EX-10.5



 





Exhibit 10.5




STOCK OPTION AGREEMENT




(Non-Qualified Stock Option Grant to Executive Officers)




     THIS AGREEMENT is made as of                     , by and between DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation (the “Company”), and                     , an individual (the
“Holder”).



W I T N E S S E T H:




     WHEREAS, the Company desires to provide the Holder with an option to purchase one
                     (___) Common Shares, without par value, of the Company (“Shares”), pursuant
to the Company’s 2004 Equity-Based Award Plan (the “Plan”) (terms not defined in this Agreement
will have the meaning set forth in the Plan); and



     WHEREAS, the Holder desires to accept such option.



     NOW, THEREFORE, in consideration of the mutual covenants herein set forth, the parties hereto
hereby agree as follows:



     1. Grant of Option. The Company does hereby irrevocably grant to the Holder, and the
Holder does hereby accept, the right and option (the “Option”) to purchase, at the option of the
Holder,                      (___) Shares at the exercise price per Share of $                     and upon and
subject to the other terms and conditions hereof and the Plan.



     2. Term of the Option; Vesting. The Option is exercisable, in whole or in part, once
vested, in accordance with the following schedule. If the Holder is then employed by the Company,
the Option shall vest as follows:



Date                    No. of Shares Vesting



Shares for which the Option has become exercisable shall be referred to herein as “Vested Shares,”
and Shares for which the Option has not become exercisable shall be referred to herein as “Unvested
Shares.” The Option shall terminate on the tenth anniversary of the date hereof and must be
exercised, if at all and to the extent exercisable, on or before such date and shall not thereafter
be exercisable, notwithstanding anything herein to the contrary. Notwithstanding anything
contained herein to the contrary, it shall be a condition to the Holder’s right to exercise the
Option with respect to any Vested Shares that there shall have been filed with the Securities and
Exchange Commission an effective registration statement on Form S-8 (or such other form as the
Company shall deem necessary) with respect to the Shares to be received upon exercise.




     3. Exercise. Subject to the other terms and conditions hereof, the Option shall be
exercisable from time to time by written notice to the Company (in the form required by the
Company) which shall:



 









 






	 	(a)	 	state that the Option is thereby being exercised, the number of
Shares with respect to which the Option is being exercised, each person in
whose name any certificates for the Shares should be registered and such
person’s address and social security number;
	 
	 	(b)	 	be signed by the person or persons entitled to exercise the
Option and, if the Option is being exercised by anyone other than the
Holder, be accompanied by proof satisfactory to counsel for the Company of
the right of such person or persons to exercise the Option under the Plan
and all applicable laws and regulations; and
	 
	 	(c)	 	be accompanied by such representations, warranties or agreements
with respect to the investment intent of such person or persons exercising
the Option as the Company may reasonably request, in form and substance
satisfactory to counsel for the Company.





     As conditions to the exercise of the Option and the obligation of the Company to issue Shares
upon the exercise thereof, the proposed recipient of the Shares shall make any representation or
warranty to comply with any applicable law or regulation or to confirm any factual matters
reasonably requested by the Company or its counsel.



     Upon exercise of the Option and the satisfaction of all conditions thereto, the Company shall
deliver a certificate or certificates for Shares to the specified person or persons at the
specified time upon receipt of the aggregate exercise price for such Shares by any method of
payment authorized by the Plan.



     4. Termination of Option. Upon termination of the Holder’s employment with the
Company, the Option will be governed as follows:



     (a) Termination by Death. If the Holder’s employment with the Company or any Subsidiary or
Affiliate terminates by reason of death, the Option shall become immediately and automatically
vested and exercisable. If termination of the Holder’s employment is due to death, then the Option
may thereafter be exercised by the estate of the Holder (acting through its fiduciary) at any time
after the date of the Holder’s death (or as the Committee may specify after grant).
Notwithstanding the foregoing, in no event will the Option be exercisable after the tenth
anniversary of the date hereof.



