Exhibit 10.5


 


PENNYMAC
MORTGAGE INVESTMENT TRUST


 


2009
EQUITY INCENTIVE PLAN


 


Section 1.               Purpose; Types of Awards;
Construction.


 


The purposes of the PennyMac
Mortgage Investment Trust 2009 Equity Incentive Plan (the “Plan”) are to
afford an incentive to (i) the officers and trustees of PennyMac Mortgage
Investment Trust (the “Trust”) and (ii) the members, officers,
trustees, directors and employees of PNMAC Capital Management, LLC, the manager
of the Trust (the “Manager”), PennyMac Loan Services, LLC, the loan
servicer to the Trust (“PLS”), or their Affiliates and other entities
that provide services to the Trust and the employees of such entities, to
continue (if applicable) as officers and trustees of the Trust, to continue
their service to the Trust, to increase their efforts on behalf of the Trust
and to promote the success of the Trust’s business. The Plan provides for the
grant of Options, Restricted Shares, Restricted Share Units, unrestricted
Shares, LTIP Units and Other Share-Based Awards.


 


Section 2.               Definitions.


 


For purposes of the Plan or
any Award Agreement, unless such Award Agreement provides otherwise, the
following terms shall be defined as set forth below:


 


(a)           “Affiliate” means (i) any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person, (ii) any executive officer or general partner of such other Person
and (iii) any legal entity for which such Person acts as an executive
officer or general partner.


 


(b)           “Award” means any Option, Restricted Share,
Restricted Share Unit, unrestricted Share, LTIP Unit or Other Share-Based Award
granted under the Plan.


 


(c)           “Award Agreement” means any written agreement,
contract or other instrument or document evidencing an Award.


 


(d)           “Board” means the Board of Trustees of the Trust.


 


(e)           “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 the Trust, any entity controlling, controlled by or under
common control with the Trust, any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the Trust or any
such entity, and with respect to any particular Participant, such Participant
and any “group” (as such term is used in Section 13(d)(3) of the
Exchange Act) of which such Participant is a member), is or becomes the “beneficial
owner” (as defined in Rule 13(d)(3) under the Exchange Act), directly
or indirectly, of shares of the Trust representing 35% or more of either (A) the
combined voting power of the Trust’s then outstanding securities or (B) the
then outstanding Shares (other than as a result of an acquisition of securities
directly from the Trust); or


 

















 


(ii)           any consolidation or merger of the
Trust where the shareholders of the Trust 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 surviving or
resulting entity in the consolidation or merger (or of its ultimate parent
entity, 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 Trust, other than a sale or
transfer by the Trust of all or substantially all of the Trust’s assets to an
entity at least 50% of the combined voting power of the securities of which are
owned by “persons” (as defined above) in substantially the same proportion
as their ownership of the Trust immediately prior to such sale or transfer or (B) the
approval by shareholders of the Trust of any plan or proposal for the
liquidation or dissolution of the Trust; or


 


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


 


Notwithstanding the
foregoing, no event or condition shall constitute a Change in Control to the
extent that, if it were, a 20% tax would be imposed under Section 409A of
the Code; provided that, in such a case, the event or condition shall continue
to constitute a Change in Control to the maximum extent possible (e.g., if
applicable, in respect of vesting without an acceleration of
distribution) without causing the imposition of such 20% tax.


 


(f)            “Code” means the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations promulgated
thereunder.


 


(g)           “Committee” means the committee established by the
Board to administer the Plan, the composition of which shall at all times
consist of “non-employee directors” within the meaning of Rule 16b-3 under
the Exchange Act.


 


(h)           “Effective Date” means July 24, 2009, the date
on which the Plan was adopted by the Board, subject to obtaining the approval
of the Trust’s shareholders.


 


(i)            “Exchange Act” means the Securities Exchange Act
of 1934, as amended from time to time, and the rules and regulations
promulgated thereunder.


