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EXHIBIT 10.18
AMENDED AND RESTATED 1993 SHARE INCENTIVE PLAN
OF
CAMDEN PROPERTY TRUST
1. PURPOSE.
The purpose of this Plan is to benefit the Company's shareholders by
encouraging high levels of performance by individuals who are key to the success
of the Company and to enable the Company to attract, motivate and retain
talented and experienced individuals essential to its continued success. This is
to be accomplished by providing such individuals an opportunity to obtain or
increase their proprietary interest in the Company's performance and by
providing such individuals with additional incentives to remain with the
Company.
2. DEFINITIONS.
The following terms, as used herein, shall have the meaning specified:
"Additional Base Shares" shall have the meaning set forth in Section
9(a).
"Additional Bonus Shares" shall have the meaning set forth in Section
9(a).
"Affiliate" means (i) any corporation more than 50% of whose stock
having general voting power is owned is by the Company or by another
Affiliate of the Company and (ii) the Special Subsidiary.
"Alternative Rights" shall have the meaning set forth in Section
6(a)(2).
"Amendment Date" shall mean February 13, 1998.
"Award" means an award granted pursuant to Section 6 hereof.
"Base Shares" shall have the meaning set forth in Section 9(a).
"Board" means the Board of Trust Managers of the Company as it may be
comprised from time to time.
"Bonus Shares" shall have the meaning set forth in Section 9(a).
"Change in Control" shall have the meaning set forth in Section 8.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" means the Committee as defined in Section 3.
"Company" means Camden Property Trust.
"Conjunctive Rights" shall have the meaning set forth in Section
6(a)(2).
"Consummation Date" means July 29, 1993.
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"Director" means any person who shall from time to time serve as a
member of the board of directors of any Affiliate.
"Election Date" shall mean the date an Independent Trust Manager is
first elected to the Board of Trust Managers.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" means the closing price of the relevant security
as reported on the composite tape of New York Stock Exchange issues
(or such other reporting system as shall be selected by the Committee)
on the relevant date, or if no sale of the security is reported for
such date, the next following day for which there is a reported sale.
The Committee shall determine the Fair Market Value of any security
that is not publicly traded, using such criteria as it shall
determine, in its sole discretion, to be appropriate for such
valuation.
"Incentive Exchange Right" shall have the meaning set forth in Section
9(a).
"Incentive Payment" shall have the meaning set forth in Section 9(a).
"Independent Trust Manager" means any Trust Manager who is not also an
employee of the Company or any Affiliate; provided, that a Trust
Manager who is a director or Trust Manager or a consultant, or both,
but is not an employee also shall be an "Independent Trust Manager."
"Initial Public Offering Price" means $22.00 per Share.
"Insider" means any person who is subject to Section 16 of the
Exchange Act.
"ISO" means an incentive stock option within the meaning of Section
422 of the Code.
"Limited Rights" shall have the meaning set forth in Section 6(d).
"Option" means any option granted pursuant to Sections 6(a)(1) or (2)
"Participant" means any person who has been granted an Award pursuant
to this Plan.
"Performance Share Award" shall have the meaning set forth in Section
6(c).
"Performance Unit" shall have the meaning set forth in Section 6(c).
"Reload Option" shall have the meaning set forth in Section 6(a)(7).
"Restricted Shares" means the Shares issued as a result of a
Restricted Share Award.
"Restricted Share Award" means a grant of the right to purchase Shares
pursuant to Section 6(b) hereof. Such Shares, when and if issued,
shall be subject to such transfer restrictions and risk of forfeiture
as the Committee shall determine at the time the Award is granted,
until such specific conditions are met. Such conditions may be based
on continuing employment or achievement of pre-established performance
objectives, or both.
"Rights" shall have the meaning set forth in Section 6(a)(2).
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"Section 16" means Section 16 of the Exchange Act or any successor
regulation and the rules promulgated thereunder by the Securities and
Exchange Commission, as they may be amended from time to time.
"Shares" means the common shares of beneficial interest of the
Company, par value $.01 per share.
"Special Subsidiary" means Apartment Connection, Inc.
"Spread" means (i) with respect to Conjunctive Rights and Alternative
Rights, the excess of the Fair Market Value of one Share on the date
of exercise of such Rights over the purchase price per Share payable
under the related Option and (ii) with respect to Rights not granted
in connection with an Option, the excess of the Fair Market Value of
one Share on the date of exercise of such Rights over the Fair Market
Value of one Share on the date such Rights were granted.
"Texas Act" shall mean the Texas Real Estate Investment Trust Act, as
amended from time to time.
"Trust Manager" means any person who shall from time to time be a
member of the Board of Trust Managers of the Company.
3. ADMINISTRATION AND INTERPRETATION.
(a) ADMINISTRATION. The Plan shall be administered by a Committee which
shall consist of two or more Independent Trust Managers, each of whom shall be a
"non-employee director" within the meaning of Rule 16b 3(b)(3)(i) of the
Exchange Act and an "outside director" within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder. The Board may from time to
time remove and appoint members of the Committee in substitution for, or in
addition to, members previously appointed and may fill vacancies, however
caused, in the Committee. The Committee may prescribe, amend and rescind rules
and regulations for administration of the Plan and shall have full power and
authority to construe and interpret the Plan. A majority of the members of the
Committee shall constitute a quorum, and the act of a majority of the members
present at a meeting or the acts of a majority of the members evidenced in
writing shall be the acts of the Committee. The Committee may correct any defect
or any omission or reconcile any inconsistency in the Plan or in any Award or
grant made hereunder in the manner and to the extent it shall deem desirable.
The Committee shall have the full and exclusive right to grant all Awards
under this Plan, which may be Options, Rights, Limited Rights, Restricted Share
Awards, Dividend Equivalent Rights, Performance Units and Performance Share
Awards. In granting Awards, the Committee shall take into consideration the
contribution the individual has made or may make to the success of the Company
or its Affiliates and such other factors as the Committee shall determine. The
Committee shall periodically determine the Participants in the Plan and the
nature, amount, pricing, time, and other terms of Awards to be made to such
individuals, subject to the other terms and provisions of the Plan. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other individuals of the Company and its
Affiliates with regard to these matters. In no event shall any individual, his
legal representative, heirs, legatees, distributees, or successors have any
right to participate in the Plan except to such extent, if any, as the Committee
shall determine.
