EXHIBIT 10.3
AMENDED AND RESTATED
2008 DEVELOPERS DIVERSIFIED REALTY CORPORATION
EQUITY-BASED AWARD PLAN
(AMENDED AND RESTATED AS OF JUNE 25, 2009)
Section 1. Purpose; Definitions.
     The purpose of the Amended and Restated 2008 Developers Diversified Realty
Corporation Equity-Based Award Plan (Amended and Restated as of June 25, 2009)
(the “Plan”) is to enable Developers Diversified Realty Corporation (the
“Company”) and its Subsidiaries (as defined below) to attract, retain and reward
employees and directors of the Company, its Subsidiaries and Affiliates
designated by the Company’s Board of Directors or the Executive Compensation
Committee of the Board and strengthen the mutuality of interests between those
employees and directors and the Company’s shareholders by offering the employees
and directors equity or equity-based incentives thereby increasing their
proprietary interest in the Company’s business and enhancing their personal
interest in the Company’s success.
     For purposes of the Plan, the following terms are defined as follows:
     (a) “409A Award” means an Award that provides for a deferral of
compensation from the date of grant, as determined under Code Section 409A and
the regulations promulgated thereunder.
     (b) “409A Change in Control” has the meaning set forth in Section 12(b)(2).
     (c) “Affiliate” means any entity (other than the Company and any
Subsidiary) that is designated by the Board as a participating employer under
the Plan.
     (d) “Award” means any award of Stock Options, Share Appreciation Rights,
Restricted Shares, Deferred Shares, Share Purchase Rights or Other Share-Based
Awards under the Plan.
     (e) “Award Agreement” means an agreement between the Company and a
participant evidencing an Award.
     (f) “Board” means the Board of Directors of the Company.
     (g) “Cause” means, unless otherwise provided by the Committee, (i) “Cause”
as defined in any Individual Agreement to which the participant is a party, or
(ii) if there is no such Individual Agreement or if it does not define Cause:
(A) conviction of the participant for committing a felony under federal law or
in the law of the state in which such action occurred, (B) dishonesty in the
course of fulfilling the participant’s employment duties, (C) willful and
deliberate failure on the part of the participant to perform the participant’s
employment duties in any material respect, or (D) prior to a Change in Control,
such other events as shall be determined by the Committee. The Committee shall,
unless otherwise provided in an Individual Agreement with the participant, have
the sole discretion to determine whether “Cause” exists, and its determination
shall be final.
     (h) “Change in Control” has the meaning set forth in Section 12(b)(1).
     (i) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
     (j) “Committee” means the Executive Compensation Committee of the Board of
the Company or any other committee or subcommittee authorized by the Board to
administer the Plan.
     (k) “Company” means Developers Diversified Realty Corporation, an Ohio
corporation, or any successor corporation.

 

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

 

     (l) “Deferral Period” has the meaning set forth in Section 8(a).
     (m) “Deferred Shares” means an Award of the right to receive Shares at the
end of a specified deferral period granted pursuant to Section 8.
     (n) “Disability” means a permanent and total disability as defined in
Section 22(e)(3) of the Code.
     (o) “Dividend Equivalent” means a right, granted to a participant under
Section 10 hereof, to receive cash, Shares, other Awards or other property equal
in value to dividends paid with respect to a specified number of Shares, or
other periodic payments.
     (p) “Elective Deferral Period” has the meaning set forth in
Section 8(b)(9).
     (q) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     (r) “Fair Market Value” means, as of a given date (in order of
applicability): (i) the closing price of a Share on the principal exchange on
which the Shares are then trading, if any, on such date, or if Shares were not
traded on such date, then on the next preceding trading day during which a sale
occurred; (ii) if Shares are not then traded on an exchange, the mean between
the closing representative bid and asked prices for Shares on such date as
reported by a national quotation system; or (iii) if Shares are not traded on an
exchange and not quoted on a national quotation system, the mean between the
closing bid and asked prices for Shares, on such date, as determined in good
faith by the Committee; or (iv) if Shares are not publicly traded, the fair
market value established by the Committee acting in good faith and in accordance
with the applicable requirements of Code Section 409A and the regulations
promulgated thereunder.
     (s) “Incentive Stock Option” means any Stock Option intended to be and
designated as, and that otherwise qualifies as, an “Incentive Stock Option”
within the meaning of Section 422 of the Code or any successor section thereto.
     (t) “Individual Agreement” means an employment or similar agreement between
a participant and the Company or one of its Subsidiaries or Affiliates.
     (u) “Minimum Deferral Period” has the meaning set forth in Section 8(b)(1).
     (v) “Minimum Holding Period” has the meaning set forth in Section 10(b)(1).
     (w) “Minimum Restriction Period” has the meaning set forth in
Section 7(b)(5).
     (x) “Non-Employee Director” has the meaning set forth under Rule 16b-3
under the Exchange Act.
     (y) “Non-Qualified Stock Option” means any Stock Option that is not an
Incentive Stock Option.
     (z) “Option Agreement” has the meaning set forth in Section 5(b).
     (aa) “Other Share-Based Awards” means an Award granted pursuant to
Section 10 that is valued, in whole or in part, by reference to, or is otherwise
based on, Shares.
     (bb) “Outside Director” has the meaning set forth in Section 162(m) of the
Code and the regulations promulgated thereunder.
     (cc) “Plan” means the Amended and Restated 2008 Developers Diversified
Realty Corporation Equity-Based Award Plan (Amended and Restated as of June 25,
2009), as amended from time to time.
     (dd) “Restricted Shares” means an Award of Shares that is granted pursuant
to Section 7 and is subject to restrictions.

- 2 -

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

 

     (ee) “Restriction Period” has the meaning set forth in Section 7(b)(5).
     (ff) “Section 16 Participant” means a participant under the Plan who is
subject to Section 16 of the Exchange Act.
     (gg) “Separation from Service” has the meaning set forth in
Section 11(b)(1)(C).
     (hh) “Share Appreciation Right” means an Award of a right to receive an
amount from the Company that is granted pursuant to Section 6.
     (ii) “Shares” means the Common Shares of the Company.
     (jj) “Specified Employee” has the meaning set forth in Section 11(b)(1)(D).
     (kk) “Stock Option” or “Option” means any option to purchase Shares
(including Restricted Shares and Deferred Shares, if the Committee so
determines) that is granted pursuant to Section 5.
     (ll) “Share Purchase Right” means an Award of the right to purchase Shares
that is granted pursuant to Section 9.
     (mm) “Subsidiary” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in that chain.
Section 2. Administration.
     The Plan shall be administered by the Committee. The Committee shall
consist of not less than three directors of the Company. All members of the
Committee shall be independent directors, Outside Directors and Non-Employee
Directors. Those directors shall be appointed by the Board and shall serve as
the Committee at the pleasure of the Board. The functions of the Committee
specified in the Plan shall be exercised by the members of the Board who are
Non-Employee Directors if and to the extent that no Committee exists that has
the authority to so administer the Plan.
     The Committee shall have full power to interpret and administer the Plan
and full authority to select the individuals to whom Awards will be granted and
to determine the type and amount of any Award to be granted to each participant,
the consideration, if any, to be paid for any Award, the timing of each Award,
the terms and conditions of any Award granted under the Plan, and the terms and
conditions of the related agreements that will be entered into with the
participant. As to the selection of and grant of Awards to participants who are
not executive officers or non-employee directors of the Company, or Section 16
Participants, the Committee may delegate its responsibilities to members of the
Company’s management in any manner consistent with applicable law.
     The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
Award issued under the Plan (and any agreement relating thereto); to direct
employees of the Company or other advisors to prepare such materials or perform
such analyses as the Committee deems necessary or appropriate; and otherwise to
supervise the administration of the Plan.
     Any interpretation or administration of the Plan by the Committee, and all
actions and determinations of the Committee, shall be final, binding and
conclusive on the Company, its shareholders, Subsidiaries, Affiliates, all
participants in the Plan, their respective legal representatives, successors and
assigns, and all persons claiming under or through any of them. No member of the
Board or of the Committee shall incur any liability for any action taken or
omitted, or any determination made, in good faith in connection with the Plan.

