Document:

exv10w1

 

Exhibit 10.1

LIBERTY PROPERTY TRUST

2008 LONG-TERM INCENTIVE PLAN

EFFECTIVE AS OF JANUARY 1, 2008

 

 

TABLE OF CONTENTS

	 	 	 
	 	 	Page
	 
	ARTICLE I            INTRODUCTION
	 	1
	ARTICLE II            DEFINITIONS
	 	2
	2.1 “Affiliate”
	 	2
	2.2 “Award”
	 	2
	2.3 “Award Agreement”
	 	2
	2.4 “Award Date”
	 	2
	2.5 “Award Period”
	 	2
	2.6 “Award Period Target”
	 	2
	2.7 “Beneficiary”
	 	2
	2.8 “Board”
	 	2
	2.9 “Cause”
	 	2
	2.10 “CEO”
	 	2
	2.11 “Change in Control”
	 	2
	2.12 “Code”
	 	2
	2.13 “Committee”
	 	2
	2.14 “Common Share”
	 	2
	2.15 “Company”
	 	3
	2.16 “Effective Date”
	 	3
	2.17 “Employee”
	 	3
	2.18 “Employer”
	 	3
	2.19 “Employment Agreement”
	 	3
	2.20 “Fair Market Value”
	 	3
	2.21 “Measurement Date”
	 	3
	2.22 “Options”
	 	3
	2.23 “Participant”
	 	3
	2.24 “Performance Period”
	 	3
	2.25 “Performance Period Target”
	 	3
	2.26 “Permanent Disability”
	 	3
	2.27 “Plan”
	 	3
	2.28 “Plan Year”
	 	3

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TABLE OF CONTENTS

(continued)

	 	 	 
	 	 	Page
	 
	2.29 “Redemption Date”
	 	3
	2.30 “Retirement”
	 	4
	2.31 “Share Incentive Plan”
	 	4
	2.32 “Target Units”
	 	4
	2.33 “Units”
	 	4
	2.34 “Weighted Average Shares Outstanding”
	 	4
	ARTICLE III            PARTICIPATION
	 	5
	3.1 Initial Participants
	 	5
	3.2 New Participants
	 	5
	ARTICLE IV            COMMON SHARES SUBJECT TO THE PLAN
	 	6
	4.1 Common Shares Subject to the Plan
	 	6
	4.2 Changes in Common Shares or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events
	 	6
	ARTICLE V            AWARDS
	 	7
	5.1 Awards
	 	7
	5.2 Options
	 	7
	5.3 Target Units
	 	8
	ARTICLE VI            PERFORMANCE TARGETS
	 	9
	6.1 Determination of Performance of the End of the Performance Period and
Award Period
	 	9
	ARTICLE VII            REDEMPTION OF TARGET UNITS; VESTING
	 	10
	7.1 Redemption of Target Units at the End of the Award Period
	 	10
	ARTICLE VIII            TERMINATION OF EMPLOYMENT
	 	11
	8.1 Termination for Cause, Voluntary Resignation, or Nonrenewal of
Employment Agreement
	 	11
	ARTICLE IX            ADMINISTRATION
	 	12
	9.1 Committee
	 	12
	9.2 Committee Authority
	 	12
	9.3 Committee Determinations
	 	12
	9.4 Compensation of Committee
	 	12

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TABLE OF CONTENTS

(CONTINUED)

	 	 	 
	 	 	Page
	 
	9.5 Indemnification of Committee
	 	12
	ARTICLE X            MISCELLANEOUS
	 	14
	10.1 Amendment; Termination
	 	14
	10.2 Non-Alienation
	 	14
	10.3 Funding
	 	14
	10.4 Governing Law
	 	14
	10.5 Withholding
	 	15
	10.6 At-Will Employment Status
	 	15
	10.7 Headings
	 	15
	10.8 Enforceability
	 	15
	10.9 Successors
	 	15
	10.10 Beneficiary
	 	15
	10.11 Incorporation of Equity Incentive Plan
	 	15
	10.12 Stock Certificates
	 	15
	10.13 Gender
	 	16
	10.14 Notices
	 	16
	10.15 Uniformity
	 	16

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LIBERTY PROPERTY TRUST

2008 LONG-TERM INCENTIVE PLAN

ARTICLE I

INTRODUCTION

     This Plan is intended to provide additional compensation for executive personnel who
contribute materially to the continued growth, development and future business success of the
Company. The Plan is a performance-based plan that utilizes (i) time-based vesting with respect to
grants of stock options, and (ii) earnings targets based on specific and distinct performance
measures over the Performance Period and Award Period as the measurement criteria for determining
incentive compensation paid in the form of restricted stock units. The Company believes that the
Plan will encourage Participants to contribute materially to the growth of the Company, thereby
benefiting the Company’s shareholders, and aligning the economic interests of Participants with
those of the shareholders. All capitalized terms used in this Article I shall have the meaning
ascribed to them in Article II below.

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ARTICLE II

DEFINITIONS

     The following terms shall have the following meanings for purposes of the Plan:

     2.1 “Affiliate” shall mean any entity that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the Company.

     2.2 “Award” shall mean the Options and Target Units awarded to a Participant under the
Plan.

     2.3 “Award Agreement” shall mean the individual agreement provided by the Committee to
each Participant notifying the Participant of participation in the Plan and specifying the Options
and Target Units awarded to the Participant and the other terms and conditions of the Award. By
accepting and executing an Award Agreement, each Participant shall be agreeing to be subject to the
terms of the Plan and to the discretion of the Committee as set forth in the Plan.

