exv99w1
EXHIBIT 99.1
EQUITY RESIDENTIAL
2011 SHARE INCENTIVE PLAN
1. Purpose of the Plan.
(a) The Equity Residential 2011 Share Incentive Plan (the Plan) is established by
Equity Residential (the Company) to secure for the Company and its shareholders the benefits
arising from capital ownership by those key employees, trustees and consultants of the Company and
its Subsidiaries (as defined below) who are and will be responsible for its future growth and
continued success.
(b) The Plan provides a means whereby such individuals may: (i) receive authorized common
shares of beneficial interest of the Company and/or one or more classes of limited partnership
interests (OP Units) in ERP Operating Limited Partnership (Operating Partnership) that are
exchangeable for common shares of beneficial interest of the Company (collectively Shares),
subject to conditions and restrictions described herein and otherwise determined by the Committee
(as defined below) (Share Awards); (ii) acquire Shares pursuant to grants of options to purchase
such Shares (Options); (iii) acquire Share Appreciation Rights (SARs) in tandem with or
independent of Options referred to in item (ii) above; or (iv) receive dividend equivalent rights
with respect to Shares (Dividend Equivalents). OP Units established pursuant to the Operating
Partnerships agreement of limited partnership, as amended from time to time, may be: (i)
convertible, exchangeable or redeemable for Shares or other limited partnership interests in the
Operating Partnership (including OP Units of a different class or series), or at the option of the
Company, for cash in an amount equal to the value of such Shares; (ii) valued and revalued from
time to time by reference to the book value, fair value or performance of the Operating Partnership
upon the occurrence of a book-up event described in Treasury Regulation §1.704-1(b)(2)(iv)(f)(5);
or (iii) if granted as LTIP Units, are intended to qualify as profits interests within the
meaning of IRS Revenue Procedure 93-27.
(c) The term Subsidiary means each entity the Company owns or controls directly or
indirectly either through voting control, equity ownership or as a general partner, managing member
or similar control position, provided that, for purposes of Incentive Stock Options (as defined
below) such term shall have the meaning given in Section 424 of the Internal Revenue Code of 1986,
as amended (the Code).
2. Administration. The authority to manage and control the operation and
administration of the Plan shall be vested in the Companys Compensation Committee (the
Committee) consisting of three or more members appointed by the Board of Trustees of the Company
from among its members. A person may serve on the Committee only if he or she (i) meets all
applicable independence requirements of the New York Stock Exchange, or if the Shares are not
traded on the NYSE, the principal national securities exchange on which the Shares are traded, (ii)
is a Non-Employee Director for purposes of Rule 16b-3 under the Securities Exchange Act of 1934,
as amended (the 1934 Act) and (iii) satisfies the requirements of an outside director for
purposes of Section 162(m) of the Code. Any interpretation of the Plan by the Committee and any
decision made by the Committee on any other matter within its discretion is final and binding on
all persons. The Committee may delegate any of its authority to administer the Plan as it deems
appropriate, except that no delegation may be made in the case of awards intended to be qualified
under Code Section 162(m) or Rule 16b-3 promulgated under the 1934 Act. The day-to-day
administration of the Plan may be carried out by an Option Coordinator designated by the General
Counsel of the Company.
3. Participation. Subject to the terms and conditions of the Plan, the Committee
shall determine and designate from time to time the key employees, trustees and consultants of the
Company and its Subsidiaries to whom Share Awards, Options, SARs or Dividend Equivalents are to be
granted (a Grantee) and the number of Shares subject to such Share Awards, Options, SARs or
Dividend Equivalents to be granted to the Grantees.
4. Shares Subject to the Plan.
(a) Subject to adjustment as provided in paragraph 13, the maximum number of Shares reserved
and available for issuance under the Plan (the Maximum Share Amount) shall be the sum of
8,815,479, plus any shares which as of the close of business on the Effective Date (as defined in
paragraph 20) are available for issuance under the Companys 2002 Share Incentive Plan (the Prior
Plan). No further awards or grants will be made under the Prior Plan after the Effective Date.
The Prior Plan will, however, continue in existence and operation following the Effective Date with
respect to awards or grants outstanding thereunder.
(b) Shares subject to the Plan may be authorized but unissued Shares, Shares now held in the
treasury of the Company or Shares hereafter acquired by the Company. Any shares underlying any
awards granted under the Plan that are forfeited, canceled, surrendered or otherwise terminated
(other than by exercise) on or after the Effective Date will be added back to the shares available
for future grants hereunder other than: (i) Shares tendered by a grantee to pay the exercise price
of an award or to satisfy tax withholding obligations; and (ii) Shares repurchased by the Company
on the open market using cash proceeds from option exercises. In addition, upon the exercise of a
SAR, the number of shares subject to the award shall be counted against the maximum number of
shares that may be issued under the Plan, on the basis of one share for every share subject
thereto, regardless of the actual number of shares used to settle the SAR upon exercise.
