EXHIBIT 10.4

60/40 vesting

COLONIAL PROPERTIES TRUST
SECOND AMENDED AND RESTATED
EMPLOYEE SHARE OPTION AND RESTRICTED SHARE PLAN
RESTRICTED SHARE AGREEMENT

     THIS AGREEMENT is entered into as of ___ ___, ___, by and between Colonial
Properties Trust, (the “Company”), and ___, a key employee of Company and/or of
its Subsidiaries or Affiliates (the “Holder”).

Recitals:

     WHEREAS, Company has adopted the Colonial Properties Trust Second Amended
and Restated Employee Share Option and Restricted Share Plan (the “Plan”)
providing for the grant under certain circumstances of common shares of
beneficial interest of the Company, par value $.01 per share (the “Shares”);

     WHEREAS, Company, under the terms and conditions set forth below, has
offered and committed to grant Shares under the Plan (the “Restricted Share
Award”) to the Holder in connection with the employment of the Holder in the
capacity set forth below; and

     WHEREAS, in consideration of the grant of the Restricted Share Award and
other benefits, the Holder is willing to accept the Restricted Share Award
provided for in this Agreement and is willing to abide by the obligations
imposed on him or her under this Agreement and the other responsibilities of his
or her position;

Provisions:

     NOW, THEREFORE, in consideration of the mutual benefits hereinafter
provided, and each intending to be legally bound, Company and the Holder hereby
agree as follows:

     1. Effect of the Plan.

     The Restricted Share Award to be granted under this Agreement will be
subject to all of the terms and conditions of the Plan (attached hereto as
Exhibit A, the terms of which are incorporated by reference and made part of
this Agreement). The Holder will abide by, and the Restricted Share Award
granted to the Holder will be subject to, all of the provisions of the Plan and
of this Agreement, together with all rules and determinations from time to time
issue by the Committee established to administer the Plan and by the Board of
Trustees of Company (hereinafter “Board”) pursuant to the Plan.

     2. Grants.

     The Holder is hereby granted and issued ___Shares. Concurrently with the
execution and delivery of this Agreement, the Company is issuing and delivering
to Holder certificates representing the Shares being acquired by him, registered
in his name. The Grant Date of this Restricted Share Award is___ ___, ___.

     3. Vesting in Restricted Shares.

          3.1 Service Requirement. The Restricted Share Award becomes vested
(i.e., nonforfeitable) as to 60% of the Restricted Shares on the first
anniversary of the Grant Date (the “Anniversary Date”) if Holder has been
providing services to the Company, a Subsidiary or an Affiliate continuously
from the Grant Date. The Restricted Share Award becomes vested as to the
remaining 40% of the Restricted Shares on the subsequent Anniversary Date,
provided Holder has been providing services to the Company, a Subsidiary or an
Affiliate continuously from the Grant Date. Service for this purpose includes
service as an employee, director or independent contractor providing services to
the Company, a Subsidiary or an Affiliate. For purposes of this Agreement,
termination of service would not be deemed to occur if the Holder, after
terminating service in one

 

--------------------------------------------------------------------------------

 

RESTRICTED SHARE AGREEMENT
PAGE 2

capacity, continues to provide service to the Company, any Subsidiary or any
Affiliate in another capacity. Termination of service is sometimes also referred
to herein as termination of employment or other relationship with the Company,
its Subsidiaries or its Affiliates.

          3.2 Limitation Period. The period during which the Restricted Share
Award is subject to the vesting conditions of Section 3.1 above is the
“Limitation Period.” Except as otherwise determined by the Committee, during the
Limitation Period applicable with respect to a Restricted Share Award, the
Holder may not sell, transfer, assign, pledge or otherwise encumber or dispose
of the Shares covered by such award. The certificate representing the Shares
distributed with respect to each Restricted Share Award made under the Plan
shall be affixed with a legend setting forth the restrictions applicable to the
transfer of such Shares. When the restrictions applicable to a Restricted Share
Award shall lapse, a certificate for the number of Shares with respect to which
restrictions have lapsed shall be delivered to the Holder free of all such
restrictions. Restricted Shares that are forfeited shall be immediately
transferred to the Company without any payment by the Company.

