Document:

ex10-1masteragreement2015.htm

  

  

  

Exhibit 10.1

 

HOME PROPERTIES, INC.

2011 STOCK BENEFIT PLAN

2015 RESTRICTED STOCK UNIT

MASTER AGREEMENT

 

This 2015 Restricted Stock Unit Master Agreement (the “Master Agreement”) relating to a grant (the “Award”) of Restricted Stock Units (as defined in the Home Properties, Inc. 2011 Stock Benefit Plan (the “Plan”)), dated as of the Effective Date set forth in the Award Certificate (the “Award Certificate”), is made by and between Home Properties, Inc. (together with its Subsidiaries, the “Company”) and each Participant.  The Award Certificate is included with and made part of the Master Agreement.  In the Master Agreement and each Award Certificate, unless the context otherwise requires, words and expressions shall have the meanings given to them in the Plan, except as herein defined.

 

Section 1. Definitions.  For purposes of the Award, the following terms shall have the following meanings specified below.  Capitalized terms not otherwise defined shall have the meanings set forth in the Plan:

 

(a) “Award Certificate” means the certificate given to each Participant specifying the Effective Date, Performance Period, Service-Vested Component Number of RSUs, Performance-Vested Component Number of RSUs at Target, and the Performance Component Range of RSUs for that Participant’s Award.

 

(b) “Base Salary” means, with regard to any Participant, such Participant’s annual base compensation as an employee of the Company determined immediately prior to the beginning of the Performance Period, without regard to any bonus, pension, profit sharing, equity or other compensation which the Participant either receives or is otherwise entitled to have paid on his or her behalf.

 

(c) “Board” means the Board of Directors of Home Properties, Inc.

 

(d) “Cause” means with regard to any Participant, that the Participant’s employment by or other relationship with the Company has been terminated by written notice because: (i) of his or her conviction of a felony for a crime involving an act of fraud or dishonesty; (ii) of intentional acts or omissions on such Participant’s part causing material injury to the property or business of the Company; or (iii) the Participant shall have breached any material term of any employment agreement in place between the Participant and the Company and shall have failed to correct such breach within any grace period provided for in such agreement or a Participant shall have breached any material condition of employment and shall have failed to correct that breach within a reasonable period of time.  “Cause” for termination shall not include bad judgment or any act or omission reasonably believed by the Participant, in good faith, to have been in, or not opposed to, the best interests of the Company.

  

  

  

 

(e) “Disability” means the Participant’s inability to perform his or her normal required services for the Company for a period of six consecutive months by reason of the individual’s mental or physical disability, as determined by the Committee in good faith in its sole discretion.

 

(f) “Effective Date” means the Effective Date set forth in the Award Certificate.

 

(g) “Final Performance-Vested Number” means, with respect to any Participant, the earned portion of the Performance-Vested Component, expressed as a number of RSUs, as determined in accordance with the methodology set forth in Schedule A at the end of the Performance Period.

 

(h) “Home Properties TSR” means the compound annual growth rate, expressed as a percentage in the value of a share of Common Stock due to stock appreciation and dividends, assuming dividends are reinvested in accordance with the Home Properties’ Dividend Reinvestment Plan, during the Performance Period.  For this purpose, the “Beginning Stock Price” means the average closing sales prices of the Company’s Common Stock on the NYSE for the trading days in the month of December immediately preceding the beginning of the Performance Period; and, the “Ending Stock Price” means the average closing sales prices of the Company’s Common Stock on the NYSE for the trading days in the month immediately preceding and including the last day of a Performance Period (or such other period as the Committee may determine).  Where “Y” is the number of fractional shares of Common Stock resulting from the deemed reinvestment of dividends paid during the Performance Period, the Home Properties TSR is calculated as follows:

	
(

	
Ending Stock Price x (1 + Y)

Beginning Stock Price

	
)1/3

	
-1

 

(i) “Maximum Number” means the Maximum Number of RSUs pursuant to the applicable Performance Component Range of RSUs set forth in the applicable Award Certificate.

 

(j) “NAREIT Apartment Index TSR” means the compound annual growth rate in the value of the NAREIT Apartment Index during the Performance Period.  The NAREIT Apartment Index TSR is obtained from information publicly reported by the National Association of Real Estate Investment Trusts.

 

(k) “NAREIT All Equity REIT Index TSR” means the compound annual growth rate in the value of the NAREIT All Equity REIT Index during the Performance Period.  The NAREIT All Equity REIT Index TSR is obtained from information publicly reported by the National Association of Real Estate Investment Trusts.

 

(l) “Participant” means an Executive Officer of the Company to whom an Award of Restricted Stock Units has been granted under the Plan.

  

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(m) “Performance Component Range” means, with regard to any Participant, the Threshold Number, Target Number and Maximum Number of Common Shares transferable under the Performance-Vested Component of an Award, each as set forth in a Participant’s Award Certificate.

 

(n) “Performance Goals” means the performance goal for each Performance Requirement, as set forth on Schedule A hereto.

 

(o) “Performance Period” means the three-year period specified in the Award Certificate.

 

(p) “Performance Requirements” means the performance requirements set forth on the Schedule A hereto.

 

(q) “Performance-Vested Component” means the number of RSUs subject to the attainment of the Performance Requirements pursuant to Section 2(c).

 

(r) “Relative NAREIT Apartment Index TSR” means the comparison of the Home Properties TSR to the NAREIT Apartment Index TSR.

 

(s) “Relative NAREIT All Equity REIT Index TSR” means the comparison of the Home Properties TSR to the NAREIT All Equity REIT Index TSR.