(c) The maximum number of Shares with respect to which Options and SARs may be granted during
any calendar year to any Grantee is 1,000,000 Shares, and the maximum number of shares with respect
to Share Awards and Dividend Equivalents may be granted during any calendar year to any Grantee is
250,000 shares. No more than thirty-three percent (33%) of the number of Shares available for
issuance under the Plan may be subject to Share Awards. The maximum number of Shares that may be
issued subject to Incentive Stock Options may not exceed the Maximum Share Amount.
(d) The term Fair Market Value of a Share means the closing price paid for Shares on the New
York Stock Exchange on the applicable day for which such Fair Market Value is being determined.
5. Share Awards.
(a) Share Awards granted shall be subject to the following conditions and/or restrictions:
(i) A Share Award shall be subject to a minimum vesting period of at least two years from the
date of Grant, with the Share Award vesting either in annual equal installments over, or in full at
the end of, said period, and may be subject to such other conditions and restrictions as are
established by the Committee as of the Date of Grant; provided, however, that up to five percent
(5%) of the total number of Shares which may be granted under the Plan may be subject to a minimum
vesting period of one year. The Committee may, but need not, establish performance goals to be
achieved within such performance periods as may be selected by it, using such measures of
individual performance or the performance of the Company and/or one (1) or more of its Subsidiaries
as it may select. Any Share Award containing conditions, terms or restrictions as established by
the Committee but not set forth
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herein shall be described in such term sheets or employment, award or similar agreements as
are approved by the Committee from time to time.
(ii) A Share Award that has not vested or continues to be subject to restrictions (including
any restrictions set forth on term sheets or employment, award or similar agreements approved by
the Committee from time to time) will be forfeited to the Company upon the termination of the
Grantees Service, unless the circumstances described in paragraph 5(a)(iii) have occurred (it
being the express intent of this document that Share Awards will not be forfeited in the event of a
Change in Control (defined below) of the Company, or the termination of the Grantees Service as
a result of any of the circumstances described in paragraph 5(a)(iii)). An individuals Service
shall continue until he or she is no longer an employee, trustee or consultant of the Company or a
Subsidiary.
(iii) Notwithstanding the foregoing, the conditions and restrictions described in paragraph
5(a)(i) and (ii) that are contained in the terms of any Share Award shall immediately lapse and be
of no effect, and the Share Awards subject to such conditions and restrictions shall fully vest
(with any performance goals deemed to be met in full at the maximum amount possible unless
otherwise provided by the specific terms of an award) in favor of the Grantee, in the event of (I)
a Change in Control of the Company, or (II) the termination of a Grantees Service:
(A) because of the Grantees death;
(B) with respect to a Grantee who is an employee in connection with his or her
Disability (as defined in Section 5(d)); or if such Grantees Service commenced prior to
January 1, 2009, in connection with such Grantees termination of Service (other than if the
termination occurs for Good Cause) at or after age 62; or
(C) with respect to a Grantee who is a member of the Board (excluding employee
trustees) in connection with his or her retirement at or after age 72, the Boards decision
not to renominate him or her for re-election to the Board at any shareholders meeting at
which Trustees are elected, or the failure to be re-elected to the Board at any such
shareholders meeting, or the Trustees resignation from the Board by reason of either: (i)
a material change in the Trustees employment or job responsibilities; or (ii) the Trustees
disability.
If the Service of a Grantee terminates other than as described above (other than if the termination
occurs for Good Cause), the Committee may determine that either: (i) the conditions and
restrictions described in paragraph 5(a)(i) and (ii) that are contained in the terms of any Share
Award shall immediately lapse and be of no effect, and in such event, the Share Awards subject to
such conditions shall fully vest in favor of the Grantee; or (ii) the vesting of any Share Awards
shall continue past the Grantees termination of Service per the original vesting schedule, subject
to such conditions as the Committee shall determine. The Committee may make the determination
described in the preceding sentence and communicate such determination in the Grantees award
agreement or in any other manner.
Upon the termination of Service (other than for Good Cause) of either: (i) an employee Grantee
whose Service commenced prior to January 1, 2009 and whose termination occurred prior to age 62; or
(ii) an employee Grantee whose Service commenced on or after January 1, 2009; in each case after
meeting the requirements of the Rule of 70, the Grantees Share Awards shall continue to vest per
the original vesting schedule (subject to immediate and full vesting upon the occurrence of any of
the circumstances described in paragraph 5(a)(iii)), provided the Grantee complies with the
non-competition and employee non-solicitation provisions contained in the Grantees Rule of 70
Release. If the Grantee violates any of these provisions following the termination of his or her
Service, unless otherwise determined by the Committee, all unvested Share Awards at the time of the
violation will be forfeited to the Company.