     (b) Termination by Reason of Disability. If the Holder’s employment with the Company or any
Subsidiary or Affiliate terminates by reason of Disability, the Option shall become immediately and
automatically vested and exercisable. If termination of the Holder’s employment is due to
Disability, then the Option may thereafter be exercised by the Holder or by the Holder’s duly
authorized legal representative if the Holder is unable to exercise the Option as a result of the
Holder’s Disability, at any time after the date of such termination of employment (or such other
period as the Committee may specify after grant). If the Holder dies before the Option is
exercised, any unexercised Option held by the Holder shall thereafter be exercisable by the estate
of the Holder (acting through its fiduciary) at any time after the date of the Holder’s death (or
such other period as the Committee may specify after grant). Notwithstanding the foregoing, in no
event will the Option be exercisable after the tenth anniversary of the date hereof.



     (c) Termination for Retirement. If the Holder’s employment with the Company or any Subsidiary
or Affiliate terminates by reason of Retirement, the Option shall become immediately and
automatically vested and exercisable. If termination of the Holder’s employment is due to
Retirement, then the Option may thereafter be exercised by the Holder at any time after the date of
such Retirement(or



 









 







such other period as the Committee may specify after grant). If the Holder is unable to exercise
the Option as a result of the Holder’s Disability, then the Option may thereafter be exercised by
the Holder’s duly authorized legal representative, at any time after the date of such Disability
(or such other period as the Committee may specify after grant). If the Holder dies before the
Option is exercised, any unexercised Option held by the Holder shall thereafter be exercisable by
the estate of the Holder (acting through its fiduciary) at any time after the date of the Holder’s
death (or such other period as the Committee may specify after grant). Notwithstanding the
foregoing, in no event will the Option be exercisable after the tenth anniversary of the date
hereof. “Retirement” means retirement from active employment with the Company, a Subsidiary or
Affiliate at the earlier to occur of: (i) a participant attaining the age of 55, or (ii) a
participant attaining the age of 50 and accruing 15 years of credited service for the Company, a
Subsidiary or Affiliate.



     (d) Termination for Cause. If the Holder’s employment with the Company or any Subsidiary or
Affiliate terminates for Cause, the Option will be governed by Section 5(b) of the Plan.



     (e) Other Termination. Unless otherwise determined by the Committee after the time of
granting the Option, if the Holder’s employment with the Company or any Subsidiary or Affiliate
terminates for any reason other than death, Disability, Retirement, or for Cause, any Vested Shares
at the time of termination must be exercised by the Holder within three (3) months after the date
the Holder’s employment terminates. Notwithstanding the foregoing, in no event will the Option be
exercisable after the tenth anniversary of the date hereof. Unless otherwise determined by the
Committee, any Unvested Shares under the Option shall be forfeited upon termination.



     (f) Leave of Absence. If the Holder is granted a leave of absence by the Company or any
Subsidiary or Affiliate, his or her employment will not be considered terminated, and he or she
will continue to be deemed an employee of the Company or Subsidiary or Affiliate during such leave
of absence or any exension thereof granted by the Company, Subsidiary or Affiliate for purposes of
the Plan.



     5. Transferability. The Holder may transfer the Option, during his or her lifetime
(i) to one or more members of such Holder’s family, (ii) to one or more trusts for the benefit of
one or more of such Holder’s family, (iii) to a partnership or partnerships of members of such
Holder’s family, or (iv) to a charitable organization as defined in Section 501(c)(3) of the Code,
provided that no consideration is paid for the transfer and that the transfer would not result in
the loss of any exemption under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, with
respect to any Option. The Option and the Holder’s rights therein are also transferable by will or
the laws of descent and distribution or pursuant to a qualified domestic relations order (as
defined in the Internal Revenue Code or the Employment Reitrement Income Security Act of 1974, as
amended). The transferee of any Option will be subject to all restrictions, terms and conditions
applicable to the Option prior to its transfer.



