(a)

Incremental shares from the assumed exercise of INDUS stock options are not included in periods where the inclusion of such shares would be anti-dilutive. The incremental shares from the assumed exercise of stock options for fiscal 2020 and 2018 would have been 64,000 and 57,000 shares, respectively. For fiscal 2020, there was a Warrant for the purchase of 504,590 shares of Common Stock that was anti-dilutive.

Sale of Common Stock

On August 24, 2020 INDUS sold Common Stock pursuant to the Securities Purchase Agreement (see Note 2).

On March 3, 2020, Gordon F. DuGan was appointed to serve as a Director of INDUS, effective immediately. Mr. DuGan was also appointed as Chairman of the Board of Directors. Mr. DuGan and the Company entered into a Chairmanship and Advisory Agreement (the “Advisory Agreement”), on March 3, 2020, whereby Mr. DuGan agreed to also serve as a non-employee advisor to INDUS on, amongst other things, growth strategy, including identifying markets, acquisitions and other transactions, recruitment of key personnel, potential capital raising efforts and general management advice (collectively the “Advisory Services”). As compensation to Mr. DuGan for providing such Advisory Services, Mr. DuGan received: (i) a non-qualified stock option to acquire 48,000 shares of INDUS Common Stock at an exercise price of $45.98 per share under the 2009 Stock Option Plan (see INDUS Stock Option Plans below) and (ii) a non-qualified stock option (the “Supplemental Advisor Option”) to acquire 52,000 shares of INDUS Common Stock at an exercise price of $46.91 per share under the 2020 Incentive Award (see INDUS Stock Option Plans below).

On March 9, 2020, INDUS completed the sale of 53,293 shares of INDUS’s Common Stock at a price per share of $46.91, for cash proceeds of $2,500, in accordance with the Advisory Agreement and pursuant to a Stock Purchase Agreement, dated as of March 5, 2020, between Mr. DuGan and INDUS.

Universal Shelf Filing/At-the-Market Equity Offering Program

On February 2, 2021, INDUS filed a universal shelf registration statement on Form S-3 (the “Universal Shelf”) with the U.S. Securities and Exchange Commission (“SEC”). Under the Universal Shelf, the Company may offer and sell up to $500,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, units or any combination of such securities during the three year period that commences upon the effective date of the Universal Shelf. Under the Universal Shelf, the Company may periodically offer one or more types of securities in amounts, at prices and on terms announced, if and when the securities are ever offered. If INDUS obtains additional capital by issuing equity, the interests of its existing stockholders will be diluted. If the Company incurs additional indebtedness, that indebtedness may impose financial and other covenants that may significantly restrict INDUS’s operations.

It is possible that INDUS will not be able to obtain additional capital under the Universal Shelf on favorable terms, or at all.

INDUS Stock Option Plans

Through March 3, 2020, stock options were granted by the Company under the INDUS Realty Trust, Inc. 2009 Stock Option Plan (as amended, the “2009 Stock Option Plan”). Options granted under the 2009 Stock Option Plan were either incentive stock options or non-qualified stock options issued at an exercise price not less than fair market value on the date approved by INDUS’s Compensation Committee. Vesting of all of the Company's stock options is solely based upon service requirements and does not contain market or performance conditions.

Stock options issued expire ten years from the grant date. In accordance with the 2009 Stock Option Plan, stock options issued to non-employee directors upon their initial election to the board of directors are fully exercisable immediately upon the date of the option grant. Stock options granted to non-employee directors upon their re-election to the board of directors vest on the second anniversary from the date of grant. Stock options granted to employees vest in equal installments on the third, fourth and fifth anniversaries from the date of grant. None of the stock options outstanding at November 30, 2020 may be exercised as stock appreciation rights.

On March 3, 2020, INDUS’s Board of Directors adopted and approved the INDUS Realty Trust, Inc. and INDUS Realty, LLC 2020 Incentive Award Plan (the “2020 Incentive Award Plan”). The 2020 Incentive Award Plan was effective as of the date it was adopted by the Board, subject to stockholder approval, which was received at INDUS’s 2020 Annual Meeting of Stockholders on May 7, 2020. The 2020 Incentive Award Plan replaced the 2009 Stock Option Plan and authorizes for grant a total of 300,000 shares (plus any shares subject to awards under the 2009 Stock Option Plan, as of the date of stockholder approval of the 2020 Incentive Award Plan, that are forfeited, expire, are converted to shares of another person or are settled for cash), subject to certain adjustments in the 2020 Incentive Award Plan. In addition to granting stock options, the 2020 Incentive Award Plan also enables INDUS to grant stock appreciation rights, restricted stock awards, restricted stock unit awards, partnership interests, other equity or cash based awards and dividend equivalents. No new awards will be granted under the 2009 Stock Option Plan; however, all outstanding awards under the 2009 Stock Option Plan remain outstanding in accordance with their terms.

The following options were granted by INDUS under the 2020 Incentive Award Plan and the 2009 Stock Option Plan:

For the Fiscal Years Ended

Nov. 30, 2020

Nov. 30, 2019

Nov. 30, 2018

Fair Value per

Number of

Option at

Number of

Option at

Number of

Option at

Shares

Grant Date

Shares

Grant Date

Shares

Grant Date

Non-employee directors

111,258

11.00 - 14.17

5,946

12.87

5,195

14.41

The fair values of all options granted were estimated as of the grant date using the Black-Scholes option-pricing model. Assumptions used in determining the fair value of the stock options granted were as follows:


	For the Fiscal Years Ended
	Nov. 30, 2020		Nov. 30, 2019		Nov. 30, 2018
Expected volatility	29.7 - 30.3	%	30.9	%	30.5	%
Risk free interest rates	0.5 - 0.9	%	2.3	%	3.0	%
Expected option term (in years)	8.5		8.5		8.5
Annual dividend yield	1.3	%	1.2	%	1.1	%


Number of option holders at November 30, 2020		28

Compensation expense and related tax benefits for stock options were as follows:


	For the Fiscal Years Ended
	Nov. 30, 2020		Nov. 30, 2019		Nov. 30, 2018
Compensation expense	$	510	$	261	$	350

Related tax benefit	$	—	$	43	$	53

For all years presented, the forfeiture rate used for directors ranged from 0% to 2%, the forfeiture rate used for executives was 17.9% and the forfeiture rate used for employees was 38.3%. The rates utilized were based on the historical activity of the grantees.

