Exhibit 4.1
LEXINGTON CORPORATE PROPERTIES TRUST
AMENDED AND RESTATED
2002 EQUITY-BASED AWARD PLAN
Purpose. The purpose of the Lexington Corporate Properties Trust 2002
Equity-Based Award Plan (the "Plan") is to advance the interests of Lexington
Corporate Properties Trust, a Maryland statutory real estate investment trust
(the "Company"), by providing an opportunity to selected employees, trustees and
consultants of the Company to purchase Common Shares, $.0001 par value, of the
Company (the "Common Shares") and to receive DERs (as hereinafter defined) and
stock awards provided for in the Plan. By encouraging such share ownership, the
Company seeks to attract, retain and motivate employees, trustees, and
consultants of experience and ability. It is intended that this purpose will be
effected by the granting of the following share-based incentives (collectively,
"awards"): (a) nonqualified stock options ("nonqualified options"); (b)
incentive stock options ("incentive options") intended to qualify under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"); (c) bonus
shares; (d) restricted shares and (e) performance shares and/ or performance
units. As an additional form of long-term incentive compensation, DERs, which
the Company intends to grant either in conjunction with other awards or
separately and which entitle the recipient to receive credits for dividends that
would be paid if the recipient had held specified Common Shares, are especially
useful to a real estate investment trust ("REIT") which, under the REIT
requirements of the Code, distributes most of its earnings to shareholders in
the form of dividends. DERs provide alignment between participant incentives and
total shareholder return by giving eligible participants the opportunity to
share in the value created through dividend payments as well as share price
growth.
1. Effective Date. This Plan was adopted by the Board of Trustees
("Board") of the Company on February 13, 2002, and is effective as of May 22,
2002, the date it was approved by the holders of a majority of the outstanding
capital stock of the Company.
2. Shares Subject to the Plan. The number of shares with respect to
which awards may be granted under the Plan shall not exceed 800,000 Common
Shares, subject to adjustment as provided in Paragraphs 12 and 14 hereof. Any
Common Share subject to an award which for any reason (i) expires, is cancelled
or is forfeited, (ii) is terminated unexercised or (iii) is withheld by the
Company from the shares otherwise to be received or otherwise held by any
participant under the Plan through the written election of such participant to
pay all or part of the exercise price of an award, if any, or to satisfy all or
a portion of the tax withholding obligation relating to such award, may again be
the subject of an award. In addition, any shares received by a participant
pursuant to an award under the Plan that are subsequently reacquired by the
Company pursuant to a repurchase right under the terms of such award may again
be the subject of an award under the Plan. The Common Shares delivered pursuant
to awards granted under the Plan may, in whole or in part, be authorized but
unissued shares, treasury shares, or any other issued shares subsequently
reacquired by the Company.
3. Administration. The Plan shall be administered by a committee (the
"Committee") appointed by the Board, in its discretion, consisting of not less
than three (3) members of the Board, each of whom must be a "non-employee
director" within the meaning of in Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and an "outside director" within the
meaning of Section 162(m) of the Code. Notwithstanding the
foregoing, the Board may at any time exercise all rights, duties and
responsibilities of the Committee, but excluding matters which under any
applicable law, rule or regulation, including Rule 16b-3 under the Exchange Act
or any successor rule or section 162(m) of the Code (to the extent the Board
intends that such matter qualify thereunder), are required to be determined in
the sole discretion of the Committee. Subject to the provisions of the Plan, the
Committee shall have full power and discretion to construe and interpret the
Plan and any agreement or instrument entered into under the Plan, including,
without limitation, any award agreement, and to establish, amend and rescind
rules and regulations for its administration; to accelerate the vesting or
exercisability of any award; to amend the terms and conditions of any
outstanding award (subject to the provisions of Paragraph 23); or to offer to
buy out an award previously granted, based on such terms and conditions as the
Committee shall establish with and communicate to the participant at the time
such offer is made. Any decisions made with respect thereto shall be final and
binding on the Company, the participants and all other persons. In addition, no
non-employee trustee or consultant shall have a right to be granted an award or,
having received an award, a right to again be granted an award, except to the
extent provided in Paragraphs 8, 12 and 14 hereof.
4. Eligible Participants. In its sole discretion, the Committee may
grant (i) DERs, incentive options, nonqualified options, bonus shares,
restricted shares, performance shares, performance units or any combination of
the foregoing, to such employees as are selected by the Committee or the Board,
and (ii) DERs, nonqualified options, bonus shares, restricted shares,
performance shares, performance units or, any combination of the foregoing to
consultants or members of the Board. The maximum number of Common Shares with
respect to which options may be granted to any otherwise eligible individual
under this Plan during any calendar year shall be 400,000 Common Shares, and the
maximum number of Common Shares with respect to which all other awards may be
granted to any otherwise eligible individual under this Plan during any calendar
year shall be 400,000, in each case, subject to adjustment as provided in
Paragraphs 12 and 14 hereof.
