Exhibit 10.1


 


 


SL GREEN REALTY CORP.


AMENDED AND RESTATED 2005 STOCK OPTION AND
INCENTIVE  PLAN


 


















TABLE OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  2.

  	
   

  	
  EFFECTIVE DATE AND
  TERMINATION OF PLAN

  	
   

  	
  4

  
	
  3.

  	
   

  	
  ADMINISTRATION OF PLAN

  	
   

  	
  5

  
	
  4.

  	
   

  	
  SHARES AND UNITS
  SUBJECT TO THE PLAN

  	
   

  	
  6

  
	
  5.

  	
   

  	
  PROVISIONS APPLICABLE
  TO STOCK OPTIONS

  	
   

  	
  7

  
	
  6.

  	
   

  	
  PROVISIONS APPLICABLE
  TO RESTRICTED STOCK

  	
   

  	
  10

  
	
  7.

  	
   

  	
  PROVISIONS APPLICABLE
  TO PHANTOM SHARES

  	
   

  	
  12

  
	
  8.

  	
   

  	
  PROVISIONS APPLICABLE
  TO DIVIDEND EQUIVALENT RIGHTS

  	
   

  	
  14

  
	
  9.

  	
   

  	
  OTHER EQUITY-BASED
  AWARDS

  	
   

  	
  16

  
	
  10.

  	
   

  	
  PERFORMANCE GOALS

  	
   

  	
  16

  
	
  11.

  	
   

  	
  TAX WITHHOLDING

  	
   

  	
  16

  
	
  12.

  	
   

  	
  REGULATIONS AND
  APPROVALS

  	
   

  	
  17

  
	
  13.

  	
   

  	
  INTERPRETATION AND
  AMENDMENTS; OTHER RULES

  	
   

  	
  18

  
	
  14.

  	
   

  	
  CHANGES IN CAPITAL
  STRUCTURE

  	
   

  	
  18

  
	
  15.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  20

  
	
  EXHIBIT A PERFORMANCE
  GOALS

  	
   

  	
  22

  
	
  EXHIBIT B PERFORMANCE
  GOALS

  	
   

  	
  23

  



 



                 i















SL GREEN REALTY CORP.


AMENDED AND RESTATED

2005 STOCK OPTION AND INCENTIVE PLAN


SL Green Realty Corp., a
Maryland corporation, wishes to attract and retain qualified key employees,
Directors, officers, advisors, consultants and other personnel and encourage
them to increase their efforts to make the Company’s business more successful
whether directly or through its Subsidiaries or other affiliates.  In furtherance thereof, the SL Green Realty
Corp. Amended and Restated 2005 Stock Option and Incentive Plan is designed to
provide equity-based incentives to certain Eligible Persons.  Awards under the Plan may be made to Eligible
Persons in the form of Options, Restricted Stock, Phantom Shares, Dividend
Equivalent Rights or other forms of equity-based compensation.


1. DEFINITIONS.


Whenever used herein, the following terms shall have
the meanings set forth below:


“Annual Rate” means the
number of Shares subject to Awards granted in a single year divided by the
number of Shares of the Company’s outstanding Common Stock at the end of such
year.


“Award,” except where
referring to a particular category of grant under the Plan, shall include
Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock, Phantom
Shares, Dividend Equivalent Rights and other equity-based Awards as
contemplated herein.


“Award Agreement” means a
written agreement in a form approved by the Committee to be entered into
between the Company and the Participant as provided in Section 3.  An Award Agreement may be, without limitation,
an employment or other similar agreement containing provisions governing grants
hereunder, if approved by the Committee for use under the Plan.


“Board” means the Board of Directors of the Company.


“Cause” means, unless
otherwise provided in the Participant’s Award Agreement, (i) engaging in
(A) willful or gross misconduct or (B) willful or gross neglect; (ii)
repeatedly failing to adhere to the directions of superiors or the Board or the
written policies and practices of the Company or its Subsidiaries or its
affiliates; (iii) the commission of a felony or a crime of moral turpitude,
dishonesty, breach of trust or unethical business conduct, or any crime
involving the Company or its Subsidiaries, or any affiliate thereof; (iv)
fraud, misappropriation or embezzlement; (v) any illegal act detrimental to the
Company its Subsidiaries or any affiliate thereof; (vi) repeated failure to
devote substantially all of the Participant’s business time and efforts to the
Company or its Subsidiaries, or any affiliate thereof, if required by the
Participant’s employment agreement; or (vii) the Participant’s failure  adequately and competently to perform his
duties after receiving notice from the Company or its Subsidiaries, or any
affiliate thereof specifically identifying the manner in which the Participant
has failed to perform; provided, however, that, if at any particular time the
Participant is subject to an effective employment agreement or consulting
agreement with the Company, then, in lieu of the foregoing definition, “Cause”
shall at that time have such meaning as may be specified in such employment
agreement.


“Change in Control”
means:













 


(i)             any “person,” including a “group”
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act,
together with all “affiliates” and “associates” (as such terms are defined in
Rule 12b-2 under the Exchange Act) of such person, shall become 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 25% or more of either
(A) the combined voting power of the Company’s then outstanding securities
having the right to vote in an election of the Board (“Voting Securities”) or
(B) the then outstanding shares of all classes of stock of the Company (in
either such case other than as a result of the acquisition of securities
directly from the Company); or


(ii)           the members of the Board at the
beginning of any consecutive 24-calendar-month period commencing on or after
the initial effective date of the Plan (the “Incumbent Directors”) cease for
any reason including without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a majority of
the Board; provided that any person becoming a director of the Company whose
election or nomination was approved by a vote of at least a majority of the
members of the Board then still in office who were members of the Board at the
beginning of such 24-calendar-month period, shall, for purposes hereof, be
considered an Incumbent Director; or


(iii)          the shareholders of the Company shall
approve (A) any consolidation or merger of the Company or any subsidiary where
the shareholders of the Company, 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 at least 50% of the voting
shares of the corporation issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if any), (B) 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 Company or (C) any plan or proposal for the
liquidation or dissolution of the Company.


Notwithstanding the
foregoing clause (i), an event described in clause (i) shall not be a Change in
Control if such event occurs solely as the result of an acquisition of
securities by the Company which, by reducing the number of shares of stock or
other Voting Securities outstanding, increases (x) the proportionate number of
shares of stock of the Company beneficially owned by any “person” (as defined
above) to 25% or more of the shares of stock then outstanding or (y) the
proportionate voting power represented by the Voting Securities beneficially
owned by any “person” (as defined above) to 25% or more of the combined voting
power of all then outstanding Voting Securities; provided, however, that if any
“person” referred to in clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional stock of the Company or other
Voting Securities (other than pursuant to a share split, stock dividend, or
similar transaction), then a Change in Control shall be deemed to have occurred
for purposes of the foregoing clause (i).


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
regard of vesting without an acceleration of distribution) without causing the
imposition of such 20% tax.


“Code” means the Internal Revenue Code of 1986, as
amended.



 2
 









 


“Committee” means the Compensation Committee of the
Board.


“Common Stock” means the
shares of common stock of the Company as constituted on the effective date of
the Plan, and any other shares into which such common stock shall thereafter be
changed by reason of a recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like.


“Company” means SL Green Realty Corp., a Maryland
corporation.


“Director” means a non-employee director of the
Company or its Subsidiaries.


“Disability” means,
unless otherwise provided by the Committee in the Participant’s Award Agreement,
a disability which renders the Participant incapable of performing all of his
or her material duties for a period of at least 150 consecutive or
non-consecutive days during any consecutive twelve-month period.  Notwithstanding the foregoing, no circumstances
or condition shall constitute a Disability 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 Disability to the
maximum extent possible (e.g., if applicable, in regard of vesting without an
acceleration of distribution) without causing the imposition of such 20% tax.


“Dividend Equivalent
Right” means a right awarded under Section 8 of the Plan to receive (or have
credited) the equivalent value of dividends paid on Common Stock.


“Eligible Person” means a
key employee, Director, officer, advisor, consultant or other personnel of the
Company and its Subsidiaries or other person expected to provide significant
services (of a type expressly approved by the Committee as covered services for
these purposes) to the Company or its Subsidiaries.