- 3 -

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

 

Section 3. Shares Subject to the Plan.
     (a) Aggregate Shares Subject to the Plan. Subject to adjustment as provided
in Section 3(c), the total number of Shares reserved and available for Awards
under the Plan is 7,400,000 Shares. Any Shares issued hereunder may consist, in
whole or in part, of authorized and unissued shares or treasury shares.
Notwithstanding anything to the contrary contained in the Plan, the following
Shares shall not be added to the Shares reserved and available for Awards under
this Section 3(a) of the Plan: (i) Shares tendered by a participant or withheld
by the Company in payment of the option price of a Stock Option or to satisfy
any tax withholding obligation with respect to Awards; (ii) Shares subject to a
Share Appreciation Right that are not issued in connection with stock settlement
on exercise of the Share Appreciation Right; and (iii) Shares reacquired by the
Company on the open market or otherwise using cash proceeds from the exercise of
Stock Options.
     (b) Forfeiture or Termination of Awards of Shares. If any Shares subject to
any Award granted hereunder are forfeited or an Award otherwise terminates or
expires without the issuance of Shares, the Shares subject to that Award shall
again be available for future Awards under the Plan as set forth in
Section 3(a), unless the participant who had been awarded those forfeited Shares
or the expired or terminated Award has theretofore received dividends or other
benefits of ownership with respect to those Shares. For purposes hereof, a
participant shall not be deemed to have received a benefit of ownership with
respect to those Shares by the exercise of voting rights, or by the accumulation
of dividends that are not realized because of the forfeiture of those Shares or
the expiration or termination of the related Award without issuance of those
Shares.
     (c) Adjustment. In the event of any merger, reorganization, consolidation,
recapitalization, share dividend, share split, combination of shares or other
change in corporate structure of the Company affecting the Shares, a
substitution or adjustment shall be made in the aggregate number of Shares
reserved and available for Awards under the Plan, in the aggregate number of
Shares that may be issued by the Company upon the exercise of Incentive Stock
Options, in the maximum number of Shares that may be subject to Awards made
under the Plan to any participant during any calendar year, in the number and
option price of Shares subject to outstanding Options granted under the Plan, in
the number and purchase price of Shares subject to outstanding Share Purchase
Rights granted under the Plan, in the number of Share Appreciation Rights
granted under the Plan, in the number of Shares underlying any Dividend
Equivalent Rights granted under the Plan, and in the number of Shares subject to
Restricted Share Awards, Deferred Share Awards and any other outstanding Awards
granted under the Plan, but the number of Shares subject to any Award shall
always be a whole number. The Committee, in its sole discretion, shall determine
the kind of securities or other property substituted and the amount of any
substitution or adjustment made, and the Committee’s determination shall be
final, binding and conclusive. Any fractional Shares otherwise issuable in
connection with such substitution or adjustment shall be eliminated.
Notwithstanding the foregoing, no substitution or adjustment shall be made which
will result in an Award becoming subject to the terms and conditions of Code
Section 409A, unless agreed upon by the Committee and the participant.
     (d) Annual Award Limit. No participant may be granted Stock Options or
other Awards under the Plan with respect to an aggregate of more than 1,000,000
Shares (subject to adjustment as provided in Section 3(c) hereof) during any
calendar year.
     (e) Incentive Stock Option Limit. Subject to adjustment as provided in
Section 3(c) of the Plan, the aggregate number of Shares actually issued by the
Company upon the exercise of Incentive Stock Options will not exceed 7,400,000
Shares.
Section 4. Eligibility.
     Grants may be made from time to time to those officers, employees and
directors of the Company, a Subsidiary or an Affiliate who are designated by the
Committee in its sole and exclusive discretion. Eligible persons may include,
but shall not necessarily be limited to, officers and directors of the Company
and any Subsidiary or Affiliate; however, Stock Options intended to qualify as
Incentive Stock Options shall be granted only to individuals who are at the time
of grant “employees” (under Section 3401(c) of the Code) of the Company or a
subsidiary of the Company (under Section 424 of the Code). The Committee may
grant more than one Award to the same eligible person. No Award shall be granted
to any eligible person during any period of time when such eligible person is on
a leave of absence. Awards to be granted to directors, which may include members
of the Committee, must be approved and granted by the members of the Board who
are Non-Employee Directors.

- 4 -

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

 

Section 5. Stock Options.
     (a) Grant. Stock Options may be granted alone, in addition to or in tandem
with other Awards granted under the Plan or cash or other awards made outside
the Plan. The Committee shall determine the individuals to whom, and the time or
times at which, grants of Stock Options will be made, the number of Shares
purchasable under each Stock Option, and the other terms and conditions of the
Stock Options in addition to those set forth in Sections 5(b) and 5(c).
     Stock Options granted under the Plan may be of two types, which shall be
indicated on their face: (i) Incentive Stock Options or (ii) Non-Qualified Stock
Options. Subject to Section 5(c), the Committee shall have the authority to
grant to any participant Incentive Stock Options, Non-Qualified Stock Options or
both types of Stock Options.
     (b) Terms and Conditions. A Stock Option under the Plan shall be evidenced
by an agreement (an “Option Agreement”), shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall determine:
     (1) Option Price. The option price per share of Shares purchasable under a
Non-Qualified Stock Option or an Incentive Stock Option shall be determined by
the Committee at the time of grant and shall be not less than 100% of the Fair
Market Value of the Shares at the date of grant (or, with respect to an
Incentive Stock Option, 110% of the Fair Market Value of the Shares at the date
of grant in the case of a participant who at the date of grant owns Shares
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its parent or Subsidiary corporations (as determined
under Sections 424(d), (e) and (f) of the Code)).
     (2) Option Term. The term of each Stock Option shall be determined by the
Committee, but may not exceed ten years from the date the Option is granted (or,
with respect to an Incentive Stock Option, five years in the case of a
participant who at the date of grant owns Shares possessing more than 10% of the
total combined voting power of all classes of stock of the Company or its parent
or Subsidiary corporations (as determined under Sections 424(d), (e) and (f) of
the Code)).
     (3) Exercise. Stock Options shall be exercisable at such time or times and
shall be subject to such terms and conditions as shall be determined by the
Committee at or after grant and permitted by Code Section 409A or agreed upon in
writing by the Committee and the participant; but, except as provided in
Section 5(b)(6) and Section 12, unless otherwise determined by the Committee at
or after grant, no Stock Option shall be exercisable prior to six months and one
day following the date of grant. If any Stock Option is exercisable only in
installments or only after specified exercise dates, subject to Section 15(a),
the Committee may waive, in whole or in part, such installment exercise
provisions, and may accelerate any exercise date or dates, at any time at or
after grant, based on such factors as the Committee shall determine in its sole
discretion; provided, however, the Committee may not waive, without the
participant’s consent, such installment exercise provisions or accelerate any
exercise dates with respect to a 409A Award if doing so would result in any
adverse tax consequences for the optionee under Code Section 409A and the
regulations promulgated thereunder.
     (4) Method of Exercise. Subject to any installment exercise provisions that
apply with respect to any Stock Option, Code Section 409A and the regulations
promulgated thereunder, and Section 5(b)(3), a Stock Option may be exercised in
whole or in part, at any time during the Option period, by the holder thereof
giving to the Company written notice of exercise specifying the number of Shares
to be purchased.
     That notice shall be accompanied by payment in full of the Option price of
the Shares for which a Stock Option is exercised, and the Committee shall
determine the acceptable form of consideration for exercising a Stock Option,
including the method of payment, either through the terms of the Option
Agreement or at the time of exercise of a Stock Option. Acceptable forms of
consideration may include:

- 5 -

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

 

