THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
1992 INCENTIVE OPTION PLAN
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(As Amended and Restated Effective as of September 30, 1997)
Article 1
Background, Amendment and Restatement, and Term.
1.1 Background. THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP, a Delaware
limited partnership (including any successor thereto, "TRG") was formed for the
purposes of, among other things, owning, operating, acquiring, developing,
redeveloping, expanding, leasing, managing, financing and refinancing, disposing
of, and generally dealing with, regional retail shopping centers and
opportunities to develop regional retail shopping centers (and interests
therein). TRG has engaged the Manager, on an exclusive basis, to provide various
services, including management, leasing, development, acquisition, and
administrative services, to TRG.
1.2 Original Plan. TRG adopted The Taubman Realty Group Limited Partnership
1992 Incentive Option Plan (the "Original Plan") effective as of November 20,
1992, to provide incentives to employees of the Manager to remain in the employ
of the Manager for the benefit of TRG, to encourage proprietary interest in TRG,
and to attract new employees with outstanding qualifications to serve the
Manager on behalf of TRG.
1.3 Amended and Restated Plan. The Original Plan is hereby amended and
restated effective as of September 30, 1997 and is referred to hereinafter as
the "Plan".
1.4 Term. The Plan will remain in effect until terminated or abandoned by
action of the Partnership Committee in accordance with the Partnership
Agreement.
Article 2
Definitions
In the Plan, whenever the context so indicates, the singular or plural
number, and the masculine, feminine or neuter gender shall each be deemed to
include the other, the terms "he," "his," and "him" shall refer to an Optionee,
and the capitalized terms shall have the following meanings:
2.1 "Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of the Company, as the same may be amended from time to time.
2.2 "Beneficiary" means (i) an individual, trust, estate, or Family Trust
who or which, by will or by operation of the laws of descent and distribution,
succeeds to the rights and obligations of an Optionee under the Plan and the
Option Agreement upon the Optionee's death; or (ii) an individual who, as a
result of designation by an Optionee, succeeds to the
rights and obligations of such Optionee under the Plan and the Option Agreement
upon such Optionee's death.
2.3 "Board of Directors" means the Board of Directors of the Company.
2.4 "Business Day" means any Day on which the New York Stock Exchange is
open for trading.
2.5 "Code" means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provisions of succeeding law).
2.6 "Common Stock" means the common stock of the Company, par value $.01
per share.
2.7 "Company" means Taubman Centers, Inc., a Michigan corporation.
2.8 "Compensation Committee" means the Compensation Committee established
for TRG pursuant to the Partnership Agreement.
2.9 "Continuing Offer" means the Continuing Offer, as amended and restated
effective as of September 30, 1997, by the Company to certain holders of Units
of Partnership Interest and Incentive Options to exchange, subject to certain
restrictions, Units of Partnership Interest (or the right, without condition, to
receive Units of Partnership Interest pursuant to the Plan) for shares of Common
Stock.
2.10 "Date of Exercise", means with respect to an Incentive Option, the
Business Day immediately preceding the date on which such Incentive Option is
exercised pursuant to the Plan.
2.11 "Date of Grant", means with respect to an Incentive Option, the
Business Day immediately preceding the date on which the Compensation Committee
grants such Incentive Option pursuant to the Plan.
2.12 "Day" means each calendar day, including Saturdays, Sundays, and legal
holidays; provided, however, that if the Day on which a period of time for
consent or approval or other action ends is not a Business Day, such period
shall end on the next Business Day.
2.13 "Disability" or "Disabled" means, with respect to an Employee, a
physical or mental condition resulting from any medically determinable physical
or mental impairment that renders such Employee incapable of engaging in any
substantial gainful employment and that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not less
than three hundred sixty-five (365) Days. Notwithstanding the foregoing, an
Employee shall not be deemed to be Disabled as a result of any condition that:
(a) was contracted, suffered, or incurred while such Employee was
engaged in, or resulted from such Employee having engaged in, a felonious
activity;
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(b) resulted from an intentionally self-inflicted injury or an
addiction to drugs, alcohol, or substances which are not administered under
the direction of a licensed physician as part of a medical treatment plan;
or
(c) resulted from service in the Armed Forces of the United
States for which such Employee received a disability benefit or pension
from the United States, or from service in the armed forces of any other
country irrespective of any disability benefit or pension.
The Disability of an Employee and the date upon which an Employee ceases to
be employed by reason of Disability shall be determined by the Compensation
Committee, upon the recommendation from the Manager, in accordance with uniform
principles consistently applied, upon the basis of such evidence as the
Compensation Committee and the Manager deem necessary and desirable, and its
good faith determination shall be conclusive for all purposes of this Plan and
the relevant Option Agreement. The Compensation Committee or the Manager shall
have the right to require an Employee to submit to an examination by a physician
or physicians and to submit to such reexaminations as the Compensation Committee
or the Manager shall require in order to make a determination concerning the
Employee's physical or mental condition; provided, however, that (i) an Employee
may not be required to undergo a medical examination more often than once each
one hundred eighty (180) Days nor at any time after the normal date of the
Employee's Retirement, and (ii) the fees and expenses of any such medical
examination(s) shall be considered expenses of administering the Plan. If any
Employee engages in any occupation or employment (except for rehabilitation as
determined by the Compensation Committee, upon the recommendation from the
Manager) for remuneration or profit, which activity would be inconsistent with
the finding of Disability, or if the Compensation Committee, upon the
recommendation from the Manager, determines on the basis of a medical
examination that an Employee no longer has a Disability, or if an Employee
refuses to submit to any medical examination properly requested by the
Compensation Committee or the Manager, then in any such event, the Employee
shall be deemed to have recovered from such Disability.