 

(t) “Retirement” means the Participant’s Termination of Employment with the Company, other than for Cause, following the date on which the sum of the following equals or exceeds 70 years: (i) the number of years of the Participant’s employment and other business relationships with the Company and any predecessor company, and (ii) the Participant’s age on the date of termination, provided that the Participant is at least 58 years old.

 

(u) “RSU” means a Restricted Stock Unit.

 

(v) “Service-Vested Component” means the number of RSUs subject to the attainment of Service Goals pursuant to Section 2(b).

 

(w) “Target Number” means the Target Number of RSUs pursuant to the applicable Performance Component Range of RSUs set forth in the applicable Award Certificate.

 

(x) “Termination of Employment” means a “separation from service” of a Participant from the Company, as defined under Section 409A.

 

(y) “Threshold Number” means the Threshold Number of RSUs pursuant to the applicable Performance Component Range of RSUs set forth in the applicable Award Certificate.

 

(z) “Vesting Date” means the Service Vesting Date, as defined in Section 2(b), with respect to the Service-Vested Component, or the Performance Vesting Dates, as defined in Section 2(c), with respect to the Performance-Vested Component, as applicable.

 

 

  

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Section 2. Grant of RSUs.

 

(a) Award of Restricted Stock Units.  The Company grants to the Participant named in the Award Certificate an Award of the Service-Vested Component number of RSUs and the opportunity to earn the Performance-Vested Component Range of RSUs, as specified in the Award Certificate.

 

(b) Service-Vested Component.

 

(i) Vesting.  Subject to Section 3, one-third of the Service-Vested Component number of RSUs shall vest on each of the first, second and third anniversaries of the Effective Date (each, a “Service Vesting Date”), provided that the Participant remains in the continuous employment with the Company through each Service Vesting Date.

 

(ii) Payment.  The applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant as soon as administratively practicable following each Service Vesting Date, but in no event later than the later of (A) the end of the calendar year in which the Service Vesting Date occurs; or (B) the 15th day of the third month following the Service Vesting Date; provided, however, that the Participant is not permitted, directly or indirectly, to designate the year of payment.

 

(c) Performance-Vested Component.

 

(i) Vesting.  Subject to Section 3, the Final Performance-Vested Number of RSUs shall be reviewed and approved by the Committee in accordance with the methodology set forth in Schedule A, with the date of such approval being referred to herein as the “Determination Date.”  The Final Performance-Vested Number of RSUs shall be earned as of  the last day of the Performance Period and shall vest on the Determination Date  or the one-year anniversary of the Determination Date, as set forth below (the “Second Performance Vesting Date”); (collectively, the “Performance Vesting Dates”).

 

(ii) Payment.  The Final Performance-Vested Number of RSUs shall be transferred to a Participant as follows:

 

(A) Subject to Section 3, fifty percent of the shares of Common Stock underlying the Final Performance-Vested Number of RSUs shall be registered in the Participant’s name as soon as administratively practicable following the  Determination Date, but in no event earlier than January 1 or later than December 31 of the year following the year in which the Performance Period ends; and

 

(B) Subject to Section 3, , the remaining fifty percent of the shares of Common Stock underlying the Final Performance-Vested Number of RSUs shall be registered in the Participant’s name as soon as administratively practicable following the Second Performance Vesting Date , and shall in all instances be transferred  to the Participant no earlier than January 1 or later than December 31 of the second year following the year in which the Performance Period ends.

 

  

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(C) In the event a Participant is vested in a fractional portion of RSUs, such portion shall be rounded down to the nearest whole number.

 

Section 3. Effects of Certain Events.

 

(a) General.  Subject to Sections 3(b) through 3(g), in the event that a Participant’s employment with the Company is terminated prior to the applicable Vesting Date, all unvested RSUs subject to the Award are automatically forfeited.

 

(b) Death.  In the event of a Participant’s Death prior to the applicable Vesting Date, such Participant shall:

 

(i)   for Service-Vested RSUs, immediately vest in all the Participant’s outstanding  Service-Vested RSUs; and

(ii)  for Performance-Vested RSUs:

 

(A)  if prior to the end of the applicable Performance Period, immediately vest in the greater of (1) the Target Number of Participant’s Performance-Vested RSUs, or (2) a pro-rata number of the Performance-Vested RSUs based on the performance from the commencement of the Performance Period through the date of Termination of Employment; and

 

(B)  if after the end of the applicable Performance Period, immediately vest in the Final Performance-Vested Number of RSUs reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

The applicable shares of Common Stock underlying the vested RSUs shall be transferred to the executor or personal representative of the Participant’s estate by the end of the calendar year in which the Participant died, or, if later, the 15th day of the third month following the date of the Participant’s death.

 

(c) Disability.  In the event of a Participant’s Termination of Employment due to Disability prior to the applicable Vesting Date, such Participant shall:

 

(i)   for Service-Vested RSUs, immediately vest in all of the Participant’s outstanding Service-Vested RSUs; and

(ii)  for Performance-Vested RSUs:

 

(A)  if prior to the end of the applicable Performance Period, immediately vest in the greater of (1) the Target Number of Participant’s Performance-Vested RSUs, or (2) a pro-rata number of the Performance-Vested RSUs based on the performance from the commencement of the Performance Period through the date of Termination of Employment; and

  

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(B)  if after the end of the applicable Performance Period, immediately vest in the Final Performance-Vested Number of RSUs reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

The applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant as soon as practicable following the Participant’s Termination of Employment due to Disability, but in no event later than 90 days thereafter.