The Committee may from time to time in granting Awards under the Plan
prescribe such other terms and conditions concerning such Awards as it deems
appropriate, including, without limitation, the achievement of specific goals
established by the Committee, provided that such terms and conditions are not
more favorable to any individual than those expressly set forth in the Plan.
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The Committee may delegate to the officers of or individuals associated
with the Company the authority to execute and deliver such instruments and
documents, to do all such acts and things, and to take all such other steps
deemed necessary, advisable or convenient for the effective administration of
the Plan in accordance with its terms and purpose, except that the Committee may
not delegate any discretionary authority with respect to substantive decisions
or functions regarding the Plan or Awards thereunder as these relate to
Insiders, including but not limited to decisions regarding the timing,
eligibility, pricing, amount or other material term of such Awards.
(b) INTERPRETATION. The Committee shall have the power to interpret and
administer the Plan. All questions of interpretation with respect to the Plan,
the number of Shares or other security, Rights, or units granted, and the terms
of any Award shall be determined by the Committee and its determination shall be
final and conclusive upon all parties in interest. In the event of any conflict
between an Award and this Plan, the terms of this Plan shall govern. It is the
intent of the Company that this Plan and Awards hereunder satisfy and be
interpreted in a manner that, in the case of participants who are or may be
Insiders, satisfies the applicable requirements of Rule 16b-3 of the Exchange
Act, so that such persons will be entitled to the benefits of Rule 16b-3 or
other exemptive rules under Section 16 and will not be subjected to liability
thereunder. If any provision of this Plan or of any Award would otherwise
frustrate or conflict with the intent expressed in this Section 3(b), that
provision to the extent possible shall be interpreted and deemed amended so as
to avoid such conflict. To the extent of any remaining irreconcilable conflict
with such intent, the provision shall be deemed void as applicable to insiders.
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(c) LIMITATION ON LIABILITY. Neither the Committee nor any member thereof
shall be liable for any act, omission, interpretation, construction or
determination made in connection with the Plan in good faith, and the members of
the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including counsel
fees) arising therefrom to the full extent permitted by law. The members of the
Committee shall be named as insureds under any directors and officers (or
similar) liability insurance coverage which the Company may have in effect from
time to time.
4. ELIGIBILITY.
The class of persons who are potential recipients of Awards granted under
this Plan consist of the (i) Independent Trust Managers, (ii) directors of
Affiliates, (iii) key employees of the Company or any Affiliate, and (iv)
consultants to the Company or any Affiliate, in each case (other than in the
case of clause (i)), as determined by the Committee from time to time. The
Independent Trust Managers, directors, key employees and consultants to whom
Awards are granted under this Plan, and the number of Shares subject to each
such Award, shall be determined by the Committee in its sole discretion,
subject, however, to the terms and conditions of this Plan. Persons to whom
Awards may be granted include key employees, consultants and directors who are
also Trust Managers. No Award may be granted to an Independent Trust Manager
other than in accordance with Section 6(b)(5).
5. SHARES SUBJECT TO GRANTS UNDER THE PLAN.
(a) LIMITATION ON NUMBER OF SHARES. The Shares subject to grants of Awards
shall be authorized but unissued Shares, and such Shares, if any, held as
"treasury stock" by the Company. Subject to adjustment as hereinafter provided,
the aggregate number of Shares as which Awards may be granted under the Plan
shall not exceed 10% of the total number of Shares outstanding at any time.
Shares ceasing to be subject to an Award because of the exercise of an
Option or Right or the vesting of an Award shall no longer be subject to any
further grant under the Plan. However, if any outstanding Option or Right, in
whole or in part, expires or terminates unexercised or is canceled or if any
Award, in whole or in part, expires or is terminated or forfeited, for any
reason prior to May 27, 2003, the Shares allocable to the unexercised,
terminated, canceled or forfeited portion of such Award may again be made the
subject of grants under the Plan; provided, however, that if the Participant
receives the benefits of ownership of any Shares (which includes the receipt of
dividends, but does not include the right to vote such Shares), such Shares may
not again be made the subject of grants under the Plan and provided, further,
that with respect to any Option or Rights granted to any Participant who is a
"covered person" as defined in Section 162(m) of the Code and the regulations
promulgated thereunder that is canceled, the number of Shares subject to such
Option and/or Rights shall continue to count against the maximum number of
Shares which may be the subject of Options and for Rights granted to such
Participant.
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For the purposes of computing the total number of Shares granted under the
Plan, the following rules shall apply to Awards payable in Shares or other
securities, where appropriate:
(i) except as provided in (v) of this Section, each Option shall be
deemed to be the equivalent of the maximum number of Shares that may
be issued upon exercise of the particular Option;
(ii) except as provided in (v) of this Section, each other Share-based
Award payable in some other security shall be deemed to be equal to
the number of Shares to which it relates;
(iii) except as provided in (v) of this Section, where the number of
Shares available under the Award is variable on the date it is
granted, the number of Shares shall be deemed to be the maximum number
of Shares that could be received under that particular Award;
(iv) where Alternative Rights are granted in connection with an
Option, only the number of Shares subject to the Option shall be
counted, and any Shares as to which such Option is canceled due to the
exercise of such Alternative Rights shall not again be available for
further grants under the Plan; and
(v) each Share awarded or deemed to be awarded under the preceding
subsections shall be treated as Shares, even if the Award is for a
security other than Shares.
(b) ADJUSTMENTS OF AGGREGATE NUMBER OF SHARES. The aggregate number of
Shares stated in Section 5(a) shall be subject to appropriate adjustment, from
time to time, in accordance with the provisions of Section 7 hereof.
6. AWARDS.
(a) OPTIONS AND RIGHTS.
(1) GRANTS OF OPTIONS. Options granted under the Plan may be either
ISOs or non-qualified stock options. At the time an Option is granted,
the Committee may, in its discretion, designate whether such Option
(i) is to be an ISO, or (ii) is not to be treated as an ISO for
purposes of this Plan and the Code. No Option which is intended to
qualify as an ISO shall be granted under this Plan to any individual
who, at the time of such grant, is not an employee of the Company or
an Affiliate.