     (A) cash;
     (B) check or wire transfer (denominated in U.S. Dollars);
     (C) subject to any conditions or limitations established by the Committee,
other Shares which (A) in the case of Shares acquired from the Company (whether
upon the exercise of a Stock Option or otherwise), have been owned by the
participant for more than six months on the date of surrender (unless this
condition is waived by the Committee), and (B) have a Fair Market Value on the
date of surrender equal to or greater than the aggregate option price of the
Shares as to which said Stock Option is being exercised (it being agreed that
the excess of the Fair Market Value over the aggregate option price shall be
refunded to the participant in cash);
     (D) subject to any conditions or limitations established by the Committee,
the Company withholding shares otherwise issuable upon exercise of a Stock
Option;
     (E) consideration received by the Company under a broker-assisted sale and
remittance program acceptable to the Committee;
     (F) such other consideration and method of payment for the issuance of
Shares to the extent permitted by applicable law; or
     (G) any combination of the foregoing methods of payment.
     No Shares shall be issued upon exercise of an Option until full payment has
been made. No grant of Stock Options may be accompanied by a tandem award of
Dividend Equivalent Rights or provide for dividends, dividend equivalents or
other distributions to be paid on such Stock Options.
     (5) Non-Transferability of Options. No Stock Option shall be transferable
by any participant other than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order (as defined in the Code or
the Employee Retirement Income Security Act of 1974, as amended) except that, if
so provided in the Option Agreement, the participant may transfer the Option,
other than an Incentive Stock Option, during the participant’s lifetime to one
or more members of the participant’s family, to one or more trusts for the
benefit of one or more of the participant’s family, or to a partnership or
partnerships of members of the participant’s family, or to a charitable
organization as defined in Section 501(c)(3) of the Code, provided that the
transfer would not result in the loss of any exemption under Rule 16b-3 of the
Exchange Act with respect to any Option. The transferee of an Option will be
subject to all restrictions, terms and conditions applicable to the Option prior
to its transfer, except that the Option will not be further transferable by the
transferee other than by will or by the laws of descent and distribution.
     (6) Termination of Employment
     (i) Termination by Death. Subject to Sections 5(b)(3) and 5(c), if any
participant’s employment with the Company or any Subsidiary or Affiliate
terminates by reason of death, any Stock Option held by that participant shall
become immediately and automatically vested and exercisable. If termination of a
participant’s employment is due to death, then any Stock Option held by that
participant may thereafter be exercised for a period of two years (or with
respect to an Incentive Stock Option, for a period of one year) (or such other
period as the Committee may specify at or after grant) from the date of death.
Notwithstanding the foregoing, in no event will any Stock Option be exercisable
after the expiration of the option period of such Option. The balance of the
Stock Option shall be forfeited if not exercised within two years (or one year
with respect to Incentive Stock Options).
     (ii) Termination by Reason of Disability. Subject to Sections 5(b)(3) and
5(c), if a participant’s employment with the Company or any Subsidiary or
Affiliate terminates by reason of Disability, any Stock Option held by that
participant shall become immediately and automatically vested and exercisable.
If termination of a participant’s employment is due to Disability, then any
Stock Option held by that participant may thereafter be exercised by the
participant or by the participant’s duly authorized legal representative if the
participant is unable to exercise the Option as a result of the participant’s
Disability, for a period of two years (or with respect to an Incentive

- 6 -

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

 

Stock Option, for a period of one year) (or such other period as the Committee
may specify at or after grant) from the date of such termination of employment;
and if the participant dies within that two year period (or such other period as
the Committee may specify at or after grant), any unexercised Stock Option held
by that participant shall thereafter be exercisable by the estate of the
participant (acting through its fiduciary) for the duration of the two-year
period from the date of that termination of employment. Notwithstanding the
foregoing, in no event will any Stock Option be exercisable after the expiration
of the option period of such Option. The balance of the Stock Option shall be
forfeited if not exercised within two years (or one year with respect to
Incentive Stock Options).
     (iii) Termination for Cause. Unless otherwise determined by the Committee
(subject to Section 15(a)) at or after the time of granting any Stock Option, if
a participant’s employment with the Company or any Subsidiary or Affiliate
terminates for Cause, any unvested Stock Options will be forfeited and
terminated immediately upon termination and any vested Stock Options held by
that participant shall terminate 30 days after the date employment terminates.
Notwithstanding the foregoing, in no event will any Stock Option be exercisable
after the expiration of the option period of such Option. The balance of the
Stock Option shall be forfeited if not exercised within 30 days.
     (iv) Other Termination. Unless otherwise determined by the Committee
(subject to Section 15(a)) at or after the time of granting any Stock Option, if
a participant’s employment with the Company or any Subsidiary or Affiliate
terminates for any reason other than death, Disability, or for Cause all Stock
Options held by that participant shall terminate 90 days after the date
employment terminates. Notwithstanding the foregoing, in no event will any Stock
Option be exercisable after the expiration of the option period of such Option.
The balance of the Stock Option shall be forfeited if not exercised within
90 days.
     (v) Leave of Absence. In the event a participant is granted a leave of
absence by the Company or any Subsidiary or Affiliate to enter military service
or because of sickness, the participant’s employment with the Company or such
Subsidiary or Affiliate will not be considered terminated, and the participant
shall be deemed an employee of the Company or such Subsidiary or Affiliate
during such leave of absence or any extension thereof granted by the Company or
such Subsidiary or Affiliate. Notwithstanding the foregoing, in the case of an
Incentive Stock Option, a leave of absence of more than 90 days will be viewed
as a termination of employment unless continued employment is guaranteed by
contract or statute.
     (c) Incentive Stock Options. Notwithstanding Sections 5(b)(5) and (6), an
Incentive Stock Option shall be exercisable by (i) a participant’s authorized
legal representative (if the participant is unable to exercise the Incentive
Stock Option as a result of the participant’s Disability) only if, and to the
extent, permitted by Section 422 of the Code and (ii) by the participant’s
estate, in the case of death, or authorized legal representative, in the case of
Disability, no later than 10 years from the date the Incentive Stock Option was
granted (in addition to any other restrictions or limitations that may apply).
Anything in the Plan to the contrary notwithstanding, no term or provision of
the Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the participants affected, to disqualify any Incentive
Stock Option under that Section 422 or any successor Section thereto.
     (d) Buyout Provisions. Subject to Section 13(b) of the Plan, the Committee
may at any time buy out for a payment in cash, Shares, Deferred Shares or
Restricted Shares, an Option previously granted, based on such terms and
conditions as the Committee shall establish and agree upon with the participant,
but no such transaction involving a Section 16 Participant shall be structured
or effected in a manner that would result in any liability on the part of the
participant under Section 16(b) of the Exchange Act or the rules and regulations
promulgated thereunder. Further, any such buy out shall comply with the
requirements of Code Section 409A and the regulations promulgated thereunder,
unless otherwise agreed upon in writing by the Committee and the participant.

- 7 -

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

 

