BRE Properties, Inc.
second amended and restated restricted Stock

Award Agreement

 

This Second Amended and Restated Restricted Stock Award Agreement (this
“Agreement”), dated as of June 28, 2013, is entered into by and between BRE
Properties, Inc., a Maryland Corporation (the “Company” or “BRE”), and [NAME]
(“Employee”).

 

Background

 

The Company and Employee have entered into an employment agreement dated
effective as of [DATE] (the “Employment Agreement”) which provides that, at the
discretion of the Compensation Committee of the Board of Directors of the
Company (“Committee”), Employee is eligible to receive long term incentive
awards.

 

The Company has established the Amended and Restated 1999 BRE Stock Incentive
Plan, as amended (the “Plan”), to provide, among other things, for the grant of
long-term incentive Awards in the form of Shares.

 

The Committee previously determined that Employee should be granted an Award in
the form of Shares in accordance with the Plan and on the terms and conditions
and subject to the restrictions stated below which shall lapse to the extent the
applicable service conditions or performance conditions have been satisfied and
become fully vested as provided herein.

 

Accordingly, on January 30, 2013 (the “Grant Date”), the Committee granted
Employee a Restricted Stock Award under the Plan as evidenced by the Award
Agreement executed by the Company and which Award Agreement was amended and
restated by the parties on April 16, 2013 (the “Prior Agreement”). This
Agreement entirely replaces and supersedes the Prior Agreement and modifies the
provisions regarding the conditions and consequences of retirement.

 

Agreement

 

The parties to this Agreement, intending to be legally bound, agree as follows:

 

1.          Terms of Plan. All capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings ascribed thereto in the Plan.
Employee confirms and acknowledges that Employee has received and reviewed a
copy of the Plan and the Information Statement with respect to the Plan.
Employee and the Company agree that the terms and conditions of the Plan are
incorporated in this Agreement by this reference.

 

2.          Main Grant of Shares. Subject to the terms and conditions of this
Agreement and of the Plan, including without limitation the vesting provisions
set forth in Sections 3, 4 and 5, the Company hereby grants to Employee three
separate grants totaling [NUMBER] Shares under the Plan which number of Shares
shall be subject to adjustment pursuant to Sections 10 and 11. The Shares shall
be deemed “Restricted Shares” under the Plan. Shares shall not include Reserve
Performance Shares (as defined in Section 4.4(a) below) unless and until granted
in accordance with Section 4.4(a). The three separate grants are made up of the
following:

 

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2.1.        Time Vesting Share. A grant of [NUMBER] Shares (the “Time Vesting
Shares”) which will vest as provided in Section 3.

 

2.2.        Performance Shares ST. A grant of [NUMBER] Shares (the “Performance
Shares ST”) which will vest as provided in Section 4.

 

2.3.        Performance Shares LT. A grant of [NUMBER] Shares (the “Performance
Shares LT”) which will vest as provided in Section 4 and which consist of:

 

(a)          [NUMBER] Shares hereinafter called MC Shares; and

 

(b)          [NUMBER] Shares hereinafter called PB Shares.

 

3.           Time Vesting of Shares. The Time Vesting Shares shall, subject to
Employee’s continuous employment with the Company through the applicable vesting
date, vest ratably over five (5) years from the Grant Date, twenty percent (20%)
on each anniversary of the Grant Date.

 

4.           Performance Shares.

 

4.1.        Definitions. For the purposes of this Agreement the following terms
shall have the following meaning:

 

(a)          “Aggregate Vesting Contribution LT” shall mean the sum of the
Vesting Contribution for each of the Goals LT.

 

(b)          “Aggregate Vesting Contribution ST” shall mean the sum of the
Vesting Contribution for each of the Goals ST.

 

(c)          “Core FFO” shall mean BRE’s core funds from operations as reported
by BRE for the year ended December 31, 2013 as adjusted for the actual timing of
property sales compared to the budgeted timing, other non-budgeted capital
events, and any other adjustments as determined by the Committee necessary to
make Core FFO as determined for the year ended December 31, 2013 comparable to
core funds from operations per the original budget for such year.

 

(d)          “Forward Multiple” shall mean with respect to BRE or any member of
the Peer Group, the Stock Price as of the LT Determination Date divided by the
consensus funds from operations for the year after the LT Determination Date as
published by First Call (or, if First Call is no longer publishing such
information, as published by another source providing similar information as
reasonably selected by the Committee) as of the LT Determination Date.

 

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(e)          “G&A” shall mean the general and administrative expenses of BRE as
reported by BRE for the year ended December 31, 2013 as adjusted for expenses
required to be included in general and administrative expenses that relate to
non-budgeted capital events and any other adjustments as determined by the
Committee necessary to make G&A as determined for the year ended December 31,
2013 comparable to general and administrative expenses per the original budget
for such year.

