Document:

exv10w3

Exhibit 10.3

Execution Version

AVIV REIT, INC.

2010 MANAGEMENT INCENTIVE PLAN

I. INTRODUCTION

     1.1 Purposes. The purposes of the Aviv REIT, Inc. 2010 Management Incentive Plan
(this “Plan”) are (i) to align the interests of the Company’s and the Partnership’s equity
holders and the recipients of awards under this Plan by increasing the proprietary interest of such
recipients in the Company’s and the Partnership’s growth and success, (ii) to advance the interests
of the Company and the Partnership by attracting and retaining employees, consultants and Advisors
of the Company, AAM and their Affiliates and (iii) to motivate such persons to act in the long-term
best interests of the Company, the Partnership and its stockholders.

     1.2 Certain Definitions.

     “AAM” shall mean Aviv Asset Management, L.L.C., a Delaware limited liability company,
or any successor thereto, which is a subsidiary of the Company or the Partnership and which employs
the individuals who conduct the business of the Company and its Subsidiaries and the Partnership
and its subsidiaries.

     “Administrator” shall mean the Board.

     “Advisor” shall mean any member of an advisory board of the Partnership or any
individuals appointed to serve as non-voting observers of meetings of the Board.

     “Affiliates” shall mean, with respect to any Person, (i) each other Person
(including, with respect to AAM, the Company and its other Subsidiaries) that, directly or
indirectly, owns or controls, whether beneficially or as a trustee, guardian or other fiduciary,
fifty percent (50%) or more of the stock or ownership interest of such Person and (ii) each other
person that controls, is controlled by or is under common control with such Person. For purposes
of this definition, the term “control” (including the terms “controlled by” and “under common
control with”) of a Person means the possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies, whether through ownership of voting securities,
by contract or otherwise.

     “Aggregate Investment Amount” shall mean, as of any date, the aggregate amount of all
investments in the Company made by the Investor beginning on the date hereof through, and
including, such date.

     “Agreement” shall mean the written agreement evidencing an award hereunder between the
Company and the recipient of such award.

     “Board” shall mean the Board of Directors of the Company.

 

 

     “Change in Control” shall mean, except as otherwise provided below, the occurrence of
a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a
substantial portion of the assets” of the Company. In determining whether an event shall be
considered a “change in the ownership,” a “change in the effective control” or a “change in the
ownership of a substantial portion of the assets” of the Company, the following provisions shall
apply:

          (a) A “change in the ownership” of the Company shall occur on the date, after the date hereof,
on which any one person (or more than one person acting as a group), other than the Investor,
acquires ownership of stock of the Company that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power of the stock of the
Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(v). If a person or
group is considered either to own more than 50% of the total fair market value or total voting
power of the stock of the Company, or to have effective control of the Company within the meaning
of clause (b) below, and such person or group acquires additional stock of the Company, or such
person establishes a group and continues to own more than 50% of the total fair market value or
total voting power of the stock of the Company, the acquisition of additional stock by such person
or group shall not be considered to cause a “change in the ownership” of the Company.

          (b) A “change in the effective control” of the Company shall occur on either of the following
dates:

     (i) The date, after the date hereof, on which any one person (or more than one
person acting as a group), other than the Investor or a group that includes the
Investor, acquires (or has acquired during the 12-month period ending on the date of
the most recent acquisition by such person or persons) ownership of stock of the
Company possessing 30% or more of the total voting power of the stock of the
Company, as determined in accordance with Treasury Regulation § 1.409A-3(i)(5)(vi).
If a person or group is considered to possess 30% or more of the total voting power
of the stock of the Company, and such person or group acquires additional stock of
the Company, the acquisition of additional stock by such person or group shall not
be considered to cause a “change in the effective control” of the Company; or

     (ii) The date, after the date hereof, on which a majority of the members of the
Board is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board before the date
of the appointment or election, as determined in accordance with Treasury Regulation
§ 1.409A-3(i)(5)(vi).

     (iii) A “change in the ownership of a substantial portion of the assets” of the
Company shall occur on the date, after the date hereof, on which any one person (or
more than one person acting as a group), other than the Investor,

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acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a total
gross fair market value equal to or more than 40% of the total gross fair market
value of all of the assets of the Company immediately before such acquisition or
acquisitions, as determined in accordance with Treasury Regulation §
1.409A-3(i)(5)(vii). A transfer of assets shall not be treated as a “change in the
ownership of a substantial portion of the assets” when such transfer is made to an
entity that is controlled by the shareholders of the Company, as determined in
accordance with Treasury Regulation § 1.409A-3(i)(5)(vii)(B).

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

     “Common Stock” shall mean the common stock, $0.01 par value per share, of the Company.

     “Company” shall mean Aviv REIT, Inc., a Maryland corporation, or any successor
thereto.

     “Corporate Transaction” shall mean a reorganization, merger or consolidation of the
Company.

     “Dividend Equivalents” shall mean, with respect to any period, the dividends per share
distributed by the Company with respect to its Common Stock during such period multiplied
by the number of shares of Common Stock underlying a Participant’s unexercised Option, or portion
thereof. The payment of any Dividend Equivalents with respect to an unexercised Option shall be
made to the Participant by the Partnership. In no event shall the payment of any Dividend
Equivalent be contingent upon the exercise of any Option to which such Dividend Equivalent relates.

     “Fair Market Value” shall be determined by the Administrator by whatever means or
method as the Administrator, in the good faith exercise of its discretion, shall at the time deem
appropriate in accordance with the Treasury Regulations issued under section 409A of the Code;
provided, that with respect to the exercise price of any Options granted hereunder, Fair
Market Value shall not be less than the price paid by the Investor in the investment which made
such Option available for issuance under this Plan.

     “Incentive Stock Option” shall mean an option to purchase shares of Common Stock that
meets the requirements of section 422 of the Code, or any successor provision, which is intended by
the Administrator to constitute an Incentive Stock Option.

     “Initial Public Offering” means an underwritten initial public offering of shares of
Common Stock registered under the Securities Act of 1933, as amended.

     “Investor” shall mean LG Aviv L.P. and any Affiliate of LG Aviv L.P. who acquires
Common Stock from the Company or from LG Aviv L.P.