5. Duration of the Plan. The Plan shall terminate when all Common Shares
that may be made subject to awards under the Plan have been acquired or, in the
case of incentive options only, ten years from the effective date of this Plan,
if earlier, unless terminated earlier pursuant to Paragraph 23 hereof, and no
awards may be granted thereafter.
6. Restrictions on Incentive Options. The aggregate fair market value,
determined as of the date an incentive stock option is granted, of the Common
Shares with respect to which incentive options are exercisable for the first
time by an individual during any calendar year shall not exceed $100,000. If an
incentive option is granted pursuant to which the aggregate fair market value of
shares with respect to which it first becomes exercisable in any calendar year
by an individual exceeds the aforementioned $100,000 limitation, the portion of
such option which is in excess of the $100,000 limitation shall be treated as a
nonqualified option pursuant to Section 422(d)(1) of the Code. In the event that
an individual is eligible to participate in any other share option plan of the
Company or any parent or subsidiary of the Company which is also intended to
comply with the provisions of Section 422 of the Code, the $100,000 limitation
shall, to the extent provided under Section 422 of the Code, apply to the
aggregate number of shares for which incentive stock options may be granted
under all such plans.
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7. Terms and Conditions of Option Grants. Subject to Paragraphs 12 and
14 hereof, options granted under this Plan shall be evidenced by award
agreements in such form and containing such terms and conditions not
inconsistent with the Plan as the Board or the Committee shall approve from time
to time, which agreements shall evidence the following terms and conditions:
(a) Option Price. Subject to the conditions in Paragraph 7(b)
hereof, if applicable, the purchase price per share payable upon the
exercise of each incentive option granted hereunder ("option price")
shall be as determined by the Board or the Committee in its discretion,
and shall be at least 100% of the fair market value on the date of
grant. The option price per share payable upon exercise of each
nonqualified option granted hereunder shall be as determined by the
Board or the Committee in its discretion and shall be at least 85% of
the fair market value per share on the date of grant. The Board or the
Committee, in its discretion, also may (but need not) establish a
purchase price payable upon acquisition of a nonqualified option.
(b) 10% Shareholder. If any participant is on the date of grant
the owner of shares (as determined under Sections 422(b)(6) and 424(d)
of the Code) possessing more than 10% of the total combined voting power
of all classes of shares of the Company or any parent or subsidiary of
the Company, then the option price per share subject to such incentive
option shall not be less than 110% of the fair market value of one share
on the date of grant, and the term of the option shall not exceed five
years after the date of such grant.
(c) Number of Shares. Each award agreement shall specify the
number of Common Shares to which it pertains.
(d) Exercise. Subject to Paragraphs 12 and 14 hereof, each option
grant shall be exercisable for the full amount or for any part thereof
and at such intervals or in such installments as the Board or the
Committee may determine at the time it grants such option; provided,
however, that (i) no option grant shall be exercisable with respect to
any Common Share later than ten years after the date of such grant,
subject to Paragraph 7(b) hereof, and (ii) to the extent that an option
is subject to exercise over a specified period of time, at least 20% of
the total number of Common Shares subject to the option shall become
exercisable on or before each anniversary of the date of the grant of
the option.
(e) Notice of Exercise and Payment. Options shall be exercised by
the delivery of a written notice of exercise to the Company's Treasurer
or any other officer of the Company designated by the Board or the
Committee to accept such notices on its behalf, specifying the number of
Common Shares with respect to which the option is to be exercised,
accompanied by full payment for such shares, which shall include
applicable taxes, if any, in accordance with Paragraph 16. If said
shares are not at that time effectively registered under the Securities
Act of 1933, as amended ("1933 Act"), the holder shall include with such
notice a letter, in form and substance satisfactory to the Company,
confirming that the shares are being purchased for the holder's own
account for investment and not with a view to distribution. The option
price upon exercise of any
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option shall be payable to the Company in full either: (i) in cash or
its equivalent; (ii) subject to such terms, conditions and limitations
as the Committee may prescribe, by tendering shares previously acquired
by the participant exercising such option having an aggregate fair
market value at the time of exercise equal to the total option price
(provided that the shares which are tendered must have been held by such
Participant for at least six (6) months prior to their tender to satisfy
the option price), or (iii) by a combination of (i) and (ii). The
Committee also may allow cashless exercise as permitted by applicable
law, subject to applicable securities law restrictions, or by any other
means which the Committee determines to be consistent with the Plan's
purpose and applicable law, in all cases, subject to such terms,
conditions and limitations as the Committee may prescribe including the
establishment of a program (which need not be administered in a
nondiscriminatory or uniform manner) under which a third party may make
bona-fide loans on arm's-length terms to any or all optionees to assist
such optionees with the satisfaction of any or all of the obligations
that such optionees may have hereunder (including, without limitation, a
loan program under which the third party would advance the aggregate
option price to the optionee and be repaid with option shares or the
proceeds thereof).