 


(j)            “Fair Market Value” means, with respect to Shares
or other property, the fair market value of such Shares or other property
determined by such methods or procedures as shall be established from time to
time by the Board. Unless otherwise determined by the Board in good faith, the
per share Fair Market Value as of a particular date shall mean (i) the
closing sales price per share on the national securities exchange on which the
Shares are principally 


 


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traded, for the last preceding date on which there was a sale of such
Shares on such exchange; (ii) if the Shares are then traded in an
over-the-counter market, the average of the closing bid and asked prices for
the Shares in such over-the-counter market for the last preceding date on which
there was a sale of such Shares in such market; or (iii) if the Shares are
not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Board, in its sole discretion, shall
determine in accordance with any applicable requirements of Section 409A
of the Code.


 


(k)           “Incumbent Trustee” shall have the meaning given to
the term under Section 2(e)(iv).


 


(l)            “Independent Trustees” mean the members of the
Board who are not officers or employees of the Manager or an Affiliate thereof
and who otherwise are “independent” in accordance with the rules of the
New York Stock Exchange or such other national securities exchange on which the
Shares may be listed.


 


(m)          “Initial Public Offering” means the proposed initial
public offering of Shares of the Trust in an underwritten offering under the
Securities Act.


 


(n)           “LTIP Unit” means an OP Unit, granted to a
Participant under Section 6(b)(iv), subject to the restrictions set forth
in such Section.


 


(o)           “Manager” means PNMAC Capital Management, LLC, the
manager of the Trust.


 


(p)           “Operating Partnership” means PennyMac Operating
Partnership, L.P., a Delaware limited partnership.


 


(q)           “Option” means a right, granted to a Participant
under Section 6(b)(i), to purchase Shares.


 


(r)            “OP Unit” means a unit of partnership interest in
the Operating Partnership.


 


(s)           “Other Share-Based Award” means a right or other
interest granted to a Participant that may be denominated or payable in, valued
in whole or in part by reference to, or otherwise based on, or related to,
Shares, including but not limited to unrestricted Shares or distribution
equivalent rights.


 


(t)            “Participant” means an eligible Person who has
been granted an Award under the Plan.


 


(u)           “Person” means any natural person, corporation,
partnership, association, limited liability company, estate, trust, joint
venture, any federal, state or municipal government or any bureau, department
or agency thereof or any other legal entity and any fiduciary acting in such
capacity on behalf of the foregoing.


 


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(v)           “Plan” means this PennyMac Mortgage Investment
Trust 2009 Equity Incentive Plan, as amended from time to time.


 


(w)          “PLS” means PennyMac Loan Services, LLC, the loan
servicer to the Trust.


 


(x)            “Removal for Cause” means a removal as a result of
a conviction of a felony or a final judgment of a court of competent
jurisdiction holding that the applicable Trustee caused demonstrable, material
harm to the Trust through bad faith or active and deliberate dishonesty.


 


(y)           “Restricted Shares” means an Award of Shares to a
Participant under Section 6(b)(ii) that may be subject to certain
restrictions and to a risk of forfeiture.


 


(z)            “Restricted Share Unit” means a right granted to a
Participant under Section 6(b)(iii) to receive from the Trust or the
Operating Partnership Shares, cash or other property at the end of a specified
period, which right may be conditioned on the satisfaction of specified
performance or other criteria.


 


(aa)         “Securities Act” means the Securities Act of 1933, as
amended from time to time, and the rules and regulations promulgated
thereunder.


 


(bb)         “Shares” means common shares of beneficial interest,
par value $0.01 per share, of the Trust.


 


(cc)         “Trust” means PennyMac Mortgage Investment Trust, a
Maryland real estate investment trust, or any successor trust.


 


Section 3.               Administration.