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     “Limited Performance-Based Award” means a Performance-Based Award which is granted
with (i) an exercise price less than 100% of the Fair Market Value of a share of Common Stock on
the date of grant of such Option or (ii) accumulated Dividend Equivalent rights as described in the
last two sentences of Section 2.1(d), and which, in either case, must be exercised no later
than 30 days following the date on which the Option becomes fully exercisable.

     “Liquidity Event” shall have the meaning set forth in the Stockholders Agreement.

     “Nonlimited Performance-Based Award” shall mean a Performance-Based Award which is not
a Limited Performance-Based Award.

     “Nonqualified Stock Option” shall mean an option to purchase shares of Common Stock
which is not an Incentive Stock Option.

     “Option” shall mean an option granted under this Plan to purchase shares of Common
Stock, including both Incentive Stock Options and Nonqualified Stock Options.

     “Participant” shall mean an employee or consultant of AAM or its Affiliates or an
Advisor who has been granted an award pursuant to the Plan.

     “Partnership” shall mean Aviv Healthcare Properties Limited Partnership, a Delaware
limited partnership, or its successor.

     “Performance-Based Awards” shall mean an Option which becomes fully exercisable on the
date on which a Liquidity Event is consummated in which the Investor has achieved or will achieve
in such Liquidity Event an amount which equals or exceeds the Performance Target, subject to the
requirements set forth in Section 2.2 relating to the Participant’s Termination.

     “Performance Target” shall mean, with respect to any Liquidity Event, the receipt by
the Investor of a 15% internal rate of return on the Investor’s Aggregate Investment Amount, solely
taking into account only the value of all cash, cash equivalents and marketable securities held by
the Investor following such Liquidity Event, after giving effect to any additional value provided
to the Investor pursuant to Section 6.4 of the Stockholders Agreement (it being understood
for the avoidance of doubt that the determination of whether such internal rate of return will be
achieved in an Initial Public Offering shall be made with respect to shares of Common Stock not
sold by the Investor in such Initial Public Offering by reference to the initial public offering
price of the shares of Common Stock sold in such Initial Public Offering (before any applicable
underwriting discounts or commissions)).

     “Person” means any individual, corporation, limited liability company, partnership,
firm, joint venture, association, joint-stock company, trust, unincorporated organization,
governmental body or other entity.

     “Plan” shall mean this Aviv REIT, Inc. 2010 Management Incentive Plan, as amended and
restated from time to time.

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     “Securities” means all capital stock of the Company outstanding from time to time and
any other equity or debt interest or security convertible into or exchangeable for any such capital
stock, or any right, warrant or option to acquire any such capital stock or such convertible or
exchangeable equity or debt interest or security, in each case, issued by the Company.

     “Stockholders Agreement” shall mean that certain Stockholders Agreement by and among
each Participant, the Company’s stockholders, including the Investor, the Company and the other
parties thereto, which contains certain restrictions and limitations applicable to Options and the
shares of Common Stock acquired upon Option exercise, as amended and restated from time to time.
If the Participant is not a party to the Stockholders Agreement at the time of exercise of an
Option (or any portion thereof), the exercise of the Option shall be subject to the condition that
the Participant enter into the Stockholders Agreement.

     “Subsidiary” shall mean any Person in which the Company owns, directly or indirectly,
an equity interest possessing more than 50% of the combined voting power of the total outstanding
equity interests of such entity.

     “Tax Date” shall mean the date an obligation to withhold or pay taxes arises in
connection with an award.

     “Ten Percent Holder” shall mean any Participant who, at the time an Option is granted,
owns stock possessing more than 10 percent of the total combined voting power of all classes of
stock of the Company (or of any Subsidiary).

     “Termination” shall mean the Participant ceasing (i) to be employed by AAM or its
Affiliates, if the Participant is an employee, (ii) to provide services to AAM or its Affiliates,
if the Participant is a consultant, as applicable or (iii) to be an Advisor.

     “Time-Based Awards” shall mean an Option which becomes exercisable as to 25% of the
number of shares of Common Stock subject to the Option on each of the first four anniversaries of
the date of grant, subject to the requirements set forth in Section 2.2 relating to the
Participant’s Termination.

     1.3 Administration. This Plan shall be administered by the Administrator. The
Administrator may grant to eligible persons under this Plan Options to purchase shares of Common
Stock in the form of Incentive Stock Options or Nonqualified Stock Options. The Administrator
shall, subject to the terms of this Plan, select eligible persons for participation in this Plan
and determine the form, amount and timing of each award to such persons and, if applicable, the
number of shares of Common Stock subject to such an award, the exercise price associated with the
award, the time and conditions of exercise of the award and all other terms and conditions of the
award, including, without limitation, the form of the Agreement evidencing the award. The
Administrator shall, subject to the terms of this Plan, interpret this Plan and the application
thereof, establish rules and regulations it deems necessary or desirable for the
administration of this Plan and may impose, incidental to the grant of an award, conditions
with

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respect to the award. All such interpretations, rules, regulations and conditions shall be
conclusive and binding on all parties. The Administrator may engage such advisors or consultants
as it deems appropriate in connection with its administration of this Plan.

     1.4 Eligibility. Participants in this Plan shall consist of such employees,
consultants or Advisors of AAM or any of its Affiliates who provide services to the Company or any
of its Subsidiaries as the Administrator in its sole discretion may select from time to time. The
Administrator’s selection of a person to participate in this Plan at any time shall not require the
Administrator to select such person to participate in this Plan at any other time.