 

(d) Retirement.  In the event of a Participant’s Retirement prior to the applicable Vesting Date:

 

(i)   for Service-Vested RSUs, immediately vest in all the Participant’s outstanding Service-Vested RSUs; and

(ii)  for Performance-Vested RSUs:

 

(A)  if prior to the end of the applicable Performance Period, such Participant shall, upon completion of Performance Period, earn the Final Performance Number of RSUs multiplied by a fraction, the numerator of which is the number of days elapsed from the first day of the Performance Period through the date which is the six (6) month anniversary of the date of Retirement (so long as the total number of days in the numerator does not exceed the total number of days in the Performance Period) and the denominator of which is the total number of days in the Performance Period(1); and

 

(B)  if after the end of the applicable Performance Period, immediately vest in the Final Performance-Vested Number of RSUs   reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

The entire number of the applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant as soon as practicable following the applicable Vesting Date, but in no event later than 90 days thereafter.

 

(e) Involuntary Termination of Employment without Cause.  Subject to Section 3(g), in the event of a Participant’s involuntary Termination of Employment without Cause prior to the applicable Vesting Date, such Participant shall:

 

(i)   for Service-Vested RSUs, immediately vest in all of the Participant’s outstanding  Service-Vested RSUs; and

(ii)  for Performance-Vested RSUs:

	
(1)  

	
For the 2015 grant to the Company’s Chief Financial Officer, this Section 3(d)(ii)(A) shall read: “if prior to the end of the applicable Performance Period, such Participant shall retain his or her right to vest in Participant’s Performance-Vested RSUs as if the Retirement had not occurred, with the number of RSUs that will vest at the end of the applicable Performance Period to be based on the performance during the entire Performance Period; and”

  

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(A)  if prior to the end of the applicable Performance Period, immediately vest in the greater of (1) the Target Number of Participant’s Performance-Vested RSUs, or (2) a pro-rata number of the Performance-Vested RSUs based on the performance from the commencement of the Performance Period through the date of Termination of Employment; and

 

(B)  if after the end of the applicable Performance Period, immediately vest in the Final Performance-Vested Number of RSUs reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

The applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant within 30 days of the Participant’s Termination of Employment.

 

(f) Involuntary Termination for Cause.  In the event of a Participant’s involuntary Termination of Employment for Cause, all unvested RSUs subject to the Award, as well as any vested RSUs that have not yet been transferred to the Participant, are automatically forfeited as of the date of the Termination of Employment.

 

(g) Certain Terminations Following a Sale Event.  In the event of an involuntary Termination of Employment without Cause  within the 24-month period following the occurrence of a Sale Event or a Change of Control as defined in the Company’s Executive Retention Plan (including any amendments thereto), each Participant shall:

 

(i)   for Service-Vested RSUs, immediately vest in all of Participant’s outstanding Service-Vested RSUs; and

(ii)  for Performance-Vested RSUs:

 

(A)  if prior to the end of the applicable Performance Period, become immediately vest in the greater of (1) the Target Number of Participant’s Performance-Vested RSUs, or (2) a pro-rata number of the Performance-Vested RSUs based on the performance from the commencement of the Performance Period through the date of Termination of Employment; provided, however, the full number of Participant’s Performance Vested RSUs shall be accelerated to the extent that the underlying Performance Requirements have been met at the time of the Termination of Employment; and

 

(B)  if after the end of the applicable Performance Period immediately vest in the Final Performance-Vested Number of RSUs  reduced by the number of shares of Common Stock previously transferred to the Participant pursuant to the Performance-Vested Component of the Award.

 

The applicable shares of Common Stock underlying the vested RSUs shall be transferred to the Participant within 30 days of the Participant’s Termination of Employment.

 

 

 

  

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(h) Fractional Shares.  In determining the number of shares of Common Stock to be paid to a Participant (or his or her executor or personal representative) pursuant to this Section 3, such number shall be rounded down to the nearest whole number.

 

Section 4. Dividend Equivalent Rights.  In accordance with Section 8 of the Plan, each RSU granted under the Award shall have a Dividend Equivalent Right associated with it with respect to cash dividends on Common Stock that have a record date after the Effective Date and prior to the date upon which the RSUs are settled for shares of Common Stock.

 

(a) Such Dividend Equivalent Rights shall be paid by crediting a hypothetical bookkeeping account for the Participant with an amount of cash equal to the amount of cash dividends that would have been paid on the dividend payment date with respect to the number of shares of Common Stock underlying the unsettled RSUs subject to the Award if such shares had been outstanding on the dividend record date.  A Participant’s Dividend Equivalent Rights account shall not be credited with interest or earnings.

 

(b) Any Dividend Equivalent Rights: (i) shall be subject to the same terms and conditions applicable to the RSU to which the Dividend Equivalent Right relates, including, without limitation, the restrictions on transfer and the forfeiture conditions contained in the Master Agreement; (ii) shall vest and become payable upon the same terms and at the same time of settlement as the RSUs to which they relate; and (iii) will be denominated and payable solely in cash.  The payment of Dividend Equivalent Rights will be net of all applicable withholding taxes pursuant to Section 5(h).

 

Section 5. Miscellaneous.

