Exhibit
10.3


 


FORM OF
EMPLOYEE STOCK OPTION AGREEMENT


 


THE
MACERICH COMPANY 

EMPLOYEE STOCK OPTION AGREEMENT

2003 EQUITY INCENTIVE PLAN


 


	
  Optionee:

  	
   

  	
   

  
	
  Award
  Date:

  	
   

  	
   

  
	
  Exercise
  Price per Share(1):

  	
   

  	
   

  
	
  Number
  of Shares(1):

  	
   

  	
   

  
	
  Expiration
  Date(2):

  	
   

  	
   

  
	
  NQSO
  or ISO(1):

  	
   

  	
   

  
	
  Vesting
  Schedule(1),(2):

  	
   

  	
  [33 1/3% of the shares
  on each anniversary of the Award Date, beginning [first anniversary] and
  ending [third anniversary]

  



 


 THIS AGREEMENT is among THE MACERICH COMPANY, a Maryland
corporation (the “Corporation”), THE MACERICH
PARTNERSHIP, L.P., a Delaware limited partnership (the “Operating
Partnership”), and is granted pursuant to and subject to The Macerich Company
2003 Equity Incentive Plan (the “Plan”). 
Capitalized terms used herein and not otherwise defined herein shall
have the meaning assigned by the Plan.


 


If the Corporation has designated the Option as an ISO
above, the Corporation intends that the Option will be treated as an Incentive
Stock Option within the meaning of Section 422 of the Code (an “ISO”) to
the maximum extent permissible under all of the ISO rules and
restrictions.  Any shares acquired upon
exercise of the Option without compliance with all applicable ISO rules will be
treated as acquired upon exercise of a Nonqualified Stock Option (a
“NQSO”).  If the Corporation has
designated the Option as a NQSO above, the Company intends that the Option will
be treated in its entirety as a NQSO and not as an ISO.


 


WHEREAS, pursuant
to the Plan, the Corporation has granted to the Optionee with reference to services
rendered and to be rendered to the Company, effective as of the Award Date, an
Option upon the terms and conditions set forth herein and in the Plan.


 


NOW THEREFORE, in
consideration of services rendered and to be rendered prior to exercise by the
Optionee and the mutual promises made herein and the mutual benefits to be
derived therefrom, the parties agree as follows:


 












(1) Subject to adjustment
under Section 6.2 of the Plan.


 


(2) Subject to early
termination if the Optionee’s employment terminates or in certain other
circumstances.  See Sections 4 through 9
of this Agreement and Sections 1.6, 2.6, 6.2, 6.3 and 6.4 of the Plan for
exceptions and additional details regarding possible adjustments, acceleration
of vesting and/or early termination of the Option.


 

















 


1.               Exercisability of Option.  The Option shall vest and become exercisable
during its term in percentage installments of the aggregate number of shares of
Common Stock of the Corporation in accordance with the Vesting Schedule as
set forth above and with and subject to the applicable provisions of the Plan
and this Agreement.  The Option may be
exercised only to the extent the Option is exercisable and vested, and, subject
to Section 1.8 of the Plan, during the Optionee’s lifetime, only by the
Optionee.  In no event may the Optionee
exercise the Option after the Expiration Date as provided above.


 


(a)          Cumulative Exercisability.  To the extent the Optionee does not at the
time of a particular exercise purchase all the shares that the Optionee may
then exercise, the Optionee has the right cumulatively thereafter to purchase
any of such shares not so purchased until the Option terminates or expires.


 


(b)         No Fractional Shares; Minimum
Exercise.  Fractional
share interests shall be disregarded, but may be cumulated.  No fewer than 100 shares may be purchased at
any one time, unless the number purchased is the total number at the time
exercisable under the Option.


