Document:

irt-ex104_448.htm

Exhibit 10.4

INDEPENDENCE REALTY TRUST, INC.

LONG TERM INCENTIVE PLAN

2017 PERFORMANCE SHARE UNIT AWARD 

GRANT AGREEMENT

 

To:  [Name]

 

Attached as Appendix A hereto is a summary of the Annual Equity Award Program (“Equity Program”) issued pursuant to the Independence Realty Trust Long Term Incentive Plan (“Plan”).  You have been granted a 2017 Performance Share Unit Award (the “Award”) under the Equity Program.  This Performance Share Unit Award Grant Agreement (the “Grant Agreement”) sets forth the potential number of Performance Share Units (each, a “Unit”) that may vest and be redeemed under this Award and its terms and conditions.  The Award is contingent upon your acknowledgement and acceptance of the terms and conditions as set forth in this Grant Agreement, the Equity Program and Plan.

 

		
	
Grant Date:
	
February 28, 2017

 

	
Maximum Number of Performance Share Units:
	
[Number]

	
 
	
The actual number of Performance Share Units that may vest and be redeemed shall be determined according to the level of achievement of the performance targets (“Performance Targets”) established by the Committee (as defined in the Plan) on February 28, 2017 and set forth in Appendix A hereto.

 

	
Nature of Units:
	
Each Unit represents the right to receive one share of Independence Realty Trust, Inc. (“IRT”) Common Shares (the “Common Shares”) or the cash equivalent based on Fair Market Value (as defined in the Plan) on the date of vesting, pursuant to the terms of this Agreement, and consistent with the provisions of the Plan, including any adjustment hereunder or thereunder, as applicable.  The Committee shall determine in its sole discretion at any time and from time to time through the date of vesting of the Unit whether any or all vested Units shall be redeemed with Common Shares or cash or any combination thereof.

 

 

		
	
Vesting:
	
The Performance Share Units awarded pursuant to the terms of this Grant Agreement and the Equity Program, shall vest 50% upon achievement of the Performance Targets determined as of the last day of the three year performance period (the “Performance Period”).  The Compensation Committee will make a determination on your satisfaction of Performance Targets within three months of the completion of the Performance Period (the “Determination Date”), which shall also be the initial vesting date of such Units.  The remaining 50% of the Performance Share Units shall vest on the first anniversary of the last day of the Performance Period.  In each case, vesting is contingent upon your continued employment through the vesting date and subject to the terms of any employment agreement between you and IRT.  The above notwithstanding, if your employment is terminated due to death, or disability, other than voluntarily or for cause (as defined in the your employment agreement) (a “Qualified Termination”) prior to the conclusion of the Performance Period, then such performance period will 

be shortened to conclude on the last day of the calendar quarter immediately preceding the date of such Qualified Termination (a “Shortened Performance Period”).  In such event, the Compensation Committee will determine within three months after the date of such Qualified Termination the number of Performance Share Units earned, if any, for such Shortened Performance Period in accordance with the performance criteria established for such award.  Your earned Performance Share Units, if any, will vest as of the date that the Compensation Committee determines the achievement of such performance criteria and will not be subject to the additional time based vesting period.  The number of Performance Share Units vested shall be determined on a pro rata basis by multiplying the number of Performance Share Units earned by a fraction, the numerator is the number of days in the Shortened Performance Period and the denominator of which is the number of days in the original 3-year Performance Period.  If the Performance Targets are not met, you will not vest in any Units.

 

	
Vesting at Retirement
	
If your employment is terminated due to “Retirement” (as defined below) Performance Share Units shall vest in the following manner.   If your Retirement occurs during the Performance Period, the number of Performance Share Units vested shall be determined on a pro rata basis by multiplying the Performance Share Units earned in the Performance Period pursuant to Appendix A by a fraction, the numerator is the number of days from the beginning of the Performance Period to the date of your Retirement and the denominator of which is the total  number of days in the 3-year Performance Period. 

 

If your Retirement occurs after the Performance Period, 100% of your Performance Share Units earned in the Performance Period shall vest upon Retirement. 

 

The above notwithstanding in no event shall you vest in any Performance Share Units if the Performance Targets are not met. 