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(b) Rights of Grantee. The Grantee of a Share Award of Shares shall be entitled to all of the
rights of a shareholder with respect to the Shares subject to the Share Award including the right
to vote such Shares and to receive dividends and other distributions payable with respect to such
Shares from and after the Date of Grant; provided that any securities or other property (but not
cash) received in any such distribution with respect to a Share Award of Shares that is still
subject to the restrictions set forth above, shall be subject to all of the restrictions set forth
herein with respect to such Share Award.
(c) Change in Control. The term Change in Control shall mean any of the following events:
(i) An acquisition (other than directly from the Company) of any voting securities of the
Company (the Voting Securities) by any Person (as the term person is used for purposes of
Section 13(d) or 14(d) of the 1934 Act), immediately after which such Person has Beneficial
Ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 30% or more of the
combined voting power of the Companys then outstanding Voting Securities; provided, however, that
in determining whether a Change in Control has occurred, Voting Securities which are acquired in a
Non-Control Acquisition (as hereinafter defined) shall not constitute an acquisition which would
cause a Change in Control. A Non-Control Acquisition shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any
corporation or other Person of which a majority of its voting power or its equity securities or
equity interest is owned directly or indirectly by the Company (a Subsidiary), (ii) the Company
or any Subsidiary or (iii) any Person in connection with a Non-Control Transaction (as
hereinafter defined);
(ii) The consummation of:
(A) A merger, consolidation or reorganization involving the Company, unless:
(1) the shareholders of the Company, immediately before such merger,
consolidation or reorganization, own, directly or indirectly, immediately
following such merger, consolidation or reorganization, at least seventy
percent (70%) of the combined voting power of the outstanding Voting
Securities of the corporation resulting from such merger or consolidation or
reorganization (the Surviving Corporation) in substantially the same
proportion as their ownership of the Voting Securities immediately before
such merger, consolidation or reorganization; and
(2) the individuals who were members of the Board of Trustees
immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least a majority of
the members of the Board of Trustees of the Surviving Corporation or a
corporation beneficially owning, directly or indirectly, a majority of the
Voting Securities of the Surviving Corporation;
(A transaction described above shall herein be referred to as a Non-Control Transaction);
(B) A complete liquidation or dissolution of the Company; or
(C) The sale or other disposition of all or substantially all of the assets of the
Company to any Person (other than to an entity of which the Company directly or indirectly
owns at least 70% of the Voting Securities). Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur solely because any Person (the Subject Person)
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acquired Beneficial Ownership of more than the permitted amount of the outstanding
Voting Securities as a result of the acquisition of Voting Securities by the Company which,
by reducing the number of Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Person, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the acquisition of
Voting Securities by the Company, and after such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
(iii) The failure to be re-elected by the voting Beneficial Owners of the outstanding Shares
of the entire slate of trustees that the Board proposes at a single election of trustees; or
(iv) The failure to be re-elected by the voting Beneficial Owners of the outstanding Shares of
one-half or more of the trustees that the Board proposes over any two or more consecutive elections
of trustees.
(d) The term Disability means the Grantee becoming unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to last for a continuous period
of not less than twelve (12) months, within the meaning of Code Section 422(c)(6).
(e) The term Rule of 70 means when an employee Grantees years of service with the Company
or its Subsidiaries or predecessors (must be at least 15 years, based on 180 months of employment,
not calendar years) plus his or her age (must be at least 55 years) on the date of termination
equals or exceeds 70 years. In addition, the employee must give the Company at least 6 months
advance written notice of his or her intention to retire and sign a release upon termination of
employment, with ongoing non-competition and employee non-solicitation provisions, releasing the
Company from customary claims (Rule of 70 Release).
6. Share Options. Options granted shall be subject to the following conditions and/or
restrictions:
(a) ISO/NQSO. Any Option to purchase Shares granted under paragraph 3(a) that satisfies all
of the requirements of Section 422 of the Code, may be designated by the Committee as an Incentive
Stock Option. Options that are not so designated, or that do not satisfy the requirements of
Section 422 of the Code shall not constitute Incentive Stock Options and shall be Non-Qualified
Share Options.
(b) Exercise Price; Repricing Prohibited. The Option price of any Incentive Stock Options or
Non-qualified Share Options awarded hereunder shall not be less than the Fair Market Value of a
Share on the date the Option is awarded under the Plan. Subject to adjustment as provided in
Section 13, the repricing of Options under this Plan (reducing the exercise price of any options
previously granted hereunder) is specifically prohibited.
