exv10w1






Exhibit 10.1




PEBBLEBROOK HOTEL TRUST




2009 EQUITY INCENTIVE PLAN





 









 








TABLE OF CONTENTS




	 	 	 	 	 
	Section         	 	Page	 
	Article I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	1.01. Affiliate
	 	 	1	 
	1.02. Agreement
	 	 	1	 
	1.03. Board
	 	 	1	 
	1.04. Change in Control
	 	 	1	 
	1.05. Code
	 	 	2	 
	1.06. Committee
	 	 	2	 
	1.07. Common Share
	 	 	2	 
	1.08. Company
	 	 	2	 
	1.09. Completion Date
	 	 	3	 
	1.10. Control Change Date
	 	 	3	 
	1.11. Corresponding SAR
	 	 	3	 
	1.12. Dividend Equivalent Right
	 	 	3	 
	1.13. Exchange Act
	 	 	3	 
	1.14. Fair Market Value
	 	 	3	 
	1.15. Initial Value
	 	 	4	 
	1.16. LTIP Unit
	 	 	4	 
	1.17. Operating Partnership
	 	 	4	 
	1.18. Option
	 	 	4	 
	1.19. Other Equity-Based Award
	 	 	4	 
	1.20. Participant
	 	 	4	 
	1.21. Performance Units
	 	 	4	 
	1.22. Person
	 	 	5	 
	1.23. Plan
	 	 	5	 
	1.24. SAR
	 	 	5	 
	1.25. Share Award
	 	 	5	 
	1.26. Ten Percent Shareholder
	 	 	5	 
	 
	 	 	 	 
	Article II PURPOSES
	 	 	6	 
	 
	 	 	 	 
	Article III ADMINISTRATION
	 	 	6	 
	 
	 	 	 	 
	Article IV ELIGIBILITY
	 	 	7	 
	 
	 	 	 	 
	Article V COMMON SHARES SUBJECT TO PLAN
	 	 	7	 
	 
	 	 	 	 
	5.01. Common Shares Issued
	 	 	7	 
	5.02. Aggregate Limit
	 	 	7	 
	5.03. Reallocation of Shares
	 	 	8	 
	 
	 	 	 	 
	Article VI OPTIONS
	 	 	8	 
	 
	 	 	 	 
	6.01. Award
	 	 	8	 
	6.02. Option Price
	 	 	8	 
	6.03. Maximum Option Period
	 	 	8	 






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	Section           	 	Page	 
	6.04. Nontransferability
	 	 	9	 
	6.05. Transferable Options
	 	 	9	 
	6.06. Employee Status
	 	 	9	 
	6.07. Exercise
	 	 	9	 
	6.08. Payment
	 	 	10	 
	6.09. Shareholder Rights
	 	 	10	 
	6.10. Disposition of Shares
	 	 	10	 
	 
	 	 	 	 
	Article VII SARS
	 	 	11	 
	 
	 	 	 	 
	7.01. Award
	 	 	11	 
	7.02. Maximum SAR Period
	 	 	11	 
	7.03. Nontransferability
	 	 	11	 
	7.04. Transferable SARs
	 	 	11	 
	7.05. Exercise
	 	 	12	 
	7.06. Employee Status
	 	 	12	 
	7.07. Settlement
	 	 	12	 
	7.08. Shareholder Rights
	 	 	12	 
	 
	 	 	 	 
	Article VIII SHARE AWARDS
	 	 	12	 
	 
	 	 	 	 
	8.01. Award
	 	 	13	 
	8.02. Vesting
	 	 	13	 
	8.03. Employee Status
	 	 	13	 
	8.04. Shareholder Rights
	 	 	13	 
	 
	 	 	 	 
	Article IX PERFORMANCE UNIT AWARDS
	 	 	14	 
	 
	 	 	 	 
	9.01. Award
	 	 	14	 
	9.02. Earning the Award
	 	 	14	 
	9.03. Payment
	 	 	14	 
	9.04. Shareholder Rights
	 	 	14	 
	9.05. Nontransferability
	 	 	14	 
	9.06. Transferable Performance Units
	 	 	15	 
	9.07. Employee Status
	 	 	15	 
	 
	 	 	 	 
	Article X OTHER EQUITY—BASED AWARDS
	 	 	15	 
	 
	 	 	 	 
	10.01. Award
	 	 	15	 
	10.02. Terms and Conditions
	 	 	15	 
	10.03. Payment or Settlement
	 	 	16	 
	10.04. Employee Status
	 	 	16	 
	10.05. Shareholder Rights
	 	 	16	 
	 
	 	 	 	 
	Article XI ADJUSTMENT UPON CHANGE IN COMMON STOCK
	 	 	16	 
	 
	 	 	 	 
	Article XII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
	 	 	17	 
	 
	 	 	 	 
	Article XIII GENERAL PROVISIONS
	 	 	17	 
	 
	 	 	 	 
	13.01. Effect on Employment and Service
	 	 	17	 






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	Section           	 	Page	 
	13.02. Unfunded Plan
	 	 	18	 
	13.03. Rules of Construction
	 	 	18	 
	13.04. Withholding Taxes
	 	 	18	 
	 
	 	 	 	 
	Article XIV change in control
	 	 	18	 
	 
	 	 	 	 
	14.01. Impact of Change in Control
	 	 	18	 
	14.02. Assumption Upon Change in Control
	 	 	19	 
	14.03. Cash-Out Upon Change in Control
	 	 	19	 
	14.04. Limitation of Benefits
	 	 	19	 
	 
	 	 	 	 
	Article XV AMENDMENT
	 	 	21	 
	 
	 	 	 	 
	Article XVI DURATION OF PLAN
	 	 	21	 
	 
	 	 	 	 
	Article XVII EFFECTIVE DATE OF PLAN
	 	 	21	 







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ARTICLE I

DEFINITIONS




1.01. Affiliate




     Affiliate means any entity, whether now or hereafter existing, which controls, is controlled
by, or is under common control with, the Company (including, but not limited to, joint ventures,
limited liability companies and partnerships). For this purpose, the term “control” shall mean
ownership of 50% or more of the total combined voting power or value of all classes of shares or
interests in the entity, or the power to direct the management and policies of the entity, by
contract or otherwise.