Notwithstanding any other provision of the Plan to the contrary,
to the extent that the aggregate Fair Market Value (determined at the
date an Option is granted) of the Shares with respect to which an
Option intended to be an ISO (and any other ISO granted to the holder
under the Plan or any other plans of the Company or an Affiliate)
first becomes exercisable during any calendar year exceeds $100,000,
such Option shall be treated as an Option which is not an ISO. Options
with respect to which no designation is made by the Committee shall be
deemed to be ISOs to the extent that the $100,000 limitation described
in the preceding sentence is met. This paragraph shall be applied by
taking Options into account in the order in which they are granted.
No ISO shall be granted to any person who, at the time of the
grants, owns Shares possessing more than 10% of the total combined
voting power of the Company or an Affiliate (other than the Special
Subsidiary) of the Company, unless (i) on the date such ISO is
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granted, the Option price is at least 110% of the Fair Market Value
per Share subject to the ISO and (ii) such ISO by its terms is not
exercisable after the expiration of five years from the date such ISO
is granted.
The purchase price per Share pursuant to the exercise of any
Option shall be fixed by the Committee at the time of grant; provided,
however, that the purchase price per (regardless of whether such
Option is an ISO or a non-qualified Option) shall not be less than the
Fair Market Value of a Share on the date on which the Option is
granted. In addition, the Committee shall designate the number of
Shares, the terms and conditions (which may include, without
limitation, the achievement of specific goals), with respect to
Options granted under the Plan. Options may be granted by the
Committee to any eligible at any time and from time to time.
The form of Option shall be as determined from time to time by
the Committee. A certificate of Option signed by the Chairman of the
Board or the President or Vice President and attested by the Treasurer
or an Assistant Treasurer or Secretary or an Assistant Secretary of
the Company shall be delivered to each person to whom Options are
granted.
(2) GRANTS OF RIGHTS. The Committee shall have the authority in its
discretion to grant to any eligible person Rights which may be granted
separately or in connection with an Option (either at the time of
grant or, with respect to a non-qualified Option, at any time during
the term of the Option). Rights granted in connection with an Option
shall be granted with respect to the same number of Shares then
covered by the Option and may be exercised, as determined by the
Committee in its discretion at the time of the grant of the Rights,
either in conjunction with, or as an alternative to, the exercise of
the related Option; provided, however, that Rights granted in
connection with an ISO can only be exercised as alternative to the
exercise of the ISO.
Rights granted in connection with an Option that entitle the
holder thereof to receive payment from the Company only if and to the
extent that the related Option is exercisable and is exercised are
referred to herein as "Conjunctive Rights." Upon any exercise of an
Option in respect of which Conjunctive Rights shall have been granted,
the holder of the Conjunctive Rights shall be entitled to receive
payment of an amount equal to the product obtained by multiplying (i)
the Spread, or such percentage or portion of the Spread as shall be
determined by the Committee at the time of grant, by (ii) the number
of Shares in respect of which the related Option shall have then been
so exercised. Notwithstanding any provision of the Plan to the
contrary, Conjunctive Rights may not be granted in relation to an ISO.
Rights granted in connection with an Option that entitle the
holder thereof to receive payment from the Company only if, and to the
extent that, the related Option is exercisable, by surrendering the
Option with respect to the number of Shares as to which such Rights
are then exercised are referred to herein as "Alternative Rights."
Notwithstanding the preceding sentence, any Alternative Rights that
relate to an ISO may be exercised only at such times that there is a
positive Spread. Upon any exercise of Alternative Rights, the holder
thereof shall be entitled to receive payment of an amount-equal to
the-product obtained by multiplying (i) the Spread, or such percentage
or portion of the Spread as shall be determined by the Committee at
the time of grant, by (ii) the number of Shares in respect of which
the Alternative Rights shall have then been so exercised.
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Rights granted without relationship to an Option shall be
exercisable at such rate as determined by the Committee. Such Rights
shall entitle the holder, upon the exercise thereof, to receive
payment from the Company of an amount equal to the product obtained by
multiplying (i) the Spread, or such percentage or portion of the
Spread as shall be determined by the Committee at the time of grant,
by (ii) the number of Shares in respect of which the Rights shall have
then been so exercised.
Notwithstanding anything contained herein, the Committee may, in
its sole discretion, limit the amount payable upon the exercise of
Rights. Any such limitation shall be determined as of the date of
grant and noted on the certificate evidencing the grant of the Rights.
Payment of the amount determined hereunder upon the exercise of
any Rights shall be made solely in cash, or solely in Shares valued at
their Fair Market Value on the date of exercise of the Rights, or in a
combination of cash and Shares, as the holder may elect, provided that
any election by the holder shall be subject to approval by the
Committee. No fractional Shares shall be issued by the Company, and
settlement therefor shall be made in cash.
Notwithstanding any other provision of the Plan or of the Rights,
for purposes of determining the amount of the Spread in the case of a
holder of Rights who is an Insider, the Committee, in its sole
discretion, may designate a single Fair Market Value per Share with
respect to all such holders who exercise Rights during any single ten
day period; provided, however, that the Fair Market Value per Share
designated by the Committee during any such period shall in no event
be greater than the highest Fair Market Value per Share on any day
during such period or less than the lowest Fair Market Value per Share
on any day during such period.
The form of Rights shall be as determined from time to time by
the Committee. A certificate of Rights signed by the Chairman of the
Board or the President or a Vice President and attested by the
Treasurer or an Assistant Treasurer, or Secretary or an Assistant
Secretary, of the Company shall be delivered to each person to whom
Rights are granted.
The Committee may fix such waiting periods, exercise dates or
other limitations as it shall deem appropriate with respect to Rights
granted under the Plan including, without limitation, the achievement
of specific goals; provided, however, that each Right granted
hereunder shall be exercisable only upon consent of the Committee.