 


The Plan shall be
administered by the Board. Except with respect to the amendment, modification,
suspension or early termination of the Plan and any change or adjustment to the
maximum number of Shares and/or OP Units that may be issued pursuant to Awards
granted under the Plan pursuant to Section 5, the Board may appoint a
Committee to administer all or a portion of the Plan. To the extent that the
Board so delegates its authority, references herein to the Board shall be
deemed references to the Committee. The Board may delegate to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
other Person to whom the Board has delegated duties as aforesaid may employ one
or more Persons to render advice with respect to any responsibility the Board
or such Committee or Person may have under the Plan. No member of the Board or
Committee shall be liable for any action taken or determination made in good
faith with respect to the Plan or any Award granted hereunder.


 


The Board shall have the
authority in its discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers
and authorities either specifically granted to it under the Plan or necessary
or advisable in the administration of the Plan, including, without limitation,
the authority to: (i) grant Awards; (ii) determine the Persons to
whom and the time or times at which Awards shall be granted; (iii) 


 


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determine the type and
number of Awards to be granted, the number of Shares to which an Award may
relate and the terms, conditions, restrictions and performance criteria
relating to any Award; (iv) determine whether, to what extent, and under
what circumstances an Award may be settled, cancelled, forfeited, exchanged, or
surrendered; (v) make adjustments in the terms and conditions of Awards; (vi) construe
and interpret the Plan and any Award; (vii) prescribe, amend and rescind rules and
regulations relating to the Plan; (viii) determine the terms and
provisions of the Award Agreements (which need not be identical for each
Participant); and (ix) make all other determinations deemed necessary or
advisable for the administration of the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all Persons,
including but not limited to, the Trust, any parent or subsidiary of the Trust,
any Participant (or any Person claiming any rights under the Plan from or
through any Participant) and any shareholder. Notwithstanding any provision of
the Plan or any Award Agreement to the contrary, except as provided in the
third paragraph of Section 5, neither the Board nor the Committee may take
any action which would have the effect of reducing the aggregate exercise or
purchase price of any Award without obtaining the approval of the Trust’s
shareholders.


 


Section 4.               Eligibility.


 


Awards may be granted, in
the discretion of the Board, to Participants. In determining the Persons to
whom Awards shall be granted and the type of any Award (including the number of
Shares to be covered by such Award), the Board shall take into account such
factors as the Board shall deem relevant in connection with accomplishing the
purposes of the Plan.


 


Section 5.               Shares and OP Units Subject to
the Plan.


 


The maximum number of Shares
and/or OP Units that may be issued pursuant to Awards granted under the Plan
shall be 40,000,000; provided, that no Award may cause the total number of
Shares and/or OP Units subject to all outstanding Awards to exceed 8% of the
issued and outstanding Shares and/or OP Units on a fully diluted basis
(assuming, if applicable, the exercise of all outstanding Options and the
conversion of all warrants, OP Units and convertible securities into Shares).  Such Shares and/or OP Units shall be
authorized but unissued Shares and OP Units, including Shares or OP Units that
have been or may be reacquired by the Trust or the Operating Partnership,
respectively, in the open market, in private transactions or otherwise.


 


If any Shares and/or OP
Units subject to an Award are forfeited, cancelled, exchanged or surrendered or
if an Award terminates or expires without the issuance of Shares and/or OP
Units to the Participant, or if Shares and/or OP Units are surrendered or
withheld by the Trust as payment of either the exercise price of an Award
and/or withholding taxes in respect of an Award, the Shares and/or OP Units
with respect to such Award shall, to the extent of any such forfeiture,
cancellation, exchange, surrender, withholding, termination or expiration,
again be available for issuance pursuant to Awards granted under the Plan. Upon
the exercise of any Award granted in tandem with any other Award, such related
Award shall be cancelled to the extent of the number of Shares and/or OP Units
as to which the Award is exercised and, notwithstanding the foregoing, such
number of Shares and/or OP Units shall no longer be available for Awards under
the Plan.  Upon the redemption of any OP
Units issued pursuant to an Award in exchange for Shares, such Shares shall no
longer be available for Awards under the 


 


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Plan, however, such OP Units
shall again be available for issuance pursuant to Awards granted under the
Plan.


