exv10w4



 





Exhibit 10.4




2007 MULTI-YEAR EQUITY INCENTIVE PLAN




Performance Period




     January 1, 2007 – December 31, 2009 (the “Performance Period”).



Participants




     On the adoption date of the Plan (as defined below), the participants of the Plan shall be
each individual who is employed by American Financial Realty Trust (the “Trust”) in one the
following positions: Chief Executive Officer (“CEO”), Executive Vice President
(“EVP”), Senior Vice President (“SVP”), Vice President (“VP”), and
Assistant Vice President (“AVP”), as of such date. After the adoption date of the Plan,
the Compensation and Human Resources Committee (the “Committee”) of the Board of Trustees
of the Trust (the “Board”) may designate, in its sole discretion, any other officer or
employee of the Trust, First States Group, L.P. (the “Company”) or any subsidiary or
affiliate of the Trust (a “participating employer”) as eligible to participate in the Plan.
Any such officer or employee subsequently designated as eligible to participate in the Plan shall
be deemed a participant in the Plan on the date determined by the Committee. All individuals
participating in the Plan shall herein be referred to collectively as the “Participants”
and individually as a “Participant”.



Plan Description




     Under the 2007 Multi-Year Equity Incentive Plan (the “Plan”), designated employees
shall be granted an initial equity award of performance units (the “Units”) at the
beginning of the Performance Period, or such later date on which the Committee determines that such
employee is eligible to participate in the Plan, (the “Performance Award”). The total
number of Units that the Participant shall be granted will be equivalent to the Maximum Award
Opportunity (as defined below) that the Participant will be entitled to receive at the end of the
Performance Period if the performance metrics (as described below) are each attained at the
maximum/high level. The Units subject to the Performance Award are phantom rights and will be
converted at the end of the Performance Period to an equivalent number of common shares of
beneficial ownership, par value $0.001 per share, of the Trust (“Common Shares”), subject
to certain restrictions, based on the level of achievement of the performance metrics on a
cumulative basis and provided that the level of achievement of the performance metrics is no less
than the minimum/threshold level of achievement. In connection with the grant of a Performance
Award, the Trust will establish and maintain a Unit account (the “Account”), as a
bookkeeping account on its records, for each Participant and will record in such Account the total
number of Units granted to the Participant pursuant to the Performance Award under the Plan. No
Participant will have any interest in any fund or specific assets of the Trust, the Company or any
participating employer by reason of the grant of the Units.



 









 





     As soon as administratively practicable following the conclusion of the Performance Period,
the Committee, together with the other independent trustees of the Board, shall determine
achievement (on a cumulative basis) under the Plan of the applicable performance metrics; provided
that, if the performance metrics are not achieved at the minimum/threshold level at the
end of the Performance Period, the Committee may, in its discretion, extend the Performance Period
(and the cumulative performance targets required to be achieved) by one additional year. Once the
Committee has certified the achievement of the performance metrics for the Performance Period, each
Participant’s Units will be converted into a combination of Common Shares and restricted Common
Shares (“Restricted Common Shares”), as described below; provided, that if the
minimum/threshold requirements for the performance metrics are not achieved at the end of the
Performance Period, plus any extended period, if any, each Participant will forfeit all of the
Units covered by their Performance Award and no Units will be converted into any Common Shares or
Restricted Common Shares. If the performance metrics achieved are between the minimum/threshold
and the maximum/high performance metric levels, then a linear interpolation will determine the
percentage of achievement, which will then be used to determine the number of Units to be
converted, and any Units not converted will be forfeited. Units will be converted into Common
Shares and Restricted Common Shares, as applicable, on or after the January 1 that follows the
conclusion of the Performance Period (or the extended Performance Period, as applicable), but not
later than the fifteenth day of the third month following the conclusion of the Performance Period
(or the extended Performance Period, as applicable).



     Dividend equivalents will accrue on the Units covered by the Performance Award from January 1,
2007 (or the date of grant of the Performance Award for individuals who become Participants in the
Plan after the adoption of the Plan) through the Conversion Date (as defined below), if any, of the
Units, and shall be paid, in cash, to the Participant on the date the Units are converted into
Common Shares or the date the Restricted Common Shares vest, as applicable. No dividend
equivalents will be paid in cash for any Units that are forfeited prior to Conversion Date or, with
respect to any dividend equivalents that correspond to Restricted Common Shares, if the Restricted
Common Shares are forfeited prior to the applicable vesting date. For purposes of the Plan, the
dividend equivalents that shall accrue shall be equivalent to the value of the dividends that would
have been distributed if the Units credited to the Participant’s Account at the time of the
declaration of the dividend were Common Shares.



