EXHIBIT 10.2

 

FORM OF
AWARD OF 2015 EQUITY PARTICIPATION PLAN OF LTC PROPERTIES, INC.
PERFORMANCE BASED MARKET STOCK UNIT AGREEMENT

 

LTC Properties, Inc., a Maryland corporation (the “Company”), and «Grantee», an
employee of the Company (the “Grantee”), for good and valuable consideration the
receipt and adequacy of which are hereby acknowledged and intending to be
legally bound hereby, agree as follows:

 

1.                                      Performance Based Market Stock Unit
Award.  The Company hereby confirms the Performance Award of market stock units
to the Grantee on «Date» (the “Date of Award”) of «100% of Target» (the
“Performance Based MSUs”).  A Performance Based MSU shall be deemed equivalent
in value to one share of Common Stock of the Company.  The award made under this
agreement (the “Agreement”) is made under and subject to the terms and
conditions of the Company’s 2015 Equity Participation Plan of LTC
Properties, Inc. (the “Plan”) and this Award is intended as a Performance Award
under Section 9.2 of the Plan.  The Plan is incorporated by reference and made a
part of this Agreement as though set forth in full herein.  Terms which are
capitalized but not defined in this Agreement have the same meaning as in the
Plan unless the context otherwise requires.  This award of Performance Based
MSUs is contingent on and shall be effective only upon receipt by the Company of
this Agreement executed by the Grantee (the “Effective Date”) and satisfaction
of the Performance Criteria described herein.

 

2.                                      Acceptance of Performance Based Market
Stock Units.  The Grantee accepts this award of Performance Based MSUs confirmed
by this Agreement, acknowledges having received a copy of the Plan and agrees to
be bound by the terms and provisions of the Plan, as the Plan may be amended
from time to time; provided, however, that no alteration, amendment, revocation
or termination of the Plan shall, without the written consent of the Grantee,
adversely affect the rights of the Grantee with respect to the Performance Based
MSUs.

 

3.                                      Performance Criteria

 

A.                                    Performance Period and Performance
Criteria.  The performance period for this award begins on the Date of Award and
ends on February 28, 2020 (the “Performance Period”), with an opportunity to
receive early vesting and payment through an early performance period beginning
on the Date of Award and ending on February 28, 2019 (the “Early Performance
Period”).  The percentage of the Award earned and vested will be established in
writing by the Committee based on the Company’s total shareholder return (the
“TSR”).  The TSR shall be calculated starting on the Date of the Award, assuming
dividend reinvestment, and measured using the twenty (20) trading-day average
price of the Common Stock of the Company immediately prior to the end of the
Performance Period and/or the Early Performance Period.  For the avoidance of
doubt, vesting of Performance Based MSUs following the end of the Performance
Period can only occur with respect to Performance Based MSUs that did not vest
on account of the Company’s performance during the Early Performance Period. 
The following table reflects the Performance Criteria for which performance will
be measured for vesting of the Performance Based MSUs awarded:

 

TSR Growth
During
Early
Performance
Period (ending
«Date»)

 

TSR Growth
During
Performance
Period
(ending «Date»)

 

Vesting as
% of Target

 

Equivalent
Annual TSR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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B.                                    Vesting and Forfeiture.  Following the end
of the Early Performance Period and/or the Performance Period, the Committee
will certify in writing the level of TSR achieved by the Company.  Vesting of
Performance Based MSUs shall occur after such certification under the following
rules:

 

i.                                          Employment Through the End of the
Early Performance Period and the Performance Period.  If the Grantee remains
employed with the Company (or as applicable, continues to provide services to
the Company) on the ending date of the Performance Period (or as applicable the
Early Performance Period) and the Performance Based MSUs have not previously
vested or been forfeited to the Company, the Grantee shall vest in the number of
Performance Based MSUs multiplied by the percent of Target achieved by the
Company, as certified in writing by the Committee.  As of the date of the
Committee’s written certification, all restrictions on the vested Performance
Based MSUs shall lapse, and the Company shall issue to Grantee one share of
Common Stock of the Company in satisfaction of each vested Performance Based
MSU.  Except as otherwise set forth in this Section 3.B, the Grantee must be
employed by the Company on the last day of the Performance Period (or, as
applicable the last day of the Early Performance Period) in order to be eligible
to receive payment of the award.