 


In the event that the Board
shall determine that any dividend or other distribution (whether in the form of
cash, Shares, OP Units or other property), recapitalization, share split,
reverse split, reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar transaction or event, affects
the Shares and/or OP Units such that an adjustment is appropriate in order to
prevent dilution or enlargement of the rights of Participants under the Plan,
then the Board shall make equitable changes or adjustments to any or all of: (i) the
number and kind of Shares, OP Units or other property (including cash) that may
thereafter be issued in connection with Awards; (ii) the number and kind
of Shares, OP Units or other property (including cash) issued or issuable in
respect of outstanding Awards; (iii) the exercise price, grant price or
purchase price relating to any Award; and (iv) the performance goals, if
any, applicable to outstanding Awards. In addition, the Board may determine
that any such equitable adjustment may be accomplished by making a payment to
the Award holder, in the form of cash or other property (including but not
limited to Shares and/or OP Units).


 


Section 6.               Terms of Awards.


 


(a)           General.  The
term of each Award shall be for such period as may be determined by the Board.
Subject to the terms of the Plan and any applicable Award Agreement, payments
to be made by the Trust upon the grant, vesting, maturation or exercise of an
Award may be made in such forms as the Board shall determine at the date of
grant or thereafter, including, without limitation, cash, Shares, OP Units or
other property, and may be made in a single payment or transfer, in
installments or on a deferred basis. The Board may make rules relating to
installment or deferred payments with respect to Awards, including the rate of
interest to be credited with respect to such payments. In addition to the
foregoing, the Board may impose on any Award or the exercise thereof, at the
date of grant or thereafter, such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Board shall determine.


 


(b)           Terms of Specified Awards.  The Board is authorized to grant the Awards
described in this Section 6(b), under such terms and conditions as deemed
by the Board to be consistent with the purposes of the Plan. Such Awards may be
granted with vesting, value and/or payment contingent upon attainment of one or
more performance goals. Except as otherwise set forth herein or as may be
determined by the Board, each Award granted under the Plan shall be evidenced
by an Award Agreement containing such terms and conditions applicable to such
Award as the Board shall determine at the date of grant or thereafter.


 


(i)            Options.  The Board is authorized to grant Options to
Participants on the following terms and conditions:


 


(A)          Exercise Price.  The exercise price per share purchasable
under an Option shall be determined by the Board, but in no event shall the per
share exercise price of any Option be less than 100% of the Fair Market Value
of a Share on the date of grant of such Option. The exercise price for Shares
subject to an Option may be paid in cash or by an exchange of Shares previously
owned by a Participant, through a “broker cashless exercise” procedure approved
by the 


 


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Board (to the extent
permitted by law) or a combination of the above, in any case in an amount
having a combined value equal to such exercise price; provided that the Board
may require that any Share exchanged by such Participant have been owned by
such Participant for at least six months as of the date of exercise. An Award
Agreement may provide that a Participant may pay all or a portion of the
aggregate exercise price by having Shares with a Fair Market Value on the date
of exercise equal to the aggregate exercise price withheld by the Trust.


 


(B)           Term and Exercisability of Options.  Options shall be exercisable over the
exercise period (which shall not exceed ten years from the date of grant), at
such times and upon such conditions as the Board may determine, as reflected in
the Award Agreement; provided that the Board shall have the authority to
accelerate the exercisability of any outstanding Option at such time and under
such circumstances as it, in its sole discretion, deems appropriate. An Option
may be exercised to the extent of any or all full Shares as to which the Option
has become exercisable, by giving written notice of such exercise to the Board
or its designated agent.


 


(C)           Termination of Service.  Subject to Section 8, an Option may not
be exercised unless: (1) the Participant is then providing services to the
Trust; and (2) the Participant has continuously maintained such
relationship since the date of grant of the Option; provided that the Award
Agreement may contain provisions extending the exercisability of Options, in
the event of specified terminations of service, to a date not later than the
expiration date of such Option.