 

(f)           “Goal” shall mean any of the Goals LT or Goals ST.

 

(g)          “Goals LT” shall mean the performance goals for Relative TSR/Peer
Group, Forward Multiple, and NAV Premium, set forth on Exhibit A.

 

(h)          “Goals ST” shall mean the performance goals for Core FFO to Budget
and G&A/Revenue set forth on Exhibit A.

 

(i)           “Good Cause” shall have the meaning set forth in the Employment
Agreement.

 

(j)           “Good Reason” shall have the meaning set forth in the Employment
Agreement.

 

(k)          “LT Determination Date” shall mean December 31, 2016.

 

(l)           “Maximum” shall mean, with respect to a Goal, the performance
metric associated with that Goal under the column labeled “Maximum” on Exhibit
A.

 

(m)         “NAV Premium” shall mean, with respect to BRE or any member of the
Peer Group, the average of the premium or discount to Net Asset Value (“NAV”) of
the research firms of Citigroup, ISI and GreenStreet (or if one of those no
longer covers BRE or a member of the Peer Group, then with respect to that
particular entity, another top rated research firm as reasonably selected by the
Committee) as published in their analysis dated closest to and after the LT
Determination Date.

 

(n)          “Peer Group” shall mean Apartment Investment and Management
Company, AvalonBay Communities, Inc., Camden Property Trust, Colonial Properties
Trust, Inc., Essex Property Trust, Inc., Equity Residential, Home Properties,
Inc., Mid-America Apartment Communities, Inc., Post Properties, Inc., and UDR,
Inc., provided that, if the stock of any one or more of such entities is no
longer publically traded during the Performance Period then such entity or
entities shall be dropped from the Peer Group.

 

(o)          “Peer Group Total Return” shall mean the sum of the Shareholder
Return for each of the members of the Peer Group (which were not dropped from
the Peer Group) during the Performance Period by (ii) the number of entities in
the Peer Group during the Performance Period (which were not dropped from the
Peer Group).

 

(p)          “Performance Period” shall mean, for all Goals LT other than
Relative TSR/Peer Group, the period of time from January 1, 2013 to and
including December 31, 2016 unless an earlier date for the end of the
Performance Period is determined pursuant to any other provision of this
Agreement and for Relative TSR/Peer Group shall mean the period from March 1,
2013 to and including December 31, 2016 unless an earlier date for the end of
the Performance Period is determined pursuant to any other provision of this
Agreement.

 

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(q)          “Relative TSR/Peer Group” shall mean the percentage of the
Company’s total Shareholder Return during the Performance Period to the Peer
Group Total Return during the Performance Period.

 

(r)           “Reserve Contribution” shall mean, for any particular Goal, if the
Goal achieved as of the relevant determination date for such Goal is

 

(i)          less than or equal to the Target, then zero,

 

(ii)         greater than the Target and less than or equal to the Maximum, then
the product of (x) the Weighting Factor of such Goal multiplied by (y) the
proportion that the Goal achieved as of the Vesting Determination Date is
between the Target and the Maximum, or

 

(iii)        greater than the Maximum, then the Weighting Factor of such Goal.

 

(s)          “Retirement Age” shall be deemed to have been attained by Employee
when the sum of the Employee’s actual age plus the number of the Employee’s
years of service with the Company is greater than or equal to sixty-five (65),
provided that the Employee’s actual age is not less than fifty-five (55).

 

(t)           “Revenue” shall mean the operating revenue of BRE as reported by
BRE.

 

(u)          “RMS Total Return” shall mean the MSCI US REIT Index Total Return
as published at the end of each day of trading on the American Stock Exchange at
www.msci.com.

 

(v)          “Shareholder Return” shall mean, for any period, the percentage
increase in value to a shareholder if such shareholder had acquired the common
stock in the applicable entity at the Stock Price on the first day of the
Performance Period, reinvested any dividends paid on such stock at the Stock
Price on the ex-dividend date and sold the stock on the last day of the
Performance Period at the Stock Price, all in accordance with the methodology
used to compute the RMS Total Return, provided if such methodology changes then
the method of determining Shareholder Return shall be modified to match such
methodology as closely as possible.

 

(w)          “ST Determination Date” shall mean December 31, 2013.

 

(x)           “Stock Price” shall mean, for a given day, with respect to BRE,
the closing price of a Share as of the end of such day and, with respect to a
member of the Peer Group, the closing price for the common stock or other most
widely and regularly traded equity interest in such member of the Peer Group as
of the end of such day.

 

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(y)           “Target” shall mean, with respect to a Goal, the performance
metric associated with that Goal under the column labeled “Target” on Exhibit A.

