EXHIBIT 10.1
ARCHSTONE-SMITH TRUST 2001 LONG-TERM INCENTIVE PLAN
ARCHSTONE-SMITH TRUST 2001
LONG-TERM INCENTIVE PLAN
SECTION 1
GENERAL
     1.1. Purpose. The Archstone-Smith Trust 2001 Long-Term Incentive Plan (the
“Plan”) has been established by Archstone-Smith Trust (the “Company”) to
(i) attract and retain persons eligible to participate in the Plan;
(ii) motivate Participants, by means of appropriate incentives, to achieve
long-range goals; (iii) provide incentive compensation opportunities that are
competitive with those of other similar companies; and (iv) further identify
Participants’ interests with those of the Company’s other shareholders through
compensation that is based on the Company’s common shares; and thereby promote
the long-term financial interest of the Company and the Subsidiaries, including
the growth in value of the Company’s equity and enhancement of long-term
shareholder return.
     1.2. Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Individuals (including transferees of Eligible Individuals to the
extent the transfer is permitted by the Plan and the applicable Award
Agreement), those persons who will be granted one or more Awards under the Plan,
and thereby become “Participants” in the Plan. Individuals who receive a grant
of Replacement Awards pursuant to Section 4 shall also be considered
Participants in the Plan with respect to such Awards.
     1.3. Operation, Administration, and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 5 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 9).
SECTION 2
OPTIONS AND SARS
     2.1. Definitions.

(a)   The grant of an “Option” entitles the Participant to purchase Shares at an
Exercise Price established by the Committee. Any Option granted under this
Section 2 may be either an incentive share option (an “ISO”) or a non-qualified
option (an “NQO”), as determined in the discretion of the Committee. An “ISO” is
an Option that is intended to satisfy the requirements applicable to an
“incentive stock option” described in section 422(b) of the Code. An “NQO” is an
Option that is not intended to be an “incentive share option” as that term is
described in section 422(b) of the Code.

(b)   A share appreciation right (an “SAR”) entitles the Participant to receive,
in cash or Shares (as determined in accordance with subsection 2.5), value equal
to (or otherwise based on) the excess of: (a) the Fair Market Value of a
specified number of Shares at the time of exercise; over (b) an Exercise Price
established by the Committee.

     2.2. Exercise Price. The “Exercise Price” of each Option and SAR granted
under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option or
SAR is granted. Except as provided in Section 4 with respect to Replacement
Awards, the Exercise Price shall not be less than 100% of the Fair Market Value
of a Share on the date of grant (or, if greater, the par value of a Share).

 

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     2.3. Exercise. An Option and an SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established by the
Committee.
     2.4. Payment of Option Exercise Price. The payment of the Exercise Price of
an Option granted under this Section 2 shall be subject to the following:

(a)   Subject to the following provisions of this subsection 2.4, the full
Exercise Price for Shares purchased upon the exercise of any Option shall be
paid at the time of such exercise (except that, in the case of an exercise
arrangement approved by the Committee and described in paragraph 2.4(c), payment
may be made as soon as practicable after the exercise).

(b)   The Exercise Price shall be payable in cash, by promissory note, or by
tendering, by either actual delivery of Shares or by attestation, Shares
acceptable to the Committee, and valued at Fair Market Value as of the day of
exercise, or in any combination thereof, as determined by the Committee.

(c)   The Committee may permit a Participant to elect to pay the Exercise Price
upon the exercise of an Option by irrevocably authorizing a third party to sell
Shares (or a sufficient portion of the Shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to pay
the entire Exercise Price and any tax withholding resulting from such exercise.

     2.5. Settlement of Award. Settlement of Options and SARs is subject to
subsection 5.7.
SECTION 3
OTHER SHARE AWARDS
     3.1. Definitions.

(a)   A “Bonus Share” Award is a grant of Shares in return for previously
performed services, or in return for the Participant surrendering other
compensation that may be due.

(b)   A “Share Unit” Award is the grant of a right to receive Shares in the
future.

(c)   A “Performance Share” Award is a grant of a right to receive Shares or
Share Units which is contingent on the achievement of performance or other
objectives during a specified period.

(d)   A “Performance Unit” Award is a grant of a right to receive a designated
dollar value amount of Shares which is contingent on the achievement of
performance or other objectives during a specified period.