     1.5 Shares Available. Subject to adjustment as provided in this Section 1.5
and Section 3.6, SEVENTY-THREE THOUSAND THREE HUNDRED THIRTY-SEVEN (73,337) shares of
Common Stock shall be available for issuance under this Plan, reduced by the sum of the aggregate
number of shares of Common Stock which become subject to outstanding Options. The number of shares
of Common Stock available for issuance pursuant to Incentive Stock Options shall not exceed the
number of shares of Common Stock set forth in the preceding sentence, subject to adjustment as
provided in Section 3.6 and subject to the provisions of sections 422 or 424 of the Code or
any successor provisions. Notwithstanding the foregoing, in the event of any additional equity
investment in the Company by the Investor after the date hereof, the number of shares of Common
Stock available for issuance under this Plan as described in the first sentence of this Section
1.5, but not the number of shares of Common Stock available for issuance pursuant to Incentive
Stock Options as described in the second sentence of this Section 1.5, shall automatically
be increased, without further action required by any person, by an amount equal to the
excess of (a) the quotient determined by dividing (i) the number of shares of
Common Stock issued in connection with such additional investment by (ii). 85 over
(b) the number of shares of Common Stock issued in connection with such additional investment. To
the extent that shares of Common Stock subject to an outstanding Option granted under this Plan are
not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of
such award or are withheld by the Company in accordance with Section 2.1(c) or Section
3.5, then such shares of Common Stock shall again be available under this Plan. Shares of
Common Stock to be delivered under this Plan shall be made available from authorized and unissued
shares of Common Stock.

II. STOCK OPTIONS

     2.1 Stock Options. The Administrator may, in its discretion, grant Options to
purchase shares of Common Stock to such eligible persons as may be selected by the Administrator;
provided, however, that Incentive Stock Options may be granted only to employees of
the Company or of a “parent corporation” or a “subsidiary corporation” (as such terms are defined
in section 424 of the Code) at the date of grant. Each Option, or portion thereof, that is not an
Incentive Stock Option, shall be a Nonqualified Stock Option. Each Incentive Stock Option shall be
granted within 10 years of the effective date of this Plan. To the extent that the aggregate Fair
Market Value (determined as of the date of grant) of shares of Common Stock with respect to which
Options designated as Incentive Stock Options are

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exercisable for the first time by a Participant during any calendar year (under this Plan or
any other plan of the Company or any Subsidiary) exceeds the amount (currently $100,000)
established by the Code, such Options shall constitute Nonqualified Stock Options.

     Options shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of this Plan, as the Administrator
shall deem advisable:

          (a) Number of Shares and Exercise Price. The number of shares of Common Stock subject
to an Option shall be determined by the Administrator. The exercise price per share of Common
Stock purchasable upon exercise of a Nonqualified Stock Option or an Incentive Stock Option shall
be equal to 100% of the Fair Market Value of a share of Common Stock on the date of grant of such
Option; provided, however, that if an Incentive Stock Option shall be granted to a
Ten Percent Holder, the exercise price per share of Common Stock shall be the price (currently 110%
of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.
Notwithstanding the foregoing, the exercise price per share of Common Stock purchasable upon
exercise of a Nonqualified Stock Option that is a Limited Performance-Based Award may be less than
100% of the Fair Market Value of a share of Common Stock on the date of grant of such Option (but
not below the price per share paid by the Investor with respect to its investment in the Company in
connection with which such Option was made available under this Plan) if such Option is structured
as a short-term deferral within the meaning of Treasury Regulation § 1.409A-1(b)(4).

          (b) Option Period and Exercisability. The period during which an Option may be
exercised shall be determined by the Administrator; provided, however, that no
Incentive Stock Option shall be exercised later than 10 years after its date of grant;
provided further, that if an Incentive Stock Option shall be granted to a Ten
Percent Holder, such Option shall not be exercised later than five years after its date of grant.
An exercisable Option, or portion thereof, may be exercised only with respect to whole shares of
Common Stock. The Administrator shall determine the circumstances under which an Option shall be
exercisable, subject to the following restrictions:

     (i) Up to one-third of the Options granted under this Plan shall be Time-Based
Awards; provided, however, that such Time-Based Awards shall become
fully exercisable on the date of a Liquidity Event.

     (ii) Any Options granted under this Plan which are not described in clause (i)
above shall be Performance-Based Awards.

          (c) Method of Exercise. A vested Option may be exercised (i) by giving written notice
to the Company specifying the number of whole shares of Common Stock to be purchased and
accompanying such notice with payment therefor in full either (A) in cash, (B) authorizing the
Company to withhold whole shares of Common Stock which would otherwise be delivered having an
aggregate Fair Market Value, determined as of the date of

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exercise, equal to the amount necessary to satisfy such obligation, provided that the Administrator determines that
such withholding of shares does not cause the Company to recognize an increased compensation
expense under applicable accounting principles or (C) any combination of (A) or (B), in each case,
to the extent set forth in the Agreement relating to the Option, and (ii) by executing such
documents as the Administrator may reasonably request. In the case of clause (B) above, any
fraction of a share of Common Stock which would be required to pay such exercise price shall be
disregarded and the remaining amount due shall be paid in cash by the Participant. No shares of
Common Stock shall be issued and, if applicable, no certificate representing Common Stock shall be
delivered, until the full exercise price therefor and any withholding taxes thereon, as described
in Section 3.5, have been paid.

     Notwithstanding anything to the contrary in the Plan or an Agreement, no Option may be
exercised if such exercise would, or would reasonably be expected to, result in the Company owning,
directly or indirectly, including by reason of any applicable attribution rule under the Code, (i)
9.9% or more of the total combined voting power of all classes of stock entitled to vote, or 9.9%
or more of the total value of all classes of stock, of any corporation that is a tenant of the
Partnership or any of its subsidiaries or (ii) an interest of 9.9% or more in the assets or net
profits of any tenant of the Partnership or any of its subsidiaries.

          (d) Dividend Equivalents. During the period a Participant’s Option, or portion
thereof, remains unexercised, an amount shall be credited to a deferred compensation account for
the Participant with respect to such unexercised Option, or portion thereof, equal to the Dividend
Equivalents attributable to the shares of Common Stock underlying such Option. Such Dividend
Equivalents shall be payable by the Partnership to the Participant, if at all, as follows:

     (i) For the period beginning on the grant date of any Time-Based Award and
ending on the date the award becomes exercisable, Dividend Equivalents with respect
to shares of Common Stock underlying the unvested portion of any Time-Based Award
shall be paid, with respect to such applicable shares, on the date the Time-Based
Award becomes exercisable.