1.02. Agreement




     Agreement means a written agreement (including any amendment or supplement thereto) between
the Company and a Participant specifying the terms and conditions of a Share Award, an award of
Performance Units, an Option, SAR or Other Equity-Based Award (including an LTIP) granted to such
Participant.



1.03. Board




     Board means the Board of Trustees of the Company.



1.04. Change in Control




     “Change in Control” shall mean a change in control of the Company which will be deemed to have
occurred after the date hereof if:




	(1)	 	any “person” as such term is used in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof except that such
term shall not include (A) the Company or any of its subsidiaries, (B) any
trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any of its affiliates, (C) an underwriter temporarily
holding securities pursuant to an offering of such securities, (D) any
corporation owned, directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of the Company’s
common shares, or (E) any person or group as used in Rule 13d-1(b) under the
Exchange Act, is or becomes the Beneficial Owner, as such term is defined in
Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of
the Company representing at least 50% of the combined voting power or common
shares of the Company;
	 
	(2)	 	during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new trustee (other than
(A) a trustee designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (1), (3), or (4) of
this Section 1.05 or (B) a trustee whose initial assumption of office




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	 	 	is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of trustees of the
Company) whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds (2/3) of
the trustees then still in office who either were trustees at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
	 
	(3)	 	there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) in combination with the
ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company, more
than 50% of the combined voting power and common shares of the Company or such
surviving entity or any parent thereof outstanding immediately after such
merger or consolidation; or
	 
	(4)	 	there is consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets (or any transaction
having a similar effect, including a liquidation) other than a sale or
disposition by the Company of all or substantially all of the Company’s assets
to an entity, more than fifty percent (50%) of the combined voting power and
common shares of which is owned by shareholders of the Company in substantially
the same proportions as their ownership of the common shares of the Company
immediately prior to such sale.





1.05. Code




     Code means the Internal Revenue Code of 1986, and any amendments thereto.



1.06. Committee




     Committee means the Compensation Committee of the Board; provided, however, that with respect
to awards made to a member of the Board who is not an employee of the Company or an Affiliate,
“Committee” means the Board.



1.07. Common Share




     Common Share means common shares of beneficial interest, par value $0.01 per share, of the
Company.



1.08. Company




     Company means Pebblebrook Hotel Trust, a Maryland real estate investment trust.



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1.09. Completion Date




     Completion Date means the later of (i) the initial closing date of the initial public offering
of the Common Shares and (ii) the expiration date of the underwriters’ over-allotment option in the
initial public offering of the Common Shares.



1.10. Control Change Date




     Control Change Date means the date on which a Change in Control occurs. If a Change in
Control occurs on account of a series of transactions, the “Control Change Date” is the date of the
last of such transactions.



1.11. Corresponding SAR




     Corresponding SAR means an SAR that is granted in relation to a particular Option and that can
be exercised only upon the surrender to the Company, unexercised, of that portion of the Option to
which the SAR relates.



1.12. Dividend Equivalent Right




     Dividend Equivalent Right means the right, subject to the terms and conditions prescribed by
the Committee, of a Participant to receive (or have credited) cash, shares or other property in
amounts equivalent to the cash, shares or other property dividends declared on Common Shares with
respect to specified Performance Units or Common Shares subject to an Other Equity-Based Award,
Option or SAR, as determined by the Committee, in its sole discretion. The Committee may provide
that such Dividend Equivalents (if any) shall be distributed only when, and to the extent that, the
underlying award is vested or earned and also may provide that Dividend Equivalents (if any) shall
be deemed to have been reinvested in additional shares of Common Stock or otherwise reinvested.



1.13. Exchange Act




     Exchange Act means the Securities Exchange Act of 1934, as amended.



1.14. Fair Market Value




     Fair Market Value means, on any given date, the reported “closing” price of a Common Share on
the New York Stock Exchange. If, on any given date, the Common Shares are not listed for trading
on the New York Stock Exchange, then Fair Market Value shall be the “closing” price of a Common
Share on such other exchange on which the Common Shares are listed for trading or, if the Common
Shares are not listed on any exchange, the amount determined by the Committee using any reasonable
method in good faith and in accordance with the regulations under Section 409A of the Code.



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1.15. Initial Value




     Initial Value means, with respect to a Corresponding SAR, the option price per share of the
related Option and, with respect to an SAR granted independently of an Option, the price per
Common Share as determined by the Committee on the date of grant; provided, however, that the price
shall not be less than the Fair Market Value on the date of grant.



1.16. LTIP Unit




     LTIP Unit means an “LTIP Unit” as defined in the Operating Partnership’s partnership
agreement. An LTIP Unit granted under this Plan represents the right to receive the benefits,
payments or other rights set forth in that partnership agreement, subject to the terms and
conditions of the applicable Agreement and that partnership agreement.



1.17. Operating Partnership




     Operating Partnership means Pebblebrook Hotel, L. P.



1.18. Option




     Option means a share option that entitles the holder to purchase from the Company a stated
number of Common Shares at the price set forth in an Agreement.



1.19. Other Equity-Based Award




     Other Equity-Based Award means any award other than an Option, SAR, a Performance Unit award
or a Share Award which, subject to such terms and conditions as may be prescribed by the Committee,
entitles a Participant to receive Common Shares or rights or units valued in whole or in part by
reference to, or otherwise based on, Common Shares (including securities convertible into Common
Shares) or other equity interests including LTIP Units.



