Exhibit 10.16

 

2004 NON-EMPLOYEE DIRECTOR SHARE PLAN OPTION AWARD AGREEMENT FOR DIRECTORS

 

EXTRA SPACE STORAGE INC.

2004 NON-EMPLOYEE DIRECTORS’ SHARE PLAN

 

OPTION AWARD AGREEMENT

 

AGREEMENT by and between Extra Space Storage Inc., a self-administered Maryland
corporation (the “Company”) and                      (the “Participant”), dated
as of the 12th day of August, 2004.

 

WHEREAS, the Company maintains the Extra Space Storage Inc. 2004 Non-Employee
Directors’ Share Plan (as amended from time to time, the “Plan”) (capitalized
terms used but not defined herein shall have the respective meanings ascribed
thereto by the Plan (which are set forth in Appendix A, attached hereto for your
convenience));

 

WHEREAS, the Participant is a director; and

 

WHEREAS, the compensation committee has determined that it is in the best
interests of the Company and its shareholders to grant a stock option to the
Participant subject to the terms and conditions set forth below.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1. Grant of Stock Option.

 

The Company hereby grants the Participant an Option to purchase          shares
of Common Stock, subject to the following terms and conditions and subject to
the provisions of the Plan. The Plan is hereby incorporated herein by reference
as though set forth herein in its entirety.

 

The Option is not intended to be and shall not be qualified as an “incentive
stock option” under Section 422 of the Code.

 

2. Option Price.

 

The Option Price per Share shall be $12.50.

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3. Initial Exercisability.

 

  (e) Subject to paragraph 5 below, the Option, to the extent that there has
been no termination of the Participant’s service and the Option has not
otherwise expired or been forfeited, shall become exercisable as follows:

 

For the Period Ending On

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Percent of the Grant Exercisable

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August 12, 2005

  25%

August 12, 2006

  25%

August 12, 2007

  25%

August 12, 2008

  25%

 

  (f) Notwithstanding the foregoing, a Participant’s Option will become
immediately exercisable in full at the time the Participant ceases to serve as a
director due to death or disability or upon a Change in Control.

 

4. Exercisability Upon and After Termination of Participant.

 

  (a) In the event of the Participant ceases to serve as a director by reason
other than on account of death or disability, no exercise of the Option may
occur after the expiration of the two-month period to follow such termination,
or if earlier, the expiration of the term of the Option set forth in paragraph 5
below; provided that, if the Participant should die after a cessation of service
as a director, the Option (if and to the extent otherwise exercisable under
paragraph 3 above) may be exercised in the manner provided by the Plan until the
earlier of (i) one year from the date the Participant ceases to serve as a
director of the Company, or (ii) the date on which the term of the Option
expires in accordance with paragraph 5 below.

 

  (b) In the event the Participant ceases to serve as a director on account of
death or disability, the Participant’s Option (whether or not otherwise
exercisable) may be exercised until the earlier of (i) one year from the date
the Participant ceases to serve as a director, or (ii) the date on which the
term of the Option as provided under paragraph 5 below.

 

  (c) Unless otherwise provided herein, no Option (or portion thereof) which had
not become exercisable at the time of cessation of service shall ever be or
become exercisable.

 

  (d) The compensation committee may, in its sole discretion, accelerate the
vesting of any Option upon the cessation of the Participant’s service for any
reason.

 

5. Term.

 

Unless earlier forfeited, the Option shall, notwithstanding any other provision
of this Agreement, expire in its entirety at the earlier of (i) the 10th
anniversary of the date hereof or (ii) one year after the date the Participant
ceases to serve as a director for any reason.

 

6. Miscellaneous.

 

  (a) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

 

  (b)

The compensation committee may make such rules and regulations and establish
such procedures for the administration of this Agreement as it deems
appropriate. Without limiting the generality of the foregoing, the compensation
committee may interpret this Agreement, with such interpretations to be
conclusive and binding on all persons and otherwise accorded the maximum

 

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deference permitted by law, provided that the compensation committee’s
interpretation shall not be entitled to deference on and after a Change in
Control except to the extent that such interpretations are made exclusively by
members of the compensation committee who are individuals who served as
compensation committee members before the Change in Control. In the event of any
dispute or disagreement as to the interpretation of this Agreement or of any
rule, regulation or procedure, or as to any question, right or obligation
arising from or related to this Agreement, the decision of the compensation
committee shall be final and binding upon all persons.

