represented by
the Company's then outstanding Voting Securities (as defined
below), or
(2) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new
director whose election by the Board or nomination for election by
the Company's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or
(3) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity)
more than 65% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or
(4) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of its
assets.
For purposes of this Section, "Voting Securities" of an entity
shall mean any securities of the entity which vote generally in the
election of its directors.
(b) Notwithstanding the foregoing, a portion of the payment made
under an Award due to a Change in Control as described in this Section
shall not occur to the extent such payment would cause the Participant
to realize less income, net of taxes, after deducting the amount of
excise taxes that would be imposed pursuant to section 4999 of the
Code, than if payment of that portion of the Award did not occur.
(c) Notwithstanding anything to the contrary contained herein, a
change in ownership that occurs as a result of a public offering of the
Company's equity securities that is approved by the Board shall not
alone constitute a Change in Control.
5.2 No Adjustment Upon Certain Transactions. 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 rendered,
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, outstanding Awards.
ARTICLE VI. GENERAL PROVISIONS
6.1 Effect on Employment. Neither the adoption of this LTIP, its
operation, nor any documents describing or referring to this LTIP (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an affiliate or in any way affect any right
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and power of the Company or an affiliate to terminate the employment
of any employee at any time with or without assigning a reason therefor.
6.2 Unfunded LTIP. The LTIP, 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 this LTIP. Any liability of the
Company to any person with respect to any grant under this LTIP shall be based
solely upon contractual obligations that may be created hereunder. 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.
6.3 Rules of Construction. Headings are given to the articles and
sections of this LTIP solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. 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.
6.4 Governing Law. The internal laws of the State of Maryland (without
regard to the choice of law provisions of Maryland) shall apply to all matters
arising under this LTIP, to the extent that federal law does not apply.
6.5 Amendment. The Board may amend or terminate this LTIP at any time;
provided, however, an amendment that would modify the material terms of the
performance goals specified hereunder is not valid until the shareholders of the
Company approve the amendment in a manner that satisfies the shareholder
approval requirements of section 162(m) of the Code.
6.6 Effective Date of LTIP. This LTIP shall be effective on July 1,
1999. Awards may be granted hereunder at any time after adoption of this LTIP by
the Board, provided that such Awards shall not be effective until July 1, 1999,
or such later date specified in the Award, and provided further that no
compensation shall be paid under this LTIP until the shareholders of the Company
approve this LTIP in a manner that satisfies section 162(m) of the Code. No
Awards may be made under this LTIP after the first shareholders meeting that
occurs in the fifth year following the year in which shareholders previously
approved this LTIP unless shareholders reapprove this LTIP at such meeting.
EXECUTION
IN WITNESS WHEREOF, the undersigned officer has executed this LTIP
effective as of ______________, 1999.
JDN REALTY CORPORATION
By:
--------------------------------
Its:
--------------------------------
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Appendix D
JDN REALTY CORPORATION
1993 INCENTIVE STOCK PLAN
EFFECTIVE DECEMBER 17, 1993;
AMENDED AND RESTATED
_____________, 1999
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JDN REALTY CORPORATION 1993 INCENTIVE STOCK PLAN
PREAMBLE
WHEREAS, effective December 17, 1993, JDN Realty Corporation (the
"Company") has established the JDN Realty Corporation 1993 Incentive Stock Plan
(the "Plan") through which the Company may award options to purchase the common
stock of the Company ("Stock") that qualify as "incentive stock options" within
the meaning of section 422 of the Internal Revenue Code, as well as options that
are not so qualified;
WHEREAS, the Company desires to amend the Plan to, among other things,
increase the maximum aggregate number of shares of Stock that may be issued
pursuant to the exercise of Awards (as hereinafter defined) hereunder; and
WHEREAS, the Company intends that this Plan as amended and restated and
the awards granted hereunder will (i) qualify as "performance-based
compensation" described in section 162(m)(4)(C) of the Internal Revenue Code,
and (ii) conform to the provisions of Securities and Exchange Commission Rule
16b-3;
NOW, THEREFORE, the Company hereby amends and restates the JDN Realty
Corporation 1993 Incentive Stock Plan (the "Plan"):
ARTICLE I. DEFINITIONS
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company.
