Document:

exv4w1

 

Exhibit 4.1 

__________________________________________________________________ 

COLONIAL PROPERTIES TRUST

2008 OMNIBUS INCENTIVE PLAN

__________________________________________________________________ 

 

     COLONIAL PROPERTIES TRUST
2008 OMNIBUS INCENTIVE PLAN 

          Colonial
Properties Trust, an Alabama real estate investment trust (the “Company”), sets
forth herein the terms of its 2008 Omnibus Incentive Plan (the “Plan”), as
follows: 

1. PURPOSE

          The
Plan is intended to enhance the Company’s and its Affiliates’ (as defined
herein) ability to attract and retain highly qualified officers, trustees, key
employees, and other persons, and to motivate such persons to serve the Company
and its Affiliates and to expend maximum effort to improve the business results
and earnings of the Company, by providing to such persons an opportunity to
acquire or increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for the grant of share
options, share appreciation rights, restricted shares, share units (including
deferred share units), and unrestricted shares. Any of these awards may, but
need not, be made as performance incentives to reward attainment of annual or
long-term performance goals in accordance with the terms hereof. Share options
granted under the Plan may be non-qualified share options or incentive share
options, as provided herein, except that share options granted to outside
trustees and any consultants or advisers providing services to the Company or an
Affiliate shall in all cases be non-qualified share options. 

2. DEFINITIONS

          For
purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply: 

     2.1 “Affiliate” means, with respect
to the Company, any company or other trade or business that controls, is
controlled by or is under common control with the Company within the meaning of
Rule 405 of Regulation C under the Securities Act, including, without
limitation, any Subsidiary. For purposes of granting share options or share
appreciation rights, an entity may not be considered an Affiliate unless the
Company holds a “controlling interest” in such entity, where the term
“controlling interest” has the same meaning as provided in Treasury Regulation
1.414(c)-2(b)(2)(i), provided that the language “at least 50 percent” is used
instead of “at least 80 percent” and, provided further, that where granting of
share options or share appreciation rights is based upon a legitimate business
criteria, the language “at least 20 percent” is used instead of “at least 80
percent” each place it appears in Treasury Regulation 1.414(c)-2(b)(2)(i).

     2.2 “Award” means a grant of an
Option, Share Appreciation Right, Restricted Share, Unrestricted Share, Share
Unit, Performance Share, or Performance Unit under the Plan. 

     2.3 “Award Agreement” means the
agreement between the Company and a Grantee that evidences and sets out the
terms and conditions of an Award. 

     2.4 “Benefit
Arrangement” shall have the meaning set
forth in Section 15 hereof. 

     2.5 “Board” means the Board of Trustees of the Company. 

     2.6 “Cause” means, as determined by the Board and unless otherwise
provided in an applicable agreement with the Company or an Affiliate, (i) gross
negligence or willful misconduct in connection with the performance of duties;
(ii) conviction of a criminal offense (other than minor traffic offenses); or
(iii) material breach of any term of any employment, consulting or other
services, confidentiality, intellectual property or non-competition agreements,
if any, between the Service Provider and the Company or an Affiliate.

     2.7 “Code” means the Internal Revenue Code of 1986, as now in
effect or as hereafter amended. 

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     2.8 “Committee” means a committee of,
and designated from time to time by resolution of, the Board, which shall be
constituted as provided in Section
3.2. 

     2.9 “Company” means Colonial Properties Trust. 

     2.10 “Corporate Transaction” means (i)
the dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) a sale of substantially all of the
assets of the Company to another person or entity, or (iii) any transaction
(including without limitation a merger or reorganization in which the Company is
the surviving entity) which results in any person or entity owning 50% or more
of the combined voting power of all classes of shares of the Company.

     2.11 “Covered Employee” means a
Grantee who is a covered employee within the meaning of Section 162(m)(3) of the
Code. 

     2.12 “Disability” means the Grantee is
unable to perform each of the essential duties of such Grantee's position by
reason of a medically determinable physical or mental impairment which is
potentially permanent in character or which can be expected to last for a
continuous period of not less than 12 months; provided, however, that, with
respect to rules regarding expiration of an Incentive Share Option following
termination of the Grantee's Service, Disability shall mean the Grantee is
unable to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. 

     2.13 “Effective Date” means March 7, 2008, the date the Plan was approved by
the Board.

     2.14 “Exchange Act” means the
Securities Exchange Act of 1934, as now in effect or as hereafter amended.

     2.15 “Fair Market Value” means the
value of a Share, determined as follows: if on the Grant Date or other
determination date the Shares are listed on an established national or regional
stock exchange, or are publicly traded on an established securities market, the
Fair Market Value of a Share shall be the closing price of the Shares on such
exchange or in such market (if there is more than one such exchange or market
the Board shall determine the appropriate exchange or market) on the Grant Date
or such other determination date (or if there is no such reported closing price,
the Fair Market Value shall be the mean between the highest bid and lowest asked
prices or between the high and low sale prices on such trading day) or, if no
sale of Shares is reported for such trading day, on the next preceding day on
which any sale shall have been reported. If the Shares are not listed on such an
exchange or traded on such a market, Fair Market Value shall be the value of the
Shares as determined by the Board by the reasonable application of a reasonable
valuation method, in a manner consistent with Code Section 409A.

     2.16 “Family Member” means a person
who is a spouse, former spouse, child, stepchild, grandchild, parent,
stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the Grantee, any person sharing the
Grantee’s household (other than a tenant or employee), a trust in which any one
or more of these persons have more than fifty percent of the beneficial
interest, a foundation in which any one or more of these persons (or the
Grantee) control the management of assets, and any other entity in which one or
more of these persons (or the Grantee) own more than fifty percent of the voting
interests. 

     2.17 “General Partner” means Colonial
Properties Trust, the general partner of Colonial Realty Limited Partnership.

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     2.18 “Grant Date” means, as determined
by the Board, the latest to occur of
(i) the date as of which the Board
approves an Award, (ii) the date on which the recipient of an Award first
becomes eligible to receive an Award under Section 6 hereof, or (iii) such
other date as may be specified by the Board. 

     2.19 “Grantee” means a person who receives or holds an Award under the
Plan. 

     2.20 “Incentive Share Option” means an
“incentive stock option” within the meaning of Section 422 of the Code, or the
corresponding provision of any subsequently enacted tax statute, as amended from
time to time. 

     2.21 “Non-qualified Share
Option” means an Option that is not an
Incentive Share Option.

     2.22 “Operating Partnership”
means Colonial Realty Limited
Partnership.

     2.23 “Option” means an option to purchase one or more Shares pursuant
to the Plan.

     2.24 “Option Price” means the exercise price for each Share subject to an
Option.

     2.25 “Other Agreement” shall have the meaning set forth in Section 15
hereof. 

     2.26 “Outside Trustee” means a member
of the Board who is not an officer or employee of the Company. 

     2.27
“Partnership Agreement” means the Third Amended and Restated Agreement of Limited
Partnership of Colonial Realty Limited Partnership, as amended and/or restated
from time to time. 

     2.28
“Performance Period” means the period of time during which the performance
goals must be met in order to determine the degree of payout and/or vesting with
respect to an Award.

     2.27 “Performance Share” means an
Award under Section 14 herein and subject to the terms of this Plan,
denominated in Shares, the value of which at the time it is payable is
determined as a function of the extent to which corresponding performance
criteria have been achieved.

     2.28 “Performance Unit”
means an Award under Section 14 herein
and subject to the terms of this Plan, denominated in units, the value of which
at the time it is payable is determined as a function of the extent to which
corresponding performance criteria have been achieved.

     2.29 “Plan” means this Colonial Properties Trust 2008 Omnibus
Incentive Plan. 

     2.30 “Prior Plans” means the Company’s
Third Amended and Restated Employee Share Option and Restricted Share Plan, the
Non-Employee Trustee Share Plan and the Trustee Share Option Plan. 

     2.31 “Purchase Price” means the
purchase price for each Share pursuant to a grant of Restricted Shares or
Unrestricted Shares. 