1.20. Participant




     Participant means an employee or officer of the Company or an Affiliate, a member of the
Board, or an individual who provides bona fide services to the Company or an Affiliate (including
an individual who provides services to the Company or an Affiliate by virtue of employment with, or
providing services to, the Operating Partnership), and who satisfies the requirements of Article IV
and is selected by the Committee to receive an award of Performance Units or a Share Award, Option,
SAR, Other Equity-Based Award or a combination thereof.



1.21. Performance Units




     Performance Units means an award, in the amount determined by the Committee, stated with
reference to a specified number of Common Shares or other securities or property, that in



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accordance with the terms of an Agreement entitles the holder to receive a payment for each
specified unit equal to the value of the Performance Unit on the date of payment.




1.22. Person




     “Person” means any human being, firm, corporation, partnership, or other entity. “Person” also
includes any human being, firm, corporation, partnership, or other entity as defined in sections
13(d)(3) and 14(d)(2) of the Exchange Act. Notwithstanding the preceding sentence, the term
“Person” does not include (i) the Company or any of its subsidiaries, (ii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or any Affiliate, (iii)
an underwriter temporarily holding securities pursuant to an offering of such securities or (iv)
any corporation owned, directly or indirectly, by the shareholders of the Company in substantially
the same proportions as their ownership of the Common Shares.



1.23.  Plan




     Plan means this Pebblebrook Hotel Trust 2009 Equity Incentive Plan.



1.24. SAR




     SAR means a share appreciation right that in accordance with the terms of an Agreement
entitles the holder to receive, with respect to each Common Share encompassed by the exercise of
the SAR, the excess, if any, of the Fair Market Value at the time of exercise over the Initial
Value. References to “SARs” include both Corresponding SARs and SARs granted independently of
Options, unless the context requires otherwise.



1.25. Share Award




     Share Award means Common Shares awarded to a Participant under Article VIII.



1.26. Ten Percent Shareholder




     Ten Percent Shareholder means any individual owning more than ten percent (10%) of the total
combined voting power of all classes of shares of the Company or of a “parent corporation” or
“subsidiary corporation” (as such terms are defined in Section 424 of the Code) of the Company. An
individual shall be considered to own any voting shares owned (directly or indirectly) by or for
his or her brothers, sisters, spouse, ancestors or lineal descendants and shall be considered to
own proportionately any voting shares owned (directly or indirectly) by or for a corporation,
partnership, estate or trust of which such individual is a shareholder, partner or beneficiary.



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ARTICLE II

PURPOSES




     The Plan is intended to assist the Company and its Affiliates in recruiting and retaining
individuals and other service providers with ability and initiative by enabling such persons or
entities to participate in the future success of the Company and its Affiliates and to associate
their interests with those of the Company and its shareholders. The Plan is intended to permit the
grant of both Options qualifying under Section 422 of the Code (“incentive stock options”) and
Options not so qualifying, and the grant of SARs, Share Awards, Performance Units, and Other
Equity-Based Awards in accordance with the Plan and any procedures that may be established by the
Committee. No Option that is intended to be an incentive stock option shall be invalid for failure
to qualify as an incentive stock option. The proceeds received by the Company from the sale of
Common Shares pursuant to this Plan shall be used for general corporate purposes.



ARTICLE III

ADMINISTRATION




     The Plan shall be administered by the Committee. The Committee shall have authority to grant
SARs, Share Awards, Performance Units, Options and Other Equity-Based Awards upon such terms (not
inconsistent with the provisions of this Plan), as the Committee may consider appropriate. Such
terms may include conditions (in addition to those contained in this Plan), on the exercisability
of all or any part of an Option or SAR or on the transferability or forfeitability of a Share
Award, an award of Performance Units or an Other Equity-Based Award. Notwithstanding any such
conditions, the Committee may, in its discretion, accelerate the time at which any Option or SAR
may be exercised, or the time at which a Share Award or Other Equity-Based Award may become
transferable or nonforfeitable or the time at which an Other Equity-Based Award or an award of
Performance Units may be settled. In addition, the Committee shall have complete authority to
interpret all provisions of this Plan; to prescribe the form of Agreements; to adopt, amend, and
rescind rules and regulations pertaining to the administration of the Plan (including rules and
regulations that require or allow Participants to defer the payment of benefits under the Plan);
and to make all other determinations necessary or advisable for the administration of this Plan.
The Committee’s determinations under the Plan (including without limitation, determinations of the
individuals to receive awards under the Plan, the form, amount and timing of such awards, the terms
and provisions of such awards and the Agreements) need not be uniform and may be made by the
Committee selectively among individuals who receive, or are eligible to receive, awards under the
Plan, whether or not such persons are similarly situated. The express grant in the Plan of any
specific power to the Committee shall not be construed as limiting any power or authority of the
Committee. Any decision made, or action taken, by the Committee in connection with the
administration of this Plan shall be final and conclusive. The members of the Committee shall not
be liable for any act done in good faith with respect to this Plan or any Agreement, Option, SAR,
Share Award, Other Equity-Based Award or award of Performance Units. All expenses of administering
this Plan shall be borne by the Company.



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ARTICLE IV

ELIGIBILITY




     Any employee of the Company or an Affiliate (including a trade or business that becomes an
Affiliate after the adoption of this Plan) and any member of the Board is eligible to participate
in this Plan. In addition, any other individual who provides significant services to the Company
or an Affiliate (including an individual who provides services to the Company or an Affiliate by
virtue of employment with, or providing services to, the Operating Partnership) is eligible to
participate in this Plan if the Committee, in its sole discretion, determines that the
participation of such individual is in the best interest of the Company. The Committee may also
grant Options, SARs, Share Awards, Performance Units and Other Equity-Based Awards to an individual
as an inducement to such individual becoming eligible to participate in the Plan and prior to the
date that the individual first performs services for the Company, an Affiliate or the Operating
Partnership, provided that such awards will not become vested or exercisable, and no shares shall
be issued or other payment made to such individual with respect to such awards prior to the date
the individual first performs services for the Company, an Affiliate or the Operating Partnership.