(3) PAYMENT OF OPTION EXERCISE PRICE. Upon exercise of an Option, the
full Option purchase price for the Shares with respect to which the
Option is being exercised shall be payable to the Company, (i) in cash
or by a check payable and acceptable to the Company or (ii) subject to
the approval of the Committee, by tendering to the Company Shares
owned by the holder for at least six months having an aggregate Fair
Market Value per Share as of the date of exercise and tender which is
not greater than the full Option purchase price for the Shares with
respect to which the Option is being exercised and by paying the
remainder of the Option purchase price as provided in (i) above;
however, the Committee may, upon confirming that the holder owns the
number of additional Shares being tendered, authorize the issuance of
a new certificate for the number of Shares being acquired pursuant to
the exercise of the Option less the number of Shares being tendered
upon the exercise and return to the holder (or not require surrender
of) the certificate for the Shares being tendered upon the exercise.
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Notwithstanding the preceding, a holder may not use any Shares
acquired pursuant to an Award granted under this Plan (or any other
plan maintained by the Company or any Affiliate) unless the holder has
beneficially owned such Shares for at least six months. Payment
instruments will be received subject to collection. In addition to the
foregoing methods of payment, the full Option purchase price for
Shares with respect to which the Option is being exercised may be
payable to the Company by such other methods as the Committee may
permit from time to time.
(4) TERM. The term of each Option and Right shall be determined by the
Committee at the date of grant; provided, however, that each Option
that is an ISO shall, notwithstanding anything in the Plan to the
contrary, expire not more than ten years from the date the Option is
granted (or five years from the date of grant to the extent required
under Section 6(a)(1)) or, if earlier, the date specified in the
certificate evidencing the grant of such Option. An Option that is a
non-qualified stock option shall expire not more than ten years from
the date the Option is granted, or if earlier, the date specified in
the certificate evidencing the grant of such Option. A Right not
granted in connection with an Option shall expire not more than ten
years from the date the Right is granted or, if earlier, the date
specified in the certificate evidencing the grant of the Right.
(5) TERMINATION OF EMPLOYMENT OR RELATIONSHIP. In the event that a
Participant's employment or relationship with the Company and its
Affiliates shall terminate, for reasons other than (i) retirement
pursuant to a retirement plan or policy of the Company or one of its
Affiliates ("retirement"), (ii) permanent disability as determined by
the Committee based on the opinion of a physician selected or approved
by the Committee ("permanent disability") or (iii) death, the
Participant's Options and Rights shall be exercisable by him or her,
subject to subsection (4) above, only within 90 business days after
such termination, but only to the extent the Option or Right was
exercisable immediately prior to such termination.
If, however, any such termination is due to retirement or
permanent disability, the Participant shall have the right, subject to
the provisions of subsection (6) above, to exercise his or her Option
and Rights at any time within the three month period commencing on the
day next following such termination. Whether any termination is due to
retirement or permanent disability, and whether an authorized leave of
absence on military or government service or for other reasons shall
constitute a termination for the purpose of the Plan, shall be
determined by the Committee.
If a Participant shall die while entitled to exercise an Option
or Rights, the Participant's estate, personal representative or
beneficiary, as the case may be, shall have the right, subject to the
provisions of subsection (4) above, to exercise the Option at any time
within six months from the date of the holder's death.
If the employment, consulting arrangement or service of any
Participant with the Company or an Affiliate shall be terminated
because of the Participant's violation of the duties of such
employment, consulting arrangement or service with the Company or an
Affiliate as he or she may from time to time have, the existence of
which violation shall be determined by the Committee in its sole
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discretion (which determination by the Committee shall be conclusive)
all unexercised Options of such Participant shall terminate
immediately upon such termination of such Participant's employment,
consulting arrangement or service with the Company and all Affiliates,
and a Participant whose employment, consulting arrangement or service
with the Company and Affiliates is so terminated, shall have no right
after such termination to exercise any unexercised Option he or she
might have exercised prior to termination of his or her employment,
consulting arrangement or service with the Company and Affiliates.
(6) OPTIONS GRANTED BY OTHER CORPORATIONS. Options may be granted
under the Plan from time to time in substitution for stock options
held by employees and directors of corporations who become key
employees or Trust Managers or directors of the Company or of any
Affiliate as a result of any "corporate transaction" as defined in the
Treasury Regulations promulgated under Section 424 of the Code.
(b) RESTRICTED SHARE AWARDS.
(1) AWARDS OF RESTRICTED SHARES. Restricted Share Awards may be
awarded by the Committee to any individual eligible to receive the
same, at any time and from time to time before May 27, 2003. In
addition, and without limiting the generality of the foregoing, the
Committee shall grant to any individual who is entitled to receive a
bonus under the Company's ash bonus incentive plan, a Restricted Share
Award with respect to Shares having a Fair Market Value on the date of
the grant of such Restricted Share Award equal to a specified
percentage determined by the Committee of the amount of such
individual's bonus, provided that such individual has made an
irrevocable election, at least six months prior to the date of the
grant of such Restricted Share Award, to receive such Restricted Share
Aware in lieu of such bonus.
(2) PURCHASE PRICE UNDER RESTRICTED SHARE AWARDS. The purchase price
of Restricted Shares to be purchased pursuant to a Restricted Share
Award shall be fixed by the Committee at the time of the grant of the
Restricted Share Award; provided, however, that such purchase price
shall not be less than the par value per Share of the Shares subject
to the Restricted Share Award. The Committee shall specify, within its
discretion, the time and manner in which payment of such purchase
price shall be paid.
(3) DESCRIPTION OF RESTRICTED SHARES. All Restricted Shares purchased
by an eligible person shall be subject to the following conditions:
(i) Restricted Shares shall be subject to such
restrictions, terms and conditions as the Committee may
establish, which may include, without limitation, "lapse"
and "non-lapse" restrictions (as such terms are defined
in regulations promulgated under Section 83 of the Code)
and the achievement of specific goals;
(ii) the Restricted Shares may not be sold, exchanged,
pledged, transferred, assigned or otherwise encumbered
or disposed of until the terms and conditions set by
the Committee at the time of the grant of the Restricted
Share Award have been satisfied;
(iii) each certificate representing Restricted Shares
issued pursuant to this Plan shall bear a legend making
appropriate reference to the following:
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"the Shares represented by this certificate have been
issued pursuant to the terms of the 1993 Share Incentive
Plan of Camden Property Trust and may not be sold,
pledged, transferred, assigned or otherwise encumbered
in any manner except as is set forth in the terms of such
award dated ____________, ________________;" and
(iv) except as set forth in Section 8 of this Plan, no
Restricted Shares granted pursuant to this Plan shall be
subject to vesting requirements over a period of less
than three years.