 

For purposes of this section “Retirement” shall mean your voluntary separation of employment following satisfaction of the “Rule of 70.”  The Rule of 70 shall be satisfied upon (1) completion of at least fifteen (15) years of service with IRT or its related entities; (2) attainment of age 55 and (3) your combined age and service equals at least 70.   You may separate upon Retirement subject to (i) your providing at least six (6) months’ advanced notice to IRT; and (ii) your consent to enter into non-compete, non-solicitation agreement with IRT (including related entities) for a period of up to three years (or such shorter period as permitted under applicable state law); and (iii) your execution of a release in favor of IRT (including its related entities, officers, directors, members and employees) of all potential claims arising in the context of your employment.  Any or all of the above conditions may be waived or modified at the sole discretion of the Compensation Committee.

 

	
Performance Period:
	
Fiscal Years 2017, 2018 and 2019.

 

2

 

		
	
Voting/Dividend Rights:
	
Units will not have any voting rights.

 

Following the 3-year Performance Period, IRT shall establish a “Dividend Equivalent Account” with respect to those Performance Share Units that remain unvested. If any dividends are paid with respect to IRT’s common shares, you will receive a credit to your Performance Share Unit Award Dividend Account equal to the value of the cash dividends that would have been distributed if you held the number of IRT’s common shares represented by such unvested Units. (No credit shall be made with respect to Performance Share Units vesting at the end of the 3-year Performance Period.) Within thirty (30) days following the date any such unvested Performance Share Units become vested, a cash payment will be paid to you by IRT equal to the value of the aggregate amount of cash credited to your Dividend Equivalent Account for the corresponding number of common shares represented by such Performance Share Units. No interest shall accrue with respect to any cash amounts credited to your Dividend Equivalent Account. If any unvested Performance Share Units are forfeited for any reason prior to vesting, the aggregate amount credited to your Dividend Equivalent Account with respect to such unvested Performance Share Units shall also be forfeited and you shall not have any rights with respect to any such amounts.

 

	
Tax Liability and Payment of Taxes:
	
You acknowledge and agree that any income or other taxes due from you with respect to the Award issued pursuant to this Grant Agreement shall be your responsibility.  Upon vesting, you may elect to have a portion of the Units withheld in order to satisfy your tax obligations.

 

	
Redemption:
	
Promptly following the Committee’s determination that any Units have vested, IRT shall notify you (or your personal representative, heir or legatee in the event of your death or incapacity) that your Units are redeemable pursuant to Section 4.04 of the Plan and shall, within 60 days of such notice, deliver a certificate for such shares; provided, however, that IRT, in its sole discretion, shall have the option to pay you the fair market value of the shares, which shall be measured as of the date when the right to the shares became vested, in lieu of delivery of the certificate. The Committee may condition delivery of the certificate or cash, as applicable, upon the prior receipt from you of any undertakings which it may determine are required to assure that the certificate or cash, as applicable, is being issued in compliance with federal and state securities laws. The right to payment of any fractional shares shall be satisfied in cash, measured by the product of the fractional amount times the fair market value of a share when the right to the shares became vested.

 

The above notwithstanding, in the event that the Units vest due to Retirement, 50% of the earned Units are redeemable as of the Determination Date and the remaining 50% shall be redeemable on the first anniversary of the last day of the Performance Period.  

 

3

 

		
	
Transferability:
	
Except as otherwise provided in this Grant Agreement, until the award vests and become non-forfeitable, you may not transfer or assign the 

award for any reason, other than under your will or as required by intestate laws.  Any attempted transfer or assignment will be null and void.

 

	
Restrictions on Resale:
	
By accepting this Grant Agreement, you agree to be bound by IRT’s policies regarding the transfer of the Common Shares and understand that there may be certain times during the year in which the you will be prohibited from selling, transferring, pledging, donating, assigning, mortgaging, or encumbering Common Shares

 

	
Clawback:
	
In addition to, and not in limitation of, the forfeiture of the Award (or any portion thereof) as provided in this Grant Agreement, the Equity Program or the Plan, IRT may recover amounts paid to you pursuant to this Award to the extent that the Committee, following an appropriate investigation and consideration of all relevant circumstances, determines that you have engaged in fraud or willful misconduct that caused the requirement for a material accounting restatement of IRT’s financial statements due to material noncompliance with any financial reporting requirement (excluding any restatement due solely to a change in accounting rules).