     (ii) For the period beginning on the grant date of any Performance-Based Award
and ending on the date (A) a Nonlimited Performance-Based Award becomes exercisable,
or (B) a Limited Performance-Based Award expires, Dividend Equivalents with respect
to shares of Common Stock underlying, as applicable, (x) the unvested portion of any
Nonlimited Performance-Based Award or (y) the unvested or vested portion of any
Limited Performance-Based Award, shall be paid within 30 days of achievement of the
Performance Target; provided, however, that the Participant
continues to be employed by or provide services to or serve as an Advisor to, as
applicable, AAM or one of its Affiliates through the date on which such Performance
Target is achieved.

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     (iii) For the period beginning on the date on which Dividend Equivalents, with
respect to shares of Common Stock underlying the vested portion of any Time-Based
Award or Nonlimited Performance-Based Award were
last paid and ending on the earlier of the date specified in clause (A) and (B)
below, Dividend Equivalents with respect to shares of Common Stock shall be paid,
with respect to such applicable shares, on the earlier of (A) the last day of the
calendar quarter in which such dividends were paid to the Company’s stockholders
(or, if not a business day, the following business day) and (B) three business days
following the Participant’s Termination.

The Administrator may, in its discretion, grant to a Participant the right to receive the Dividend
Equivalents which accumulated, from the date on which the Option was made available under this Plan
and prior to the applicable grant date, with respect to the shares of Common Stock underlying a
Nonqualified Stock Option which is a Limited Performance-Based Award. Such Dividend Equivalents
shall be payable by the Partnership to the Participant, if at all, as described in clause (ii)
above.

          (e) Rights as Stockholders. The holder of an Option shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the
exercise of any part of an Option, except with respect to shares purchased upon exercise of all or
any part of an Option, provided, that such holder has signed the Stockholders Agreement
and, if applicable, certificates representing such shares have been issued by the Company to such
holder.

          (f) Transfer of Options or Common Stock. Shares of Common Stock acquired upon
exercise of an Option shall be subject to the terms and conditions of the Stockholders Agreement.
The Administrator may require the Participant to give the Company prompt notice of any disposition
of shares of Common Stock acquired by exercise of an Incentive Stock Option within two years from
the date of granting of such Option or one year after the transfer of such shares to such
Participant. The Administrator may direct that the certificates, if applicable, evidencing shares
of Common Stock acquired by exercise of an Incentive Stock Option refer to such requirement.

     2.2 Termination of Employment or Service. In the event of the Participant’s
Termination, for any reason, then each Option held by such Participant shall be exercisable only to
the extent that such Option is exercisable on the effective date of such Termination, and may
thereafter be exercised by such Participant (or such Participant’s legal representative or similar
person) until and including the earlier to occur of (i) the date which is 30 days after the
effective date of such Termination and (ii) the expiration date of the term of such Option. The
Participant shall not be entitled to any further Dividend Equivalent payments in accordance with
Section 2.1(d) following the date the Option ceases to be exercisable as described in the
preceding sentence.

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III. GENERAL

     3.1 Effective Date and Term of Plan. This Plan shall be submitted to the stockholders
of the Company in connection with the closing of the Investor’s initial investment in the Company
and the adoption of the Plan by the Board. The Administrator may terminate
this Plan at any time; provided, however, that termination of this Plan shall
not adversely affect the terms or conditions of any award granted prior to termination without the
Participant’s written consent. In the event that this Plan is not approved by the stockholders of
the Company, this Plan and any awards hereunder shall be void and of no force or effect.

     3.2 Amendments. The Administrator may amend this Plan and the terms and conditions of
any outstanding awards as it shall deem advisable, subject to any requirement of Board or
stockholder approval required by applicable law or by the Stockholders Agreement;
provided, however, that except as set forth in Section 3.12 hereof, no
amendment may adversely affect the rights of a Participant’s outstanding award without the written
consent of such Participant.

     3.3 Agreement. Each award under this Plan shall be evidenced by an Agreement setting
forth the terms and conditions applicable to such award. No award shall be valid until an
Agreement is executed by the Company and the Participant and, upon execution by each party and
delivery of the Agreement to the Company within the time period specified by the Company, such
award shall be effective as of the effective date set forth in the Agreement.

     3.4 Non-Transferability. No award shall be transferable other than by will, the laws
of descent and distribution or pursuant to beneficiary designation procedures approved by the
Administrator consistent with the transfer restrictions contained in the Company’s Charter,
including, to the extent expressly permitted in the Agreement relating to such award, to the
Participant’s family members, a trust or entity established by the Participant for estate planning
purposes or a charitable organization designated by the Participant. Except to the extent
permitted by the foregoing sentence or the Agreement relating to an award, each award may be
exercised during the Participant’s lifetime only by the Participant or the Participant’s legal
representative, guardian or similar person. Except as permitted by the second preceding sentence,
no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise
disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or
similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any award, such award and all rights thereunder shall immediately become null
and void.

     3.5 Tax Withholding. The Company shall have the right to require, prior to the
issuance or delivery of any shares of Common Stock pursuant to an award hereunder, payment by the
Participant to which such award has been granted of any federal, state, local or other taxes which
may be required to be withheld or paid in connection with such award. An Agreement shall provide
that (i) the Company may, in its sole discretion (which shall be exercised in accordance with the
terms of the Stockholders Agreement), withhold whole shares of Common

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Stock which would otherwise
be delivered to a Participant, having an aggregate Fair Market Value, determined as of the Tax
Date, equal to the amount necessary to satisfy any such obligation or (ii) the Participant may
satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B)
authorizing the Company, to the extent permitted by the Company in its sole discretion (which shall
be exercised in accordance with the terms of the Stockholders Agreement), to withhold whole shares
of Common Stock which would otherwise
be delivered having an aggregate Fair Market Value, determined as of the Tax Date, equal to
the amount necessary to satisfy any such obligation or (C) any combination of (A) and (B), in each
case to the extent set forth in the Agreement relating to the award and subject to the
Participant’s execution of such documents as the Company may reasonably request. Shares of Common
Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the
amount determined by applying the minimum statutory withholding rate. Any fraction of a share of
Common Stock which would be required to satisfy such an obligation shall be disregarded and the
remaining amount due shall be paid in cash by the Participant.