 


2.               Exercise of Option.  To the extent vested and exercisable, the
Option may be exercised by the delivery to the Corporation of a written
exercise notice stating the number of shares to be purchased pursuant to the
Option accompanied by payment of the aggregate Exercise Price of the shares to
be purchased and the payment or provision for any applicable employment or
other taxes or withholding for taxes thereon. 
Subject to Section 6.4 of the Plan, the Option shall be deemed to
be exercised upon receipt and approval by the Corporation of such written
exercise notice accompanied by the aggregate Exercise Price and any other
payments so required, as permitted pursuant to Section 3.


 


3.               Method of Payment of Option. Payment of
the aggregate Exercise Price shall be by any of the following, or a combination
thereof, at the election of the Optionee:


 


(a)          in cash or by electronic
funds transfer, or by check payable to the order of the Corporation, in the
full amount of the purchase price of the shares and the amount (if any)
required to satisfy any applicable withholding taxes; or


 


(b)         by delivering a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Corporation the amount of sales proceeds necessary to
pay the aggregate Exercise Price, subject to compliance with applicable law and
cashless exercise procedures approved by the Corporation; or


 


(c)          by delivery of shares of
Common Stock that have been held by the Optionee for at least six months, in
accordance with Section 2.2(b) of the Plan, subject to compliance with
applicable law.


 


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Other payment methods may be permitted only if
expressly authorized by the Committee with respect to the Option or all options
under and consistent with the terms of the Plan.


 


4.               Continuance
of Employment Required. 
The vesting schedule requires continued service through each
applicable vesting date as a condition to the vesting of the applicable
installment and rights and benefits under this Agreement.  Partial service, even if substantial, during
any vesting period will not entitle the Optionee to any proportionate vesting
or avoid or mitigate a termination of rights and benefits upon or following a
termination of employment or service as provided in Section 5 or 8 below
or under the Plan.


 


5.               Effect of Termination of Employment
on Exercise Period.  If
the Optionee’s employment by either the Corporation or any subsidiary
terminates, the Option and all other rights and benefits under this Agreement
terminate, except that the Optionee may, at any time within the applicable
period below after the Severance Date, exercise the Option to the extent the
Option was exercisable on the Severance Date and has not otherwise expired or
terminated:


 


(a)          If the Optionee’s
employment terminates for any reason other than Total Disability or death,
Retirement or for Cause, the Optionee shall have three months after the
Severance Date to exercise the Option to the extent the Option was exercisable
on the Severance Date.


 


(b)         If the Optionee’s
employment terminates as a result of Total Disability or death, the Optionee
(or the Optionee’s Personal Representative or Beneficiary, as the case may be)
shall have 12 months after the Severance Date to exercise the Option to the
extent the Option was exercisable on the Severance Date.


 


(c)          If the Optionee’s
employment terminates as a result of Retirement, the Optionee (or the
Optionee’s Personal Representative or Beneficiary, as the case may be) shall
have 12 months after the Severance Date to exercise the Option to the extent
the Option was exercisable on the Severance Date (provided that, with respect
to an ISO, after three months the Option will no longer be exercisable as an
ISO) to the extent the Option was exercisable on the Severance Date.


 


Notwithstanding the foregoing exercise periods after the Severance
Date, to the extent the Option was otherwise an ISO, the Option will qualify as
an ISO only if it is exercised within the applicable exercise periods for ISOs
and meets all other requirements of the Code for ISOs; and, in the case of a Total
Disability that is not a permanent and total disability within the meaning of
Section 22(e)(3) of the Code, only if the Option is exercised within three
months of the Severance Date.  If the
Option is not exercised within the applicable exercise periods or does not meet
such other requirements, the Option will be rendered a NQSO.  If the Optionee’s employment terminates for
Cause, the Option shall terminate as of the Severance Date.


 


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6.               Qualified Termination Upon or Following Change in
Control Event.