 

(z)           “Threshold” shall mean, with respect to a Goal, the performance
metric associated with that Goal under the column labeled “Threshold” on Exhibit
A.

 

(aa)         “Vesting Contribution” shall mean (i) for any particular Goals LT,
if the Goal achieved as of the LT Determination Date and (ii) for any particular
Goals ST, the Goal achieved as of the ST Determination Date is

 

(i)          less than the Threshold, then zero,

 

(ii)         greater than or equal to the Threshold and less than the Target,
then the product of (x) the Weighting Factor of such Goal multiplied by (y) the
sum of (i) 50% plus (ii) the product of (A) the proportion that the Goal
achieved as of the Vesting Determination Date is between the Threshold and the
Target multiplied by (B) 50%,

 

(iii)        greater than or equal to the Target, then the Weighting Factor of
such Goal.

 

(bb)        “Vesting Determination Date” shall mean the ST Determination Date or
LT Determination Date, as applicable.

 

(cc)         “Weighting Factor” shall mean, with respect to a Goal, the
percentage associated with that Goal under the column labeled “Weighting Factor”
on Exhibit A.

 

4.2.        Vesting of Performance Shares ST.

 

(a)          The Performance Shares ST shall, subject to Sections 5 and 6, vest
on each anniversary of the Grant Date provided that Employee has not terminated
employment with the Company before the date on which such Shares are vesting.
The number of Performance Shares ST that vest on each such date shall be equal
to twenty five percent (25%) of the Performance Shares ST multiplied by the
Aggregate Vesting Contribution ST.

 

(b)          The Vesting Contribution shall be determined for each of the Goals
ST as of the ST Determination Date as soon as all of the information reasonably
necessary for determining the Vesting Contribution is available. If any of the
information reasonably necessary for determining the Vesting Contribution is not
available through the end of the year in which the ST Determination Date occurs
and is not expected to be available within 60 days of the ST Determination Date,
then, with respect to such year (and only for that information that is not
available), the year to date information available through the most recent
quarter shall, if appropriate, be annualized and applied to the computations
required by this Section 4 as though such information represented the
information for the full year.

 

(c)          The Committee shall have sole responsibility for determining and
shall certify the computation of the Vesting Contribution for each Goal and the
amount of Performance Shares ST that shall vest pursuant to this Section 4.2.

 

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4.3.        Vesting of Performance Shares LT.

 

(a)          The Performance Shares LT shall, subject to Sections 5 and 6, vest
on the fourth anniversary and fifth anniversary of the Grant Date provided that
Employee has not terminated employment with the Company before date on which
such Shares are vesting. The number of Performance Shares LT that vest on each
such date shall be equal to fifty percent (50%) of the Performance Shares LT
multiplied by the Aggregate Vesting Contribution LT.

 

(b)          The Vesting Contribution for each of the Goals LT shall be
determined as of the LT Determination Date as soon as all of the information
reasonably necessary for determining the Vesting Contribution is available. If
any of the information reasonably necessary for determining the Vesting
Contribution is not available through the end of the relevant Performance Period
prior to the year in which the LT Determination Date occurs and is not expected
to be available within 60 days of the LT Determination Date, then, with respect
to such year (and only for that information that is not available), the year to
date information available through the most recent quarter shall, if
appropriate, be annualized and applied to the computations required by this
Section 4 as though such information represented the information for the full
year ending with the end of the Performance Period for such Goal.

 

(c)          The Committee shall have sole responsibility for determining and
shall certify the computation of the Vesting Contribution for each Goal and the
amount of Performance Shares LT that shall vest pursuant to this Section 4.3.

 

4.4.        Grant and Issuance of Reserve Performance Shares.

 

