PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
1997 STOCK OPTION PLAN
Table of Contents
Page
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1. Purpose....................................................... 2
2. Administration................................................ 2
3. Eligibility................................................... 3
4. Stock......................................................... 3
5. Granting of Awards............................................ 4
6. Annual Limit.................................................. 4
7. Terms and Conditions of Options............................... 5
8. Forfeiture.................................................... 10
9. Capital Adjustments........................................... 11
10. Certain Corporate Transactions................................ 11
11. Exercise Upon Change in Control............................... 12
12. Amendment or Termination of the Plan.......................... 13
13. Rights........................................................ 14
14. Indemnification of Board and Committee........................ 14
15. Application of Funds.......................................... 14
16. Shareholder Approval.......................................... 15
17. No Obligation Regarding Awards................................ 15
18. Termination of Plan........................................... 15
19. Governing Law................................................. 15
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PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
1997 STOCK OPTION PLAN
WHEREAS, the Pennsylvania Real Estate Investment Trust (the
"Trust") desires to award incentive and nonqualified stock options to certain
of the officers and other key employees of the Trust and of PREIT-RUBIN, Inc.
("PREIT-RUBIN");
NOW, THEREFORE, the Pennsylvania Real Estate Investment
Trust 1997 Stock Option Plan (the "Plan") is hereby adopted under the
following terms and conditions:
1. Purpose. The Plan is intended to provide a means whereby the Trust
may grant incentive stock options and nonqualified stock options
(collectively, the "Options"), to purchase common shares of the Trust ("Common
Stock"), to officers and other key employees of the Trust and of PREIT-RUBIN
("Key Employees"), a corporation the majority of the equity (but not the
voting power) of which is indirectly owned by the Trust. Thereby, the Trust
expects to attract and retain such Key Employees and motivate them to exercise
their best efforts on behalf of the Trust, any Related Corporation, and
PREIT-RUBIN. For purposes of the Plan, a "Related Corporation" shall mean
either a "subsidiary corporation" of the Trust, as defined in Section 424(f)
of the Internal Revenue Code of 1986, as amended (the "Code"), or the "parent
corporation" of the Trust, as defined in Section 424(e) of the Code. The term
"Related Corporation" shall not include PREIT-RUBIN.
As used in the Plan, (i) the term "ISO" shall mean an option
which, at the time such option is granted, qualifies as an incentive stock
option within the meaning of Section 422 of the Code and is designated as an
ISO in the "Option Agreement" (as defined in Section 7(n) hereof); and (ii)
the term "NQSO" shall mean an option which, at the time such option is
granted, does not qualify as an ISO, and is designated as a nonqualified stock
option in the Option Agreement.
2. Administration
(a) The Plan shall be administered by the Trust's Executive
Compensation and Human Resources Committee (the "Committee"), which shall
consist solely of not fewer than two non-employee trustees (directors) of the
Trust (within the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or any successor thereto) who are also
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outside trustees (directors) (within the meaning of Treas. Reg.
ss.1.162-27(e)(3), or any successor thereto) of the Trust, and who shall be
appointed by, and shall serve at the pleasure of, the Trust's Board of Trustees
(the "Board"). Each member of the Committee, while serving as such, shall be
deemed to be acting in his capacity as a director of the Trust.
(b) The Committee shall have full authority, subject to the
terms of the Plan, to select the Key Employees to be granted Options (also
referred to as "Awards") under the Plan, to grant Awards on behalf of the Trust,
and to set the date of grant and the other terms of such Awards. The Committee
may correct any defect, supply any omission, and reconcile any inconsistency in
the Plan and in any Award granted hereunder in the manner and to the extent it
deems desirable. The Committee may also, in its discretion but with the written
consent of the Key Employee, revise previously granted Options, adjust the price
of an Option, or cancel an Option and grant a new Option to replace the
cancelled Option. The Committee also shall have the authority to establish such
rules and regulations, not inconsistent with the provisions of the Plan, for the
proper administration of the Plan, to amend, modify, or rescind any such rules
and regulations, and to make such determinations and interpretations under, or
in connection with, the Plan, as it deems necessary or advisable. All such
rules, regulations, determinations, and interpretations shall be binding and
conclusive upon the Trust and PREIT-RUBIN, their shareholders, and all Key
Employees, upon their respective legal representatives, beneficiaries,
successors, and assigns, and upon all other persons claiming under or through
any of them.
