EXHIBIT 10.9
EMPLOYEE AND TRUST MANAGER INCENTIVE SHARE PLAN
OF
HARTMAN COMMERCIAL PROPERTIES REIT
1. PURPOSE OF THE PLAN AND DEFINITIONS
1.1 Purpose. The purposes of this Employee and Trust Manager
Incentive Share Plan (the "Plan") of Hartman Commercial Properties REIT (the
"Trust") are to:
(a) furnish incentive to individuals chosen to receive
share-based awards because they are considered capable of responding by
improving operations and increasing profits;
(b) encourage selected persons to accept or continue
employment with the Trust; and
(c) increase the interest of Trust Managers in the Trust's
welfare through their participation in the growth in value of the
Trust's Shares.
To accomplish these purposes, this Plan provides a means whereby
Employees, Trust Managers and other enumerated persons may receive Awards.
1.2 Definitions. For purposes of this Plan, the following terms have
the following meanings:
"Affiliate" means a parent or subsidiary entity, to be interpreted in
accordance with the comparable terms "parent" and "subsidiary" corporation in
the applicable provisions (currently Section 424) of the Code at the time this
definition is being applied.
"Award" means any award under this Plan, including any grant of Options,
Restricted Shares, Share Appreciation Rights, Dividend Equivalent Rights or
Trust Manager Shares.
"Award Agreement" means, with respect to each Award, the written
agreement executed by the Trust and the Participant or other written document
approved by the Committee setting forth the terms and conditions of the Award.
"Board" means the Board of Trust Managers of the Trust.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Commission" means the Securities and Exchange Commission and any
successor agency.
"Committee" has the meaning given it in Section 4.1.
"Common Shares" or "Shares" means common shares of beneficial interest
of the Trust, $.001 par value per share.
"Declaration of Trust" means the then operative declaration of trust
adopted by the shareholders of the Trust.
"Dividend Equivalent Right" means an Award of rights pursuant to Section
9.
"Effective Date" has the meaning given it in Section 19.
"Employee" has the meaning ascribed to it for purposes of Section
3401(c) of the Code and the Treasury Regulations adopted under that Section, and
it includes an officer or a Trust Manager who is also an employee of the Trust.
"Employment Termination" means that a Participant has ceased, for any
reason and with or without cause, to be an Employee or Trust Manager of, or a
consultant to, the Trust or any Affiliate of the Trust. However, the term
"Employment Termination" shall not include a Non-Employee Trust Manager ceasing
to be a Trust Manager or a transfer of a Participant from the Trust to an
Affiliate or vice versa, or from one Affiliate to another, or a leave of absence
duly authorized by the Trust unless the Committee has provided otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Exercise Notice" has the meaning given it in Section 6.1(h).
"Executive Officer" means an eligible person who, as of the earlier of:
(i) the date an Award is vested, (ii) the date restrictions with respect to an
Award lapse or (iii) the date a payment is made pursuant to an Award Agreement,
is a "covered employee" as defined in Section 1.162-27(c)(2) of the Treasury
Regulations and any successor Treasury Regulation adopted under Section 162(m).
"Grant Date" has the meaning given it in Section 6.1(d).
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"Incentive Share Option" or "ISO" means any Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code, and any successor provision.
"Non-Employee Trust Manager" means a person who qualifies as a
"Non-Employee Director" as defined in Rule 16b-3 and an "outside director" as
defined in Treasury Regulation Section 1.162-27(e)(3) and any successor Treasury
Regulation.
"Non-Qualified Share Option" or "NQO" means any Option that is not an
Incentive Share Option.
"Option" means an option granted under Section 5.
"Participant" means an eligible person who is granted an Award.
"Plan" means this Employee and Trust Manager Incentive Share Plan.
"Restricted Shares" means an Award granted under Section 7.
"Retainer" has the meaning given it in Section 10.
"Rule 16b-3" means Rule 16b-3 adopted under Section 16(b) of the
Exchange Act or any successor rule, as it may be amended from time to time, and
references to paragraphs or clauses of Rules 16b-3 refer to the corresponding
paragraphs or clauses of Rule 16b-3 as it exists at the Effective Date or the
comparable paragraph or clause of Rule 16b-3 or successor rule, as that
paragraph or clause may thereafter be amended.
"Section 16(b)" means Section 16(b) under the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"Share Appreciation Right" means an Award granted under Section 8.
"Ten Percent Shareholder" means any person who, at the time this
definition is being applied, owns, directly or indirectly (or is treated as
owning by reason of attribution rules currently set forth in Code Section 424 or
any successor statute), shares of the Trust constituting more than 10% of the
total combined voting power of all classes of outstanding shares of the Trust or
of any Affiliate of the Trust.
"Trust" has the meaning given it in Section 1.1.
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"Trust Manager" means a person elected or appointed and serving as a
trust manager of the Trust in accordance with the Declaration of Trust and the
Texas Real Estate Investment Trust Act.
"Trust Manager" Option has the meaning given it in Section 5.3.
"Trust Manager Shares" means Shares issued to a Non-Employee Trust
Manager under Section 10.