(f) Termination of Service. Each award agreement shall contain
provisions for the termination of the options granted thereunder if the
optionee ceases for any reason to be an employee, consultant or trustee
of the Company or any subsidiary of the Company, as follows:
(i) if the optionee ceases to perform services for the
Company or any parent or subsidiary of the Company by reason of
resignation or other voluntary action of the optionee, the
optionee may, at any time within a period of 30 days after the
optionee ceases to perform services, exercise each of the
optionee's options to the extent that the option was exercisable
by the optionee on the date on which the optionee ceased to
perform services for the Company or any parent or subsidiary of
the Company;
(ii) if the optionee ceases to perform services for the
Company or any parent or subsidiary of the Company for any reason
other than cause (as specified in the applicable share option
agreement), retirement (as defined in (v) below), resignation or
other voluntary action before retirement, death or disability (as
defined in (iii) below), the optionee may, at any time within a
period of three months after the optionee ceases to perform
services, exercise each of his options to the extent that the
option was exercisable by the optionee on the date on which the
optionee ceases to perform services for the Company or any parent
or subsidiary of the Company;
(iii) if the optionee ceases to perform services for the
Company or any parent or subsidiary of the Company because of a
disability as defined by Section 22(e)(3) of the Code to mean the
inability of the optionee to engage in any substantial gainful
activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous
period of not less than 12 months, the
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optionee may, at any time within a period of one year after the
optionee ceases to perform services, exercise the option to the
extent that the option was exercisable by the optionee on the
date the optionee ceases to perform services;
(iv) if the optionee dies at a time when the optionee
might have exercised the option, then the optionee's estate,
personal representative or beneficiary to whom it has been
transferred by will or the laws of descent and distribution may
at any time within a period of one year after the optionee's
death exercise the option to the extent the optionee might have
exercised it at the time of his death;
(v) if the optionee ceases to perform services for the
Company or any parent or subsidiary of the Company because of the
optionee's retirement at or after attainment of age 60, the
optionee may exercise incentive options within three months, and
nonqualified stock options within a period of one year, after the
optionee's retirement date to the extent the optionee might have
exercised them at his retirement date; and
(vi) if the Company or any parent or subsidiary of the
Company determines that it no longer wishes to engage the
optionee's services and makes such determination based on cause
(as specified in the applicable share option agreement), any
outstanding options (whether or not vested) held by such optionee
shall immediately terminate and cease to be exercisable at the
time of such termination for cause.
(g) Rights as Shareholder. The optionee shall have no rights as a
shareholder with respect to any Common Shares covered by an option until
the date the option has been exercised and the full purchase price for
such shares has been received by the Company.
(h) Non-Transferability. No option shall be transferable by the
optionee otherwise than by will or the laws of descent and distribution,
and each option shall be exercisable during the optionee's lifetime only
by the optionee (or the optionee's guardian or legal representative).
Notwithstanding the preceding sentence, the Board or the Committee, in
their sole discretion, may permit the assignment or transfer of options
(other than incentive options except if permitted pursuant to Section
422 of the Code) and the exercise thereof by a person other than an
optionee, on such terms and conditions as the Committee may determine.
(i) Repurchase of Shares by the Company. Any Common Shares
purchased by an optionee upon exercise of an option may, in the
discretion of the Committee, be subject to repurchase by the Company if
and to the extent specifically set forth in the award agreement pursuant
to which Common Shares were purchased.
8. Grants to Non-Employee Trustees
(a) The Committee, in its discretion, may grant nonqualified
options to any non-employee trustee in accordance with this Paragraph 8.
The Board shall determine with respect to each trustee option (a) the
number of Common Shares subject to an
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option, (b) the purchase price per Common Share purchasable upon
exercise of the option, (c) the period during which an option may be
exercised and (d) whether an option shall become exercisable in
cumulative or non-cumulative installments and in part or in full at any
time. The terms of each non-employee trustee's option shall be set forth
in the award agreement relating to such option.
(b) Any option granted to a non-employee trustee shall terminate
on the non-employee trustee's termination of service in accordance with
the provisions of Paragraph 7(f)(i) through (vi) hereof. Non-employee
trustees' options shall otherwise be subject to the terms and conditions
of this Plan.