(c) General Exercisability. Each Option granted under paragraph 3 shall be exercisable,
either in whole or in part, at such time or times as shall be determined by the Committee at the
time the Option is granted or at such earlier times as the Committee shall subsequently determine,
but in no event later than the Options Expiration Date (defined below). The Committee may
establish performance goals to be achieved within such periods as may be selected by it in its
discretion using such measures of performance of the Grantee, the Company and/or its subsidiaries
as it may select. The Expiration Date with respect to an Option means the date established by
the Committee at the Date of
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Grant (subject to any earlier termination by the Committee), but in no event later than the
date which is ten (10) years after the date on which the Option is granted. All rights to purchase
Shares pursuant to an Option shall cease as of the Options Expiration Date.
(d) ISO Exercisability. The aggregate exercise price for Shares with respect to which
Incentive Stock Options are exercisable for the first time by a Grantee during any calendar year
may not exceed one hundred thousand dollars ($100,000) or such different maximum amount as may be
provided under Section 422 of the Code. Any Options that are intended to be Incentive Stock
Options but that become exercisable in excess of such amount shall be deemed to be a Non-Qualified
Stock Option to the extent of such excess.
(e) Immediate Vesting. Notwithstanding the provisions of paragraph 6(c), each Option granted
under the Plan to a Grantee and as to which the Expiration Date has not occurred shall be
immediately and fully exercisable, for the period indicated, in the event of (I) a Change in
Control of the Company (in which case it shall be exercisable until its Expiration Date), or (II)
the termination of a Grantees Service:
(i) because of the Grantees death, in which case it shall be exercisable by the person or
persons to whom the Grantees right passes by will or by the laws of descent and distribution,
until its Expiration Date;
(ii) with respect to a Grantee who is an employee in connection with his or her Disability (as
defined in Section 5(d)); or if such Grantees Service commenced on or prior to January 1, 2009, in
connection with such Grantees termination of Service (other than if the termination occurs for
Good Cause) at or after age 62, in which case it shall be exercisable until its Expiration Date; or
(iii) with respect to a Grantee who is a member of the Board (excluding employee trustees) in
connection with his or her retirement at or after age 72, the Boards decision not to renominate
him or her for re-election to the Board at any shareholders meeting at which Trustees are elected,
or the failure to be re-elected to the Board at any such shareholders meeting, or the Trustees
resignation from the Board by reason of either: (i) a material change in the Trustees employment
or job responsibilities; or (ii) the Trustees Disability, in which case it shall be exercisable
until its Expiration Date.
If the Service of a Grantee terminates other than as described above, his or her Options shall not
become exercisable with respect to any additional Shares, unless (other than if the termination
occurs for Good Cause) the Committee determines that either: (i) the vesting of the Options shall
accelerate (in whole or in part) in connection with such termination; or (ii) the vesting of any
Options (in whole or in part) shall continue past the Grantees termination of Service, subject to
such conditions as the Committee shall determine; and in each case, each Option shall be
exercisable until the earlier of: (a) 90 days after such termination unless extended by the
Committee; or (b) its Expiration Date.
Upon the termination of Service (other than for Good Cause) of either: (i) an employee Grantee
whose Service commenced prior to January 1, 2009 and whose termination occurred prior to age 62; or
(ii) an employee Grantee whose Service commenced on or after January 1, 2009; in each case after
meeting the requirements of the Rule of 70, the Grantees Options shall continue to vest per the
original vesting schedule (subject to immediate and full vesting upon the occurrence of any of the
circumstances described in paragraph 6(e)), and each Option shall be exercisable until its
Expiration Date, provided the Grantee complies with the non-competition and employee
non-solicitation provisions contained in the Grantees Rule of 70 Release. If the Grantee violates
any of these provisions following the termination of his or her Service, unless otherwise
determined by the Committee, all vested and unvested Options at the time of the violation will be
forfeited to the Company.
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(f) Good Cause. If the Service of a Grantee terminates for Good Cause, as determined by
the Committee, his Option shall expire immediately. Good Cause shall include, but not be limited
to, the Grantees engaging in conduct which (i) breaches his or her duty of loyalty to the Company;
(ii) is injurious to the Company or a Subsidiary; or (iii) disparages the Company, any Subsidiary,
or any of their respective officers or trustees. The Committee may also establish guidelines for
determining whether a Grantees Service has terminated for good cause and communicate such
guidelines in the Grantees award agreement, or in any other manner, including but not limited to
such term sheets and supplements hereto as are approved by the Committee from time to time.