     2.4 “Award Date” shall mean the date effective as of which an Award is made.

     2.5 “Award Period” shall mean the three-year period beginning on the Award Date.

     2.6 “Award Period Target” shall mean the performance measure or set of measures
established by the Committee by March 30 of each year with respect to that year’s Award Period
Units, if any, in accordance with the requirements of Code Section 162(m).

     2.7 “Beneficiary” shall mean, on the death of the Participant, his estate, which shall
include either the Participant’s probate estate or living trust.

     2.8 “Board” shall mean the Board of Trustees of the Company.

     2.9 “Cause” shall mean, unless defined otherwise in a Participant’s Employment
Agreement, “Cause” as defined in the Share Incentive Plan.

     2.10 “CEO” shall mean the Chief Executive Officer of the Company.

     2.11 “Change in Control” shall mean, unless defined otherwise in a Participant’s
Employment Agreement, a “Change of Control” as defined in the Share Incentive Plan.

     2.12 “Code” shall mean the Internal Revenue Code of 1986, as amended.

     2.13 “Committee” shall mean the Compensation Committee of the Board or such other
committee appointed by the Board for purposes of administering the Plan.

     2.14 “Common Share” shall mean a common share of beneficial ownership, par value
$0.001 per share, of the Company.

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     2.15 “Company” shall mean Liberty Property Trust, a Maryland real estate investment
trust or any business organization that succeeds to its business and elects to continue this Plan.

     2.16 “Effective Date” shall mean January 1, 2008.

     2.17 “Employee” shall mean any employee of an Employer, whether such employee is so
employed at the time this Plan is adopted or becomes so employed subsequent to the adoption of this
Plan.

     2.18 “Employer” shall mean the Company or an Affiliate that employs the Participant.

     2.19 “Employment Agreement” shall mean the employment agreement entered into between
the Employee and the Employer governing the terms of the Employee’s employment with the Employer.

     2.20 “Fair Market Value” shall mean “Fair Market Value” as defined in the Share
Incentive Plan.

     2.21 “Measurement Date” shall mean December 31 of the last day of (i) the Performance
Period, with respect to the Performance Period Units (as defined in Section 5.03 hereof), or (ii)
the Award Period, with respect to the Award Period Units (as defined in Section 5.03 hereof), or
such other date determined by the Committee in its sole discretion.

     2.22 “Options” shall mean “Options” as defined in, and issued under, the Share
Incentive Plan.

     2.23 “Participant” shall mean any Employee who has been designated by the Committee as
eligible to receive an Award under this Plan.

     2.24 “Performance Period” shall mean each Plan Year after the Effective Date;
provided, however, that with respect to any individual who becomes a Participant in the Plan after
the Effective Date, the “Performance Period” shall be the period determined by the Committee in its
sole discretion.

     2.25 “Performance Period Target” shall mean the performance measure or set of
measures established by the Committee by March 30 of each year with respect to that year’s
Performance Period Units, if any, in accordance with the requirements of Code Section 162(m).

     2.26 “Permanent Disability” shall mean the Participant’s becoming disabled within the
meaning of section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

     2.27 “Plan” shall mean the Liberty Property Trust 2008 Long-Term Incentive Plan, as
embodied herein and as amended from time to time.

     2.28 “Plan Year” shall mean the calendar year.

     2.29 “Redemption Date” shall mean the date that all or any portion of the Target Units
are redeemed under the Plan.

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     2.30 “Retirement” shall mean “Retirement” as defined in, and subject to the terms and
conditions of, the Share Incentive Plan.

     2.31 “Share Incentive Plan” shall mean the Liberty Property Trust Amended and Restated
Share Incentive Plan, as may be amended from time to time, or such other plan maintained by the
Company pursuant to which Common Shares granted under the Plan may be issued to Participants.

     2.32 “Target Units” shall mean the aggregate number of Units awarded to a Participant
under the Plan, as described in Section 5.3 of the Plan.

     2.33 “Units” shall mean phantom rights that will be converted to Common Shares on a
Redemption Date if the Award Period Targets or Performance Period Targets specified under the Plan
are met. Each Unit shall represent one Common Share.

     2.34 “Weighted Average Shares Outstanding” shall mean, for any Measurement Date, the
weighted average number of Company shares outstanding, as publicly reported by the Company as of
such date.

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ARTICLE III

PARTICIPATION

     3.1 Initial Participants. The Committee shall determine which Employees shall be
Participants in the Plan as of the Effective Date and shall provide each individual with an Award
Agreement evidencing their participation in the Plan.

     3.2 New Participants. At any time after the Effective Date, the Committee may provide
that other Employees shall be eligible to participate in the Plan on the terms and conditions that
the Committee determines appropriate for such Employee. Any such Employee shall be provided with
an individual Award Agreement evidencing their participation in the Plan. Any Employee designated
as a Participant in the Plan shall not become a Participant in the Plan until the first day of the
Plan Year that first occurs on or after such individual’s designation as a Participant in the Plan.