(a)          The Committee has reserved for issuance to Employee up to [NUMBER]
Shares (the “Reserve Performance Shares”) in the event a Goal exceeds Target (as
adjusted for any stock splits, stock dividends, reclassifications or similar
events) to be granted and issued to Employee pursuant to this Section 4.4. If
pursuant to the Committee’s determination pursuant to Section 4.2 it is
determined that any Goals ST achieved as of the ST Determination Date or, any
Goals LT achieved as of the LT Determination Date is greater than the Target for
such Goal, then the Committee shall grant, as soon as practicable after the date
such determination is finalized to Employee a number of the Reserve Performance
Shares equal to the product of (x) the sum of the Reserve Contribution for each
Goal multiplied by (y) the number of Reserve Performance Shares multiplied by
(z) with respect to a Goals ST, the ST Percentage (as defined below) and with
respect to a Goals LT, the LT Percentage (as defined below). The “ST Percentage”
shall equal the percentage obtained by dividing (i) the Performance Shares ST by
(ii) the sum of Performance Shares ST plus Performance Shares LT. The “LT
Percentage” shall equal one hundred percent (100%) minus the ST Percentage. The
Reserve Performance Shares to be granted pursuant to this Section 4.4(a) based
upon any Goals ST exceeding Target shall vest twenty-five percent (25%) on the
first anniversary of the Grant Date and twenty-five percent (25%) on each
anniversary thereafter until all such Shares have vested, but only if Employee
has not terminated employment with the Company before such anniversary of the
Grant Date with respect to Shares that would vest on or after such termination
of employment. All such Reserve Performance Shares granted based upon any Goals
ST exceeding target shall, upon grant, be treated for all purposes the same as
Performance Shares ST, including vesting upon termination or retirement, payment
of dividends, restriction on transfer and legends on any certificates issued for
such shares. The Reserve Performance Shares to be granted pursuant to this
Section 4.4(a) based upon any Goals LT exceeding Target shall vest fifty percent
(50%) on the fourth anniversary of the Grant Date and fifty percent (50%) on the
fifth anniversary of the Grant Date, but only if Employee has not terminated
employment with the Company before such anniversary of the Grant Date with
respect to Shares that would vest on or after such termination of employment.
All such Reserve Performance Shares granted based upon any Goals LT exceeding
target shall, upon grant be treated for all purposes the same as Performance
Shares LT, including vesting upon termination or retirement, payment of
dividends, restriction on transfer and legends on any certificates issued for
such shares.

 

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(b)          If Employee shall be entitled to receive any Reserve Performance
Shares, then the Company shall, promptly after such shares vest issue to
Employee a stock certificate (or identify issuance in book entry form)
representing the number of Reserve Performance Shares determined in accordance
with Section 4.4(a) (the “Reserve Certificate”). The Reserve Certificate (or
book entry as the case may be) shall not have endorsed thereon, or be subject
to, the legend set forth in Section 7 and the Company shall not retain or
otherwise escrow or withhold the Reserve Certificate from Employee pursuant to
this Agreement.

 

(c)          Employee shall have no rights as a shareholder (including voting
rights or rights to dividends) with respect to any Reserve Performance Shares
until such time as they are granted pursuant to Section 4.4(a).

 

4.5.        Limitation on Total Value of MC Shares. In determining the total
Performance Shares LT and Reserve Performance Shares to be issued, if the value
(computed as hereinafter described, the “Computed MC Value”) of the number of
Performance Shares LT that would vest based upon the Vesting Contribution of the
Relative TSR/Peer Group plus the number of Reserve Performance Shares granted
based upon the Reserve Contribution of the Relative TSR/Peer Group as of the end
of the Performance Period (such resulting sum, the “Provisional MC Shares”)
exceeds three times the value (determined as hereinafter described, the “Maximum
MC Value”) of the MC Shares as of the Grant Date, then the number of Performance
Shares LT and/or Reserve Performance Shares shall be reduced by a number of
Shares equal to (i) the Computed MC Value minus the Maximum MC Value divided by
(ii) the Stock Price on the LT Determination Date. The Computed MC Value shall
be the result obtained by multiplying the number of Provisional MC Shares by the
Stock Price on the LT Determination Date and the Maximum MC Value shall be the
result obtained by multiplying the MC Shares by three times the Stock Price on
the Grant Date.

 

4.6.        Recoupment. If Employee’s Employment Agreement, as of the date of
any restatement, provides for recoupment of any previously paid compensation
related to a restatement, then all Shares received pursuant to this Agreement
shall be subject to such recoupment as provided in any policy adopted by Company
to comply with applicable laws, regulations or requirement of the stock
exchange(s) upon which Company’s securities are listed and shall not be fully
and finally earned for purposes of federal and state wage and hour laws until
the applicable recoupment period has expired.

 

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5.           Vesting of Shares Upon Change in Employment Status. This Section 5
provides the terms and conditions for vesting of Shares in connection with
termination of employment. If Employee has terminated employment then any Shares
that do not become vested under this Section 5 shall be forfeited by Employee,
and ownership of all such unvested Shares shall transfer back to the Company and
Employee shall have no further rights with respect to any of such unvested
Shares.

 

5.1.        Termination Without Cause, Resignation With Good Reason, Retirement,
or Upon Death or Disability. (a) Notwithstanding Sections 3 and 4, if prior to
the last date on which any Shares granted could vest, Employee's employment with
the Company is terminated by Employee due to Good Reason or by the Company for
other than Good Cause, or due to Employee’s death or Disability, then effective
as of the date of such termination:

 

(i)          if such termination occurs before the LT Determination Date, the
number of Performance Shares LT that shall vest pursuant to Section 4 and the
number of Reserve Performance Shares that will be issued based upon the Goals LT
will be computed in accordance with Section 4 using as the LT Determination
Date, the last day of the quarter ending on or before the Employee's termination
and multiplying the number of Shares that would thereby vest by a fraction the
numerator of which is the number of whole quarters between January 1, 2013 and
the date of such termination and the denominator of which is sixteen (16);