 

	
Miscellaneous:
	
As a condition of the granting of this Award, you agree, for yourself and your legal representatives and/or guardians, that this Grant Agreement shall be interpreted by the Board (or a committee thereof) and that any such interpretation of the terms of this Grant Agreement and any determination made by the Board (or a committee thereof) pursuant to this Grant Agreement shall be final, binding and conclusive.  This Grant Agreement may be executed in counterparts.  This Grant Agreement and the Award granted hereunder shall be governed by Maryland Law.

 

This Grant Agreement and the Award granted hereunder are granted under and governed by the terms and conditions of the Plan, the provisions of which are incorporated herein by reference.  Additional provisions regarding your Award and definitions of capitalized terms used and not defined in this Grant Agreement can be found in the Plan.  Any inconsistency between this Grant Agreement and the Plan shall be resolved in favor of the Plan. You hereby acknowledges receipt of a copy of the Plan. The invalidity or unenforceability of any provisions of this Grant Agreement shall not affect the validity or enforceability of any other provision of this Grant Agreement, which shall remain in full force and effect.  In the event that any provision of this Grant Agreement or any word, phrase, clause, sentence, or other portion hereof (or omission thereof) should be held to be unenforceable or invalid for any reason, such provision or portion thereof shall be modified or deleted in such a manner so as to make this Grant Agreement as so modified legal and enforceable to the fullest extent permitted under applicable law.

 

4

 

BY SIGNING BELOW AND ACCEPTING THIS GRANT AGREEMENT AND THE AWARD GRANTED HEREUNDER, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE PLAN.  YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN.

 

 

_______________________________________________________________

Authorized OfficerGrantee

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Appendix A

Effective February 28, 2017,  the compensation committee (the “Compensation Committee”) of the board of directors (the “Board”) of Independence Realty Trust, Inc. (“IRT”) approved awards under Independence Realty Trust, Inc. Long Term Incentive Plan (as amended and restated May 12, 2016) (the “2016 Plan”) for three of IRT’s executive officers (the “Eligible Officers”).  These awards included awards intended to qualify as “qualified performance-based compensation” under section 162(m) of Internal Revenue Code and Article X of the 2016 Plan.  The Compensation Committee adopted an Annual Equity Award Program (the “Equity Program”) pursuant to the 2016 Plan and made awards thereunder (the “2017 Equity Awards ”) to the Eligible Officers setting forth the basis on which the Eligible Officers could earn and vest in equity compensation over the years 2017 through 2020.  The Eligible Officers are Scott F. Schaeffer, IRT’s Chairman and Chief Executive Officer, Farrell M. Ender, IRT’s President, and James J. Sebra, IRT’s Chief Financial Officer and Treasurer.  The terms of the 2017 Equity Awards are described below.  On February 28, 2017, the Compensation Committee also made a separate award which vested immediately of 624 shares of IRT common stock under the 2016 Plan to Mr. Ender.

 

2017 Equity Awards

 

The Compensation Committee is granting restricted share Equity Award under the 2017 Equity Awards Plan consisting of the following two components:

 

	
 
	
•
	
“Performance Component” - 75% of the value of each Eligible Officer’s 2017 potential Equity Award will be based on the attainment of absolute and relative Total Shareholder Return (“TSR”) hurdles over a three-year period, which include both share price appreciation and reinvestment of common stock dividends, as well as a subjective evaluation of the achievement of strategic objectives.   This component consists of Performance Share Unit Awards (the “2017 PSUs”) authorized by the Compensation Committee under the Equity Program adopted pursuant to the 2016 Plan, with the number of shares of IRT common stock (“Common Shares”) issued or their equivalent value in cash paid, at the Compensation Committee’s option, at the conclusion of the relevant performance period. The number of 2017 PSUs earned will be determined (a) for 80% by IRT’s performance for the three year period commencing January 1, 2017 and ending December 31, 2019 relative to two long term performance metrics established by the Compensation Committee, as described in greater detail below, and (b) for 20% of the awards, by the Compensation Committee’s subjective evaluation of the Eligible Officer’s contribution to the creation of overall stockholder value.   