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


“Fair Market Value” per
Share as of a particular date means (i) if Shares are then listed on a national
stock exchange, the closing sales price per Share on the exchange for the last
preceding date on which there was a sale of Shares on such exchange, as
determined by the Committee, (ii) if Shares are not then listed on a national
stock exchange but are then traded on 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, as determined by the Committee, or (iii) if Shares are not then
listed on a national stock exchange or traded on an over-the-counter market,
such value as the Committee in its discretion may in good faith determine;
provided that, where the Shares are so listed or traded, the Committee may make
such discretionary determinations where the Shares have not been traded for 10
trading days.


“Full-Value Award” means
an Award other than an Option, Stock Appreciation Right or other Award that
does not deliver the full value at grant thereof of the underlying shares.


“Fungible Pool Unit” shall be the measuring unit used for purposes of
the Plan, as specified in Section 4, to determine the number of Shares which
may be subject to Awards hereunder, which shall consist of Shares in the
proportions (ranging from 0.7 to 3.0) as set forth in Section 4(a).


“Grantee” means an
Eligible Person granted Restricted Stock, Phantom Shares, Dividend Equivalent
Rights or such other equity-based Awards as may be granted pursuant to Section
9.



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“Incentive Stock Option”
means an “incentive stock option” within the meaning of Section 422(b) of the
Code.


“Non-Qualified Stock Option” means an Option which is
not an Incentive Stock Option.


“Option” means the right
to purchase, at a price and for the term fixed by the Committee in accordance
with the Plan, and subject to such other limitations and restrictions in the
Plan and the applicable Award Agreement, a number of Shares determined by the
Committee.


“Optionee” means an
Eligible Person to whom an Option is granted, or the Successors of the
Optionee, as the context so requires.


“Option Price” means the price per Share, determined
by the Board or the Committee, at which an Option may be exercised.


“Participant” means a Grantee or Optionee.


 “Phantom Share” means a right, pursuant to the
Plan, of the Grantee to payment of the Phantom Share Value.


“Phantom Share Value,”
per Phantom Share, means the Fair Market Value of a Share of Class A Common
Stock, or, if so provided by the Committee, such Fair Market Value to the
extent in excess of a base value established by the Committee at the time of
grant.


“Plan” means the Company’s
Amended and Restated 2005 Stock Option and Incentive Plan, as set forth herein
and as the same may from time to time be amended.


“Restricted Stock” means an award of Shares that are
subject to restrictions hereunder.


“Retirement” means,
unless otherwise provided by the Committee in the Participant’s Award
Agreement, the Termination of Service (other than for Cause) of a Participant
on or after the Participant’s attainment of age 65 or on or after the
Participant’s attainment of age 55 with five consecutive years of service with
the Company and or its Subsidiaries or its affiliates.


“Securities Act” means
the Securities Act of 1933, as amended.


“Settlement Date” means the date determined under
Section 7.4(c).


“Shares” means shares of Common Stock of the Company.


“Stock Appreciation Right” means the right to settle
an Option as provided for in Section 5.7.


“Subsidiary” means any
corporation (other than the Company) that is a “subsidiary corporation” with
respect to the Company under Section 424(f) of the Code.  In the event the Company becomes a subsidiary
of another company, the provisions hereof applicable to subsidiaries shall,
unless otherwise determined by the Committee, also be applicable to any company
that is a “parent corporation” with respect to the Company under Section 424(e)
of the Code.


“Successor of the
Optionee” means the legal representative of the estate of a deceased Optionee
or the person or persons who shall acquire the right to exercise an Option by
bequest or inheritance or by reason of the death of the Optionee.



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“Termination of Service”
means a Participant’s termination of employment or other service, as applicable,
with the Company and its Subsidiaries.


“Three-Year Average
Annual Rate” means the average of the Annual Rates (i) during the first three
calendar years following April 1, 2005 and (ii) for the first three calendar
years following April 1, 2007.


2. EFFECTIVE DATE AND TERMINATION OF PLAN.


The effective date of the
Plan is April 1, 2007.  The Plan shall
not become effective unless and until it is approved by the requisite
percentage of the holders of the Common Stock of the Company.  The Plan shall terminate on, and no Award
shall be granted hereunder on or after, the 10-year anniversary of the earlier
of the approval of the Plan by (i) the Board or (ii) the shareholders of the
Company; provided, however, that the Board may at any time prior to that date terminate
the Plan; and provided, further, that all Awards made under the Plan prior to a
Plan termination shall remain in effect until such Awards have been satisfied
or terminated in accordance with the terms and provisions of the Plan and the
applicable Award Agreement.


3. ADMINISTRATION OF PLAN.


(a)   The Plan shall be administered by the
Committee appointed by the Board. Unless otherwise determined by the Board, the
Committee, upon and after such time as it is covered in Section 16 of the
Exchange Act, shall consist of at least two individuals each of whom shall be a
“nonemployee director” as defined in Rule 16b-3 as promulgated by the
Securities and Exchange Commission (“Rule 16b-3”) under the Exchange Act and
shall, at such times as the Company is subject to Section 162(m) of the Code
(to the extent relief from the limitation of Section 162(m) of the Code is
sought with respect to Awards), qualify as “outside directors” for purposes of
Section 162(m) of the Code; provided that no action taken by the Committee
(including without limitation grants) shall be invalidated because any or all
of the members of the Committee fails to satisfy the foregoing requirements of
this sentence.  If and to the extent
applicable, no member of the Committee may act as to matters under the Plan
specifically relating to such member.  Notwithstanding the other foregoing provisions of
this Section 3(a), any Award under the Plan to a person who is a member of the
Committee shall be made and administered by the Board.  If no Committee is designated by the Board to
act for these purposes, the Board shall have the rights and responsibilities of
the Committee hereunder and under the Award Agreements.


(b)   Subject to the provisions of the Plan, the
Committee shall in its discretion (i) authorize the granting of Awards to
Eligible Persons; and (ii) determine the eligibility of Eligible Persons to
receive an Award, as well as determine the number of Shares to be covered under
any Award Agreement, considering the position and responsibilities of the
Eligible Persons, the nature and value to the Company of the Eligible Person’s
present and potential contribution to the success of the Company whether
directly or through its Subsidiaries and such other factors as the Committee
may deem relevant.


(c)   The Award Agreement shall contain such other
terms, provisions and conditions not inconsistent herewith as shall be
determined by the Committee.  In the
event that any Award Agreement or other agreement hereunder provides (without
regard to this sentence) for the obligation of the Company or any affiliate
thereof to purchase or repurchase Shares from a Participant or any other
person, then, notwithstanding the provisions of the Award Agreement or such
other agreement, such obligation shall not apply to the extent that the
purchase or repurchase would not be permitted under governing state law.  The Participant shall take whatever
additional actions and execute whatever additional documents the Committee may
in its reasonable judgment deem necessary or advisable in order to carry out or
effect



 5
 









one or more of the
obligations or restrictions imposed on the Participant pursuant to the express
provisions of the Plan and the Award Agreement.


(d)   The Committee may provide, in its discretion,
that (i) all stock issued hereunder be initially maintained in separate
brokerage account for the Participant at a brokerage firm selected by, and
pursuant to an arrangement with, the Company; and (ii) in the case of vested
Shares, the Participant may move such Shares to another brokerage account of
the Participant’s choosing or request that a stock certificate be issued and
delivered to him or her.


(e)   The Committee, in its discretion, may
delegate to the Chief Executive Officer of the Company all or part of the
Committee’s authority and duties with respect to awards, including, without
limitation, the granting of awards to individuals who are not subject to the
reporting and other provisions of Section 16 of the Act and who are not
and are not expected to be “covered employees” within the meaning of
Section 162(m) of the Code.  Any
such delegation by the Committee may, in the sole discretion of the Committee,
include a limitation as to the amount of awards that may be awarded during the
period of the delegation and may contain guidelines as to the determination of
the option exercise price, or price of other awards and the vesting
criteria.  The Committee may revoke or
amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Committee’s delegate that were consistent with the
terms of the Plan.