No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option granted under it.
3. Eligibility. The class of employees who shall be eligible to receive
Awards under the Plan shall be the Key Employees (including any trustees who
also are officers or key employees). More than one Award may be granted to a Key
Employee under the Plan. A Key Employee who has been granted an Option under the
Plan shall be referred to as an "Optionee."
4. Stock. Options may be granted under the Plan to purchase up to
560,000 shares of Common Stock, par value $1.00 per share. However, no Key
Employee shall receive Options for more than 250,000 shares of the Trust's
Common Stock in any single calendar year, subject to adjustment as hereinafter
provided. Shares issuable under the Plan may be authorized but unissued shares
or reacquired shares, and the Trust may purchase shares required for this
purpose, from time to time, if it deems such purchase to be advisable.
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If any Option granted under the Plan expires or otherwise
terminates for any reason whatsoever (including, without limitation, the
Optionee's surrender thereof) without having been exercised, the shares
subject to the unexercised portion of the Option shall continue to be
available for the granting of Options under the Plan as fully as if the shares
had never been subject to an Option. However, (i) if an Option is cancelled,
the shares of Common Stock covered by the cancelled Option shall be counted
against the maximum number of shares specified above for which Options may be
granted to a single Key Employee, and (ii) if the exercise price of an Option
is reduced after the date of grant, the transaction shall be treated as a
cancellation of the original Option and the grant of a new Option for purposes
of such maximum.
5. Granting of Awards. From time to time until the expiration or
earlier suspension or discontinuance of the Plan, the Committee may, on behalf
of the Trust, grant to Key Employees under the Plan such Awards as it determines
are warranted; provided, however, that (i) ISOs shall not be granted to Key
Employees who are not employed by the Trust or a Related Corporation, and (ii)
grants of ISOs and NQSOs shall be separate and not in tandem. In making any
determination as to whether a Key Employee shall be granted an Award, the type
of Award to be granted, the number of shares to be covered by the Award, and
other terms of the Award, the Committee shall take into account the duties of
the Key Employee, his present and potential contributions to the success of the
Trust and/or of PREIT-RUBIN, the tax implications to the Trust and the Key
Employee of any Award granted, and such other factors as the Committee shall
deem relevant in accomplishing the purposes of the Plan.
6. Annual Limit
(a) ISOs. The aggregate fair market value (determined under
Section 7(b) hereof as of the date the ISO is granted) of the Common Stock with
respect to which ISOs are exercisable for the first time by a Key Employee
during any calendar year (counting ISOs under this Plan and incentive stock
options under any other stock option plan of the Trust or a Related Corporation)
shall not exceed $100,000. If an Option intended as an ISO is granted to a Key
Employee and the Option may not be treated in whole or in part as an ISO
pursuant to the $100,000 limitation, the Option shall be treated as an ISO to
the extent it may be so treated under the limitation and as an NQSO as to the
remainder. For purposes of determining whether an ISO would cause the limitation
to be exceeded, ISOs shall be taken into account in the order granted.
(b) NQSOs. The annual limits set forth above for ISOs shall
not apply to NQSOs.
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7. Terms and Conditions of Options. Options granted pursuant to the
Plan shall include expressly or by reference the following terms and conditions,
as well as such other provisions not inconsistent with the provisions of the
Plan (and, for ISOs granted under the Plan, the provisions of Section 422(b) of
the Code), as the Committee shall deem desirable --
(a) Number of Shares. The Option shall state the number of
shares of Common Stock to which the Option pertains.
(b) Price. The Option shall state the Option price which shall
be determined and fixed by the Committee in its discretion but, in the case of
an ISO, shall not be less than the higher of 100 percent (110 percent in the
case of a more-than-10-percent shareholder, as provided in subsection (j) below)
of the fair market value of the optioned shares of Common Stock on the date the
ISO is granted, or the par value thereof, and, in the case of an NQSO, shall not
be less than the higher of 100 percent of the fair market value of the optioned
shares of Common Stock on the date the NQSO is granted, or the par value
thereof.
