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Exhibit 10.3
 
RESTRICTED UNIT AWARD AGREEMENT
 
THIS RESTRICTED UNIT AWARD AGREEMENT (this “Agreement”) is entered into as of
                                 , 20              (the “Effective Date”), by
and between Whitestone REIT, a Maryland real estate investment trust (the
“Company”), and                                             (the “Participant”).
 
WHEREAS, the Participant is an employee of the Company or one of its
subsidiaries or affiliates and in connection therewith has rendered services and
received compensation for those services, for and on behalf of the Company
and/or its subsidiaries or affiliates; and 

WHEREAS, the Company has initiated and the shareholders approved the 2008
Long-Term Equity Incentive Ownership Plan as it may be further amended from time
to time (the “Plan”), for the purpose of:  (a) encouraging performance beyond
the Participant’s assigned responsibilities and focusing as well on company
goals and targets (collectively referred to as “FFO Targets”); and (b) enabling
the Participant to participate, through the Plan, as a shareholder after
attaining the FFO Targets; and

WHEREAS, the Company maintains the Plan, which is incorporated into and forms a
part of this Agreement, and the Participant has been selected by the
Compensation Committee administering the Plan (the “Committee”) to receive an
award under the Plan.

NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as
follows:
 
1. Restricted Unit Award. The Participant is hereby allocated                   
Units (the “Units”) subject to the restrictions and on the terms and conditions
set forth in this Agreement (the “Award”). Each Unit shall represent the right
to receive one (1) common share of beneficial interest, par value $0.001 per
share, of the Company (the “Common Shares”). The number of Units subject to this
Award and the number of Common Shares deliverable with respect to such Units may
be adjusted from time to time for capitalization adjustments as described in
Section 4.2 of the Plan.
 
2. Restriction on the Units.
 
(a) Period of Restriction. Except as otherwise set forth herein, all the Units
issued to the Participant pursuant to this Agreement shall be subject to a
period of restriction (the “Period of Restriction”) during which the
Participant’s rights in and to such Units shall be subject to the limitations
and obligations set forth in this Section 2.

(b) Lapse of Period of Restriction. The Period of Restriction shall lapse in
accordance with the provisions of Exhibit A, which is attached hereto and forms
part of this Agreement.  During the period that the Units are subject to the
Period of Restriction, such Units are referred to herein as “Restricted Units.”

(c) Delivery of the Common Shares. Subject to Section 2(d) below, upon the lapse
of the Period of Restriction with respect to a Unit, the Unit shall be converted
into the right to receive a Common Share, and the Company will deliver to the
Participant a number of Common Shares equal to the number of Units subject to
this Award, on the applicable date of the lapse of the Period of Restriction or
as soon as practicable thereafter. The form of delivery (e.g., a share
certificate or electronic entry evidencing such shares) shall be determined by
the Company.

(d) Termination of Continuous Employment. Notwithstanding any other provision of
this Agreement to the contrary, if the Participant is an employee of the Company
or one of its subsidiaries or affiliates, and if the Participant’s continuous
employment with the Company terminates for any reason (or no reason), other than
the Participant’s death or Disability (as defined in the Plan), any Restricted
Units that are subject to the Period of Restriction on the date of the
Participant’s termination shall be immediately forfeited by the Participant and
shall be automatically transferred to and reacquired by the Company at no cost
to the Company, and neither the Participant nor his or her heirs, executors,
administrators or successors shall have any right or interest in such Restricted
Units or the underlying Common Shares. In the event of the Participant’s death
or Disability, any Restricted Units that are subject to the Period of
Restriction on the date of death or Disability shall immediately vest and the
Participant or his or her heirs, executors, administrators or successors shall
have the right and interest in such Restricted Units.

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3. No Rights as a Shareholder. Until Common Shares shall have been delivered to
the Participant in accordance with Section 2(c) hereof, subject to the terms of
this Agreement and the Plan, shall have no rights of a shareholder with respect
to the Restricted Units, including no right to vote the Restricted Units and no
right to receive current dividends and distributions, with respect to the
Restricted Units.
 
4.  Change in Control. Notwithstanding Section 2 of this Agreement, if the
Participant holds Restricted Units at the time a Change in Control (as defined
in the Plan) occurs, the Period of Restriction with respect to such Restricted
Units granted in Section 1 shall automatically lapse immediately prior to the
consummation of such Change in Control. In addition, if there are any Restricted
Units that have been allocated pursuant to this Agreement, but not yet granted
as set forth in Exhibit A at the time of the Change in Control and the
Participant remains employed with the acquiring or successor entity (or parent
thereof), then the Participant must receive an award of a comparable value
covering shares of a successor corporation (with appropriate adjustments as to
the number and kind of shares and the purchase price).
 
5. Withholding. All deliveries and distributions under this Agreement shall be
subject to withholding of all applicable taxes. The Participant agrees to make
appropriate arrangements with the Company for satisfaction of any applicable
federal, state or local income tax, withholding requirements or like
requirements, including the payment to the Company upon the lapse of the Period
of Restriction with respect to the Restricted Units (or such later date as may
be applicable under the Internal Revenue Code of 1986, as amended (the “Code”)),
or other settlement in respect of, the Restricted Units of all such taxes and
requirement.. The Participant agrees that the Company shall be authorized to
take such action as the Company may deem necessary (including, without
limitation, in accordance with applicable law, withholding amounts from any
compensation or other amount owing from the Company to the Participant) to
satisfy all obligations for the payment of such taxes.
 
6. Restrictions on Transfer. During the Period of Restriction, the Participant
shall not sell, transfer, pledge, hypothecate, assign, exchange or otherwise
dispose of the Restricted Units. Any attempted sale, transfer, pledge,
hypothecation, assignment, exchange or other disposition shall be null and void
and of no force or effect and the Company shall have the right to disregard the
same on its books and records and to issue “stop transfer” instructions to its
transfer agent.
 