	
 
	
•
	
The actual number of 2017 PSUs earned by a participant may range from 0% to 150% of target based on actual performance for the performance period. The performance based awards vest 50% at December 31, 2019 based on performance for 2017-2019, and the 50% balance, consisting of the same number of shares that were awarded at December 31, 2019, become time vesting and vest one year thereafter, subject to forfeiture in such year only in the event IRT has terminated the Eligible Officer’s employment for cause or the Eligible Officer has resigned without good reason as determined, in each situation, under such Eligible Officer’s employment agreement. The Compensation Committee currently intends to redeem any vested 2017 PSUs with Common Shares, subject to the availability of shares of IRT common stock under the 2016 Plan at the time of vesting. 

 

					
	
Performance Criteria
	
2017 Weighting
	
Threshold
	
Performance Criteria
Target
	
Maximum

	
Relative 3-year TSR(1)
	
60%
	
30th percentile
	
50th percentile
	
75th percentile

	
Absolute 3-Year TSR
	
20%
	
22.50%
	
33.75%
	
45.00%

	
Strategic Objectives
	
20%
	
 
	
Subjective
	
 

(1) For purposes of determining the Company’s achievement against this metric, the Company’s TSR will be compared to the constituents of the FTSE NAREIT Apartment Index (the “Index”) over the performance period, using the relative percentile ranking approach for all constituents that are included in the Index over the full performance period.  

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No awards will be earned if below Threshold performance is achieved for a particular metric.

 

	
 
	
•
	
“Time-Based Component” - The remaining 25% of the potential Equity Award will be time-based.   This component consists of Restricted Stock Awards (the “2017 Stock Awards”) authorized by the Compensation Committee under the Equity Program adopted pursuant to the 2016 Plan,.  The shares of IRT common stock subject to the Annual Restricted Share Awards will vest 25% per annum on the first four anniversaries from the date of grant.

 

Number of PSUs and 2017 Stock Awards

 

The number of 2017 PSUs awarded is set forth below and was determined by dividing the maximum dollar amount of the award that may be earned by IRT’s closing stock price on the NYSE MKT on February 28, 28, 2017, the grant date, $9.19, based on the following proposed individual award opportunities.  The number of shares awarded for 2017 Stock Awards is set forth below and was determined by dividing the dollar amount of the award based by such closing stock price. 

 

						
	
 
	
 
	
 
	
Performance-Based Award

	
Executive
	
Total Target Award
	
Time-Based Award
	
Threshold
	
Target
	
Maximum

	
Scott F. Schaeffer
	
$1,000,000
	
$250,000
	
$375,000
	
$750,000
	
$1,125,000

	
Farrell M. Ender
	
400,000
	
100,000
	
150,000
	
300,000
	
450,000

	
James J. Sebra
	
450,000
	
112.500
	
168,750
	
337,500
	
506,250

 

 

						
	
Executive
	
Number of 2017 Stock Awards
	
Number of 2017 PSUs
	
 
	
 
	
 

	
Scott F. Schaeffer
	
27,203
	
122,416
	
 
	
 
	
 

	
Farrell M. Ender
	
10,881
	
48,966
	
 
	
 
	
 

	
James J. Sebra
	
12,242
	
55,087
	
 
	
 
	
 

Additional Terms of the 2017 Equity Awards 

Dividends will be paid with respect to outstanding 2017 Stock Awards, subject to forfeiture prior to vesting. Dividend equivalents will not be paid on the 50% of the 2017 PSUs that have met the 3 year performance based criteria and have vested, but dividend equivalents will be paid on the remaining 50 % of the 2017 PSUs only for the year during which they time vest, subject to forfeiture prior to vesting. No dividend equivalents will be paid while the 2017 PSUs are subject to performance criteria. Dividend equivalents will accrue only on the portion of the 2017 PSUs which have met the performance criteria and remain subject only to time vesting.

The 2017 Stock Awards will have voting rights and the 2017 PSUs will not have any voting rights. 