 

(ii)         if such termination occurs before the ST Determination Date, the
number of Performance Shares ST that shall vest pursuant to Section 4 and the
number of Reserve Performance Shares that will be issued based upon the Goals ST
will be computed in accordance with Section 4 using as the ST Determination
Date, the last day of the quarter ending on or before the Employee's termination
date and multiplying the number of Shares that would thereby vest by a fraction
the numerator of which is the number of whole quarters between January 1, 2013
and the date of such termination and the denominator of which is four (4);

 

(iii)        only if (i) or (ii) applies the number of Earned Dividend Shares
relating to such subsection (i) or (ii) as the case may be, that vest will equal
the number determined pursuant to Section 10 using the Vesting Contributions as
computed in (i) and/or (ii) whichever are applicable,

 

(iv)        all then outstanding unvested Time Vesting Shares shall vest;

 

(v)          if such termination occurs on or after the ST Determination Date,
all then outstanding unvested Performance Shares ST (and any unvested Reserve
Performance Shares treated in the same manner as Performance Shares ST as
provided in Section 4.4(a)) and the unvested Earned Dividend Shares issued based
upon the Performance Shares ST shall vest; and

 

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(vi)        if such termination occurs on or after the LT Determination Date,
all then outstanding unvested Performance Shares LT (and any unvested Reserve
Performance Shares treated in the same manner as Performance Shares LT as
provided in Section 4.4(a)) and the unvested Earned Dividend Shares issued based
upon the Performance Shares LT shall vest.

 

(b)          Notwithstanding Sections 3 and 4, if prior to the last date on
which any Shares granted could vest, Employee's employment with the Company is
terminated by Employee due to his/her retirement on or after the Retirement Age,
then effective as of the date of such termination:

 

(i)          if such termination occurs before the LT Determination Date, the
number of Performance Shares LT that shall vest pursuant to Section 4 and the
number of Reserve Performance Shares that will be issued based upon the Goals LT
will be computed in accordance with Section 4 using as the LT Determination
Date, the last day of the quarter ending on or before the Employee's termination
date and multiplying the number of Shares that would thereby vest by a fraction
the numerator of which is the number of whole quarters between January 1, 2013
and the date of such termination and the denominator of which is twenty (20);

 

(ii)         if such termination occurs before the ST Determination Date, the
number of Performance Shares ST that shall vest pursuant to Section 4 and the
number of Reserve Performance Shares that will be issued based upon the Goals ST
will be computed in accordance with Section 4 using as the ST Determination
Date, the last day of the quarter ending on or before the Employee's termination
date and multiplying the number of Shares that would thereby vest by a fraction
the numerator of which is the number of whole quarters between January 1, 2013
and the date of such termination and the denominator of which is sixteen (16);

 

(iii)        only if (i) or (ii) applies the number of Earned Dividend Shares
relating to such subsection (i) or (ii) as the case may be, that vest will equal
the number determined pursuant to Section 10 using the Vesting Contributions as
computed in (i) and/or (ii) whichever are applicable,

 

(iv)        the number of then outstanding unvested Time Vesting Shares (if any)
that shall vest on Employee’s termination date shall be equal to the difference
of (x) the total number of granted Time Vesting Shares multiplied by a fraction
the numerator of which is the number of whole quarters between January 1, 2013
and the Employee’s termination date and the denominator of which is twenty (20),
minus (y) the number of Time Vesting Shares that had vested before Employee’s
termination date;

 

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(v)          if such termination occurs on or after the ST Determination Date,
the number of then outstanding unvested Performance Shares ST (if any) (and any
unvested Reserve Performance Shares treated in the same manner as Performance
Shares ST as provided in Section 4.4(a)) that shall vest on Employee’s
termination date shall be equal to the difference of (x) the total number of
Performance Shares ST that were still outstanding as of the ST Determination
Date after taking into account any forfeitures of Performance Shares ST imposed
by Section 4.2(a) (and any unvested Reserve Performance Shares treated in the
same manner as Performance Shares ST as provided in Section 4.4(a)) multiplied
by a fraction the numerator of which is the number of whole quarters between
January 1, 2013 and the Employee’s termination date and the denominator of which
is sixteen (16), minus (y) the number of Performance Shares ST (and any Reserve
Performance Shares treated in the same manner as Performance Shares ST as
provided in Section 4.4(a)) that had vested before Employee’s termination date,
and additionally all Earned Dividend Shares issued based upon the Performance
Shares ST shall vest; and

 