(g) Exercise Procedure. The Committee shall establish procedures governing the exercise of an
Option consistent with the purposes of the Plan. Such procedures may include, without limitation,
delivery to the Company of written notice of exercise accompanied by payment in full of the Option
Price for the Shares to which the exercise relates and payment of any amount necessary to satisfy
any withholding tax liability that may result from the exercise of the Option. Notwithstanding
anything else to the contrary contained herein, any payment to be made by a Grantee hereunder,
including but not limited to, payment upon the exercise of an option or any other award hereunder
or in satisfaction of any tax withholding obligation, may be made in cash or, if approved by the
Committee or the Chief Executive Officer of the Company, (i) through the delivery of Shares
beneficially owned by such Grantee; or (ii) by a net exercise procedure effected through a
reduction of Shares subject to an award under the Plan in satisfaction of such payment; or (iii)
through delivery of written notice, subject to the Companys receipt of a third party payment in
full in cash for the full amount of such payment, in each case in the manner and subject to the
procedures established by the Committee or Chief Executive Officer.
(h) Suspension of Right. Notwithstanding any other provision of this paragraph 6, the
Compensation Committee, in its sole and absolute discretion, may suspend the right of any person to
exercise an Option for up to 30 days if the Grantees Service has been or may be suspended or
terminated for any reason. Following such suspension, the rights of the person to exercise such
Option shall be controlled by any determination with respect to employment termination made prior
to the end of the period of suspension.
7. Share Appreciation Rights. SARs granted shall be subject to the following
conditions and/or restrictions:
(a) Grant/Repricing Prohibited. A SAR granted at the time a related Option is granted may be
granted either in addition to the related Option (Non-Tandem SAR) or in tandem with the related
Option (Tandem SAR). A SAR not related to an Option will be subject to the provisions applicable
to Non-Tandem SARs. At the time a Non-Tandem SAR is granted, the Committee shall specify the base
price of the Shares to be used in connection with the calculation described in subsection (b)(i)
below, which shall be 100% of the Fair Market Value of a Share on the date of grant. The number of
Shares subject to a Tandem SAR shall not exceed one for each Share subject to the related Option.
No Tandem SAR may be granted to a key employee in connection with an Incentive Stock Option in a
manner that will disqualify the Incentive Stock Option under Section 422 of the Code unless the key
employee consents thereto. Subject to adjustment as provided in Section 13, the repricing of SARs
(i.e., reducing the base price of any SAR previously granted hereunder) is specifically prohibited.
(b) Value. Upon exercise, a SAR shall entitle the Grantee to receive from the Company the
number of Shares (or cash equivalent thereof) having an aggregate Fair Market Value equal to the
following:
(i) in the case of a Non-Tandem SAR, the excess of the Fair Market Value of one Share as of
the date on which the SAR is exercised over the base Share price specified in such SAR, multiplied
by the number of Shares then subject to the SAR, or the portion thereof being exercised.
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(ii) in the case of a Tandem SAR, the excess of the Fair Market Value of one Share as of the
date on which the SAR is exercised over the exercise price per Share specified in such Option,
multiplied by the number of Shares then subject to the Option, or the portion thereof as to which
the SAR is being exercised.
Cash shall be delivered in lieu of any fractional shares. The Committee, in its discretion, shall
be entitled to cause the Company to elect to settle any part or all of its obligation arising out
of the exercise of a SAR by the payment of cash in lieu of all or part of the Shares it would
otherwise be obligated to deliver in an amount equal to the Fair Market Value of such Shares on the
date of exercise. So long as the Grantee is subject to Section 16(b) of the 1934 Act with respect
to securities of the Company, the Committee may not cause the Company to elect to settle any part
or all of its obligation arising out of the exercise of a SAR by the payment of cash pursuant to
this subparagraph, unless (A) such exercise occurs no earlier than six months after the date of
grant of the SAR, and (B) the Committee approves such form of settlement.
(c) Exercise of Tandem SARs. A Tandem SAR shall be exercisable during such time, and be
subject to such restrictions and conditions and other terms, as the Committee shall specify at the
time such Tandem SAR is granted which restrictions and conditions and other terms need not be the
same for all Grantees. Notwithstanding the preceding sentence, the Tandem SAR shall be exercisable
only at such time as the Option to which it relates is exercisable and shall be subject to the
restrictions and conditions and other terms applicable to such Option. Upon the exercise of a
Tandem SAR, the unexercised Option, or the portion thereof to which the exercised portion of the
Tandem SAR is related, shall expire. The exercise of any Option shall cause the expiration of the
Tandem SAR related to such Option, or portion thereof, that is exercised.
(d) Non-Tandem SAR Exercisabilty. Each Non-Tandem SAR granted under the Plan shall be
exercisable, either in whole or in part, at such time or times as shall be determined by the
Committee at the time the Non-Tandem SAR is granted or at such earlier times as the Committee shall
subsequently determine, but in no event later than the Non-Tandem SARs Expiration Date (defined
below). The Committee may establish performance goals to be achieved within such periods as may be
selected by it in its discretion using such measures of performance of the Grantee, the Company
and/or its subsidiaries as it may select. The Expiration Date with respect to a Non-Tandem SAR
or any portion thereof granted under the Plan means the date established by the Committee at the
Date of Grant (subject to any earlier termination by the Committee), but in no event later than the
date which is ten (10) years after the date on which the Non-Tandem SAR is granted.
