Document:

Exhibit 10.6

 

DIRECTOR DESIGNATION AGREEMENT

 

This DIRECTOR DESIGNATION AGREEMENT (the “Agreement”), dated as of December 19, 2012, is entered into by and among Silver Bay Realty Trust Corp., a Maryland corporation (the “Company”), and Two Harbors Investment Corp., a Maryland corporation (“Two Harbors”).

 

RECITALS

 

WHEREAS, Two Harbors and its Affiliates (as defined below) own interests in certain properties that will be transferred to the Company and/or its Affiliates pursuant to one or more contribution agreements (the “Contribution Agreements”), in connection with the initial public offering of shares of the Company’s common stock (the “Common Stock”);

 

WHEREAS, Two Harbors and its Affiliates will receive shares of the Company’s common stock in exchange for such property interests;

 

WHEREAS, a majority of the Company’s board of directors (the “Board of Directors”) must be Independent Directors (as defined under the Listing Rules of the New York Stock Exchange, Inc. and as defined in the Exchange Act (as defined below));

 

WHEREAS, the Company and Two Harbors, acting through and at the direction of its committee of independent directors, desire that Two Harbors shall have the right to designate two individuals for nomination for election to the Board of Directors of the Company in accordance with and subject to the terms of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

Article I

 

DEFINED TERMS

 

In addition to the definitions set forth above or otherwise herein, the following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement:

 

“Affiliate” of any Person means any other Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, “control” when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

 

“Agreement” means this Agreement, as it may be amended, supplemented or restated from time to time.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, together with rules and regulations promulgated thereunder.

 

“Initial Designees” means William W. Johnson and Stephen G. Kasnet.

 

“IPO Date” means the closing date of the initial public offering of shares of Common Stock of the Company pursuant to the Registration Statement.

 

“Person” means an individual or a corporation, partnership, limited liability company, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentally thereof.

 

“Registration Statement” means the Registration Statement on Form S-11 (File No: 333-183838), as filed by the Company with the United States Securities and Exchange Commission on September 11, 2012, and as amended or supplemented from time to time.

 

“Termination Effective Time” means the date and time at which the 2014 Annual Meeting is called to order.

 

“2013 Annual Meeting” means the annual meeting of stockholders of the Company to be held, or held, during calendar year 2013.

 

“2014 Annual Meeting” means the annual meeting of stockholders of the Company to be held, or held, during calendar year 2014.

 

Article II

 

BOARD OF DIRECTORS

 

1.                                      Two Harbors Right to Designate Director Nominees.  Subject to the terms and conditions of this Agreement, Two Harbors shall have the right to designate from time to time two individuals qualifying as Independent Directors as nominees for election to the Board of Directors, provided that such individuals shall commence their service on the Board of Directors as of the IPO Date and shall terminate their service on the Board of Directors (unless re-nominated by the Board of Directors in its sole discretion) not later than the Termination Effective Time, and provided further that at no time shall the right provided for hereinabove be exercisable if it would lead to or result in more than two nominees of Two Harbors serving on the Board of Directors at any time.

 

2.                                      Nomination.  The Company agrees to nominate for election to the Board of Directors the individual(s) designated by Two Harbors to be nominated for election as directors pursuant to and in accordance with the terms and conditions of this Agreement.  Nothing herein shall affect the rights of the Company or any stockholder or director of the Company to nominate for election to the Board of Directors individuals in addition to those designated by Two Harbors (provided, however, that the Board of Directors shall not nominate more individuals for election

 

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as directors than there are director positions to be filled), to solicit votes or proxies for or on behalf of such individuals or to otherwise take such action in connection with the nomination or election of directors as in the opinion of the Company or such stockholder or director may be in the best interests of the Company.  Nothing herein shall obligate the Company or the Board of Directors to nominate or cause to be nominated for election to the Board of Directors any designee of Two Harbors, or to take any other action, if the Board of Directors (or nominating committee) determines in good faith that so doing would constitute a breach of its duties under applicable law.