(vi)        if such termination occurs on or after the LT Determination Date,
the number of then outstanding unvested Performance Shares LT (if any) (and any
unvested Reserve Performance Shares treated in the same manner as Performance
Shares LT as provided in Section 4.4(a)) that shall vest on Employee’s
termination date shall be equal to the sum of (x) the total number of
Performance Shares LT that were still outstanding as of the LT Determination
Date after taking into account any forfeitures of Performance Shares LT imposed
by Section 4.3(a) (and any unvested Reserve Performance Shares treated in the
same manner as Performance Shares LT as provided in Section 4.4(a)) (the “LT
Remaining Shares”) multiplied by fifty percent (50%) and then further multiplied
by a fraction the numerator of which is the number of whole quarters between
January 1, 2013 and the Employee’s termination date and the denominator of which
is twenty (20), plus (y) if such termination occurs before January 30, 2017, the
product of the LT Remaining Shares multiplied by fifty percent (50%), and
additionally all Earned Dividend Shares issued based upon the Performance Shares
LT shall vest.

 

5.2.        Termination for Cause or Resignation Without Good Reason.
Notwithstanding Sections 3 and 4, if Employee’s employment with the Company is
terminated by the Company for Good Cause or Employee resigns without Good Reason
prior to the Vesting Determination Date, all of the then-unvested Shares and any
right to any Reserve Performance Shares shall be forfeited by Employee,
ownership of all such unvested Shares shall transfer back to the Company and
Employee shall have no further rights with respect to any of such unvested
Shares or any Reserve Performance Shares.

 

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5.3.        Termination Following a Change of Control. If within 12 months after
the effective date of a Change of Control (as defined in the Employment
Agreement) Employee’s employment with (i) the Company, (ii) an affiliate of the
Company (as such term is defined in the Exchange Act) or (iii) such entity that
the Company has merged or consolidated with or an affiliate (as such term is
defined in the Exchange Act) of such entity (such entity or affiliate in (i),
(ii) or (iii), the “Continuing Employer”) is terminated by Employee for Good
Reason or by the Continuing Employer without Good Cause, then, notwithstanding
Sections 3, 4 and 10, 100% of the then-unvested Shares (including unvested Time
Vesting Shares, Performance Shares LT and Performance Shares ST), all Reserve
Performance Shares that are to be treated the same as Performance Shares ST and
all Earned Dividend Shares that would have been issued as of such date had such
date been the date for issuing Earned Dividend Shares with respect to either
Performance Shares LT or Performance Shares ST shall automatically vest on the
date of such termination of employment, provided, however, that, if prior to
such termination the Shares shall have been exchanged or converted into the
right to receive other securities, cash or property, whether pursuant to a
merger, consolidation or sale of all or substantially all of the assets of the
Company (a “Conversion Event”), then each Share that could vest pursuant to this
Section 5.3 shall immediately after such Conversion Event represent the right to
receive such other securities, cash or property that Employee would have
received or been entitled to had such Shares been outstanding immediately prior
to such Conversion Event. Employee and Company agree that any termination of
Employee’s Employment Agreement with the Company attendant to any Change of
Control in which Employee is, in connection with such Change of Control, hired
as an employee of a Continuing Employer and retains substantially the same
economic rights as contained in this Agreement shall not be deemed a termination
of Employee’s Employment Agreement with a Continuing Employer for purposes of
this Section 5.3 unless following the Change of Control Employee resigns for
Good Reason or is terminated without Good Cause by the Company.

 

6.           Restrictions Period. The period of time between the Grant Date and
the date Shares become vested is referred to herein as the “Restriction Period.”
Until a Share becomes vested in accordance with Section 3, 4 or 5, neither such
Share nor any beneficial interest therein shall be sold, transferred, assigned,
pledged, encumbered or otherwise disposed of in any way at any time (including,
without limitation, by operation of law) other than (i) to the Company or its
assignees or (ii), after written notice to the Company identifying the
transferee to the reasonable satisfaction of the Company, to an intervivos or
testamentary trust for the benefit of the Employee and/or the Employee’s spouse
during the Employee’s life or to such other person or persons (individually or
as trustee or trustees of a trust), for estate planning or gifting purposes, as
the Committee may specifically approve. Any permitted transferee of Shares or
any interest therein shall be required as a condition of such transfer to agree
in writing, in form satisfactory to the Company, that it shall receive and hold
such Share or interest subject to the provisions of this Agreement, including
but not limited to the forfeiture provisions hereof. For purposes of this
Agreement, the term “Employee” shall include such a permitted transferee when
appropriate in settlement thereof. Company shall have no obligation to deliver
Shares until the tax withholding obligations of the Company have been satisfied
by Employee.

 

7.           Legend. All certificates representing any Shares which are not
vested shall have endorsed thereon during the Restriction Period the following
legend:

 

The shares represented by this certificate are subject to an agreement between
the Corporation and the registered holder, a copy of which is on file at the
principal office of this Corporation.