          3.3 Termination of Service. If before the end of the Limitation
Period, the Holder terminates service with the Company by reason of the Holder’s
death, “permanent and total disability” (within the meaning of Section 22(e)(3)
of the Code) or is terminated without Cause by the Company, the Holder, his or
her legal guardian, or the executor or administrator of the estate of the Holder
or the person or persons to whom rights under the Restricted Share Agreement
have passed by bequest or inheritance, as the case may be, shall be fully vested
in the shares covered by the Restricted Share Agreement. If the Holder
terminates service with the Company voluntarily other than by reason of
Retirement or is terminated for Cause, the Holder shall immediately forfeit to
the Company all unvested Restricted Shares awarded hereunder. If the Holder
terminates service by reason of Retirement, the Holder shall continue to vest in
this Restricted Share Award as if the Holder’s service had not terminated.

          For purposes of this Restricted Share Agreement,

          “Cause” means (i) the commission of a felony or a crime involving
moral turpitude or the commission of any other act or omission involving
dishonesty or fraud with respect to the Company, Subsidiary, or Affiliate or any
of their customers or suppliers, (ii) conduct tending to bring the Company,
Subsidiary, or Affiliate into substantial public disgrace or disrepute,
(iii) substantial and repeated failure to perform duties of the office held by
the Holder as reasonably directed by the Board, and such failure is not cured
within 30 days after the Holder receives notice thereof from the Board,
(iv) gross negligence or willful misconduct with respect to the Company,
Subsidiary, or Affiliate or (v) material breach of any term of any employment,
consulting or other services, confidentiality, intellectual property or
non-competition agreements, if any, between Holder and the Company, Subsidiary
or Affiliate; and

          “Retirement” means termination of the Holder’s employment with the
Company, a Subsidiary or an Affiliate at or after: (i) the date the Holder
attains age 55 or (ii) such time as the Holder’s age in whole years plus the
Holder’s number of full years of service with the Company equals 70.

     4. Dividend and Voting Rights.

     Subject to the restrictions contained herein, Holder, as owner of his
Shares, shall have all of the rights of a shareholder, including the right to
vote such Shares and to receive all dividends, cash or stock, paid or delivered
thereon.

     5. Change of Control; Sale of Assets/Shares.

          5.1 Changes in Shares. If the number of outstanding Shares is
increased or decreased or the Shares are changed into or exchanged for a
different number or kind of Shares or other securities of the Company on account
of any recapitalization, reclassification, Share split, reverse split,
combination of Shares, exchange of Shares, Share dividend or other distribution
payable in capital stock, or other increase or decrease in

-2-

--------------------------------------------------------------------------------

 

RESTRICTED SHARE AGREEMENT
PAGE 3

such Shares effected without receipt of consideration by the Company occurring
after the date the Restricted Share Award is granted, a proportionate and
appropriate adjustment shall be made by the Company in the number and kind of
Shares subject to the Restricted Share Agreement, so that the proportionate
interest of the Holder immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event.

          5.2. Reorganization in Which the Company Is the Surviving Entity.
Subject to Section 5.3, if the Company shall be the surviving entity in any
reorganization, merger or consolidation of the Company with one or more other
entities, the Restricted Share Award shall pertain to and apply to the
securities to which a holder of the number of Shares subject to the Restricted
Share Agreement would have been entitled immediately following such
reorganization, merger or consolidation.

          5.3 Reorganization in Which the Company Is Not the Surviving Entity or
Sale of Assets or Shares. Upon the dissolution or liquidation of the Company, or
upon a merger, consolidation or reorganization of the Company with one or more
other entities in which the Company is not the surviving entity, or upon a sale
of substantially all of the assets of the Company to another entity, or upon any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving entity) approved by the Board which results in any
person or entity (or persons or entities acting as a group or otherwise in
concert) owning 80 percent or more of the combined voting power of all classes
of securities of the Company, the unvested Restricted Share Award shall become
fully vested.

          5.4 Adjustments. Adjustments specified in this Section relating to
Shares or securities of the Company shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. No
fractional Shares or units of other securities 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 or unit.