     2.32 “Reporting Person” means a person
who is required to file reports under Section 16(a) of the Exchange Act.

     2.33 “Restricted
Shares” means Shares awarded to a
Grantee pursuant to Section
11 hereof. 

     2.34 “SAR Exercise
Price” means the per share exercise
price of a SAR granted to a Grantee under Section 10 hereof. 

     2.35 “Securities Act” means the Securities Act of 1933, as now in effect or as
hereafter amended. 

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     2.36 “Service” means service as a
Service Provider to the Company or an Affiliate. Unless otherwise stated in the
applicable Award Agreement, a Grantee's change in position or duties shall not
result in interrupted or terminated Service, so long as such Grantee continues
to be a Service Provider to the Company or an Affiliate. Subject to the
preceding sentence, whether a termination of Service shall have occurred for
purposes of the Plan shall be determined by the Board, which determination shall
be final, binding and conclusive.

     2.37 “Service Provider” means an
employee, officer or trustee of the Company or an Affiliate, or a consultant or
adviser (who is a natural person) currently providing services to the Company or
an Affiliate. 

     2.38 “Share” means a common share of beneficial interest, par value
$.01 per share, of the Company. 

     2.39 “Share Appreciation Right” or
“SAR” means a right granted to a Grantee under Section 10 hereof. 

     2.40 “Share Unit” means a bookkeeping
entry representing the equivalent of one Share awarded to a Grantee pursuant to
Section 11 hereof.

     2.41 “Subsidiary” means any
“subsidiary corporation” of the Company within the meaning of Section 424(f) of
the Code. 

     2.42 “Substitute Awards” means Awards
granted upon assumption of, or in substitution for, outstanding awards
previously granted by a company or other entity acquired by the Company or any
Affiliate or with which the Company or any Affiliate combines.

     2.43 “Ten Percent Shareholder” means
an individual who owns more than ten percent (10%) of the total combined voting
power of all classes of outstanding Shares of the Company, its parent or any of
its Subsidiaries. In determining share ownership, the attribution rules of
Section 424(d) of the Code shall be applied. 

     2.44 “Unit Option” means an option to
purchase one or more Units pursuant to the Plan. 

     2.45
“Units” means units of partnership interest of the Operating Partnership (but
does not include preferred interests in the Operating Partnership). 

     2.44 “Unrestricted Shares”
means an Award pursuant to
Section 12 hereof. 

3. ADMINISTRATION OF THE PLAN 

     3.1. Board

          The
Board shall have such powers and authorities related to the administration of
the Plan as are consistent with the Company’s declaration of trust and by-laws
and applicable law. The Board shall have full power and authority to take all
actions and to make all determinations required or provided for under the Plan,
any Award or any Award Agreement, and shall have full power and authority to
take all such other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan that the Board
deems to be necessary or appropriate to the administration of the Plan, any
Award or any Award Agreement. All such actions and determinations shall be by
the affirmative vote of a majority of the members of the Board present at a
meeting or by unanimous consent of the Board executed in writing in accordance
with the Company’s declaration of trust and by-laws and applicable law. The
interpretation and construction by the Board of any provision of the Plan, any
Award or any Award Agreement shall be final, binding and conclusive. 

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     3.2. Committee.

          The
Board from time to time may delegate to the Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in Section 3.1 above and other applicable provisions, as the Board
shall determine, consistent with the declaration of trust and by-laws of the
Company and applicable law.

          (i) Except as provided in Subsection (ii) and except as
the Board may otherwise determine, the Committee, if any, appointed by the Board
to administer the Plan shall consist of two or more Outside Trustees of the
Company who: (a) qualify as “outside directors” within the meaning of Section
162(m) of the Code and who (b) meet such other requirements as may be
established from time to time by the Securities and Exchange Commission for
plans intended to qualify for exemption under Rule 16b-3 (or its successor)
under the Exchange Act and who (c) comply with the independence requirements of
the stock exchange on which the Shares are listed. Discretionary Awards to
Outside Trustees may only be administered by the Committee. 

          (ii) The Board may also appoint one or more separate
committees of the Board, each composed of one or more trustees of the Company
who need not be Outside Trustees, who may administer the Plan with respect to
employees or other Service Providers who are not officers or trustees of the
Company, may grant Awards under the Plan to such employees or other Service
Providers, and may determine all terms of such Awards. 

In the event that the Plan, any
Award or any Award Agreement entered into hereunder provides for any action to
be taken by or determination to be made by the Board, such action may be taken
or such determination may be made by the Committee if the power and authority to
do so has been delegated to the Committee by the Board as provided for in this
Section. Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and conclusive. To the
extent permitted by law, the Committee may delegate its authority under the Plan
to a member of the Board.

     3.3. Terms of Awards.

          Subject
to the other terms and conditions of the Plan, the Board shall have full and
final authority to:

          (i)
designate Grantees,

          (ii)
determine the type or types of Awards to be made to a Grantee,

          (iii)
determine the number of Shares to be subject to an Award,

          (iv) establish the terms and conditions of each Award
(including, but not limited to, the exercise price of any Option, the nature and
duration of any restriction or condition (or provision for lapse thereof)
relating to the vesting, exercise, transfer, or forfeiture of an Award or the
Shares subject thereto, the treatment of an Award in the event of a change of
control, and any terms or conditions that may be necessary to qualify Options as
Incentive Share Options),

          (v)
prescribe the form of each Award Agreement evidencing an Award, and 

          (vi) amend, modify, or supplement the terms of any
outstanding Award. Such authority specifically includes the authority, in order
to effectuate the purposes of the Plan but without amending the Plan, to make or
modify Awards to eligible individuals who are foreign nationals or are
individuals who are employed outside the United States to recognize differences
in local law, tax policy, or custom. Notwithstanding the foregoing, no
amendment, modification or supplement of any Award shall, without the consent of
the Grantee, impair the Grantee’s rights under such Award. 

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          The Company may retain the right in an Award Agreement to
cause a forfeiture of the gain realized by a Grantee on account of actions taken
by the Grantee in violation or breach of or in conflict with any employment
agreement, non-competition agreement, any agreement prohibiting solicitation of
employees or clients of the Company or any Affiliate thereof or any
confidentiality obligation with respect to the Company or any
Affiliate thereof or otherwise in competition with the Company or
any Affiliate thereof, to the extent specified in such Award Agreement
applicable to the Grantee. In addition, the Company may annul an Award if the
Grantee is an employee of the Company or an Affiliate thereof and is terminated
for Cause as defined in the applicable Award Agreement or the Plan, as
applicable. 

          Furthermore, if the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, the individuals subject to automatic forfeiture under Section
304 of the Sarbanes-Oxley Act of 2002 and any Grantee who knowingly engaged in
the misconduct, was grossly negligent in engaging in the misconduct, knowingly
failed to prevent the misconduct or was grossly negligent in failing to prevent
the misconduct, shall reimburse the Company the amount of any payment in
settlement of an Award earned or accrued during the twelve-(12)month period
following the first public issuance or filing with the United States Securities
and Exchange Commission (whichever first occurred) of the financial document
that contained such material noncompliance. 

     3.4. No Repricing

          Notwithstanding anything in this Plan to the contrary, no
amendment or modification may be made to an outstanding Option or SAR,
including, without limitation, by replacement of Options or SARs with cash or
other award type, that would be treated as a repricing under the rules of the
stock exchange on which the Shares are listed, in each case, without the
approval of the shareholders of the Company, provided, that, appropriate
adjustments may be made to outstanding Options and SARs pursuant to
Section 17 or Section 5.3
and may be made to make changes to
achieve compliance with applicable law, including Internal Revenue Code Section
409A. 

     3.5. Deferral
Arrangement.

          The Board may permit or require the deferral of any award
payment into a deferred compensation arrangement, subject to such rules and
procedures as it may establish, which may include provisions for the payment or
crediting of interest or dividend equivalents, including converting such credits
into deferred Share equivalents. Any such deferrals shall be made in a manner
that complies with Code Section 409A. 