 

3.                                      Mechanics of Designation.  The Company shall give Two Harbors at least 20 days prior written notice of the date of the proposed mailing of proxy materials for the 2013 Annual Meeting and any other meeting of stockholders prior to the 2014 Annual Meeting at which there will be (or there is anticipated to be) the election of directors of the Company.  Promptly upon (and in any event within 10 days after) receipt of such notice from the Company, or upon the occurrence of any other event that gives rise to the exercise by Two Harbors of its rights hereunder to designate an individual for nomination for election to the Board, Two Harbors shall give written notice (a “Designation Notice”) to the Company of the name of each individual which Two Harbors designates under this Agreement to then be nominated for election or reelection to the Board of Directors, together with the following:  (i) all information relating to each such individual that is required to be provided under the Bylaws of the Company in respect of any individual who a stockholder proposes to nominate for election, including all information relating to such individual that is required to be disclosed in the solicitation of proxies for election of directors or is otherwise required pursuant to Regulation 14A under the Exchange Act, (ii) such individual’s or individuals’ written consent to serving as a director if elected, and if applicable, being named in the proxy statement for the 2013 Annual Meeting as a nominee, (iii) a certificate from each such individual as to the completeness and accuracy of such information so provided about him or her, and (iv) a fully executed Resignation Letter as described below.  In addition, Two Harbors will certify to the Company in such Designation Notice that each of the individual designees named therein qualifies as an Independent Director and shall provide all information relevant to the determination of such designees’ qualification as an Independent Director, provided, however that, subject to the provisions of Article III, Section 2 below, the ultimate determination as to the qualification of each such designee as an Independent Director shall nevertheless be made in good faith by the Board of Directors.  If the Designation Notice is not provided to the Company in proper form or on a timely basis as provided above, Two Harbors shall be deemed to have re-designated its existing designee(s) then serving on the Board of Directors except for any such designee who for any reason is unavailable to serve or has been determined for any reason to no longer qualify as an Independent Director, in respect of which such right hereunder will be deemed to have been waived if a qualifying replacement is not promptly named.  At the request of the Board of Directors, any individual so nominated for election or reelection as a director shall furnish to the Secretary of the Company that information required to be set forth in the Designation Notice.

 

4.                                      Certain Requirements.  Through the Termination Effective Date, (a) Two Harbors agrees to vote, and will cause its Affiliates to vote, all shares of Common Stock as to which it or they have voting rights, and to use its best efforts to cause all directors who are designees of Two Harbors designated or elected pursuant to the terms of this Agreement to vote, for the election of a slate of directors which shall (i) include the nominee(s) designated by Two Harbors pursuant to

 

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this Agreement and (ii) consist of a majority of Independent Directors (the “Approved Slate”), and (b) the Company will cause its Affiliates to vote all shares of Common Stock as to which they have voting rights, and to use its best efforts to cause all of its directors other than its directors who are designated by Two Harbors to vote, for the election of the Approved Slate.  Two Harbors acknowledges that the directors of the Company (including the Two Harbors designees), if and when elected by the stockholders of the Company, will be elected by the affirmative vote of the holders of the issued and outstanding shares of stock of the Company entitled to vote at elections of directors, and that any designee who is nominated for election to the Board of Directors may fail to be elected by the stockholders of the Company.

 

5.                                      Actions By Two Harbors.  The parties acknowledge and consent that all decisions or actions permitted or required to be taken by Two Harbors under this Agreement shall be taken by Two Harbors at the direction of a majority of Two Harbors’ independent directors.  The Company shall, however, be entitled to assume, without inquiry, that all communications or notices given, and decisions made or actions taken, hereunder by or on behalf of Two Harbors shall have been given, made or taken at the direction of a majority of Two Harbors’ independent directors.

 

Article III

 

TERM OF DESIGNEES IN OFFICE

 

1.                                      Statement of Intent.  The Company and Two Harbors acknowledge that the purpose and intent of this Agreement is to allow for and provide a means whereby two (2) individuals designated for nomination by Two Harbors and qualifying as Independent Directors may if elected serve on the Board of Directors of the Company during the period commencing with the IPO Date and terminating at the Termination Effective Time.

 

2.                                      Initial Designees.  The Company agrees to cause the Initial Designees, to be elected by the Board of Directors effective as of the IPO Date, initially to serve on the Board of Directors until the 2013 Annual Meeting and until their respective successors are duly elected and shall qualify; it being acknowledged however that such designees will be designees of Two Harbors pursuant hereto, and that the term of office of any such director (or any director subsequently designated by Two Harbors pursuant hereto) may terminate upon the earlier death, resignation or removal of such individual.  Two Harbors represents to the Company, and based upon the information provided by Two Harbors to the Company with regard to each such individual named in the Registration Statement, the Company concurs, that each such individual qualifies as an Independent Director.