As of November 30, 2020, the unrecognized compensation expense related to nonvested stock options that will be recognized during future periods is as follows:


Fiscal 2021	$	442
Fiscal 2022	$	377
Fiscal 2023	$	244
Fiscal 2024	$	120
Fiscal 2025	$	23

The total grant date fair value of options vested during fiscal 2020, fiscal 2019 and fiscal 2018 was $458, $472 and $69, respectively. The intrinsic value of options exercised in fiscal 2020, fiscal 2019 and fiscal 2018 was $1,216, $299 and $765, respectively.

A summary of the activity under the 2009 INDUS Stock Option Plan is as follows:




		Weighted Avg.
	Options	Exercise Price
Outstanding at November 30, 2017	333,762	$	29.22
Granted	5,195	$	38.48
Exercised	(94,677)	$	31.18
Forfeited	(20,279)	$	33.78
Outstanding at November 30, 2018	224,001	$	28.20
Granted	5,946	$	36.99
Exercised	(32,337)	$	28.57
Forfeited	(7,788)	$	32.62
Outstanding at November 30, 2019	189,822	$	28.23
Granted	111,258	$	45.72
Exercised	(54,930)	$	28.58
Outstanding at November 30, 2020	246,150	$	36.06


				Weighted Avg.
				Remaining
Range of Exercise Prices for	Outstanding at	Weighted Avg.		Contractual Life	Total Intrinsic
Outstanding Options	November 30, 2020	Exercise Price		(in years)	Value
$23.00 - $28.00	106,304	$	26.80	5.3	$	4,726
$28.00 - $32.00	16,616	$	30.08	4.4		684
$32.00 - $47.00	123,230	$	44.84	9.1		3,255
	246,150	$	36.06	7.1	$	8,665

Vested options	99,980	$	28.49	5.3	$	4,276

Accumulated Other Comprehensive Income (Loss)

AOCI for the unrealized gain (loss) on cash flow hedges for fiscal 2020, fiscal 2019 and fiscal 2018, is comprised of the following:


Balance at November 30, 2017	$	(284)
Other comprehensive income before reclassifications		2,242
Amounts reclassified		473
Adoption of ASU No. 2018-02 - reclassification of deferred taxes to retained earnings		(36)
Net activity for other comprehensive loss		2,679
Balance at November 30, 2018		2,395
Other comprehensive loss before reclassifications		(5,560)
Amounts reclassified		24
Net activity for other comprehensive income		(5,536)
Balance at November 30, 2019		(3,141)
Other comprehensive income before reclassifications		(6,348)
Amounts reclassified		1,438
Net activity for other comprehensive loss		(4,910)
Balance at November 30, 2020	$	(8,051)

Changes in AOCI are as follows:


	For the Fiscal Years Ended
	November 30, 2020						November 30, 2019						November 30, 2018
			Tax						Tax						Tax
			(Expense)						(Expense)						(Expense)
	Pre-Tax		Benefit		Net-of-Tax		Pre-Tax		Benefit		Net-of-Tax		Pre-Tax		Benefit		Net-of-Tax
Reclassification included in net (loss) income:
Loss on cash flow hedges (interest expense)	$	1,438	$	—	$	1,438	$	32	$	(8)	$	24	$	636	$	(163)	$	473

Change in other comprehensive loss:
Decrease (increase) in fair value of INDUS’s cash flow hedges		(6,348)		—		(6,348)		(7,154)		1,594		(5,560)		2,876		(634)		2,242

Total other comprehensive (loss) income	$	(4,910)	$	—	$	(4,910)	$	(7,122)	$	1,586	$	(5,536)	$	3,512	$	(797)	$	2,715

See Notes 1, 3 and 8 for additional information on cash flow hedges.

Cash Dividends

There were no cash dividends declared in fiscal 2020. In fiscal 2019 and fiscal 2018, INDUS declared annual cash dividends of $0.50 and $0.45 per common share, respectively, which were paid in the first quarters of fiscal 2020 and fiscal 2019, respectively.

As discussed above (see Note 1), INDUS announced the E&P Distribution. The E&P Distribution will be $11,250 or $1.99 per share payable to holders of record as of January 22, 2021. Subject to the stockholder elections described below, the E&P Distribution will be a special dividend payable in a combination of cash and shares of Common Stock with a total amount of cash payable to stockholders of $3,398, equating to $0.60 per share. Stockholders of record as of January 22, 2021 have been provided with election materials to elect, subject to certain limitations, to receive the E&P Distribution either in cash, shares of Common Stock or a fixed combination of cash and shares of Common Stock. The E&P Distribution is expected to be paid on March 8, 2021, following the solicitation period. The Common Stock component of the E&P Distribution will be based on the Company’s two-day volume weighted average price on February 25, 2021 and February 26, 2021. Going forward, INDUS expects to begin making regular quarterly dividend payments, commencing with the quarter ending June 30, 2021.

Stock Repurchases

See Supplemental Cash Flow Information in Note 10 for information on Common Stock received in connection with the exercise of stock options.