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ARTICLE IV

COMMON SHARES SUBJECT TO THE PLAN

     4.1 Common Shares Subject to the Plan. All Common Shares issued under the Plan shall
be issued from the Share Incentive Plan. If any Options or Units are forfeited prior to being
exercised or redeemed, respectively, the Common Shares corresponding to such Options or Units shall
not again be available for issuance under the Plan; provided, however, that if the reason for the
forfeiture of the Target Units is because the Participant’s employment with the Employer is (i)
terminated by the Employer with Cause, voluntarily terminated by the Participant, or terminated as
a result on nonrenewal of the Participant’s Employment Agreement, then any Common Shares
corresponding to Options or Units that are forfeited by the Participant as a result of such
termination of employment with the Employer shall again be available for issuance under the Plan,
or (ii) terminated without Cause, then any Common Shares corresponding to Units for which no
exercise redemption can occur shall again be available for issuance under the Plan.

     4.2 Changes in Common Shares or Assets of the Company, Acquisition or Liquidation of the
Company and Other Corporate Events. If an event described in Section 4(c) of the Share
Incentive Plan (or other similar provision of such plan or a successor plan) occurs, then the
Committee shall, in such manner as it may deem equitable, adjust (i) the maximum number of Common
Shares that may be issued under the Plan, and (ii) the number of Options or Units covered by the
Target Unit held by a Participant, in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles.

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ARTICLE V

AWARDS

     5.1 Awards. Awards under the Plan shall consist of Options and Target Units awarded
effective as of the Award Date. All Awards shall be subject to the terms and conditions set forth
herein and to such other terms and conditions consistent with the Plan as the Committee deems
appropriate and as are specified in writing by the Committee to the individual in the Award
Agreement. The Committee may, by way of the Award Agreement or otherwise, establish such terms,
conditions, restrictions and/or limitations, if any, of any Award, provided they are not
inconsistent with the Plan, including, without limitation, the requirement that the Participant not
engage in competition with, solicit customers or employees of, or disclose or use confidential
information of the Company or its Affiliates. If at any time the Employee breaches such conditions
or otherwise engages in activities that constitute “cause” as defined in the Award Agreement or
otherwise, the Award shall terminate, and the Company may rescind any exercise (in the case of an
Option) or redemption (in the case of Target Units) and delivery of Common Shares upon such
exercise or redemption within one year after the Employee engages in such conduct. In the event of
any such rescission, the Employee shall return to the Company the Common Shares received upon the
exercise or redemption or, if the Employee no longer owns the Common Shares, the Employee shall pay
to the Company the amount of any gain realized or payment received as a result of any sale or other
disposition of the Common Shares (or, in the event the Employee transfers the Common Shares by gift
or otherwise without consideration, the fair market value of the Common Shares on the date of
breach), net of the price originally paid by the Employee for the Common Shares. The payment shall
be made in such manner and on such terms and conditions as may be required by the Company. The
Company shall be entitled to set off against the amount of any such payment any amounts otherwise
owed to the Employee by the Company.

     Any Options, Target Units or Common Shares issued under the Plan shall also be subject to the
terms and conditions of the Share Incentive Plan (except as otherwise provided herein), including
the provisions regarding Code Section 162(m) described in Section 12 of the Share Incentive Plan
(it being intended that the Committee shall operate the Plan in accordance with all terms,
conditions and restrictions of Code Section 162(m)). The Committee shall approve the form and
provisions of the Award Agreement. An Option or Target Unit awarded to one Participant does not
mean that the Participant will receive an Option or Target Unit at any other time or that the
Participant will receive the same Option or Target Unit in any future Award. An Option or Target
Unit awarded to one Employee does not mean that any other Employee will receive an Award of an
Option or Target Unit or have the same number of Options or Units subject to such Target Unit.

     5.2 Options. Each Participant shall, as part of his Award, be awarded an Option to
purchase a specified number of Common Shares, which shall be determined by the Committee, in its
sole discretion, and set forth in the Participant’s Award Agreement. Twenty percent of the total
number of Common Shares underlying such Option shall become exercisable on the first anniversary of
the related date of grant, an additional thirty percent shall become exercisable on the second such
anniversary, and the remaining fifty percent shall become exercisable on the third such
anniversary. In addition, such Options shall become vested and exercisable in full if the
Participant ceases to be employed by, or provide service to, the Employer by reason of death,

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Permanent Disability or Retirement, as such terms are defined in, and subject to the
provisions of, the Share Incentive Plan.

     5.3 Target Units. Each Participant shall, as part of his Award, be awarded a
specified number of Units, which shall be determined by the Committee, in its sole discretion, and
set forth in the Participant’s Award Agreement. The total number of Units awarded to the
Participant shall be such Participant’s Target Unit, a percentage (to be determined by the
Committee) of which will be subject to measurement against one performance measure (or set of
performance measures) (the “Performance Period Units”), and the remainder of which will be subject
to measurement against a different performance measure (or set of performance measures) (the “Award
Period Units”). The Target Units shall represent the maximum number of Common Shares that the
Participant will receive at the end of the Award Period if the Performance Period and Award Period
are met at the end of the Performance Period and Award Period, respectively. A Participant’s
Target Units shall be as set forth in the Participant’s Award Agreement, subject to decrease or
forfeiture in accordance with the terms of the Plan and as the Committee may, in its sole
discretion, decide.