 

3.                                      Loss of Independent Status; Death, Incapacity, Resignation.  In the event that any Two Harbors designee serving on, or nominated for election to, the Board of Directors pursuant hereto shall (i) be determined in good faith by the Board of Directors for any reason not to be or to cease to continue to be an Independent Director (in which event Two Harbors agrees to cause the immediate written resignation of such individual from the Board of Directors (or withdrawal of such individual’s name as a nominee for election or reelection, as the case may be)), or (ii) die, become incapacitated or resign, Two Harbors shall be free to exercise its rights hereunder in respect of the designation pursuant hereto of another individual, who qualifies as an Independent

 

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Director, for nomination for election to the Board of Directors instead of the resigning individual, for the remainder of his or her term of office (provided that Two Harbors and such substitute designee shall have complied with the terms of this Agreement in respect of his or her designation and election).  Such written resignation or withdrawal shall be in form and substance reasonably acceptable to the Company under the circumstances.

 

4.                                      Termination Effective Time / Resignation.  In order to further the intention of the parties and to provide for the termination as of the Termination Effective Time of the term of office of each of the designees of Two Harbors then serving on the Board of Directors, Two Harbors agrees as follows:

 

(a)                                 As a condition to designating each individual for nomination for election to the Board of Directors as its designee pursuant hereto (whether elected by the stockholders or the Board of Directors at any time), Two Harbors will cause each such individual to deliver to the Board of Directors and Secretary of the Company an Irrevocable Advance Letter of Resignation, in substantially the form attached hereto as Exhibit A (a “Resignation Letter”), providing for, among things, the irrevocable resignation of such individual from the Board of Directors (if then still serving on the Board of Directors) as of the Termination Effective Time.

 

(b)                                 Two Harbors will cause each individual designated by Two Harbors for nomination and who is serving on the Board of Directors to resign from the Board of Directors on or as of the Termination Effective Time, and will cause each such individual to confirm (and to reconfirm from time to time as reasonably requested by the Company), promptly and in any event within ten (10) days after request from the Company, his or her intention and irrevocable agreement to resign from the Board of Directors effective as of the Termination Effective Time.

 

Article IV

 

MISCELLANEOUS

 

1.                                      Remedies.  In addition to being entitled to exercise all rights provided herein and granted by law, including recovery of damages, each of the Company and Two Harbors shall be entitled to specific performance of the respective rights and obligations of the other party under this Agreement.  Each agrees that monetary damages would not be adequate for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

2.                                      Amendments and Waivers.  The provisions of this Agreement, including the provisions of this sentence, may not be amended or modified unless in writing, executed by the parties to this Agreement, and waivers or consents to departures from the provisions hereof may not be given unless in a writing executed on behalf of the party to be charged therewith.  No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon any breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

 

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3.                                      Notices.  All notices and other communications in connection with this Agreement shall be made in writing by hand-delivery, registered first-class mail, telecopier, or air courier guaranteeing overnight delivery:

 

(a)                                 if to Two Harbors, at:

 

Two Harbors Investment Corp.
 601 Carlson Parkway Suite 1400
 Minnetonka, Minnesota 55305
 Attention:  General Counsel

 

and

 

(b)                                 if to the Company, at:

 

Silver Bay Realty Trust Corp.
 601 Carlson Parkway Suite 250
 Minnetonka, Minnesota 55305
 Attention:  General Counsel

 

or at such other address as such party shall notify the other of in accordance herewith from time to time.

 

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when received if deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery.

 

4.                                      Successors and Assigns.  This Agreement shall not be assignable by Two Harbors but shall inure to the benefit of any successor by merger of Two Harbors.

 

5.                                      Counterparts.  This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

6.                                      Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of Maryland without regard to the choice of law provisions thereof.