 

(a) Administration.  The Award shall be administered by the Committee.  The Committee shall have authority to interpret the Award, the Award Certificate and the Master Agreement, to prescribe rules and regulations relating to the Award, the Award Certificate and the Master Agreement, to take any other actions it deems necessary or advisable for the administration of the Award, the Award Certificate and the Master Agreement and shall retain all general authority granted to it under Section 2.2 of the Plan.  After the end of the Performance Period, the Committee shall approve, on the Determination Date, the Final Performance-Vested Number of RSUs awarded to a Participant under an Award, which shall be the Performance-Vested Component Number of RSUs.

 

(b) Amendment.  The terms of the Award, the Award Certificate and the Master Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of a Participant under any outstanding Award without the written consent of such Participant.

 

(c) Adjustments.  Upon the occurrence of certain events relating to the Company’s stock contemplated by Section 10.2 of the Plan (including, without limitation, any reorganization, recapitalization, reclassification, Common Stock dividend, Common Stock split, reverse Common Stock split or other similar transaction), the Committee shall make adjustments in the number of RSUs then outstanding and the number and kind of securities that may be issued in respect of the Award.  No such adjustment shall be made with respect to any ordinary cash dividend paid on the Common Stock.  Furthermore, the Committee shall adjust the Performance Requirements referenced in Schedule A to the extent (if any) it determines that the adjustment is necessary or advisable to preserve the intended incentives and benefits to reflect any material change in corporate capitalization, any material corporate transaction (such as a reorganization, combination, separation, merger, acquisition, or any combination of the foregoing), or any complete or partial liquidation of the Company, or any other similar special circumstances.

 

 

 

  

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(d) Participant is Unsecured General Creditor.  The Participant and the Participant’s heirs, successors, and assigns shall have no legal or equitable rights, interest, or claims in any specific property or assets of the Company.  Assets of the Company shall not be held under any trust for the benefit of the Participant or the Participant’s heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of the Company under the Award, the Master Agreement or the Plan.  Any and all of the Company’s assets shall be, and remain, the general unrestricted assets of the Company.  The Company’s sole obligation under the Award shall be merely that of an unfunded and unsecured promise of the Company to pay the Participant in the future, subject to the conditions and provisions of the Award, the Master Agreement and the Plan.

 

(e) No Transferability; No Assignment.  Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the RSUs or the shares of Common Stock and/or amounts, if any, payable under the Award, which are, and all rights to which are expressly declared to be, unassignable and non-transferable.  No part of the RSUs or the shares of Common Stock and/or amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

 

(f) No Right to Continued Employment.  The terms and conditions of the Award, the Award Certificate, the Master Agreement and the Plan shall not be deemed to constitute a contract of employment between the Company and a Participant.  Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, except as otherwise provided in a written employment agreement.  Nothing in the Award, the Award Certificate, the Master Agreement or the Plan shall be deemed to give a Participant the right to be retained in the service of the Company as an employee or to interfere with the right of the Company to discipline or discharge a Participant at any time.

 

(g) Limitation on Shareholder Rights.  A Participant shall have no rights as a shareholder of the Company, no dividend rights and no voting rights with respect to the RSUs and any shares of Common Stock underlying or issuable in respect of such RSUs until such shares of Common Stock are actually issued to and held of record by the Participant.  No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the shares of Common Stock.

 

 

 

  

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(h) Tax Withholding.

 

(i)   Regardless of any action the Company takes with respect to any or all federal, state or local income tax, employment tax or other tax related items (“Tax Related Items”), the Participant acknowledges that the ultimate liability for all Tax Related Items associated with the RSUs is and remains the Participant’s responsibility and that the Company: (A) makes no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant or vesting of the RSUs, the delivery of the shares of Common Stock, the subsequent sale of shares of Common Stock acquired at vesting and the receipt of any Dividend Equivalent Rights; and (B) does not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax Related Items.  Further, if Participant has relocated to a different jurisdiction between the date of grant and the date of any taxable event, Participant acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

(ii)  Prior to the relevant taxable event, the Participant shall pay or make adequate arrangements satisfactory to the Company, in its sole discretion, to satisfy all withholding and payment on account obligations for Tax Related Items of the Company.  In this regard, the Participant authorizes the Company, in its sole discretion, to satisfy the obligations with regard to all Tax Related Items legally payable by the Participant with respect to the Award by withholding the number of  shares of Common Stock with an aggregate Fair Market Value necessary to satisfy the minimum statutory withholding amount.  Participant shall pay to the Company any amount of Tax Related Items that the Company may be required to withhold as a result of the Award that are not satisfied by the previously described method.  The Company may refuse to deliver the shares of Common Stock to the Participant if the Participant fails to comply with Participant’s obligations in connection with the Tax Related Items as described in this Section.

 

(i) Compensation Recovery Policy.  The compensation under the Award shall be subject to being recovered under the Company’s compensation recovery policy, if any, or any similar policy that the Company may adopt from time to time.  For avoidance of doubt, compensation recovery rights to shares of Common Stock issued under the Award shall extend to any proceeds realized by the Participant upon the sale or other transfer of such shares of Common Stock.

 

(j) Section 409A Compliance.  The Award and the shares of Common Stock and amounts payable under the Award are intended to comply with the requirements of Section 409A so as to prevent the inclusion in gross income of any benefits accrued hereunder in a taxable year prior to the taxable year or years in which such amount would otherwise be actually distributed or made available to the Participants.  The Plan shall be administered and interpreted to the extent possible in a manner consistent with that intent.  Notwithstanding the terms of Section 3, to the extent that a distribution to a Participant who is a “Specified Employee” (as defined under Section 409A) at the time of his or her Termination of Employment (other than by reason of death or Disability, but including by reason of Retirement) is required to be delayed by six months pursuant to Section 409A, such distribution shall be made on the first day of the seventh month following the Participant’s Termination of Employment.  The Company shall not be liable to any Participant for any payment made under this Plan that is determined to result in an additional tax, penalty or interest under Section 409A, nor for reporting in good faith any payment made under this Agreement as an amount includible in gross income under Section 409A.

