exv10w03



 



Exhibit
10.03




Description
of the Amendment to the Series A Out-Performance Program






     
The Series A Out-Performance Program of United Dominion Realty Trust, Inc. (the “Company”), was approved by the Company’s
stockholders at its 2001 Annual Meeting of Shareholders. The Series A Out-Performance Program was designed to provide
participants with the possibility of substantial returns on
their investment if the total return on the Company’s common stock
exceeded targeted levels, while putting the participants’
investment at risk if those levels were not exceeded. The
Series A Out-Performance Partnership Shares, referred to herein
as the “Series A OPPSs,” vested in June 2003.




     
The Series A Out-Performance Program, as approved by the
Company’s stockholders in 2001, permitted individuals to transfer
Series A OPPSs only to a family member or a family-owned
entity or in the event of death or disability. These
restrictions on transfer provide limited liquidity for
the holders of interests in the Series A Out-Performance
Program and they do not allow such holders to tender their Series A OPPSs as consideration for their investment in a
subsequent out-performance program. Participating in an out-performance program can involve a
significant upfront cash investment by a participant, which many
participants may not have and cannot fund out of existing assets
or without borrowing or without selling the participant’s
existing shares of the Company’s common stock. The Company believes that requiring
participants to pay cash upfront as the only means of
participating in an out-performance program has limited the
attractiveness and participation by some of the Company’s executives and
other key employees in subsequent out-performance programs.
At the Company’s Annual Meeting of Stockholders held on
May 3, 2005 (the “Meeting”), the Company’s stockholders
approved an amendment to the Series A Out-Performance Program that was designed to address this concern. The amendment to the Series
A Out-Performance Program, approved by the Company’s
stockholders at the Meeting, allows the participants to sell the Series A OPPSs to the
Company or to exchange the Series A OPPSs for interests in
subsequent out-performance programs, with the prior written
consent of the board of managers of UDR Out-Performance I,
LLC. The value of the interests in the Series A Out-Performance
Program that are exchanged for interests in a subsequent
out-performance program will be determined based on the fair
market value at the time as determined by an independent
valuation expert. UDR Out-Performance I, LLC is a limited liability company owned
by members of the Company’s senior management and other key employees
whose current board of managers is comprised of two of the
Company’s independent directors and two members of the
Company’s senior management. Amending the Series A Out-Performance Program to allow
participants to sell Series A OPPSs to the Company or
to exchange Series A OPPSs for interests in subsequent
out-performance programs will allow the Series A
participants to participate in subsequent out-performance
programs, such as the New Out-Performance Program that was also
approved by the Company’s stockholders at the Meeting, by tendering
the Series A OPPSs, instead of cash, as consideration for
their investment in the subsequent out-performance program.





     A
description of the Series A Out-Performance Program is attached as
Exhibit 10(xviii) to the Company’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001 (Commission File No.
1-10524).