 

ii.                                       Separation From Service Due to Death
or Disability.  If the Grantee experiences a Separation From Service prior to
the end of the Performance Period because of the Grantee’s death or disability
and the Performance Based MSUs have not been previously vested or been forfeited
to the Company, the unearned Performance MSUs as of the date of the Separation
From Service shall be deemed to be earned and vested at 100% of Target, and the
Company shall issue to Grantee one share of Common Stock of the Company in
satisfaction of each vested Performance Based MSU.  In the event that the
Separation From Service due to death or disability occurs between the end of the
Early Performance Period and the end of the Performance Period, then
acceleration of vesting shall only occur with respect to the Performance Based
MSUs representing the difference between the Performance Based MSUs already
earned and vested on account of the performance during the Early Performance
Period and the Target MSUs, if any.  For the avoidance of doubt, a Grantee who
experiences a Separation From Service due to death or disability shall not have
the opportunity to earn and vest any Performance Based MSUs in excess of the
Target.

 

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iii.                                    Voluntary Separation From Service or
Involuntary Separation From Service for Cause.  If the Grantee experiences a
voluntary Separation From Service or an involuntary Separation From Service for
Cause prior to the last day of the Performance Period, (or, as applicable, the
last day of the Early Performance Period) all unearned and unvested Performance
Based MSUs shall, upon such Separation From Service and without any further
action, be forfeited to the Company by the Grantee and cease to be issued and
outstanding Performance Based MSUs.

 

iv.                                   Involuntary Separation From Service
Without Cause or a Voluntary Separation From Service for Good Reason and Without
a Change in Control.  If the Grantee experiences an involuntary Separation From
Service as the result of being terminated by the Company without Cause or a
voluntary Separation From Service for Good Reason, and such Separation From
Service does not occur: (a) within the 24-month period immediately following a
Change in Control, or (b) prior to and in connection with a Change in Control,
and the Performance Based MSUs have not vested or been forfeited to the Company,
the Grantee shall vest in the Performance Based MSUs multiplied by the percent
of Target achieved by the Company at the conclusion of the Early Performance
and/or Performance Period (as certified in writing by the Committee) and
prorated based on the number of full months that the Grantee was employed by the
Company (or as applicable, provided services to the Company) during the full
Performance Period.  As of the date of the Committee’s written certification,
all restrictions on the vested Performance Based MSUs shall lapse, and the
Company shall issue to Grantee one share of Common Stock of the Company in
satisfaction of each vested Performance Based MSU (which shall be at the same
time as for then-employed participants).  For purposes of this Section 3(b)(iv),
an involuntary Separation From Service without Cause or voluntary Separation
From Service for Good Reason within 180 days preceding a Change in Control will
be deemed to have been a Separation From Service in connection with a Change in
Control.  In determining whether a Separation From Service occurring more than
180 days preceding a Change in Control constitutes a Separation From Service in
connection with a Change in Control, the Administrator shall consider the
totality of facts and circumstances surrounding such termination of employment.

 

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v.                                      Timing and Calculation of Vesting Upon a
Change in Control where the Purchaser assumes the Plan and this Agreement.  Upon
a Change in Control under which the purchaser assumes the Plan and this
Agreement, the Award shall be calculated based on actual TSR performance through
the date of the Change in Control using the transaction stock price for LTC
Properties, Inc. to calculate the annualized compound annual TSR rate for the
end of the performance period, and measuring the level of achievement through
application of the “Equivalent Annual TSR” column of the table in Section 3.A
above (the “CIC Earned Units”).  The CIC Earned Units shall then remain subject
to time-based vesting requirements, such that if the Change in Control occurs on
or before the end of the Early Performance Period, then the CIC Earned Units
shall vest in full upon February 28, 2019, and if the Change in Control occurs
between February 28, 2019 and February 28, 2020, then the CIC Earned Units shall
vest in full upon February 28, 2020.  As of the date of the vesting, all
restrictions on the vested Performance Based MSUs shall lapse, the Company shall
issue to Grantee one share of Common Stock of the Company in satisfaction of
each vested Performance Based MSU.  Except as otherwise provided in this Section
3(b), Grantee must be employed by the Company on the last day of the Performance
Period (or, as applicable the last day of the Early Performance Period) in order
to be eligible to receive payment of the award.