Section 6. Share Appreciation Rights.
     (a) Grant. Share Appreciation Rights may be granted in connection with all
or any part of an Option, either concurrently with the grant of the Option or,
if the Option is a Non-Qualified Stock Option, by an amendment to the Option at
any time thereafter during the term of the Option. Share Appreciation Rights may
be exercised in whole or in part at such times and under such conditions as may
be specified by the Committee in the participant’s Option Agreement; provided,
that no Share Appreciation Right granted in connection with all or any part of
an Option shall be exercisable for less than the Fair Market Value of the
underlying Shares as of the date of the original grant of the Option unless such
Share Appreciation Right or Option is a 409A Award, as provided for in the
applicable Award Agreement.
     (b) Terms and Conditions. The following terms and conditions will apply to
all Share Appreciation Rights that are granted in connection with Options:
     (1) Rights. Share Appreciation Rights shall entitle the participant, upon
exercise of all or any part of the Share Appreciation Rights, to surrender to
the Company, unexercised, that portion of the underlying Option relating to the
same number of Shares as is covered by the Share Appreciation Rights (or the
portion of the Share Appreciation Rights so exercised) and to receive in
exchange from the Company an amount equal to the excess of (x) the Fair Market
Value, on the date of exercise, of the Shares covered by the surrendered portion
of the underlying Option over (y) the option price of the Shares covered by the
surrendered portion of the underlying Option. The Committee may limit the amount
that the participant will be entitled to receive upon exercise of the Share
Appreciation Right, as provided for in the applicable Award Agreement. No grant
of Share Appreciation Rights may be accompanied by a tandem award of Dividend
Equivalent Rights or provide for dividends, dividend equivalents or other
distributions to be paid on such Share Appreciation Rights.
     (2) Surrender of Option. Upon the exercise of the Share Appreciation Right
and surrender of the related portion of the underlying Option, the Option, to
the extent surrendered, will not thereafter be exercisable. The underlying
Option may provide that such Share Appreciation Rights will be payable solely in
cash.
     (3) Exercise. In addition to any further conditions upon exercise that may
be imposed by the Committee, the Share Appreciation Rights shall be exercisable
only to the extent that the related Option is exercisable, except that, unless
otherwise determined by the Committee at or after grant, in no event will a
Share Appreciation Right held by a Section 16 Participant be exercisable within
the first six months after it is awarded even though the related Option is or
becomes exercisable, and each Share Appreciation Right will expire no later than
the date on which the related Option expires. A Share Appreciation Right may be
exercised only at a time when the Fair Market Value of the Shares covered by the
Share Appreciation Right exceeds the option price of the Shares covered by the
underlying Option.
     (4) Method of Exercise. Share Appreciation Rights may be exercised by the
participant giving written notice of the exercise to the Company, stating the
number of Share Appreciation Rights the participant has elected to exercise and
surrendering the portion of the underlying Option relating to the same number of
Shares as the number of Share Appreciation Rights elected to be exercised.
     (5) Payment. The manner in which the Company’s obligation arising upon the
exercise of the Share Appreciation Right will be paid will be determined by the
Committee and shall be set forth in the participant’s Option Agreement. The
Committee may provide for payment in Shares or cash, or a fixed combination of
Shares or cash, or the Committee may reserve the right to determine the manner
of payment at the time the Share Appreciation Right is exercised. Shares issued
upon the exercise of a Share Appreciation Right will be valued at their Fair
Market Value on the date of exercise.
Section 7. Restricted Shares.
     (a) Grant. Restricted Shares may be issued alone, in addition to or in
tandem with other Awards under the Plan or cash or other awards made outside the
Plan. The Committee shall determine the individuals to whom, and the time or
times at which, grants of Restricted Shares will be made, the number of
Restricted Shares to be awarded to each participant, the price (if any) to be
paid by the participant (subject to Section 7(b)), the date or

- 8 -

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

 

dates upon which Restricted Share Awards will vest, the period or periods within
which those Restricted Share Awards may be subject to forfeiture, and the other
terms and conditions of those Awards in addition to those set forth in
Section 7(b).
     The Committee may condition the grant of Restricted Shares upon the
attainment of specified performance goals or such other factors as the Committee
may determine in its sole discretion.
     (b) Terms and Conditions. Restricted Shares awarded under the Plan shall be
subject to the following terms and conditions and such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall deem desirable. A participant who receives a Restricted Share Award shall
not have any rights with respect to that Award, unless and until the participant
has executed an agreement evidencing the Award in the form approved from time to
time by the Committee, has delivered a fully executed copy thereof to the
Company, and has otherwise complied with the applicable terms and conditions of
that Award.
     (1) The purchase price (if any) for Restricted Shares shall be determined
by the Committee at the time of grant.
     (2) Awards of Restricted Shares must be accepted by executing a Restricted
Share Award Agreement and paying the price (if any) that is required under
Section 7(b)(1).
     (3) Each participant receiving a Restricted Share Award shall be issued a
stock certificate in respect of those Restricted Shares. The certificate shall
be registered in the name of the participant and shall bear an appropriate
legend referring to the terms, conditions and restrictions applicable to the
Award.
     (4) The Committee shall require that the stock certificates evidencing the
Restricted Shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Shares
Award, the participant shall have delivered to the Company a stock power,
endorsed in blank, relating to the Shares covered by that Award.
     (5) Subject to the provisions of this Plan and the Restricted Share Award
Agreement, during a period set by the Committee commencing with the date of any
Award (the “Restriction Period”), the participant shall not be permitted to
sell, transfer, pledge, assign or otherwise encumber the Restricted Shares
covered by that Award. Subject to Section 15(a), the Restriction Period shall
not be less than three years in duration with respect to a non-performance-based
Restricted Share Award or less than a one year performance period with respect
to a performance-based Restricted Share Award (“Minimum Restriction Period”).
For clarification, if a Restricted Share Award vests in installments, the
duration of the Restriction Period shall be measured from the date of grant of
the Restricted Share Award until the date of vesting of the last installment.
Subject to Section 15(a), a non-performance- based Restricted Share Award can
vest no more favorably than one-third of the Restricted Share Award each year,
and a performance-based Restricted Share Award can vest no earlier than
expiration of the one year performance period. Subject to these limitations and
the Minimum Restriction Period requirement, the Committee, in its sole
discretion, may provide for the lapse of restrictions in installments and,
subject to Section 15(a), may accelerate or waive restrictions, in whole or in
part, based on service, performance or such other factors and criteria as the
Committee may determine in its sole discretion.
     (6) Except as provided in this Section 7(b)(6) and Sections 7(b)(5) and
7(b)(7), the participant shall have, with respect to the Restricted Shares
awarded, all of the rights of a shareholder of the Company, including the right
to vote the Shares and the right to receive any dividends; provided, however,
that to the extent performance-based Restricted Shares have not yet been earned
as a result of the achievement of applicable performance goals, dividends or
other distributions on such unearned performance-based Restricted Shares shall
be deferred and deemed reinvested in additional performance-based Restricted
Shares until the achievement of the applicable performance goals. The Committee,
in its sole discretion, as determined at the time of Award, may permit or
require the payment of cash dividends to be deferred and subject to forfeiture
and, if the Committee so determines, reinvested, subject to Section 15(g), in
additional Restricted Shares to the extent Shares are available under Section 3,
or otherwise reinvested. Unless the Committee or Board determines otherwise,
Share dividends issued with respect to

- 9 -

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

 

Restricted Shares shall be treated as additional Restricted Shares that are
subject to the same restrictions and other terms and conditions that apply to
the Shares with respect to which such dividends are issued.
     (7) No Restricted Shares shall be transferable by a participant other than
by will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order (as defined in the Code or the Employee Retirement
Income Security Act of 1974, as amended) except that, if so provided in the
Restricted Shares Agreement, the participant may transfer the Restricted Shares,
during the participant’s lifetime to one or more members of the participant’s
family, to one or more trusts for the benefit of one or more of the
participant’s family, to a partnership or partnerships of members of the
participant’s family, or to a charitable organization as defined in
Section 501(c)(3) of the Code, provided that the transfer would not result in
the loss of any exemption under Rule 16b-3 of the Exchange Act with respect to
any Restricted Shares. The transferee of Restricted Shares will be subject to
all restrictions, terms and conditions applicable to the Restricted Shares prior
to its transfer, except that the Restricted Shares will not be further
transferable by the transferee other than by will or by the laws of descent and
distribution.
     (8) Unless otherwise determined by the Committee at or after the time of
granting any Restricted Shares, if a participant’s employment with the Company
or any Subsidiary or Affiliate terminates by reason of death, any Restricted
Shares held by that participant shall thereafter vest and any restriction shall
lapse.
     (9) Unless otherwise determined by the Committee at or after the time of
granting any Restricted Shares, if a participant’s employment with the Company
or any Subsidiary or Affiliate terminates by reason of Disability, any
Restricted Shares held by that participant shall thereafter vest and any
restriction shall lapse.
     (10) Subject to Section 15(a), unless otherwise determined by the Committee
at or after the time of granting any Restricted Shares, if a participant’s
employment with the Company or any Subsidiary or Affiliate terminates for any
reason other than death or Disability, the Restricted Shares held by that
participant that are unvested or subject to restriction at the time of
termination shall thereupon be forfeited.
     (c) Minimum Value. In order to better ensure that Award payments actually
reflect the performance of the Company and service of the participant, the
Committee may provide, in its sole discretion, for a tandem performance-based or
other Award designed to guarantee a minimum value, payable in cash or Shares, to
the recipient of a Restricted Share Award, subject to such performance, future
service, deferral and other terms and conditions as may be specified by the
Committee.
Section 8. Deferred Shares.
     (a) Grant. Deferred Shares may be awarded alone, in addition to or in
tandem with other Awards granted under the Plan or cash or other awards made
outside the Plan. The Committee shall determine the individuals to whom, and the
time or times at which, Deferred Shares shall be awarded, the number of Deferred
Shares to be awarded to any participant, the duration of the period (the
“Deferral Period”) during which, and the conditions under which, receipt of the
Shares will be deferred, and the other terms and conditions of the Award in
addition to those set forth in Section 8(b).
     The Committee may condition the grant of Deferred Shares upon the
attainment of specified performance goals or such other factors as the Committee
shall determine in its sole discretion.
     (b) Terms and Conditions. Deferred Share Awards shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
     (1) The purchase price for Deferred Shares shall be determined at the time
of grant by the Committee. Subject to the provisions of the Plan and the Award
Agreement referred to in Section 8(b)(10), Deferred Share Awards may not be
sold, assigned, transferred, pledged or otherwise encumbered during the