2. ELIGIBLE PERSONS
Every person who, at or as of the Grant Date, is (a) a full-time
Employee of the Trust or of an Affiliate of the Trust, (b) a Trust Manager of
the Trust or a trust manager of an Affiliate of the Trust, or (c) someone whom
the Committee designates as eligible for an Award (other than for Incentive
Share Options) because the person (i) performs bona fide consulting or advisory
services for the Trust or an Affiliate of the Trust pursuant to a written
agreement (other than services in connection with the offer or sale of
securities in a capital-raising transaction), and (ii) has a direct and
significant effect on the financial development of the Trust or an Affiliate of
the Trust, shall be eligible to receive Awards hereunder. Trust Managers of the
Trust who are not full-time Employees are only eligible to receive Trust Manager
Options under Section 5.3 and Trust Manager Shares under Section 10.
3. SHARES SUBJECT TO THIS PLAN
The total number of Shares that may be issued under Awards is an amount
of Shares equal to 5% of the Trust's outstanding Shares on a fully-diluted
basis, with such amount of Shares not to exceed 5,000,000. Such Shares may
consist, in whole or in part, of authorized and unissued Common Shares or Shares
reacquired in private transactions or open market purchases, but all Shares
issued under the Plan, regardless of their source, shall be counted against the
Share limitation. Any Shares that are retained by the Trust upon exercise or
settlement of an Award in order to satisfy the exercise price in whole or in
part, or to pay withholding taxes due with respect to such exercise or
settlement, shall be treated as issued to the Participant and will thereafter
not be available under the Plan. Any Shares subject to unexercised portions of
Options granted under the Plan which shall have been terminated, been cancelled
or expired may again be subject to Options hereunder. The number of Shares
reserved for issuance under this Plan is subject to adjustment in accordance
with the provisions for adjustment in this Plan. Notwithstanding the foregoing,
no downward adjustment in the number of Shares available for issuance under this
Plan will be made as a result of decreases in the number Shares outstanding that
do not constitute changes in the capitalization of the Company that affect all
shareholders.
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4. ADMINISTRATION
4.1 Committee. This Plan shall be administered by a committee (the
"Committee") appointed by the Board. The Committee shall be constituted so that,
if and so long as Shares are registered under Section 12 of the Exchange Act,
each member of the Committee shall be a Non-Employee Trust Manager. The number
of persons that shall constitute the Committee shall be determined from time to
time by a majority of all the members of the Board; provided, however, the
Committee shall not consist of fewer than two persons. Notwithstanding the
foregoing, this Plan shall be administered by the Board prior to the formation
of the Committee and during that period, the Board shall have all authority
granted to the Committee under this Plan.
4.2 Duration, Removal, Etc. The members of the Committee shall serve
at the pleasure of the Board, which shall have the power, at any time and from
time to time, to remove members from or add members to the Committee. Removal
from the Committee may be with or without cause. Any individual serving as a
member of the Committee shall have the right to resign from the Committee by
giving at least three days' prior written notice to the Board. The Board, and
not the remaining members of the Committee, shall have the power and authority
to fill vacancies on the Committee, however caused. The Board shall promptly
fill any vacancy that causes the number of members of the Committee to be fewer
than two or, if and so long as Shares are registered under Section 12 of the
Exchange Act, any other minimum number that Rule 16b-3 promulgated under the
Exchange Act may require from time to time (unless the Board expressly
determines not to have Awards under the Plan comply with Rule 16b-3).
4.3 Meetings and Actions of Committee. The Board shall designate
which of the Committee members shall be the chairperson of the Committee. If the
Board fails to designate a chairperson for the Committee, the members of the
Committee shall elect one of the Committee members as chairperson, who shall act
as chairperson until he or she ceases to be a member of the Committee or until
the Board (or the Committee) elects a new chairperson. The Committee shall hold
its meetings at those times and places as the chairperson of the Committee may
determine. At all meetings of the Committee, a quorum for the transaction of
business shall be required, and a quorum shall be deemed present if at least a
majority of the members of the Committee is present. At any meeting of the
Committee, each member shall have one vote. All decisions and determinations of
the Committee shall be made by the majority vote of all of its members present,
at a meeting at which a quorum is present, and a unanimous vote of the members
of the Committee shall be required if the Committee is comprised of only two
members; provided, however, that any decision or determination reduced to
writing and signed by all members of the Committee shall be as fully effective
as if it had been made at a meeting that was duly called and held. The Committee
may make any rules and regulations for the conduct of its business that are not
inconsistent with this Plan, the Declaration of Trust, the Bylaws of the Trust
or Rule 16b-3 (so long as it is applicable).
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4.4 Committee's Powers. Subject to the express provisions of this
Plan and Rule 16b-3 (so long as it is applicable), the Committee shall have the
authority, in its sole discretion: (a) to adopt, amend and rescind
administrative and interpretive rules and regulations relating to the Plan; (b)
to determine the eligible persons to whom, and the time or times at which,
Awards shall be granted; (c) to determine the number of Shares that shall be the
subject of each Award; (d) to determine the terms and provisions of each Award
Agreement (which need not be identical) and any amendments thereto, including
provisions defining or otherwise relating to (i) the period or periods and
extent of exercisability of any Option or Share Appreciation Right, (ii) the
extent to which the transferability of Shares issued or transferred pursuant to
any Award is restricted, (iii) the effect of Employment Termination on an Award,
and (iv) the effect of approved leaves of absence (consistent with any
applicable Treasury Regulations); (e) to accelerate the time of exercisability
of any Option, Dividend Equivalent Right or Share Appreciation Right; (f) to
construe the respective Award Agreements and the Plan; (g) to make
determinations of the fair market value of Shares; (h) to waive any provision,
condition or limitation set forth in an Award Agreement; (i) to delegate its
duties under the Plan to such agents as it may appoint from time to time,
provided, however, that the Committee may not delegate its duties with respect
to making or exercising discretion with respect to Awards to eligible persons if
such delegation would cause Awards not to qualify for the exemptions provided by
Rule 16b-3 (so long as it is applicable, and unless the Board expressly
determines not to have Awards under the Plan comply with Rule 16b-3); and (j) to
make all other determinations, perform all other acts and exercise all other
powers and authority necessary or advisable for administering the Plan,
including the delegation of those ministerial acts and responsibilities as the
Committee deems appropriate. Subject to Rule 16b-3 (so long as it is
applicable), the Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan, in any Award or in any Award Agreement
in the manner and to the extent it deems necessary or desirable to implement the
Plan, and the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to in
this Section 4.4 shall be final and conclusive. Notwithstanding any provision in
this Plan to the contrary, Awards will be made to Non-Employee Trust Managers
only under Sections 5.3 and 10 of this Plan. In addition, notwithstanding any
provision of this Plan to the contrary, the Committee may not in any manner
exercise discretion under the Plan with respect to any Awards made to
Non-Employee Trust Managers.