ARTICLE V

COMMON SHARES SUBJECT TO PLAN




5.01. Common Shares Issued




     Upon the award of Common Shares pursuant to a Share Award, an Other Equity-Based Award or in
settlement of an award of Performance Units, the Company may deliver to the Participant Common
Shares from its treasury shares or authorized but unissued Common Shares. Upon the exercise of any
Option, SAR or Other Equity-Based Award denominated in Common Shares, the Company may deliver to
the Participant (or the Participant’s broker if the Participant so directs), Common Shares from its
treasury shares or authorized but unissued Common Shares.



5.02. Aggregate Limit




     (a) The maximum aggregate number of Common Shares that may be issued under this Plan pursuant
to the exercise of Options and SARs, the grant of Share Awards or Other Equity-Based Awards and the
settlement of Performance Units is equal to ___percent (___%) of the number of fully diluted
Common Shares (taking into account interests in the Operating Partnership that may become
convertible into Common Shares) outstanding on the Completion Date, including any shares issued
pursuant to the exercise of the underwriters’ over-allotment option on or before the Completion
Date. Other Equity-Based Awards that are LTIP Units shall reduce the maximum aggregate number of
Common Shares that may be issued under this Plan on a one-for-one basis, i.e., each such unit shall
be treated as an award of Common Shares.



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     (b) The maximum number of Common Shares that may be issued under this Plan in accordance with
Section 5.02(a) shall be subject to adjustment as provided in Article XI.



     (c) The maximum number of Common Shares that may be issued upon the exercise of Options that
are incentive stock options or Corresponding SARs that are related to incentive stock options shall
be determined in accordance with Sections 5.02(a) and 5.02(b).



5.03. Reallocation of Shares




     If any award or grant under the Plan (including LTIP Units) expires, is forfeited or is
terminated without having been exercised or is paid in cash without delivery of Common Shares, then
any Common Shares covered by such lapsed, cancelled, expired, unexercised or cash-settled portion
of such award or grant and any forfeited, lapsed, cancelled or expired LTIP Units shall be
available for the grant of other Options, SARs, Share Awards, Other Equity-Based Awards and
settlement of Performance Units under this Plan.



ARTICLE VI

OPTIONS




6.01. Award




     In accordance with the provisions of Article IV, the Committee will designate each individual
to whom an Option is to be granted and will specify the number of Common Shares covered by such
awards. The Committee also will specify whether Dividend Equivalent Rights are granted in
conjunction with the Option.



6.02. Option Price




     The price per Common Share purchased on the exercise of an Option shall be determined by the
Committee on the date of grant, but shall not be less than the Fair Market Value on the date the
Option is granted. Notwithstanding the preceding sentence, the price per Common Share purchased on
the exercise of any Option that is an incentive stock option granted to an individual who is a Ten
Percent Shareholder on the date such option is granted, shall not be less than one hundred ten
percent (110%) of the Fair Market Value on the date the Option is granted. Except as provided in
Article XI, the price per share of an outstanding Option may not be reduced (by amendment,
cancellation and new grant or otherwise) without the approval of shareholders.



6.03. Maximum Option Period




     The maximum period in which an Option may be exercised shall be determined by the Committee on
the date of grant except that no Option shall be exercisable after the expiration of ten years from
the date such Option was granted. In the case of an incentive stock option granted



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to a Participant who is a Ten Percent Shareholder on the date of grant, such Option shall not
be exercisable after the expiration of five years from the date of grant. The terms of any Option
may provide that it is exercisable for a period less than such maximum period.




6.04. Nontransferability




     Except as provided in Section 6.05, each Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In the event of any
transfer of an Option (by the Participant or his transferee), the Option and any Corresponding SAR
that relates to such Option must be transferred to the same person or persons or entity or
entities. Except as provided in Section 6.05, during the lifetime of the Participant to whom the
Option is granted, the Option may be exercised only by the Participant. No right or interest of a
Participant in any Option shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.



6.05. Transferable Options




     Section 6.04 to the contrary notwithstanding, if the Agreement provides, an Option that is not
an incentive stock option may be transferred by a Participant to the Participant’s children,
grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership
in which such family members are the only partners, on such terms and conditions as may be
permitted under Rule 16b-3 under the Exchange Act as in effect from time to time. The holder of an
Option transferred pursuant to this Section shall be bound by the same terms and conditions that
governed the Option during the period that it was held by the Participant; provided, however, that
such transferee may not transfer the Option except by will or the laws of descent and distribution.
In the event of any transfer of an Option (by the Participant or his transferee), the Option and
any Corresponding SAR that relates to such Option must be transferred to the same person or persons
or entity or entities.



6.06. Employee Status




     For purposes of determining the applicability of Section 422 of the Code (relating to
incentive stock options), or in the event that the terms of any Option provide that it may be
exercised only during employment or continued service or within a specified period of time after
termination of employment or continued service, the Committee may decide to what extent leaves of
absence for governmental or military service, illness, temporary disability, or other reasons shall
not be deemed interruptions of continuous employment or service.



6.07. Exercise




     Subject to the provisions of this Plan and the applicable Agreement, an Option may be
exercised in whole at any time or in part from time to time at such times and in compliance with
such requirements as the Committee shall determine; provided, however, that incentive stock options
(granted under the Plan and all plans of the Company and its Affiliates) may not be first



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exercisable in a calendar year for Common Shares having a Fair Market Value (determined as of
the date an Option is granted) exceeding $100,000. An Option granted under this Plan may be
exercised with respect to any number of whole shares less than the full number for which the Option
could be exercised. A partial exercise of an Option shall not affect the right to exercise the
Option from time to time in accordance with this Plan and the applicable Agreement with respect to
the remaining shares subject to the Option. The exercise of an Option shall result in the
termination of any Corresponding SAR to the extent of the number of shares with respect to which
the Option is exercised.