9. Restricted Share Awards and Bonus Share Awards. The Committee may, in
its discretion, grant restricted share awards and bonus share awards, subject to
the following terms and conditions and such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Number of Shares and Other Terms. The number of Common Shares
subject to a restricted share award or bonus share award, the
performance measures (if any) and restriction period applicable to a
restricted share award and the payments, if any, required of the
participant in order to receive the award shall be determined by the
Committee.
(b) Vesting and Forfeiture. The award agreement relating to a
restricted share award shall provide, in the manner determined by the
Committee, in its discretion, and subject to the provisions of this
Plan, (1) for the vesting of the Common Shares subject to such award (i)
if specified performance measures are satisfied or met during the
specified restriction period or (ii) if the holder of such award remains
continuously in the employment or service of the Company or a subsidiary
during the specified restricted period and (2) for the forfeiture of the
Common Shares subject to such award (i) if specified performance
measures are not satisfied or met during the specified restriction
period or (ii) if the holder of such award does not remain continuously
in the employment or service of the Company or a subsidiary during the
specified restriction period. Bonus share awards shall not be subject to
any performance measures or restriction periods.
(c) Share Certificates. The provisions of this Paragraph 9(c)
shall apply except as otherwise set forth in the award agreement
relating to restricted shares. During the restriction period, a
certificate or certificates representing a restricted share award shall
be registered in the holder's name and may bear a legend, in addition to
any legend which may be required pursuant to Paragraph 22, indicating
that the ownership of the Common Shares represented by such certificate
are subject to the restrictions, terms and conditions of this Plan and
the award agreement relating to the restricted share award. All such
certificates shall be deposited with the Company, together with share
powers or other instruments of assignment (including a power of
attorney), each endorsed in blank with a guarantee of signature if
deemed necessary or appropriate by the Company, which would permit
transfer to the Company of all or a portion of the Common Shares subject
to the restricted share award in the event such award is forfeited in
whole or in part. Upon termination of any applicable restriction period
(and the satisfaction or attainment of
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applicable performance measures), or upon the grant of a bonus share
award, in each case subject to the Company's right to require payment of
any taxes in accordance with Paragraph 16, a certificate or certificates
evidencing ownership of the requisite number of Common Shares shall be
delivered to the holder of such award. The foregoing to the contrary
notwithstanding, the Committee may, in its discretion, provide that a
participant's ownership of restricted shares prior to the lapse of the
restriction period or any other applicable restrictions shall, in lieu
of such certificates, be evidenced by a "book entry" (i.e., a
computerized or manual entry) in the records of the Company or its
designated agent in the name of the participant who has received such
award. Such records of the Company or such agent shall, absent manifest
error, be binding on all participants who have been awarded restricted
share awards. The holding of restricted shares by the Company, or the
use of book entries to evidence the ownership of restricted shares, in
accordance with this Paragraph 9(c), shall not affect the rights of
participants as owners of the restricted shares awarded to them, nor
affect the restrictions applicable to such shares under the award
agreement or the Plan, including, without limitation, the restriction
period.
(d) Rights with Respect to Restricted Share Awards. Unless
otherwise set forth in the award agreement relating to a restricted
share award, and subject to the terms and conditions of a restricted
share award, the holder of such award shall have all rights as a
shareholder of the Company, including, but not limited to, voting
rights, the right to receive dividends and the right to participate in
any capital adjustment applicable to all holders of Common Shares;
provided, however, that a distribution with respect to Common Shares,
other than a distribution in cash, shall be deposited with the Company
and shall be subject to the same restrictions as the Common Shares with
respect to which such distribution was made.
(e) Termination of Employment or Service. Subject to Paragraph 13
and unless otherwise set forth in the award agreement relating to a
restricted share award, if the employment or service with the Company or
a subsidiary of the Company of the holder of such award terminates, the
portion of such award which is subject to a restriction period shall
terminate as of the effective date of such holder's termination of
employment or service and shall be forfeited and such portion shall be
canceled by the Company.
(f) Section 83(b) Election. If the holder of a restricted share
award makes an election under Section 83(b) of the Code, or any
successor section thereto, to be taxed with respect to a restricted
share award as of the date of transfer of the restricted shares rather
than as of the date or dates upon which such holder would otherwise be
taxable under Section 83(a) of the Code, such holder shall deliver a
copy of such election to the Company immediately after filing such
election with the Internal Revenue Service. Neither the Company nor a
subsidiary shall have any liability or responsibility relating to or
arising out of the filing or not filing of any such election or any
defects in its construction.
