PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
INCENTIVE BONUS PLAN
(Effective as of January 1, 1998)
PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
INCENTIVE BONUS PLAN
(Effective as of January 1, 1998)
TABLE OF CONTENTS
Page
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1. Purpose...................................................... 1
2. Definitions.................................................. 1
3. Participation................................................ 2
4. Annual Incentive Bonus Opportunity........................... 3
5. Calculation of Bonus Opportunity............................. 3
6. Plan Mechanics............................................... 3
7. Beneficiary Designation...................................... 3
8. Payment to Guardian.......................................... 4
9. Withholding; Payroll Taxes................................... 4
10. Source of Funds.............................................. 4
11. Administration............................................... 4
12. Nonalienation of Benefits.................................... 5
13. Amendment and Termination.................................... 6
14. No Contract of Employment.................................... 6
15. Applicable Law............................................... 6
16. Successors................................................... 6
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17. Headings............................................................ 6
18. Number and Gender................................................... 6
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PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
INCENTIVE BONUS PLAN
(Effective as of January 1, 1998)
PREAMBLE
WHEREAS, the Pennsylvania Real Estate Investment Trust (the
"Trust") desires to establish an incentive bonus plan for the benefit of
certain of the officers and other key employees of the Trust and of
PREIT-RUBIN, Inc.
("PREIT-RUBIN");
NOW, THEREFORE, effective as of January 1, 1998, the
Pennsylvania Real Estate Investment Trust Incentive Bonus Plan (the "Plan") is
hereby adopted under the following terms and conditions:
* * * * *
1. Purpose. The purpose of the Plan is to help motivate certain
officers and key employees of the Trust and PREIT-RUBIN to reach and exceed
challenging goals of profitability and growth within their companies. The
purpose of the Plan also is to help focus the attention of the eligible officers
and key employees on critical financial indicators that measure both the Trust
and PREIT-RUBIN's success.
2. Definitions
(a) "Bonus" means the amount of annual incentive compensation
a Participant will receive under the Plan.
(b) "Committee" means the Executive Compensation and Human
Resources Committee of the Board of Trustees, to whom responsibility for
administering the Plan is delegated under Section 11.
(c) "Disability" means total and permanent disability as
defined in the Employer's long-term disability plan which covers the Eligible
Employee.
(d) "Eligible Employee" means any officer or other key
employee of an Employer.
(e) "Employer" means the Trust and PREIT-RUBIN.
(f) "FAD" means "funds available for distribution" which is
calculated as FFO minus expenses such as, but not limited to, capital
improvements and capital expenditures.
(g) "FFO" means "funds from operations" of the Trust, defined
as income before gains (losses) on investments and extraordinary items (computed
in accordance with generally accepted accounting principles) plus real estate
depreciation and similar adjustments for unconsolidated joint ventures after
adjustments for non-real estate depreciation and amortization of financing
costs.
(h) "Participant" means an Eligible Employee who has been
designated by the Committee under Section 3 as eligible to receive a Bonus under
the Plan.
(i) "Plan" means the Pennsylvania Real Estate Investment Trust
Incentive Bonus Plan, effective January 1, 1998, and as it may be amended from
time to time.
(j) "Plan Year" means the 12-month period beginning each
January 1 and ending each December 31.
(k) "PREIT-RUBIN" means PREIT-RUBIN, Inc.
(l) "Trust" means the Pennsylvania Real Estate Investment
Trust.
(m) "Trustees" means the members of the Board of Trustees of
the Trust.
3. Participation. The Committee shall designate as of the Effective
Date which Eligible Employees are eligible to receive Bonuses under the Plan,
and inform them in writing of their participation in the Plan within 30 days
after the Effective Date. Thereafter, the Committee shall review the
participation of any new Eligible Employees and inform those who will be new
Participants in subsequent Plan Years of their participation, in writing,
within 30 days after the beginning of the subsequent Plan Year.
