EX-10.3
Stock Option And Incentive Plan
BEACON CAPITAL PARTNERS, INC.
1998 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the Beacon Capital Partners, Inc. 1998 Stock
Option and Incentive Plan (the "Plan"). The purpose of the Plan is to encourage
and enable the officers, employees, Independent Directors and other key persons
(including consultants) of Beacon Capital Partners, Inc. (the "Company"), the
employees and other key persons of Beacon Capital Partners, L.P. (the "Operating
Partnership") and the Company's other Subsidiaries, upon whose judgment,
initiative and efforts the Company largely depends for the successful conduct of
its business to acquire a proprietary interest in the Company. It is anticipated
that providing such persons with a direct stake in the Company's welfare will
assure a closer identification of their interests with those of the Company,
thereby stimulating their efforts on the Company's behalf and strengthening
their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Deferred Stock Awards, Restricted Stock Awards, Unrestricted Stock
Awards, Performance Share Awards, Dividend Equivalent Rights and Other
Stock-Based Awards.
"Board" means the Board of Directors of the Company.
"Change of Control" is defined in Section 17.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the Compensation Committee of the Board.
"Deferred Stock Award" means Awards granted pursuant to Section 7.
"Dividend Equivalent Right" means Awards granted pursuant to Section 10.
"Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 18.
"Fair Market Value" of the Stock on any given date means the fair market
value of the Stock determined in good faith by the Committee; provided, however,
that (i) if the Stock is admitted to quotation on the National Association of
Securities Dealers Automated Quotation
System ("NASDAQ"), the Fair Market Value on any given date shall not be less
than the average of the highest bid and lowest asked prices of the Stock
reported for such date or, if no bid and asked prices were reported for such
date, for the last day preceding such date for which such prices were reported,
or (ii) if the Stock is admitted to trading on a national securities exchange or
the NASDAQ National Market System, the Fair Market Value on any date shall not
be less than the closing price reported for the Stock on such exchange or system
for such date or, if no sales were reported for such date, for the last date
preceding the date for such a sale was reported. Notwithstanding the foregoing,
the Fair Market Value on the first day of the Initial Public Offering of Stock
shall be the initial offering price as set forth in the final prospectus for the
Company's initial public offering.
"Incentive Stock Option" means any Stock Option that is designated and
qualifies as an "incentive stock option" as defined in Section 422 of the Code.
"Independent Director" means a member of the Board who is not an officer
or employee of the Corporation or any affiliate thereof and who does not have a
material business or professional relationship with the Corporation or any
affiliate thereof.
"Initial Public Offering" means the Company's initial public offering of
Stock.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Operating Partnership" means Beacon Capital Partners, L.P., a Delaware
limited partnership, and any successor thereto.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Other Stock-Based Award" means Awards granted pursuant to Section 11.
"Performance Share Award" means Awards granted pursuant to Section 9.
"Restricted Stock Award" means Awards granted pursuant to Section 6.
"Stock" means the Common Stock, par value $0.01 per share, of the Company,
subject to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50 percent or more of the economic interest or the total combined
voting power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
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"Unrestricted Stock Award" means any Award granted pursuant to Section 8.
SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS
(a) Committee. The Plan shall be administered by the Committee of the
Board.