10. Performance Share and Performance Unit Awards.
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(a) Performance Share and Performance Unit Awards. The Committee
may, in its discretion, grant performance share awards and/or
performance unit awards to such eligible persons as may be selected by
the Committee. The entitlements of a participant with respect to his or
her outstanding performance share and/ or performance unit awards shall
be reflected by a bookkeeping entry in the records of the Company,
unless otherwise provided by the award agreement.
(b) Terms of Performance Share and Performance Unit Awards.
Performance share and performance unit awards shall be subject to the
following terms and conditions and shall contain such additional terms
and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
(i) Number of Performance Shares or Units and Performance
Measures or Other Conditions. The number of performance shares or
performance units subject to any award and the performance
measures, other terms and conditions to which the award is
subject, and/or performance period applicable to such award shall
be determined by the Committee.
(ii) Vesting and Forfeiture. The award agreement relating
to a performance share or performance unit award shall provide,
in the manner determined by the Committee, in its discretion, and
subject to the provisions of this Plan, for the vesting of such
award, if specified performance measures are satisfied or met
during the specified performance period, or the other conditions
applicable to such award are met, and for the forfeiture of such
award, if specified performance measures are not satisfied or met
during the specified performance period or other conditions
applicable to such award are not met.
(iii) Settlement of Vested Performance Share or
Performance Unit Awards. The award agreement relating to a
performance share or performance unit award (1) shall specify
whether such award may be settled in Common Shares (including
shares of restricted shares) or cash or a combination thereof and
(2) may specify whether the holder thereof shall be entitled to
receive, on a current or deferred basis, Dividend Equivalent
Rights, and, if determined by the Committee, interest on any
deferred Dividend Equivalent Rights, with respect to the number
of Common Shares subject to such award. If a performance share or
performance unit award is settled in shares of restricted shares,
a certificate or certificates representing such restricted shares
shall be issued in accordance with Paragraph 9(c) and the holder
of such restricted shares shall have such rights of a shareholder
of the Company as determined pursuant to Paragraph 9(d). Prior to
the settlement of a performance share or performance unit award
in Common Shares, including restricted shares, the holder of such
award shall have no rights as a shareholder of the Company with
respect to the Common Shares subject to such award.
(iv) Termination of Employment or Service. Subject to
Paragraph 13 and unless otherwise set forth in the award
agreement relating to a performance share or performance unit
award, if the employment or service with the Company of the
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holder of such award terminates, the portion of such award which
is subject to a performance period or other conditions applicable
to the award which have not been met on the effective date of
such holder's termination of employment or service shall be
forfeited and such portion shall be canceled by the Company.
(c) Non-Transferability of Performance Shares and Performance
Units. No performance share or performance unit shall be transferable
other than (i) by will, the laws of descent and distribution or pursuant
to beneficiary designation procedures approved by the Company or (ii) as
otherwise set forth in the award agreement relating to performance share
or performance unit. Each performance share or performance unit may be
exercised or settled during the participant's lifetime only by the
holder or the holder's legal representative or similar person. Except as
permitted by the second preceding sentence, no performance share or
performance unit may be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation
of law or otherwise) or be subject to execution, attachment or similar
process, and any attempt to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of such performance share or
performance unit shall be null and void and of no force or effect.
11. Deferrals. Notwithstanding anything in this Plan to the contrary,
the Committee may permit or require a participant to defer such participant's
receipt of the payment of cash or the delivery of Common Shares that would
otherwise be due to such participant by virtue of the exercise of an option, the
grant of bonus shares, the lapse or waiver of the period of restriction or other
restrictions with respect to restricted shares, the satisfaction of any
requirements or goals with respect to performance shares or performance units,
the receipt of any dividends with respect to restricted share awards or other
awards hereunder or the receipt of DERs hereunder. If any such deferral election
is permitted or required, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals.
12. Share Dividends; Share Splits; Share Combinations;
Recapitalizations. Adjustment shall be made in the maximum number and kind of
Common Shares subject to the Plan and the maximum number and kind that may be
granted under awards pursuant to Paragraph 4 and in the number, kind and price
of shares or units covered by any outstanding awards hereunder, and the
performance measures of each outstanding restricted share award, performance
share award, performance unit award, or DER as may be determined to be
appropriate and equitable by the Board or the Committee, in its sole discretion,
to prevent dilution or enlargement of rights intended to be made available under
the Plan, or as otherwise necessary to reflect any change specified in this
Paragraph 12 to give effect to any share dividends, share splits, reverse share
splits, share combinations, reclassifications, recapitalizations and other
similar changes in the capital structure of the Company after the date such
award is granted. The decision of the Board or the Committee regarding any such
adjustment shall be final, binding and conclusive.