 

vi.                                   Timing and Calculation of Vesting Upon a
Change in Control where the Purchaser does not assume the Plan and this
Agreement.  Notwithstanding any provision in this Agreement to the contrary, if
the successor to the Company as part of the Change in Control does not assume
the Plan and this Agreement, then the CIC Earned Units shall immediately vest
and the Company shall issue to Grantee one share of Common Stock of the Company
in satisfaction of each vested Performance Based MSU.  Notwithstanding the
foregoing, to the extent that the Performance Based MSUs are deemed at the time
to constitute “deferred compensation” as defined under Section 409A of the Code,
then any acceleration of the Performance Based MSU that is triggered by a Change
in Control shall be subject to the Change in Control also constituting a “change
in control” as described in Section 1.409A-3(i)(5)(v) of the Treasury
Regulations, to the extent necessary to avoid the imposition of taxes under
Section 409A of the Code.

 

vii.                                Involuntary Separation From Service Without
Cause or Voluntary Separation for Good Reason in Connection with a Change in
Control.  Notwithstanding Section 3(B)(v) and any other provision in this
Agreement to the contrary, if the Grantee experiences an involuntary Separation
From Service without Cause or a voluntary Separation with Good Reason: within
the 24 months following a Change in Control, or prior to a Change in Control,
but in connection with the Change in Control, then the CIC Earned Units shall
immediately vest and the Company shall issue to Grantee one share of Common
Stock of the Company in satisfaction of each vested Performance Based MSU (and
with respect to a Separation From Service covered by this section that occurs
prior to a Change in Control, vesting of the award shall not occur until the
consummation of the transaction).  For purposes of this Section 3(b)(vii), an
involuntary Separation From Service without Cause or voluntary Separation From
Service for Good Reason within 180 days preceding a Change in Control will be
deemed to have

 

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been a Separation From Service in connection with a Change in Control.  In
determining whether a Separation From Service occurring more than 180 days
preceding a Change in Control constitutes a Separation From Service in
connection with a Change in Control, the Administrator shall consider the
totality of facts and circumstances surrounding such termination of employment. 
For the avoidance of doubt, in the event that Grantee experiences an
involuntarily Separation From Service without Cause or a voluntary Separation of
Service for Good Reason as a result of a contemplated Change in Control that
does not occur, such a Separation From Service shall be treated as a Separation
From Service under Section 3(b)(iv) and shall not be treated as a Separation
From Service under this Section 3(b)(vii) because of the non-occurrence of the
Change in Control.

 

C.                                    Dividend Equivalents.  Grantee is hereby
provided with Dividend Equivalents (as defined in Section 9.3 of the Plan), and
at such time as restrictions on the Performance Based MSUs lapse and vesting
occurs, Grantee shall receive an amount equal to any cash dividends that would
have been payable to Grantee if Grantee had been directly issued an amount of
Common Stock of the Company equivalent to the Performance Based MSUs.  The
Dividend Equivalents shall be paid in cash (minus applicable tax withholding)
and limited to the actual number of Performance Based MSUs which become vested
under this Section 3.  This Section 3(C) shall not apply to record dates for
dividends occurring prior to the Date of Award or after vesting occurs.

 

D.                                    No Alienation of Performance Based Market
Stock Units.  No Grantee shall sell, exchange, assign, alienate, pledge,
hypothecate, encumber, charge, give, transfer or otherwise dispose of, either
voluntarily or by operation of law, any of the Performance Based MSUs, or any
rights or interests appertaining to the Performance Based MSUs, prior to the
lapse of the restrictions imposed herein.

 

E.                                     Compliance with Laws.  The Grantee
understands the provisions of Article 13.9 of the Plan to the effect that the
obligation of the Company to issue shares of Common Stock under the Plan is
subject to (i) the effectiveness of a registration statement under the
Securities Act of 1933, as amended, if deemed necessary or appropriate by
counsel for the Company, (ii) the condition that the shares shall have been
listed (or authorized for listing upon official notice of issuance) upon each
stock exchange, if any, on which the Common Stock may then be listed, if deemed
necessary or appropriate by counsel for the Company and (iii) any other
applicable laws, regulations, rules and orders which may then be in effect.

 

F.                                      Share Certificates.  The certificate or
certificates representing the shares to be issued or delivered hereunder may
bear any legends required by any applicable securities laws and may reflect any
transfer or other restrictions imposed by the Plan, and the Company may at some
time issue to the stock transfer agent appropriate stop-transfer instructions
with respect to such shares.  In addition, also as a condition precedent to the
issuance or delivery of shares, the Grantee may be required to make certain
other representations and warranties and to provide certain other information to
enable the Company to comply with the laws, rules, regulations and orders
specified under the first sentence of this Section 3(F) and to execute a joinder
to any shareholders’ agreement of the Company, in the form provided by the
Company, pursuant to which the transfer of shares received under the Plan may be
restricted.