(e)   A “Restricted Share” Award is a grant of Shares, and a “Restricted Share
Unit” Award is the grant of a right to receive Shares in the future, with such
Shares or right to future delivery of such Shares subject to a risk of
forfeiture or other restrictions that will lapse upon the achievement of one or
more goals relating to completion of service by the Participant, or achievement
of performance or other objectives, as determined by the Committee.

     3.2. Restrictions on Awards. Each Bonus Share Award, Share Unit Award,
Restricted Share Award, Restricted Share Unit Award, Performance Share Award,
and Performance Unit Award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine.
SECTION 4
REPLACEMENT AWARDS
     4.1. In General. In the event of a business transaction in which
equity-based awards of an entity other than the Company are to be replaced with
awards based on Shares, and such replacement awards, including without
limitation share options, bonus shares, share units, restricted shares,
restricted share units, performance units, and performance shares (with any
replacement awards granted pursuant to this Section 4 sometimes referred to in
the

 

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Plan as “Replacement Awards”) may be granted under this Plan subject to such
terms as the Committee determines to be appropriate. As applied to any
Replacement Award, the provisions of this Section 4 shall supersede any other
provision of the Plan.
     4.2. Archstone Communities Trust. In lieu of awards related to the common
shares of beneficial interest in Archstone Communities Trust (“Archstone”)
granted pursuant to the Archstone Communities Trust 1997 Long-Term Incentive
Plan which were outstanding as of the Archstone Closing Date (as defined in the
Merger Agreement) (the “Archstone Awards”), Replacement Awards will be
automatically granted to the holders of the Archstone Awards . The number of
Shares and, if applicable, the Exercise Price per Share, subject to a
Replacement Award shall be equal to the same number of common shares of
beneficial interest in Archstone and, if applicable, the same Exercise Price per
share, subject to corresponding Archstone Award. Except as provided in the
preceding sentence, the Replacement Awards granted pursuant to this subsection
4.2 shall be subject to the same terms and conditions as the corresponding
Archstone Awards.
     4.3. Charles E. Smith Residential Realty, Inc. In lieu of outstanding
awards related to the common stock of Charles E. Smith Residential Realty, Inc.
(“Smith, Inc.”) or partnership units of Charles E. Smith Residential Realty,
L.P. (“Smith, L.P.”) granted pursuant to either: (a) the Charles E. Smith
Residential Realty, Inc. Directors Stock Option Plan, or (b) the Charles E.
Smith Residential Realty, Inc. First Amended and Restated 1994 Employee Stock
and Unit Option Plan, which were outstanding as of the Effective Time of the
Merger (as defined in the Merger Agreement) (the “Smith Awards”), Replacement
Awards will be automatically granted to the holders of Smith Awards. The number
of Shares subject to a Replacement Award shall be equal to (i) the number of
shares of common stock of Smith, Inc. or (ii) the number of partnership units of
Smith, L.P., as applicable, that could have been purchased (assuming full
vesting) under the corresponding Smith Award multiplied by 1.975 (rounded down
to the nearest whole number). The Exercise Price per Share subject to a
Replacement Award shall be equal to the per-share (or unit, as applicable)
exercise price corresponding under the corresponding Smith Award divided by
1.975 (rounded up to the nearest whole cent). Other than the number of Shares
and the exercise price, the Replacement Awards granted pursuant to this
subsection 4.3 shall be subject to the same terms and conditions as the
corresponding Smith Awards.
SECTION 5
OPERATION AND ADMINISTRATION
     5.1. Effective Date. Subject to the approval of the shareholders of the
Company, the Plan shall be effective as of the Archstone Closing Date (the
“Effective Date”). The Plan shall be unlimited in duration and, in the event of
Plan termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that no Awards may be granted under the Plan
after the ten-year anniversary of the Effective Date (except for Awards granted
pursuant to commitments entered into prior to such ten-year anniversary).
     5.2. Shares Subject to Plan. The Shares for which Awards may be granted
under the Plan shall be subject to the following:

(a)   The Shares with respect to which Awards may be made under the Plan shall
be Shares currently authorized but unissued or currently held or, to the extent
permitted by applicable law, subsequently acquired by the Company as treasury
shares, including Shares purchased in the open market or in private
transactions.

(b)   Subject to the following provisions of this subsection 5.2, the maximum
number of Shares that may be delivered to Participants and their beneficiaries
under the Plan shall be equal to 20,000,000 Shares.