(e) Acceleration. Notwithstanding the above, each SAR granted under the Plan to a Grantee and
as to which the Expiration Date has not occurred shall be immediately and fully exercisable, for
the period indicated, in the event of (I) a Change in Control of the Company (in which case it
shall be exercisable until its Expiration Date), or (II) the termination of a Grantees Service
under the same conditions described in Section 6(e). Upon the termination of Service (other than
for Good Cause) of either: (i) an employee Grantee whose Service commenced prior to January 1, 2009
and whose termination occurred prior to age 62; or (ii) an employee Grantee whose Service commenced
on or after January 1, 2009; in each case after meeting the requirements of the Rule of 70, the
Grantees SARs shall continue to vest per the original vesting schedule (subject to immediate and
full vesting upon the occurrence of any of the circumstances described in paragraph 6(e)), provided
the Grantee complies with the non-competition and employee non-solicitation provisions contained in
the Grantees Rule of 70 Release. If the Grantee violates any of these provisions following the
termination of his or her Service, unless otherwise determined by the Committee, all unvested SARs
at the time of the violation will be forfeited to the Company.
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(f) Other Termination. If the Service of a Grantee who is an employee terminates other than
as described above and other than for good cause, or the Service of a Grantee who is a consultant
or a member of the Board of Trustees terminates for any reason other than for good cause, his SAR
shall not become exercisable with respect to any additional Shares unless the Committee accelerates
the exercisability of the SAR pursuant to paragraph (d), and the SAR shall be exercisable until the
earlier of (i) 90 days after such termination unless extended by the Committee or (ii) its
Expiration Date.
(g) Good Cause. If the Service of a Grantee terminates for good cause, his SAR shall expire
immediately. The Committee may establish guidelines for determining whether a Grantees Service
has terminated for good cause and communicate such guidelines in the Grantees award agreement, or
in any other manner, including but not limited to such term sheets and supplements hereto as are
approved by the Committee from time to time.
(h) Exercise Procedure. The Committee shall establish procedures governing the exercise of a
SAR consistent with the purposes of the Plan. Such procedures may include, without limitation,
delivery to the Company of written notice of exercise prior to the SAR expiration.
(i) Settlement of SARs. As soon as is reasonably practicable after the exercise of a SAR, the
Company shall issue, in the name of the Grantee, share certificates representing the total number
of full Shares to which the Grantee is entitled pursuant to subparagraph 7(d) hereof and cash in an
amount equal to the Fair Market Value, as of the date of exercise, of any resulting fractional
Shares; or if the Committee causes the Company to elect to settle all or part of its obligations
arising out of the exercise of the SAR in cash, deliver to the Grantee an amount in cash equal to
the Fair Market Value, as of the date of exercise, of the Shares it would otherwise be obligated to
deliver, subject to any required withholding of state, federal and local taxes.
(j) Suspension of Right. Notwithstanding any other provisions of this paragraph 7, the
Committee in its sole and absolute discretion, may suspend the right of any person to exercise a
SAR for up to 30 days if the Grantees Service has been or may be suspended or terminated for any
reason. Following such suspension, the rights of the person to exercise such SAR shall be
controlled by any determination with respect to employment termination made prior to the end of the
period of suspension.
8. Dividend Equivalents. A Dividend Equivalent shall be related to a number of Shares
specified at the time of grant and shall entitle the holder to cash payments that equal the cash
dividend, if any, paid with respect to such Shares provided that the Dividend Equivalent is
outstanding on the record date thereof and that it is not subject to any condition limiting the
Grantees right to receive such payments. A Dividend Equivalent shall be subject to such
restrictions and conditions and other terms including those relating to expiration and forfeiture,
as the Committee shall specify at the time such Dividend Equivalent is granted. Notwithstanding
the foregoing, any restriction or condition (other than expiration or forfeiture) limiting the
Grantees right to receive the cash payment described above shall lapse under the same
circumstances in which option exercisability accelerates as described in paragraph 6(e).
9. Withholding. Whenever under the Plan a Grantee recognizes income with respect to
any Share Award, Option, SAR or Dividend Equivalent (the Award) hereunder, the Company shall have
the right to withhold from any Award under the Plan or to collect as a condition of any payment
under the Plan, any taxes required by law to be withheld. The Company may, at the request of the
Grantee, retain Shares which would otherwise be delivered to the Grantee upon exercise of an Option
or granting or vesting of Share Awards or other Awards, to satisfy the minimum statutory
withholding tax liability that may result from such exercise or vesting, as the case may be.