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ARTICLE VI

PERFORMANCE TARGETS

     6.1 Determination of Performance as of the End of the Performance Period and Award
Period. As soon as administratively practicable after the end of the Performance Period and
Award Period, the Committee shall determine whether, and the extent to which, the Performance
Period Target and Award Period Target, respectively, were met. If they were met or exceeded, the
applicable portion of the Participant’s Target Units will be deemed earned as of the related
Measurement Date. The Committee shall use objectively determinable performance goals based on one
or more of the following criteria: Funds from operations, total shareholder return, share price,
earnings per share, net earnings, operating earnings, earnings before income taxes, EBITDA
(earnings before income tax expense, interest expense, and depreciation and amortization expense),
funds from operations, adjusted funds from operations, certain levels of operating expense, return
on assets, shareholder return, return on equity, growth in assets, unit volume, sales or market
share, or strategic business criteria consisting of one or more objectives based on meeting
specified revenue goals, market penetration goals, geographic business expansion goals, cost
targets, goals relating to acquisitions or divestitures, targeted financing or capital market
objectives or specified, objective, individual performance goals or metrics.

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ARTICLE VII

REDEMPTION OF TARGET UNITS; VESTING

     7.1 Redemption of Target Units at the End of the Award Period. As of the end of the
Award Period, each Unit earned in accordance with Article VI will be redeemed for one Common Share
to the extent that Common Shares are available for issuance under the Equity Incentive Plan at the
time of the redemption. No restrictions on transferability of such Common Shares, other than those
imposed by the Company on its Common Shares in general and under the Equity Incentive Plan, shall
be imposed effective as of such date. Such Common Shares will be transferred to the Participant
within the calendar year immediately following the close of such Award Period. Unless otherwise
determined by the Committee at the date of grant, cash, Common Shares or other property equal in
value to dividends paid with respect to the Common Shares underlying Target Units will be paid
when, and to the extent that, such Target Units are redeemed at the end of the Award Period.

10

 

ARTICLE VIII

TERMINATION OF EMPLOYMENT

          8.1 Termination for Cause, Voluntary Resignation, or Nonrenewal of Employment
Agreement. Unless the Committee determines otherwise or as otherwise provided in the
Participant’s Employment Agreement, if a Participant’s employment with an Employer is terminated by
the Employer on account of Cause, voluntarily by the Participant for any reason, or the
Participant’s Employment Agreement terminates without renewal and the Participant’s employment with
the Employer terminates as a result of such nonrenewal, the portion of the Participant’s Options
and Target Units that has not vested and been exercised or redeemed, respectively, will be
forfeited. If the termination occurs prior to the applicable Redemption Date, no Units shall be
redeemed for the Participant.

          8.1.1 Termination for Retirement, Death, or Permanent Disability. Unless the
Committee determines otherwise or as otherwise provided in the Participant’s Employment Agreement,
if a Participant’s employment with an Employer is terminated on account of death or by the Employer
on account of Permanent Disability, or if the Participant terminates on account of Retirement, then
all Options and Target Units shall become fully vested at the time of such termination. The
Participant shall be eligible to exercise such Options, and the Participant’s Target Units shall be
redeemed in accordance with the terms of the Plan, as if the Participant continued in employment
with the Employer for the remainder of the Performance Period or Award Period, as applicable.

          8.1.2 Change in Control. [In the event of a Change in Control, the Committee may take
whatever action it deems necessary or desirable, in accordance with Section 16 of the Share
Incentive Plan.]

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ARTICLE IX

ADMINISTRATION

     9.1 Committee. This Plan shall be administered by the Committee. The Committee may
delegate authority to one or more subcommittees, as it deems appropriate. The Committee may also
delegate ministerial duties to Employees of an Employer or other persons it deems appropriate and
capable of fulfilling such ministerial duties.

     9.2 Committee Authority. The Committee shall have the sole authority to (i) determine
which Employees shall be Participants, (ii) determine the Performance Period and Award Period for a
Participant, (iii) determine the total number of Units that are subject to the Participant’s Target
Unit, (iv) determine the Performance Period Target and Award Period Target, (vi) amend any
previously granted Award or Award Agreement, subject to the limitations under Section 11.1, (vii)
determine the Redemption Date, and (viii) deal with any matters arising under the Plan.
Notwithstanding the preceding sentence, the Committee may consider the recommendations of the CEO
as such recommendations relate to determining which Employees, other than himself, shall receive
Awards under the Plan, the total number of Options and the total number of Units subject to the
Participant’s Target Unit, determine the Performance Period Target and Award Period Target for such
Participant, and the consequences of such Participant’s termination of employment on his
outstanding Options and Target Units.

     9.3 Committee Determinations. The Committee shall have all powers necessary to
administer and interpret the Plan, to make factual determinations and to adopt or amend such rules,
regulations, agreements and instruments for implementing the Plan and for the conduct of its
business as it deems necessary or advisable, in its sole discretion. The Committee’s
interpretations, constructions and determinations shall be final, binding and conclusive on all
parties, including but not limited to the Employers and any Employee or Participant. As a
condition of participating in the Plan and receiving an Award, a Participant must acknowledge, in
writing or by acceptance of an Award, that all decisions and determinations of the Committee shall
be final and binding on the Participant, his or her Beneficiaries and any other person having or
claiming an interest under such Award. All powers of the Committee shall be executed in its sole
discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated individuals.

     9.4 Compensation of Committee. The Committee shall receive for its services hereunder
only the compensation to which its members are otherwise entitled for the service as members of the
Board. The Committee is authorized at the expense of the Company to employ such legal counsel, as
it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in
connection with the administration of the Plan shall be paid by the Company.