4. SHARES AND
UNITS SUBJECT TO THE PLAN.


(a)   Subject to
adjustments as provided in Section 14, the total number of Shares subject to
Awards granted under the Plan, in the aggregate, may not exceed 7,000,000 (the “Fungible
Pool Limit”).  Each Share issued or to be
issued in connection with Full-Value Awards that vest or are granted based on
the achievement of the performance goals set forth in Exhibit A shall be
counted against the Fungible Pool Limit as 2.0 Fungible Pool Units.  Each Share issued or to be issued in
connection with any other Full-Value Awards shall be counted against the
Fungible Pool Limit as 3.0 Fungible Pool Units. 
Options, Stock Appreciation Rights and other Awards that do not deliver
the full value at grant thereof of the underlying Shares and that expire 10
years from the date of grant shall be counted against the Fungible Pool Limit
as 1 Fungible Pool Unit.  Options, Stock
Appreciation Rights and other Awards that do not deliver the full value at
grant thereof of the underlying Shares and that expire five years from the date
of grant shall be counted against the Fungible Pool Limit as 0.7 of a Fungible
Pool Unit.  (For these purposes, the
number of Shares taken into account with respect to a Stock Appreciation Right
shall be the number of Shares underlying the Stock Appreciation Rights at grant
(i.e., not the final number of Shares delivered upon exercise of the Stock
Appreciation Rights).)  Shares that have
been granted as Restricted Stock or that have been reserved for distribution in
payment for Options, Phantom Shares or other equity-based Awards but are later
forfeited or for any other reason are not payable under the Plan may again be
made the subject of Awards under the Plan.


(b)   At the end of (i) the third calendar year
following April 1, 2005 and (ii) the third calendar year following April 1,
2007, the Three-Year Average Annual Rate, respectively, shall not exceed the
greater of (1) 2%, with respect to the third calendar year following April 1,
2005, or 2.23%, with respect to the third calendar year following April 1, 2007
or (2) the mean of the Company’s GICS peer group (collectively, the “Target
Rate”).  For purposes of calculating the
number of Shares granted in a year in connection with the limitation set forth
in the foregoing sentence, Shares underlying Full-Value Awards will be taken
into account as (i) 1.5 Shares if the Company’s annual Common Stock price
volatility is 53% or higher, (ii) two Shares if the Company’s annual Common
Stock price volatility is between 25% and 52%, and (iii) four Shares if the
Company’s annual Common Stock price volatility is less than 25%.  (For the avoidance of doubt, the Annual Rate
in any one year during such three-year 



 6
 









periods may exceed the
applicable Target Rate, provided that the Three-Year Average Annual Rate does
not exceed the applicable Target Rate.)


(c)   Shares subject to Dividend Equivalent Rights,
other than Dividend Equivalent Rights based directly on the dividends payable
with respect to Shares subject to Options or the dividends payable on a number
of Shares corresponding to the number of Phantom Shares awarded, shall be
subject to the limitation of Section 4.1(a). 
If any Phantom Shares, Dividend Equivalent Rights or other equity-based
Awards under Section 9 are paid out in cash, then, notwithstanding the first
sentence of Section 4.1(a) above (but subject to the second sentence thereof)
the underlying Shares may again be made the subject of Awards under the Plan.


(d)   The certificates for Shares issued hereunder
may include any legend which the Committee deems appropriate to reflect any
rights of first refusal or other restrictions on transfer hereunder or under
the Award Agreement, or as the Committee may otherwise deem appropriate.


(e)   No award may be granted under the Plan to any
person who, assuming exercise of all options and payment of all awards held by
such person, would own or be deemed to own more than 9.8% of the outstanding
shares of Common Stock.  Subject to
adjustments as provided in Section 14, no Eligible Person shall be granted
Awards (with Shares subject to Awards being counted, depending on the type of
Award, in the proportions ranging from 0.7 to 3.0, as described in Section
4(a)) in any one year covering more than 700,000 Shares, it being expressly
contemplated that Awards in exclusively one category (e.g., Options) can (but
need not) be used in the discretion of the Committee to reach the limitation
set forth in this sentence.


5. PROVISIONS APPLICABLE TO STOCK OPTIONS.


5.1   Grant of
Option.


Subject to the
other terms of the Plan, the Committee (or, as expressly permitted by Section
3, the Chief Executive Officer) shall, in its discretion as reflected by the
terms of the applicable Award Agreement: (i) determine and designate from time
to time those Eligible Persons to whom Options are to be granted and the number
of Shares to be optioned to each Eligible Person; (ii) determine whether to
grant Incentive Stock Options or to grant Non-Qualified Stock Options, or both
(to the extent that any Option does not qualify as an Incentive Stock Option,
it shall constitute a separate Non-Qualified Stock Option); provided that
Incentive Stock Options may only be granted to employees; (iii) determine the
time or times when and the manner and condition in which each Option shall be
exercisable and the duration of the exercise period; (iv) designate each Option
as one intended to be an Incentive Stock Option or as a Non-Qualified Stock
Option; and (v) determine or impose other conditions to the grant or exercise
of Options under the Plan as it may deem appropriate.


5.2   Option
Price.


The Option Price shall be
determined by the Committee on the date the Option is granted and reflected in
the Award Agreement, as the same may be amended from time to time.  The Option Price shall not be less than 100%
of the Fair Market Value of a Share on the day the Option is granted.  Any particular Award Agreement may provide
for different exercise prices for specified amounts of Shares subject to the
Option.


5.3   Period
of Option and Vesting.



 7
 









 


(a)   Unless earlier expired, forfeited or
otherwise terminated, each Option shall expire in its entirety upon the 10th
anniversary of the date of grant or shall have such other term (which may be
shorter, but not longer) as is set forth in the applicable Award Agreement
(except that, in the case of an individual described in Section 422(b)(6) of
the Code (relating to certain 10% owners) who is granted an Incentive Stock
Option, the term of such Option shall be no more than five years from the date
of grant).  The Option shall also expire,
be forfeited and terminate at such times and in such circumstances as otherwise
provided hereunder or under the Award Agreement.


(b)   Each Option, to the extent that the Optionee
has not had a Termination of Service and the Option has not otherwise lapsed,
expired, terminated or been forfeited, shall first become exercisable according
to the terms and conditions set forth in the Award Agreement, as determined by
the Committee at the time of grant. 
Unless otherwise provided in the Award Agreement, no Option (or portion
thereof) shall ever be exercisable if the Optionee has a Termination of Service
before the time at which such Option (or portion thereof) would otherwise have
become exercisable, and any Option that would otherwise become exercisable
after such Termination of Service shall not become exercisable and shall be
forfeited upon such termination. 
Notwithstanding the foregoing provisions of this Section 5.3(b), Options
exercisable pursuant to the schedule set forth by the Committee at the time of
grant may be fully or more rapidly exercisable or otherwise vested at any time
in the discretion of the Committee.  Upon
and after the death of an Optionee, such Optionee’s Options, if and to the
extent otherwise exercisable hereunder or under the applicable Award Agreement
after the Optionee’s death, may be exercised by the Successors of the Optionee.


5.4   Exercisability
Upon and After Termination of Optionee.


(a)   Subject to
provisions of the Award Agreement, in the event the Optionee has a Termination
of Service other than by the Company or its Subsidiaries for Cause, or other
than by reason of death, Retirement or Disability, no exercise of an Option may
occur after the expiration of the three-month period to follow the termination,
or if earlier, the expiration of the term of the Option as provided under
Section 5.3(a); provided that, if the Optionee should die after the
Termination of Service, such termination being for a reason other than Cause,
Disability or Retirement, but while the Option is still in effect, the Option
(if and to the extent otherwise exercisable by the Optionee at the time of
death) may be exercised until the earlier of (i) one year from the date of the
Termination of Service of the Optionee, or (ii) the date on which the term of
the Option expires in accordance with Section 5.3(a).


(b)   Subject to provisions of the Award Agreement,
in the event the Optionee has a Termination of Service on account of death or
Disability or Retirement, the Option (whether or not otherwise exercisable) may
be exercised until the earlier of (i) one year from the date of the Termination
of Service of the Optionee, or (ii) the date on which the term of the Option
expires in accordance with Section 5.3.


(c)   Notwithstanding any other provision hereof,
unless otherwise provided in the Award Agreement, if the Optionee has a
Termination of Service by the Company for Cause, the Optionee’s Options, to the
extent then unexercised, shall thereupon cease to be exercisable and shall be
forfeited forthwith.


5.5   Exercise
of Options.


(a)   Subject to vesting, restrictions on
exercisability and other restrictions provided for hereunder or otherwise
imposed in accordance herewith, an Option may be exercised, and payment in full
of the aggregate Option Price made, by an Optionee only by written notice (in
the form prescribed by the Committee) to the Company specifying the number of
Shares to be purchased.


