Exhibit 10.12

 

2004 LONG TERM INCENTIVE COMPENSATION PLAN OPTION AWARD FOR EMPLOYEE WITHOUT
EMPLOYMENT AGREEMENT

 

EXTRA SPACE STORAGE INC.

2004 LONG TERM INCENTIVE COMPENSATION PLAN

 

OPTION AWARD AGREEMENT

 

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

 

WHEREAS, the Company maintains the Extra Space Storage Inc. 2004 Long Term
Incentive Compensation 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 Optionee is an employee of the Company or its Subsidiaries; and

 

WHEREAS, the Committee has determined that it is in the best interests of the
Company and its shareholders to grant a stock option to the Optionee 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 Optionee 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.

 

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

 

For the Period Ending On

 

Percent of the Grant Exercisable

August 12, 2005

 

25%

August 12, 2006

 

25%

August 12, 2007

 

25%

August 12, 2008

 

25%

 

(d)            Notwithstanding the foregoing, the Option shall also become
exercisable and otherwise vested upon a Change in Control while the Optionee is
employed.

 

4. Exercisability Upon and After Termination of Optionee.

 

(a)             In the event of the Optionee’s Termination of Service other than
a termination by the Optionee for any reason, termination by the Company and its
Subsidiaries for Cause or termination by reason of death, Retirement or
Disability, no exercise of the Option may occur after the expiration of the
three-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
Optionee should die after a Termination of Service, but while the Option is
still in effect, the Option (if and to the extent otherwise exercisable under
paragraph 3(a) above) may be exercised in the manner provided by the Plan until
the earlier of (i) one year from the date of the Termination of Service of the
Optionee, or (ii) the date on which the term of the Option expires in accordance
with paragraph 5 below.

 

(b)            In the event the Optionee has a Termination of Service on account
of death, Disability or Retirement, the Option may be exercised until the
earlier of (i) one year from the date of the Termination of Service of the
Optionee, or (ii) the date on which the term of the Option expires as provided
under paragraph 5 below.

 

(c)             Notwithstanding any other provision of this Agreement, if
(i) the Optionee has a Termination of Service by the Company or a Subsidiary for
Cause or (ii) the Optionee terminates employment with the Company and its
Subsidiaries for any reason (other than on account of death, Retirement or
Disability), the Optionee’s Options, to the extent then unexercised, shall
thereupon cease to be exercisable and shall be forfeited forthwith.

 

(d)            Other than as specified below, no Option (or portion thereof)
which had not become exercisable at the time of cessation of employment shall
ever be or become exercisable. No provision of this paragraph 4 is intended to
or shall permit the exercise of the Option to the extent the Option was not
exercisable upon cessation of employment.

 

(e)             The Committee may, in its sole discretion, accelerate all or a
portion of the vesting of any Option upon the cessation of the Optionee’s
employment for any reason (other than a termination by the Company for Cause).

 

5. Term.

 

Unless earlier forfeited, the Option shall, notwithstanding any other provision
of this Agreement, expire in its entirety upon the 10th anniversary of the date
hereof. The Option shall also expire and be forfeited at such earlier times and
in such circumstances as otherwise provided hereunder or under the Plan.

 

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

 

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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 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 Committee may
interpret this Agreement, with such interpretations to be conclusive and binding
on all persons and otherwise accorded the maximum deference permitted by law,
provided that the 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 Committee who are individuals who served
as 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 Committee shall be final and
binding upon all persons.

 

(c)             All notices hereunder shall be in writing, and if to the Company
or the Committee, shall be delivered to the Board or mailed to its principal
office, addressed to the attention of the Board; and if to the Optionee, shall
be delivered personally, sent by email or facsimile transmission or mailed to
the Optionee 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 Optionee or the Company to insist upon strict
compliance with any provision of this Agreement or the Plan, or to assert any
right the Optionee 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 Optionee agrees that, at the request of the Committee, the
Optionee 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
Optionee 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 Optionee any
right to continue in the employ of the Company or its Subsidiaries or interfere
in any way with the right of the Company or its Subsidiaries to terminate the
Optionee’s employment 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 Optionee have executed this Agreement as
of the day and year first above written.