 

 

 

 

  

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(k) Section 280G of the Code.  In the event that the accelerated vesting of the RSUs or the amounts payable under the Award, together with all other payments and the value of any benefit received or to be received by the Participant, would result in all or a portion of such payment being subject to excise tax under Section 4999 of the Code (the “Excise Tax”), then the Participant’s payment shall be either (a) the full payment or (b) such lesser amount that would result in no portion of the payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state, and local employment taxes, income taxes, and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code.  Any such reduction shall be made by the Company in compliance with all applicable legal authority, including Section 409A.  All determinations required to be made under this Section shall be made by the nationally recognized accounting firm which is the Company’s outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax, which firm must be reasonably acceptable to the Participant (the “Accounting Firm”).  The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Participant.  Notice must be given to the Accounting Firm within 15 business days after an event entitling the Participant to a payment under Section 3.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).

 

(l) Governing Law.  The implementation and interpretation of the Award and the Master Agreement shall be governed by and enforced in accordance with the laws of the State of New York without giving effect to the conflicts of law provisions thereof, except for mandatorily applicable provisions of Maryland law.

*           *           *           *           *

 

  

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HOME PROPERTIES, INC.

 

2011 STOCK BENEFIT PLAN

 

2015 RESTRICTED STOCK UNIT MASTER AGREEMENT

 

SCHEDULE A

 

The Committee has determined and specifies that the following shall apply to the Performance-Vested Component:

 

Section 1. Performance Requirements.  The Final Performance-Vested number awarded to the Participant at the end of the Performance Period is determined based on three Performance Requirements: (a) Home Properties TSR, (b) the Relative NAREIT All Equity REIT Index TSR and (c) the Relative NAREIT Apartment Index TSR.

 

Section 2. Weightings.  The respective weightings of the Performance Requirements set forth in Section 1(a) of this Schedule A applicable to the Performance-Vested Component are as follows:

 

	
Performance Requirement

	
Weighting

	
Home Properties TSR

	
25%

	
Relative NAREIT All Equity REIT Index TSR

	
25%

	
Relative NAREIT Apartment Index TSR

	
50%

 

Section 3. Performance Goals.  The Committee determines the applicable Performance Goals for each Performance Requirement, which are as follows:

	
Performance Requirements

	
Performance Goals

	
Threshold

	
Target

	
Maximum

	
Home Properties TSR

	
7%

	
9%

	
11%

	
Relative NAREIT All Equity REIT Index TSR

	
30th Percentile

	
50th Percentile

	
75th Percentile

	
Relative NAREIT Apartment Index TSR

	
30th Percentile

	
50th Percentile

	
75th Percentile

 

Section 4. Actual Performance.  The Committee reviews and approves the actual Home Properties TSR, the Relative NAREIT All Equity REIT Index TSR and the Relative NAREIT Apartment Index TSR for the Performance Period.

 

Section 5. Performance Results.

 

(a) For each Performance Requirement, the number of RSUs that vest based on the achievement of that Performance Requirement’s Performance Goals at Threshold, at Target and at Maximum is the Performance Component Range of RSUs set forth in the Participant’s Award Certificate at Threshold, at Target and at Maximum, respectively, multiplied by that Performance Requirement’s Weighting, rounded down to the nearest whole number.

 

(b) In the event that the Company’s actual performance does not meet the Threshold for a Performance Requirement, no RSUs shall be earned for such Performance Requirement.

 

 

 

  

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(c) If the Company’s actual performance for the Performance Period is between Threshold and Target for the Performance Requirement, the number of earned RSUs for that Performance Requirement shall be determined using straight line interpolation between the Threshold Number and the Target Number from the Participant’s Performance Component Range of RSUs set forth in the Participant’s Award Certificate, rounded down to the nearest whole number.

 

(d) If the Company’s actual performance for the Performance Period is between Target and Maximum for the Performance Requirement, the number of earned RSUs for that Performance Requirement shall be determined using straight line interpolation between the Target Number and the Maximum Number from the Participant’s Performance Component Range of RSUs set forth in the Participant’s Award Certificate, rounded down to the nearest whole number.

 

(e) If the Company’s actual performance for the Performance Period is above Maximum for a Performance Requirement, the number of earned RSUs shall be the Maximum Number from the Participant’s Performance Component Range of RSUs set forth in the Participant’s Award Certificate.

 

Section 6. Performance-Vested Component Number of RSUs.  The total number of the RSUs subject to the Performance-Vested Component shall be the sum of the number of RSUs that vest for each Performance Requirement.

EXAMPLE  (for illustration purposes only)

 

Suppose a Participant received an award and his or her Award Certificate provided for a Performance-Vested Component Number of RSUs at Target of 1,000, and a Performance Component Range of RSUs as follows:

	
Threshold Number

	
Target Number

	
Maximum Number

	
800

	
1,000

	
1,200

The Performance Requirements, Weightings and Performance Goals were as set forth above in this Schedule A.