6.08. Payment




     Subject to rules established by the Committee and unless otherwise provided in an Agreement,
payment of all or part of the Option price may be made in cash, certified check, by tendering
Common Shares or by attestation of ownership of Common Shares or by a broker-assisted cashless
exercise. If Common Shares are used to pay all or part of the Option price, the sum of the cash
and cash equivalent and the Fair Market Value (determined as of the day preceding the date of
exercise) of the shares surrendered must not be less than the Option price of the shares for which
the Option is being exercised.



6.09. Shareholder Rights




     No Participant shall have any rights as a shareholder with respect to Common Shares subject to
an Option until the date of exercise of such Option.



6.10. Disposition of Shares




     A Participant shall notify the Company of any sale or other disposition of Common Shares
acquired pursuant to an Option that was an incentive stock option if such sale or disposition
occurs (i) within two years of the grant of an Option or (ii) within one year of the issuance of
the Common Shares to the Participant. Such notice shall be in writing and directed to the
Secretary of the Company.



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ARTICLE VII

SARS




7.01. Award




     In accordance with the provisions of Article IV, the Committee will designate each individual
to whom SARs are to be granted and will specify the number of Common Shares covered by such awards.
The Committee also will specify whether Dividend Equivalent Rights are granted in conjunction with
the SAR. No Participant may be granted Corresponding SARs (under the Plan and all plans of the
Company and its Affiliates) that are related to incentive stock options which are first exercisable
in any calendar year for Common Shares having an aggregate Fair Market Value (determined as of the
date the related Option is granted) that exceeds $100,000.



7.02. Maximum SAR Period




     The term of each SAR shall be determined by the Committee on the date of grant, except that no
SAR shall have a term of more than ten years from the date of grant. In the case of a
Corresponding SAR that is related to an incentive stock option granted to a Participant who is a
Ten Percent Shareholder on the date of grant, such Corresponding SAR shall not be exercisable after
the expiration of five years from the date of grant. The terms of any SAR may provide that it has a
term that is less than such maximum period.



7.03. Nontransferability




     Except as provided in Section 7.04, each SAR granted under this Plan shall be nontransferable
except by will or by the laws of descent and distribution. In the event of any such transfer, a
Corresponding SAR and the related Option must be transferred to the same person or persons or
entity or entities. Except as provided in Section 7.04, during the lifetime of the Participant to
whom the SAR is granted, the SAR may be exercised only by the Participant. No right or interest of
a Participant in any SAR shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.



7.04. Transferable SARs




     Section 7.03 to the contrary notwithstanding, if the Agreement provides, an SAR, other than a
Corresponding SAR that is related to an incentive stock option, may be transferred by a Participant
to the Participant’s children, grandchildren, spouse, one or more trusts for the benefit of such
family members or a partnership in which such family members are the only partners, on such terms
and conditions as may be permitted under Rule 16b-3 under the Exchange Act as in effect from time
to time. The holder of an SAR transferred pursuant to this Section shall be bound by the same
terms and conditions that governed the SAR during the period that it was held by the Participant;
provided, however, that such transferee may not transfer the SAR except by will or the laws of
descent and distribution. In the event of any transfer of a Corresponding SAR



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(by the Participant or his transferee), the Corresponding SAR and the related Option must be
transferred to the same person or person or entity or entities.




7.05. Exercise




     Subject to the provisions of this Plan and the applicable Agreement, an SAR may be exercised
in whole at any time or in part from time to time at such times and in compliance with such
requirements as the Committee shall determine; provided, however, that a Corresponding SAR that is
related to an incentive stock option may be exercised only to the extent that the related Option is
exercisable and only when the Fair Market Value exceeds the option price of the related Option. An
SAR granted under this Plan may be exercised with respect to any number of whole shares less than
the full number for which the SAR could be exercised. A partial exercise of an SAR shall not
affect the right to exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the SAR. The exercise of a
Corresponding SAR shall result in the termination of the related Option to the extent of the number
of shares with respect to which the SAR is exercised.



7.06. Employee Status




     If the terms of any SAR provide that it may be exercised only during employment or continued
service or within a specified period of time after termination of employment or continued service,
the Committee may decide to what extent leaves of absence for governmental or military service,
illness, temporary disability or other reasons shall not be deemed interruptions of continuous
employment or service.



7.07. Settlement




     At the Committee’s discretion, the amount payable as a result of the exercise of an SAR may be
settled in cash, Common Shares, or a combination of cash and Common Shares. No fractional share
will be deliverable upon the exercise of an SAR but a cash payment will be made in lieu thereof.



7.08. Shareholder Rights




     No Participant shall, as a result of receiving an SAR, have any rights as a shareholder of the
Company or any Affiliate until the date that the SAR is exercised and then only to the extent that
the SAR is settled by the issuance of Common Shares. Notwithstanding the foregoing, the Committee
may provide in an Agreement that the holder of an SAR is entitled to Dividend Equivalents during
the period beginning on the date of the award and ending on the date the SAR is exercised.



ARTICLE VIII

SHARE AWARDS




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8.01. Award




     In accordance with the provisions of Article IV, the Committee will designate each individual
to whom a Share Award is to be made and will specify the number of Common Shares covered by such
awards.



8.02. Vesting




     The Committee, on the date of the award, may prescribe that a Participant’s rights in a Share
Award shall be forfeitable or otherwise restricted for a period of time or subject to such
conditions as may be set forth in the Agreement. By way of example and not of limitation, the
Committee may prescribe that a Participant’s rights in a Share Award shall be forfeitable or
otherwise restricted subject to the attainment of objectives stated with reference to the
Company’s, an Affiliate’s or a business unit’s attainment of objectives stated with respect to
performance criteria established by the Committee.