2.14 "Effective Date" means September 30, 1997. The effective date of the
Original Plan was November 20, 1992.
2.15 "Employee" means an individual who is and continues to be employed
(within the meaning of Section 3401 of the Code and the regulations promulgated
thereunder) by the Manager or a Manager Entity. An Employee shall cease to be an
Employee upon the voluntary or involuntary termination of his employment with
the Manager or a Manager Entity (as such terms are defined in Sections 2.26 and
2.27 hereof) for any reason, including death, Disability, Retirement, or with or
without cause. Transfers of employment between the Manager and a Manager Entity,
or between Manager Entities, shall not affect an individual's status as an
Employee for purposes of the Plan and shall not be treated as a cessation of
employment provided that the cessation of employment with the Manager or a
Manager Entity is immediately followed by employment with the Manager or another
Manager Entity. Whether an authorized leave of absence, or an absence due to
military or government service, Disability, or any other reason, constitutes a
cessation of employment shall be determined by the Compensation Committee, upon
the recommendation from the Manager.
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2.16 "Exercise Price", means with respect to an Incentive Option, the price
at which an Optionee may exercise his Incentive Option to acquire one or more
Units of Partnership Interest which are the subject of such Optionee's Incentive
Option, and in accordance with the following provisions:
(a) Incentive Options Granted prior to or at the time of the
Initial Public Offering: The Exercise Price shall be equal
to $11.139 for each Unit of Partnership Interest subject to
an Incentive Option granted prior to or at the time of the
Initial Public Offering.
(b) Incentive Option Granted After November 20, 1992 but prior
to September 30, 1997: The Exercise Price shall be equal to
the Fair Market Value of each Unit of Partnership Interest
(as defined in the Original Plan) determined as of the Date
of Grant, divided by 1975.08 (rounding the quotient up to
the nearest 1/10th cent) for each Unit of Partnership
Interest subject to an Incentive Option granted on any date
after November 20, 1992 but prior to September 30, 1997.
(c) Incentive Options Granted on or after September 30, 1997:
The Exercise Price shall be equal to the Fair Market Value
of each Unit of Partnership Interest (as defined in Section
2.18) determined as of the Date of Grant, for each Unit of
Partnership Interest subject to an Incentive Option granted
on any date on or after September 30, 1997.
2.17 "Fair Market Value of the Common Stock" means the per share value of
the Common Stock on the Valuation Date, and is determined as follows:
(a) If the Common Stock is listed or admitted for trading on any
national securities exchange, the Fair Market Value of the Common Stock is
the closing price per share on such exchange on such Valuation Date (or, if
listed on more than one exchange, the principal said exchange).
(b) If the Common Stock is not traded on any national securities
exchange, but is quoted on the National Association of Securities Dealers,
Inc. Automated Quotation System (NASDAQ System) or any similar system of
automated dissemination of quotations of prices in common use, the Fair
Market Value of the Common Stock is the price per share equal to the mean
between the closing high bid and the closing low bid on such system on such
Valuation Date.
(c) If neither paragraph (a) nor paragraph (b) of this definition
is applicable, the Fair Market Value of the Common Stock is the fair market
value per share, on such Valuation Date, as determined by the Board of
Directors (or by the Partnership Committee if the Board of Directors does
not, for any reason, provide such determination), in good faith and in
accordance with uniform principles consistently applied.
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2.18 "Fair Market Value of each Unit of Partnership Interest" means, with
respect to an Incentive Option, the value of a Unit of Partnership Interest that
is the subject of an Incentive Option granted on or after September 30, 1997 and
is equal to the Fair Market Value of the Common Stock.
2.19 "Family Trust" means, with respect to an Optionee, a trust for the
benefit of such Optionee or for the benefit of any member or members of such
Optionee's Immediate Family, or for the benefit of such Optionee and any member
or members of such Optionee's Immediate Family (for the purpose of determining
whether or not a trust is a Family Trust, the fact that one or more of the
beneficiaries (but not the sole beneficiary) of the trust includes a Person or
Persons, other than a member of such Optionee's Immediate Family, entitled to a
distribution after the death of the settlor if he, she, it, or they shall have
survived the settlor of such trust, which distribution is to be made of
something other than a Partnership Interest and/or includes an organization or
organizations exempt from federal income taxes pursuant to the provisions of
Section 501(a) of the Code and described in Section 501(c)(3) of the Code, shall
be disregarded); provided, however, that a trust will be a "Family Trust"
hereunder only if the trustee or trustees of such Family Trust shall be solely
such Optionee, a member or members of such Optionee's Immediate Family, a
responsible financial institution and/or an attorney who is a member of the Bar
of any State in the United States and/or an individual or individuals approved
by the Partnership Committee.
2.20 "Fractional Unit" means less than one Unit of Partnership Interest.
2.21 "Immediate Family" means, with respect to an Optionee, (i) such
Optionee's spouse (former or then current), (ii) such Optionee's parents and
grandparents, and (iii) ascendants and descendants (natural or adoptive, of the
whole or half blood) of such Optionee's parents or of the parents of such
Optionee's spouse (former or then current).
2.22 "Impermissible Holder" is defined in Section 7.17 hereof.
2.23 "Incentive Option" means an option granted pursuant to the Plan to
acquire one (1) or more Units of Partnership Interest, general and/or limited.