 

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8.           Retention of Certificate. The certificate or certificates
evidencing any of the unvested Shares shall be deposited with the Secretary of
the Company. The Shares may also be held in a restricted book entry account in
the name of Employee. Such certificates or such book entry shares are to be held
by the Company until termination of the Restriction Period, when they shall be
released by the Company to Employee, provided that, if the number of the Shares
ultimately vested as of the Vesting Determination Date is different than the
amount of Shares granted, then the certificate originally issued shall be
cancelled and a new certificate representing the number of the Shares that have
vested shall be delivered to Employee and all of the unvested Shares outstanding
immediately after the Vesting Determination Date shall be forfeited by Employee,
ownership of all such unvested Shares shall transfer back to the Company and
Employee shall have no further rights with respect to any of such unvested
Shares.

 

9.           Employee Shareholder Rights. During the Restriction Period, while
Employee remains in continuous service with the Company, Employee shall have all
of the rights of a shareholder with respect to unvested Shares except that
Employee shall have no right to transfer the Shares other than to the limited
extent set forth in Section 6 and the right to receive dividends with respect to
the Performance Shares shall be modified and subject to vesting as provided in
Section 10. Employee shall have the right (i) to vote all Shares other than,
prior to the ST Determination Date, the Earned Dividend Shares issued based upon
the Performance Shares ST and, prior to the LT Determination Date, Earned
Dividend Shares issued based upon the Performance Shares LT and (ii) to receive
dividends on (A) all Time Vesting Shares and, (B) from and after the ST
Determination Date, all Performance Shares ST, Reserved Performance Shares to be
treated as Performance Shares ST and all Earned Dividend Shares issued with
respect to the Performance Shares ST, and (C) from and after the LT
Determination Date, all Performance Shares LT, Reserved Performance Shares to be
treated the same as Performance Shares LT and all Earned Dividend Shares issued
with respect to Performance Shares LT such dividends to be paid on the date of
payment of dividends as declared by the Company (each a “Payment Date”),
provided that the Employee’s employment with the Company has not terminated
prior to the Payment Date.

 

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10.         Dividends on Performance Shares and Reserve Performance Shares. If
the Company shall declare a cash dividend on Shares at any time during the
Performance Period with respect to Performance Shares LT, or prior to the ST
Determination Date with respect to Performance Shares ST, then the Performance
Shares LT or the Performance Shares ST, as the case may be, shall not receive
such dividend; however, the number of Shares subject to this Agreement shall be
increased by and the Company shall issue to Employee (subject to Section 8)
immediately after such dividend a number of Shares equal to (x) the amount of
cash dividends that would otherwise have been payable with respect to each
Performance Share LT and Performance Shares ST granted to Employee pursuant to
this Agreement, had they been vested and free of restrictions on the Payment
Date divided by (y) the closing price of a Share on the applicable Payment Date 
The number of incremental Shares which are so issued by virtue of this Section
10 (the “Earned Dividend Shares”) shall be treated separately from the
Performance Shares LT prior to the LT Determination Date and the Performance
Shares ST prior to the ST Determination Date and are issuable in lieu of any
cash dividend on the Performance Shares LT prior to the LT Determination Date
and, prior to the ST Determination Date on the Performance Shares ST.  Earned
Dividend Shares issued on the Performance Shares LT shall vest on the same dates
and in the same percentage as the Performance Shares LT in an amount equal to
the Aggregate Vesting Contribution LT, multiplied by (Y) the Earned Dividend
Shares issued on the Performance Shares LT.  Earned Dividend Shares issued on
the Performance Shares ST shall vest on the same dates and in the same
percentages as the Performance Shares ST in an amount equal to the Aggregate
Vesting Contribution ST multiplied by (Y) the Earned Dividend Shares issued on
the Performance Shares ST. If, at any time, it is determined that any Reserve
Performance Shares are to be granted and/or issued, then Earned Dividend Shares
shall be granted and/or issued as though such Reserve Performance Shares were
Performance Shares ST or Performance Shares LT, as the case may be and shall for
all purposes be treated as Earned Dividend Shares granted and/or issued with
respect to Performance Shares ST or Performance Shares LT, as the case may be.
Prior to (i) the ST Determination Date with respect to Earned Dividend Shares
issued with respect to the Performance Shares ST and (ii) the LT Determination
Date with respect to Earned Dividend Shares issued with respect to the
Performance Shares LT, no dividends shall be payable on Earned Dividend Shares,
Employee shall have no right as a shareholder with respect to the Earned
Dividend Shares nor shall the provisions of this Section 10 relating to
increasing the number of shares based upon dividend payments on the Performance
Shares LT and Performance Shares ST apply to such Earned Dividend Shares. After
the ST Determination Date with respect to Earned Dividend Shares granted with
respect to Performance Shares ST and Reserve Performance Shares granted based
upon the Goals ST and After the LT Determination Date with respect to Earned
Dividend Shares granted with respect to Performance Shares LT and Reserve
Performance Shares granted based upon the Goals LT shall be entitled to receive
dividends and otherwise be treated as any other Shares granted pursuant to this
Agreement.