Suppose the performance results for the Performance Period are as follows:

	
Performance Requirement

	
Performance Result

	
Level Achieved

	
Home Properties TSR

	
9%

	
Target

	
Relative NAREIT All Equity REIT Index TSR

	
Home Properties TSR is at the 75th Percentile

	
Maximum

	
Relative NAREIT Apartment Index TSR

	
Home Properties TSR is at the 30th Percentile

	
Threshold

Home Properties TSR Performance Requirement Number of RSUs would be  250 (1,000 at Target x 25% Weighting).

Relative NAREIT All Equity REIT Index TSR Performance Requirement Number of RSUs would be 300 (1,200 at Maximum x 25% Weighting).

 

 

 

  

ii

  

 

Relative NAREIT Apartment Index TSR Performance Requirement Number of RSUs would be 400 (800 at Threshold x 50% Weighting).

Performance-Vested Component Number of RSUs would be 950 (250 + 300 + 400).

*           *           *           *         *

  

iii

  

 

 

HOME PROPERTIES, INC.

2011 STOCK BENEFIT PLAN

2015 RESTRICTED STOCK UNIT AWARD CERTIFICATE

Home Properties, Inc., a Maryland corporation (together with its Subsidiaries, the “Company”), hereby grants to the Participant as of the Effective Date set forth below, a Restricted Stock Unit Award to receive Restricted Stock Units (“RSUs”) as set forth below (the “Award”).  Each RSU subject to the Award consists of a Restricted Stock Unit issued under the Home Properties, Inc. 2011 Stock Benefit Plan (the “Plan”).

Subject to attainment of the Service Requirements and Performance Requirements set forth in the 2015 Restricted Stock Unit Master Agreement (the “Master Agreement”), each RSU entitles the Participant to receive one share of Common Stock for each vested RSU, as determined pursuant to the terms and conditions set forth in the Master Agreement.

	
Participant:

	
 

	
Effective Date:

	
 

	
Performance Period:

	
January 1, 2015 through December 31, 2017

	
Service-Vested Component Number of RSUs:

 

	
Shares

	
Value

	
Performance-Vested Component Number of RSUs at Target:

	
Shares

	
Value

 

	
Performance Component

	
Threshold Number

 

	
Target Number

	
Maximum Number

	
Range of RSUs:

	
 

	
 

	
 

	
Value $:

	
 

	
 

	
 

The Award is subject to the terms and conditions set forth in this Award Certificate, the Plan and the Master Agreement. All terms and provisions of the Plan and the Master Agreement, as the same may be amended from time to time, are incorporated and made part of this Award Certificate. If any provision of this Award Certificate is in conflict with the terms of the Plan or the Master Agreement, then the terms of the Plan or the Master Agreement, as applicable, shall govern. All capitalized terms used in this Award Certificate and not defined herein shall have the meanings assigned to them in the Plan or the Master Agreement. The Participant hereby expressly acknowledges receipt of a copy of the Plan and the Master Agreement.

THE PARTICIPANT KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES HIS OR HER RIGHT TO A TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW IN ANY ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE AWARD AND THE TRANSACTIONS IT CONTEMPLATES. THIS WAIVER APPLIES TO ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTICIPANT ACKNOWLEDGES THAT HE OR SHE HAS RECEIVED THE ADVICE OF COMPETENT COUNSEL, OR THE OPPORTUNITY TO DO SO.

Signature: ________________________________

Print Name:______________________________

  

ivExhibit 10.1 Q115

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”), by and among ROCKTENN-SOUTHERN CONTAINER, LLC, a Delaware limited liability company (“RTSC”) (successor-in-interest to Southern Container Corp., a Delaware corporation), ROCK-TENN SERVICES INC., a Georgia corporation (“Employer”), and JAMES B. PORTER III (“Executive”), is entered into as of December 22, 2014, to be effective as of January 1, 2015.
RECITALS
A.    Executive has rendered services to RTSC pursuant to the terms of that certain Employment Agreement dated as of January 1, 2006 (the “Employment Agreement”) and that certain First Amendment to the Employment Agreement dated January 8, 2007 (the “First Amendment”); 
B.    RTSC and Executive desire to terminate each of the Employment Agreement and the First Amendment as provided herein; and 
C.    Employer and Executive desire to enter into this Agreement as provided herein which shall supersede in its entirety the Employment Agreement and the First Amendment.
ACCORDINGLY, intending to be legally bound, the parties hereto agree as follows:
		
	1.
	Termination of Employment Agreement and First Amendment. The Employment Agreement and the First Amendment shall terminate and be of no further force and effect after December 31, 2014.

		
	2.
	Term.  Employer will employ, and Executive agrees to perform his current executive role, with the salary and other employee and executive benefits determined by the Compensation Committee of the Board of Directors of Rock-Tenn Company (“RockTenn”) for the period from January 1, 2015 through December 31, 2015, unless Employer terminates Executive’s employment for Cause (as hereinafter defined) which termination will be effective immediately upon written notice to Executive.  After December 31, 2015, Employer may terminate Executive’s employment for any reason at any time by providing Executive with written notice at least ninety (90) days before the date on which such termination is to be effective; provided, however, Employer may terminate Executive’s employment immediately for Cause upon written notice to Executive.  Executive may resign at any time after December 31, 2015 by providing Employer with written notice at least thirty (30) days before the date on which such resignation is to be effective.  Upon termination of Executive’s employment other than for Cause, Executive shall be entitled to (i) continue to receive compensation and benefits (as in effect on the date notice of termination is provided to Executive) through the effective date of such termination and (ii) to the applicable benefits set forth in Sections 3 or 4 of this Agreement.