7. Plan Provisions Control. This Agreement is subject to the terms and
conditions of the Plan, which are incorporated herein by reference.
Notwithstanding anything to the contrary contained herein, the provisions of the
Plan shall govern if and to the extent that there are inconsistencies between
the provisions of the Plan and the provisions of this Agreement. The Participant
acknowledges that the Participant has received a copy of the Plan prior to the
execution of this Agreement.

8. No Rights Conferred. Nothing in this Agreement shall give the Participant any
right to continue in the employ or service of the Company, any affiliate or any
subsidiary and/or as a member of the Company’s Board of Trustees or in any other
capacity, or interfere in any way with the right of the Company, any affiliate
or any subsidiary to terminate the employment or services of the Participant.

9. Consent to Electronic Delivery.  The Company may choose to deliver certain
statutory materials relating to the Plan in electronic form. By accepting this
Agreement, the Participant agrees that the Company may deliver the Plan
prospectus and the Company’s annual report to the Participant in an electronic
format. If at any time the Participant would prefer to receive paper copies of
these documents, please contact Chief Financial Officer of the Company to
request paper copies of these documents.

10. Adjustments. All references to the number and class of shares covered by
this Agreement and other terms in this Agreement may be appropriately adjusted,
in the discretion of the Committee, in the event of certain unusual or
non-recurring transactions, as set forth in Section 4.2 of the Plan.
 
11. Compliance with Section 409A of the Code. The Participant hereby consents
(without further consideration) to any change to this Agreement or the Award so
the Participant can avoid paying penalties under Section 409A of the Code, even
if those changes affect the terms and conditions of this Agreement of the Award
and reduce its value or potential value.
 
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12. Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. This Agreement may not be
assigned or transferred in whole or in part by the Participant, nor may the
Participant delegate any duty or obligation under this Agreement, and any
attempt to so assign, transfer or delegate shall be null and void and of no
force or effect.
 
13. Interpretation of this Agreement. All determinations and interpretations
made by the Committee with regard to any questions arising under the Plan or
this Agreement shall be final, binding and conclusive as to all persons,
including without limitation the Participant and any person claiming rights from
or through the Participant.
 
14. Venue. Each party to this Agreement hereby irrevocably (i) consents and
submits to the exclusive jurisdiction of the state and federal courts in Harris
County, Texas in connection with any disputes arising out of this Agreement, and
(ii) waives any objection based on venue or inconvenient forum with respect to
any action instituted therein arising under this Agreement or the transactions
contemplated hereby, and agrees that any dispute with respect to such matters
shall be heard only in the courts described above.
 
15. Governing Law; Entire Agreement; Amendment. This Agreement shall be governed
by and construed in accordance with the laws of the State of Maryland, without
regard to such state’s conflict of laws principles. The Plan and this Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior understandings and agreements, written or
oral, of the parties hereto with respect to the subject matter hereof. This
Agreement may be amended by the Committee, subject to the Participant’s consent
if such amendment materially and adversely affects the rights of the
Participant, except that the consent of the Participant shall not be required
for any amendment made pursuant to Section 4.2 or Section 15.11 of the Plan, or
as set forth in Section 11 of this Agreement.
 
16. Tax Elections. THE PARTICIPANT UNDERSTANDS THAT HE OR SHE (AND NOT THE
COMPANY) SHALL BE RESPONSIBLE FOR THE PARTICIPANT’S OWN TAX LIABILITY THAT MAY
ARISE AS A RESULT OF THE ACQUISITION OF THE UNITS HEREUNDER. THE PARTICIPANT
ACKNOWLEDGES AND AGREES THAT HE OR SHE HAS CONSIDERED THE ADVISABILITY OF ALL
TAX ELECTIONS IN CONNECTION WITH THE ISSUANCE OF THE UNITS.
 
17. Notices. Any notice, demand or request required or permitted to be given
under this Agreement shall be in writing and shall be deemed given (i) when
delivered personally, or (ii) three days after being deposited in the United
States mail, by certified or registered mail, postage prepaid, or (iii) the next
business day after sent by nationally recognized overnight delivery service, and
addressed, if to the Company, at its principal place of business, Attention:
Chief Financial Officer, and if to the Participant, at his or her most recent
address as shown in the employment or stock records of the Company.
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
 

 
Whitestone REIT
 
By:
   
Name:
   
Title:
       
Participant:
     
Date:
   

 
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Exhibit A
 
LAPSE OF PERIOD OF RESTRICTION

The purpose of this Exhibit A is to set forth the performance goals and measures
that will be applied to determine the amount of the award to be made under the
terms of the attached Restricted Unit Award Agreement (the “Agreement”). This
Exhibit A is incorporated into and forms a part of the Agreement.

The Period of Restriction will lapse as follows:
(a) 10% of these Units will vest when the Company meets the annual FFO (as
defined below) goal of $__________.
(b) 20% of these Units will vest when the Company meets the annual FFO goal of
$__________.
(c) 20% of these Units will vest when the Company meets the annual FFO goal of
$__________.
(d) 25% of these Units will vest when the Company meets the annual FFO goal of
$__________.
(e) 25% of these Units will vest when the Company meets the annual FFO goal of
$__________.

FFO is defined as the net income (loss) available to common shareholders
computed in accordance withU.S. generally accepted accounting principles,
excluding gains or losses from sales of operating real estateassets and
extraordinary items, plus depreciation and amortization of operating properties,
including our share of unconsolidated real estate joint ventures and
partnerships.  For purposes of this Award, FFO will be based on the annual
audited FFO as it appears in the Company’s annual report of Form 10-K.
 
 
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