Once an Eligible Employee is approved for participation in the Plan,
he will continue to be a Participant from Plan Year to Plan Year unless and
until he is informed in writing by the Committee that the Committee's approval
of his
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participation has been withdrawn effective as of the beginning of the
subsequent Plan Year. Thus, participation in one Plan Year shall not guarantee
participation in any subsequent Plan Year.
4. Annual Incentive Bonus Opportunity. For each Participant, the Trust
has established an "Annual Incentive Bonus Opportunity" which will be used to
determine each Participant's Bonus. The Annual Incentive Bonus Opportunity for
each Eligible Employee's position is set forth in Appendix A attached hereto.
5. Calculation of Bonus Opportunity. Each Participant's Annual
Incentive Bonus Opportunity shall be determined in accordance with a formula set
forth in Appendix A attached hereto. Appendix A also contains an example of how
a Participant's Bonus award(s) will be determined under the Plan.
6. Plan Mechanics. Bonuses shall be paid once a year in a single-sum
cash payment within a reasonable time after the Trust's fiscal year-end
financial statements are approved by the Trustees. Except as provided in a
Participant's employment agreement with an Employer, only a Participant employed
by an Employer as of December 31 of a Plan Year shall be eligible to receive a
Bonus for that Plan Year, unless the Participant was no longer an employee on
the applicable December 31 because (i) the Participant's position was eliminated
due to a reorganization, (ii) the Participant retired at or after age 65, (iii)
the Participant incurred a Disability, or (iv) the Participant died.
7. Beneficiary Designation
(a) Each Participant shall designate the person or persons
as his beneficiary or beneficiaries to whom his Bonus shall be paid in the
event of his death prior to the payment of his Bonus to him. Each beneficiary
designation shall be substantially in the form set forth in Appendix B
attached hereto and shall be effective only when filed with the Committee
during the Participant's lifetime.
(b) Any beneficiary designation may be changed by a
Participant without the consent of any previously designated beneficiary or
any other person by the filing of a new beneficiary designation with the
Committee. The filing of a new beneficiary designation shall cancel all
beneficiary designations previously filed.
(c) If any Participant fails to designate a beneficiary in
the manner provided above, or if the beneficiary designated by a Participant
predeceases the
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Participant, the Committee shall direct such Participant's Bonus to be
distributed as follows:
(i) to the Participant's surviving spouse; or
(ii) if the Participant has no surviving
spouse, then to the Participant's estate.
8. Payment to Guardian. If an amount is payable under this Plan to a
minor, a person declared incompetent, or a person incapable of handling the
disposition of property, the Committee may direct the payment of the amount to
the guardian, legal representative, or person having the care and custody of the
minor, incompetent, or incapable person. The Committee may require proof of
incompetency, minority, incapacity, or guardianship as the Committee may deem
appropriate prior to the payment. The payment shall completely discharge the
Committee, the Trustees, the Trust, and PREIT-RUBIN and its Board of Directors
from all liability with respect to the amount paid.
9. Withholding; Payroll Taxes. The Employer shall withhold from
payments made under the Plan any taxes required to be withheld from a
Participant's compensation for federal, state, or local income tax.
10. Source of Funds. This Plan shall be unfunded, and the payment of
Bonuses hereunder shall be made from the general assets of the Employer. Each
Participant and beneficiary shall be a general and unsecured creditor of the
Employer to the extent of the value of his Bonus determined hereunder, and he
shall have no right, title, or interest in any specific asset that the Employer
may set aside, earmark, or identify as for the payment of Bonuses under the
Plan. The employer's obligation under the Plan shall be merely that of an
unfunded and unsecured promise to pay money in the future.
11. Administration
(a) In General. This Plan shall be administered by the
Executive Compensation and Human Resources Committee of the Board of Trustees.