     3.6. No Liability.

          No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award or Award
Agreement. 

     3.7. Share
Issuance/Book-Entry 

          Notwithstanding
any provision of this Plan to the contrary, the issuance of the Shares under the
Plan may be evidenced in such a manner as the Board, in its discretion, deems
appropriate, including, without limitation, book-entry registration or issuance
of one or more Share certificates.

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4. SHARES
SUBJECT TO THE PLAN

     4.1. Number of Shares
Available for Awards 

          Subject
to adjustment as provided in Section
17 hereof, the number of Shares
available for issuance under the Plan shall be five million (5,000,000), all of
which may be granted as Incentive Share Options, increased by Shares covered by
awards granted under a Prior Plan that are not purchased or are forfeited or
expire, or otherwise terminate without delivery of any Shares subject thereto,
to the extent such Shares would again be available for issuance under such Prior
Plan. Shares issued or to be issued under the Plan shall be authorized but
unissued Shares; or, to the extent permitted by applicable law, issued Shares
that have been reacquired by the Company.

     4.2. Adjustments in
Authorized Shares 

          The
Board shall have the right to substitute or assume Awards in connection with
mergers, reorganizations, separations, or other transactions to which Section
424(a) of the Code applies. The number of Shares reserved pursuant to
Section 4 shall be increased by the corresponding number of Awards assumed and, in
the case of a substitution, by the net increase in the number of Shares subject
to Awards before and after the substitution. 

     4.3. Share Usage

          Shares
covered by an Award shall be counted as used as of the Grant Date. Any Shares
that are subject to Awards of Options shall be counted against the limit set
forth in Section 4.1 as one (1) Share for every one (1) Share subject to an
Award of Options. With respect to SARs, the number of Shares subject to an award
of SARs will be counted against the aggregate number of Shares available for
issuance under the Plan regardless of the number of Shares actually issued to
settle the SAR upon exercise. Any Shares that are subject to Awards other than
Options or Share Appreciation Rights shall be counted against the limit set
forth in Section 4.1 as 3.60 Shares for every one (1) Share granted. If any
Shares covered by an Award granted under the Plan or a Prior Plan are not
purchased or are forfeited or expire, or if an Award otherwise terminates
without delivery of any Shares subject thereto or is settled in cash in lieu of
Shares, then the number of Shares counted against the aggregate number of Shares
available under the Plan with respect to such Award shall, to the extent of any
such forfeiture, termination or expiration, again be available for making Awards
under the Plan in the same amount as such Shares were counted against the limit
set forth in Section 4.1, provided that any Shares covered by an Award granted
under a Prior Plan will again be available for making Awards under the Plan in
the same amount as such Shares were counted against the limits set forth in the
applicable Prior Plan. The number of Shares available for issuance under the
Plan shall not be increased by (i) any Shares tendered or withheld or Award
surrendered in connection with the purchase of Shares upon exercise of an Option
as described in Section
13.2, or (ii) any Shares deducted or
delivered from an Award payment in connection with the Company’s tax withholding
obligations as described in Section
18.3. 

5. EFFECTIVE
DATE, DURATION AND AMENDMENTS 

     5.1. Effective
Date.

          The
Plan shall be effective as of the Effective Date, subject to approval of the
Plan by the Company’s shareholders within one year of the Effective Date. Upon
approval of the Plan by the shareholders of the Company as set forth above, all
Awards made under the Plan on or after the Effective Date shall be fully
effective as if the shareholders of the Company had approved the Plan on the
Effective Date. If the shareholders fail to approve the Plan within one year of
the Effective Date, any Awards made hereunder shall be null and void and of no
effect. Following the Effective Date no awards will be made under the Prior
Plans.

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     5.2. Term.

          The
Plan shall terminate automatically ten (10) years after the Effective Date and
may be terminated on any earlier date as provided in Section 5.3.

     5.3. Amendment and
Termination of the Plan 

          The
Board may, at any time and from time to time, amend, suspend, or terminate the
Plan as to any Shares as to which Awards have not been made. An amendment shall
be contingent on approval of the Company’s shareholders to the extent stated by
the Board, required by applicable law or required by applicable stock exchange
listing requirements. In addition, an amendment will be contingent on approval
of the Company’s shareholders if the amendment would: (i) materially increase
the benefits accruing to participants under the Plan, (ii) materially increase
the aggregate number of Shares that may be issued under the Plan, or (iii)
materially modify the requirements as to eligibility for participation in the
Plan. No Awards shall be made after termination of the Plan. No amendment,
suspension, or termination of the Plan shall, without the consent of the
Grantee, impair rights or obligations under any Award theretofore awarded under
the Plan. 

6. AWARD
ELIGIBILITY AND LIMITATIONS 

     6.1. Service Providers
and Other Persons 

          Subject
to this Section 6, Awards may be made under the Plan to: (i) any Service
Provider to the Company or of any Affiliate, including any Service Provider who
is an officer or trustee of the Company, or of any Affiliate, as the Board shall
determine and designate from time to time and (ii) any other individual whose
participation in the Plan is determined to be in the best interests of the
Company by the Board.

     6.2. Successive Awards
and Substitute Awards.

          An
eligible person may receive more than one Award, subject to such restrictions as
are provided herein. Notwithstanding Sections 8.1 and 10.1, the Option
Price of an Option or the grant price of a SAR that is a Substitute Award (as
defined in Section 2.42) may be less than 100% of the Fair Market Value of a
Share on the original date of grant; provided, that, the Option Price or grant
price is determined in accordance with the principles of Code Section 424 and
the regulations thereunder. 

7. AWARD
AGREEMENT 

          Each
Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in
such form or forms as the Board shall from time to time determine. Award
Agreements granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-qualified Share Options or Incentive Share
Options, and in the absence of such specification such options shall be deemed
Non-qualified Share Options.

8. TERMS AND
CONDITIONS OF OPTIONS 

     8.1. Option Price

          The
Option Price of each Option shall be fixed by the Board and stated in the Award
Agreement evidencing such Option. Except in the case of Substitute
Awards, the Option Price of each Option shall be at least the Fair Market Value
on the Grant Date of a Share; provided, however, that in the event that a
Grantee is a Ten Percent Shareholder, the Option Price of an Option granted to
such Grantee that is intended to be an Incentive Share Option shall be not less
than 110 percent of the Fair Market Value of a Share on the Grant Date. In no
case shall the Option Price of any Option be less than the par value of a
Share.

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     8.2. Vesting.

           Subject to Sections 8.3 and 17.3 hereof,
each Option granted under the Plan shall become exercisable at such times and
under such conditions as shall be determined by the Board and stated in the
Award Agreement. For purposes of this Section 8.2, fractional numbers
of Shares subject to an Option shall be rounded down to the next nearest whole
number.

     8.3. Term.

          Each
Option granted under the Plan shall terminate, and all rights to purchase Shares
thereunder shall cease, upon the expiration of ten years from the date such
Option is granted, or under such circumstances and on such date prior thereto as
is set forth in the Plan or as may be fixed by the Board and stated in the Award
Agreement relating to such Option; provided, however, that in
the event that the Grantee is a Ten Percent Shareholder, an Option granted to
such Grantee that is intended to be an Incentive Share Option shall not be
exercisable after the expiration of five years from its Grant
Date. 

     8.4. Termination of
Service.

          Each Award Agreement shall set forth the extent to which
the Grantee shall have the right to exercise the Option following termination of
the Grantee’s Service. Such provisions shall be determined in the sole
discretion of the Board, need not be uniform among all Options issued pursuant
to the Plan, and may reflect distinctions based on the reasons for termination
of Service.

     8.5. Limitations on
Exercise of Option.

          Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, prior to the date the Plan is approved by the shareholders of
the Company as provided herein or after the occurrence of an event referred to
in Section 17 hereof which results in termination of the
Option.