 



 8















 


(b)   Without limiting the scope of the Committee’s
discretion hereunder, the Committee may impose such other restrictions on the
exercise of Incentive Stock Options (whether or not in the nature of the
foregoing restrictions) as it may deem necessary or appropriate.


5.6 Payment.


(a)   The aggregate Option Price shall be paid in
full upon the exercise of the Option. 
Payment must be made by one of the following methods:


(i)            a certified or bank cashier’s check
or wire transfer;


(ii)           subject to Section 12(e), the
proceeds of a Company loan program or third-party sale program or a notice
acceptable to the Committee given as consideration under such a program, in
each case if permitted by the Committee in its discretion, if such a program
has been established and the Optionee is eligible to participate therein;


(iii)          if approved by the Committee in its
discretion, Shares of previously owned Common Stock, which have been previously
owned for more than six months, having an aggregate Fair Market Value on the
date of exercise equal to the aggregate Option Price; or


(iv)          by any combination of such methods of
payment or any other method acceptable to the Committee in its discretion.


(b)   Except in the case of Options exercised by
certified or bank cashier’s check, the Committee may impose limitations and
prohibitions on the exercise of Options as it deems appropriate, including,
without limitation, any limitation or prohibition designed to avoid accounting
consequences which may result from the use of Common Stock as payment upon
exercise of an Option.


(c)   The Committee may provide that no Option may
be exercised with respect to any fractional Share.  Any fractional Shares resulting from an
Optionee’s exercise that is accepted by the Company shall in the discretion of
the Committee be paid in cash.


5.7  Stock Appreciation Rights.


The Committee, in
its discretion, may also permit (taking into account, without limitation, the
application of Section 409A of the Code, as
the Committee may deem appropriate) the Optionee to elect to exercise an
Option by receiving a combination of Shares and cash, or, in the discretion of
the Committee, either Shares or solely in cash, with an aggregate Fair Market
Value (or, to the extent of payment in cash, in an amount) equal to the excess
of the Fair Market Value of the Shares with respect to which the Option is
being exercised over the aggregate Option Price, as determined as of the day
the Option is exercised.


5.8  Exercise by Successors.


An Option may be
exercised, and payment in full of the aggregate Option Price made, by the
Successors of the Optionee only by written notice (in the form prescribed by
the Committee) to the Company specifying the number of Shares to be
purchased.  Such notice shall state that
the aggregate Option Price will be paid in full, or that the Option will be
exercised as otherwise provided hereunder, in the discretion of the Company or
the Committee, if and as applicable.



 9
 









 


5.9   Nontransferability of Option.


Each Option granted under
the Plan shall be nontransferable by the Optionee except by will or the laws of
descent and distribution of the state wherein the Optionee is domiciled at the
time of his death; provided, however, that the Committee may (but need not)
permit other transfers, where the Committee concludes that such transferability
(i) does not result in accelerated U.S. federal income taxation, (ii) does not
cause any Option intended to be an Incentive Stock Option to fail to be
described in Section 422(b) of the Code, and (iii) is otherwise appropriate and
desirable; and provided, further, that in no event may an Option be transferred
by the Optionee for consideration without shareholder approval.


5.10 Deferral.


Except as provided
in the Award Agreement, the Committee (taking into account, without limitation,
the possible application of Section 409A of the Code, as the Committee may deem appropriate) may establish a program
under which Participants will have Phantom Shares subject to Section 7 credited
upon their exercise of Options, rather than receiving Shares at that time.


5.11 Certain Incentive Stock Option Provisions.


(a)  The aggregate Fair Market
Value, determined as of the date an Option is granted, of the Common Stock for
which any Optionee may be awarded Incentive Stock Options which are first
exercisable by the Optionee during any calendar year under the Plan (or any
other stock option plan required to be taken into account under Section 422(d)
of the Code) shall not exceed $100,000.


(b)  If Shares acquired upon exercise of an
Incentive Stock Option are disposed of in a disqualifying disposition within
the meaning of Section 422 of the Code by an Optionee prior to the expiration
of either two years from the date of grant of such Option or one year from the
transfer of Shares to the Optionee pursuant to the exercise of such Option, or
in any other disqualifying disposition within the meaning of Section 422 of the
Code, such Optionee shall notify the Company in writing as soon as practicable
thereafter of the date and terms of such disposition and, if the Company (or
any affiliate thereof) thereupon has a tax-withholding obligation, shall pay to
the Company (or such affiliate) an amount equal to any withholding tax the
Company (or affiliate) is required to pay as a result of the disqualifying
disposition.


(c) The Option
Price with respect to each Incentive Stock Option shall not be less than 100%,
or 110% in the case of an individual described in Section 422(b)(6) of the Code
(relating to certain 10% owners), of the Fair Market Value of a Share on the
day the Option is granted.  In the case
of an individual described in Section 422(b)(6) of the Code who is granted an
Incentive Stock Option, the term of such Option shall be no more than five
years from the date of grant.


6. PROVISIONS
APPLICABLE TO RESTRICTED STOCK.


6.1   Grant of Restricted Stock.


(a)   In connection with the grant of Restricted
Stock, whether or not performance goals (as provided for under Section 10)
apply thereto, the Committee shall establish one or more vesting periods with
respect to the shares of Restricted Stock granted, the length of which shall be
determined in the discretion of the Committee. 
Subject to the provisions of this Section 6, the applicable Award
Agreement and the other provisions of the Plan, restrictions on Restricted
Stock shall lapse if the Grantee satisfies all applicable employment or other
service requirements through the end of the applicable vesting period.  Nothing in this Section 6 shall limit the
Committee’s authority, and the Committee is 



 10
 









 


expressly authorized, to grant
Shares which are fully vested upon grant (and for which there is no period of
forfeiture), and which are subject to the rules of this Section 6.


(b)   Subject to the other terms of the Plan, the
Committee may, in its discretion as reflected by the terms of the applicable
Award Agreement:  (i) authorize the
granting of Restricted Stock to Eligible Persons; (ii) provide a specified purchase price for the Restricted
Stock (whether or not the payment of a purchase price is required by any state
law applicable to the Company); (iii) determine the restrictions
applicable to Restricted Stock and (iv) determine or impose other conditions,
including any applicable performance goals, to the grant of Restricted Stock
under the Plan as it may deem appropriate.


6.2   Certificates.


(a)   Unless otherwise provided by the Committee,
each Grantee of Restricted Stock shall be issued a stock certificate in respect
of Shares of Restricted Stock awarded under the Plan.  Each such certificate shall be registered in
the name of the Grantee. Without limiting the generality of Section 4.1(c), the
certificates for Shares of Restricted Stock issued hereunder may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer hereunder or under the Award Agreement, or as the Committee may
otherwise deem appropriate, and, without limiting the generality of the
foregoing, shall bear a legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the following form:


The transferability of
this certificate and the shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) of the SL Green Realty Corp. 2005
Stock Option and Incentive Plan and an Award Agreement entered into between the
registered owner and SL Green Realty Corp. Copies of such Plan and Award
Agreement are on file in the offices of SL Green Realty Corp., at 420 Lexington
Avenue, New York, New York 10170.


(b)   The Committee may require that any stock
certificates evidencing such Shares be held in custody by the Company until the
restrictions hereunder shall have lapsed, and that, as a condition of any Award
of Restricted Stock, the Grantee shall have delivered to the Company a stock
power, endorsed in blank, relating to the stock covered by such Award.  If and when such restrictions so lapse, the
stock certificates shall be delivered by the Company to the Grantee or his or
her designee as provided in Section 6.3 (and
the stock power shall be so delivered or shall be discarded).


6.3   Restrictions and Conditions.


Unless otherwise
provided by the Committee, the Shares of Restricted Stock awarded pursuant to
the Plan shall be subject to the following restrictions and conditions:


(i)                              Subject to the
provisions of the Plan and the Award Agreements, during a period commencing
with the date of such Award and ending on the date the period of forfeiture
with respect to such Shares lapses, the Grantee shall not be permitted
voluntarily or involuntarily to sell, transfer, pledge, anticipate, alienate,
encumber or assign Shares of Restricted Stock awarded under the Plan (or have
such Shares attached or garnished). 
Subject to the provisions of the Award Agreements and clause (iii)
below, the period of forfeiture with respect to Shares granted hereunder shall
lapse as provided in the applicable Award Agreement.  Notwithstanding the foregoing, unless
otherwise expressly provided by the Committee, the period of forfeiture with
respect to such Shares shall only lapse as to whole Shares.