 


(D)          Other Provisions.  Options may be subject to such other
conditions including, but not limited to, restrictions on transferability of
the Shares acquired upon exercise of such Options, as the Board may prescribe
in its discretion or as may be required by applicable law.


 


(ii)           Restricted Shares.  The Board is authorized to grant Restricted
Shares to Participants on the following terms and conditions:


 


(A)          Issuance and Restrictions.  Restricted Shares shall be subject to such
restrictions on transferability and other restrictions, if any, as the Board
may impose at the date of grant or thereafter, which restrictions may lapse
separately or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Board may determine. The Board may place
restrictions on Restricted Shares that shall lapse, in whole or in part, only
upon the attainment of one or more performance goals.


 


(B)           Forfeiture.  Subject to Section 8, upon termination
of service to the Trust during the applicable restriction period, Restricted
Shares and any declared but unpaid distributions that are then subject to
restrictions shall be forfeited; provided that the Board may provide, by rule or
regulation or in any Award Agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Restricted Shares will
be waived in whole or in part in the 


 


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event of terminations
resulting from specified causes, and the Board may in other cases waive in
whole or in part the forfeiture of Restricted Shares.


 


(C)           Certificates for Shares.  Restricted Shares granted under the Plan may
be evidenced in such manner as the Board shall determine. If certificates
representing Restricted Shares are registered in the name of the Participant,
such certificates shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Shares, and the Trust
shall retain physical possession of the certificate.


 


(D)          Distributions.  Distributions paid on Restricted Shares shall
be paid at the distribution payment date, provided that such payments may be
held by the Trust until such date as determined by the Board, and in any event
shall be payable in cash or reinvested by the Trust in Shares purchased from
the Trust for the Fair Market Value of such Shares on the payment date of such
distribution. Unless otherwise determined by the Board, Shares distributed in
connection with a share split or share distribution, and other property
distributed as a distribution, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Shares with respect to which
such Shares or other property has been distributed.


 


(iii)          Restricted Share Units.  The Board is authorized to grant Restricted
Share Units to Participants, subject to the following terms and conditions:


 


(A)          Award and Restrictions.  Delivery of Shares, cash or other property,
as determined by the Board, will occur upon expiration of the period specified
for Restricted Share Units by the Board during which forfeiture conditions
apply, or such later date as the Board shall determine. The Board may place
restrictions on Restricted Share Units that shall lapse, in whole or in part,
only upon the attainment of one or more performance goals.


 


(B)           Forfeiture.  Subject to Section 8, upon termination
of service to the Trust prior to the vesting of a Restricted Share Unit, or
upon failure to satisfy any other conditions precedent to the delivery of
Shares or cash to which such Restricted Share Units relate, all Restricted
Share Units and any declared but unpaid distribution equivalents that are then
subject to deferral or restriction shall be forfeited; provided that the Board
may provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture conditions
relating to Restricted Share Units will be waived in whole or in part in the
event of termination resulting from specified causes, and the Board may in
other cases waive in whole or in part the forfeiture of Restricted Share Units.


 


(C)           Distribution Equivalents.  Unless otherwise determined by the Board,
Restricted Share Units shall be credited with distribution equivalents at such
time as distributions, whether in the form of cash, Shares or other property,
are paid with respect to the Shares. Unless otherwise determined by the Board, 


 


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any such distribution
equivalents shall be paid on the distribution payment date to the Participant
as though each Restricted Share Unit held by such Participant were an
outstanding Share.


 


(iv)          LTIP Units.  The Board is authorized to grant LTIP Units
to Participants, subject to the following terms and conditions:


 


(A)          Award and Restrictions.  Delivery of OP Units, Shares, cash or other
property, and the right to convert vested units to Shares, as determined by the
Board, will occur upon expiration of the period specified for LTIP Units by the
Board during which forfeiture conditions apply, or such later date as the Board
shall determine. The Board may place restrictions on LTIP Units that shall
lapse, in whole or in part, only upon the attainment of one or more performance
goals.