The fair market value of a share of Common Stock shall be
arrived at by a good faith determination of the Committee and shall be --
(i) if there are sales of Common Stock on a
registered securities exchange or in an over-the-counter market on
the date of grant, then the mean between the highest and lowest
quoted selling price on the date of grant; or
(ii) if there are no such sales of Common Stock on
the date of grant but there are such sales on dates within a
reasonable period both before and after the date of grant, then the
weighted average of the means between the highest and lowest selling
price on the nearest date before and the nearest date after the date
of grant; or
(iii) if actual sales are not available during a
reasonable period beginning before and ending after the date of
grant, then the mean between the bid and asked price on the date of
grant as reported by the National Quotation Bureau; or
(iv) if (i) through (iii) are not applicable, such
other method of determining fair market value as shall be authorized
by the Code, or the rules or regulations thereunder, and adopted by
the Committee.
Where the fair market value of the optioned shares of Common Stock is
determined under (ii) above, the average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the date of
grant
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shall be weighted inversely by the respective numbers of trading days between
the selling dates and the date of grant (i.e, the valuation date), in accordance
with Treas. Reg. ss. 20.2031-2(b)(1), or any successor thereto.
(c) Term
(1) ISOs. Subject to earlier termination as provided
in subsections (e), (f), and (g) below and in Section 8 hereof, the term of each
ISO shall be not more than 10 years (five years in the case of a
more-than-10-percent shareholder, as discussed in subsection (j) below) from the
date of grant.
(2) NQSOs. Subject to earlier termination as provided
in subsections (e), (f), and (g) below and in Section 8 hereof, the term of each
NQSO shall be not more than 10 years from the date of grant.
(d) Exercise. Options shall be exercisable in such
installments and on such dates as the Committee may specify; provided that (i)
in the case of new Options granted to an Optionee to replace options (whether
granted under the Plan or otherwise) held by the Optionee or in the case of
Options repriced by the Committee, the new or repriced Options may be made
exercisable, if so determined by the Committee, in its discretion, at the
earliest date the original Options were exercisable, but not earlier than three
months from the date of grant of the new Options or the repricing of the
original Options; and (ii) the Committee may accelerate the exercise date of any
outstanding Options, in its discretion, if it deems such acceleration to be
desirable.
Any exercisable Options may be exercised at any time up to
the expiration or termination of the Option. Exercisable Options may be
exercised, in whole or in part and from time to time, by giving written notice
of exercise to the Trust at its principal office, specifying the number of
shares to be purchased and accompanied by payment in full of the aggregate
Option exercise price for such shares. Only full shares shall be issued under
the Plan, and any fractional share which might otherwise be issuable upon
exercise of an Option granted hereunder shall be forfeited.
The Option price shall be payable in the case of an ISO, if
the Committee in its discretion causes the Option Agreement so to provide, and
in the case of an NQSO, if the Committee in its discretion so determines at or
prior to the time of exercise --
(1) in cash or its equivalent;
(2) in shares of Common Stock previously acquired by
the Optionee; provided that (i) if such shares of Common Stock were acquired
through
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the exercise of an ISO and are used to pay the Option price for ISOs, such
shares have been held by the Optionee for a period of not less than the
holding period described in Section 422(a)(1) of the Code on the date of
exercise, or (ii) if such shares of Common Stock were acquired through the
exercise of an NQSO and are used to pay the Option price of an ISO, or if such
shares of Common Stock were acquired through the exercise of an ISO or an NQSO
and are used to pay the Option price of an NQSO, such shares have been held by
the Optionee for a period of more than one year on the date of exercise;
(3) by delivering a properly executed notice of
exercise of the Option to the Trust and a broker, with irrevocable instructions
to the broker promptly to deliver to the Trust the amount of sale or loan
proceeds necessary to pay the exercise price of the Option;
(4) if the Optionee is designated as an "eligible
participant" by the Committee at the date of grant in the case of an ISO, or at
or after the date of grant in the case of an NQSO, and if the Optionee
thereafter so requests, (i) the Trust will loan the Optionee the money required
to pay the exercise price of the Option; (ii) any such loan to an Optionee shall
be made only at the time the Option is exercised; and (iii) the loan will be
made on the Optionee's personal, negotiable, demand promissory note, bearing
interest at the lowest rate which will avoid imputation of interest under
Section 7872 of the Code, and including such other terms as the Committee may
prescribe; or
(5) in any combination of subsections (1), (2), (3),
and (4) above.