     9.5 Indemnification of Committee. To the extent permitted by applicable state law,
the Company shall indemnify and hold harmless the members of the Committee, the CEO, and any
delegate who is an Employee of an Employer, against any and all expenses, liabilities and claims,
including legal fees, to defend against such liabilities and claims arising out of their discharge
in good faith of responsibilities under or incident to the Plan, other than expenses and

12

 

liabilities arising out of gross negligence or willful misconduct. This indemnity shall not
preclude such further indemnities as may be available under insurance purchased by the Company or
provided by the Company under any bylaw, agreement or otherwise, as such indemnities are permitted
under state law.

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ARTICLE X

MISCELLANEOUS

     10.1 Amendment; Termination. This Plan, any Award and any Award Agreement may be
amended or modified only with the consent of the Company acting through the Committee; provided,
that any amendment or modification which adversely affects a Participant must be consented to by
such Participant to be effective against him, unless such amendment or modification to the Plan
occurs prior to the Effective Date and, in such a case, no consent of the Participant is required
for such amendment or modification. Notwithstanding anything in the Plan to the contrary, while
the Plan is not intended to be a deferred compensation plan subject to the requirements of section
409A of the Code, if it is subsequently determined that the Plan is subject to the requirements of
section 409A of the Code, the Committee may, without the consent of Participants in the Plan, amend
the Plan and outstanding Award Agreements to comply with the requirements of section 409A of the
Code and any corresponding guidance and regulations issued under section 409A of the Code. This
Plan shall terminate, automatically and without further action of the Company, upon the full
satisfaction of all of the Company’s obligations hereunder.

     10.2 Non-Alienation. The Company shall pay all amounts payable hereunder only to the
person or persons designated by the Plan and not to any other person or corporation. No part of a
Participant’s Award hereunder shall be liable for the debts, contracts, or engagements of such
Participant, nor shall a Participant’s Award be subject to execution by levy, attachment, or
garnishment or by any other legal or equitable proceeding (including, but not limited to, an action
for a divorce or legal separation), nor shall any such person have any right to alienate,
anticipate, sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder
in any manner whatsoever. If any Participant is adjudicated bankrupt or purports to anticipate,
alienate, sell, transfer, commute, assign, pledge, encumber or charge any distribution or payment
from the Plan, voluntarily or involuntarily, the Committee, in its sole discretion, may cancel such
redemption (or any part thereof) to or for the benefit of such Participant in such manner as the
Committee shall direct.

     10.3 Funding. The Plan is intended to be a bonus plan and is not intended to be a
plan covered by the Employee Retirement Income Security Act of 1974, as amended. The Company shall
not be required to set aside any funds for payment of amounts hereunder. Participants and their
Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or
interests in any specific property or assets of the Company. No assets of the Company shall be
held in any way as collateral security for the fulfilling of the obligations of the Company under
this Plan. Any and all of the Company’s assets shall be, and remain, the general unpledged,
unrestricted assets of the Company. The Company’s obligation under the Plan shall be merely that
of an unfunded and unsecured promise of the Company to distribute Common Shares in the future, and
the rights of Participants and their Beneficiaries shall be no greater than those of unsecured
general creditors.

     10.4 Governing Law. The Plan is established under and will be construed according to
the laws of the Commonwealth of Pennsylvania, excluding conflict of law provisions.

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     10.5 Withholding. The redemption and/or vesting of Awards under the Plan shall
constitute taxable compensation to the Participant and shall be subject to federal (including
FICA), state and local income tax reporting and withholding. In addition, each Participant shall
be responsible for the payment of all individual tax liabilities relating to such redemption and/or
vesting. The Employer may require that the Participant or the Beneficiary to pay to the Employer
the amount of any federal, state or local taxes that the Employer is required to withhold with
respect to the redemption and/or vesting of Awards, or the Employer may deduct from other wages
paid by the Employer the amount of any withholding taxes due with respect to such redemption and/or
vesting. If permitted by the Committee, a Participant may elect to satisfy the Employer’s
withholding obligation with respect to the redemption and/or vesting of an Award under the Plan by
having Common Shares withheld up to an amount that does not exceed the Participant’s minimum
applicable withholding tax rate for federal (including FICA), state and local tax liabilities. The
election must be in a form and manner prescribed by the Committee, may be subject to prior approval
of the Committee, and no Earned Shares may be withheld for this purpose.

     10.6 At-Will Employment Status. The terms and conditions of this Plan shall not be
deemed to constitute a contract of employment between the Company or the Employer and the
Participant. Such employment continues to be an “at will” employment relationship that can be
terminated at any time for any reason, or no reason, with or without cause, and with or without
notice, unless otherwise expressly provided for in the Participant’s Employment Agreement. Nothing
in this Plan shall be deemed to give a Participant the right to be retained in the service of the
Company or the Employer, or to interfere in any way with any right of the Company or the Employer
to discipline or discharge the Participant at any time, subject to the terms of the Participant’s
Employment Agreement.

     10.7 Headings. The headings of Articles are for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this Plan.

     10.8 Enforceability. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining parts hereof, and this
Plan shall be construed and enforced as if such illegal or invalid provision had never been
included herein.

     10.9 Successors. The provisions of this Plan shall bind and inure to the benefit of
the Company and its successors and assigns and the Participants and their Beneficiaries. No other
person shall be a third-party beneficiary or acquire any rights under this Plan.

     10.10 Beneficiary. Any payments payable to a Participant following the Participant’s
death shall be payable to the Participant’s Beneficiary.

     10.11 Incorporation of Equity Incentive Plan. The provisions of the Equity Incentive
Plan are hereby incorporated by reference as set forth herein with respect to Common Shares awarded
under the Plan.

