Document:

Exhibit 10.1

 

FORM OF ADVISORY AGREEMENT

 

AMONG

 

CLARION PROPERTY TRUST INC.,

 

CLARION PROPERTY TRUST OPERATING PARTNERSHIP LP,

 

AND

 

CPT ADVISORS LLC

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Definitions

  	
  1

  
	
  2.

  	
  Appointment

  	
  6

  
	
  3.

  	
  Duties of the Advisor

  	
  6

  
	
  4.

  	
  Authority of Advisor

  	
  9

  
	
  5.

  	
  Sub-Advisors

  	
  9

  
	
  6.

  	
  Bank Accounts

  	
  10

  
	
  7.

  	
  Records; Access

  	
  10

  
	
  8.

  	
  Limitations on Activities

  	
  10

  
	
  9.

  	
  Relationship with Directors

  	
  10

  
	
  10.

  	
  Advisory Fee

  	
  11

  
	
  11.

  	
  Expenses

  	
  12

  
	
  12.

  	
  Other Services

  	
  13

  
	
  13.

  	
  Reimbursement to the Advisor

  	
  13

  
	
  14.

  	
  Other Activities of the Advisor

  	
  14

  
	
  15.

  	
  Relationship of the Parties

  	
  14

  
	
  16.

  	
  The Clarion Name

  	
  15

  
	
  17.

  	
  Term of Agreement

  	
  15

  
	
  18.

  	
  Termination by the Parties

  	
  15

  
	
  19.

  	
  Assignment to an Affiliate

  	
  15

  
	
  20.

  	
  Payments to and Duties of Advisor Upon Termination

  	
  15

  
	
  21.

  	
  Indemnification by the Company and the Operating
  Partnership

  	
  16

  
	
  22.

  	
  Indemnification by Advisor

  	
  16

  
	
  23.

  	
  Non-Solicitation

  	
  16

  
	
  24.

  	
  Miscellaneous

  	
  17

  

 

i

 

FORM OF
ADVISORY AGREEMENT

 

THIS
ADVISORY AGREEMENT (the “Agreement”), dated as of the         
day of     , 2010 and effective as of the date the
Registration Statement (as defined below) is declared effective by the
Securities and Exchange Commission (the “Effective Date”), is among
Clarion Property Trust Inc., a Maryland corporation (the “Company”),
Clarion Property Trust Operating Partnership LP, a Delaware limited partnership
(the “Operating Partnership”), and CPT Advisors LLC, a Delaware limited
liability company. Capitalized terms used herein shall have the meanings ascribed
to them in Section 1 below.

 

W I T N E S S E T H

 

WHEREAS,
the Company intends to qualify as a REIT, and to invest its funds in
investments permitted by the terms of Sections 856 through 860 of the
Code;

 

WHEREAS,
the Company is the general partner of the Operating Partnership and intends to
conduct all of its business and make all Investments through the Operating
Partnership;

 

WHEREAS,
the Company and the Operating Partnership desire to avail themselves of the
experience, sources of information, advice, assistance and certain facilities
of the Advisor and to have the Advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of, and subject to the
supervision of, the Board, all as provided herein; and

 

WHEREAS,
the Advisor is willing to undertake to render such services, subject to the
supervision of the Board, on the terms and conditions hereinafter set forth;

 

NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:

 

1.             DEFINITIONS.  As used in this Agreement, the following terms have the definitions
hereinafter indicated:

 

Acquisition Expenses. Any and all expenses incurred by the Company, the
Operating Partnership, the Advisor, or any of their Affiliates in connection
with the selection, acquisition, origination, making or development of any
Investments, whether or not acquired, including, without limitation, legal fees
and expenses, travel and communications expenses, costs of appraisals,
nonrefundable option payments on property not acquired, accounting fees and
expenses, title insurance premiums, and the costs of performing due diligence.

 

Advisor. CPT Advisors
LLC, a Delaware limited liability company, any successor advisor to the Company,
the Operating Partnership or any Person to which CPT Advisors LLC or any
successor advisor subcontracts substantially all of its functions.
Notwithstanding the foregoing, a Person hired or retained by CPT Advisors LLC
to perform sub-advisory or property management and related services for the
Company or the Operating Partnership that is not hired or retained to perform
substantially all of the functions of CPT Advisors LLC with respect to the
Company or the Operating Partnership as a whole shall not be deemed to be an
Advisor.

 

Advisory Fee. The fee payable
to the Advisor pursuant to Section 10.

 

Affiliate or Affiliated. With respect to any Person, (i) any Person
directly or indirectly owning, controlling or holding, with the power to vote,
10.0% or more of the outstanding voting securities of such other Person; (ii) any
Person 10.0% or more of whose outstanding voting securities are directly or 

 

 

indirectly
owned, controlled or held, with the power to vote, by such other Person; (iii) any
Person directly or indirectly controlling, controlled by or under common
control with such other Person; (iv) any executive officer, director,
trustee or general partner of such other Person; and (v) any legal entity
for which such Person acts as an executive officer, director, trustee or
general partner.

 

Annual Total Return. As further described in Section 10,
the investment return provided to Stockholders, which shall generally be equal
to the aggregate sum for all Shares outstanding during the period of (i) distributions
paid per Share over the period plus (ii) the increase or decrease of NAV
per Share over the period.

 

Articles of Incorporation. The Articles of Incorporation of the Company, as
amended from time to time.

 

Average Invested Assets. For a specified period, the average of the aggregate
book value of the assets of the Company invested, directly or indirectly, in
Investments before deducting depreciation, bad debts or other non-cash
reserves, computed by taking the average of such values at the end of each
month during such period.

 

Board. The board of
directors of the Company, as of any particular time.

 

Business Day. Any day on
which the New York Stock Exchange is open for trading.

 

Bylaws. The bylaws of
the Company, as the same are in effect from time to time.

 

Cause. With respect to
the termination of this Agreement, fraud, criminal conduct, willful misconduct
or willful or negligent breach of fiduciary duty by the Advisor in connection
with performing its duties hereunder.

 

Code. Internal
Revenue Code of 1986, as amended from time to time, or any successor statute
thereto. Reference to any provision of the Code shall mean such provision as in
effect from time to time, as the same may be amended, and any successor
provision thereto, as interpreted by any applicable regulations as in effect
from time to time.

 

Company. Company shall
have the meaning set forth in the preamble of this Agreement.

 

Dealer Manager. ING Funds
Distributor, LLC, or such other Person or entity selected by the Board to act
as the dealer manager for the Offering.

 

Dealer Manager Fee. The dealer manager fee payable to the Dealer Manager
as described in the Company’s Prospectus.

 

Director. A member of the
Board.

 

Distribution Fee. The
distribution fee payable to the Dealer Manager and reallowable to Participating
Broker-Dealers with respect to Shares sold by them as described in the Company’s
Prospectus.

 

Distributions. Any
distributions of money or other property by the Company to owners of Shares,
including distributions that may constitute a return of capital for federal
income tax purposes.

 

2

 

Effective Date. Effective Date
shall have the meaning set forth in the preamble of this Agreement.

 

Excess Amount. Excess Amount
shall have the meaning set forth in Section 13.

 

Expense Year. Expense Year
shall have the meaning set forth in Section 13.

 

Fixed Component. The
non-variable component of the Advisory Fee as described in Section 10(b).

 

GAAP. Generally
accepted accounting principles as in effect in the United States of America
from time to time.

 

Gross Proceeds. The aggregate
purchase price of all Shares sold for the account of the Company through all
Offerings, without deduction for Selling Commissions, volume discounts, any due
diligence expense reimbursement or Organization and Offering Expenses. For the
purpose of computing Gross Proceeds, the purchase price of any Share for which
reduced Selling Commissions are paid to the Dealer Manager or a Participating
Broker-Dealer (where net proceeds to the Company are not reduced) shall be
deemed to be the full amount of the offering price per Share pursuant to the
Prospectus for such Offering without reduction.

 

Indemnitee. Indemnitee and
Indemnitees shall have the meaning set forth in Section 21 herein.

 

Independent Director. Independent Director shall have the meaning set
forth in the Articles of Incorporation.

 

Investment Company Act. The Investment Company Act of 1940, as amended.

 

Investments. Any investments
by the Company or the Operating Partnership in Real Property and Real Estate
Related Assets.

 

Joint Ventures. The joint
venture or partnership arrangements (other than with the Operating Partnership)
in which the Company or any of its subsidiaries is a co-venturer or general
partner which are established to acquire Real Properties.

 

Listing. The listing of
the Shares on a national securities exchange or the receipt by the Stockholders
of securities that are listed on a national securities exchange in exchange for
the Company’s common stock. Upon such Listing, the Shares shall be deemed
Listed.

 

Loans. Any
indebtedness or obligations in respect of borrowed money or evidenced by bonds,
notes, debentures, deeds of trust, letters of credit or similar instruments,
including mortgages and mezzanine loans.

 

NASAA REIT Guidelines. The Statement of Policy Regarding Real Estate
Investment Trusts published by the North American Securities Administrators
Association on May 7, 2007, as may be amended from time to time.

 

NAV. The Company’s
net asset value, calculated pursuant to the Valuation Guidelines.

 

3

 

Net Income. For any period,
the Company’s total revenues applicable to such period, less the total expenses
applicable to such period other than additions to reserves for depreciation,
bad debts or other similar non-cash reserves and excluding any gain from the
sale of the Company’s assets.

 

Offering. The public
offering of Shares pursuant to a Prospectus.

 

Operating Partnership. Operating Partnership shall have the meaning set
forth in the preamble of this Agreement.

 

Operating Partnership Agreement. The Limited Partnership Agreement of Clarion
Property Trust Operating Partnership LP, as amended from time to time.

 

Organizational and Offering Expenses. All expenses incurred by or on behalf of the Company
in connection with and in preparing the Company for registration of, and
subsequently offering and distributing to the public, its Shares, whether
incurred before or after the date of this Agreement, which may include but are
not limited to: total underwriting and brokerage discounts and commissions
including fees of the underwriters’ attorneys; expenses for printing, engraving
and mailing; salaries of employees while engaged in sales activity; telephone
and other telecommunications costs; all advertising and marketing expenses
(including the costs related to investor and broker-dealer sales meetings);
charges of transfer agents, registrars, trustees, escrow holders, depositories
and experts; and fees, expenses and taxes related to the filing, registration
and qualification of the sale of the Shares under federal and state laws,
including accountants’ and attorneys’ fees and expenses.

 

Participating Broker-Dealers. Broker-dealers who are members of the Financial
Industry Regulatory Authority, or that are exempt from broker-dealer
registration, and who, in either case, have executed participating dealer or
other agreements with the Dealer Manager to sell Shares in an Offering.

 

Performance Component. The variable component of the Advisory Fee as
described in Section 10(b).

 

Person. An individual,
corporation, partnership, trust, joint venture, limited liability company or
other entity.

 

Primary Offering. The portion of
an Offering other than the Shares offered pursuant to the Company’s
distribution reinvestment plan.

 

Priority Return Percentage. Priority Return Percentage has the meaning set forth
in Section 10(d).

 

Prospectus. A “Prospectus”
under Section 2(10) of the Securities Act, including a preliminary
Prospectus, an offering circular as described in Rule 253 of the General Rules and
Regulations under the Securities Act or, in the case of an intrastate offering,
any document by whatever name known, utilized for the purpose of offering and
selling securities to the public.

 

Real Estate Related Assets. Any investments by the Company or the Operating Partnership in (i) mortgage,
mezzanine, bridge and other loans on Real Property, (ii) equity securities
such as common stocks, preferred stocks and convertible securities of public or
private real estate companies, and (iii) debt securities such as
collateralized mortgage backed securities, commercial mortgages and other debt
securities.

 

4

 

Real Property. Real property
owned from time to time by the Company or the Operating Partnership, either
directly or through Joint Ventures, which consists of (i) land only, (ii) land,
including the buildings located thereon, (iii) buildings only or (iv) such
investments the Board and the Advisor mutually designate as Real Property to
the extent such investments could be classified as Real Property.

 

Registration Statement. That certain registration statement on Form S-11
of the Company filed with the Securities and Exchange Commission related to the
registration of the Shares for the Company’s initial Offering.

 

REIT. A “real estate
investment trust” under Sections 856 through 860 of the Code or as may be
amended.

 

Related Party. With respect to
any Person, any other Person whose ownership of Shares would be attributed to
the first such Person under Code Section 544 (as modified by Code Section 856(h)(1)(B)).

 

Securities Act. The Securities
Act of 1933, as amended.

 

Selling Commission. That percentage of Gross Proceeds from the sale of
Shares in the Primary Offering payable to the Dealer Manager and reallowable to
Participating Broker-Dealers with respect to Shares sold by them as described
in the Company’s Prospectus.

 

Shares. The shares of
the Company’s common stock, par value $0.01 per share.

 

Stockholders. The registered
holders of the Shares.

 

Sub-Advisor. Sub-Advisor and
Sub-Advisors shall have the meaning set forth in Section 5.

 

Termination Date. The date of
termination of this Agreement or expiration of this Agreement in the event this
Agreement is not renewed for an additional term.

 

Total Operating Expenses. All costs and expenses paid or incurred by the
Company, as determined under GAAP, that are in any way related to the operation
of the Company or its business, including the Advisory Fee, but excluding (i) the
expenses of raising capital such as Organization and Offering Expenses, legal,
audit, accounting, underwriting, brokerage, listing, registration, and other
fees, printing and other such expenses and taxes incurred in connection with
the issuance, distribution, transfer and registration of securities, (ii) interest
payments, (iii) taxes, (iv) non-cash expenditures such as
depreciation, amortization and bad debt reserves, (v) incentive fees paid
in compliance with the NASAA REIT Guidelines; (vi) acquisition fees and
Acquisition Expenses, (vii) real estate commissions on the sale of Real
Property, and (viii) other fees and expenses connected with the
acquisition, disposition, management and ownership of real estate interests,
mortgages or other property (including the costs of foreclosure, insurance
premiums, legal services, maintenance, repair, and improvement of property).
The definition of “Total Operating Expenses” set forth above is intended to
encompass only those expenses which are required to be treated as Total
Operating Expenses under the NASAA REIT Guidelines. As a result, and
notwithstanding the definition set forth above, any expense of the Company
which is not part of Total Operating Expenses under the NASAA REIT Guidelines
shall not be treated as part of Total Operating Expenses for purposes hereof.