4.5 Term of Plan. No Awards shall be granted under this Plan after
10 years from the Effective Date of this Plan.
5. GRANT OF OPTIONS
5.1 Written Agreement. Each Option shall be evidenced by an Award
Agreement. The Award Agreement shall specify whether each Option it evidences is
a NQO or an ISO.
5.2 Annual $100,000 Limitation on ISOs. To the extent that the
aggregate "fair market value" of Shares with respect to which ISOs first become
exercisable by a Participant in
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any calendar year exceeds $100,000, taking into account ISOs granted under this
Plan and any other plan of the Trust or any Affiliate of the Trust, the Options
covering such additional Shares becoming exercisable in that year shall cease to
be ISOs and thereafter be NQOs. For this purpose, the "fair market value" of
Shares subject to Options shall be determined as of the date the Options were
granted. In reducing the number of Options treated as ISOs to meet this $100,000
limit, the most recently granted Options shall be reduced first.
5.3 Annual Grants to Non-Employee Trust Managers. On the last day of
each calendar year beginning with the last day of 1999, each Non-Employee Trust
Manager who is then a member of the Board shall automatically be granted a NQO
to purchase 1,000 Shares (each such Option is referred to herein as a "Trust
Manager Option"). The exercise price of Trust Manager Options shall be the fair
market value of the Shares subject to such Option on the date the Option is
granted. Each Trust Manager Option shall be fully exercisable upon the date of
grant and continuing, unless sooner terminated as provided in this Plan, for 10
years after the date it is granted. If, for any reason other than death or
permanent and total disability, a Non-Employee Trust Manager ceases to be a
member of the Board, each Trust Manager Option held by that Non-Employee Trust
Manager on the date that the Non-Employee Trust Manager ceases to be a member of
the Board may be exercised in whole or in part at any time within one year after
the date of such termination or until the expiration of the Trust Manager
Option, whichever is earlier. If a Non-Employee Trust Manager dies or becomes
permanently and totally disabled (within the meaning of Section 422(c)(6) of the
Code) while a member of the Board (or within the period that the Trust Manager
Options remain exercisable after the Non-Employee Trust Manager ceases to be a
member of the Board), each Trust Manager Option then held by that Non-Employee
Trust Manager may be exercised, in whole or in part, by the Non-Employee Trust
Manager, by the Non-Employee Trust Manager's personal representative or by the
person to whom the Non-Employee Trust Manager transferred the Trust Manager
Option by will or the laws of descent and distribution, at any time within two
years after the date of death or permanent and total disability of the
Non-Employee Trust Manager or until the expiration date of the Trust Manager
Option, whichever is earlier. Each Trust Manager Option shall be evidenced by an
Award Agreement.
6. CERTAIN TERMS AND CONDITIONS OF OPTIONS AND OTHER AWARDS
Each Option shall be designated as an ISO or a NQO and shall be subject
to the terms and conditions set forth in Section 6.1. Notwithstanding the
foregoing, the Committee may provide for different terms and conditions in any
Award Agreement or amendment thereto as provided in Section 4.4.
6.1 All Awards. All Options and other Awards shall be subject to the
following terms and conditions:
(a) Changes in Capital Structure. If the number of
outstanding Shares is increased by means of a share dividend payable in
Shares, a share split or other
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subdivision or by a reclassification of Shares, then, from and after the
record date for such dividend, subdivision or reclassification, the
number and class of Shares subject to this Plan (including without
limitation its Sections 3, 5.3 and 10) and each outstanding Award shall
be increased in proportion to such increase in outstanding Shares and
the then-applicable exercise price of each outstanding Award shall be
correspondingly decreased. If the number of outstanding Shares is
decreased by means of a share split or other subdivision or by a
reclassification of Shares, then, from and after the record date for
such split, subdivision or reclassification, the number and class of
Shares subject to this Plan (including without limitation its Sections
3, 5.3 and 10) and each outstanding Award shall be decreased in
proportion to such decrease in outstanding Shares and the
then-applicable exercise price of each outstanding Award shall be
correspondingly increased.