In the event the Option price is paid, in whole or in part,
with shares of Common Stock, the portion of the Option price so paid shall be
equal to the aggregate fair market value (determined under subsection (b)
above, but as of the date of exercise of the Option, rather than the date of
grant) of the Common Stock so surrendered in payment of the Option price.
(e) Termination of Employment. If an Optionee's employment by
the Trust or PREIT-RUBIN is terminated by either party prior to the expiration
date fixed for his Option for any reason other than retirement, death,
disability, change in control, cause, or employment with a competitor, such
Option may be exercised, to the extent of the number of shares with respect to
which the Optionee could have exercised it on the date of such termination, or
to any greater extent permitted by the Committee, by the Optionee at any time
prior to the earlier of (i) the expiration date specified in such Option, or
(ii) an accelerated expiration date determined by the Committee, in its
discretion, and set forth in the Option Agreement; except that, subject to
Section 8 hereof, such accelerated expiration date shall not be earlier than the
date of the Optionee's termination of
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employment, and in the case of ISOs, such accelerated expiration date shall
not be later than three months after such termination of employment.
(f) Retirement or Disability. If an Optionee attains the age
which the Trust or PREIT-RUBIN may from time to time establish as the retirement
age for any class of its employees or becomes disabled (within the meaning of
Section 22(e)(3) of the Code) during his employment and, prior to the expiration
date fixed for his Option, his employment is terminated as a consequence of such
retirement or disability, such Option may be exercised, to the extent of the
number of shares with respect to which the Optionee could have exercised it on
the date of such termination, or to any greater extent permitted by the
Committee, by the Optionee at any time prior to the earlier of (i) the
expiration date specified in such Option, or (ii) an accelerated termination
date determined by the Committee, in its discretion, and set forth in the Option
Agreement; except that, subject to Section 8 hereof, such accelerated
termination date shall not be earlier than the date of the Optionee's
termination of employment by reason of retirement or disability, and in the case
of ISOs, such accelerated termination date shall not be later than three months
after such termination of employment. In the event of the Optionee's legal
disability, such Option may be exercised by the Optionee's legal representative.
(g) Death. If an Optionee dies during his employment, and
prior to the expiration date fixed for his Option, or if an Optionee whose
employment is terminated for any reason, dies following his termination of
employment but prior to the earliest of (i) the expiration date fixed for his
Option, (ii) the expiration of the period determined under subsections (e) and
(f) above, or (iii) in the case of an ISO, three months following termination of
employment, such Option may be exercised, to the extent of the number of shares
with respect to which the Optionee could have exercised it on the date of his
death, or to any greater extent permitted by the Committee, by the Optionee's
estate, personal representative, or beneficiary who acquired the right to
exercise such Option by bequest or inheritance or by reason of the death of the
Optionee. Such post-death exercise may occur at any time prior to the earlier of
(i) the expiration date specified in such Option or (ii) an accelerated
termination date determined by the Committee, in its discretion, and set forth
in the Option Agreement; except that, subject to Section 8 hereof, such
accelerated termination date shall not be earlier than one year, nor later than
three years, after the date of death.
(h) Non-Transferability; Registration. No ISO and (except as
otherwise provided in any Option Agreement) no NQSO shall be assignable or
transferable by the Optionee other than by will or by the laws of descent and
distribution, and (subject to the preceding clause) during the lifetime of the
Optionee, shall be exercisable only by him or by his guardian or legal
representative. If the Optionee is married at the time of exercise and if the
Optionee so requests at the time of exercise, the certificate or certificates
shall be
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registered in the name of the Optionee and the Optionee's spouse, jointly, with
right of survivorship.
(i) Rights as a Shareholder. An Optionee shall have no rights
as a shareholder with respect to any shares covered by his Option until the
issuance of a stock certificate to him for such shares.
(j) Ten Percent Shareholder. If the Optionee owns more than 10
percent of the total combined voting power of all shares of stock of the Trust
at the time an ISO is granted to him, the Option price for the ISO shall be not
less than 110 percent of the fair market value (as determined under subsection
(b) above) of the optioned shares of Common Stock on the date the ISO is
granted, and such ISO, by its terms, shall not be exercisable after the
expiration of five years from the date the ISO is granted. The conditions set
forth in this subsection shall not apply to NQSOs.