1.2 Agreement. A written agreement (including any amendment or
supplement thereto) between the Company or Affiliate and a Participant
specifying the terms and conditions of an Award granted to such Participant.
1.3 Award. A right that is granted under the Plan to a Participant by
the Company, including Options, Restricted Stock, and SARs.
1.4 Board. The board of directors of the Company.
1.5 Code. The Internal Revenue Code of 1986, as amended.
1.6 Committee. A committee composed of at least two individuals (or
such number that satisfies section 162(m)(4)(C) of the Code and Rule 16b-3 of
the Exchange Act) who are members of the Board and are not employees of the
Company or an Affiliate, and who are designated by the Board as the
"compensation committee" or are otherwise designated to administer the Plan. In
the absence of a designation of a Committee by the Board, the Board shall be the
Committee.
1.7 Company. JDN Realty Corporation and its successors.
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1.8 Date of Exercise. The date that the Company accepts tender of the
exercise price of an Award, if any, or accepts an election to exercise rights
under an SAR.
1.9 Exchange Act. The Securities Exchange Act of 1934, as amended.
1.10 Fair Market Value. On any given date, Fair Market Value shall be
the applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):
(a) If the Stock is traded on the New York Stock Exchange or
the American Stock Exchange, the closing price of the
Stock on such exchange on which such Stock is traded on
the trading day immediately preceding the date as of
which Fair Market Value is being determined, or on the
next preceding day on which such Stock is traded if no
Stock was traded on such trading day.
(b) If the Stock is not traded on the New York Stock Exchange
or the American Stock Exchange, but is reported on the
Nasdaq National Market System or another Nasdaq automated
quotation system, and market information is published on
a regular basis, then Fair Market Value shall be the
closing price of the Stock, as so published, on the
trading day immediately preceding the date as of which
Fair Market Value is being determined, or the closing
price on the next preceding trading day on which such
prices were published if no Stock was traded on such
trading day.
(c) If market information is not so published on a regular
basis, then Fair Market Value shall be the average of the
high bid and low asked prices of the Stock in the
over-the-counter market over a period of trading days
that is reasonably representative of the normal trading
of the Stock immediately preceding the date on which Fair
Market Value is being determined, as reported by a
generally accepted reporting service.
(d) If the Stock is not publicly traded, Fair Market Value
shall be the value determined in good faith by the
Committee or the Board. However, such determination shall
not take into account any restriction on the stock,
except for a restriction which by its terms will never
lapse.
1.11 Incentive Option. An Option that is intended to qualify as an
"incentive stock option" within the meaning of section 422 of the Code. An
Incentive Option, or a portion thereof, shall not be invalid for failure to
qualify under section 422 of the Code, but shall be treated as a Nonqualified
Option.
1.12 Nonqualified Option. An Option that is not an Incentive Option.
1.13 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an
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Agreement. As used herein, an Option includes both Incentive Options and
Nonqualified Options.
1.14 Participant. A Board member, employee, consultant or advisor of
the Company or of an Affiliate who either satisfies the requirements of Article
IV and is selected by the Committee to receive an Award, or receives an Award
pursuant to grant specified in this Plan.
1.15 Plan. The JDN Realty Corporation 1993 Incentive Stock Plan.
1.16 Restricted Stock. A grant of Stock that is subject to restrictions
on transfer and/or a risk of forfeiture by and to the Participant, as described
in Section 4.6. Shares of Stock that are subject to any such restrictions or
risks of forfeiture shall cease to be Restricted Stock at the time that such
restrictions and risks of forfeiture lapse in accordance with the terms of the
Agreement or the Plan.
1.17 SAR. A right to receive compensation hereunder calculated by
reference to the increase in the value of a certain number of shares of Stock
from the date of an award, as described in Section 4.5. An SAR is an unfunded,
unsecured promise of the Company to the Participant. Unless otherwise stated in
an Agreement, or unless the Committee in its discretion honors the exercise of
an SAR by issuing Stock, the holder of an SAR has no beneficial rights of Stock
ownership or to receive shares of stock.