 


If the Optionee upon or not later than 12 months
following a Change in Control Event has a Qualified Termination (as defined in
Section 7.1(gg) of the Plan) or terminates his or her employment for Good
Reason, then any portion of the Option that has not previously vested shall
thereupon vest, subject to the provisions of Sections 6.2(a), 6.2(e), 6.4 and
6.5 of the Plan and Sections 8 and 12 of this Agreement; provided, however,
that in no event shall the Option become exercisable earlier than six months
after the Award Date.  As used in this
Agreement, the term “Good Reason” means a termination of employment by the
Optionee for any one or more of the following reasons, to the extent not
remedied by the Company within a reasonable period of time after receipt by the
Company of written notice from the Optionee specifying in reasonable detail
such occurrence, without the Optionee’s written consent thereto: (1) an adverse
and significant change in the Optionee’s position, duties, responsibilities or
status with the Company;  (2) a change
in the Optionee’s principal office location to a location farther away from the
Optionee’s home which is more than 30 miles from the Optionee’s principal
office; (3) the taking of any action by the Company to eliminate benefit plans
without providing substitutes therefor, to materially reduce benefits
thereunder or to substantially diminish the aggregate value of the incentive
awards or other fringe benefits; provided that if neither a surviving entity
nor its parent following a Change in Control Event is a publicly-held company,
the failure to provide stock-based benefits shall not be deemed Good Reason if
benefits of comparable value using recognized valuation methodology are substituted
therefor; and provided further that a reduction or elimination in the aggregate
of not more than 10% in aggregate benefits in connection with across the board
reductions or modifications affecting persons similarly situated of comparable
rank in the Company or a combined organization shall not constitute Good
Reason; (4) any reduction in the Optionee’s Base Salary; or (5) any material
breach by the Company of any written employment or management continuity
agreement with the Optionee.  For
purposes of the definition of “Good Reason,” the term “Base Salary” means the
annual base rate of compensation payable as salary to the Optionee by the
Company as of the Optionee’s date of termination, before deductions or
voluntary deferrals authorized by the Optionee or required by law to be
withheld from the Optionee by the Company, and salary excludes all other extra
pay such as overtime, pensions, severance payments, bonuses, stock incentives,
living or other allowances, and other benefits and perquisites.


 


7.               Adjustments
Upon Specified Events. 
As provided in Section 6.2 of the Plan, upon the occurrence of
certain events relating to or affecting the Corporation’s stock contemplated by
Section 6.2 of the Plan, the Committee shall, in such manner, to such
extent (if any) and at such times as it deems appropriate and equitable in the
circumstances, make adjustments in the number, amount and type of shares (or
other securities or property) subject to the Option, the Exercise Price and the
securities deliverable upon exercise of the Option (or any combination thereof)
or provide for a cash payment or the assumption, substitution or exchange of
the Option or the shares or other securities subject to the Option, based upon
the distribution or consideration payable to stockholders generally.  All rights of the Optionee hereunder are
subject to such adjustments and other provisions of the Plan.


 


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8.               Possible Early Termination of Award.  As permitted by Section 6.2(b) of the
Plan, and without limiting the authority of the Committee under other
provisions of Section 6.2 of the Plan or Section 6 of this Agreement,
the Committee retains the right to terminate the Option, to the extent it has
not vested, upon a dissolution of the Corporation or a reorganization event or
transaction in which the Corporation does not survive (or does not survive as a
public company in respect of its outstanding common stock).  This Section 8 is not intended to
prevent future vesting (including provision for future vesting) if the Option
(or a substituted award) remains outstanding following a Change in Control
Event.


 


9.               Change in
Subsidiary’s Status; Leaves of Absence.  If the Optionee is employed only by an
entity that ceases to be a subsidiary, this event is deemed for purposes of
this Agreement to be a termination of the Optionee’s employment by the Company
other than a termination for Cause, Total Disability, Retirement or death of
the Optionee.  Absence from work caused
by military service, authorized sick leave or other leave approved in writing
by the Company or the Committee shall not be considered a termination of
employment by the Company for purposes of Section 5 only if reemployment
upon the expiration of such leave is required by contract or law, or such leave
is for a period of not more than 90 days.