13. Acceleration of Exercisability Under Certain Circumstances. Upon the
occurrence of any of the events listed below, all outstanding options held by
all participants shall become immediately exercisable in full and/or no longer
subject to any right of the Company (or any designee) to repurchase shares
purchased pursuant thereto. Any outstanding restricted share
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awards, performance shares and performance units shall, as provided by the
Committee in its discretion in the respective applicable award agreement, be
subject to such terms and conditions of such respective award agreements as may
be determined by the Committee therein. The events are:
(a) delivery of written notice of a shareholders' meeting to the
shareholders of the Company announcing a shareholders' meeting at which
the shareholders will consider a proposed acquisition of the Company by
merger or other combination, a proposed sale of substantially all the
Company's assets or similar proposed transaction or a reorganization of
the Company; or
(b) commencement (within the meaning of Rule 14d-2 as promulgated
under the Exchange Act) of a "tender offer" for Common Shares subject to
Section 14(d) of the Exchange Act, other than a self-tender by the
Company.
14. Merger; Sale of Assets; Dissolution. In the event of a change of the
Common Shares of the Company resulting from a merger or similar reorganization
as to which the Company is the surviving corporation, the number and kind of
shares or units which thereafter may be subject to awards and sold under the
Plan and the number and kind of shares or units then subject to awards granted
hereunder and the price per share thereof (if any) shall be appropriately
adjusted in such manner as the Board or the Committee may deem equitable to
prevent substantial dilution or enlargement of the rights available or granted
hereunder. Except as otherwise determined by the Board or the Committee, a
merger or a similar reorganization in which the Company does not survive, a
liquidation or distribution of the Company, or a sale of all or substantially
all of the stock or assets of the Company, shall cause every option outstanding
hereunder to terminate, to the extent not then exercised, unless any surviving
entity agrees to assume the obligations hereunder.
15. Terms and Conditions of DERs. A Dividend Equivalent Right ("DER") is
an award entitling the recipient to receive credits based on cash dividends that
would be paid on the Common Shares specified in the DER (or other award to which
it relates) if such shares were held by the recipient. A DER may be granted
hereunder to any participant as a component of another award granted hereunder
or as a freestanding award. The terms and conditions of DERs shall be specified
in the grant. The performance measures (if any) applicable to a DER shall be
determined by the Committee. DERs credited to a participant may be paid
currently or may be deemed to be reinvested in Common Shares. 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. Alternately, DERs may be deferred pursuant to the
provisions of Paragraph 11 of the Plan. DERs may be settled in cash or shares or
a combination thereof, in a single installment or multiple installments. A DER
granted as a component of another award hereunder may provide that such DER
shall be settled upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such DER shall expire or be
forfeited or annulled under the same conditions as such other award. A DER
granted as a component of another award hereunder may also contain terms and
conditions different from such other award.
16. Tax Withholding.
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(a) Tax Withholding. The Company and/or any subsidiary shall have
the power and the right to deduct or withhold, or require a participant
to remit to the Company, an amount sufficient, or take whatever other
actions are necessary and proper to satisfy, Federal, state, and local
taxes, domestic or foreign, required by law or regulation to be withheld
or paid with respect to any taxable event arising as a result of the
Plan. Each participant shall (and in no event shall Common Shares be
delivered to such participant with respect to an award until), no later
than the date as of which the value of the award first becomes
includible in the gross income of the participant for income or
employment tax purposes, pay to the Company in cash, or make
arrangements satisfactory to the Company, as determined in the
Committee's discretion, regarding payment to the Company of, any taxes
of any kind required by law to be withheld with respect to the Common
Shares or other property subject to such award, and the Company and any
subsidiary shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to such
participant.
(b) Satisfaction of Withholding in Shares. With respect to
withholding required upon the exercise of options, upon the lapse of
restrictions on restricted shares, or upon any other taxable event
arising as a result of awards granted hereunder, the Committee may
permit a participant to elect, subject to the approval of the Committee,
to satisfy the withholding requirement, in whole or in part, (a) by
having the Company withhold shares otherwise deliverable to such
participant pursuant to such award having a fair market value, as
determined by the Committee, on the date the tax is to be determined
equal to the minimum statutory total tax which could be imposed on the
transaction, and/or (b) by tendering to the Company Common Shares owned
by such participant and acquired more than six (6) months prior to such
tender in full or partial satisfaction of such tax obligations, based on
the fair market value of the Common Shares, as determined by the
Committee, on the date the tax is to be determined. All such elections
shall be irrevocable, made in writing, signed by the participant, and
shall be subject to any restrictions or limitations that the Committee,
in its sole discretion, deems appropriate.