 


(B)           Forfeiture.  Subject to Section 8, upon termination
of service to the Trust prior to the vesting of an LTIP Unit, or upon failure
to satisfy any other conditions precedent to the delivery of OP Units, Shares
or cash to which such LTIP Units relate, all LTIP Units and any accrued but
unpaid distributions or allocations that are then subject to restriction shall
be forfeited; provided that the Board may provide, by rule or regulation
or in any Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to LTIP Units will be waived in
whole or in part in the event of termination resulting from specified causes,
and the Board may in other cases waive in whole or in part the forfeiture of
LTIP Units.


 


(C)           Certificates for LTIP Units.  LTIP Units granted under the Plan may be
evidenced in such manner as the Board shall determine. If certificates
representing LTIP Units are registered in the name of the Participant, such
certificates shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such LTIP Units, and the Trust shall
retain physical possession of the certificate.


 


(D)          Distributions.  Unless otherwise determined by the Board,
distributions and allocations with respect to LTIP Units shall be paid or made
at the distribution or allocation payment date, as applicable, provided that
such payments or allocations may be held by the Trust until such date as
determined by the Board, and in any event shall be payable in cash or
reinvested by the Trust in Shares purchased from the Trust for the Fair Market
Value of such Shares on the payment date of such distribution or allocation.
Unless otherwise determined by the Board, Shares and/or OP Units distributed in
connection with a share split or share distribution, and other property
distributed as a distribution, shall be subject to restrictions and a risk of
forfeiture to the same extent as the LTIP Units with respect to which such
Shares or other property has been distributed.


 


(v)           Other Share-Based Awards.  The Board is authorized to grant Awards to
Participants in the form of Other Share-Based Awards, as deemed by the Board to
be consistent with the purposes of the Plan. Awards granted pursuant to this
paragraph may 


 


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be granted with vesting,
value and/or payment contingent upon the attainment of one or more performance
goals. The Board shall determine the terms and conditions of such Awards at the
date of grant or thereafter. Without limiting the generality of this paragraph,
Other Share-Based Awards may include grants of Shares that are not subject to
any restrictions or a substantial risk of forfeiture.


 


Section 7.               Automatic Grant of Awards to
Independent Trustees


 


(a)           Automatic Grant of Awards.  Each Independent Trustee shall be granted
2,250 Restricted Share Units upon the completion of the Initial Public
Offering.  Such Restricted Share Units
shall vest in full and the restrictions thereon lapse on the one-year
anniversary of the date of grant.  Any
Independent Trustee appointed or elected to the Board for the first time
following the completion of the Initial Public Offering shall automatically be
granted (under this Plan or another applicable Trust equity incentive plan)
2,250 Restricted Share Units on his or her date of appointment or election,
which Restricted Share Units shall vest in full and the restrictions thereon
lapse on the one-year anniversary of the date of grant.  Unless otherwise determined by the Board at
the time of payment, each Restricted Share Unit shall represent the right to
receive one Share upon the date on which the restrictions applicable to such
Restricted Share Unit lapse.  Restricted
Share Units shall be entitled to Distribution Equivalents as provided in the
Award Agreements with regard to the Restricted Share Units.


 


(b)           Non-Transferability; Book Accounts.


 


(i)            Common Shares issuable with respect
to the Restricted Share Units granted under this Section 7 shall be
transferable, subject to any restrictions imposed by applicable law, by an
Independent Trustee immediately on the date upon which the Restricted Share
Units become vested and the restrictions thereon lapse.


 


(ii)           The Trust shall establish a book
account, in the name of each applicable Independent Trustee, with respect to
the award of the Restricted Share Units.


 


(c)           Discretionary Grants of Awards.  The Board, in its discretion, may grant
additional Awards to the Independent Trustees. Any such grant may vary among
individual Independent Trustees.