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     10.12 Stock Certificates.

          10.12.1 Stock Certificate. On the Redemption Date or as soon as practicable
thereafter, the Company shall issue a stock certificate to each Participant receiving Common Shares
hereunder. Each such certificate shall be registered in the name of the appropriate Participant.
The certificates issued hereunder shall bear a legend referring to the terms, conditions and
restrictions applicable to such Common Shares hereunder.

     10.13 Gender. The masculine gender shall include the feminine and the singular the
plural, unless the context clearly requires otherwise.

     10.14 Notices. Any notice or filing required or permitted to be given to the
Committee under the Plan shall be sufficient if in writing or hand delivered, or sent by registered
or certified mail to the Committee. Any notice to the Participant shall be sent to the last known
address of the Participant on the Employer’s records or hand delivered to the Participant. Any
such notices shall be deemed given as of the date of delivery, or, if delivery is made by mail, as
of the date shown on the postmark on the receipt for registration or certification.

     10.15 Uniformity. Nothing herein shall be construed as requiring that amounts
distributable under the Plan be the same with respect to each Participant.

16exv10w2

 

Exhibit 10.2

LIBERTY PROPERTY TRUST

STOCK OPTION

THIS STOCK OPTION (the “Option”) is granted as of this                      day of                     , 200___by
LIBERTY PROPERTY TRUST, a Maryland real estate investment trust (the “Company”), to «Optionee»,
(the “Optionee”).

W I T N E S S E T H:

1. Grant. The Company hereby grants to the Optionee an Option to purchase on the
terms and conditions hereinafter set forth all or any part of an aggregate of                                 shares of
the Company’s common shares of beneficial interest, $.001 par value per share (the “Option Shares”)
at the purchase price of $                     per share (the “Option Price”). This Option is intended to be
an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”) to the extent permitted under the Code. To the extent that this Option is
exercisable for the first time during any calendar year with respect to Option Shares having a
value (determined using as the per share value the fair market value of an Option Share on the date
hereof) in excess of $100,000, or to the extent this Option is exercised after the period provided
for the exercise of “incentive stock options” under the Code, this Option shall be treated as an
option which is not an “incentive stock option.” This Option is granted pursuant to the Liberty
Property Trust Amended and Restated Share Incentive Plan (the “Plan”).

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2. Term.

     (a) General Rule. The Option granted hereunder shall become exercisable with respect
to (1) up to twenty percent (20%) of the Option Shares after the first anniversary of the date
hereof, (2) up to fifty percent (50%) of the Option Shares after the second anniversary of the date
hereof, and (3) one hundred percent (100%) of the Option Shares after the third anniversary of the
date hereof. Notwithstanding, the preceding sentence, upon the Optionee’s termination of services
or employment with the Company or an Affiliate as a result of the Optionee’s death, Disability (as
defined in the Plan), any portion of the Option that is not otherwise exercisable shall become
exercisable upon the date of such termination of services or employment with the Company or an
Affiliate. The Option granted hereunder shall terminate in all events at 5:00 p.m. local
Philadelphia, Pennsylvania time ten years from the date hereof, unless sooner terminated under
subsection 2(e) below.

     The Board of Trustees in its administrative capacity with respect to the Plan or, if so
designated, any committee designated by the Board of Trustees to administer the Plan with respect
to persons including Optionee is referred to in this Option as the “Committee”.

     (b) Retirement.

          (i) Notwithstanding subsection 2(a) above, and subject to subsection 2(c) below, in the event
the Optionee terminates employment or service with the Company or an Affiliate, other than as a
result of Optionee’s death or Disability, after the Optionee has attained age 55 or 56, with at
least 10 years of employment or service

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for the Company or an Affiliate, at a time when the Option granted pursuant to this Award is
not fully exercisable under Section 2(a) above, the portion of the Option that would have become
exercisable within the 12 month period after the Optionee’s termination of employment or service
with the Company or an Affiliate shall become exercisable as of the date of the Optionee’s
termination of employment or service with the Company or an Affiliate.

          (ii) Notwithstanding subsection 2(a) above, and subject to subsection 2(c) below, in the event
the Optionee terminates employment or service with the Company or an Affiliate other than as a
result of Optionee’s death or Disability after the Optionee has attained age 57 or 58, with at
least 8 years of employment or service for the Company or an Affiliate or attained age 59 or 60,
with at least 6 years of employment or service for the Company or an affiliate, at a time when the
Option granted pursuant to this Award is not fully exercisable under Section 2(a) above, the
portion of the Option that would have become exercisable within the 24 month period after the
Optionee’s termination of employment or service with the Company or an Affiliate shall become
exercisable as of the date of the Optionee’s termination of employment or service with the Company
or an Affiliate.

          (iii) Notwithstanding subsection 2(a) above, and subject to subsection 2(c) below, in the
event the Optionee terminates employment or service with the Company or an Affiliate other than as
a result of Optionee’s death or Disability after the Optionee has attained age 61 or 62, with at
least 4 years of employment or service for the Company or an Affiliate, or attained age 63 or 64,
with at least 2 years of employment or service for the Company or an Affiliate at a time when the
Option

3

 

granted pursuant to this Award is not fully exercisable under Section 2(a) above, the portion
of the Option that would have become exercisable within the 36 month period after the Optionee’s
termination of employment or service with the Company or an Affiliate shall become exercisable as
of the date of the Optionee’s termination of employment or service with the Company or an
Affiliate.