(k) Listing and Registration of Shares. Each Option shall be
subject to the requirement that, if at any time the Committee shall determine,
in its discretion, that the listing, registration, or qualification of the
shares of Common Stock covered thereby upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
granting of such Option or the purchase of shares of Common Stock thereunder, or
that action by the Trust or by the Optionee should be taken in order to obtain
an exemption from any such requirement, no such Option may be exercised, in
whole or in part, unless and until such listing, registration, qualification,
consent, approval, or action shall have been effected, obtained, or taken under
conditions acceptable to the Committee. Without limiting the generality of the
foregoing, each Optionee or his legal representative or beneficiary may also be
required to give satisfactory assurance that shares purchased upon exercise of
an Option are being purchased for investment and not with a view to
distribution, and certificates representing such shares may be legended
accordingly.
(l) Withholding and Use of Shares to Satisfy Tax Obligations.
The obligation of the Trust to deliver shares of Common Stock upon the exercise
of any Option (or cash in lieu thereof) shall be subject to applicable federal,
state, and local tax withholding requirements.
If the exercise of any Option is subject to the withholding
requirements of applicable federal tax law, the Committee, in its discretion,
may permit or require the Optionee to satisfy the federal withholding tax, in
whole or in part, by electing to have the Trust withhold shares of Common Stock
subject to the exercise (or by returning previously acquired shares of Common
Stock to the Trust). The Trust may not withhold shares in excess of the number
necessary to
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satisfy the minimum federal income tax withholding requirements. Shares of
Common Stock shall be valued, for purposes of this subsection, at their fair
market value under subsection (b) above, but as of the date the amount
attributable to the exercise of the Option is includable in income by the
Optionee under Section 83 of the Code (the "Determination Date"). If shares of
Common Stock acquired by the exercise of an ISO are used to satisfy the
withholding requirement described above, such shares of Common Stock must have
been held by the Optionee for a period of not less than the holding period
described in Section 422(a)(1) of the Code as of the Determination Date.
The Committee shall adopt such withholding rules as it deems
necessary to carry out the provisions of this subsection.
(m) Loans. If an Optionee is designated as an "eligible
participant" by the Committee at the date of grant in the case of an ISO, or at
or after the date of grant in the case of an NQSO, and if the Optionee
thereafter so requests, the Trust will loan the Optionee the money required to
satisfy any regular income tax obligations (as opposed to alternative minimum
tax obligations) resulting from the exercise of any Options. Any loan or loans
to an Optionee shall be made only at the time any such tax resulting from such
exercise is due. The Committee, in its discretion, may require an affidavit from
the Optionee specifying the amount of the tax required to be paid and the date
when such tax must be paid. The loan will be made on the Optionee's personal,
negotiable, demand promissory note, bearing interest at the lowest rate which
will avoid imputation of interest under Section 7872 of the Code, and including
such other terms as the Committee may prescribe.
(n) Option Agreements -- Other Provisions. Options granted
under the Plan shall be evidenced by written documents ("Option Agreements") in
such form as the Committee shall from time to time approve, and containing such
provisions not inconsistent with the provisions of the Plan (and, for ISOs
granted pursuant to the Plan, not inconsistent with Section 422(b) of the Code),
as the Committee shall deem advisable. The Option Agreements shall specify
whether the Option is an ISO or NQSO. Each Optionee shall enter into, and be
bound by, an Option Agreement as soon as practicable after the grant of an
Option.
8. Forfeiture. If the employment of an Optionee is terminated for
"Cause" (as defined below) or the Optionee terminates his employment and
commences working for a "Competitor" (as defined below), his right under any
then outstanding Award shall terminate at the time of such termination of
employment. As used in this Section, in the case of any Optionee not subject
to a written employment agreement, "Cause" shall mean any willful or
intentional act having the effect of injuring the reputation, business, or
business relationships of
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the Trust or PREIT-RUBIN, or any repeated or continuous failure, neglect, or
refusal to perform in a satisfactory manner duties assigned to such Optionee.
In the case of an Optionee subject to a written employment agreement, "Cause"
shall mean any action giving the Trust or PREIT-RUBIN the right to terminate
such person's employment agreement for Cause. "Competitor" shall mean any
person or entity other than the Trust or PREIT-RUBIN engaged -- either before
the Optionee's employment is terminated or within the one-year period after
such termination -- in a business competitive (in the good faith judgment of
the Committee) with that of the Trust or PREIT-RUBIN.