Any Eligible Officer whose employment is terminated will forfeit any unvested 2017 Equity Awards except with respect to 2017 PSUs in the event of a Qualified Termination or Retirement as described below and except where such Eligible Officer’s employment agreement with IRT provides for accelerated vesting in defined circumstances. 

If an Eligible Officer’s employment is terminated due to death or disability and other than voluntarily or for cause (as defined in the relevant employment agreement for each Eligible Officer) (a “Qualified Termination”) prior to the conclusion of the 3-year performance period applicable to such Eligible Officer’s 2017 PSUs, then such performance period will be shortened to conclude on the date of such Qualified Termination (a “Shortened Performance Period”). In such event, the Compensation Committee will determine within three months after the date of such Qualified Termination the number of 2017 PSUs earned by such Eligible Officer, if any, for such Shortened Performance Period in accordance with the performance criteria established for such award. The Eligible Officer’s earned 2017 PSUs, if any, will vest as of the date that the Compensation Committee determines the achievement of such performance criteria and will not be subject to the additional time based vesting period. The number of 2017 PSUs eligible to be earned shall be determined on a pro rata basis by multiplying the number of 2017 PSUs issued to such Eligible Officer by a fraction, the numerator is the number of days in the Shortened Performance Period and the denominator of which is the number of days in the original 3-year Performance Period. With respect to earned 

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2017 PSUs held by the Officer for which the Performance Period is complete but for which the additional time-based vesting period is incomplete prior to the Eligible Officer’s Qualified Termination, any restrictions on such earned awards shall lapse and such earned awards shall automatically become fully vested as of the date of such Qualified Termination. 

In the event of an Eligible Officer’s “Retirement” (as defined below), the 2017 PSUs will vest in the following manner. If such Retirement occurs during the performance period, the number of 2017 PSUs vested will be determined on a pro rata basis by multiplying the 2017 PSUs earned in the performance period by a fraction, the numerator is the number of days from the beginning of the performance period to the date of such Retirement and the denominator of which is the total number of days in the 3-year performance period. If an Eligible Officer’s Retirement occurs after the performance period, 100% of the 2017 PSUs earned in the performance period will vest upon Retirement. The above notwithstanding in no event will any 2017 PSUs vest if the performance targets are not met. “Retirement” is defined in the 2017 PSUs as the Eligible Officer’s voluntary separation of employment following satisfaction of the “Rule of 70.” The Rule of 70 will be satisfied upon (1) completion of at least fifteen (15) years of service with IRT or its related entities; (2) attainment of age 55 and (3) such Eligible Officer’s combined age and service equals at least 70. An Eligible Officer may separate upon Retirement subject to providing at least six (6) months’ advance notice to IRT and entering into a separate three-year non-competition and non-solicitation agreement if requested. In the event the 2017 PSUs vest due to Retirement, 50% of the vested 2017 PSUs will be redeemable as of the relevant determination date and the remaining 50% will be redeemable on the first anniversary of the last day of the performance period. 

Clawback Policy 

Awards made under the 2017 Cash Bonus Awards and the 2017 Equity Awards for the Eligible Officers are subject to a clawback policy which will allow IRT to recover amounts paid to such officer pursuant to such awards to the extent that the Compensation Committee, following an appropriate investigation and consideration of all relevant circumstances, determines that such officer has engaged in fraud or willful misconduct that caused the requirement for a material accounting restatement of IRT’s financial statements due to material noncompliance with any financial reporting requirement (excluding any restatement due solely to a change in accounting rules). 

8irt-ex105_447.htm

Exhibit 10.5

 

[Specimen Award to Eligible Officers]

 

INDEPENDENCE REALTY TRUST, INC.

LONG TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD CERTIFICATE

 

To the Grantee Named Below:

 

You have been granted Restricted Stock of Independence Realty Trust, Inc. (the “Company”) under Section 9.1 of the Independence Realty Trust, Inc. Long Term Incentive Plan (the “Plan”).  This Restricted Stock Award Certificate (the “Award Certificate”) sets forth the aggregate number of shares under this Award and its terms and conditions.  This Award is contingent upon your acknowledgement and acceptance of the terms and conditions as set forth in this Award Certificate and in the Plan.