2.24 "Incumbent Board" is defined in Section hereof.
2.25 "Initial Public Offering" or "IPO" means the initial public offering
of shares of Common Stock pursuant to the Company's first effective registration
statement for the sale to the public of such Common Stock filed under the
Securities Act of 1933, as amended.
2.26 "Manager" means TTC, or such other Person who has by written contract
with TRG agreed to provide management, administration, leasing, and development
services for the properties of TRG.
2.27 "Manager Entity" means a Person in which the Manager, or one or more
of the Persons possessing a beneficial interest in the Manager, possesses a
beneficial interest and which Person has agreed to provide personnel,
management, administration, leasing and/or development or other services for the
properties of TRG, or to the Manager for the benefit of TRG, or for TRG itself.
2.28 "Option Agreement" is defined in Section hereof.
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2.29 "Optionee" means an Employee or a former Employee who has received an
Incentive Option.
2.30 "Original Plan" means The Taubman Realty Group Limited Partnership
1992 Incentive Option Plan effective as of November 20, 1992.
2.31 "Partnership Agreement" means The Amended and Restated Agreement of
Limited Partnership of The Taubman Realty Group Limited Partnership, as the same
has been or may be amended and/or supplemented.
2.32 "Partnership Committee" means the Partnership Committee and the
Executive Committee established for TRG pursuant to the Partnership Agreement.
2.33 "Partnership Interest" means an interest, as a Partner, in TRG, as
such terms are defined in the Partnership Agreement.
2.34 "Partnership Interest Certificate" is defined in Section hereof.
2.35 "Person" or "Persons" means an individual, a partnership (general or
limited), corporation, joint venture, business trust, cooperative, association,
or other form of business organization, whether or not regarded as a legal
entity under applicable law, a trust (inter vivos or testamentary), an estate of
a deceased, insane, or incompetent person, a quasi-governmental entity, a
government or any agency, authority, political subdivision, or other
instrumentality thereof, or any other entity.
2.36 "Plan" means The Taubman Realty Group Limited Partnership 1992
Incentive Option Plan as amended and restated effective as of September 30,
1997, as the same may be amended from time to time.
2.37 "Retirement" means the termination of employment by an Employee after
the attainment of the age of sixty-five (65) years or upon such earlier date as
required by local law or as otherwise determined by the Compensation Committee,
upon the recommendation from the Manager.
2.38 "Special Incentive Options" means those Incentive Options granted for
the purpose of converting amounts previously granted to eligible employees under
The Taubman Company, Inc. Long Term Management Incentive Plan into Incentive
Options under this Plan. All references and provisions in the Plan applicable to
Incentive Options shall include and apply equally to Special Incentive Options
unless expressly provided otherwise.
2.39 "Transfer" means any assignment, sale, transfer, conveyance, mortgage
or other encumbrance, pledge, or other disposition or act of alienation, whether
voluntary or involuntary, or by operation of law.
2.40 "Termination for Cause" means termination of employment by reason of
an Optionee's action or repeated acts, including without limitation, the
commission of a felony, fraud, or wilful misconduct, which has resulted, or is
likely to result, in material damage to the Manager, a Manager Entity, or TRG,
as the Compensation Committee, upon the recommendation from the Manager, may
conclusively determine.
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2.41 "TRG" means The Taubman Realty Group Limited Partnership, a Delaware
limited partnership, or any successor thereto.
2.42 "TTC" means The Taubman Company Limited Partnership, a Delaware
limited partnership.
2.43 "Units of Partnership Interest" means the units into which Partnership
Interests are divided.
2.44 "Valuation Date" means, with respect to an Incentive Option, the Date
of Grant of such Incentive Option or the Date of Exercise, as applicable.
Whenever reference is made to a Valuation Date, it shall mean, with respect to
the Common Stock, the price at the close of trading on such Valuation Date, and
with respect to any other item, midnight in Detroit, Michigan at the end of such
Valuation Date.
Article 3
Administration.
3.1 Administration. The Plan shall be administered by the Compensation
Committee in accordance with this Article 3. Except as otherwise provided in the
Partnership Agreement or this Plan and except as otherwise expressly reserved to
the Partnership Committee in the Plan or in the Partnership Agreement, the
Compensation Committee shall have the sole discretionary authority (i) to select
the Employees who are to be granted Incentive Options under the Plan, (ii) to
determine the number of Units of Partnership Interest in TRG to be optioned to
an Employee, (iii) to authorize the granting of Incentive Options, (iv) to
interpret the Plan, (v) to establish and modify administrative rules for the
Plan, (vi) to impose such conditions and restrictions on Incentive Options as it
determines appropriate, (vii) to execute Option Agreements, (viii) to cancel
Incentive Options and to substitute new Incentive Options with the consent of an
Optionee, and (ix) to take any other actions in connection with the Plan and the
Incentive Options and to make all determinations under the Plan as it may deem
necessary or advisable.
It is anticipated that the Compensation Committee will act upon a
recommendation from the Manager in exercising the discretion granted to the
Compensation Committee under the Plan. Action taken or not taken by the
Compensation Committee on one or more occasions shall be without obligation to
take or not take such action on any other occasion(s).
The Compensation Committee may, subject to the provisions of the
Partnership Agreement, delegate to one or more Persons any of its powers, other
than its power to authorize the granting of Incentive Options, hereinbefore,
hereinafter, or pursuant to the Partnership Agreement provided or conferred, or
designate one or more Persons to do or perform those matters to be done or
performed by the Compensation Committee, including administration of the Plan.