(b) Powers of Committee. The Committee shall have the power and authority
to grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the individuals to whom Awards may from time to time
be granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted
Stock Awards, Deferred Stock Awards, Unrestricted Stock Awards,
Performance Share Awards, Dividend Equivalent Rights and Other Stock-Based
Awards, or any combination of the foregoing, granted to any one or more
participants;
(iii) to determine the number of shares of Stock to be covered by
any Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the
Plan, of any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of all
or any portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend at any
time the period in which Stock Options may be exercised;
(vii) to determine at any time whether, to what extent, and under
what circumstances distribution or the receipt of Stock and other amounts
payable with respect to an Award shall be deferred either automatically or
at the election of the participant and whether and to what extent the
Company shall pay or credit amounts constituting interest (at rates
determined by the Committee) or dividends or deemed dividends on such
deferrals; and
(viii) at any time to adopt, alter and repeal such rules, guidelines
and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
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administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
(c) Delegation of Authority to Grant Awards. The Committee, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Committee's authority and duties with respect to the granting of
Awards at Fair Market Value, to individuals who are not subject to the reporting
and other provisions of Section 16 of the Act or "covered employees" within the
meaning of Section 162(m) of the Code. Any such delegation by the Committee
shall include a limitation as to the amount of Awards that may be granted during
the period of the delegation and shall contain guidelines as to the
determination of the exercise price of any Option, the conversion ratio or price
of other Awards and the vesting criteria. The Committee may revoke or amend the
terms of a delegation at any time but such action shall not invalidate any prior
actions of the Committee's delegate or delegates that were consistent with the
terms of the Plan.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be such aggregate number of shares
of Stock as does not exceed the sum of (i) 2,543,895 shares; plus (ii) as of the
last business date of each calendar quarter ending after the closing of the
Company's offering of Common Stock pursuant to the Offering Memorandum dated
March 17, 1998, 10 percent of any net increase in the total number of shares of
Stock outstanding (assuming all units of partnership interests in the Operating
Partnership that are subject to redemption rights are converted into Stock). For
purposes of this limitation, the shares of Stock underlying any Awards which are
forfeited, cancelled, reacquired by the Company, satisfied without the issuance
of Stock or otherwise terminated (other than by exercise) shall be added back to
the shares of Stock available for issuance under the Plan. Subject to such
overall limitation, shares of Stock may be issued up to such maximum number
pursuant to any type or types of Award. The shares available for issuance under
the Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company and held in its treasury.
(b) Changes in Stock. If, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar change in the Company's capital stock, the outstanding
shares of Stock are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or additional
shares or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Stock or other
securities, the Committee shall make an appropriate or proportionate adjustment
in (i) the maximum number of shares reserved for issuance under the Plan, (ii)
the number of Stock Options that can be granted to any one individual
participant, (iii) the number and kind of shares or other securities
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subject to any then outstanding Awards under the Plan, and (iv) the price for
each share subject to any then outstanding Stock Options under the Plan, without
changing the aggregate exercise price (i.e., the exercise price multiplied by
the number of Stock Options) as to which such Stock Options remain exercisable.
The adjustment by the Committee shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan resulting from any
such adjustment, but the Committee in its discretion may make a cash payment in
lieu of fractional shares.
The Committee may also adjust the number of shares subject to outstanding
Awards and the exercise price and the terms of outstanding Awards to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Committee that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such adjustment shall be made in the case of an Incentive Stock Option, without
the consent of the participant, if it would constitute a modification, extension
or renewal of the Option within the meaning of Section 424(h) of the Code.
(c) Mergers. In the case of (i) the dissolution or liquidation of the
Company, (ii) a merger, reorganization or consolidation in which a majority of
the outstanding voting power of the Company is acquired by another person or
entity (other than a holding company formed by the Company), (iii) the sale of
all or substantially all of the assets of the Company to an unrelated person or
entity, or (iv) the sale of all or substantially all of the Stock of the Company
to an unrelated person or entity (in each case, a "Transaction"), all
outstanding Awards shall become fully vested and nonforfeitable as of the
closing or consummation of such Transaction (except as may be otherwise provided
in the Award agreement). In contemplation of and subject to the consummation of
the Transaction, the Board, or the board of directors of any corporation
assuming the obligations of the Company, may, in its discretion, take any one or
more of the following actions, as to outstanding Awards: (i) provide that such
Awards shall be assumed or equivalent awards shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof), and/or (ii) upon
written notice to the participants, provide that all Awards will terminate
immediately prior to the consummation of the Transaction. In the event that,
pursuant to clause (ii) above, Awards will terminate immediately prior to the
consummation of the Transaction, all Awards, other than Stock Options, shall be
fully settled in cash or in kind at such appropriate consideration as determined
by the Committee in its sole discretion after taking into account the
consideration payable per share of Stock pursuant to the business combination
(the "Transaction Price") and all Stock Options shall be fully settled, in cash
or in kind, in an amount equal to the difference between (A) the Transaction
Price times the number of shares of Stock subject to such outstanding Stock
Options (to the extent then exercisable at prices not in excess of the
Transaction Price) and (B) the aggregate exercise price of all such outstanding
Stock Options; provided, however, that each participant shall be permitted,
within a specified period determined by the Committee prior to the consummation
of the Transaction, to exercise all outstanding Stock Options, including those
that are not then exercisable, subject to the consummation of the Transaction.