 

2%/25% Guidelines. 2%/25% Guidelines shall have the meaning set forth
in Section 13.

 

Valuation Guidelines. The valuation guidelines adopted by the Board, as amended
from time to time.

 

5

 

2.             APPOINTMENT. The Company
and the Operating Partnership hereby appoint the Advisor to serve as their
advisor on the terms and conditions set forth in this Agreement, and the Advisor
hereby accepts such appointment.

 

3.             DUTIES OF
THE ADVISOR.  The Advisor
undertakes to use its best efforts to present to the Company and the Operating
Partnership potential investment opportunities and to provide the Company and
the Operating Partnership with a continuing and suitable investment program
consistent with the investment objectives and policies of the Company as
determined and adopted from time to time by the Board. In performance of this
undertaking, subject to the supervision of the Board and consistent with the
provisions of the Articles of Incorporation and Bylaws and the Operating
Partnership Agreement, the Advisor shall, either directly or by engaging an
Affiliate or a third party:

 

(a)       serve as the Company’s and the Operating Partnership’s
investment and financial advisor and provide research and economic and
statistical data in connection with the Company’s and the Operating Partnership’s
Investments and investment policies;

 

(b)       provide the daily management for the Company and the
Operating Partnership and perform and supervise the various administrative
functions reasonably necessary for the management of the Company and the
Operating Partnership, including the collection of revenues and the payment of
the Company’s and the Operating Partnership’s debts and obligations;
maintenance of appropriate computer services to perform such administrative
functions; maintaining the Company’s and the Operating Partnership’s books and
records; and organizing meetings of the Board;

 

(c)       determine the proper allocation of the Company’s and
the Operating Partnership’s Investments between (i) Real Property, (ii) Real
Estate Related Assets, and (iii) cash and cash equivalents and other
short-term investments;

 

(d)       consult with the officers and Directors of the
Company and assist the Directors in the formulation and implementation of the
Company’s financial, valuation and other policies and, as necessary, furnish
the Directors with advice and recommendations with respect to the making of
investments and dispositions consistent with the investment objectives and
policies of the Company and in connection with any borrowings proposed to be
undertaken by the Company or the Operating Partnership;

 

(e)       subject to the provisions of Section 4 hereof, (i) locate,
analyze and select potential Investments; (ii) structure and negotiate the
terms and conditions of transactions pursuant to which acquisitions and
dispositions of Investments will be made; (iii) research, identify, review
and recommend acquisitions and dispositions of Investments to the Board and
make investments on behalf of the Company and the Operating Partnership in
compliance with the investment objectives and policies of the Company; (iv) arrange
for financing and refinancing and make other changes in the asset or capital
structure of, and dispose of, reinvest the proceeds from the sale of, or
otherwise deal with, Investments; (v) enter into leases and service
contracts for Investments and, to the extent necessary, perform all other
operational functions for the maintenance and administration of such
Investments; (vi) actively oversee and manage Investments for purposes of
meeting the Company’s investment objectives; (vii) select Joint Venture
partners, structure corresponding agreements and oversee and monitor these
relationships; (viii) oversee Affiliated and non-Affiliated property
managers who perform services for the Company or the Operating Partnership; (ix) oversee
Affiliated and non-Affiliated Persons with whom the Advisor contracts to
perform certain of the services required to be performed under this Agreement;
and (x) manage accounting and other record-keeping functions for the
Company and the Operating Partnership;

 

6

 

(f)        negotiate on behalf of the Company and the Operating
Partnership with banks or lenders for Loans to be made to the Company and the
Operating Partnership, and negotiate on behalf of the Company and the Operating
Partnership with investment banking firms and broker-dealers or negotiate
private sales of Shares or other securities of the Company or the Operating
Partnership and obtain Loans for the Company and the Operating Partnership, but
in no event in such a way so that the Advisor shall be acting as broker-dealer
or underwriter; and provided, further, that any fees and costs payable to third
parties incurred by the Advisor in connection with the foregoing shall be the
responsibility of the Company or the Operating Partnership;

 

(g)       monitor the operating performance of the Investments
and provide periodic reports with respect thereto to the Board, including
comparative information with respect to such operating performance and budgeted
or projected operating results;

 

(h)       from time to time, or at any time reasonably
requested by the Directors, make reports to the Directors of its performance of
services to the Company and the Operating Partnership under this Agreement,
including reports with respect to potential conflicts of interest involving the
Advisor or any of its Affiliates;

 

(i)        calculate, at the end of each Business Day, the NAV
as provided in the Valuation Guidelines, and in connection therewith, (i) obtain
appraisals and reports (which may, but are not required to, be prepared by the
Advisor or its Affiliates), where required and appropriate, concerning the
value of the Investments and (ii) engage such third-party appraisal
managers as the Advisor deems appropriate to supervise the appraisal process;
provided that any appraisal manager shall be approved in advance of engagement
by the Board;

 

(j)        deliver to, or maintain on behalf of, the Company
copies of all appraisals obtained in connection with the investments in any
Real Property;

 

(k)       provide the Company and the Operating Partnership
with all necessary cash management services;

 

(l)        arrange, negotiate, coordinate and manage operations
of any Joint Venture interests held by the Company or the Operating Partnership
and conduct all matters with any Joint Venture partners;

 

(m)      communicate on the Company’s or the Operating Partnership’s
behalf with the respective holders of any of the Company’s or the Operating
Partnership’s equity or debt securities as required to satisfy the reporting
and other requirements of any governmental bodies or agencies and to maintain
effective relations with such holders;

 

(n)       evaluate and recommend to the Board hedging
strategies and modifications thereto in effect and cause the Company to engage
in overall hedging strategies consistent with the Company’s status as a REIT
and with the Company’s investment policies approved by the Board;

 

(o)       advise the Company regarding the maintenance of the
Company’s exemption from the Investment Company Act and monitor compliance with
the requirements for maintaining an exemption from such act;

 

(p)       advise the Company regarding the maintenance of the
Company’s status as a REIT and monitor compliance with the various REIT
qualification tests and other rules set out in the Code and the
regulations promulgated thereunder;

 

7

 

(q)       invest or reinvest any money of the Company or the
Operating Partnership (including investing in short-term investments pending
investment in long-term Investments, payment of fees, costs and expenses, or
payments of distributions to the Stockholders and the Operating Partnership’s
partners), and advise the Company and the Operating Partnership as to the
Company’s or the Operating Partnership’s respective capital structure and
capital raising;

 

(r)        investigate, select, and, on behalf of the Company
and the Operating Partnership, engage and conduct business with such Persons as
the Advisor deems necessary to the proper performance of its obligations
hereunder, including but not limited to consultants, accountants,
correspondents, lenders, technical advisors, attorneys, brokers, underwriters,
corporate fiduciaries, escrow agents, depositaries, custodians, agents for
collection, insurers, insurance agents, banks, builders, developers, property
owners, real estate management companies, real estate operating companies,
securities investment advisors, mortgagors, and any and all agents for any of
the foregoing, including Affiliates of the Advisor, and Persons acting in any
other capacity deemed by the Advisor necessary or desirable for the performance
of any of the foregoing services, including, but not limited to, entering into
contracts in the name of the Company and the Operating Partnership with any of
the foregoing;

 

(s)       cause the Company and the Operating Partnership to
retain qualified accountants and legal counsel, as applicable, to assist in
developing appropriate accounting procedures, compliance procedures and testing
systems with respect to financial reporting obligations and compliance with the
REIT provisions of the Code and to conduct compliance reviews thereto, as
required;

 

(t)        cause the Company and the Operating Partnership to
qualify to do business in all applicable jurisdictions and to obtain and
maintain all appropriate licenses;

 

(u)       assist the Company in maintaining the registration of
the Shares under federal and state securities laws and complying with all
federal, state and local regulatory requirements applicable to the Company in
respect of the Offering and the Company’s business activities (including the
Sarbanes-Oxley Act of 2002), including preparing or causing to be prepared all
supplements to the Prospectus, post-effective amendments to the registration
statement for any Offering and financial statements required under applicable
regulations and contractual undertakings and all reports and documents, if any,
required under the Securities Act and the Securities Exchange Act of 1934, as
amended;

 

(v)       take all necessary actions to enable the Company and
the Operating Partnership to make required tax filings and reports, including
soliciting Stockholders for required information to the extent provided by the
REIT provisions of the Code;

 

(w)      handle and resolve all claims, disputes or
controversies (including all litigation, arbitration, settlement or other
proceedings or negotiations) in which the Company and the Operating Partnership
may be involved or to which the Company and the Operating Partnership may be
subject, arising out of the Company’s or the Operating Partnership’s day-to-day
operations, subject to such limitations or parameters as may be imposed from
time to time by the Board;

 

(x)        use commercially reasonable efforts to cause
expenses incurred by or on behalf of the Company and the Operating Partnership
to be reasonable or customary and within any budgeted parameters or expense
guidelines set by the Board from time to time;

 

(y)       do all things necessary to assure its ability to
render the services described in this Agreement;

 

8

 

(z)        perform such other services as may be required from
time to time for the management and other activities relating to the Company’s
and the Operating Partnership’s respective business and assets as the Board
shall reasonably request or the Advisor shall deem appropriate under the
particular circumstances; and

 

(aa)     use commercially reasonable efforts to cause the
Company and the Operating Partnership to comply with all applicable laws.

 

4.             AUTHORITY
OF ADVISOR.

 

(a)           Pursuant to the terms of
this Agreement (including the restrictions included in this Section 4 and
in Section 8), and subject to the continuing and exclusive authority of
the Board over the management of the Company, the Board (by virtue of its
approval of this Agreement and authorization of the execution hereof by the
officers of the Company) hereby delegates to the Advisor the authority to take,
or cause to be taken, any and all actions and to execute and deliver any and
all agreements, certificates, assignments, instruments or other documents and
to do any and all things that, in the judgment of the Advisor, may be necessary
or advisable in connection with the Advisor’s duties described in Section 3,
including the making of any Investment that fits within the Company’s
investment objectives, strategy and guidelines, policies and limitations as
described in the Company’s Prospectus and within the discretionary limits and
authority as granted to the Advisor from time to time by the Board.

 

(b)           Notwithstanding the
foregoing, any investment in an Investment that does not fit within the Company’s
investment objectives, strategy, guidelines, policies and limitations as
described in the Company’s Prospectus and within the discretionary limits and
authority as granted from time to time by the Board, will require the prior
approval of the Board, any particular Directors specified by the Board or any
committee of the Board, as the case may be.

 

(c)           If a transaction requires
approval by the Directors, the Advisor will deliver to the Directors all
documents and other information required by them to properly evaluate the
proposed transaction.

 

(d)           The prior approval of a
majority of the Independent Directors not otherwise interested in the
transaction and a majority of the Directors not otherwise interested in the
transaction will be required for each transaction to which the Advisor or its
Affiliates is a party.

 

(e)           The Board may, at any time
upon the giving of notice to the Advisor, modify or revoke the authority set
forth in this Section 4; provided, however, that such modification or
revocation shall be effective upon receipt by the Advisor and shall not be
applicable to investment transactions to which the Advisor has committed the
Company or the Operating Partnership prior to the date of receipt by the
Advisor of such notification.

 

5.             SUB-ADVISORS.
The Advisor is hereby authorized to enter into one or more sub-advisory
agreements with other investment advisors (each, a “Sub-Advisor”)
pursuant to which the Advisor may obtain the services of the Sub-Advisor(s) to
assist the Advisor in fulfilling any of its responsibilities hereunder.
Specifically, the Advisor may retain a Sub-Advisor to recommend specific real
properties, securities or other investments based upon the Company’s investment
objectives, policies, guidelines and restrictions, and work, along with the
Advisor, in sourcing, structuring, negotiating, arranging or effecting the
acquisition or disposition of such investments and monitoring investments on
behalf of the Company, subject to the oversight of the Advisor and the Board.

 

9

 

(a)           The Advisor and not the
Company shall be responsible for any compensation payable to any Sub-Advisor.
Notwithstanding the foregoing, the Company shall reimburse the Advisor for any
expenses properly incurred by the Sub-Advisor, to the extent such expenses
would be reimbursable if incurred by the Advisor pursuant to the terms of Section 11
hereof, in order for the Advisor to timely reimburse the Sub-Advisor for such
out-of-pocket costs.

 

(b)           Any sub-advisory agreement
entered into by the Advisor shall be in accordance with the requirements of the
Articles of Incorporation and other applicable federal and state law.

 

6.             BANK
ACCOUNTS. The Advisor may establish and maintain one or more
bank accounts in its own name for the account of the Company or the Operating
Partnership or in the name of the Company and the Operating Partnership and may
collect and deposit into any such account or accounts, and disburse from any
such account or accounts, any money on behalf of the Company or the Operating
Partnership, under such terms and conditions as the Directors may approve,
provided that no funds shall be commingled with the funds of the Advisor; and
the Advisor shall from time to time render appropriate accountings of such collections
and payments to the Directors and to the auditors of the Company, as
applicable.

 

7.             RECORDS;
ACCESS. The Advisor shall maintain appropriate records of
all its activities hereunder and make such records available for inspection by
the Directors and by counsel, auditors and authorized agents of the Company, at
any time or from time to time during normal business hours. The Advisor shall
at all reasonable times have access to the books and records of the Company and
the Operating Partnership.