 


(d)           Limited to Independent Trustees.  The provisions of this Section 7 shall
apply only to Awards granted or to be granted to Independent Trustees, shall be
interpreted as if this Section 7 constituted a separate plan of the Trust
and shall not be deemed to modify, limit or otherwise apply to any other
provision of this Plan or to any Award granted under this Plan to a Participant
who is not an Independent Trustee of the Trust. To the extent inconsistent with
the provisions of any other Section of this Plan, the provisions of this Section 7
shall govern the rights and obligations of the Trust and Independent Trustees
respecting Awards granted or to be granted to Independent Trustees.


 


Section 8.               Acceleration of Awards.


 


(a)           Independent Trustees.  Unless otherwise determined by the Board and
set forth in an individual Award Agreement, in the event that the service to
the Trust of a Participant 


 


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who is an Independent Trustee is terminated other than pursuant to a
Removal for Cause, any Award held by such Participant that was not previously
vested and/or exercisable shall become fully vested and/or exercisable, and any
performance conditions imposed with respect to such Award shall be deemed to be
fully achieved.


 


(b)           Change in Control. 
Unless otherwise determined by the Board and set forth in an individual
Award Agreement, upon a Change in Control, any Award held by a Participant that
was not previously vested and/or exercisable shall become fully vested and/or
exercisable, and any performance conditions imposed with respect to such Award
shall be deemed to be fully achieved.


 


(c)           Termination of Management Agreement.  Unless otherwise determined by the Board and
set forth in an individual Award Agreement, upon termination of the Management
Agreement other than for Cause (as defined in the Management Agreement), any
Award held by a Participant that was not previously vested and/or exercisable
shall become fully vested and/or exercisable, and any performance conditions
imposed with respect to such Award shall be deemed to be fully achieved.


 


Section 9.               General Provisions.


 


(a)           Nontransferability. 
Unless otherwise provided in an Award Agreement, Awards shall not be
transferable by a Participant except by will or the laws of descent and
distribution and shall be exercisable during the lifetime of a Participant only
by such Participant or his guardian or legal representative.


 


(b)           No Right to Continued Service, etc.  Nothing in the Plan or in any Award, any
Award Agreement or other agreement entered into pursuant hereto shall confer
upon any Participant the right to continue as a trustee of, or continue to
provide services to, the Trust or any parent, subsidiary or Affiliate of the
Trust or to be entitled to any remuneration or benefits not set forth in the
Plan or such Award Agreement or other agreement or to interfere with or limit
in any way the right of the Trust to terminate such Participant’s service.


 


(c)           Taxes.  The
Trust or any parent or subsidiary of the Trust is authorized to withhold from
any Award granted any payment relating to an Award under the Plan, including
from a distribution of Shares, or any other payment to a Participant, amounts
of applicable withholding and other taxes due in connection with any
transaction involving an Award, and to take such other action as the Board may
deem advisable to enable the Trust and Participants to satisfy obligations for
the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Shares or
other property and to make cash payments in respect thereof in satisfaction of
a Participant’s tax obligations. The Board may provide in the Award Agreement
that in the event that a Participant is required to pay any amount to be
withheld in connection with the issuance of Shares in settlement or exercise of
an Award, such Participant may satisfy such obligation (in whole or in part) by
electing to have the Trust withhold a portion of the Shares to be received upon
settlement or exercise of such Award that is equal to the minimum amount
required to be withheld.


 


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Notwithstanding the
foregoing, a Participant who is not an employee of the Trust, the Manager or
PLS or any parent or subsidiary of the Trust, the Manager or PLS shall be
solely responsible for the payment of any taxes that may become payable by such
Participant which arise from the issuance, vesting or exercise of any Award
granted to it by the Trust under the Plan.


 


(d)           Effective Date; Amendment and Termination.


 


(i)            The Plan shall take effect upon the
Effective Date, subject to the approval of the Trust’s shareholders.


 


(ii)           The Board may at any time and from
time to time terminate, amend, modify or suspend the Plan in whole or in part;
provided, however, that unless otherwise determined by the Board, an amendment
that requires shareholder approval in order for the Plan to comply with any
law, regulation or stock exchange requirement shall not be effective unless
approved by the requisite vote of shareholders. The Board may at any time and
from time to time amend any outstanding Award in whole or in part.
Notwithstanding the foregoing sentence of this clause (ii), no amendment or
modification to or suspension or termination of the Plan or amendment of any
Award shall affect adversely any of the rights of any Participant, without such
Participant’s consent, under any Award theretofore granted under the Plan.


