Exhibit 10.31
PUBLIC STORAGE
2007 EQUITY AND PERFORMANCE-BASED INCENTIVE COMPENSATION PLAN
FORM OF NON-QUALIFIED SHARE OPTION AGREEMENT
This Share Option Agreement (the "Option Agreement") is made as of the ____
day of _________, 200__, (the "Grant Date"), by and between Public Storage (the
"Trust") and __________________, (the "Optionee"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Trust's
2007 Equity and Performance-Based Incentive Compensation Plan (the "Plan").
WHEREAS, the Board of Trustees of the Trust (the "Board") has duly adopted,
and the shareholders of the Trust have duly approved, the Plan, which provides
for the grant to employees and Trustees of the Trust and its Subsidiaries and
Service Providers of options for the purchase of shares of the Trust's common
shares of beneficial interest, par value $.10 per share (the "Common Shares"),
which may be granted from time to time as the Committee so determines;
WHEREAS, the Trust has determined that it is desirable and in its best
interests to grant to the Optionee, pursuant to the Plan, options to purchase a
certain number of Common Shares as compensation for services rendered to the
Trust, and/or in order to provide the Optionee with an incentive to advance the
interests of the Trust, all according to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto do hereby agree as follows:
1. GRANT OF OPTION.
Subject to the terms of the Plan (the terms of which are incorporated by
reference herein), the Trust hereby grants to the Optionee the right and option
(the "Option") to purchase from the Trust, on the terms and subject to the
conditions hereinafter set forth, ________ Common Shares. This Option shall not
constitute an incentive shares option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
2. PRICE.
The purchase price (the "Option Price") of the Common Shares subject to the
Option evidenced by this Option Agreement is $_________ per share (the Fair
Market Value on the Grant Date).
3. EXERCISE OF OPTION.
Except as otherwise provided herein, the Option granted pursuant to this
Option Agreement shall be subject to exercise as follows:
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3.1 Time of Exercise of Option.
The Optionee may exercise the Option (subject to the limitations on
exercise set forth in the Plan or in this Option Agreement), in installments as
determined by the Committee as follows: [ ]. The foregoing installments, to the
extent not exercised, shall accumulate and be exercisable, in whole or in part,
at any time and from time to time, after becoming exercisable and prior to the
termination of the Option; provided, that no single exercise of the Option shall
be for less than 100 shares, unless the number of shares purchased is the total
number at the time available for purchase under this Option.
3.2 Exercise by Optionee.
During the lifetime of the Optionee, only the Optionee (or, in the
event of the Optionee's legal incapacity or incompetency, the Optionee's
guardian or legal representative) or a person or entity to whom the Optionee has
transferred the Option in accordance with Section 6 hereof may exercise the
Option.
3.3 Term of Option.
The Option shall have a term of [ ]years, subject to earlier
termination in accordance with this Option Agreement or the terms of the Plan as
determined by the Committee.
3.4 Limitations on Exercise of Option.
In no event may the Option be exercised, in whole or in part, after ten
years following the Grant Date, or after the occurrence of an event referred to
in Section 8 below which results in termination of the Option. In no event may
the Option be exercised for a fractional Share.
3.5 Termination of Employment or Other Relationship.
Subject to Sections 3.6 and 3.7 hereof, upon the termination of (i) the
employment of the Optionee by the Trust or any Subsidiary or Service Provider or
service as a Trustee, or (ii) a Service Provider's relationship with the Trust,
the Optionee shall have the right at any time within 30 days after such
termination and prior to termination of the Option pursuant to Section 3.4
above, to exercise, in whole or in part, any Option held by such Optionee at the
date of such termination, to the extent such Option was exercisable immediately
prior to such termination.
3.6 Rights in the Event of Death.
If the Optionee dies while employed by the Trust, a Subsidiary or a
Service Provider, or while serving as a Trustee or Service Provider, the
executors or administrators or legatees or distributees of the Optionee's estate
shall have the right, at any time within one year after the date of the
Optionee's death and prior to termination of the Option pursuant to Section 3.4
above, to exercise the Option with respect to all shares subject to the Option,
whether or not the Option was exercisable immediately prior to the Optionee's
death.
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3.7 Rights in the Event of Disability.
If the Optionee terminates employment with the Trust, a Subsidiary, or
a Service Provider, or if the Optionee ceases to be a Service Provider or
Trustee, by reason of the permanent and total disability of the Optionee, then
the Optionee shall have the right, for a period of one year after such
termination and prior to termination of the Option pursuant to Section 3.4
above, to exercise the Option to the extent such Option was exercisable
immediately prior to such termination or becomes exercisable within such one
year period pursuant to Section 3.1 above. Whether termination of employment or
service is to be considered by reason of permanent and total disability for
purposes of this Option Agreement shall be determined by the Committee, which
determination shall be final and conclusive.