 

8.             LIMITATIONS
ON ACTIVITIES. Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its
sole judgment made in good faith, would (a) adversely affect the status of
the Company as a REIT, (b) subject the Company to regulation under the
Investment Company Act, or (c) violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company or its Shares, or otherwise not be permitted by the Articles of
Incorporation or Bylaws of the Company, except if such action shall be ordered
by the Directors, in which case the Advisor shall notify promptly the Directors
of the Advisor’s judgment of the potential impact of such action and shall
refrain from taking such action until it receives further clarification or
instructions from the Directors. In such event, the Advisor shall have no
liability for acting in accordance with the specific instructions of the
Directors so given. Notwithstanding the foregoing, the Advisor, its directors,
officers, employees and members, and partners, directors, officers, members and
stockholders of the Advisor’s Affiliates shall not be liable to the Company or
to the Directors or Stockholders for any act or omission by the Advisor, its
directors, officers, employees, or members, and partners, directors, officers,
members or stockholders of the Advisor’s Affiliates taken or omitted to be
taken in the performance of their duties under this Agreement except as
provided in Section 22 of this Agreement.

 

9.             RELATIONSHIP
WITH DIRECTORS. Subject to Section 8 of this Agreement and to
restrictions advisable with respect to the qualification of the Company as a
REIT, directors, managers, officers and employees of the Advisor or an Affiliate
of the Advisor or any corporate parent of an Affiliate, may serve as a Director
and as officers of the Company, except that no director, officer or employee of
the Advisor or its Affiliates who also is a Director or officer of the Company
shall receive any compensation from the Company for serving as a Director or
officer other than reasonable reimbursement for travel and related expenses
incurred in attending meetings of the Directors and no such Director shall be
deemed an Independent Director for purposes of satisfying the Director
independence requirement set forth in the Articles of Incorporation.

 

10

 

10.          ADVISORY
FEE.

 

(a)           The Advisor is not entitled
to acquisition, disposition or financing fees.

 

(b)           The Advisor shall receive
the Advisory Fee as compensation for services rendered hereunder. The Advisory
Fee will be calculated using a detailed policy approved by the Board, including
a majority of the Independent Directors, and agreed to by the Advisor, which
shall be consistent with the description of the calculation of the Advisory Fee
as set forth herein.  The Advisory Fee
will be comprised of two separate components: (1) a fixed component in an
amount equal to 1/365th of 1.1% of NAV for each day (the “Fixed
Component”), subject to reduction in accordance with Section 10(c) below,
and (2) a performance component (the “Performance Component”) that
is paid annually and calculated based on the Annual Total Return.

 

(c)           The amount of the Fixed
Component that accrues each day shall be reduced by up to 1/365th of 0.20% of NAV for such day, to the extent
and in the same amount that the daily accrual of the Distribution Fee for such
day is increased with respect to that portion of the overall NAV represented by
Shares held by a Participating Broker-Dealer that meets certain thresholds of
Shares under management.  In all cases,
the aggregate of the daily accrual of the Fixed Component and the Distribution
Fee will total 1/365th of 1.60% of NAV for each day.

 

(d)           The Performance Component
will not be paid for any calendar year in which the Annual Total Return
expressed as a percentage is less than or equal to 6.0% (the “Priority
Return Percentage”). The dollar amount of the Performance Component will
equal 25.0% of the difference between (i) the Annual Total Return and (ii) the
amount required to provide Stockholders an Annual Total Return equal to the
Priority Return Percentage. In no event will the Performance Component exceed
10.0% of the Annual Total Return for any calendar year.  In the event NAV per share decreases below
$10.00 on any day during the measurement period, any increase in NAV per share
to $10.00 shall not be included in the calculation of the Performance
Component.  If the Performance Component
is payable pursuant to this Section 10(d), the Advisor will be entitled to
such payment even in the event that the Annual Total Return to Stockholders (or
any particular Stockholder) expressed as a percentage on a cumulative basis
over any longer or shorter period has been less than the Priority Return
Percentage. The Advisor shall not be obligated to return any portion of any
Advisory Fee paid based on the Company’s subsequent performance.

 

(e)           The Advisor shall, on a
daily basis, (i) accrue a liability reserve account equal to the amount
due for both the Fixed Component and the Performance Component, such accrual to
be reflected in the NAV per share calculation for such day; and (ii) calculate
the Annual Total Return, prorated as of the end of such day and, based on such
calculation, adjust the balance of liability reserve accrual to reflect the
estimated amount due on account of the Performance Component.

 

(f)            The Advisory Fee will accrue
daily and is payable in cash. The Fixed Component is payable monthly in arrears
(after the close of business and NAV calculations for the last Business Day for
such month), the Performance Component is payable promptly after the audited
financial statements for each calendar year become available, provided that if
this Agreement or its term expires without renewal prior to December 31 of
any calendar year, then the Performance Component for such partial year shall
be payable promptly after the Company files its unaudicted financial statements
on Form 10-Q for the quarter that includes the Termination Date.  The Performance Component shall be payable
for each calendar year in which this Agreement is in effect, even if the Agreement
is in effect for less than a full calendar year.  In the event this Agreement is terminated or
its term expires without renewal, the Advisory Fee will be calculated and due
and payable after the calculation of NAV on the Termination Date. If the Advisory
Fee is payable with respect to any partial calendar month or calendar year, the
Fixed 

 

11

 

Component
will be prorated based on the number of days elapsed during any partial
calendar month and the Performance Component will be prorated based on the
number of days elapsed during and Annual Total Return achieved for the period
of such partial calendar year.

 

(g)           In the event the Company or
the Operating Partnership commences a liquidation of its Investments during any
calendar year, the Company will pay the Advisor its Advisory Fee from the
proceeds of the liquidation and the performance component of the Advisory Fee
will be calculated at the end of the liquidation period prior to the
distribution of the liquidation proceeds to the Stockholders.

 

(h)           In lieu of cash, the Advisor
may elect to receive the payment of any of its fees in Shares.  Any such Shares will be valued at the Company’s
NAV per Share on the issue date and will not be eligible for redemption by the
Advisor until six months from the issue date.

 

11.          EXPENSES.

 

(a)           As required by the NASAA
REIT Guidelines, the cumulative Selling Commissions, Dealer Manager Fees,
Distribution Fees and Organizational and Offering Expenses paid by the Company
will not exceed 15.0% of Gross Proceeds from the sale of Shares in the Primary
Offering.

 

(b)           In addition to the
compensation paid to the Advisor pursuant to Section 10 hereof, the
Company or the Operating Partnership shall pay directly or reimburse the Advisor
for all of the expenses paid or incurred by the Advisor in connection with the
services it provides to the Company and the Operating Partnership pursuant to
this Agreement, including, but not limited to:

 

(i)            Organizational
and Offering Expenses; provided that within 60 days after the end of the
month in which an Offering terminates, the Advisor shall reimburse the Company
to the extent the Organizational and Offering Expenses, Selling Commissions,
Dealer Manager Fees and Distribution Fees borne by the Company exceed 15.0% of
the Gross Proceeds raised in the completed Offering;

 

(ii)           Acquisition
Expenses incurred in connection with the selection and acquisition of
Investments, including such expenses incurred related to assets pursued or
considered but not ultimately acquired by the Company, subject to limitations
set forth in the Articles of Incorporation;

 

(iii)          the actual cost
of goods and services used by the Company and obtained from entities not
affiliated with the Advisor;

 

(iv)          interest and
other costs for borrowed money, including discounts, points and other similar
fees;

 

(v)           taxes and
assessments on income of the Company or Investments, taxes as an expense of
doing business and any other taxes otherwise imposed on the Company and its
business, assets or income;

 

(vi)          costs
associated with insurance required in connection with the business of the
Company or by the Board;

 

(vii)         expenses of
managing, improving, developing, operating and selling Investments, whether
payable to an Affiliate of the Company or a non-affiliated Person;

 

12

 

(viii)        all expenses in
connection with payments to the Directors for attending meetings of the Board
and Stockholders;

 

(ix)           expenses
connected with payments of Distributions in cash or otherwise made or caused to
be made by the Company to the Stockholders;

 

(x)            expenses of
organizing, redomesticating, merging, liquidating or dissolving the Company or
of amending the Articles of Incorporation or the Bylaws;

 

(xi)           expenses of
providing services for and maintaining communications with Stockholders,
including the cost of preparation, printing, and mailing annual reports and
other Stockholder reports, proxy statements and other reports required by
governmental entities;

 

(xii)          administrative
service expenses, including but not limited to personnel and related employment
costs incurred by the Advisor or its Affiliates in performing the services
described in Section 3 hereof, including but not limited to reasonable
salaries, bonuses and wages, benefits and overhead of all individuals whose
primary job function relates to the Company’s business, provided that no
reimbursement shall be made for costs of such employees of the Advisor or its
Affiliates to the extent that such employees perform services for which the
Advisor receives a separate fee and provided further that in the event that
personnel costs are reimbursed for individuals who serve as executive officers
of the Company, the Advisor shall cause the Company to include disclosures of
the amount of such costs in its next quarterly or annual report filed with the
Securities and Exchange Commission; and

 

(xiii)         audit,
accounting and legal fees and other fees for professional services relating to
the operations of the Company and all such fees incurred at the request, or on
behalf of, the Board, the Independent Directors or any committee of the Board.

 

(c)           Expenses incurred by the
Advisor on behalf of the Company and the Operating Partnership and payable
pursuant to this Section 11 shall be reimbursed no less than monthly to
the Advisor. The Advisor shall prepare a statement documenting the expenses of
the Company and the Operating Partnership and the calculation of the Advisory
Fee during each quarter, and shall deliver such statement to the Company and
the Operating Partnership within forty-five (45) days after the end of
each quarter.

 

(d)           In lieu of cash, the Advisor
may elect to receive the reimbursement of any of its expenses in Shares.  Any such Shares will be valued at the Company’s
NAV per Share on the issue date and will not be eligible for redemption by the
Advisor until six months from the issue date.

 

12.          OTHER SERVICES. Should the
Board request that the Advisor or any director, officer or employee thereof
render services for the Company and the Operating Partnership other than set
forth in Section 3, such services shall be separately compensated at such
rates and in such amounts as are agreed by the Advisor and the Independent
Directors, subject to the limitations contained in the Articles of
Incorporation, and shall not be deemed to be services pursuant to the terms of
this Agreement.

 

13.          REIMBURSEMENT TO THE
ADVISOR. The Company shall not reimburse the Advisor at the
end of any fiscal quarter for Total Operating Expenses that in the four
consecutive fiscal quarters then ended (the “Expense Year”) exceeded
(the “Excess Amount”) the greater of 2.0% of Average Invested Assets or
25.0% of Net Income (the “2%/25% Guidelines”) for such year unless the
Independent Directors determine that such excess was justified, based on
unusual and nonrecurring 

 

13

 

factors
that the Independent Directors deem sufficient. If the Independent Directors do
not approve such excess as being so justified, any Excess Amount paid to the
Advisor during a fiscal quarter shall be repaid to the Company. If the
Independent Directors determine such excess was justified, then, within sixty
(60) days after the end of any fiscal quarter of the Company for which
total reimbursed Total Operating Expenses for the Expense Year exceed the
2%/25% Guidelines, the Advisor, at the direction of the Independent Directors,
shall cause such fact to be disclosed to the Stockholders in writing (or the
Company shall disclose such fact to the Stockholders in the next quarterly
report of the Company or by filing a Current Report on Form 8-K with the
Securities and Exchange Commission within sixty (60) days of such quarter
end), together with an explanation of the factors the Independent Directors
considered in determining that such excess were justified. The Company will
ensure that such determination will be reflected in the minutes of the meetings
of the Board. All figures used in the foregoing computations shall be
determined in accordance with GAAP applied on a consistent basis.

 

14.          OTHER
ACTIVITIES OF THE ADVISOR.

 

(a)           Relationship. Nothing
herein contained shall prevent the Advisor or any of its Affiliates from
engaging in or earning fees from other activities, including, without
limitation, the rendering of advice to other Persons (including other REITs)
and the management of other programs advised, sponsored or organized by the
Advisor or its Affiliates; nor shall this Agreement limit or restrict the right
of any director, officer, member, partner, employee, or stockholder of the
Advisor or its Affiliates to engage in or earn fees from any other business or
to render services of any kind to any other partnership, corporation, firm,
individual, trust or association and earn fees for rendering such services. The
Advisor may, with respect to any investment in which the Company is a
participant, also render advice and service to each and every other participant
therein, and earn fees for rendering such advice and service. Specifically, it
is contemplated that the Company may enter into joint ventures or other similar
co-investment arrangements with certain Persons, and pursuant to the agreements
governing such joint ventures or arrangements, the Advisor may be engaged to
provide advice and service to such Persons, in which case the Advisor will earn
fees for rendering such advice and service.

 

(b)           Time
Commitment. The Advisor shall, and shall cause its Affiliates
and their respective employees, officers and agents to, devote to the Company
such time as shall be reasonably necessary to conduct the business and affairs
of the Company in an appropriate manner consistent with the terms of this
Agreement. The Company acknowledges that the Advisor and its Affiliates and
their respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

(c)           Investment
Opportunities. The Advisor shall use its best efforts to present
to the Company and the Operating Partnership a number of potential investment
opportunities appropriate for the portfolio of the Company and the Operating
Partnership consistent with the investment policies and objectives of the
Company, but neither the Advisor nor any Affiliate of the Advisor shall be
obligated generally to present any particular investment opportunity to the
Company or the Operating Partnership even if the opportunity is of a character
that, if presented to the Company or the Operating Partnership, could be taken
by the Company or the Operating Partnership. In the event an investment
opportunity is located, the allocation procedure set forth under the caption “Conflicts
of Interest — Certain Conflict Resolution Measures — Allocation of Investment
Opportunities” in the Prospectus shall govern the allocation of the opportunity
among the Company and the Operating Partnership, on the one hand, and
Affiliates of the Advisor, on the other hand; provided any changes to the
procedure shall be presented in advance and approved by the Board, including a
majority of the Independent Directors.