 11
 









 


(ii)                             Except as provided
in the foregoing clause (i), below in this clause (ii) or in Section 14, or as
otherwise provided in the applicable Award Agreement, the Grantee shall have,
in respect of the Shares of Restricted Stock, all of the rights of a
shareholder of the Company, including the right to vote the Shares and the
right to receive any cash dividends currently; provided, however that, if
provided in an Award Agreement, cash dividends on such Shares shall (A) be held
by the Company (unsegregated as a part of its general assets) until the period
of forfeiture lapses (and forfeited if the underlying Shares are forfeited),
and paid over to the Grantee (without interest) as soon as practicable after
such period lapses (if not forfeited), or (B) treated as may otherwise be
provided in an Award Agreement. 
Certificates for Shares (not subject to restrictions) shall be delivered
to the Grantee or his or her designee, at the request thereof, promptly after,
and only after, the period of forfeiture shall lapse without forfeiture in
respect of such Shares of Restricted Stock.


(iii)                            Except as otherwise
provided in the applicable Award Agreement, if the Grantee has a Termination of
Service by the Company and its Subsidiaries for Cause, or by the Grantee for
any reason, during the applicable period of forfeiture, then (A) all Shares
still subject to restriction shall thereupon, and with no further action, be
forfeited by the Grantee, and (B) in the
event the Grantee has paid a cash purchase price for the forfeited Shares, the
Company shall pay to the Grantee as soon as practicable (and in no event more
than 30 days) after such termination an amount equal to the lesser of (x) the
amount paid by the Grantee (if any) for such forfeited Restricted Stock as
contemplated by Section 6.1, and (y) the Fair Market Value on the date of
termination of the forfeited Restricted Stock.


7. PROVISIONS
APPLICABLE TO PHANTOM SHARES.


7.1   Grant of Phantom Shares.


Subject to the
other terms of the Plan, the Committee shall, in its discretion as reflected by
the terms of the applicable Award Agreement: 
(i) authorize the granting of Phantom Shares to Eligible Persons and
(ii) determine or impose other conditions to the grant of Phantom Shares under
the Plan as it may deem appropriate.


7.2   Term.


The Committee may
provide in an Award Agreement that any particular Phantom Share shall expire at
the end of a specified term.


7.3   Vesting.


Phantom Shares shall vest
as provided in the applicable Award Agreement.


7.4   Settlement of Phantom Shares.


(a)   Each vested and outstanding Phantom Share
shall be settled by the transfer to the Grantee of one Share; provided that the
Committee at the time of grant may provide that a Phantom Share may be settled
(i) in cash at the applicable Phantom Share Value or (ii) in cash or by
transfer of Shares as elected by the Grantee in accordance with procedures
established by the Committee (taking into
account, without limitation, Section 409A of the Code, as the Committee may
deem appropriate).



 12
 









 


(b)   Phantom Shares shall be settled with a
single-sum payment by the Company; provided that, with respect to Phantom
Shares of a Grantee which have a common Settlement Date, the Committee may
permit the Grantee to elect in accordance with procedures established by the
Committee (taking into account, without
limitation, Section 409A of the Code, as the Committee may deem appropriate) to
receive installment payments over a period not to exceed 10 years.


(c)      (i)      Unless
otherwise provided in the applicable Award Agreement, the “Settlement Date”
with respect to a Phantom Share is as soon as practicable after (but not later
than the first day of the month to follow) the date on which the Phantom Share
vests; provided that a Grantee may elect, in accordance with procedures to be
established by the Committee, that such Settlement Date will be deferred as
elected by the Grantee to as soon as practicable after (but not later than the
first day of the month to follow) the Grantee’s Termination of Service, or such
other time as may be permitted by the Committee.  Unless
otherwise determined by the Committee, elections under this Section 7.4(c)(i)
must, except as may otherwise be permitted under the rules applicable under
Section 409A of the Code, (A) be effective at least one year after they are made,
or, in the case of payments to commence at a specific time, be made at least
one year before the first scheduled payment and (B) defer the commencement of
distributions for at least five years.


(ii)       Notwithstanding Section 7.4(c)(i), the
Committee may provide that distributions of Phantom Shares can be elected at
any time in those cases in which the Phantom Share Value is determined by
reference to Fair Market Value to the extent in excess of a base value, rather
than by reference to unreduced Fair Market Value.


(iii)      Notwithstanding the foregoing, the
Settlement Date, if not earlier pursuant to this Section 7.4(c), is the date of
the Grantee’s death.


(d)   Notwithstanding the other provisions of this
Section 7, in the event of a Change in Control, the Settlement Date shall be
the date of such Change in Control and all amounts due with respect to Phantom
Shares to a Grantee hereunder shall be paid as soon as practicable (but in no
event more than 30 days) after such Change in Control, unless such Grantee elects
otherwise in accordance with procedures established by the Committee.


(e)   Notwithstanding any other provision of the
Plan, a Grantee may receive any amounts to be paid in installments as provided
in Section 7.4(b) or deferred by the Grantee as provided in Section 7.4(c) in
the event of an “Unforeseeable Emergency.” 
For these purposes, an “Unforeseeable Emergency,” as determined by the
Committee in its sole discretion, is a severe financial hardship to the Grantee
resulting from a sudden and unexpected illness or accident of the Grantee or “dependent,”
as defined in Section 152(a) of the Code, of the Grantee, loss of the Grantee’s
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Grantee.  The circumstances that will
constitute an Unforeseeable Emergency will depend upon the facts of each case,
but, in any case, payment may not be made to the extent that such hardship is or
may be relieved:


(i)            through reimbursement or
compensation by insurance or otherwise,


(ii)           by liquidation of the Grantee’s
assets, to the extent the liquidation of such assets would not itself cause
severe financial hardship, or


(iii)          by future cessation of the making of
additional deferrals under Section 7.4 (b) and (c).



 13
 









 


Without
limitation, the need to send a Grantee’s child to college or the desire to
purchase a home shall not constitute an Unforeseeable Emergency.  Distributions of amounts because of an
Unforeseeable Emergency shall be permitted to the extent reasonably needed to
satisfy the emergency need.


7.5   Other Phantom Share Provisions.


(a)   Rights to payments with respect to Phantom
Shares granted under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, garnishment, levy, execution, or other legal or equitable process,
either voluntary or involuntary; and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, attach or garnish, or levy or execute on
any right to payments or other benefits payable hereunder, shall be void.


(b)   A Grantee may designate in writing, on forms
to be prescribed by the Committee, a beneficiary or beneficiaries to receive
any payments payable after his or her death and may amend or revoke such
designation at any time.  If no
beneficiary designation is in effect at the time of a Grantee’s death, payments
hereunder shall be made to the Grantee’s estate.  If a Grantee with a vested Phantom Share
dies, such Phantom Share shall be settled and the Phantom Share Value in
respect of such Phantom Shares paid, and any payments deferred pursuant to an
election under Section 7.4(c) shall be accelerated and paid, as soon as
practicable (but no later than 60 days) after the date of death to such Grantee’s
beneficiary or estate, as applicable.


(c)   The Committee may establish a program under
which distributions with respect to Phantom Shares may be deferred for periods
in addition to those otherwise contemplated by foregoing provisions of this
Section 7.  Such program may include,
without limitation, provisions for the crediting of earnings and losses on
unpaid amounts, and, if permitted by the Committee, provisions under which
Participants may select from among hypothetical investment alternatives for
such deferred amounts in accordance with procedures established by the
Committee.


(d)   Notwithstanding any other provision of this
Section 7, any fractional Phantom Share will be paid out in cash at the Phantom
Share Value as of the Settlement Date.


(e)   No Phantom Share shall be construed to give
any Grantee any rights with respect to Shares or any ownership interest in the
Company.  Except as may be provided in
accordance with Section 8, no provision of the Plan shall be interpreted to
confer upon any Grantee any voting, dividend or derivative or other similar
rights with respect to any Phantom Share.