If a certificate representing Restricted Shares is issued to an
individual (whether or not escrowed as provided below), the individual
shall be the record owner of such Shares and and shall have all the
rights of a shareholder with respect to such Shares (unless the
Restricted Share Award specifically provides otherwise), including the
right to vote and the right to receive dividends or other dividends
made or paid with respect to such Shares.
In order to enforce the restrictions, terms and conditions that
may be applicable to a Participant's Restricted Shares, the Committee
may require the Participant, upon the receipt of a certificate or
certificates representing such Shares, or at any time thereafter, to
deposit such certificate or certificates, together with stock powers
and other instruments of transfer, appropriately endorsed in blank,
with the Company or an escrow agent designated by the Company under an
escrow agreement, which may be a part of a Restricted Share Award, in
such form as shall be determined by the Committee.
After the satisfaction of the terms and conditions set by the
Committee with respect to Restricted Shares issued to an individual,
and provided the Restricted Shares are not subject to a non-lapse
restriction, a new certificate, without the legend set forth above,
for the number of Shares that are no longer subject to such
restrictions, terms and conditions shall be delivered to the
individual. If such terms and conditions are satisfied as to a
portion, but fewer than all, of such Shares, the remaining Shares
issued with respect to such Award shall either be reacquired by the
Company or, if appropriate under the terms of the award applicable to
such Shares, shall continue to be subject to the restrictions, terms
and conditions set by the Committee at the time of Award.
(4) TERMINATION OF EMPLOYMENT OR RELATIONSHIP. If the employment or
relationship with the Company and its Affiliates of a holder of a
Restricted Share Award is terminated for any reason before
satisfaction of the terms and conditions for the vesting (within the
meaning of Section 83 of the Code) of all Shares subject to the
Restricted Share Award, the number of Restricted Shares not
theretofore vested shall be reacquired by the Company and forfeited,
and the purchase price paid for such forfeited Shares by the holder
shall be returned to the holder. If Restricted Shares issued shall be
reacquired by the Company and forfeited as provided above, the
individual, or in the event of his death, his personal representative,
shall forthwith deliver to the Secretary of the Company the
certificates representing such Shares, accompanied by such instrument
of transfer, if any, as may reasonably be required by the Company.
(5) RESTRICTED SHARE AWARDS TO INDEPENDENT TRUST MANAGERS. Each
Independent Trust Manager shall be granted a Restricted Share Award on
or her Election Date. Thereafter, each Independent Trust Manager shall
be granted a Restricted Share Award of 2,000 or up to 2,225 Shares, at
the discretion of the Board of Trust Managers, on each anniversary of
the Election Date for so long as the individual remains an Independent
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Trust Manager. The Restricted Shares granted on an Election Date under
this Section 6(b)(5) shall vest at the rate of 20% on each anniversary
of the Election Date over a five year period. Notwithstanding the
preceding sentences, all or any part of any Restricted Shares granted
pursuant to this Section 6(b)(5) shall immediately vest (but in no
event during the six-month period commencing on the date of grant) in
the event of the holder's retirement from the Company and all
Affiliates on or after his or her 65th birthday, the holder's
permanent disability (within the meaning of Section 22(e)(3) of the
Code), or the holder's death. All or any part of any Restricted Shares
granted pursuant to this Section 6(b)(5) also shall vest (but in no
event during the six-month period commencing on the date of grant)
upon the occurrence of a Change in Control (as defined in Section 8)
while the holder is serving as a Trust Manager of the Company. Any
Restricted Shares granted pursuant to this Section 6(b)(5) to the
extent unvested, shall terminate immediately upon the holder's ceasing
to serve as a Trust Manager of the Company (for reasons other than
retirement, permanent disability or death as described above). To the
extent the Board shall appoint a "Lead Independent Trust Manager,"
such person shall additionally be entitled to receive on the date of
appointment and on the first anniversary date thereafter, a Restricted
Share Award of 2,000 Shares. Thereafter, on each anniversary date, the
Lead Independent Trust Manager will receive a Restricted Share Award
of 1,000 Shares.
No grants of Restricted Shares or any other grants under this
Plan may be made to an Independent Trust Manager except in accordance
with this Section 6(b) (5). Notwithstanding any other provision of the
Plan to the contrary, the provisions of this Section 6(b)(5) shall not
be amended more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules or regulations promulgated thereunder.
(c) PERFORMANCE UNITS AND PERFORMANCE SHARE AWARDS.
(1) AWARDS. Awards may be granted in the form of Performance Units or
Performance Share Awards. Performance Units are units valued by
reference to designated criteria established by the Committee, other
than Shares. Performance Share Awards are Shares expressed in terms
of, or valued by reference to, a Share. Awards of Performance Units
and Performance Share Awards shall refer to a commitment by the
Company to make a distribution to the Participant or to his or her
beneficiary depending on (i) the attainment of the performance
objectives and other conditions established by the Committee and (ii)
the base value of the Performance Unit or Performance Share Award,
respectively, as established by the Committee.
(2) SETTLEMENT. Settlement of Performance Units and Performance Share
Awards may, in the sole discretion of the Committee, be in cash, in
Shares (held for at least six months), or a combination thereof. The
Committee may designate a method of converting Performance Units into
Shares, including but not limited to a method based on the Fair Market
Value over a series of consecutive trading days. Prior to the
settlement of any Performance Unit or Performance Share Award in
Shares, the recipient of such Award shall pay to the Company an amount
of cash equal to, at a minimum, the par value per Share multiplied by
the number of Shares to be issued.
(3) NO RIGHTS AS A SHAREHOLDER. Participants shall not be entitled to
exercise any voting rights or to receive any interest or dividends
with respect to Performance Units or Performance Share Awards.