1.18 Stock. The common stock of the Company.
1.19 Ten Percent Shareholder. An individual who owns more than 10% of
the total combined voting power of all classes of stock of the Company or an
Affiliate at the time he is granted an Incentive Option. For the purpose of
determining if an individual is a Ten Percent Shareholder, he shall be deemed to
own any voting stock owned (directly or indirectly) by or for his brothers and
sisters (whether by whole or half blood), 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. PURPOSE OF PLAN
The purpose of the Plan is to provide a performance incentive and to
encourage Stock ownership by officers, directors, consultants and advisors of
the Company and its Affiliates, and to align the interests of such individuals
with those of the Company, its Affiliates and its shareholders. It is intended
that Participants may acquire or increase their proprietary interests in the
Company and be encouraged to remain in the employ or directorship of the Company
or of its Affiliates. The proceeds received by the Company from the sale of
Stock pursuant to this Plan may be used for general corporate purposes.
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. The Plan shall be administered by the
Committee. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made or
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action taken by the Committee to administer 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 this Plan or any Agreement or Award. The Company shall
bear all expenses of Plan administration. In addition to all other authority
vested with the Committee under the Plan, the Committee shall have complete
authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner
for executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend, and rescind rules for Plan administration;
and
(e) Make all determinations it deems advisable for the
administration of this Plan.
3.2 Authority to Grant Awards. The Committee shall have authority to
grant Awards upon such terms the Committee deems appropriate and that are not
inconsistent with the provisions of this Plan. Such terms may include conditions
on the exercise of all or any part of an Award.
3.3 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the Committee, in its absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers and directors subject to section 16(b) of
the Exchange Act, without so restricting, limiting or conditioning the Plan with
respect to other Participants.
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation. The Committee may from time to time designate
employees, consultants and advisors to whom Awards are to be granted and who are
eligible to become Participants. Such designation shall specify the number of
shares of Stock, if any, subject to each Award. All Awards granted under this
Plan shall be evidenced by Agreements which shall be subject to applicable
provisions of this Plan or such other provisions as the Committee may adopt that
are not inconsistent with the Plan. Such provisions may include, by way of
example and not limitation, provisions for cash bonuses to be paid in
combination with awards.
4.2 Grant of Awards. An Award may be granted in combination with or in
lieu of cash bonuses that are otherwise provided to Participants. An Award shall
be deemed to be granted to a Participant at the time that the Committee
designates in a writing that is adopted by the Committee as the grant of an
Award, and that makes reference to the Participant and the number of shares of
Stock that are subject to the Award. Accordingly, an Award may be deemed to be
granted prior to the approval of this Plan by the shareholders of the Company
and prior to the time that an Agreement is executed by the Participant and the
Company.
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4.3 Limitations on Grants. A person who is not an employee of the
Company or an Affiliate is not eligible to receive an Incentive Option. No
person may receive Awards with respect to more than 1,000,000 shares of Stock
(subject to increases and adjustments as provided in Article VIII) in any
one-year period.
4.4 Limitation on Incentive Options. To the extent that the aggregate
Fair Market Value of Stock with respect to which Incentive Options are
exercisable for the first time by a Participant during any calendar year (under
all stock incentive plans of the Company and its Affiliates) exceeds $100,000
(or the amount specified in section 422 of the Code), determined as of the date
an Incentive Option is granted, such Options shall be treated as Nonqualified
Options. This provision shall be applied by taking Incentive Options into
account in the order in which they were granted.
4.5 Stock Appreciation Rights. The Committee may grant an SAR to a
Participant either in tandem with the grant of an Award, or as an award that is
separate from any Award granted under the Plan. Subject to the terms of an
Agreement, a Participant who receives an SAR shall have the right, upon written
request, to surrender any exercisable Award, or portion thereof, in exchange for
cash, whole shares of Stock, or a combination thereof, as determined by the
Committee, with a value equal to the excess of the Fair Market Value, as of the
date of such request, of one share of Stock over the Fair Market Value of the
Stock on the Date of Grant (or such other value specified in the Agreement),
multiplied by the number of shares covered by the SAR or portion thereof to be
surrendered. In the case of any SAR which is granted in connection with an
Incentive Option, such SAR shall be exercisable only when the Fair Market Value
of the Common Stock exceeds the price specified therefor in the SAR or portion
thereof to be surrendered. In the event of the exercise of any SAR granted
hereunder, the number of shares reserved for issuance under the Plan shall be
reduced only to the extent that shares of Stock are actually issued in
connection with the exercise of such SAR.