8.03. Employee Status




     In the event that the terms of any Share Award provide that shares may become transferable and
nonforfeitable thereunder only after completion of a specified period of employment or continuous
service, the Committee may decide in each case to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be deemed interruptions
of continuous employment or service.



8.04. Shareholder Rights




     Unless otherwise specified in accordance with the applicable Agreement, while the Common
Shares granted pursuant to the Share Award may be forfeited or are nontransferable, a Participant
will have all rights of a stockholder with respect to a Share Award, including the right to receive
dividends and vote the shares; provided, however, that during such period (i) a Participant may not
sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of shares granted pursuant to a
Share Award, (ii) the Company shall retain custody of the certificates evidencing shares granted
pursuant to a Share Award, and (iii) the Participant will deliver to the Company a stock power,
endorsed in blank, with respect to each Share Award. The limitations set forth in the preceding
sentence shall not apply after the shares granted under the Share Award are transferable and are no
longer forfeitable.



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ARTICLE IX

PERFORMANCE UNIT AWARDS




9.01. Award




     In accordance with the provisions of Article IV, the Committee will designate each individual
to whom an award of Performance Units is to be made and will specify the number of Common Shares or
other securities or property covered by such awards. The Committee also will specify whether
Dividend Equivalent Rights are granted in conjunction with the Performance Units.



9.02. Earning the Award




     The Committee, on the date of the grant of an award, shall prescribe that the Performance
Units will be earned, and the Participant will be entitled to receive payment pursuant to the award
of Performance Units, only upon the satisfaction of performance objectives and such other criteria
as may be prescribed by the Committee.



9.03. Payment




     In the discretion of the Committee, the amount payable when an award of Performance Units is
earned may be settled in cash, by the issuance of Common Shares, by the delivery of other
securities or property or a combination thereof. A fractional Common Share shall not be
deliverable when an award of Performance Units is earned, but a cash payment will be made in lieu
thereof. The amount payable when an award of Performance Units is earned shall be paid in a lump
sum.



9.04. Shareholder Rights




     A Participant, as a result of receiving an award of Performance Units, shall not have any
rights as a shareholder until, and then only to the extent that, the award of Performance Units is
earned and settled in Common Shares. After an award of Performance Units is earned and settled in
Common Shares, a Participant will have all the rights of a shareholder as described in Section
8.05.



9.05. Nontransferability




     Except as provided in Section 9.06, Performance Units granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. No right or interest of
a Participant in any Performance Units shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.



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9.06. Transferable Performance Units




     Section 9.05 to the contrary notwithstanding, if the Agreement provides, an award of
Performance Units may be transferred by a Participant to the Participant’s children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a partnership in which such
family members are the only partners, on such terms and conditions as may be permitted under Rule
16b-3 under the Exchange Act as in effect from time to time. The holder of Performance Units
transferred pursuant to this Section shall be bound by the same terms and conditions that governed
the Performance Units during the period that they were held by the Participant; provided, however
that such transferee may not transfer Performance Units except by will or the laws of descent and
distribution.



9.07. Employee Status




     In the event that the terms of any Performance Unit award provide that no payment will be made
unless the Participant completes a stated period of employment or continued service, the Committee
may decide to what extent leaves of absence for government or military service, illness, temporary
disability, or other reasons shall not be deemed interruptions of continuous employment or service.



ARTICLE X

OTHER EQUITY—BASED AWARDS




10.01. Award




     In accordance with the provisions of Article IV, the Committee will designate each individual
to whom an Other Equity-Based Award is to be made and will specify the number of Common Shares or
other equity interests (including LTIP Units) covered by such awards; provided, however, that the
grant of LTIP Units must satisfy the requirements of the partnership agreement of the Operating
Partnership as in effect on the date of grant. The Committee also will specify whether Dividend
Equivalent Rights are granted in conjunction with the Other Equity-Based Award.



10.02. Terms and Conditions




     The Committee, at the time an Other Equity-Based Award is made, shall specify the terms and
conditions which govern the award. The terms and conditions of an Other Equity-Based Award may
prescribe that a Participant’s rights in the Other Equity-Based Award shall be forfeitable,
nontransferable or otherwise restricted for a period of time or subject to such other conditions as
may be determined by the Committee, in its discretion and set forth in the Agreement. Other
Equity-Based Awards may be granted to Participants, either alone or in addition to other awards
granted under the Plan, and Other Equity-Based Awards may be granted in the settlement of other
Awards granted under the Plan.



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10.03. Payment or Settlement




     Other Equity-Based Awards valued in whole or in part by reference to, or otherwise based on,
Common Shares, shall be payable or settled in Common Shares, cash or a combination of Common Shares
and cash, as determined by the Committee in its discretion; provided, however, that any Common
Shares that are issued on account of the conversion of LTIP Units into Common Stock shall not be
issued under the Plan. Other Equity-Based Awards denominated as equity interests other than Common
Shares may be paid or settled in shares or units of such equity interests or cash or a combination
of both as determined by the Committee in its discretion.



10.04. Employee Status




     If the terms of any Other Equity-Based Award provides that it may be earned or exercised only
during employment or continued service or within a specified period of time after termination of
employment or continued service, the Committee may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability or other reasons shall not be
deemed interruptions of continuous employment or service.



10.05. Shareholder Rights




     A Participant, as a result of receiving an Other Equity-Based Award, shall not have any rights
as a shareholder until, and then only to the extent that, the Other Equity-Based Award is earned
and settled in Common Shares.