 

11.         Changes in Capitalization. Awards shall be subject to adjustment as
provided in Section 6.4 of the Plan.

 

12.         Taxes. Employee shall be liable for any and all taxes, including
withholding taxes, arising out of the grant, issuance or vesting of Shares or
any grant or issuance of Reserve Performance Shares or Earned Dividend Shares
hereunder. Employee in accordance with procedures, if any, as may be established
from time to time by the Committee, all such withholding tax obligation shall be
satisfied by having the Company retain from Shares otherwise deliverable having
a fair market value equal to the Company’s minimum withholding obligation.

 

13.         Fractional Shares. The Company shall not be required to deliver any
fractional Shares that may vest or become issuable pursuant to this Agreement or
record or issue any fractional Share that may be issuable pursuant to Section 10
or 11. In lieu of any delivery, recordation or issuance of any such fractional
Share, the Company shall, at such time as such fractional Share would otherwise
be deliverable, subject to recording or issuable, pay to Employee an amount in
cash (rounded to the nearest whole cent) equal to product of (x) the Stock Price
at such time multiplied by (y) the fraction of a Share to which Employee would
otherwise be entitled.

 

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14.         Miscellaneous.

 

14.1.          83(b) Election. Employee understands that Section 83(a) of the
Code, taxes as ordinary income the fair market value of the Shares as of the
date that such Shares vest in accordance with this Agreement. Employee
understands that Employee may elect to be taxed at the time that Shares are
granted, rather than when and as vesting occurs, by filing an election under
Section 83(b) (an “83(b) Election”) of the Code with the Internal Revenue
Service within thirty (30) days from the date of the grant of the Shares.
Employee understands that, if an 83(b) Election is made, an additional copy of
such 83(b) Election is required to be filed with his/her federal income tax
return for the calendar year in which the grant occurs and must also provide a
copy to the Company. Employee acknowledges and understands that it is the
Employee’s sole decision, obligation, and responsibility whether or not to file
such 83(b) Election, and neither the Company nor the Company’s legal or
financial advisors shall have any obligation or responsibility with respect to
such filing nor shall the Company or the Company’s legal or financial advisors
have any obligation or responsibility with respect to the Employee’s decision to
make or not make an 83(b) election. Employee further acknowledges that the
Company has directed the Employee to seek independent advice regarding the
applicable provisions of the Code, the income tax laws of any municipality, or
state in which the Employee may reside.

 

14.2.          Transfers in Violation of Restrictions. The Company shall not be
required (i) to transfer on its books any Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (ii) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom such shares shall have been
so transferred.

 

14.3.          Further Assurances. The parties agree to execute such further
instruments and to take such action as may reasonably be necessary to carry out
the intent of this Agreement.

 

14.4.          Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon delivery to Employee
at Employee’s address then on file with the Company.

 

14.5.          No Employment Guarantee. Neither the Plan nor this Agreement nor
any provisions under either shall be construed so as to grant Employee any right
to remain in the employ of the Company and neither alters Employee’s at-will
status.

 

14.6.          Arbitration. This Agreement shall be governed by the arbitration
provisions of the Employment Agreement, including the provision relating to
recovery of reasonable attorneys’ fees, costs, and expense.

 

[Remainder of Page Intentionally Left Blank]

 

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14.7.          Entire Agreement. This Agreement, including the Plan, and the
Employment Agreement constitute the entire agreement of the parties with respect
to the subject matter hereof and supersedes any other agreements or
understandings including without limitation the Prior Agreement.

 

14.8.          Acknowledgement Regarding SOX Section 304. If Employee is the
Chief Executive Officer, President or Chief Financial Officer, Employee
acknowledges that the Shares that may vest, the Reserve Performance Shares that
may be granted pursuant to this Agreement and the Earned Dividend Shares may be
subject to forfeiture or Employee may be required to reimburse the Company for
the value of such Shares, Reserve Performance Shares, or Earned Dividend Shares,
if applicable, pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, if the
Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under federal securities law.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

BRE Properties, Inc.   Employee            

 

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Exhibit A

 

Goals and Performance Metrics

 

Goals LT Metric Description Weighting Factor Threshold Target Maximum NAV
Premium         Forward Multiple         Relative TSR/ Peer Group              
              Goals ST Metric Description Weighting Factor Threshold Target
Maximum Core FFO to Budget         G&A/Revenues        

 

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