- 10 -

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

 

Deferral Period. At the expiration of the Deferral Period (or the Elective
Deferral Period referred to in Section 8(b)(9), where applicable), share
certificates shall be delivered to the participant, or the participant’s legal
representative, for the Shares covered by the Deferred Share Award. Subject to
Section 15(a), the Deferral Period applicable to any Deferred Share Award shall
not be less than three years in duration with respect to a non-performance-based
Deferred Share Award or less than a one year performance period with respect to
a performance-based Deferred Share Award (“Minimum Deferral Period”). For
clarification, if a Deferred Share Award vests in installments, the duration of
the Deferral Period shall be measured from the date of grant of the Deferred
Share Award until the date of vesting of the last installment. Subject to
Section 15(a), a non-performance-based Deferred Share Award can vest no more
favorably than one-third of the Deferred Share Award each year, and a
performance-based Deferred Share Award can vest no earlier than expiration of
the one year performance period.
     (2) To the extent a Deferred Share Award is a 409A Award, the Committee
will grant the Award in a manner as to comply with the requirements of Code
Section 409A and the regulations promulgated thereunder and in accordance with
Section 11(b).
     (3) Amounts equal to any dividends declared during the Deferral Period with
respect to the number of Shares covered by a Deferred Share Award will be paid
to the participant in cash, deferred or deemed to be reinvested in additional
Deferred Shares that are subject to the same restrictions and other terms and
conditions that apply to the Deferred Shares with respect to which such
dividends are issued, all as determined by the Committee, in its sole
discretion, at the time of the Award; provided, however, that to the extent
performance-based Deferred Shares have not yet been earned as a result of the
achievement of applicable performance goals, dividends or other distributions on
such unearned performance-based Deferred Shares shall be deferred and deemed
reinvested in additional performance-based Deferred Shares until the achievement
of the applicable performance goals.
     (4) No Deferred Shares shall be transferable by a participant other than by
will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order (as defined in the Code or the Employee Retirement
Income Security Act of 1974, as amended) except that, if so provided in the
Deferred Shares Agreement, the participant may transfer the Deferred Shares
during the participant’s lifetime to one or more members of the participant’s
family, to one or more trusts for the benefit of one or more of the
participant’s family, to a partnership or partnerships of members of the
participant’s family, or to a charitable organization as defined in
Section 501(c)(3) of the Code, provided that the transfer would not result in
the loss of any exemption under Rule 16b-3 of the Exchange Act with respect to
any Deferred Shares. The transferee of Deferred Shares will be subject to all
restrictions, terms and conditions applicable to the Deferred Shares prior to
their transfer, except that the Deferred Shares will not be further transferable
by the transferee other than by will or by the laws of descent and distribution.
     (5) Unless otherwise determined by the Committee at the time of granting
any Deferred Shares, if a participant’s employment by the Company or any
Subsidiary or Affiliate terminates by reason of death, any Deferred Shares held
by such participant shall thereafter vest or any restriction shall lapse, and
the participant’s representative shall receive the Deferred Shares in one lump
sum within 10 business days following such death; provided, however, that the
participant’s representative must first provide satisfactory proof of death to
the Committee.
     (6) Unless otherwise determined by the Committee at the time of granting
any Deferred Shares, if a participant’s employment by the Company or any
Subsidiary or Affiliate terminates by reason of Disability, any Deferred Shares
held by such participant shall thereafter vest or any restriction lapse, and the
participant or the participant’s representative shall be issued the Deferred
Shares in one lump sum within 10 business days following such Disability. A
determination of Disability shall be made by the Committee.
     (7) Subject to Section 15(a), unless otherwise determined by the Committee
at or after the time of granting any Deferred Share Award, if a participant’s
employment by the Company or any Subsidiary or Affiliate terminates for any
reason other than death or Disability, all Deferred Shares held by such
participant which are unvested or subject to restriction shall thereupon be
forfeited.

- 11 -

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

 

     (8) Based on service, performance or such other factors or criteria as the
Committee may determine and subject to Section 15(a), the Committee may, at or
after grant, accelerate the vesting of all or any part of any Deferred Share
Award, subject in all cases to the Minimum Deferral Period requirement.
     (9) A participant may elect to further defer receipt of a Deferred Share
Award (or an installment of an Award) for a specified period or until a
specified event (the “Elective Deferral Period”), subject in each case to the
Committee’s approval, the terms of this Section 8, such other terms as are
determined by the Committee, all in its sole discretion, and in compliance with
the terms and conditions of Code Section 409A and the regulations promulgated
thereunder. Subject to any exceptions approved by the Committee, such election
must be made at least 12 months prior to the date the Deferral Period is set to
expire and the Elective Deferral Period must be for a period of at least five
years from the date the Deferral Period is set to expire, except to the extent
the holder of a Deferred Share becomes entitled to receive the underlying Shares
due to death or Disability.
     (10) Each such Award shall be confirmed by, and subject to the terms of, a
Deferred Share Award Agreement evidencing the Award in the form approved from
time to time by the Committee.
     (c) Minimum Value Provisions. In order to better ensure that Award payments
actually reflect the performance of the Company and service of the participant,
the Committee may provide, in its sole discretion, for a tandem
performance-based or other Award designed to guarantee a minimum value, payable
in cash or Shares to the recipient of a Deferred Share Award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
Section 9. Share Purchase Rights.
     (a) Grant. Share Purchase Rights may be granted alone, in addition to or in
tandem with other Awards granted under the Plan or cash or other awards made
outside the Plan. The Committee shall determine the individuals to whom, and the
time or times at which, grants of Share Purchase Rights will be made, the number
of Shares which may be purchased pursuant to the Share Purchase Rights, and the
other terms and conditions of the Share Purchase Rights in addition to those set
forth in Section 9(b). The Shares subject to the Share Purchase Rights may be
purchased, as determined by the Committee at the time of grant:
     (1) at the Fair Market Value of such Shares on the date of grant; or
     (2) at 85% of the Fair Market Value of such Shares on the date of grant if
the grant of Share Purchase Rights is made in lieu of cash compensation.
     Subject to Section 9(b) hereof, the Committee may also impose such
deferral, forfeiture or other terms and conditions as it shall determine, in its
sole discretion, on such Share Purchase Rights or the exercise thereof.
     Each Share Purchase Right Award shall be confirmed by, and be subject to
the terms of, a Share Purchase Rights Agreement, which shall be in form approved
by the Committee.
     (b) Terms and Conditions. Share Purchase Rights may contain such additional
terms and conditions not inconsistent with the terms of the Plan as the
Committee shall deem desirable, and shall generally be exercisable for such
period as shall be determined by the Committee. However, unless otherwise
determined by the Committee at or after grant, Share Purchase Rights granted to
Section 16 Participants shall not become exercisable earlier than six months and
one day after the grant date. Share Purchase Rights shall not be transferable by
a participant other than by will or by the laws of descent and distribution.
Section 10. Other Share-Based Awards.
     (a) Grant. Other Awards of Shares and other Awards that are valued, in
whole or in part, by reference to, or are otherwise based on, Shares, including,
without limitation, performance shares, convertible preferred shares,
convertible debentures, exchangeable securities, dividend equivalent rights and
Share Awards or