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(d) LIMITED RIGHTS.
The Committee shall have the power to grant limited Rights ("Limited
Rights") which shall be a part of an Award. Limited Rights shall provide for the
automatic cash payment to the holder of the Award equal to the Spread (or other
determination of the value of the Award as fixed by the Committee) upon the
occurrence of a Change in Control (as defined Section 8) on the dated fixed by
the Committee at the time of the grant of such Limited Right. Limited Rights may
provide that Committee approval is not required for the exercise of such Limited
Right.
(e) DIVIDENDS AND DIVIDEND EQUIVALENTS.
An Award (including without limitation an Option Award) may provide the
Participant with the right to receive dividend payments or dividend equivalent
payments with respect to Shares subject to the Award (both before and after the
Shares subject to the Award are earned, vested or acquired), which payments may
be either made currently or credited to an account for the Participant, and may
be settled in cash or Shares as determined by the Committee. Any such
settlements, and any such crediting of dividends or dividend equivalents or
reinvestment in Shares, may be subject to such conditions, restrictions and
contingencies as the Committee shall establish.
(f) CONSIDERATION FOR AWARDS.
Subject to the requirements of the Texas Act, the Company shall obtain such
consideration for the grant of an Award under this Section 6 as the Committee in
its discretion may determine.
7. ADJUSTMENT PROVISIONS.
If, prior to the complete exercise of any Option, or prior to the
expiration or lapse of all of the restrictions and conditions imposed pursuant
to a Restricted Share Award, there shall be declared and paid a dividend upon
the Shares or if the Shares shall be split up, converted, exchanged,
reclassified, or in any way substituted for, then (i) in the case of an Option,
the Option, to the extent that it has not been exercised, shall entitle the
holder thereof upon the future exercise of the Option to such number and kind of
securities or cash or other property subject to the terms of the Option to which
he would have been entitled had he actually owned the Shares subject to the
unexercised portion of the Option at the time of the occurrence of such
dividend, split-up, conversion, exchange, reclassification or substitution, and
the aggregate purchase price upon the future exercise of the Option shall be the
same as if the originally optioned Shares were being purchased thereunder; and
(ii) in the case of Restricted Shares issued pursuant to a Restricted Share
Award, the holder of such Award shall receive, subject to the same restrictions
and other conditions of such Award as determined pursuant to the provisions of
Section 6(b), the same securities or other property as are received by the
holders of the Company's Shares pursuant to such dividend, split-up, conversion,
exchange, reclassification or substitution. Any fractional Shares or securities
payable upon the exercise of the Option as a result of such adjustment shall be
payable in cash based upon the Fair Market Value of such Shares or securities at
the time of such exercise. If any such event should occur, the number of Shares
with respect to which Awards remain to be issued, or with respect to which
Awards may be reissued, shall be adjusted in a similar manner.
In addition to the adjustments provided for in the preceding paragraph,
upon the occurrence of any of the events referred to in said paragraph prior to
the complete exercise of any Rights or Limited Rights, or prior to the complete
expiration of the vesting period with respect to Performance Units or a
Performance Share Award, the Committee, in its sole discretion, shall determine
the amount of cash and/or number of Shares or other property to which the holder
84
of the Rights shall be entitled upon their exercise, or to which the holder of
the Performance Units or Performance Share Award shall be entitled upon the
expiration of the vesting period, so that there shall be no increase or dilution
in the cash and/or value of the Shares or other property to which the holder of
Rights or of Performance Units or a Performance Share Award shall be entitled by
reason of such events.
Notwithstanding any other provision of the Plan, in the event of a
recapitalization, merger, consolidation, rights offering, separation,
reorganization or liquidation, or any other change in the corporate structure or
outstanding Shares, the Committee may make such equitable adjustments to the
number of Shares and the class of shares available hereunder or to any
outstanding Awards as it shall deem appropriate to prevent dilution or
enlargement of rights.
8. ACCELERATION.
Notwithstanding any other provision of the Plan to the contrary, all or any
part of any remaining unexercised Options and Rights granted to any person may
be exercised in the following circumstances (but in no event during the six
month period commencing on the date granted) and all or any part of any other
Award not theretofore vested shall vest: (a) with respect to Options or Rights
only, immediately upon (but prior to the expiration of the term of the Option or
Rights) retirement, (b) subject to the provisions of Section 6 hereof, upon the
permanent disability or death of the holder, (c) upon the occurrence of such
special circumstance or event as in the opinion of the Committee merits special
consideration, or (d) upon a Change in Control as defined below in which case
the date on which such immediate exercisability and accelerated vesting shall
occur (the "Acceleration Date".) shall be the date of the occurrence of the
Change in Control.
A "Change in Control" shall be deemed to have occurred if:
(a) any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act) (other than the Company, any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of
Shares in the Company) together with its "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 of the
Exchange Act) makes a tender or exchange offer for or is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), or has become the beneficial owner
during the most recent twelve-month period ending on the date
of the most recent acquisition by such person directly or
indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's then
outstanding securities; or
(b) during any period of two consecutive years (not including
any period prior to the effective date of this Plan),
individuals who at the beginning of such period constitute the
Board, and any new Trust Manager (other than a Trust Manager
designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (a),
(c) or (d) of this definition) 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 Trust
Managers then still in office who either were Trust Managers
at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason
to constitute at least a majority thereof; or
(c) the shareholders of the Company approve a merger or
consolidation of the Company with any other company other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior
85
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 80% of the combined voting
power of the voting securities of the Company (or such
surviving entity) outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 25% of the combined voting power of the
Company's then outstanding securities; or
(d) the shareholders of the Company adopt a plan of complete
liquidation of the Company or approve an agreement for the
sale, exchange or disposition by the Company of all or a
significant portion of the Company's assets. For purposes of
this clause (d), the term "the sale, exchange or disposition
by the Company of all or a significant portion of the
Company's assets" shall mean a sale or other disposition
transaction or series of related transactions involving assets
of the Company or any subsidiary of the Company (including the
stock of any subsidiary of the Company) in which the value of
the assets or stock being sold or otherwise disposed of (as
measured by the purchase price being paid therefore or by such
other method as the Board determines is appropriate in a case
where there is no readily ascertainable purchase price)
constitutes more than 33-1/3% of the Fair Market Value of the
Company (as hereinafter defined). For purposes of the
preceding sentence, the "fair market value of the Company"
shall be the aggregate market value of the outstanding shares
of beneficial interest of the Company (on a fully diluted
basis) plus the aggregate market value of the Company's other
outstanding equity securities. The aggregate market value of
the Shares shall be determined by multiplying the number of
Shares (on a fully diluted basis) outstanding on the date of
the execution and delivery of a definitive agreement with
respect to the transaction or series of related transactions
(the "Transaction Date") by the average closing price of the
Shares for the ten trading days immediately preceding the
Transaction Date. The aggregate market value of any other
equity securities of the Company shall be determined in a
manner similar to that prescribed in the immediately preceding
sentence for determining the aggregate market value of the
Shares or by such other method as the Board shall determine is
appropriate.