7.6   Claims Procedures.


(a)   To the extent that the Plan is determined by
the Committee to be subject to the Employee Retirement Income Security Act of
1974, as amended, the Grantee, or his beneficiary hereunder or authorized
representative, may file a claim for payments with respect to Phantom Shares
under the Plan by written communication to the Committee or its designee.  A claim is not considered filed until such
communication is actually received. 
Within 90 days (or, if special circumstances require an extension of
time for processing, 180 days, in which case notice of such special circumstances
should be provided within the initial 90-day period) after the filing of the
claim, the Committee will either:


(i)            approve the claim and take
appropriate steps for satisfaction of the claim; or


(ii)           if the claim is wholly or partially
denied, advise the claimant of such denial by furnishing to him a written
notice of such denial setting forth (A) the 



 14
 









 


specific reason or
reasons for the denial; (B) specific reference to pertinent provisions of the
Plan on which the denial is based and, if the denial is based in whole or in
part on any rule of construction or interpretation adopted by the Committee, a
reference to such rule, a copy of which shall be provided to the claimant; (C)
a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of the reasons why such
material or information is necessary; and (D) a reference to this Section 7.6
as the provision setting forth the claims procedure under the Plan.


(b)   The claimant may request a review of any
denial of his claim by written application to the Committee within 60 days
after receipt of the notice of denial of such claim.  Within 60 days (or, if special circumstances
require an extension of time for processing, 120 days, in which case notice of
such special circumstances should be provided within the initial 60-day period)
after receipt of written application for review, the Committee will provide the
claimant with its decision in writing, including, if the claimant’s claim is
not approved, specific reasons for the decision and specific references to the
Plan provisions on which the decision is based.


8. PROVISIONS
APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS.


8.1   Grant of Dividend Equivalent Rights.


Subject to the
other terms of the Plan, the Committee shall, in its discretion as reflected by
the terms of the Award Agreements, authorize the granting of Dividend
Equivalent Rights to Eligible Persons based on the regular cash dividends
declared on Common Stock, to be credited as of the dividend payment dates,
during the period between the date an Award is granted, and the date such Award
is exercised, vests or expires, as determined by the Committee; provided,
however, that in no event may a Dividend Equivalent Right be granted in
connection with an Option or a Stock Appreciation Right.  Such Dividend Equivalent Rights shall be
converted to cash or additional Shares by such formula and at such time and
subject to such limitation as may be determined by the Committee.  If a Dividend Equivalent Right is granted in
respect of an Award hereunder (other than an Option or Stock Appreciation
Right), then, unless otherwise stated in the Award Agreement, in no event shall
the Dividend Equivalent Right be in effect for a period beyond the time during
which the applicable portion of the underlying Award is in effect.


8.2   Certain Terms.


(a)   The term of a Dividend Equivalent Right shall
be set by the Committee in its discretion.


(b)   Unless otherwise determined by the Committee,
except as contemplated by Section 8.4, a Dividend Equivalent Right is
exercisable or payable only while the Participant is an Eligible Person.


(c)   Payment of the amount determined in
accordance with Section 8.1 shall be in cash, in Common Stock or a combination
of the both, as determined by the Committee.


(d)   The Committee may impose such
employment-related conditions on the grant of a Dividend Equivalent Right as it
deems appropriate in its discretion.



 15
 









 


8.3   Other Types of Dividend Equivalent Rights.


The Committee may
establish a program under which Dividend Equivalent Rights of a type whether or
not described in the foregoing provisions of this Section 8 may be granted to
Participants.  For example, and without
limitation, the Committee may grant a dividend equivalent right with respect to
a Phantom Share, which right would consist of the right (subject to Section
8.4) to receive a cash payment in an amount equal to the dividend distributions
paid on a Share from time to time.


8.4   Deferral.


The Committee may
establish a program (taking into account, without limitation, the possible application
of Section 409A of the Code, as the
Committee may deem appropriate) under which Participants (i) will have
Phantom Shares credited, subject to the terms of Sections 7.4 and 7.5 as though
directly applicable with respect thereto, upon the granting of Dividend
Equivalent Rights, or (ii) will have payments with respect to Dividend
Equivalent Rights deferred.  In the case
of the foregoing clause (ii), such program may include, without limitation,
provisions for the crediting of earnings and losses on unpaid amounts, and, if
permitted by the Committee, provisions under which Participants may select from
among hypothetical investment alternatives for such deferred amounts in
accordance with procedures established by the Committee.


9. OTHER EQUITY-BASED
AWARDS.


The
Committee shall have the right (i) to grant other Awards based upon the Common
Stock having such terms and conditions as the Committee may determine,
including, without limitation, the grant of shares based upon certain
conditions, the grant of convertible preferred shares, convertible debentures
and other exchangeable or redeemable securities or equity interests, and the
grant of stock appreciation rights, (ii) to grant limited-partnership or any
other membership or ownership interests (which may be expressed as units or
otherwise) in a Subsidiary or operating or other partnership (or other
affiliate of the Company), with any Shares being issued in connection with the
conversion of (or other distribution on account of) an interest granted under the
authority of this clause (ii) to be subject, for the avoidance of doubt, to
Section 4 and the other provisions of the Plan, and (iii) to grant Awards
valued by reference to book value, fair value or performance parameters
relative to the Company or any Subsidiary or group of Subsidiaries.


10. PERFORMANCE GOALS.


The
Committee, in its discretion, (i) may establish one or more performance goals
as a precondition to the issuance or vesting of Awards, and (ii) may provide,
in connection with the establishment of the performance goals, for
predetermined Awards to those Participants (who continue to meet all applicable
eligibility requirements) with respect to whom the applicable performance goals
are satisfied.  In the case of any
grant intended to qualify as performance based compensation under Section
162(m) of the Code (including, for these purposes, grants constituting
performance based compensation, as determined without regard to certain
shareholder approval and disclosure requirements by virtue of an applicable
transition rule), the Committee (i) may use
one or a combination of the performance goals set forth in Exhibit B; and (ii)
may establish other goals (with shareholder approval of other types of goals)
intended to be performance goals as contemplated by Section 162(m) of the Code
and the regulations thereunder.



 16















11. TAX WITHHOLDING.


11.1         In General.


The Company shall
be entitled to withhold from any payments or deemed payments any amount of tax
withholding determined by the Committee to be required by law.  Without limiting the generality of the
foregoing, the Committee may, in its discretion, require the Participant to pay
to the Company at such time as the Committee determines the amount that the
Committee deems necessary to satisfy the Company’s obligation to withhold
federal, state or local income or other taxes incurred by reason of (i) the
exercise of any Option, (ii) the lapsing of any restrictions applicable to any
Restricted Stock, (iii) the receipt of a distribution in respect of Phantom
Shares or Dividend Equivalent Rights or (iv) any other applicable income-recognition
event (for example, an election under Section 83(b) of the Code).


11.2         Share Withholding.


(a)   Upon exercise of an Option, the Optionee may,
if approved by the Committee in its discretion, make a written election to have
Shares then issued withheld by the Company from the Shares otherwise to be
received, or to deliver previously owned Shares, in order to satisfy the
liability for such withholding taxes.  In
the event that the Optionee makes, and the Committee permits, such an election,
the number of Shares so withheld or delivered shall have an aggregate Fair
Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes.  Where the exercise of
an Option does not give rise to an obligation by the Company to withhold
federal, state or local income or other taxes on the date of exercise, but may
give rise to such an obligation in the future, the Committee may, in its
discretion, make such arrangements and impose such requirements as it deems
necessary or appropriate.


(b)   Upon lapsing of restrictions on Restricted
Stock (or other income-recognition event), the Grantee may, if approved by the
Committee in its discretion, make a written election to have Shares withheld by
the Company from the Shares otherwise to be released from restriction, or to
deliver previously owned Shares (not subject to restrictions hereunder), in
order to satisfy the liability for such withholding taxes.  In the event that the Grantee makes, and the
Committee permits, such an election, the number of Shares so withheld or
delivered shall have an aggregate Fair Market Value on the date of exercise
sufficient to satisfy the applicable withholding taxes.