(c) Special Obligations as to Incentive Options. The Committee
may require a participant to give prompt written notice to the Company
concerning any disposition of Common Shares received upon the exercise
of an incentive option within: (i) two (2) years from the date of
granting such incentive option to such participant or (ii) one (1) year
from the transfer of such Common Shares to such participant or (iii)
such other period as the Committee may from time to time determine. The
Committee may direct that a participant with respect to an incentive
option undertake in the applicable award agreement to give such written
notice described in the preceding sentence, at such time and containing
such information as the Committee may prescribe, and/or that the
certificates evidencing Common Shares acquired by exercise of an
incentive option refer to such requirement to give such notice.
17. Rights as Shareholder. No person shall have any right as a
shareholder of the Company with respect to any Common Shares or other equity
security of the Company which is subject to an award hereunder unless and until
such person becomes a shareholder of record with respect to such Common Shares
or equity security.
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18. Loans. The Company may, in the discretion of the Committee, extend
one or more loans to participants in connection with the exercise or receipt of
an award granted to any such participant. The terms and conditions of any such
loan shall be established by the Committee.
19. Plan Unfunded. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the issuance of Common Shares or the payment of
cash upon exercise or payment of any award. . The Company may, but shall not be
required to, establish a rabbi trust pursuant to Rev. Proc. 92-64, 1992-2 C.B.
422, promulgated by the Internal Revenue Service or otherwise, whereby amounts
which are deferred pursuant to Paragraph 11 of this Plan will be held in trust,
subject to the claims of the Company's creditors in the event of the Company's
insolvency, until paid to the participant under the terms of the Plan.
20. Award Agreements. Each award shall be evidenced by an award
agreement, which shall be executed by the Company and the participant to whom
such award has been granted, unless the award agreement provides otherwise; two
or more awards granted to a single participant may, however, be combined in a
single award agreement. An award agreement shall not be a precondition to the
granting of an award; no person shall have any rights under any award, however,
unless and until the participant to whom the award shall have been granted (i)
shall have executed and delivered to the Company an award agreement or other
instrument evidencing the award, unless such award agreement provides otherwise,
and (ii) has otherwise complied with the applicable terms and conditions of the
award. The Committee shall prescribe the form of all award agreements, and,
subject to the terms and conditions of the Plan, shall determine the content of
all award agreements. Any award agreement may be supplemented or amended in
writing from time to time as approved by the Committee; provided that the terms
and conditions of any such award agreement as supplemented or amended are not
inconsistent with the provisions of the Plan.
21. Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below. All other terms which are defined throughout
the Plan shall have their defined meanings whenever used in the Plan.
(a) The term "award agreement" means an agreement entered into by
the Company and a participant setting forth the terms and provisions
applicable to awards granted to such participant under the Plan.
(b) The term "bonus shares" means Common Shares which are not
subject to a restriction period or performance measures.
(c) The term "bonus share award" means an award of bonus shares
under this Plan.
(d) The term "consultant" means an independent contractor who
performs services for the Company or a subsidiary in a capacity other
than as an employee or a member of the Board.
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(e) The term "DERs" or "dividend equivalent rights" means awards
granted pursuant to Paragraph 15 hereof.
(f) The term "employee" means any officer or employee of the
Company or a subsidiary whom the Company or subsidiary classifies as an
employee for payroll tax purposes (regardless of whether or not that
designation is correct). Trustees of the Company who are employed by the
Company or a Subsidiary shall be considered employees under the Plan.
(g) The term "fair market value" means the fair market value of a
Common Share as determined by the Board in its sole discretion by such
reasonable valuation method as the Committee shall, in its discretion,
select and apply in good faith as of a given date; provided, however,
that for purposes of Paragraphs 7(a) and (b), such fair market value
shall be determined subject to Section 422(c)(7) of the Code; and
provided further, that (i) if the shares are admitted to trading on a
national securities exchange, fair market value on any date shall be the
last sale price reported for the shares on such exchange on such date or
on the last date preceding such date on which a sale was reported or
(ii) if the shares are admitted to trading on the National Association
of Securities Dealers ("NASDAQ") Stock Market, fair market value on any
date shall be the last sale price reported for the shares on the NASDAQ
Stock Market on such date or on the last day preceding such date on
which a sale was reported.
(h) The term "option," unless otherwise indicated, means either
an incentive option or a nonqualified option.
(i) The term "option price" means the price at which a Common
Share may be purchased by a participant pursuant to an option.
(j) The term "optionee" means an employee, consultant or trustee
of the Company to whom an option is granted under the Plan.