4.6 Restricted Stock. An award of Restricted Stock to a Participant is
a grant of Stock that is subject to forfeiture and/or restrictions on transfer
that are identified in an Agreement. The Committee may grant Restricted Stock to
a Participant as a part of a "deposit share," "performance award" or any other
arrangement established by the Committee and specified in an Agreement. A
Participant who receives Restricted Stock shall be treated as a shareholder of
the Company for all purposes, except that the rights of the Participant may be
limited under the terms of the Agreement. Unless otherwise specified in an
Agreement, and until the date that restrictions on transfer and all risks of
forfeiture lapse: (i) to the extent that the Company maintains a dividend
reinvestment plan, or as determined in the discretion of the Committee, any
dividends paid on Restricted Stock shall be reinvested in whole shares of Stock
and shall be subject to the same restrictions and forfeiture provisions as the
shares of Stock with respect to which such dividends were paid; (ii) any cash
amounts paid as dividends on Restricted Stock that are not reinvested in Stock
shall be held by the Company to the credit of the Participant without interest
until the lapse of such restrictions and forfeiture provisions; and (iii) the
Participant agrees by accepting an Award of Restricted Stock to designate the
chief executive officer of the Company as his proxy with respect to such
Restricted Stock (and shares acquired with dividends thereon) on all matters
that are presented by the Company to shareholders for a vote.
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ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option or the grant of
Restricted Stock, the Company shall deliver to the Participant authorized but
unissued Stock.
5.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to the exercise of Awards is 3,988,043,
subject to increases and adjustments as provided in Article VIII. The aggregate
number of SARs that may be granted shall be determined by the Committee.
5.3 Forfeitures. If any Award granted hereunder expires or terminates
for any reason without having been exercised in full, the shares of Stock
subject thereto shall again be available for issuance of an Award under this
Plan.
ARTICLE VI. EXERCISE OF AWARDS
6.1 Exercise Price. The exercise price of an Incentive Option shall not
be less than 100% of the Fair Market Value of a share of Stock on the date the
Incentive Option is granted. In the case of a Ten Percent Shareholder, however,
the exercise price of an Incentive Option shall not be less than 110% of the
Fair Market Value of a share of Stock on the date the Incentive Option is
granted. The exercise price of a Nonqualified Option, Restricted Stock or an SAR
shall be the price determined by the Committee at the time that such Award is
granted. If the exercise price of an Award is changed after the date it is
granted, such change shall be deemed to be a termination of the existing Award
and the issuance of a new Award.
6.2 Right to Exercise. An Award shall be exercisable on the date of
grant or on any other date established by the Committee or provided for in an
Agreement, provided, however, that Awards granted to officers or directors
subject to section 16 of the Exchange Act shall not be exercisable, and
restrictions on Restricted Stock shall not lapse, until at least six months
after the Award is granted. A Participant must exercise an Incentive Option
while he is an employee of the Company or an Affiliate or within the periods
that may be specified in the Agreement after termination of employment, death,
disability or a "change of control" (as defined in any change of control
agreement to which the Company and any such Participant are parties).
6.3 Maximum Exercise Period. The maximum period in which an Award may
be exercised shall be determined by the Committee on the date of grant except
that no Incentive Option shall be exercisable after the expiration of 10 years
(five years in the case of Incentive Options granted to a Ten Percent
Shareholder) from the date it was granted. The terms of any Award may provide
that it is exercisable for a shorter period. All Incentive Options shall
terminate on the date the Participant's employment with the Company terminates,
except as otherwise provided in the Agreement with respect to termination of
employment, death, disability or a "change of control" (as defined in any change
of control agreement to which the Company and any such Participant are parties).