 

15.          RELATIONSHIP OF THE PARTIES.
The Company and the Operating Partnership, on the one hand, and the
Advisor on the other, are not partners or joint venturers with each other, and 

 

14

 

nothing
in this Agreement shall be construed to make them such partners or joint
venturers or impose any liability as such on either of them.

 

16.          THE
CLARION NAME.  The Advisor and its Affiliates have a
proprietary interest in the name “Clarion.” 
The Advisor hereby grants to the Company a non-transferable,
non-assignable, non-exclusive, royalty-free right and license to use the name “Clarion”
during the term of this Agreement. 
Accordingly, and in recognition of this right, if at any time the
Company ceases to retain the Advisor or one of its Affiliates to perform
advisory services for the Company, the Company will, promptly after receipt of
written request from the Advisor, cease to conduct business under or use the
name “Clarion” or any derivative thereof and the Company shall change its name
and the names of any of its subsidiaries to a name that does not contain the
name “Clarion” or any other word or words that might, in the reasonable
discretion of the Advisor, be susceptible of indication of some form of
relationship between the Company and the Advisor or any of its Affiliates.  At such time, the Company will also make any
changes to any trademarks, servicemarks or other marks necessary to remove any
references to the word “Clarion.” Consistent with the foregoing, it is
specifically recognized that the Advisor or one or more of its Affiliates has
in the past and may in the future organize, sponsor or otherwise permit to
exist other investment vehicles (including vehicles for investment in Real
Property and Real Estate Related Assets) and financial and service
organizations having “Clarion” as a part of their name, all without the need
for any consent (and without the right to object thereto) by the Company.

 

17.          TERM OF AGREEMENT. This Agreement
shall continue in force for a period of one year from the Effective Date,
subject to an unlimited number of successive one-year renewals upon mutual
consent of the parties. It is the duty of the Directors to evaluate the
performance of the Advisor annually before renewing the Agreement, and each
such renewal shall be for a term of no more than one year.

 

18.          TERMINATION BY THE PARTIES. This Agreement
may be terminated (i) immediately by the Company or the Operating
Partnership for Cause or upon the bankruptcy of the Advisor or upon a material
breach of this Agreement by the Advisor; provided, that such material breach is
not capable of being cured or has not been cured within thirty (30) days
after the giving of notice thereof by the Company or the Operating Partnership
to the Advisor; (ii) upon sixty (60) days’ written notice without
Cause or penalty by a majority vote of the Independent Directors; or (iii) upon
sixty (60) days’ written notice by the Advisor. The provisions of
Sections 16 and 20 through 32 survive termination of this Agreement.

 

19.          ASSIGNMENT TO AN AFFILIATE. This Agreement
may be assigned by the Advisor to an Affiliate with the approval of a majority
of the Directors (including a majority of the Independent Directors). The
Advisor may assign any rights to receive fees or other payments under this
Agreement to any Person without obtaining the approval of the Directors. This
Agreement shall not be assigned by the Company or the Operating Partnership
without the consent of the Advisor, except in the case of an assignment by the
Company or the Operating Partnership to a corporation, limited partnership or
other organization which is a successor to all of the assets, rights and
obligations of the Company or the Operating Partnership, in which case such
successor organization shall be bound hereunder and by the terms of said
assignment in the same manner as the Company and the Operating Partnership are
bound by this Agreement.

 

20.          PAYMENTS TO
AND DUTIES OF ADVISOR UPON TERMINATION.

 

(a)           After the Termination Date,
the Advisor shall not be entitled to compensation for further services
hereunder except it shall be entitled to receive from the Company or the
Operating Partnership within thirty (30) days after the effective date of
such termination all unpaid reimbursements of expenses 

 

15

 

and
all earned but unpaid fees payable to the Advisor prior to termination of this
Agreement, subject to the 2%/25% Guidelines to the extent applicable.

 

(b)           The Advisor shall promptly
upon termination:

 

(i)            pay over to the
Company and the Operating Partnership all money collected and held for the
account of the Company and the Operating Partnership pursuant to this
Agreement, after deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled;

 

(ii)           deliver to the
Board a full accounting, including a statement showing all payments collected
by it and a statement of all money held by it, covering the period following
the date of the last accounting furnished to the Board;

 

(iii)          deliver to the
Board all assets, including all Investments, and documents of the Company and
the Operating Partnership then in the custody of the Advisor; and

 

(iv)          cooperate with
the Company and the Operating Partnership to provide an orderly management
transition.

 

21.          INDEMNIFICATION BY THE
COMPANY AND THE OPERATING PARTNERSHIP. The Company and the
Operating Partnership shall indemnify and hold harmless the Advisor and its
Affiliates, including their respective officers, directors, partners and
employees (the “Indemnitees,” and each an “Indemnitee”), from all
liability, claims, damages or losses arising in the performance of their duties
hereunder, and related expenses, including reasonable attorneys’ fees, to the
extent such liability, claims, damages or losses and related expenses are not
fully reimbursed by insurance, and to the extent that such indemnification
would not be inconsistent with the laws of the State of Maryland, the Articles
of Incorporation or the provisions of Section II.G of the NASAA REIT
Guidelines.

 

22.          INDEMNIFICATION BY ADVISOR. The Advisor
shall indemnify and hold harmless the Company and the Operating Partnership
from contract or other liability, claims, damages, taxes or losses and related
expenses including attorneys’ fees, to the extent that such liability, claims,
damages, taxes or losses and related expenses are not fully reimbursed by
insurance and are incurred by reason of the Advisor’s bad faith, fraud, willful
misfeasance, gross negligence or reckless disregard of its duties; provided,
however, that the Advisor shall not be held responsible for any action of the
Board in following or declining to follow any advice or recommendation given by
the Advisor.

 

23.          NON-SOLICITATION. During the
period commencing on the Effective Date and ending one year following the
Termination Date, the Company shall not, without the Advisor’s prior written
consent, directly or indirectly, (i) solicit or encourage any person to
leave the employment or other service of the Advisor or its Affiliates, or (ii) hire,
on behalf of the Company or any other person or entity, any person who has left
the employment within the one year period following the termination of that
person’s employment the Advisor or its Affiliates. During the period commencing
on the date hereof through and ending one year following the Termination Date,
the Company will not, whether for its own account or for the account of any
other Person, intentionally interfere with the relationship of the Advisor or
its Affiliates with, or endeavor to entice away from the Advisor or its
Affiliates, any person who during the term of the Agreement is, or during the
preceding one-year period, was a tenant, co-investor, co-developer, joint
venturer or other customer of the Advisor or its Affiliates.

 

16

 

24.          MISCELLANEOUS.

 

(a)           Notices.  Any notice, report or other
communication required or permitted to be given hereunder shall be in writing
unless some other method of giving such notice, report or other communication
is required by the Articles of Incorporation, the Bylaws, or accepted by the
party to whom it is given, and shall be given by being delivered by hand, by
courier or overnight carrier or by registered or certified mail to the
addresses set forth herein:

 

	
  To
  the Company:

  	
  Clarion
  Property Trust Inc.

  230 Park Avenue

  New York, NY 10169

  
	
   

  	
  Attention:
  

  	
  Edward
  L. Carey, Co-President

  
	
   

  	
   

  	
  Douglas
  L. DuMond, Co-President

  
	
   

  	
   

  	
   

  
	
  To
  the Operating Partnership:

  	
  Clarion
  Property Trust Operating Partnership LP

  230 Park Avenue

  New York, NY 10169

  
	
   

  	
  Attention:
  

  	
  Edward
  L. Carey, Co-President, Clarion

  
	
   

  	
   

  	
  Property
  Trust Inc.

  
	
   

  	
   

  	
  Douglas
  L. DuMond, Co-President,

  
	
   

  	
   

  	
  Clarion
  Property Trust Inc.

  
	
   

  	
   

  	
   

  
	
  To
  the Advisor:

  	
  CPT
  Advisors LLC

  230 Park Avenue

  New York, NY 10169

  
	
   

  	
  Attention:
  

  	
  Edward
  L. Carey, Co-President

  
	
   

  	
   

  	
  Douglas
  L. DuMond, Co-President

  

 

Any
party may at any time give notice in writing to the other parties of a change
in its address for the purposes of this Section 24.

 

(b)           Modification.  This Agreement shall not be
changed, modified, terminated, or discharged, in whole or in part, except by an
instrument in writing signed by the parties hereto, or their respective
successors or assignees.

 

(c)           Severability.  The provisions of this
Agreement are independent of and severable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

 

(d)           Construction.  The provisions of this
Agreement shall be construed and interpreted in accordance with the laws of the
State of New York without regard to the conflicts-of-law principles that would
require the application of any other law.

 

(e)           Entire Agreement.   This Agreement contains the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof.
The express terms hereof control and supersede any course of performance or
usage of the trade inconsistent with any of the terms hereof.

 

17

 

(f)            Indulgences, Not Waivers.  Neither the failure nor any delay on the part of a party to exercise
any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.

 

(g)           Gender.  Words used herein regardless
of the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context requires.

 

(h)           Titles Not to Affect
Interpretation.  The titles of
Sections and Subsections contained in this Agreement are for convenience only,
and they neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.

 

(i)            Execution in
Counterparts.  This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts hereof, individually or
taken together, shall bear the signatures of all of the parties reflected
hereon as the signatories.

 

[Remainder of page intentionally
left blank]

 

18

 

IN WITNESS WHEREOF, the parties hereto have executed
this Advisory Agreement as of the date and year first above written.

 

	
   

  	
  Clarion Property Trust Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Clarion Property Trust Operating Partnership LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Clarion Property Trust Inc.,

  
	
   

  	
   

  	
  Its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CPT Advisors LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  ING Clarion Partners LLC,

  
	
   

  	
   

  	
  Its member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:Exhibit 10.3

 

 

CLARION PROPERTY TRUST INC.

LONG TERM INCENTIVE PLAN

 

 

 

CLARION PROPERTY TRUST INC.

LONG TERM INCENTIVE PLAN

 

	
  ARTICLE 1  PURPOSE

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  General

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3  EFFECTIVE
  TERM OF PLAN

  	
  7

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Effective Date

  	
  7

  
	
  3.2

  	
  Termination of Plan

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4  ADMINISTRATION

  	
  7

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Committee

  	
  7

  
	
  4.2

  	
  Actions and Interpretations by the Committee

  	
  8

  
	
  4.3

  	
  Authority of Committee

  	
  8

  
	
  4.4

  	
  Award Certificates

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5  SHARES
  SUBJECT TO THE PLAN

  	
  9

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Number of Shares

  	
  9

  
	
  5.2

  	
  Share Counting

  	
  9

  
	
  5.3

  	
  Stock Distributed

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6  ELIGIBILITY

  	
  10

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  General

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7  STOCK
  OPTIONS

  	
  10

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  General

  	
  10

  
	
  7.2

  	
  Incentive Stock Options

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8  STOCK
  APPRECIATION RIGHTS

  	
  11

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Grant of Stock Appreciation Rights

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9  RESTRICTED
  STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS

  	
  12

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Grant of Restricted Stock, Restricted Stock Units and
  Deferred Stock Units

  	
  12

  
	
  9.2

  	
  Issuance and Restrictions

  	
  13

  
	
  9.3

  	
  Dividends on Restricted Stock

  	
  13

  
	
  9.4

  	
  Forfeiture

  	
  13

  
	
  9.5

  	
  Delivery of Restricted Stock

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10  PERFORMANCE AWARDS

  	
  14

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Grant of Performance Awards

  	
  14

  
	
  10.2

  	
  Performance Goals

  	
  14

  

 

i

 

	
  ARTICLE 11  DIVIDEND
  EQUIVALENTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Grant of Dividend Equivalents

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12  STOCK OR OTHER STOCK-BASED AWARDS

  	
  15

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Grant of Stock or Other Stock-Based Awards

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13  PROVISIONS
  APPLICABLE TO AWARDS

  	
  15

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Term of Awards

  	
  15

  
	
  13.2

  	
  Form of Payment for Awards

  	
  15

  
	
  13.3

  	
  Limits on Transfer

  	
  15

  
	
  13.4

  	
  Beneficiaries

  	
  16

  
	
  13.5

  	
  Stock Trading Restrictions

  	
  16

  
	
  13.6

  	
  Acceleration for Any Reason

  	
  16

  
	
  13.7

  	
  Forfeiture Events

  	
  16

  
	
  13.8

  	
  Substitute Awards

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14  CHANGES IN
  CAPITAL STRUCTURE

  	
  17

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  Mandatory Adjustments

  	
  17

  
	
  14.2

  	
  Discretionary Adjustments

  	
  17

  
	
  14.3

  	
  General

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15  AMENDMENT,
  MODIFICATION AND TERMINATION

  	
  18

  
	
   

  	
   

  	
   

  
	
  15.1

  	
  Amendment, Modification and Termination

  	
  18

  
	
  15.2

  	
  Awards Previously Granted

  	
  18

  
	
  15.3

  	
  Compliance Amendments

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16  GENERAL
  PROVISIONS

  	
  19

  
	
   

  	
   

  	
   

  
	
  16.1

  	
  Rights of Participants

  	
  19

  
	
  16.2

  	
  Withholding

  	
  20

  
	
  16.3

  	
  Special Provisions Related to Section 409A of the Code

  	
  20

  
	
  16.4

  	
  Unfunded Status of Awards

  	
  21

  
	
  16.5

  	
  Relationship to Other Benefits

  	
  21

  
	
  16.6

  	
  Expenses

  	
  22

  
	
  16.7

  	
  Titles and Headings

  	
  22

  
	
  16.8

  	
  Gender and Number

  	
  22

  
	
  16.9

  	
  Fractional Shares

  	
  22

  
	
  16.10

  	
  Government and Other Regulations

  	
  22

  
	
  16.11

  	
  Governing Law

  	
  22

  
	
  16.12

  	
  Additional Provisions

  	
  23

  
	
  16.13

  	
  No Limitations on Rights of Company

  	
  23

  
	
  16.14

  	
  Indemnification

  	
  23

  

 

ii

 

CLARION PROPERTY TRUST INC.