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10. Compliance with Applicable Laws; Governing Law.
(a) Notwithstanding any other provision in the Plan, the Company shall have no liability to
issue any Shares under the Plan unless such issuance would comply with all applicable laws and
applicable requirements of any securities exchange or similar entity. Notwithstanding any other
provision of the Plan, a Grantee or such other persons as are entitled to exercise an Option or SAR
(as described in paragraph 11(b)) will be prohibited from exercising the Option or SAR to the
extent that the General Counsel of the Company has determined that purchases and sales of the
Company securities shall be restricted because of the existence or potential existence of material
nonpublic information concerning the Company, whether or not such determination has been
communicated to the Grantee or such persons. If the General Counsel of the Company has made such a
determination and the Grantee or such persons give notice of an intent to exercise the Option or
SAR (and satisfy all other conditions to the exercise thereof), the General Counsel of the Company
shall advise the Grantee or such persons concerning such restrictions, and the effective time of
the Grantees exercise shall be postponed to the earlier of the date that the General Counsel of
the Company determines that such restriction is no longer necessary with respect to exercises of
the Option or SAR, or the day before the date that the Option or SAR expires.
(b) This Plan shall be interpreted and construed in accordance with the laws of the State of
Maryland.
11. Transferability.
(a) Share Awards. The Shares and OP Units subject to Share Awards shall not be sold,
assigned, pledged or otherwise transferred, voluntarily or involuntarily, by the Grantee, while
they are subject to the restrictions described in paragraph 5(a).
(b) Options, SARs and Dividend Equivalents. Options, SARs and Dividend Equivalents granted
under the Plan are not transferable except (i) by will or by the laws of descent and distribution
or, to the extent not inconsistent with the applicable provisions of the Code, pursuant to a
qualified domestic relations order (as that term is defined in the Code); and (ii) a Grantee may
transfer all or part of an Option that is not an Incentive Stock Option, or a SAR, to the Grantees
spouse, child or children, grandchild or grandchildren, or other relatives or to a trust for the
benefit of the Grantee and/or any of the foregoing; provided that the transferee thereof shall hold
such Option or SAR subject to all of the conditions and restrictions contained herein and otherwise
applicable to the Option or SAR, and that, as a condition to such transfer, the Company may require
the transferee to agree in writing (in a form acceptable to the Company) that the transfer is
subject to such conditions and restrictions.
12. Employment and Shareholder Status; Award Agreements. The Plan does not constitute
a contract of employment or continued service, and selection as a Grantee will not give any Grantee
the right to be retained in the employ of the Company or any Subsidiary or the right to continue as
a trustee of the Company. Any Share Award granted under the Plan shall not confer upon the holder
thereof any right as a shareholder of the Company prior to the issuance of Shares pursuant thereto.
No person entitled to exercise any Option or SAR granted under the Plan shall have any of the
rights or privileges of a shareholder of record with respect to any Shares issuable upon exercise
of such Option or SAR until certificates representing such Shares have been issued and delivered.
At the time of a grant, the Committee may require a Grantee to enter into an agreement with the
Company in a form specified by the Committee agreeing to the terms and conditions of the Plan and
to such additional terms and conditions, not inconsistent with the Plan, as the Committee may, in
its sole discretion, prescribe.
13. Adjustments. In the event of any change in the outstanding Shares by reason of
any share dividend, split, recapitalization, merger, consolidation, combination, exchange of shares
or other similar corporate change, or in the event of any distribution or dividend to common
shareholders other
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than a regular cash dividend, the Committee shall make such equitable adjustments as it deems to be
appropriate to the aggregate number and kind of Shares reserved for issuance under the Plan or
subject to Share Awards, Options, SARs or Dividend Equivalents outstanding or to be granted under
the Plan, and to the terms of any outstanding Share Awards, Options, SARs or Dividend Equivalents,
so that the total value of each such Award shall not be changed.
14. Section 162(m).
(a) The provisions of this paragraph 14 shall apply only to the extent determined by the
Committee for purposes of making an Award performance-based compensation within the contemplation
of Section 162(m) of the Code. In the event of any inconsistencies between this paragraph, and the
other Plan provisions within the scope of the foregoing, the provisions of this paragraph shall
control.
(b) As soon as practicable following the grant of an Award subject to this paragraph, (but in
no event more than ninety (90) days after the Date of Grant), the Committee shall establish the
performance-related goals to be used in connection with conditions, restrictions and limitations
applicable to such Award. The performance-related goals shall be chosen from among the following
factors, or any combination of the following, as the Committee deems appropriate: total shareholder
return; growth in Funds from Operations, dividends, revenues, net income, share price, earnings per
share or any similar earnings-based financial measure determined by the Committee; return on
assets, capital and/or shareholders equity; and the Companys financial performance versus its
peers. The Committee may select among the goals specified from Award to Award, which need not be
the same for each Grantee. The foregoing does not limit the Committees use of other performance
goals, or no performance goals, in connection with the grant of an Award not subject to this
paragraph.