(b) Certain Corporate Transactions. This Section 6.1(b)
addresses the impact of certain corporate transactions on outstanding
Awards other than Awards granted to Non-Employee Trust Managers (except
to the extent provided in Section 6.1(c)) and other than transactions
requiring adjustments in accordance with Section 6.1(a). In the case of
any reclassification or change of outstanding Shares issuable upon
exercise of an outstanding Award or in the case of any consolidation or
merger of the Trust with or into another entity (other than a merger in
which the Trust is the surviving entity and which does not result in any
reclassification or change in the then-outstanding Shares) or in the
case of any sale or conveyance to another entity of the property of the
Trust as an entirety or substantially as an entirety, then, as a
condition of such reclassification, change, consolidation, merger, sale
or conveyance, the Trust or such successor or purchasing entity, as the
case may be, shall make lawful and adequate provision whereby the holder
of each outstanding Award shall thereafter have the right, on exercise
of such Award, to receive the kind and amount of securities, property
and/or cash receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of
securities issuable upon exercise of such Award immediately before such
reclassification, change, consolidation, merger, sale or conveyance.
Such provision shall include adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in
Section 6.1(a). Notwithstanding the foregoing, if such a transaction
occurs, in lieu of causing such rights to be substituted for outstanding
Awards, the Committee may, upon 20 days' prior written notice to
Participants in its sole discretion: (i) shorten the period during which
Awards are exercisable, provided they remain exercisable, to the extent
otherwise exercisable, for at least 20 days after the date the notice is
given, or (ii) cancel an Award upon payment to the Participant in cash,
with respect to each Award to the extent then exercisable, of an amount
which, in the sole discretion of the Committee, is determined to be
equivalent to the amount, if any, by which the fair market value (at the
effective time of the transaction) of the consideration that the
Participant would have received if the Award had been exercised before
the effective time exceeds the exercise price of the Award. The actions
described in this Section 6.1(b) may be taken without regard to any
resulting tax consequences to the
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Participant. The fourth sentence of this Section 6.1(b) shall not apply
to any Award held by a person then subject to Section 16(b) if such
Award has not been outstanding for at least six months.
(c) Special Rule For Non-Employee Trust Managers. In the
case of any of the transactions described in the second sentence of
Section 6.1(b), that second sentence and the third sentence, but not the
fourth sentence, of Section 6.1(b) shall apply to any outstanding
Options granted to Non-Employee Trust Managers under Section 5.3.
(d) Grant Date. Each Award Agreement shall specify the date
as of which it shall be effective (the "Grant Date").
(e) Fair Market Value. For purposes of this Plan, the fair
market value of Shares shall be determined as follows:
(i) If the Shares are listed on any established
stock exchange or a national market system, including, without
limitation, the Nasdaq National Market System, its fair market
value shall be the closing sales price for the Shares, or the
mean between the high bid and low asked prices if no sales were
reported, as quoted on such system or exchange (or, if the
Shares are listed on more than one exchange, then on the largest
such exchange) for the date the value is to be determined (or if
there are no sales or bids for such date, then for the last
preceding business day on which there were sales or bids), as
reported in The Wall Street Journal or similar publication.
(ii) If the Shares are regularly quoted by a
recognized securities dealer but selling prices are not
reported, or if there is no market for the Shares, its fair
market value shall be determined in good faith by the Committee,
with reference to the Trust's net worth, prospective earning
power, dividend-paying capacity and other relevant factors,
including the goodwill of the Trust, the economic outlook in the
Trust's industry, the Trust's position in the industry and its
management, and the values of stock of other enterprises in the
same or similar lines of business.
(f) Time of Exercise; Vesting. Awards may, in the sole
discretion of the Committee, be exercisable or may vest, and
restrictions may lapse, as the case may be, at such times and in such
amounts as may be specified by the Committee in the grant of the Award.
(g) Nonassignability of Rights. No Award that is a
derivative security (as defined in Rule 16a-1(c) under the Exchange Act)
shall be transferable other than with the consent of the Committee
(which consent will not be granted in the case of ISOs unless the
conditions for transfer of ISOs specified in the Code have been
satisfied) or by
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will or the laws of the descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of
ERISA. Awards requiring exercise shall be exercisable only by the
Participant, assignees that were approved by the Committee, executors,
administrators or beneficiaries of the Participant (who are the
permitted transferees hereunder), guardians or members of a committee
for an incompetent Participant, or similar persons duly authorized by
law to administer the estate or assets of a Participant.
(h) Notice and Payment. To the extent it is exercisable, an
Award shall be exercisable only by written or recorded electronic notice
of exercise, in the manner specified by the Committee from time to time,
delivered to the Trust or its designated agent during the term of the
Award (the "Exercise Notice"). The Exercise Notice shall: (x) state the
number of Shares with respect to which the Award is being exercised; (y)
be signed by the holder of the Award or by the person authorized to
exercise the Award pursuant to Section 6.1(g); and (z) include such
other information, instruments and documents as may be required to
satisfy any other condition to exercise set forth in the Award
Agreement. Except as provided below, payment in full, in cash or check,
shall be made for all Shares purchased at the time notice of exercise of
an Award is given to the Trust. The proceeds of any payment shall
constitute general funds of the Trust. At the time an Award is granted
or before it is exercised, the Committee, in the exercise of its sole
discretion, may authorize any one or more of the following additional
methods of payment:
(i) for all Participants other than officers and
Trust Managers, acceptance of each such Participant's full
recourse promissory note for some or all (to the extent
permitted by law) of the exercise price of the Shares being
acquired, payable on such terms and bearing such interest rate
as determined by the Committee, and secured in such manner, if
at all, as the Committee shall approve, including, without
limitation, by a security interest in the Shares which are the
subject of the Award or other securities;
(ii) for all Participants, delivery by each such
Participant of Shares already owned by such Participant for all
or part of the exercise price of the Award being exercised,
provided that the fair market value of such Shares is equal on
the date of exercise to the exercise price of the Award being
exercised, or such portion thereof as the Participant is
authorized to pay and elects to pay by delivery of such Shares;
(iii) for all Participants, surrender by each such
Participant, or withholding by the Trust from the Shares
issuable upon exercise of the Award, of a number of Shares
subject to the Award being exercised with a fair market value
equal to some or all of the exercise price of the Shares being
acquired, together
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with such documentation as the Committee and the broker, if
applicable, shall require; or
(iv) for all Participants, to the extent permitted by
applicable law, payment may be made pursuant to arrangements
with a brokerage firm under which that brokerage firm, on behalf
of a Participant, shall pay to the Trust the exercise price of
the Award being exercised (either as a loan to the Participant
or from the proceeds of the sale of Shares issued under that
Award), and the Trust shall promptly cause the Shares being
purchased under the Award to be delivered to the brokerage firm.