- 12 -

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

 

options valued by reference to book value or Subsidiary performance, may be
granted alone, in addition to or in tandem with other Awards granted under the
Plan or cash or other awards made outside the Plan.
     At the time the Shares or Other Share-Based Awards are granted, the
Committee shall determine the individuals to whom and the time or times at which
such Shares or Other Share-Based Awards shall be awarded, the number of Shares
to be used in computing an Award or which are to be awarded pursuant to such
Awards, the consideration, if any, to be paid for such Shares or Other
Share-Based Awards, and all other terms and conditions of the Awards in addition
to those set forth in Section 10(b). The Committee will also have the right, at
its sole discretion, to settle such Awards in Shares, Restricted Shares or cash
in an amount equal to the Fair Market Value of the Shares or Other Share-Based
Awards at the time of settlement.
     The provisions of Other Share-Based Awards need not be the same with
respect to each participant.
     (b) Terms and Conditions. Other Share-Based Awards shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
     (1) Subject to the provisions of this Plan and the Award Agreement referred
to in Section 10(b)(5) below, Shares awarded or subject to Awards made under
this Section 10 may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the Shares are issued, or, if later, the
date on which any applicable restriction, performance, holding or deferral
period or requirement is satisfied or lapses. Subject to Section 15(a), unless
otherwise determined by the Committee at or after grant, all Shares or Other
Share-Based Awards granted under this Section 10 shall be subject to a minimum
holding period (including any applicable restriction, performance and/or
deferral periods) of three years in duration with respect to a
non-performance-based Other Share-Based Award or a minimum one year performance
period with respect to a performance-based Other Share-Based Award (the “Minimum
Holding Period”). For clarification, if an Other Share-Based Award vests in
installments, the duration of the Minimum Holding Period shall be measured from
the date of grant of the Other Share-Based Award until the date of vesting of
the last installment. Subject to Section 15(a), a non-performance-based Other
Share-Based Award can vest no more favorably than one-third of the Other
Share-Based Award each year, and a performance-based Other Share-Based Award can
vest no earlier than expiration of the one year performance period.
     (2) Subject to the provisions of this Plan and the Award Agreement and
unless otherwise determined by the Committee at the time of grant, the recipient
of an Other Share-Based Award shall be entitled to receive, currently or on a
deferred basis, interest or dividends or interest or dividend equivalents with
respect to the number of Shares covered by the Award, as determined at the time
of the Award by the Committee, in its sole discretion, subject, if applicable,
to the provisions of Code Section 409A and the regulations promulgated
thereunder, and the Committee may provide that such amounts (if any) shall be
deemed to have been reinvested in additional Shares or otherwise reinvested;
provided, however, that to the extent performance-based Other Share-Based Awards
have not yet been earned as a result of the achievement of applicable
performance goals, dividends, dividend equivalents or other distributions on
such unearned performance-based Other Share-Based Awards shall be deferred and
deemed reinvested in additional performance-based Shares or Other Share-Based
Awards until the achievement of the applicable performance goals.
     (3) Subject to the Minimum Holding Period, any Other Share-Based Award and
any Shares covered by any such Award shall vest or be forfeited to the extent,
at the times and subject to the conditions, if any, provided in the Award
Agreement, as determined by the Committee in its sole discretion.
     (4) In the event of the participant’s Disability or death, or, subject to
Section 15(a), in cases of special circumstances, the Committee may, in its sole
discretion, waive, in whole or in part, any or all of the remaining limitations
imposed hereunder or under any related Award Agreement (if any) with respect to
any part or all of any Award under this Section 10. Notwithstanding the
foregoing, the Committee may not waive, in whole or in part, any remaining
limitations imposed with respect to any Award if such waiver

- 13 -

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

 

results in an Award’s failure to comply with the requirements of Code
Section 409A and the regulations promulgated thereunder, unless agreed upon in
writing by the Committee and Participant.
     (5) Each Award shall be confirmed by, and subject to the terms of, an
agreement or other instrument evidencing the Award in the form approved from
time to time by the Committee, the Company and the participant.
     (6) Shares (including securities convertible into Shares) issued under this
Section 10 on a bonus basis may be issued for no cash consideration. Shares
(including securities convertible into Shares) purchased pursuant to a purchase
right awarded under this Section 10 shall bear a price of at least 85% of the
Fair Market Value of the Shares on the date of grant. The purchase price of such
Shares, and of any Other Share-Based Award granted hereunder, or the formula by
which such price is to be determined, shall be fixed by the Committee at the
time of grant.
     (7) In the event that any “derivative security,” as defined in
Rule 16a-1(c) (or any successor thereto) promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, is awarded pursuant to
this Section 10 to any Section 16 Participant, such derivative security shall
not be transferable other than by will or by the laws of descent and
distribution.
     (c) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the participant to receive credits based on cash distributions that
would have been paid on the Shares specified in the Dividend Equivalent Right
(or other Award to which it relates) if such Shares had been issued to and held
by the participant. A Dividend Equivalent Right may be granted hereunder to any
participant as a component of another Award or as a freestanding award;
provided, however, that Dividend Equivalent Rights may not be granted, either
directly or indirectly, in connection with, with respect to or as a component of
Stock Options or Share Appreciation Rights.
     (1) Terms and Conditions. In addition to the terms and conditions set forth
in Section 10(b), Dividend Equivalent Rights shall be subject to the following
additional terms and conditions. Dividend Equivalents credited to the holder of
a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional Shares, which may thereafter accrue additional Dividend
Equivalent Rights; provided, however, that to the extent performance-based
Dividend Equivalent Rights have not yet been earned as a result of the
achievement of applicable performance goals, dividends, dividend equivalents or
other distributions on such unearned performance-based Dividend Equivalent
Rights shall be deferred and deemed reinvested in additional performance-based
Dividend Equivalent Rights until the achievement of the applicable performance
goals. Any such reinvestment shall be at Fair Market Value on the date of
reinvestment. Dividend Equivalent Rights may be settled in cash or Shares or a
combination thereof, in a single installment or installments, all determined in
the sole discretion of the Committee. A Dividend Equivalent Right granted as a
component of another Award may provide that such Dividend Equivalent Right shall
be settled upon exercise, settlement, or payment of, or lapse of restrictions
on, such other Award, and that such Dividend Equivalent Right shall expire or be
forfeited or annulled under the same conditions as such other Award. A Dividend
Equivalent Right granted as a component of another Award may also contain terms
and conditions different from such other Award.
     (2) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the Award Agreement
for interest equivalents to be credited with respect to such cash payment.
Interest equivalents may be compounded and shall be paid upon such terms and
conditions as may be specified by the grant.
     (3) Termination of Employment. Except as may otherwise be provided by the
Committee either in the Award Agreement or in writing after the Award Agreement
is issued, a participant’s rights in all Dividend Equivalent Rights or interest
equivalents (other than any accrued but unpaid Dividend Equivalent Rights or
interest equivalents) shall automatically terminate upon the date that a
participant’s employment with the Company or any Subsidiary or Affiliate
terminates for any reason other than death or Disability. Any accrued but unpaid
Dividend Equivalent Rights or interest equivalents shall be paid in one lump sum
amount by the Company within 90 days after the termination of the participant’s
employment with the Company or any Subsidiary or Affiliate.