     6. Requirements of Law.

     The Company shall not be required to issue any Shares under the Agreement
if the issuance of such Shares would constitute a violation by the Holder or by
the Company 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 Company shall determine, in its discretion, that
the listing, registration or qualification of any Shares subject to the
Restricted Share Agreement 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 of
Shares hereunder, the Restricted Shares shall not vest 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 Company.
Specifically in connection with the Securities Act of 1933 (as now in effect or
as hereafter amended), unless a registration statement under such Act is in
effect with respect to the Shares covered by the Restricted Share Agreement, the
Company shall not be required to issue such Shares unless the Company has
received evidence satisfactory to it that the Holder may acquire such Shares
pursuant to an exemption from registration under such Act. Any determination in
this connection by the Company shall be final, binding, and conclusive. The
Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended). The Company shall not be obligated to take any affirmative
action in order to cause the issuance of 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 Restricted Shares shall not vest
unless and until the Shares covered by the Restricted Share Agreement are
registered or are subject to an available exemption from registration, the
vesting of the Restricted Shares (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.

-3-

--------------------------------------------------------------------------------

 

RESTRICTED SHARE AGREEMENT
PAGE 4

     7. Withholding of Taxes.

     The parties hereto recognize that the Company, a Subsidiary or an Affiliate
may be obligated to withhold federal and local income taxes and Social Security
and Medicare taxes to the extent that the Holder realizes compensation income in
connection with the Restricted Shares. The Holder agrees that the Company, a
Subsidiary or an Affiliate may: (i) withhold amounts needed to cover such taxes
from payments otherwise due and owing to the Holder and (ii) sell or repurchase
a sufficient number of the Restricted Shares to pay such taxes without the
consent of the Holder. The Holder further agrees that upon demand the Holder
will promptly pay to the Company, a Subsidiary or an Affiliate having such
obligation any additional amounts as may be necessary to satisfy such
withholding tax obligation. Such payment shall be made in cash or cash
equivalent.

     8. Disclaimer of Rights.

     No provision in this Restricted Share Agreement shall be construed to
confer upon the Holder the right to be employed by the Company, any Subsidiary
or any Affiliate, or to interfere in any way with the right and authority of the
Company, any Subsidiary or any Affiliate either to increase or decrease the
compensation of the Holder at any time, or to terminate any employment or other
relationship between the Holder and the Company, any Subsidiary or any
Affiliate.

     9. Interpretation of this Restricted Share Agreement.

     All decisions and interpretations made by the Committee or the Board of
Trustees of the Company with regard to any question arising under the Plan or
this Restricted Share Agreement shall be binding and conclusive on the Company
and the Holder and any other person entitled to the Restricted Shares as
provided for herein. In the event that there is any inconsistency between the
provisions of this Restricted Share Agreement and of the Plan, the provisions of
the Plan shall govern.

     10. Governing Law.

     This Restricted Share Agreement is executed pursuant to and shall be
governed by the laws of the State of Maryland (but not including the choice of
law rules thereof).

     11. Arbitration.

     Any disputes between the Company and the Holder in any way concerning this
Restricted Share Agreement shall be submitted at the initiative of either party
to mandatory arbitration before a single arbitrator in Birmingham, Alabama
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association, or its successor, then in effect. The decision of the arbitrator
shall be rendered in writing, shall be final and may be entered as a judgment in
any court in the State of Alabama. The parties irrevocably consent to the
jurisdiction of the federal and state courts located in Alabama for this
purpose. Each party shall be responsible for its or his own costs incurred in
such arbitration and in enforcing any arbitration award, including attorney’s
fees.

     12. Approval by Shareholders.

     This Restricted Share Agreement and the issuance of any Shares under it are
expressly subject to the approval of the Plan by the shareholders of the Company
as provided for therein. The Restricted Share shall not in any event be vested
in whole or in part prior to the date the Plan is approved by the shareholders
of the Company as provided for therein.

-4-

--------------------------------------------------------------------------------

 

RESTRICTED SHARE AGREEMENT
PAGE 5

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

            COLONIAL PROPERTIES TRUST
      By:            

         
 
       
WITNESS (as to Holder)
    HOLDER  

-5-