 

7.                                      Severability.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

 

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8.                                      Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

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

 

	
 
    	
SILVER   BAY REALTY TRUST CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David N. Miller
    
	
 
    	
 
    	
Name:   David N. Miller
    
	
 
    	
 
    	
Title:   Chief Executive Officer and President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TWO   HARBORS INVESTMENT CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas Siering
    
	
 
    	
 
    	
Name:   Thomas Siering
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    

 

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EXHIBIT A
  IRREVOCABLE ADVANCE LETTER OF RESIGNATION

 

                              , 201   

 

Silver Bay Realty Trust Corp.
 601 Carlson Parkway Suite 250
 Minnetonka, Minnesota 55305
 Attention :  Board of Directors and Secretary

 

Ladies and Gentlemen:

 

Please be advised that, in connection with my nomination for election (or reelection) to the Board of Directors of Silver Bay Realty Trust Corp., a Maryland corporation (the “Company”), as an individual designee of Two Harbors Investment Corp. pursuant that certain Director Designation Agreement dated as of               2012, and in order to induce the Board of Directors to nominate me for such election (or reelection), I hereby covenant, acknowledge and agree as follows:

 

1.                                            I understand that, if elected to the Board of Directors, my stated term of office will be until the next annual meeting of stockholders of the Company and until my successor is duly elected and qualified; provided, however, that my term of office shall terminate effective upon my earlier death, resignation or removal.

 

2.                                            Notwithstanding such stated term of office, and assuming that I am elected and then serving on the Board of Directors, I do hereby resign from the Board of Directors effective as of the date and time at which the annual meeting of stockholders of the Company held in calendar year 2014 is called to order.

 

5.                                            My resignation from the Board of Directors pursuant to the foregoing is made to induce my election to the Board of Directors and is irrevocable.  Moreover, I do hereby waive acceptance, formally or informally, by the Board of Directors or the Secretary of the Company, or otherwise, of this Irrevocable Advance Letter of Resignation or my resignation provided for hereunder, and such resignation shall be effective as and when provided for hereinabove, notwithstanding any acceptance, or not, of this Irrevocable Advance Letter of Resignation or such resignation.

 

6.                                            This Irrevocable Advance Letter of Resignation, including the provisions of this sentence, may not be amended or modified unless in writing, executed by the individual named below and on behalf of the Company, and waivers or consents to departures from the

 

 

provisions hereof may not be given unless in a writing executed on behalf of the party to be charged therewith.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

2Exhibit 10.8

 

SILVER BAY REALTY TRUST CORP.

 

2012 EQUITY INCENTIVE PLAN

 

RESTRICTED STOCK AGREEMENT

 

Unless otherwise defined herein, the terms defined in the Silver Bay Realty Trust Corp. 2012 Equity Incentive Plan (the “Plan”) will have the same defined meanings in this Restricted Stock Agreement (the “Agreement”).

 

I.                                        NOTICE OF RESTRICTED STOCK GRANT

 

Grantee Name:

 

Address:

 

You have been granted (the “Grant”) Restricted Stock, subject to the terms and conditions of the Plan and this Agreement, as follows:

 

Grant Number:

 

Date of Grant:

 

Vesting Commencement Date:

 

Total Number of Shares Granted:

 

Vesting Schedule:

 

Subject to any acceleration provisions contained in the Plan or set forth below, the Restricted Stock will vest and the Company’s right to reacquire the Restricted Stock which is the subject of the Grant will lapse in accordance with the following schedule; provided that you have not incurred a Termination of Service prior to any such vesting date:

 

[INSERT VESTING SCHEDULE]

 

By Grantee’s signature and the signature of the representative of Silver Bay Realty Trust Corp. (the “Company”) below, Grantee and the Company agree that this Grant is awarded under and governed by the terms and conditions of the Plan and this Agreement, including the Terms and Conditions of Restricted Stock Grant, attached hereto as Exhibit A, all of which are made a part of this document.  Grantee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Plan and Agreement.

 

Grantee further agrees that the Company may deliver by email or other electronic means all documents relating to the Plan or this Agreement (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements).  Grantee also agrees that the Company may deliver these documents by 

 

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posting them on a website maintained by the Company or by a third party under contract with the Company.  If the Company posts these documents on a website, it will notify Grantee by email.  Grantee further agrees to comply with the Company’s Insider Trading Policy when selling Shares.