     3.6 Adjustment. In the event any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or
other similar change in capitalization or event, or any distribution to holders of Common Stock
(other than a regular cash dividend) occurs on or after the date this Plan is approved by the
stockholders of the Company, (i) the number and type of securities available for all awards under
this Plan shall be appropriately adjusted by the Board and (ii) the number and type of securities
subject to each outstanding Option and the exercise price per security shall be appropriately
adjusted by the Administrator, such adjustments to be made in the case of outstanding Options
without an increase in the aggregate exercise price. The decision of the Board or the
Administrator, as applicable, regarding any such adjustment shall be final, binding and conclusive.
If any such adjustment would result in a fractional security being (i) available under this Plan,
such fractional security shall be disregarded or (ii) subject to an award under this Plan, the
Company shall pay the Participant, in connection with the first exercise of such award, in whole or
in part, occurring after such adjustment, an amount in cash determined by multiplying (x) the
fraction of such security (rounded to the nearest hundredth) by (y) the excess, if any, of (A) the
Fair Market Value on the exercise date over (B) the exercise price of such award.

     3.7 Corporate Transaction; Change in Control.

          (a) If the Company shall be a party to a Corporate Transaction, or in the event of a Change in
Control, the Administrator may, in its discretion (which shall be exercised in accordance with the
terms of the Stockholders Agreement):

     (i) require that some or all outstanding Options shall immediately become
exercisable in full or in part;

     (ii) require outstanding awards, in whole or in part, to be assumed by the
corporation resulting from such Corporate Transaction, or a parent corporation
thereof;

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     (iii) require that shares of capital stock of the corporation resulting from
such Corporate Transaction, or a parent corporation thereof, be substituted for some
or all of the shares of Common Stock subject to an outstanding award, with an
appropriate and equitable adjustment to such award as determined by the Board in
accordance with Section 3.6; and/or

     (iv) require outstanding awards, in whole or in part, to be surrendered to the
Company by the Participant, and to be immediately cancelled by the Company, and to
provide for the Participant to receive (A) a cash payment in an amount equal to the
number of shares of Common Stock then subject to the portion of such Option
surrendered, to the extent such Option is then exercisable or becomes exercisable
pursuant to clause (i), multiplied by the excess, if any, of the highest per share
price offered to holders of Common Stock in any transaction whereby the Corporate
Transaction takes place, over the exercise price per share of Common Stock subject
to such Option; (B) shares of capital stock of the corporation resulting from such
Corporate Transaction, or a parent corporation thereof, having a fair market value,
as determined by the Administrator not less than the amount determined under clause
(A) above; or (C) a combination of the payment of cash pursuant to clause (A) above
and the issuance of shares pursuant to clause (B) above.

          (b) Unless otherwise approved by the Administrator, any holder of an Option that is then
exercisable or becomes exercisable pursuant to an event described in Section 3.7(a) or as a
result of a Liquidity Event, shall be entitled to receive only that consideration which is received
by the other holders of Common Stock in connection with such event; provided, that such
holder first exercises such Option.

     3.8 No Right of Participation or Employment or Service. Unless otherwise set forth in
an employment agreement, no person shall have any right to participate in this Plan. Neither this
Plan nor any award made hereunder shall confer upon any person any right to continued employment or
service with AAM or any of its Affiliates or affect in any manner the right of AAM or any of its
Affiliates to terminate the employment or service of any person at any time without liability
hereunder.

     3.9 Designation of Beneficiary. A Participant may file with the Administrator, in
accordance with the procedures approved by the Administrator consistent with the transfer
restrictions contained in the Company’s Charter, a written designation of one or more persons as
such Participant’s beneficiary or beneficiaries (both primary and contingent) in the event of the
Participant’s death or incapacity. To the extent an outstanding Option granted hereunder is
exercisable, such beneficiary or beneficiaries shall be entitled to exercise such Option pursuant
to procedures prescribed by the Administrator. Each beneficiary designation shall become effective
only when filed in writing with the Administrator during the Participant’s lifetime on a form
prescribed by the Administrator. The filing with the Administrator of a new beneficiary
designation shall cancel all previously filed beneficiary designations. If a Participant fails to

12

 

designate a beneficiary, or if all designated beneficiaries of a Participant predecease the
Participant, then each outstanding Option hereunder held by such Participant, to the extent
exercisable, may be exercised by such Participant’s executor, administrator, legal representative
or similar person.

     3.10 Governing Law. This Plan, each award hereunder and the related Agreement, and
all determinations made and actions taken pursuant thereto, to the extent not otherwise
governed by the Code or the laws of the United States, shall be governed by the laws of the
State of Maryland and construed in accordance therewith without giving effect to principles of
conflicts of laws.

     3.11 Arbitration. Any dispute or controversy between the Company or its respective
affiliates (including AAM) on the one hand, and the Participant on the other hand, whether arising
out of or relating to this Plan, any Agreement or otherwise, shall be settled by final and binding
arbitration in Cook County, Illinois administered by the American Arbitration Association, with any
such dispute or controversy being so administered in accordance with its Commercial Rules then in
effect, and judgment on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitrator shall have the authority to award any remedy or relief that a
court of competent jurisdiction could order or grant, including, without limitation, the issuance
of an injunction. Except as necessary in court proceedings to enforce this arbitration provision
or an award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without the prior written
consent of the Company and the Participant. The Company and the Participant acknowledge that this
Plan and each Agreement evidence transactions involving interstate commerce. Notwithstanding any
choice of law provision included in this Plan or any Agreement, the United States Federal
Arbitration Act shall govern the interpretation and enforcement of this arbitration provision.

     3.12 Code Section 409A.

          (a) This Plan and each Agreement evidencing an award hereunder are intended to be excepted
from the requirements of section 409A of the Code or to avoid accelerated taxation and/or the
imposition of any additional tax or penalty under section 409A of the Code, as applicable, and
shall be interpreted and construed consistent with that intent. Notwithstanding such intention,
the Administrator may, at any time and in its sole discretion and without a Participant’s prior
consent, amend the Plan and/or awards, adopt policies and procedures, or take any other actions
(including amendments, policies, procedures and actions with retroactive effect) as are necessary
or appropriate to (i) exempt the Plan and/or any award from the application of section 409A of the
Code, (ii) preserve the intended tax treatment of any such award, or (iii) comply with the
requirements of section 409A of the Code, including without limitation any such regulations
guidance, compliance programs and other interpretive authority that may be issued after the date of
grant.