9. Capital Adjustments. The number of shares which may be issued under
the Plan, and the maximum number of shares with respect to which Awards may be
granted to any Key Employee under the Plan, both as stated in Section 4 hereof,
and the number of shares issuable upon exercise or vesting of outstanding Awards
under the Plan (as well as the Option price per share under outstanding Options)
shall, subject to the provisions of Section 424(a) of the Code, be adjusted, as
may be deemed appropriate by the Committee, to reflect any stock dividend, stock
split, share combination, or similar change in the capitalization of the Trust.
In the event any such change in capitalization cannot be reflected in a straight
mathematical adjustment of the number of shares issuable upon the exercise of
outstanding Options (and a straight mathematical adjustment of the exercise
price thereof), the Committee shall make such adjustments as are appropriate to
reflect most nearly such straight mathematical adjustment. Such adjustments
shall be made only as necessary to maintain the proportionate interest of
Optionee, and preserve, without exceeding, the value of Awards.
10. Certain Corporate Transactions. In the event of a corporate
transaction (as that term is described in Section 424(a) of the Code and the
Treasury Regulations issued thereunder as, for example, a merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation),
each outstanding Award shall be assumed by the surviving or successor
corporation; provided, however, that, in the event of a proposed corporate
transaction, the Committee may terminate all or a portion of any outstanding
Award if it determines that such termination is in the best interests of the
Trust. If the Committee decides to terminate outstanding Options, the Committee
shall give each Key Employee holding an Option to be terminated not fewer than
seven days' notice prior to any such termination, and any Option which is to be
so terminated may be exercised (if and only to the extent that it is then
exercisable) up to, and including the date immediately preceding such
termination. Further, as provided in Section 7(d) hereof, the Committee, in its
discretion, may accelerate, in whole or in part, the date on which any or all
Options become exercisable.
The Committee also may, in its discretion, change the terms of
any outstanding Award to reflect any such corporate transaction, provided that,
in the
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case of ISOs, such change would not constitute a "modification" under Section
424(h) of the Code, unless the Optionee consents to the change.
11. Exercise Upon Change in Control
(a) Notwithstanding any other provision of this Plan, all
outstanding Options shall become fully vested and exercisable upon a Change in
Control.
(b) "Change in Control" shall mean:
(1) The acquisition by an individual, entity, or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a "Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30 percent or more of the combined voting
power of the then outstanding voting securities of the Trust entitled to vote
generally in the election of trustees (the "Outstanding Shares"); provided,
however, that the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Trust, (ii) any acquisition by
the Trust, (iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Trust or any corporation controlled by the Trust,
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of paragraph (3) below, or (v) any acquisition
by any Person entitled to file Form 13G under the Exchange Act with respect to
such acquisition; or
(2) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a trustee subsequent to the date hereof whose appointment, election, or
nomination for election by the Trust's shareholders, was approved by a vote of
at least a majority of the trustees then comprising the Incumbent Board (other
than an appointment, election, or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the trustees of the Trust, as such terms are
used in Rule 14a-1 promulgated under the Exchange Act) shall be, for purposes of
this Plan, considered as though such person were a Member of the Incumbent
Board; or
(3) approval by the shareholders of the Trust of a
reorganization, merger or consolidation, or sale or other disposition of all or
substantially all of the assets of the Trust (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners of the
Outstanding Shares immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60 percent of, respectively, the then
outstanding shares of stock and the combined voting power of the then
outstanding voting securities
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entitled to vote generally in the election of trustees, as the case may be, of
the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Trust
or all or substantially all of the Trust's assets either directly or through one
or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Shares, (ii)
no Person (excluding any employee benefit plan (or related trust) of the Trust
or such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 30 percent or more of, respectively, the then
outstanding shares of stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination, and (iii) at least a majority of the members
of the board of trustees or directors of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(4) approval by the shareholders of the Trust of a
complete liquidation or dissolution of the Trust.