(c)   To the extent provided by the Committee, any Award may be settled in cash
rather than Shares. To the extent any Shares covered by an Award are not
delivered to a Participant or beneficiary because the Award is forfeited or
canceled, or the Shares are not delivered because the Award is settled in cash
or used to satisfy the applicable tax withholding obligation, such Shares shall
not be deemed to have been delivered for purposes of determining the maximum
number of Shares available for delivery under the Plan.

 

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(d)   If the exercise price of any option granted under the Plan is satisfied by
tendering Shares to the Company (by either actual delivery or by attestation),
only the number of Shares issued net of the Shares tendered shall be deemed
delivered for purposes of determining the maximum number of Shares available for
delivery under the Plan.

(e)   Subject to paragraph 5.2(f), the following additional maximums are imposed
under the Plan.]

(i) The maximum number of Shares that may be covered by Awards granted to any
one individual pursuant to Section 2 (relating to Options and SARs) shall be
1,000,000 Shares during any one calendar year period. If an Option is in tandem
with an SAR, such that the exercise of the Option or SAR with respect to a share
of Shares cancels the tandem SAR or Option right, respectively, with respect to
such share, the tandem Option and SAR rights with respect to each share of
Shares shall be counted as covering only one Share for purposes of applying the
limitations of this subparagraph (i).
(ii) The maximum number of Shares that may be issued during any one calendar
year in conjunction with Awards granted pursuant to Section 3 (relating to Other
Shares Awards) which are intended to be “performance-based” compensation for
purposes of section 162(m) of the Code shall be 1,000,000 Shares.

(f)   In the event of a corporate transaction involving the Company (including,
without limitation, any share dividend, share split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination or exchange of shares), the Committee may adjust the terms
of the Plan and Awards to preserve the benefits or potential benefits of the
Plan or the Awards. Action by the Committee with respect to the Plan or Awards
may include: (i) adjustment of the number and kind of shares which may be
delivered under the Plan; (ii) adjustment of the number and kind of shares
subject to outstanding Awards; (iii) adjustment of the Exercise Price of
outstanding Options and SARs; and (iv) any other adjustments that the Committee
determines to be equitable.

     5.3. General Restrictions. Delivery of Shares or other amounts under the
Plan shall be subject to the following:

(a)   Notwithstanding any other provision of the Plan, the Company shall have no
liability to deliver any Shares under the Plan or make any other distribution of
benefits under the Plan unless such delivery or distribution would comply with
all applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.

(b)   To the extent that the Plan provides for issuance of certificates to
reflect the issuance of Shares, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any securities exchange.

     5.4. Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. Except as otherwise provided by the
Committee, such withholding obligations may be satisfied (a) through cash
payment by the Participant, (b) through the surrender of Shares which the
Participant already owns, or (c) through the surrender of Shares to which the
Participant is otherwise entitled under the Plan; provided, however, that such
Shares under this paragraph (c) may be used to satisfy not more than the
Company’s minimum statutory withholding obligation (based on minimum statutory
withholding rates for Federal and state tax purposes, including payroll taxes,
that are applicable to such supplemental taxable income).
     5.5. Grant and Use of Awards. In the discretion of the Committee, a
Participant may be granted any Award permitted under the provisions of the Plan,
and more than one Award may be granted to a Participant. Awards may be granted
as alternatives to or replacement of awards granted or outstanding under the
Plan, or any other plan or arrangement of the Company or a Subsidiary (including
a plan or arrangement of a business or entity, all or a portion Shares of which
is acquired by the Company or a Subsidiary). The Committee may use available
Shares as the form of payment for compensation, grants or rights earned or due
under any other compensation plans

 