 

Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions relating to the Plan and Agreement.  Grantee further agrees to notify the Company upon any change in the residence address indicated below.

 

	
GRANTEE:
    	
 
    	
SILVER BAY REALTY TRUST CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature
    	
 
    	
By
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Print   Name
    	
 
    	
Title
    

 

Residence Address:

 

 

 

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EXHIBIT A

 

TERMS AND CONDITIONS OF RESTRICTED STOCK GRANT

 

1.                                      Grant of Restricted Stock.  By the Grant, the Company hereby grants to the individual named in the Notice of Restricted Stock Grant designated as Part I (the “Notice of Grant”) of this Agreement (the “Grantee”) under the Plan for past services and as a separate incentive in connection with his or her services and not in lieu of any salary or other compensation for his or her services, Restricted Stock, subject to all of the terms and conditions in this Agreement and the Plan, which is incorporated herein by reference.  Subject to Section 19 of the Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan will prevail.

 

2.                                      Escrow of Shares.

 

(a)                                 All Restricted Stock which is the subject of the Grant will, upon execution of this Agreement, be delivered and deposited with an escrow holder designated by the Company (the “Escrow Holder”).  The Restricted Stock which is the subject of the Grant will be held by the Escrow Holder until such time as such Restricted Stock vests or the date Grantee incurs a Termination of Service.

 

(b)                                 The Escrow Holder will not be liable for any act it may do or omit to do with respect to holding the Restricted Stock in escrow while acting in good faith and in the exercise of its judgment.

 

(c)                                  Upon Grantee’s Termination of Service for any reason, the Escrow Holder, upon receipt of written notice of such Termination of Service, will take all steps necessary to accomplish the transfer to the Company of the unvested Restricted Stock which is the subject of the Grant.  Grantee hereby appoints the Escrow Holder with full power of substitution, as Grantee’s true and lawful attorney-in-fact with irrevocable power and authority in the name and on behalf of Grantee to take any action and execute all documents and instruments, including, without limitation, stock powers which may be necessary to transfer the certificate or certificates evidencing such unvested Restricted Stock to the Company upon such Termination of Service.

 

(d)                                 The Escrow Holder will take all steps necessary to accomplish the transfer of such Restricted Stock to Grantee after vesting, following Grantee’s request that the Escrow Holder do so.

 

(e)                                  Subject to the terms hereof, Grantee will have all the rights of a stockholder with respect to the Shares represented by the Restricted Stock which is the subject of the Grant while they are held in escrow, including without limitation, the right to vote such Shares and the right to receive dividends; provided, however, the Grantee agrees that cash dividends declared thereon while the Restricted Stock which is the subject of the Grant remains held in escrow (except with respect to such Restricted Stock held in escrow with respect to which the Grantee has made an election to be taxed immediately under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”)) shall constitute compensation (and not a

 

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dividend), subject to applicable tax withholding, solely for tax purposes and for purposes of the Amended and Restated Limited Partnership Agreement of Silver Bay Operating Partnership L.P., a Delaware limited partnership, dated as of December 19, 2012.

 

(f)            If, by virtue of any dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares, the Shares represented by the unvested Restricted Stock which are the subject of the Grant are increased or decreased or otherwise changed or modified, or exchanged or converted, then such new or additional or changed or modified Shares or shares, securities or other property (including cash) received by the Grantee with respect to such unvested Restricted Stock will thereupon be held in the same manner as is held the unvested Restricted Stock pursuant to this Agreement, subject to all of the terms, conditions and restrictions (including without limitation the terms of this Agreement providing for the lapse of such restrictions, and forfeiture, and the provisions of Paragraph 2(a) through (e) above and Paragraph 2(g) below) which were applicable to the unvested Restricted Stock pursuant to this Agreement.  Similarly, if Grantee receives rights or warrants with respect to any unvested Restricted Stock which is the subject of the Grant, such rights or warrants may be held or exercised by Grantee, provided that until such exercise any such rights or warrants and after such exercise any Shares or shares or other securities acquired by or upon the exercise of such rights or warrants will be considered to be or treated on the same terms as Shares of unvested Restricted Stock, and will be held in the same manner as is held the unvested Restricted Stock pursuant to this Agreement, subject to all of the terms, conditions and restrictions (including without limitation the terms of this Agreement providing for the lapse of such restrictions, and forfeiture, and the provisions of Paragraph 2(a) through (e) above and Paragraph 2(g) below) which were applicable to the unvested Restricted Stock pursuant to this Agreement.  The Committee in its absolute discretion at any time may accelerate the vesting of all or any portion of such new or additional Shares or shares, securities, property (including cash), rights or warrants, or Shares or shares or other securities acquired by or upon the exercise of such rights or warrants.