Performance Metrics




     The performance metrics that will be measured to determine the conversion of the Units subject
to the Performance Award to Common Shares and Restricted Common Shares, as applicable, shall be
determined based on the Trust’s achievement of the following performance metrics on a cumulative
basis during the Performance Period (plus any extension) with the percentage weighting of each
performance metric as provided: (i) Absolute Shareholder Return (25% weighting) – achievement of
specified compound annual shareholder returns; (ii) Strategic Metric #1 — maintenance of dividend



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coverage at the end of 2009 through earnings from core operations; (iii) Strategic Metric #2 (25%
weighting) – maintenance of industry normative debt to market capitalization ratios measured as of
the fourth quarter 2009; and (iv) Strategic Metric #4 (25% weighting) – maintaining industry
normative cash fixed charge and cash interest coverage ratios measured as of the fourth quarter
2009. The relevant performance criteria measurements for the foregoing are set forth in the
attached Exhibit A. The conversion of the performance metrics to the relevant weighting percentage
shall be determined separately based on the achievement of the individual metrics, with achievement
at the high/maximum level equal
to 25% and achievement at the threshold/minimum level equal to threshold/minimum Units, with
achievement (i) between the threshold/minimum and high/maximum performance metric levels, then a
linear interpolation will determine the percentage of achievement, (ii) below the threshold/minimum
level, then no percentage achievement and (iii) above the high/maximum level, then percentage
achievement will be deemed at the high/maximum level.



Multi-Year Equity Incentive Opportunities




     The conversion of the Units to Restricted Common Shares and Common Shares following the
conclusion of the Performance Period shall be determined based on the achievement of the
performance metrics described above, and the actual amount of such award shall be based on a
percentage of the Participant’s base salary as compared to the Maximum Bonus Opportunity and
Minimum Bonus Opportunity.



     Each Participant shall have a “Maximum Award Opportunity”, which shall be the
high/maximum opportunity for each Participant if the performance metrics attained at the end of the
Performance Period (or the extended Performance Period, as applicable) were achieved at the
high/maximum level. The Maximum Award Opportunity for each Participant shall be determined by
dividing such Participant’s Maximum Dollar Value (as defined below) into the average of the Trust’s
closing share price for the 20 trading day period ending on the date of the adoption of the Plan.
The “Maximum Dollar Value” for the CEO and each EVP and SVP upon adoption of the Plan will
be based on the following percentages of such Participant’s designated base salary at the beginning
of the Performance Period (or such other percentage if such individual becomes eligible to
participate in the Plan after the adoption of the Plan): (i) CEO, 600%; (ii) EVPs, 450%; and (iii)
SVPs, 382.5%. The “Maximum Dollar Value” that each VP and AVP, as well as each other
Participant in the Plan who is not the CEO, or an EVP or SVP at the time that the Plan is adopted,
shall be eligible to receive will be determined by the CEO and approved by the Committee, in its
sole discretion, and need not be uniform as among Participants.



     In addition to a Maximum Award Opportunity, each Participant shall have a “Minimum Award
Opportunity”, which shall be the threshold/minimum opportunity for each Participant if the
performance metrics attained at the end of the Performance Period were achieved at the
threshold/minimum level. The Minimum Award Opportunity for each Participant shall be determined by
dividing such Participant’s Minimum Dollar Value (as defined below) into the average of the Trust’s
closing share price for the 20



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trading day period ending on the date of the adoption of the Plan.
The “Minimum Dollar Value” for the CEO and each EVP and SVP upon initial participation in
the Plan will be based on the following percentages of such Participant’s designated base salary at
the beginning of the Performance Period (or such other percentage if such individual becomes
eligible to participate in the Plan after the adoption of the Plan): (i) CEO, 300%; (ii) EVPs,
150%; and (iii) SVPs, 127.5%. The “Minimum Dollar Value” that each VP and AVP, as well as
each other Participant in the Plan who is not the CEO, or an EVP or SVP at the time that the Plan
is adopted, shall be eligible to receive will be determined by the CEO and approved by the
Committee, in its sole discretion, and need not be uniform as among Participants.



Conversion of Unit Awards




     Following the end of the Performance Period (or the extended Performance Period, as
applicable), the Committee, together with the other independent trustees of the Board, shall
determine, in its sole discretion, whether and to what extent the separate performance metrics have
been attained and certify the results of the Performance Period for each Participant. Once
determined, the Committee shall certify the results and multiply the achievement of the relevant
metric by the corresponding weighting percentage for such metric to determine the portion of the
Units, if any, attributable to such metric. Once the separate metrics have been determined, the
Committee will take the sum of the converted metrics for each Participant to determine the
percentage of the Participant’s Units, if any, for the Performance Period (or the extended
Performance Period, as applicable) that shall be converted (the “Convertible Units”).