(c)   Upon the making of a distribution in respect
of Phantom Shares or Dividend Equivalent Rights, the Grantee may, if approved
by the Committee in its discretion, make a written election to have amounts
(which may include Shares) withheld by the Company from the distribution
otherwise to be made, or to deliver previously owned Shares (not subject to restrictions
hereunder), in order to satisfy the liability for such withholding taxes.  In the event that the Grantee makes, and the
Committee permits, such an election, any Shares so withheld or delivered shall
have an aggregate Fair Market Value on the date of exercise sufficient to
satisfy the applicable withholding taxes.


11.3         Withholding Required.


Notwithstanding anything contained in the Plan or the Award Agreement
to the contrary, the Participant’s satisfaction of any tax-withholding
requirements imposed by the Committee shall be a condition precedent to the
Company’s obligation as may otherwise be provided hereunder to provide Shares
to the Participant and to the release of any restrictions as may otherwise be
provided hereunder, as applicable; and the applicable Option, Restricted Stock,
Phantom Shares or Dividend Equivalent Rights shall be forfeited upon the
failure of the Participant to satisfy such requirements with respect to, as
applicable, (i) the exercise of the Option, (ii) the lapsing of restrictions on
the Restricted Stock (or other income-recognition event) or (iii) distributions
in respect of any Phantom Share or Dividend Equivalent Right.



 17
 









 


12. REGULATIONS AND
APPROVALS.


(a)   The obligation of the Company to sell Shares
with respect to an 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 Committee.


(b)   The Committee may make such changes to the
Plan as may be necessary or appropriate to comply with the rules and
regulations of any government authority or to obtain tax benefits applicable to
an Award.


(c)   Each grant of Options, Restricted Stock,
Phantom Shares (or issuance of Shares in respect thereof) or Dividend
Equivalent Rights (or issuance of Shares in respect thereof), or other Award
under Section 9 (or issuance of Shares in respect thereof), is subject to the
requirement that, if at any time the Committee determines, in its discretion,
that the listing, registration or qualification of Shares 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 issuance
of Options, Shares of Restricted Stock, Phantom Shares, Dividend Equivalent
Rights, other Awards or other Shares, no payment shall be made, or Phantom
Shares or Shares issued or grant of Restricted Stock or other Award made, in
whole or in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions in a manner
acceptable to the Committee.


(d)   In the event that the disposition of stock
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 shall be restricted against transfer to the extent
required under the Securities Act, and the Committee may require any individual
receiving Shares pursuant to the Plan, as a condition precedent to receipt of
such Shares, to represent to the Company in writing that such Shares are acquired
for investment only and not with a view to distribution and that such Shares
will be disposed of only if registered for sale under the Securities Act or if
there is an available exemption for such disposition.


(e)   Notwithstanding any other provision of the
Plan, the Company shall not be required to take or permit any action under the
Plan or any Award Agreement which, in the good-faith determination of the
Company, would result in a material risk of a violation by the Company of
Section 13(k) of the Exchange Act.


13. INTERPRETATION AND
AMENDMENTS; OTHER RULES.


The Committee may make
such rules and regulations and establish such procedures for the administration
of the Plan as it deems appropriate. 
Without limiting the generality of the foregoing, the Committee may (i)
determine the extent, if any, to which Options, Phantom Shares or Shares
(whether or not Shares of Restricted Stock) or Dividend Equivalent Rights shall
be forfeited (whether or not such forfeiture is expressly contemplated
hereunder); (ii) interpret the Plan and the Award Agreements hereunder, with
such interpretations to be
conclusive and binding on all persons and otherwise accorded the maximum
deference permitted by law, provided that the Committee’s interpretation shall
not be entitled to deference on and after a Change in Control except to the
extent that such interpretations are made exclusively by members of the
Committee who are individuals who served as Committee members before the Change
in Control; and (iii) take any other actions and make any other determinations
or decisions that it deems necessary or appropriate in connection with the Plan
or the administration or interpretation thereof.  In the event of any dispute or disagreement
as to the interpretation of the Plan or of any rule, regulation or procedure,
or as to any question, right or obligation arising from or related to the Plan,
the decision of the Committee, except as provided in clause (ii) of the
foregoing sentence, shall be final and binding upon all persons.  The Committee
may, in its discretion, delegate the
authority and 



 18
 









 


responsibility
to act pursuant to the Plan with respect to ministerial administrative matters,
which actions shall at all times be subject to the supervision of the
Committee, and the actions of such a delegee in accordance with the foregoing
shall be considered the actions of the Committee hereunder.  Unless otherwise expressly provided
hereunder, the Committee, with respect to any grant, may exercise its
discretion hereunder at the time of the Award or thereafter.  The Board may amend the Plan as it shall deem
advisable, except that no amendment may adversely affect a Participant with
respect to an Award previously granted unless such amendments are required in
order to comply with applicable laws; provided, however, that the Plan may not
be amended without shareholder approval in any case in which amendment in the
absence of shareholder approval would cause the Plan to fail to comply with any
applicable legal requirement or applicable exchange or similar rule.


14. CHANGES IN CAPITAL
STRUCTURE.


(a)   If (i) the Company or its Subsidiaries shall
at any time be involved in a merger, consolidation, dissolution, liquidation,
reorganization, exchange of shares, sale of all or substantially all of the assets
or stock of the Company or its Subsidiaries or a transaction similar thereto,
(ii) any stock dividend, stock split, reverse stock split, stock combination,
reclassification, recapitalization or other similar change in the capital
structure of the Company or its Subsidiaries, or any distribution to holders of
Common Stock other than cash dividends, shall occur or (iii) any other event
shall occur which in the judgment of the Committee necessitates action by way
of adjusting the terms of the outstanding Awards, then:


(x)  the maximum aggregate number of Shares which
may be made subject to Options and Dividend Equivalent Rights under the Plan,
the maximum aggregate number and kind of Shares of Restricted Stock that may be
granted under the Plan, the maximum aggregate number of Phantom Shares and
other Awards which may be granted under the Plan may be appropriately adjusted
by the Committee in its discretion; and


(y) the Committee shall take any such
action as in its discretion shall be necessary to maintain each Participants’
rights hereunder (including under their Award Agreements) with respect to
Options, Phantom Shares and Dividend Equivalent Rights (and, as appropriate,
other Awards under Section 9), so that they are substantially proportionate to
the rights existing in such Options, Phantom Shares and Dividend Equivalent
Rights (and other Awards under Section 9) prior to such event, including,
without limitation, adjustments in (A) the number of Options, Phantom Shares
and Dividend Equivalent Rights (and other Awards under Section 9) granted, (B)
the number and kind of shares or other property to be distributed in respect of
Options, Phantom Shares and Dividend Equivalent Rights (and other Awards under
Section 9 as applicable), (C) the Option Price and Phantom Share Value, and (D)
performance-based criteria established in connection with Awards; provided
that, in the discretion of the Committee, the foregoing clause (D) may also be
applied in the case of any event relating to a Subsidiary if the event would
have been covered under this Section 14(a) had the event related to the
Company.


To
the extent that such action shall include an increase or decrease in the number
of Shares (or units of other property then available) subject to all
outstanding Awards, the number of Shares (or units) available under Section 4
shall be increased or decreased, as the case may be, proportionately, as may be
determined by the Committee in its discretion.


(b)   Any Shares or other securities distributed to
a Grantee with respect to Restricted Stock or otherwise issued in substitution
of Restricted Stock shall be subject to the restrictions and 



 19
 









 


requirements imposed by
Section 6, including depositing the certificates therefor with the Company
together with a stock power and bearing a legend as provided in Section 6.2(a).


(c)   If the Company shall be consolidated or
merged with another corporation or other entity, each Grantee who has received
Restricted Stock that is then subject to restrictions imposed by Section 6.3(a)
may be required to deposit with the successor corporation the certificates, if
any, for the stock or securities or the other property that the Grantee is
entitled to receive by reason of ownership of Restricted Stock in a manner
consistent with Section 6.2(b), and such stock, securities or other property
shall become subject to the restrictions and requirements imposed by Section
6.3(a), and the certificates therefor or other evidence thereof shall bear a
legend similar in form and substance to the legend set forth in Section 6.2(a).


(d)   If a Change in Control shall occur, then the
Committee, as constituted immediately before the Change in Control, may make
such adjustments as it, in its discretion, determines are necessary or
appropriate in light of the Change in Control, provided that the Committee
determines that such adjustments do not have an adverse economic impact on the
Participant as determined at the time of the adjustments.