     8.6. Method of
Exercise.

          Subject
to the terms of Article 13
and Section 18.3, an Option that is
exercisable may be exercised by the Grantee’s delivery to the Company of notice
of exercise on any business day, at the Company’s principal office, on the form
specified by the Company. Such notice shall specify the number of Shares with
respect to which the Option is being exercised and shall be accompanied by
payment in full of the Option Price of the Shares for which the Option is being
exercised plus the amount (if any) of federal and/or other taxes which the
Company may, in its judgment, be required to withhold with respect to an
Award.

     8.7. Rights of Holders of
Options 

          Unless
otherwise stated in the applicable Award Agreement, an individual holding or
exercising an Option shall have none of the rights of a shareholder (for
example, the right to receive cash or dividend payments or distributions
attributable to the subject Shares or to direct the voting of the subject
Shares) until the Shares covered thereby are fully paid and issued to him.
Except as provided in Section
17 hereof, no adjustment shall be made
for dividends, distributions or other rights for which the record date is prior
to the date of such issuance. 

     8.8. Delivery of Share
Certificates.

          Promptly
after the exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a shares
certificate or certificates evidencing his or her ownership of the Shares
subject to the Option.

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     8.9. Transferability of
Options 

          Except
as provided in Section
8.10, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee's guardian or legal representative) may exercise an Option. Except as
provided in Section 8.10, no Option shall be assignable or transferable by the
Grantee to whom it is granted, other than by will or the laws of descent and
distribution. 

     8.10. Family
Transfers.

          If
authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of an Option which is not an Incentive Share Option to any
Family Member. For the purpose of this Section 8.10, a “not for value”
transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic
relations order in settlement of marital property rights; or (iii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by
Family Members (or the Grantee) in exchange for an interest in that entity.
Following a transfer under this Section
8.10, any such Option shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer. Subsequent transfers of transferred Options are prohibited except
to Family Members of the original Grantee in accordance with this
Section 8.10 or by will or the laws of descent and distribution. The
events of termination of Service of Section 8.4 hereof shall continue
to be applied with respect to the original Grantee, following which the Option
shall be exercisable by the transferee only to the extent, and for the periods
specified, in Section 8.4.

     8.11. Limitations on
Incentive Share Options.

          An
Option shall constitute an Incentive Share Option only (i) if the Grantee of
such Option is an employee of the Company or any Subsidiary of the Company; (ii)
to the extent specifically provided in the related Award Agreement; and (iii) to
the extent that the aggregate Fair Market Value (determined at the time the
Option is granted) of the Shares with respect to which all Incentive Share
Options held by such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the Grantee’s employer and
its Affiliates) does not exceed $100,000. This limitation shall be applied by
taking Options into account in the order in which they were granted.

     8.12. Notice of
Disqualifying Disposition 

          If any
Grantee shall make any disposition of Shares issued pursuant to the exercise of
an Incentive Share Option under the circumstances described in Code Section
421(b) (relating to certain disqualifying dispositions), such Grantee shall
notify the Company of such disposition within ten (10) days thereof. 

9. GRANT AND
EXERCISE OF UNIT OPTIONS 

     9.1 Issuance of Unit
Options 

          Upon the issuance of an Option, and in accordance with
Section 4.2(B) of the Partnership Agreement, the General Partner shall be deemed
automatically to have caused the Operating Partnership to issue to the General
Partner a corresponding Unit Option on terms identical to those of such Option.

     9.2 Exercise of Unit
Options 

          A Unit Option shall be deemed exercised automatically,
upon the exercise by an Optionee of the corresponding Option, as to the number
of Units equal to the number of Shares for which such Option is exercised. The
General Partner shall then cause the Operating Partnership to issue such Units
to the General Partner, and the Company shall remit payment for such Units to
the General Partner, which shall then remit payment to the Operating
Partnership, all in accordance with Section 4.2(B) of the Partnership Agreement.

11

 

     9.2 Termination of Unit
Options 

          Upon
the termination of an Option, the corresponding Unit Option also shall
terminate. 

10. TERMS AND
CONDITIONS OF SHARE APPRECIATION RIGHTS 

     10.1. Right to Payment and
Grant Price. 

          A SAR
shall confer on the Grantee to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one Share on the
date of exercise over (B) the grant price of the SAR as determined by the Board.
The Award Agreement for a SAR shall specify the grant price of the SAR, which
shall be at least the Fair Market Value of a Share on the date of grant. SARs
may be granted in conjunction with all or part of an Option granted under the
Plan or at any subsequent time during the term of such Option, in conjunction
with all or part of any other Award or without regard to any Option or other
Award; provided that a SAR that is granted subsequent to the Grant Date of a
related Option must have a SAR Price that is no less than the Fair Market Value
of one Share on the SAR Grant Date.

     10.2. Other
Terms.

          The
Board shall determine at the date of grant or thereafter, the time or times at
which and the circumstances under which a SAR may be exercised in whole or in
part (including based on achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or become
exercisable following termination of Service or upon other conditions, the
method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Shares will be delivered or deemed to be
delivered to Grantees, whether or not a SAR shall be in tandem or in combination
with any other Award, and any other terms and conditions of any SAR. 

     10.3. Term.

          Each
SAR granted under the Plan shall terminate, and all rights thereunder shall
cease, upon the expiration of ten years from the date such SAR is granted, or
under such circumstances and on such date prior thereto as is set forth in the
Plan or as may be fixed by the Board and stated in the Award Agreement relating
to such SAR. 

     10.4. Transferability of
SARS 

          Except
as provided in Section
10.5, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee's guardian or legal representative) may exercise a SAR. Except as
provided in Section 10.5, no SAR shall be assignable or transferable by the
Grantee to whom it is granted, other than by will or the laws of descent and
distribution. 

     10.5. Family
Transfers.

          If
authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of a SAR to any Family Member. For the purpose of this
Section 10.5, a “not for value” transfer is a transfer which is (i) a
gift, (ii) a transfer under a domestic relations order in settlement of marital
property rights; or (iii) a transfer to an entity in which more than fifty
percent of the voting interests are owned by Family Members (or the Grantee) in
exchange for an interest in that entity. Following a transfer under this
Section 10.5, any such SAR shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer.
Subsequent transfers of transferred SARs are prohibited except to Family Members
of the original Grantee in accordance with this Section 10.5 or by will
or the laws of descent and distribution.

12

 

11. TERMS AND
CONDITIONS OF RESTRICTED SHARES AND SHARE UNITS 

     11.1. Grant of Restricted
Shares or Share Units.

          Awards
of Restricted Shares or Share Units may be made for no consideration (other than
par value of the Shares which is deemed paid by Services already
rendered).

     11.2. Restrictions.

          At the
time a grant of Restricted Shares or Share Units is made, the Board may, in its
sole discretion, establish a period of time (a “restricted period”) applicable
to such Restricted Shares or Share Units. Each Award of Restricted Shares or
Share Units may be subject to a different restricted period. The Board may in
its sole discretion, at the time a grant of Restricted Shares or Share Units is
made, prescribe restrictions in addition to or other than the expiration of the
restricted period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any portion of the
Restricted Shares or Share Units as described in Article 14. Notwithstanding the
foregoing terms of this Section
11.2, and subject to Section 11.9 below, (i) Restricted Shares and Share Units that vest solely by the
passage of time shall not vest in full in less than three (3) years from the
Grant Date, and (ii) Restricted Shares and Share Units that vest, or for which
vesting may be accelerated, by achieving performance targets shall not vest in
full in less than one (1) year from the Grant Date. The foregoing restriction
shall not apply to Restricted Shares or Share Units assumed in connection with
mergers, reorganizations, separations, or other transactions to which Section
424(a) of the Code applies. Neither Restricted Shares nor Share Units may be
sold, transferred, assigned, pledged or otherwise encumbered or disposed of
during the restricted period or prior to the satisfaction of any other
restrictions prescribed by the Board with respect to such Restricted Shares or
Share Units.