LONG TERM INCENTIVE PLAN

 

ARTICLE 1

PURPOSE

 

1.1.                              GENERAL.  The purpose of the Clarion Property Trust
Inc. Long Term Incentive Plan is to enable Clarion Property Trust Inc. and its
Affiliates (as defined below) to (1) provide an incentive to employees,
officers, directors, consultants and advisors to increase the value of the
Company’s common stock, (2) give such persons a stake in the Company’s
future that corresponds to the stake of each of the Company’s stockholders, and
(3) obtain or retain the services of these persons who are considered
essential to the Company’s long-term success, by offering such persons an
opportunity to participate in the Company’s growth through ownership of the
Company’s common stock or through other equity-related awards. Accordingly, the
Plan permits the grant of incentive awards from time to time to selected
employees, officers, directors, consultants and advisors of the Company and its
Affiliates.

 

ARTICLE 2

DEFINITIONS

 

2.1.                              DEFINITIONS.  When a word or phrase appears in this Plan
with the initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to
it in this Section or in Section 1.1 unless a clearly different
meaning is required by the context.  The
following words and phrases shall have the following meanings:

 

(a)                                  “Affiliate”
means (i) any Subsidiary or Parent, or (ii) an entity that directly
or through one or more intermediaries controls, is controlled by or is under
common control with, the Company, as determined by the Committee.

 

(b)                                 “Award”
means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Deferred Stock Unit, Performance Award, Dividend Equivalent, Other
Stock-Based Award, or any other right or interest relating to Stock or cash,
granted to a Participant under the Plan.

 

(c)                                  “Award
Certificate” means a written document, in such form as the Committee
prescribes from time to time, setting forth the terms and conditions of an
Award.  Award Certificates may be in the
form of individual award agreements or certificates or a program document
describing the terms and provisions of an Award or series of Awards under the
Plan.  The Committee may provide for the
use of electronic, internet or other non-paper Award Certificates, and the use
of electronic, internet or other non-paper means for the acceptance thereof and
actions thereunder by a Participant.

 

(d)                                 “Beneficial
Owner” shall have the meaning given such term in Rule 13d-3 

 

1

 

of the General Rules and
Regulations under the 1934 Act.

 

(e)                                  “Board”
means the Board of Directors of the Company.

 

(f)                                    “Cause”
as a reason for a Participant’s termination of employment shall have the meaning
assigned such term in the employment, severance or similar agreement, if any,
between such Participant and the Company or an Affiliate, provided, however
that if there is no such employment, severance or similar agreement in which
such term is defined, and unless otherwise defined in the applicable Award
Certificate, “Cause” shall mean any of the following acts by the Participant,
as determined by the Committee: gross neglect of duty, prolonged absence from
duty without the consent of the Company, material breach by the Participant of
any published Company code of conduct or code of ethics; or willful misconduct,
misfeasance or malfeasance of duty which is reasonably determined to be
detrimental to the Company. With respect to a Participant’s termination of
directorship, “Cause” means an act or failure to act that constitutes cause for
removal of a director under applicable Maryland law.  The determination of
the Committee as to the existence of “Cause” shall be conclusive on the
Participant and the Company.

 

(g)                                 “Change in
Control” means and includes the occurrence of any one of the following
events but shall specifically exclude a Public Offering:

 

(i)                                     during any
consecutive 12 month period, individuals who, at the beginning of such period,
constitute the Board (the “Incumbent Directors”) cease for any reason to
constitute at least a majority of such Board, provided that any person becoming
a director after the beginning of such 12 month period and whose election or
nomination for election was approved by a vote of at least a majority of the
Incumbent Directors then on the Board shall be an Incumbent Director; provided,
however, that no individual initially elected or nominated as a director
of the Company as a result of an actual or threatened election contest with
respect to the election or removal of directors (“Election Contest”) or
other actual or threatened solicitation of proxies or consents by or on behalf
of any Person other than the Board (“Proxy Contest”), including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest, shall be deemed an Incumbent Director; or

 

(ii)                                  any Person
becomes a Beneficial Owner, directly or indirectly, of either (A) 30% or
more of the then-outstanding shares of common stock of the Company (“Company
Common Stock”) or (B) securities of the Company representing 30% or
more of the combined voting power of the Company’s then outstanding securities
eligible to vote for the election of directors (the “Company Voting
Securities”); provided, however, that for purposes of this
subsection (ii), the following acquisitions of Company Common Stock or Company
Voting Securities shall not constitute a Change in Control: (w) an
acquisition directly from the Company, (x) an acquisition by the Company or
a Subsidiary, (y) an acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary, or (z) an
acquisition pursuant to a 

 

2

 

Non-Qualifying Transaction (as defined in subsection
(iii) below); or

 

(iii)                               the
consummation of a reorganization, merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or a
Subsidiary (a “Reorganization”), or the sale or other disposition of all
or substantially all of the Company’s assets (a “Sale”) or the
acquisition of assets or stock of another corporation or other entity (an “Acquisition”),
unless immediately following such Reorganization, Sale or Acquisition: (A) all
or substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the outstanding Company Common Stock and outstanding
Company Voting Securities immediately prior to such Reorganization, Sale or
Acquisition beneficially own, directly or indirectly, more than 30% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Reorganization, Sale or Acquisition (including, without
limitation, an entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets or stock either directly or
through one or more subsidiaries, the “Surviving Entity”) in
substantially the same proportions as their ownership, immediately prior to
such Reorganization, Sale or Acquisition, of the outstanding Company Common
Stock and the outstanding Company Voting Securities, as the case may be, and (B) no
Person (other than (x) the Company or any Subsidiary, (y) the
Surviving Entity or its ultimate parent entity, or (z) any employee
benefit plan (or related trust) sponsored or maintained by any of the
foregoing) is the Beneficial Owner, directly or indirectly, of 30% or more of
the total common stock or 30% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the Surviving
Entity, and (C) at least a majority of the members of the board of
directors of the Surviving Entity were Incumbent Directors at the time of the
Board’s approval of the execution of the initial agreement providing for such
Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition
which satisfies all of the criteria specified in (A), (B) and (C) above
shall be deemed to be a “Non-Qualifying Transaction”); or

 

(iv)                              approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company.

 

(h)                                 “Charter”
means the articles of incorporation of the Company, as such articles of
incorporation may be amended from time to time.

 

(i)                                     “Code”
means the Internal Revenue Code of 1986, as amended from time to time.  For purposes of this Plan, references to
sections of the Code shall be deemed to include references to any applicable
regulations thereunder and any successor or similar provision.

 

(j)                                     “Committee”
means the committee of the Board described in Article 4.

 

3

 

(k)                                  “Company”
means Clarion Property Trust Inc., a Maryland corporation, or any successor
corporation.

 

(l)                                     “Continuous
Status as a Participant” means the absence of any interruption or
termination of service as an employee, officer, director, consultant or
advisors of the Company or any Affiliate, as applicable; provided, however,
that for purposes of an Incentive Stock Option “Continuous Status as a
Participant” means the absence of any interruption or termination of
service as an employee of the Company or any Parent or Subsidiary, as
applicable, pursuant to applicable tax regulations.  Continuous Status as a Participant shall not
be considered interrupted in the following cases: (i) a Participant
transfers employment between the Company and an Affiliate or between Affiliates,
or (ii) in the discretion of the Committee as specified at or prior to
such occurrence, in the case of a spin-off, sale or disposition of the
Participant’s employer from the Company or any Affiliate, or (iii) any
leave of absence authorized in writing by the Company prior to its
commencement; provided, however, that for purposes of Incentive Stock Options,
no such leave may exceed 90 days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. 
If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 91st day of such leave any Incentive Stock
Option held by the Participant shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock
Option.  Whether military, government or
other service or other leave of absence shall constitute a termination of
Continuous Status as a Participant shall be determined in each case by the
Committee at its discretion, and any determination by the Committee shall be
final and conclusive.

 

(m)                               “Deferred
Stock Unit” means a right granted to a Participant under Article 9 to
receive Shares (or the equivalent value in cash or other property if the
Committee so provides) at a future time as determined by the Committee, or as
determined by the Participant within guidelines established by the Committee in
the case of voluntary deferral elections.

 

(n)                                 “Disability”
of a Participant means that the Participant (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) is,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Participant’s employer. 
If the determination of Disability relates to an Incentive Stock Option,
Disability means Permanent and Total Disability as defined in Section 22(e)(3) of
the Code.  In the event of a dispute, the
determination of whether a Participant is Disabled will be made by the
Committee and may be supported by the advice of a physician competent in the
area to which such Disability relates.

 

(o)                                 “Dividend
Equivalent” means a right granted to a Participant under Article 11.

 

4

 

(p)                                 “Effective
Date” has the meaning assigned such term in Section 3.1.

 

(q)                                 “Eligible
Participant” means an employee, officer, consultant or director of the
Company or any Affiliate.

 

(r)                                    “Exchange”
means any national securities exchange on which the Stock may from time to time
be listed or traded.

 

(s)                                  “Fair Market
Value,” on any date, means (i) if the Stock is listed on a securities
exchange, the closing sales price on such exchange or over such system on such
date or, in the absence of reported sales on such date, the closing sales price
on the immediately preceding date on which sales were reported, or (ii) if
the Stock is not listed on a securities exchange, the mean between the bid and
offered prices as quoted by the applicable interdealer quotation system for
such date, provided that if the Stock is not quoted on such interdealer
quotation system or it is determined that the fair market value is not properly
reflected by such quotations, Fair Market Value will be determined by such
other method as the Committee determines in good faith to be reasonable and in
compliance with Code Section 409A.

 

(t)                                    “Grant Date”
of an Award means the first date on which all necessary corporate action has
been taken to approve the grant of the Award as provided in the Plan, or such
later date as is determined and specified as part of that authorization
process.  Notice of the grant shall be
provided to the grantee within a reasonable time after the Grant Date.

 

(u)                                 “Incentive
Stock Option” means an Option that is intended to be an incentive stock
option and meets the requirements of Section 422 of the Code or any
successor provision thereto.

 

(v)                                 “Independent
Director” means a director of the Company who is not a common law employee
of the Company and who meets the additional requirements set forth for an “independent
director” in the Charter.

 

(w)                               “Nonstatutory
Stock Option” means an Option that is not an Incentive Stock Option.

 

(x)                                   “Option”
means a right granted to a Participant under Article 7 of the Plan to
purchase Stock at a specified price during specified time periods.  An Option may be either an Incentive Stock
Option or a Nonstatutory Stock Option.

 

(y)                                 “Other
Stock-Based Award” means a right granted to a Participant under Article 12,
that relates to or is valued by reference to Stock or other Awards relating to
Stock.

 

5

 

(z)                                   “Parent”
means a corporation, limited liability company, partnership or other entity
which owns or beneficially owns a majority of the outstanding voting stock or
voting power of the Company. Notwithstanding the above, with respect to an
Incentive Stock Option, Parent shall have the meaning set forth in Section 424(e) of
the Code.

 

(aa)                            “Participant”
means a person who, as an employee, officer, director or consultant of the
Company or any Affiliate, has been granted an Award under the Plan; provided
that in the case of the death of a Participant, the term “Participant” refers
to a beneficiary designated pursuant to Section 13.4 or the legal guardian
or other legal representative acting in a fiduciary capacity on behalf of the
Participant under applicable state law and court supervision.

 

(bb)                          “Performance
Award” means any award granted under the Plan pursuant to Article 10.

 

(cc)                            “Person”
means any individual, entity or group, within the meaning of Section 3(a)(9) of
the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of the
1934 Act.

 

(dd)                          “Plan”
means the Clarion Property Trust Inc. Long Term Incentive Plan, as amended from
time to time.

 

(ee)                            “Public
Offering” shall occur on the closing date of a public offering of any class
or series of the Company’s equity securities pursuant to a registration
statement filed by the Company under the 1933 Act.

 

(ff)                                “Restricted
Stock” means Stock granted to a Participant under Article 9 that is
subject to certain restrictions and to risk of forfeiture.

 

(gg)                          “Restricted
Stock Unit” means a right granted to a Participant under Article 9 to
receive shares of Stock (or the equivalent value in cash or other property if
the Committee so provides) in the future, which right is subject to certain
restrictions and to risk of forfeiture.

 

(hh)                          “Shares”
means shares of the Company’s Stock.  If
there has been an adjustment or substitution pursuant to Section 14.1, the
term “Shares” shall also include any shares of stock or other securities that
are substituted for Shares or into which Shares are adjusted pursuant to Section 14.1.

 

(ii)                                  “Stock”
means the $0.01 par value common stock of the Company and such other securities
of the Company as may be substituted for Stock pursuant to Section 14.1.

 

(jj)                                  “Stock
Appreciation Right” or “SAR” means a right granted to a Participant
under Article 8 to receive a payment equal to the difference between the
Fair Market Value of a Share as of the date of exercise of the SAR over the
grant price of the 

 

6

 

SAR, all as determined
pursuant to Article 8.

 

(kk)                            “Subsidiary”
means any corporation, limited liability company, partnership or other entity
of which a majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company. Notwithstanding the
above, with respect to an Incentive Stock Option, Subsidiary shall have the
meaning set forth in Section 424(f) of the Code.