Any Person or Persons delegated or designated by the Compensation Committee
shall be subject to the same obligations and requirements imposed on the
Compensation Committee and its members under the Plan and the Partnership
Agreement.
Notwithstanding the foregoing provisions of this Section 3.1, any selection
of an officer or director of the Company to be granted an Incentive Option under
the Plan, and any
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decisions concerning the timing, pricing, and amount of a grant to an officer or
director of the Company, in the event such officer or director is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 at the time of
grant, shall be made solely by those members of the Compensation Committee, but
in no event fewer than two, who are "disinterested persons" within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934. In view of the fact
that, subject to certain restrictions, the Units of Partnership Interest
acquired upon exercise of an Incentive Option may be exchanged, pursuant to the
Continuing Offer, for shares of Common Stock, all grants of Incentive Options to
such officers and directors of the Company must further be confirmed by a
committee of two or more disinterested directors of the Company (which
confirmation shall be deemed made if such disinterested directors who serve on
such committee of the Board of Directors also serve on the Compensation
Committee).
3.2 Expenses of Administration. TRG shall pay all costs and expenses of
administering the Plan.
3.3 Indemnification. The Compensation Committee, members of the
Compensation Committee, and each Person or Persons designated or delegated by
the Compensation Committee, and the Manager and each Manager Entity and the
shareholders, directors and officers of the Manager and each Manager Entity
shall be entitled to indemnification and reimbursement from TRG for any action
or any failure to act in connection with services performed by or on behalf of
the Compensation Committee for the benefit of TRG to the fullest extent provided
or permitted by the Partnership Agreement and by any insurance policy or other
agreement intended for the benefit of the Compensation Committee, or by any
applicable law.
Article 4
Units of Partnership Interest Available Under the Plan
4.1 Units of Partnership Interest Available. Incentive Options may be
granted by TRG under the Plan from time to time to purchase an aggregate Eight
Million, Eight Hundred Eighty- Seven Thousand, Eight Hundred Sixty (8,887,860)
Units of Partnership Interest, as said number may be increased by the action of
the Partnership Committee.
4.2 Units of Partnership Interest Subject to Terminated or Expired
Incentive Options. In the event that an outstanding Incentive Option is
surrendered, expires or is terminated for any reason before it shall have been
fully exercised, then all Units of Partnership Interest in TRG formerly subject
to such Incentive Option shall again be available for any Incentive Option
subsequently granted under the Plan.
4.3 Adjustments. In the event of any change in the Units of Partnership
Interest by reason of merger, or by reason of a division or combination of Units
of Partnership Interest, or otherwise, the number and kind of Units of
Partnership Interest which may thereafter be optioned and sold under the Plan,
the number and kind of Units of Partnership Interest subject to option and
outstanding Option Agreements, and the Exercise Price per Unit of Partnership
Interest, shall be appropriately adjusted in a manner consistent with such
change, as the Compensation Committee may deem equitable.
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Article 5
Participation
All Employees shall be eligible to receive grants of Incentive Options
under the Plan. The Optionees shall be such individuals as the Compensation
Committee may select, upon the recommendation from the Manager, from among the
Employees (who may include executive officers of the Manager), and shall be
based upon the expected future contribution of such Employee to the Manager for
the benefit of TRG.
Article 6
Incentive Options
6.1 Power to Grant Incentive Options. The Compensation Committee may grant
to such Employees as the Compensation Committee may select, in accordance with
Article 5 hereof, Incentive Options entitling the Optionee to purchase Units of
Partnership Interest from TRG in such quantity, exercisable at an Exercise Price
equal to the Fair Market Value of the Units of Partnership Interest determined
as of the Date of Grant, and on such terms and subject to such conditions not
inconsistent with the terms of the Plan, as may be established by the
Compensation Committee. No Incentive Option covering a Fractional Unit shall be
granted under the Plan.
6.2 Modification, Extension, and Renewal of Incentive Options. Subject to
the approval of the Partnership Committee, the Compensation Committee may
modify, extend, or renew outstanding Incentive Options, or accept the
cancellation or surrender of outstanding Incentive Options (to the extent not
previously exercised) for the granting of new Incentive Options in substitution
therefor. Notwithstanding the foregoing, no modification of an Incentive Option
shall, without the consent of the Optionee, alter or impair any rights or
obligations under any Incentive Option previously granted.
6.3 Optionee to Have No Rights as a Partner. An Optionee shall have no
rights as a partner in TRG with respect to the Units of Partnership Interest
made subject to an Incentive Option unless and until such Optionee exercises
such Incentive Option, is admitted as a partner in TRG, and is issued a
Partnership Interest Certificate evidencing his Units of Partnership Interest.
No adjustments shall be made for distributions, allocations, or other rights
with respect to any Units of Partnership Interest prior to the last to occur of
the foregoing events specified in this Section 6.3.
Article 7
Terms and Conditions of Incentive Options
7.1 Option Agreements. The terms of any Incentive Option shall be as set
forth in a written incentive option agreement (an "Option Agreement") in such
form as the Compensation Committee shall from time to time determine. Each
Option Agreement shall comply with and be subject to the terms and conditions of
the Plan, the Partnership Agreement, and such other terms and conditions as the
Compensation Committee may deem appropriate. No Person shall have any rights
under any Incentive Option granted under the Plan unless and until TRG and the
Optionee have executed an Option Agreement setting forth the grant and the terms
and conditions of the Incentive Option.