(k) The term "parent" shall have, for the purpose of this Plan,
the meaning ascribed to it under Section 424(e) of the Code.
(l) The term "participant" means an employee, consultant or
trustee of the Company to whom an award is granted under the Plan.
(m) The term "performance measures" means the criteria and
objectives that may be established by the Committee, which, if
established, shall be satisfied or met (i) as a condition to the
exercisability of all or a portion of an option, or (ii) during the
applicable restriction period or performance period as a condition to
the holder's receipt, in the case of a restricted share award, of the
Common Shares subject to such award, or, in the case of a performance
share award, performance unit award or DER, of payment with respect to
such award or DER. If the Committee desires, in its sole discretion,
that compensation payable pursuant to an award subject to performance
measures be "qualified performance-based compensation" within the
meaning of section 162(m) of the Code, such criteria and objectives
shall include one or more of the following: the attainment by a Common
Share of a specified fair market value for a specified period of
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time, earnings per share, return to shareholders (including dividends),
return on equity, net income or earnings (before or after taxes),
revenues, market share, cash flows or cost reduction goals, or any
combination of the foregoing. Performance goals of awards may relate to
the performance of the entire Company or a subsidiary, any of their
respective divisions, units or offices, an individual participant or any
combination of the foregoing. If the Committee desires, in its sole
discretion, that compensation payable pursuant to an award subject to
performance measures be "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code, the performance
measures shall be established by the Committee no later than the end of
the first quarter of the performance period or restriction period, as
applicable (or such other time designated by the Internal Revenue
Service), and the Committee shall determine the extent to which any such
pre-established performance goals and/or other terms and conditions of
such award are attained or not attained following the end of the
performance period and certify such determination in writing in order to
qualify such awards as performance-based under Section 162(m) of the
Code. The Committee shall have the discretion to adjust the
determinations of the degree of attainment of the pre-established
performance goals based on the above-listed performance criteria;
provided, however, that awards which the Committee determines are
designed to qualify as performance-based under Section 162(m) of the
Code, and which are held by an employee, may not be adjusted upward (the
Committee shall retain the discretion to adjust such awards downward).
(n) The term "performance period" means any period designated by
the Committee during which the performance measures applicable to a
restricted share award, performance share award, performance unit award
or DER are measured.
(o) The term "performance share" or "performance unit" means a
right, contingent upon the attainment of specified performance measures
within a specified performance period, and / or the satisfaction of
other terms and conditions determined by the Committee when the award is
granted and set forth in the award agreement, to receive one Common
Share, which may be restricted share, or in lieu thereof, the fair
market value of such performance share or performance unit in cash.
(p) The term "performance share award" or "performance unit
award" means an award of performance shares or performance units, as the
case may be, under the Plan.
(q) The term "restricted shares" means Common Shares which are
subject to a restriction period.
(r) The term "restricted share award" means an award of
restricted shares under this Plan.
(s) The term "restriction period" means shall mean any period
designated by the Committee during which the Common Shares subject to a
restricted share award may not be sold, transferred, assigned, pledged,
hypothecated or otherwise encumbered or disposed of, except as provided
in this Plan or the award agreement relating to such award.
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(t) The term "subsidiary" shall have, for purposes of this Plan,
the meaning ascribed to it under Section 424(f) of the Code and
regulations promulgated thereunder.
(u) The term "trustee" means a member of the Company's Board.
22. Restrictions on Shares. Each award made hereunder shall be subject
to the requirement that if at any time the Company determines that the listing,
registration or qualification of the Common Shares subject to such award upon
any securities exchange or under any law, or the consent or approval of any
governmental body, or the taking of any other action is necessary or desirable
as a condition of, or in connection with, the delivery of shares thereunder,
such shares shall not be delivered unless such listing, registration,
qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company. The Company may
require that certificates evidencing Common Shares delivered pursuant to any
award made hereunder bear a legend indicating that the sale, transfer or other
disposition thereof by the holder is prohibited except in compliance with the
1933 Act and the rules and regulations thereunder.
23. Termination or Amendment of Plan. The Board may from time to time,
with respect to any shares at the time not subject to awards, suspend or
terminate the Plan or amend or revise the terms of the Plan; provided that any
amendment of the Plan shall be approved by shareholders representing a majority
of the outstanding shares of capital stock of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable laws of the State of Maryland, voting as a single class, to the
extent that such shareholder approval is necessary to comply with applicable
provisions of the Code, rules promulgated pursuant to Section 16 of the Exchange
Act, applicable state law, or NASD or exchange listing requirements.
No amendment, suspension or termination of the Plan shall, without the
consent of any affected participant, alter or impair any rights or obligations
under any award theretofore granted to such participant under the Plan.
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