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(d) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers and other
employees, Independent Directors and key persons of the Company and its
Subsidiaries who are responsible for or contribute to the management, growth or
profitability of the Company, the Operating Partnership and the Company's other
Subsidiaries as are selected from time to time by the Committee in its sole
discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or NonQualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after March 16,
2008.
(a) Stock Options. The Committee in its discretion may grant Stock Options
to eligible employees, Independent Directors and key persons of the Company or
any Subsidiary. Stock Options granted pursuant to this Section 5(a) shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable. If the Committee so determines, Stock Options
may be granted in lieu of cash compensation at the participant's election,
subject to such terms and conditions as the Committee may establish, as well as
in addition to other compensation.
(i) Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Committee at the time of grant but shall not be less
than 100 percent of the Fair Market Value on the date of grant in the case
of Incentive Stock Options, or 25 percent of the Fair Market Value on the
date of grant, in the case of Non-Qualified Stock Options. If an employee
owns or is deemed to own (by reason of the attribution rules of Section
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424(d) of the Code) more than 10 percent of the combined voting power of
all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee, the
option price of such Incentive Stock Option shall be not less than 110
percent of the Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable more
than ten years after the date the option is granted. If an employee owns
or is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than 10 percent of the combined voting power of all
classes of stock of the Company or any parent or subsidiary corporation
and an Incentive Stock Option is granted to such employee, the term of
such option shall be no more than five years from the date of grant.
(iii) Exercisability; Rights of a Stockholder. Stock Options shall
become exercisable at such time or times, whether or not in installments,
as shall be determined by the Committee at or after the grant date;
provided, however, that Stock Options granted in lieu of compensation
shall be exercisable in full as of the grant date. The Committee may at
any time accelerate the exercisability of all or any portion of any Stock
Option. An optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or
in part, by giving written notice of exercise to the Company, specifying
the number of shares to be purchased. Payment of the purchase price may be
made by one or more of the following methods to the extent provided in the
Option Award agreement:
(A) In cash, by certified or bank check or other instrument
acceptable to the Committee;
(B) Through the delivery (or attestation to the ownership) of
shares of Stock that have been purchased by the optionee on the open
market or that have been beneficially owned by the optionee for at
least six months and are not then subject to restrictions under any
Company plan, if permitted by the Committee in its discretion. Such
surrendered shares shall be valued at Fair Market Value on the
exercise date;
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable
and acceptable to the Company for the purchase price; provided that
in the event the optionee chooses to pay the purchase price as so
provided, the optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such
payment procedure; or
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(D) By the optionee delivering to the Company a promissory
note if the Board has expressly authorized the loan of funds to the
optionee for the purpose of enabling or assisting the optionee to
effect the exercise of his Stock Option; provided that at least so
much of the exercise price as represents the par value of the Stock
shall be paid other than with a promissory note.
Payment instruments will be received subject to collection. The delivery
of certificates representing the shares of Stock to be purchased pursuant
to the exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in
the Stock Option or applicable provisions of laws. In the event an
optionee chooses to pay the purchase price by previously-owned shares of
Stock through the attestation method, the shares of Stock transferred to
the optionee upon the exercise of the Stock Option shall be net of the
number of shares attested to.
(v) Annual Limit on Incentive Stock Options. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
shares of Stock with respect to which Incentive Stock Options granted
under this Plan and any other plan of the Company or its parent and
subsidiary corporations become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000. To the extent
that any Stock Option exceeds this limit, it shall constitute a
Non-Qualified Stock Option.
(b) Reload Options. At the discretion of the Committee, Options granted
under the Plan may include a "reload" feature pursuant to which an optionee
exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Committee may provide) to purchase that number of shares of Stock equal to
the number delivered to exercise the original Option with an Option term equal
to the remainder of the original Option term unless the Committee otherwise
determines in the Award agreement for the original Option grant.