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7.2 Plan Provisions Control Incentive Option Terms. The terms of the Plan
shall govern all Incentive Options granted under the Plan, and in no event shall
the Compensation Committee have the power to grant any Incentive Option under
the Plan which is contrary to any of the provisions of the Plan. In the event
that any provision of an Incentive Option granted under the Plan shall conflict
with any term in the Plan as constituted on the Date of Grant of such Incentive
Option, the term in the Plan constituted on the Date of Grant of such Incentive
Option shall control.
7.3 Conditions for Exercise (Vesting). Except with respect to Special
Incentive Options or in the case of the death, Disability, or Retirement of an
Optionee, and subject to the provisions of Sections 7.6, 8.3, and 8.4 hereof, no
part of an Incentive Option granted under the Plan may be exercised until the
Optionee has completed three (3) years of employment with the Manager after the
Date of Grant of such Incentive Option. Except with respect to Special Incentive
Options or in the case of the death, Disability, or Retirement of an Optionee,
and provided that an Optionee has completed three (3) years of employment with
the Manager after the Date of Grant of such Incentive Option, such Incentive
Option shall become exercisable (i.e., it shall "vest") as follows:
(a) Subject to paragraph (d) below of this Section 7.3, each
Incentive Option (other than a Special Incentive Option) granted under this
Plan shall become exercisable (i) on the third (3rd) anniversary date of
the Date of Grant of such Incentive Option, to the extent of one-third
(1/3) of the Units of Partnership Interest made subject to such Incentive
Option; (ii) on the fourth (4th) anniversary date of the Date of Grant of
such Incentive Option, to the extent of an additional one-third (1/3) of
the Units of Partnership Interest made subject to such Incentive Option;
and (iii) on the fifth (5th) anniversary date of the Date of Grant, to the
extent of all of the Units of Partnership Interest made subject to such
Incentive Option.
(b) The vesting and exercise of Special Incentive Options shall
be determined under the terms of the Original Plan.
(c) For purposes of this Section 7.3, in determining the "Units
of Partnership Interest made subject to such Incentive Option," account
shall be taken of any adjustments made to the Units of Partnership Interest
as described in Section 4.3 hereof after the Date of Grant of the Incentive
Option, such that the number of Units of Partnership Interest with respect
to which an Optionee's Incentive Option is vested shall be redetermined at
the time of an adjustment, and the number of Units of Partnership Interest
with respect to which an Optionee's Incentive Option becomes vested on any
anniversary date shall be determined by reference to the number of Units of
Partnership Interest then subject to such Incentive Option, taking any
adjustments previously made into account.
(d) An Optionee may exercise all or any portion of an Incentive
Option, to the extent vested; however, Incentive Options may not be
exercised over less than one (1) Unit of Partnership Interest. If, as a
result of the vesting provisions of Section 7.3(a), the Units of
Partnership Interest with respect to which an Optionee's Incentive
Option(s) become exercisable include a Fractional Unit, then the
exercisable Options shall be rounded down to cover whole Units only.
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7.4 Conversion of Incentive Options Granted Prior to September 30, 1997. In
connection with the division of Units of Partnership Interest effective
September 30, 1997, the number of Units of Partnership Interest subject to all
unexercised and outstanding Incentive Options granted prior to September 30,
1997 shall be increased (effective as of September 30, 1997) by a factor of
1,975.08, rounding up to the next whole Unit if the product would otherwise
include a Fractional Unit.
7.5 Expiration Date. Notwithstanding any other provision of the Plan, no
Incentive Option shall be exercisable after the tenth (10th) anniversary of the
Date of Grant.
7.6 Acceleration of Exercise Time. Notwithstanding anything to the contrary
in the Plan, including Sections 7.3, 7.7 and 7.8 hereof, the Compensation
Committee, in its discretion, upon the recommendation from the Manager, may
allow the exercise, in whole or in part, at any time more than six (6) months
after the Date of Grant, as determined by the Compensation Committee, of any
Incentive Option held by an Optionee, which Incentive Option has not previously
become exercisable.
7.7 Termination of Employment (Except by Death, Disability, or Retirement)
Within Three Years After Date of Grant. Except in the case of the death,
Disability, or Retirement of an Optionee, if an Optionee ceases to be an
Employee for any reason within three (3) years after the Date of Grant to such
Optionee of an Incentive Option under the Plan, such Optionee's right to
exercise such Incentive Option or any part thereof shall be forfeited
immediately and permanently.
7.8 Termination of Employment (Except by Death, Disability, or Retirement)
More Than Three Years After Date of Grant. Except in the case of the death,
Disability, or Retirement of an Optionee, if an Optionee ceases to be an
Employee for any reason more than three (3) years after the Date of Grant to
such Optionee of an Incentive Option under the Plan, such Optionee shall have
the right, subject to the restrictions of Sections 7.5, 7.17 and 7.18 hereof, to
exercise such Incentive Option, in full or in part, at any time within ninety
(90) Days after his cessation of employment, but only to the extent that, on the
date of such cessation of employment, such Optionee's right to exercise such
Incentive Option had vested pursuant to the terms of Section 7.3 hereof and the
applicable Option Agreement and had not previously been exercised.
7.9 Termination for Cause. Notwithstanding the preceding Sections of this
Article 7, including without limitation Sections 7.3 and 7.8 hereof, an
Incentive Option shall cease to be exercisable and shall be forfeited
immediately and permanently on the date of an Optionee's cessation of employment
if such cessation is a Termination For Cause (as defined in Section 2.40
hereof).