          (iv) Notwithstanding subsection 2(a) above, and subject to subsection 2(c) below, in the event
the Optionee terminates employment or service with the Company or an Affiliate other than as a
result of Optionee’s death or Disability after the Optionee has attained age 65 or older, with at
least one year of employment or service for the Company, at a time when the Option granted pursuant
to this Award is not fully exercisable under Section 2(a) above, this Award shall become fully
exercisable as of the date of the Optionee’s termination of employment or service with the Company
or an Affiliate.

     (c) Good Faith Retirement Determination. In order for the accelerated vesting
referred to in subsections 2(b)(i)-(iv) above to occur upon the termination of employment or
service of the Optionee with the Company or an Affiliate other than as a result of Optionee’s death
or Disability, the Committee must make an determination, evidenced by an affirmative action on the
part of the Committee, that such termination of employment or service constitutes termination of
employment or other active for-profit service that is undertaken in good faith by the Optionee,
meaning, among other factors that may be taken into account in the sole discretion of the
Committee, that the termination of employment or service is determined by the Committee, in its
sole discretion, (A) not to be materially detrimental to the business interests of the Company;

4

 

(B) not to result in a violation of any obligations of the Optionee to the Company; and (C) to
be motivated by the Optionee’s intention, following such termination, to cease working on a full
time basis, for the Company or any other employer, or to provide any services, whether on a
consulting, independent contractor, employee or other basis to any entity engaged in the business
of owning, operating or developing commercial real estate. Absent such an affirmative action on
the part of the Committee, the accelerated vesting referred to in subsections 2(b)(i)-(iv) above
shall not occur.

     (d) Change of Control. Notwithstanding the foregoing, in the event there is a Change
of Control while the Optionee is employed by, or in the service of, the Company or an Affiliate and
subsequently Optionee’s service or employment is terminated by the Company other than “for cause”
within two years following a Change of Control, any portion of the Option that is not otherwise
exercisable shall become exercisable upon the date of such termination of employment or service
with the Company or an Affiliate.

     (e) Early Termination of Options. Notwithstanding the provisions of subsection 2 (a),
all right to exercise this Option shall terminate upon the first to occur of the following:

          (i) The third month anniversary of the date of termination of the Optionee’s services or
employment with the Company or an Affiliate for any reason other than death, Disability or
Retirement,

          (ii) The thirty-sixth month anniversary of the date of termination of the Optionee’s services
or employment with the Company or an Affiliate on account of

5

 

death, Disability or Retirement. Any Option not exercised within the one (1) year period after the
date of termination of the Optionee’s services or employment with the Company or an Affiliate due
to a Disability shall be treated as a Non-Qualified Option. Any Option not exercised within the
three month anniversary date after the termination of the Optionee’s services or employment with
the Company or an Affiliate on accont of Retirement shall be treated as a Non-Qualified Option.

          (iii) A finding by the Committee, after full consideration of the facts presented on behalf
of both the Company and the Optionee, that the Optionee has breached his or her employment or
service contract with the Company or an Affiliate, or has been engaged in disloyalty to the Company
or an Affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony
or proven dishonesty in the course of his or her employment or service, or has disclosed trade
secrets or confidential information of the Company or an Affiliate. In such event, in addition to
immediate termination of the Option, the Optionee shall automatically forfeit all Shares for which
the Company has not yet delivered the Share certificates upon refund by the Company of the Option
Price. Notwithstanding anything herein to the contrary, the Company may withhold delivery of Share
certificates pending the resolution of any inquiry that could lead to a finding resulting in a
forfeiture.

          (iv) The date, if any, set by the Board of Trustees as an accelerated expiration date in the
event of the liquidation or dissolution of the Company.

3. Transfers. This Option is not transferable by the Optionee otherwise than by will or
pursuant to the laws of descent and distribution in the event of the Optionee’s death (in which
event the Option may be exercised by the heirs or legal representatives of the Optionee). Except
as expressly set forth above in this Section 3, the Option may be exercised during the lifetime of
the Optionee only by the Optionee. Any attempt at assignment, transfer, pledge or disposition of
the Option contrary to the provisions

6

 

hereof or the levy of any execution, attachment or similar process upon the Option other than as
expressly set forth above in this Section 3 shall be null and void and without effect. Any
exercise of the Option by a person other than the Optionee shall be accompanied by appropriate
proofs of the right of such person to exercise the Option.

4. Method of Exercise and Payment. When exercisable under Section 2, the Option may
be exercised by written notice to the Company’s Treasurer specifying the number of Option Shares to
be purchased and, unless the Option Shares are covered by a then current registration statement or
a Notification under Regulation A under the Securities Act of 1933 (the “Act”), containing the
Optionee’s acknowledgment in form and substance satisfactory to the Company, that the Optionee (a)
is purchasing such Option Shares for investment and not for distribution or resale (other than a
distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made
without violating the registration provisions of the Act), (b) has been advised and understands
that (i) the Option Shares have not been registered under the Act and are “restricted securities”
within the meaning of Rule 144 under the Act and are subject to restrictions on transfer and (ii)
the Company is under no obligation to register the Option Shares under the Act or to take any
action which would make available to the Optionee any exemption from such registration, (c) has
been advised and understands that such Option Shares may not be transferred without compliance with
all applicable federal and state securities laws, and (d) has been advised and understands that an
appropriate legend referring to the restrictions contained in this Option may be endorsed on the
certificate. The notice shall be accompanied by payment of the aggregate Option Price of the
Option Shares being purchased (a) in cash, (b) by certified or cashier’s check payable to the order
of the Company, (c) subject to the terms of the Plan (including without limitation, Section 15 of
the Plan) by payment through a broker in accordance with procedures permitted by Regulation T of
the Federal Reserve Board or (d) by such