(c) Non-transferability of Options. No Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee. Notwithstanding the foregoing, the Committee, in
its sole discretion, may provide in the Award agreement regarding a given Option
that the optionee may transfer, without consideration for the transfer, his
Non-Qualified Stock Options to members of his immediate family, to trusts for
the benefit of such family members, or to partnerships in which such family
members are the only partners, provided that the transferee agrees in writing
with the Company to be bound by all of the terms and conditions of this Plan and
the applicable Option.
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SECTION 6. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. A Restricted Stock Award is an
Award entitling the recipient to acquire, at par value or such other higher
purchase price determined by the Committee, shares of Stock subject to such
restrictions and conditions as the Committee may determine at the time of grant
("Restricted Stock"). Conditions may be based on continuing employment (or other
business relationship) and/or achievement of pre-established performance goals
and objectives. The grant of a Restricted Stock Award is contingent on the
participant executing the Restricted Stock Award agreement. The terms and
conditions of each such agreement shall be determined by the Committee, and such
terms and conditions may differ among individual Awards and participants.
(b) Rights as a Stockholder. Upon execution of a written instrument
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a participant shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the Committee
shall otherwise determine, certificates evidencing the Restricted Stock shall
remain in the possession of the Company until such Restricted Stock is vested as
provided in Section 6(d) below, and the participant shall be required, as a
condition of the grant, to deliver to the Company a stock power endorsed in
blank.
(c) Restrictions. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award agreement. If a participant's employment
(or other business relationship) with the Company and its Subsidiaries
terminates for any reason, the Company shall have the right to repurchase
Restricted Stock that has not vested at the time of termination at its original
purchase price, from the participant or the participant's legal representative.
(d) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the non-transferability of the
Restricted Stock and the Company's right of repurchase or forfeiture shall
lapse. Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed "vested." Except as may otherwise be provided by the Committee
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's rights in any shares of
Restricted Stock that have not vested shall automatically terminate upon the
participant's termination of employment (or other business relationship) with
the Company and its Subsidiaries and such shares shall be subject to the
Company's right of repurchase as provided in Section 6(c) above.
(e) Waiver, Deferral and Reinvestment of Dividends. The Restricted Stock
Award agreement may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.
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SECTION 7. DEFERRED STOCK AWARDS
(a) Nature of Deferred Stock Awards. A Deferred Stock Award is an Award of
phantom stock units to a participant, subject to restrictions and conditions as
the Committee may determine at the time of grant. Conditions may be based on
continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a Deferred Stock
Award is contingent on the participant executing the Deferred Stock Award
agreement. The terms and conditions of each such agreement shall be determined
by the Committee, and such terms and conditions may differ among individual
Awards and participants. At the end of the deferral period, the Deferred Stock
Award, to the extent vested, shall be paid to the participant in the form of
shares of Stock.
(b) Election to Receive Deferred Stock Awards in Lieu of Compensation. The
Committee may, in its sole discretion, permit a participant to elect to receive
a portion of the cash compensation or Restricted Stock Award otherwise due to
such participant in the form of a Deferred Stock Award. Any such election shall
be made in writing and shall be delivered to the Company no later than the date
specified by the Committee and in accordance with rules and procedures
established by the Committee. The Committee shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the Committee
deems appropriate.
(c) Rights as a Stockholder. During the deferral period, a participant
shall have no rights as a stockholder; provided, however, that the participant
may be credited with Dividend Equivalent Rights with respect to the phantom
stock units underlying his Deferred Stock Award, subject to such terms and
conditions as the Committee may determine.
(d) Restrictions. A Deferred Stock Award may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.
(e) Termination. Except as may otherwise be provided by the Committee
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's right in all Deferred Stock
Awards that have not vested shall automatically terminate upon the participant's
termination of employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason.
SECTION 8. UNRESTRICTED STOCK AWARDS
Grant or Sale of Unrestricted Stock. The Committee may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Committee) an Unrestricted Stock Award to any participant pursuant to
which such participant may receive shares of Stock free of any restrictions
("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted
or sold as described in the preceding sentence in respect of past services or
other valid consideration, or in lieu of cash compensation due to such
participant.
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SECTION 9. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. The Committee in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals, the periods
during which performance is to be measured, and all other limitations and
conditions.