		
	3.
	Termination by Employer other than for Cause.  If Employer terminates Executive’s employment after December 31, 2015 for grounds other than for Cause:

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	(a)
	Stock Options.  Executive’s outstanding unvested stock options, if any, shall, as of the date of such termination of employment, become immediately vested in full and shall become immediately exercisable and shall remain exercisable until the earlier of ninety (90) days following the date of termination of Executive’s employment or the latest date on which such option could be exercised under its terms had Executive’s employment not been terminated.

		
	(b)
	LTI Awards.  Provided that any applicable performance goals under any outstanding unvested long-term incentive awards other than stock options (the “LTI Awards”) are satisfied in accordance with the terms of each such award, (i) Executive shall be fully vested in any LTI Award granted in any calendar year prior to the calendar year in which Executive’s employment is terminated; and (ii) Executive shall be vested in a pro-rated portion of any LTI Award granted in the calendar year in which Executive’s employment is terminated.  The amount of any pro-rated LTI Award shall be determined by multiplying (x) the payment that would have been made under the award had Executive’s employment been continued through the entire vesting period under the award by (y) a fraction, the numerator of which is the number of whole months elapsed in the calendar year prior to the termination of Executive’s employment, and the denominator of which is twelve (12).  Any payment in respect of an LTI Award shall be made at time payment would have been made had Executive’s employment not terminated.

		
	(c)
	Severance and Bonus for Terminations after December 31, 2015.  If Executive’s employment is terminated after December 31, 2015, Executive shall receive the following severance and bonus payments: (i) Employer shall pay to Executive, and Executive shall accept, as liquidated damages and not as a penalty, an amount equal to twelve (12) months of Executive’s base salary, at the rate in effect on the date of termination, payable at the time Executive’s salary would have been paid had his employment continued for such twelve-(12) month period (the “Severance Period”) and (ii) Employer shall pay to Executive the bonus Executive would have been entitled to with respect to the Severance Period, payable at the times such bonus would have been paid had his employment continued for the Severance Period; provided, however, that the amount and duration of severance and bonus set forth in clauses (i) and (ii) shall be pro-rated (and thus reduced) by multiplying the amounts determined under such clauses by a fraction, the numerator of which shall be the total number of days remaining between the date of the termination of Executive’s employment and December 31, 2016, and the denominator or which shall be 366. For purposes of clarifying clause (ii) of this subsection 3(c), in determining the bonus Executive would have been entitled to hereunder for the applicable Severance Period, the bonus shall be paid based on Executive’s existing bonus arrangement unless with respect to any portion of the Severance Period a bonus arrangement has not been established for Executive, in which case Executive’s bonus shall be paid out at the rate of One Hundred Percent (100%) of target pro-rated for such portion of the Severance Period.      

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	(d)
	Definitions.  For purposes of this Agreement, “Cause” means Executive’s conviction of a felony, fraud, gross misconduct, gross negligence, disloyalty, gross insubordination, breach of trust, or breach of any material provisions of this Agreement.

		
	4.
	Resignation by Executive.  If Executive resigns or voluntarily terminates employment with Employer after December 31, 2015, Executive shall be entitled to the vesting of Executive’s outstanding unvested stock options and LTI Awards as set forth in subsections 3(a) and 3(b) of this Agreement but not to any other benefits or amounts set forth in Section 3(c).

		
	5.
	Termination by Employer for Cause.  If Employer terminates Executive’s employment at any time for Cause, then Executive shall only be entitled to continue to receive compensation and benefits (as in effect on the date notice of termination is provided to Executive) through the effective date of such termination and Executive shall not be entitled to any other compensation or benefits.

		
	6.
	Section 409A.  Notwithstanding anything in this Agreement establishing the effective date of Executive’s termination of employment, for purposes of any deferred compensation plan or arrangement subject to Section 409A of the Internal Revenue Code (“Section 409A”) the date of Executive’s “separation from service” shall be determined in accordance with the regulations under Section 409A.  To the extent that any payments under this Agreement or any other plan or arrangement constitute “deferred compensation” within the meaning of Section 409A, such amounts shall, to the extent required under Section 409A, be paid after the 6-month anniversary of the date of Executive’s separation from service (as defined under Section 409A).  For purposes of Section 409A, each payment made to Executive pursuant to Section 3 shall be deemed a separate payment.

		
	7.
	Restrictive Covenants.  

		
	(a)
	Covenant Not to Compete.  Executive acknowledges and agrees that the Employer, RockTenn and their and direct and indirect subsidiaries (collectively, the “Company”) operate in the highly competitive packaging business of manufacturing corrugated and consumer packaging and merchandising displays and providing recycling services to customers across the United States (the “Company’s Business”).  Executive further acknowledges and agrees that during Executive’s employment with Employer, Executive served as a senior member of management for the Company throughout the United States.  Accordingly, Executive covenants and agrees that during Executive’s employment with Employer and for a period of two (2) years following the date of the termination of Executive’s employment with Employer and its affiliates for any reason or no reason (the “Separation Date”), Executive will not, either directly or indirectly, work or perform services for another business or entity that competes with Company’s Business as the President, CEO, COO, Vice President, director, or member of senior management, or otherwise provide, regardless of title, managerial-type services to such business or entity, whether as an employee, 

3

independent contractor, advisor, or otherwise, within the United States, including Georgia.  
		