     Based on the level of achievement of the performance metrics as outlined above, a
Participant’s Convertible Units shall be converted as follows: 50% of the Participant’s Convertible
Units shall be converted into Common Shares on or after the January 1 that follows the conclusion
of the Performance Period (or the extended Performance Period, as applicable), but not later than
the fifteenth day of the third month following the conclusion of the Performance Period (or the
extended Performance Period, as applicable) (the “Conversion Date”), and the remaining 50%
of the Convertible Units shall be converted into Restricted Common Shares on the Conversion Date.
The Restricted Common Shares shall become fully vested on December 31, 2010, provided the
Participant is then employed by the Trust, the Company or any participating employer, as
applicable. The attached Exhibit B sets forth several examples that illustrate this calculation.



     Dividends payable on Restricted Common Shares shall be accumulated and not paid to the
Participant until the corresponding Restricted Common Shares become vested. Accrued dividend
equivalents credited to the Account on the portion of the Convertible Units that are converted into
Common Shares shall be paid to the Participant, in cash, on the Conversion Date. Accrued dividend
equivalents credited to the Account on the portion of the Convertible Units that are converted into
Restricted Common Shares shall be paid to the Participant, in cash, on December 31, 2010, provided
the Participant is then employed by the Trust, the Company or any participating employer, as
applicable.



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Termination of Employment Prior to Conclusion of Performance Period




     1. Termination for Cause or Voluntary by the Participant



     If the employment of a Participant is terminated by the Trust, the Company or any
participating employer for “Cause”1 or by voluntary action of the Participant prior to the
conclusion of the Performance Period, the Participant shall forfeit all of his or her Units subject
to the Performance Award, as well as all accumulated dividend equivalents, under the Plan at the
time of such Participant’s termination of employment and shall not be entitled to any future
conversion of such Units to Common Shares or Restricted Common Shares or cash payment for the
dividend equivalents.



     2. Termination Without Cause, Death or Permanent Disability



     If the employment of a Participant is terminated by the Trust, the Company or any
participating employer without Cause or by the Trust, the Company or any participating employer
because of death or “Permanent Disability”2 prior to the conclusion of the Performance
Period, the Participant’s Units subject to the Performance Award shall be converted on a pro rata
basis, and the corresponding dividend equivalents shall be paid, as follows:



	 	 	 
	Termination Date	 	Percentage of Award Convertible
	If the termination occurs on or
before December 31, 2007

	 	Up to 33.3% of cumulative opportunity
	 
	 	 
	If the termination occurs after
December 31, 2007 and on or before
December 31, 2008

	 	Up to 66.7% of cumulative opportunity
	 
	 	 
	If the termination occurs after
December 31, 2008 and on or before
December 31, 2009

	 	Up to 100% of cumulative opportunity





The Committee, in its sole discretion, using the Participant’s termination date as the last day of
the Performance Period and measuring the Trust’s actual achievement of each of the Plan performance
metrics through the termination date on a pro rata basis (as set forth in the table above), shall
determine the number of Convertible Units, if any, for the






 




			
	1	 	“Cause” means any of the following: (i) willful refusal by the
participant to follow lawful directives of the Board; (ii) failure to
adhere to the Trust’s, the Company’s or any participating employer’s
reasonable and customary guidelines of employment or reasonable and
customary corporate governance guidelines or policies, including without
limitation the code of business ethics adopted by the Board; (iii) the
participant’s conviction of, or plea of guilty or nolo contendere to, a
felony or of any crime involving moral turpitude, fraud or embezzlement;
(iv) gross negligence or willful misconduct of the participant resulting
in material harm or loss to the Trust, the Company or any participating
employer or material damage to the reputation of the Trust, the Company or
any participating employer; (v) material breach by the participant of any
one or more of the covenants contained in the participant’s employment
agreement; or (vi) violation of the participant’s fiduciary duties to the
Trust, the Company or any participating employer.
	 
	2	 	“Permanent Disability” shall have the same meaning as under the
Trust’s, the Company’s or a participating employer’s long-term disability plan,
in which the participant is participating at the time of such Permanent
Disability.




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Participant using the same formula as if
the determination was done at the end of the Performance Period, except making adjustments to
reflect the pro ration. Fractional Units will be rounded up to the next whole Unit. The
Participant’s Convertible Units shall be converted entirely to Common Shares, and dividend
equivalents converted to cash, within 60 days following the Participant’s termination of employment
without Cause, or due to death or Permanent Disability, as applicable. Any Units not converted to
Convertible Units, and corresponding dividend equivalents, shall be forfeited and the Participant
(or the Participant’s beneficiary) shall not be eligible for any future Convertible Units or
payment of the corresponding dividend equivalents.