(b) Rights as a Stockholder. A participant receiving a Performance Share
Award shall have the rights of a stockholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the Performance Share Award agreement (or in a performance plan
adopted by the Committee).
(c) Termination. Except as may otherwise be provided by the Committee
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's rights in all Performance Share
Awards shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.
(d) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Committee may in its sole discretion accelerate, waive or,
subject to Section 14, amend any or all of the goals, restrictions or conditions
applicable to a Performance Share Award.
SECTION 10. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would
have been paid on the shares of Stock specified in the Dividend Equivalent Right
(or other award to which it relates) if such shares had been issued to and held
by the recipient. A Dividend Equivalent Right may be granted hereunder to any
participant as a component of another Award or as a freestanding award. The
terms and conditions of Dividend Equivalent Rights shall be specified in the
grant. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan sponsored by
the Company, if any. Dividend Equivalent Rights may be settled in cash or shares
of Stock or a combination thereof, in a single installment or installments. A
Dividend Equivalent Right granted as a component of another Award may
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provide that such Dividend Equivalent Right shall be settled upon exercise,
settlement, or payment of, or lapse of restrictions on, such other award, and
that such Dividend Equivalent Right shall expire or be forfeited or annulled
under the same conditions as such other award. A Dividend Equivalent Right
granted as a component of another Award may also contain terms and conditions
different from such other award.
(b) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
(c) Termination. Except as may otherwise be provided by the Committee
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's rights in all Dividend Equivalent
Rights or interest equivalents shall automatically terminate upon the
participant's termination of employment (or cessation of business relationship)
with the Company and its Subsidiaries for any reason.
SECTION 11. OTHER STOCK-BASED AWARDS
(a) Nature of Other Stock-Based Awards. An Other Stock-Based Award
includes other Awards of Stock and other Awards that are valued in whole or in
part by reference to, or are otherwise based on, Stock or units (or other
interest) in the Company or the Operating Partnership, as the case may be,
including without limitation, convertible preferred stock, convertible
debentures, exchangeable securities and Awards valued by reference to book value
or subsidiary performance. An Other Stock-Based Award may be granted to any
participant either along side or in addition to or in tandem with any other
Award granted under the Plan and/or cash awards made outside of the Plan. Stock
(including securities convertible into Stock) issued on a bonus basis under this
Section 11 may be issued for no cash consideration. Stock (including securities
convertible into Stock) purchased with a purchase right awarded under this
Section 11 shall be priced at least 25 percent of the Fair Market Value of the
Stock on the date of grant. The grant of an Other Stock-Based Award may be
subject to restrictions and conditions as the Committee may determine at the
time of grant, including conditions based on continuing employment (or other
business relationship) and/or achievement of pre-established performance goals
and objectives. The grant of an Other Stock-Based Award is contingent on the
participant executing the Award agreement. The terms and conditions of each such
agreement shall be determined by the Committee, and such terms and conditions
may differ among individual Awards and participants. An Other Stock-Based Award
may be settled in shares of Stock or units (or other interests) in the Company
or the Operating Partnership, as the case may be.
(b) Rights as a Stockholder. Until such time as an Other Stock-Based Award
is actually paid out in shares of Stock, a participant shall have no rights as a
holder of Stock.
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(c) Restrictions. An Other Stock-Based Award may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Award agreement.
(d) Termination. Except as may otherwise be provided by the Committee in
the Award agreement or, subject to Section 14 below, in writing after the Award
agreement is issued, a participant's right in his Other Stock-Based Awards that
have not vested shall automatically terminate upon the participant's termination
of employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.
SECTION 12. TAX WITHHOLDING
(a) Payment by Participant. Each participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant. The Company's obligation to deliver stock certificates to any
participant is subject to and conditioned on tax obligations being satisfied by
the participant.
(b) Payment in Stock. Subject to approval by the Committee, a participant
may elect to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Stock to be
issued pursuant to any Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company shares of Stock
owned by the participant with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the withholding amount due.
SECTION 13. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the Committee
otherwise so provides in writing.