     11.3. Restricted Share
Certificates.

          The
Company shall issue, in the name of each Grantee to whom Restricted Shares have
been granted, share certificates representing the total number of Restricted
Shares granted to the Grantee, as soon as reasonably practicable after the Grant
Date. The Board may provide in an Award Agreement that either (i) the Secretary
of the Company shall hold such certificates for the Grantee’s benefit until such
time as the Restricted Shares are forfeited to the Company or the restrictions
lapse, or (ii) such certificates shall be delivered to the Grantee,
provided, however, that such certificates shall bear a legend or legends
that comply with the applicable securities laws and regulations and makes
appropriate reference to the restrictions imposed under the Plan and the Award
Agreement.

     11.4. Rights of Holders of
Restricted Shares.

          Unless
the Board otherwise provides in an Award Agreement, holders of Restricted Shares
shall have the right to vote such Shares and the right to receive any dividends
declared or paid with respect to such Shares. The Board may provide that any
dividends paid on Restricted Shares must be reinvested in Shares, which may or
may not be subject to the same vesting conditions and restrictions applicable to
such Restricted Shares. All distributions, if any, received by a Grantee with
respect to Restricted Shares as a result of any share split, share dividend,
combination of shares, or other similar transaction shall be subject to the
restrictions applicable to the original Grant. 

     11.5. Rights of Holders of
Share Units.

               11.5.1. Voting and Dividend
Rights. 

          Holders
of Share Units shall have no rights as shareholders of the Company. The Board
may provide in an Award Agreement evidencing a grant of Share Units that the
holder of such Share Units shall be entitled to receive, upon the Company’s
payment of a cash dividend on its outstanding Shares, a cash payment for each
Share Unit held equal to the per-share dividend paid on the Shares. Such Award
Agreement may also provide that such cash payment will be deemed reinvested in
additional Share Units at a price per unit equal to the Fair Market Value of a
Share on the date that such dividend is paid.

13

 

               11.5.2. Creditor’s Rights.

          A
holder of Share Units shall have no rights other than those of a general
creditor of the Company. Share Units represent an unfunded and unsecured
obligation of the Company, subject to the terms and conditions of the applicable
Award Agreement. 

     11.6. Termination of
Service.

               (a)
Unless the Board otherwise provides in an Award Agreement or in writing after
the Award Agreement is issued, upon the termination of a Grantee’s Service, any
Restricted Shares or Share Units held by such Grantee that have not vested, or
with respect to which all applicable restrictions and conditions have not
lapsed, shall immediately be deemed forfeited. Upon forfeiture of Restricted
Shares or Share Units, the Grantee shall have no further rights with respect to
such Award, including but not limited to any right to vote Restricted Shares or
any right to receive dividends with respect to Restricted Shares or Share
Units.

               (b)
Notwithstanding the terms of Section
11.6(a), and subject to Section 11.9 below, the Board may not (i) grant Restricted Shares or Share Units that
provide for acceleration of vesting, except in the case of a Grantee’s death,
disability or retirement, or upon or in connection with a Corporate Transaction,
or upon the satisfaction of performance-based vesting conditions as provided in
Section 11.2; or (ii) waive vesting restrictions or conditions
applicable to Restricted Shares or Share Units, except in the case of a
Grantee’s death, disability or retirement or upon or in connection with a
Corporation Transaction. The foregoing restriction shall not apply to Restricted
Shares or Share Unit Awards assumed in connection with mergers, reorganizations,
separations, or other transactions to which Section 424(a) of the Code applies.

     11.7. Purchase of
Restricted Shares and Shares Subject to Share Units. 

          The Grantee shall be required, to the extent required by
applicable law, to purchase the Restricted Shares or Shares subject to vested
Share Units from the Company at a Purchase Price equal to the greater of (i) the
aggregate par value of the Shares represented by such Restricted Shares or Share
Units (ii) the Purchase Price, if any, specified in the Award Agreement relating
to such Restricted Shares or Share Units. The Purchase Price shall be payable in
a form described in Section 13
or, in the discretion of the Board, in
consideration for past or future Services rendered to the Company or an
Affiliate. 

     11.8. Delivery of
Shares.

          Upon
the expiration or termination of any restricted period and the satisfaction of
any other conditions prescribed by the Board, the restrictions applicable to
Restricted Shares or Share Units settled in Shares shall lapse, and, unless
otherwise provided in the Award Agreement, a share certificate for such Shares
shall be delivered, free of all such restrictions, to the Grantee or the
Grantee’s beneficiary or estate, as the case may be. Neither the Grantee, nor
the Grantee’s beneficiary or estate, shall have any further rights with regard
to a Share Unit once the Shares represented by the Share Unit has been
delivered. 

     11.9. Unrestricted
Pool.

          Notwithstanding
anything to the contrary in this Plan, Restricted Shares and Share Unit Awards
may be (i) granted with vesting terms that do not comply with the requirements
of Section 11.2; (ii) granted with terms providing for the acceleration
of vesting that do not comply with Section 11.6(b), and/or (iii)
subsequent to the date of grant, modified to provide acceleration of vesting
terms that do not comply with Section
11.6(b), provided that, in no event,
shall the aggregate number of shares underlying Restricted Shares and Share Unit
Awards granted or modified as contemplated in this Section 11.9
exceed five percent of the shares authorized for issuance in Section 4.1
hereof.

14

 

12. TERMS AND
CONDITIONS OF UNRESTRICTED SHARE AWARDS 

          The
Board may, in its sole discretion, grant (or sell at par value or such other
higher purchase price determined by the Board) an Unrestricted Share Award to
any Grantee pursuant to which such Grantee may receive Shares free of any
restrictions (“Unrestricted Shares”) under the Plan; provided,
however, that, in the aggregate, no more than five percent of the shares
reserved for issuance under this Plan may be granted pursuant to this
Section 12 and the exceptions set forth in Section 11.9.
Unrestricted Share Awards may be granted or sold as described in the preceding
sentence in respect of past services and other valid consideration, or in lieu
of, or in addition to, any cash compensation due to such Grantee.

13. FORM OF
PAYMENT FOR OPTIONS AND RESTRICTED SHARES 

     13.1. General Rule.

          Payment of the Option Price for the Shares purchased
pursuant to the exercise of an Option or the Purchase Price for Restricted
Shares shall be made in cash or in cash equivalents acceptable to the Company.

     13.2. Surrender of Shares.

          To the extent the Award Agreement so provides, payment of
the Option Price for Shares purchased pursuant to the exercise of an Option or
the Purchase Price for Restricted Shares may be made all or in part through the
tender or attestation to the Company of Shares, which shall be valued, for
purposes of determining the extent to which the Option Price or Purchase Price
has been paid thereby, at their Fair Market Value on the date of exercise or
surrender. 

     13.3. Cashless Exercise.

          With respect to an Option only (and not with respect to
Restricted Shares), to the extent permitted by law and to the extent the Award
Agreement so provides, payment of the Option Price for Shares purchased pursuant
to the exercise of an Option may be made all or in part by delivery (on a form
acceptable to the Board) of an irrevocable direction to a licensed securities
broker acceptable to the Company to sell Shares and to deliver all or part of
the sales proceeds to the Company in payment of the Option Price and any
withholding taxes described in Section
18.3. 

     13.4. Other Forms of
Payment. 

          To the extent the Award Agreement so provides, payment of
the Option Price for Shares purchased pursuant to exercise of an Option or the
Purchase Price for Restricted Shares may be made in any other form that is
consistent with applicable laws, regulations and rules, including, without
limitation, Service. 

15

 

14. TERMS AND
CONDITIONS OF PERFORMANCE SHARES AND PERFORMANCE UNITS 

     14.1. Grant of Performance
Units/Performance Shares.

           Subject to the terms and provisions of this Plan, the
Board, at any time and from time to time, may grant Performance Units and/or
Performance Shares to Participants in such amounts and upon such terms as the
Committee shall determine.

     14.2. Value of Performance
Units/Performance Shares.

          Each Performance Unit shall have an initial value that is
established by the Board at the time of grant. The Board shall set performance
goals in its discretion which, depending on the extent to which they are met,
will determine the value and/or number of Performance Units/Performance Shares
that will be paid out to the Participant.