	(b)
	Covenant Not to Solicit Customers.  Executive agrees that during the Executive’s employment with Employer and for a period of three (3) years following the Separation Date, Executive shall not, in any way, directly or indirectly, solicit, divert, or take away, or attempt to solicit, divert or take away, any of the customers or prospective customers of the Company with whom Executive had Material Contact (as defined below) within two (2) years prior to the Separation Date, for the purpose of selling to any such customer or prospective customer any paper products or services that are competitive with those provided by the Company’s Business.  “Material Contact” means contact between Executive and any customer or prospective customer (i) with whom Executive dealt on behalf of the Company; (ii) whose dealings with the Company were coordinated or supervised by Executive; (iii) about whom Executive obtained confidential information in the ordinary course of business as a result of Executive’s association with the Company; or (iv) who receives products provided by the Company, the sale or provision of which results or resulted in compensation, commissions, or earnings for Executive.

		
	(c)
	Covenant Not to Recruit Personnel.  During the Term of this Agreement and for a period of three (3) years following the Separation Date, Executive will not in any way, directly or indirectly, recruit or solicit to hire any employee of the Company with whom Executive had contact while employed with the Company or cause or seek to cause any such Company employee to terminate an employment relationship with the Company.

		
	(d)
	Remedies.  Executive acknowledges that (i) breach of this Section 7 of this Agreement would result in irreparable injury and permanent damage to the Company; (ii) such restrictions are reasonable and necessary to protect the legitimate business interests of the Company and are critical to the success of the Company’s Business; and (iii) determining damages in the event of a breach of Section 7 of this Agreement would be difficult and that money damages alone would be an inadequate remedy for the injuries and damages which Company would suffer from Executive’s breach of this Section 7.  Executive, therefore, agrees that if Executive breaches this Section 7, the Company, in addition to and without limiting any other remedies or rights which it may have, shall have the right to injunctive relief or other similar remedy to specifically enforce such provisions.  Executive waives any requirement that the Company post a bond or any other security.  Nothing contained herein shall preclude the Company from seeking monetary or other damages of any kind, including reasonable fees and expenses of counsel and other expenses.

7.    General Provisions.
7.1    Notices.  All notices given hereunder shall be in writing and shall be sent by certified mail, return receipt requested, or by recognized overnight courier, addressed 

4

to the respective party at its or his address set forth below or at such other address or to such designee as such party shall designate by a notice given in the manner herein provided.  Each such notice shall be deemed to be given on the date mailed or so deposited with the courier.
	
		
	Notice to Employer may be sent to:
	Rock-Tenn Company
504 Thrasher Street
Norcross, GA  30071
c/o General Counsel

	Notices to Executive may be sent to:
	James B. Porter III
3325 Piedmont Road, NE
Unit # 3004
Atlanta, GA  30305

7.2    Assignment.  Executive may not assign this Agreement or any of his rights or obligations hereunder.
7.3    Invalid Provisions.  If any provision of this Agreement or the application thereof to any party or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to such party or circumstance shall not be affected thereby and shall be enforced to the greatest extent permitted by applicable law.
7.4    Entire Agreement; Waiver; Remedies; Etc.  This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and there are no agreements or representations with respect thereto except as contained herein; supersedes any other or prior employment or compensatory agreement between the parties; and may not be amended, modified or renewed, nor may any of the provisions hereof be waived, except by a writing signed by the parties hereto.  Notwithstanding the foregoing, this Agreement is not intended to eliminate or reduce Executive’s participation in the Rock-Tenn Company 401(K) Retirement Savings Plan, the Rock-Tenn Company Supplemental Retirement Savings Plan and any RockTenn executive life insurance program in which Executive participates.  A waiver by any party of any of the terms or conditions of this Agreement, or any breach thereof, will not be deemed a waiver of such term or condition for the future, or of any other term or condition, or of any subsequent breach thereof.  All rights and remedies by this Agreement reserved to Employer and its affiliates shall be cumulative and shall not be in limitation of any other right or remedy that such parties may have at law, in equity or otherwise.  
7.5    Binding Effect.  This Agreement will be binding upon the parties hereto and their respective personal representatives, successors and permitted assigns.  In the event of (a) a merger where Employer is not the surviving entity; (b) a consolidation of Employer with another entity; or (c) a transfer of all or substantially all of the assets of Employer, the surviving or consolidated entity, or in the event of a transfer of Employer’s assets, the transferee of Employer’s assets will have the benefit of and be bound by the provisions of this Agreement.

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7.6    Governing Law; Jurisdiction.  This Agreement shall be governed by the laws of the State of Georgia, without giving effect to the principles of conflicts of laws thereof, as to all matters, including, but not limited to, matters of validity, construction, effect, performance and remedies.  Any action or proceeding seeking to enforce any provisions of, or based on any right arising out of, this Agreement may be brought against any of the parties in the courts of the State of Georgia, or, if it has or can acquire jurisdiction, in the United States District Court for the Northern District of Georgia, and each of the parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any object to venue laid therein.  Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world.  
7.7    Descriptive Headings.  The Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement.

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IN WITNESS WHEREOF, set forth the parties have executed this Agreement on the dates set forth below.

	
			
	EXECUTIVE

/s/ James B. Porter III                         
James B. Porter III

Date:  12/22/14                                   
	 
	ROCKTENN-SOUTHERN 
CONTAINER, LLC

By:           /s/ Steven C. Voorhees        
Title:             CEO                               
Date:             12/29/14                         

	ROCK-TENN SERVICES, INC.

By:           /s/ Steven C. Voorhees        
Title:             CEO                               
Date:             12/29/14                         

Acknowledged by:
ROCK-TENN COMPANY

By:           /s/ Steven C. Voorhees        
Title:             CEO                               
Date:             12/29/14                         

	 
	 

7

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