- 14 -

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

 

Section 11. Form and Timing of Payment under Awards; Deferrals.
     (a) Form and Timing of Payment. Subject to the terms of the Plan and any
applicable Award Agreement (as may be amended pursuant to Section 13 hereof),
payments to be made by the Company, a Subsidiary or Affiliate upon the exercise
of an Option or other Award or settlement of an Award may be made in such forms
as the Committee shall determine, including, without limitation, cash, Shares,
other Awards or other property, and may be made in a single payment or transfer,
in installments, or on a deferred basis; provided, however that settlement in
other than Shares or payment on a deferred basis must be authorized by the
applicable Award Agreement. The settlement of any Award may be accelerated and
cash paid in lieu of Shares in connection with such settlement; provided,
however that settlement in cash must be authorized by the applicable Award
Agreement. The acceleration of any Award that does not result in a cash
settlement must also be authorized by the applicable Award Agreement.
Installment or deferred payments may be required by the Committee or permitted
at the election of the participant on terms and conditions approved by the
Committee, including without limitation the ability to defer awards pursuant to
any deferred compensation plan maintained by the Company, a Subsidiary or
Affiliate. Payments may include, without limitation, provisions for the payment
or crediting of a reasonable interest rate on installment or deferred payments
or the grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Shares.
     (b) Certain Limitations on Awards to Ensure Compliance with Code
Section 409A.
     (1) 409A Awards and Deferrals. Other provisions of the Plan
notwithstanding, the terms of any 409A Award, including any authority of the
Company or the Committee and rights of the participant with respect to the 409A
Award, shall be limited to those terms permitted under Code Section 409A and the
regulations promulgated thereunder. The following rules will apply to 409A
Awards:
     (A) If a participant is permitted to elect to defer an Award or any payment
under an Award, such election shall be permitted only at times in compliance
with Code Section 409A and the regulations promulgated thereunder;
     (B) The Company shall have no authority to accelerate or delay
distributions relating to 409A Awards in excess of the authority permitted under
Code Section 409A and the regulations promulgated thereunder;
     (C) Any distribution of a 409A Award triggered by a Participant’s
termination of employment shall be made only at the time that the Participant
has had a “Separation from Service” within the meaning of Code Section 409A (or
at such earlier time preceding a termination of employment that there occurs
another event triggering a distribution under the Plan or the applicable Award
Agreement in compliance with Code Section 409A and the regulations promulgated
thereunder);
     (D) Any distribution of a 409A Award to a “Specified Employee,” as
determined under Code Section 409A, after Separation from Service, shall occur
at the expiration of the six-month period following said Specified Employee’s
Separation from Service. In the case of installment payments, this six-month
delay shall not affect the timing of any installment otherwise payable after the
six-month delay period; and
     (E) In the case of any distribution of a 409A Award, the time and form of
payment for such distribution will be specified in the Award Agreement; provided
that, if the time and form of payment for such distribution is not otherwise
specified in the Plan or an Award Agreement or other governing document, the
distribution shall be made in one lump sum amount on or about March 10 (and not
later than March 15) in the calendar year following the calendar year at which
the settlement of the Award is specified to occur, any applicable restriction
lapses, or there is no longer a substantial risk of forfeiture applicable to
such amounts.

- 15 -

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

 

     (2) Distribution upon Vesting. In the case of any Award providing for a
distribution upon the lapse of a substantial risk of forfeiture, the time and
form of payment for such distribution will be specified in the Award Agreement;
provided that, if the timing and form of payment of such distribution is not
otherwise specified in the Plan or an Award Agreement or other governing
document, the distribution shall be made in one lump sum amount on March 15 of
the calendar year following the calendar year in which the substantial risk of
forfeiture lapses.
     (3) Scope and Application of this Provision. For purposes of the Plan,
references to a term or event (including any authority or right of the Company,
the Committee or a participant) being “permitted” under Code Section 409A means
that the term or event will not cause the participant to be deemed to be in
constructive receipt of compensation relating to the 409A Award prior to the
distribution of cash, shares or other property or to be liable for payment of
interest or a tax penalty under Code Section 409A.
     (4) Interpretation. If and to the extent that any provision of an Award is
required or intended to comply with Code Section 409A, such provision shall be
administered and interpreted in a manner consistent with the requirements of
Code Section 409A. If and solely to the extent that any such provision of an
Award as currently written would conflict with or result in adverse consequences
to a participant under Code Section 409A, the Committee shall have the
authority, without the consent of the participant, to administer such provision
and to amend the Award with respect to such provision to the extent the
Committee deems necessary for the purposes of avoiding any portion of the Shares
or amounts to be delivered to the participant being subject to additional income
or other taxes under Code Section 409A.
Section 12. Change in Control Provision.
     (a) Impact of Event. The provisions of this Section 12(a) shall apply to an
Award only as provided for in an applicable Award Agreement. With respect to
each participant under the Plan, in the event the participant’s employment with
the Company, any Subsidiary or any Affiliate, as applicable, is terminated
without Cause within a specified time period (as provided for in the applicable
Award Agreement) following (i) a “Change in Control” as defined in
Section 12(b)(1) or (ii) a “409A Change in Control” as defined in
Section 12(b)(2), then the following provisions shall apply with respect to such
participant:
     (1) Any Stock Options awarded under the Plan not previously exercisable and
vested shall become fully exercisable and vested;
     (2) Any Share Appreciation Rights shall become immediately exercisable; and
     (3) The restrictions applicable to any Restricted Share Awards, Deferred
Shares, Share Purchase Rights and Other Share-Based Awards shall lapse and such
Shares and Awards shall be deemed fully vested.
(b) Definition of Change in Control.
     (1) A “Change in Control” means the occurrence of any of the following: (i)
consummation of a consolidation or merger in which the Company is not the
surviving corporation, the sale of substantially all of the assets of the
Company, or the liquidation or dissolution of the Company; (ii) any person or
other entity (other than the Company or a Subsidiary or any Company employee
benefit plan (including any trustee of any such plan acting in its capacity as
trustee)) purchases any Shares (or securities convertible into Shares) pursuant
to a tender or exchange offer without the prior consent of the Board, or becomes
the beneficial owner of securities of the Company representing 30% or more of
the voting power of the Company’s outstanding securities without the prior
consent of the Board; or (iii) during any two-year period, individuals who at
the beginning of such period constitute the entire Board cease to constitute a
majority of the Board; provided, that any person becoming a director of the
Company during such two-year period whose election, or nomination for election
by the Company’s shareholders, was approved by a vote of at least two-thirds of
the directors who at the beginning of such period constituted the entire Board
(either by a specific vote or by approval of the Company’s proxy statement in
which such person is named

- 16 -

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

 