 

(ll)                                  “1933 Act”
means the Securities Act of 1933, as amended from time to time.

 

(mm)                      “1934 Act”
means the Securities Exchange Act of 1934, as amended from time to time.

 

ARTICLE 3

EFFECTIVE TERM OF PLAN

 

3.1.                              EFFECTIVE DATE.  The Plan shall be effective as of the date it
is approved by both the Board and the stockholders of the Company (the “Effective
Date”).

 

3.2.                              TERMINATION OF PLAN.  The Plan shall terminate on the tenth
anniversary of the Effective Date unless earlier terminated as provided
herein.  The termination of the Plan on
such date shall not affect the validity of any Award outstanding on the date of
termination, which shall continue to be governed by the applicable terms and
conditions of this Plan.  Notwithstanding
the foregoing, no Incentive Stock Options may be granted more than ten (10) years
after the earlier of (a) adoption of this Plan by the Board, or (b) the
Effective Date.

 

ARTICLE 4

ADMINISTRATION

 

4.1.                              COMMITTEE.  The Plan shall be administered by a Committee
appointed by the Board (which Committee shall consist of at least two
directors) or, at the discretion of the Board from time to time, the Plan may
be administered by the Board.  The members
of the Committee shall be appointed by, and may be changed at any time and from
time to time in the discretion of, the Board. 
It is intended that at least two of the directors appointed to serve on
the Committee shall be “non-employee directors” (within the meaning of Rule 16b-3
promulgated under the 1934 Act) and that any such members of the Committee who
do not so qualify shall abstain from participating in any decision to make or
administer Awards that are made to Eligible Participants who at the time of
consideration for such Award are persons subject to the short-swing profit rules of
Section 16 of the 1934 Act. 
However, the mere fact that a Committee member shall fail to qualify as
a “non-employee director” or shall fail to abstain from such action shall not
invalidate any Award made by the Committee which Award is otherwise validly
made under the Plan.  The members of the
Committee shall be appointed by, and may be changed at any time and from time
to time in the discretion of, the Board. 
The Board may reserve to itself any or all of the authority and
responsibility of the Committee under the Plan or may act as administrator of
the Plan for any and all purposes.  To
the extent the Board has reserved any authority and 

 

7

 

responsibility or during any time that the
Board is acting as administrator of the Plan, it shall have all the powers of
the Committee hereunder, and any reference herein to the Committee (other than
in this Section 4.1) shall include the Board.  To the extent any action of the Board under
the Plan conflicts with actions taken by the Committee, the actions of the
Board shall control.

 

4.2.                              ACTION AND INTERPRETATIONS
BY THE COMMITTEE.  For
purposes of administering the Plan, the Committee may from time to time adopt
rules, regulations, guidelines and procedures for carrying out the provisions
and purposes of the Plan and make such other determinations, not inconsistent
with the Plan, as the Committee may deem appropriate.  The Committee may correct any defect, supply
any omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent it deems necessary to carry out the intent of the
Plan.  The Committee’s interpretation of
the Plan, any Awards granted under the Plan, any Award Certificate and all
decisions and determinations by the Committee with respect to the Plan are
final, binding, and conclusive on all parties. 
Each member of the Committee is entitled to, in good faith, rely or act
upon any report or other information furnished to that member by any officer or
other employee of the Company or any Affiliate, the Company’s or an Affiliate’s
independent certified public accountants, Company counsel or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan.  No
member of the Committee will be liable for any good faith determination, act or
omission in connection with the Plan or any Award.

 

4.3.                              AUTHORITY OF COMMITTEE.  The Committee has the exclusive power,
authority and discretion to:

 

(a)                                  Grant Awards;

 

(b)                                 Designate
Participants;

 

(c)                                  Determine the
type or types of Awards to be granted to each Participant;

 

(d)                                 Determine the
number of Awards to be granted and the number of Shares or dollar amount to
which an Award will relate;

 

(e)                                  Determine the
terms and conditions of any Award granted under the Plan;

 

(f)                                    Prescribe the
form of each Award Certificate, which need not be identical for each
Participant;

 

(g)                                 Decide all
other matters that must be determined in connection with an Award;

 

(h)                                 Establish,
adopt or revise any rules, regulations, guidelines or procedures as it may deem
necessary or advisable to administer the Plan;

 

(i)                                     Make all other
decisions and determinations that may be required under

 

8

 

the Plan or as the Committee deems necessary or
advisable to administer the Plan;

 

(j)                                     Amend the Plan
or any Award Certificate as provided herein; and

 

(k)                                  Adopt such
modifications, procedures, and subplans as may be necessary or desirable to
comply with provisions of the laws of non-U.S. jurisdictions in which the
Company or any Affiliate may operate, in order to assure the viability of the
benefits of Awards granted to participants located in such other jurisdictions
and to meet the objectives of the Plan.

 

4.4.                              AWARD CERTIFICATES.  Each Award shall be evidenced by an Award
Certificate.  Each Award Certificate
shall include such provisions, not inconsistent with the Plan, as may be specified
by the Committee.

 

ARTICLE 5

SHARES SUBJECT TO THE PLAN

 

5.1.                              NUMBER OF SHARES.  Subject to adjustment as provided in Sections
5.2 and Section 14.1, the aggregate number of Shares reserved and
available for issuance pursuant to Awards granted under the Plan shall be 2,000,000;
provided, however, that no Awards shall be granted under the Plan on any date
on which the aggregate number of Shares subject to Awards previously issued
under the Plan, together with the proposed Awards to be granted on such date,
shall exceed 2% of the Company’s total outstanding Shares on such date.  The maximum number of Shares that may be
issued upon exercise of Incentive Stock Options granted under the Plan shall be
2,000,000.

 

5.2.                              SHARE COUNTING.  Shares covered by an Award shall be
subtracted from the Plan share reserve as of the Grant Date, but shall be added
back to the Plan share reserve in accordance with this Section 5.2.

 

(a)                                  To the extent
that an Award is canceled, terminates, expires, is forfeited or lapses for any
reason, any unissued or forfeited Shares originally subject to the Award will
be added back to the Plan share reserve and again be available for issuance
pursuant to Awards granted under the Plan.

 

(b)                                 Shares subject
to Awards settled in cash will be added back to the Plan share reserve and
again be available for issuance pursuant to Awards granted under the Plan.

 

(c)                                  Shares withheld
or repurchased from an Award or delivered by a Participant to satisfy minimum
tax withholding requirements will be added back to the Plan share reserve and
again be available for issuance pursuant to Awards granted under the Plan.

 

(d)                                 If the exercise
price of an Option is satisfied in whole or in part by delivering Shares to the
Company (by either actual delivery or attestation), the number of Shares so
tendered (by delivery or attestation) shall be added to the Plan share reserve
and will be available for issuance pursuant to Awards granted under the Plan.

 

(e)                                  To the extent
that the full number of Shares subject to an Option or SAR is 

 

9

 

not
issued upon exercise of the Option or SAR for any reason, including by reason
of net-settlement of the Award, the unissued Shares originally subject to the
Award will be added back to the Plan share reserve and again be available for
issuance pursuant to other Awards granted under the Plan.

 

(f)                                    To the extent
that the full number of Shares subject to an Award other than an Option or SAR
is not issued for any reason, including by reason of failure to achieve maximum
performance goals, the unissued Shares originally subject to the Award will be
added back to the Plan share reserve and again be available for issuance
pursuant to Awards granted under the Plan.

 

(g)                                 Substitute
Awards granted pursuant to Section 13.8 of the Plan shall not count
against the Shares otherwise available for issuance under the Plan under Section 5.1.

 

5.3.                              STOCK DISTRIBUTED.  Any Stock distributed pursuant to an Award
may consist, in whole or in part, of authorized and unissued Stock, treasury
Stock or Stock purchased on the open market.

 

ARTICLE 6

ELIGIBILITY

 

6.1.                              GENERAL.  Awards may be granted only to Eligible
Participants.  Incentive Stock Options
may be granted only to Eligible Participants who are employees of the Company
or a Parent or Subsidiary as defined in Section 424(e) and (f) of
the Code.  Eligible Participants who are
service providers to an Affiliate may be granted Options or SARs under this
Plan only if the Affiliate qualifies as an “eligible issuer of service
recipient stock” within the meaning of §1.409A-1(b)(5)(iii)(E) of the
final regulations under Code Section 409A.

 

ARTICLE 7

STOCK OPTIONS

 

7.1.                              GENERAL.  The Committee is authorized to grant Options
to Participants on the following terms and conditions:

 

(a)                                  EXERCISE PRICE.  The exercise price per Share under an Option
shall be determined by the Committee, provided that the exercise price for any
Option (other than an Option issued as a substitute Award pursuant to Section 13.8)
shall not be less than the Fair Market Value as of the Grant Date.

 

(b)                                 PROHIBITION ON
REPRICING.  Except as
otherwise provided in Section 14.1, the exercise price of an Option may
not be reduced, directly or indirectly by cancellation and regrant or
otherwise, without the prior approval of the stockholders of the Company.

 

(c)                                  TIME AND
CONDITIONS OF EXERCISE.  The
Committee shall 

 

10

 

determine the time or times at which an Option may
be exercised in whole or in part, subject to Section 7.1(e), including a
provision that an Option that is otherwise exercisable and has an exercise
price that is less than the Fair Market Value of the Stock on the last day of
its term will be automatically exercised on such final date of the term by
means of a “net exercise,” thus entitling the optionee to Shares equal to the
intrinsic value of the Option on such exercise date, less the number of Shares
required for tax withholding.  The
Committee shall also determine the performance or other conditions, if any,
that must be satisfied before all or part of an Option may be exercised or
vested.

 

(d)                                 PAYMENT.  The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of payment, and the
methods by which Shares shall be delivered or deemed to be delivered to
Participants.  As determined by the
Committee at or after the Grant Date, payment of the exercise price of an
Option may be made in, in whole or in part, in the form of (i) cash or
cash equivalents, (ii) delivery (by either actual delivery or attestation)
of previously-acquired Shares based on the Fair Market Value of the Shares on
the date the Option is exercised, (iii) withholding of Shares from the
Option based on the Fair Market Value of the Shares on the date the Option is
exercised, (iv) broker-assisted market sales, or (iv) any other “cashless
exercise” arrangement.

 

(e)                                  EXERCISE TERM.  Except for Nonstatutory Options granted to
Participants outside the United States, no Option granted under the Plan shall
be exercisable for more than ten years from the Grant Date.

 

(f)                                    NO DEFERRAL
FEATURE.  No Option shall provide for any feature for the deferral of compensation
other than the deferral of recognition of income until the exercise or
disposition of the Option.

 

(g)                                 NO DIVIDEND
EQUIVALENTS.  No Option
shall provide for Dividend Equivalents.

 

7.2.                              INCENTIVE STOCK OPTIONS.  The terms of any Incentive Stock Options
granted under the Plan must comply with the requirements of Section 422 of
the Code.  Without limiting the
foregoing, any Incentive Stock Option granted to a Participant who at the Grant
Date owns more than 10% of the voting power of all classes of shares of the
Company must have an exercise price per Share of not less than 110% of the Fair
Market Value per Share on the Grant Date and an Option term of not more than
five years.  If all of the requirements
of Section 422 of the Code (including the above) are not met, the Option
shall automatically become a Nonstatutory Stock Option.

 

ARTICLE 8

STOCK APPRECIATION RIGHTS

 

8.1.                              GRANT OF STOCK
APPRECIATION RIGHTS.  The
Committee is authorized to grant Stock Appreciation Rights to Participants on
the following terms and conditions:

 

11

 

(a)                                  RIGHT TO
PAYMENT.  Upon the exercise of a SAR,
the Participant has the right to receive, for each Share with respect to which
the SAR is being exercised, the excess, if any, of:

 

(1)                                        The Fair Market
Value of one Share on the date of exercise; over

 

(2)                                        The base price
of the SAR as determined by the Committee and set forth in the Award
Certificate, which shall not be less than the Fair Market Value of one Share on
the Grant Date.

 

(b)                                 PROHIBITION ON
REPRICING.  Except as
otherwise provided in Section 14.1, the base price of a SAR may not be
reduced, directly or indirectly by cancellation and regrant or otherwise,
without the prior approval of the stockholders of the Company.

 

(c)                                  TIME AND
CONDITIONS OF EXERCISE.  The
Committee shall determine the time or times at which a SAR may be exercised in
whole or in part, including a provision that a SAR that is otherwise
exercisable and has a base price that is less than the Fair Market Value of the
Stock on the last day of its term will be automatically exercised on such final
date of the term, thus entitling the holder to cash or Shares equal to the
intrinsic value of the SAR on such exercise date, less the cash or number of
Shares required for tax withholding. 
Except for SARs granted to Participants outside the United States, no
SAR shall be exercisable for more than ten years from the Grant Date.

 

(d)                                 NO DEFERRAL
FEATURE.  No SAR shall provide for any
feature for the deferral of compensation other than the deferral of recognition
of income until the exercise or disposition of the SAR.

 

(e)                                  NO DIVIDEND
EQUIVALENTS.  No SAR
shall provide for Dividend Equivalents.

 

(f)                                    OTHER TERMS.  All SARs shall be evidenced by an Award
Certificate.  Subject to the limitations
of this Article 8, the terms, methods of exercise, methods of settlement,
form of consideration payable in settlement (e.g., cash, Shares or other
property), and any other terms and conditions of the SAR shall be determined by
the Committee at the time of the grant and shall be reflected in the Award
Certificate.

