Exhibit 10.5


 


PENNYMAC MORTGAGE INVESTMENT TRUST


 


2009 EQUITY INCENTIVE PLAN


 


Section 1.               Purpose; Types of Awards;
Construction.


 


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


 


Section 2.               Definitions.


 


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


 


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


 


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


 


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


 


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


 


(e)           “Change in Control” means the
happening of any of the following:


 


(i)            any “person,”
including a “group” (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act, but excluding the Trust, any entity controlling, controlled
by or under common control with the Trust, any trustee, fiduciary or other
person or entity holding securities under any employee benefit plan or trust of
the Trust or any such entity, and with respect to any particular Participant,
such Participant and any “group” (as such term is used in Section 13(d)(3) of
the Exchange Act) of which such Participant is a member), is or becomes
the “beneficial owner” (as defined in Rule 13(d)(3) under the
Exchange Act), directly or indirectly, of shares of the Trust representing 35%
or more of either (A) the combined voting power of the Trust’s then
outstanding securities or (B) the then outstanding Shares (other than as a
result of an acquisition of securities directly from the Trust); or


 

















 


(ii)           any consolidation
or merger of the Trust where the shareholders of the Trust immediately prior to
the consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, shares representing in the aggregate 50%
or more of the combined voting power of the securities of the surviving or
resulting entity in the consolidation or merger (or of its ultimate parent
entity, if any); or


 


(iii)          there shall occur (A) any
sale, lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of
all or substantially all of the assets of the Trust, other than a sale or
transfer by the Trust of all or substantially all of the Trust’s assets to an
entity at least 50% of the combined voting power of the securities of which are
owned by “persons” (as defined above) in substantially the same proportion
as their ownership of the Trust immediately prior to such sale or transfer or (B) the
approval by shareholders of the Trust of any plan or proposal for the
liquidation or dissolution of the Trust; or


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 3.               Administration.


 


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


 


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


 


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


 


Section 4.               Eligibility.


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 6.               Terms of Awards.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 7.              Automatic Grant
of Awards to Independent Trustees


 


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


 


(b)           Non-Transferability;
Book Accounts.


 


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


 


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


 


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


 


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


 


Section 8.              Acceleration of
Awards.


 


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


 


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


 


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


 


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


 


Section 9.              General Provisions.


 


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


 


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


 


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


 


 


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


 


(d)           Effective Date;
Amendment and Termination.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(j)            Regulations and Other
Approvals.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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