 

 

EXTRA SPACE STORAGE INC.

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

[Optionee’s Name]

 

 

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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.

 

“Award Agreement” means a written agreement in a form approved by the Committee
to be entered into between the Company and the Participant as provided in
Section 3 of the Plan.

 

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

 

“Cause” means, unless otherwise provided in the Participant’s Award Agreement,
(i) engaging in (A) willful or gross misconduct or (B) willful or gross neglect,
(ii) repeatedly failing to adhere to the directions of superiors or the Board or
the written policies and practices of the Company or its Subsidiaries or its
affiliates, (iii) the commission of a felony or a crime of moral turpitude, or
any crime involving the Company or its Subsidiaries, or any affiliate thereof,
(iv) fraud, misappropriation or embezzlement, (v) a material breach of the
Participant’s employment agreement (if any) with the Company or its Subsidiaries
or its affiliates, or (vi) any illegal act detrimental to the Company or its
Subsidiaries or its affiliates; provided, however, that, if at any particular
time the Participant is subject to an effective employment agreement with the
Company, then, in lieu of the foregoing definition, “Cause” shall at that time
have such meaning as may be specified in such employment agreement.

 

“Change in Control” means the happening of any of the following:

 

(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 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

 

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(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.

 

“Committee” means the Committee appointed by the Board under Section 3 of the
Plan.

 

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

 

“Director” means a non-employee director of the Company or its Subsidiaries.

 

“Disability” means the occurrence of an event which would entitle an employee of
the Company to the payment of disability income under one of the Company’s
approved long-term disability income plans or, in the absence of such a plan,
unless otherwise provided by the Committee in the Participant’s Award Agreement,
a disability which renders the Participant incapable of performing all of his or
her material duties for a period of at least 180 consecutive or non-consecutive
days during any consecutive twelve-month period.

 

“Grantee” means an employee, Director and consultant granted Restricted Stock,
Phantom Shares or Dividend Equivalent Rights or such other equity-based Awards
as may be granted pursuant to Section 9 of the Plan.

 

“Option” means the right to purchase, at a price and for the term fixed by the
Committee in accordance with the Plan, and subject to such other limitations and
restrictions in the Plan and the applicable Award Agreement, a number of Shares
determined by the Committee.

 

“Option Price” means the exercise price per Share.

 

“Participant” means a Grantee or Optionee.

 

“Retirement” means the Termination of Service of a Participant with the Company
under circumstances which would entitle an employee of the Company to an
immediate pension under one of the Company’s approved retirement plans, or, in
the absence of such a plan, unless otherwise provided by the Committee in the
Participant’s Award Agreement, the Termination of Service (other than for Cause)
of a Participant on or after the Participant’s attainment of age 65 or on or
after the Participant’s attainment of age 55 with five consecutive years of
service with the Company and or its Subsidiaries or its affiliates.

 

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

 

“Shares” means shares of Common Stock of the Company.

 

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.

“Subsidiary” means any corporation (other than the Company), partnership or
other entity at least 50% of the economic interest in the equity of which is
owned by the Company or by another subsidiary.

 

“Successor of the Optionee” means the legal representative of the estate of a
deceased Optionee or the person or persons who shall acquire the right to
exercise an Option by bequest or inheritance or by reason of the death of the
Optionee.

 

“Termination of Service” means a Participant’s termination of employment or
other service, as applicable, with the Company and its Subsidiaries. Cessation
of service as an officer, or employee, Director and consultant shall not be
treated as a Termination of Service if the Participant continues without
interruption to serve thereafter in another one (or more) of such other
capacities.

 

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Schedule to Exhibit 10.12

 

As of the date of filing this report, the Company has entered into this form of
Long Term Incentive Compensation Plan Option Award Agreement with its employees
other than Kenneth M. Woolley, Kent W. Christensen, Charles L. Allen and Karl
Haas (each of whom had an employment agreement with the Company).  In accordance
with Instruction 2 to Item 601 of Regulation S-K, the Company has filed only the
form of such agreement as the award agreements are substantially identical in
all material respects, except as to the parties thereto, the dates of execution,
the number of stock options awarded and the exercise price of such options.  The
Company agrees to furnish the agreements at the request of the SEC.

 

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