 

ARTICLE 9

RESTRICTED STOCK, RESTRICTED STOCK UNITS

AND DEFERRED STOCK UNITS

 

9.1.                              GRANT OF
RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS.  The Committee is authorized to make Awards of
Restricted Stock, Restricted Stock Units or Deferred Stock Units to
Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee.  An Award of 

 

12

 

Restricted Stock, Restricted Stock Units or
Deferred Stock Units shall be evidenced by an Award Certificate setting forth
the terms, conditions, and restrictions applicable to the Award.

 

9.2.                              ISSUANCE AND RESTRICTIONS.  Restricted Stock, Restricted Stock Units or
Deferred Stock Units shall be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, for example,
limitations on the right to vote Restricted Stock or the right to receive
dividends on the Restricted Stock). 
These restrictions may lapse separately or in combination at such times,
under such circumstances, in such installments, upon the satisfaction of
performance goals or otherwise, as the Committee determines at the time of the
grant of the Award or thereafter.  Except
as otherwise provided in an Award Certificate or any special Plan document
governing an Award, the Participant shall have all of the rights of a
stockholder with respect to the Restricted Stock, and the Participant shall
have none of the rights of a stockholder with respect to Restricted Stock Units
or Deferred Stock Units until such time as Shares of Stock are paid in
settlement of the Restricted Stock Units or Deferred Stock Units.  Unless otherwise provided in the applicable
Award Certificate, awards of Restricted Stock will be entitled to full dividend
rights and any dividends paid thereon will be paid or distributed to the holder
no later than the end of the calendar year in which the dividends are paid to
stockholders or, if later, the 15th  day of the third month following the date the
dividends are paid to stockholders.

 

9.3                                 DIVIDENDS ON RESTRICTED
STOCK.  In the case of Restricted
Stock, the Committee may provide that ordinary cash dividends declared on the
Shares before they are vested (i) will be forfeited, (ii) will be deemed
to have been reinvested in additional Shares or otherwise reinvested (subject
to Share availability under Section 5.1 hereof), or (iii) in the case
of Restricted Stock that is not subject to performance-based vesting, will be
paid or distributed to the Participant as accrued (in which case, such
dividends must be paid or distributed no later than the 15th day of the 3rd
month following the later of (A) the calendar year in which the
corresponding dividends were paid to shareholders, or (B) the first calendar
year in which the Participant’s right to such dividends is no longer subject to
a substantial risk of forfeiture). 
Unless otherwise provided by the Committee, dividends accrued on Shares
of Restricted Stock before they are vested shall, as provided in the Award
Certificate, either (i) be reinvested in the form of additional Shares,
which shall be subject to the same vesting provisions as provided for the host
Award, or (ii) be credited by the Company to an account for the
Participant and accumulated without interest until the date upon which the host
Award becomes vested, and any dividends accrued with respect to forfeited
Restricted Stock will be reconveyed to the Company without further
consideration or any act or action by the Participant.

 

9.4.                              FORFEITURE.  Subject to the terms of the Award Certificate
and except as otherwise determined by the Committee at the time of the grant of
the Award or thereafter, upon termination of Continuous Status as a Participant
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock or
Restricted Stock Units that are at that time subject to restrictions shall be
forfeited.

 

9.5.                              DELIVERY OF RESTRICTED STOCK.  Shares of Restricted Stock shall be delivered
to the Participant at the Grant Date either by book-entry registration or by
delivering to the Participant, or a custodian or escrow agent (including,
without limitation, the Company or

 

13

 

one
or more of its employees) designated by the Committee, a stock certificate or
certificates registered in the name of the Participant.  If physical certificates representing shares
of Restricted Stock are registered in the name of the Participant, such
certificates must bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock.

 

ARTICLE 10

PERFORMANCE AWARDS

 

10.1.                        GRANT OF
PERFORMANCE AWARDS.  The
Committee is authorized to grant any Award under this Plan, including
cash-based Awards, with performance-based vesting criteria, on such terms and
conditions as may be selected by the Committee. 
Any such Awards with performance-based vesting criteria are referred to
herein as Performance Awards. The Committee shall have the complete discretion
to determine the number of Performance Awards granted to each Participant and
to designate the provisions of such Performance Awards as provided in Section 4.3.  All Performance Awards shall be evidenced by
an Award Certificate or a written program established by the Committee,
pursuant to which Performance Awards are awarded under the Plan under uniform
terms, conditions and restrictions set forth in such written program.

 

10.2.                        PERFORMANCE GOALS.  The Committee may establish performance goals
for Performance Awards which may be based on any criteria selected by the
Committee.  Such performance goals may be
described in terms of Company-wide objectives or in terms of objectives that
relate to the performance of the Participant, an Affiliate or a division,
region, department or function within the Company or an Affiliate. If the
Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company or the manner in which the
Company or an Affiliate conducts its business, or other events or circumstances
render performance goals to be unsuitable, the Committee may modify such
performance goals in whole or in part, as the Committee deems appropriate.  If a Participant is promoted, demoted or
transferred to a different business unit or function during a performance
period, the Committee may determine that the performance goals or performance
period are no longer appropriate and may (i) adjust, change or eliminate the
performance goals or the applicable performance period as it deems appropriate
to make such goals and period comparable to the initial goals and period, or (ii) make
a cash payment to the participant in an amount determined by the Committee.

 

ARTICLE 11

DIVIDEND EQUIVALENTS

 

11.1.                        GRANT OF
DIVIDEND EQUIVALENTS.  Except as
provided in Sections 7.1(g) and 8.1(e), the Committee is authorized to
grant Dividend Equivalents with respect to Awards granted hereunder, subject to
such terms and conditions as may be selected by the Committee.  Dividend Equivalents shall entitle the
Participant to receive payments equal to dividends with respect to all or a
portion of the number of Shares subject to an Award, as determined by the
Committee.  The Committee may provide
that Dividend Equivalents (i) will be deemed to have been reinvested in
additional Shares or otherwise reinvested, or (ii) except in the case of
Performance Awards, will be paid or distributed to the Participant as accrued
(in 

 

14

 

which case, such Dividend Equivalents must be
paid or distributed no later than the 15th day of the 3rd month following the later of (A) the
calendar year in which the corresponding dividends were paid to shareholders,
or (B) the first calendar year in which the Participant’s right to such
Dividends Equivalents is no longer subject to a substantial risk of
forfeiture).  Unless otherwise provided
by the Committee, Dividend Equivalents accruing on unvested Full-Value Awards
shall, as provided in the Award Certificate, either (i) be reinvested in
the form of additional Shares, which shall be subject to the same vesting
provisions as provided for the host Award, or (ii) be credited by the
Company to an account for the Participant and accumulated without interest
until the date upon which the host Award becomes vested, and any Dividend
Equivalents accrued with respect to forfeited Awards will be reconveyed to the
Company without further consideration or any act or action by the Participant.

 

ARTICLE 12

STOCK OR OTHER STOCK-BASED
AWARDS

 

12.1.                        GRANT OF STOCK OR OTHER
STOCK-BASED AWARDS.  The
Committee is authorized, subject to limitations under applicable law, to grant
to Participants such other Awards that are payable in, valued in whole or in
part by reference to, or otherwise based on or related to Shares, as deemed by
the Committee to be consistent with the purposes of the Plan, including without
limitation, membership interests in a Subsidiary or operating partnership,
Shares awarded purely as a “bonus” and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Shares, and Awards valued by reference to book
value of Shares or the value of securities of or the performance of specified
Parents or Subsidiaries.  The Committee
shall determine the terms and conditions of such Awards.

 

ARTICLE 13

PROVISIONS APPLICABLE TO AWARDS

 

13.1.                        TERM OF AWARD.  The term of each Award shall be for the
period as determined by the Committee, provided that in no event shall the term
of any Option or a Stock Appreciation Right exceed a period of ten years from
its Grant Date.

 

13.2.                        FORM OF PAYMENT FOR
AWARDS.  At the discretion of the
Committee, payment of Awards may be made in cash, Stock, a combination of cash
and Stock, or any other form of property as the Committee shall determine.  In addition, payment of Awards may include
such terms, conditions, restrictions and/or limitations, if any, as the
Committee deems appropriate, including, in the case of Awards paid in the form
of Stock, restrictions on transfer and forfeiture provisions.  Further, payment of Awards may be made in the
form of a lump sum, or in installments, as determined by the Committee.

 

13.3.                        LIMITS ON TRANSFER.  No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or an Affiliate, or shall be
subject to any lien, obligation, or liability of such Participant to any other
party other than the Company or an Affiliate. 
No unexercised or restricted Award shall be assignable or transferable
by a Participant other than by will or the laws

 

15

 

of
descent and distribution; provided, however, that the Committee may (but need
not) permit other transfers (other than transfers for value) where the
Committee concludes that such transferability (i) does not result in
accelerated taxation, (ii) does not cause any Option intended to be an
Incentive Stock Option to fail to be described in Code Section 422(b), and
(iii) is otherwise appropriate and desirable, taking into account any
factors deemed relevant, including without limitation, state or federal tax or
securities laws applicable to transferable Awards.

 

13.4.                        BENEFICIARIES.  Notwithstanding Section 13.3, a
Participant may, in the manner determined by the Committee, designate a
beneficiary to exercise the rights of the Participant and to receive any
distribution with respect to any Award upon the Participant’s death.  A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject
to all terms and conditions of the Plan and any Award Certificate applicable to
the Participant, except to the extent the Plan and Award Certificate otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee.  If no beneficiary has
been designated or survives the Participant, payment shall be made to the
Participant’s estate.  Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.

 

13.5.                        STOCK TRADING RESTRICTIONS.  All Stock issuable under the Plan is subject
to any stop-transfer orders and other restrictions as the Committee deems
necessary or advisable to comply with federal or state securities laws, rules and
regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded.  The Committee may place legends on any Stock
certificate or issue instructions to the transfer agent to reference
restrictions applicable to the Stock.

 

13.6.                    ACCELERATION FOR ANY REASON.  The Committee may in its sole discretion at
any time determine that all or a portion of a Participant’s Options, SARs, and
other Awards in the nature of rights that may be exercised shall become fully
or partially exercisable, that all or a part of the time-based vesting
restrictions on all or a portion of the outstanding Awards shall lapse, and/or
that any performance-based criteria with respect to any Awards shall be deemed
to be wholly or partially satisfied, in each case, as of such date as the Committee
may, in its sole discretion, declare. 
The Committee may discriminate among Participants and among Awards
granted to a Participant in exercising its discretion pursuant to this Section 13.6.  Notwithstanding anything in the Plan,
including this Section 13.6, the Committee may not accelerate the payment
of any Award if such acceleration would violate Section 409A(a)(3) of
the Code.

 

13.7.                        FORFEITURE EVENTS.  The Committee may specify in an Award
Certificate that the Participant’s rights, payments and benefits with respect
to an Award shall be subject to reduction, cancellation, forfeiture or
recoupment upon the occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award. Such events
shall include, but shall not be limited to, termination of employment for
Cause, violation of material Company or Affiliate policies, breach of
noncompetition, confidentiality or other restrictive covenants that may apply
to the Participant, or other conduct by the Participant that is detrimental to
the business or reputation of the Company or any Affiliate.

 

16

 

13.8.                        SUBSTITUTE AWARDS.  The Committee may grant Awards under the Plan
in substitution for stock and stock-based awards held by employees of another
entity who become employees of the Company or an Affiliate as a result of a
merger or consolidation of the former employing entity with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or
stock of the former employing corporation. 
The Committee may direct that the substitute awards be granted on such
terms and conditions as the Committee considers appropriate in the
circumstances.

 

ARTICLE 14

CHANGES IN CAPITAL STRUCTURE

 

14.1.                        MANDATORY ADJUSTMENTS.  In the
event of a nonreciprocal transaction between the Company and its stockholders
that causes the per-share value of the Stock to change (including, without
limitation, any stock dividend, stock split, spin-off, rights offering, or
large nonrecurring cash dividend), the authorization limits under Section 5.1
shall be adjusted proportionately, and the
Committee shall make such adjustments to the Plan and Awards as it deems
necessary, in its sole discretion, to prevent dilution or enlargement of rights
immediately resulting from such transaction. 
Action by the Committee may include: (i) adjustment of the number
and kind of shares that may be delivered under the Plan; (ii) adjustment
of the number and kind of shares subject to outstanding Awards; (iii) adjustment
of the exercise price of outstanding Awards or the measure to be used to
determine the amount of the benefit payable on an Award; and (iv) any
other adjustments that the Committee determines to be equitable.  Notwithstanding
the foregoing, the Committee shall not make any adjustments to outstanding
Options or SARs that would constitute a modification or substitution of the
stock right under Treas. Reg. Sections 1.409A-1(b)(5)(v) that would be
treated as the grant of a new stock right or change in the form of payment for
purposes of Code Section 409A.  Without limiting the foregoing, in the
event of a subdivision of the outstanding Stock (stock-split), a declaration of
a dividend payable in Shares, or a combination or consolidation of the
outstanding Stock into a lesser number of Shares, the authorization limits
under Section 5.1 shall automatically be adjusted proportionately, and the
Shares then subject to each Award shall automatically, without the necessity
for any additional action by the Committee, be adjusted proportionately without
any change in the aggregate purchase price therefor.

 

14.2.                        DISCRETIONARY ADJUSTMENTS.  Upon the occurrence or in anticipation of any
corporate event or transaction involving the Company (including, without
limitation, any merger, reorganization, recapitalization, combination or
exchange of shares, or any transaction described in Section 14.1), the Committee
may, in its sole discretion, provide (i) that Awards will be settled in
cash rather than Stock, (ii) that Awards will become immediately vested
and exercisable and will expire after a designated period of time to the extent
not then exercised, (iii) that Awards will be assumed by another party to
a transaction or otherwise be equitably converted or substituted in connection
with such transaction, (iv) that outstanding Awards may be settled by
payment in cash or cash equivalents equal to the excess of the Fair Market
Value of the underlying Stock, as of a specified date associated with the
transaction, over the exercise price of the Award, (v) that performance
targets and performance periods for Performance Awards will be modified, or (vi) any
combination of the foregoing.  The
Committee’s 

 

17

 

determination
need not be uniform and may be different for different Participants whether or
not such Participants are similarly situated.