6.4 Transferability. Generally, any Award granted under this Plan shall
not be transferable except by will or by the laws of descent and distribution,
and shall be exercisable during the lifetime of the Participant only by the
Participant. However, a
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Nonqualified Option, an SAR, or Restricted Stock granted under this Plan may be
transferable to the extent provided in the Agreement. Provided, further, that no
right or interest of a Participant in any Award shall be liable for, or subject
to, any lien, obligation or liability of such Participant.
6.5 Employee Status. The Committee shall determine the extent to which
a leave of absence for military or government service, illness, temporary
disability, or other reasons shall be treated as a termination or interruption
of employment for purposes of determining questions of forfeiture and exercise
of an Award after termination of employment; provided, however, that if the
period treated as employment with respect to an Incentive Option exceeds 90
days, such Option shall be deemed a Nonqualified Option.
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise. An Award granted hereunder shall be deemed to have been
exercised on the Date of Exercise. Subject to the provisions of Articles VI and
IX, an Award may be exercised in whole or in part at such times and in
compliance with such requirements as the Committee shall determine.
7.2 Payment. Unless otherwise provided by the Agreement, payment of the
Award price shall be made in cash or, to the extent approved by the Committee,
Stock that was acquired prior to the exercise of the Award, other consideration
acceptable to the Committee, or a combination thereof.
7.3 Federal Withholding Tax Requirements. Upon exercise of a
Nonqualified Option, Restricted Stock, or an SAR by a Participant who is an
employee of the Company or an Affiliate, the Participant shall, upon
notification of the amount due and prior to or concurrently with the delivery of
the certificates representing the shares, pay to the Company amounts necessary
to satisfy applicable federal, state and local withholding tax requirements or
shall otherwise make arrangements satisfactory to the Company for such
requirements. Such withholding requirements shall not apply to the exercise of
an Incentive Option, or to a disqualifying disposition of Stock that is acquired
with an Incentive Option, unless the Committee gives the Participant notice that
withholding described in this Section is required.
7.4 Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to Options or SARs prior to the Date
of Exercise of such Award. No Participant shall acquire rights as a stockholder
through the grant or exercise of an SAR, except to the extent which the
Committee, in its sole discretion, issues Stock to the Participant as payment
upon the exercise of the SAR. A Participant's rights as a shareholder with
respect to Restricted Stock shall be determined as provided in Section 4.6.
7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Awards hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Award hereunder, or is granted Restricted Stock, and
executes any applicable shareholder agreement or agreement described in Section
9.2 that the Company requires at the time of exercise.
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ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares. The maximum number of shares of stock with
respect to which Awards hereunder may be granted and which are the subject of
outstanding Awards, and the exercise price thereof, shall be adjusted as the
Committee determines in its sole discretion to be appropriate, in the event
that:
(a) the Company or an Affiliate effects one or more stock
dividends, stock splits, reverse stock splits,
subdivisions, consolidations or other similar events;
(b) the Company or an Affiliate engages in a transaction to
which section 424 of the Code applies; or
(c) there occurs any other event which in the judgment of the
Committee necessitates such action;
Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Awards specified in
Sections 4.3 and 5.2 that are proportionate to the modifications of the Stock
that are on account of such corporate changes. Notwithstanding the foregoing,
the Committee may not modify the Plan or the terms of any Awards then
outstanding or to be granted hereunder to provide for the issuance under the
Plan of a different class of stock or kind of securities.
8.2 Substitution of Awards on Merger or Acquisition. The Committee may
grant Awards in substitution for stock awards, stock options, stock appreciation
rights or similar awards held by an individual who becomes an employee of the
Company or an Affiliate in connection with a transaction to which section 424(a)
of the Code applies. The terms of such substituted Awards shall be determined by
the Committee in its sole discretion, subject only to the limitations of Article
V.