Notwithstanding the foregoing, (except as provided otherwise in an Award) a
Change in Control shall not be deemed to have occurred if, prior to the time a
Change in Control would otherwise be deemed to have occurred pursuant to the
above provisions, the Board determines otherwise.
9. RELOAD FEATURE.
(a) Automatically upon vesting of 20,000 or more Options, the
Participant holding such vested Options shall have the right
(the "Incentive Exchange Right") to exercise (at any time
during the time period the Options are exercisable) any such
vested Options. The exercise price for the Options must be
paid with Shares held by the Participant for at least six
months. Upon the exercise of the Options, the Participant
shall receive Shares covered by the exercised Options. Rather
than issuing the Participant the full number of Shares, the
Company shall have the right to net the Shares to be issued
against the Shares being surrendered by the Participant as
payment for the exercise price, i.e., upon receipt of proof
that the Shares have been held for at least six months, the
86
Company shall direct that the Participant retain such Shares.
The Company shall then issue to the Participant Shares (the
"Incentive Payment") having a Fair Market Value equal to the
difference between the Fair Market Value of the Shares
underlying the exercised Options on the date the Incentive
Exchange Right is exercised and the exercise price of the
exercised Options. The Participant shall have the right to
receive bonus Shares by depositing 25% of the Incentive in
Shares (the "Base Shares") with the Company. With respect to
the Base Shares, the Participant will receive bonus Shares
(the "Bonus Shares") in an amount equal to the number of Base
Shares multiplied by 25%. The Bonus Shares shall be restricted
and the restrictions shall lapse as follows:
Year One - 10%
Year Two - 10%
Year Three - 80%
The Base Shares received by the Participant will be held by the Company
until the Bonus Shares vest in full; provided, however, the Participant may
elect at any time (upon written notice to the Company) to have the Company issue
the Base Shares to the Participant. If the Participant elects to receive the
Base Shares prior to the vesting of the Bonus Shares, all unvested Bonus Shares
shall be forfeited to the Company.
The Participant shall receive the remaining 75% of the Incentive Payment in
Shares ("Additional Base Shares"). Any Additional Base Shares shall be issued
directly to the Participant. With respect to the Additional Base Shares, the
Participant shall likewise receive bonus Shares (the "Additional Bonus Shares")
in an amount equal to the number of Additional Base Shares multiplied by 35%.
The Additional Bonus Shares shall be restricted and the restrictions shall lapse
as follows:
Year One - 10%
Year Two - 10%
Year Three - 10%
Year Four - 10%
Year Five - 60%
All restricted Shares received under this Section 9(a) and all Base Shares
held by the Company for the Participant shall have the same rights with respect
to voting and dividends as Restricted Shares awarded under this Plan.
(b) Upon exercise of the Incentive Exchange Right, the number
of Options as to which such rights were exercised shall be
"reloaded" and reissued to the Participant who exercised the
Incentive Exchange Right, such Options to represent the right
to purchase a number of Shares equal to the number of Options
exercised less the number of Shares received as the Incentive
Payment. Upon being reloaded, each Option shall again
represent the right to purchase a Share at an exercise price
equal to the Fair Market Value of the Share on the date of the
reload (the date of notice of exercise of the Incentive
Exchange Right). Vesting shall begin with respect to the
reloaded Options on the date of issuance of the reloaded
Options and the vesting term shall be the same as the
surrendered Options (i.e., ten years).
(c) Notwithstanding anything herein to the contrary:
(i) Options may be reloaded only once;
(ii) the maximum Fair Market Value of Incentive Payments
that may be made by the Company in any calendar year is
$1,000,000 per person;
(iii) the maximum Incentive Payments in Shares that any
officer, Trust Manager or 5% or more shareholder may
87
receive under this Section 9 is limited to an amount equal
to 1% of the Company's outstanding Shares on the Amendment
Date; and
(iv) the maximum amount of Incentive Payments that may be
paid in Shares under this Section 9 is limited to an
amount equal to 5% of the Company's outstanding Shares on
the Amendment Date.
If a Participant gives notice of his or her intention to exercise his or
her Incentive Exchange Right and the Company has already paid its maximum amount
of Incentive Payments under items (iii) or (iv) above, the election under this
Section 9 shall be automatically revoked.
Following is an example reload exercise:
Participant A holds options to purchase 40,000 shares at a price of $20 per
share. All of the options have vested. Participant A elects to exercise 30,000
of his options to purchase shares via a Reload transaction pursuant to Section 9
of the Amended and Restated 1993 Share Incentive Plan. These options were
granted for 10 years and currently have 4 years until expiration. The Company's
shares are currently trading at $28 per share, and the Participant can prove
that he owns 25,000 shares that he has held for six months or longer.