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SECTION 14. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the
Committee may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. The Committee may provide substitute Awards at the same or
reduced exercise or purchase price or with no exercise or purchase price in a
manner not inconsistent with the terms of the Plan, but such price, if any, must
satisfy the requirements which would apply to the substitute or amended Award if
it were then initially granted under this Plan, but no such action shall
adversely affect rights under any outstanding Award without the holder's
consent. If and to the extent determined by the Committee to be required by the
Code to ensure that Incentive Stock Options granted under the Plan are qualified
under Section 422 of the Code or to ensure that compensation earned under Awards
qualifies as performance-based compensation under Section 162(m) of the Code, if
and to the extent intended to so qualify, Plan amendments shall be subject to
approval by the Company stockholders entitled to vote at a meeting of
stockholders. Nothing in this Section 14 shall limit the Board's authority to
take any action permitted pursuant to Section 3(c).
SECTION 15. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.
SECTION 16. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements. The Committee may
require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Committee may require the placing of such
stop-orders and restrictive legends on certificates for Stock and Awards as it
deems appropriate.
(b) Delivery of Stock Certificates. Stock certificates to participants
under this Plan shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the
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Company shall have mailed such certificates in the United States mail, addressed
to the participant, at the participant's last known address on file with the
Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
(d) Trading Policy Restrictions. Option exercises and other Awards under
the Plan shall be subject to such Company's insider-trading-policy-related
restrictions, terms and conditions as may be established by the Committee, or in
accordance with policies set by the Committee, from time to time.
(e) Headings. The Article and Section headings in this Plan are inserted
for convenience of reference only, and shall not affect the interpretation of
this Plan.
SECTION 17. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section 17
after the Initial Public Offering:
(a) Except as otherwise provided in the applicable Award agreement, each
outstanding Stock Option shall automatically become fully exercisable and each
other outstanding Award shall become fully vested.
(b) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Act (other than the Company, any of its Subsidiaries, or any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any of its Subsidiaries),
together with all "affiliates" and "associates" (as such terms are defined
in Rule 12b-2 under the Act) of such person, shall become the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 40 percent or more
of the combined voting power of the Company's then outstanding securities
having the right to vote in an election of the Company's Board of
Directors ("Voting Securities") (in such case other than as a result of an
acquisition of securities directly from the Company); or
(ii) persons who, as of the effective date of the Initial Public
Offering, constitute the Company's Board of Directors (the "Incumbent
Directors") cease for any
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reason, including, without limitation, as a result of a tender offer,
proxy contest, merger or similar transaction, to constitute at least a
majority of the Board, provided that any person becoming a director of the
Company subsequent to the effective date of the Initial Public Offering
(excluding, for this purpose (A) any such individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of members of the Board of
Directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors,
including by reason of agreement intended to avoid or settle any such
actual or threatened contest or solicitation, and (B) any individual whose
initial assumption of office is in connection with a reorganization,
merger or consolidation, involving an unrelated entity) shall be
considered an Incumbent Director if such person's election was approved by
or such person was nominated for election by either (1) a vote of at least
a majority of the Incumbent Directors or (2) a vote of at least a majority
of the Incumbent Directors who are members of a nominating committee
comprised, in the majority, of Incumbent Directors; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company where the stockholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or indirectly,
shares representing in the aggregate more than 50 percent of the voting
shares of the corporation issuing cash or securities in the consolidation
or merger (or of its ultimate parent corporation, if any), (B) any sale,
lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of
all or substantially all of the assets of the Company or (C) any plan or
proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed
to have occurred for purposes of the foregoing clause (i) solely as the result
of an acquisition of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the proportionate number of
shares of Voting Securities beneficially owned by any person to 40 percent or
more of the combined voting power of all then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company), then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (i).
SECTION 18. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a
majority of the votes cast at a meeting of stockholders at which a quorum is
present or by a unanimous written consent of stockholders. Subject to such
approval by the stockholders and to the requirement
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that no Stock may be issued hereunder prior to such approval, Stock Options and
other Awards may be granted hereunder on and after adoption of this Plan by the
Board.
SECTION 19. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be governed
by, and construed in accordance with, the laws of the State of Maryland, applied
without regard to conflict of law principles.
DATE APPROVED BY BOARD OF DIRECTORS: March 17, 1998
DATE APPROVED BY STOCKHOLDERS: March 17, 1998
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