     6. Taxes. The Holder hereby agrees to pay to the Company, in accordance with the
terms of the Plan, any federal, state or local taxes of any kind required by law to be withheld and
remitted by the Company with respect to an exercise of the Option. The Holder may satisfy such tax
obligation, in whole or in part, by (i) electing to have the Company withhold a portion of the
Shares otherwise to be delivered upon exercise of (or the lapse of restrictions relating to) the
Option with a Fair Market Value equal to the amount of such taxes, or (ii) delivering to the
Company Shares other than Shares issuable upon exercise of (or the lapse of restrictions relating
to) the Option with a Fair Market Value equal to the amount of such taxes. The election, if any,
must be made on or before the date that the amount of tax to be withheld is determined. If the
Holder does not make such payment to the Company, the Company shall have the right to withhold from
any payment of any kind otherwise due to the Holder from the Company, any federal, state or local
taxes of any kind required by law to be withheld with respect to an exercise of the



 









 







Option or the Shares which are the subject of such Option.



     7. Deferral. If the Company has adopted a deferred compensation plan with respect to
equity-based awards, the Holder may, in his or her sole discretion, elect to participate under that
deferral plan.



     8. Subject to the Plan. This Agreement is made and the Option evidenced hereby is
granted under and pursuant to, and they are expressly made subject to all of the terms and
conditions of, the Plan, notwithstanding anything herein to the contrary. The Holder hereby
acknowledges receipt of a copy of the Plan and that the Holder has read and understands the terms
and conditions of the Plan.



     9. Intent. The Option is intended to be treated as a Non-Qualified Stock Option and
not as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code.
The Option shall be construed and exercised consistent with such intention.



     10. Securities Law Compliance.



     (a) Notwithstanding any provision of this Agreement to the contrary, the Option shall not be
exercisable unless, at the time the Holder attempts to exercise the Option, in the opinion of
counsel for the Company, all applicable securities laws, rules and regulations have been complied
with. The Holder agrees that the Company may impose such restrictions on the Shares as are deemed
advisable by the Company, including, without limitation, restrictions relating to listing or
trading requirements. The Holder further agrees that certificates representing the Shares may bear
such legends and statements as the Company shall deem appropriate or advisable to assure, among
other things, compliance with applicable securities laws, rules and regulations.



     (b) The Holder agrees that any Shares which the Holder may acquire by virtue of the Option may
not be transferred, sold, assigned, pledged, hypothecated or otherwise disposed of by the Holder
unless (i) a registration statement or post-effective amendment to a registration statement under
the Securities Act of 1933, as amended, with respect to such Shares has become effective so as to
permit the sale or other disposition of such Shares by the Holder, or (ii) there is presented to
the Company an opinion of counsel satisfactory to the Company to the effect that the sale or other
proposed disposition of such Shares by the Holder may lawfully be made otherwise than pursuant to
an effective registration statement or post-effective amendment to a registration statement
relating to such Shares under the Securities Act of 1933, as amended.



     11. Rights of the Holder. The granting of the Option shall in and of itself not
confer any right on the Holder to continue in the employ of the Company and shall not interfere in
any way with the right of the Company to terminate the Holder’s employment at any time, subject to
the terms of any employment agreement between the Company and the Holder. The Holder shall have no
dividend, voting or other rights of a stockholder with respect to the Shares which are subject to
the Option prior to the purchase of such Shares upon exercise of the Option and the execution and
delivery of all other documents and instruments deemed necessary or desirable by the Company.



     12. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio, except to the extent otherwise governed by Federal law.



 









 





     IN WITNESS WHEREOF, the parties have subscribed their names hereto as of the date first above
written.



	 	 	 	 	 	 	 
	 	 	DEVELOPERS DIVERSIFIED REALTY	 	 
	 	 	CORPORATION, an Ohio corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 	 	Holder’s Signature:	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 	 	Holder’s Social Security Number