as a nominee of the Company for director), but excluding for this purpose any
person whose initial assumption of office as a director of the Company occurs as
a result of either an actual or threatened election contest with respect to the
election or removal of directors of the Company or other actual or threatened
solicitation of proxies or consents by or on behalf of an individual,
corporation, partnership, group, associate or other entity or person other than
the Board, shall be, for purposes of this Section 12(b)(1)(iii), considered as
though such person was a member of the Board at the beginning of such period.
     (2) A “409A Change in Control” means the date on which any one of the
following occurs: (i) any one person, or more than one person acting as a group
(as determined under Code Section 409A and the regulations promulgated
thereunder), acquires (or has acquired during the twelve (12) month period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the Company possessing 30% or more of the total voting
power of the stock of the Company; or (ii) a majority of members of the Board of
Directors is replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of the Board of
Directors before the date of such appointment or election; or (iii) any one
person, or more than one person acting as a group (as determined under Code
Section 409A and the regulations promulgated thereunder), acquires ownership of
stock of the Company that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power
of the stock of the Company; or (iv) any one person, or more than one person
acting as a group (as determined under Code Section 409A and the regulations
thereunder), acquires (or has acquired during the twelve (12) month period
ending on the date of the most recent acquisition by such person or persons)
assets from the Company that have a total gross fair market value equal to or
more than 40% of the total gross fair market value of all of the assets of the
Company before such acquisition or acquisitions. For this purpose, “gross fair
market value” means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.
Section 13. Amendments and Termination.
     (a) The Board may at any time, amend, alter or discontinue the Plan, but no
such amendment, alteration or discontinuation shall be made that would
(i) impair the rights of a participant under an Award theretofore granted,
without the participant’s consent or (ii) require shareholder approval under any
applicable law or regulation (including any applicable regulation of an exchange
on which the Shares are traded), unless such shareholder approval is received.
The Company shall submit to the shareholders of the Company, for their approval,
any amendments to the Plan required pursuant to Section 162(m) of the Code or
any material revisions to the Plan so long as such approval is required by law
or regulation (including any applicable regulation of an exchange on which the
Shares are traded).
     (b) The Committee may at any time, in its sole discretion, amend the terms
of any Award, but (i) no such amendment shall be made that would impair the
rights of a participant under an Award theretofore granted, without the
participant’s consent; (ii) no such amendment shall be made that would make the
applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable
to any Section 16 Participant holding the Award without the participant’s
consent and (iii) notwithstanding anything to the contrary contained in the
Plan, the terms of outstanding Stock Options or Share Appreciation Rights may
not be amended to reduce the option price of outstanding Stock Options
(including Stock Options underlying Share Appreciation Rights), and, except in
connection with a corporate transaction or event described in Section 3(c) or
Section 12 of the Plan, no outstanding Stock Options or Share Appreciation
Rights may be cancelled in exchange for other Awards, or cancelled in exchange
for Stock Options or Share Appreciation Rights with an option price that is less
than the option price of the original Stock Options (including Stock Options
underlying the original Share Appreciation Rights) or cancelled in exchange for
cash, without shareholder approval. Section 13(b)(iii) is intended to prohibit
(without shareholder approval) the repricing of “underwater” Stock Options and
Share Appreciation Rights and will not be construed to prohibit the adjustments
or payments provided for in Section 3(c) or Section 12 of the Plan.
Notwithstanding any provision of the Plan to the contrary, this
Section 13(b)(iii) may not be amended without approval by the Company’s
shareholders.

- 17 -

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

 

     (c) Subject to the above provisions, the Board shall have all necessary
authority to amend the Plan, clarify any provision or to take into account
changes in applicable securities and tax laws and accounting rules, as well as
other developments.
Section 14. Unfunded Status of Plan.
     The Plan is intended to constitute an “unfunded” plan for incentive and
deferred compensation. With respect to any payment not yet made to a participant
by the Company, nothing contained herein shall give that participant any rights
that are greater than those of a general creditor of the Company.
Section 15. General Provisions.
     (a) Except in connection with the death, Disability or retirement of
participants or in connection with the termination of a participant’s employment
with the Company, any Subsidiary or any Affiliate after a Change in Control or a
409A Change in Control as described in Section 12(a), the Committee may not
accelerate the exercise date or vesting of, or waive any installment provision,
limitation or restriction with respect to, Awards that represent in the
aggregate a number of Shares greater than (i) 370,000 Shares (subject to
adjustment as provided in Section 3(c)) less (ii) the number of Shares applied
against the Restriction Limit (as hereinafter defined) based upon their
restriction period, deferral period or holding period (the “Acceleration
Limit”). The Committee may accelerate the exercise date or vesting of, or waive
any installment provision, limitation or restriction with respect to, an Award
upon a participant’s death, Disability or retirement or in connection with the
termination of a participant’s employment with the Company, any Subsidiary or
any Affiliate after a Change in Control or a 409A Change in Control as described
in Section 12(a), and the Shares covered by such acceleration or waiver shall
not count against the Acceleration Limit. The Committee may not establish a
restriction period, deferral period or holding period less than the Minimum
Restriction Period, Minimum Deferral Period or Minimum Holding Period,
respectively, with respect to Awards that represent in the aggregate a number of
Shares greater than (i) 370,000 Shares (subject to adjustment as provided in
Section 3(c)) less (ii) the number of Shares subject to Awards applied against
the Acceleration Limit as a result of acceleration or waiver (the “Restriction
Limit”). In addition, without regard to the Acceleration Limit or the
Restriction Limit, the Committee may (i) accelerate the exercise date or vesting
of, or waive any installment provision, limitation or restriction with respect
to, an Award or (ii) grant Shares with less than the Minimum Restriction Period
or Minimum Holding Period, to the extent the Company is obligated to do so under
an agreement or plan entered into prior to the date of adoption of this Plan by
the Company’s shareholders.
     (b) The Committee may require each participant acquiring Shares pursuant to
an Award under the Plan to represent to and agree with the Company in writing
that the participant is acquiring the Shares without a view to distribution
thereof. The certificates for any such Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
     All Shares or other securities delivered under the Plan shall be subject to
such stop-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Shares are then
listed, and any applicable federal or state securities laws, and the Committee
may cause a legend or legends to be put on any certificate for any such Shares
to make appropriate reference to those restrictions.
     (c) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required, and such arrangements may be either generally
applicable or applicable only in specific cases.
     (d) Neither the adoption of the Plan, nor its operation, nor any document
describing, implementing or referring to the Plan, or any part thereof, shall
confer upon any participant under the Plan any right to continue in the employ,
or as a director, of the Company or any Subsidiary or Affiliate, or shall in any
way affect the right and power of the Company or any Subsidiary or Affiliate to
terminate the employment, or service as a director, of any participant under the
Plan at any time with or without assigning a reason therefor, to the same extent
as the Company or any Subsidiary or Affiliate might have done if the Plan had
not been adopted.

- 18 -

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

 

     (e) For purposes of this Plan, a transfer of a participant between the
Company and any Subsidiary or Affiliate shall not be deemed a termination of
employment.
     (f) No later than the date as of which an amount first becomes includable
in the gross income of the participant for federal income tax purposes with
respect to any Award under the Plan, the participant shall pay to the Company,
or make arrangements satisfactory to the Committee regarding the payment of, any
federal, state or local taxes or other items of any kind required by law to be
withheld with respect to that amount. Subject to the following sentence, unless
otherwise determined by the Committee, withholding obligations may be settled
with Shares, including unrestricted Shares previously owned by the participant
or Shares that are part of the Award that gives rise to the withholding
requirement. Notwithstanding the foregoing, any right by a Section 16
Participant to elect to settle any tax withholding obligation with Shares that
are part of an Award must be set forth in the agreement evidencing that Award or
be approved by the Committee in its sole discretion. The obligations of the
Company under the Plan shall be conditional on those payments or arrangements
and the Company and its Subsidiaries and Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise payable to the participant.
     (g) The actual or deemed reinvestment of dividends or dividend equivalents
in additional Restricted Shares (or in Deferred Shares or other types of Awards)
at the time of any dividend payment shall be permissible only if sufficient
Shares are available under Section 3 for reinvestment (taking into account then
outstanding Stock Options).
     (h) The Plan, all Awards made and actions taken thereunder and any
agreements relating thereto shall be governed by and construed in accordance
with the laws of the State of Ohio.
     (i) All agreements entered into with participants pursuant to the Plan
shall be subject to the Plan.
     (j) The provisions of Awards need not be the same with respect to each
participant.
     (k) Notwithstanding anything to the contrary contained in this Plan, in no
event will any Award granted under the Plan be transferred for value.
Section 16. Shareholder Approval; Effective Date of Plan.
     The Amended and Restated 2008 Developers Diversified Realty Corporation
Equity-Based Award Plan was originally adopted by the Board on April 28, 2009
and was subject to approval by the holders of the Company’s outstanding Shares,
in accordance with applicable law. The Amended and Restated 2008 Developers
Diversified Realty Corporation Equity-Based Award Plan was amended by the Board
on June 12, 2009 and June 25, 2009.
Section 17. Term of Plan.
     No Award shall be granted pursuant to the Plan on or after November 1,
2017, but Awards granted prior to that date may extend beyond that date.

- 19 -