8.3 Effect of Certain Transactions. Upon a merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation of
the Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for their shares of Stock (but not a public
offering of Stock by the Company), and the Company is not the surviving entity
(even though it may survive as a subsidiary corporation), any Award granted
hereunder shall terminate, provided that the Participant shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise his Awards in whole
or in part, and all restrictions on Restricted Stock shall lapse, whether or not
the vesting requirements set forth in any Agreement have been satisfied, unless
the Committee elects to convert all Awards hereunder into stock incentive awards
of an acquiring corporation. Provided, however, that, notwithstanding the
foregoing, a portion of the acceleration of exercisability of Awards shall not
occur with respect to any holder to the extent that such portion of acceleration
would cause the Participant or holder of such Award to be liable for the payment
of taxes pursuant to section 4999 of the Code. If the Committee so elects to
convert the Awards, the amount and price of such converted options shall be
determined by adjusting the amount and price of the Awards granted hereunder in
the same proportion as used for determining the number of shares of stock of the
acquiring corporation the holders
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of the Stock receive in such merger, consolidation, acquisition of property or
stock, separation or reorganization, and the vesting schedule set forth in the
Agreement shall continue to apply to the converted options.
8.4 No Adjustment Upon Certain Transactions. 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 rendered,
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, outstanding Awards.
8.5 Fractional Shares. Only whole shares of Stock may be acquired
through the exercise of an Award. Any amounts tendered in the exercise of an
Award remaining after the maximum number of whole shares have been purchased
will be returned to the Participant.
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General. No Award shall be exercisable, no Stock shall be issued,
no certificates for shares of Stock shall be delivered, and no payment shall be
made under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any certificate issued to evidence shares of
Stock for which an Award is exercised may bear such legends and statements as
the Committee upon advice of counsel may deem advisable to assure compliance
with federal or state laws and regulations. No Award shall be exercisable, no
Stock shall be issued, no certificate for shares shall be delivered and no
payment shall be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from any regulatory
bodies having jurisdiction over such matters.
9.2 Representations by Participants. As a condition to the exercise of
an Award, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 9.1. At the option
of the Company, a stop transfer order against any shares of stock may be placed
on the official stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel was provided (concurred in by counsel for the Company) and
stating that such transfer is not in violation of any applicable law or
regulation may be stamped on the stock certificate in order to assure exemption
from registration. The Committee may also require such other action or agreement
by the Participants as may from time to time be necessary to comply with federal
or state securities laws. This provision shall not obligate the Company or any
Affiliate to undertake registration of options or stock hereunder.
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ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall 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 terminate the employment of any employee at any time
with or without assigning a reason therefor.
10.2 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 this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. 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.
10.3 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. 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.
10.4 Governing Law. The internal laws of the State of Maryland shall
apply to all matters arising under this Plan, except to the extent that Maryland
law is preempted by federal law.
10.5 Compliance With Section 16 of the Exchange Act. With respect to
persons subject to liability under section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 (or successor provisions) under the Exchange Act. To the extent any
provision of this Plan or action by Committee fails to so comply, it shall be
deemed null and void to the extent permitted by law and deemed advisable by the
Committee.
10.6 Amendment; Termination. The Board may amend or terminate this Plan
at any time; provided, however, an amendment that would have a material adverse
effect on the rights of a Participant under an outstanding Award is not valid
with respect to such Award without the Participant's consent, except as
necessary for Incentive Options to maintain qualification under the Code; and
provided, further, that the shareholders of the Company must approve, in general
meeting:
(a) 12 months before or after the date of adoption, any
amendment that increases the aggregate number of shares
of Stock that may be issued under Incentive Options or
changes the employees (or class of employees) eligible to
receive Incentive Options;
(b) before the effective date thereof, any amendment that
changes the number of shares in the aggregate which may
be issued pursuant to Awards granted under the Plan or
the maximum number of shares with respect to which any
individual may receive options in any calendar year,
except pursuant to Article VIII; and
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(c) before the effective date thereof, any amendment that
increases the period during which Awards may be granted
or exercised.
Generally, shareholder approval shall not be required for minor amendments to
the Plan pursuant to Section 3.1 hereof intended to benefit the administration
of the Plan, for amendments necessitated by changes in legislation or
administrative rules governing the Plan, or for amendments that the Board deems
necessary to obtain or maintain favorable tax, securities exchange or regulatory
treatment of the Plan for future Participants.