     14.3. Earning of
Performance Units/Performance Shares.

          Subject
to the terms of this Plan, after the applicable Performance Period has ended,
the holder of Performance Units/Performance Shares shall be entitled to receive
payout on the value and number of Performance Units/Performance Shares earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance goals have been achieved. The
Board shall have the ability, which it may exercise in its sole discretion, to
alter the performance goals to take into account unusual or nonrecurring events
or items or other factors the Board considers relevant.

     14.4. Form and Timing of
Payment of Performance Units/Performance Shares.

           Payment of earned Performance Units/Performance Shares
shall be as determined by the Board and as evidenced in the Award Agreement.
Subject to the terms of this Plan, the Board, in its sole discretion, may pay
earned Performance Units/Performance Shares in the form of cash or in Shares (or
in a combination thereof) equal to the value of the earned Performance
Units/Performance Shares at the close of the applicable Performance Period, or
as soon as practicable after the end of the Performance Period. Any Shares may
be granted subject to any restrictions deemed appropriate by the Committee. The
determination of the Committee with respect to the form of payout of such Awards
shall be set forth in the Award Agreement pertaining to the grant of the
Award.

     14.5. Settlement of Awards;
Other Terms. 

          Settlement
of such Awards shall be in cash, Shares, other Awards or other property, in the
discretion of the Board. The Board shall specify the circumstances in which such
Performance Shares or Performance Units shall be paid or forfeited in the event
of termination of Service by the Grantee prior to the end of a performance
period or settlement of Awards.

16

 

15. PARACHUTE
LIMITATIONS 

          Notwithstanding
any other provision of this Plan or of any other agreement, contract, or
understanding heretofore or hereafter entered into by a Grantee with the Company
or any Affiliate, except an agreement, contract, or understanding that expressly
addresses Section 280G or Section 4999 of the Code (an “Other Agreement”), and
notwithstanding any formal or informal plan or other arrangement for the direct
or indirect provision of compensation to the Grantee (including groups or
classes of Grantees or beneficiaries of which the Grantee is a member), whether
or not such compensation is deferred, is in cash, or is in the form of a benefit
to or for the Grantee (a “Benefit Arrangement”), if the Grantee is a
“disqualified individual,” as defined in Section 280G(c) of the Code, any
Option, Restricted Share, Share Unit, Performance Share or Performance Unit held
by that Grantee and any right to receive any payment or other benefit under this
Plan shall not become exercisable or vested (i) to the extent that such right to
exercise, vesting, payment, or benefit, taking into account all other rights,
payments, or benefits to or for the Grantee under this Plan, all Other
Agreements, and all Benefit Arrangements, would cause any payment or benefit to
the Grantee under this Plan to be considered a “parachute payment” within the
meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute
Payment”) and (ii) if, as a result of receiving a Parachute Payment, the
aggregate after-tax amounts received by the Grantee from the Company under this
Plan, all Other Agreements, and all Benefit Arrangements would be less than the
maximum after-tax amount that could be received by the Grantee without causing
any such payment or benefit to be considered a Parachute Payment. In the event
that the receipt of any such right to exercise, vesting, payment, or benefit
under this Plan, in conjunction with all other rights, payments, or benefits to
or for the Grantee under any Other Agreement or any Benefit Arrangement would
cause the Grantee to be considered to have received a Parachute Payment under
this Plan that would have the effect of decreasing the after-tax amount received
by the Grantee as described in clause (ii) of the preceding sentence, then the
Grantee shall have the right, in the Grantee’s sole discretion, to designate
those rights, payments, or benefits under this Plan, any Other Agreements, and
any Benefit Arrangements that should be reduced or eliminated so as to avoid
having the payment or benefit to the Grantee under this Plan be deemed to be a
Parachute Payment; provided, however, that in order to comply with
Section 409A of the Code, the reduction or elimination will be performed in the
order in which each dollar of value subject to an Award reduces the Parachute
Payment to the greatest extent. 

16. REQUIREMENTS
OF LAW 

     16.1. General.

          The
Company shall not be required to sell or issue any Shares under any Award if the
sale or issuance of such Shares would constitute a violation by the Grantee, any
other individual exercising an Option, or the Company of any provision of any
law or regulation of any governmental authority, including without limitation
any federal or state securities laws or regulations. If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any securities exchange or
under any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the issuance or purchase of Shares, no Shares may be
issued or sold to the Grantee or any other individual exercising an Option
pursuant to such Award unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no way affect
the date of termination of the Award. Without limiting the generality of the
foregoing, in connection with the Securities Act, upon the exercise of any
Option or any SAR that may be settled in Shares or the delivery of any Shares
underlying an Award, unless a registration statement under such Act is in effect
with respect to the Shares covered by such Award, the Company shall not be
required to sell or issue such Shares unless the Board has received evidence
satisfactory to it that the Grantee or any other individual exercising an Option
may acquire such Shares pursuant to an exemption from registration under the
Securities Act. Any determination in this connection by the Board shall be
final, binding, and conclusive. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act. The Company shall not be obligated to take any affirmative action in order
to cause the exercise of an Option or a SAR or the issuance of Shares pursuant
to the Plan to comply with any law or regulation of any governmental authority.
As to any jurisdiction that expressly imposes the requirement that an Option (or
SAR that may be settled in Shares) shall not be exercisable until the Shares
covered by such Option (or SAR) are registered or are exempt from registration,
the exercise of such Option (or SAR) under circumstances in which the laws of
such jurisdiction apply shall be deemed conditioned upon the effectiveness of
such registration or the availability of such an exemption. 

17

 

     16.2. Rule
16b-3.

          During
any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Awards
pursuant to the Plan and the exercise of Options and SARs granted hereunder will
qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the
extent that any provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the
extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement. 

17. EFFECT OF
CHANGES IN CAPITALIZATION

     17.1. Changes in
Shares.

          If the
number of outstanding Shares is increased or decreased or the Shares are changed
into or exchanged for a different number or kind of shares or other securities
of the Company on account of any recapitalization, reclassification, share
split, reverse split, combination of shares, exchange of shares, share dividend
or other distribution payable in capital shares, or other increase or decrease
in such shares effected without receipt of consideration by the Company
occurring after the Effective Date, the number and kinds of shares for which
grants of Options and other Awards may be made under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the number and kind
of shares for which Awards are outstanding shall be adjusted proportionately and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options or
SARs shall not change the aggregate Option Price or SAR Exercise Price payable
with respect to Shares that are subject to the unexercised portion of an
outstanding Option or SAR, as applicable, but shall include a corresponding
proportionate adjustment in the Option Price or SAR Exercise Price per share.
The conversion of any convertible securities of the Company shall not be treated
as an increase in shares effected without receipt of consideration.
Notwithstanding the foregoing, in the event of any distribution to the Company's
shareholders of securities of any other entity or other assets (including an
extraordinary dividend but excluding a non-extraordinary dividend of the
Company) without receipt of consideration by the Company, the Company shall, in
such manner as the Company deems appropriate, adjust (i) the number and kind of
Shares subject to outstanding Awards and/or (ii) the exercise price of
outstanding Options and Share Appreciation Rights to reflect such distribution.

18

 

     17.2. Reorganization in
Which the Company Is the Surviving Entity Which does not Constitute a Corporate
Transaction. 

          Subject
to Section 17.3 hereof, if the Company shall be the surviving entity in
any reorganization, merger, or consolidation of the Company with one or more
other entities which does not constitute a Corporate Transaction, any Option or
SAR theretofore granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of Shares subject to such Option or
SAR would have been entitled immediately following such reorganization, merger,
or consolidation, with a corresponding proportionate adjustment of the Option
Price or SAR Exercise Price per share so that the aggregate Option Price or SAR
Exercise Price thereafter shall be the same as the aggregate Option Price or SAR
Exercise Price of the shares remaining subject to the Option or SAR immediately
prior to such reorganization, merger, or consolidation. Subject to any contrary
language in an Award Agreement evidencing an Award, any restrictions applicable
to such Award shall apply as well to any replacement shares received by the
Grantee as a result of the reorganization, merger or consolidation. In the event
of a transaction described in this Section 17.2, Share Units shall be adjusted
so as to apply to the securities that a holder of the number of Shares subject
to the Share Units would have been entitled to receive immediately following
such transaction. 