The Committee shall have the authority to:
(i) determine which Eligible Employees should be
approved for participation in the Plan;
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(ii) approve the extent to which a portion of the
Bonus referred to in Section 5 is awarded to a Participant;
(iii) interpret any disputed provision of the Plan;
and
(iv) determine all questions concerning Bonuses under
the Plan.
To the maximum extent permissible under law, the determinations of such
Committee on all such matters shall be final and binding upon all persons
involved.
(b) Records and Reports. The Committee (or its designee) shall
keep a record of the Committee's actions and shall maintain all books of
account, records, and other data as necessary for the proper administration of
the Plan. Such records shall contain all relevant data pertaining to individual
Participants and their rights under the Plan. The Committee shall have the duty
to carry into effect all rights or benefits provided hereunder to the extent
assets of the Employer are properly available therefor.
(c) Payment of Expenses. Each Employer shall pay its portion
of the expenses of administering the Plan. Such expenses shall include any
expenses incident to the functioning of the Committee in administering the Plan.
(d) Indemnification for Liability. Each Employer shall
indemnify the Committee against any and all claims, losses, damages, expenses,
and liabilities arising from its responsibilities in connection with the Plan,
unless the same is determined to be due to its gross negligence or willful
misconduct.
12. Nonalienation of Benefits. Except as hereinafter provided with
respect to marital disputes, none of the Bonuses or rights of a Participant or
any beneficiary of a Participant shall be subject to the claim of any creditor.
In particular, to the fullest extent permitted by law, all such Bonuses and
rights shall be free from attachment, garnishment, or any other legal or
equitable process available to any creditor of the Participant or his
beneficiary. Neither the Participant nor his beneficiary shall have the right to
alienate, anticipate, commute, pledge, encumber, or assign any of the payments
which he may expect to receive, contingently or otherwise, under this Plan,
except the right to designate a beneficiary to receive death benefits provided
hereunder. In cases of marital dispute, the Employer shall observe the terms of
the Plan unless and until ordered to do otherwise by a state or federal court.
As a condition of participation, a Participant agrees to hold the Employer
harmless from any harm that arises out of its obeying the final order of any
state or federal court, whether such order effects
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a judgment of such court or is issued to enforce a judgment or order of
another court.
13. Amendment and Termination
(a) The Chief Executive Officer ("CEO") of the Trust may
approve and execute changes of a technical nature to the Plan which do not
materially affect the substance thereof and which, in the opinion of the CEO,
are necessary and desirable. In addition, the Trustees reserve the right to
amend the Plan, by written resolution, at any time and from time to time in any
fashion, and to terminate it at will.
(b) No amendment or termination of the Plan shall decrease or
restrict any Bonus payable for the Plan Year in which the Plan is amended or
terminated, or for any preceding Plan Year.
14. No Contract of Employment. Nothing contained herein shall be
construed as conferring upon any person the right to be employed by the Employer
or to continue in the employ of the Employer.
15. Applicable Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the Commonwealth of Pennsylvania.
16. Successors. The provisions of this Plan shall bind and inure to the
benefit of the Trust and PREIT-RUBIN and their successors and assigns. The term
"successors" as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of the Trust or PREIT-RUBIN,
and successors of any such corporation or other business entity.
17. Headings. The headings of the Sections of the Plan are for
reference only. In the event of a conflict between a heading and the contents of
a Section, the contents of the Section shall control.
18. Number and Gender. Whenever any words used herein are in the
singular form or in the masculine form, they shall be construed as though they
were also used in the plural form or in the feminine or neuter form in all cases
where they would so apply.
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IN WITNESS WHEREOF, the Pennsylvania Real Estate Investment
Trust and PREIT-RUBIN, Inc. have caused these presents to be duly executed
this 30th day of September, 1997.
Attest: PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
/s/ Jeffrey A. Linn By:/s/ Jonathan B. Weller
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, Secretary Jonathan B. Weller, President
Attest: PREIT-RUBIN, INC.
/s/ Alan Fele By:/s/ Ronald Rubin
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, Secretary , President
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