(c) With respect to the grant of an Award subject to this paragraph, the Committee shall, at
the same time it is making the determinations under this paragraph, determine the relationship
between the performance-related goals and the conditions, restrictions and limitations applicable
to the Award. In connection with an Award subject to this paragraph, no performance-related goal
will be considered to be satisfied until the Committee has certified the extent to which the
performance-related goals and any other material terms were satisfied.
(d) Once established, performance-related goals shall not be changed, except to the extent
that the Committee has specified adjustments as part of the determinations made under paragraph
14(b) and (c). Except as provided in the preceding sentence, in connection with an Award subject
to this paragraph, no performance-related goal applicable to a condition, restriction or limitation
shall be considered to be satisfied if the minimum performance-related goals applicable thereto are
not achieved.
15. Section 409A. To the extent that any Award is determined to constitute
nonqualified deferred compensation within the meaning of Section 409A of the Code (Section
409A), the Award shall be subject to such additional rules and requirements as specified by the
Committee from time to time in order to comply with Section 409A. In this regard, if any amount
under an Award is payable upon a separation from service (within the meaning of Section 409A) to
a Grantee who is then considered a specified employee (within the meaning of Section 409A), then
no such payment shall be made prior to the date that is the earlier of (i) six months and one day
after the Grantees separation from service, or (ii) the Grantees death, but only to the extent
such delay is necessary to prevent such payment from being subject to interest, penalties and/or
additional tax imposed pursuant to Section 409A.
16. Repurchase of Share Awards, SARS and Options. The Committee has the right to
determine that it is in the best interests of the Company to repurchase any outstanding Options
(whether vested or unvested), SARS (vested or unvested) and unvested Shares or OP Units subject to Share
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Awards for cash payable to the Grantee equal to the Fair Market Value of such Options,
SARS, Shares and OP Units determined by the Committee in its good faith discretion. All
outstanding Options, SARS and unvested Share Awards may be subject to repurchase in accordance with
the terms of this paragraph 16; provided, however, that there shall be no repurchase of Options or
SARs for a value in excess of the difference between the exercise price and the share price at the
time of repurchase.
17. Indemnification. Neither the Board nor any member of either or any delegate
thereof, shall be liable for any act, omission, interpretation, construction or determination made
in good faith in connection with the Plan, and the members of the Board (and any delegate thereof)
shall be entitled in all cases to indemnification and reimbursement by the Company in respect of
any claim, loss, damage or expense (including, without limitation, reasonable attorneys fees)
arising or resulting therefrom to the fullest extent permitted by law and/or under the Companys
declaration of trust or bylaws or any directors and officers liability insurance coverage which
may be in effect from time to time and/or any indemnification agreement between such individual and
the Company.
18. Amendments to Plan; Suspension or Termination of Plan. Subject to any approval of
the shareholders of the Company which may be required by law, the Board of Trustees of the Company
may at any time amend, suspend or terminate the Plan. No amendment, suspension or termination of
the Plan shall alter or impair any Share Award, Option, SAR or Dividend Equivalent previously
granted under the Plan without the consent of the holder thereof.
19. General Provisions.
(a) The expenses of administering the Plan shall be borne by the Company or its subsidiaries.
(b) The titles and headings of the paragraphs in the Plan are for convenience of reference
only, and in the event of any conflict, the text of the Plan, rather than such titles or headings,
shall control.
(c) Except where otherwise indicated by the context, any masculine term used herein also shall
include the feminine; the plural shall include the singular and the singular shall include the
plural.
(d) Each Award may contain such other terms and conditions as the Committee may determine;
provided that such other terms and conditions are not inconsistent with the provisions of this
Plan.
(e) In the event that the Company establishes, for itself or using the services of a third
party, an automated system for the documentation, granting or exercise of Awards, such as a system
using an internet website or interactive voice response, then the paperless documentation, granting
or exercise of Awards by a Grantee may be permitted through the use of such an automated system.
(f) Nothing contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, and such arrangements may be either generally applicable or applicable
only in specific cases.
(g) Option exercises and other Awards under the Plan shall be subject to the Companys insider
trading policies and procedures, as in effect from time to time.
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20. Effective Date of Plan. This Plan shall become effective upon approval by the
shareholders of the Company (the Effective Date). No Awards may be granted under the Plan after
the tenth anniversary of the Effective Date.
Date approved by Board of Trustees of the Company: March 24, 2011.
Date approved by Shareholders of the Company: June 16, 2011.
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