     17.3. Corporate
Transaction in which Awards are not Assumed.

          Upon
the occurrence of a Corporate Transaction in which outstanding Options, SARs,
Share Units and Restricted Shares are not being assumed or
continued:

          (i)
all outstanding Restricted Shares shall be deemed to have vested, and all Share
Units shall be deemed to have vested and the Shares subject thereto shall be
delivered, immediately prior to the occurrence of such Corporate Transaction,
and

          (ii)
either of the following two actions shall be taken:

               (A)
fifteen days prior to the scheduled consummation of a Corporate Transaction, all
Options and SARs outstanding hereunder shall become immediately exercisable and
shall remain exercisable for a period of fifteen days, or

               (B)
the Board may elect, in its sole discretion, to cancel any outstanding Awards of
Options, Restricted Shares, Share Units, and/or SARs and pay or deliver, or
cause to be paid or delivered, to the holder thereof an amount in cash or
securities having a value (as determined by the Board acting in good faith), in
the case of Restricted Shares or Share Units, equal to the formula or fixed
price per share paid to holders of Shares and, in the case of Options or SARs,
equal to the product of the number of Shares subject to the Option or SAR (the
“Award Shares”) multiplied by the amount, if any, by which (I) the formula or
fixed price per share paid to holders of Shares pursuant to such transaction
exceeds (II) the Option Price or SAR Exercise Price applicable to such Award
Shares.

          With
respect to the Company's establishment of an exercise window, (i) any exercise
of an Option or SAR during such fifteen-day period shall be conditioned upon the
consummation of the event and shall be effective only immediately before the
consummation of the event, and (ii) upon consummation of any Corporate
Transaction, the Plan and all outstanding but unexercised Options and SARs shall
terminate. The Board shall send notice of an event that will result in such a
termination to all individuals who hold Options and SARs not later than the time
at which the Company gives notice thereof to its shareholders.

19

 

     17.4. Corporation
Transaction in which Awards are Assumed. 

          The
Plan, Options, SARs, Share Units and Restricted Shares theretofore granted shall
continue in the manner and under the terms so provided in the event of any
Corporate Transaction to the extent that provision is made in writing in
connection with such Corporate Transaction for the assumption or continuation of
the Options, SARs, Share Units and Restricted Shares theretofore granted, or for
the substitution for such Options, SARs, Share Units and Restricted Shares for
new common share options and share appreciation rights and new common share
units and restricted shares relating to the shares of a successor entity, or a
parent or subsidiary thereof, with appropriate adjustments as to the number of
shares (disregarding any consideration that is not common stock) and option and
share appreciation right exercise prices. In the event a Grantee’s Award is
assumed, continued or substituted upon the consummation of any Corporate
Transaction and his employment is terminated without Cause within one year
following the consummation of such Corporate Transaction, the Grantee’s Award
will be fully vested and may be exercised in full, to the extent applicable,
beginning on the date of such termination and for the one-year period
immediately following such termination or for such longer period as the
Committee shall determine.

     17.5. Adjustments

          Adjustments
under this Section 17 related to Shares or securities of the Company shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. No fractional shares or other securities shall be issued
pursuant to any such adjustment, and any fractions resulting from any such
adjustment shall be eliminated in each case by rounding downward to the nearest
whole share. The Board shall determine the effect of a Corporate Transaction
upon Awards other than Options, SARs, Share Units and Restricted Shares, and
such effect shall be set forth in the appropriate Award Agreement. The Board may
provide in the Award Agreements at the time of grant, or any time thereafter
with the consent of the Grantee, for different provisions to apply to an Award
in place of those described in Sections
17.1, 17.2, 17.3 and
17.4. This Section 17 does not limit the Company’s ability to provide for
alternative treatment of Awards outstanding under the Plan in the event of
change of control events that are not Corporate Transactions. 

     17.6. No Limitations on
Company

          The
making of Awards pursuant to the Plan shall not affect or limit in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets. 

18. GENERAL
PROVISIONS 

     18.1. Disclaimer of Rights

          No
provision in the Plan or in any Award or Award Agreement shall be construed to
confer upon any individual the right to remain in the employ or service of the
Company or any Affiliate, or to interfere in any way with any contractual or
other right or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment or other relationship between any individual and the Company. In
addition, notwithstanding anything contained in the Plan to the contrary, unless
otherwise stated in the applicable Award Agreement, no Award granted under the
Plan shall be affected by any change of duties or position of the Grantee, so
long as such Grantee continues to be a trustee, officer, consultant or employee
of the Company or an Affiliate. The obligation of the Company to pay any
benefits pursuant to this Plan shall be interpreted as a contractual obligation
to pay only those amounts described herein, in the manner and under the
conditions prescribed herein. The Plan shall in no way be interpreted to require
the Company to transfer any amounts to a third party trustee or otherwise hold
any amounts in trust or escrow for payment to any Grantee or beneficiary under
the terms of the Plan.

     18.2. Nonexclusivity of
the Plan 

          Neither
the adoption of the Plan nor the submission of the Plan to the shareholders of
the Company for approval shall be construed as creating any limitations upon the
right and authority of the Board to adopt such other incentive compensation
arrangements (which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular individual or
particular individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of share options otherwise than
under the Plan.  

20

 

     18.3. Withholding Taxes

          The
Company or an Affiliate, as the case may be, shall have the right to deduct from
payments of any kind otherwise due to a Grantee any federal, state, or local
taxes of any kind required by law to be withheld with respect to the vesting of
or other lapse of restrictions applicable to an Award or upon the issuance of
any Shares upon the exercise of an Option or pursuant to an Award. At the time
of such vesting, lapse, or exercise, the Grantee shall pay to the Company or the
Affiliate, as the case may be, any amount that the Company or the Affiliate may
reasonably determine to be necessary to satisfy such withholding obligation.
Subject to the prior approval of the Company or the Affiliate, which may be
withheld by the Company or the Affiliate, as the case may be, in its sole
discretion, the Grantee may elect to satisfy such obligations, in whole or in
part, (i) by causing the Company or the Affiliate to withhold Shares otherwise
issuable to the Grantee or (ii) by delivering to the Company or the Affiliate
Shares already owned by the Grantee. The Shares so delivered or withheld shall
have an aggregate Fair Market Value equal to such withholding obligations. The
Fair Market Value of the Shares used to satisfy such withholding obligation
shall be determined by the Company or the Affiliate as of the date that the
amount of tax to be withheld is to be determined. A Grantee who has made an
election pursuant to this Section
18.3 may satisfy his or her withholding
obligation only with Shares that are not subject to any repurchase, forfeiture,
unfulfilled vesting, or other similar requirements. The maximum number of Shares
that may be withheld from any Award to satisfy any federal, state or local tax
withholding requirements upon the exercise, vesting, lapse of restrictions
applicable to such Award or payment of Shares pursuant to such Award, as
applicable, cannot exceed such number of shares having a Fair Market Value equal
to the minimum statutory amount required by the Company to be withheld and paid
to any such federal, state or local taxing authority with respect to such
exercise, vesting, lapse of restrictions or payment of Shares.

     18.4. Captions

          The
use of captions in this Plan or any Award Agreement is for the convenience of
reference only and shall not affect the meaning of any provision of the Plan or
such Award Agreement. 

     18.5. Other Provisions

          Each
Award granted under the Plan may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Board, in its sole
discretion. 

     18.6. Number and Gender

          With
respect to words used in this Plan, the singular form shall include the plural
form, the masculine gender shall include the feminine gender, etc., as the
context requires. 

     18.7. Severability

          If any
provision of the Plan or any Award Agreement shall be determined to be illegal
or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction. 