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or arrangements of the Company or a Subsidiary, including the plans and
arrangements of the Company or a Subsidiary assumed in business combinations.
     5.6. Dividends and Dividend Equivalents. An Award (including without
limitation an Option or SAR Award) may provide the Participant with the right to
receive dividend payments, dividend equivalent payments or dividend equivalent
units with respect to Shares subject to the Award (both before and after the
Shares subject to the Award is earned, vested, or acquired), which payments may
be either made currently or credited to an account for the Participant, and may
be settled in cash or Shares, as determined by the Committee. Any such
settlements, and any such crediting of dividends or dividend equivalents or
reinvestment in Shares or Share equivalents, may be subject to such conditions,
restrictions and contingencies as the Committee shall establish, including the
reinvestment of such credited amounts in Shares equivalents.
     5.7. Settlement of Awards. The obligation to make payments and
distributions with respect to Awards may be satisfied through cash payments, the
delivery of Shares, the granting of replacement Awards, or combination thereof
as the Committee shall determine. Satisfaction of any such obligations under an
Award, which is sometimes referred to as “settlement” of the Award, may be
subject to such conditions, restrictions and contingencies as the Committee
shall determine. The Committee may permit or require the deferral of any Award
payment, subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest or dividend
equivalents, and may include converting such credits into deferred Share
equivalents. Each Subsidiary shall be liable for payment of cash due under the
Plan with respect to any Participant to the extent that such benefits are
attributable to the services rendered for that Subsidiary by the Participant.
Any disputes relating to liability of a Subsidiary for cash payments shall be
resolved by the Committee.
     5.8. Transferability. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.
     5.9. Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
     5.10. Agreement With Company. An Award under the Plan shall be subject to
such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
to any Participant shall be reflected in such form of written document, if any,
as is determined by the Committee. A copy of such document shall be provided to
the Participant, and the Committee may, but need not require that the
Participant sign a copy of such document. Such document is referred to in the
Plan as an “Award Agreement” regardless of whether any Participant signature is
required.
     5.11. Action by Company or Subsidiary. Any action required or permitted to
be taken by the Company or any Subsidiary shall be by resolution of its board of
directors, or by action of one or more members of the board (including a
committee of the board) who are duly authorized to act for the board, or (except
to the extent prohibited by applicable law or applicable rules of any share
exchange) by a duly authorized officer of such company.
     5.12. Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
     5.13. Limitation of Implied Rights.

(a)   Neither a Participant nor any other person shall, by reason of
participation in the Plan, acquire any right in or title to any assets, funds or
property of the Company or any Subsidiary whatsoever, including, without
limitation, any specific funds, assets, or other property which the Company or
any Subsidiary, in its sole discretion, may set aside in anticipation of a
liability under the Plan. A Participant shall have only a contractual right to
the Shares or amounts, if any, payable under the Plan, unsecured by any assets
of the Company or any Subsidiary, and nothing contained in the Plan shall
constitute a guarantee that the assets of the Company or any Subsidiary shall be
sufficient to pay any benefits to any person.

 

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(b)   The Plan does not constitute a contract of employment or continued
service, and selection as a Participant will not give any participating
individual the right to be retained in the employ or continued service of the
Company or any Subsidiary, nor any right or claim to any benefit under the Plan,
unless such right or claim has specifically accrued under the terms of the Plan.
Except as otherwise provided in the Plan, no Award under the Plan shall confer
upon the holder thereof any rights as a shareholder of the Company prior to the
date on which the individual fulfills all conditions for receipt of such rights.

     5.14. Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
SECTION 6
CHANGE IN CONTROL
     Subject to the provisions of paragraph 5.2(f) (relating to the adjustment
of shares), and except as otherwise provided in the Plan or the Award Agreement
reflecting the applicable Award, the effect of a Change in Control upon an Award
under this Plan, if any, shall be determined by the Committee.
SECTION 7
COMMITTEE
     7.1. Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the “Committee”) in
accordance with this Section 7. The Committee shall be selected by the Board,
and shall consist solely of two or more members of the Board. If the Committee
does not exist, or for any other reason determined by the Board, the Board may
take any action under the Plan that would otherwise be the responsibility of the
Committee.
     7.2. Powers of Committee. The Committee’s administration of the Plan shall
be subject to the following:

(a)   Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Individuals those
persons who shall receive Awards, to determine the time or times of receipt, to
determine the types of Awards and the number of Shares covered by the Awards, to
establish the terms, conditions, performance criteria, restrictions, and other
provisions of such Awards, and (subject to the restrictions imposed by
Section 8) to cancel or suspend Awards.

(b)   To the extent that the Committee determines that the restrictions imposed
by the Plan preclude the achievement of the material purposes of the Awards in
jurisdictions outside the United States, the Committee will have the authority
and discretion to modify those restrictions as the Committee determines to be
necessary or appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.

(c)   The Committee will have the authority and discretion to conclusively
interpret the Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of any Award
Agreement made pursuant to the Plan, and to make all other determinations that
may be necessary or advisable for the administration of the Plan.