7.10 Death of Optionee. If an Optionee dies while an Employee and without
having fully exercised his Incentive Option(s), then any outstanding Incentive
Option(s) of such Optionee shall vest immediately and fully, and the executor,
administrator, or other personal representative of the Optionee's estate, or the
trustee of any Family Trust receiving such Incentive Option(s) as a result of
such Optionee's death, or any heir, successor, assign, or other transferee of
the Optionee receiving such Incentive Option(s) by will or by the laws of
descent and distribution, shall have the right, subject to the restrictions of
Sections 7.5, 7.17 and 7.18 hereof, to exercise such Incentive Option(s) to
acquire the Units of Partnership
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Interest in TRG made subject to such Incentive Option(s), in full or in part, at
any time within seven hundred thirty (730) Days after the Optionee's death.
7.11 Disability of Optionee. If an Optionee who ceases to be an Employee at
any time by reason of Disability has not fully exercised his Incentive
Option(s), then any outstanding Incentive Option(s) of such Optionee shall vest
immediately and fully, and such Optionee or his guardian or other legal
representative, shall have the right, subject to the restrictions of Sections
7.5, 7.17 and 7.18 hereof, to exercise such Incentive Option(s) to acquire the
Units of Partnership Interest in TRG made the subject of such Incentive
Option(s), in full or in part, at any time prior to the tenth (10th) anniversary
date of the Date of Grant.
7.12 Retirement of Optionee. If an Optionee who ceases to be an Employee at
any time by reason of Retirement has not fully exercised his Incentive
Option(s), then any Incentive Option(s) of such Optionee shall vest immediately
and fully, and such Optionee shall have the right, subject to the restrictions
of Sections 7.5, 7.17 and 7.18 hereof, to exercise such Incentive Option(s) to
acquire the Units of Partnership Interest in TRG made the subject of such
Incentive Option(s), in full or in part, at any time prior to the tenth (10th)
anniversary date of the Date of Grant.
7.13 Exercise Procedures. Each Incentive Option granted under the Plan
shall be exercised by written notice to the Compensation Committee, which notice
must be received by the Compensation Committee on or before the earlier of (i)
the date such Incentive Option expires pursuant to Section 7.5 hereof, and (ii)
the last date on which such Incentive Option may be exercised as provided in
Sections 7.7 through 7.12 and in Section 8.3 hereof.
7.14 Payment of the Exercise Price. The purchase price for each Unit of
Partnership Interest in TRG to be purchased upon exercise of an Incentive Option
granted under the Plan shall be paid in full in cash by the Optionee pursuant to
the Option Agreement and in an amount equal to the Exercise Price.
7.15 Taxes. TRG or the Manager, or a Manager Entity, as the case may be,
shall be entitled, if the Compensation Committee deems it necessary or
desirable, to withhold (or secure payment from an Optionee or Beneficiary in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by TRG or the Manager with respect to any amount payable
and/or Units of Partnership Interest issuable under such Optionee's Incentive
Option, and TRG may defer payment or issuance of the Units of Partnership
Interest upon such Optionee's exercise of an Incentive Option unless indemnified
to its satisfaction against any liability for such tax. The amount of any such
withholding shall be determined by the Compensation Committee.
7.16 Surrender of Incentive Options. Any Incentive Option granted under the
Plan may be surrendered to TRG for cancellation on such terms as the
Compensation Committee and the Optionee agree, including, but not limited to,
terms which provide that upon such surrender TRG shall pay to the Optionee cash
or, subject to the provisions of Section 7.17 hereof, Units of Partnership
Interest, or a combination of cash and Units of Partnership Interest.
7.17 Prohibition Against Exercise of Incentive Option. In the event that an
Optionee properly exercising an Incentive Option as provided in the Plan, or any
other Person properly
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exercising an Incentive Option as provided in the Plan, is not a Person to whom
a Partner (as that term is defined in the Partnership Agreement) would be
permitted to Transfer all or any portion of its Partnership Interest, as
provided in Section 8.1(b) of the Partnership Agreement (such Optionee or other
Person being hereinafter referred to as an "Impermissible Holder"), then such
Impermissible Holder shall nevertheless be permitted to exercise such Incentive
Option as provided in Sections 7.3 through 7.12 and in Sections 8.2 and 8.4
hereof, by complying with the procedures provided in Sections 7.13 and 7.15
hereof and by paying or causing to be paid to TRG the Exercise Price pursuant to
Section 7.14, but such Impermissible Holder shall not be issued Unit(s) of
Partnership Interest but shall, instead, and at the same time, receive shares of
Common Stock pursuant to and subject to the terms and conditions of the
Continuing Offer.
7.18 Prohibition Against Exercise of Option within Six (6) Months of Date
of Grant. Notwithstanding any other provision of the Plan (including Sections
8.3 and 8.4 hereof), no Incentive Option which, but for this Section 7.18 is
exercisable, shall be exercised within six (6) months from the Date of Grant.
Article 8
Amendment and Termination of the Plan; Dissolution of TRG
8.1 Amendment of the Plan. The Compensation Committee, with the approval or
at the direction of the Partnership Committee, may from time to time suspend or
discontinue the Plan or revise or amend the Plan in any respect whatsoever. In
addition, the Compensation Committee, with the approval or at the direction of
the Partnership Committee and the Company, may cause the Company to adopt an
incentive option plan in replacement of the Plan whereby options to purchase
shares of Common Stock of the Company are granted to Employees. In such event,
all outstanding Incentive Options shall be adjusted to be consistent with the
terms and provisions of the Plan and the Continuing Offer, and in such manner as
the Compensation Committee may deem equitable or as may be required pursuant to
applicable law; provided, however, that except with the written consent of an
Optionee or as otherwise specifically provided herein with respect to a
replacement plan, no amendment or suspension of the Plan shall alter or impair
any Incentive Option previously granted to such Optionee under the Plan.