     18.8. Governing Law

          The validity and construction of this Plan and the
instruments evidencing the Awards hereunder shall be governed by the laws of the
State of Maryland, other than any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this Plan and the
instruments evidencing the Awards granted hereunder to the substantive laws of
any other jurisdiction. 

21

 

     18.9. Section 409A of the
Code 

          The Board intends to comply with Section 409A of the Code
("Section 409A"), or an exemption to Section 409A, with regard to Awards
hereunder that constitute nonqualified deferred compensation within the meaning
of Section 409A. To the extent that the Board determines that a Grantee would be
subject to the additional 20% tax imposed on certain nonqualified deferred
compensation plans pursuant to Section 409A as a result of any provision of any
Award granted under this Plan, such provision shall be deemed amended to the
minimum extent necessary to avoid application of such additional tax. The nature
of any such amendment shall be determined by the Board. 

* * * 

22exv10w1

 

Exhibit 10.1

SATISFACTION, WAIVER AND RELEASE AGREEMENT

     THIS SATISFACTION, WAIVER AND RELEASE AGREEMENT (this “Agreement”) is entered into as of April
17, 2008, by and among Abbott Laboratories, an Illinois corporation (“Abbott”), and ImaRx
Therapeutics, Inc., a Delaware corporation (“ImaRx”).

     WHEREAS, Abbott and ImaRx are parties to that certain Asset Purchase Agreement dated as of
April 10, 2006 (as amended, the “Purchase Agreement”);

     WHEREAS, upon consummation of the transactions contemplated by the Purchase Agreement, ImaRx
issued to Abbott a Secured Promissory Note, dated April 25, 2006, in the principal amount of
$15,000,000 (the “Note”);

     WHEREAS, Abbott and ImaRx are parties to that certain Security Agreement, dated as of April
25, 2006 (the “Security Agreement”), pursuant to which the satisfaction of the Obligations (as such
term is defined in the Note) is secured by a continuing, first priority security interest in the
Collateral (as such term is defined in the Security Agreement);

     WHEREAS, Abbott, ImaRx and LaSalle Bank National Association, a national banking association
(the “Escrow Agent”), are parties to that certain Escrow Agreement, dated as of April 25, 2006 (the
“Escrow Agreement”), pursuant to which ImaRx deposited certain funds into an escrow account
maintained by the Escrow Agent;

     WHEREAS, Abbott, ImaRx and the Escrow Agent, are parties to that certain Note Extension and
Amendment Agreement, dated as of October 25, 2007;

     WHEREAS, on March 31, 2008 and April 1, 2008, the Escrow Agent paid to Abbott the current
balance of the Escrow Fund (as such term is defined in the Escrow Agreement);

     WHEREAS, pursuant to the terms of that certain Master Project Agreement, dated as of December
15, 2005, by and between Fisher BioServices Inc. (“Fisher”) and ImaRx (the “Fisher Agreement”),
Fisher stores certain cell banks and recombinants that are currently owned by Abbott (the
“Samples”); and

     WHEREAS, Abbott and ImaRx desire to (1) satisfy ImaRx’s obligations under the Note,
(2) terminate the Note and the Security Agreement and (3) mutually waive and release certain rights
and obligations, in each case in accordance with and subject to the terms of this Agreement.

     NOW, THEREFORE, in consideration of the foregoing, and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned parties hereby agree as
follows:

 

 

     1. Payment; Fisher Fees. Upon execution of this Agreement, ImaRx shall pay $5,177,609 (the
“Repayment Amount”) to Abbott via wire transfer of immediately available funds to the account
listed on Exhibit A hereto. Furthermore, ImaRx shall be responsible for, and immediately
after the execution of this Agreement, promptly pay all amounts due under the Fisher Agreement that
relate to the storage of the Samples through February 29, 2008 (the “Fisher Fees”).

     2. Satisfaction. Effective upon Abbott’s receipt of the Repayment Amount and ImaRx’s payment
of the Fisher Fees, (a) the Obligations shall be deemed to be indefeasibly paid in full by ImaRx,
(b) the Note shall be cancelled and returned to ImaRx and (c) the Security Agreement and the Escrow
Agreement shall be terminated.

     3. Waiver and Release. Effective upon Abbott’s receipt of the Repayment Amount and ImaRx’s
payment of the Fisher Fees, each of ImaRx and Abbott hereby indefeasibly (a) waive its rights under
the Escrow Agreement, the Note, the Security Agreement, the Purchase Agreement (including, without
limitation, those arising under Section 9.5 thereof) and the transactions contemplated by any of
the foregoing, regardless of when such rights arose or may arise (b) release the other party, and
its parent, affiliates and subsidiaries, together with all of their directors, officers, employees,
representatives and agents, from and against any and all causes of action, claims, demands,
actions, suits, costs, liabilities, damages, and fees (including attorney fees) however
denominated, brought against any of them or all of them arising out of or related to the Escrow
Agreement, the Note, the Security Agreement, the Purchase Agreement (including, without limitation,
those arising under Section 9.5 thereof) and all transactions contemplated by any of the foregoing
(“Released Claims”), regardless of when any Released Claim arose or may arise; provided, however,
that the waiver and release contained in Section 3 of this Agreement shall not apply to, and
“Released Claims” shall not include, the rights and obligations arising under Sections 9.2, 9.3,
9.4, 10.2, 10.5 and Article 12 of the Purchase Agreement. Notwithstanding the foregoing, the
Assignment and Assumption Agreement, the Intellectual Property Transfer Agreement and the Inventory
Trademark Licensing Agreement (as each such term is defined in the Purchase Agreement) remain in
full force and effect in accordance with their respective terms.

     4. Release of Security Interest. After receiving the Repayment Amount and confirmation that
the Fisher Fees have been paid, Abbott shall execute and deliver to ImaRx all deeds, assignments
and other instruments, and will take such other actions, as may be reasonably requested by ImaRx,
which request must be received by Abbott within 30 days of the date hereof, in order to re-vest in
ImaRx full title to the Collateral; provided, however, that the costs and expenses of preparing or
filing any of the foregoing shall be borne exclusively by ImaRx. Additionally, after receiving the
Repayment Amount and confirmation that the Fisher Fees have been paid, ImaRx is authorized to file,
at its sole cost and expense, any termination statement under the Uniform Commercial Code in effect
in any jurisdiction to terminate financing statements that evidence the security interest in the
Collateral created by the Security Agreement and the Note.

 

 

     5. Solvency. Immediately after giving effect to the transactions contemplated by this
Agreement, including the payment of funds to Abbott and Fisher pursuant to Section 1 hereof, (a)
the amount of the fair saleable value of ImaRx’s assets on a going concern basis will, exceed (i)
the value of all its liabilities, including contingent and other liabilities as of such time and
(ii) the amount that will be required to pay its probable liabilities on its existing debts
(including contingent liabilities) as such debts become absolute and matured, (b) ImaRx will not
have an unreasonably small amount of capital for the operation of the businesses in which it is
engaged or proposed to be engaged following such date and (c) ImaRx will be able to pay its
liabilities, including contingent and other liabilities, as they mature.

     6. Modification. This Agreement may not be altered, amended or modified in any way, except as
specifically provided in writing signed by the parties hereto.

     7. Governing Law. This Agreement shall be governed by the internal laws of the State of
Delaware, excluding that body of law related to conflict of laws and choice of law.

     8. Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which together shall constitute one and the same
agreement. Each party acknowledges that an original signature or a copy thereof transmitted by
facsimile shall constitute an original signature for purposes of this Agreement.

     IN WITNESS WHEREOF, this Agreement is executed by the undersigned parties as of the date first
written above.

ABBOTT LABORATORIES

	 	 	 	 	 
	By:
	 	/s/ Sean Murphy	 	 
	Name:

	 	 

Sean Murphy
	 	 
	Title:	 	V.P. Licensing & New Business Development
	Date:
	 	17 April 2008	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	IMARX THERAPEUTICS, INC.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Greg Cobb	 	 
	 

	 	 	 	 
	Name:

	 	Greg Cobb	 	 
	Title:

	 	Chief Financial Officer	 	 
	Date:
	 	17 April 2008

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