(d)   Any interpretation of the Plan by the Committee and any decision made by
it under the Plan is final and binding on all persons.

(e)   In controlling and managing the operation and administration of the Plan,
the Committee shall take action in a manner that conforms to the articles and
by-laws of the Company, and applicable state corporate law.

     7.3. Delegation by Committee. Except to the extent prohibited by applicable
law or the applicable rules of a securities exchange, the Committee may allocate
all or any portion of its responsibilities and powers to any one or

 

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more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.
     7.4. Information to be Furnished to Committee. The Company and Subsidiaries
shall furnish the Committee with such data and information as it determines may
be required for it to discharge its duties. The records of the Company and
Subsidiaries as to an individual’s employment or service, termination of
employment or service, leave of absence, reemployment or recommencement of
service and compensation shall be conclusive on all persons unless determined to
be incorrect. Participants and other persons entitled to benefits under the Plan
must furnish the Committee such evidence, data or information as the Committee
considers desirable to carry out the terms of the Plan.
SECTION 8
AMENDMENT AND TERMINATION
     The Board may, at any time, amend or terminate the Plan, and may amend any
Award Agreement, provided that no amendment or termination may, in the absence
of written consent to the change by the affected Participant (or, if the
Participant is not then living, the affected beneficiary), adversely affect the
rights of any Participant or beneficiary under any Award granted under the Plan
prior to the date such amendment is adopted by the Board; and further provided
that adjustments pursuant to paragraph 5.2(f) shall not be subject to the
foregoing limitations of this Section 8.
SECTION 9
DEFINED TERMS
     In addition to the other definitions contained herein, the following
definitions shall apply:

(a)   Award. The term “Award” means any award or benefit granted under the Plan,
including, without limitation, the grant of Options, SARs, Bonus Share Awards,
Share Unit Awards, Restricted Share Awards, Restricted Share Unit Awards,
Performance Unit Awards, Performance Share Awards, and Replacement Awards.

(b)   Board. The term “Board” means the Board of Trustees of the Company.

(c)   Change in Control. The term “Change in Control” shall be as defined in the
Award Agreement, or as otherwise provided by the Committee.

(d)   Code. The term “Code” means the Internal Revenue Code of 1986, as amended.
A reference to any provision of the Code shall include reference to any
successor provision of the Code.

(e)   Eligible Individual. For purposes of the Plan, the term “Eligible
Individual” means any employee of the Company or a Subsidiary, and any
consultant or other person providing services to the Company or a Subsidiary;
provided, however, that an incentive stock option may only be granted to an
employee of the Company or a Subsidiary.

(f)   Fair Market Value. For purposes of determining the “Fair Market Value” of
a Share as of any date, the following rules shall apply:

(i) If the principal market for the Shares is a national securities exchange or
the Nasdaq securities market, then the “Fair Market Value” as of that date shall
be the reported closing price of the Shares on the next preceding business day
on the principal exchange or market on which the Shares are then listed or
admitted to trading.
(ii) If the Share are not listed on a national securities exchange and the
Shares are not quoted on the Nasdaq share market, then the “Fair Market Value”
as of that date shall be the closing price for the Shares

 

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on the next preceding business day as reported on the Nasdaq OTC Bulletin Board
Service or by the National Quotation Bureau, Incorporated or a comparable
service.
(iii) If subparagraphs (i) and (ii) next above are otherwise inapplicable, then
the Fair Market Value of the Shares shall be determined in good faith by the
Committee.

(g)   Merger Agreement means that certain Amended and Restated Agreement and
Plan of Merger among Archstone Communities Trust, Charles E. Smith Residential
Realty, Inc., et. al., dated as of May 3, 2001.

(h)   Replacement Award. The term “Replacement Award” shall have the meaning
ascribed to it in Section 4.

(i)   Subsidiary. The term “Subsidiary” means any corporation, partnership,
joint venture or other entity during any period in which at least a fifty
percent voting or profits interest is owned, directly or indirectly, by the
Company (or by any entity that is a successor to the Company), and any other
business venture designated by the Committee in which the Company (or any entity
that is a successor to the Company) has a significant interest, as determined in
the discretion of the Committee.

(j)   Shares. The term “Shares” means common shares of beneficial interest in
the Company, par value $0.01 per share.