ARTICLE XI

ADJUSTMENT UPON CHANGE IN COMMON STOCK




     The maximum number of Common Shares as to which Options, SARs, Performance Units, Share Awards
and Other Equity-Based Awards may be granted and the terms of outstanding Share Awards, Options,
SARs, Performance Units and Other Equity-Based Awards shall be adjusted as determined by the Board
in the event that (i) the Company (a) effects one or more share dividends, extra-ordinary cash
dividends, share split-ups, subdivisions or consolidations of shares or (b) engages in a
transaction to which Section 424 of the Code applies or (ii) there occurs any other event which, in
the judgment of the Board necessitates such action. Any determination made under this Article XI
by the Board shall be final and conclusive.



     The issuance by the Company of shares of any class, or securities convertible into shares of
any class, for cash or property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the maximum number of shares as to
which Options, SARs, Performance Units, Share Awards and Other Equity-Based Awards may



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be granted or the terms of outstanding Share Awards, Options, SARs, Performance Shares or
Other Equity-Based Awards.



     The Committee may make Share Awards and may grant Options, SARs, Performance Units or Other
Equity-Based Awards in substitution for performance shares, phantom shares, stock awards, stock
options, stock appreciation rights, or similar awards held by an individual who becomes an employee
of the Company or an Affiliate in connection with a transaction described in the first paragraph of
this Article XI. Notwithstanding any provision of the Plan (other than the limitation of Section
5.02), the terms of such substituted Share Awards, SARs, Other Equity-Based Awards, Options or
Performance Units shall be as the Committee, in its discretion, determines is appropriate.



ARTICLE XII

COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES




     No Option or SAR shall be exercisable, no Common Shares shall be issued, no certificates for
Common Shares shall be delivered, and no payment shall be made under this Plan except in compliance
with all applicable federal and state laws and regulations (including, without limitation,
withholding tax requirements), any listing agreement to which the Company is a party, and the rules
of all domestic stock exchanges on which the Company’s shares may be listed. The Company shall
have the right to rely on an opinion of its counsel as to such compliance. Any certificate issued
to evidence Common Shares when a Share Award is granted, a Performance Unit or Other Equity-Based
Award is settled or for which an Option or SAR is exercised may bear such legends and statements as
the Committee may deem advisable to assure compliance with federal and state laws and regulations.
No Option or SAR shall be exercisable, no Share Award or Performance Unit shall be granted, no
Common Shares shall be issued, no certificate for Common Shares shall be delivered, and no payment
shall be made under this Plan until the Company has obtained such consent or approval as the
Committee may deem advisable from regulatory bodies having jurisdiction over such matters.



ARTICLE XIII

GENERAL PROVISIONS




13.01. Effect on Employment and Service




     Neither the adoption of this Plan, its operation, nor any documents describing or referring to
this Plan (or any part thereof), shall confer upon any individual or entity any right to continue
in the employ or service of the Company or an Affiliate or in any way affect any right and power of
the Company or an Affiliate to terminate the employment or service of any individual or entity at
any time with or without assigning a reason therefor.



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13.02. Unfunded Plan




     This Plan, insofar as it provides for grants, shall be unfunded, and the Company shall not be
required to segregate any assets that may at any time be represented by grants under this Plan.
Any liability of the Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on,
any property of the Company.



13.03. Rules of Construction




     Headings are given to the articles and sections of this Plan solely as a convenience to
facilitate reference. The reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.



13.04. Withholding Taxes




     Each Participant shall be responsible for satisfying any income and employment tax withholding
obligations attributable to participation in the Plan. Unless otherwise provided by the Agreement,
any such withholding tax obligations may be satisfied in cash (including from any cash payable in
settlement of an award of Performance Units, SARs or Other Equity-Based Award) or a cash equivalent
acceptable to the Committee. Any minimum statutory federal, state, district or city withholding
tax obligations also may be satisfied (a) by surrendering to the Company Common Shares previously
acquired by the Participant; (b) by authorizing the Company to withhold or reduce the number of
Common Shares otherwise issuable to the Participant upon the exercise of an Option or SAR, the
settlement of a Performance Unit award or an Other Equity-Based Award (if applicable) or the grant
or vesting of a Share Award; or (c) by any other method as may be approved by the Committee. If
Common Shares are used to pay all or part of such withholding tax obligation, the Fair Market Value
of the shares surrendered, withheld or reduced shall be determined as of the day the tax liability
arises.



ARTICLE XIV

CHANGE IN CONTROL




14.01. Impact of Change in Control.




     Upon a Change in Control, the Committee is authorized to cause (i) outstanding Options and
SARs to become fully exercisable, (ii) outstanding Share Awards to become transferable and
nonforfeitable and (iii) outstanding Performance Units and Other Equity-Based Awards to become
earned and nonforfeitable in their entirety.



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14.02. Assumption Upon Change in Control.




     In the event of a Change in Control, the Committee, in its discretion and without the need for
a Participant’s consent, may provide that an outstanding Option, SAR, Share Award, Performance Unit
or Other Equity-Based Award shall be assumed by, or a substitute award granted by, the surviving
entity in the Change in Control. Such assumed or substituted award shall be of the same type of
award as the original Option, SAR, Share Award, Performance Unit or Other Equity-Based Award being
assumed or substituted. The assumed or substituted award shall have a value, as of the Control
Change Date, that is substantially equal to the value of the original award (or the difference
between the Fair Market Value and the option price or Initial Value in the case of Options and
SARs) as the Committee determines is equitably required and such other terms and conditions as may
be prescribed by the Committee.