13

 

          (b) Participants (or their beneficiaries) shall be responsible for all taxes with respect to
any awards under the Plan. The Administrator and the Company make no guarantees to any person
regarding the tax treatment of awards or payments made under the Plan. Neither the Administrator
nor the Company has any obligation to take any action to prevent the assessment of any additional
tax or penalty on any Participant with respect to any award under section 409A of the Code or
otherwise and none of the Company, any of its Subsidiaries or Affiliates, or any of their employees
or representatives shall have any liability to a Participant with respect thereto.

14

 

     This Aviv REIT, Inc. 2010 Management Incentive Plan was duly adopted and approved by the
stockholders of the Company on August 12, 2010.

	 	 	 	 	 
	 	 	 
	 	                              /s/ Robert J. S. Roriston
 	 
	 	Robert J. S. Roriston 	 
	 	Secretary 	 
	 

Signature Page to

Aviv REIT, Inc.

2010 Management Incentive Plan

 

Acknowledged and agreed on

this 17th day of September, 2010

AVIV HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

By: Aviv Healthcare, L.L.C., its general partner

	 	 	 	 	 
	 	 
	By:  	          /s/ Craig M. Bernfield
 	 
	 	Name:  	Craig M. Bernfield 	 
	 	Title:  	Sole Manager 	 
	 

Signature Page to

Aviv REIT, Inc.

2010 Management Incentive Planexv10w4

Exhibit 10.4

AVIV REIT, INC.

2010 MANAGEMENT INCENTIVE PLAN

AWARD NOTICE

[                    ]

[                    ]

[                    ]

[                    ]

          You have been granted an Option to purchase shares of the common stock, $0.01 par value per
share (“Common Stock”), of Aviv REIT, Inc. (the “Company”), pursuant to the terms and
conditions of the Aviv REIT, Inc. 2010 Management Incentive Plan (the “Plan”) and the Stock
Option Agreement (together with this Award Notice, the “Agreement”). Copies of the Plan
and the Stock Option Agreement are attached hereto. Capitalized terms not defined herein shall
have the meanings specified in the Plan or the Agreement.

	 	 	 

	Option:

	 	You have been awarded a Nonqualified Stock Option to purchase from
the Company [l] shares of its Common Stock, subject to
adjustment as provided in Section 3.4 of the Agreement.
	 
	 	 
	Grant Date:

	 	[                                        ]
	 
	 	 
	Exercise Price:

	 	$[l] per share, subject to adjustment as provided
in Section 3.4 of the Agreement.
	 
	 	 
	Type of Award:

	 	Time-Based Award
	 
	 	 
	Vesting Schedule:

	 	The Option shall vest with respect to 25% of the number of shares
of Common Stock subject thereto on each of the first four one-year
anniversaries of the Grant Date; provided that, you do not
experience a Termination prior to the applicable vesting date.
	 
	 	 
	Exercise Schedule:

	 	Subject to Section 2.2 of the Agreement, the Option shall be
exercisable to the extent that the Option is vested.
	 
	 	 
	Expiration Date:

	 	N/A

Aviv REIT, Inc.

By:_____________________________

Name: [                                        ]

Title: [                                        ]

Award Notice — Management Incentive Plan

 

 

Acknowledgment, Acceptance and Agreement:

By signing below and returning this Award Notice to Aviv REIT, Inc. at the address stated herein, I
hereby acknowledge receipt of the Agreement and the Plan, accept the Option granted to me and agree
to be bound by the terms and conditions of this Award Notice, the Agreement and the Plan.

                                                            

Participant

                                                            

Date

AVIV REIT, INC.

303 WEST MADISON STREET, SUITE 2400

CHICAGO, IL 60606

ATTENTION: [                    ]

 

 

AVIV REIT, INC.

2010 MANAGEMENT INCENTIVE PLAN

STOCK OPTION AGREEMENT

          Aviv REIT, Inc., a Maryland corporation (the “Company”), hereby grants to the
individual (the “Participant”) named in the award notice (the “Award Notice”)
attached to this Stock Option Agreement (this “Agreement”) as of the date set forth in the
Award Notice (the “Grant Date”), pursuant to the provisions of the Aviv REIT, Inc. 2010
Management Incentive Plan (the “Plan”), an option to purchase from the Company the number
of shares of common stock, $0.01 par value per share (“Common Stock”), set forth in the
Award Notice at the price per share set forth in the Award Notice (the “Exercise Price”)
(the “Option”), upon and subject to the terms and conditions set forth below, in the Award
Notice and in the Plan. Capitalized terms not defined herein shall have the meanings specified in
the Plan.

          1. Option Subject to Acceptance of Agreement. The Option shall be null and void
unless the Participant shall accept this Agreement by executing the Award Notice in the space
provided therefor and returning an original execution copy of the Award Notice to the Company.

          2. Time and Manner of Exercise of Option.

          2.1. Maximum Term of Option. If designated in the Award Notice as an Incentive Stock
Option or a Nonqualified Stock Option which is a Limited Performance-Based Award, in no event may
the Option be exercised, in whole or in part, after the expiration date set forth in the Award
Notice (the “Expiration Date”).

          2.2. Vesting and Exercise of Option. The Option shall become vested in accordance
with the vesting schedule set forth in the Award Notice (the “Vesting Schedule”) and shall
become exercisable in accordance with the exercise schedule set forth in the Award Notice (the
“Exercise Schedule”). In the event of the Participant’s Termination for any reason, the
Option shall be vested only to the extent it is vested on the effective date of the Participant’s
Termination and may thereafter be exercised by the Participant until and including the earliest to
occur of (i) the date which is 30 days after the effective date of the Participant’s Termination
and (iii) the Expiration Date, if applicable.