 


10.         Additional Provisions Applicable
to ISOs.


 


(a)          ISO Value Limit.  If the aggregate fair market value of the
shares with respect to which ISOs (whether granted under the Option or otherwise)
first become exercisable by the Participant in any calendar year exceeds
$100,000, as measured on the applicable award dates, the limitations of
Section 2.3 of the Plan shall apply and to such extent the Option will be
rendered a NQSO.


 


(b)         Notice of Sale.  The Participant agrees to notify the
Corporation of any sale or other disposition of any shares if such sale or
disposition of any shares occurs within two years after the Award Date or
within one year after the date of exercise of any Option intended as an ISO.


 


(c)          Transferability.  In accordance with Section 1.8 of the
Plan and the Code, an ISO is not transferable by the Optionee other than by
will or the laws of descent and distribution, and is exercisable during the
Optionee’s lifetime only by the Optionee.


 


(d)         Tax Withholding.  If any portion of the Option is rendered a
NQSO in accordance with the terms hereof or applicable law, the Participant
shall pay or make provision for the payment of any applicable withholding and
employment taxes upon exercise of the Option.


 


11.         Limitation on Exercise of Option.  The Optionee will not be entitled to receive
Common Stock upon exercise of the Option to the extent that it will cause the
Optionee to Beneficially or Constructively Own Equity Shares in excess of the
Ownership Limit.  If the Optionee
exercises any portion of this Option which upon


 


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delivery of the Common Stock would cause the Optionee to Beneficially
or Constructively Own Equity Shares in excess of the Ownership Limit, the
Corporation has the right to deliver to the Optionee, in lieu of Common Stock,
a check or cash in the amount equal to the Fair Market Value of the Common
Stock otherwise deliverable on the date of exercise (minus any amounts withheld
pursuant to Section 6.5 of the Plan).


 


12.         Limitations on Acceleration and Reduction in Benefits
in Event of Tax Limitations.


 


(a)          Limitation on Acceleration.  Notwithstanding anything contained herein or
in the Plan or any other agreement to the contrary, in no event shall the
vesting of the Option be accelerated pursuant to Section 6.3 of the Plan
or Section 6 hereof to the extent that the Corporation would be denied a
federal income tax deduction for such vesting because of Section 280G of
the Code and, in such circumstances, the Option will continue to vest in
accordance with and subject to the other provisions hereof.


 


(b)         Reduction in Benefits.  If the Optionee would be entitled to
benefits, payments or coverage hereunder and under any other plan, program or
agreement which would constitute “parachute payments,” then notwithstanding any
other provision hereof or of any other existing agreement to the contrary, the
Optionee may by written notice to the Secretary of the Corporation designate
the order in which such “parachute payments” shall be reduced or modified so
that the Company is not denied federal income tax deductions for any “parachute
payments” because of Section 280G of the Code.


 


(c)          Determination of Limitations.  The term “parachute payments” shall have the
meaning set forth in and be determined in accordance with Section 280G of
the Code and regulations issued thereunder. 
All determinations required by this Section 12, including without
limitation the determination of whether any benefit, payment or coverage would
constitute a parachute payment, the calculation of the value of any parachute
payment and the determination of the extent to which any parachute payment
would be nondeductible for federal income tax purposes because of Section 280G
of the Code, shall be made by an independent accounting firm (other than the
Corporation’s outside auditing firm) having nationally recognized expertise in
such matters selected by the Committee. 
Any such determination by such accounting firm shall be binding on the
Corporation, its Subsidiaries and the Optionee.


 


13.         Optionee not a Stockholder.  Neither the Optionee nor any other person
entitled to exercise the Option shall have any of the rights or privileges of a
stockholder of the Corporation as to any shares of Common Stock until the
issuance and delivery to him or her of a certificate evidencing the shares
registered in his or her name.  No
adjustment will be made for dividends or other rights as a stockholder as to
which the record date is prior to such date of delivery.