 

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4.                                      Withholding of Taxes.  The Grantee will
be advised by the Company as to the amount of any Federal income or employment
taxes required to be withheld by the Company on the compensation income
resulting from the vesting and lapse of restrictions on the Performance Based
MSUs and Dividend Equivalents.  State, local or foreign income or employment
taxes may also be required to be withheld by the Company on any compensation
income resulting from the award of the Performance Based MSUs and Dividend
Equivalents.  The Grantee will pay any taxes required to be withheld directly to
the Company upon request.  Notwithstanding any provision to the contrary, the
Administrator may in its discretion and in satisfaction of the foregoing
requirement allow such Holder to elect to have the Company withhold shares of
Common Stock otherwise issuable (or elect the withholding of cash for which
Dividend Equivalents are payable) under the Agreement (or allow the return of
shares of Common Stock) having a Fair Market Value equal to the sums required to
be withheld, provided that any such withholding does not cause an adverse
accounting consequence or cost.

 

If the Grantee does not pay any taxes required to be withheld directly to the
Company within ten days after any request as provided above, the Company may
withhold such taxes from any other compensation to which the Grantee is entitled
from the Company.  The Grantee will hold the Company harmless in acting to
satisfy the withholding obligation in this manner if it becomes necessary to do
so.

 

5.                                      Interpretation of Plan and Agreement.
 This Agreement is a Performance Based Award referred to in Article 9.2 of the
Plan.  The provisions of the Plan shall apply in all cases.  If there is any
conflict between the Plan and this Agreement, the provisions of the Plan will
control.  Any dispute or disagreement which arises under or in any way relates
to the interpretation or construction of the Plan or this Agreement will be
resolved by the Administrator and the decision of the Administrator will be
final, binding and conclusive for all purposes.

 

6.                                      Effect of Agreement on Rights of Company
and Grantee.  This Agreement does not confer any right on the Grantee to
continue in the employ of the Company or interfere in any way with the rights of
the Company to terminate the employment of the Grantee.

 

7.                                      Binding Effect.  This Agreement will be
binding upon the successors and assigns of the Company and upon the legal
representatives, heirs and legatees of the Grantee.

 

8.                                      Entire Agreement.  This Agreement
constitutes the entire agreement between the Company and the Grantee and
supersedes all prior agreements and understandings, oral or written, between the
Company and the Grantee with respect to the subject matter of this Agreement.

 

9.                                      Amendment.  This Agreement may be
amended only by a written instrument signed by the Company and the Grantee.

 

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10.                               409A. The Plan and this Agreement are designed
and administered to be exempt from Section 409A of the Code.  To the extent that
the Administrator or any governmental agency determines that any Performance
Based MSU granted hereunder is subject to Section 409A of the Code, the
Agreement shall incorporate (or shall be amended to incorporate) the terms and
conditions necessary to avoid the consequences specified in
Section 409A(a)(1) of the Code.  Notwithstanding anything in this Agreement to
the contrary, if any amounts that become due under this Agreement on account of
Grantee’s termination of employment constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code, payment of such
amounts shall not commence until Grantee incurs a Separation from Service.  If,
at the time of Grantee’s Separation from Service under this Agreement, Grantee
is a “specified employee” (within the meaning of Section 409A of the Code), any
amounts that constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code that become payable on account of Grantee’s
Separation from Service will not be paid until after the end of the sixth
calendar month beginning after Grantee’s Separation from Service (“409A
Suspension Period”) to the extent necessary to avoid the imposition of taxes
under Section 409A of the Code.  Within 14 calendar days after the end of the
409A Suspension Period, Grantee shall be paid a lump sum payment equal to any
payments delayed because of the preceding sentence.  Thereafter, Grantee shall
receive any remaining benefits as if there had not been an earlier delay. Each
payment or benefit payable under this Agreement is intended to constitute a
separate payment for purposes of Section 409A of the Code.

 

11.                               Section Headings.  The Section headings
contained in this Agreement are for reference purposes only and will not affect
in any way the meaning or interpretation of any of the provisions of this
Agreement.

 

12.                               Governing Law and Jurisdiction.  This
Agreement will be governed by, and construed and enforced in accordance with,
the laws of the State of Maryland.

 

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IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement as
of the Date of Award.

 

 

 

LTC PROPERTIES, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

GRANTEE:

 

 

 

 

 

 

 

«Grantee»

 

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