3.8 Reduction in Number of Shares Subject to Option.
The number of Common Shares which may be purchased upon exercise of the
Option pursuant to this Section 3 shall be reduced by the number of shares
previously purchased upon exercise of the Option pursuant to this Section 3.
4. METHOD OF EXERCISE OF OPTION.
The Option may be exercised to the extent that it has become exercisable
hereunder by (a) exercise through the Trust's approved broker for such
exercises, or (b) delivery to the Trust on any business day, at its principal
office addressed to the attention of the Committee, of written notice of
exercise, which notice shall specify the number of shares for which the Option
is being exercised, and shall be accompanied by payment in full of the Option
Price of the shares for which the Option is being exercised. Payment of the
Option Price for the Common Shares purchased pursuant to the exercise of the
Option shall be made (a) in cash or by check payable to the order of the Trust;
(b) through the tender to the Trust of Common Shares, which shares shall be
valued, for purposes of determining the extent to which the Option Price has
been paid thereby, at their Fair Market Value on the date of exercise; or (c) by
a combination of the methods described in (a) and (b). Payment in full of the
Option Price need not accompany the written notice of exercise provided the
notice directs that the Common Shares certificate or certificates for the shares
for which the Option is exercised be delivered to the Trust approved broker for
such exercises as the agent for the Optionee and, at the time such Common Shares
are delivered, the broker tenders to the Trust cash (or cash equivalents
acceptable to the Trust) equal to the Option Price plus the amount, if any, of
federal and/or other taxes which the Trust may, in its judgment, be required to
withhold with respect to the exercise of the Option. An attempt to exercise the
Option granted other than as set forth above shall be invalid and of no force or
effect. Promptly after the exercise of the Option and the payment in full of the
Option Price of the Common Shares covered thereby, the Optionee shall be
entitled to, as applicable, (a) the issuance of a certificate for Common Shares
or certificates evidencing the Optionee's ownership of such shares or (b) direct
registration for such shares or (c) electronic transfer of such shares to a
Trust-approved broker.
5. PARACHUTE LIMITATIONS.
Notwithstanding any other provision of this Option Agreement or of any
other agreement, contract, or understanding heretofore or hereafter entered into
by a Optionee with the Trust or any Subsidiary, except an agreement, contract or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "Other Agreement"), and notwithstanding any
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formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Optionee (including groups or classes of
participants or beneficiaries of which the Optionee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Optionee (a "Benefit Arrangement"), if the Optionee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any Option held by that
Optionee and any right to receive any payment or other benefit under this Option
Agreement shall not become exercisable or vested (i) to the extent that such
right to exercise, vesting, payment, or benefit, taking into account all other
rights, payments, or benefits to or for the Optionee under this Option
Agreement, all Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Optionee under this Option Agreement to be considered
a "parachute payment" within the meaning of Section 280G(b)(2) of the Code as
then in effect (a "Parachute Payment") and (ii) if, as a result of receiving a
Parachute Payment, the aggregate after-tax amounts received by the Optionee from
the Trust under this Option Agreement, all Other Agreements, and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by the Optionee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment, or benefit under this Option Agreement, in
conjunction with all other rights, payments, or benefits to or for the Optionee
under any Other Agreement or any Benefit Arrangement would cause the Optionee to
be considered to have received a Parachute Payment under this Option Agreement
that would have the effect of decreasing the after-tax amount received by the
Optionee as described in clause (ii) of the preceding sentence, then the
Optionee shall have the right, in the Optionee's sole discretion, to designate
those rights, payments, or benefits under this Option Agreement, any Other
Agreements, and any Benefit Arrangements that should be reduced or eliminated so
as to avoid having the payment or benefit to the Optionee under this Option
Agreement be deemed to be a Parachute Payment.
6. LIMITATIONS ON TRANSFER.
The Option is not transferable by the Optionee, other than by will or the
laws of descent and distribution in the event of death of the Optionee, and
except that the Optionee may transfer the Option in whole or in part to (i) the
spouse, children (including step-children and adopted children) or grandchildren
of the Optionee ("Family Members"), (ii) a trust for the exclusive benefit of
one or more Family Members, or (iii) a partnership of which the Optionee and/or
one or more Family Members are the only partners, provided that the transferee,
in connection with the transfer, agrees in writing to be bound by all of the
terms of this Option Agreement and the Plan and further agrees not to transfer
the Option other than by will or the laws of descent and distribution in the
event of the death of the transferee. Following any transfer permitted by this
Section 6, the transferee shall have all of the rights of the Optionee
hereunder, and the Option shall be exercisable by the transferee only to the
extent that the Option would have been exercisable by the Optionee had the
Option not been transferred. The Option shall not be pledged or hypothecated (by
operation of law or otherwise) or subject to execution, attachment or similar
processes.