 

(g)                                  The Company may instruct the transfer agent for its Common Stock to place a legend on the certificates representing the Restricted Stock or otherwise note its records as to the restrictions on transfer set forth in this Agreement.

 

3.                                      Vesting Schedule.  Except as provided in Section 4, and subject to Section 5, the Restricted Stock which is the subject of the Grant will vest in accordance with the vesting provisions set forth in the Notice of Grant.  The Restricted Stock scheduled to vest on a certain date or upon the occurrence of a certain condition will not vest in Grantee in accordance with any of the provisions of this Agreement, unless Grantee continuously provides services to the Company (i.e., does not incur a Termination of Service) from the Date of Grant (as set forth in the Notice of Grant) until the date such vesting occurs.

 

4.                                      Committee Discretion.  The Committee, in its discretion, may accelerate the vesting of the balance, or some lesser portion of the balance, of the unvested Restricted Stock at any time, subject to the terms of the Plan.  If so accelerated, such Restricted Stock will be considered as having vested as of the date specified by the Committee.

 

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5.                                      Forfeiture upon Termination of Service; Leaves of Absence and Part-Time Work.

 

(a)                                 Notwithstanding any contrary provision of this Agreement, the balance of the Restricted Stock which is the subject of the Grant that remains unvested at the time of Grantee’s Termination of Service for any reason will be forfeited and automatically transferred to and reacquired by the Company at no cost to the Company upon the date of such Termination of Service and Grantee will have no further rights thereunder.  Grantee will not be entitled to a refund of the price paid for such Restricted Stock, if any, returned to the Company pursuant to this Section 5.  Grantee hereby appoints the Escrow Agent with full power of substitution, as Grantee’s true and lawful attorney-in-fact with irrevocable power and authority in the name and on behalf of Grantee to take any action and execute all documents and instruments, including, without limitation, stock powers which may be necessary to transfer the certificate or certificates evidencing such unvested Shares to the Company upon such Termination of Service.

 

(b)                                 For purposes of this Grant, Grantee will not have a Termination of Service when Grantee goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of service is required by the terms of the leave or by applicable law.  But Grantee will have a Termination of Service when the approved leave ends, unless Grantee immediately returns to active work.

 

(c)                                  Vesting of Grantee’s Restricted Stock which is the subject of the Grant will be suspended during any unpaid leave of absence.  If Grantee goes on a paid leave of absence, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave.  If Grantee commences working on a part-time basis, then the vesting schedule specified in the Notice of Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between Grantee and the Company pertaining to your part-time schedule

 

6.                                      Death of Grantee.  Any distribution or delivery to be made to Grantee under this Agreement will, if Grantee is then deceased, be made to Grantee’s designated beneficiary, or if no beneficiary survives Grantee, the Committee or executor of Grantee’s estate.  Any such transferee must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

 

7.                                      Withholding of Taxes.  Notwithstanding any contrary provision of this Agreement, no certificate representing the Shares represented by the Restricted Stock which is the subject of the Grant may be released from the escrow established pursuant to Section 2, unless and until satisfactory arrangements (as determined by the Committee) will have been made by Grantee with respect to the payment of income, employment and other taxes which the Company determines must be withheld with respect to such Shares.  The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit Grantee to satisfy such tax withholding obligation, in whole or in part (without limitation) by (a) paying cash, (b) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the minimum amount required to be withheld, (c) delivering to the Company already vested and owned Shares having a Fair Market Value equal to the amount required to be withheld, or (d) selling a sufficient number of such Shares otherwise deliverable to 

 

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Grantee through such means as the Company may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld.  To the extent determined appropriate by the Company in its discretion, it will have the right (but not the obligation) to satisfy any tax withholding obligations by reducing the number of Shares otherwise deliverable to Grantee.  If Grantee fails to make satisfactory arrangements for the payment of any required tax withholding obligations hereunder at the time any applicable Shares otherwise are scheduled to vest pursuant to Sections 3 or 4, Grantee will permanently forfeit such Shares and the Shares will be returned to the Company at no cost to the Company.