14.03. Cash-Out Upon Change in Control.




     In the event of a Change in Control, the Committee, in its discretion and without the need of
a Participant’s consent, may provide that each Option, SAR, Share Award and Performance Unit and
Other Equity-Based Award shall be cancelled in exchange for a payment. The payment may be in
cash, Common Shares or other securities or consideration received by shareholders in the Change in
Control transaction. The amount of the payment shall be an amount that is substantially equal to
(i) the amount by which the price per share received by shareholders in the Change in Control
exceeds the option price or Initial Value in the case of an Option and SAR, or (ii) the price per
share received by shareholders for each Common Share subject to a Share Award, Performance Unit or
Other Equity-Based Award or (iii) the value of the other securities or property in which the
Performance Unit or Other Equity-Based award is denominated. If the option price or Initial Value
exceeds the price per share received by shareholders in the Change in Control transaction, the
Option or SAR may be cancelled under this Section 14.03 without any payment to the Participant.



14.04. Limitation of Benefits




     The benefits that a Participant may be entitled to receive under this Plan and other benefits
that a Participant is entitled to receive under other plans, agreements and arrangements (which,
together with the benefits provided under this Plan, are referred to as “Payments”), may constitute
Parachute Payments that are subject to Code Sections 280G and 4999. As provided in this Section
14.04, the Parachute Payments will be reduced if, and only to the extent that, a reduction will
allow a Participant to receive a greater Net After Tax Amount than a Participant would receive
absent a reduction.



     The Accounting Firm will first determine the amount of any Parachute Payments that are payable
to a Participant. The Accounting Firm also will determine the Net After Tax Amount attributable to
the Participant’s total Parachute Payments.



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     The Accounting Firm will next determine the largest amount of Payments that may be made to the
Participant without subjecting the Participant to tax under Code Section 4999 (the “Capped
Payments”). Thereafter, the Accounting Firm will determine the Net After Tax Amount attributable
to the Capped Payments.



     The Participant will receive the total Parachute Payments or the Capped Payments, whichever
provides the Participant with the higher Net After Tax Amount. If the Participant will receive the
Capped Payments, the total Parachute Payments will be adjusted by first reducing the amount of any
noncash benefits under this Plan or any other plan, agreement or arrangement (with the source of
the reduction to be directed by the Participant) and then by reducing the amount of any cash
benefits under this Plan or any other plan, agreement or arrangement (with the source of the
reduction to be directed by the Participant). The Accounting Firm will notify the Participant and
the Company if it determines that the Parachute Payments must be reduced to the Capped Payments and
will send the Participant and the Company a copy of its detailed calculations supporting that
determination.



     As a result of the uncertainty in the application of Code Sections 280G and 4999 at the time
that the Accounting Firm makes its determinations under this Article XIV, it is possible that
amounts will have been paid or distributed to the Participant that should not have been paid or
distributed under this Section 14.04 (“Overpayments”), or that additional amounts should be paid or
distributed to the Participant under this Section 14.04 (“Underpayments”). If the Accounting Firm
determines, based on either the assertion of a deficiency by the Internal Revenue Service against
the Company or the Participant, which assertion the Accounting Firm believes has a high probability
of success or controlling precedent or substantial authority, that an Overpayment has been made,
the Participant must repay to the Company, without interest; provided, however, that no loan will
be deemed to have been made and no amount will be payable by the Participant to the Company unless,
and then only to the extent that, the deemed loan and payment would either reduce the amount on
which the Participant is subject to tax under Code Section 4999 or generate a refund of tax imposed
under Code Section 4999. If the Accounting Firm determines, based upon controlling precedent or
substantial authority, that an Underpayment has occurred, the Accounting Firm will notify the
Participant and the Company of that determination and the amount of that Underpayment will be paid
to the Participant promptly by the Company.



     For purposes of this Section 14.04, the term “Accounting Firm” means the independent
accounting firm engaged by the Company immediately before the Control Change Date. For purposes of
this Article XIV, the term “Net After Tax Amount” means the amount of any Parachute Payments or
Capped Payments, as applicable, net of taxes imposed under Code Sections 1, 3101(b) and 4999 and
any State or local income taxes applicable to the Participant on the date of payment. The
determination of the Net After Tax Amount shall be made using the highest combined effective rate
imposed by the foregoing taxes on income of the same character as the Parachute Payments or Capped
Payments, as applicable, in effect on the date of payment. For purposes of this Section 14.04, the
term “Parachute Payment” means a payment that is



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described in Code Section 280G(b)(2), determined in accordance with Code Section 280G and the
regulations promulgated or proposed thereunder.



     Notwithstanding any other provision of this Section 14.04, the limitations and provisions of
this Section 14.04 shall not apply to any Participant who, pursuant to an agreement with the
Company or the terms of another plan maintained by the Company, is entitled to indemnification for
any liability that the Participant may incur under Code Section 4999.



ARTICLE XV

AMENDMENT




     The Board may amend or terminate this Plan at any time; provided, however, that no amendment
may adversely impair the rights of Participants with respect to outstanding awards. In addition,
an amendment will be contingent on approval of the Company’s shareholders if such approval is
required by law or the rules of any exchange on which the Common Shares are listed or if the
amendment would materially increase the benefits accruing to Participants under the Plan,
materially increase the aggregate number of Common Shares that may be issued under the Plan or
materially modify the requirements as to eligibility for participation in the Plan.



ARTICLE XVI

DURATION OF PLAN




     No Share Award, Performance Unit Award, Option, SAR or Other Equity-Based Award may be granted
under this Plan after the day before the tenth anniversary of the date that the Plan is adopted by
the Board. Share Awards, Performance Unit awards, Options, SARs and Other Equity-Based Awards
granted before such date shall remain valid in accordance with their terms.



ARTICLE XVII

EFFECTIVE DATE OF PLAN




     Options, Share Awards, Performance Units and Other Equity-Based Awards may be granted under
this Plan on and after the date that the Plan is adopted by the Board, provided that, this Plan
shall not be effective unless approved by holders of a majority of the outstanding Common Shares
entitled to vote and present or represented by properly executed and delivered proxies at a duly
held shareholders’ meeting at which a quorum is present or by unanimous consent of the
shareholders, within twelve months before or after the date that the Plan is adopted by the Board.




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