 


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14.         No Guarantee of Continued Service .  Nothing contained in this Agreement or the
Plan constitutes an employment or service commitment by the Company, affects
the Optionee’s status as an employee at will who is subject to termination
without cause, confers upon the Optionee any right to remain employed by the
Company, interferes in any way with the right of the Company at any time to
terminate such employment, or affects the right of the Company to increase or
decrease the Optionee’s other compensation or benefits.  Nothing in this Section 14, however, is
intended to adversely affect any independent contractual right of the Optionee
without his or her consent thereto. 
Employment for any period of time (including a substantial period of
time) after the Award Date will not entitle the Optionee to any proportionate
vesting or avoid or mitigate a termination of rights and benefits upon or
following a termination of employment if the express conditions to vesting
pursuant to Section 1 or 6 have not been satisfied.


 


15.         Non-Transferability of Option.  The Option and any other rights of the
Optionee under this Agreement or the Plan are nontransferable except as
provided in Section 1.8 of the Plan.


 


16.         Notices.  Any notice to be given under the terms of
this Agreement shall be in writing and addressed to the Corporation at its
principal office located at 401 Wilshire Boulevard, Suite 700, Santa Monica,
California 90401, to the attention of the Corporate Secretary and to the
Optionee at the address given beneath the Optionee’s signature hereto, or at
such other address as either party may hereafter designate in writing to the
other.


 


17.         Effect of Award Agreement.  This Agreement shall be binding upon and
inure to the benefit of any successor or successors of the Corporation, except
to the extent the Committee determines otherwise.


 


18.         Entire Agreement; Governing Law.  The Plan is incorporated herein by
reference.  [Subject to Section 20
below,] The Plan and this Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and the Optionee
with respect to the subject matter hereof, and may not be modified adversely to
the Optionee’s interest except by means of a writing signed by the Company and
the Optionee.  The constructive
interpretation, performance and enforcement of this Agreement and the Option
shall be governed by the internal substantive laws, but not the choice of law
rules, of the State of Maryland.


 


19.         Plan.  The Option and all rights of the Optionee
with respect thereto are subject to, and the Optionee agrees to be bound by,
all of the terms and conditions of the provisions of the Plan, incorporated
herein by reference, to the extent such provisions are applicable to Awards
granted to Eligible Persons.  The
Optionee acknowledges receipt of a copy of the Plan, which is made a part
hereof by this reference, and agrees to be bound by the terms thereof.  Unless otherwise expressly provided in other
Sections of this Agreement, provisions of the Plan that confer discretionary
authority on the Committee do not (and shall not be deemed to) create any
rights in the Optionee unless


 


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such rights are expressly set forth herein or are otherwise in the sole
discretion of the Committee specifically so conferred by appropriate action of
the Committee under the Plan after the date hereof.


 


20.         [  Other Agreements.  If any provision of this Agreement is
inconsistent with any provision of the Management Continuity Agreement dated as
of [  March 15, 2002  ] between the Corporation and
Participant and as it may be amended from time-to-time (the “MCA”), the
provisions of the MCA shall control.  ]  [  This provision and the introductory clause of the
second sentence of Section 18 is to be included only in agreements with
Optionees subject to the MCA.  ]


 


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  THE MACERICH COMPANY,

  	
   

  	
  AGREED AND ACKNOWLEDGED:

  
	
  a Maryland corporation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
  (Optionee’s Signature)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City, State, Zip Code)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  	
   

  



 


 


CONSENT OF SPOUSE


 


 


In consideration of the execution of the foregoing
Employee Stock Option Agreement by the Corporation, I, the spouse of the
employee named above, join with my spouse in executing this Agreement and agree
to be bound by all of the terms and provisions of this Agreement and of the
Plan.


 


 


	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature of Spouse

  



 


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