          2.3. Method of Exercise. Subject to the limitations set forth in this Agreement, a
vested Option may be exercised by the Participant (i) by giving written notice to the Company
specifying the number of whole shares of Common Stock to be purchased and accompanying such notice
with payment therefor in full either (A) in cash, (B) authorizing the Company to withhold whole
shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value,
determined as of the date of exercise, equal to the amount necessary to satisfy such obligation,
provided that the Administrator determines that such withholding of shares does not cause the
Company to recognize an increased compensation expense under applicable accounting principles or
(C) any combination of (A) or (B) and (ii) by executing such documents as the Administrator may
reasonably request. In the case of clause

 

 

(B) above, any fraction of a share of Common Stock which would be required to pay such
exercise price shall be disregarded and the remaining amount due shall be paid in cash by the
Participant. No shares of Common Stock shall be issued and, if applicable, no certificate
representing Common Stock shall be delivered until the full exercise price therefor and any
withholding taxes thereon, as described in Section 3.3, have been paid.

          2.4. Time of Exercise. The Option may be exercised by the Participant with respect to
all or a portion of the number of shares of Common Stock with respect to which the Option is then
vested.

          2.5. Termination of Option. In no event may the Option be exercised after it
terminates as set forth in this Section 2.5. The Option shall terminate, to the extent not
earlier terminated pursuant to Section 2.2 or exercised pursuant to Section 2.3, on
the Expiration Date, if applicable, or the date determined by the Board in accordance with
Section 3.1 of the Plan. Upon the termination of the Option, the Option and all rights
hereunder shall immediately become null and void.

          2.6. Dividend Equivalents. During the period a Participant’s Option, or portion
thereof, remains unexercised, the Participant shall be eligible to receive the applicable Dividend
Equivalents in accordance with Section 2.1(d) of the Plan. The Participant shall not be
entitled to any further payments of such Dividend Equivalents following the date such Option ceases
to be exercisable as set forth in this Agreement.

          3. Additional Terms and Conditions of Option.

          3.1. Nontransferability of Option. The Option may not be transferred by the
Participant other than by will or the laws of descent and distribution or pursuant to the
designation of one or more beneficiaries in such form as may be required by the Administrator
consistent with the transfer restrictions contained in the Company’s Charter. Except to the extent
permitted by the foregoing sentence, (i) during the Participant’s lifetime the Option is
exercisable only by the Participant or the Participant’s legal representative, guardian or similar
person and (ii) the Option may not be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to
execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge,
hypothecate, encumber or otherwise dispose of the Option, the Option and all rights hereunder shall
immediately become null and void.

          3.2. Investment Representation. The Participant hereby represents and covenants that
(a) any shares of Common Stock purchased upon exercise of the Option will be purchased for
investment and not with a view to the distribution thereof within the meaning of the Securities Act
of 1933, as amended (the “Securities Act”), unless such purchase has been registered under
the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such
shares shall be made either pursuant to an effective registration statement under the Securities
Act and any applicable state securities laws, or pursuant to an exemption from registration under
the Securities Act and such state securities laws; and (c) if requested by the Company, the
Participant shall submit a written statement, in a form satisfactory to the Company, to the effect
that such representation (x) is true and correct as of the date of any

2

 

purchase of any shares hereunder or (y) is true and correct as of the date of any sale of any
such shares, as applicable. As a further condition precedent to any exercise of the Option, the
Participant shall comply with all regulations and requirements of any regulatory authority having
control of or supervision over the issuance or delivery of the shares and, in connection therewith,
shall execute any documents which the Board or the Administrator shall in its sole discretion deem
necessary or advisable.

          3.3. Withholding Taxes.

          (a) As a condition precedent to the issuance of Common Stock upon exercise of the
Option, the Participant shall, upon request by the Company, pay to the Company in addition
to the aggregate Exercise Price of the shares, such amount as the Company may be required,
under all applicable federal, state, local or other laws or regulations, to withhold and pay
over as income or other withholding taxes (the “Required Tax Payments”) with respect
to such exercise of the Option. If the Participant shall fail to advance the Required Tax
Payments after request by the Company, the Company may, in its discretion, deduct any
Required Tax Payments from any amount then or thereafter payable by the Company to the
Participant.

          (b) The Participant may elect to satisfy his or her obligation to advance the Required
Tax Payments by any of the following means: (1) a cash payment to the Company, (2)
authorizing the Company to withhold whole shares of Common Stock which would otherwise be
issued to the Participant upon exercise of the Option having an aggregate Fair Market Value,
determined as of the Tax Date, equal to the Required Tax Payments or (3) any combination of
(1) and (2). The Company shall have sole discretion to disapprove of an election pursuant
to clause (2) or (3). Shares of Common Stock to be delivered or withheld may not have a
Fair Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Common Stock which would be required to satisfy any such obligation
shall be disregarded and the remaining amount due shall be paid in cash by the Participant.
No certificate representing a share of Common Stock shall be issued or delivered until the
Required Tax Payments have been satisfied in full.

          3.4. Adjustment. In the event of any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or
other similar change in capitalization or event, or any distribution to holders of the Company’s
Common Stock other than a regular cash dividend, the number and type of securities subject to the
Option and the Exercise Price shall be appropriately adjusted by the Administrator, such adjustment
to be made without an increase in the aggregate purchase price. The decision of the Administrator
regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would
result in a fractional security being subject to the Option, the Company shall pay the Participant,
in connection with the first exercise occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the
difference, if any, between (A) the Fair Market Value on such date and (B) the Exercise Price of
the Option.

3

 

          3.5. Liquidity Event. In the event of a Liquidity Event, if the Option is a
Time-Based Award, then it shall immediately become vested and exercisable in full.

          3.6. Compliance with Applicable Law. The Option is subject to the condition that if
the listing, registration or qualification of the shares subject to the Option upon any securities
exchange or under any law, or the consent or approval of any governmental body, or the taking of
any other action is necessary or desirable as a condition of, or in connection with, the purchase
or issuance of shares hereunder, the Option may not be exercised, in whole or in part, and such
shares may not be issued, unless such listing, registration, qualification, consent, approval or
other action shall have been effected or obtained, free of any conditions not acceptable to the
Company. The Company agrees to use reasonable efforts to effect or obtain any such listing,
registration, qualification, consent, approval or other action.