Such transactions shall be effected in accordance with the
procedures that the Committee may establish from time to time.
If the exercise price is satisfied in whole or in part by the
delivery of Shares pursuant to paragraph (ii) above, the
Committee may issue the Participant an additional Option, with
terms identical to those set forth in the option agreement
governing the exercised Option, except for the exercise price
which shall be the fair market value used for such delivery and
the number of Shares subject to such additional Option shall be
the number of Shares so delivered.
(i) Termination of Employment. Any Award or portion thereof
which has not vested on or before the date of a Participant's Employment
Termination shall expire on the date of such Employment Termination. As
to an Award or portion thereof that has vested by the time of Employment
Termination, the Committee shall establish, in respect of each Award
when granted, the effect of an Employment Termination on the rights and
benefits thereunder and in so doing may, but need not, make distinctions
based upon the cause of termination (such as retirement, death,
disability or other factors) or which party effected the termination
(the employer or the Employee). Notwithstanding any other provision in
this Plan or the Award Agreement, the Committee may decide in its
discretion at the time of any Employment Termination (or within a
reasonable time thereafter) to extend the exercise period of an Award
(but not beyond the period specified in Section 6.2(b) or 6.3(b), as
applicable) and not decrease the number of Shares covered by the Award
with respect to which the Award is exercisable or vested. A transfer of
a Participant from the Trust to an Affiliate or vice versa, or from one
Affiliate to another, or a leave of absence duly authorized by the
Trust, shall not be deemed an Employment Termination or a break in
continuous employment unless the Committee has provided otherwise.
(j) Death, Disability or Retirement. Any Award or portion
thereof which has not vested on or before the date of the Participant's
death, disability or retirement shall expire on the date of such
Participant's death, disability or retirement. As to an Award or portion
thereof that has vested by the date of death, disability or retirement
of the Participant, such Awards or portions thereof must be exercised
within two years of the date of the Participant's death, disability or
retirement by the Participant or a person authorized under this Plan to
exercise such Award.
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(k) Payment of Dividends Upon Exercise of Options. If
provided for in the Award Agreement relating to an Option, upon exercise
of the Option, the Participant shall be entitled to receive a cash
payment from the Trust equal to the amount of dividends that have been
paid from the Grant Date of the Option through the date of exercise of
the Option on that number of Common Shares that is equal to the number
of Common Shares being purchased upon exercise of such Option.
(l) Other Provisions. Each Award Agreement may contain such
other terms, provisions and conditions not inconsistent with this Plan,
as may be determined by the Committee, and each ISO granted under this
Plan shall include such provisions and conditions as are necessary to
qualify such Option as an "incentive stock option" within the meaning of
Section 422 of the Code, unless the Committee determines otherwise.
(m) Withholding and Employment Taxes. At the time of
exercise of an Award, the lapse of restrictions on an Award or a
disqualifying disposition of Shares issued under an ISO (within the
meaning of Section 6.3(c)), the Participant shall remit to the Trust in
cash all applicable federal and state withholding and employment taxes.
If and to the extent authorized and approved by the Committee in its
sole discretion, a Participant may elect, by means of a form of election
to be prescribed by the Committee, to have Shares which are acquired
upon exercise of an Award withheld by the Trust or tender other Shares
owned by the Participant to the Trust at the time that the amount of
such taxes is determined, in order to pay the amount of such tax
obligations, subject to such limitations as the Committee determines are
necessary or appropriate to comply with Rule 16b-3 in the case of
Participants who are subject to Section 16(b). For example, the
Committee may require that the election be irrevocable and that the
election not be made within six months of the acquisition of the
securities to be tendered to satisfy the tax withholding obligation
(except that this limitation shall not apply in the event that death or
disability of the Participant occurs before the expiration of the
six-month period). Any Shares so withheld or tendered shall be valued by
the Trust as of the date they are withheld or tendered. If Shares are
tendered to satisfy such withholding tax obligation, the Committee may
issue the Participant an additional Option, with terms identical to
those set forth in the option agreement governing the Option exercised,
except that the exercise price shall be the fair market value used by
the Trust in accepting the tender of Shares for such purpose and the
number of Shares subject to the additional Option shall be the number of
Shares tendered by the Participant.