The results of the Reload are as follows:
Option exercise price (30,000 X $20 = $600,000) $600,000
($600,000 / $28 = 21,429 shares) in the form of 21,429 shares
{Since Participant A owns at least 21,429 shares which have been held for
more than 6 months, he is able to exercise the Reload. He has chosen to exercise
on a "net" basis, and therefore is not required to deliver the actual physical
securities, but rather must only prove ownership.}
Incentive Payment {($28-$20) X 30,000 shares] $240,000
($240,000 / $28 = 8,571 shares) in the form of 8,571 shares
Base Shares (8,571 X 25% = 2,143 shares) 2,143 shares
Bonus Shares (2,143 X 25% = 536 shares) 536 shares
(vesting over 3 years - 10%, 10%, 80%)
Additional Shares (8,571 X 75% = 6,428 shares) 6,428 shares
Additional Bonus Shares (6,428 X 35% = 2,250 shares) 2,250 shares
(vesting over 5 years - 10%, 10%, 10%, 10%, 60%)
Reloaded Options priced at $28 per share,
expiring 10 years later. 21,429 options
(30,000 shares purchased - 8,571 Incentive Payment Shares = 21,429)
10. PARTICIPANT'S AGREEMENT.
If, at the time of the exercise of any Option or Right or the granting or
vesting of an Award, in the opinion of counsel for the Company, it is necessary
or desirable, in order to comply with any then applicable laws or regulations
88
relating to the sale of securities, that the individual exercising the Option or
Right or receiving the Award shall agree to hold any Shares issued to the
individual for investment and without any present intention to resell or
distribute the same and that the individual will dispose of such Shares only in
compliance with such laws and regulations, the individual will, upon the request
of the Company, execute and deliver to the Company a further agreement to such
effect.
11. WITHHOLDING TAXES.
No Award may be exercised and no distribution of Shares or cash pursuant to
an Award may be made under the Plan until appropriate arrangements have been
made by the holder with the Company for the payment of any amounts that the
Company may be required to withhold with respect thereto, which arrangements may
include the tender of previously owned Shares or the withholding of Shares
issuable pursuant to such Award.
12. TERMINATION OF AUTHORITY TO MAKE GRANT.
No Awards will be granted pursuant to this Plan after May 27, 2003.
13. AMENDMENT AND TERMINATION.
The Board may from time to time and at any time alter, amend, suspend,
discontinue or terminate this Plan or, with the consent of an affected holder,
any outstanding Awards hereunder, provided, however, that no such action of the
Board may, without the approval of the shareholders of the Company, alter the
provisions of the Plan or outstanding Awards so as to (i) increase the maximum
number of Shares which may be subject to Awards under the Plan (except as
provided in Section 5(b)); or (ii) change the class of persons eligible to
receive Awards; or (iii) amend the Plan in any manner that would require
shareholder approval under Rule 16b-3 of the Exchange Act or under Section
162(m) of the Code.
14. PREEMPTION BY APPLICABLE LAWS AND REGULATIONS.
Notwithstanding anything in the Plan to the contrary, if, at any time
specified herein for the making of any determination or payment, or the issuance
or other distribution of Shares, any law, regulation or requirement of any
governmental authority having jurisdiction in the premises shall require either
the Company or the Participant (or the Participant's beneficiary), as the case
may be, to take any action in connection with any such determination, payment,
issuance or distribution, the issuance or distribution of such Shares or the
making of such determination or payment, as the case may be, shall be deferred
until such action shall have been taken.
15. CHANGE IN CONTROL LIMITATION.
Notwithstanding any other provision in the Plan, to the extent that the
acceleration of exercisability or vesting of an Award under this Plan following
a Change in Control, when aggregated with other payments or benefits to the
Participant, whether or not payable pursuant to this Plan, would, as determined
by tax counsel selected by the Company, result in "excess parachute payments"
(as defined in Section 280G of the Code) such parachute payments or benefits
provided to a Participant under this Plan shall be reduced to the extent
necessary so that no portion thereof shall be subject to the excise tax imposed
by Section 4999 of the Code, but only if, by reason of such reduction, the
Participant's net after tax benefit shall exceed the net after tax benefit if
such reduction were not made. "Net after tax benefit" shall mean the sum of (i)
all payments and benefits which a Participant receives or is then entitled to
receive that would constitute a "parachute payment" within the meaning of
Section 280G of the Code, less (ii) the amount of federal income taxes payable
89
with respect to the payments and benefits described in (i) above calculated at
the maximum marginal income tax rate for the year in which such payments and
benefits shall be paid to the Participant (based upon the rate for such year as
set forth in the Code at the time of the first payment of the foregoing), less
(iii) the amount of excise taxes imposed with respect to the payments and
benefits described in (i) above by Section 4999 of the Code.
16. MISCELLANEOUS.
(a) No Employment Contract. Nothing contained in the Plan
shall be construed as conferring upon any Participant the
right to continue in the employ, or as a Trust Manager or
Director of or consultant to, of the Company or any Affiliate.
(b) Employment or Service with Affiliates. Employment by, or
service for, the Company for the purpose of this Plan shall be
deemed to include employment by, or service for, any
Affiliate.
(c) No Rights as a Shareholder. A Participant shall have no
rights as a shareholder with respect to Shares covered by the
Participant's Award until the date of the issuance of such
Shares to the Participant pursuant thereto. No adjustment will
be made for dividends or other distributions or rights for
which the record date is prior to the date of such issuance.
(d) Nonassignability. Neither a Participant nor a
Participant's estate, personal representative or beneficiary
shall have the power or right to sell, exchange, pledge,
transfer, assign or otherwise encumber or dispose of such
Participant's estate's, personal representative's or
beneficiary's interest arising under the Plan nor shall such
interest be subject to seizure for the payment of a
Participant's or beneficiary's debts, Judgments, alimony, or
separate maintenance or be transferable by operation of the
law in the event of a Participant's, estate's, personal
representative's or beneficiary's bankruptcy or insolvency
and to the extent any such interest arising under the Plan is
awarded to a spouse pursuant to any divorce proceeding, such
interest shall be deemed to be terminated and forfeited,
notwithstanding any vesting provisions or other terms herein
or in such Award.
(e) Application of Funds. The proceeds received by the
Company from the sale of Shares pursuant to the Plan will be
used for its general business purposes.
(f) Governing Law: Construction. All rights and obligations
under the Plan shall be governed by, and the Plan shall be
construed in accordance with, the laws of the State of Texas
without regard to the principles of conflicts of laws. Titles
and headings to Sections herein are for purposes of reference
only, and shall in no way limit, define or otherwise affect
the meaning or interpretation of any provisions of the Plan.