 

  (c) All notices hereunder shall be in writing, and if to the Company or the
compensation committee, shall be delivered to the board of directors of the
Company (the “Board”) or mailed to its principal office, addressed to the
attention of the Board; and if to the Participant, shall be delivered
personally, sent by email or facsimile transmission or mailed to the Participant
at the address appearing in the records of the Company. Such addresses may be
changed at any time by written notice to the other party given in accordance
with this paragraph 6(c).

 

  (d) The failure of the Participant or the Company to insist upon strict
compliance with any provision of this Agreement or the Plan, or to assert any
right the Participant or the Company, respectively, may have under this
Agreement or the Plan, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement or the Plan.

 

  (e) The Participant agrees that, at the request of the compensation committee,
the Participant shall represent to the Company in writing that the shares being
acquired are acquired for investment only and not with a view to distribution
and that such shares will be disposed of only if registered for sale under the
Securities Act, or if there is an available exemption for such disposition. The
Participant expressly understands and agrees that, in the event of such a
request, the making of such representation shall be a condition precedent to
receipt of Shares upon exercise of the Option.

 

  (f) Nothing in this Agreement shall confer on the Participant any right to
continue in the service of the Company or its subsidiaries or interfere in any
way with the right of the Company or its subsidiaries to terminate the
Participant’s service at any time.

 

  (g) This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
written or oral, with respect thereto.

 

IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement
as of the day and year first above written.

 

EXTRA SPACE STORAGE INC. By:  

 

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Name:  

 

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Title:  

 

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[Participant’s Name]

 

Appendix A

 

Please note, the definitions contained in this Appendix A are provided for your
convenience, and at all times, such definitions shall have the meaning ascribed
thereto under the Plan, as may be amended from time to time.

 

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“Board” means the Board of Directors of the Company.

 

“Change in Control” shall have occurred if:

 

(i) any “person,” including a “group” (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act, but excluding (A) the Company, (B) any entity
controlling, controlled by or under common control with the Company, (C) any
employee benefit plan of the Company or any entity described in clause (B), (D)
with respect to any particular Participant, the Participant and any “group” (as
such term is used in Section 13(d)(3) of the Exchange Act) of which the
Participant is a member), (E) Kenneth M. Woolley, his affiliates, associates and
people acting in concert with any of the foregoing and (F) Spencer F. Kirk, his
affiliates, associates and people acting in concert with any of the foregoing,
is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under the
Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of either (1) the combined voting power of the Company’s then
outstanding securities or (2) the then outstanding Shares (in either such case
other than as a result of an acquisition of securities directly from the
Company); provided, however, that, in no event shall a Change in Control be
deemed to have occurred upon an initial public offering of the Company’s common
stock under the Securities Act; or

 

(ii) any consolidation or merger of the Company where the shareholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares
representing in the aggregate 50% or more of the combined voting power of the
securities of the corporation issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any); or

 

(iii) there shall occur (A) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any party as
a single plan) of all or substantially all of the assets of the Company, other
than a sale or disposition by the Company of all or substantially all of the
Company’s assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by “persons” (as defined above) in
substantially the same proportion as their ownership of the Company immediately
prior to such sale or (B) the approval by shareholders of the Company of any
plan or proposal for the liquidation or dissolution of the Company; or

 

(iv) the members of the Board at the beginning of any consecutive
24-calendar-month period (the “Incumbent Directors”) cease for any reason other
than due to death to constitute at least a majority of the members of the Board;
provided that any director whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the
members of the Board then still in office who were members of the Board at the
beginning of such 24-calendar-month period, shall be deemed to be an Incumbent
Director.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.
References to any provision of the Code include regulations thereunder and
successor provisions and regulations thereto.

 

“Common Stock” means the Company’s Common Stock, par value $.01 per share,
either currently existing or authorized hereafter.

 

“Option” means the right, granted to a director under Section 6 of the Plan, to
purchase a specified number of Shares at the specified exercise price for a
specified period of time under the Plan. No Option shall be intended to qualify
as an “incentive stock option” under Section 422 of the Code.

 

“Option Price” means the exercise price per Share.

 

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“Participant” means any person who, as a non-employee director of the Company,
has been granted an Option which remain outstanding under the Plan

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Share” means a common share of the Company and such other securities as may be
substituted for such Share or such other securities pursuant to Section 7 of the
Plan.

 

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