12. Amendment or Termination of the Plan
(a) In General. The Board, pursuant to a written resolution,
from time to time may suspend or terminate the Plan or amend it, and the
Committee may amend any outstanding Awards in any respect whatsoever; except
that, without the approval of the shareholders (given in the manner set forth in
subsection (b) below) --
(1) any amendment which would --
(A) change the class of employees eligible
to participate in the Plan with respect to ISOs;
(B) except as permitted under Section 10
hereof, increase the maximum number of shares of Common Stock with respect to
which ISOs may be granted under the Plan; or
(C) extend the duration of the Plan under
Section 18 hereof with respect to any ISOs granted hereunder.
(2) No amendment requiring shareholder
approval pursuant to Treas. Reg. ss. 1.162-27(e)(4)(vi) or any successor thereto
may be made.
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Notwithstanding the foregoing, no such suspension, discontinuance, or
amendment shall materially impair the rights of any holder of an outstanding
Option without the consent of such holder.
(b) Manner of Shareholder Approval. The approval of
shareholders must be effected by a majority of the votes cast (including
abstentions, to the extent abstentions are counted as voting under applicable
state law), in a separate vote at a duly held shareholders' meeting at which a
quorum representing a majority of all outstanding voting stock is, either in
person or by proxy, present and voting on the Plan.
13. Rights. Neither the adoption of the Plan nor any action of the
Board or the Committee shall be deemed to give any individual any right to be
granted an Award, or any other right hereunder, unless and until the Committee
shall have granted such individual an Award, and then his rights shall be only
such as are provided by the Option Agreement. Notwithstanding any provisions
of the Plan or the Option Agreement with a Key Employee, the Trust or
PREIT-RUBIN (as applicable) shall have the right, in its discretion but
subject to any employment contract entered into with the Key Employee, to
retire the Key Employee at any time pursuant to its retirement rules or
otherwise to terminate his employment at any time for any reason whatsoever.
14. Indemnification of Board and Committee. Without limiting any
other rights of indemnification which they may have from the Trust, any
Related Corporation, or PREIT-RUBIN, the members of the Board and the members
of the Committee shall be indemnified by the Trust against all costs and
expenses reasonably incurred by them in connection with any claim, action,
suit, or proceeding to which they or any of them may be a party by reason of
any action taken or failure to act under, or in connection with, the Plan, or
any Award granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by legal counsel
selected by the Trust) or paid by them in satisfaction of a judgment in any
such action, suit, or proceeding, except a judgment based upon a finding of
willful misconduct or recklessness on their part. Upon the making or
institution of any such claim, action, suit, or proceeding, the Board or
Committee member shall notify the Trust in writing, giving the Trust an
opportunity, at its own expense, to handle and defend the same before such
Board or Committee member undertakes to handle it on his own behalf. The
provisions of this Section shall not give members of the Board or the
Committee greater rights than they would have under the Trust's by-laws or
Pennsylvania law.
15. Application of Funds. The proceeds received by the Trust from the
sale of Common Stock pursuant to Awards granted under the Plan shall be used for
general corporate purposes. Any cash received in payment for shares upon
exercise of an Option shall be added to the general funds of the Trust and shall
be
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used for its corporate purposes. Any Common Stock received in payment for
additional Common Stock upon exercise of an Option shall become treasury
stock.
16. Shareholder Approval. This Plan shall become effective on July 8,
1997 (the date the Plan was adopted by the Board); provided, however, that if
the Plan is not approved by the shareholders, in the manner described in Section
12(b) hereof, within 12 months before or after the date the Plan is adopted by
the Board, all ISOs granted hereunder shall be null and void and no additional
ISOs shall be granted hereunder.
17. No Obligation Regarding Awards. The granting of an Award shall
impose no obligation upon a Key Employee to exercise or meet the conditions of
such Award.
18. Termination of Plan. Unless earlier terminated as provided in the
Plan, the Plan and all authority granted hereunder shall terminate absolutely at
12:00 midnight on July 7, 2007 which date is within 10 years after the date the
Plan was adopted by the Board, and no Awards hereunder shall be granted
thereafter. Nothing contained in this Section, however, shall terminate or
affect the continued existence of rights created under Awards issued hereunder,
and outstanding on the date set forth in the preceding sentence, which by their
terms extend beyond such date.
19. Governing Law. The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the
Commonwealth of Pennsylvania shall govern the operation of, and the rights of
Key Employees under, the Plan, and Awards granted hereunder.
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