6.2 Terms and Condition to Which Only NQOs Are Subject. Options
granted under this Plan which are designated as NQOs shall be subject to the
following terms and conditions:
(a) Exercise Price. The exercise price of a NQO shall be
determined by the Committee; provided, however, that the exercise price
of a NQO shall not be less than the fair market value of the Shares
subject to the Option on the Grant Date or, if required by
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applicable state securities laws in the case of a NQO granted to any Ten
Percent Shareholder, not less than 110% of such fair market value.
(b) Option Term. Unless an earlier expiration date is
specified by the Committee at the Grant Date, each NQO shall expire 10
years after the Grant Date or, if required by applicable state
securities laws in the case of a NQO granted to a Ten Percent
Shareholder, five years after the Grant Date.
6.3 Terms and Conditions to Which Only ISOs Are Subject. Options
granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions:
(a) Exercise Price. The exercise price of an ISO shall be
determined in accordance with the applicable provisions of the Code and
shall in no event be less than the fair market value of the Shares
covered by the ISO at the Grant Date; provided, however, that the
exercise price of an ISO granted to a Ten Percent Shareholder shall not
be less than 110% of such fair market value.
(b) Option Term. Unless an earlier expiration date is
specified by the Committee at the Grant Date, each ISO shall expire 10
years after the Grant Date; provided, however, that an ISO granted to a
Ten Percent Shareholder shall expire no later than five years after the
Grant Date.
(c) Disqualifying Dispositions. If Shares acquired by
exercise of an ISO are disposed of within two years after the Grant Date
or within one year after the transfer of the Shares to the optionee, the
holder of the Shares immediately before the disposition shall promptly
notify the Trust in writing of the date and terms of the disposition,
shall provide such other information regarding the disposition as the
Trust may reasonably require and shall pay the Trust any withholding and
employment taxes which the Trust in its sole discretion deems applicable
to the disposition.
(d) Termination of Employment. Notwithstanding Section
6.3(i), all vested ISOs must be exercised within three months of the
Employment Termination of the optionee unless such Employment
Termination is due to the employee being disabled (within the meaning of
Section 422 (c)(6) of the Code), in which case the ISO shall be
exercised within one year of the Employment Termination, notwithstanding
Section 6.3(j).
6.4 Surrender of Options. The Committee, acting in its sole
discretion, may include a provision in an Award Agreement allowing the optionee
to surrender the Option covered by the agreement, in whole or in part in lieu of
exercise in whole or in part, on any date that the fair market value of the
Shares subject to the Option exceeds the exercise price and the Option is
exercisable (to the extent being surrendered). The surrender shall be effected
by the delivery of the Award Agreement, together with a signed statement which
specifies the number of Shares as
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to which the optionee is surrendering the Option, together with a request for
such type of payment. Upon such surrender, the optionee shall receive (subject
to any limitations imposed by Rule 16b-3), at the election of the Committee,
payment in cash or Shares, or a combination of the two, equal to (or equal in
fair market value to) the excess of the fair market value of the Shares covered
by the portion of the Option being surrendered on the date of surrender over the
exercise price for such Shares. The Committee, acting in its sole discretion,
shall determine the form of payment, taking into account such factors as it
deems appropriate. To the extent necessary to satisfy Rule 16b-3, the Committee
may terminate an optionee's rights to receive payments in cash for fractional
Shares. Any Award Agreement providing for such surrender privilege shall also
incorporate such additional restrictions on the exercise or surrender of Options
as may be necessary to satisfy the conditions of Rule 16b-3.
7. RESTRICTED SHARES
Restricted Shares shall be subject to the following terms and
conditions:
7.1 Grant. The Committee may grant one or more Awards of Restricted
Shares to any Participant other than Non-Employee Trust Managers. Each Award of
Restricted Shares shall specify the number of Shares to be issued to the
Participant, the date of issuance and the restrictions imposed on the Shares
including the conditions of release or lapse of such restrictions. Unless the
Committee provides otherwise, the restrictions shall not lapse earlier than six
months after the date of the Award. Pending the lapse of restrictions,
certificates evidencing Restricted Shares shall bear a legend referring to the
restrictions and shall be held by the Trust. Prior to the issuance of any
Restricted Shares, the Participant receiving such Restricted Shares shall pay to
the Trust an amount of cash equal to, at a minimum, the par value per Restricted
Share multiplied by the number of Restricted Shares to be issued. Upon the
issuance of Restricted Shares, the Participant may be required to furnish such
additional documentation or other assurances as the Committee may require to
enforce restrictions applicable thereto.
7.2 Restrictions. Except as specifically provided elsewhere in this
Plan or the Award Agreement regarding Restricted Shares, Restricted Shares may
not be sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until the restrictions have
lapsed and the rights to the Shares have vested. The Committee may in its sole
discretion provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions, in whole or in part, based on service,
performance or such other factors or criteria as the Committee may determine.
7.3 Dividends. Unless otherwise determined by the Committee, cash
dividends with respect to Restricted Shares shall be paid to the recipient of
the Award of Restricted Shares on the normal dividend payment dates, and
dividends payable in Shares shall be paid in the form of Restricted Shares
having the same terms as the Restricted Shares upon which such dividend is paid.
Each Award Agreement for Awards of Restricted Shares shall specify whether and,
if so,
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the extent to which the Participant shall be obligated to return to the Trust
any cash dividends paid with respect to any Restricted Shares which are
subsequently forfeited.
7.4 Forfeiture of Restricted Shares. Except to the extent otherwise
provided in the governing Award Agreement, when a Participant's Employment
Termination occurs, the Participant shall automatically forfeit all Restricted
Shares still subject to restriction.