 

14.3.                        GENERAL.  Any discretionary adjustments made pursuant
to this Article 14 shall be subject to the provisions of Section 15.2.  To the extent that any adjustments made
pursuant to this Article 14 cause Incentive Stock Options to cease to
qualify as Incentive Stock Options, such Options shall be deemed to be
Nonstatutory Stock Options.

 

ARTICLE 15

AMENDMENT, MODIFICATION AND
TERMINATION

 

15.1.                        AMENDMENT, MODIFICATION AND
TERMINATION.  The Board
or the Committee may, at any time and from time to time, amend, modify or
terminate the Plan without stockholder approval; provided, however, that if an
amendment to the Plan would, in the reasonable opinion of the Board or the
Committee, either (i) materially increase the number of Shares available
under the Plan, (ii) expand the types of awards under the Plan, (iii) materially
expand the class of participants eligible to participate in the Plan, (iv) materially
extend the term of the Plan, or (v) otherwise constitute a material change
requiring stockholder approval under applicable laws, policies or regulations
or the applicable listing or other requirements of an Exchange, then such
amendment shall be subject to stockholder approval; and provided, further, that
the Board or Committee may condition any other amendment or modification on the
approval of stockholders of the Company for any reason, including by reason of
such approval being necessary or deemed advisable (i) to comply with the
listing or other requirements of an Exchange, or (ii) to satisfy any other
tax, securities or other applicable laws, policies or regulations.

 

15.2.                        AWARDS PREVIOUSLY GRANTED.  At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however:

 

(a)                                  Subject to the
terms of the applicable Award Certificate, such amendment, modification or
termination shall not, without the Participant’s consent, reduce or diminish
the value of such Award determined as if the Award had been exercised, vested,
cashed in or otherwise settled on the date of such amendment or termination
(with the per-share value of an Option or SAR for this purpose being calculated
as the excess, if any, of the Fair Market Value as of the date of such
amendment or termination over the exercise or base price of such Award);

 

(b)                                 The original
term of an Option or SAR may not be extended without the prior approval of the
stockholders of the Company;

 

(c)                                  Except as
otherwise provided in Section 14.1, the exercise price of an Option or SAR
may not be reduced, directly or indirectly, without the prior approval of the
stockholders of the Company; and

 

(d)                                 No termination,
amendment, or modification of the Plan shall adversely 

 

18

 

affect any Award previously granted under the Plan,
without the written consent of the Participant affected thereby.  An outstanding Award shall not be deemed to
be “adversely affected” by a Plan amendment if such amendment would not reduce
or diminish the value of such Award determined as if the Award had been
exercised, vested, cashed in or otherwise settled on the date of such amendment
(with the per-share value of an Option or SAR for this purpose being calculated
as the excess, if any, of the Fair Market Value as of the date of such
amendment over the exercise or base price of such Award).

 

15.3.                        COMPLIANCE AMENDMENTS.  Notwithstanding anything in the Plan or in
any Award Certificate to the contrary, the Board may amend the Plan or an Award
Certificate, to take effect retroactively or otherwise, as deemed necessary or
advisable for the purpose of conforming the Plan or Award Certificate to any
present or future law relating to plans of this or similar nature (including,
but not limited to, Section 409A of the Code), and to the administrative
regulations and rulings promulgated thereunder. 
By accepting an Award under this Plan, a Participant agrees to any
amendment made pursuant to this Section 15.3 to any Award granted under
the Plan without further consideration or action.

 

ARTICLE 16

GENERAL PROVISIONS

 

16.1.                        RIGHTS OF PARTICIPANTS.

 

(a)                                  No Participant
or any Eligible Participant shall have any claim to be granted any Award under
the Plan.  Neither the Company, its
Affiliates nor the Committee is obligated to treat Participants or Eligible
Participants uniformly, and determinations made under the Plan may be made by
the Committee selectively among Eligible Participants who receive, or are
eligible to receive, Awards (whether or not such Eligible Participants are
similarly situated).

 

(b)                                 Nothing in the
Plan, any Award Certificate or any other document or statement made with respect
to the Plan, shall interfere with or limit in any way the right of the Company
or any Affiliate to terminate any Participant’s employment or status as an
officer, or any Participant’s service as a director, at any time, nor confer
upon any Participant any right to continue as an employee, officer, or director
of the Company or any Affiliate, whether for the duration of a Participant’s
Award or otherwise.

 

(c)                                  Neither an
Award nor any benefits arising under this Plan shall constitute an employment
contract with the Company or any Affiliate and, accordingly, subject to Article 15,
this Plan and the benefits hereunder may be terminated at any time in the sole
and exclusive discretion of the Committee without giving rise to any liability
on the part of the Company or any of its Affiliates.

 

(d)                                 No Award gives
a Participant any of the rights of a stockholder of the Company unless and
until Shares are in fact issued to such person in connection with such Award.

 

19

 

16.2.                        WITHHOLDING.  The Company or any Affiliate shall have the
authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant’s FICA obligation) required by law to be
withheld with respect to any exercise, lapse of restriction or other taxable
event arising as a result of the Plan. 
With respect to withholding required upon any taxable event under the
Plan, the Committee may, at the time the Award is granted or thereafter,
require or permit that any such withholding requirement be satisfied, in whole
or in part, by withholding from the Award Shares having a Fair Market Value on
the date of withholding equal to the minimum amount (and not any greater
amount) required to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes. 
All such elections shall be subject to any restrictions or limitations
that the Committee, in its sole discretion, deems appropriate.

 

16.3.                        SPECIAL
PROVISIONS RELATED TO SECTION 409A OF THE CODE.

 

(a)                                  General.  It is intended that the payments and benefits
provided under the Plan and any Award shall either be exempt from the
application of, or comply with, the requirements of Section 409A of the
Code.  The Plan and all Award
Certificates shall be construed in a manner that effects such intent.  Nevertheless, the tax treatment of the
benefits provided under the Plan or any Award is not warranted or
guaranteed.  Neither the Company, its
Affiliates nor their respective directors, officers, employees or advisers
shall be held liable for any taxes, interest, penalties or other monetary
amounts owed by any Participant or other taxpayer as a result of the Plan or
any Award.

 

(b)                                 Definitional
Restrictions. Notwithstanding anything in the Plan or in any
Award Certificate to the contrary, to the extent that any amount or benefit
that would constitute non-exempt “deferred compensation” for purposes of Section 409A
of the Code would otherwise be payable or distributable, or a different form of
payment (e.g., lump sum or installment) would be effected, under the Plan or
any Award Certificate by reason of the occurrence of a Change in Control, or
the Participant’s Disability or separation from service, such amount or benefit
will not be payable or distributable to the Participant, and/or such different
form of payment will not be effected, by reason of such circumstance unless the
circumstances giving rise to such Change in Control, Disability or separation
from service meet any description or definition of “change in control event,” “disability”
or “separation from service,” as the case may be, in Section 409A of the
Code and applicable regulations (without giving effect to any elective
provisions that may be available under such definition).  This provision does not prohibit the vesting
of any Award upon a Change in Control, Disability or separation from service,
however defined.  If this provision
prevents the payment or distribution of any amount or benefit, such payment or
distribution shall be made on the next earliest payment or distribution date or
event specified in the Award Certificate that is permissible under Section 409A
of the Code.  If this provision prevents
the application of a different form of payment of any amount or benefit, such
payment shall be made in the same form as would have applied absent such
designated event or circumstance.

 

20

 

(c)                                  Allocation
among Possible Exemptions.  If
any one or more Awards granted under the Plan to a Participant could qualify
for any separation pay exemption described in Treas. Reg. Section 1.409A-1(b)(9),
but such Awards in the aggregate exceed the dollar limit permitted for the
separation pay exemptions, the Company (acting through the Committee) shall
determine which Awards or portions thereof will be subject to such exemptions.

 

(d)                                 Six-Month Delay
in Certain Circumstances. 
Notwithstanding anything in the Plan or in any Award Certificate to the
contrary, if any amount or benefit that would constitute non-exempt “deferred
compensation” for purposes of Section 409A of the Code would otherwise be
payable or distributable under this Plan or any Award Certificate by reason of
a Participant’s separation from service during a period in which the
Participant is a Specified Employee (as defined below), then, subject to any
permissible acceleration of payment by the Committee under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic
relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment
of employment taxes):

 

(i)                                     the amount of such
non-exempt deferred compensation that would otherwise be payable during the
six-month period immediately following the Participant’s separation from
service will be accumulated through and paid or provided on the first day of
the seventh month following the Participant’s separation from service (or, if
the Participant dies during such period, within 30 days after the Participant’s
death) (in either case, the “Required Delay Period”), and

 

(ii)                                  the normal payment or
distribution schedule for any remaining payments or distributions will resume
at the end of the Required Delay Period.

 

For
purposes of this Plan, the term “Specified Employee” has the meaning
given such term in Section 409A of the Code and the final regulations
thereunder, provided, however, that, as permitted in such final regulations,
the Company’s Specified Employees and its application of the six-month delay rule of
409A(a)(2)(B)(i) of the Code shall be determined in accordance with rules adopted
by the Board or any committee of the Board, which shall be applied consistently
with respect to all nonqualified deferred compensation arrangements of the
Company, including this Plan.

 

16.4.                        UNFUNDED STATUS
OF AWARDS.  The Plan is
intended to be an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made to
a Participant pursuant to an Award, nothing contained in the Plan or any Award
Certificate shall give the Participant any rights that are greater than those
of a general creditor of the Company or any Affiliate.  This Plan is not intended to be subject to
ERISA.

 

16.5.                        RELATIONSHIP TO OTHER
BENEFITS.  No payment
under the Plan shall be taken into account in determining any benefits under
any pension, retirement, savings, profit sharing, group insurance, welfare or
benefit plan of the Company or any Affiliate unless provided otherwise in such
other plan.

 

21

 

16.6.                        EXPENSES.  The expenses of administering the Plan shall
be borne by the Company and its Affiliates.

 

16.7.                        TITLES AND HEADINGS.  The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

 

16.8.                        GENDER AND NUMBER.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.

 

16.9.                        FRACTIONAL SHARES.  No fractional Shares shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional Shares or whether such fractional Shares shall be eliminated
by rounding up or down.

 

16.10.                  GOVERNMENT AND OTHER
REGULATIONS.

 

(a)                                  Notwithstanding
any other provision of the Plan, no Participant who acquires Shares pursuant to
the Plan may, during any period of time that such Participant is an affiliate
of the Company (within the meaning of the rules and regulations of the
Securities and Exchange Commission under the 1933 Act), sell such Shares,
unless such offer and sale is made (i) pursuant to an effective
registration statement under the 1933 Act, which is current and includes the
Shares to be sold, or (ii) pursuant to an appropriate exemption from the
registration requirement of the 1933 Act, such as that set forth in Rule 144
promulgated under the 1933 Act.

 

(b)                                 Notwithstanding
any other provision of the Plan, if at any time the Committee shall determine
that the registration, listing or qualification of the Shares covered by an
Award upon any Exchange or under any foreign, federal, state or local law or
practice, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting
of such Award or the purchase or receipt of Shares thereunder, no Shares may be
purchased, delivered or received pursuant to such Award unless and until such
registration, listing, qualification, consent or approval shall have been
effected or obtained free of any condition not acceptable to the
Committee.  Any Participant receiving or
purchasing Shares pursuant to an Award shall make such representations and
agreements and furnish such information as the Committee may request to assure
compliance with the foregoing or any other applicable legal requirements.  The Company shall not be required to issue or
deliver any certificate or certificates for Shares under the Plan prior to the
Committee’s determination that all related requirements have been
fulfilled.  The Company shall in no event
be obligated to register any securities pursuant to the 1933 Act or applicable
state or foreign law or to take any other action in order to cause the issuance
and delivery of such certificates to comply with any such law, regulation or
requirement.

 

16.11.                  GOVERNING LAW.  To the extent not governed by federal law,
the Plan and all 

 

22

 

Award
Certificates shall be construed in accordance with and governed by the laws of
the State of Maryland.

 

16.12.                  ADDITIONAL PROVISIONS.  Each Award Certificate may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of the Plan.

 

16.13.                  NO LIMITATIONS ON RIGHTS OF
COMPANY.  The grant of any Award shall
not in any way affect the right or power of the Company to make adjustments,
reclassification or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets.  The Plan shall not
restrict the authority of the Company, for proper corporate purposes, to draft
or assume awards, other than under the Plan, to or with respect to any
person.  If the Committee so directs, the
Company may issue or transfer Shares to an Affiliate, for such lawful
consideration as the Committee may specify, upon the condition or understanding
that the Affiliate will transfer such Shares to a Participant in accordance
with the terms of an Award granted to such Participant and specified by the
Committee pursuant to the provisions of the Plan.

 

16.14.                  INDEMNIFICATION.  Each person who is or shall have been a
member of the Committee or of the Board shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company’s approval, or paid by him
or her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Company an opportunity,
at its own expense, to handle and defend the same before he or she undertakes
to handle and defend it on his or her own behalf, unless such loss, cost,
liability, or expense is a result of his or her own willful misconduct or
except as expressly provided by statute. 
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company’s charter or bylaws, as a matter of law, or otherwise, or any power
that the Company may have to indemnify them or hold them harmless.

 

**********

 

23

 

The foregoing is hereby acknowledged as being the
Clarion Property Trust Inc. Long Term Incentive Plan as adopted by the Board on
                    ,
2010 and by the stockholders on
                          ,
2010.

 

	
   

  	
  CLARION PROPERTY TRUST INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

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