 


(e)           Expiration of Plan. 
Unless earlier terminated by the Board pursuant to the provisions of the
Plan, the Plan shall expire on the tenth anniversary of the Effective Date. No
Awards shall be granted under the Plan after such expiration date. The
expiration of the Plan shall not affect adversely any of the rights of any
Participant, without such Participant’s consent, under any Award theretofore
granted.


 


(f)            Deferrals. 
Subject to applicable law, the Board shall have the authority to
establish such procedures and programs that it deems appropriate to provide
Participants with the ability to defer receipt of cash, Shares, OP Units or
other property payable with respect to Awards granted under the Plan.


 


(g)           No Rights to Awards; No Shareholder Rights.  No Participant shall have any claim to be
granted any Award under the Plan. There is no obligation for uniformity of
treatment among Participants. Except as provided specifically herein, a
Participant or a transferee of an Award shall have no rights as a shareholder
with respect to any Shares covered by the Award until the date of the issuance
of such Shares and, if such Shares are evidenced by certificates, the delivery
of a certificate evidencing such Shares.


 


(h)           Unfunded Status of Awards.  The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Trust.


 


(i)            No Fractional Shares.  No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award. The Board shall determine whether
cash, other Awards or 


 


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other property shall be issued or paid in lieu of such fractional
Shares or whether such fractional Shares or any rights thereto shall be
forfeited or otherwise eliminated.


 


(j)            Regulations and Other Approvals.


 


(i)            The obligation of the Trust to sell
or deliver Shares and/or OP Units with respect to any Award granted under the
Plan shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and the obtaining
of all such approvals by governmental agencies as may be deemed necessary or
appropriate by the Board.


 


(ii)           Each Award is subject to the
requirement that, if at any time the Board determines, in its absolute discretion,
that the listing, registration or qualification of Shares and/or OP Units
issuable pursuant to the Plan is required by any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Award or the issuance of Shares and/or OP Units, no such
Award shall be granted or payment made or Shares and/or OP Units issued, in
whole or in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions not acceptable to
the Board.


 


(iii)          In the event that the disposition of
Shares and/or OP Units acquired pursuant to the Plan is not covered by a
then-current registration statement under the Securities Act and is not
otherwise exempt from such registration, such Shares and/or OP Units shall be
restricted against transfer to the extent required by the Securities Act or
regulations thereunder, and the Board may require a Participant receiving
Shares and/or OP Units pursuant to the Plan, as a condition precedent to
receipt of such Shares and/or OP Units, to represent to the Trust in writing
that the Shares and/or OP Units acquired by such Participant are acquired for
investment only and not with a view to distribution.


 


(iv)          The Board may require a Participant
receiving Shares and/or OP Units pursuant to the Plan, as a condition precedent
to receipt of such Shares and/or OP Units, to enter into a shareholder
agreement or “lock-up” agreement in such form as the Board shall determine is
necessary or desirable to further the Trust’s interests.


 


(v)           All Awards under the Plan are
intended to comply with any applicable requirements of Section 409A of the
Code and the regulations thereunder, and no Award, deferral, election, payment
or other action shall be permitted to the extent it would violate such
requirements.


 


(k)           Limitation of Ownership. No Award shall be issued under the Plan to any Person who after such
Award would beneficially own, or be deemed to own, more than 9.8% by vote or
value, whichever is more restrictive, of the outstanding Shares, or 9.8% by
vote or value, whichever is more restrictive, of the outstanding shares of
beneficial interest of the Trust, unless the foregoing restriction is expressly
and specifically waived by action of the Board.


 


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(l)            Governing Law. 
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of Maryland without giving effect to the conflict
of laws principles thereof.


 


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