7. RIGHTS AS SHAREHOLDER.
Neither the Optionee, nor any executor, administrator, distributee or
legatee of the Optionee's estate, nor any transferee hereof shall be, or have
any of the rights or privileges of, a shareholder of the Trust in respect of any
Common Shares issuable hereunder unless and until such shares have been fully
paid and certificates representing such shares have been endorsed, transferred
and delivered, and the name of the Optionee (or of such personal representative,
administrator, distributee or legatee of the Optionee's estate, or of such
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transferee) has been entered as the shareholder of record on the books of the
Trust.
8. EFFECT OF CHANGES IN CAPITALIZATION.
8.1 Changes in Shares.
If the number of outstanding Common Shares is increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Trust by reason of any recapitalization, reclassification,
share split, reverse split, combination of shares, exchange of shares, share
dividend or other distribution payable in capital shares, or other increase or
decrease in such shares effected without receipt of consideration by the Trust
occurring after the date the Option is granted, a proportionate and appropriate
adjustment shall be made by the Trust in the number and kind of shares subject
to the Option, so that the proportionate interest of the Optionee immediately
following such event shall, to the extent practicable, be the same as
immediately prior to such event. Any such adjustment in the Option shall not
change the total Option Price with respect to shares subject to the unexercised
portion of the Option but shall include a corresponding proportionate adjustment
in the Option Price per share. In the event of a spin-off by the Trust of the
shares of a subsidiary, a share dividend for which the Trust will claim a
dividends paid deduction under Section 561 of the Code (or any successor
provision), or a pro rata distribution to all shareholders of other assets of
the Trust, the Committee may, but shall not be required to, make appropriate
adjustments to (i) the number and kind of shares or other assets for which the
Option is exercisable and (ii) the per-share exercise price of the Option.
8.2 Reorganization in Which the Trust Is the Surviving Entity and in
Which No Change of Control Occurs.
Subject to Section 8.3 hereof, if the Trust shall be the surviving
entity in any reorganization, merger or consolidation of the Trust with one or
more other entities, the Option shall pertain to and apply to the securities to
which a holder of the number of shares subject to the Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price immediately prior to such reorganization, merger or consolidation.
8.3 Reorganization, Sale of Assets or Sale of Shares Which Involves a
Change of Control.
Subject to the exceptions set forth in the last sentence of this
Section 8.3, fifteen days prior to the scheduled consummation of a Change of
Control, the Option shall become immediately exercisable with respect to all
shares subject to the Option and shall remain exercisable for a period of
fifteen days. Any exercise of the Option during such fifteen-day period shall be
conditioned upon the consummation of the Change of Control and shall be
effective only immediately before the consummation of the Change of Control.
Upon consummation of any Change of Control, unless exercised the Option shall
terminate. The Committee shall send written notice of an event that will result
in such a termination to the Optionee not later than the time at which the Trust
gives notice thereof to its shareholders. For purposes of this Section 8.3, a
"Change of Control" shall be deemed to occur upon (i) the dissolution or
liquidation of the Trust or upon a merger, consolidation, or reorganization of
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the Trust with one or more other entities in which the Trust is not the
surviving entity, (ii) a sale of substantially all of the assets of the Trust to
another entity, or (iii) any transaction (including without limitation a merger
or reorganization in which the Trust is the surviving Trust) which results in
any person or entity (other than B. Wayne Hughes and members of his family and
their affiliates) owning 50% or more of the combined voting power of all classes
of shares of the Trust. This Section 8.3 shall not apply to any Change of
Control to the extent that (A) provision is made in writing in connection with
such Change of Control for the assumption of the Option, or for the substitution
for the Option of a new option covering the shares of a successor Trust, or a
parent, subsidiary or affiliate thereof, with appropriate adjustments as to the
number and kind of shares and exercise prices, in which event the Option shall
continue in the manner and under the terms so provided or (B) a majority of the
full Board determines that such Change of Control shall not trigger application
of the provisions of this Section 8.3.
8.4 Adjustments.
Adjustments specified in this Section 8 relating to Common Shares or
securities of the Trust shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. No fractional shares shall
be issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.