7

 

other mode of payment as the Board may approve. Such exercise shall be effective upon the actual
receipt by the Company’s Treasurer of such written notice and payment. In addition, except as
provided below, the Optionee may make payment in whole or in part in common shares of beneficial
interest in the Company. If payment is made in whole or in part in such shares, then the Optionee
shall deliver to the Company certificates registered in the name of the Optionee representing such
shares legally and beneficially owned by the Optionee, free of all liens, claims and encumbrances
of every kind and having a fair market value (as determined under the Plan) on the date of delivery
that is at least as great as the Option Price of the Option Shares with respect to which this
Option is to be exercised by payment in such shares, accompanied by powers duly endorsed in blank
by the Optionee. Notwithstanding the foregoing, the Committee, in its sole discretion, may refuse
to accept Shares in payment of the Option Price or may impose such other limitations and
prohibitions on the use of shares of beneficial interest in the Company to exercise this Option as
it deems appropriate. In the event the Committee refuses to accept Shares in payment of the Option
Price, any certificates representing Shares which were delivered to the Company shall be returned
to the Optionee with notice of the refusal of the Committee to accept such shares in payment of the
Option Price.

5. Adjustments on Changes in Capitalization. In the event that the outstanding
shares of beneficial interest in the Company are changed by reason of a reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, combination or exchange of
shares and the like (not including the issuance of shares on the conversion of other securities of
the Company which are outstanding on the date of grant and which are convertible into such shares)
or dividends payable in such shares, an equitable adjustment shall be made in the number of Shares
and price per Share subject to this Option in accordance with the applicable provisions of the
Plan.

8

 

6. Legal Requirements. If the listing, inclusion, registration or qualification of
the Option Shares upon any securities exchange, in any automated quotation system, or under any
federal or state law, or the consent or approval of any governmental regulatory body is necessary
as a condition of or in connection with the purchase of any Option Shares, the Company shall not be
obligated to issue or deliver the certificates representing the Option Shares as to which this
Option has been exercised unless and until such listing, inclusion, registration, qualification,
consent or approval shall have been effected or obtained. If registration is considered
unnecessary by the Company, the Company may cause a legend to be placed on the Option Shares being
issued calling attention to their having been acquired for investment and not having been
registered.

7. Plan Provisions; Administration. This Option has been granted pursuant to and is
subject to the terms and provisions of the Plan. Subject to the provisions of the Plan, all
questions of interpretation and application of the Plan and this Option shall be determined by the
Committee. The Committee determination shall be final, binding and conclusive.

8. Notices. Any notice to be given to the Company shall be in writing and shall be
addressed to the Treasurer of the Company at its principal executive office, and any notice to be
given to the Optionee shall be addressed to the Optionee at the address then appearing in the
records of the Company or the Affiliate of the Company relating to addresses of members of the
Board or at such other address as either party hereafter may designate in writing to the other.
Except as otherwise set forth herein, any such notice shall be deemed to have been duly given, made
and received only when personally delivered, or on the day delivery is guaranteed when transmitted,
addressed as aforesaid, to a third party company or governmental entity providing delivery services
in the ordinary course of business, or two days following the day when deposited in the

9

 

United States mails, by registered or certified mail, postage prepaid, return receipt requested,
addressed as aforesaid. Notwithstanding the foregoing, any notice of exercise pursuant to Section
4 shall be deemed to have been duly given, made or received only upon actual receipt by, or upon
tender of delivery to, the addressee of such notice.

9. No Commitment to Retain. Nothing herein contained shall affect the right of the
Company or any Affiliate to terminate the Optionee’s services, responsibilities, duties, or
authority to represent the Company or any Affiliate at any time for any reason whatsoever.

10. Amendment. The Board of Trustees of the Company shall have the right to amend
this Option, subject to the Optionee’s consent if such amendment is not favorable to the Optionee,
except that the consent of the Optionee shall not be required for any amendment made under
Subsection 8(e) (i) (E) or Section 10 of the Plan.

11. Withholding of Taxes. Whenever the Company proposes or is required to deliver or
transfer Option Shares in connection with the exercise of this Option, the Company shall have the
right to (a) require the Optionee to remit to the Company an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such Option Shares or (b) take whatever action it deems necessary
to protect its interests with respect to tax liabilities.

12. Notification of Company Upon Early Disposition of Option Shares. If, following
the exercise of this Option in whole or in part, the Optionee disposes of any Option Shares within
two years from the date of grant of this Option or within one year after the transfer of the Option
Shares to the Optionee, the Optionee shall give notice in writing to the
Committee of such disposition and shall provide the Committee with such other information as the
Committee may reasonably request.

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IN WITNESS WHEREOF, the Company has granted this Option on the day and year first above
written.

	 	 	 	 	 
	 	LIBERTY PROPERTY TRUST

 	 
	 	By:  	 	 
	 	 	William P. Hankowsky 	 
	 	 	President and

Chief Executive Officer 	 
	 
	 	ACKNOWLEDGED:

 	 
	 	By:  	 	 
	 	Optionee:   «Optionee» 	 
	 	 	 	 
	 

11

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