(e)   The judgment of the Committee with respect to
any matter referred to in this Section 13 shall be conclusive and binding upon
each Participant without the need for any amendment to the Plan.


15. MISCELLANEOUS.


15.1         No Rights to Employment or Other
Service.


Nothing in the
Plan or in any grant made pursuant to the Plan shall confer on any individual
any right to continue in the employ or other service of the Company or its
Subsidiaries or interfere in any way with the right of the Company or its
Subsidiaries and its shareholders to terminate the individual’s employment or
other service at any time.


15.2         Right of First Refusal; Right of
Repurchase.


At the time of
grant, the Committee may provide in connection with any grant made under the
Plan that Shares received hereunder shall be subject to a right of first
refusal pursuant to which the Company shall be entitled to purchase such Shares
in the event of a prospective sale of the Shares, subject to such terms and
conditions as the Committee may specify at the time of grant or (if permitted
by the Award Agreement) thereafter, and to a right of repurchase, pursuant to
which the Company shall be entitled to purchase such Shares at a price
determined by, or under a formula set by, the Committee at the time of grant or
(if permitted by the Award Agreement) thereafter.


15.3         No Fiduciary Relationship.


Nothing contained
in the Plan (including without limitation Sections 7.5(c) and 8.4), and no
action taken pursuant to the provisions of the Plan, shall create or shall be
construed to create a trust of any kind, or a fiduciary relationship between
the Company or its Subsidiaries, or their officers or the Committee, on the one
hand, and the Participant, the Company, its Subsidiaries or any other person or
entity, on the other.



 20
 









 


15.4         No Fund Created.


Any and all
payments hereunder to any Participant under the Plan shall be made from the
general funds of the Company (or, if applicable, a Participating Company), no
special or separate fund shall be established or other segregation of assets
made to assure such payments, and the Phantom Shares (including for purposes of
this Section 15.4 any accounts established to facilitate the implementation of
Section 7.4(c)) and any other similar devices issued hereunder to account for
Plan obligations do not constitute Common Stock and shall not be treated as (or
as giving rise to) property or as a trust fund of any kind; provided, however,
that the Company may establish a mere bookkeeping reserve to meet its
obligations hereunder or a trust or other funding vehicle that would not cause
the Plan to be deemed to be funded for tax purposes or for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended.  The obligations of the Company under the Plan
are unsecured and constitute a mere promise by the Company to make benefit
payments in the future and, to the extent that any person acquires a right to
receive payments under the Plan from the Company, such right shall be no
greater than the right of a general unsecured creditor of the Company.  (If any affiliate of the Company is or is
made responsible with respect to any Awards, the foregoing sentence shall apply
with respect to such affiliate.)  Without
limiting the foregoing, Phantom Shares and any other similar devices issued
hereunder to account for Plan obligations are solely a device for the measurement
and determination of the amounts to be paid to a Grantee under the Plan, and
each Grantee’s right in the Phantom Shares and any such other devices is
limited to the right to receive payment, if any, as may herein be provided.


15.5         Notices.


All notices under the Plan shall be in writing, and if to the Company,
shall be delivered to the Board or mailed to its principal office, addressed to
the attention of the Board; and if to the Participant, shall be delivered
personally, sent by facsimile transmission or mailed to the Participant at the
address appearing in the records of the Company.  Such addresses may be changed at any time by
written notice to the other party given in accordance with this Section 15.5.


15.6         Exculpation and Indemnification.


The Company shall
indemnify and hold harmless the members of the Board and the members of the
Committee from and against any and all liabilities, costs and expenses incurred
by such persons as a result of any act or omission to act in connection with
the performance of such person’s duties, responsibilities and obligations under
the Plan, to the maximum extent permitted by law.


15.7         Captions.


The use of
captions in this Plan is for convenience. 
The captions are not intended to provide substantive rights.


15.8         Governing Law.


THE PLAN SHALL BE GOVERNED BY THE LAWS OF MARYLAND WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICT OF LAWS.



 21
 









EXHIBIT A


PERFORMANCE GOALS


(i) 7% FFO growth.


(ii) 10% total return to shareholders.


(iii) Total return to shareholders in the top one-third
of the “peer group”.


For purposes of this
Exhibit A, “peer group” shall be Alexandria Real Estate Equities, Inc.,
American Financial Realty Trust, Boston Properties, Inc., Brandywine Realty
Trust, Corporate Office Properties Trust, Crescent Real Estate Equities
Company, Douglas Emmett, Duke Realty Corporation, Highwoods Properties, Inc.,
HRPT Properties, Kilroy Realty Corporation, Liberty Property Trust, Mack-Cali
Realty Corporation, Maguire Properties, Parkway Properties, SL Green Realty
Corp., and Washington REIT.  Such “peer
group” may not change with respect to any particular Award.



 22
 









EXHIBIT B


PERFORMANCE GOALS


Performance-Based
Awards intended to qualify as “performance based” compensation under Section
162(m) of the Code, may be payable upon the attainment of objective performance
goals that are established by the Committee and relate to one or more
Performance Criteria, in each case on specified date or over any period, up to
10 years, as determined by the Committee. 
Performance Criteria may (but need not) be based on the achievement of
the specified levels of performance under one or more of the measures set out
below relative to the performance of one or more other corporations or indices.


“Performance Criteria” means the following business criteria
(or any combination thereof) with respect to one or more of the Company, any
Subsidiary or any division or operating unit thereof:


	
  

  	
  (i)

  	
  pre-tax income,

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  after-tax income,

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  net income (meaning net income as reflected in the
  Company’s financial reports for the applicable period, on an aggregate,
  diluted and/or per share basis),

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  operating income,

  
	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  cash flow,

  
	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  earnings per share,

  
	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  return on equity,

  
	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
  return on invested capital or assets,

  
	
   

  	
   

  	
   

  
	
   

  	
  (ix)

  	
  cash and/or funds available for distribution,

  
	
   

  	
   

  	
   

  
	
   

  	
  (x)

  	
  appreciation in the fair market value of the Common
  Stock,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xi)

  	
  return on investment,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xii)

  	
  total return to shareholders,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xiii)

  	
  net earnings growth,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xiv)

  	
  stock
  appreciation (meaning an increase in the price or value of the Common Stock
  after the date of grant of an award and during the applicable period),

  
	
   

  	
   

  	
   

  
	
   

  	
  (xv)

  	
  related return ratios,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xvi)

  	
  increase in revenues,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xvii)

  	
  net earnings,

  



 


 



 23
 









 


	
  

  	
  (xviii)

  	
  changes (or the absence of changes) in the per share
  or aggregate market price of the Company’s Common Stock,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xix)

  	
  number of securities sold,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xx)

  	
  earnings before any one or more of the following
  items: interest, taxes, depreciation or amortization for the applicable
  period, as reflected in the Company’s financial reports for the applicable
  period,

  
	
   

  	
   

  	
   

  
	
   

  	
  (xxi)

  	
  total revenue
  growth (meaning the increase in total revenues after the date of grant of an
  award and during the applicable period, as reflected in the Company’s
  financial reports for the applicable period),

  
	
   

  	
   

  	
   

  
	
   

  	
  (xxii)

  	
  the Company’s
  published ranking against its peer group of real estate investment trusts
  based on total shareholder return, and

  
	
   

  	
   

  	
   

  
	
   

  	
  (xxiii)

  	
  FFO.

  



 


Performance Goals may be
absolute amounts or percentages of amounts or may be relative to the
performance of other companies or of indexes.


Except as otherwise
expressly provided, all financial terms are used as defined under Generally
Accepted Accounting Principles (“GAAP”) and all determinations shall be made in
accordance with GAAP, as applied by the Company in the preparation of its
periodic reports to shareholders.


To the extent permitted
by Section 162(m) of the Code, unless the Committee provides otherwise at the
time of establishing the Performance Goals, for each fiscal year of the
Company, the Committee may provide for objectively determinable adjustments, as
determined in accordance with GAAP, to any of the Performance Criteria
described above for one or more of the items of gain, loss, profit or expense:
(A) determined to be extraordinary or unusual in nature or infrequent in
occurrence, (B) related to the disposal of a segment of a business, (C)
related to a change in accounting principle under GAAP, (D) related to
discontinued operations that do not qualify as a segment of a business under
GAAP, and (E) attributable to the business operations of any entity
acquired by the Company during the fiscal year.



 24