8. SHARE APPRECIATION RIGHTS
The Committee may grant Share Appreciation Rights to eligible persons
other than Non-Employee Trust Managers. A Share Appreciation Right shall entitle
its holder to receive from the Trust, at the time of exercise of the right, an
amount in cash equal to (or, at the Committee's discretion, Shares equal in fair
market value to) the excess of the fair market value (at the date of exercise)
of a Share over a specified price fixed by the Committee in the governing Award
Agreement multiplied by the number of Shares as to which the holder is
exercising the Share Appreciation Right. The specified price fixed by the
Committee shall not be less than the fair market value of the Shares at the date
of grant of the Share Appreciation Right. Share Appreciation Rights may be
granted in tandem with any previously or contemporaneously granted Option or
independent of any Option. The specified price of a tandem Share Appreciation
Right shall be the exercise price of the related Option. Any Share Appreciation
Rights granted in connection with an ISO shall contain such terms as may be
required to comply with Section 422 of the Code.
9. DIVIDEND EQUIVALENT RIGHTS
9.1 General. The Committee shall have the authority to grant
Dividend Equivalent Rights to Participants other than Non-Employee Trust
Managers upon such terms and conditions as it shall establish, subject in all
events to the following limitations and provisions of general application set
forth in this Plan. Each Dividend Equivalent Right shall entitle a holder to
receive, for a period of time to be determined by the Committee, a payment equal
to the quarterly dividend declared and paid by the Trust on one Common Share. If
the Dividend Equivalent Right relates to a specific Option, the period shall not
extend beyond the earliest of the date the Option is exercised, the date any
Share Appreciation Right related to the Option is exercised, or the expiration
date set forth in the Option.
9.2 Rights and Options. Each Dividend Equivalent Right may relate to
a specific Option granted under this Plan and may be granted to the optionee
either concurrently with the grant of such Option or at such later time as
determined by the Committee, or each Dividend Equivalent Right may be granted
independent of any Option.
9.3 Payments. The Committee shall determine at the time of grant
whether payment pursuant to a Dividend Equivalent Right shall be immediate or
deferred and if immediate, the Trust shall make payments pursuant to each
Dividend Equivalent Right concurrently with the
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payment of the quarterly dividend to holders of Common Shares. If deferred, the
payments shall not be made until a date or the occurrence of an event specified
by the Committee and then shall be made within 30 days after the occurrence of
the specified date or event, unless the Dividend Equivalent Right is forfeited
under the terms of the Plan or applicable Award Agreement. The Committee shall
also determine in its sole discretion whether any portion of any payment shall
be made in Common Shares.
9.4 Termination of Employment. In the event of Employment
Termination, any Dividend Equivalent Right held by such Participant on the date
of Employment Termination shall automatically be forfeited, unless otherwise
expressly provided by the Committee.
10. TRUST MANAGER SHARES
10.1 Election. The Trust intends to pay each Non-Employee Trust
Manager an annual fee in the amount set from time to time by the Board (the
"Retainer"). Each Non-Employee Trust Manager shall be entitled to receive his or
her Retainer exclusively in cash, exclusively in unrestricted Shares ("Trust
Manager Shares") or any portion in cash and Trust Manager Shares. Following the
approval of this Plan by the shareholders of the Trust, each Non-Employee Trust
Manager shall be given the opportunity, during the month in which the
Non-Employee Trust Manager first becomes a Non-Employee Trust Manager and during
each December thereafter, to elect among these choices for the balance of the
calendar year (in the case of the election made during the month the
Non-Employee Trust Manager first becomes a Non-Employee Trust Manager) and for
the ensuing calendar year (in the case of a subsequent election made during any
December). If the Non-Employee Trust Manager chooses to receive at least some of
his or her Retainer in Trust Manager Shares, the election shall also indicate
the percentage of the Retainer to be paid in Trust Manager Shares. If a
Non-Employee Trust Manager makes no election during his or her first opportunity
to make an election, the Non-Employee Trust Manager shall be assumed to have
elected to receive his or her entire Retainer in cash. If a Non-Employee Trust
Manager makes no election during any succeeding election month, the Non-Employee
Trust Manager shall be assumed to have remade the election then currently in
effect for that Non-Employee Trust Manager.
10.2 Issuance. The Trust shall make the first issuance of Trust
Manager Shares to electing Non-Employee Trust Managers on the first business day
following the last day of the full calendar quarter following the approval of
the Plan by the Trust's shareholders. Subsequent issuances of Trust Manager
Shares shall be made on the first business day of each subsequent calendar
quarter and shall be made to all persons who are Non-Employee Trust Managers on
that day except any Non-Employee Trust Manager whose Retainer is to be paid
entirely in cash. The number of Shares issuable to those Non-Employee Trust
Managers on the relevant date indicated above shall equal:
(% X R/4) / P
where:
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% = the percentage of the Non-Employee Trust Manager's
Retainer that the Non-Employee Trust Manager elected
or is deemed to have elected to receive in the form
of Trust Manager Shares, expressed as a decimal;
R = the Non-Employee Trust Manager's Retainer for the year
during which the issuance occurs;
P = the fair market value of Shares determined in accordance
with Section 6.1(e).
Trust Manager Shares shall not include any fractional Shares. Fractions shall be
rounded to the nearest whole Share (with one-half being rounded upward).