9. GENERAL RESTRICTIONS.
The Trust shall not be required to sell or issue any Common Shares under
the Option if the sale or issuance of such shares would constitute a violation
by the individual exercising the Option or by the Trust of any provision of any
law or regulation of any governmental authority, including without limitation
any federal or state securities laws or regulations. If at any time the Trust
shall determine, in its discretion, that the listing, registration or
qualification of any Common Shares subject to the Option upon any securities
exchange or under any state or federal law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares hereunder, the Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Trust, and any delay caused thereby shall
in no way affect the date of termination of the Option. Specifically, in
connection with the Securities Act of 1933, upon notice of exercise of the
Option, unless a registration statement under such Act is in effect with respect
to the shares covered by the Option, the Trust shall not be required to sell or
issue such shares unless the Committee has received evidence satisfactory to the
Committee that the holder of the Option may acquire such shares pursuant to an
exemption from registration under such Act. Any determination in this connection
by the Committee shall be final, binding, and conclusive. The Trust shall not be
obligated to take any affirmative action in order to cause the exercise of the
Option or the issuance of shares of Common Shares pursuant thereto to comply
with any law or regulation of any governmental authority. As to any jurisdiction
that expressly imposes the requirement that the Option shall not be exercisable
unless and until the shares covered by the Option are registered or are subject
to an available exemption from registration, the exercise of the Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.
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10. DISCLAIMER OF RIGHTS.
No provision in this Option Agreement shall be construed to confer upon the
Optionee the right to be employed by the Trust or any Subsidiary or Service
Provider or to provide services to the Trust, or to interfere in any way with
the right and authority of the Trust or any Subsidiary or Service Provider
either to increase or decrease the compensation of the Optionee at any time, or
to terminate any employment or other relationship between the Optionee and the
Trust or any Subsidiary or Service Provider.
11. WITHHOLDING TAXES
Upon the request of the Trust, a Subsidiary or a Service Provider, the
Optionee shall promptly pay to the Trust, Subsidiary or Service Provider, or
make arrangements satisfactory to the Trust, Subsidiary or Service Provider
regarding payment of, any federal, state or local taxes of any kind required by
law to be withheld as a result of the Optionee's exercise of the Option. The
Trust, a Subsidiary or a Service Provider shall have the right to deduct from
payments of any kind otherwise due to the Optionee any such taxes. The Optionee
shall make any such payments in cash or cash equivalents or, subject to the
prior approval of the Committee, which may be withheld in the Committee's sole
discretion, the Optionee may elect to satisfy the withholding obligation, in
whole or in part, (i) by causing the Trust, the Subsidiary or the Service
Provider to withhold shares of Common Shares otherwise issuable to the Optionee
pursuant to the Option or (ii) by delivering to the Trust, the Subsidiary or the
Service Provider shares of Common Shares already owned by the Optionee. The
Common Shares so delivered or withheld shall have an aggregate Fair Market Value
equal to the applicable withholding obligations. The Optionee may deliver or
have withheld only Common Shares that are not subject to any repurchase,
forfeiture, unfulfilled vesting, or other similar requirements.
12. INTERPRETATION OF THIS OPTION AGREEMENT.
All decisions and interpretations made by the Committee with regard to any
question arising under the Plan or this Option Agreement shall be binding and
conclusive on the Trust and the Optionee and any other person entitled to
exercise the Option as provided for herein. In the event that there is any
inconsistency between the provisions of this Option Agreement and of the Plan,
the provisions of the Plan shall govern.
13. GOVERNING LAW.
This Option Agreement is executed pursuant to and shall be governed by the
laws of the State of California (but not including the choice of law rules
thereof).
14. BINDING EFFECT.
Subject to all restrictions provided for in this Option Agreement and by
applicable law relating to assignment and transfer of this Option Agreement and
the option provided for herein, this Option Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors, transferees and assigns.
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15. NOTICE.
Any notice hereunder by the Optionee to the Trust shall be in writing and
shall be deemed duly given if mailed or delivered to the Trust at its principal
office, addressed to the attention of the Corporate Secretary, or if so mailed
or delivered to such other address as the Trust may hereafter designate by
notice to the Optionee. Any notice hereunder by the Trust to the Optionee shall
be in writing and shall be deemed duly given if mailed or delivered to the
Optionee at the address specified below by the Optionee for such purpose, or if
so mailed or delivered to such other address as the Optionee may hereafter
designate by written notice given to the Trust.
16. ENTIRE AGREEMENT.
This Option Agreement constitutes the entire agreement and supersedes all
prior understandings and agreements, written or oral, of the parties hereto with
respect to the subject matter hereof. Neither this Option Agreement nor any term
hereof may be amended, waived, discharged or terminated except by a written
instrument signed by the Trust and the Optionee; provided, however, that the
Trust unilaterally may waive any provision hereof in writing to the extent that
such waiver does not adversely affect the interests of the Optionee hereunder,
but no such waiver shall operate as or be construed to be a subsequent waiver of
the same provision or a waiver of any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Option
Agreement, or caused this Option Agreement to be duly executed on their behalf,
as of the day and year first above written.
PUBLIC STORAGE
By: ________________________________
Name:
Title:
OPTIONEE:
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Name:
ADDRESS FOR NOTICE TO OPTIONEE:
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Number Street
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City State Zip Code
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