8.2 Termination of the Plan. The Compensation Committee, with the approval
or at the direction of the Partnership Committee, shall have the right and power
to terminate the Plan at any time, and no Incentive Option shall be granted
under the Plan after the termination of the Plan. Except as otherwise provided
in Section 8.3 hereof, the termination of the Plan shall not have any other
effect, and any Incentive Option outstanding at the time of the termination of
the Plan may be exercised after termination of the Plan, at any time prior to
the expiration date of such Incentive Option and to the same extent and subject
to the same terms and conditions, as provided in Article 7 hereof, that would
have applied to such Incentive Option if the Plan had not been terminated.
8.3 Dissolution of TRG. The dissolution of TRG (provided that TRG is not
reconstituted as provided in the Partnership Agreement) shall automatically and
without further action cause the Plan to terminate and each outstanding
Incentive Option which is not yet vested to vest immediately and fully. Each
Optionee holding an outstanding Incentive Option which is then, or by reason of
the dissolution of TRG has become, vested and exercisable, as
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set forth in Article 7 hereof, shall receive written notice of the dissolution
of TRG and shall have fifteen (15) Days from the receipt of such written notice
of dissolution to exercise such Optionee's Incentive Option(s) by delivering
written notice of such exercise as provided in Section 7.13 hereof and by paying
or causing to be paid to TRG the Exercise Price. Except as otherwise provided in
this Section 8.3, any Incentive Option exercised upon dissolution shall be
exercisable only as provided under the Plan and shall continue to be subject to
all of the terms and conditions of the Plan. The grant of any Incentive Option
pursuant to the Plan shall not affect in any way the right or power of TRG to
make changes to its business structure, or to merge, dissolve, or terminate, or
to sell or transfer any or all of its assets.
8.4 Termination of Management Contract/Change of Control Event. Upon the
termination of the Master Services Agreement (as defined in the Partnership
Agreement) between TRG and the Manager, for any reason, or upon the occurrence
of either of the following events (a "change of control" event), all Incentive
Options previously granted under the Plan shall vest immediately and fully, but
shall otherwise be exercisable only as provided under the Plan and shall
continue to be subject to all of the terms and conditions of the Plan. For
purposes of this Section 8.4, a "change of control" event means:
(a) The acquisition of beneficial ownership of Units of
Partnership Interest in TRG entitling the Person acquiring such beneficial
ownership to appoint a majority of the members of the Partnership
Committee, if such Person was not, at the time of the Initial Public
Offering, a Partner of TRG (as identified in the Preamble to the
Partnership Agreement); or
(b) If, at such time as the Company obtains the right to appoint
a majority of the members of the Partnership Committee, or at any time
thereafter, at least a majority of that number of the individuals who
constitute the Board of Directors are not, or cease for any reason to be,
the same individuals who constituted the Board of Directors immediately
after the consummation of the Initial Public Offering (the "Incumbent
Board"); provided, that any individual becoming a director after the
Initial Public Offering whose election or nomination for election by the
Company's shareholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall, for the purposes of
this clause (b), be considered as though such individual were a member of
the Incumbent Board.
Article 9
Compliance With Other Laws and Regulations
9.1 Exemption or Qualification. The Plan, the grant and exercise of
Incentive Options under the Plan, and the obligation of TRG to sell and deliver
Units of Partnership Interest under such Incentive Options shall be subject to
all applicable federal and state laws, rules, and regulations and to such
approvals by any government or regulatory agency as may be required. TRG shall
not be required to issue or deliver any Partnership Interest Certificates for
Units of Partnership Interest prior to such time as there is an appropriate
exemption available from the registration or qualification requirements for such
Units of Partnership Interest under any federal or state law, or any ruling or
regulation of any government body which TRG shall, in its discretion, determine
to be necessary or advisable. Any determination by TRG and its counsel in
connection with any of the matters set forth in this Section 9.1 shall be
conclusive and binding on all Persons.
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9.2 Representation. The Compensation Committee may require that any Person
who is granted an Incentive Option under the Plan represent and agree in writing
that if the Units of Partnership Interest made subject to the Incentive Option
are issuable under an exemption from registration requirements, the Units of
Partnership Interest will be "restricted" securities which may be resold only in
compliance with the applicable securities laws, and that such Person is
acquiring the Units of Partnership Interest issued upon exercise of an Incentive
Option for investment and not with a view toward distribution.
Article 10
Disposition of Units of Partnership Interest
10.1 Limitations on Transfer. An Optionee's rights and interests under the
Plan may not be assigned or transferred other than by will or the laws of
descent and distribution, and during the lifetime of an Optionee, only the
Optionee personally (or the Optionee's personal representative) may exercise the
Optionee's rights under the Plan. An Optionee's Beneficiary may exercise the
Optionee's rights to the extent they are exercisable under the Plan following
the death of the Optionee. Notwithstanding any other provision of the Plan to
the contrary, an Optionee's rights and interests under the Plan shall vest in
the Company upon the Optionee's exercise of the Incentive Option, acceptance of
the Continuing Offer, and payment of the Exercise Price as described in Section
7.17 hereof.