          3.7. Issuance or Delivery of Shares. The shares of Common Stock subject to the Option
may be held by a custodian in book entry form with the restrictions on such shares duly noted or,
alternatively, the Company may hold the certificate or certificates representing such shares, in
either case until the Option has been exercised. Upon the exercise of the Option, in whole or in
part, the Company shall issue or deliver, subject to the conditions of this Article 3, the
number of shares of Common Stock purchased against full payment therefor. Such issuance shall be
evidenced by removal of such restrictions from those of such shares that are held in book entry
form, and, if applicable, the Company shall deliver to the Participant any certificate or
certificates representing those of such shares that are held by the Company and destroy or return
to the Participant the stock power or powers relating to such shares. If such stock power or
powers also relate to unvested shares of Common Stock, then the Company may require, as a condition
precedent to the delivery of any certificate pursuant to this Section 3.7, the execution
and delivery to the Company of one or more irrevocable stock powers relating to such unvested
shares. The Company shall pay all original issue or transfer taxes and all fees and expenses
incident to such issuance, except as otherwise provided in Section 3.3.

          3.8. Option Confers No Rights as Stockholder. The Participant shall not be entitled
to any privileges of ownership with respect to shares of Common Stock subject to the Option unless
and until such shares are purchased and issued upon the exercise of the Option, in whole or in
part, and the Participant becomes a stockholder of record with respect to such issued shares. The
Participant shall not be considered a stockholder of the Company with respect to any such shares
not so purchased and issued. As a condition to the exercise of the Option, the Participant shall,
concurrently with the exercise of the Option, also execute the Stockholders Agreement, unless the
Participant has already executed the Stockholders Agreement.

          3.9. Option Confers No Rights to Continued Employment or Service. In no event shall
the granting of the Option or its acceptance by the Participant, or any provision of this Agreement
or the Plan, give or be deemed to give the Participant any right to continued employment or service
with AAM or any of its Affiliates.

          3.10. Designation of Option. If designated in the Award Notice as an Incentive Stock
Option, this Option is intended to qualify as an Incentive Stock Option as defined in section 422
of the Code. To the extent the Option is exercised pursuant to its terms after the period set
forth in section 422(a) of the Code or exceeds the limitation set forth in section 422(d)

4

 

of the Code (currently $100,000) or otherwise does not meet the requirements for an incentive
stock option under section 422 of the Code, the Option shall not be treated as an incentive stock
option under Section 422.

          3.11. Initial Public Offering. The Participant hereby agrees that in the event of an
Initial Public Offering, the Participant shall not offer, sell, contract to sell, pledge,
hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any
shares of stock of the Company or any rights to acquire stock of the Company for such period of
time from and after the effective date of such registration statement as may be established by the
underwriter for such Initial Public Offering. The foregoing limitation shall not apply to shares
registered in the Initial Public Offering under the Securities Act.

          4. Miscellaneous Provisions.

          4.1. Decisions of Administrator. The Administrator shall have the right to resolve
all questions which may arise in connection with the Option or its exercise. Any interpretation,
determination or other action made or taken by the Administrator regarding the Plan or this
Agreement shall be final, binding and conclusive.

          4.2. Successors. This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company and any person or persons who shall, upon the death of the
Participant, acquire any rights hereunder in accordance with this Agreement or the Plan.

          4.3. Notices. All notices, requests or other communications provided for in this
Agreement shall be made, if to the Company, to Aviv REIT, Inc., 303 West Madison Street, Suite
2400, Chicago, Illinois 60606, Attention: Craig M. Bernfield, Chairman, President and Chief
Executive Officer, and if to the Participant, to the Participant’s address set forth in the
Company’s records. All notices, requests or other communications provided for in this Agreement
shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by
facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known
address of the party entitled thereto or (d) by express courier service. The notice, request or
other communication shall be deemed to be received upon personal delivery, upon confirmation of
receipt of facsimile transmission, or upon receipt by the party entitled thereto if by United
States mail or express courier service; provided, however, that if a notice,
request or other communication is not received during regular business hours, it shall be deemed to
be received on the next succeeding business day of the Company.

          4.4. Partial Invalidity. The invalidity or unenforceability of any particular
provision of this Agreement shall not effect the other provisions hereof and this Agreement shall
be construed in all respects as if such invalid or unenforceable provisions were omitted.

          4.5. Governing Law. This Agreement, the Option and all determinations made and
actions taken pursuant hereto and thereto, to the extent not otherwise governed by the laws of the
United States, shall be governed by the laws of the State of Maryland and construed in accordance
therewith without giving effect to conflicts of laws principles.

5

 

          4.6. Counterparts. The Award Notice may be executed in two counterparts, each of
which shall be deemed an original and both of which together shall constitute one and the same
instrument.

          4.7. Agreement Subject to the Plan. This Agreement is subject to the provisions of
the Plan, and shall be interpreted in accordance therewith. The Participant hereby acknowledges
receipt of a copy of the Plan, and by signing and returning the Award Notice to the Company, at the
address stated herein, he or she agrees to be bound by the terms and conditions of this Agreement,
the Award Notice and the Plan.

          4.8. Code Section 409A.

          (a) This Agreement is intended to be excepted from or comply with, as applicable, the
requirements of section 409A of the Code, and shall be interpreted and construed consistent with
that intent. Notwithstanding such intention, the Administrator may, at any time and in its sole
discretion and without a Participant’s prior consent, amend this Agreement, adopt policies and
procedures, or take any other actions (including amendments, policies, procedures and actions with
retroactive effect) as are necessary or appropriate to (i) exempt this Agreement from the
application of section 409A of the Code, (ii) preserve the intended tax treatment of any such
award, or (iii) comply with the requirements of section 409A of the Code, including without
limitation any such regulations guidance, compliance programs and other interpretive authority that
may be issued after the date of grant.

          (b) Participants (or their beneficiaries) shall be responsible for all taxes with respect to
any awards under the Plan. The Administrator and the Company make no guarantees to any person
regarding the tax treatment of awards or payments made under the Plan. Neither the Administrator
nor the Company has any obligation to take any action to prevent the assessment of any additional
tax or penalty on any Participant with respect to any award under section 409A of the Code or
otherwise and none of the Company, any of its Subsidiaries or Affiliates, or any of their employees
or representatives shall have any liability to a Participant with respect thereto.

6

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