Termination of Employment After Conclusion of the Performance Period




     1. Termination for Cause or Voluntary by the Participant



     If the employment of a Participant is terminated by the Trust, the Company or any
participating employer for Cause or by voluntary action of the Participant after the conclusion of
the Performance Period, all unvested Restricted Common Shares and credited dividend equivalents and
accrued dividends thereon shall be forfeited.



     2. Termination Without Cause, Death or Permanent Disability



     If the employment of a Participant is terminated by the Trust, the Company or any
participating employer without Cause or by the Trust, the Company or any participating employer
because of death or Permanent Disability after the conclusion of the Performance Period, all earned
but unvested Restricted Common Shares and the credited dividend equivalents and accrued dividends
thereon shall become vested and paid, respectively, at the time of the Participant’s termination of
employment.



Change of Control of Trust




     If a “Change of Control”3 of the Trust occurs before the conclusion of the Performance
Period, the Participants’ Units shall be converted to Convertible Units on a pro rata basis up to
the amounts set forth in the table below using the same formula as if the determination was done at
the end of the Performance Period, except making adjustments to reflect the pro ration. Such
Units, if any, to be converted as determined by the Committee in its discretion using the Change of
Control date as the last day of the Performance Period and measuring (i) the Trust’s actual
achievement of absolute shareholder return through such date and (ii) an assumed “high/maximum”
level of achievement for each of the strategic metrics, shall be converted to Common Shares as of





 




			
	3	 	For purposes of the Plan, “Change of Control” will be deemed to
have taken place upon the occurrence of any of the following events: (i) any
person, entity or affiliated group, excluding the Trust or any employee benefit
plan of the Trust, acquiring more than 50% of the then outstanding voting
shares of the Trust; (ii) the consummation of any merger or consolidation of
the Trust into another company, such that the holders of the voting shares of
the Trust immediately prior to such merger or consolidation is less than 50% of
the voting power of the securities of the surviving company or the parent of
such surviving company; (iii) the complete liquidation of the Trust or the sale
or disposition of all or substantially all of the Trust’s assets, such that
after the transaction, the holders of the voting shares of the Trust
immediately prior to the transaction is less than 50% of the voting securities
of the acquiror or the parent of the acquiror; or (iv) a majority of the Board
votes in favor of a decision that a Change of Control has occurred.




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the date of the Change of Control and shall be fully vested upon such conversion and the
corresponding dividend equivalents shall be paid in cash as of the date of the Change of Control.
Fractional Units will be rounded up to the next whole Unit.




	 	 	 
	Change of Control Date	 	Percentage of Award Convertible
	If the Change of Control occurs on or
before March 31, 2008

	 	Up to 40% of cumulative opportunity
	 
	 	 
	If the Change of Control occurs after
March 31, 2008 and on or before
December 31, 2008

	 	Up to 70% of cumulative opportunity
	 
	 	 
	If the Change of Control occurs after
December 31, 2008 and on or before
December 31, 2009

	 	Up to 100% of cumulative opportunity






     If a Change of Control of the Trust occurs after the conclusion of the Performance Period, any
earned but unvested Restricted Common Shares shall vest and all credited dividend equivalents and
accrued dividends thereon shall be paid.



New Plan Participants




     At the discretion of the Committee, new participants may be added to the Plan from time to
time with such pro rata awards as the CEO shall recommend and the Committee shall approve.



Common Shares Subject to the Equity Incentive Plan




     All Units issued under the Plan, and the Common Shares and Restricted Common Shares for which
such Units are converted, as well as dividend equivalents, shall be issued from the American
Financial Realty Trust 2002 Equity Incentive Plan, as amended from time to time or such other
equity incentive plan as determined by the Committee, in its sole discretion (the “Equity
Incentive Plan”). The provisions of the Equity Incentive Plan are hereby incorporated by
reference as set forth herein with respect to the Units, Common Shares, Restricted Common Shares,
and dividend equivalents issued under the Plan.



Administration




     The Board or the Committee may terminate or amend the Plan at any time; provided, that no
termination of the Plan may impact outstanding awards and no amendment may be made to the Plan or
an outstanding award which would be have a materially adverse effect to the Participant without the
Participant’s consent, except as necessary to comply with applicable law.



     All decisions and determinations by the Committee shall be final, conclusive and binding on
the Trust, the Participants, and any other persons having or claiming an interest hereunder. All
awards under the Plan shall be granted conditional upon the Participant’s acknowledgement, by
continuing in employment with the Trust, the



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Company or such participating employer, as applicable,
that all decisions and determinations of the Committee shall be final and binding on the
Participant, his or her beneficiaries and any other person having or claiming an interest in such
awards.




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