10.2 Partnership Interest Certificates. Units of Partnership Interest shall
be represented by a certificate of TRG (a "Partnership Interest Certificate").
Each Partnership Interest Certificate shall bear the following legend:
The Unit(s) of Partnership Interest represented by this
certificate is (are) subject to and transferable only in
compliance with the Amended and Restated Agreement of Limited
Partnership of The Taubman Realty Group Limited Partnership, as
the same may be amended and/or supplemented from time to time
(the "Partnership Agreement"), a copy of which is on file at the
office of The Taubman Realty Group Limited Partnership. Any
assignment, sale, transfer, conveyance, mortgage, or other
encumbrance, pledge, granting of an Option or proxy, or other
disposition or act of alienation, whether voluntary or
involuntary, or by operation of law, in respect of a Unit of
Partnership Interest made other than as permitted in the
Partnership Agreement shall be null and void and have no force or
effect whatsoever.
In addition, Partnership Interest Certificates evidencing Units of
Partnership Interest acquired under the Plan pursuant to an unregistered
transaction shall bear the following restrictive legend and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law:
The sale of the Unit(s) of Partnership Interest represented by
this certificate has not been registered under the
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Securities Act of 1933 (the "Act"). Any transfer of such Unit(s)
of Partnership Interest will be invalid unless a registration
statement under the Act is in effect as to such transfer, or, in
the opinion of counsel for the Partnership, such registration is
unnecessary in order for such transfer to comply with the Act.
Any determination by TRG and its counsel in connection with any of the matters
set forth in this Section 10.2 shall be conclusive and binding on all persons.
Article 11
General Provisions
11.1 No Right to Continued Employment. No Employee or any other Person
shall have any claim or right to be granted an Incentive Option under the Plan.
Neither the adoption and maintenance of the Plan nor the granting of Incentive
Options pursuant to the Plan shall be deemed to constitute a contract of
employment between the Manager or TRG or the Company and any Employee or to be a
condition of the employment of any Person. The Plan and any Incentive Option
granted under the Plan shall not confer upon any Optionee any right with respect
to continued employment by the Manager or a Manager Entity, nor shall they
interfere in any way with the right of the Manager or a Manager Entity to
terminate the employment of any Optionee at any time, and for any reason, with
or without cause, it being acknowledged, unless expressly provided otherwise in
writing, that the employment of any Optionee is "at will."
11.2 Dealings with Beneficiaries or Representatives of an Optionee. The
Compensation Committee may require such proper proof of death and such evidence
of the right of any Person other than an Optionee to exercise any Incentive
Option granted under the Plan, as the Compensation Committee deems necessary or
advisable. The Compensation Committee's determination of death or Disability and
of the right of any Person other than an Optionee to exercise an Incentive
Option shall be conclusive. The Compensation Committee, in its discretion, may
require from any Person, other than an Optionee, exercising any Incentive Option
under the Plan, such security and indemnity as the Compensation Committee, in
its discretion, deems necessary or advisable. The issuance of and acceptance of
any Units of Partnership Interest and/or of cash (pursuant to Section 7.14) or
the issuance and acceptance of Common Stock pursuant to Section 7.17 hereof,
shall constitute a complete acquittance and discharge of full liability of TRG,
the Manager, each Manager Entity, and the Company under the Plan, and the
Compensation Committee shall be entitled to demand a receipt and/or acquittance
in full satisfaction of all claims against TRG, the Manager, each Manager
Entity, and the Company.
11.3 Application of Funds. The proceeds received by TRG from the exercise
of any Incentive Option to acquire a Unit of Partnership Interest in TRG shall
be used for general partnership purposes of TRG.
11.4 Inspection of Records. Copies of the Plan, records reflecting each
Optionee's Incentive Option(s), and any other documents and records that an
Optionee is entitled by law to inspect shall be open to inspection by the
Optionee and his duly authorized representative(s) at the office of TRG at any
reasonable business hour.
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11.5 Word Meanings. The words such as "herein," "hereinafter," "hereof,"
and "hereunder" refer to this Plan as a whole and not merely to a subdivision in
which such words appear unless the context otherwise requires.
11.6 Section Titles. Section titles are for descriptive purposes only and
shall not control or alter the meaning of the Plan as set forth in the text.
11.7 Severability. Whenever possible, each provision in the Plan and every
Incentive Option at any time granted under the Plan shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Incentive Option at any time granted under the Plan shall be
held to be prohibited or invalid under applicable law, then, (i) such provision
shall be deemed amended to accomplish the objectives of the provision as
originally written to the fullest extent permitted by law, and (ii) all other
provisions of the Plan and every other Incentive Option at any time granted
under the Plan shall remain in full force and effect.
11.8 Compliance with Securities Exchange Act. With respect to persons
subject to Section 16 of the Securities Exchange Act of 1934 (the "1934 Act"),
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or action by the plan administrators fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the plan administrators.
11.9 Strict Construction. No rule of strict construction shall be implied
against TRG, the Partnership Committee, the Compensation Committee, or any other
Person in the interpretation of any of the terms of the Plan, any Incentive
Option granted under the Plan or any rule or procedure established by the
Compensation Committee.
11.10 Choice of Law. All determinations made and actions taken pursuant to
the Plan shall be governed by the internal laws of the State of Michigan and
construed in accordance therewith.
11.11 Execution. To record the adoption of the Plan, as amended and
restated, TRG has caused the execution hereof effective as of the 30th day of
September, 1997.
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: /s/ Lisa A. Payne
---------------------------------------
Its: Authorized Signatory
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