11. SECURITIES LAWS
Nothing in this Plan or in any Award or Award Agreement shall require
the Trust to issue any Shares with respect to any Award if, in the opinion of
counsel for the Trust, that issuance could constitute a violation of the
Securities Act, any other law or the rules of any applicable securities exchange
or securities association then in effect. As a condition to the grant or
exercise of any Award, the Trust may require the Participant (or, in the event
of the Participant's death, the Participant's legal representatives, heirs,
legatees or distributees) to provide written representations concerning the
Participant's (or such other person's) intentions with regard to the retention
or disposition of the Shares covered by the Award and written covenants as to
the manner of disposal of such Shares as may be necessary or useful to ensure
that the grant, exercise or disposition thereof will not violate the Securities
Act, any other law or any rule of any applicable securities exchange or
securities association then in effect. The Trust shall not be required to
register any Shares under the Securities Act or register or qualify any Shares
under any state or other securities laws.
12. EMPLOYMENT OF OTHER RELATIONSHIP
Nothing in this Plan or any Award shall in any way interfere with or
limit the right of the Trust or any of its Affiliates to terminate any
Participant's employment or status as a consultant or Trust Manager at any time,
nor confer upon any Participant any right to continue in the employ of, or as a
Trust Manager or consultant of, the Trust or any of its Affiliates.
13. AMENDMENT, SUSPENSION AND TERMINATION OF THIS PLAN
The Board may at any time amend, suspend or discontinue this Plan
without shareholder approval, except as required by applicable law; provided,
however, that no amendment, alteration, suspension or discontinuation shall be
made which would impair the rights of any
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Participant under any Award previously granted, without the Participant's
consent, except to conform this Plan and Awards granted to the requirements of
federal or other tax laws including without limitation Section 422 of the Code
and/or ERISA, or to the requirements of Rule 16b-3. The provisions of the Plan
relating to Awards for Non-Employee Trust Managers may not be amended more than
once each six months. The Board may choose to require that the Trust's
shareholders approve any amendment to this Plan in order to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or for any other reason.
14. LIABILITY AND INDEMNIFICATION OF THE COMMITTEE
No person constituting, or member of the group constituting, the
Committee shall be liable for any act or omission on such person's part,
including but not limited to the exercise of any power or discretion given to
such member under this Plan, except for those acts or omissions resulting from
such member's gross negligence or willful misconduct. The Trust shall indemnify
each present and future person constituting, or member of the group
constituting, the Committee against, and each person or member of the group
constituting the Committee shall be entitled without further act on his or her
part to indemnity from the Trust for, all expenses (including the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation) reasonably incurred by such person in
connection with or arising out of any action, suit or proceeding to the fullest
extent permitted by law and by the Declaration of Trust and Bylaws of the Trust.
15. GRANTS TO PERSONS EXPECTED TO BECOME EMPLOYEES OR TRUST MANAGERS
As allowed by this Plan, the Committee may grant Awards (other than
ISOs) to persons who are expected to become Employees, Trust Managers (other
than Non-Employee Trust Managers) or consultants of the Trust. The grant shall
be deemed to have been made upon the date the grantee becomes an Employee, Trust
Manager or consultant of the Trust without further action or approval by the
Committee.
16. CERTAIN TRUST MANAGERS AND OFFICERS
All Award Agreements for Participants who are subject to Section 16(b)
shall be deemed to include such additional limitations, terms and provisions as
Rule 16b-3 then requires unless the Committee determines that any such Award
should not comply with the requirements of Rule 16b-3. All Award Agreements
relating to ISOs shall be deemed to include such additional terms and provisions
as Section 422 of the Code or any successor provision thereto then requires
under the Committee expressly determines that such Award should not comply with
such requirements.
17. SECURITIES LAW LEGENDS
Certificates of Shares and Restricted Shares, when issued, may have the
following legend and statements of other applicable restrictions endorsed
thereon:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE LAWS. THE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE
SATISFACTORY TO THE ISSUER (WHICH, IN THE SOLE DISCRETION THE ISSUER,
MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH
OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
This legend shall not be required for any Shares issued pursuant to an effective
registration statement under the Securities Act.
18. SEVERABILITY
If any provision of this Plan is held to be illegal or invalid for any
reason, that illegality or invalidity shall not affect the remaining portions of
the Plan, but such provision shall be fully severable and the Plan shall be
construed and enforced as if the illegal or invalid provision had never been
included in this Plan. Such an illegal or invalid provision shall be replaced by
a revised provision that most nearly comports to the substance of the illegal or
invalid provision. If any of the terms or provisions of this Plan or any Award
Agreement conflict with the requirements of Rule 16b-3 (as those terms or
provisions are applied to eligible persons who are subject to Section 16(b) or
Section 422 of the Code (with respect to ISOs)), those conflicting terms or
provisions shall be deemed inoperative to the extent they conflict with those
requirements. With respect to ISOs, if this Plan does not contain any provision
required to be included in a plan under Section 422 of the Code, that provision
shall be deemed to be incorporated into this Plan with the same force and effect
as if it had been expressly set out in this Plan; provided, however, that, to
the extent any Option that is intended to qualify as an ISO cannot so qualify,
that Option (to that extent) shall be deemed to be a NQO for all purposes of the
Plan.
19. EFFECTIVE DATE AND PROCEDURAL HISTORY
This Plan was originally approved by the Trust's Board on March ___,
1999. It was approved in that form by the holders of the Trust's voting shares
on March ___, 1999 (the "Effective Date").
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