 

 

		
	
Grant Date:
	
February 28, 2017

 

	
Number of Shares:
	
__________________

 

	
Vesting:
	
You are receiving this Award which represents your 2017 Stock Awards under the Plan in your capacity as an Eligible Officer. Your award will vest provided that you continue as an employee of the Company or any Affiliate through the following:  

 

First anniversary of Grant Date                                    1/4 of Shares

Second anniversary of Grant Date                                1/4 of Shares

Third anniversary of the Grant Date                             1/4 of Shares

Fourth anniversary of the Grant Date                           1/4 of Shares

 

Additionally, your award will vest all of the Shares under this Award if the Company undergoes a Change in Control (as defined in the Plan) and your service is terminated within one year of such Change in Control.  

 

	
 
	
If your employment service with the Company terminates by reason of death or Disability, then your Restricted Stock will become fully vested.  

 

If your service with the Company terminates prior to full vesting for any reason other than death, Disability or Change in Control, you shall forfeit any remaining unvested Restricted Stock and related dividends subject to this Award as of the date of such termination of service.  Upon a forfeiture, unvested Restricted Stock and related dividends shall be transferred to the Company.  If your employment service with the Company terminates prior to full vesting, but you continue to provide services to the Company as a Consultant, then such termination of service shall not result in the forfeiture of unvested Restricted Stock.

 

 

Restricted Stock Grant Award Certificate

 

		
	
Rights a Shareholder:
	
Except as otherwise provided in this Award Certificate or the Plan, you shall have all the rights of a stockholder of the Company with respect to the Restricted Stock, subject to the restrictions, including, without 

limitation, voting rights and allocation of cash or stock dividends, in respect of the Restricted Stock subject to the vesting of the Award.  

 

The Company may require you to execute an “Investment Representation Statement” and enter into a shareholder’s agreement or any other agreement required by the Board or shareholders in general, with such terms and conditions as the Company may prescribe.

 

	
Tax Liability of the Participant and Payment of Taxes:
	
You acknowledge and agree that any income or other taxes due from you with respect to the Restricted Stock issued pursuant to this Award Certificate shall be your responsibility. Upon vesting, you may elect to have a portion of your vested shares withheld in order to satisfy your tax obligations.  

Upon execution of this Award Certificate, you may file an election under Section 83(b) of the Code  (See attached Exhibit A ). You have been given the opportunity to obtain the advice of your tax advisors with respect to the tax consequences of the Restricted Stock and the provisions of this Award Certificate.  You assume all responsibility for filing the Section 83(b) election and paying any taxes resulting from such election or from failure to file the election and paying taxes resulting from the lapse of the restrictions on the unvested shares. Tax obligations arising from the Section 83(b) election must be paid by you and cannot be satisfied by withholding shares. 

 

	
Transferability:
	
Except as otherwise provided in this Award Certificate, until the Restricted Stock vests and become non-forfeitable, you may not transfer or assign the Restricted Stock for any reason, other than under your will or as required by intestate laws.  Any attempted transfer or assignment will be null and void.

 

	
Restrictions on Resale:

 
	
By accepting this Award Certificate, you agree not to sell any Restricted Stock acquired under this Award Certificate at a time when applicable laws, the Company or Company policies, any stockholder agreement or other agreement to which you are a party or any agreement between the Company and its underwriters, prohibit a sale. 

 

 

	
Miscellaneous:

 
	
As a condition of the granting of this Award, you agree, for yourself and your legal representatives and/or guardians, that this Award Certificate shall be interpreted by the Board (or a committee thereof) and that any such interpretation of the terms of this Award Certificate and any determination made by the Board (or a committee thereof) pursuant to this Award Certificate shall be final, binding and conclusive.  This Award Certificate may be executed in counterparts.  This Award Certificate and the Restricted Stock granted hereunder shall be governed by Maryland Law.