 

8.                                      Rights as Stockholder.  Neither Grantee nor any person claiming under or through Grantee will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares will have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to Grantee or the Escrow Agent.  Except as provided in Section 2, after such issuance, recordation and delivery, Grantee will have all the rights of a stockholder of the Company with respect to voting such Shares and payment of dividends or distributions on such Shares.

 

9.                                      No Guarantee of Continued Service.  GRANTEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE SHARES OF RESTRICTED STOCK PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING TO PROVIDE SERVICES (I.E., NOT INCURRING A TERMINATION OF SERVICE) AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING GRANTEE) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS RESTRICTED STOCK OR ACQUIRING SHARES HEREUNDER.  GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR OTHER SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH GRANTEE’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING GRANTEE) TO TERMINATE GRANTEE’S RELATIONSHIP AS AN EMPLOYEE OR OTHER SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

10.                               Address for Notices.  Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company, in care of its Stock Plan Administrator at Silver Bay Realty Trust Corp, 601 Carlson Parkway, Suite 250, Minnetonka, Minnesota 55305, or at such other address as the Company may hereafter designate in writing.

 

11.                               Grant is Not Transferable.  Except to the limited extent provided in Section 6, the unvested Shares subject to this Grant and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process.  Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any unvested Shares represented by the Restricted Stock subject to this Grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this Grant and the rights and privileges conferred hereby immediately will become null and void.

 

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12.                               Binding Agreement.  Subject to the limitation on the transferability of this Grant (and the Restricted Stock subject thereof) contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

 

13.                               Additional Conditions to Release from Escrow.  The Company will not be required to issue any certificate or certificates for Shares hereunder or release such Shares from the escrow established pursuant to Section 2 prior to fulfillment of all the following conditions: (a) the admission of such Shares to listing on all stock exchanges on which such class of stock is then listed; (b) the completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee will, in its absolute discretion, deem necessary or advisable; (c) the obtaining of any approval or other clearance from any state or federal governmental agency, which the Committee will, in its absolute discretion, determine to be necessary or advisable; and (d) the lapse of such reasonable period of time following the date of grant of the Restricted Stock as the Committee may establish from time to time for reasons of administrative convenience.

 

14.                               Plan Governs.  This Agreement is subject to all terms and provisions of the Plan.  In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan will govern.  Capitalized terms used and not defined in this Agreement will have the meaning set forth in the Plan.

 

15.                               Committee Authority.  The Committee will have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not Grantee becomes vested with respect to any Shares represented by the Restricted Stock which is the subject of the Grant).  All actions taken and all interpretations and determinations made by the Committee in good faith will be final and binding upon Grantee, the Company and all other interested persons.  No member of the Committee will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement.

 

16.                               Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock awarded under the Plan or future Restricted Stock that may be awarded under the Plan by electronic means or request Grantee’s consent to participate in the Plan by electronic means.  Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

17.                               Captions.  Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

18.                               Agreement Severable.  In the event that any provision in this Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or 

 

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unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.

 

19.                               Modifications to the Agreement.  This Agreement constitutes the entire understanding of the parties on the subjects covered.  Grantee expressly warrants that he or she is not accepting this Agreement in reliance on any promises, representations, or inducements other than those contained herein.  Modifications to this Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company.  Notwithstanding anything to the contrary in the Plan or this Agreement, the Company reserves the right to revise this Agreement as it deems necessary or advisable, in its sole discretion and without the consent of Grantee, to comply with Section 409A of the Code or to otherwise avoid imposition of any additional tax or income recognition under Section 409A of the Code in connection with this award of Shares of Restricted Stock.

 

20.                               Amendment, Suspension or Termination of the Plan.  By accepting this Grant, Grantee expressly warrants that he or she has received an award of Restricted Stock under the Plan, and has received, read and understood a description of the Plan.  Grantee understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.

 

21.                               Governing Law.  This Agreement will be governed by the laws of the State of Maryland, without giving effect to the conflict of law principles thereof.

 

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