10.7 Duration of Incentive Options. This Plan shall continue until it
is terminated by the Board pursuant to Section 10.6. However, no Incentive
Option may be granted under this Plan with respect to the additional shares of
Stock that are reserved for grant effective ____________, 1999, pursuant to
Section 5.2, after ____________, 2009, which is 10 years after the date that
this amendment and restatement of the Plan is adopted by the Board. Incentive
Options granted before ____________, 1999 shall remain valid in accordance with
their terms.
10.8 Effective Date of Plan. This Plan was originally effective
December 17, 1993, and was approved by the shareholders of the Company
thereafter. This amendment and restatement of the Plan shall be effective on the
date of its adoption by the Board. Awards may be granted hereunder at any time
after the adoption of this or any other amendment to the Plan which increases
the number of shares of Stock available for Awards; provided, however, that the
effectiveness of an amendment to this Plan will be retroactively revoked if it
is not approved by the shareholders of the Company in a manner that satisfies
Treasury Regulation Section 1.422-5 within 12 months of the date of adoption by
the Board. All Awards granted under the Plan after the effective date of an
amendment that increases the number of shares of Stock available for grant under
the Plan will become void immediately following the 12-month anniversary of the
date of its adoption by the Board if approval by shareholders has not yet been
obtained, except to the extent that shares of Stock were available for such
Awards prior to the Board's adoption of such amendment.
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APPENDIX E
PROXY CARD
JDN REALTY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints J. Donald Nichols and William J. Kerley, and
either of them, as proxies, with full power of substitution and resubstitution,
to vote all of the shares of Common Stock which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of JDN Realty Corporation, to be held
on Wednesday, May 19, 1999, at 9:00 a.m. (Atlanta Time) at the Grand Hyatt
Atlanta, Atlanta, Georgia 30305, and at any adjournment thereof.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED AS
SPECIFIED. IF NOT OTHERWISE SPECIFIED, THE ABOVE NAMED PROXIES WILL VOTE (1) FOR
THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED BELOW, (2) FOR THE APPROVAL OF
THE AMENDMENT AND RESTATEMENT OF THE JDN REALTY CORPORATION 1993 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN, (3) FOR THE APPROVAL OF THE AMENDMENT AND
RESTATEMENT OF THE JDN REALTY CORPORATION 1995 EMPLOYEE STOCK PURCHASE PLAN, (4)
FOR THE ADOPTION OF THE JDN REALTY CORPORATION LONG-TERM INCENTIVE PLAN, (5) FOR
THE APPROVAL OF THE AMENDMENT TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE UNDER THE JDN REALTY CORPORATION 1993 INCENTIVE STOCK PLAN, (6) FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF
THE COMPANY AND ITS SUBSIDIARIES FOR THE COMPANY'S 1999 FISCAL YEAR, AND (7) IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
1. Election of Class II Directors. Nominees: Elizabeth L. Nichols, Haywood
D. Cochrane, Jr.
<TABLE>
<S> <C> <C>
[ ] FOR nominees [ ] AGAINST [ ] WITHHOLD AUTHORITY
listed (except withheld nominees listed to vote for any individual nominee. Write name
to the contrary) of nominee here:
------------------------------
</TABLE>
2. Approval of the amendment and restatement of the JDN Realty Corporation 1993
Non-Employee Director Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED ON REVERSE SIDE)
3. Approval of the amendment and restatement of the JDN Realty
Corporation 1995 Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Adoption of the JDN Realty Corporation Long-Term Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Approval of the amendment to increase the number of shares reserved for
issuance under the JDN Realty Corporation 1993 Incentive Stock Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Ratification of the appointment of Ernst & Young LLP as independent auditors
of the Company and its subsidiaries for the Company's 1999 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: , 1999
--------------------
--------------------------------
Signature
--------------------------------
Signature if held jointly
IMPORTANT: Please sign exactly
as your name or names appear on
this proxy and mail promptly in
the enclosed envelope. If you
sign as agent or in any other
capacity, please state the
capacity in which you sign.