 

 

 

This Award Certificate and the Restricted Stock granted hereunder are granted under and governed by the terms and conditions of the Plan, the provisions of which are incorporated herein by reference.  Additional provisions regarding your Restricted Stock and definitions of capitalized terms used and not defined in this Restricted Stock can be found in the Plan.  Any inconsistency between this Award Certificate and the Plan shall be resolved in favor of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan. The invalidity or unenforceability of any provisions of this Award Certificate shall not affect the validity or enforceability of any other provision of this Award Certificate, which shall remain in full force and effect.  In the event that any provision of this Award Certificate or any word, phrase, clause, sentence, or other portion hereof (or omission thereof) should be held to be unenforceable or invalid for any reason, such provision or portion thereof shall be modified or deleted in such a manner so as to make this Award Certificate as so modified legal and enforceable to the fullest extent permitted under applicable law.

 

BY SIGNING BELOW AND ACCEPTING THIS AWARD CERTIFICATE AND THE RESTRICTED STOCK GRANTED HEREUNDER, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN AND IN THE PLAN.  YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN.

 

INDEPENDENCE REALTY TRUST, INC.GRANTEE

 

 

By: _______________________________________________________________

Name:  _________________________

Title:  __________________________

 

INDEPENDENCE REALTY TRUST, INC.

TWO LOGAN SQUARE

100 N. 18TH STREET

PHILADELPHIA, pa 19103

 

To:Participants Receiving Share Awards

Re:“83(b) Election” for Federal Income Tax Treatment

 

You have been awarded Common Shares of Independence Realty Trust, Inc. (“Common Shares”) pursuant to the Independence Realty Trust, Inc. Long Term Incentive Plan (the “Plan”) as described in the Restricted Stock Award Certificate (the “Award”).  This memorandum outlines the tax treatment of the Award, and explains the opportunity you have to impact that treatment if you make an appropriate election as provided under Section 83(b) of the Internal Revenue Code (“Code”), or an “83(b) election”.  This memorandum is for information purposes only and should not be construed as tax or financial planning advice.  You should consult with your personal tax advisor to determine the most appropriate course based on your personal financial goals.  

Federal Income Taxes

 

The Award consists of Common Shares, the Fair Market Value of which is taxed at ordinary income rates when the restrictions applicable to the Common Shares lapse and you become “vested” in such Common Shares.  The vesting schedule of the Common Shares is set forth in your Award.  The Award provides that you may elect to satisfy any withholding tax arising on a vesting date by having Common Shares and related dividends subject to the Award withheld with a Fair Market Value equal to the tax due. 

 

Under Section 83(b) of the Code, you have the option of electing to include as ordinary income in your taxable income for 2017 the Fair Market Value at the grant date of some or all of the unvested Common Shares included in the Award.  An 83(b) election allows you to defer the remaining tax on the appreciation on the Common Shares, if any, that occurs during the vesting period until you sell or otherwise dispose of the Common Shares.  Any appreciation or depreciation of the Common Shares at disposition will be taxable as a capital gain or loss, respectively.  The risk, however, is that if you do not vest in the Common Shares included in the Award after having made a Section 83(b) election, you will have paid federal income taxes on property that will be forfeited and the taxes paid are not deductible.  In addition, any withholding taxes due when you make an 83(b) election must be paid in cash and cannot be satisfied by having Common Shares and related dividends subject to the Award withheld. 

 

Under your current Award, if you make an 83(b) election, you are required to include in your 2017 ordinary income an amount equal to the product resulting from multiplying the Fair Market Value of a Common Share on the grant date by the number of Common Shares in your Award subject to your 83(b) election.  You will have no additional tax liability when vesting occurs.  When you sell any Common Shares in your Award, any appreciation in excess of the Fair Market Value of a Common Share on the grant date will be taxed as capital gain. 

 

 

If you do not make an 83(b) election, the Fair Market Value of such Common Shares on the vesting date, including any appreciation after the date of grant, will be includable as ordinary income in the year when the Common Shares vest.  

 

Code Section 83(b) election

 

A copy of the 83(b) election form is included with your Award Certificate.  The 83(b) election must be filed with the IRS within 30 days of the grant date of the Award.  This initial filing must be made with the Internal Revenue Service Center with which you file your Federal income tax returns.  Additionally, you are required to file a copy of your 83(b) election (1) with your income tax return for the taxable year in which you receive the Award  (in this case, your 2017 tax return) and (2) with the Company Human Resources department.  The 83(b) election is irrevocable except with the consent of the IRS.  You need not make the election with respect to all of the Common Shares granted in the Award.

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